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REGAL REXNORD CORPORATION REPORTS STRONG SECOND QUARTER 2022 FINANCIAL RESULTS

8.1.22

BELOIT, Wis., Aug. 1, 2022 /PRNewswire/ -- Regal Rexnord Corporation (NYSE: RRX)

Second Quarter Highlights

  • Sales Up 52% Versus PY And Up 12% On An Organic Basis*
  • Daily Orders Down 2% In 2Q Versus PY On A Pro Forma Basis
  • Backlog Up Over 50% Versus Beginning of 2021; Book-To-Bill Above One For Prior 7 Quarters, Averaging 1.10 In 2021 and 1.05 In 1H 2022
  • Strong Gross Margin Improvement Despite Sizable Inflationary & Supply Chain Pressures; Price/Cost Remained Positive
  • Adjusted EBITDA Margin* Up 230 Basis Points Versus PY To 21.0%
  • Adjusted Diluted EPS* Of $2.76 Versus $2.68 In PY; GAAP Diluted EPS Of $2.12 Versus $2.06 In PY
  • Synergies From Rexnord PMC And Arrowhead Systems Transactions Slightly Ahead Of Plan
  • Raising 2022 Adjusted Diluted EPS Guidance To A Range Of $10.20 To $10.80 From $10.10 To $10.70 And Revising Its GAAP EPS Guidance To A Range Of $7.01 to $7.61 From A Range Of $6.90 To $7.50
  • Repurchased $70M of RRX Shares 

CEO Louis Pinkham commented, "I am extremely pleased with our strong 2Q performance. While a host of supply chain and inflation-related challenges continued to confront us, our Regal Rexnord team remained focused on executing what's under our control. By continuing to embrace an 80/20 mindset and act with a sense of urgency to serve our customers, the team delivered 12% organic top line growth, which reflects strong price realization, healthy end markets, and meaningful share gains. We're continuing to build momentum in our outgrowth initiatives by raising service levels, capitalizing on our digital investments, and growing our pipeline of new and often more energy-efficient products and solutions."

"As an enterprise, we also delivered further gross margin and adjusted EBITDA margin gains, fueled by the Regal Rexnord Business System, in addition to our acquisition synergies. I am particularly pleased with our performance at Industrial Systems. Industrial's performance reflects meaningful, durable operational improvements made by that team consistently leveraging an 80/20 mindset and our LEAN tools, and I am confident this business has turned a corner operationally. I also find Commercial System's organic growth and margin performance to be noteworthy because it reflects sustainable outgrowth and mix gains underpinned by our digital initiatives, a healthy new product pipeline and market-leading service metrics."

"We did experience some temporary margin pressure in our Climate Solutions segment during the quarter, mostly due to proactive decisions we made to over-serve certain of our key customers, resulting in stronger growth but also higher costs for items such as expedited freight and supplier premiums. We do, however, see these pressures as temporary and expect our Climate segment margins to track back towards recent historic levels in the high-teens to low-20's by the fourth quarter."

Mr. Pinkham went on to comment, "Another source of strong positive momentum in our business are synergies tied to the Rexnord PMC and Arrowhead transactions. Both our integration team and our core MCS "run" team continue to execute at a high level, and we see increasing upside potential on both cost and revenue synergies versus our current targets. The Arrowhead business, which we now refer to as our Automation Solutions business unit (ASBU), is also seeing strong prospects, with a host of merger-enabled new products now under development, teeing up attractive outgrowth opportunities. We plan to update investors on our synergy targets in greater detail at our upcoming investor day, which we are hosting at the New York Stock Exchange on September 13."

Mr. Pinkham concluded, "In summing up our second quarter results, the Regal Rexnord team is continuing to deliver very strong performance. I remain confident that we still have ample opportunities ahead of us." 

*Non-GAAP Financial Measurement, See Appendix for Reconciliation 

Guidance Update
The Company now expects organic revenue growth at a high single digit rate, up from its prior range of mid-single digit to high single digit rate.

The Company is raising its 2022 annual guidance for adjusted earnings per share to a range of  $10.20 to $10.80, from a range of $10.10 to $10.70 previously, and revising its GAAP earnings per share to a range of $7.01 to $7.61 from a range of $6.90 to $7.50.

Segment Performance
Second quarter 2022 segment results versus the prior year:

  • Motion Control Solutions segment net sales were $599.3 million, an increase of 178.6%, or 6.4% on an organic basis. Primary drivers included the merger with Rexnord PMC and the acquisition of Arrowhead and, on an organic basis, broad-based growth and price realization. Adjusted EBITDA margin was 26.4% of adjusted net sales*.
  • Climate Solutions net sales were $293.5 million, an increase of 14.1%, or 14.8% on an organic basis.   Adjusted EBITDA margin was 17.1% of adjusted net sales*. The segment experienced several points of margin pressure due to recent strategic decisions to over-serve key customers. However, we expect margins to recover to levels more consistent with recent history by the fourth quarter.
  • Commercial Systems net sales were $301.9 million, an increase of 12.1%, or 14.6% on an organic basis. Primary drivers included end market strength and share gains especially in the North America general industrial, pool and commercial HVAC markets, along with healthy price realization. Adjusted EBITDA margin was 16.5% of adjusted net sales*.
  • Industrial Systems net sales were $154.7 million, an increase of 6.5%, or 9.4% on an organic basis. Primary drivers included strength and outgrowth in Americas general industrial markets, and strong price realization. Adjusted EBITDA margin was 16.2% of adjusted net sales*.

Conference Call

Regal Rexnord will hold a conference call to discuss this earnings release at 9:00 AM CT (10:00 AM ET) on Tuesday, August 2, 2022. To listen to the live audio and view the presentation during the call, please visit Regal Rexnord's Investors website: https://investors.regalrexnord.com. To listen by phone or to ask the presenters a question, dial 1.888.317.6003 (U.S. callers) or +1.412.317.6061 (international callers) and enter 9880181# when prompted.

A webcast replay will be available at the link above, and a telephone replay will be available at 1.877.344.7529 (U.S. callers) or +1.412.317.0088 (international callers), using a replay access code of 6915791#. Both replays will be accessible for three months after the earnings call.

About Regal Rexnord

Regal Rexnord Corporation is a global leader in the engineering and manufacturing of industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products and specialty electrical components and systems, serving customers around the world. Through longstanding technology leadership and an intentional focus on producing more energy-efficient products and systems, Regal Rexnord helps create a better tomorrow – for its customers and for the planet.

Regal Rexnord is comprised of four segments: Motion Control Solutions, Climate Solutions, Commercial Systems and Industrial Systems. Regal Rexnord is headquartered in Beloit, Wisconsin and has manufacturing, sales and service facilities worldwide. For more information, visit RegalRexnord.com.

Forward Looking Statements

This press 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, prospects and opportunities. Such forward-looking statements may include, among other things, statements about the merger with the Rexnord Process & Motion Control business (the "Rexnord PMC business") or the acquisition of Arrowhead Systems, LLC ("Arrowhead"), the benefits and synergies of the transactions described in this communication relating to the acquisitions of the Rexnord PMC business and Arrowhead (the "Transactions"), future opportunities for Regal Rexnord, and any other statements regarding Regal Rexnord's future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition and other expectations and estimates for future periods. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as "anticipate," "believe," "confident," "estimate," "expect," "intend," "plan," "may," "will," "project," "forecast," "would," "could," "should," and similar expressions. These forward-looking statements are based upon information currently available to Regal Rexnord and are subject to a number of risks, uncertainties, and other factors that could cause actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause actual results to differ materially from the results referred to in the forward-looking statements Regal Rexnord makes in this release include: dependence on key suppliers and the potential effects of supply disruptions; fluctuations in commodity prices and raw material costs; any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses and future prospects; the possibility that Regal Rexnord may be unable to achieve expected synergies and operating efficiencies in connection with the Transactions within the expected time-frames or at all and to successfully integrate the Rexnord PMC business and Arrowhead; expected or targeted future financial and operating performance and results; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the Transactions; Regal Rexnord's ability to retain key executives and employees; the continued financial and operational impacts of and uncertainties relating to the COVID-19 pandemic on customers and suppliers and the geographies in which they operate; uncertainties regarding the ability to execute restructuring plans within expected costs and timing; challenges to the tax treatment that was elected with respect to the acquisition of the Rexnord PMC business and related transactions; requirements to abide by potentially significant restrictions with respect to the tax treatment of the Rexnord PMC business which could limit Regal Rexnord's ability to undertake certain corporate actions that otherwise could be advantageous; actions taken by competitors and their ability to effectively compete in the increasingly competitive global electric motor, drives and controls, power generation and power transmission industries; the ability to develop new products based on technological innovation, such as the Internet of Things, and marketplace acceptance of new and existing products, including products related to technology not yet adopted or utilized in geographic locations in which Regal Rexnord does business; dependence on significant customers; seasonal impact on sales of products into HVAC systems and other residential applications; risks associated with global manufacturing, including public health crises and political, societal or economic instability, including instability caused by the conflict between Russia and Ukraine; issues and costs arising from the integration of acquired companies and businesses and the timing and impact of purchase accounting adjustments; Regal Rexnord's overall debt levels and its ability to repay principal and interest on its outstanding debt; prolonged declines in one or more markets, such as heating, ventilation, air conditioning, refrigeration, power generation, oil and gas, unit material handling, water heating and aerospace; economic changes in global markets, such as reduced demand for products, currency exchange rates, inflation rates, interest rates, recession, government policies, including policy changes affecting taxation, trade, tariffs, immigration, customs, border actions and the like, and other external factors that Regal Rexnord cannot control; product liability, asbestos and other litigation, or claims by end users, government agencies or others that products or customers' applications failed to perform as anticipated, particularly in high volume applications or where such failures are alleged to be the cause of property or casualty claims; unanticipated liabilities of acquired businesses; unanticipated adverse effects or liabilities from business exits or divestitures; unanticipated costs or expenses that may be incurred related to product warranty issues; infringement of intellectual property by third parties, challenges to intellectual property, and claims of infringement on third party technologies; effects on earnings of any significant impairment of goodwill; losses from failures, breaches, attacks or disclosures involving information technology infrastructure and data; cyclical downturns affecting the global market for capital goods; and other risks and uncertainties including, but not limited, to those described in the section entitled "Risk Factors" in Regal Rexnord's Annual Report on Form 10-K on file with the SEC and from time to time in other filed reports including Regal Rexnord's Quarterly Reports on Form 10-Q. For a more detailed description of the risk factors associated with Regal Rexnord, please refer to Part I, Item 1A in Regal Rexnord's Annual Report on Form 10-K for the fiscal year ended January 1, 2022 on file with the SEC and subsequent SEC filings. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are made only as of the date of this release, and Regal Rexnord undertakes no obligation to update any forward-looking information contained in this release or with respect to the announcements described herein to reflect subsequent events or circumstances.

Non-GAAP Measures
(Unaudited)
(Dollars in Millions, Except per Share Data)

We prepare financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We also periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentations and similar events that may be considered "non-GAAP" financial measures. This additional information is not meant to be considered in isolation or as a substitute for our results of operations prepared and presented in accordance with GAAP.

In this earnings release, we disclose the following non-GAAP financial measures, and we reconcile these measures in the tables below to the most directly comparable GAAP financial measures: adjusted diluted earnings per share, adjusted income from operations, adjusted operating margin, adjusted net sales, net debt, adjusted EBITDA, adjusted EBITDA margin, adjusted bank EBITDA, adjusted net income attributable to Regal Rexnord Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Rexnord Corporation, adjusted income before taxes, adjusted provision for income taxes and adjusted effective tax rate. We believe that these non-GAAP financial measures are useful measures for providing investors with additional information regarding our results of operations and for helping investors understand and compare our operating results across accounting periods and compared to our peers. Our management primarily uses adjusted income from operations, adjusted operating income, and adjusted operating margin to help us manage and evaluate our business and make operating decisions, while adjusted diluted earnings per share, net debt, adjusted EBITDA, adjusted EBITDA margin, adjusted net sales, adjusted net income attributable to Regal Rexnord Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Rexnord Corporation, adjusted income before taxes, adjusted provision for income taxes and adjusted effective tax rate are primarily used to help us evaluate our business and forecast our future results. Accordingly, we believe disclosing and reconciling each of these measures helps investors evaluate our business in the same manner as management.

In addition to these non-GAAP measures, we use the term "organic sales growth" to refer to the increase in our sales between periods that is attributable to organic sales. "Organic sales" to refers to GAAP sales from existing operations excluding any sales from acquired businesses recorded prior to the first anniversary of the acquisition and excluding any sales from business divested/to be exited recorded prior to the first anniversary of the exit and excluding the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period's organic sales using the currency exchange rates that were in effect during the prior year periods.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME







Unaudited









(Dollars in Millions, Except per Share Data)


















Three Months Ended


Six Months Ended



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

Net Sales


$      1,349.4


$         886.9


$      2,647.9


$      1,701.0

Cost of Sales


915.9


629.2


1,792.5


1,193.5

Gross Profit


433.5


257.7


855.4


507.5

Operating Expenses


238.6


140.2


490.6


288.5

Asset Impairments



2.3



2.3

Total Operating Expenses


238.6


142.5


490.6


290.8

Income from Operations


194.9


115.2


364.8


216.7

Other Income, Net


(1.5)


(1.2)


(2.8)


(2.4)

Interest Expense


13.4


11.5


22.4


24.1

Interest Income


0.8


1.7


1.9


3.2

Income before Taxes


183.8


106.6


347.1


198.2

Provision for Income Taxes


40.6


20.6


76.8


41.9

Net Income


143.2


86.0


270.3


156.3

Less: Net Income Attributable to Noncontrolling Interests


1.2


1.6


2.7


3.0

Net Income Attributable to Regal Rexnord Corporation


$         142.0


$           84.4


$         267.6


$         153.3

Earnings Per Share Attributable to Regal Rexnord Corporation:









Basic


$           2.13


$           2.07


$           3.99


$           3.78

Assuming Dilution


$           2.12


$           2.06


$           3.96


$           3.74

Cash Dividends Declared Per Share


$           0.35


$           0.33


$           0.68


$           0.63

Weighted Average Number of Shares Outstanding:









Basic


66.8


40.7


67.1


40.6

Assuming Dilution


67.1


41.0


67.5


41.0

 

CONDENSED CONSOLIDATED BALANCE SHEETS





Unaudited





(Dollars in Millions)







Jun 30, 2022


Jan 1, 2022

ASSETS





Current Assets:





Cash and Cash Equivalents


$            702.5


$            672.8

Trade Receivables, less Allowances

 of $18.7 million in 2022 and $18.7 million in 2021


854.8


785.8

Inventories


1,388.4


1,192.4

Prepaid Expenses and Other Current Assets


151.8


157.6

Total Current Assets


3,097.5


2,808.6






Net Property, Plant, Equipment and Noncurrent Assets


7,361.0


7,558.8

Total Assets


$       10,458.5


$       10,367.4






LIABILITIES AND EQUITY





Current Liabilities:





Accounts Payable


$            652.8


$            643.8

Other Accrued Expenses


437.4


446.6

Current Maturities of Debt


30.6


4.9

Total Current Liabilities


1,120.8


1,095.3






Long-Term Debt


2,132.5


1,913.6

Other Noncurrent Liabilities


889.5


950.3

Equity:





Total Regal Rexnord Corporation Shareholders' Equity


6,276.7


6,370.0

Noncontrolling Interests


39.0


38.2

Total Equity


6,315.7


6,408.2

Total Liabilities and Equity


$       10,458.5


$       10,367.4

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW









Unaudited









(Dollars in Millions)











Three Months Ended


Six Months Ended



Jun 30, 2022


Jul 3, 2021


Jun 30, 2022


Jul 3, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:









Net Income


$        143.2


$          86.0


$        270.3


$        156.3

Adjustments to Reconcile Net Income and Changes in Assets
and Liabilities (Net of Acquisitions and Divestitures) to Net
Cash (Used in) Provided by Operating Activities:









Depreciation and Amortization


78.4


30.5


156.3


62.3

(Gain) Loss on Disposal of Assets


(1.4)


(0.1)


(1.7)


0.5

Loss on Businesses Divested and Assets to be Exited



2.3



2.3

Share-Based Compensation Expense


4.9


4.5


11.2


7.8

Change in Operating Assets and Liabilities


(114.3)


(36.1)


(331.2)


(92.6)

Net Cash Provided by Operating Activities


110.8


87.1


104.9


136.6

CASH FLOWS FROM INVESTING ACTIVITIES:









Additions to Property, Plant and Equipment


(19.2)


(13.6)


(32.6)


(24.3)

Proceeds Received from Sales of Property, Plant and Equipment


4.1


0.9


5.5


1.8

Business Acquisitions, Net of Cash Acquired



(1.9)


(35.0)


(3.8)

Net Cash Used in Investing Activities


(15.1)


(14.6)


(62.1)


(26.3)

CASH FLOWS FROM FINANCING ACTIVITIES:









Net Repayments Under Revolving Credit Facility


(395.0)



(176.7)


Net Repayments of Short-Term Borrowings


(0.1)


0.2


(2.0)


Proceeds from Long-Term Debt


500.0



1,536.8


Repayments of Long-Term Debt


(0.9)


(0.1)


(1,108.4)


(50.2)

Dividends Paid to Shareholders


(22.0)


(12.2)


(44.3)


(24.4)

Proceeds from the Exercise of Stock Options


1.6



3.4


0.1

Repurchase of Common Stock


(69.8)



(184.0)


Distributions to Noncontrolling Interest



(4.5)



(4.5)

Shares Surrendered for Taxes


(5.3)


(4.2)


(8.1)


(6.1)

Financing Fees Paid


(2.0)


(4.6)


(6.5)


(17.0)

Net Cash Provided by (Used in) Financing Activities


6.5


(25.4)


10.2


(102.1)

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS


(24.4)


5.0


(23.3)


(1.0)

Net Increase in Cash and Cash Equivalents


77.8


52.1


29.7


7.2

Cash and Cash Equivalents at Beginning of Period


624.7


566.4


672.8


611.3

Cash and Cash Equivalents at End of Period


$        702.5


$        618.5


$        702.5


$        618.5

 

SEGMENT INFORMATION



















Unaudited





















(Dollars in Millions)





















Three Months Ended



Commercial
Systems


Industrial
Systems


Climate
Solutions


Motion Control
Solutions


Total Regal
Rexnord



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

Net Sales


$   301.9


$   269.3


$  154.7


$  145.2


$  293.5


$  257.3


$  599.3


$  215.1


$  1,349.4


$  886.9

Adjusted Net Sales*


$   301.9


$   269.3


$  154.7


$  145.2


$  293.5


$  257.3


$  599.3


$  215.1


$  1,349.4


$  886.9






















GAAP Operating Margin


13.8 %


10.2 %


13.7 %


3.0 %


15.1 %


18.7 %


14.6 %


16.5 %


14.4 %


13.0 %

Adjusted Operating Margin*


13.8 %


12.4 %


13.8 %


3.2 %


15.2 %


19.0 %


15.2 %


20.1 %


14.7 %


14.7 %

Adjusted EBITDA Margin %


16.5 %


15.8 %


16.2 %


7.9 %


17.1 %


21.0 %


26.4 %


27.1 %


21.0 %


18.7 %






















Components of Net Sales:





















Organic Sales Growth*


14.6 %


48.1 %


9.4 %


12.8 %


14.8 %


43.0 %


6.4 %


32.3 %


11.8 %


36.0 %

Acquisitions


— %


— %


— %


— %


— %


— %


174.1 %


— %


42.2 %


— %

Foreign Currency Impact


(2.4) %


5.1 %


(2.9) %


7.7 %


(0.7) %


1.4 %


(1.9) %


2.6 %


(1.9) %


3.9 %






















SEGMENT INFORMATION



















Unaudited





















(Dollars in Millions)





















Six Months Ended



Commercial
Systems


Industrial
Systems


Climate
Solutions


Motion Control
Solutions


Total Regal
Rexnord



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

Net Sales


$   595.2


$   506.3


$  299.4


$  281.6


$  567.4


$  496.4


$  1,185.9


$  416.7


$  2,647.9


$  1,701.0

Adjusted Net Sales*


$   595.2


$   506.3


$  299.4


$  281.6


$  567.4


$  496.4


$  1,185.9


$  416.7


$  2,647.9


$  1,701.0






















GAAP Operating Margin


15.9 %


11.1 %


9.7 %


3.3 %


16.9 %


18.7 %


12.3 %


14.1 %


13.8 %


12.7 %

Adjusted Operating Margin*


15.9 %


12.3 %


9.8 %


3.5 %


17.0 %


18.9 %


14.4 %


19.6 %


14.8 %


14.6 %

Adjusted EBITDA Margin %


18.8 %


15.9 %


12.4 %


8.3 %


19.1 %


21.2 %


25.6 %


26.7 %


21.2 %


18.8 %






















Components of Net Sales:





















Organic Sales Growth


19.4 %


31.0 %


8.3 %


6.9 %


14.8 %


27.3 %


8.1 %


15.5 %


13.4 %


21.5 %

Acquisitions


— %


— %


— %


— %


— %


— %


178.0 %


— %


43.6 %


— %

Foreign Currency Impact


(1.8) %


3.9 %


(2.0) %


5.6 %


(0.5) %


0.5 %


(1.4) %


2.0 %


(1.4) %


2.8 %

 

ADJUSTED DILUTED EARNINGS PER SHARE


Three Months Ended


Six Months Ended



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

GAAP Diluted Earnings Per Share


$           2.12


$           2.06


$           3.96


$           3.74

Restructuring and Related Costs


(0.01)


0.11


0.18


0.14

Transaction and Related Costs


0.01


0.19


0.05


0.55

Inventory Step Up


0.06



0.10


Intangible Amortization


0.53


0.20


1.05


0.41

Share-Based Compensation Expense


0.08


0.08


0.14


0.14

Gain on Sale of Assets


(0.03)



(0.04)


(0.01)

Loss on Businesses Divested and Assets to be Exited



0.04



0.04

Adjusted Diluted Earnings Per Share


$           2.76


$           2.68


$           5.44


$           5.01










 

2022 ADJUSTED ANNUAL GUIDANCE


Minimum


Maximum

2022 Diluted EPS Annual Guidance


$                               7.01


$                               7.61

Restructuring and Related Costs


0.68


0.68

Intangible Amortization


2.10


2.10

Share-Based Compensation Expense


0.29


0.29

Transaction and Related Costs


0.06


0.06

Inventory Step Up


0.10


0.10

Gain on Sales of Assets


(0.04)


(0.04)

2022 Adjusted Diluted EPS Annual Guidance


$                             10.20


$                             10.80

 



Three Months Ended

ADJUSTED EBITDA


Commercial
Systems


Industrial
Systems


Climate
Solutions


Motion Control
Solutions


Total Regal
Rexnord

(Dollars in Millions)


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

GAAP Income from Operations


$    41.7


$    27.4


$    21.2


$      4.3


$    44.3


$    48.0


$    87.7


$    35.5


$  194.9


$  115.2

Restructuring and Related Costs


(0.1)


4.1


0.2


0.3


0.4


0.3


(1.6)


0.9


(1.1)


5.6

Transaction and Related Costs








1.3


7.1


1.3


7.1

Inventory Step Up








6.0



6.0


Loss on Businesses Divested and Assets to be Exited



1.8





0.5





2.3

Gain on Sale of Assets








(2.6)


(0.2)


(2.6)


(0.2)

Adjusted Income from Operations


$    41.6


$    33.3


$    21.4


$      4.6


$    44.7


$    48.8


$    90.8


$    43.3


$  198.5


$  130.0






















Depreciation


$      5.7


$      5.8


$      3.2


$      5.5


$      4.0


$      2.6


$    19.0


$      5.4


$    31.9


$    19.3

Amortization


1.7


2.0


0.2


0.2


0.4


1.0


44.2


8.0


46.5


11.2

Other Income (Expense), Net


0.3


0.3


0.3


0.2


0.3


0.4


0.6


0.3


1.5


1.2

Adjusted Bank EBITDA


$    49.3


$    41.4


$    25.1


$    10.5


$    49.4


$    52.8


$  154.6


$    57.0


$  278.4


$  161.7






















 Stock Based Compensation


$      0.6


$      1.1


$     (0.1)


$      0.9


$      0.9


$      1.3


$      3.5


$      1.2


$      4.9


$      4.5

Adjusted EBITDA


$    49.9


$    42.5


$    25.0


$    11.4


$    50.3


$    54.1


$  158.1


$    58.2


$  283.3


$  166.2






















GAAP Operating Margin %


13.8 %


10.2 %


13.7 %


3.0 %


15.1 %


18.7 %


14.6 %


16.5 %


14.4 %


13.0 %

Adjusted Operating Margin %


13.8 %


12.4 %


13.8 %


3.2 %


15.2 %


19.0 %


15.2 %


20.1 %


14.7 %


14.7 %

Adjusted EBITDA Margin %


16.5 %


15.8 %


16.2 %


7.9 %


17.1 %


21.0 %


26.4 %


27.1 %


21.0 %


18.7 %

 



Six Months Ended

ADJUSTED EBITDA


Commercial
Systems


Industrial
Systems


Climate
Solutions


Motion Control
Solutions


Total Regal
Rexnord

(Dollars in Millions)


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

GAAP Income from Operations


$    94.6


$   56.2


$    29.1


$     9.2


$    95.8


$   92.7


$  145.3


$   58.6


$  364.8


$  216.7

Restructuring and Related Costs


0.6


4.3


0.3


0.8


0.7


0.6


14.3


1.6


15.9


7.3

Transaction and Related Costs








4.3


21.8


4.3


21.8

Inventory Step Up








9.0



9.0


Loss on Businesses Divested and Assets to be Exited



1.8





0.5





2.3

Gain on Sale of Assets


(0.7)




(0.1)




(2.6)


(0.5)


(3.3)


(0.6)

Adjusted Income from Operations


$    94.5


$   62.3


$    29.4


$     9.9


$    96.5


$   93.8


$  170.3


$   81.5


$  390.7


$  247.5






















Depreciation


$    11.7


$   11.9


$      6.6


$   11.0


$      7.9


$     6.1


$    36.3


$   11.0


$    62.5


$    40.0

Amortization


3.4


3.7


0.4


0.6


0.9


2.0


89.1


16.0


93.8


22.3

Other Income (Expense), Net


0.6


0.6


0.4


0.4


0.6


0.8


1.2


0.6


2.8


2.4

Adjusted Bank EBITDA


$  110.2


$   78.5


$    36.8


$   21.9


$  105.9


$ 102.7


$  296.9


$ 109.1


$  549.8


$  312.2






















Stock Based Compensation


$      1.7


$     2.0


$      0.4


$     1.5


$      2.2


$     2.3


$      6.9


$     2.0


$    11.2


$      7.8

Adjusted EBITDA


$  111.9


$   80.5


$    37.2


$   23.4


$  108.1


$ 105.0


$  303.8


$ 111.1


$  561.0


$  320.0






















GAAP Operating Margin %


15.9 %


11.1 %


9.7 %


3.3 %


16.9 %


18.7 %


12.3 %


14.1 %


13.8 %


12.7 %

Adjusted Operating Margin %


15.9 %


12.3 %


9.8 %


3.5 %


17.0 %


18.9 %


14.4 %


19.6 %


14.8 %


14.6 %

Adjusted EBITDA Margin %


18.8 %


15.9 %


12.4 %


8.3 %


19.1 %


21.2 %


25.6 %


26.7 %


21.2 %


18.8 %

 

DEBT TO EBITDA




Last Twelve Months





Jun 30, 2022


Jan 1, 2022

Net Income


$                  349.8


$                  235.8

Interest Expense




58.7


60.4

Interest Income




(6.1)


(7.4)

Taxes




109.6


74.7

Depreciation and Amortization




264.6


170.6

EBITDA




$                  776.6


$                  534.1

Restructuring and Related Costs




30.6


22.0

Transaction and Related Costs




71.6


89.1

Impairments and Exit Related Costs




3.3


5.6

Goodwill Impairment




33.0


33.0

Inventory Step Up




33.3


24.3

Gain on Sale of Assets




(5.2)


(2.5)

Adjusted Bank EBITDA




$                  943.2


$                  705.6








Current Maturities of Long-Term Debt




$                    30.6


$                      4.9

Long-Term Debt




2,132.5


1,913.6

Total Gross Debt




$               2,163.1


$               1,918.5

Cash




(702.5)


(672.8)

Net Debt




$               1,460.6


$               1,245.7








Gross Debt/EBITDA




2.8


3.6

Gross Debt/Adjusted Bank EBITDA




2.3


2.7








Net Debt/EBITDA




1.9


2.3

Net Debt/Adjusted Bank EBITDA




1.5


1.8

 

FREE CASH FLOW


Three Months Ended


Six Months Ended



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021

Net Cash Provided by Operating Activities


$              110.8


$                 87.1


$        104.9


$        136.6

Additions to Property Plant and Equipment


(19.2)


(13.6)


(32.6)


(24.3)

Free Cash Flow


$                91.6


$                 73.5


$          72.3


$        112.3










GAAP Net Income Attributable to Regal Rexnord Corporation


$              142.0


$                 84.4


$        267.6


$        153.3

Loss on Businesses Divested and Impairments



2.3



2.3

Tax Effect from Loss on Businesses Divested and Impairments



(0.5)



(0.5)

Adjusted Net Income Attributable to Regal Rexnord Corporation


$              142.0


$                 86.2


$        267.6


$        155.1










Free Cash Flow as a Percentage of Adjusted Net Income Attributable to Regal Rexnord Corporation


64.5 %


85.3 %


27.0 %


72.4 %










 

ADJUSTED EFFECTIVE TAX RATE


Three Months Ended


Six Months Ended



Jun 30,
2022


Jul 3,
2021


Jun 30,
2022


Jul 3,
2021










Income before Taxes


$         183.8


$         106.6


$        347.1


$        198.2

Provision for Income Taxes


40.6


20.6


76.8


41.9

Effective Tax Rate


22.1 %


19.3 %


22.1 %


21.1 %










Income before Taxes


$         183.8


$         106.6


$        347.1


$        198.2

Restructuring and Related Costs


(1.1)


5.6


15.9


7.3

Transaction and Related Costs


1.3


10.4


4.3


29.5

Inventory Step Up


6.0



9.0


Intangible Amortization


46.5


11.2


93.8


22.3

Share-Based Compensation Expense


4.9


4.5


11.2


7.8

Gain on Sales of Assets


(2.6)


(0.2)


(3.3)


(0.6)

Loss on Businesses Divested and Assets to be Exited



2.3



2.3

Adjusted Income before Taxes


$         238.8


$         140.4


$        478.0


$        266.8










Provision for Income Taxes


$            40.6


$            20.6


$           76.8


$           41.9

Tax Effect from Restructuring and Related Costs


(0.1)


1.3


4.0


1.7

Tax Effect of Transaction and Related Costs


0.3


2.6


1.0


7.1

Tax Effect of Inventory Step Up


1.5



2.1


Tax Effect of Intangible Amortization


11.2


2.7


23.0


5.4

Tax Effect of Share-Based Compensation Expense


(0.7)


1.1


1.5


1.9

Tax Effect of Gain on Sales of Assets


(0.6)



(0.8)


(0.1)

Tax Effect from Loss on Businesses Divested and Assets to be Exited



0.5



0.5

Adjusted Provision for Income Taxes


$            52.2


$            28.8


$        107.6


$           58.4










Adjusted Effective Tax Rate


21.9 %


20.5 %


22.5 %


21.9 %

 

ORGANIC SALES GROWTH


Three Months Ended



June 30, 2022




Commercial Systems


Industrial Systems


Climate Solutions


Motion Control Solutions


Total Regal Rexnord

Net Sales Three Months Ended Jun 30, 2022


$          301.9


$          154.7


$         293.5


$           599.3


$      1,349.4

Net Sales from Business Acquired





(374.5)


(374.5)

Impact from Foreign Currency Exchange Rates


6.7


4.2


1.8


4.0


16.7

Organic Sales Three Months Ended Jun 30, 2022


$          308.6


$          158.9


$         295.3


$           228.8


$         991.6












Net Sales Three Months Ended Jul 3, 2021


$          269.3


$          145.2


$         257.3


$           215.1


$         886.9

Adjusted Net Sales Three Months Ended Jul 3, 2021


$          269.3


$          145.2


$         257.3


$           215.1


$         886.9












Three Months Ended Jun 30, 2022 Organic Sales Growth %


14.6 %


9.4 %


14.8 %


6.4 %


11.8 %

Three Months Ended Jun 30, 2022 Net Sales Growth %


12.1 %


6.5 %


14.1 %


178.6 %


52.1 %












ORGANIC SALES GROWTH


Six Months Ended



June 30, 2022




Commercial Systems


Industrial Systems


Climate Solutions


Motion Control Solutions


Total Regal Rexnord

Net Sales Six Months Ended Jun 30, 2022


$          595.2


$          299.4


$         567.4


$       1,185.9


$      2,647.9

Net Sales from Business Acquired





(741.6)


(741.6)

Impact from Foreign Currency Exchange Rates


9.2


5.6


2.6


6.0


23.4

Organic Sales Six Months Ended Jun 30, 2022


$          604.4


$          305.0


$         570.0


$           450.3


$      1,929.7












Net Sales Six Months Ended Jul 3, 2021


$          506.3


$          281.6


$         496.4


$           416.7


$      1,701.0

Adjusted Net Sales Six  Ended Months Jul 3, 2021


$          506.3


$          281.6


$         496.4


$           416.7


$      1,701.0












Six Months Ended Jun 30, 2022 Organic Sales Growth %


19.4 %


8.3 %


14.8 %


8.1 %


13.4 %

Six Months Ended Jun 30, 2022 Net Sales Growth %


17.6 %


6.3 %


14.3 %


184.6 %


55.7 %

 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/regal-rexnord-corporation-reports-strong-second-quarter-2022-financial-results-301597266.html

SOURCE Regal Rexnord Corporation

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