Rexnord Corporation (NYSE:RXN):
Fourth Quarter Highlights
-
Net sales increased 5% (+4% core sales, +2% acquisitions, -1% impact
of foreign currency translation) to $570 million
-
Income from operations increased 5% year-over-year to $79 million or
13.8% of sales
-
Adjusted EBITDA of $120 million resulting in an adjusted EBITDA margin
of 21.0%
-
Net income increased 67% from the prior year to $40 million
-
Diluted earnings per share from continuing operations was $0.39;
adjusted earnings per share increased 56% from the prior year to $0.50
Fiscal 2014 Highlights
-
Net sales were $2.082 billion for fiscal year 2014, an increase of 4%
(+3% core sales, +1% acquisitions)
-
Income from continuing operations increased 10% year-over-year to $280
million or 13.4% of sales
-
Adjusted EBITDA of $413 million resulting in an adjusted EBITDA margin
of 19.8%
-
Net income from continuing operations was $30 million in fiscal year
2014, inclusive of a $133 million loss on debt extinguishment
associated with our August 2013 debt refinancing, compared to $55
million in fiscal year 2013
-
Diluted earnings per share from continuing operations was $0.29;
adjusted earnings per share increased 42% from the prior year to $1.39
-
Free cash flow for fiscal year 2014 was $144 million and again
exceeded adjusted net income, inclusive of $9 million of debt
refinancing fees and costs associated with the Board of Directors'
review of strategic alternatives that was concluded in June 2013
-
Total liquidity at year-end was $675 million ($339 million of cash
plus $336 million of available borrowings), inclusive of $74 million
in net proceeds from the issuance of our common stock in February
2014. Net debt leverage was 3.8x as of March 31, 2014
Todd A. Adams, President and Chief Executive Officer, commented, “We're
pleased with our fourth quarter results in light of some challenging
market conditions during the quarter. Core sales growth improved to 4%
in the quarter, while our adjusted EBITDA margin was 21%. Despite the
drag from unusually adverse winter weather and the impact of project
shipment timing in Water Management, we achieved our adjusted EPS
guidance for the fourth quarter and fiscal year.
"In our Process & Motion Control platform, we are seeing on-going
stability in most of our end-markets. Core growth is expected to remain
modest in the near term, driven by a lower backlog that impacts the
first half of the year, but will be augmented by a full-year
contribution from Precision Gear Holdings which we acquired in December
2013. For the full year, our adjusted EBITDA margin of 25.6% increased
70 basis points from last year's record margin on a 2% increase in sales
(1% core growth) as we continue to drive margin expansion amidst, in
total, stable end-markets. Looking ahead, the investments we have made
in innovation, globalization and operational excellence driven through
the Rexnord Business System gives us confidence in our ability to drive
continued long-term growth and strong operating performance in the
platform."
"In Water Management, despite the adverse impact of the winter weather
and the timing of certain water infrastructure project shipments, core
growth was 6% in the quarter and 8% for the fiscal year. Looking
forward, we expect margins to expand meaningfully in fiscal 2015, and we
continue to believe we will see significant benefits from a recovering
non-residential construction market and from on-going global investment
in water infrastructure."
Fiscal 2015 Guidance
Adams continued, "Our initial fiscal 2015 guidance is for core growth of
+3% to +5%, incremental Adjusted EBITDA margins of approximately 30%,
adjusted earnings per share range of $1.60 to $1.70 and free cash flow
to again exceed adjusted net income. Our fiscal 2015 guidance excludes
our non-core ring gear and pinion product line ("Mill Products") used in
mining sector crushing machinery applications as our Board of Directors
has approved a plan to assess the strategic alternatives for Mill
Products. We expect to conclude this strategic review prior to our
fiscal year-end, and therefore our fiscal 2015 guidance excludes the
operations and any potential exit costs related to this business. Mill
Products contributed approximately $50 million to revenue and $0.06 to
EPS in fiscal 2014. Excluding Mill Products, our guidance represents a
24% comparable year-over-year growth in adjusted earnings per share at
the midpoint of the range. With respect to the phasing of our core
growth, we expect core sales to grow +2% to +4% in the first half of
fiscal 2015 and +4% to +6% in the second half of the fiscal year. For
the first quarter, we anticipate sales to be in the range of $500 to
$510 million and adjusted earnings per share in the range of $0.24 to
$0.26. Our guidance does not include the EPS accretion from acquisitions
that we expect to complete over the course of the year."
Fourth Quarter Fiscal 2014 Segment Highlights
Process & Motion Control
Process & Motion Control ("PMC") net sales were $359 million in the
fourth quarter of fiscal 2014. Core net sales, which excludes the 3%
favorable impact of acquisitions and 1% unfavorable impact from foreign
currency, increased 3% year-over-year as single digit growth in the
majority of our end-markets was partially offset by a decline in sales
to our bulk material handling markets.
PMC Adjusted EBITDA in the fourth quarter increased 18% from the prior
year to $105 million and Adjusted EBITDA as a percentage of sales
increased 300 basis points year-over-year to 29.2%.
Water Management
Water Management net sales were $211 million in the fourth quarter of
fiscal 2014. Core net sales, which excludes a 1% unfavorable impact from
foreign currency, increased 6% year-over-year due to market share gains
and increased alternative market sales in our non-residential
construction end-markets, partially offset by the impact of severe
weather in the fourth quarter of the current year.
Water Management Adjusted EBITDA in the fourth quarter was $24 million
resulting in an 11.1% Adjusted EBITDA margin compared to 15.3% in the
fourth quarter of fiscal 2013. Profitability in Water Management was
lower than expected primarily due to shipment timing of certain water
infrastructure projects, adverse mix in our non-residential construction
and water infrastructure markets (primarily related to severe weather)
as well as the acceleration of costs to fund initiatives to improve our
North American valve and gate group asset utilization.
Non-GAAP Financial Measures
The following non-GAAP financial measures are utilized by management in
comparing our operating performance on a consistent basis. We believe
that these financial measures are appropriate to enhance an overall
understanding of our underlying operating performance trends compared to
historical and prospective periods and our peers. Management also
believes that these measures are useful to investors in their analysis
of our results of operations and provide improved comparability between
fiscal periods, and in the case of Adjusted EBITDA, is a measurement
with which we must comply under our credit agreement. Non-GAAP financial
measures should not be considered in isolation from, or as a substitute
for, financial information calculated in accordance with GAAP. Investors
are encouraged to review the reconciliation of these non-GAAP measures
to their most directly comparable GAAP financial measures. A
reconciliation of non-GAAP financial measures presented above to our
GAAP results has been provided in the financial tables included in this
press release.
Core Sales
Core sales excludes the impact of acquisitions, divestitures and foreign
currency translation. Management believes that core sales facilitates
easier comparisons of our net sales performance with prior and future
periods and to our peers. We exclude the effect of acquisitions because
the nature, size and number of acquisitions can vary dramatically from
period to period and between us and our peers, and can also obscure
underlying business trends and make comparisons of long-term performance
difficult. We exclude the effect of foreign currency translation from
this measure because the volatility of currency translation is not under
management's control.
Adjusted Net Income and Adjusted Earnings Per Share
Adjusted net income and adjusted earnings per share (calculated on a
diluted basis) exclude actuarial gains and losses on pension and
postretirement benefit obligations, restructuring and other similar
costs, gains or losses on divestitures, gains or losses on
extinguishment of debt, the impact of inventory fair value adjustments
in connection with purchase accounting, and other non-operational,
non-cash or non-recurring losses or gains, net of their income tax
impact. The tax rates used to calculate adjusted net income and adjusted
earnings per share are based on a transaction specific basis. We believe
that adjusted net income and adjusted earnings per share are useful in
assessing our financial performance by excluding items that are not
indicative of our core operating performance or that may obscure trends
useful in evaluating our continuing results of operations.
EBITDA
EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is presented because it is an important
supplemental measure of performance and it is frequently used by
analysts, investors and other interested parties in the evaluation of
companies in our industry. EBITDA is also presented and compared by
analysts and investors in evaluating the performance of issuers of “high
yield” securities because it is a common measure of the ability to meet
debt service obligations. Other companies in our industry may calculate
EBITDA differently. EBITDA is not a measurement of financial performance
under GAAP and should not be considered as an alternative to cash flow
from operating activities or as a measure of liquidity or an alternative
to net income as indicators of operating performance or any other
measures of performance derived in accordance with GAAP. Because EBITDA
is calculated before recurring cash charges, including interest expense
and taxes, and is not adjusted for capital expenditures or other
recurring cash requirements of the business, it should not be considered
as a measure of discretionary cash available to invest in the growth of
the business.
Adjusted EBITDA
“Adjusted EBITDA” is the term we use to describe EBITDA as defined and
adjusted in our credit agreement, which is net income, adjusted for the
items summarized in the table below. Adjusted EBITDA is intended to show
our unleveraged, pre-tax operating results and therefore reflects our
financial performance based on operational factors, excluding
non-operational, non-cash or non-recurring losses or gains. Adjusted
EBITDA is not a presentation made in accordance with GAAP, and our use
of the term Adjusted EBITDA varies from others in our industry. This
measure should not be considered as an alternative to net income, income
from operations or any other performance measures derived in accordance
with GAAP. Adjusted EBITDA has important limitations as an analytical
tool, and you should not consider it in isolation, or as a substitute
for analysis of our results as reported under GAAP. For example,
Adjusted EBITDA does not reflect: (a) our capital expenditures, future
requirements for capital expenditures or contractual commitments;
(b) changes in, or cash requirements for, our working capital needs;
(c) the significant interest expenses, or the cash requirements
necessary to service interest or principal payments, on our debt;
(d) tax payments that represent a reduction in cash available to us;
(e) any cash requirements for the assets being depreciated and amortized
that may have to be replaced in the future; or (f) the impact of
earnings or charges resulting from matters that we and the lenders under
our credit agreement may not consider indicative of our ongoing
operations. In particular, our definition of Adjusted EBITDA allows us
to add back certain non-cash, non-operating or non-recurring charges
that are deducted in calculating net income, even though these are
expenses that may recur, vary greatly and are difficult to predict and
can represent the effect of long-term strategies as opposed to
short-term results.
In addition, certain of these expenses can represent the reduction of
cash that could be used for other corporate purposes. Further, although
not included in the calculation of Adjusted EBITDA below, the measure
may at times allow us to add estimated cost savings and operating
synergies related to operational changes ranging from acquisitions to
dispositions to restructurings and/or exclude one-time transition
expenditures that we anticipate we will need to incur to realize cost
savings before such savings have occurred. Further, management and
various investors use the ratio of total debt less cash to Adjusted
EBITDA (which includes a full pro-forma last-twelve-month impact of
acquisitions), or "net debt leverage", as a measure of our financial
strength and ability to incur incremental indebtedness when making key
investment decisions and evaluating us against peers.
Free Cash Flow
We define Free Cash Flow as cash flow from operations less capital
expenditures plus the excess tax benefit on stock option exercises, and
we use this metric in analyzing our ability to service and repay our
debt and to forecast future periods. However, this measure does not
represent funds available for investment or other discretionary uses
since it does not deduct cash used to service our debt.
About Rexnord
Headquartered in Milwaukee, Wisconsin, Rexnord is comprised of two
strategic platforms, Process & Motion Control and Water Management, with
approximately 7,400 employees worldwide. The Process & Motion Control
platform designs, manufactures, markets and services specified,
highly-engineered mechanical components used within complex systems. The
Water Management platform designs, procures, manufactures and markets
products that provide and enhance water quality, safety, flow control
and conservation. Additional information about the Company can be found
at www.rexnord.com.
Conference Call Details
Rexnord will hold a conference call on Wednesday, May 21, 2014 at 5:00
p.m. Eastern Time to discuss its fiscal 2014 fourth quarter and full
year results and provide a general business update. Rexnord President
and CEO, Todd Adams, and Senior Vice President and CFO, Mark Peterson,
will co-host the call. The conference call can be accessed via telephone
as follows:
Domestic toll-free #: 800-708-4540
International toll #: 847-619-6397
Access Code: 37204594
A live webcast of the call will also be available on the Investor
Relations section of the Company's website. Please go to the website (www.rexnord.com)
at least fifteen minutes prior to the start of the call to register,
download and install any necessary audio software.
If you are unable to participate during the live teleconference, a
replay of the conference call will be available from 7:30 p.m. Eastern
Time, May 21, 2014 until 11:30 p.m. Eastern Time, June 4, 2014. To
access the replay, please dial 888-843-7419 (domestic) or 630-652-3042
(international) with access code 3720 4594#.
Cautionary Statement on Forward-Looking
Statements
Information in this release may involve outlook, expectations, beliefs,
plans, intentions, strategies or other statements regarding the future,
which are forward-looking statements. These forward-looking statements
involve risks and uncertainties. All forward-looking statements included
in this release are based upon information available to Rexnord
Corporation as of the date of the release, and Rexnord Corporation
assumes no obligation to update any such forward-looking statements. The
statements in this release are not guarantees of future performance, and
actual results could differ materially from current expectations.
Numerous factors could cause or contribute to such differences. Please
refer to "Risk Factors" and "Cautionary Notice Regarding Forward-Looking
Statements" in the Company's Form 10-K for the fiscal year ended
March 31, 2014 as well as the Company's annual, quarterly and current
reports filed on Forms 10-K, 10-Q and 8-K from time to time with the
Securities and Exchange Commission for a further discussion of the
factors and risks associated with the business.
|
|
|
Rexnord Corporation and Subsidiaries
|
Consolidated Statements of Operations
|
(in Millions, except share and per share amounts)
|
|
|
|
|
|
|
|
Fourth Quarter Ended
|
|
Fiscal Year Ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
|
March 31, 2014
|
|
March 31, 2013
|
Net sales
|
|
$
|
569.7
|
|
|
$
|
540.3
|
|
|
$
|
2,082.0
|
|
|
$
|
2,005.1
|
|
Cost of sales
|
|
361.0
|
|
|
342.1
|
|
|
1,318.4
|
|
|
1,273.7
|
|
Gross profit
|
|
208.7
|
|
|
198.2
|
|
|
763.6
|
|
|
731.4
|
|
Selling, general and administrative expenses
|
|
113.3
|
|
|
108.7
|
|
|
424.5
|
|
|
406.2
|
|
Zurn PEX loss contingency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.1
|
|
Restructuring and other similar charges
|
|
3.9
|
|
|
2.3
|
|
|
8.7
|
|
|
8.6
|
|
Amortization of intangible assets
|
|
13.0
|
|
|
12.4
|
|
|
50.8
|
|
|
51.1
|
|
Income from operations
|
|
78.5
|
|
|
74.8
|
|
|
279.6
|
|
|
255.4
|
|
Non-operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
(22.7
|
)
|
|
(38.7
|
)
|
|
(109.1
|
)
|
|
(153.3
|
)
|
Loss on the extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(133.2
|
)
|
|
(24.0
|
)
|
Other expense, net
|
|
(4.8
|
)
|
|
(1.4
|
)
|
|
(15.1
|
)
|
|
(2.9
|
)
|
Income from continuing operations before income taxes
|
|
51.0
|
|
|
34.7
|
|
|
22.2
|
|
|
75.2
|
|
Provision (benefit) for income taxes
|
|
11.1
|
|
|
10.8
|
|
|
(7.4
|
)
|
|
20.3
|
|
Net income from continuing operations
|
|
39.9
|
|
|
23.9
|
|
|
29.6
|
|
|
54.9
|
|
Loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
Net income
|
|
$
|
39.9
|
|
|
$
|
23.9
|
|
|
$
|
29.6
|
|
|
$
|
50.1
|
|
Non-controlling interest income (loss)
|
|
0.1
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
Net income attributable to Rexnord
|
|
$
|
40.0
|
|
|
$
|
23.9
|
|
|
$
|
30.2
|
|
|
$
|
50.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
|
$
|
0.25
|
|
|
$
|
0.30
|
|
|
$
|
0.57
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.29
|
|
|
$
|
0.55
|
|
Net loss per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.05
|
)
|
Diluted
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.05
|
)
|
Net income per share attributable to Rexnord:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
|
$
|
0.25
|
|
|
$
|
0.31
|
|
|
$
|
0.52
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.30
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
99,834
|
|
|
97,103
|
|
|
98,105
|
|
|
95,972
|
|
Effect of dilutive stock options
|
|
3,407
|
|
|
3,355
|
|
|
3,213
|
|
|
3,894
|
|
Diluted
|
|
103,241
|
|
|
100,458
|
|
|
101,318
|
|
|
99,866
|
|
|
|
|
|
|
Rexnord Corporation and Subsidiaries
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
Fourth Quarter and Fiscal Year
|
(in Millions, except share and per share amounts) (Unaudited)
|
|
|
|
|
|
|
|
Fourth Quarter Ended
|
|
Fiscal Year Ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
|
March 31, 2014
|
|
March 31, 2013
|
Net income
|
|
$
|
39.9
|
|
|
$
|
23.9
|
|
|
$
|
29.6
|
|
|
$
|
50.1
|
Interest expense, net
|
|
22.7
|
|
|
38.7
|
|
|
109.1
|
|
|
153.3
|
Income tax provision (benefit)
|
|
11.1
|
|
|
10.8
|
|
|
(7.4
|
)
|
|
20.3
|
Depreciation and amortization
|
|
27.9
|
|
|
28.5
|
|
|
108.5
|
|
|
112.4
|
EBITDA
|
|
101.6
|
|
|
101.9
|
|
|
239.8
|
|
|
336.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to EBITDA
|
|
|
|
|
|
|
|
|
|
Actuarial loss on pension and postretirement benefit obligation
|
|
2.7
|
|
|
5.5
|
|
|
2.7
|
|
|
5.7
|
Loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.8
|
Restructuring and other similar costs
|
|
3.9
|
|
|
2.3
|
|
|
8.7
|
|
|
8.6
|
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
133.2
|
|
|
24.0
|
Impact of inventory fair value adjustment
|
|
1.3
|
|
|
—
|
|
|
1.7
|
|
|
—
|
Stock-based compensation expense
|
|
1.7
|
|
|
1.7
|
|
|
7.0
|
|
|
7.1
|
LIFO expense
|
|
3.5
|
|
|
2.2
|
|
|
4.8
|
|
|
5.7
|
Zurn PEX loss contingency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.1
|
Other expense, net (1)
|
|
4.8
|
|
|
1.4
|
|
|
15.1
|
|
|
2.9
|
Subtotal of adjustments to EBITDA
|
|
17.9
|
|
|
13.1
|
|
|
173.2
|
|
|
68.9
|
Adjusted EBITDA
|
|
$
|
119.5
|
|
|
$
|
115.0
|
|
|
$
|
413.0
|
|
|
$
|
405.0
|
|
|
|
|
|
|
|
Fourth Quarter Ended
|
|
Fiscal Year Ended
|
Adjusted Net Income and Earnings Per Share
|
|
March 31, 2014
|
|
March 31, 2013
|
|
March 31, 2014
|
|
March 31, 2013
|
Net income
|
|
$
|
39.9
|
|
|
$
|
23.9
|
|
|
$
|
29.6
|
|
|
$
|
50.1
|
|
Loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.8
|
|
Restructuring and other similar costs
|
|
3.9
|
|
|
2.3
|
|
|
8.7
|
|
|
8.6
|
|
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
133.2
|
|
|
24.0
|
|
Impact of inventory fair value adjustment
|
|
1.3
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
Stock-based compensation expense
|
|
1.7
|
|
|
1.7
|
|
|
7.0
|
|
|
7.1
|
|
LIFO expense
|
|
3.5
|
|
|
2.2
|
|
|
4.8
|
|
|
5.7
|
|
Actuarial loss on pension and postretirement benefit obligation
|
|
2.7
|
|
|
5.5
|
|
|
2.7
|
|
|
5.7
|
|
Zurn PEX loss contingency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.1
|
|
Other expense, net (1)
|
|
4.8
|
|
|
1.4
|
|
|
15.1
|
|
|
2.9
|
|
Tax effect on above items
|
|
(5.9
|
)
|
|
(4.9
|
)
|
|
(62.2
|
)
|
|
(21.4
|
)
|
Adjusted net income
|
|
$
|
51.9
|
|
|
$
|
32.1
|
|
|
$
|
140.6
|
|
|
$
|
97.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
99,834
|
|
|
97,103
|
|
|
98,105
|
|
|
95,972
|
|
Effect of dilutive stock options
|
|
3,407
|
|
|
3,355
|
|
|
3,213
|
|
|
3,894
|
|
Diluted
|
|
103,241
|
|
|
100,458
|
|
|
101,318
|
|
|
99,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share - diluted
|
|
$
|
0.50
|
|
|
$
|
0.32
|
|
|
$
|
1.39
|
|
|
$
|
0.98
|
|
Net income per share - diluted (in accordance with GAAP)
|
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.29
|
|
|
$
|
0.55
|
|
(1)
|
|
Other expense, net includes the impact of foreign currency
transactions, sale of property, plant and equipment, costs
attributable to the now-concluded review of strategic alternatives
initiated by our Board of Directors and other miscellaneous
expenses. See "Management Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Form 10-K for
the fiscal year ended March 31, 2014 for further information.
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
Cash provided by operating activities
|
|
$
|
190.8
|
|
|
$
|
144.5
|
|
Expenditures for property, plant and equipment
|
|
(52.2
|
)
|
|
(60.1
|
)
|
Excess tax benefit on exercise of stock options
|
|
5.8
|
|
|
18.1
|
|
Free cash flow
|
|
$
|
144.4
|
|
|
$
|
102.5
|
|
|
Rexnord Corporation and Subsidiaries
|
Consolidated Statements of Comprehensive Income
|
(in Millions)
|
|
|
|
|
|
|
|
Fourth Quarter Ended
|
|
Fiscal Year Ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
|
March 31, 2014
|
|
March 31, 2013
|
Net income
|
|
$
|
40.0
|
|
|
$
|
23.9
|
|
|
30.2
|
|
|
$
|
50.1
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
1.8
|
|
|
(8.6
|
)
|
|
7.1
|
|
|
(14.3
|
)
|
Unrealized loss on interest rate derivatives, net of tax
|
|
(1.7
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
Change in pension and other postretirement defined benefit plans,
net of tax
|
|
10.3
|
|
|
(14.0
|
)
|
|
9.5
|
|
|
(13.1
|
)
|
Other comprehensive income (loss), net of tax
|
|
10.4
|
|
|
(22.6
|
)
|
|
14.9
|
|
|
(27.4
|
)
|
Non-controlling interest loss
|
|
(0.1
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
Total comprehensive income
|
|
$
|
50.3
|
|
|
$
|
1.3
|
|
|
$
|
44.5
|
|
|
$
|
22.7
|
|
|
|
|
|
|
Rexnord Corporation and Subsidiaries
|
Consolidated Balance Sheets
|
(in Millions, except share amounts)
|
|
|
|
|
|
|
|
March 31, 2014
|
|
March 31, 2013
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
339.0
|
|
|
$
|
524.1
|
|
Receivables, net
|
|
368.3
|
|
|
350.4
|
|
Inventories, net
|
|
359.7
|
|
|
326.2
|
|
Other current assets
|
|
53.8
|
|
|
46.4
|
|
Total current assets
|
|
1,120.8
|
|
|
1,247.1
|
|
Property, plant and equipment, net
|
|
440.9
|
|
|
410.7
|
|
Intangible assets, net
|
|
592.6
|
|
|
613.5
|
|
Goodwill
|
|
1,150.7
|
|
|
1,118.4
|
|
Insurance for asbestos claims
|
|
36.0
|
|
|
35.0
|
|
Other assets
|
|
42.5
|
|
|
49.1
|
|
Total assets
|
|
$
|
3,383.5
|
|
|
$
|
3,473.8
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Current maturities of debt
|
|
$
|
29.0
|
|
|
$
|
169.3
|
|
Trade payables
|
|
241.1
|
|
|
208.3
|
|
Compensation and benefits
|
|
61.4
|
|
|
55.6
|
|
Current portion of pension and postretirement benefit obligations
|
|
5.8
|
|
|
5.7
|
|
Interest payable
|
|
—
|
|
|
48.1
|
|
Other current liabilities
|
|
112.2
|
|
|
121.2
|
|
Total current liabilities
|
|
449.5
|
|
|
608.2
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
1,943.0
|
|
|
1,962.3
|
|
Pension and postretirement benefit obligations
|
|
147.7
|
|
|
170.8
|
|
Deferred income taxes
|
|
207.1
|
|
|
225.2
|
|
Reserve for asbestos claims
|
|
36.0
|
|
|
35.0
|
|
Other liabilities
|
|
38.1
|
|
|
43.8
|
|
Total liabilities
|
|
2,821.4
|
|
|
3,045.3
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none
issued
|
|
—
|
|
|
—
|
|
Common stock, $0.01 par value; 200,000,000 shares authorized; shares
issued: 102,055,058 at March 31, 2014 and 98,108,438 at March 31,
2013
|
|
1.0
|
|
|
1.0
|
|
Additional paid-in capital
|
|
872.7
|
|
|
784.0
|
|
Retained deficit
|
|
(281.3
|
)
|
|
(311.5
|
)
|
Accumulated other comprehensive loss
|
|
(23.8
|
)
|
|
(38.7
|
)
|
Treasury stock at cost; 900,904 shares at March 31, 2014 and March
31, 2013
|
|
(6.3
|
)
|
|
(6.3
|
)
|
Total Rexnord stockholders' equity
|
|
562.3
|
|
|
428.5
|
|
Non-controlling interest
|
|
(0.2
|
)
|
|
—
|
|
Total stockholders' equity
|
|
562.1
|
|
|
428.5
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,383.5
|
|
|
$
|
3,473.8
|
|
|
Rexnord Corporation and Subsidiaries
|
Consolidated Statements of Cash Flows
|
(in Millions)
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
Operating activities
|
|
|
|
|
|
|
Net income
|
|
$
|
29.6
|
|
|
$
|
50.1
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
57.7
|
|
|
61.3
|
|
Amortization of intangible assets
|
|
50.8
|
|
|
51.1
|
|
Amortization of deferred financing costs
|
|
2.6
|
|
|
3.9
|
|
Loss (gain) on dispositions of property, plant and equipment
|
|
2.3
|
|
|
(3.6
|
)
|
Deferred income taxes
|
|
(24.9
|
)
|
|
(15.4
|
)
|
Other non-cash (credits) charges
|
|
(0.1
|
)
|
|
7.3
|
|
Loss on extinguishment of debt
|
|
133.2
|
|
|
24.0
|
|
Stock-based compensation expense
|
|
7.0
|
|
|
7.1
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Receivables
|
|
(11.3
|
)
|
|
(20.3
|
)
|
Inventories
|
|
(11.3
|
)
|
|
(12.8
|
)
|
Other assets
|
|
(6.8
|
)
|
|
7.5
|
|
Accounts payable
|
|
26.0
|
|
|
(4.3
|
)
|
Accruals and other
|
|
(64.0
|
)
|
|
(11.4
|
)
|
Cash provided by operating activities
|
|
190.8
|
|
|
144.5
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(52.2
|
)
|
|
(60.1
|
)
|
Acquisitions, net of cash acquired
|
|
(112.0
|
)
|
|
(21.0
|
)
|
Loan receivable for financing under New Market Tax Credit incentive
program
|
|
—
|
|
|
(9.7
|
)
|
Proceeds from dispositions of property, plant and equipment
|
|
0.4
|
|
|
6.7
|
|
Proceeds from divestiture, net of cash
|
|
—
|
|
|
2.3
|
|
Cash used for investing activities
|
|
(163.8
|
)
|
|
(81.8
|
)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Proceeds from borrowings of long-term debt
|
|
1,935.1
|
|
|
15.4
|
|
Repayments of long-term debt
|
|
(1,948.4
|
)
|
|
(313.2
|
)
|
Proceeds from borrowings of short-term debt
|
|
13.5
|
|
|
12.6
|
|
Repayments of short-term debt
|
|
(165.6
|
)
|
|
(8.2
|
)
|
Payment of tender premium
|
|
(109.9
|
)
|
|
(17.6
|
)
|
Payment of deferred financing fees
|
|
(17.1
|
)
|
|
(2.0
|
)
|
Proceeds from issuance of common stock, net of direct offering costs
|
|
73.8
|
|
|
458.3
|
|
Proceeds from exercise of stock options
|
|
2.1
|
|
|
2.3
|
|
Third party investment in non-controlling interest
|
|
0.4
|
|
|
—
|
|
Excess tax benefit on exercise of stock options
|
|
5.8
|
|
|
18.1
|
|
Cash (used for) provided by financing activities
|
|
(210.3
|
)
|
|
165.7
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(1.8
|
)
|
|
(2.3
|
)
|
(Decrease) increase in cash and cash equivalents
|
|
(185.1
|
)
|
|
226.1
|
|
Cash and cash equivalents at beginning of period
|
|
524.1
|
|
|
298.0
|
|
Cash and cash equivalents at end of period
|
|
$
|
339.0
|
|
|
$
|
524.1
|
|
|
|
|
Rexnord Corporation and Subsidiaries
|
Supplemental Data
|
(in Millions)
|
(Unaudited)
|
|
|
|
|
|
Fiscal 2014
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
$
|
314.6
|
|
|
$
|
311.8
|
|
|
$
|
300.8
|
|
|
$
|
358.7
|
|
|
$
|
1,285.9
|
|
Water Management
|
|
194.1
|
|
|
202.7
|
|
|
188.3
|
|
|
211.0
|
|
|
796.1
|
|
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
508.7
|
|
|
$
|
514.5
|
|
|
$
|
489.1
|
|
|
$
|
569.7
|
|
|
$
|
2,082.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
$
|
70.8
|
|
|
$
|
77.6
|
|
|
$
|
76.2
|
|
|
$
|
104.8
|
|
|
$
|
329.4
|
|
Water Management
|
|
29.5
|
|
|
32.1
|
|
|
28.2
|
|
|
23.5
|
|
|
113.3
|
|
Corporate
|
|
(7.5
|
)
|
|
(7.0
|
)
|
|
(6.4
|
)
|
|
(8.8
|
)
|
|
(29.7
|
)
|
Total
|
|
$
|
92.8
|
|
|
$
|
102.7
|
|
|
$
|
98.0
|
|
|
$
|
119.5
|
|
|
$
|
413.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
22.5
|
%
|
|
24.9
|
%
|
|
25.3
|
%
|
|
29.2
|
%
|
|
25.6
|
%
|
Water Management
|
|
15.2
|
%
|
|
15.8
|
%
|
|
15.0
|
%
|
|
11.1
|
%
|
|
14.2
|
%
|
Total (including Corporate)
|
|
18.2
|
%
|
|
20.0
|
%
|
|
20.0
|
%
|
|
21.0
|
%
|
|
19.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
$
|
313.9
|
|
|
$
|
309.1
|
|
|
$
|
302.9
|
|
|
$
|
340.2
|
|
|
$
|
1,266.1
|
|
Water Management
|
|
179.7
|
|
|
190.4
|
|
|
168.8
|
|
|
200.1
|
|
|
739.0
|
|
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
493.6
|
|
|
$
|
499.5
|
|
|
$
|
471.7
|
|
|
$
|
540.3
|
|
|
$
|
2,005.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
$
|
74.2
|
|
|
$
|
77.7
|
|
|
$
|
74.9
|
|
|
$
|
89.0
|
|
|
$
|
315.8
|
|
Water Management
|
|
29.3
|
|
|
30.5
|
|
|
23.7
|
|
|
30.7
|
|
|
114.2
|
|
Corporate
|
|
(6.0
|
)
|
|
(7.7
|
)
|
|
(6.6
|
)
|
|
(4.7
|
)
|
|
(25.0
|
)
|
Total
|
|
$
|
97.5
|
|
|
$
|
100.5
|
|
|
$
|
92.0
|
|
|
$
|
115.0
|
|
|
$
|
405.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA %
|
|
|
|
|
|
|
|
|
|
|
Process & Motion Control
|
|
23.6
|
%
|
|
25.1
|
%
|
|
24.7
|
%
|
|
26.2
|
%
|
|
24.9
|
%
|
Water Management
|
|
16.3
|
%
|
|
16.0
|
%
|
|
14.0
|
%
|
|
15.3
|
%
|
|
15.5
|
%
|
Total (including Corporate)
|
|
19.8
|
%
|
|
20.1
|
%
|
|
19.5
|
%
|
|
21.3
|
%
|
|
20.2
|
%
|
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