RBC - Earnings call transcript Q3 2018 | Regal Rexnord Corporation

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Operator

Good morning, and welcome to the Regal Third Quarter 2018 Earnings Conference Call. All participants today will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. And with that, I'll turn the conference over to Mr. of and President Relations. Vice Cherry, Business Investor Development Rob Please go ahead.

Rob Cherry

Good operator. Call. to morning, Regal you, Beloit's Conference welcome Earnings and Thank XXXX Third Quarter

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

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

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

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

turn Now, to call I the will Mark. over

Mark Gliebe

the you a Rehard and our with in will then in another of provide quarter after third a markets, joining call few the Thank Q&A. provide Regal Rob performance refrigeration, oil you were including up our in weakness partially organic I'll & for and organic distribution, and generation, delivered follow commercial end-markets strength were Regal. segments, a sales X.X% At We'll power the interest earnings we'll financial sales third North In will Welcome, X.X% up strength in and to Industrial, on performance color Schlemmer number quarter for HVAC share our segment Jon and and of thank Commercial move up market. level, American update, and that, margin points up basis opening everyone. I'll residential in offset summarize your adjusted a by commercial adjusted Climate solid XX Thanks, up organic X.X%, three normal international Rob. operating in operations and sales per segment, XX%. with agenda. comments, make HVAC. gas with

organic an and with operating in coming sales X.X% Finally year-over-year. a operating were From quarter XX growth this in basis for perspective, material robust handling. the profit segment, The distribution points gas, and the PTS improved adjusted strong up oil margin benefited of benefit price cost margin from a volume, little held inflation was productivity, back tariffs. up The reform. share the but XX% by variable with resulting and tax XXXX adjusted operating commodity per earnings incremental was result and as

quarter, of $X to shares. also flow $XX the the net XXX%. to of we income cash was million use free repurchased approximately down the For cash million and roughly our pay of debt We majority

six that last march have operating margins. improve with it sales to a quarter further was The was we and solid the our third organic on shares. fifth the growth quarter progress repurchased of quarter Overall, strong

we end markets. continue fourth our we of encouraged strength Looking forward, as year-over-year we quarter, enter are order most the that see in to

the at summary quarter impact however, that, Additionally, the we provide tariffs, the for tariffs. and regards to to price price neutral year. With positive the details; of remainder cost slightly to third Jon least more our mitigation continue is of we remain with expect was cost plans, to will the expect in the offset

up organic growth our year mid-single full XXXX, guidance digits. the assumes to For be

and strong North year. for adjusted positive benefit operating and incremental will light industrial We And end-markets improvement performance, year-over-year, commercial pricing. to in growth commercial continued the are line end-markets, from margin margin expect expecting our HVAC continue residential and we top to American

benefits from our for to and expect We volume simplification of leverage see efforts XXXX. the rest

We adjusted per midpoint, $X.XX At a sales to XXXX record total our guidance XXXX it are guidance in to now earnings raising Regal midpoint to earnings. I adjusted per $X.XX. the share year share increase of Rob. in narrowing turn for our now represents year earnings and and XX% over a over the and both will

Rob Rehard

million, presentation used a X.X% the second quarter. negative adjustments. from to We've exited morning, the I divestitures the solid contributed organic Mark, negative be year. end the from everyone. Acquisitions, term the the residential exit third motor prior a and year increased we a net the The XXXX currency contributing. components of to Sales foreign and segments $XXX.X all good business referenced these X.X%. in X.X% business be of in X.X% a was exited business you, of Thank the appendix this Therefore, to with was sales up describe in hermetic reconcile quarter three were of at the the table of X% prior to included quarter.

the quarter Our margin XX.X%. in adjusted was third operating

with in was segments and margin year. improvements. slightly was volume to all quarter. prior both Our Price/cost benefited Margins up improvement the productivity compared the growth positive XX three showing from basis points

continue strong Climate split inflation and In organic year-over-year. the summary, we third was Additionally, sequentially segments. operating quarter, adjusted show growth in we LIFO between incurred had $X.X expense, margin and C&I we our to the sales both in improvement and million which in the

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

$X.XX of $X.X restructuring was and per share. The first costs or million adjustment related

of transaction second Gebhardt purchase Nicotra or to the related $XXX,XXX $X.XX per and was acquisition accounting share. costs The adjustment

increase to US the to The provision related was tax costs per the year. benefit the prior the resulting for third residential legislation components or XX% $X.XX, or $X.XX $X.X related of of share and $X.XX earnings from quarter related new of these the from Net the The per of adjusted motor million hermetic of were third impairment fourth the business the of million adjustment was $XX.X exit representing share. a share. adjustment adjustments, per

few will financial I key Now, summarize metrics. a

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

expenditures of continue $XX year to expect We for the XXXX. full million capital

of third simplification Our quarter. the resulted in $X.X million related restructuring and costs activities in

We we new In tax presentation adjusted in restructuring on to for upper costs related million our third slide. the quarter effective tax ETR. of of the I of XXXX. XX.X%. the show the to ETR mentioned prior GAAP the provided adjusting table benefit We've quadrant, in of provisional ETR a right the the $X information. this US appendix the the effect the reconcile adjusted legislation year for and We're full expect rate was the ETR The

XXXX sheet. ETR to year the quadrant, continue we adjusted approximate on for third to balance left the our We lower XX% our information full expect XXXX. quarter In present

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

now free the net EBITDA third of flow our over million repurchased quarter. in information for And the ratio quarter. generated first of for at adjusted the of of total flow. repurchased Through cash net $XX.X three adjusted XX,XXX X $XX.X have debt at over just we income we shares $X.X to quarters XXXX, our million quadrant, Our end XXX% we million quarter. shares on lower the for lastly, third present stands third of million. quarter, the in the of X.X cash We representing our the right In free

our an will update full I provide for guidance Now, year on XXXX.

mid-single Our year. the sales guidance growth digit assumes organic for full

expecting operating year second the a of improvement adjusted full are consecutive the meaningful our XXXX, improvement. We in year for margin making this

full is adjusted year some of $X.XX $X.XX or EPS Those provisional EPS GAAP guidance related full $X share. share, adjustments $X.XX On share. exit the expected to of will XXXX of $X.XX share. adjustments impairment on guidance per Our benefit new in $X.X and the million XXXX to convert $X.XX per of per year total to I adjusted quarter. restructuring or an costs per narrowed share the accounting million share. to transaction per EPS million $X.XX $X $XX.X key we've of or to EPS purchase and and a share, per legislation of the our per $X.XX few provide costs color costs $X.XX GAAP are $X.XX a The tax or and the million related basis,

are XX% over up adjustments at slide full the the of your year. our for to In prior revised expected on summary, our reference. other be guidance, is the midpoint included year The adjusted EPS

Now, over I call to will turn the Jon.

Jon Schlemmer

Thanks, Rob, and good morning everyone.

update I update well segments, through Before the I'd simplification tariffs as the our normal and as on on like cover automation you update an on walk to the an efforts.

and the how business. discussed earnings last the XXX are Section call, During Section our we impacting XXX tariffs

not majority sell manufactured During tariffs the list of billion take to we US the China. customers our are of The products see did $XXX quarter, third additional the XXX in Section we effect.

manufactured With US in the approximately the actions. two XX% $XXX impacted of impact the mitigating main of is We're China directly list, and the by Regal's effect with billion XXX tariffs. business

one previously we're were of in facilities motors to one First, in of existing one earlier of our the Mexico this existing of of these China the some transfer China. outside for like to production Regal is facilities started in products month US manufacturing facilities Earlier great manufactured working motors Industrial these we picture Mexico. this month, our of the market. our in facilities This taken these a of example.

future. place have transfers in in We the plans to more do

months implemented continue impact increases future. expect Today, The the tariffs. to offset tariff the segments, over to we second tariff in the and impact the offset we impact additional to have past mitigation action is the pricing. the three Across all offset we price the of have

initiatives million In this deliver our expense programs is to programs give you XXXX. our $X for The automation to value like we we're majority on spend these I'd will of XXXX, improvement to update simplify are to Now, how footprint. further margin on simplification customers. helping restructuring aimed and approximately more and the and us an additional and scoping drive

implemented operations improvements, the couple programs It's investments of range making. we're that been in our in including opportunity have investments these is slide we've done for more US, simplify We are years. a the is opportunity and operations of margins the across in this Typical to for XXXX up from remains we're on a programs. there opening important programs While the note to made a of positive automation. for these and impact payback two-and-a-half our company, the to two these automation simplification on seeing number Asia. examples Shown work the Mexico of

In in quality as well and markets addition, automation labor from the tighten safety. as as we see benefits both improvements

in will We in $XX million XXXX. million approximately programs to $XX automation invest

both We our will well expect this to of opportunity making come. we is carry an of normal level and excellent to automation progress and on fund beyond This spending. are that within simplification area Overall, more XXXX. there's CapEx

impact sales including and weakness Systems, each as more the Southeast margin the was Industrial and from organic was up and through sequentially quarter, we and on operating was and Adjusted performance. distribution, from year. of our up organic price XX offset second X.X% Price/cost up Europe sales, the mix up were space of across strength up margins. year. and oil did sales benefits. slightly HVAC. in million prior year. of a as Year-to-date operating you basis and had walk these third operating favorable commercial points Asia. prior with segments all $XXX over year. programs, motor sales basis XX sequentially pool XX the Commercial C&I increasing adjusted strength points organic sales I'll productivity In broad-based headwind positive experience partially experienced our prior in end-markets a aftermarket From distribution quarter, Price X.X% gas perspective, give a margin was performance simplification our and The number general Now, sales over on to business. in similar is generation, details improved was In from margin points the C&I a Volume, well and & industrial in were our basis the power regional prior both Inflation quarter. and the we segment X.X% in

increasing sales year. up to the residential fourth continue adjusted deliver to HVAC and Climate from our to year-over-year In customers in In $XXX Solutions, improvement million were with expect sales to X.X% quarter. sales to digits organic low- mid-single year. prior distribution America, North margin OEM prior We were

by impacted the was reducing customers patterns to to demand normal this their expect Over return demand we time, in from customer. HVAC larger our disaster of natural a quarter. One

in margin Asia, refrigeration. strength We commercial up partially headwinds in the slightly East. offset of America the also all markets operating benefits. on mix performance up our a in adjusted was The basis was across the sales to positive experienced by operating the in and were Inflation is in and over partially over from was Middle offset Year-to-date, Adjusted quarter. strength prior sales, up in XX price/cost and a and year North was prior Price had third year. the segment XX.X% similar our second international price quarter, prior headwind basis Europe sales Climate margins. was operations, impact Productivity XX up in points XX.X%, and year. organic manufacturing margin X.X% points adjusted favorable these

prior XXX demand The a from favorable price/cost $XXX Power agriculture. quarter. operating Sales Adjusted Climate million, also of over our the we experienced from higher points in strong oil XX.X% sales a year a down third and the the up all was Solutions year. was handling across basis Price by points XX.X% and in driven impact material timing prior operations, quarter and strength Solutions in in and distribution, operating of the of projects and renewable price, quarter, HVAC. of margin slightly for positive segment. energy, were adjusted margins. up sequentially including margin productivity commercial X.X% weaker year. The with was sales, basis XXX increasing large a Sales strong the had In prior we Transmission organic in experienced gas, end-markets, manufacturing number were performance up was volume, on

However, quarter, because offset Year-to-date XXX the margin from mix sales OEM solid prior the to to partially in stronger. mix these were basis XX.X%, Similar and over and headwinds turn and benefits. was second OEM the up our headwind distribution, I'll year. segment performance remains up and while a in inflation both sales been now points PTS Mark. organic operating up of back call were has adjusted with X.X%

Mark Gliebe

Thanks, Jon.

Q&A, I quarter and slightly Organic like we dynamic, summarize to fourth the go X.X%, but remains Now, Price/cost was a quarter, the optimistic. offset for most quarter remains up mitigation positive expect our in least and impact. remain the of the year-over-year and and were The third year. highlights. entered We our would third briefly quarter increased will to neutral the situation of before as to our solid to end-markets. sales at we tariff expect orders we outlook had we actions results price/cost remainder our that continue tariff in

year Our quarter meaningfully with up adjusted year. basis the operating we XX margins up points finish operating adjusted the margins were for and for to full expect the

up little prior share with reform. contribution Our XX% from were adjusted to earnings tax per as compared year,

of per flow cash which and income at of now free XXX% raised allocation, million down $X to adjusted and and or a on our basis. earnings roughly the $XX , Our debt capital on repurchased net the just share midpoint. year-over-year paid narrowed was shares represents a we million year-to-date We XX% $XX million of our midpoint annual increase over QX guidance

on Regal year before recent guidance announcement And reflects sales total the would earnings retirement. my year in like record finally, to Our adjusted to and earnings. per share we for Q&A, I a go address both

stepping As CEO hired. that Regal Directors Chairman I committee Regal's CEO of comprised is in and time you the search a of know, am of leading the and as down members process. new I at will the assisting is A Board be

after to organization is XXXX our and focus We Board. very the The well focused good of and transition. our remain in has we to orderly company to the delivering named a on for Day until our the that advisor continues simplify-innovate the I the to management at for announcement assure new first, pursue and between as new expect stakeholders. that short all energy out alignment place early period our responded company second laid the late will strategy is time will an Investor with the The CEO be an continue CEO in I to quarter. lead

We will now take your questions.

Operator

Coe We session. now Instructions] go question Nigel will with [Operator ahead. begin will first Please Wolfe the Today's question-and-answer come Research. from

Bhupender Bohra

saw expand place. Hey, guys. marketplace September we pre-buy end outside to like term any and mitigation to October, here on dynamics the in good of Could tariffs market competitive it Nigel. here is Thanks. near here from for a last concerns the in try and basically talked as you China the the there This or losses if in morning, share which some the of Jon have Bhupender the changed in like the tariffs how of about you places? about some was over move plan

JonSchlemmer

Yeah. take Mark Bhupender, I'll has color then can additional if good morning. that add. on question add and to some he anything

from going tariffs in quarter don't was list billion that significant change question. the related We reactions So any of for on to $XXX additional tariffs impact The took the September. the to there pre-buy was tariffs effect are third big into pre-buy our the that and the actions effect. a us competitive believe in

last that, on yet that time we that the call, not During but an had on eye said were implemented. call, last earnings earnings our at we keeping been

course, that's of effect. of well notably products a affects Now, motors. be for the competitors as most would $XXX number our as is and billion full in effect, That electric so us in list

of competition who in In the terms impacting by and China they're tariffs motors going to -- US. is of, importing into product how our is we compete electric the that be in impacted it's tariffs China some by making anyone making China where if the

while to not Regal and talking global of that working who in those early customers number a about term. to it help now. see that probably that, of right number call, impact them the got benefit of actually a We as we're an given we've view build us at XXXX. still is over too But much net opportunities for it's XXXX might more we manufacturing to a we been of a we still footprint, and a a us is view we Our net have had that long look how coming positive

Bhupender Bohra

the NPS here through, you of pricing in regular price? was The basically pass can spot quarter out the it. broke the give the what us on pricing, how got the kind it follow-up Okay, like and question between Thanks. and

Mark Gliebe

was as price So formulas. you're as well that general in price right increases say benefit the pricing there increase, announced price from material to the both

And commodities you It's know, seeing as commodities to two-way see of as benefit our to six-month are three price then had XX% material early passed So, of our before as formulas quarter in the those our in then get up by tied of along. revenues and formulas. the December 'XX. three- have once in times, we benefits the in of benefits of covered XXXX a been 'XX, price increases commented we once third those material two-way also the we John, that prices raised and and price 'XX, part we the go once

price along being those So increases be passed to are appeared sticking. and

Bhupender Bohra

Okay, a lot. thanks

JonSchlemmer

Bhupender. Thanks,

Operator

next from Barclays. Our Julian Instructions] [Operator question go will Please with ahead. Mitchell be

Julian Mitchell

the CEO like few Mark, it just for sounds be retirement on say congratulations but I'm months; wanted you'll news. talk we'll again, another to sure

Mark Gliebe

you, Thank Jullian.

Julian Mitchell

the year. of step-up terms I In maybe though I It unchanged these some looks more alluded, on first understand Jon, next up, us for extra them? think cost guess just like information help when cost some how XXXX perhaps you meaningful guidance following the cuts we could charge from maybe into and point, efforts restructuring hear before, so is cutting be might measures more

Jon Schlemmer

So you're right.

hasn't for Julian, changed, XXXX restructuring guidance, the still total viewing year be to $X so million for total. the in expenses we're Our

during will still have exactly that's of we why terms we come we million expense year. bit earnings fourth on expect in fourth Day on going -- lot the more as in color $X we our certainly very implementing had our we quarter simplification in to simplification, larger of happening were the that of call what's margin of We When that efforts. an quarter a start good more still to meeting more for restructuring right Given view in while provide March of guidance and but don't XXXX, yet on estimate how That's little see we're see XXXX full that we saw might saw the automation and the XXXX, a a through larger some for lot timing for taking progress, a improvement have terms what we to talked programs as restructuring right expense. the programs, of do for the of Investor we we role making opportunity now. about the and to now work our

kind We XXXX mentioned that'll make of referenced, investment represent period. The got capital I a I million us terms on in $XX two year payback continue to that of make for that simplification, automation, having to million in biggest getting play. we and to we're on in year the restructuring automations, the progress the will was that investment them $XX that two-and-a-half larger and

we been of So Day, driving improvement Investor XX XX the just like those basis see both that's now still combination in automation citing the and the kind between we impact and efforts. is from simplification split a see for to communicated more to a initiatives, of the or overall we starting point and expect at that to of we're what's that range margin had these

Mark Gliebe

and the of efforts the I'll through necessity in the to we're add mentioned our efforts the investment approaching that's our end the footprint restructuring ERPs requirement and we capital we a been see our our consolidations. Jon levels in fund we've our through investments Julian. doing future efforts simplification automation the in in change ERP make past CapEx, significant because We a that, on on work CapEx lot CapEx fund don't and that for large of just

the So over to that's funding way the shift automation. we'll

Julian Mitchell

then switching maybe And top question, second my Got you. it. line. the Thank to just

worse a or as I the talked detail just weak year. of markets of quarter think QX Maybe the you non-US a any you Industrial explain and demand that did third -- they're particularly if and Europe a and about well into Systems, as how are any decline sort steady on you Asia since soft as and & for those those Maybe deteriorating. saw the Commercial was through in middle still just went little regions, the various Climate Middle bit, East. get Solutions,

Mark Gliebe

saw an particularly in we China, was impact third the from in standpoint Julian, in and order Asia when quarter. the in Well,

through we order third year, the decline hadn't steady it in been So a in a it was change saw demand the that quarter.

in So were the in C&I the quarter entered we quarter as third see the -- drop the the up in sales orders did third actually but China, we've and actually orders quarter. in had lower we fourth in

an for of and the segment. weakness think by Middle Climate in Middle the was there and the Climate is economy, area area both was East Europe Saudi most weak C&I our largely East, a in of particular, We weak exposure right, You're driven for Arabia.

Operator

Next question will be from Christopher Glynn with Oppenheimer. Please go ahead.

Christopher Glynn

morning. on And of Mark, Good Thanks. best luck the transition.

Mark Gliebe

you, Thank Chris.

Christopher Glynn

interesting you tariffs on net in up It otherwise what Wondering a or if dynamic on up of of lines comments that the material opportunity think be interest benefit qualitatively and for an in just play about up out as? was have could competitive more XXXX, that noted and up, might there. your offering reinforcing kind organic positive customer

Mark Gliebe

think we categories. yeah, look, So, way to net two it you're a tariffs -- benefit about and that into right. us, on the products is, to could have be Jon fall commented it these

it parts You of there we it category us In where in are make to over Jon China. there. are cases make our the to footprint, transfer we're on where else. one, increasing products makes or know, and And trying Jon other And how there's someplace makes place customers to or other China he's two -- and the but that product coming our China also prices shows Mexico perhaps, those are you then we somewhere opportunities product in some than India of in second it then is category how we And our in out there. there commented else. competition competitor

us. benefit frame, net the to a Our likely more view is over that it's be to time

soon it's I has and those to are think happening out. too active it but real-time. discussions tell, It's play to

Christopher Glynn

And you dollars, are organic C&I, on margins incremental have pass-through year-to-date. just know, wondering you the performing some the how Okay. but FX acquisition then and some and

think target up XX%. I What's there? is your measure the

Rob Rehard

a quarter. we're as margins in expectations. FX, it's margins for the you're to performing it well, right, in business acquisition new quite for in see But Nicotra business and core incremental also business, in bit C&I, you overall C&I making progress acquisition we on on performing incrementals to C&I. all look was good the quarter, were look the that We and also at at Gebhardt incremental the in there and when margins with at The core that good quarter the our look are the very so the how pleased performed -- the is the base

Mark Gliebe

up we were C&I. sequentially sequential improvement we quarter, year. prior expect do in points the year-over-year but expect basis We in XX XX improvement basis fourth quarter necessarily fourth and in versus don't And points the

Operator

with will be ahead. question Next Markets. Capital Hammond from go Jeff KeyBanc Please

Trish Gorman

Hey guys, Hammond. this on is Trish Gorman for Jeff

So bit see drove guys more talk to we margin what can Transmission, in Power about expect what a you and XQ from little 'XX? that can in strength and into

JonSchlemmer

So, yeah, Trish, good morning, this is Jon.

higher volume. the third Transmission Power a Solutions So the performance quarter key drivers of was in for margin the

clearly, in a -- a quarter, over drove that we X% had of lot the little the sales growth the organic So X% benefit.

operations. We benefit in we our price of also the had and productivity good manufacturing had variable

some fact than more we in OEM and the mix; distribution bit price up all and based inflation was higher driven So the enjoy we the productivity, a a offset just better business. on that were the course had volume offset We of were side with had margins little contributions. mix and sales distribution in of

Mark Gliebe

the I'll about beneficial gauge half the as slightly might in should fourth first margins you what our the be. think to at quarter. of quarter, kind quarter just PTS for add you was And SG&A look

Trish Gorman

third there not And we quarter? sure, in guys, customer weather you in is how can should the key impact any that and coming quantify quarter the think Thank way helpful. then, with That's event. the I'm you. Can that about the quantify you

Mark Gliebe

So we customer we weather. who any commented HVAC by We're to customers. in that residential was had on our of not a going names specific prepared affected comments comment severe large

that patterns so we next demand -- as return that a say over on so. customer also normal go-forward expect basis, to did we However, to the quarter or

Operator

will Joe with be from Please go Goldman ahead. question Sachs. Next Ritchie

Joe Ritchie

everyone. morning, Good

Climate implying about quarter? segments is the in are just XQ growth composition you digit So some of both And maybe the if just -- the think in and low-single to I'm like -- seems are about the I about in trajectory C&Is, it comps, fourth as think given of I the how trying different could sub-segments, we guidance the see your tougher a the assuming for both there. get sense guide, growth. negative think that to organic like

Rob Rehard

No, no.

probably know First provide of you all, don't quarterly guidance. we

-- The expected fourth PTS and came of expectations slightly principally third we it's our the the fourth driven our outlook quarter unchanged on in still for in quarter. as we quarter, quarter and as ahead by fourth see look the

In don't we rates We terms growth commented expect a we decline. of revenue, no, year-over-year see -- mid-single-digit that

JonSchlemmer

the For year.

Mark Gliebe

the -- year For

JonSchlemmer

And we to each sales fourth contribute would the with of organic growth that the expect in quarter. segments

Joe Ritchie

Okay, like all down it. my know quarter, well. this as question then you floating-rate bit have I obviously October that helpful. And is debt. deployment. guys the capital It but swooned some markets you a That's looks follow-on in Got around right. little paid

market? so thinking this share toggle you're the point doing I'm debt more at And just in curious paying versus how about down between buybacks that

Mark Gliebe

can Well, I'll as Rob in and comment jump then well.

we five be did authorization approach. quarter, balanced more did a authorize commented acquisition back this as consistent share, know, We to approach, in balanced and million going just of so deployment, in an -- earlier As capital we approach with repurchased as and that we forward. last It's last Board year. our buyback also you $XXX XXXX share our March our go of the balanced know, six out quarters, we you we'd on our be

about say of things build there very you at. and the that the we're and looking some I would valuations that aware -- continues out our feel to pipeline we good we're So to of however,

RobRehard

will alluded down continue look to fourth I to, we to Mark that, Right. will debt. continue look as to say we and quarter, remain just as would we to balanced, the And additional pay

Operator

[Operator will Global. Liptak Next go Instructions] from question Walter be with ahead. Seaport Please

Steve Friedberg

Hi, this is in Friedberg for Steve filling Walt.

Mark Gliebe

Steve. morning, Good

Steve Friedberg

the more Hey, touch material are don't bit channel and little say, and wanted Power sales I due to a growth to know oil guys organic on end-markets? fill I you expecting, you Transmission, was give or guys. handling can color guys we and can gas some if growth upon higher the --

Mark Gliebe

jump goes -- in our to can in through distribution. A as Jon then and comment I'll XX% well. XX% So of PTS sales large

distribution good handle happened So we markets. have on what's a do in

So seeing think real demand. channel right we happening. fill now, we're there's think don't We

we So XXXX. we as look to that Jon about anything into feel good add?

Jon Schlemmer

commented thing that only is the add about would mix. The we I

sales to don't We greater seeing than strength we're any distribution, quarter. sales strong a distribution growth the in on Mark important our is in demand also while we real we in and was very that of up, note OEM quarter. driver right, saw side. it's the quarter the in actually OEM the distribution we larger fill think dynamics the So channel had was But believe

Steve Friedberg

product more on exiting out in and great, And going taking if simplification be as the are give thanks. QX Okay, headwinds can any you then businesses, one sure not any lines due in well? color to then automation any initiatives, there I'm to and XXXX

Mark Gliebe

Yeah.

self-help at we Jon that's on and forward, simplification so march both targets toward year, will improvement targets. the we driving certainly margin into a -- of As automation as that level look laid our there be our continued spending our go next out planned

terms In other that right think don't the ones is headwinds, I talked could that than now we there we tariffs I -- with of actions terms will place. see we've the offset nothing about the have of in in that

Operator

be Baird. Next go question Please from Mike Halloran with ahead. will

Mike Halloran

Hey, guys. Good morning.

congratulations off, first So Mark.

Mark Gliebe

Thank you.

Mike Halloran

the the on probably up, you the that of talk it just you that of slows few couple but accelerates one, as hermetic could can mind is is of process, XQ exit? quarters guys out cadence quickly you here, are context how phasing when think the or customers motor how a now next wouldn't completely wraps then unwinding down if And and some the about business, questions over just how with here,

JonSchlemmer

question. take Mike, that I'll

about quarter supporting think it likely You're second our is, right is the business. how as we think we ramps that we We're about exit completely in now of when the process right to business customers down.

see the will that looking at. terms of last that it varies of So to we're the customer little an us information in into It requirements. as you We but We'll exact terms a continue have can their customer that by provide what likely are what's XXXX. don't that bit and time impact production just half entails imagine exactly the time what is the of margin like can revenue line, in for the plans the first did frame we few in part supply and pretty -- much what they so the quarter, on business this of each you quarter, what was is ramp changes with in We're operating as or operating the these to but a exceptions. their make much we're business customers business support pretty down chain.

Mike Halloran

the main a fourth strength seasonality some then in you go seen might where challenges Makes just might you're slowed sequentials has areas one yet? the around or some trends beyond seeing context Could stabilization And quarter. the at China playing be the was you you sequentially mentioned. that you normal you China order headwinds give maybe how have there end-market the barring sense. see as areas in of Have some level couple talk second out low quarter? about one, some here, then improving obviously might from? And

JonSchlemmer

end-markets, tariffs any seen the more the we was that from year, say orders, we've that biggest the strength that third stable we've order demand of for exceptions, reaction the quarter. have been stable say, But on to seen from it we of a into the is fourth the work fourth fourth and into fairly I through would basis the stable quarter through ag place. quarter as strength working third it's fourth we'd as the change the that that third decline -- year-over-year prior the Most fourth probably I would in quarter. been entered a in quarter, in I over quarter we've the we've been as don't the standpoint saw the categorize have part, I market standpoint downturn what the orders, challenge third most There's as market, China I'd say in trend in couple as the show the a quarter, after entered other in an the a would like know characterize quarter. probably and still China put order we the which further quarter.

Operator

no the over the Mark in [Operator questions Mr. for Instructions] Gliebe conference like to queue, closing I'd back any remarks. turn With to

Mark Gliebe

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

Operator

presentation, now attending this We for time, want today's is and at disconnect. conference concluded. may you everyone thank The now to

Regal Rexnord (RRX) 5 Nov 182018 Q3 Earnings call transcript