REGAL REXNORD CORPORATION REPORTS STRONG SECOND QUARTER 2022 FINANCIAL RESULTS
Regal Rexnord Corporation (NYSE: RRX) reported a robust second quarter, with sales soaring by 52% year-over-year and 12% organically. Despite a 2% decline in daily orders, backlog increased by over 50% since early 2021, maintaining a strong book-to-bill ratio. Adjusted EBITDA margins improved by 230 basis points to 21.0%, supported by synergies from recent acquisitions. The company raised its 2022 adjusted EPS guidance to a range of $10.20 to $10.80, reflecting ongoing growth and operational improvements.
- Sales increased by 52% year-over-year and 12% organically.
- Adjusted EBITDA margin improved by 230 basis points to 21.0%.
- Raised 2022 adjusted EPS guidance to $10.20 to $10.80.
- Backlog increased by over 50% compared to early 2021.
- Strong performance in multiple segments, particularly Motion Control.
- Daily orders decreased by 2% year-over-year on a pro forma basis.
- Margin pressures in Climate Solutions due to strategic over-serving of key customers.
BELOIT, Wis., Aug. 1, 2022 /PRNewswire/ -- Regal Rexnord Corporation (NYSE: RRX)
Second Quarter Highlights
- Sales Up
52% Versus PY And Up12% 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
"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
Segment Performance
Second quarter 2022 segment results versus the prior year:
- Motion Control Solutions segment net sales were
$599.3 million , an increase of178.6% , or6.4% 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 was26.4% of adjusted net sales*. - Climate Solutions net sales were
$293.5 million , an increase of14.1% , or14.8% on an organic basis. Adjusted EBITDA margin was17.1% 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 of12.1% , or14.6% 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 was16.5% of adjusted net sales*. - Industrial Systems net sales were
$154.7 million , an increase of6.5% , or9.4% on an organic basis. Primary drivers included strength and outgrowth in Americas general industrial markets, and strong price realization. Adjusted EBITDA margin was16.2% 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, | Jul 3, | Jun 30, | Jul 3, | |||||
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 | 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 | ||||||||
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 | Industrial | Climate | Motion Control | Total Regal | ||||||||||||||||
Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | |||||||||||
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 | Industrial | Climate | Motion Control | Total Regal | ||||||||||||||||
Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | |||||||||||
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, | Jul 3, | Jun 30, | Jul 3, | |||||
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 | Industrial | Climate | Motion Control | Total Regal | |||||||||||||||
(Dollars in Millions) | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | ||||||||||
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 | Industrial | Climate | Motion Control | Total Regal | |||||||||||||||
(Dollars in Millions) | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | Jun 30, | Jul 3, | ||||||||||
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 | $ 296.9 | $ 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 | $ 303.8 | $ 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, | Jul 3, | Jun 30, | Jul 3, | |||||
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, | Jul 3, | Jun 30, | Jul 3, | |||||
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 % | |||||
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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