FOURTH QUARTER FISCAL YEAR 2018 FINANCIAL RESULTS May 15, 2018 - PowerPoint PPT Presentation

FOURTH QUARTER FISCAL YEAR 2018 FINANCIAL RESULTS May 15, 2018

CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT 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 May 14, 2018, 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. 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 them and why we believe they are helpful to investors, and contain reconciliations to GAAP data. 2

STRATEGIC UPDATE Consolidated Rexnord • 4Q net sales growth increases to +14% year over year, core sales (1) growth to +7% • FY18 Adjusted EBITDA (1) increases 13% year over year to $390 million • Next stage of Supply Chain Optimization & Footprint Repositioning under way Process & Motion Control • 4Q core sales growth sustained at +6% • Centa Power Transmission integration on track, contributes 5% to PMC sales growth Water Management • 4Q core sales growth increases to +8% • Plan to divest non-strategic VAG operations from Water Management platform Cash Flow & Balance Sheet • Net debt leverage ratio (1) declines to 2.7x • FY18 free cash flow (1) increases to $188 million Note: All FY18 and 4QFY18 figures include VAG results. (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 May 14, 2018. 3

FOCUS WATER PLATFORM AROUND ZURN Zurn is a leader in the North American specification-grade plumbing products market • Significant presence in later-cycle institutional nonresidential building construction  Education, health care, transportation, public sectors • FY18 core revenue growth of 4% exceeded estimated market growth • FY18 Adjusted EBITDA margin expanded by more than 100 bps to 25% • Product innovator with established new product pipeline 400ST n-Pattern Backflow Series EZ1 Floor Drain System F1960 PEX Expansion System Sundara Handwashing System Anticipate reporting VAG as Discontinued Operations in 1QFY19 • Acquired pre-IPO in FY12 under former private-equity ownership • Engineered valves for water & wastewater infrastructure, industry, hydropower • Potential proceeds can further reduce financial leverage 4

SCOFR 2.0 Second phase of S upply C hain O ptimization & F ootprint R epositioning initiatives • Investing to reduce fixed costs, enhance productivity, and improve free cash flow  $20-million total investment includes $11 of capital expenditures  $15-million estimated total annual structural cost reductions • SCOFR 2.0 projects to be completed in late FY19/early FY20 5

AEROSPACE CENTER OF EXCELLENCE Customer Value Creation • Downer’s Grove Site April 2018 Foster joint collaboration & innovation • Eliminate inefficiencies in value chain • Increase customer operating productivity Industry 4.0 Operating Model • Closed-loop digital processes from quotation and order entry to engineering and manufacturing, inspection, and shipment • Advanced manufacturing technologies Shareholder Value Creation Assembly Cell • Optimize new facility on existing site Development • Increase asset utilization • Reduce lead-times, working capital • Deliver BIC customer satisfaction Advanced Machine Tools Rexnord is a leading developer & manufacturer of aerospace bearing & seal products 6

ACQUISITION UPDATE PMC: Centa Power Transmission (February 2018) • Flexible couplings leader, ~$100 million annual sales • Expands addressable applications, served markets Share End Market of Sales Key Applications • Majority of sales from MRO applications Marine ~ 40% Passenger Ships, Yachts, Workboats • Commercial integration process well under way Power Generation ~ 40% Gensets, Wind Turbines • Industrial 15-20% Compressor/Pump Packages, Mobile Equipment RBS identifying opportunities in internal processes Transportation <5% Rail • Margins present substantial value-creation potential source: Company estimates WM: World Dryer (October 2017) • Largest installed base in North American hand dryer market • Approximately $20 million of annual sales • Additive to addressable nonresidential building washroom content • Commercial integration complete • Significant reduction in product line complexity • Margins enable re-investment in new product development 7

FINANCIAL UPDATE Fourth Quarter Fiscal Year 2018 (1) • Adjusted EBITDA (2) of $111 million increased 13% year over year • Net sales increased 14% year over year • World Dryer, Centa acquisitions increased sales by 4% • Foreign currency translation increased sales by 3% Core sales (2) increased 7% year over year • • Loss Per Share of ($0.65), including $111-million goodwill impairment charge (VAG) • Adjusted EPS (2) of $0.42 Fiscal Year 2018 (1) • Adjusted EBITDAof $390 million increased 13% year over year • Net sales increased 8% year over year • Core sales increased 5% year over year • Earnings Per Share of $0.50, including the impairment charge • Adjusted EPSof $1.39 (1) All results include VAG operations. (2) 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 May 14, 2018. 8

INITIATING FISCAL YEAR 2019 OUTLOOK Fiscal Year 2019 Outlook • Outlook excludes VAG Core sales growth (1) in mid-single-digit percentage range (2) • Adjusted EBITDA (1) in $420 - $440 million range (2) • • Free cash flow (1) to exceed net income (2) • Anticipate reporting VAG results as Discontinued Operations beginning in 1QFY19  VAG generated revenue of $215 million in FY18 (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 May 14, 2018. (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. 9

FY19 OUTLOOK (1) ADJUSTED EBITDA (2) BRIDGE Bridge to midpoint of $420 - $440 million range 440 (6) 430 • +11-12% growth in 13 • 420 Adjusted EBITDA at midpoint 410 • Assumes +MSD% core growth 31 400 • Assumes no acquisitions 430 390 • Excludes VAG (1) (3) (1) 390 380 386 370 360 FY18 Pension FY18 Growth FY19E Adj Adjusted Accounting VAG Base Adj & M&A EBITDA (4) EBITDA (2) Change (3) EBITDA (2) RBS Midpoint (1) Anticipating VAG results to be reported as Discontinued Operations beginning in the 1Q FY19. (2) 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 May 14, 2018. (3) The adoption of FASB ASU No. 2017-17 (in fiscal year 2019) requires changes to be applied retrospectively, reducing fiscal year 2018 Adjusted EBITDA by $3 million. (4) 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. 10

4Q FY18 SUMMARY 4Q FY18 4Q FY17 Change Adjusted Net Sales (1,2) $575 $503 14% Growth from: Core 7% Acquisitions 4% Translation 3% Adjusted EBITDA (1) $111 $98 13% % of Sales 19.3% 19.5% (20 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 May 14, 2018. (2) Net Sales in 4Q FY17 is adjusted for the RHF product line exit in FY17. All periods include VAG. 11

PROCESS & MOTION CONTROL 4Q FY18 4Q FY17 Change End-Market Outlook Assumed in Guidance Net Sales $361 $314 15% Industrial Distribution Growth from: US & Canada Core 6% Europe Acquisitions 5% Rest of World Translation 4% Food & Beverage: Global Commercial Aerospace: Global Adjusted EBITDA (1) $86 $70 22% Process Industries: Global % of Sales 23.8% 22.3% 150 bps • Net sales growth was 15% year over year • Core growth was 6% year over year • Adjusted EBITDA margin increased by 150 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 May 14, 2018. 12