Regal Beloit(RRX) - 2024 Q3 - Quarterly Results

Financial Performance - GAAP diluted EPS of $1.09 and adjusted diluted EPS of $2.49, up 18.6% year-over-year[1] - Sales totaled $1,477.4 million, down 10.4% compared to the previous year; organic sales decreased by 2.7%[1] - Adjusted EBITDA of $337.0 million, slightly up from $330.0 million year-over-year, with a record adjusted EBITDA margin of 22.8%, an increase of 110 basis points[1] - Net income attributable to Regal Rexnord Corporation for the three months ended September 30, 2024, was $72.7 million, compared to a net loss of $139.5 million in the same period last year[16] - Basic earnings per share for the three months ended September 30, 2024, was $1.09, compared to a loss of $2.10 per share in the same period last year[16] - The company reported a net income of $73.0 million for Q3 2024, a significant recovery from a net loss of $138.6 million in Q3 2023[25] Sales and Revenue Breakdown - Automation & Motion Control segment net sales were $401.6 million, a decrease of 4.3%[3] - Industrial Powertrain Solutions segment net sales were $644.2 million, an increase of 0.5%[4] - Power Efficiency Solutions segment net sales were $431.6 million, a decrease of 6.4%[5] - Total net sales for the three months ended September 30, 2024, reached $1,477.4 million, with Industrial Powertrain Solutions contributing $644.2 million, Power and Efficiency Solutions $431.6 million, and Automation & Motion Control $401.6 million[34] - For the nine months ended September 30, 2024, total net sales amounted to $4,572.7 million, with Industrial Powertrain Solutions at $1,963.1 million, Power and Efficiency Solutions at $1,227.8 million, and Automation & Motion Control at $1,224.0 million[35] Debt and Cash Management - Paid down $114 million of gross debt in Q3, totaling $733 million year-to-date, on track to pay down approximately $900 million of debt for the year[1] - Long-term debt decreased to $5,654.6 million as of September 30, 2024, compared to $6,377.0 million at the end of 2023[17] - Cash and cash equivalents were $458.6 million as of September 30, 2024, down from $574.0 million at the end of 2023[17] - Total current liabilities decreased to $1,208.6 million as of September 30, 2024, from $1,326.4 million at the end of 2023[17] - Net Debt as of September 30, 2024, was $5,198.9 million, with a Gross Debt to Adjusted EBITDA ratio of 4.23[26] Guidance and Future Expectations - Company expects modestly positive organic growth in Q4 2024[1] - Annual guidance for 2024 adjusted diluted EPS updated to a range of $9.15 to $9.45, down from $9.40 to $9.80[2] - The company provided annual guidance for GAAP diluted EPS in the range of $3.27 to $3.57 for 2024[21] - The company expects to realize $100 million in synergies within 18 months, improving the interest coverage ratio to 3.63 when including these synergies[28] Operational Efficiency and Cost Management - Synergies of $27 million achieved in Q3, on track to deliver $90 million for the year[1] - The company incurred transaction and integration-related costs of $10.5 million, primarily associated with the Altra Transaction[22] - Restructuring and related costs for the three months totaled $10.7 million, while for the nine months, these costs were $35.5 million[34][35] - The company is focused on actions related to employee reductions, facility consolidations, and product line exits as part of its restructuring strategy[34][35] Profitability Metrics - Adjusted EBITDA for Regal Rexnord was $339.2 million for the three months ended September 30, 2024, compared to $330.0 million excluding Industrial Systems[23] - Adjusted operating margin improved to 15.4% in Q3 2024 from 9.3% in Q3 2023[22] - The adjusted EBITDA margin for the three months ended September 30, 2024, was 26.2%, compared to 24.2% in the same period of 2023[19] - Adjusted Income from Operations for Q3 2024 was $290.3 million, up from $209.2 million in Q3 2023, representing an increase of 38.8%[24] Cash Flow and Investment Activities - Net cash provided by operating activities decreased to $154.8 million from $186.7 million year-over-year[18] - Adjusted free cash flow for the nine months ended September 30, 2024, is $326.5 million, down from $512.2 million in 2023[29] - The company had a net cash used in investing activities of $29.3 million for the three months ended September 30, 2024[18] Market and Economic Impact - The company experienced a foreign currency impact of (0.3)% on organic sales growth for the three months ended September 30, 2024[19] - The effective tax rate for the three months ended September 30, 2024, is 10.3%, compared to (10.1)% in the same period of 2023[30]