Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Baird Global Industrial Conference 2023
19 slides from Regal Rexnord's conference presentation, Nov 8, 2023
Slide 1: Baird Global Industrials Conference
BAIRD GLOBAL INDUSTRIALS CONFERENCE November 8, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This release contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which reflect Regal Rexnord’s current estimates, expectations and projections about Regal Rexnord’s future results, performance, prospect
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted in the In addition to these non-GAAP measures, we use the term “organic sales growth” to refer to the United States of America (“GAAP”). We also periodically disclose certain finan
Slide 4: Who We Are
WHO WE ARE RRX Provides Highly Engineered Components & Sub-Systems That Convert, Transmit & Apply Power Convert Energy To Power PES Power Electric Motors, Controls & Air Transmission Alternative Energy Other1 E-commerce/Food & Beverage Moving Components & Systems Agriculture Aerospace Automation Non
Slide 5: Sales Decomposition
SALES DECOMPOSITION* Sales By Segment Sales By Geography Sales By End Market Rest of World 4% Other 5% Hospitality 2% Europe 17% Alternative Energy 3% General Industrial AMC 26% IPS 40% Residential New 20% Construction 3% Medical 3% Data Center 4% Asia Agriculture Residential Pacific 8% 4% HVAC & Po
Slide 6: Our Transformation Journey
OUR TRANSFORMATION JOURNEY 2018 2022 2023* 2025 Consistent Market Revenue Outgrowth ($B) $3.6 $5.2 ~$6.25 Adj. Gross Margin 26% 33% ~34% ~40% Adj. EBITDA Margin 14% 21% ~21% >25% Free Cash Flow $285M $352M >$650M ~$1.0B Power Transmission Motors & Air Moving Automation Legacy Solidifying The Emergin
Slide 7: Sustainable Competitive Advantages
SUSTAINABLE COMPETITIVE ADVANTAGES Flexible Global Footprint Portfolio Breadth & Scale Strategic Go-To-Market Long standing direct and distributor Our flexible, Portfolio of power relationships support strong channel 80 global transmission positions and drive manufacturing components, 80/20 “red car
Slide 8: Strong Secular End Market Exposures
STRONG SECULAR END MARKET EXPOSURES* Food & Beverage Residential HVAC ~10% - Packaging Proliferation - Energy Efficiency Regs. of sales* ~10% - Line Speed Acceleration - Heat Pump Growth - Plastic-To-Aluminum Shift Aerospace Warehouse - Emissions Reduction - E-Commerce Growth ~5% - Smart Weapons Dem
Slide 9: Secular and Regulatory Tailwinds
SECULAR AND REGULATORY TAILWINDS ~$2.7T+ Global Demand Tailwind Opportunity Automation Electrification Shift To Cleaner Factory Automation Sources Of Power (E.G. Demand To Address Heat Pumps, Labor Inflation And Electrifying Commercial Scarcity Vehicles) ~$1.5T+ ~$400B+ ~$500B+ ~$200B+ ~$80B+ Regula
Slide 10: Clear Strategy to Drive Outgrowth
CLEAR STRATEGY TO DRIVE OUTGROWTH Wallet Gain Wallet Share by overserving our best customers (“Focus on Quad 1”) Share Pursue New Customers that resemble our current Quad 1’s – our “Perfect Prospects” Digital New Customers Grow with new and existing customers by doubling product vitality (2025 vs. 2
Slide 11: Strong Margin Expansion Story
STRONG MARGIN EXPANSION STORY Adj. Gross Margin Bridge (2023E to 2025E) ~40% Merger Synergies ~34% Accretive 80/20 NPD 2023E Synergies Mix M&G* 80/20, 2025E Lean, Other Price/Cost Volume Discipline Adj. EBITDA Margin Bridge (2023E to 2025E) >25% ~21% Productivity RBS Lean 2023E GM Gains Growth 2025E
Slide 12: Strong Free Cash Flow, Set to Rise Materially
STRONG FREE CASH FLOW, SET TO RISE MATERIALLY FCF Bridge (2023E to 2025E, $M) ~$1,000 ~$650+ 2023E Working Adj. EBITDA Cash Taxes Interest Capex, 2025E Capital Costs** Restructuring Memo: Sales Memo: Cash Tax Rate Growth 2023: ~30% 2024: 0%* 2024: 28-29%* 2025: 3%* 2025: 27-28%* Clear Path To ~$1 Bi
Slide 13: Attractive Equity Opportunity as Capital Structure Evolves
ATTRACTIVE EQUITY OPPORTUNITY AS CAPITAL STRUCTURE EVOLVES Components Of Enterprise Value Key Assumptions • 1.5% Sales CAGR In 2023-2025* % Equity • Achieve ~40% GM & ~25% Adj. EBITDA Margin Targets In 2025 • Deploy Excess Cash (Post Dividend) To Debt Reduction • Close M&G Sale In 1H24 • Flat EV/EBI
Slide 14: Why Invest in RRX
WHY INVEST IN RRX A Strong Franchise With Sustainable Competitive Advantages, ~50% Exposure To ✓ Secular Growth Markets And Regulatory & Government Stimulus Demand Tailwinds Improving Outgrowth Driven By Rising M&A Synergies, 80/20 Growth Initiatives And A ✓ Robust New Product Pipeline Proven Margin
Slide 15: Q&A
Q&A 1s (@RegalRexnord
Slide 16: Appendix: Segment Overviews
APPENDIX: SEGMENT OVERVIEWS 16
Slide 17: Automation & Motion Control (AMC)
AUTOMATION & MOTION CONTROL (AMC) Sales by Segment Financials* Key Brands AMC, 26% Sales: $1.7B Adj. EBITDA: $0.4B Adj. EBITDA Margin: ~23% * 2022 Pro forma for the Key Products acquisition of Altra. Miniature & Linear Actuators Controllers Servo Motors Channel Mix Principal End Markets • General In
Slide 18: Industrial Powertrain Solutions (IPS)
INDUSTRIAL POWERTRAIN SOLUTIONS (IPS) Sales by Segment Financials* Key Brands IPS, 40% Sales: $2.6B Adj. EBITDA: $0.6B Adj. EBITDA Margin: ~24% * 2022 Pro forma for the Key Products acquisition of Altra. Gearing Bearings Industrial Chain IoT Channel Mix Principal End Markets AM, 50% • General Indust
Slide 19: Power Efficiency Solutions (PES)
POWER EFFICIENCY SOLUTIONS (PES) Sales by Segment Financials* Key Brands Sales: $2.2B Adj. EBITDA: $0.4B Adj. EBITDA Margin: ~18% * 2022 Key Products PES, 34% Super Premium Premium Efficiency Channel Mix Principal End Markets Efficiency Motors Air Moving Systems AM, 25% • Residential HVAC • Commerci
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