Regal Rexnord : RRX Investor Presentation - March 2025

Published: 2025-03-17 09:14:05 ET RRX

INVESTOR PRESENTATION, MARCH 2025

Why Invest in RRX

High Secular Exposures

Technology Differentiated Products

Strong Brands & Channel Positions

Robust Aftermarket Sales

Advantaged Global Footprint

Highly Cash Generative

Organic Sales Out-Growth Poised to Accelerate

Expect increasingly consistent above-market organic growth

by harnessing the power of our transformed portfolio and go-to-market

Tracking to Top Quartile Margins

Expect Adj. gross margin of 40%, and Adj. EBITDA margin approaching 25% exiting 2025, plus potential upside beyond

Strong Earnings Growth Outlook

Target low double digit Adj. EPS CAGR over the 2024-2027 forecast period

~$900M/~$1.0B Adjusted FCF in 2026/2027

Expect Adj. FCF margins in the low- to mid-teens, supporting significant balance sheet de-levering followed by robust inorganic growth

Our Transformed RRX Portfolio is Positioned for Faster and More Durable Growth

Transformation Across All Key Metrics

2018

From

2024

~$4B

Enterprise Value

~$16B

77%

7 - 9x

EV/EBITDA Multiple*

10 - 12x

28%

$3.6B

Adj. Net Sales*

~$5.9B2

~24%

Customer Concentration1

~11%

~27%

Adj. Gross Margin*

~38%2

~15%

Adj. EBITDA Margin*

~22%2

23%

$285M

Adj. Free Cash Flow*

~$512M

44%

~8%

Adj. FCF Margin*

~9%

Power Transmission (PTS Segment)

Automation & Motion Control (AMC)

Motors & Air Moving (C&I, Climate)

Power Transmission (IPS)

Motors & Air Moving (PES)

1 Sales from top 10 OEM customers

2 Pro forma for the acquisition of Altra and giving effect to the sale of Industrial Systems

* Non-GAAP financial measure. For reconciliation, see appendix to September 17, 2024 investor day materials available at https://investors.regalrexnord.com.

Repositioned for Top Quartile Performance

Org

Structure

Simplification

New

Product

Development

Digital

2018 & Prior

Today & Going Forward

Centralized Operating Structure

Decentralized - 14 Business Units Led by P&L Owners

Global Operating Footprint of ~11M+ sq. ft.

Down ~18% (2024), Further reduction >15% (2027E)

SKU Proliferation

Significant 80/20 Product Line Simplification

Components Focused, LSD% Solutions Sales

Solutions Focused, HSD% of Sales (2024), Rising to HT% (2027E)

"If You Build It…" Approach to NPD

NPD Driven by VOC & 80/20 Principles

RD&E <2%

RD&E >3% (2025E and Ongoing)

Product Vitality1 ~5%

Vitality at ~10% (2024), Rising to ~20% (2027E)

Nascent Digital Capability

More Advanced Digital Platforms

Organization Positioned to Accelerate Growth, Especially in Secular Markets

1 Vitality calculated as percent of OEM sales from products released in the past three years

Regal Rexnord Snapshot1 (NYSE: RRX)

~$5.9B

~38%

~22%

~30,000

Total Revenue

Adj. Gross Margin*

Adj. EBITDA Margin*

Associates

POWER MOTION

POWER EFFICIENCY SOLUTIONS

(PES)

High Efficiency Electric Motors

Premium Efficiency Air

Premium Efficiency

Moving Systems

Motors

TRANSMIT MOTION

INDUSTRIAL POWERTRAIN SOLUTIONS

(IPS)

Power Transmission Components

Bearings

Couplings

Gearing

Industrial Powertrains

Clutches & Brakes

CONTROL MOTION

AUTOMATION & MOTION CONTROL

(AMC)

High Precision Servo Motors, Actuators, Drives

Linear

Actuators

Servo Drives & Systems

Servo Motors

Primary

Discrete 10%

Medical,

Primary 11%

Data Center, 7%

Markets C-HVAC,

Markets

Energy,

C-HVAC 6%

Markets

21%

General

17%

Automation,

25%

Commercial,

46%

R-HVAC,

33%

G.I.,

Metals &

Mining,

42%

25%

G.I., 15%

Food &

Aero, Bev.,

20% 22%

~$1.6B Sales | ~30% Adj. GM* | ~16% Adj. EBITDA Margin*

~$2.6B Sales | ~42% Adj. GM* | ~26% Adj. EBITDA Margin*

~$1.6B Sales | ~40% Adj. GM* | ~22% Adj. EBITDA Margin*

1 2024 data, giving effect to the sale of Industrial Systems

* Non-GAAP financial measure. For reconciliation, see appendix to September 17, 2024 investor day materials available at https://investors.regalrexnord.com.

The Next Stage In Our Transformation Journey

2024

From

2027E

~$5.9B1

Adj. Net Sales*

~$6.4 to ~$7.0B

28%

~2.2%

Sales CAGR

2 - 5%

28%

30%

('19 - '23)

('24E - '27E)

~38%1

Adj. Gross Margin*

~40%

~22%1

Adj. EBITDA Margin*

~25%

44%

HSD

Free Cash Flow Margin*

Low-Mid Teens

42%

Automation & Motion Control (AMC)

Power Transmission (IPS)

Motors & Air Moving (PES)

* Non-GAAP financial measure. For reconciliation, see appendix to September 17, 2024 investor day materials available at https://investors.regalrexnord.com.

We Benefit From Sustainable Competitive Advantages

Flexible, Global

Portfolio Breadth & Scale

Scale & Scope of GTM

Manufacturing Footprint

Secular Market Exposure

Brands - Differentiated

Deep Domain Expertise

Product & Technology

Clear Plans to Accelerate Portfolio Wide Organic Growth

2019-2023

Mid-Cycle

Segment

Organic Growth1

Growth Target

AMC

~4.4%

IPS

~2.5%

PES

~0%

RRX ~2.2% ~4%

Key Drivers of Growth Outlook

1 Adjusted to include Rexnord PMC, Arrowhead and Altra sales performance in the 2019-2023 period

RRX Growth Algorithm:

Evolving as a Growth Compounder

Target High Growth Markets

Growth investments aligned to secular and mega trends

Solution Selling

Moving up the value chain from components

Raise Business Durability

Strategies to reduce cyclicality

Leverage Unrivaled Scale & Scope

Our transformed portfolio enables unique customer value propositions

Accelerated by the Regal Rexnord Business System

Disclaimer

Regal Rexnord Corporation published this content on March 17, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 17, 2025 at 13:13:06.610.