Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Oppenheimer Industrial Growth Summit 2014
31 slides from Regal Rexnord's conference presentation, May 13, 2014
Slide 1: Regal Beloit Corporation Investor Relations Presentation
Regal Beloit Corporation Investor Relations Presentation May 13, 2014 Mark J. Gliebe Jonathan Schlemmer Chuck Hinrichs John Perino President Chief Operating Officer Vice President Vice President Chief Executive Officer Chief Financial Officer 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: Overview: Building a Premier Global Enterprise
Overview Getting to Know Regal Best in Class Industrial Performance Growth Catalysts Financial Performance Building a Premier Global Enterprise p4
Slide 5: Getting to Know Regal
Overview Getting to Know Regal Best in Class Industrial Performance Growth Catalysts Financial Performance Building a Premier Global Enterprise p5
Slide 6: Company Overview
Company Overview Founded 1955 Sales by Product/Platform Percentage of Sales Beloit, WI Mech- Other anical Revenues Industrial Residential Pwr $3.1B Gen HVAC 34% 39% Revenue Growth 7-Year CAGR C&I Other 9.7% Resi Motors 27% 2011, 2012, 2013 Free Cash Flow Exceeds Commercial Adj. Net Income Sales by G
Slide 7: Necessary and Innovative Products
Necessary and Innovative Products Electric Motors Power Generation Electronic Controls Mechanical p7
Slide 8: Diverse Applications
Diverse Applications p8
Slide 9: Global Foot Print
Global Foot Print Able to Meet Customer Demands Anywhere In the World Aligning with Faster Growing Economies p9
Slide 10: Best in Class Industrial Performance
Overview Getting to Know Regal Best in Class Industrial Performance Growth Catalysts Financial Performance Building a Premier Global Enterprise p 10
Slide 11: Total Shareholder Returns
Total Shareholder Returns Five Year History 150% 106.3% Regal Beloit 104.6% S&P 500 88.9% DJIA 130% Total 5-YR Cumulative Shareholder Return 110% 90% 70% 50% 30% 10% (10%) (30%) (50%) 12/31/08 12/31/09 12/31/10 12/31/11 12/30/12 12/30/13 Source: Capital IQ p 11
Slide 12: Regal Compass Operating System
Regal Compass Operating System Lean Six Sigma Tools Leadership Tools Quality Talent Management Cost Long Range Plans Delivery Compliance/Safety Cap Ex Risk Management Cash Cycle Customer Care New Products Integrations Near Term Income Long Term Statement Growth p 12
Slide 13: Growth Catalysts
Overview Getting to Know Regal Best in Class Industrial Performance Growth Catalysts Financial Performance Building a Premier Global Enterprise p 13
Slide 14: Energy Efficiency Mega-Trend
Energy Efficiency Mega-Trend Energy Efficient Product Sales* $700 $600 $500 $400 $300 $200 $100 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Regional SEER Update US Small Motor Standard Update APGA/HARDI & DOE settled Effective March 9, 2015 Effective 1/1/15, 13 SEER in North, 14 Applies
Slide 15: New Products
New Products New Product Introductions 71 70 60 60 50 DEC Star Variable Speed 50 Pool Motor 40 30 22 20 10 2008 2011 2012 2013 SyMAX-I™ HERA-MAX Gear Motor Develop New Products with Focus on Energy Efficiency p 15
Slide 16: Successful Acquirer and Integrator
Successful Acquirer and Integrator 2014 Rigorous Evaluation and 2013 Integration Process Drives Return On Investment 2012 Aligning Footprint with Faster Growing End 2011 Markets and Economies PTY. HARGIL LTD. DYNAMICS Acquisition Pipeline 2010 Continues to Be Active Consistent and Successful A
Slide 17: Successful Acquirer and Integrator
Successful Acquirer and Integrator Evaluating Acquisition Opportunities that Meet our Strategic and Financial Requirements Strategic Goals Financial Goals Technology and Energy EPS Accretive in First Year Efficiency Cash Flow Positive in First Expand Geographic Footprint Year Margin Improv
Slide 18: Simplification Initiative
Simplification Initiative Reduction Targets 2011 2012 2013 Next 3 Years ERPs 3 3 2 ~ 4 Factories 2 4 1 ~ 5 Warehouses 0 6 3 ~ 7 Design Platforms 2 2 2 ~ 6 Entities 10 20 19 ~ 20 Suppliers 50 120 100 ~ 400 Brands 2 2 1 ~ 10 Improve Margins, Easier to do Business p 18
Slide 19: Design Platform Simplification
Design Platform Simplification Platform Description 48 Frame Fractional HVAC Motors Fractional HVACR Motors 3.3” and Blowers Worm Gear Mechanical Industrial Motors for Asia IEC IE3 Mark 3 and Europe 48/56 Frame Fractional C&I Motors
Slide 20: Footprint Simplification
Footprint Simplification Springfield, Missouri Estimated Restructuring – Solid Progress Expense* ($M) – Expect to See Benefits in 4Q $4.2 and 2015 $3.3 Acuna, Mexico $2.7 $3.0 – Solid Progress – Expect to See Benefits in 4Q and 2015 Melbourne, Australia – Consolidating Operations – To Be Compl
Slide 21: Investing in Emerging Markets
Investing in Emerging Markets Hermetic Motors - Taicang Generators - Shanghai Visual Management Lean Production p 21
Slide 22: Growth Catalyst Summary
Growth Catalyst Summary Energy Efficiency Trends Introducing New Products Consistent and Successful Acquirer Simplification Initiative Investing in Emerging Markets 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Slide 23: Financial Performance
Overview Getting to Know Regal Best in Class Industrial Performance Growth Catalysts Financial Performance Building a Premier Global Enterprise p 23
Slide 24: Sales and EPS Growth
Sales and EPS Growth $3,500 $4.75 Sales *EPS $4.25 $3,000 $3.75 $2,500 $3.25 $2.75 $2,000 $ Thousands $2.25 $1,500 $1.75 $1,000 $1.25 9.7 % Sales CAGR (2006-2013) $0.75 $500 $0.25 $0 -$0.25 2006 2007 2008 2009 2010 2011* 2012* 2013* *2011, 2012 and 2013 are adjusted EPS. See Non-GAAP reconciliation
Slide 25: Balance Sheet Strength
Balance Sheet Strength 60% 50% Total Debt / Total Capital 40% 30% 20% 10% Current Debt/Cap at 27% LTM Debt / EBITDA at 1.9x 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Str
Slide 26: Consistent Cash Flow and Growth Investment
Consistent Cash Flow and Growth Investment Free Cash Flow Capex FCF% of Net Income $400 300% $350 250% $300 200% $250 $200 150% $150 100% $100 50% $50 $0 0% 2006 2007 2008 2009 2010 2011 2012 2013 Cash Div($M) $16.6 $18.1 $19.4 $21.6 . $25.1 $27.6 $30.8 $35.1 April 2014 Increased Dividend 10% ______
Slide 27: 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 28: Thank You
Thank You Mark J Gliebe President Chief Executive Officer Jonathan Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer John Perino Vice President Investor Relations p 28
Slide 29: Appendix Non-GAAP Reconciliations: Adjusted Diluted EPS
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE First Second Third Fourth Fiscal Quarter Quarter Quarter Quarter Year 2013 GAAP Diluted Earnings (Loss) Per Share $ 1.09 $ 1.13 $ 1.16 $ (0.74) $ 2.64 Asset Impairment and Other Net of Taxes — — — 1.65 1.65 Purchase Accounting and
Slide 30: Appendix Non-GAAP Reconciliations: EBITDA
Appendix Non-GAAP Reconciliations EBITDA Reconciliation (Dollars in Millions) 1Q 2013 2 Q2013 3Q 2013 4Q 2013 FY 2013 Net Income $ 49.5 $ 51.1 $ 52.6 $ (33.2) $ 120.0 Asset Impairment and Other, Net — — — 81.0 81.0 Plus: Minority Interest 1.2 2.5 1.9 0.4 6.0 Plus: Taxes 15.3 17.9 15.0 (3.7) 44.5 Plu
Slide 31: Appendix Non-GAAP Reconciliations: Free Cash Flow
Appendix Non-GAAP Reconciliations Free Cash Flow Reconciliation (Dollars in Millions) 2006 2007 2008 2009 2010 2011 2012 2013 Cash Flow from Operation 93.5 $ 200.6 $ 154.2 $ 314.9 $ 175.4 $ 265.3 $ 351.7 $ 305.0 Capital Expenditures (52.5) (36.6) (52.2) (33.6) (45.0) (57.6) (91.0) (82.7) Grants Rece
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