Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Q1 2014 Earnings Presentation
22 slides from Regal Rexnord's earnings presentation, May 6, 2014
Slide 1: Regal Beloit Corporation First Quarter 2014 Earnings Conference Call
Regal Beloit Corporation First Quarter 2014 Earnings Conference Call May 6, 2014 Mark Gliebe Jon Schlemmer Chairman and Chief Operating Officer Chief Executive Officer Chuck Hinrichs John Perino Vice President Vice President Chief Financial Officer Investor Relations
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 term
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 income
Slide 4: Agenda
Agenda Opening Comments Mark Gliebe Financial Update Chuck Hinrichs Operations Update Jon Schlemmer Summary Mark Gliebe Q&A All p4
Slide 5: Opening Comments
Opening Comments > Adjusted EPS* in Line with Earlier Guidance > Revenues Up 3% Over Prior Year − N.A. HVAC − N.A. C&I Motors − Power Generation − China − India & Australia − Europe − N.A. Mechanical − Cemp and Hy-Bon Acquisitions * Non-GAAP Financial Measurement, See Appendix for Reconciliation p5
Slide 6: Opening Comments
Opening Comments > Gross Margin in Line with Expectations > Simplification Programs Remain on Track > Cemp and Hy-Bon Integration on Plan > 2nd Quarter Outlook – Typical Residential HVAC Seasonality – North American C&I Motors Expected Up Slightly – Continued Strength in Power Generation – Internati
Slide 7: 1st Quarter Financial Results
1st Quarter Financial Results ADJUSTED DILUTED EARNINGS PER SHARE* Three Months Ended Mar 29, Mar 30, 2014 2013 GAAP Diluted Earnings Per Share $ 0.96 $ 1.09 Restructuring Costs 0.06 0.01 Purchase Accounting and Acquisition Costs 0.02 – Tax Benefit Recorded Attributable to Prior Year – (0.02) Adjust
Slide 8: 1st Quarter Financial Results
1st Quarter Financial Results > Sales of $801 Million, Up 3.0% from Prior Year – Foreign Currency Translation Reduced Total Net Sales by 1% – Sales from Acquired Businesses $23 Million – Organic Sales Growth Excluding Currency and Acquisitions of 1% > Adjusted Gross Margin* of 24.9% vs. 25.7% in Pri
Slide 9: Key Financial Metrics
Key Financial Metrics Capital Expenditures Effective Tax Rate (ETR) > $22.3 Million in 1Q 2014 > 26.2% ETR in 1Q 2014 > $80-$85 Million Est. for FY 2014 > ~ 27% ETR Est. for 2014 Balance Sheet at Mar 29, 2014 Dividend Increase Announced > Total Debt of $768 Million > Quarterly Cash Dividend Increase
Slide 10: 2nd Quarter 2014 Guidance
2nd Quarter 2014 Guidance > GAAP EPS Guidance of $1.19 to $1.27 > Adjusted EPS Guidance of $1.24 to $1.32 - Adds Back $0.05 of Restructuring Charges > Guidance Excludes Potential Devaluation of the Venezuelan Bolivar p 10
Slide 11: End Market Update
End Market Update > Solid N.A. Residential Product Growth – HVAC Up 5% – Strong Demand for Non-HVAC Residential Products – Expecting Modest Growth in 2Q > N.A. Commercial & Industrial Motor Sales Down 3% – End Market Demand Mixed – Adverse Weather Headwind – Expecting Slight Growth in 2Q > Global Po
Slide 12: End Market Update
End Market Update > N.A. Mechanical Sales Down – Driven by Reduced Demand for Gas Fracturing Equipment – Excluding Milwaukee Gear, Sales Up – Expecting Slight Year over Year Growth in 2Q > International Sales Mixed – Growth in China, Europe and Latin America – Challenging Conditions Continue in Indi
Slide 13: Footprint Simplification
Footprint Simplification > Springfield, Missouri Estimated Restructuring – Solid Progress Expense* ($M) – Expect to See Benefits in 4Q and 2015 $4.2 $3.3 > Acuna, Mexico $2.7 $3.0 – Solid Progress – Expect to See Benefits in 4Q and 2015 > Melbourne, Australia 4Q13 A 1Q14 A 2Q14 2H14 – Consolidating
Slide 14: Supplier Simplification
Supplier Simplification Number of Suppliers > 2013 Supplier Alignment Program Launch > Direct and Indirect Material > Reduce Supplier Base by Over 1,500 by 2014 2012 2013 2014 Improves Delivery, Quality, Inventory and Cost p 14
Slide 15: Design Platform Simplification
Design Platform Simplification Platform Description 48 Frame Fractional HVAC Motors Fractional HVACR Motors 3.3” and Blowers Worm Gear Mechanical Industrial Motors for Asia IEC IE3 Mark 3 and Europe 48/56 Frame Fractional C&I Motors
Slide 16: Worm Gear Design Simplification
Worm Gear Design Simplification > Two Consolidated into One > 50% Fewer Parts > Improved Quality, Delivery and Cost > Improved Asset Utilization One Done, Four to Go!
Slide 17: Closing Comments
Closing Comments > 1Q 2014 Results in Line with Guidance > Continue to Launch New Products > Simplification Efforts Making a Difference > Cemp and Hy-Bon Acquisitions Are Contributing > Acquisition Pipeline Healthy > Strong Balance Sheet Provides Flexibility > 2Q 2014 Guidance − Expect Growth in HVA
Slide 18: Questions and Answers
Questions and Answers p 18
Slide 19: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE* Three Months Ended Mar 29, Mar 30, 2014 2013 GAAP Diluted Earnings Per Share $ 0.96 $ 1.09 Purchase Accounting Costs 0.02 — Restructuring Costs 0.06 0.01 Retroactive Tax Credit — (0.02) Adjusted Diluted Earnings Per Share $ 1.04
Slide 20: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED INCOME FROM OPERATIONS* Three Months Ended Dollars in Millions Mar 29, Mar 30, 2014 2013 GAAP Income from Operations $ 69.7 $ 75.9 Purchase Accounting and Transaction Costs 1.3 - Restructuring Costs 4.2 0.9 Adjusted Income from Operations $ 75.2 $ 76.8 FREE
Slide 21: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations EBITDA Reconciliation Dollars in Millions 2Q 2013 3Q 2013 4Q 2013 1Q 2014 LTM Net Income $51.1 $52.6 ($33.2) $43.8 $114.3 Asset Impairment and Other, Net - - 81.0 - 81.0 Plus: Minority Interest 2.5 1.9 0.4 1.2 6.0 Plus: Taxes 17.9 15.0 -3.7 16.0 45.2 Plus: Interest
Slide 22: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Organic Growth Reconciliation Net Sales Quarter Ended March 29, 2014 $801.2 Net Sales from Businesses Acquired Within Last Twelve Months (23.4) Impact of Foreign Currency Exchange Rates 7.6 Adjusted Net Sales Quarter Ended March 29, 2014 $785.4 Net Sales Quarter End