Regal Rexnord Corporation

Morning, and welcome to the Regal Rex Nord 3rd Quarter 2021 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I'd now like to turn the conference over to Robert Berry, Vice President of Investor Relations. Please go ahead.

Great. Thank you, Anthony. Good morning and welcome to Regal Rexnord's third quarter 2021 earnings conference call. Joining me today are Louis Pinkham, our chief executive officer, and Rob Reihard, our vice president and chief financial officer. Before turning the call over to Louis, I would like to remind you that the statements made in this conference call that are not historical in nature are forward-looking statements. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results, and actual results could differ materially from those expressed or implied in forward-looking statements. For a list of factors that could cause actual results to differ materially from projected results, please refer to today's earnings release and our SEC filings. On slide three, we state that we are presenting certain non-GAAP financial measures in this presentation. We believe that these are useful financial measures to provide you with additional insight into our operating performance and for helping investors understand and compare our operating results across accounting periods, and in the same manner as management. Please read this slide for information regarding these non-GAAP financial measures, and please see the appendix for reconciliations of these measures to the most comparable measures in accordance with GAAP. Turning to slide four, let me briefly review the agenda for today's call. Louis will lead off with his opening comments. Rob Rahard will then provide our third quarter financial results in detail and discuss updates to our 2021 and 2022 guidance. Louis will then come back to discuss the acquisition of Arrowhead Systems, which we announced today. We will then move to Q&A, after which Louis will have some closing remarks. And with that, I'll turn the call over to Louis.

Thanks, Rob. And good morning, everyone. Thanks for joining us to discuss our third quarter earnings and to get an update on our business. And thank you for your interest in the new Regal Rexnord. While unprecedented levels of inflation and severe supply chain disruptions are surely top of mind, as they have been for Regal Rexnord, on the whole, I'm feeling upbeat, especially given our team's strong performance in the third quarter, along with strong market demand, but also because of the tremendous progress we are making transforming Regal, now Regal Rexnord, into a higher margin, faster growing, more cash generative, and higher return enterprise. Despite many external headwinds in the quarter, Regal Rexnord posted record operating margins and record earnings on robust 16% organic top line growth. Many factors drove this performance, But a couple highlights include being modestly price cost positive and achieving market share gains across our portfolio. And with our third quarter's orders up 27% and up at a low 20s rate in October, we are confident we will have healthy top line momentum as we enter 2022. We also closed a transformational merger with Rexnord's process and motion control business, synergies from which should add materially to our margins, free cash flow, and organic growth profile over the next few years, particularly as we begin to deliver the benefits of selling our customers an integrated industrial powertrain solution, which, by the way, has already started to happen. I am also extremely excited to announce today our acquisition of Arrowhead, a highly strategic bolt-on that we expect to be accretive to adjusted EPS in year one, to achieve an ROIC exceeding 10% before year five, and which promises to open an array of growth vectors for our conveying business, both organic and inorganic. I will discuss Arrowhead in more detail later on this call. I'll note, however, that even after adding PMC and Arrowhead, our balance sheet remains very healthy at about one times levered, and combined with our strong free cash flow, gives us lots of flexibility to create more shareholder value from various capital deployment initiatives going forward. Before turning it over to Rob, I want to spend a minute saying thank you to all our Regal Rexnord associates around the world. Our strong performance at its core is about talent. It's about our nearly 30,000 Regal Rexnord associates and their disciplined execution, leveraging their individual skills and diverse perspective, exhibiting dedication and hard work, and acting with urgency for our customers. always guided by our Regal Rexnord values. On October 5th, the day after we closed the PMC merger, I and many Regal associates spent the day at the PMC headquarters in Milwaukee, now the headquarters of our combined PMC and PTS business, Motion Control Solutions, or MCS. We spent significant time walking every floor of our 10-story building meeting with hundreds of associates along the way. That was a great experience on so many levels. But one of the things that excited me most was all the talk of 80-20, of customer segmentation, of lean principles, of SKU rationalization, of the importance of diversity engagement and inclusion, and of using data to make decisions. Bluntly, I was thrilled because this is the language of legacy Regal and of the new Regal REST Nord. I think so many of our management tools, 80, 20 prime among them, are helping us navigate these choppy times just a little bit better than our competition. But it is the disciplined execution of our associates using these tools that is helping us succeed. So again, a sincere thank you to all our associates. Another welcome to our PMC associates. And I look forward to being able to welcome the approximately 300 Arrowhead associates to the Regal Rexnor team later this quarter. And now I'll turn the call over to Rob, who will take you through the financials in more detail and discuss our guidance, after which I'll be back to discuss Arrowhead.