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Rexnord Corporation Reports Second Quarter Results For Fiscal 2013

PMC Adjusted EBITDA in the second quarter was $78 million and Adjusted EBITDA as a percentage of sales increased 140 basis points from the prior year period to 25.1% of sales. Our Adjusted EBITDA margin increase was driven by productivity gains and efficiencies as well as increased operating leverage on higher year-over-year core sales.

Water Management

Water Management net sales in the second quarter increased 38% from the prior year to $190 million due to the acquisition of VAG. Core sales were flat year-over-year as market share gains and increased alternative market sales in our non-residential construction end-markets were offset by expected lower shipments to our North American municipal water end-markets.

Water Management Adjusted EBITDA in the second quarter was $31 million and Adjusted EBITDA as a percentage of sales was 16.0% as core margin expansion year-over-year was offset by the mix impact of VAG.

Discontinued Operations

During the second quarter of fiscal 2013, the Company’s Board of Director's approved a plan to divest a non-core engineered chain business located in Shanghai, China within the PMC platform. The Company is currently engaged in an active sale process and expects the transaction to be completed within the next 12 months. The Company recognized a loss from discontinued operations net of tax of $1.1 million in the second quarter of fiscal 2013. Prior year balance sheet and statement of operations amounts have been reclassified to conform to the discontinued operations presentation. The Company will not have continuing involvement after a sale is completed and Management does not believe that the divestiture of this non-core business will have a material impact on the Company's results of operations, financial position, or cash flows.

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. 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.

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