Slide 1: First Quarter 2017 Earnings Conference Call
Regal Beloit Corporation First Quarter 2017 Earnings Conference Call May 9, 2017 Mark Gliebe Jon Schlemmer Chairman and Chief Operating Officer Chief Executive Officer Chuck Hinrichs Robert Cherry Vice President Vice President Chief Financial Officer Business Development & Investor Relations ©2017 R
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: Agenda and Opening Comments
Agenda and Opening Comments Opening Comments Mark Gliebe Financial Update Chuck Hinrichs Operations Update Jon Schlemmer Summary Mark Gliebe Q&A All 4
Slide 5: Opening Comments – 1st Quarter Results
Opening Comments – 1st Quarter Results Adjusted Diluted EPS* Up 12.6% from Prior Year, Slightly Ahead of Our Expectations Organic Sales Growth* Up Slightly at 0.7% – Climate Up 3.7% – C&I Up 1.7% – PTS Down 5.0% Adjusted Operating Margin* Up 100 bps – Volume Leverage and Positive Mix in Climat
Slide 6: Opening Comments – Looking Forward
Opening Comments – Looking Forward Orders Up Low Single Digits Versus Prior Year in All Three Segments Expecting Low Single Digits Organic Sales Growth in 2017 – Two-Way Material Price Formulas Should Continue to be a Tailwind to Sales – Middle East and Oil & Gas Comparisons Should Improve in 2H
Slide 7: 1st Quarter 2017 Financial Results
1st Quarter 2017 Financial Results Sales of $813.5 Million, Down 0.6% – Organic Sales* of 0.7% – Foreign Currency Translation of (0.6%) – Business Divestiture of (0.6%) Adjusted Operating Margin* of 9.6% Compared to 8.6% in the Prior Year – Incremental Margins from Sales Increases in Climate Sol
Slide 8: 1st Quarter 2017 Financial Results
1st Quarter 2017 Financial Results ADJUSTED DILUTED EARNINGS PER SHARE* Three Months Ended Apr 1, Apr 2, 2017 2016 GAAP Diluted Earnings Per Share $ 1.02 $ 0.93 Restructuring and Related Costs 0.05 0.02 Adjusted Diluted Earnings Per Share $ 1.07 $ 0.95 Adjusted Diluted EPS Up 12.6% * Non-GAAP Financ
Slide 9: 1st Quarter 2017 Key Financial Metrics
1st Quarter 2017 Key Financial Metrics Capital Expenditures Effective Tax Rate (ETR) $17 Million in 1Q 2017 22.5% ETR in 1Q 2017 $75 Million Expected in FY 2017 Expect FY 2017 ETR of ~23% Expect FY 2017 D&A of $145-$150 Million Restructuring $3.2 Million in 1Q 2017 $9.0 Million Expecte
Slide 10: 2017 Full Year Guidance
2017 Full Year Guidance Assumptions Low Single Digit Growth in 2017 Organic Sales, F/X Headwind Improvement in 2017 Adjusted Operating Margin Guidance FY 2017 GAAP Diluted EPS Guidance of $4.40 to $4.80 FY 2017 Adjusted Diluted EPS* Guidance of $4.55 to $4.95 – Increase from Prior Guidance o
Slide 11: 1Q 2017 Commercial & Industrial Systems
1Q 2017 Commercial & Industrial Systems Sales Adj. Income from Sales Operations* $381 Million, Organic Sales* Up 1.7% 4th Consecutive Quarter of Improvement $381 $378 $27 Sales Performance – Asia Sales Up $22 – Strength in Power Generation – CHVAC and Pool Pump Up – Diminishing Weakness in Oil
Slide 12: 1Q 2017 Climate Solutions
1Q 2017 Climate Solutions Sales Adj. Income from Sales Operations* $248 Million, Organic Sales* Up 3.7% 5th Consecutive Quarter of Improvement $248 $32 Sales Performance $240 $26 – NA Resi HVAC up Mid-Single Digits – Diminishing Middle East Weakness – Soft Heating Aftermarket – Price ~ Flat, I
Slide 13: 1Q 2017 Power Transmission Solutions
1Q 2017 Power Transmission Solutions Sales Adj. Income from Sales Operations* $185 Million, Organic Sales* Down 5.0% 3rd Consecutive Quarter of Improvement $201 $23 Sales Performance $185 – Demand Patterns in Renewable Energy $18 – Diminishing Weakness in Oil & Gas Order Rates Improving and
Slide 14: Simplification Update
Simplification Update Three Manufacturing Programs Announced in 4Q 2016 On Schedule – Consolidation of Mexico HVAC Motor Operations – Consolidation of India Large Motors – Consolidation of China Small Motors Fourth Manufacturing Program Announced in 1Q 2017, Consolidating Pennsylvania Motor Oper
Slide 15: Commercial Excellence
Commercial Excellence Sales Coverage and Talent Digital Customer Experience Adding Sales Professionals to Improve High-Resolution Product Images Coverage and Distribution Focus 25% of the Positions Filled in 1Q 2017 Adding Talent to the Sales Organization Arming Team with Common CRM Tools In
Slide 16: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Per Share Paid $0.94 $0.90 $0.84 $0.78 $0.74 $0.70 $0.66 $0.64 $0.62 $0.58 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dividend Increase of 8% Announced May 1, 2017 16
Slide 17: 1st Quarter Summary Comments
1st Quarter Summary Comments Adjusted Diluted EPS* Up 12.6% Organic Sales Growth Up Slightly Orders Up Low Single Digits in All Three Segments Adjusted Operating Margins* Up 100 bps Reduced Debt by $43.5 Million Began Repatriation of $150 Million of Cash Continuing Progress on Simplifi
Slide 18: Questions and Answers
Questions and Answers REGAL 18
Slide 19: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Apr 1, Apr 2, 2017 2016 GAAP Diluted Earnings Per Share $ 1.02 $ 0.93 Restructuring and Related Costs 0.05 0.02 Adjusted Diluted Earnings Per Share $ 1.07 $ 0.95 RECONCILIATION OF 2017 ADJUSTED ANNUAL GUIDANCE M
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) Apr 1, Apr 2, Apr 1, Apr 2, Apr 1, Apr 2, Apr 1, Apr 2, 2017 2016 2017 2016 2017 2016 2017 2016 GAAP Income
Slide 21: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations FREE CASH FLOW RECONCILIATION Three Months Ended (Dollars in Millions) Apr 1, Apr 2, 2017 2016 Net Cash Provided by Operating Activities $ 50.5 $ 58.6 Additions to Property Plant and Equipment (17.0) (14.9) Free Cash Flow $ 33.5 $ 43.7 Free Cash Flow as a Percentage
Slide 22: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED EBITDA AND TOTAL DEBT/ADJUSTED EBITDA RECONCILIATION (Dollars in Millions) LTM Apr 1, 2017 Net Income $ 208.1 Plus: Minority Interest 6.1 Plus: Taxes 58.2 Plus: Interest Expense 58.1 Less: Interest Income (4.4) Plus: Depreciation and Amortization 149.7 Plus
Slide 23: 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 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2015, 2016 and 2017 have 52 weeks Fiscal Year 2014 had 53 weeks