Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Jefferies 11th Annual Industrial Conference (August 2015)
22 slides from Regal Rexnord's conference presentation, Aug 13, 2015
Slide 1: Regal Beloit Corporation Investor Relations Presentation
Regal Beloit Corporation Investor Relations Presentation August 2015 Mark Gliebe Jon Schlemmer Chuck Hinrichs John Perino Chairman Chief Operating Officer Vice President Vice President Chief Executive Officer Chief Financial Officer Financial Planning & Analysis
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 periodically disclose certain financial measures that may be considered “non-GAAP” financial measures. We believe that these non-GAAP financi
Slide 4: Agenda
Agenda Company and Segment Overview Jon Schlemmer 2nd Quarter 2015 Results Jon Schlemmer Financial Presentation Chuck Hinrichs Q&A All 2015 p4
Slide 5: Company Overview
Company Overview Founded in 1955 with Headquarters in Beloit, Wisconsin Revenues ~$3.7B Revenue Growth 5-Year CAGR of 9.8% 127% Free Cash Flow as a % of Adj. Net Income* in 2011-2014 Dividends Increased in 10 Out of the Last 11 Years Management Experienced, Credible, Stable * Non-GAAP Financial Meas
Slide 6: Business Segments
Business Segments Climate Solutions Commercial & Industrial Systems Power Transmission Solutions 2015
Slide 7: 2nd Quarter 2015 Results
2nd Quarter 2015 Results > 2nd Quarter Highlights − Sales Up 11% − Increased Adjusted Operating Margin* to 11.9%, Up 120 Basis Points Over Prior Year − Adjusted Earnings Per Share* Up 19% − Free Cash Flow* 151% of Net Income, Reduced Debt by $54 Million > Challenging Sales and Orders Environment − A
Slide 8: Commercial & Industrial Systems
Commercial & Industrial Systems (millions) 2Q Sales Versus Prior Year Adj. Operating Margin* 9.9% > ~150 bps Headwind from Lower Oil & Gas and China > Significant Self Help Efforts ($21) Oil & Gas − Rightsizing the Oil & Gas Businesses ($ 6) China − Completed Two Additional Rooftop Power Gen Simplif
Slide 9: Climate Solutions
Climate Solutions (millions) 2Q Sales Versus Prior Year Adj. Operating Margin* 15.2% > Up 330 Basis Points from Prior Year > Simplification, SG&A and Cost Controls Delivering Savings ($8) SEER 13 ($4) Price Formulas > 4th Design Platform Simplification Furnace Program On Track to be Substantially Co
Slide 10: Power Transmission Solutions
Power Transmission Solutions (millions) 2Q Sales Versus Prior Year End Markets - Total Segment Oil & Gas Renewable Energy Ag Equipment Food & Beverage Distribution Material Handling Adj. Operating Margin* 11.8% > Up 60 Basis Points from Prior Year > Simplification and PTS Acquisition Both Contributi
Slide 11: PTS Integration Remains on Track
PTS Integration Remains on Track > 26 Sites Substantially Complete by Early 4Q 2015 > ERP Integrated by 3Q 2016 > Synergies Expected to Exceed the Year 1 Target - 4 Year Target $30 Million - $5 Million Tax Synergies > Ongoing Positive Customer Feedback Responding to Customer Feedback Synergy Highlig
Slide 12: Margin Improvement Progress
Margin Improvement Progress Adj. Operating Profit Margin* Key Drivers 11.9% > Simplification Initiative 10.7% 10.9% > SG&A and Cost Controls 9.8% 10.1% 9.4% > PTS Accretion Looking Forward > Estimated $9 Million Restructuring Expense in the 2nd Half 2015 > Additional Simplification Programs Under Ev
Slide 13: 2015 Guidance
2015 Guidance > GAAP EPS Guidance of $4.76 to $4.96 > Adjusted EPS* Guidance of $5.40 to $5.60 − $0.47 of PTS Purchase Accounting Adjustments and Transaction Costs − $0.15 of Restructuring Charges − $0.02 Venezuela Devaluation in 1Q 2015 > Key Assumptions − Headwinds from Oil & Gas, SEER 13 Pre-Buil
Slide 14: Strong Free Cash Flow
Strong Free Cash Flow* $Ms Free Cash Flow FCF% of Adj. Net Income* $300 140% 135% $250 130% $200 125% $150 120% 115% $100 110% $50 105% $0 100% 2011 2012 2013 2014 * Non-GAAP Financial Measurement, See Appendix for Reconciliation Strong Free Cash Flow Enables Strategic Capital Deployment 2015 p 14
Slide 15: Capital Allocation Priorities
Capital Allocation Priorities Strong Balance Sheet Target Debt/EBITDA Ratio: 1.5 – 3.5 Capital Expenditures Target: 2.5% - 3.0% of Sales Dividends Target: 18% – 22% Payout Ratio Acquisitions Share Repurchase Target Accretive Bolt-on and Transformative Opportunistic Share Repurchases to Offset Stock
Slide 16: Total Debt / Total Capital
Capital Allocation Priorities 60% Power Transmission 50% Total Debt / Total Capital 40% 30% 20% 10% PF Debt / Cap at 48% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Record of Strong Free Cash Flow to Reduce Debt 2015 p 16
Slide 17: Investment Thesis
Investment Thesis > Global Leader in Key Markets – Innovative Product Leadership – Operating System Driving Results > Growth Drivers – New Products with Focus on Energy Efficiency – Well Positioned in Emerging Markets – Successful and Disciplined Acquirer > Executing on Operating Profit Improvement
Slide 18: Questions and Answers
Questions and Answers 2015 p 18
Slide 19: Thank You
Thank You Mark J Gliebe Chairman Chief Executive Officer Jon Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer John Perino Vice President Financial Planning & Analysis
Slide 20: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Industrial Power Transmission Adjusted Operating Income Systems Climate Solutions Solutions Total Regal Dollars in Millions Jul 4, Jun 28, Jul 4, Jun 28, Jul 4, Jun 28, Jul 4, Jun 28, 2015 2014 2015 2014 2015 2014 2015 2014 Income fro
Slide 21: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED NET INCOME Fiscal Years Dollars in Millions 2011 2012 2013 2014 GAAP Net Income (Loss) Attributable to Regal $ 152.3 $ 195.6 $ 120.0 $ 31.0 Beloit Corporatioin Goodwill and Asset Impairments and Other, $ - $ - $ 81.0 $ 159.5 Net of Taxes Tax Effect from Goo
Slide 22: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations RECONCILIATION OF 2015 ADJUSTED ANNUAL GUIDANCE Minimum Maximum 2015 EPS Annual Guidance $ 4.76 $ 4.96 Purchase Accounting and Transaction Costs 0.47 0.47 Restructuring 0.15 0.15 Venezuelan Currency Devaluation 0.02 0.02 2015 Adjusted EPS Annual Guidance $ 5.40 $ 5.
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