Slide 1: First Quarter 2013 Earnings Conference Call
Regal Beloit Corporation First Quarter 2013 Earnings Conference Call May 1, 2013 Mark Gliebe Chairman and Chief Executive Officer Jon Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer John Perino Vice President 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 p 4 Opening Comments Mark Gliebe Financial Update Chuck Hinrichs Operations Update Jon Schlemmer Summary Mark Gliebe Q&A All
Slide 5: Opening Comments – 1st Quarter
Opening Comments – 1st Quarter Results In Line with Guidance – C&I Slowed During the Quarter – North American Residential HVAC Sales Up – Unico Strong Growth Highlights – Free Cash Flow* in Line with Normal Seasonal Build –Continued Progress on Delivering Synergies –Launched 20 New Products –Comp
Slide 6: 2nd Quarter Outlook
2nd Quarter Outlook North American C&I Markets Sluggish – Primary Challenge Housing Supporting Overall HVAC Demand HVAC Headwinds –Cool Spring Weather –Value Oriented Products –Market Dynamics p 6
Slide 7: 1st Quarter 2013 Financial Highlights
1st Quarter 2013 Financial Highlights Results In Line with Guidance Sales Declined 3.7% from Prior Year – Mixed Sales Results –Currency Exchange Rates Reduced Sales Stable Operating Profit Margins Free Cash Flow* 91.7% of Net Income p 7 * Non-GAAP Financial Measurement, See Appendix for Reco
Slide 8: 1st Quarter 2013 Financial Highlights
1st Quarter 2013 Financial Highlights p 8 Restructuring Charges of $0.9 Million or $0.01 EPS – $0.5 million COGS, $0.4 million Operating Expenses ADJUSTED DILUTED EARNINGS PER SHARE* Mar 30, 2013 Mar 31, 2012 GAAP Diluted Earnings Per Share 1.09$ 1.16$ Purchase Accounting Costs - 0.01 Restructurin
Slide 9: 1st Quarter 2013 Financial Highlights
Capital Expenditures $20.6 Million $100 Million for FY 2013 Effective Tax Rate (ETR) $1 Million Retroactive R&D Tax Credit Completed EPC Tax Integration Provides Sustainable Benefits 2Q 2013 ETR 27% Free Cash Flow $45 Million FCF* 92% of Net Income Balance Sheet at 03/30/2013 Total
Slide 10: 2nd Quarter 2013 Guidance
2nd Quarter 2013 Guidance GAAP EPS Guidance of $1.17 to $1.25 Adjusted EPS Guidance of $1.19 to $1.27, After Adding Back $0.02 of Restructuring Costs – Difficult North American C&I Markets – HVAC Market Dynamics p 10
Slide 11: 1st Quarter 2013 Operations Update
1st Quarter 2013 Operations Update Softer C&I Market Conditions down 6.7% – Declining Exports – Delayed Capital Investment Decisions N.A. Residential HVAC Up 3.5% Sales Outside U.S. Down 6.8%, – 35% of Decrease Related to Currency – Represents 34% of Total Sales Unico Sales Remain Strong – L
Slide 12: Synergies and Simplification
Synergies and Simplification Juarez Restructuring Synergy Projects On Track Continuing Manufacturing Simplification Plans Five Design Simplification Programs In Process – High Efficiency Small Motor Designs Completed – Larger Motor Design Consolidation in Process – Implementing Lean Engineerin
Slide 13: Accelerating New Products
50 60 20 2011 2012 YTD 2013 Accelerating New Products p 13 21% New Product Launches Products Used in Broad Applications HVAC Swimming Pools Oil and Gas Pumping Industrial Motors
Slide 14: High Efficiency Blower Systems
High Efficiency Blower Systems ECM Motor ECM Blower System HALO Electronic Control Axial Motor Integrated Blower, Motor and Electronic Controls High Efficiency and Compact Quieter Operation
Slide 15: Unico Oil & Gas Systems for Latin America
System Designed for Remote Wells Innovative PCP Progressing Cavity Pump Design Utilizing Regal Technology New Remote Process Control System Unico Oil & Gas Systems for Latin America Remote Process Control System SyMax PM Motor HERA Gearbox Gas Powered Lift System
Slide 16: High Efficiency HVAC Retrofit
Designed for HVAC Retrofits in Hospitality Market Up to 80% Efficiency Savings Quieter Operation High Efficiency HVAC Retrofit Link to video at: http://youtu.be/NaKu0xr15gA
Slide 17: Summary
Summary p 17 1st Quarter In Line With Guidance Synergy Programs and Simplification Initiative Remain on Track Second Quarter Guidance – Typical Seasonal HVAC Order Improvement –Offset by HVAC Market Dynamics –Weakness in North American C&I Continue Acquisition Strategy
Slide 18: Questions and Answers
REGAL Questions and Answers
Slide 19: Non-GAAP Reconciliations: Adjusted Diluted Earnings Per Share
p 19 Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Mar 30, 2013 Mar 31, 2012 GAAP Diluted Earnings Per Share 1.09$ 1.16$ Purchase Accounting Costs - 0.01 Restructuring Costs 0.01 - Gain on Disposal of Real Estate - (0.02) Retroactive Tax Credit (0.02) - Adjusted Diluted Earni
Slide 20: Non-GAAP Reconciliations: Free Cash Flow
p 20 Appendix Non-GAAP Reconciliations Free Cash Flow Reconciliation Dollars in Millions Mar 30, 2013 Mar 31, 2012 GAAP Net Cash Provided by Operating Activities 66.0$ 68.5$ Additions to Property Plant and Equipment (20.6)$ (19.8)$ Free Cash Flow 45.4$ 48.7$ Free Cash Flow as a Percentage of Net Inc
Slide 21: Non-GAAP Reconciliations: EBITDA
Appendix Non-GAAP Reconciliations p 21 EBITDA Reconciliation Dollars in Millions 2Q 2012 3Q 2012 4Q 2012 1Q 2013 LTM Net Income $62.7 $54.3 $29.9 $49.5 196.4 Plus: Minority Interest 1.6 0.9 1.0 1.2 4.7 Plus: Taxes 28.2 17.9 5.7 15.3 67.1 Plus: Interest Expense 11.2 10.6 10.9 10.6 43.3 Less: Interest