Slide 1: Investor Relations Presentation
Regal Beloit Corporation Investor Relations Presentation February 2019 Mark Gliebe Jon Schlemmer Chairman and Chief Operating Officer Chief Executive Officer Rob Rehard Robert Cherry Vice President Vice President Chief Financial Officer Business Development & Investor Relations Creating a better tom
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this presentation may be forward-looking statements. Forward-looking statements represent our management’
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 periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentati
Slide 4: Regal is…
Regal is… A Leader in High Efficiency Motor & Power Transmission Systems − Well-positioned for global energy efficiency trend A Strong Free Cash Flow Generator − Five-year average free cash flow 132% of adjusted net income* Positioned to Drive Organic Growth through Innovation Takeaway − Disru
Slide 5: Regal Overview
Regal Overview Sales by Product Sales by Segment Other Power Founded in 1955 with Couplings Climate Transmission Solutions Headquarters in Bearings Solutions 24% Beloit, Wisconsin Small 28% Gearing Motors Generators 48% 2018 Sales of $3.6B Large Motors Fans & Commercial & Industrial Systems Blowers
Slide 6: Segment End Markets, Products & Brands
Segment End Markets, Products & Brands Commercial & Industrial Systems OEM 71% - Dist. 29% Climate Solutions OEM 89% - Dist. 11% Power Transmission Solutions OEM 32% - Dist. 68% Creating a better tomorrow™… ©2019 Regal Beloit Corporation, Proprietary and Confidential 11/26/2018 │ 6
Slide 7: Financial Snapshot
Financial Snapshot Net Sales Adj. Operating Margin* (billions) 11.0% $3.6 10.4% $3.4 9.7% $3.2 2016 2017 2018 2016 2017 2018 Adj. Diluted EPS* Free Cash Flow* Yield $6.00 11.2% 9.9% $4.87 8.8% $4.44 2016 2017 2018 2016 2017 2018 * Non-GAAP Financial Measurement, See Appendix for Reconciliation Creat
Slide 8: Consistently Generating Cash
Consistently Generating Cash (millions) $500 175% $400 150% 125% $300 100% Takeaway message goes here (16 pt.) $200 75% 50% $100 25% $- 0% 2014 2015 2016 2017 2018 * Non-GAAP Financial Measurement, See Appendix for Reconciliation Free Cash Flow % of Adj. Net Income 5-Year Average of 132% Creating a
Slide 9: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Paid Per Share $1.08 $1.00 $0.94 $0.90 $0.84 $0.78 $0.74 Takeaway message goes here (16 pt.) $0.70 $0.64 $0.66 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dividend Increase of 8% Announced April 30, 2018 Creating a better tomorrow™… ©2019 Regal Beloit C
Slide 10: Capital Allocation
Capital Allocation Invest in Growth Return Cash to Reduce Leverage Opportunities Shareholders Capital Share Retire Retain Acquisitions Dividends Expense Repurchases Existing Debt Excess Cash Balanced Targets 2% - 3% Takeaway message goes Strengthen Maintaining here ~20% (16 pt.) Dividend Net Debt/EB
Slide 11: Enterprise Strategy
Enterprise Strategy CORE CAPABILITIES FOUNDATIONAL PERFORMANCE Top Quartile Unique Culture Cash Generation KEY ELEMENTS Strong Takeaway message • Focus ongoes Corehere (16 pt.) Improving Operators • Innovate to Grow Margins • Simplification Innovative Customer Favored Drives Long Term Growth and Imp
Slide 12: 2017 Investor Day Commitments
2017 Investor Day Commitments 2019 Targets from 2017 Investor Day Organic Sales Adj. Operating ROIC* Free Cash Flow* Growth Margins* to Net Income 2% – 4% CAGR 200 – 250 bps 300 – 400 bps 100% – 125% Takeaway message goes here (16 pt.) Cumulative Results through 2018 Free Cash Flow Organic Sales Adj
Slide 13: Focus on Core
Focus on Core Focus On Core Businesses Where We Can Differentiate with Technology Increase the Focus on the Distribution Channel to Drive Growth Selectively Prune Businesses Where We Do Not Have a Clear Advantage or Scale Divesting or Exiting Non-Core Businesses Hermetic Engineered Takeaway me
Slide 14: Innovate to Grow
Innovate to Grow Disruptive Axial Energy Efficiency Internet of Things Technology Fan Energy Rating (FER) Standard Axial Motor & Efficient motors use electronics Effective July of 2019 Industrial Motor Control Every motor can be a sensor Expecting significant shift Every motor can communic
Slide 15: Energy Efficiency – Furnace Fan Regulation
Energy Efficiency – Furnace Fan Regulation Industry Units by Motor Type (million units) 3.1 Fan Energy Rating (FER) 2.9 New National Furnace Standard High Efficiency Electrical Efficiency Requirement Takeaway message goes here (16 pt.) Standard High Efficiency Motor Mandate 7/1/19 Effectiv
Slide 16: Full Range of FER Solutions
Full Range of FER Solutions DEC Star® Blower Highest Efficiency Best FER Solution Set ECM 3.0+ Solution High Efficiency Highest Motor Efficiency Ensite® Motor ECM Motor with Proven Reliability Premium Solution for Most Difficult Applications Efficiency and Features Takeaway message goes here (
Slide 17: Scaling & Expanding Axial Technology
Scaling & Expanding Axial Technology Axial Axial DEC Star® UlteMAX® GlacAir® Draft Inducer Gas Pre-Mix Blower Motor & Control Takeaway message goes here (16 pt.) 2011 2013 2015 2017 2019 Growth Opportunities in Both Existing and New Markets for Regal Creating a better tomorrow™… ©2019 Regal Beloit C
Slide 18: Disruptive Axial Technology
Disruptive Axial Technology Standard UlteMAX® Industrial Motor Motor & Control Compact Form Factor 50% – 75% Lower Weight Takeaway message goes here (16 pt.) Higher Energy Standard Air Handling Axial Air Handling Efficiency Multiple Applicable Markets ~$70 Million Incremental Sales in Axial
Slide 19: Internet of Things (IoT)
Internet of Things (IoT) New Entry Level ECM for Furnace Applications to Meet FER Regulation Excellent Energy Efficiency Takeaway message goes here (16 pt.) Advanced Blak Box™ Diagnostic Near Field Communication (NFC) IoT Ready IoT Enabled Entry Level Product Now in Marketplace Creating a
Slide 20: Leveraging Simplification
Leveraging Simplification Footprint Consolidation Automation 10,000 9,000 ft2 Enables 8,000 (000’s) 7,000 Investing ~$10M in 2019 2.5 Year Payback 6,000 2013 2015 2017 2019 Quality & Safety Benefits Takeaway message goes here (16 pt.) ERP Consolidation Digital Customer Experience % Sales on St
Slide 21: 2019 Sustainability Report
2019 Sustainability Report Published Inaugural Sustainability Report Available at Regal’s Investors Website Increasing the Impact of Our Handprint Decreasing the Impact of Our Footprint Takeaway message goes here (16 pt.) We Believe Sustainability Delivers Long-Term Value for Shareholders Cr
Slide 22: Key Takeaways
Key Takeaways Regal is… A Leader in High Efficiency Motor & Power Transmission Systems A Strong Free Cash Flow Generator Positioned to Drive Organic Growth through Innovation Takeaway message goes here (16 pt.) Delivering Results from Ongoing Simplification Initiative Committed to Generati
Slide 23: Thank You
Thank You Mark Gliebe Jon Schlemmer Chairman and Chief Operating Officer Chief Executive Officer Rob Rehard Robert Cherry Vice President Vice President Chief Financial Officer Business Development & Investor Relations Creating a better tomorrow™… ©2019 Regal Beloit Corporation, Proprietary and Confi
Slide 24: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Twelve Months Ended Dec 29, Dec 30, Dec 29, Dec 30, 2018 2017 2018 2017 GAAP Diluted Earnings Per Share $ 1.28 $ 1.15 $ 5.26 $ 4.74 Restructuring and Related Costs 0.04 0.02 0.13 0.22 Purchase Accounting and Tra
Slide 25: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Power Transmission ADJUSTED INCOME FROM OPERATIONS Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Dec 29, Dec 30, Dec 29, Dec 30, Dec 29, Dec 30, Dec 29, Dec 30, 2018 2017 2018 2017 2018 2017 2018 201
Slide 26: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Industrial Power Transmission ADJUSTED NET SALES Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Dec 29, Dec 30, Dec 29, Dec 30, Dec 29, Dec 30, Dec 29, Dec 30, 2018 2017 2018 2017 2018 2017 2018 2017 Net Sales $
Slide 27: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the first and second quarter 2018 net sales and income from operations illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and actual performance. Commercial & Power Indu
Slide 28: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the third and fourth quarter 2018 net sales and income from operations illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and actual performance. Commercial & Power Indu
Slide 29: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the full year 2018 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and ac
Slide 30: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations FREE CASH FLOW Three Months Ended Twelve Months Ended (Dollars in Millions) Dec 29, Dec 30, Dec 29, Dec 30, 2018 2017 2018 2017 Net Cash Provided by Operating Activities $ 112.4 $ 56.9 $ 362.7 $ 291.9 Additions to Property Plant and Equipment (18.4) (16.2) (77.6) (6
Slide 31: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Commercial & Power Industrial Climate Transmission Systems Solutions Solutions Total Regal Net Sales Three Months Ended Dec 29, 2018 $ 436.7 $ 232.2 $ 212.8 $ 881.7 Net Sales from Business Acquired (31.4)
Slide 32: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations TOTAL NET DEBT/ADJUSTED EBITDA (Dollars in Millions) LTM Dec 29, 2018 Net Income Attributable to Regal Beloit Corporation $ 231.2 Plus: Minority Interest 4.6 Plus: Taxes 56.4 Plus: Interest Expense 55.2 Less: Interest Income (1.9) Plus: Depreciation and Amortization
Slide 33: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations RETURN ON INVESTED CAPITAL (ROIC) (Dollars in Millions) Dec 29, Dec 30, Dec 31, Jan 2, 2018 2017 2016 2016 Cash and Cash Equivalents $ (248.6) $ (139.6) $ (284.5) $ (252.9) Current Maturities of Debt 0.5 101.2 100.6 6.3 Long-Term Debt 1,306.6 1,039.9 1,310.9 1,715.6
Slide 34: Appendix Regal Shipping Days
Appendix Regal Shipping Days 1Q 2Q 3Q 4Q FY 2014 63 63 63 64 253 2015 64 63 64 59 250 2016 64 64 63 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 61 250 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2015, 2016, 2017, 2018 a