Document
false0000082811 0000082811 2020-08-03 2020-08-03


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________

FORM 8-K
_______________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    August 3, 2020
_______________________

              Regal Beloit Corporation             
(Exact name of registrant as specified in its charter)

Wisconsin
1-7283
39-0875718
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

          200 State Street, Beloit, Wisconsin 53511-6254           
(Address of Principal Executive Offices, Including Zip Code)

Registrant's Telephone Number: (608) 364-8800

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
_______________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading symbol
Name of each exchange on which registered
Common Stock
RBC
New York Stock Exchange





Item 2.02    Results of Operations and Financial Condition.

On August 3, 2020, Regal Beloit Corporation (the "Company") issued a news release reporting the financial results of the Company for its second quarter ended June 27, 2020. A copy of the Company's news release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01    Regulation FD Disclosure.

The Company will hold a conference call at 10:00 a.m. ET on August 4, 2020 to discuss its financial results for its second quarter ended June 27, 2020 and will provide a presentation in connection therewith. A copy of the Company's conference call presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01.    Financial Statements and Exhibits.
(a)
Not Applicable
(b)
Not Applicable
(c)
Not Applicable
(d)
Exhibits. The following exhibits are being furnished herewith:

Exhibit Index
Exhibit Number
 
Exhibit Description
99.1
 
99.2
 
104.1
 
Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document).







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

REGAL BELOIT CORPORATION


Date: August 3, 2020          By: /s/ Thomas E. Valentyn                
Thomas E. Valentyn
Vice President, General Counsel and Secretary




  regallogopurplewhitea08.jpg
newsreleaseimagea14.jpg

FOR RELEASE ON: August 3, 2020        

CONTACT:    Robert Barry, VP - Investor Relations
608-361-7530                    
[email protected]

Regal Beloit Corporation Announces Second Quarter 2020 Financial Results

•
Adjusted Income from Operations Deleveraged at 15.5% of Net Sales
•
Generated $77 million of Free Cash Flow, Conversion at 255% of Adjusted Net Income
•
COVID-19 Impacts Weighed Heavily On Sales and Manufacturing Operations
•
Order Rates Year-Over-Year Improved Significantly in June (14%) and July (7%) versus April (31%)

BELOIT, WI - Regal Beloit Corporation (NYSE: RBC), a global leader in the engineering and manufacturing of high-efficiency electric motors and power transmission products, reported second quarter 2020 diluted earnings per share of $0.69 compared to $1.55 a year ago. Second quarter 2020 adjusted diluted earnings per share* were $0.95 compared to $1.49 a year ago.

Key financial results for the second quarter 2020 included:

•
Total net sales of $634.1 decreased 27.4% from the prior year. Excluding the negative impacts of 1.2% from foreign currency and 1.5% from businesses to be divested/exited, sales declined 24.7% on an organic basis.
•
Income from operations was $45.9 million or 7.2% of net sales. Adjusted income from operations declined $34.3 million from a year ago, to $59.5 million. Adjusted operating margin of 9.4% was down 160 basis points versus the prior year’s 11.0%.
•
Adjusted income from operations deleveraged at 15.5%.
•
Net cash provided by operating activities was $86.9 million and capital expenditures totaled $9.5 million, resulting in free cash flow of $77.4 million, which is 255.4% of adjusted net income.
•
No shares were purchased in the second quarter, and the Company is currently evaluating when to resume its share buyback program.

Second quarter 2020 segment results versus the prior year second quarter:

•
Commercial Systems segment net sales were $175.9 million, a decrease of 28.6%. Businesses divested/to be exited had a negative 3.8% impact, and foreign currency had a negative 1.2% impact. The result was a negative organic sales growth rate of 23.6%, driven largely by COVID-related pressures on the N.A. general industrial and commercial HVAC end markets, and on the Europe air moving end market, combined with proactive account pruning efforts. Partially offsetting these headwinds were share gains in the China motors business. During the quarter, production recovery at the Company’s China factories, combined with strong end user demand, drove improved performance in pool pumps, which also saw June orders rise nearly 50%. Operating margin was 3.5%. After net adjustments of $4.3 million, adjusted operating margin was 6.0% of adjusted net sales.

•
Industrial Systems segment net sales were $120.6 million, a decrease of 22.4%. Foreign currency had a negative 2.6% impact. The result was a negative organic sales growth rate of 19.8%, driven by COVID-related headwinds across the business, but especially impacting sales into the N.A. general industrial, oil & gas, and non-residential construction end markets, combined with proactive account pruning. Partially offsetting these headwinds, the Company realized share gains in the data center market. Operating margin was 2.7%. After net adjustments of $2.0 million, adjusted operating margin was 4.3% of adjusted net sales.



*This earnings release includes non-GAAP financial measures. Descriptions of why we believe these non-GAAP measures are useful and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included with this earnings release.


•
Climate Solutions segment net sales were $178.2 million, a decrease of 33.5%. Businesses divested/to be exited had a negative 1.4% impact, and foreign currency had a negative 0.7% impact. The result was a negative organic sales growth rate of 31.4%, driven mainly by headwinds related to the COVID-19 pandemic, in particular de-stocking in the N.A. residential HVAC channel during much of the quarter, weak demand in hospitality end markets in Europe, and to a lesser extent ongoing proactive account pruning efforts. Operating margin was 11.2%. After net adjustments of $2.1 million, adjusted operating margin was 12.4% of adjusted net sales.

•
Power Transmission Solutions segment net sales were $159.4 million, a decrease of 21.9%. Foreign currency had a negative 0.7% impact, and businesses divested/to be exited had a negative 0.1% impact. The result was a negative organic sales growth rate of 21.1% driven by significant COVID-related declines in U.S. general industrial and upstream oil & gas end markets, in addition to ongoing proactive account pruning activities. On the positive side, and partially offsetting these headwinds, were tailwinds in U.S. midstream oil & gas (tied to pre-existing projects), China general industrial, and N.A. agriculture end markets. Operating margin was 10.4%. After net adjustments of $5.2 million, adjusted operating margin was 13.6% of adjusted net sales.

Summarizing Regal’s second quarter 2020 performance, CEO Louis Pinkham commented, “Regal associates faced unprecedented personal and professional challenges in the quarter tied to COVID-19, including weak demand in many of our end markets, and disruptions to some of our principal manufacturing operations. However, a lot of hard work by our associates, executed with a sense of urgency, enabled our Company to achieve excellent deleverage, and very strong free cash flow. I am impressed by our associates’ constant focus on balancing safety with a need to service our customers with Regal’s essential products during this uniquely challenging period.”

Mr. Pinkham went on to comment, “As I look across our segments, all faced severe, COVID-related end market headwinds that weighed on second quarter sales and, except for PTS, significant disruptions to key manufacturing operations. But despite these obstacles, both PTS and Industrial posted meaningful year-over-year operating profit and margin gains, while Commercial held its deleverage to 20%, and some of our businesses managed to realize market share gains. Climate performance was disappointing, but we believe it was largely due to COVID-related pressures outside our control, leaving us optimistic that much-improved order rates in June and July will translate into materially higher margins for this segment in the second half of 2020.”

COVID-19 Update

COVID-19 evolved during the first quarter of 2020 into a global pandemic, resulting in a severe global health crisis that drove a dramatic slowdown in global economic and social activity. COVID-19 started to impact Regal’s business in China early in the first quarter, and as the virus spread and the quarter progressed, the virus increasingly impacted the Company’s business on a global scale.

Impacts from COVID-19 on Regal’s business became more severe during the first half of the second quarter - both in terms of weakening demand in most of the Company’s end markets, which are weighted to North America, and regarding its impact on the Company’s manufacturing operations, particularly in Mexico and India. Fortunately, as the second quarter progressed, pressure on Regal’s order rates started to abate, and previously disrupted supply chains and manufacturing capabilities also improved. At present, the Company’s global manufacturing operations are largely operational, with plants running at somewhat reduced rates approximating 90% of full capacity, on average, in India and Mexico. The Company is hopeful that recent improvements will be sustainable, but acknowledges that in many regions confirmed cases of COVID-19 are on the rise.

In the face of this global crisis, management’s first priority has been the health and safety of Regal associates. Regal implemented a host of measures to help its associates stay safe - measures that have been enhanced and refined as impacts from the virus grew, and as the Company’s knowledge about how to enhance their effectiveness improved. Today, Regal believes that many of its COVID-19-related safety practices are best in class and in some cases have been recognized by local and regional governments as such.

As part of Regal’s ongoing response to the impacts of COVID-19, the Company has taken additional cost actions, on top of the substantial restructuring, supply chain, and 80/20 reorganization efforts that were already underway prior to the start of the COVID-19 pandemic, and also beyond actions announced when it reported first quarter


results. These additional actions included a firmwide reduction in force, and a voluntary early retirement program. Together, these additional actions impacted roughly 4% of the Company’s workforce. Regal will consider making further changes to its cost structure as the implications of COVID-19 continue to evolve.

Framework for Third Quarter

For the third quarter of 2020, the Company expects its net sales to decline between 8% and 12% compared to the prior year, and for deleverage on net sales to fall in a range of 12-18%. This framework reflects the Company’s cost initiatives, current backlog, July results, and estimated demand levels over the next two months, and does not take into consideration any significant changes in the global spread of, and government reactions to COVID-19.

In light of continued uncertainty created by the COVID-19 pandemic, in particular as it relates to the demand environment for the Company’s products, combined with the inherently short-cycle nature of its business, which results in limited backlog, the Company feels it is not currently in a position to provide useful forward looking commentary beyond the third quarter.

Conference Call

Regal will hold a conference call to discuss this earnings release at 9:00 AM CDT (10:00 AM EDT) on Tuesday, August 4, 2020. To listen to the live audio and view the presentation during the call, please visit Regal’s Investors website: https://investors.regalbeloit.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 6531425# 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 10146106#. Both will be accessible for three months after the earnings call.

About the Company

Regal Beloit Corporation (NYSE: RBC) is a global leader in the engineering and manufacturing of electric motors and controls, power generation and power transmission products serving customers throughout the world. We create a better tomorrow by developing and responsibly producing energy-efficient products and systems.

The Company is comprised of four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Power Transmission Solutions. Regal is headquartered in Beloit, Wisconsin and has manufacturing, sales and service facilities worldwide. For more information, visit RegalBeloit.com.

CAUTIONARY STATEMENT

The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this release may be forward-looking statements. Forward-looking statements represent our management’s judgment regarding future events. In many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “forecast,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative of these terms or other similar words. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to: the continued financial and operational impacts of and uncertainties relating to the COVID-19 pandemic on us and our customers and suppliers and the geographies in which we operate; uncertainties regarding our ability to execute our restructuring plans within expected costs and timing; actions taken by our 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 marketplace acceptance of new and existing products, including products related to technology not yet adopted or utilized in certain geographic locations in which we do business; fluctuations in commodity prices and raw material costs; our dependence on significant customers; risks associated with global manufacturing, including risks associated with public health crises; issues and costs arising from the integration of acquired companies and businesses and the timing and impact of purchase accounting adjustments; our overall debt levels


and our ability to repay principal and interest on our outstanding debt; prolonged declines in one or more markets we serve, such as heating, ventilation, air conditioning, refrigeration, power generation, oil and gas, unit material handling or water heating; economic changes in global markets where we do business, such as reduced demand for the products we sell, 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 we cannot control; product liability and other litigation, or claims by end users, government agencies or others that our products or our 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 we may incur related to product warranty issues; our dependence on key suppliers and the potential effects of supply disruptions; infringement of our intellectual property by third parties, challenges to our intellectual property, and claims of infringement by us of third party technologies; effects on earnings of any significant impairment of goodwill or intangible assets; losses from failures, breaches, attacks or disclosures involving our 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 “Item 1A-Risk Factors” of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 26, 2020 and from time to time in other filed reports. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. The forward-looking statements included in this release are made only as of their respective dates, and we undertake no obligation to update these statements to reflect subsequent events or circumstances.




NON-GAAP MEASURES AND OTHER DEFINITIONS
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 (both historical and projected), adjusted income from operations, adjusted operating margin, adjusted net sales, net debt, adjusted EBITDA, adjusted operating leverage, adjusted net income attributable to Regal Beloit Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income before taxes, adjusted provision for income taxes, adjusted effective tax rate, net sales from ongoing business, adjusted income from operations of ongoing business, ongoing business adjusted operating margin and adjusted diluted earnings per share for ongoing business. 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, adjusted operating margin, and adjusted operating leverage to help us manage and evaluate our business and make operating decisions, while adjusted diluted earnings per share, net debt, adjusted EBITDA, adjusted net sales, adjusted net income attributable to Regal Beloit Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income before taxes, adjusted provision for income taxes, adjusted effective tax rate, net sales from ongoing business, adjusted income from operations of ongoing business, ongoing business adjusted operating margin and adjusted diluted earnings per share for ongoing business 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 also use the term “organic sales” to refer to GAAP sales from existing operations excluding any sales from acquired businesses recorded prior to the first anniversary of the acquisition (“net sales from business acquired") and excluding any sales from business divested/to be exited (“net 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. We use the term “organic sales growth” to refer to the increase in our sales between periods that is attributable to organic sales. For further clarification, we may use the term “acquisition growth” to refer to the increase in our sales between periods that is attributable to acquisition sales.





CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
(Dollars in Millions, Except per Share Data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
Net Sales
 
$
634.1

 
$
873.7

 
$
1,368.3

 
$
1,727.5

Cost of Sales
 
463.8

 
639.7

 
994.7

 
1,258.9

Gross Profit
 
170.3

 
234.0

 
373.6

 
468.6

Operating Expenses
 
121.6

 
138.0

 
253.4

 
242.0

Asset Impairments
 
2.8

 
—

 
4.3

 
10.0

Total Operating Expenses
 
124.4

 
138.0

 
257.7

 
252.0

Income from Operations
 
45.9

 
96.0

 
115.9

 
216.6

Other (Income) Expenses, net
 
(1.1
)
 
0.2

 
(2.2
)
 
0.3

Interest Expense
 
10.6

 
13.4

 
22.2

 
27.0

Interest Income
 
1.4

 
1.4

 
2.5

 
2.5

Income before Taxes
 
37.8

 
83.8

 
98.4

 
191.8

Provision for Income Taxes
 
8.5

 
16.4

 
22.4

 
37.6

Net Income
 
29.3

 
67.4

 
76.0

 
154.2

Less: Net Income Attributable to Noncontrolling Interests
 
1.2

 
0.8

 
2.1

 
1.7

Net Income Attributable to Regal Beloit Corporation
 
$
28.1

 
$
66.6

 
$
73.9

 
$
152.5

Earnings Per Share Attributable to Regal Beloit Corporation:
 
 
 
 
 
 
 
 
Basic
 
$
0.69

 
$
1.56

 
$
1.82

 
$
3.57

Assuming Dilution
 
$
0.69

 
$
1.55

 
$
1.81

 
$
3.54

Cash Dividends Declared Per Share
 
$
0.30

 
$
0.30

 
$
0.60

 
$
0.58

Weighted Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
Basic
 
40.5

 
42.6

 
40.6

 
42.7

Assuming Dilution
 
40.7

 
43.0

 
40.7

 
43.0




CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
Unaudited
 
 
 
 
(Dollars in Millions)
 
 
 
 
 
 
Jun 27, 2020
 
Dec 28, 2019
ASSETS
 
 
 
 
Current Assets:
 
 
 
 
Cash and Cash Equivalents
 
$
432.2

 
$
331.4

Trade Receivables, less Allowances
of $13.3 Million in 2020 and $9.7 Million in 2019
 
427.2

 
461.4

Inventories
 
679.7

 
678.4

Prepaid Expenses and Other Current Assets
 
136.6

 
136.5

Total Current Assets
 
1,675.7

 
1,607.7

 
 
 
 
 
Net Property, Plant, Equipment and Noncurrent Assets
 
2,732.4

 
2,823.0

Total Assets
 
$
4,408.1

 
$
4,430.7

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts Payable
 
$
342.6

 
$
337.0

Other Accrued Expenses
 
235.2

 
222.9

Current Maturities of Debt
 
0.6

 
0.6

Total Current Liabilities
 
578.4

 
560.5

 
 
 
 
 
Long-Term Debt
 
1,125.1

 
1,136.9

Other Noncurrent Liabilities
 
357.6

 
352.9

Equity:
 
 
 
 
Total Regal Beloit Corporation Shareholders' Equity
 
2,319.1

 
2,351.1

Noncontrolling Interests
 
27.9

 
29.3

Total Equity
 
2,347.0

 
2,380.4

Total Liabilities and Equity
 
$
4,408.1

 
$
4,430.7




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
(Dollars in Millions)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
Jun 27, 2020
 
Jun 29, 2019
 
Jun 27, 2020
 
Jun 29, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
Net Income
 
$
29.3

 
$
67.4

 
76.0

 
154.2

Adjustments to Reconcile Net Income and Changes in Assets and Liabilities (Net of Acquisitions and Divestitures) to Net Cash Provided by Operating Activities:
 
 
 
 
 
 
 
 
Depreciation and Amortization
 
33.3

 
32.2

 
65.9

 
66.5

Loss on Disposal of Assets
 
0.7

 
0.3

 
1.4

 
0.4

Loss (Gain) on Businesses Divested and Assets to be Exited
 
2.8

 
(4.2
)
 
4.2

 
(35.4
)
Share-Based Compensation Expense
 
2.8

 
3.1

 
5.5

 
7.4

Change in Operating Assets and Liabilities
 
18.0

 
13.5

 
36.6

 
(62.5
)
Net Cash Provided by Operating Activities
 
86.9

 
112.3

 
189.6

 
130.6

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
Additions to Property, Plant and Equipment
 
(9.5
)
 
(36.0
)
 
(20.4
)
 
(56.2
)
Proceeds Received from Sales of Property, Plant and Equipment
 
2.6

 
1.7

 
5.3

 
1.7

Proceeds Received from Disposal of Businesses
 
—

 
18.8

 
0.3

 
138.2

Net Cash (Used in) Provided by Investing Activities
 
(6.9
)
 
(15.5
)
 
(14.8
)
 
83.7

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
Net Borrowings (Repayments) Under Revolving Credit Facility
 
(239.5
)
 
9.2

 
(12.4
)
 
(60.4
)
Net Repayments of Short-Term Borrowings
 
—

 
(1.6
)
 
—

 
—

Proceeds from Long-Term Debt
 
0.1

 
—

 
0.1

 
—

Repayments of Long-Term Debt
 
(0.1
)
 
(0.1
)
 
(0.2
)
 
(24.2
)
Dividends Paid to Shareholders
 
(12.1
)
 
(12.0
)
 
(24.3
)
 
(24.0
)
Proceeds from the Exercise of Stock Options
 
0.2

 
—

 
0.2

 
—

Repurchase of Common Stock
 
—

 
(55.9
)
 
(25.0
)
 
(55.9
)
Distributions to Noncontrolling Interest
 
(2.7
)
 
—

 
(2.7
)
 
(0.3
)
Shares Surrendered for Taxes
 
(1.4
)
 
(5.9
)
 
(2.5
)
 
(7.5
)
Net Cash Used in Financing Activities
 
(255.5
)
 
(66.3
)
 
(66.8
)
 
(172.3
)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
 
3.2

 
(3.5
)
 
(7.2
)
 
0.7

Net Increase (Decrease) in Cash and Cash Equivalents
 
(172.3
)
 
27.0

 
100.8

 
42.7

Cash and Cash Equivalents at Beginning of Period
 
604.5

 
264.3

 
331.4

 
248.6

Cash and Cash Equivalents at End of Period
 
$
432.2

 
$
291.3

 
$
432.2

 
$
291.3





SEGMENT INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
Net Sales
 
$
175.9

 
$
246.3

 
$
120.6

 
$
155.5

 
$
178.2

 
$
267.9

 
$
159.4

 
$
204.0

 
$
634.1

 
$
873.7

Net Sales from Businesses Divested/to be Exited
 
—

 
(12.6
)
 
—

 
—

 
—

 
(5.6
)
 
—

 
—

 
—

 
(18.2
)
Adjusted Net Sales*
 
$
175.9

 
$
233.7

 
$
120.6

 
$
155.5

 
$
178.2

 
$
262.3

 
$
159.4

 
$
204.0

 
$
634.1

 
$
855.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Margin
 
3.5
 %
 
8.4
 %
 
2.7
 %
 
(0.8
)%
 
11.2
 %
 
19.3
 %
 
10.4
 %
 
12.2
 %
 
7.2
 %
 
11.0
 %
Adjusted Operating Margin*
 
6.0
 %
 
9.5
 %
 
4.3
 %
 
0.1
 %
 
12.4
 %
 
17.6
 %
 
13.6
 %
 
12.4
 %
 
9.4
 %
 
11.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Components of Net Sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Organic Sales Growth*
 
(23.6
)%
 
(4.8
)%
 
(19.8
)%
 
(8.4
)%
 
(31.4
)%
 
2.3
 %
 
(21.1
)%
 
(0.8
)%
 
(24.7
)%
 
(2.5
)%
Businesses Divested/to be Exited
 
(3.8
)%
 
(9.1
)%
 
—
 %
 
(0.9
)%
 
(1.4
)%
 
(5.0
)%
 
(0.1
)%
 
(2.6
)%
 
(1.5
)%
 
(5.0
)%
Foreign Currency Impact
 
(1.2
)%
 
(1.8
)%
 
(2.6
)%
 
(2.8
)%
 
(0.7
)%
 
(0.7
)%
 
(0.7
)%
 
(1.0
)%
 
(1.2
)%
 
(1.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
Net Sales
 
$
375.3

 
$
488.5

 
$
250.2

 
$
293.6

 
$
388.3

 
$
531.2

 
$
354.5

 
$
414.2

 
$
1,368.3

 
$
1,727.5

Net Sales from Businesses Divested/to be Exited
 
—

 
(25.0
)
 
—

 
—

 
—

 
(21.1
)
 
—

 
(5.6
)
 
—

 
(51.7
)
Adjusted Net Sales*
 
$
375.3

 
$
463.5

 
$
250.2

 
$
293.6

 
$
388.3

 
$
510.1

 
$
354.5

 
$
408.6

 
$
1,368.3

 
$
1,675.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Margin
 
5.0
 %
 
16.1
 %
 
1.1
 %
 
(1.9
)%
 
12.7
 %
 
17.1
 %
 
12.7
 %
 
12.8
 %
 
8.5
 %
 
12.5
 %
Adjusted Operating Margin*
 
6.9
 %
 
9.8
 %
 
2.5
 %
 
(0.6
)%
 
13.9
 %
 
16.7
 %
 
14.8
 %
 
13.4
 %
 
10.1
 %
 
10.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Components of Net Sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Organic Sales Growth
 
(18.1
)%
 
(3.9
)%
 
(12.6
)%
 
(10.2
)%
 
(23.3
)%
 
3.0
 %
 
(12.6
)%
 
1.2
 %
 
(17.4
)%
 
(1.9
)%
Acquisitions
 
—
 %
 
6.9
 %
 
—
 %
 
—
 %
 
—
 %
 
—
 %
 
—
 %
 
—
 %
 
—
 %
 
1.9
 %
Businesses Divested/to be Exited
 
(4.2
)%
 
(11.2
)%
 
—
 %
 
(0.8
)%
 
(3.1
)%
 
(3.2
)%
 
(1.2
)%
 
(1.0
)%
 
(2.4
)%
 
(4.4
)%
Foreign Currency Impact
 
(0.9
)%
 
(1.6
)%
 
(2.2
)%
 
(3.1
)%
 
(0.5
)%
 
(0.9
)%
 
(0.6
)%
 
(1.2
)%
 
(1.0
)%
 
(1.6
)%




ADJUSTED DILUTED EARNINGS PER SHARE
 
Three Months Ended
 
Six Months Ended
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
GAAP Diluted Earnings Per Share
 
$
0.69

 
$
1.55

 
$
1.81

 
$
3.54

Restructuring and Related Costs
 
0.21

 
0.07

 
0.31

 
0.11

Loss (Gain) on Businesses Divested and Assets to be Exited
 
0.05

 
(0.10
)
 
0.08

 
(0.69
)
Net Loss (Income) from Businesses Divested/to be Exited
 
—

 
(0.03
)
 
0.01

 
(0.10
)
Executive Transition Costs
 
—

 
—

 
0.05

 
0.03

Adjusted Diluted Earnings Per Share
 
$
0.95

 
$
1.49

 
$
2.26

 
$
2.89

 
 
 
 
 
 
 
 
 



ADJUSTED INCOME FROM OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
GAAP Income (Loss) from Operations
 
$
6.2

 
$
20.8

 
$
3.2

 
$
(1.3
)
 
$
20.0

 
$
51.7

 
$
16.5

 
$
24.8

 
$
45.9

 
$
96.0

Restructuring and Related Costs
 
2.3

 
1.1

 
2.0

 
1.5

 
1.3

 
0.6

 
5.3

 
0.4

 
10.9

 
3.6

Loss (Gain) on Businesses Divested and Assets to be Exited
 
2.0

 
1.8

 
—

 
—

 
0.8

 
(6.1
)
 
—

 
0.1

 
2.8

 
(4.2
)
Gain on Sale of Assets
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
—

Operating Loss (Income) from Businesses Divested/to be Exited
 
—

 
(1.6
)
 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
(1.7
)
Executive Transition Costs
 
—

 
0.1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.1

Adjusted Income from Operations
 
$
10.5

 
$
22.2

 
$
5.2

 
$
0.2

 
$
22.1

 
$
46.1

 
$
21.7

 
$
25.3

 
$
59.5

 
$
93.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Margin %
 
3.5%
 
8.4%
 
2.7%
 
(0.8)%
 
11.2%
 
19.3%
 
10.4%
 
12.2%
 
7.2%
 
11.0%
Adjusted Operating Margin %
 
6.0%
 
9.5%
 
4.3%
 
0.1%
 
12.4%
 
17.6%
 
13.6%
 
12.4%
 
9.4%
 
11.0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED INCOME (LOSS) FROM OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
GAAP Income (Loss) from Operations
 
$
18.7

 
$
78.6

 
$
2.7

 
$
(5.6
)
 
$
49.5

 
$
90.6

 
$
45.0

 
$
53.0

 
$
115.9

 
$
216.6

Restructuring and Related Costs
 
4.1

 
2.3

 
2.9

 
2.4

 
2.4

 
0.7

 
7.1

 
0.5

 
16.5

 
5.9

Purchase Accounting and Transaction Costs
 
—

 
0.1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.1

(Gain) Loss on Businesses Divested and Assets to be Exited
 
2.7

 
(32.8
)
 
0.2

 
1.0

 
1.3

 
(4.8
)
 
—

 
1.2

 
4.2

 
(35.4
)
Gain on Sale of Assets
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
—

Operating (Income) Loss from Businesses Divested/to be Exited
 
—

 
(3.3
)
 
—

 
—

 
0.4

 
(2.0
)
 
—

 
(0.3
)
 
0.4

 
(5.6
)
Executive Transition Costs
 
0.5

 
0.5

 
0.4

 
0.3

 
0.5

 
0.5

 
0.4

 
0.4

 
1.8

 
1.7

Adjusted Income (Loss) from Operations
 
$
26.0

 
$
45.4

 
$
6.2

 
$
(1.9
)
 
$
54.1

 
$
85.0

 
$
52.4

 
$
54.8

 
$
138.7

 
$
183.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Margin %
 
5.0%
 
16.1%
 
1.1%
 
(1.9)%
 
12.7%
 
17.1%
 
12.7%
 
12.8%
 
8.5%
 
12.5%
Adjusted Operating Margin %
 
6.9%
 
9.8%
 
2.5%
 
(0.6)%
 
13.9%
 
16.7%
 
14.8%
 
13.4%
 
10.1%
 
10.9%



DEBT TO EBITDA
 
 
 
Last Twelve Months
 
 
 
 
Jun 27, 2020
 
Dec 28, 2019
Net Income
 
$
164.4

 
$
242.6

Interest Expense
 
 
 
48.2

 
53.0

Interest Income
 
 
 
(5.6
)
 
(5.6
)
Taxes
 
 
 
46.0

 
61.2

Depreciation and Amortization
 
 
 
133.9

 
134.5

EBITDA
 
 
 
$
386.9

 
$
485.7

Restructuring and Related Costs
 
 
 
41.9

 
31.3

Purchase Accounting and Transactions Costs
 
 
 
—

 
0.1

Impairment and Exit Related Costs
 
 
 
4.3

 
10.0

Executive Transition Costs
 
 
 
2.3

 
2.2

Operating Loss (Income) from Businesses Divested/to be Exited
 
 
 
1.9

 
(4.1
)
Gain on Sale of Assets
 
 
 
(3.9
)
 
(3.8
)
Loss (Gain) on Divestiture of Businesses
 
 
 
0.6

 
(44.7
)
Adjusted EBITDA
 
 
 
$
434.0

 
$
476.7

 
 
 
 
 
 
 
Current Maturities of Long-Term Debt
 
 
 
$
0.6

 
$
0.6

Long-Term Debt
 
 
 
1,125.1

 
1,136.9

Total Gross Debt
 
 
 
$
1,125.7

 
$
1,137.5

Cash
 
 
 
(432.2
)
 
(331.4
)
Net Debt
 
 
 
$
693.5

 
$
806.1

 
 
 
 
 
 
 
Gross Debt/EBITDA
 
 
 
2.9

 
2.3

Gross Debt/Adjusted EBITDA
 
 
 
2.6

 
2.4

 
 
 
 
 
 
 
Net Debt/EBITDA
 
 
 
1.8

 
1.7

Net Debt/Adjusted EBITDA
 
 
 
1.6

 
1.7


OPERATING LEVERAGE - TOTAL REGAL
 
Three Months Ended
 
Six Months Ended
(Dollars in Millions)
 
Jun 27,
2020
 
Jun 29,
2019
 
Change
 
Jun 27,
2020
 
Jun 29,
2019
 
Change
GAAP Income from Operations
 
$
45.9

 
$
96.0

 
$
(50.1
)
 
$
115.9

 
$
216.6

 
$
(100.7
)
Adjusted Income from Operations
 
$
59.5

 
$
93.8

 
$
(34.3
)
 
$
138.7

 
$
183.3

 
$
(44.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
634.1

 
$
873.7

 
$
(239.6
)
 
$
1,368.3

 
$
1,727.5

 
$
(359.2
)
Adjusted Net Sales
 
$
634.1

 
$
855.5

 
$
(221.4
)
 
$
1,368.3

 
$
1,675.8

 
$
(307.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Leverage
 
 
 
 
 
20.9
%
 
 
 
 
 
28.0
%
Adjusted Operating Leverage
 
 
 
 
 
15.5
%
 
 
 
 
 
14.5
%



OPERATING LEVERAGE - COMMERCIAL SYSTEMS
 
Three Months Ended
 
Six Months Ended
(Dollars in Millions)
 
Jun 27,
2020
 
Jun 29,
2019
 
Change
 
Jun 27,
2020
 
Jun 29,
2019
 
Change
GAAP Income from Operations
 
$
6.2

 
$
20.8

 
$
(14.6
)
 
$
18.7

 
$
78.6

 
$
(59.9
)
Adjusted Income from Operations
 
$
10.5

 
$
22.2

 
$
(11.7
)
 
$
26.0

 
$
45.4

 
$
(19.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
175.9

 
$
246.3

 
$
(70.4
)
 
$
375.3

 
$
488.5

 
$
(113.2
)
Adjusted Net Sales
 
$
175.9

 
$
233.7

 
$
(57.8
)
 
$
375.3

 
$
463.5

 
$
(88.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating Leverage
 
 
 
 
 
20.7
%
 
 
 
 
 
52.9
%
Adjusted Operating Leverage
 
 
 
 
 
20.2
%
 
 
 
 
 
22.0
%


FREE CASH FLOW
 
Three Months Ended
 
Six Months Ended
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
Net Cash Provided by Operating Activities
 
$
86.9

 
$
112.3

 
$
189.6

 
$
130.6

Additions to Property Plant and Equipment
 
(9.5
)
 
(36.0
)
 
(20.4
)
 
(56.2
)
Free Cash Flow
 
$
77.4

 
$
76.3

 
$
169.2

 
$
74.4

 
 
 
 
 
 
 
 
 
GAAP Net Income Attributable to Regal Beloit Corporation
 
$
28.1

 
$
66.6

 
$
73.9

 
$
152.5

Loss (Gain) on Businesses Divested and Impairments
 
2.8

 
(4.2
)
 
4.2

 
(35.4
)
Tax Effect from Loss (Gain) on Businesses Divested and Impairments
 
(0.6
)
 
0.2

 
(0.9
)
 
5.5

Adjusted Net Income Attributable to Regal Beloit Corporation1
 
$
30.3

 
$
62.6

 
$
77.2

 
$
122.6

 
 
 
 
 
 
 
 
 
Free Cash Flow as a Percentage of Adjusted Net Income Attributable to Regal Beloit Corporation
 
255.4
%
 
121.9
%
 
219.2
%
 
60.7
%
 
 
 
 
 
 
 
 
 
 1 The Net Income Attributable to Regal Beloit Corporation is adjusted for the gains and losses on divested businesses and goodwill and asset impairments related to the businesses to be exited and used in the Free Cash Flow Calculation.



ADJUSTED EFFECTIVE TAX RATE
 
Three Months Ended
 
Six Months Ended
 
 
Jun 27,
2020
 
Jun 29,
2019
 
Jun 27,
2020
 
Jun 29,
2019
Income before Taxes
 
$
37.8

 
$
83.8

 
$
98.4

 
$
191.8

Provision for Income Taxes
 
8.5

 
16.4

 
22.4

 
37.6

Effective Tax Rate
 
22.5
%
 
19.6
%
 
22.8
%
 
19.6
%
 
 
 
 
 
 
 
 
 
Income before Taxes
 
$
37.8

 
$
83.8

 
$
98.4

 
$
191.8

Loss (Gain) on Businesses Divested and Assets to be Exited
 
2.8

 
(4.2
)
 
4.2

 
(35.4
)
Adjusted Income before Taxes
 
$
40.6

 
$
79.6

 
$
102.6

 
$
156.4

 
 
 
 
 
 
 
 
 
Provision for Income Taxes
 
$
8.5

 
$
16.4

 
$
22.4

 
$
37.6

Tax Effect from Loss (Gain) on Businesses Divested and Assets to be Exited
 
0.6

 
(0.2
)
 
0.9

 
(5.5
)
Non-deductible Portion of Executive Transition Costs
 
—

 
—

 
(0.5
)
 
—

Adjusted Provision for Income Taxes
 
$
9.1

 
$
16.2

 
$
22.8

 
$
32.1

 
 
 
 
 
 
 
 
 
Adjusted Effective Tax Rate
 
22.4
%
 
20.4
%
 
22.2
%
 
20.5
%



ORGANIC SALES GROWTH
 
Three Months Ended
 
 
June 27, 2020
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
Net Sales Three Months Ended Jun 27, 2020
 
$
175.9

 
$
120.6

 
$
178.2

 
$
159.4

 
$
634.1

Impact from Foreign Currency Exchange Rates
 
2.7

 
4.1

 
1.8

 
1.5

 
10.1

Organic Sales Three Months Ended Jun 27, 2020
 
$
178.6

 
$
124.7

 
$
180.0

 
$
160.9

 
$
644.2

 
 
 
 
 
 
 
 
 
 
 
Net Sales Three Months Ended Jun 29, 2019
 
$
246.3

 
$
155.5

 
$
267.9

 
$
204.0

 
$
873.7

Net Sales from Businesses Divested/to be Exited
 
(12.6
)
 
—

 
(5.6
)
 
—

 
(18.2
)
Adjusted Net Sales Three Months Ended Jun 29, 2019
 
$
233.7

 
$
155.5

 
$
262.3

 
$
204.0

 
$
855.5

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended Jun 27, 2020 Organic Sales Growth %
 
(23.6
)%
 
(19.8
)%
 
(31.4
)%
 
(21.1
)%
 
(24.7
)%
Three Months Ended Jun 27, 2020 Net Sales Growth %
 
(28.6
)%
 
(22.4
)%
 
(33.5
)%
 
(21.9
)%
 
(27.4
)%
 
 
 
 
 
 
 
 
 
 
 
ORGANIC SALES GROWTH
 
Six Months Ended
 
 
June 27, 2020
 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
Net Sales Six Months Ended Jun 27, 2020
 
$
375.3

 
$
250.2

 
$
388.3

 
$
354.5

 
$
1,368.3

Impact from Foreign Currency Exchange Rates
 
4.4

 
6.4

 
2.8

 
2.5

 
16.1

Organic Sales Six Months Ended Jun 27, 2020
 
$
379.7

 
$
256.6

 
$
391.1

 
$
357.0

 
$
1,384.4

 
 
 
 
 
 
 
 
 
 
 
Net Sales Six Months Ended Jun 29, 2019
 
$
488.5

 
$
293.6

 
$
531.2

 
$
414.2

 
$
1,727.5

Net Sales from Businesses Divested/to be Exited
 
(25.0
)
 
—

 
(21.1
)
 
(5.6
)
 
(51.7
)
Adjusted Net Sales Six Months Ended Jun 29, 2019
 
$
463.5

 
$
293.6

 
$
510.1

 
$
408.6

 
$
1,675.8

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended Jun 27, 2020 Organic Sales Growth %
 
(18.1
)%
 
(12.6
)%
 
(23.3
)%
 
(12.6
)%
 
(17.4
)%
Six Months Ended Jun 27, 2020 Net Sales Growth %
 
(23.2
)%
 
(14.8
)%
 
(26.9
)%
 
(14.4
)%
 
(20.8
)%


The following tables outline by quarter and full year the 2019 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited.

 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
Fiscal 2019 First Quarter Schedule for Ongoing Business
 
 
 
 
 
 
 
 
 
 
Net Sales Three Months Ended March 30, 2019
 
$
242.2

 
$
138.1

 
$
263.3

 
$
210.2

 
$
853.8

Net Sales from Businesses Divested/to be Exited
 
(12.4
)
 
—

 
(15.5
)
 
(5.6
)
 
(33.5
)
Net Sales from Ongoing Business
 
$
229.8

 
$
138.1

 
$
247.8

 
$
204.6

 
$
820.3

 
 
 
 
 
 
 
 
 
 
 
GAAP Income (Loss) from Operations Three Months Ended March 30, 2019
 
$
57.8

 
$
(4.3
)
 
$
38.9

 
$
28.2

 
$
120.6

Restructuring and Related Costs
 
1.2

 
0.9

 
0.1

 
0.1

 
2.3

Purchase Accounting and Transaction Costs
 
0.1

 
—

 
—

 
—

 
0.1

(Gain) Loss on Businesses Divested and Assets to be Exited
 
(34.6
)
 
1.0

 
1.3

 
1.1

 
(31.2
)
Income from Operations of Businesses Divested/to be Exited
 
(1.7
)
 
—

 
(1.9
)
 
(0.3
)
 
(3.9
)
Executive Transition Costs
 
0.4

 
0.3

 
0.5

 
0.4

 
1.6

Adjusted Income (Loss) from Operations of Ongoing Business
 
$
23.2

 
$
(2.1
)
 
$
38.9

 
$
29.5

 
$
89.5

 
 
 
 
 
 
 
 
 
 
 
Ongoing Business Adjusted Operating Margin %
 
10.1
%
 
(1.5
)%
 
15.7
%
 
14.4
%
 
10.9
%
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2019 Second Quarter Schedule for Ongoing Business
 
 
 
 
 
 
 
 
 
 
Net Sales Three Months Ended June 29, 2019
 
$
246.3

 
$
155.5

 
$
267.9

 
$
204.0

 
$
873.7

Net Sales from Businesses Divested/to be Exited
 
(12.6
)
 
—

 
(5.6
)
 
—

 
(18.2
)
Net Sales from Ongoing Business
 
$
233.7

 
$
155.5

 
$
262.3

 
$
204.0

 
$
855.5

 
 
 
 
 
 
 
 
 
 
 
GAAP Income (Loss) from Operations Three Months Ended June 29, 2019
 
$
20.8

 
$
(1.3
)
 
$
51.7

 
$
24.8

 
$
96.0

Restructuring and Related Costs
 
1.1

 
1.5

 
0.6

 
0.4

 
3.6

(Gain) Loss on Businesses Divested and Assets to be Exited
 
1.8

 
—

 
(6.1
)
 
0.1

 
(4.2
)
Income from Operations of Businesses Divested/to be Exited
 
(1.6
)
 
—

 
(0.1
)
 
—

 
(1.7
)
Executive Transition Costs
 
0.1

 
—

 
—

 
—

 
0.1

Adjusted Income from Operations of Ongoing Business
 
$
22.2

 
$
0.2

 
$
46.1

 
$
25.3

 
$
93.8

 
 
 
 
 
 
 
 
 
 
 
Ongoing Business Adjusted Operating Margin %
 
9.5
%
 
0.1
 %
 
17.6
%
 
12.4
%
 
11.0
%



 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
Fiscal 2019 Third Quarter Schedule for Ongoing Business
 
 
 
 
 
 
 
 
 
 
Net Sales Three Months Ended September 28, 2019
 
$
214.8

 
$
143.8

 
$
230.9

 
$
182.8

 
$
772.3

Net Sales from Businesses Divested/to be Exited
 
—

 
—

 
(0.9
)
 
—

 
(0.9
)
Net Sales from Ongoing Business
 
$
214.8

 
$
143.8

 
$
230.0

 
$
182.8

 
$
771.4

 
 
 
 
 
 
 
 
 
 
 
GAAP Income (Loss) from Operations Three Months Ended September 28, 2019
 
$
16.6

 
$
(2.3
)
 
$
37.6

 
$
20.9

 
$
72.8

Restructuring and Related Costs
 
2.5

 
3.1

 
0.8

 
0.9

 
7.3

Loss on Businesses Divested and Assets to be Exited
 
0.1

 
—

 
0.1

 
—

 
0.2

Loss from Operations of Businesses Divested/to be Exited
 
—

 
—

 
0.9

 
—

 
0.9

Executive Transition Costs
 
—

 
0.1

 
—

 
—

 
0.1

Adjusted Income from Operations of Ongoing Business
 
$
19.2

 
$
0.9

 
$
39.4

 
$
21.8

 
$
81.3

 
 
 
 
 
 
 
 
 
 
 
Ongoing Business Adjusted Operating Margin %
 
8.9
%
 
0.6
%
 
17.1
%
 
11.9
%
 
10.5
%
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2019 Fourth Quarter Schedule for Ongoing Business
 
 
 
 
 
 
 
 
 
 
Net Sales Three Months Ended December 28, 2019
 
$
202.0

 
$
138.0

 
$
206.4

 
$
191.8

 
$
738.2

Net Sales from Businesses Divested/to be Exited
 
—

 
—

 
(0.2
)
 
—

 
(0.2
)
Net Sales from Ongoing Business
 
$
202.0

 
$
138.0

 
$
206.2

 
$
191.8

 
$
738.0

 
 
 
 
 
 
 
 
 
 
 
GAAP Income (Loss) from Operations Three Months Ended December 28, 2019
 
$
7.9

 
$
(1.4
)
 
$
35.7

 
$
19.5

 
$
61.7

Restructuring and Related Costs
 
7.0

 
2.9

 
2.7

 
5.5

 
18.1

Gain on Sale of Assets
 
—

 
—

 
(3.8
)
 
—

 
(3.8
)
Loss on Businesses Divested and Assets to be Exited
 
0.1

 
—

 
—

 
0.4

 
0.5

Loss from Operations of Businesses Divested/to be Exited
 
—

 
—

 
0.6

 
—

 
0.6

Executive Transition Costs
 
0.1

 
0.1

 
0.1

 
0.1

 
0.4

Adjusted Income from Operations of Ongoing Business
 
$
15.1

 
$
1.6

 
$
35.3

 
$
25.5

 
$
77.5

 
 
 
 
 
 
 
 
 
 
 
Ongoing Business Adjusted Operating Margin %
 
7.5
%
 
1.2
%
 
17.1
%
 
13.3
%
 
10.5
%



 
 
Commercial Systems
 
Industrial Systems
 
Climate Solutions
 
Power Transmission Solutions
 
Total Regal
Fiscal 2019 Full Year Schedule for Ongoing Business
 
 
 
 
 
 
 
 
 
 
Net Sales Twelve Months Ended December 28, 2019
 
$
905.3

 
$
575.4

 
$
968.5

 
$
788.8

 
$
3,238.0

Net Sales from Businesses Divested/to be Exited
 
(25.0
)
 
—

 
(22.2
)
 
(5.6
)
 
(52.8
)
Net Sales from Ongoing Business
 
$
880.3

 
$
575.4

 
$
946.3

 
$
783.2

 
$
3,185.2

 
 
 
 
 
 
 
 
 
 
 
GAAP Income (Loss) from Operations Twelve Months Ended December 28, 2019
 
$
103.1

 
$
(9.3
)
 
$
163.9

 
$
93.4

 
$
351.1

Restructuring and Related Costs
 
11.8

 
8.4

 
4.2

 
6.9

 
31.3

Purchase Accounting and Transaction Costs
 
0.1

 
—

 
—

 
—

 
0.1

Gain on Sale of Assets
 
—

 
—

 
(3.8
)
 
—

 
(3.8
)
(Gain) Loss on Businesses Divested and Assets to be Exited
 
(32.6
)
 
1.0

 
(4.7
)
 
1.6

 
(34.7
)
Income from Operations of Businesses Divested/to be Exited
 
(3.3
)
 
—

 
(0.5
)
 
(0.3
)
 
(4.1
)
Executive Transition Costs
 
0.6

 
0.5

 
0.6

 
0.5

 
2.2

Adjusted Income from Operations of Ongoing Business
 
$
79.7

 
$
0.6

 
$
159.7

 
$
102.1

 
$
342.1

 
 
 
 
 
 
 
 
 
 
 
Ongoing Business Adjusted Operating Margin %
 
9.1
%
 
0.1
%
 
16.9
%
 
13.0
%
 
10.7
%

2019 ADJUSTED DILUTED EARNINGS PER SHARE FOR ONGOING BUSINESS
 
Three Months Ended
 
Twelve Months Ended Dec 28, 2019
 
 
Mar 30,
2019
 
Jun 29,
2019
 
Sep 28,
2019
 
Dec 28,
2019
 
Adjusted Diluted Earnings Per Share
 
$
1.43

 
$
1.52

 
$
1.35

 
$
1.25

 
$
5.55

Earnings Per Share from Businesses Divested/to be Exited
 
(0.03
)
 
(0.03
)
 
—

 
—

 
(0.06
)
Adjusted Diluted Earnings Per Share for Ongoing Business
 
$
1.40

 
$
1.49

 
$
1.35

 
$
1.25

 
$
5.49




August 4, 2020 Second Quarter 2020 Earnings 2Q CONFERENCE CALL Louis Pinkham Rob Rehard Chief Executive Officer Vice President Chief Financial Officer

 
2Q 2020 CAUTIONARY STATEMENT The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: rates, inflation rates, interest rates, recession, government policies, including policy changes affecting With the exception of historical facts, the statements contained in this presentation may be forward-looking taxation, trade, tariffs, immigration, customs, border actions and the like, and other external factors that we statements. Forward-looking statements represent our management’s judgment regarding future events. In cannot control; product liability and other litigation, or claims by end users, government agencies or others many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” that our products or our customers’ applications failed to perform as anticipated, particularly in high volume “intend,” “estimate,” “forecast,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative of applications or where such failures are alleged to be the cause of property or casualty claims; unanticipated these terms or other similar words. These forward-looking statements are not guarantees of future liabilities of acquired businesses; unanticipated adverse effects or liabilities from business exits or performance and are subject to risks, uncertainties, assumptions and other factors, some of which are divestitures; unanticipated costs or expenses we may incur related to product warranty issues; our beyond our control, which could cause actual results to differ materially from those expressed or implied by dependence on key suppliers and the potential effects of supply disruptions; infringement of our intellectual such forward-looking statements, including but not limited to: the continued financial and operational property by third parties, challenges to our intellectual property, and claims of infringement by us of third impacts of and uncertainties relating to the COVID-19 pandemic on us and our customers and suppliers and party technologies; effects on earnings of any significant impairment of goodwill or intangible assets; losses the geographies in which we operate; uncertainties regarding our ability to execute our restructuring plans from failures, breaches, attacks or disclosures involving our information technology infrastructure and data; within expected costs and timing; actions taken by our competitors and our ability to effectively compete in cyclical downturns affecting the global market for capital goods; and other risks and uncertainties including the increasingly competitive global electric motor, drives and controls, power generation and power but not limited to those described in “Item 1A-Risk Factors” of the Company’s Annual Report on Form 10-K transmission industries; our ability to develop new products based on technological innovation, such as the filed with the U.S. Securities and Exchange Commission on February 26, 2020 and from time to time in other Internet of Things, and marketplace acceptance of new and existing products, including products related to filed reports. All subsequent written and oral forward-looking statements attributable to us or to persons technology not yet adopted or utilized in certain geographic locations in which we do business; fluctuations acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. The in commodity prices and raw material costs; our dependence on significant customers; risks associated with forward-looking statements included in this presentation are made only as of their respective dates, and we global manufacturing, including risks associated with public health crises; issues and costs arising from the undertake no obligation to update these statements to reflect subsequent events or circumstances. integration of acquired companies and businesses and the timing and impact of purchase accounting adjustments; our overall debt levels and our ability to repay principal and interest on our outstanding debt; prolonged declines in one or more markets we serve, such as heating, ventilation, air conditioning, refrigeration, power generation, oil and gas, unit material handling or water heating; economic changes in global markets where we do business, such as reduced demand for the products we sell, currency exchange ©2020 Regal Beloit Corporation 2

 
2Q 2020 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income in the United States of America (“GAAP”). We also periodically disclose certain financial before taxes, adjusted provision for income taxes, adjusted effective tax rate, net sales from measures in our quarterly earnings releases, on investor conference calls, and in investor ongoing business, adjusted income from operations of ongoing business, ongoing business presentations and similar events that may be considered “non-GAAP” financial measures. This adjusted operating margin and adjusted diluted earnings per share for ongoing business are additional information is not meant to be considered in isolation or as a substitute for our primarily used to help us evaluate our business and forecast our future results. Accordingly, we results of operations prepared and presented in accordance with GAAP. believe disclosing and reconciling each of these measures helps investors evaluate our business in the same manner as management. In this presentation, we disclose the following non-GAAP financial measures, and we reconcile these measures in the tables in the appendix to the most directly comparable GAAP financial In addition to these non-GAAP measures, we also use the term “organic sales” to refer to GAAP measures: adjusted diluted earnings per share (both historical and projected), adjusted income sales from existing operations excluding any sales from acquired businesses recorded prior to from operations, adjusted operating margin, adjusted net sales, net debt, adjusted EBITDA, the first anniversary of the acquisition (“net sales from business acquired") and excluding any adjusted operating leverage, adjusted net income attributable to Regal Beloit Corporation, free sales from business divested/to be exited (“net sales from business divested/to be exited“) cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Beloit recorded prior to the first anniversary of the exit and excluding the impact of foreign currency Corporation, adjusted income before taxes, adjusted provision for income taxes, adjusted translation. The impact of foreign currency translation is determined by translating the effective tax rate, net sales from ongoing business, adjusted income from operations of respective period’s organic sales using the currency exchange rates that were in effect during ongoing business, ongoing business adjusted operating margin, and adjusted diluted earnings the prior year periods. We use the term “organic sales growth” to refer to the increase in our per share for ongoing business. We believe that these non-GAAP financial measures are useful sales between periods that is attributable to organic sales. For further clarification, we may use measures for providing investors with additional information regarding our results of the term “acquisition growth” to refer to the increase in our sales between periods that is operations and for helping investors understand and compare our operating results across attributable to acquisition sales. accounting periods and compared to our peers. Our management primarily uses adjusted income from operations, adjusted operating income, adjusted operating margin, and adjusted operating leverage to help us manage and evaluate our business and make operating decisions, while adjusted diluted earnings per share, net debt, adjusted EBITDA, adjusted net sales, adjusted net income attributable to Regal Beloit Corporation, free cash flow, free cash flow as a ©2020 Regal Beloit Corporation 3

 
2Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2020 Results & 3Q Framework ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 4

 
2Q 2020 CEO COMMENTARY AND OVERVIEW • Sales Down 24.7% on an Organic Basis ($ in millions, except per share data) 2Q 2019 2Q 2020 • Significant Headwinds From COVID-19 • 80/20 Pruning Initiatives Reduced Sales by ~190bps Adjusted Net Sales* $855.5 $634.1 • Margins Supported by Reorganization and Cost-Out Initiatives Adjusted Income from $93.8 $59.5 • Deleverage of 15.5% Operations* • Operating Margin Down 160bps On Severe Top Line Pressure Adjusted Operating Margin* 11.0% 9.4% • Strong Free Cash Flow of $77M • FCF Conversion at 255% Adjusted Diluted EPS* $1.49 $0.95 • COVID-19 a Material Headwind, But Bright Spots Emerging • April/May/June/July Orders Down 31%/27%/14%/7% Free Cash Flow* $76.3 $77.4 * Non-GAAP Financial Measurement, See Appendix for Reconciliation. ©2020 Regal Beloit Corporation 5

 
2Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2020 Results & 3Q Framework ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 6

 
2Q 2020 COMMERCIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Down 23.6% ($ Millions) from Operations* • Market Performance ($ Millions) – N.A. General Industrial Markets – N.A. Commercial HVAC $233.7 – Europe Air Moving – 80/20 Account Pruning (~1.5%) + Pool $175.9 + China Share Gain Adjusted Operating Margin* $22.2 • 6.0% of Adj. Net Sales • Down 350 bps from Prior Year – Volume $10.5 – Government Decree Burden – Freight 2Q19 2Q20 2Q19 2Q20 + Cost Reductions + Price/cost * Non-GAAP Financial Measurement, See Appendix for Reconciliation. Deleverage At 20% Despite Significant Topline Headwinds ©2020 Regal Beloit Corporation 7

 
2Q 2020 INDUSTRIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Down 19.8% ($ Millions) from Operations* • Market Performance ($ Millions) – General Industrial – Non-Res Construction – Oil & Gas – 80/20 Account Pruning (~1.8%) $155.5 + Data Centers $120.6 Adjusted Operating Margin* • 4.3% of Adj. Net Sales $5.2 • Up 420 bps from Prior Year + Cost Reductions + Price/Material Costs $0.2 + Mix – Volume 2Q19 2Q20 2Q19 2Q20 – Government Decree Burdens * Non-GAAP Financial Measurement, See Appendix for Reconciliation. Restructuring Firmly Underway, Significant Upside Remains ©2020 Regal Beloit Corporation 8

 
2Q 2020 CLIMATE SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Down 31.4% ($ Millions) from Operations* • Market Performance ($ Millions) – N.A. HVAC De-Stock (C-19) – Hospitality – FER Pre-Build Compare – 80/20 Account Pruning (~3.0%) $46.1 + Sequential Monthly HVAC Order Trends $262.3 Adjusted Operating Margin* • 12.4% of Adj. Net Sales $178.2 $22.1 • Down 520 bps from Prior Year – Volume – Government Decree Burdens – Mix (FER comp) + Price/Cost Neutral 2Q19 2Q20 2Q19 2Q20 + SG&A Reductions * Non-GAAP Financial Measurement, See Appendix for Reconciliation. HVAC Orders Rebounding and Building Momentum ©2020 Regal Beloit Corporation 9

 
2Q 2020 POWER TRANSMISSION SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Down 21.1% ($ Millions) from Operations* • Market Performance ($ Millions) – N.A. General Industrial – Upstream Oil & Gas $204.0 – Alternative Energy lumpiness – 80/20 Account Pruning (~1.0%) + Midstream (pre-existing projects) $159.4 + China $25.3 Adjusted Operating Margin* $21.7 • 13.6% of Adj. Net Sales • Up 120 bps from Prior Year + Cost Reductions + Mix + Price/Cost 2Q19 2Q20 2Q19 2Q20 – Volume – Government Decree Burden * Non-GAAP Financial Measurement, See Appendix for Reconciliation. Margins Up Despite Down Sales, Short Cycle Industrial Appears Stable. Deleverage at 8% ©2020 Regal Beloit Corporation 10

 
2Q 2020 KEY FINANCIAL METRICS & COST SAVINGS SUMMARY Capital Expenditures Balance Sheet as June 27, 2020 • $9.5 Million in 2Q 2020 • Total Debt of $1,125.7 Million • $50.0 Million Expected in FY 2020 • Net Debt of $693.5 Million • Down $66.9 Million from 1Q 2020 Effective Tax Rate (ETR) • Net Debt/Adj. EBITDA* of 1.6 • 22.4% Adj. ETR* in 2Q 2020 • Fully repaid revolver in the quarter • 21.0% Adj. ETR* Expected in FY 2020 Free Cash Flow* Restructuring & Related Costs • $77.4 Million in 2Q 2020, Up $1.1 Million from 2Q 2019 • $10.9 Million in 2Q 2020 • No Shares Purchased in 2Q 2020 • $25.0 Million Expected in FY 2020 • Considering Re-Instatement of Share Purchases Cost Savings Summary Annualized 1Q20 2Q20 3Q20 4Q20 FY20 (Dollars in Millions) Savings Permanent Cost Savings1 $45.0 $4.0 $8.5 $10.0 $13.5 $36.0 Temporary Cost Savings2 $6.0 $6.0 Total Cost Savings $4.0 $14.5 $10.0 $13.5 $42.0 1. Annualized permanent savings includes: 2019 $6M, 2020 $36M, 2021 $3M 2. Associated with furloughs and salary reductions * Non-GAAP Financial Measurement, See Appendix for Reconciliation. ©2020 Regal Beloit Corporation 11

 
2Q 2020 THIRD QUARTER FRAMEWORK FY 2020 Guidance Remains Suspended Third Quarter Framework • Net Sales Decline 8 - 12% Y/Y • PTS at High End of Range, Commercial at Low End • Deleverage at 12 - 18% Other FY 2020 Modeling Assumptions • Net Interest Expense of ~$40 Million • Capital Expenditures of ~$50 Million • Depreciation & Amortization Expense of ~$130 Million • Effective Tax Rate of ~21% • Restructuring & Related Expense of ~$25 Million • Expect FCF > 125% of Adj. Net Income Expect To Keep Deleverage Rates Below Historic Levels ©2020 Regal Beloit Corporation 12

 
2Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2020 Results & 3Q Framework ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 13

 
2Q Appendix

 
2Q 2020 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Six Months Ended Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 GAAP Diluted Earnings Per Share $ 0.69 $ 1.55 $ 1.81 $ 3.54 Restructuring and Related Costs 0.21 0.07 0.31 0.11 Loss (Gain) on Businesses Divested and Assets to be Exited 0.05 (0.10) 0.08 (0.69) Net Loss (Income) from Businesses Divested/to be Exited — (0.03) 0.01 (0.10) Executive Transition Costs — — 0.05 0.03 Adjusted Diluted Earnings Per Share $ 0.95 $ 1.49 $ 2.26 $ 2.89 ©2020 Regal Beloit Corporation 15

 
2Q 2020 APPENDIX Three Months Ended Power Commercial Transmission ADJUSTED INCOME FROM OPERATIONS Syste ms Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 GAAP Income (Loss) from Operations $ 6.2 $ 20.8 $ 3.2 $ (1.3) $ 20.0 $ 51.7 $ 16.5 $ 24.8 $ 45.9 $ 96.0 Restructuring and Related Costs 2.3 1.1 2.0 1.5 1.3 0.6 5.3 0.4 10.9 3.6 Loss (Gain) on Businesses Divested and Assets to be Exited 2.0 1.8 - - 0.8 (6.1) - 0.1 2.8 (4.2) Gain on Sale of Assets - - - - - - (0.1) - (0.1) - Operating Loss (Income) from Businesses Divested/to be Exited - (1.6) - - - (0.1) - - - (1.7) Executive Transition Costs - 0.1 - - - - - - - 0.1 Adjusted Income from Operations $ 10.5 $ 22.2 $ 5.2 $ 0.2 $ 22.1 $ 46.1 $ 21.7 $ 25.3 $ 59.5 $ 93.8 GAAP Operating Margin % 3.5 % 8.4 % 2.7 % (0.8)% 11.2 % 19.3 % 10.4 % 12.2 % 7.2 % 11.0 % Adjusted Operating Margin % 6.0 % 9.5 % 4.3 % 0.1 % 12.4 % 17.6 % 13.6 % 12.4 % 9.4 % 11.0 % Six Months Ended Power Commercial Transmission ADJUSTED INCOME (LOSS) FROM OPERATIONS Syste ms Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 GAAP Income (Loss) from Operations $ 18.7 $ 78.6 $ 2.7 $ (5.6) $ 49.5 $ 90.6 $ 45.0 $ 53.0 $ 115.9 $ 216.6 Restructuring and Related Costs 4.1 2.3 2.9 2.4 2.4 0.7 7.1 0.5 16.5 5.9 Purchase Accounting and Transaction Costs - 0.1 - - - - - - - 0.1 (Gain) Loss on Businesses Divested and Assets to be Exited 2.7 (32.8) 0.2 1.0 1.3 (4.8) - 1.2 4.2 (35.4) Gain on Sale of Assets - - - - - - (0.1) - (0.1) - Operating (Income) Loss from Businesses Divested/to be Exited - (3.3) - - 0.4 (2.0) - (0.3) 0.4 (5.6) Executive Transition Costs 0.5 0.5 0.4 0.3 0.5 0.5 0.4 0.4 1.8 1.7 Adjusted Income (Loss) from Operations $ 26.0 $ 45.4 $ 6.2 $ (1.9) $ 54.1 $ 85.0 $ 52.4 $ 54.8 $ 138.7 $ 183.3 GAAP Operating Margin % 5.0 % 16.1 % 1.1 % (1.9)% 12.7 % 17.1 % 12.7 % 12.8 % 8.5 % 12.5 % Adjusted Operating Margin % 6.9 % 9.8 % 2.5 % (0.6)% 13.9 % 16.7 % 14.8 % 13.4 % 10.1 % 10.9 % ©2020 Regal Beloit Corporation 16

 
2Q 2020 APPENDIX Three Months Ended Commercial Power Transmission ADJUSTED NET SALES Syste ms Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Net Sales $ 175.9 $ 246.3 $ 120.6 $ 155.5 $ 178.2 $ 267.9 $ 159.4 $ 204.0 $ 634.1 $ 873.7 Nets Sales from Businesses Divested/to be Exited - (12.6) - - - (5.6) - - - (18.2) Adjusted Net Sales $ 175.9 $ 233.7 $ 120.6 $ 155.5 $ 178.2 $ 262.3 $ 159.4 $ 204.0 $ 634.1 $ 855.5 Six Months Ended Commercial Power Transmission ADJUSTED NET SALES Syste ms Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Net Sales $ 375.3 $ 488.5 $ 250.2 $ 293.6 $ 388.3 $ 531.2 $ 354.5 $ 414.2 $ 1,368.3 $ 1,727.5 Nets Sales from Businesses Divested/to be Exited - (25.0) - - - (21.1) - (5.6) - (51.7) Adjusted Net Sales $ 375.3 $ 463.5 $ 250.2 $ 293.6 $ 388.3 $ 510.1 $ 354.5 $ 408.6 $ 1,368.3 $ 1,675.8 ©2020 Regal Beloit Corporation 17

 
2Q 2020 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended Six Months Ended (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 Income before Taxes $ 37.8 $ 83.8 $ 98.4 $ 191.8 Provision for Income Taxes 8.5 16.4 22.4 37.6 Effective Tax Rate 22.5% 19.6% 22.8% 19.6% Income before Taxes $ 37.8 $ 83.8 $ 98.4 $ 191.8 Loss (Gain) on Businesses Divested and Assets to be Exited 2.8 (4.2) 4.2 (35.4) Adjusted Income before Taxes $ 40.6 $ 79.6 $ 102.6 $ 156.4 Provision for Income Taxes $ 8.5 $ 16.4 $ 22.4 $ 37.6 Tax Effect from Loss (Gain) on Businesses Divested and Assets to be Exited 0.6 (0.2) 0.9 (5.5) Non-deductible Portion of Executive Transition Costs - - (0.5) - Adjusted Provision for Income Taxes $ 9.1 $ 16.2 $ 22.8 $ 32.1 Adjusted Effective Tax Rate 22.4% 20.4% 22.2% 20.5% ©2020 Regal Beloit Corporation 18

 
2Q 2020 APPENDIX Three Months Six Months FREE CASH FLOW Ended Ended (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 2020 2019 Net Cash Provided by Operating Activities $ 86.9 $ 112.3 $ 189.6 $ 130.6 Additions to Property Plant and Equipment (9.5) (36.0) (20.4) (56.2) Free Cash Flow $ 77.4 $ 76.3 $ 169.2 $ 74.4 GAAP Net Income Attributable to Regal Beloit Corporation $ 28.1 $ 66.6 $ 73.9 $ 152.5 Loss (Gain) on Businesses Divested and Impairments 2.8 (4.2) 4.2 (35.4) Tax Effect from Loss (Gain) on Businesses Divested and Impairments (0.6) 0.2 (0.9) 5.5 Adjusted Net Income Attributable to Regal Beloit Corporation $ 30.3 $ 62.6 $ 77.2 $ 122.6 Free Cash Flow as a Percentage of Adjusted Net Income Attributable to Regal Beloit Corporation 255.4 % 121.9 % 219.2 % 60.7 % ©2020 Regal Beloit Corporation 19

 
2Q 2020 APPENDIX ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Power Commercial Industrial Climate Transmission Syste ms Syste ms Solutions Solutions Total Regal Net Sales Three Months Ended Jun 27, 2020 $ 175.9 $ 120.6 $ 178.2 $ 159.4 $ 634.1 Impact from Foreign Currency Exchange Rates 2.7 4.1 1.8 1.5 10.1 Organic Sales Three Months Ended Jun 27, 2020 $ 178.6 $ 124.7 $ 180.0 $ 160.9 $ 644.2 Net Sales Three Months Ended Jun 29, 2019 $ 246.3 $ 155.5 $ 267.9 $ 204.0 $ 873.7 Net Sales from Business Divested/to be Exited (12.6) - (5.6) - (18.2) Adjusted Net Sales Three Months Ended Jun 29, 2019 $ 233.7 $ 155.5 $ 262.3 $ 204.0 $ 855.5 Organic Sales Growth % (23.6)% (19.8)% (31.4)% (21.1)% (24.7)% Net Sales Growth % (28.6)% (22.4)% (33.5)% (21.9)% (27.4)% ORGANIC SALES GROWTH Six Months Ended (Dollars in Millions) Power Commercial Industrial Climate Transmission Syste ms Syste ms Solutions Solutions Total Regal Net Sales Six Months Ended Jun 27, 2020 $ 375.3 $ 250.2 $ 388.3 $ 354.5 $ 1,368.3 Impact from Foreign Currency Exchange Rates 4.4 6.4 2.8 2.5 16.1 Organic Sales Six Months Ended Jun 27, 2020 $ 379.7 $ 256.6 $ 391.1 $ 357.0 $ 1,384.4 Net Sales Six Months Ended Jun 29, 2019 $ 488.5 $ 293.6 $ 531.2 $ 414.2 $ 1,727.5 Net Sales from Business Divested/to be Exited (25.0) - (21.1) (5.6) (51.7) Adjusted Net Sales Six Months Ended Jun 29, 2019 $ 463.5 $ 293.6 $ 510.1 $ 408.6 $ 1,675.8 Organic Sales Growth % (18.1)% (12.6)% (23.3)% (12.6)% (17.4)% Net Sales Growth % (23.2)% (14.8)% (26.9)% (14.4)% (20.8)% ©2020 Regal Beloit Corporation 20

 
2Q 2020 APPENDIX TOTAL GROSS DEBT/EBITDA TOTAL GROSS DEBT/ADJUSTED EBITDA (Dollars in Millions) (Dollars in Millions) LTM Jun 27, LTM Jun 27, 2020 2020 Net Income $ 164.4 Net Income $ 164.4 Plus: Taxes 46.0 Plus: Taxes 46.0 Plus: Interest Expense 48.2 Plus: Interest Expense 48.2 Less: Interest Income (5.6) Plus: Depreciation and Amortization 133.9 Less: Interest Income (5.6) Plus: Restructuring and Related Costs 41.9 Plus: Depreciation and Amortization 133.9 Plus: Impairment and Exit Related Costs 4.3 Plus: Executive Transition Costs EBITDA $ 386.9 2.3 Plus: Operating Loss from Businesses Divested/to be Exited 1.9 Less: Gain on Sale of Assets (3.9) Current Maturities of Debt $ 0.6 Less: Gain on Divestiture of Business 0.6 Long-Term Debt 1,125.1 Adjusted EBITDA $ 434.0 Total Gross Debt $ 1,125.7 Current Maturities of Debt $ 0.6 Long-Term Debt 1,125.1 Total Gross Debt/EBITDA 2.9 Total Gross Debt $ 1,125.7 Total Gross Debt/Adjusted EBITDA 2.6 ©2020 Regal Beloit Corporation 21

 
2Q 2020 APPENDIX TOTAL NET DEBT/EBITDA TOTAL NET DEBT/ADJUSTED EBITDA (Dollars in Millions) (Dollars in Millions) LTM Jun 27, LTM Jun 27, 2020 2020 Net Income $ 164.4 Net Income $ 164.4 Plus: Taxes 46.0 Plus: Taxes 46.0 Plus: Interest Expense 48.2 Plus: Interest Expense 48.2 Less: Interest Income (5.6) Less: Interest Income (5.6) Plus: Depreciation and Amortization 133.9 Plus: Depreciation and Amortization 133.9 Plus: Restructuring and Related Costs 41.9 Plus: Impairment and Exit Related Costs 4.3 Adjusted EBITDA $ 386.9 Plus: Executive Transition Costs 2.3 Plus: Operating Loss from Businesses Divested/to be Exited 1.9 Current Maturities of Debt $ 0.6 Less: Gain on Sale of Assets (3.9) Long-Term Debt 1,125.1 Less: Gain on Divestiture of Business 0.6 Less: Cash (432.2) Adjusted EBITDA $ 434.0 Total Net Debt $ 693.5 Current Maturities of Debt $ 0.6 Total Net Debt/Adjusted EBITDA 1.8 Long-Term Debt 1,125.1 Less: Cash (432.2) Total Net Debt $ 693.5 Total Net Debt/Adjusted EBITDA 1.6 ©2020 Regal Beloit Corporation 22

 
2Q 2020 APPENDIX OPERATING LEVERAGE-TOTAL REGAL Three Months Ended Six Months Ended (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 Change 2020 2019 Change GAAP Income from Operations $ 45.9 $ 96.0 $ (50.1) $ 115.9 $ 216.6 $ (100.7) Adjusted Income from Operations $ 59.5 $ 93.8 $ (34.3) $ 138.7 $ 183.3 $ (44.6) Net Sales $ 634.1 $ 873.7 $ (239.6) $ 1,368.3 $ 1,727.5 $ (359.2) Adjusted Net Sales $ 634.1 $ 855.5 $ (221.4) $ 1,368.3 $ 1,675.8 $ (307.5) GAAP Operating Leverage 20.9 % 28.0 % Adjusted Operating Leverage 15.5 % 14.5 % ©2020 Regal Beloit Corporation 23

 
2Q 2020 APPENDIX OPERATING LEVERAGE-COMMERCIAL SYSTEMS Three Months Ended Six Months Ended (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 Change 2020 2019 Change GAAP Income from Operations $ 6.2 $ 20.8 $ (14.6) $ 18.7 $ 78.6 $ (59.9) Adjusted Income from Operations $ 10.5 $ 22.2 $ (11.7) $ 26.0 $ 45.4 $ (19.4) Net Sales $ 175.9 $ 246.3 $ (70.4) $ 375.3 $ 488.5 $ (113.2) Adjusted Net Sales $ 175.9 $ 233.7 $ (57.8) $ 375.3 $ 463.5 $ (88.2) GAAP Operating Leverage 20.7 % 52.9 % Adjusted Operating Leverage 20.2 % 22.0 % OPERATING LEVERAGE-POWER TRANSMISSION SOLUTIONS Three Months Ended Six Months Ended (Dollars in Millions) Jun 27, Jun 29, Jun 27, Jun 29, 2020 2019 Change 2020 2019 Change GAAP Income from Operations $ 16.5 $ 24.8 $ (8.3) $ 45.0 $ 53.0 $ (8.0) Adjusted Income from Operations $ 21.7 $ 25.3 $ (3.6) $ 52.4 $ 54.8 $ (2.4) Net Sales $ 159.4 $ 204.0 $ (44.6) $ 354.5 $ 414.2 $ (59.7) Adjusted Net Sales $ 159.4 $ 204.0 $ (44.6) $ 354.5 $ 408.6 $ (54.1) GAAP Operating Leverage 18.6 % 13.4 % Adjusted Operating Leverage 8.1 % 4.4 % ©2020 Regal Beloit Corporation 24

 
2Q 2020 APPENDIX The following tables outline by quarter and full year the 2019 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited. Power Commercial Industrial Climate Transmission Syste ms Syste ms Solutions Solutions Total Regal Fiscal 2019 First Quarter Schedule for Ongoing Business Net Sales Three Months Ended March 30, 2019 $ 242.2 $ 138.1 $ 263.3 $ 210.2 $ 853.8 Net Sales from Businesses Divested/to be Exited (12.4) - (15.5) (5.6) (33.5) Adjusted Net Sales from Ongoing Business $ 229.8 $ 138.1 $ 247.8 $ 204.6 $ 820.3 GAAP Income (Loss) from Operations Three Months Ended March 30, 2019 $ 57.8 $ (4.3) $ 38.9 $ 28.2 $ 120.6 Restructuring and Related Costs 1.2 0.9 0.1 0.1 2.3 Purchase Accounting and Transaction Costs 0.1 - - - 0.1 (Gain) Loss on Businesses Divested and Assets to be Exited (34.6) 1.0 1.3 1.1 (31.2) Operating Income from Businesses Divested/to be Exited (1.7) - (1.9) (0.3) (3.9) Executive Transition Costs 0.4 0.3 0.5 0.4 1.6 Adjusted Income (Loss) from Operations of Ongoing Business $ 23.2 $ (2.1) $ 38.9 $ 29.5 $ 89.5 Ongoing Business Adjusted Operating Margin % 10.1 % (1.5)% 15.7 % 14.4 % 10.9 % Fiscal 2019 Second Quarter Schedule for Ongoing Business Net Sales Three Months Ended June 29, 2019 $ 246.3 $ 155.5 $ 267.9 $ 204.0 $ 873.7 Net Sales from Businesses Divested/to be Exited (12.6) - (5.6) - (18.2) Adjusted Net Sales from Ongoing Business $ 233.7 $ 155.5 $ 262.3 $ 204.0 $ 855.5 GAAP Income (Loss) from Operations Three Months Ended June 29, 2019 $ 20.8 $ (1.3) $ 51.7 $ 24.8 $ 96.0 Restructuring and Related Costs 1.1 1.5 0.6 0.4 3.6 (Gain) Loss on Businesses Divested and Assets to be Exited 1.8 - (6.1) 0.1 (4.2) Operating Income from Businesses Divested/to be Exited (1.6) - (0.1) - (1.7) Executive Transition Costs 0.1 - - - 0.1 Adjusted Income from Operations of Ongoing Business $ 22.2 $ 0.2 $ 46.1 $ 25.3 $ 93.8 Ongoing Business Adjusted Operating Margin % 9.5 % 0.1 % 17.6 % 12.4 % 11.0 % ©2020 Regal Beloit Corporation 25

 
2Q 2020 APPENDIX The following tables outline by quarter and full year the 2019 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited. Power Commercial Industrial Climate Transmission Syste ms Syste ms Solutions Solutions Total Regal Fiscal 2019 Third Quarter Schedule for Ongoing Business Net Sales Three Months Ended September 28, 2019 $ 214.8 $ 143.8 $ 230.9 $ 182.8 $ 772.3 Net Sales from Businesses Divested/to be Exited - - (0.9) - (0.9) Adjusted Net Sales from Ongoing Business $ 214.8 $ 143.8 $ 230.0 $ 182.8 $ 771.4 GAAP Income (Loss) from Operations Three Months Ended September 28, 2019 $ 16.6 $ (2.3) $ 37.6 $ 20.9 $ 72.8 Restructuring and Related Costs 2.5 3.1 0.8 0.9 7.3 Loss on Businesses Divested and Assets to be Exited 0.1 - 0.1 - 0.2 Operating Income from Businesses Divested/to be Exited - - 0.9 - 0.9 Executive Transition Costs - 0.1 - - 0.1 Adjusted Income from Operations of Ongoing Business $ 19.2 $ 0.9 $ 39.4 $ 21.8 $ 81.3 Ongoing Business Adjusted Operating Margin % 8.9 % 0.6 % 17.1 % 11.9 % 10.5 % Fiscal 2019 Fourth Quarter Schedule for Ongoing Business Net Sales Three Months Ended December 28, 2019 $ 175.9 $ 120.6 $ 178.2 $ 159.4 $ 634.1 Net Sales from Businesses Divested/to be Exited - - - - - Adjusted Net Sales from Ongoing Business $ 175.9 $ 120.6 $ 178.2 $ 159.4 $ 634.1 GAAP Income (Loss) from Operations Three Months Ended December 28, 2019 $ 7.9 $ (1.4) $ 35.7 $ 19.5 $ 61.7 Restructuring and Related Costs 7.0 2.9 2.7 5.5 18.1 Gain on Sale of Assets - - (3.8) - (3.8) Loss on Businesses Divested and Assets to be Exited 0.1 - - 0.4 0.5 Operating (Income) Loss from Businesses Divested/to be Exited - - 0.6 - 0.6 Executive Transition Costs 0.1 0.1 0.1 0.1 0.4 Adjusted Income from Operations of Ongoing Business $ 15.1 $ 1.6 $ 35.3 $ 25.5 $ 77.5 Ongoing Business Adjusted Operating Margin % 8.6% 1.3% 19.8% 16.0% 12.2% ©2020 Regal Beloit Corporation 26

 
2Q 2020 APPENDIX The following tables outline by quarter and full year the 2019 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited. Power Commercial Industrial Climate Transmission Syste ms Syste ms Solutions Solutions Total Regal Fiscal 2019 Twelve Months Ended for Ongoing Business Net Sales Twelve Months Ended December 28, 2019 $ 879.2 $ 558.0 $ 940.3 $ 756.4 $ 3,133.9 Net Sales from Businesses Divested/to be Exited (25.0) - (22.0) (5.6) (52.6) Adjusted Net Sales from Ongoing Business $ 854.2 $ 558.0 $ 918.3 $ 750.8 $ 3,081.3 GAAP Income (Loss) from Operations Nine Months Ended December 28, 2019 $ 103.1 $ (9.3) $ 163.9 $ 93.4 $ 351.1 Restructuring and Related Costs 11.8 8.4 4.2 6.9 31.3 Purchase Accounting and Transaction Costs 0.1 - - - 0.1 Gain on Sale of Assets - - (3.8) - (3.8) (Gain) Loss on Businesses Divested and Assets to be Exited (32.6) 1.0 (4.7) 1.6 (34.7) Operating Income from Businesses Divested/to be Exited (3.3) - (0.5) (0.3) (4.1) Executive Transition Costs 0.6 0.5 0.6 0.5 2.2 Adjusted Income from Operations of Ongoing Business $ 79.7 $ 0.6 $ 159.7 $ 102.1 $ 342.1 Ongoing Business Adjusted Operating Margin % 9.3 % 0.1 % 17.4 % 13.6 % 11.1 % 2019 ADJUSTED DILUTED EARNINGS PER SHARE FOR ONGOING Twelve BUSINESS Three Months Ended Months Ended Dec Mar 30, 2019 Jun 29, 2019 Sep 28, 2019 Dec 28, 2019 28, 2019 Adjusted Diluted Earnings Per Share $ 1.43 $ 1.52 $ 1.35 $ 1.25 $ 5.55 Earnings Per Share from Businesses Divested/to be Exited (0.03) (0.03) - - (0.06) Adjusted Diluted Earnings Per Share for Ongoing Business $ 1.40 $ 1.49 $ 1.35 $ 1.25 $ 5.49 ©2020 Regal Beloit Corporation 27

 
2Q 2020 APPENDIX Shipping 1Q 2Q 3Q 4Q FY Days 2014 63 63 63 64 253 2015 64 63 64 59 250 2016 64 64 63 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 61 250 2020 63 63 63 64 253 . Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 . Fiscal Years 2015, 2016, 2017, 2018 and 2019 have 52 weeks . Fiscal Year 2014 and 2020 have 53 weeks ©2020 Regal Beloit Corporation 28