Zurn Elkay Water Solutions Corporation · NYSE:ZWS
Zurn Elkay Water Solutions — Rexnord — Melius Research Industrial Tech & Aerospace Forum 2019
20 slides from Zurn Elkay Water Solutions's conference presentation, Jun 4, 2019
Slide 1: Melius Research Industrial Tech & Aerospace Forum
MELIUS RESEARCH INDUSTRIAL TECH & AEROSPACE FORUM June 4, 2019
Slide 2: Safe Harbor Statements
SAFE HARBOR STATEMENTS This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looki
Slide 3: Rexnord Profile
REXNORD PROFILE $4.2 $2.05 21.6% 113% Enterprise Value Revenue Adjusted EBITDA Free Cash Flow ($B) ($B) Margin Conversion Concentrated Multi-Platform Industrial Sustainable Competitive Advantages Rexnord Business System Solving Smarter Note: Data are Fiscal Year 2019 Continuing Operations. Adjusted
Slide 4: Platform Approach
PLATFORM APPROACH Process & Motion Control 1600 26% 1200 24% The best provider of digi-mechanical productivity and reliability solutions 800 22% • Amplifying competitive advantages in scale & scope 400 20% • Expanding in product adjacencies, consumer-driven markets 0 18% • Accelerating innovation, d
Slide 5: Rexnord Platform Profiles
REXNORD PLATFORM PROFILES PROCESS & MOTION CONTROL WATER MANAGEMENT Digi-Mechanical Power Transmission Solutions Specification-Grade Commercial Plumbing Products • IIoT Enabled Solutions for First Fit and Retrofit Applications • IIoT Enabled Solutions for New Construction and Retrofit Applications •
Slide 6: Solving Smarter
SOLVING SMARTER We Advance the Efficient Use of Resources through Smarter Solutions • Highly-engineered components • Specification for the application by end user • Minor contribution to system cost • Critical contribution to system reliability, productivity, safety • Distribution channel complexity
Slide 7: Rexnord Value Creation Model
REXNORD VALUE CREATION MODEL 7
Slide 8: Rexnord Business System
REXNORD BUSINESS SYSTEM • Integrated strategic planning & operational management system • Structured approach to 17 Core Business Processes Four guiding principles: Performance Plan People Process •Health & Safety •Strategic •Continuous •Customer •Total Associate Planning Improvement Experience Enga
Slide 9: Financial Progress
FINANCIAL PROGRESS Note: Percentage changes are FY19 versus FY16. Substantial tariff and inflation impacts fully offset in FY19 6/3/2019 Rexnord Corporation 9
Slide 10: Strategic Progress
STRATEGIC PROGRESS FY 2019 Accomplishments ✓ Expanded digitally-connected solutions portfolio ✓ Launched SCMS and connected backflow retrofit solutions ✓ Completed SCOFR 2.0 initiatives with $15 million structural cost reduction ✓ Launched 8020 simplification strategy ✓ Completed integration of Cent
Slide 11: DiRXN = 'Direction' = Digital Rexnord
DiRXN = ‘DIRECTION’ = DIGITAL REXNORD • Enterprise-wide initiative to enable improved customer productivity via digitally-connected tools, products and services. • Differentiate by digitally connecting traditional mechanical solutions to user control systems, engineering & asset management software
Slide 12: Smart Condition Monitoring System
SMART CONDITION MONITORING SYSTEM • Pragmatic solution connects seamlessly into existing factory automation control systems • Retrofit solution addresses large installed base • Easy to install – enhances system reliability and safety within 24 hours 6/3/2019 Rexnord Corporation 12
Slide 13: Zurn Connected Products
ZURN CONNECTED PRODUCTS Zurn Connected Flood Control System • Detects and calculates discharge flow rate/volume in relief valve in real time Sensor • Water shut-off occurs automatically to prevent catastrophic flooding Flush • Secure, real-time notifications when operating metrics deviate from targe
Slide 14: Zurn plumbSMART Portal
ZURN plumbSMART PORTAL 6/3/2019 Rexnord Corporation 14
Slide 15: Cash Flow & Balance Sheet Update
CASH FLOW & BALANCE SHEET UPDATE Leverage Reduction ✓ Target to operate over longer-term with Net Debt / Adjusted EBITDA ratio of 2x - 3x Net Debt Leverage Ratio (2) Free Cash Flow ($ millions) (1) 4.0x 250 3.8x 200 3.5x 150 3.1x 3.0x 213 100 2.7x 188 167 2.5x 141 2.3x 50 2.1x 2.0x 0 Mar-16 Mar-17 M
Slide 16: Rexnord Acquisitions
REXNORD ACQUISITIONS Proprietary Internal RBS Strategic Identification & Negotiation & Integration Planning Cultivation Transaction Process • Strategic process focuses on leveraging competitive advantages Acquisition History Year Platform • Proprietary cultivation process benefits both buyer and sel
Slide 17: Capital Allocation
CAPITAL ALLOCATION • Debt reduction has been the largest use of capital ✓ December 2017 debt refinancing (FY18) • Issued $500 million 4.875% Senior Notes due 2025 • Repaid approximately $300 million net under credit agreement • Amended credit agreement to reduce pricing, extend maturities ✓ Reduced
Slide 18: Rexnord Corporation
6/3/2019 Rexnord Corporation 18
Slide 19: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS (1) In completing the acquisition of Centa, the Company also acquired two previously established joint venture relationships in which the Company's owns a non-controlling interest in each of the entities and therefore accounts for the investments in these entities utilizing
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS (1) In completing the acquisition of Centa, the Company also acquired two previously established joint venture relationships in which the Company's owns a non-controlling interest in each of the entities and therefore accounts for the investments in these entities utilizing
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