Rbc Bearings Incorporated · NYSE:RBC
Rbc Bearings — Merger or Acquisition (March 2015)
21 slides from Rbc Bearings's merger presentation, Mar 26, 2015
Slide 1: Acquisition of Sargent Aerospace & Defense Business from Dover Corporation
Acquisition of Sargent Aerospace & Defense Business from Dover Corporation March 27, 2015
Slide 2: Safe Harbor Statement
1 Safe Harbor Statement © 2015 RBC Bearings Incorporated This document contains, or may be deemed to contain, “forward - looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of
Slide 3: Presenters: Dr. Michael J. Hartnett and Daniel A. Bergeron
Dr. Michael J. Hartnett Chairman, President and Chief Executive Officer Daniel A. Bergeron Director, Vice President and Chief Financial Officer 2
Slide 4: Agenda for Today's Investor Call
3 Agenda for Today’s Investor Call • Overview of the Sargent Aerospace & Defense Transaction • Review of Transaction Financial Details and Impact • Discussion of Sargent’s Strategic Fit with RBC • Question and Answer Session
Slide 5: RBC's Acquisition of Sargent Aerospace & Defense
4 Diversification of aerospace product offering strengthens RBC’s business while reinforcing bearings business and expanding customer penetration Combination creates diversified manufacturer of highly engineered industrial and aerospace products with over $640 million in sales Strong strategic fit w
Slide 6: Overview of the Sargent Aerospace & Defense Transaction
5 Overview of the Sargent Aerospace & Defense Transaction
Slide 7: Sargent Overview and Financial Details
▪ Offers a deep portfolio of highly engineered products, Designated Engineering Representative (“DER”) approved repairs, and Parts Manufacturer Approvals (“PMAs”) ▪ Is a leading precision - engineered manufacturer for commercial, military, and defense programs including aircraft, rotorcraft, submari
Slide 8: Sargent – Products and Markets
Fasteners 27% Hydraulics 25% Aftermarket Services 18% Bearings 13% Rings & Joints 10% Machined Components 7% 7 By Product 63% Commercial 1 37% Proprietary Products 33% International 2014A REVENUE MIX Sargent – Products and Markets By End Market By Geography 1. Before eliminations. Military OEM 34% C
Slide 9: Sargent product categories and brands
8 CATEGORY BRAND KEY HIGHLIGHTS 2014A REVENUE OEM HYDRAULICS (Tucson, AZ) ▪ Hydraulic valves and actuators ▪ Key supplier of hydraulic components on many commercial and military aircraft as well as nuclear class submarines $49 SPECIALTY BEARINGS (Tucson, AZ) ▪ Teflon - lined and metal - to - metal m
Slide 10: Financial Details and Impact
9 Financial Details and Impact
Slide 11: Unique Opportunity to Create Significant Shareholder Value
10 • Attractive Effective Purchase Price and Related Valuation Multiples – Effective purchase multiple of ~9.4x Adj. LTM EBITDA 1 • 338(h)(10) Election and Tax Basis Step - up to Enhance Cash Flow • Significant Potential Synergy Opportunities - $7.5 Million Run - Rate • Scale Achieved with Nearly $1
Slide 12: Transaction Consideration
Transaction Consideration • Total purchase price of $500 million for 100% of Sargent business – Cash consideration of $500 million financed with mix of new senior debt and cash on hand – Net present value of 338(h )(10) election and asset tax basis step - up benefits reduces effective purchase price
Slide 13: Complementary Strengths Create Value: Synergy Summary
Complementary Strengths Create Value 12 • $7.5M of Expected Annual Synergies – $1.5 million expected to be realized in first year – Incremental realization of $1.5 million per year up to $7.5 million annual run - rate • Key Cost Synergy Categories – Supply chain logistics – Material sourcing – Manuf
Slide 14: Pro Forma LTM Financials
13 Pro Forma LTM Financials Note: EBITDA equals Adjusted Operating Income plus Depreciation, Amortization and Incentive Stock Compensation. Refer to page 20 for Adjusted Operating Income, Adjusted Gross Margin and Adjusted EBITDA ($ in millions) LTM December 2014 Adj. Gross Margin Adj. EBITDA Net Sa
Slide 15: Compelling Value Creation Potential
▪ $ 80 million of cash (of $120 million on hand) ▪ $220 million draw on new revolving credit facility ▪ $200 million from new term loan A ▪ $0.25 - $0.35 per diluted share for the first twelve months of operations 1 ▪ 2.6x LTM 12/31/2014 Pro Forma EBITDA ▪ $100 - $110 million for first twelve months
Slide 16: Strategic Fit
____ © Strategic Fit
Slide 17: A Strategic and Accretive Acquisition
• Large transaction for RBC Bearings to expand and strengthen our aerospace and defense business and portfolio – Fits well with our philosophy of providing high quality products and solutions to our customer base – Broadens and strengthens product offering enhancing our customer solutions and experi
Slide 18: Q&A Session
____ © Q&A Session
Slide 19: Appendix
____ © Appendix
Slide 20: Non-GAAP Financial Measures
19 Non - GAAP Financial Measures In addition to disclosing results of operations that are determined in accordance with generally accepted accounting principles (“GAAP”), this document also discloses non - GAAP results of operations that exclude certain charges . These non - GAAP measures adjust for
Slide 21: Reconciliation of Non-GAAP Financial Measures
20 Reconciliation of Non - GAAP Financial Measures Dec 27, Dec 28, 2014 2013 Reconciliation of reported gross margin to adjusted gross margin: Reported gross margin $170,466 $160,236 Consolidation and restructuring of operations 3,707 - Adjusted gross margin $174,173 $160,236 Reconciliation of repor