Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Baird Industrial Conference 2011
31 slides from Regal Rexnord's conference presentation, Nov 8, 2011
Slide 1: Baird Industrial Conference
John Perino Vice President Investor Relations Chuck Hinrichs Vice President Chief Financial Officer Baird Industrial Conference November 8, 2011 Mark Gliebe President Chief Executive Officer Jon Schlemmer Chief Operating Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement 1 This presentation contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our management's judgment regarding future events. In many cases, you can identify forward-looking statements by te
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures 2 We prepare financial statements in accordance with accounting principles generally accepted in the United States (GAAP). We also disclose adjusted diluted earnings per share (EPS), adjusted gross profit, adjusted gross profit as a percentage of net sales, adjusted opera
Slide 4: Overview: Getting to Know Regal Beloit
Overview 3 Getting to Know Regal Beloit Best in Class Industrial Performance Growth Catalysts Financial Consistency Building a Premier Global Enterprise
Slide 5: Overview: Getting to Know Regal Beloit
Overview 4 Getting to Know Regal Beloit Best in Class Industrial Performance Growth Catalysts Financial Consistency Building a Premier Global Enterprise
Slide 6: Regal Beloit Corporation Overview
Transformation Regal Beloit Corporation Overview 5 Revenues (PF) $3B + Employees ~25,800 Total Shareholder Returns 7-Year CAGR 142% Founded 1955 Beloit, WI A Mid Cap Diversified Industrial A Truly Global Manufacturer A Lean Six Sigma Continuous Improvement Culture A Company Innovating Around Energy
Slide 7: Necessary and Innovative Products
Necessary and Innovative Products 6 Electric Motors Power Transmission Electric Generators Custom Electric Drives
Slide 8: Well Balanced, Well Diversified Business Model
7 Well Balanced, Well Diversified Business Model 7 Revenues by Geography Revenues by Channel Cyclicality Revenues by End Markets Late Mid Early _____________________ Management Estimates
Slide 9: Best in Class Industrial Performance
Overview 8 Getting to Know Regal Beloit Best in Class Industrial Performance Growth Catalysts Financial Consistency Building a Premier Global Enterprise
Slide 10: Total Shareholder Returns
Total Shareholder Returns 9 Performance Consistent With Best in Class Industrials _____________________ Best In Class Industrials includes Ametek, Inc., Danaher Corporation, Emerson Electric Co., IDEX Corporation, and Roper Industries, Inc. +142.0% Regal Beloit Corporation +115.2% Best in Class Indu
Slide 11: Relative Performance Profile
Relative Performance Profile 10 _____________________ Source: Capital IQ and Bloomberg Note: CAGR represents cumulative annual growth rate for the 2006 - 2011E calendar periods. 2011E revenue estimates represent the median analyst estimate per Capital IQ. EBITDA is computed as income from operations
Slide 12: Regal Beloit Compass Operating System
Regal Beloit Compass Operating System 11 Near Term Income Statement Quality Cost Delivery Cap Ex Cash Cycle New Products Long Term Growth Lean Six Sigma Tools Leadership Tools Talent Management Long Range Plans Compliance/Safety Risk Management Customer Care Integrations
Slide 13: Growth Catalysts
Overview 12 Getting to Know Regal Beloit Best in Class Industrial Performance Growth Catalysts Financial Consistency Building a Premier Global Enterprise
Slide 14: Strategic Rationale to Acquire EPC
Offers Stronger Global Footprint Strategic Rationale to Acquire EPC 13 Combined Energy Efficient Technology Provides Ability To Deliver Additional Value To Customers Complementary Product Offerings Commercial And Residential Hermetic Strengthens Presence In High Growth Regions Augments Low Cost Manu
Slide 15: EPC Broad Product Platform
EPC Broad Product Platform 14 Key Applications Commercial HVAC&R Residential HVAC&R Pump Distribution General Industry 25% 26% 16% 24% 9% _____________________ Management Estimates
Slide 16: Integration Summary
Integration Summary EPC Leadership Team in Key Management Positions Integration Mechanics Have Gone Smoothly: IT, Payroll, Benefits, Finance, etc Now Focusing on Customers, Products, Markets and Synergies Customer: Face to Face Meetings and Customer Survey Products: New Product Rationalization and P
Slide 17: Anticipated Gross Synergies
16 Anticipated Gross Synergies1 Anticipated Integration Capital and Expense Explanation of Synergies Procurement Synergies Select Favorable Materials Pricing Materials Specification Consolidation Logistics Synergies Truck Route Consolidation Load Consolidations Manufacturing Synergies Facility Ratio
Slide 18: Global Energy Efficiency Regulations Continuing Catalyst for Growth
China Energy Efficiency And Benefit Society Project. Provide Incentives To Promote High Efficiency IE2 And IE3 Motors Energy Efficiency Ratings Required On AC Equipment In Both China and India. Higher Ratings Require Energy Efficient Motors Motor Efficiency Legislation (MEPS) to IE2 California Title
Slide 19: Increasing Global Presence
Increasing Global Presence 18 Expanding in Higher Growth Regions 2005 Sales 2011 Proforma Sales Five Year Growth Rate _____________________ Management Estimates
Slide 20: Technology Leader
Technology Leader 19 Energy Efficient Product Sales Regal Beloit Technology Leadership High Efficiency More Effective Use of Power Variable Speed Broad Variation of Speed During Use Embedded Intelligence Electronic "Smarts" Built Into Products Lower Operating Costs Reduced Lifetime Costs to Operate
Slide 21: Successful Acquirer and Integrator
Successful Acquirer and Integrator 20 Acquisition Strategy Technology and Energy Efficiency Expand Geographic Footprint Synergy Opportunities Acquisition Pipeline Continues to Be Active 2004 - 2009 2010 2011 CMT HARGIL DYNAMICS PTY. LTD. Consistent and Successful Acquirer
Slide 22: Record of Strong, Continuous Growth
Record of Strong, Continuous Growth 21 2012 Est Track Record of Consistent Growth and Execution Real Momentum with 10 Recent Acquisitions Energy Efficiency Innovation Tailwind Continuing to Globalize and Simplify Continuous Improvement Headset
Slide 23: Financial Consistency
Overview 22 Getting to Know Regal Beloit Best in Class Industrial Performance Growth Catalysts Financial Consistency Building a Premier Global Enterprise
Slide 24: Third Quarter Financial Highlights
Third Quarter Financial Highlights 23 Strong Third Quarter Performance Adjusted Diluted EPS +17% $1.14 $1.33 $591 $737 Revenue ($M) +25% Adjusted Operating Profit Margin +30 bps Free Cash Flow ($M) +64% 11.8% $37 $68
Slide 25: Sales and EPS Growth
Sales and EPS Growth 24 EPS Sales 17.6% Sales CAGR (2001-2011E) 2005 _____________________ Source: Capital IQ and StreetAccount. Note: 2011E sales and EPS estimates based on midpoint of consensus analyst guidance per Reuters. Strong Track Record of Growth $ Thousands
Slide 26: Consistent Cash Flow While Investing for Growth
Consistent Cash Flow While Investing for Growth 25 Cash Div ($M) $14.7 $16.6 $18.1 $19.4 $21.6 $25.1 $26.8 _____________________ Note: 2011E free cash flow, capex and Net Income estimates based on midpoint of consensus analyst guidance per Reuters
Slide 27: Balance Sheet Strength
Balance Sheet Strength 26 _____________________ Note: EBITDA is computed as income from operations plus depreciation and amortization. Q2 2011 total debt / total capital is pro forma for the EPC acquisition. *Includes 8% of hedging activities. 2004 2005 2006 2007 2008 2009 2010 2011 - - -
Slide 28: Investment Thesis
Investment Thesis Well Positioned Global Business Model Performance Consistent with Best in Class Industrials Leadership in Necessary, Innovative Products RBC Operating System Drives Results Accelerating Growth Drivers EPC Adds 2011 Revenue Growth and Longer Term Synergy Opportunities Increasing Glo
Slide 29: Thank you
SSREGAL BELOIT Thank you
Slide 30: Appendix - Non GAAP Measures
APPENDIX - Non GAAP Measures 29
Slide 31: Reconciliation of Historic Free Cash Flow
30 Appendix Reconciliation of Historic Free Cash Flow (Data in $ Millions) 2005 2006 2007 2008 2009 2010 2011 E1 Cash Flow from Operation $112.2 $93.5 $200.6 $154.2 $314.9 $175.4 $282.0 Capital Expenditures (28.3) (52.5) (36.6) (52.2) (33.6) (45.0) (54.0) Free Cash Flow $83.9 $41.0 $164.0 $102.0 $28