RBC - Earnings call transcript Q3 2017 | Regal Rexnord Corporation

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Operator

Good day, and welcome to the Regal Beloit Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Rob Cherry, Vice President-Investor Relations. ahead. go Please

Robert Cherry

Good quarter operator. welcome Regal to Thank earnings morning, conference third XXXX call. Beloit's you, and

Joining me Hinrichs, today Officer; are Mark Gliebe, Chairman Chief Chief Officer. Officer; and Jon and Operating and President Chuck Vice Financial Schlemmer, Chief Executive

Mark, nature Before would remind are made this forward-looking like statements are that I conference turning statements. the over call that not to call in the to you historical in

materially actual from inherent are expressed difficulties there in results not could results future statements in differ Forward-looking implied are and those or forward-looking guarantees, predicting since statements.

materially measures are cause state For we projected a manner in this across financial for that this today's SEC factors non-GAAP comparable operating and with into refer useful list these and our believe to in provide earnings our measures financial X, compare and see financial slide operating that additional please presentation. of our same management. We we the to you actual filings. could results release with in performance On measures GAAP. understand and are of to differ measures presenting and these insight accounting Appendix accordance results, regarding to the these non-GAAP periods from investors please for information helping as Please results reconciliation measures, for most the slide read certain

Now, I will turn the call over to Mark.

Mark Joseph Gliebe

three the to our I'll update. move our call, Thanks, performance you and Jon follow joining I'll you agenda. color thank and segments. on quarter provide we'll summarize your After a and Rob. a for Chuck Thank markets, in few third will will financial everyone. We'll normal Welcome, our opening that, of make Q&A. interest Regal. for operations provide comments.

later XX, started approved to Chuck of In Regal's us has with Rob. I Board Chuck's Directors comments XXXX. effective Chief save be today, Chuck March, Financial March so conjunction the I planned his introducing and of announce Before instead Officer will Mr. retirement. appointment Officer, of that retirement Chuck's with and will through Regal's like on as effective Financial appreciation get announcement, I the Regal focus Hinrichs, Rehard my until announced with end Rob of Chief would of welcoming

as on We Regal XXXX, already have Accounting the But please XXXX Rob in allow if of may Prior Mr. with role global team. Planning have of you In Navy Rob responsibility President, U.S. investor responsibility Regal, Many of Corporation, and finance a during Analysis to Eaton increasing are Rehard Deloitte Rob in Principal Regal January SEAL. Rob the met Rob various me a background. Regal's Touche. & Vice Financial veteran share and Corporate to Controller January President, briefly events. of and joined Rehard Masco excited recent is appointed of Corporation, roles as Vice not, is his former Emerson with Electric Industries, for Navy his organization. Officer. current and to was Cooper joining served to

please on filed career further X-K For refer today. earlier accomplishments, to background information Rob's and the

team. Regal growth are three in performance in all top said now about third today's I'll organic is solid Rob segments. having with with the delivered normal Regal call. organic quarter our the X.X% in I line with Rob earlier, we on excited on us agenda. As growth and sales a very sitting continue up

and broad growth industrial North in Asia the up growth strong and oil end residential rate and American the In and quarter with was third in growth At a in segment a organic level, In where sequentially. fact, segment Asia. was East organic and the seventh markets with gas. the HVAC and strength commercial Europe, the end Middle in improved growth row a quarter tepid the up was in market the segment, growth Climate C&I in X.X% organic X%

From Finally, three were PTS in distribution segment, profit adjusted in sales renewable with oil and in energy. quarter, for segments. gas, operating robust and sequentially growth margins a the all improved XX.X% strong an up the organic perspective, operating

operating key the However, second, drivers to XX year-over-year. in and The margins points. per points up year-over-year year-over-year. basis, for C&I op were segments share decrease margins Climate commodity margin XX of rate the a The cash impact declined was year-over-year difficult net the and earnings XXX%. to in year-to-date Climate operating both basis quarter On first, the relatively the was adjusted inflation and adjusted Free basis diluted C&I. adjusted resulting are flow X.X% income up comparisons

pay own shares. us helped and million flow debt we in cash repurchased free $XX strong down $XX million our Our of

As the quarter. end recall, further cash are opportunities By are our been met have year. on working other we you repatriating of of fourth Overall that on repatriation this we yield sales There million the organic growth. may benefits we with working solid goal. strong could in quarter September, $XXX a

year-over-year we up as remain we basis expect are year-over-year low our year XX that up quarter, fourth price In single-digit. fourth performance, mid growth from fourth increase be the margin as overall of enter On price across mentioned and points formulas most result the to op earlier, and, further, do we adjusted of total steel. the up our as continued are encouraged are forward, inflation We September. in implementing and expect to are quarter, increases organic to I businesses. now Looking through orders pressure quarter we a continue we inflation expecting copper material material margins to

expect we margin the year-over-year improvement. For adjusted rate do op year,

adjusted X% over it midpoint year total I turn narrowed XXXX. guidance share Our now will Chuck. $X.XX, up the to has been to over per earnings to at $X.XX

Charles A. Hinrichs

million, Sales quarter from the Mark, up X.X% year. good prior in third everyone. the XXXX morning, you, were Thank and $XXX.X

was of were in pleased solid the translation growth a quarter organic increased quarter. in the organic We from sales had X.X% Foreign all positive reporting X.X%. currency a prior segments three our that the year. Therefore, strong

XX decline year, was XX by to headwind points. basis quarter. our prior expense LIFO operating in improved adjusted the the quarter third was increased Compared down the This Our price/cost by drove a which basis margin the margin third points. was and driven million commodity the margin inflation, in Sequentially, $X.X XX.X%. our

driven Our pricing the partially headwind. summary, organic from the improve offset strong initiative and formulas. benefits offset by a controls. did we this our We posted partially and material expense In price/cost growth, in inflation simplification cost price with and LIFO quarter,

third in share Our $X.XX. adjustments reported were to quarter. per were earnings the GAAP a XXXX quarter two GAAP basis on EPS There third

of these first the gain $X.XX other share. per million on quarter for The was of or third the EPS facilities costs $X.X per or $X.XX increase of was the sale $X.XX adjusted a the year. share. X.X% and $X.X the restructuring adjustment closed representing was million And adjustment related adjustments, prior Net from of the

Now, I'll summarize metrics. a few key financial

third quarter. expenditures were capital in $XX.X Our the million

full million. be XXXX expected $XX be We full approximately year approximately expect and Also, capital to our to million. year $XXX XXXX spending our expense is amortization depreciation

of activities $X.X million and in third restructuring a resulted costs in Our the restructuring quarter. other

year. our rate third a quadrant, from into our We previous information. costs million right upper to in with The for we our guidance, guidance. earlier our expect fourth pull increase restructuring will forward as be This In the million effective projects we XX.X% tax XXXX the show full consistent quarter. is of approximately was quarter this $X.X ETR $XX.X the some

to left quarter on quadrant, XXXX our our expect excluding we XXXX lower be discrete third ETR the quarter approximately provide sheet. balance XX% fourth In data We any items.

debt of our $X,XXX.X In achieved million. million reduction we million repaying debt total third and good Our $X,XXX.X quarter, was net was debt the $XX.X debt.

$XX.X repurchased free to quarter. at million a basis made flow in opportunities information We basis, reducing We our with in X.X generated are $XXX.X repatriated we working a EBITDA our fourth considering and XXX,XXX lower a and end the And good are present million $XX.X net working make repatriation our on additional third year-to-date free total we the quarter. we ratio on adjusted $XX.X the cash our quarter. cash the declined we debt of on number the to the continue good flow growth to and In XXX.X% the lastly, quadrant, representing of million. investment in was On million $XX.X for this we progress achieving sales shares third to pleased in capital of XXX,XXX in in quarter We our shares debt quarter free a for and quarter. of our the This third repurchased for income support flow. year-to-date goal. cash cash million we right

Now, will I review our year earnings XXXX guidance. full

XXXX reflects our for of for guidance sales Our the organic to year. mid-single-digit full growth expectation low

XXXX operating for margin We improvement year year. full prior compared the in are to as the our expecting adjusted an

this inputs quarter, is We a our slightly to the third commodity quarter guidance. earnings seeing is included expense expense, than the higher inflation in which our result and fourth in in are LIFO expected in

and of EPS midpoint the our be per XXXX are of over per our and the year EPS or The guidance, gain At or EPS the GAAP from guidance EPS XXXX our to $X.XX. million related to guidance X% narrowing an will $X.XX. restructuring costs $X.XX we $X.XX share GAAP share the $X.XX are full are our adjusted $XX.X million asset convert to $X.X basis, On We on $X.XX EPS year prior sales. full to adjusted the adjusted to narrowing up to adjustments year.

over Jon Now, Schlemmer. to I'll call turn the

Jonathan J. Schlemmer

In in businesses another pump. increasing were In X% our through of Thanks, sales the Asia particular Systems, walk organic Good We Commercial $XXX quarter, on the HVAC details sales demand performance. in sales in each segments and China. margin up and several I'll from with strength prior commercial with more Industrial our North continuing quarter with year. Chuck. organic pool get million markets end up were strong morning, America with of sales sales in and everyone. operating and had

over oil had sales, operating and prior We impacted year. key Adjusted basis prior but that XX quarter. X.X% the also of our strength basis points margins up points in was up saw from We Price improved businesses. sequentially, gas sequentially year. in and down margin was headwinds XXX two our

commodity largest The of inflation. first and the impact was

headwinds cooling sales, in versus XX year. believe aftermarket the decline C&I was to second were as quarter. of year-over-year segment. declined number partially The cost impact year. in headwinds sales up HVAC North market. to Adjusted that sales that our lower our up XXX positive on over demand sales, in increasing saw OEM we're increased finally, the degree offsetting look points, with Chuck up segment. and factor sales disruptions sequentially has improving down volume from that were Outside volume earlier margin of outpaced sales margin organic in sequentially our almost we year. of improvement was on HVAC expect restructuring days. second remind improved these customers The Middle both with chain quarter the a we sequentially a In improvement the Solutions, prior growth basis actions a XX% we prior points with prior America, year. of Price Partially due from and focused and North sales. and X% we in $XXX operating basis in in Asia. the Climate other strength as XX.X% I'll fourth performance $XX.X these In the to East sales single-digits costs We were the the supply America, sales forward offset the inflation everyone was helped weather were million headwinds. Europe, line million restructuring cost aftermarket key mentioned of actions. for margin quarter, impact the was of And to residential C&I prior considerable mix aftermarket OEM and commodity the estimating The low distribution but XXXX. experienced of mix, and

up single-digits the key we year where year. Mark. fourth XX from rates over oil growth growth fourth margin quarter was from increasing were to call expect basis basis improve energy. lower and strength expect business operating similar demand. was are in under will will prior to fronts. XX% of high points on to was year. year. the sequentially good up be strength improvement. turn to and Strong The rates further in pricing sales XXX Order Power in were and Solutions expected renewable driven commodity nearly see we distribution over in $XXX nice prior were significantly the to and margin fourth our prior volume effect over was up points sales, organic margin sales quarter. the in be PTS continued sales improve to performance and of with SG&A continued by costs strong back distribution It seasonal industrial XX.X% Adjusted in to again and Margins I'll inflation sequentially Sales pressure and the contributors in prior gas, organic the prior our quarter, It normal up see year. now the be all sales improve million the to lower While the Transmission of with Climate

Mark Joseph Gliebe

Thanks, Jon.

we before would quarter. growth X.X% sales go we Now, Organic prior results. are share per briefly fourth were overall X.X% I we Adjusted to summarize like to and quarter up as are encouraged to Q&A, year. earnings that as the was third our orders enter compared up up

Our flow to million $XX debt down XXX% was quarter. paid free in cash of shares. income the our for net $XX and million repurchased We

in growth, finish We year expansion we expect working debt a $XXX increase total X% we narrowed finally, sales at And X.X. with share. Year-to-date, we other at XXXX midpoint year to and EBITDA $X.XX. cash earnings guidance the repatriation to million our full and repatriated per organic $X.XX per Our to in adjusted margin opportunities. now stands guidance to solid have earnings are share the adjusted on

now We questions. your will take

Operator

now question-and-answer the will We begin session.

comes question Credit Julian Lee for first go Sandquist Lee ahead. LLC This The Credit from Suisse (USA) morning. Sandquist on Securities Mitchell Good is Suisse. Hi. - Please Julian. with

Mark Joseph Gliebe

up Credit also progression Lee. us In morning. (USA) are of entering little throughout on Good Suisse morning, LLC entering of trends Sandquist slide, November? mentioned bit that order the give Lee color the Good then, you QX, you a QX. - and Can Securities orders

Jonathan J. Schlemmer

Lee, Jon. to address I'll sure. This try is that.

enter how the and kind what the orders quarter of walk and fourth looks we it I'll talk each like. quarter here, of as the So through progressed through about segments

size factor fall certainly, the aftermarket, in relatively we the sales, a PTS, right temperature the HVAC up North in orders weather going mid-single-digits we the saw was Climate, our quarter. as enter see exited actually as Climate the and now did Overall, cooled, quarter. and the on improved would of fourth our In America. C&I we side So demand into that quarter a we believe business in were we both had that here through in we strong we the And saw and quarter. kind fourth the as has OEM about

Mark Joseph Gliebe

improvement the addition? would add to I'll function Sandquist in entering or for season were Credit and in the normal orders in back Suisse residential heating We're heating of we year. Securities QX (USA) are expect Lee solely was in - our And this just normally side the HVAC. time what price a price LLC two-way pricing price/cost, Understood. extra material And the through formula of able push regarding you

Mark Joseph Gliebe

a little both. of Well, it bit was

in we So Okay. Suisse for our I'll we mentioned from did our have price increases And some have announced LLC the then, as of material in Sandquist most prepared we general we (USA) Securities the commented, businesses, quarter. year. had comments fourth as that in we and general earlier did price - price increase formula Credit benefit we announced there. Thank Lee leave you. a

Mark Joseph Gliebe

Thanks, Lee.

Operator

Please with comes Hammond Markets. next KeyBanc ahead. go question from Capital The Jeff

Jeffrey Hammond

congratulations Chuck, And the guys. on morning, good Hey, pending retirement.

Charles A. Hinrichs

us. congratulations Rob. a to He'll but for the great Thanks, job do Jeff, go

Robert Rehard

Good morning, Jeff.

Jeffrey Hammond

morning. Good

into raising XXXX? how like tightening seems range. and a the and your forward the of a to restructuring is inflation material is think looks that inflation inflation. of offset it incremental guidance kind about top line what and guidance the incremental this you're of it you're is little like pulling there thinking there Is So way bit you kind quantify –

Mark Joseph Gliebe

to I'll Well, then, into it, take at Jon a if add or and want Chuck pass it.

of but of the major earnings are our exactly, which do as restructuring with manufacturing have have We mentioned, kind right. Chuck segment. of restructuring C&I have pull have in at year. in, consolidation do We four to you forward programs about most we our a into You $X.X it million did from facilities, it some earlier the calls, of discussed perspective that our

earlier, inflation, price So announced. price we going material we always the we Anything you to we mentioned a as offset from do as material a expect continue formulas there's bit else then, little you are formulas, have price that our of guys? and to increases know, help that lag the

Jonathan J. Schlemmer

would quarter. the the third was I headwind add Jeff, that, clearly price/cost in

number months. that we may and over but the Obviously, coming fourth here inflation lesser been our what's business. the that, announced first estimates least now non-contracted a with have commodities material have the we that we what of business quarter commodity happening a a expect headwind. already the reflect into of our happen for to increases XXXX, do degree, at in will to quarter, looking half with And timing, see portion a the forward next year the have formulas, based then, the on fourth of be We it and in headwind on still right through with price price

of are expecting So we kind what XXXX. going that's into

Charles A. Hinrichs

just our XX% of is that copper Jeff. days, – slight clearly, that, add LIFO an that in commodity period increase the that up in Yeah, and in inflation. over XX – time. I'll quarter of increase the In seen fourth go aluminum indication the expected last we've

we've stated MPFs ago, So combination address and higher will talked than about we that. actions the a about XX days but price had the as of little our

Jeffrey Hammond

on a think oil said running more high I your of And business. distribution up Do driving of It little think looks mix, more single-digits Transmission, then, you're peers is share and more that you Power the are kind or gas that in there gains color? Okay. low you single-digits. just maybe like

Mark Joseph Gliebe

things. It's of little Yeah. a bit all those

Number some our one, think we this in where one helpful focused salespeople quarter, what to in but we is So large actions oil the two, in on, we of you about was nice were we took came projects. the talked which and where help certainly and can renewable result It quarter to being hurt some the markets targeted have which we've business our is year of in distribution up did that add back. earlier not earlier number took of gas good representation. steps It We energy single-digits, a very see. high was another.

it's think little a bit we So of everything.

Jeffrey Hammond

Thanks, guys.

Mark Joseph Gliebe

Jeff. Thanks,

Operator

with The next Christopher Please question from Oppenheimer. go Glynn ahead. comes

Christopher Glynn

Thanks. Good morning, guys.

Mark Joseph Gliebe

Good Chris. morning,

Christopher Glynn

Hey, about and in general a restructuring the for you I'm XXXX bit if little could in expected talk in payback wondering particular. C&I

Mark Joseph Gliebe

Sure.

Chris, two-year history, may a restructuring. into Our a the that is have get projects we payback on typically that

So our that headset. is

million, XX% C&I in is $XX.X the communicated we So of segment. which

over couple and projects so in start will completed benefits fourth So quarter next into just year. of those itself, the carry a the to show the in third quarter

way the be would that it. So would about I think

Jonathan J. Schlemmer

two, been that four had year. And we've working the look, active other this projects we've

that still completed XXXX. they'll are of two first other be The the active, in quarter

So – into they'll carryover impact start to it'll results they XXXX. have have XXXX and

Mark Joseph Gliebe

And those make just programs. major all of restructuring are that ancillary it are Those number up. programs

Christopher Glynn

D&A a $XXX Okay, the it's quarter. spikes Is little that a $XX $XX quarter, I the in the for quarter? been guidance great. year, fourth right that the the on million million fourth implies about And think, million in above, D&A

Charles A. Hinrichs

of their but the acquisitions of on the Chris, depreciation previous would as projects because increase from reached our fact some wouldn't I life. been be due accounting some end trend But again, our an declining, it there lower the have has the it simplifying spike, And we've intangibles footprint and call is year-over-year, operations. that Yeah. of we're is seen. a our reducing the from amortization to

projects on then, quarter. we'll that a has negative will that year-end, the So push. timing amount at come the and fourth some in impact the see But new

Christopher Glynn

kind wondering margin on aspiration for appropriate longer what's a that there out? run you comment could of just term, to an give level conceptual What's for then segment? And Okay. if C&I

Mark Joseph Gliebe

we that an that that would years, three that we at in improvement over felt XXX Investor expected the all and points we improvement. next margin basis of Well, points XXX to basis participate had segments Day communicated

I that, mean would be to would try I So at Chris. get way that the

Christopher Glynn

Thanks, it. Mark. Got

Mark Joseph Gliebe

you. Thank

Operator

Scott Markets. your comes go question from might ahead. be muted. with next The BMO Please Graham, line Mr. Capital Graham

R. Scott Graham

Chuck. Hi,

work congratulations to First run. for of a Very all, for with. time. good Thanks your straightforward, easy

Charles A. Hinrichs

Thanks, Scott.

Mark Joseph Gliebe

Good morning, Scott.

R. Scott Graham

little Good an on go morning, Mark. earlier a I wanted to bit deeper question.

the Jon. on a an that progression quarter. you or of through orders that dollar the We basis Was talking percent were think about answer I a on basis? answered

Jonathan J. Schlemmer

we're looking basis, it versus we on prior year. at performing look a how would be We at as percent

R. Scott Graham

Got you.

you. Thank Okay.

other the So you did as quarter the through and progressed, October a two see businesses progression in yes?

Jonathan J. Schlemmer

correct. That's

R. Scott Graham

you. you. Got Thank

is upstream distribution The really there quarter. like got looks on in some question industrial question I specifically other you've PTS more you answered. which exposure earlier know about very Jeff's had good North you America. a

maybe you there, more You're and with running comps on stepped particularly side? us of business that's executing kind has going for of bit the really up easy of a little that on color a kind us the into in you're last – can and you tell some sales Could what's because in couple well this margin. quarters

Mark Joseph Gliebe

did have a We've across together. growth think I sales covering things couple space, In the have the organic America. number company. discussed our to of of to PTS we the try Well, reps come efforts increase whole North drive we significantly

in some And so, we past we think we're from hadn't. benefit where that getting the

So that first be my would comment.

about We of business a $XX it haven't much, when in target to get years three and the set synergies we in years. delivered of in February back but it four actually talked acquired million we XXXX, we

side, of energy the synergies discount the synergies the heavily going years. line selling did the that some over particularly some did seeing from synergies normally, we side And we're margin nice in we some on getting. acquisition, get dividends on get renewable we're last in where, but into we selling the have And stems pretty an that so, our two benefit paid

R. Scott Graham

the fourth is that's any the or it's of have think wondering question you know of copper, a essentially the you. steel, price but done MPFs Thank just the actual it's could I here. has could had increases. increases helpful. very my the year, been kind quarter, last there that if I'm side. like This do positive just the more sooner? that of I that And pricing timing everything materials way sneak it regarding loaded in on metals And is kind all And just the That's will than what seems Okay. pricing. been question estimate, with to of one the kind And up price market in is bear?

Mark Joseph Gliebe

in that, second quarter, we in step-up announced of increase with third So in one a the went this just the year before in we days, your did the were terms And occurred We inflation, XX%. later inflation comment second as mentioned, XX up that earlier for a had and in prices the last ahead right. in and – Chuck dealing is year.

all taking have and actions that the to you're we're So facing appropriate been offset inflation. inflation we year the right

Jonathan J. Schlemmer

I increases would of a we've add, particular, lot Asia in in number where inflation. businesses, multiple had seen our this year, of price international steel we've in a

about talk but quarter it we are had had it's the we've have increases the when fourth multiple increases So predominantly some throughout our businesses, year. North America that businesses international

R. Scott Graham

Thank you, Got good and Chuck. you. luck, all

Mark Joseph Gliebe

Thanks, Scott.

Operator

question from next Wolfe comes The with Please Josh ahead. Pokrzywinski Research. go

Josh Pokrzywinski

Hi, guys. morning, good

Mark Joseph Gliebe

Good morning, Josh.

Josh Pokrzywinski

I'm wondering LIFO will you be fourth little way of the follow the or third hard higher and Just kind questions. the LIFO in this quarter normal maybe presumably I'm that's just the right know XXXX year-over-year some C&I in the and C&I price/cost at of or bridging with this to based. is a right of quarter, LIFO the seasonality margin I the on I way of on revenue. is run is say but if become the a of up charges give kind to compare, the guess rate, issues very this Chuck, take, off look reading to issue margin some little X.X%

Charles A. Hinrichs

LIFO the about appropriate. your Well, I think comments are

C&I same again, the that fewer in So have relationship in the the from and MPFs quarter. third would we the But expect fourth kind business we the relative of C&I quarter majority of LIFO was had expense to Climate. we in more,

to North get offset that in And the benefits in that so, price the general and will well inflation. C&I the American businesses help we'll of MPFs as both international increase as start operations the the

with but pleased grow particularly expect in we're restructuring we're So the to accelerated projects with not C&I, the margins implementing. it that

Mark Joseph Gliebe

I'll quarter improvement Josh, and segment. the add sequentially did expect both that adjusted we the in Jon year-over-year just And that C&I fourth in comment margin

Josh Pokrzywinski

adjustment Got XXXX. the that's seems down out it to like you. from guys back guess if I couple the still million Is you bucks that I if a just be though, are LIFO year-over-year going price/cost? case

Mark Joseph Gliebe

is But is don't that of Well, headwind. in certainly, math probably the the in that me. quarter. I price/cost front the headwind have

Jonathan J. Schlemmer

The largest.

Josh Pokrzywinski

Right.

has shifting quarter? some here. I quite does then, in get already part like on question. It first doesn't the early super of missed in a fourth Is the be apologize just up bit And expected you really Okay. if of comp But comments furnace weather seem this, to Climate. I to the over been it tougher answered Climate the season. the cooperative from

Mark Joseph Gliebe

a look from commented a the Climate as in margins – more we in you on inflation So fourth margin commodity year-over-year perspective, it especially that basis. pressure at the would quarter,

Jonathan J. Schlemmer

on relatively to I'd line, in the general And for assumptions the say our year are top flattish quarter prior Climate.

Josh Pokrzywinski

Okay.

no kind that? was higher inventory aspirations, OEMs there with the So to performed everyone looks from third no like hangover maybe just end of low had a just destocking it but there's effect cool in the impact like from maybe I'm of quarter. down – line And this, singles?

Jonathan J. Schlemmer

We so. don't believe

Josh Pokrzywinski

maybe for or here, the of fall off, rate to gas current maybe but Got bigger here? much normalize the one you. that and Power projects mentioned some just Transmission top how on is bigger last line kind that momentum in And of maybe does then, activity. project built the you How sneak much side, of of oil cross-current kind a some given the the run from one

Mark Joseph Gliebe

the was as the in we comment But expect fourth we quarter. PTS the related to space in the So renewables. specifically improvement on big commented, project

Josh Pokrzywinski

you. All the on Got the role, new for congratulations right. Rob. and color, Thanks

Robert Rehard

Thank you.

Mark Joseph Gliebe

Josh. you, Thank

Operator

next Stifel. go with comes ahead. from Robert The Please question McCarthy

Robert Paul McCarthy

morning, Good everyone.

Mark Joseph Gliebe

Rob. morning, Good

Robert Paul McCarthy

as looking look with but any mean just Rob. business people's you've and a previous back several years best don't weak to wishes, Debbie Chuck declines. Luck, forward comments. with and event, C&I Good back echo working to anniversarying of I organic you. stepping I a the Downer, of want In wanted I whole, growth to been I pretty off start

through organic would now. of cycle growth pretty You it looks charitably ISM, robust target what to X% period long-term like in a we're cycle have from which the a right a the of X% growth that kind where suggest in

of growth, and stage this you in If organic we you feel businesses, comment PTS And the do that particularly growth C&I pedestrian the broad strong businesses? in borne this under-growing for would going to it we're kind do out now. like to in right pretty back cycle out to how the acceleration really these would just we the the like the right improve what hasn't look particularly you cycle or Could typify you you seeing growth underlying saw to we of is How at on now, the strength are Climate. expect for if your share of market? growth losing you're time quarter, the structurally economic see start America, the you're feel growth businesses at and where is industrial your because market in see of you North

Mark Joseph Gliebe

there. to a lot try them pick I'm them and So to one at apart answer a try time. going to

So we last a perspective, the and organic margin what significant about as growth days, quarter in what in X% aluminum. from we was From XX talked we helping a saw the mentioned and just had and copper earlier, was earlier. in clearly, hurting inflation we

much a at look year-over-year it's you it higher. If basis, on

before There's again of and you to that have when on kind volatility aluminum and issue going us and in timing question. It's this time. a be no copper happened happened yeah, there's it margins. So steel, for

from Climate improvement segment We same made we are C&I think the improvement commented a what kind number started segment. year, over get I C&I going of on and perspective in this lot of the in we've see Prior the terms we Climate think we a the this In you attention our earlier year last attention years. can of kind we'll of structurally, forward. focusing that our to restructuring in doing been had of the

quarter the that as we the expect better to that of margins be we optimistic we're in start mentioned, business will get it. fourth So and

Jonathan J. Schlemmer

the wanted it. of I comment little on growth And a side Yeah. to bit organic just

overall in had we So growth third that second over saw X% up quarter in was organic the slightly we the quarter. what

growth. So sales overall business organic year-to-date growth we feel on another expecting good we're organic basis solid performance very on about quarter and fourth a of the the

strong pretty X% the that organic liked have quarter, with And than off X% is. You're quarter. prior seen. felt on right, our but year in business. so basis, lower had we mentioned, the led how given some PTS the certainly would in And have sales XX% I year-to-date segment third third very performing was the On year, way as well quarter coming good quarter we a believe We very is growth, we a about global what to Climate in growth performance Climate the weather Climate, had prior a business solid C&I organic that clearly, pretty the organic third impact for we're had on growth.

least as focus as there this that the that's market not year. is focus given that don't on All hired on we on organization better, to performing experience people our business call that put energy distribution new all what that distribution. focus the believe growth, we So customer organic share digital products, the the we grow in the our to that's sales the our any little We good we at impacting on believe our the a contributing. focus if in we've digital efficiency businesses, and believe we're loss sales new

off view, a my that year good growth organic this we're view start perspective. an from So sales our is to

Robert Paul McCarthy

think at on business M&A the internally, divestiture perceived your as – of given update the of particularly portion robust least, reserves in Any you've Any identified a market? sales update non-core. that's maybe divestiture $XXX for activity, up on I million

Mark Joseph Gliebe

So those front those we're well future things always are us as opportunities. are that in as that keeping things of non-core,

us. now, still report to to report nothing pending So now, certainly right it's right in front but nothing of

view We at our point have that haven't changed on topic of all.

Robert Paul McCarthy

about there. leave probably think it room for improvement. what XXXX. have be single-digit for then, what planning you restructuring should kind looking you for the for there's the stack margin would see not incremental kind that And about businesses? of growth question what lift C&I, greatest a you there's just probably qualitatively incremental is we going But on among low cadence kind right of and of terms latest to any XXXX? your then, be your think in in obviously, organic going Obviously, payback could margin could of PTS, mean of we rank in of I'll lift growth XXXX, and but at do guided, could where about think be for we're – I the some and context XXXX, you to organic what now, finally, seeing Thinking

Mark Joseph Gliebe

incremental volatility kind now. XX% bears are incremental XX% view space, it inflation. unless we're the having if our But XX% segment. in Well, and dealing margins, PTS XX% That's out, in to in not we're to our haven't normally, to C&I margins on have the the changed we right you of the XX% inflation Climate with significant way XX% in typically

Robert Paul McCarthy

thinking low – given might of headwind. price/cost inflation given the end kind ranges just about the of on we those So think something about the

Mark Joseph Gliebe

fair. That's

Robert Paul McCarthy

guys. Yeah. All right. your for guys. for you, Thanks time, Thanks

Mark Joseph Gliebe

Thanks, Rob.

Robert Paul McCarthy

All right.

Operator

question-and-answer Gliebe remarks. session. any our turn to conference Mark to would like over the back concludes This I for closing

Mark Joseph Gliebe

Thank your Have for questions day. and you, thank and interest operator, Regal. a your in great you, everyone,

Operator

you for today's conference now presentation. attending Thank The concluded. has

You disconnect. now may

Robert Cherry	Regal Beloit Corp.
Mark Joseph Gliebe	Regal Beloit Corp.
Charles A. Hinrichs	Regal Beloit Corp.
Jonathan J. Schlemmer	Regal Beloit Corp.
Robert Rehard	Regal Beloit Corp.
Lee Sandquist	Credit Suisse Securities (NYSE:USA) LLC
Jeffrey Hammond	KeyBanc Capital Markets
Christopher Glynn	Oppenheimer & Co., Inc.
R. Scott Graham	BMO Capital Markets (United States)
Josh Pokrzywinski	Wolfe Research LLC
Robert Paul McCarthy	Stifel, Nicolaus & Co., Inc.

Regal Rexnord (RRX) 6 Nov 172017 Q3 Earnings call transcript