REGAL REXNORD REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS
CLOSED ON SALE OF INDUSTRIAL SYSTEMS BUSINESS, COMPLETING PLANNED STRATEGIC PORTFOLIO TRANSFORMATION, WITH NET PROCEEDS TO BE USED FOR DEBT REDUCTION
ANNOUNCED UPDATED BUSINESS PURPOSE TO ALIGN WITH TRANSFORMED BUSINESS PORTFOLIO
We Create A Better Tomorrow With
1Q Highlights
- GAAP Diluted EPS Of
$0.30 , Adjusted Diluted EPS* Of$2.00 - Adjusted Free Cash Flow* Of
$64.6 Million ; On Track To Full Year Outlook Of$700 Million - Paid Down
$135.0 Million Of Gross Debt - Sales Of
$1,547.7 Million , Up 26.4% Versus PY, Down 7.5% On A Pro Forma Organic Basis - GAAP Gross Margin Of 35.7%; Adjusted Gross Margin* Of 36.5% Versus PY Of 33.5% On A Pro Forma Basis*
- GAAP Net Income Of
$20.4 Million Versus PY GAAP Net Loss Of$(5.5) Million - Adjusted EBITDA* Of
$317.4 Million Versus PY Of$327.1 Million On A Pro Forma Basis* - Adjusted EBITDA Margin* Of 20.5%, Up 100 Basis Points Versus PY On A Pro Forma Basis*
- Synergies Of
$26 Million ; On Track To Deliver$90 Million In The Year
CEO
Guidance
The Company is updating its annual guidance for 2024 GAAP Diluted Earnings per Share to a range of
Segment Performance
Segment results versus the prior year are summarized below:
- Automation & Motion Control net sales were
$400.2 million , an increase of 96.9%, or a decrease of 4.5% on a pro forma organic basis*. Results reflect the Altra acquisition plus strength in the medical, data center, and aerospace markets, net of continued weakness in the discreet factory automation and food & beverage end markets. Adjusted EBITDA margin was 22.5% of adjusted net sales*. - Industrial Powertrain Solutions net sales were
$643.4 million , an increase of 55.3%, or a decrease of 1.0% on a pro forma organic basis*. Results reflect the Altra acquisition, plus strength in general industrial and energy markets, net of weakness in the alternative energy, construction equipment, and agriculture markets. Adjusted EBITDA margin was 25.8% of adjusted net sales*. - Power Efficiency Solutions net sales were
$385.3 million , a decrease of 17.9%, or a decrease of 17.8% on an organic basis*. The decline primarily reflects continued weakness inNorth America residential HVAC markets, particularly in heating products. Adjusted EBITDA margin was 13.2% of adjusted net sales*. - Industrial Systems net sales were
$118.8 million , a decrease of 13.3%, or a decrease of 12.6% on an organic basis. Adjusted EBITDA margin was 8.6% of adjusted net sales*.
As previously disclosed, with the sale of the Industrial Systems business, effective
*Non-GAAP Financial Measurement, See Appendix for Reconciliation |
Conference Call
A webcast replay will be available at the link above, and a telephone replay will be available at 1.877.344.7529 (
About
The Company's end markets benefit from meaningful secular demand tailwinds, and include factory automation, food & beverage, aerospace, medical, data center, warehouse, alternative energy, residential and commercial buildings, general industrial, construction, metals and mining, and agriculture.
Forward Looking Statements
All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as "anticipate," "believe," "confident," "estimate," "expect," "intend," "plan," "may," "will," "project," "forecast," "would," "could," "should," and similar expressions, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements in this communication include, without limitation: the possibility that the Company may be unable to achieve expected benefits, synergies and operating efficiencies in connection with the sale of the
Non-GAAP Measures
(Unaudited)
(Dollars in Millions, Except per Share Data)
We prepare our financial statements in accordance with accounting principles generally accepted in
In this 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, adjusted gross margin, pro forma adjusted gross margin, net debt, EBITDA, adjusted EBITDA, pro forma EBITDA, pro forma adjusted EBITDA, adjusted EBITDA (including synergies), interest coverage ratio, interest coverage ratio (including synergies), adjusted EBITDA margin, gross debt/adjusted EBITDA, net debt/adjusted EBITDA, net debt/adjusted EBITDA (including synergies),adjusted cash flows from operations, adjusted free cash flow, 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 and adjusted operating margin to help us manage and evaluate our business and make operating decisions, while the other non-GAAP measures disclosed 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. This release also includes non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of this forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of this non-GAAP financial measure would require the Company to predict the timing and likelihood of future restructurings and other charges. Neither these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measure is not provided.
In addition to these non-GAAP measures, we use the term "organic sales growth" and "pro forma organic sales growth" to refer to the increase in our sales between periods that is attributable to organic sales. "Organic sales" 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. "Pro forma organic sales" refers to "organic sales" giving effect to the acquisition of Altra. 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.
The assumptions and related pro forma adjustments in the selected financial information presented within this release are consistent with those presented in the Company's Current Reports on Form 8-K filed on
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
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Unaudited |
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(Dollars in Millions, Except per Share Data) |
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||
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Three Months Ended |
||
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$ 1,547.7 |
|
$ 1,224.1 |
Cost of Sales |
|
994.6 |
|
826.0 |
Gross Profit |
|
553.1 |
|
398.1 |
Operating Expenses |
|
397.7 |
|
329.2 |
Loss on Assets Held for Sale |
|
21.5 |
|
— |
Total Operating Expenses |
|
419.2 |
|
329.2 |
Income from Operations |
|
133.9 |
|
68.9 |
Interest Expense |
|
105.4 |
|
95.4 |
Interest Income |
|
(3.1) |
|
(31.9) |
Other Expense (Income), Net |
|
0.3 |
|
(1.4) |
Income before Taxes |
|
31.3 |
|
6.8 |
Provision for Income Taxes |
|
10.9 |
|
12.3 |
Net Income (Loss) |
|
20.4 |
|
(5.5) |
Less: Net Income Attributable to Noncontrolling Interests |
|
0.6 |
|
0.4 |
Net Income (Loss) Attributable to |
|
$ 19.8 |
|
$ (5.9) |
Earnings (Loss) Per Share Attributable to |
|
|
|
|
Basic |
|
$ 0.30 |
|
$ (0.09) |
Assuming Dilution |
|
$ 0.30 |
|
$ (0.09) |
Cash Dividends Declared Per Share |
|
$ 0.35 |
|
$ 0.35 |
Weighted Average Number of Shares Outstanding: |
|
|
|
|
Basic |
|
66.4 |
|
66.2 |
Assuming Dilution |
|
66.8 |
|
66.6 |
CONDENSED CONSOLIDATED BALANCE SHEETS |
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Unaudited |
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(Dollars in Millions) |
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ASSETS |
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Current Assets: |
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|
|
Cash and Cash Equivalents |
|
$ 465.3 |
|
$ 574.0 |
Trade Receivables, Less Allowances of |
|
828.1 |
|
921.6 |
Inventories |
|
1,319.1 |
|
1,274.2 |
Prepaid Expenses and Other Current Assets |
|
275.9 |
|
245.6 |
Assets Held for Sale |
|
377.2 |
|
368.6 |
Total Current Assets |
|
3,265.6 |
|
3,384.0 |
Net Property, Plant and Equipment |
|
994.0 |
|
1,041.2 |
Operating Lease Assets |
|
166.0 |
|
172.8 |
|
|
6,506.2 |
|
6,553.1 |
Intangible Assets, Net of Amortization |
|
3,965.8 |
|
4,083.4 |
Deferred Income Tax Benefits |
|
37.0 |
|
33.8 |
Other Noncurrent Assets |
|
70.7 |
|
69.0 |
Noncurrent Assets Held for Sale |
|
68.5 |
|
94.1 |
Total Assets |
|
$ 15,073.8 |
|
$ 15,431.4 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts Payable |
|
$ 566.1 |
|
$ 549.4 |
Dividends Payable |
|
23.3 |
|
23.2 |
Accrued Compensation and Employee Benefits |
|
154.0 |
|
198.7 |
Accrued Interest |
|
92.6 |
|
85.1 |
Other Accrued Expenses |
|
282.6 |
|
325.2 |
Current Operating Lease Liabilities |
|
36.1 |
|
37.2 |
Current Maturities of Long-Term Debt |
|
3.9 |
|
3.9 |
Liabilities Held for Sale |
|
89.9 |
|
103.7 |
Total Current Liabilities |
|
1,248.5 |
|
1,326.4 |
Long-Term Debt |
|
6,242.0 |
|
6,377.0 |
Deferred Income Taxes |
|
966.9 |
|
1,012.7 |
Pension and Other Post Retirement Benefits |
|
114.7 |
|
120.4 |
Noncurrent Operating Lease Liabilities |
|
129.4 |
|
132.2 |
Other Noncurrent Liabilities |
|
76.9 |
|
77.2 |
Noncurrent Liabilities Held for Sale |
|
19.9 |
|
20.4 |
Equity: |
|
|
|
|
Regal Rexnord Corporation Shareholders' Equity: |
|
|
|
|
Common Stock, |
|
0.7 |
|
0.7 |
|
|
4,647.2 |
|
4,646.2 |
Retained Earnings |
|
1,976.3 |
|
1,979.8 |
Accumulated Other Comprehensive Loss |
|
(369.7) |
|
(282.4) |
Total Regal Rexnord Corporation Shareholders' Equity |
|
6,254.5 |
|
6,344.3 |
Noncontrolling Interests |
|
21.0 |
|
20.8 |
Total Equity |
|
6,275.5 |
|
6,365.1 |
Total Liabilities and Equity |
|
$ 15,073.8 |
|
$ 15,431.4 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW |
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Unaudited |
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(Dollars in Millions) |
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Three Months Ended |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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|
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Net Income (Loss) |
|
$ 20.4 |
|
$ (5.5) |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities (Net of Acquisitions and Divestitures): |
|
|
|
|
Depreciation |
|
41.5 |
|
30.2 |
Amortization |
|
86.7 |
|
46.3 |
Loss on Assets Held for Sale |
|
21.5 |
|
— |
Noncash Lease Expense |
|
11.3 |
|
7.7 |
Share-Based Compensation Expense |
|
9.1 |
|
21.7 |
Financing Fee Expense |
|
3.1 |
|
23.0 |
Benefit from Deferred Income Taxes |
|
(30.4) |
|
(10.2) |
Other Non-Cash Changes |
|
1.4 |
|
0.3 |
Change in Operating Assets and Liabilities, Net of Acquisitions and Divestitures |
|
|
|
|
Receivables |
|
47.7 |
|
31.7 |
Inventories |
|
(47.8) |
|
47.1 |
Accounts Payable |
|
14.5 |
|
(18.3) |
Other Assets and Liabilities |
|
(95.9) |
|
(67.8) |
Net Cash Provided by Operating Activities |
|
83.1 |
|
106.2 |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Additions to Property, Plant and Equipment |
|
(18.5) |
|
(18.7) |
Business Acquisitions, Net of Cash Acquired |
|
— |
|
(4,852.9) |
Proceeds Received from Sales of Property, Plant and Equipment |
|
1.0 |
|
6.1 |
|
|
(17.5) |
|
(4,865.5) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Borrowings Under Revolving Credit Facility |
|
495.1 |
|
893.3 |
Repayments Under Revolving Credit Facility |
|
(566.8) |
|
(639.5) |
Proceeds from Short-Term Borrowings |
|
— |
|
14.1 |
Repayments of Short-Term Borrowings |
|
— |
|
(15.9) |
Proceeds from Long-Term Borrowings |
|
— |
|
5,532.9 |
Repayments of Long-Term Borrowings |
|
(65.8) |
|
(500.8) |
Dividends Paid to Shareholders |
|
(23.3) |
|
(23.2) |
Shares Surrendered for Taxes |
|
(10.7) |
|
(8.2) |
Proceeds from the Exercise of Stock Options |
|
3.5 |
|
0.9 |
Financing Fees Paid |
|
— |
|
(50.0) |
|
|
(168.0) |
|
5,203.6 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
|
(10.5) |
|
10.5 |
Net (Decrease) Increase in Cash and Cash Equivalents |
|
(112.9) |
|
454.8 |
Cash and Cash Equivalents at Beginning of Period |
|
635.3 |
|
688.5 |
Cash and Cash Equivalents at End of Period (a) |
|
$ 522.4 |
|
$ 1,143.3 |
|
|
(a) |
The three months ended |
SEGMENT INFORMATION |
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Unaudited |
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(Dollars in Millions) |
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Three Months Ended |
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Industrial |
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Power Efficiency |
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Automation & |
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Industrial Systems |
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Total |
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$ 643.4 |
|
$ 414.4 |
|
$ 385.3 |
|
$ 469.5 |
|
$ 400.2 |
|
$ 203.2 |
|
$ 118.8 |
|
$ 137.0 |
|
$ 1,547.7 |
|
$ 1,224.1 |
Adjusted |
|
$ 643.4 |
|
$ 414.4 |
|
$ 385.3 |
|
$ 469.5 |
|
$ 400.2 |
|
$ 203.2 |
|
$ 118.8 |
|
$ 137.0 |
|
$ 1,547.7 |
|
$ 1,224.1 |
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GAAP Operating Margin |
|
12.8 % |
|
6.3 % |
|
7.4 % |
|
9.7 % |
|
10.0 % |
|
(2.6) % |
|
(14.2) % |
|
2.0 % |
|
8.7 % |
|
5.6 % |
Adjusted Operating Margin |
|
14.3 % |
|
16.6 % |
|
9.7 % |
|
10.7 % |
|
10.4 % |
|
9.0 % |
|
7.7 % |
|
3.7 % |
|
11.7 % |
|
11.6 % |
Adjusted EBITDA Margin % |
|
25.8 % |
|
29.3 % |
|
13.2 % |
|
13.7 % |
|
22.5 % |
|
23.0 % |
|
8.6 % |
|
6.7 % |
|
20.5 % |
|
19.7 % |
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Components of Net Sales: |
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Organic Sales Growth |
|
(3.4) % |
|
1.3 % |
|
(17.8) % |
|
(15.9) % |
|
(1.5) % |
|
11.7 % |
|
(12.6) % |
|
8.0 % |
|
(9.6) % |
|
(4.1) % |
Acquisitions |
|
58.7 % |
|
— % |
|
— % |
|
— % |
|
98.1 % |
|
— % |
|
— % |
|
— % |
|
36.1 % |
|
— % |
Foreign Currency Impact |
|
— % |
|
(1.8) % |
|
(0.1) % |
|
(1.3) % |
|
0.3 % |
|
(1.4) % |
|
(0.7) % |
|
(3.2) % |
|
(0.1) % |
|
(1.7) % |
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ADJUSTED DILUTED EARNINGS PER SHARE |
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Unaudited |
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Three Months Ended |
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GAAP Earnings (Loss) Per Share |
|
$ 0.30 |
|
$ (0.09) |
Intangible Amortization |
|
0.98 |
|
0.53 |
Restructuring and Related Costs (a) |
|
0.19 |
|
0.07 |
Share-Based Compensation Expense (b) |
|
0.11 |
|
0.31 |
Impairments and Exit Related Costs |
|
0.01 |
|
— |
Loss on Assets Held for Sale (c) |
|
0.32 |
|
— |
Gain on Sale of Assets |
|
(0.01) |
|
(0.01) |
Transaction and Integration Related Costs (d) |
|
0.09 |
|
1.31 |
Discrete Tax Items |
|
0.01 |
|
0.10 |
Adjusted Diluted Earnings Per Share |
|
$ 2.00 |
|
$ 2.22 |
|
|
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. |
(b) |
Includes the impact related to the accelerated vesting of awards for certain former Altra employees in the first quarter 2023. |
(c) |
The three months ended |
(d) |
For 2024, primarily relates to (1) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses and (2) legal, professional service and integration costs associated with the Altra Transaction. For 2023, primarily relates to (1) legal, professional service, severance, certain other employee compensation and financing costs and incremental net interest expense on new debt associated with the Altra Transaction and integration and (2) legal and professional service costs associated with the sale of the industrial motors and generators businesses. |
2024 ADJUSTED ANNUAL GUIDANCE |
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Unaudited |
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Minimum |
|
Maximum |
2024 GAAP Diluted EPS Annual Guidance |
|
$ 3.97 |
|
$ 4.77 |
Intangible Amortization |
|
4.00 |
|
4.00 |
Restructuring and Related Costs (a) |
|
0.58 |
|
0.58 |
Share-Based Compensation Expense |
|
0.51 |
|
0.51 |
Operating Lease Asset Step Up |
|
0.01 |
|
0.01 |
Impairments and Exit Related Costs |
|
0.01 |
|
0.01 |
Loss on Assets Held for Sale |
|
0.32 |
|
0.32 |
Gain on Sale of Assets |
|
(0.01) |
|
(0.01) |
Transaction and Integration Related Costs (b) |
|
0.20 |
|
0.20 |
Discrete Tax Items |
|
0.01 |
|
0.01 |
2024 Adjusted Diluted EPS Annual Guidance |
|
$ 9.60 |
|
$ 10.40 |
|
|
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. |
(b) |
Primarily relates to (1) legal, professional service and integration costs associated with the Altra Transaction and (2) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses. |
ADJUSTED EBITDA |
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Unaudited |
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(Dollars in Millions) |
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Three Months Ended |
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Industrial |
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Power Efficiency |
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Automation & |
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Industrial |
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Total |
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GAAP Income (Loss) from Operations |
|
$ 82.1 |
|
$ 25.9 |
|
$ 28.5 |
|
$ 45.4 |
|
$ 40.2 |
|
$ (5.2) |
|
$ (16.9) |
|
$ 2.8 |
|
|
|
$ 68.9 |
Restructuring and Related Costs (a) |
|
4.9 |
|
0.8 |
|
8.3 |
|
4.7 |
|
2.0 |
|
0.5 |
|
2.0 |
|
0.2 |
|
17.2 |
|
6.2 |
Operating Lease Asset Step Up |
|
0.3 |
|
— |
|
— |
|
— |
|
— |
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— |
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— |
|
— |
|
0.3 |
|
— |
Impairments and Exit Related Costs |
|
0.2 |
|
— |
|
0.2 |
|
— |
|
0.1 |
|
— |
|
— |
|
— |
|
0.5 |
|
— |
Loss on Assets Held for Sale (b) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
21.5 |
|
— |
|
21.5 |
|
— |
Gain on Sale of Assets |
|
— |
|
— |
|
— |
|
— |
|
(0.8) |
|
(0.6) |
|
— |
|
— |
|
(0.8) |
|
(0.6) |
Transaction and Integration Related Costs (c) |
|
4.4 |
|
42.0 |
|
0.5 |
|
— |
|
0.3 |
|
23.5 |
|
2.6 |
|
2.1 |
|
7.8 |
|
67.6 |
Adjusted Income from Operations |
|
$ 91.9 |
|
$ 68.7 |
|
$ 37.5 |
|
$ 50.1 |
|
$ 41.8 |
|
$ 18.2 |
|
$ 9.2 |
|
$ 5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
$ 50.0 |
|
$ 29.8 |
|
$ 2.1 |
|
$ 2.1 |
|
$ 34.4 |
|
$ 14.2 |
|
$ 0.2 |
|
$ 0.2 |
|
$ 86.7 |
|
$ 46.3 |
Depreciation |
|
20.2 |
|
11.8 |
|
9.5 |
|
9.6 |
|
11.5 |
|
5.5 |
|
0.3 |
|
3.3 |
|
41.5 |
|
30.2 |
Share-Based Compensation Expense (d) |
|
4.3 |
|
10.6 |
|
2.0 |
|
2.0 |
|
2.3 |
|
8.6 |
|
0.5 |
|
0.5 |
|
9.1 |
|
21.7 |
Other (Expense) Income, Net |
|
(0.1) |
|
0.5 |
|
(0.1) |
|
0.6 |
|
(0.1) |
|
0.2 |
|
— |
|
0.1 |
|
(0.3) |
|
1.4 |
Adjusted EBITDA |
|
|
|
|
|
$ 51.0 |
|
$ 64.4 |
|
$ 89.9 |
|
$ 46.7 |
|
$ 10.2 |
|
$ 9.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin % |
|
12.8 % |
|
6.3 % |
|
7.4 % |
|
9.7 % |
|
10.0 % |
|
(2.6) % |
|
(14.2) % |
|
2.0 % |
|
8.7 % |
|
5.6 % |
Adjusted Operating Margin % |
|
14.3 % |
|
16.6 % |
|
9.7 % |
|
10.7 % |
|
10.4 % |
|
9.0 % |
|
7.7 % |
|
3.7 % |
|
11.7 % |
|
11.6 % |
Adjusted EBITDA Margin % |
|
25.8 % |
|
29.3 % |
|
13.2 % |
|
13.7 % |
|
22.5 % |
|
23.0 % |
|
8.6 % |
|
6.7 % |
|
20.5 % |
|
19.7 % |
|
|
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. |
(b) |
The three months ended |
(c) |
Primarily relates to (1) legal, professional service and integration costs associated with the Altra Transaction and (2) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses. |
(d) |
Includes the impact related to the accelerated vesting of awards for certain former Altra employees in the first quarter 2023. |
NET INCOME TO ADJUSTED EBITDA |
|
|
||
Unaudited |
|
|
|
|
(Dollars in Millions) |
|
|
||
|
|
|
|
|
|
|
Three Months Ended |
||
|
|
|
|
|
Net Income (Loss) |
|
$ 20.4 |
|
$ (5.5) |
Plus: Income Taxes |
|
10.9 |
|
12.3 |
Plus: Interest Expense |
|
105.4 |
|
95.4 |
Less: Interest Income |
|
(3.1) |
|
(31.9) |
Plus: Depreciation |
|
41.5 |
|
30.2 |
Plus: Amortization |
|
86.7 |
|
46.3 |
EBITDA |
|
261.8 |
|
146.8 |
Plus: Restructuring and Related Costs (a) |
|
17.2 |
|
6.2 |
Plus: Share-Based Compensation Expense (b) |
|
9.1 |
|
21.7 |
Plus: Operating Lease Asset Step Up |
|
0.3 |
|
— |
Plus: Impairments and Exit Related Costs |
|
0.5 |
|
— |
Plus: Loss on Assets Held for Sale (c) |
|
21.5 |
|
— |
Less: Gain on Sale of Assets |
|
(0.8) |
|
(0.6) |
Plus: Transaction and Integration Related Costs (d) |
|
7.8 |
|
67.6 |
Adjusted EBITDA |
|
$ 317.4 |
|
$ 241.7 |
|
|
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. |
(b) |
Includes the impact related to the accelerated vesting of awards for certain former Altra employees in the first quarter 2023. |
(c) |
The three months ended |
(d) |
For 2024, primarily relates to (1) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses and (2) legal, professional service and integration costs associated with the Altra Transaction. For 2023, primarily relates to (1) legal, professional service, and certain other employee compensation costs associated with the Altra Transaction and integration and (2) legal and professional service costs associated with the sale of the industrial motors and generators businesses. |
DEBT TO EBITDA |
|
|
Unaudited |
|
|
(Dollars in Millions) |
Last Twelve Months |
|
|
|
|
Net Loss |
|
$ (28.4) |
Plus: Income Taxes |
|
51.3 |
Plus: Interest Expense |
|
441.0 |
Less: Interest Income |
|
(14.8) |
Plus: Depreciation |
|
177.0 |
Plus: Amortization |
|
348.2 |
EBITDA |
|
$ 974.3 |
Plus: Restructuring and Related Costs (a) |
|
95.4 |
Plus: Share-Based Compensation Expense |
|
45.6 |
Plus: Inventory and Operating Lease Asset Step Up |
|
54.8 |
Plus: Impairments and Exit Related Costs |
|
10.1 |
Plus: Loss on Assets Held for Sale (b) |
|
109.2 |
Plus: Goodwill Impairment |
|
57.3 |
Less: Gain on Sale of Assets |
|
(0.8) |
Plus: Transaction and Integration Related Costs (c) |
|
36.9 |
Adjusted EBITDA*(d) |
|
$ 1,382.8 |
|
|
|
Current Maturities of Long-Term Debt |
|
$ 3.9 |
Long-Term Debt |
|
6,242.0 |
Total Gross Debt |
|
$ 6,245.9 |
Cash (e) |
|
(522.4) |
Net Debt |
|
$ 5,723.5 |
|
|
|
Gross Debt/Adjusted EBITDA |
|
4.52 |
|
|
|
Net Debt/Adjusted EBITDA (d) |
|
4.14 |
|
|
|
Interest Coverage Ratio (d) |
|
3.24 |
|
|
|
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. Includes |
|
(b) |
Reflects the loss on assets held for sale of |
|
(c) |
Primarily relates to (1) legal, professional service, and certain other employee compensation costs associated with the Altra Transaction and integration and (2) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses. |
|
(d) |
Synergies expected to be realized in the future are included in the calculation of EBITDA that serves as the basis for financial covenant compliance for certain of the Company's debt. The Company expects to realize synergies of |
|
|
|
|
Adjusted EBITDA |
$ 1,382.8 |
|
Altra Synergies to be Realized Within 24 months |
115.0 |
|
Adjusted EBITDA (including synergies) |
$ 1,497.8 |
|
|
|
|
Net Debt/Adjusted EBITDA (including synergies) |
3.82 |
|
|
|
|
Interest Expense |
$ 441.0 |
|
Interest Income |
(14.8) |
|
Net Interest Expense |
$ 426.2 |
|
|
|
|
Interest Coverage Ratio(1) |
3.24 |
|
Interest Coverage Ratio (including synergies)(2) |
3.51 |
|
|
|
|
(1) Computed as Adjusted EBITDA/Net Interest Expense |
|
|
(2) Computed as Adjusted EBITDA (including synergies)/Net Interest Expense |
|
|
|
|
(e) |
This amount includes |
ADJUSTED FREE CASH FLOW |
|
|
|
|
Unaudited |
|
|
|
|
(Dollars in Millions) |
|
|
|
|
|
|
Three Months Ended |
||
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ 83.1 |
|
$ 106.2 |
Payments for Certain Acquisition Costs (Net of Tax of |
|
— |
|
86.9 |
Adjusted Cash Flows from Operations |
|
83.1 |
|
193.1 |
Additions to Property Plant and Equipment |
|
(18.5) |
|
(18.7) |
Adjusted Free Cash Flow |
|
$ 64.6 |
|
$ 174.4 |
|
|
|
|
|
(a) |
Reflects the payment of |
ADJUSTED EFFECTIVE TAX RATE |
|
|
|
Unaudited |
|
|
|
(Dollars in Millions) |
Three Months Ended |
||
|
|
|
|
Income before Taxes |
$ 31.3 |
|
$ 6.8 |
Provision for Income Taxes |
10.9 |
|
12.3 |
Effective Tax Rate |
34.8 % |
|
180.9 % |
|
|
|
|
Income before Taxes |
$ 31.3 |
|
$ 6.8 |
Intangible Amortization |
86.7 |
|
46.3 |
Restructuring and Related Costs (a) |
17.2 |
|
6.2 |
Share-Based Compensation Expense (b) |
9.1 |
|
21.7 |
Operating Lease Asset Step Up |
0.3 |
|
— |
Impairments and Exit Related Costs |
0.5 |
|
— |
Loss on Assets Held for Sale (c) |
21.5 |
|
— |
Gain on Sale of Assets |
(0.8) |
|
— |
Transaction and Integration Related Costs (d) |
7.8 |
|
105.8 |
Adjusted Income before Taxes* |
$ 173.6 |
|
$ 186.2 |
|
|
|
|
Provision for Income Taxes |
$ 10.9 |
|
$ 12.3 |
Tax Effect of Intangible Amortization |
21.0 |
|
11.4 |
Tax Effect of Restructuring and Related Costs |
4.1 |
|
1.6 |
Tax Effect of Share-Based Compensation Expense |
2.1 |
|
1.2 |
Tax Effect of Operating Lease Asset Step Up |
0.1 |
|
— |
Tax Effect of Impairments and Exit Related Costs |
0.1 |
|
— |
Tax Effect of Gain on Sale of Assets |
(0.1) |
|
(0.1) |
Tax Effect of Transaction and Integration Related Costs |
1.9 |
|
18.3 |
Discrete Tax Items |
(0.6) |
|
(6.5) |
Adjusted Provision for Income Taxes* |
$ 39.5 |
|
$ 38.2 |
|
|
|
|
Adjusted Effective Tax Rate* |
22.8 % |
|
20.5 % |
(a) |
Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset charges. |
(b) |
Includes the impact related to the accelerated vesting of awards for certain former Altra employees in the first quarter 2023. |
(c) |
The three months ended |
(d) |
For 2024, primarily relates to (1) legal, professional service, and rebranding costs associated with the sale of the industrial motors and generators businesses and (2) legal, professional service and integration costs associated with the Altra Transaction. For 2023, primarily relates to (1) legal, professional service, severance, certain other employee compensation and financing costs and incremental net interest expense on new debt associated with the Altra Transaction and integration and (2) legal and professional service costs associated with the sale of the industrial motors and generators businesses. |
ORGANIC SALES GROWTH |
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||
|
|
Industrial |
|
Power Efficiency |
|
Automation & |
|
Industrial Systems |
|
Total |
Net Sales Three Months Ended |
|
$ 643.4 |
|
$ 385.3 |
|
$ 400.2 |
|
$ 118.8 |
|
$ 1,547.7 |
|
|
(243.2) |
|
— |
|
(199.3) |
|
— |
|
(442.5) |
Impact from Foreign Currency Exchange Rates |
|
0.1 |
|
0.7 |
|
(0.8) |
|
0.9 |
|
0.9 |
Organic Sales Three Months Ended |
|
$ 400.3 |
|
$ 386.0 |
|
$ 200.1 |
|
$ 119.7 |
|
$ 1,106.1 |
|
|
|
|
|
|
|
|
|
|
|
Net Sales Three Months Ended |
|
$ 414.4 |
|
$ 469.5 |
|
$ 203.2 |
|
$ 137.0 |
|
$ 1,224.1 |
Adjusted Net Sales Three Months Ended |
|
$ 414.4 |
|
$ 469.5 |
|
$ 203.2 |
|
$ 137.0 |
|
$ 1,224.1 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
(3.4) % |
|
(17.8) % |
|
(1.5) % |
|
(12.6) % |
|
(9.6) % |
Three Months Ended |
|
55.3 % |
|
(17.9) % |
|
96.9 % |
|
(13.3) % |
|
26.4 % |
|
|
|
|
|
|
|
|
|
|
|
PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) |
|||||||||||
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|||||||||
|
|
Industrial |
|
Power Efficiency |
|
Automation & |
|
Industrial Systems |
|
Total |
|
Net Sales Three Months Ended |
|
$ 643.4 |
|
$ 385.3 |
|
$ 400.2 |
|
$ 118.8 |
|
$ 1,547.7 |
|
Impact from Foreign Currency Exchange Rates |
|
(0.9) |
|
0.7 |
|
0.8 |
|
0.9 |
|
1.5 |
|
Pro Forma Organic Sales Three Months Ended |
|
$ 642.5 |
|
$ 386.0 |
|
$ 401.0 |
|
$ 119.7 |
|
$ 1,549.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales Three Months Ended |
|
$ 414.4 |
|
$ 469.5 |
|
$ 203.2 |
|
$ 137.0 |
|
$ 1,224.1 |
|
|
|
234.5 |
|
— |
|
216.6 |
|
— |
|
451.1 |
|
Pro Forma Adjusted Net Sales Three Months Ended |
|
$ 648.9 |
|
$ 469.5 |
|
$ 419.8 |
|
$ 137.0 |
|
$ 1,675.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
(1.0) % |
|
(17.8) % |
|
(4.5) % |
|
(12.6) % |
|
(7.5) % |
|
Three Months Ended |
|
(0.8) % |
|
(17.9) % |
|
(4.7) % |
|
(13.3) % |
|
(7.6) % |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED GROSS MARGIN |
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
Three Months Ended |
|||||||||
|
|
|
||||||||
|
|
Industrial |
|
Power Efficiency |
|
Automation & |
|
Industrial Systems |
|
Total |
|
|
$ 643.4 |
|
$ 385.3 |
|
$ 400.2 |
|
$ 118.8 |
|
$ 1,547.7 |
|
|
|
|
|
|
|
|
|
|
|
Gross Margin |
|
$ 264.8 |
|
$ 99.3 |
|
$ 159.9 |
|
$ 29.1 |
|
$ 553.1 |
Restructuring and Related Costs (a) |
|
2.2 |
|
7.3 |
|
0.6 |
|
1.6 |
|
11.7 |
Operating Lease Asset Step Up |
|
0.3 |
|
— |
|
— |
|
— |
|
0.3 |
Adjusted Gross Margin |
|
$ 267.3 |
|
$ 106.6 |
|
$ 160.5 |
|
$ 30.7 |
|
$ 565.1 |
|
|
|
|
|
|
|
|
|
|
|
Gross Margin % |
|
41.2 % |
|
25.8 % |
|
40.0 % |
|
24.5 % |
|
35.7 % |
Adjusted Gross Margin % |
|
41.5 % |
|
27.7 % |
|
40.1 % |
|
25.8 % |
|
36.5 % |
|
|
(a) |
Relates to costs associated with actions taken for facility consolidations and site closures, product line exits and other asset charges. |
PRO FORMA ADJUSTED GROSS MARGIN |
|
|
Unaudited |
|
|
(Dollars in Millions) |
|
|
|
|
Three Months Ended |
|
|
|
Pro |
|
$ 1,675.2 |
|
|
|
Pro Forma Gross Margin |
|
$ 554.9 |
Pro Forma Restructuring and Related Costs (a) |
|
6.8 |
Pro Forma Adjusted Gross Margin |
|
$ 561.7 |
|
|
|
Pro Forma Gross Margin % |
|
33.1 % |
Pro Forma Adjusted Gross Margin % |
|
33.5 % |
|
|
(a) |
Relates to costs associated with actions taken for facility consolidations and site closures, product line exits and other asset charges. |
PRO FORMA ADJUSTED GROSS MARGIN |
|
|
|
|
Unaudited |
|
|
|
|
(Dollars in Millions) |
|
|||
|
|
|
|
|
The following pro forma adjusted gross margin has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction as if it had occurred on |
||||
|
|
|
|
|
|
Regal Rexnord Three |
Altra |
Transaction |
Pro forma |
Gross Margin |
398.1 |
162.2 |
(5.4) |
554.9 |
Restructuring and Related Costs(1) |
5.6 |
1.2 |
— |
6.8 |
Adjusted Gross Margin |
403.7 |
163.4 |
(5.4) |
561.7 |
|
|
|
|
|
|
|
|
|
|
(1) Represents restructuring and related costs in Cost of Sales. |
||||
(2) Represents incremental depreciation expense relating to the step-up in fair value of Property, Plant and Equipment in Cost of Sales. |
PRO FORMA NET INCOME TO ADJUSTED EBITDA |
|
Unaudited |
|
(Dollars in Millions) |
|
|
|
|
Three Months Ended |
|
Mar 31, 2023 |
Pro |
$ 1,675.2 |
Pro Forma Adjusted |
$ 1,675.2 |
|
|
Pro Forma Net Loss |
$ (37.6) |
Plus: Income Taxes |
4.5 |
Plus: Interest Expense |
127.7 |
Less: Interest Income |
(2.7) |
Plus: Depreciation |
46.0 |
Plus: Amortization |
87.1 |
Pro Forma EBITDA |
225.0 |
Plus: Restructuring and Related Costs |
7.6 |
Plus: Share-Based Compensation Expense |
25.3 |
Plus: Loss on Assets Held for Sale and Gain on Sale of Assets |
(0.6) |
Plus: Transaction and Integration Related Costs |
69.8 |
Pro Forma Adjusted EBITDA |
$ 327.1 |
|
|
Pro Forma Adjusted EBITDA Margin % |
19.5 % |
|
|
PRO FORMA NET LOSS |
|
|
|
|
|
Unaudited |
|
|
|
|
|
(Dollars in Millions) |
|
||||
|
|
|
|
|
|
The following pro forma net (loss) income has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on |
|||||
|
|
|
|
|
|
|
|
Altra |
Transaction |
Transaction |
Pro forma |
Net (Loss) Income |
(5.5) |
31.4 |
(12.0) |
(51.5) |
(37.6) |
|
|
|
|
|
|
Note 1 - Pro forma Transaction Accounting Adjustments - Altra Transaction |
|
|
|
||
Property, Plant and Equipment Depreciation Step Up(1) |
$ (6.7) |
|
|
||
Incremental Charge in Amortization of Intangible Assets(2) |
(28.0) |
|
|
||
Removal of Historical Altra Interest Expense(3) |
15.3 |
|
|
||
Tax Impact |
|
|
7.4 |
|
|
|
|
|
(12.0) |
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(1) Adjustment for incremental depreciation expense relating to the estimated preliminary step-up in fair value of Property, Plant and Equipment |
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(2) Adjustment for incremental amortization expense relating to the estimated preliminary fair value of intangible assets recognized in the Altra Transaction |
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(3) Adjustment to remove interest expense related to the Altra debt that was settled in connection with the Altra Transaction |
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Note 2 - Pro forma Transaction Accounting Adjustments - Debt Financing |
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New Interest Expense on Debt Financing(4) |
$ (31.8) |
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Removal of Interest Income(5) |
(29.4) |
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Tax Impact |
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9.7 |
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(51.5) |
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(4) Adjustment to recognize interest expense on the new debt related to the Altra Transaction |
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(5) Adjustment to remove interest income associated with income earned on the investment of the proceeds of the debt financing prior to the close of the Altra Transaction during the three months ended |
View original content:https://www.prnewswire.com/news-releases/regal-rexnord-reports-first-quarter-2024-financial-results-302137221.html
SOURCE