FIRST QUARTER FISCAL YEAR 2018 FINANCIAL RESULTS FINANCIAL RESULTS - PowerPoint PPT Presentation

FIRST QUARTER FISCAL YEAR 2018 FINANCIAL RESULTS FINANCIAL RESULTS August 3, 2017

CAUTIONARY STATEMENT UNDER THE CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT This presentation and discussion contains certain forward looking statements that are This presentation and discussion contains certain forward ‐ looking statements that are subject to the Safe Harbor and Cautionary language contained in the press release we issued on August 2, 2017, as well as other factors that could cause actual results to differ materially from those discussed and that are disclosed in our filings with the Securities and Exchange Commission Securities and Exchange Commission. Some comparisons will refer to certain non ‐ GAAP measures. Our earnings release and SEC filings contain additional information about these non ‐ GAAP measures, why we use SEC fili i ddi i l i f i b h GAAP h them and why we believe they are helpful to investors, and contain reconciliations to GAAP data. 2

STRATEGIC UPDATE Consolidated Rexnord • Formal launch of DiRXN (“ Direction ”), our proprietary digital enterprise strategy Process & Motion Control Process & Motion Control Core sales (1) growth accelerates to +5% in 1Q • • New e ‐ commerce solution provides enhanced capabilities to customers Water Management Core sales, margin comparisons expected to be positive through balance of year • • Initial connected product designs to be launched in FY18 Cash Flow & Balance Sheet Solid 1Q start for Free Cash Flow (1) supports unchanged FY18 outlook • Net debt leverage ratio (1) declines to 3.0x • (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. 3

DiRXN = DIGITAL REXNORD = ‘DIRECTION’ DiRXN = DIGITAL REXNORD = DIRECTION • Enterprise-wide initiative to enable improved customer productivity via p p p y digitally-connected tools, products, and services • Differentiates by digitally connecting traditional mechanical solutions to control systems, engineering & asset management software, and IIoT • Encapsulates our deep application knowledge into digital components p p pp g g p for easy customer & partner use at each stage of their lifecycle • Leverages common digital infrastructure across Business Platforms – with unique deliverables to match end-market requirements • Launched May 2017 with first commercial shipments in June y p Reduce Downtime & Expedite Recovery Mitigate unexpected process interruption, enhance diagnostics Reduce routine inspections, maintenance frequency, costs R d ti i ti i t f t Optimize Asset Management Avoid investment in spare units & related storage footprint Plug-and-Play Capabilities Deliver complete with plug-and-play connectivity Deliver complete with plug and play connectivity Unit birth certificate with baseline performance signature 24/7 access to online operating data, instructional videos, performance specifications, CAD drawings, upgrade tools 4

FINANCIAL UPDATE FINANCIAL UPDATE First Quarter Fiscal Year 2018 Adjusted EBITDA (1) of $86 million increased 9% year over year Adjusted EBITDA ( ) of $86 million increased 9% year over year • • • Net sales increased 3% year over year Cambridge acquisition added 3% • • RHF product line exit reduced sales by 2% • • Foreign currency translation reduced sales by 1% Foreign currency translation reduced sales by 1% Core sales (1) increased 3% year over year • • GAAP EPS of $0.20 Adjusted EPS (1) of $0.27 • Fiscal Year 2018 Outlook Core sales growth in low ‐ single ‐ digit percentage range (2) • Adjusted EBITDA in $365 ‐ $385 million range (2) • j $ $ g Free cash flow (1) to exceed net income • (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. (2) Forward ‐ looking information and a non ‐ GAAP measure. Although Rexnord can quantify certain elements, it is not able to quantify all variances from GAAP without unreasonable efforts because certain factors are unknown at this time and out of Rexnord’s control. 5

1Q FY18 SUMMARY 1Q FY18 SUMMARY 1Q FY18 1Q FY17 Change Adjusted Net Sales (1,2) $488 $465 5% 1Q FY18 Net Sales Growth from: Core 3% Acquisitions q 3% Translation (1%) 41% Adjusted EBITDA (1) 59% $86 $79 9% % of Sales % of Sales 17.6% 17.6% 17.0% 17.0% 60 bps 60 bps • Core growth increases to 3% year over year • Cambridge contributes 3% to growth Process & Motion Control Water Management • Adjusted EBITDA margin increases 60 bps (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. (2) Net Sales in 1Q FY17 is adjusted for the RHF product line exit in FY17. 6

PROCESS & MOTION CONTROL 1Q FY18 1Q FY17 Change 1Q FY18 Net Sales Net Sales $288 $264 9% Growth from: Growth from: 52% 48% Core 5% Acquisitions 5% Translation (1%) Adjusted EBITDA (1) $58 $49 17% OEMs & End Users % of Sales 20.0% 18.6% 140 bps Maintenance, Repair, Operations End ‐ Market Outlook Assumed in Guidance • Core growth was 5% year over year Industrial Distribution US & Canada • Cambridge added 5% to growth Europe Rest of World • Adjusted EBITDA increased 17% year over year Food & Beverage: Global Food & Beverage: Global Commercial Aerospace: Global (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in Process Industries: Global the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. 7

WATER MANAGEMENT 1Q FY18 1Q FY17 Change 1Q FY18 Net Sales Adjusted Net Sales (1,2) $200 $202 (1%) Growth from: Growth from: 72% 72% Core 0% 28% Acquisitions ‐‐ Translation (1%) Adjusted EBITDA (1) $37 $38 (3%) Water Safety, Quality, Flow Control & Conservation % of Sales 18.6% 19.0% (40 bps) Water Infrastructure End ‐ Market Outlook Assumed in Guidance • Core growth was flat year over year Nonresidential Construction: US & Canada Residential Construction: US & Canada • Adjusted EBITDA margin decreased by 40 bps Water & Wastewater Infrastructure Europe China China Middle East (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. Rest of World (2) Net Sales in 1Q FY17 is adjusted for the RHF product line exit in FY17. 8

CASH FLOW & BALANCE SHEET Net Debt Leverage Ratio (1) Free Cash Flow ($ millions) (2) 250 250 4.0x 4 0 200 3.8x 3.7x 3.7x 3.5x 150 100 197 167 139 141 3.0x 50 30 3.1x 3.1x 3.0x 8 0 2.5x (50) 31 ‐ Mar ‐ 14 31 ‐ Mar ‐ 15 31 ‐ Mar ‐ 16 31 ‐ Mar ‐ 17 31 ‐ Mar ‐ 17 30 ‐ Jun ‐ 17 FY14 FY15 FY16 FY17 3 Mos FY17 3 Mos FY18 Total Debt ($ millions) (3) Total Liquidity ($ millions) (4) 1,000 2,500 Available Borrowing Capacity Cash & Equivalents 800 2,000 516 1,500 600 485 490 490 370 370 339 339 400 1,000 1,944 1,912 1,893 1,595 1,595 1,592 500 200 341 344 346 346 346 336 0 0 31 ‐ Mar ‐ 14 31 ‐ Mar ‐ 15 31 ‐ Mar ‐ 16 31 ‐ Mar ‐ 17 31 ‐ Mar ‐ 17 30 ‐ Jun ‐ 17 31 ‐ Mar ‐ 14 31 ‐ Mar ‐ 15 31 ‐ Mar ‐ 16 31 ‐ Mar ‐ 17 31 ‐ Mar ‐ 17 30 ‐ Jun ‐ 17 (1) Net Debt Leverage is defined as the ratio of total debt less cash to pro forma LTM Adjusted EBITDA. (2) Free Cash Flow is defined as Cash from Operations less Capital Expenditures, and is a Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. (3) Total Debt includes a New Market Tax Credit Receivable ($28), which is more than offset by an associated payable ($37) that is also included in Total Debt in all periods presented. (4) Liquidity is defined as cash and cash equivalents plus available borrowing capacity. 9

APPENDIX APPENDIX

FISCAL YEAR 2018 OUTLOOK FISCAL YEAR 2018 OUTLOOK Core sales % growth (1) Core sales % growth (1) + Low Single Digit + Low Single Digit Adjusted EBITDA (1) $365 ‐ $385 million Free Cash Flow (1) > Net Income Depreciation & Amortization (2) $ 88 million Interest Expense (LIBOR ≤ 1.5%) $ 85 million Effective Tax Rate (3) (3) ff ~ 32% Capital Expenditures 2% to 2.5% of sales (1) Non ‐ GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8 ‐ K filed with the Securities and Exchange Commission on August 2, 2017. (2) Excludes an estimated $1 million of accelerated depreciation related to supply chain optimization and footprint repositioning initiatives. (3) As applied to calculation of Adjusted Net Income. 11