Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Merger or Acquisition (February 2021)
22 slides from Regal Rexnord's merger presentation, Feb 16, 2021
Slide 1: Regal Beloit to Combine with Rexnord's Process & Motion Control Segment
©2021 Regal Beloit Corporation 1 February 16, 2021 Regal Beloit to Combine with Rexnord’s Process & Motion Control Segment CREATING A PREMIER GLOBAL POWER TRANSMISSION PROVIDER
Slide 2: Additional Information and Forward Looking Statements
Additional Information This communication does not constitute an offer to buy, or a solicitation of an offer to sell, any securities of Regal Beloit Corporation ("Regal"), Rexnord Corporation ("Rexnord") or Land Newco, Inc. ("Land") In connection with the proposed transaction, Regal and Land will fi
Slide 3: Non-GAAP Financial Measures and Certain Financial Metrics
In this presentation, we disclose the following non-GAAP financial measures: adjusted EBITDA, EBITDA margin, return on invested capital (ROIC), unlevered free cash flow, net leverage, net debt and cash earnings per share (EPS). As used in this communication, we define: (i) "adjusted EBITDA" to mean:
Slide 4: Today's Presenters
©2021 Regal Beloit Corporation 4 TODAY’S PRESENTERS Louis Pinkham Chief Executive Officer Rob Rehard Chief Financial Officer Todd Adams Chairman, President & Chief Executive Officer
Slide 5: The New Regal – Transformed Strategically and Financially
©2021 Regal Beloit Corporation 5 THE NEW REGAL – TRANSFORMED STRATEGICALLY AND FINANCIALLY Together, a new Regal creating increased value for customers, investors, and associates Creates world - class power transmission provider Will combine with Regal PTS; maintain Rexnord name and HQ in Milwaukee,
Slide 6: Compelling Value Creation for All Shareholders
©2021 Regal Beloit Corporation 6 1 Adjusted EBITDA excluding stock - based compensation. Pro forma Adjusted EBITDA includes $70M of cost synergies in 2022E and $120 M in 2024E 2 Numbers shown at the $300M dividend midpoint case. Pre - dividend, accretion to non - GAAP adj. cash EPS expected to be ~3
Slide 7: Structure & Ownership
©2021 Regal Beloit Corporation 7 Structure & Ownership • Regal to combine with Rexnord’s PMC business in a tax - efficient Reverse Morris Trust (RMT) transaction valued at $3,688M 1 • Economic allocation of 61.4% for Regal shareholders and 38.6% for Rexnord shareholders with potential for an ownersh
Slide 8: Significant Value Unlocked for Rexnord Shareholders
©2021 Regal Beloit Corporation 8 SIGNIFICANT VALUE UNLOCKED FOR REXNORD SHAREHOLDERS Significant ownership in highly - attractive combined PT business Compelling value creation opportunity for all stakeholders Strong cultural fit between logical partners Creates standalone best - in - class water ma
Slide 9: Strategic Transaction with Compelling Value Creation
©2021 Regal Beloit Corporation 9 STRATEGIC TRANSACTION WITH COMPELLING VALUE CREATION Creates a premier power transmission player, combining highly complementary portfolios Generates significant cost synergies, worth at least $120M annually Cross marketing opportunities improve growth potential and
Slide 10: Delivering Unmatched Capabilities Across the Entire General Industrial Drive Train
©2021 Regal Beloit Corporation 10 DELIVERING UNMATCHED CAPABILITIES ACROSS THE ENTIRE GENERAL INDU STRIAL DRIVE TRAIN Full drive train brings opportunity to increase value to customers Clutches Brakes Motors Mounted Bearings Sensing Fluid Couplings Gear Drives Grid Couplings Monitoring Mounted Beari
Slide 11: Portfolios with Highly Complementary Products and Solutions
©2021 Regal Beloit Corporation 11 Regal Strength PMC Strength Couplings High - performance disc couplings Broad standard - purpose grid & gear couplings Gearing Right - angle worm gears Large parallel gear drives Mounted bearings Light/medium - duty ball bearings Heavy - duty roller bearings Aero Ni
Slide 12: Results in Premier Power Transmission Player
©2021 Regal Beloit Corporation 12 RESULTS IN PREMIER POWER TRANSMISSION PLAYER ~30% outside of N.A. Regal Brands PMC Brands 19% 11% 70% Europe Rest of World N.A. Pro Forma 2020 PT Revenue by End Market Pro Forma 2020 PT Revenue by Geography 26% 17% 11% 9% 7% 7% 6% 5% 4% 8% G.I. F&B Metals/mining A&D
Slide 13: Unlocks Meaningful Synergies
©2021 Regal Beloit Corporation 13 UNLOCKS MEANINGFUL SYNERGIES 2022 2023 2024 Procurement Footprint SG&A $ 70 $ 120 $ 100 Significant Cost Synergies 1 ($M) • Capabilities across the drive train • Cross - selling opportunities • Expanded geographies • Enhanced aftermarket support • Strengthens digita
Slide 14: Drives Growth via Improved Value Proposition
©2021 Regal Beloit Corporation 14 DRIVES GROWTH VIA IMPROVED VALUE PROPOSITION Combined capabilities accelerate innovation, new product introductions A better partner to distributors of all sizes Provide access to a larger installed base and the most complete power transmission product and solution
Slide 15: Complementary Offerings Create Full-Lifecycle Support
©2021 Regal Beloit Corporation 15 DRAFT - Strictly Private & Confidential COMPLEMENTARY OFFERINGS CREATE FULL - LIFECYCLE SUPPORT + Adds value for customers by: • Asset Management • Improved Asset Performance • Increased Component Reliability • Lower Operating Cost Diagnose Procure Install Monitor R
Slide 16: Broader Capabilities to Drive Innovation
©2021 Regal Beloit Corporation 16 DRAFT - Strictly Private & Confidential BROADER CAPABILITIES TO DRIVE INNOVATION Make it Easier to Order Augmented Reality Predictive Analytics Seamless Transactions Guided digital handoffs between end user, channel partners, and Regal to minimize leakage Interactiv
Slide 17: Creates More Balanced Regal Portfolio
©2021 Regal Beloit Corporation 17 70% 30% OE AM Product Mix (2020 Sales) 55% 24% 21% Motors PT Niche / Specialty Regal CREATES MORE BALANCED REGAL PORTFOLIO Regal 38% 47% 15% Motors PT Niche / Specialty Regal + PMC Original Equipment vs. Aftermarket Mix (2020 Sales) 66% 34% OE AM Regal + PMC Power T
Slide 18: Expanded Energy Efficiency Platform
©2021 Regal Beloit Corporation 18 ESG Enabling Products & Solutions 1 52 - 57% 43 - 48% Other ESG Regal EXPANDED ENERGY EFFICIENCY PLATFORM Regal + PMC Majority of Regal sales to come from ESG enabling products and services (2020 Sales) (2022E Sales) 40 - 45% 55 - 60% Other ESG Grove Gear Drive Help
Slide 19: Robust Cash Flow Generation
©2021 Regal Beloit Corporation 19 ROBUST CASH FLOW GENERATION 2020F ~$ 200 2020F Pro forma 2020E Pro forma 2024E ~$750 ~$ 590 ~$ 390 27% Accelerating Cash Flow Generation Continued Disciplined Capital Allocation Unlevered Free Cash Flow ($M) Investments for organic growth Continued return of capital
Slide 20: Ownership Adjustment Mechanism
©2021 Regal Beloit Corporation 20 OWNERSHIP ADJUSTMENT MECHANISM 1 Dividend to be based on Regal’s 15 - day VWAP of $128.82 as of February 12, 2021 2 Based on common shares 3 Adjusted EPS pre intangible amortization. EPS accretion refers to first year post closing 4 Including cost and cross - sellin
Slide 21: Strongly Aligned Cultures and Mission
©2021 Regal Beloit Corporation 21 STRONGLY ALIGNED CULTURES AND MISSION We create a better tomorrow by energy - efficiently converting power into motion Integrity Customer success Continuous improvement A passion to win
Slide 22: Strategic Transaction with Compelling Value Creation
©2021 Regal Beloit Corporation 22 STRATEGIC TRANSACTION WITH COMPELLING VALUE CREATION Creates a premier power transmission player, combining highly complementary portfolios Generates significant cost synergies, worth at least $120M annually Cross marketing opportunities improve growth potential and