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REGAL REXNORD CORPORATION HOSTS 2024 INVESTOR CONFERENCE, INTRODUCES NEW THREE YEAR FINANCIAL TARGETS

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Regal Rexnord (NYSE: RRX) hosted its 2024 Investor Day, introducing new three-year financial targets. The company maintained its 2024 guidance with sales of $6.2 billion and adjusted diluted EPS of $9.40 to $9.80, but now expects results in the lower half of the range. For 2024-2027, RRX targets:

- Organic net sales growth at 2% to 5% CAGR
- Adjusted gross margins rising to ~40% by 2025
- Adjusted EBITDA margins increasing to ~25% by 2025
- Adjusted diluted EPS growth at low double-digit CAGR
- Adjusted free cash flow margins in low- to mid-teens by 2027
- Net leverage declining to ~2.5x in 2025 and 1.5-2.0x by 2027

CEO Louis Pinkham emphasized opportunities for significant shareholder value creation through organic growth initiatives, margin expansion, and potential inorganic growth.

Regal Rexnord (NYSE: RRX) ha ospitato il suo Investor Day 2024, introducendo nuovi obiettivi finanziari triennali. L'azienda ha mantenuto la sua guida per il 2024 con vendite di 6,2 miliardi di dollari e un utile per azione diluito rettificato compreso tra 9,40 e 9,80 dollari, ma si aspetta ora risultati nella parte inferiore dell'intervallo. Per il periodo 2024-2027, RRX punta a:

- Crescita delle vendite nette organiche tra il 2% e il 5% CAGR
- Margini lorde rettificati in aumento fino a ~40% entro il 2025
- Margini EBITDA rettificati incrementando fino a ~25% entro il 2025
- Crescita dell'utile per azione diluito rettificato a bassa cifra a doppio dito CAGR
- Margini di flusso di cassa libero rettificato nei bassi- e medi-digits entro il 2027
- Leverage netto in calo fino a ~2,5x nel 2025 e tra 1,5-2,0x entro il 2027

Il CEO Louis Pinkham ha sottolineato le opportunità per una significativa creazione di valore per gli azionisti attraverso iniziative di crescita organica, espansione dei margini e potenziale crescita inorganica.

Regal Rexnord (NYSE: RRX) llevó a cabo su Día del Inversor 2024, presentando nuevos objetivos financieros a tres años. La compañía mantuvo su guía para 2024 con ventas de 6.2 mil millones de dólares y un EPS diluido ajustado de 9.40 a 9.80 dólares, pero ahora espera resultados en la mitad inferior del rango. Para el periodo 2024-2027, RRX tiene como objetivo:

- Crecimiento de ventas netas orgánicas entre 2% y 5% CAGR
- Márgenes brutos ajustados aumentando a ~40% para 2025
- Márgenes EBITDA ajustados incrementándose a ~25% para 2025
- Crecimiento del EPS diluido ajustado de dígitos bajos a de doble dígito CAGR
- Márgenes de flujo de caja libre ajustado en los dígitos bajos a medios para 2027
- Apalancamiento neto disminuyendo a ~2.5x en 2025 y a 1.5-2.0x para 2027

El CEO Louis Pinkham enfatizó las oportunidades para una creación significativa de valor para los accionistas a través de iniciativas de crecimiento orgánico, expansión de márgenes y un posible crecimiento inorgánico.

레갈 렉스노드 (NYSE: RRX)는 2024 투자자 데이를 개최하며 새로운 3년 재무 목표를 소개했습니다. 회사는 2024년 가이던스를 유지하며 62억 달러 매출 및 조정 후 희석 EPS 9.40~9.80 달러로 제시했지만, 이제 범위 하단에서 결과를 예상하고 있습니다. 2024-2027년 동안 RRX는 다음과 같은 목표를 세웁니다:

- 유기적 순매출 성장 2%~5% CAGR
- 조정된 총 이익률 2025년까지 약 40%까지 상승
- 조정된 EBITDA 마진 2025년까지 약 25%로 증가
- 조정된 희석 EPS 성장 저두 자릿 수 CAGR
- 조정된 자유 현금 흐름 마진 2027년까지 저-중간 자릿 수
- 넷 레버리지 2025년까지 약 2.5x, 2027년까지 1.5-2.0x로 감소

CEO 루이 핑캄은 유기적 성장 이니셔티브, 마진 확대 및 잠재적 비유기적 성장을 통해 주주 가치를 크게 창출할 수 있는 기회를 강조했습니다.

Regal Rexnord (NYSE: RRX) a organisé sa Journée des Investisseurs 2024 et a présenté de nouveaux objectifs financiers triennaux. L'entreprise a maintenu ses prévisions 2024 avec des ventes de 6,2 milliards de dollars et un BPA dilué ajusté compris entre 9,40 et 9,80 dollars, mais elle s'attend désormais à des résultats dans la moitié inférieure de la fourchette. Pour 2024-2027, RRX vise à :

- Croissance des ventes nettes organiques de 2% à 5% CAGR
- Marges brutes ajustées augmentant à ~40% d'ici 2025
- Marges EBITDA ajustées atteignant ~25% d'ici 2025
- Croissance du BPA dilué ajusté à faible chiffre à double chiffre CAGR
- Marges de flux de trésorerie libre ajustées dans les faibles à moyens chiffres jusqu'en 2027
- Effet de levier net déclinant à ~2,5x en 2025 et entre 1,5-2,0x d'ici 2027

Le CEO Louis Pinkham a souligné les opportunités de création significative de valeur pour les actionnaires grâce à des initiatives de croissance organique, l'expansion des marges et une croissance potentiellement inorganique.

Regal Rexnord (NYSE: RRX) veranstaltete seinen Investorentag 2024 und stellte neue finanzielle Zielvorgaben für drei Jahre vor. Das Unternehmen bestätigte seine Prognose für 2024 mit Umsätzen von 6,2 Milliarden Dollar und einem ajustierten verwässerten EPS von 9,40 bis 9,80 Dollar, erwartet jedoch jetzt Ergebnisse im unteren Bereich der Spanne. Für 2024-2027 zielt RRX auf folgende Ziele:

- Organisches Umsatzwachstum von 2% bis 5% CAGR
- Adjusted Bruttomargen, die bis 2025 auf ~40% steigen
- Adjusted EBITDA-Margen, die bis 2025 auf ~25% steigen
- Wachstum des ajustierten verwässerten EPS im niedrigen zweistelligen CAGR
- Adjusted freie Cashflow-Margen im niedrigen bis mittleren Teenbereich bis 2027
- Netto-Leverage, das bis 2025 auf ~2,5x und bis 2027 auf 1,5-2,0x sinkt

CEO Louis Pinkham betonte die Möglichkeiten zur Schaffung erheblicher Shareholder-Werte durch organisches Wachstum, Margenexpansion und potenzielles anorganisches Wachstum.

Positive
  • Organic net sales growth target of 2% to 5% CAGR from 2024 to 2027
  • Adjusted gross margins expected to rise to ~40% by 2025
  • Adjusted EBITDA margins projected to increase to ~25% by 2025
  • Adjusted diluted EPS growth targeted at low double-digit CAGR
  • Adjusted free cash flow margins expected to reach low- to mid-teens by 2027
  • Net leverage projected to decline to 1.5-2.0x by 2027
Negative
  • Company now expects results in the lower half of the 2024 guidance range
  • Net leverage of ~2.5x in 2025 indicates significant debt levels in the near term

Insights

Regal Rexnord's investor conference reveals a mixed outlook. While maintaining 2024 guidance, they now lean towards the lower end of their earnings range, signaling near-term challenges. However, their 2024-2027 targets paint a more optimistic picture:

  • Organic sales CAGR of 2% to 5%
  • Adjusted gross margins rising to ~40%
  • Adjusted EBITDA margins increasing to ~25%
  • Low double-digit adjusted EPS growth

These targets suggest potential for margin expansion and steady growth. The focus on deleveraging, with net leverage targeted at 1.5-2.0x by 2027, indicates a strengthening balance sheet. However, investors should note the reliance on adjusted metrics and monitor GAAP performance closely.

Regal Rexnord's strategy aligns with key market trends in industrial automation and sustainable energy solutions. Their focus on factory automation, alternative energy and data centers positions them well in high-growth sectors. The company's emphasis on organic growth initiatives suggests a shift from recent acquisition-driven expansion. This approach may lead to more sustainable, long-term value creation. However, the modest 2-5% organic growth target raises questions about market share gains in competitive industries. Investors should watch for concrete plans to outpace market growth and capitalize on secular trends in electrification and automation.

MILWAUKEE, Sept. 17, 2024 /PRNewswire/ -- Regal Rexnord Corporation (NYSE: RRX) is hosting its 2024 Investor Day today at The Mandarin Oriental Hotel in New York City beginning at 8:30 AM ET. A live webcast of the event will be accessible on the Company's investor relations website at investors.regalrexnord.com.

CEO Louis Pinkham, CFO Rob Rehard, and other members of the executive leadership team will discuss the Company's strategic growth objectives, including plans to accelerate profitable organic sales growth, continue to expand adjusted gross margins and adjusted EBITDA margins, grow free cash flow, and drive significant potential value creation through various capital deployment initiatives.

In conjunction with today's event, the Company is maintaining its previously announced annual 2024 guidance, including sales of $6.2 billion, GAAP diluted earnings per share in a range of $3.70 to $4.10, and adjusted diluted earnings per share* in a range of $9.40 to $9.80. However, based on recent performance, the Company now believes that the lower half of the outlook range is more likely.

The Company is also introducing the following financial targets for the 2024 to 2027 period:

  • Organic net sales growth at a CAGR of 2% to 5%
  • Adjusted gross margins** rising to ~40% exiting 2025 and remaining steady thereafter
  • Adjusted EBITDA margins** rising to ~25% exiting 2025 and remaining steady thereafter
  • Adjusted diluted earnings per share** growth at a low double digit CAGR
  • Adjusted free cash flow margins** in the low- to mid-teens by 2027
  • Net leverage** declining to ~2.5x in 2025 and to 1.5–2.0x by 2027

Commenting on the Company's three-year outlook, CEO Louis Pinkham said: "We see many opportunities to create significant value for shareholders by capitalizing on the strengths of our enterprise, which over the last five years we have dramatically transformed, through organic and inorganic actions, to be increasingly durable, high-margin, and cash generative. As we will discuss in some detail at our investor meeting today, our teams are working on a wide range of compelling initiatives to accelerate organic growth. We also see a clear path to top quartile gross, EBITDA and cash flow margins, ROIC expansion, and meaningful opportunities to create value through de-levering and, over time, inorganic growth. In short, we believe Regal Rexnord presents a highly compelling value creation opportunity, underpinned by lots of controllable execution."  

Supplemental Materials
Supplemental materials and additional information will be accessible on Regal Rexnord's Investor website: https://investors.regalrexnord.com. The Company intends to disseminate important information about the Company to its investors on the Investors section of its website: https://investors.regalrexnord.com. Investors are advised to look at Regal Rexnord's website for future important information about the Company.

About Regal Rexnord
Regal Rexnord's 30,000 associates around the world help create a better tomorrow by providing sustainable solutions that power, transmit and control motion. The Company's electric motors and air moving subsystems provide the power to create motion. A portfolio of highly engineered power transmission components and subsystems efficiently transmits motion to power industrial applications. The Company's automation offering, comprised of controls, actuators, drives, and precision motors, controls motion in applications ranging from factory automation to precision control in surgical tools.

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.

Regal Rexnord is comprised of three operating segments: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control. Regal Rexnord is headquartered in Milwaukee, Wisconsin and has manufacturing, sales and service facilities worldwide. For more information, including a copy of our Sustainability Report, visit RegalRexnord.com.

* Non-GAAP Financial Measure, See Appendix for Reconciliation to the most directly comparable GAAP financial measure.
** Regal Rexnord does not provide a reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because it is unable to predict certain adjustment items without unreasonable effort.

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," "target, " "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 expected market or macroeconomic trends, 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 Industrial Motors and Generators businesses, the acquisition of Altra Industrial Motion Corp. ("Altra Transaction"), and the merger with the Rexnord Process & Motion Control business (the "Rexnord PMC business") within the expected time-frames or at all and to successfully integrate Altra Industrial Motion Corp. ("Altra") and the Rexnord PMC business; the Company's substantial indebtedness as a result of the Altra Transaction and the effects of such indebtedness on the Company's financial flexibility; the Company's ability to achieve its objectives on reducing its indebtedness on the desired timeline; 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; unanticipated operating costs, customer loss or business disruption; the Company's ability to retain key executives and employees; uncertainties regarding our ability to execute restructuring plans within expected costs and timing; challenges to the tax treatment that was elected with respect to the merger with the Rexnord PMC business and related transactions; actions taken by competitors and our ability to effectively compete in the increasingly competitive global electric motor, drives and controls, power generation and power transmission industries; our ability to develop new products based on technological innovation, such as the Internet of Things and artificial intelligence, and marketplace acceptance of new and existing products; dependence on significant customers and distributors; risks associated with climate change and uncertainty regarding our ability to deliver on our sustainability commitments and/or to meet related investor, customer and other third party expectations relating to our sustainability efforts; risks associated with global manufacturing, including risks associated with public health crises and political, societal or economic instability, including instability caused by ongoing geopolitical conflicts; issues and costs arising from the integration of acquired companies and businesses; prolonged declines in one or more markets; risks associated with excess or obsolete inventory charges, including related write-offs or write-downs; 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 the Company 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; unanticipated liabilities of acquired businesses; unanticipated adverse effects or liabilities from business exits or divestitures; the Company's ability to identify and execute on future M&A opportunities, including significant M&A transactions; the impact of any such M&A transactions on the Company's results, operations and financial condition, including the impact from costs to execute and finance any such transactions; 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; costs and unanticipated liabilities arising from rapidly evolving laws and regulations; and other factors that can be found in our filings with the SEC, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Measures 
(Unaudited)
(Dollars in Millions, Except per Share Data)
We prepare our 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 release, we disclose certain non-GAAP forward-looking information, including adjusted targets such as gross margin, EBITDA margin, diluted earnings per share, free cash flow margin and net leverage. We believe that these forward-looking non-GAAP financial measures are useful measures for providing investors with additional information regarding our financial targets. 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" 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 divested businesses 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.

Appendix

 

2024 ADJUSTED ANNUAL GUIDANCE





Unaudited












Minimum


Maximum

2024 GAAP Diluted EPS Annual Guidance


$                           3.70


$                           4.10

Intangible Amortization


3.92


3.92

Restructuring and Related Costs (a)


0.68


0.68

Share-Based Compensation Expense


0.51


0.51

Operating Lease Asset Step Up


0.01


0.01

Impairments and Exit Related Costs


0.02


0.02

Loss on Sale of Businesses


0.06


0.06

Gain on Sale of Assets


(0.01)


(0.01)

Transaction and Integration Related Costs (b)


0.26


0.26

Discrete Tax Items


0.25


0.25

2024 Adjusted Diluted EPS Annual Guidance


$                           9.40


$                           9.80

 

(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 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.

 

Cision View original content:https://www.prnewswire.com/news-releases/regal-rexnord-corporation-hosts-2024-investor-conference-introduces-new-three-year-financial-targets-302249433.html

SOURCE Regal Rexnord Corporation

FAQ

What are Regal Rexnord's (RRX) sales projections for 2024?

Regal Rexnord (RRX) maintains its 2024 sales guidance of $6.2 billion.

What is Regal Rexnord's (RRX) adjusted diluted EPS guidance for 2024?

RRX's adjusted diluted EPS guidance for 2024 is $9.40 to $9.80, with expectations now in the lower half of this range.

What organic net sales growth is Regal Rexnord (RRX) targeting for 2024-2027?

Regal Rexnord (RRX) is targeting organic net sales growth at a CAGR of 2% to 5% for the 2024-2027 period.

What are Regal Rexnord's (RRX) adjusted gross margin targets by 2025?

RRX aims to increase adjusted gross margins to approximately 40% by the end of 2025.

What is Regal Rexnord's (RRX) net leverage target for 2027?

Regal Rexnord (RRX) targets a net leverage ratio of 1.5-2.0x by 2027.

Regal Rexnord Corporation

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Specialty Industrial Machinery
General Industrial Machinery & Equipment, Nec
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MILWAUKEE