This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Rexnord Corporation Reports Third Quarter Results For Fiscal 2013

Stocks in this article: RXN

Domestic toll-free #: 888-771-4371International toll #: 847-585-4405Access Code: 33978110

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 6:30 p.m. Eastern Time, February 11, 2013 until 11:30 p.m. Eastern Time, February 26, 2013. To access the replay, please dial 888-843-7419 (domestic) or 630-652-3042 (international) with access code 3397 8110#.

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, 2012 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

Condensed Consolidated Statements of Operations

(in Millions, except share and per share amounts)

(Unaudited)

   
Third Quarter Ended Nine Months Ended
December 29, 2012   December 31, 2011 December 29, 2012   December 31, 2011
Net sales $ 471.7 $ 485.9 $ 1,464.8 $ 1,404.1
Cost of sales 303.8   321.4   931.6   914.3  
Gross profit 167.9 164.5 533.2 489.8
Selling, general and administrative expenses 93.7 98.0 297.5 274.7
Zurn PEX loss contingency 10.1
Restructuring and other similar charges 2.3 2.7 6.3 2.7
Amortization of intangible assets 12.4   12.7   38.7   37.6  
Income from operations 59.5 51.1 180.6 174.8
Non-operating expense:
Interest expense, net (39.1 ) (45.1 ) (114.6 ) (132.3 )
Loss on the extinguishment of debt (2.9 ) (24.0 ) (0.7 )
Loss on divestiture (6.9 )
Other expense, net (2.2 ) (3.0 ) (1.5 ) (10.8 )
Income from continuing operations before income taxes 15.3 3.0 40.5 24.1
Provision (benefit) for income taxes 3.9   (2.5 ) 9.5   3.5  
Net income from continuing operations 11.4 5.5 31.0 20.6
(Loss) income from discontinued operations, net of tax (2.2 ) 0.1   (4.8 ) 0.7  
Net income $ 9.2   $ 5.6   $ 26.2   $ 21.3  
 
Net income per share from continuing operations:
Basic $ 0.12 $ 0.08 $ 0.32 $ 0.31
Diluted $ 0.11 $ 0.08 $ 0.31 $ 0.29
Net (loss) income per share from discontinued operations:
Basic $ (0.02 ) $ $ (0.05 ) $ 0.01
Diluted $ (0.02 ) $ $ (0.05 ) $ 0.01
Net income per share:
Basic $ 0.10 $ 0.08 $ 0.27 $ 0.32
Diluted $ 0.09 $ 0.08 $ 0.26 $ 0.30
 
Weighted-average number of shares outstanding (in thousands):
Basic 96,789 66,724 95,591 66,724
Effect of dilutive stock options 3,489   5,491   4,077   5,266  
Diluted 100,278   72,215   99,668   71,990  
 

Rexnord Corporation and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

Third quarter

(in Millions, except share and per share amounts) (Unaudited)

   
Third Quarter Ended Nine Months Ended
December 29, 2012   December 31, 2011 December 29, 2012   December 31, 2011
Net income $ 9.2 $ 5.6 $ 26.2 $ 21.3
Interest expense, net 39.1 45.1 114.6 132.3
Income tax provision (benefit) 3.9 (2.5 ) 9.5 3.5
Depreciation and amortization 26.9   29.9   83.9   83.5  
EBITDA 79.1   78.1   234.2   240.6  
 
Adjustments to EBITDA
Actuarial loss on pension and postretirement benefit obligation 0.2
Loss on divestiture 6.9
Loss (income) from discontinued operations, net of tax 2.2 (0.1 ) 4.8 (0.7 )
Restructuring and other similar costs 2.3 2.7 6.3 2.7
Loss on extinguishment of debt 2.9 24.0 0.7
Impact of inventory fair value adjustment 3.3 4.2
Stock-based compensation expense 1.9 0.6 5.4 2.7
LIFO expense 1.4 1.8 3.5 4.9
Zurn PEX loss contingency 10.1
Other expense, net (1) 2.2   3.0   1.5   10.8  
Subtotal of adjustments to EBITDA 12.9   11.3   55.8   32.2  
Adjusted EBITDA $ 92.0   $ 89.4   $ 290.0   $ 272.8  
Third Quarter Ended   Nine Months Ended
Adjusted Net Income and Earnings Per Share December 29, 2012   December 31, 2011 December 29, 2012   December 31, 2011
Net income $ 9.2 $ 5.6 $ 26.2 $ 21.3
Loss on divestiture 6.9
Loss (income) from discontinued operations, net of tax 2.2 (0.1 ) 4.8 (0.7 )
Restructuring and other similar costs 2.3 2.7 6.3 2.7
Loss on extinguishment of debt 2.9 24.0 0.7
Impact of inventory fair value adjustment 3.3 4.2
Stock-based compensation expense 1.9 0.6 5.4 2.7
LIFO expense 1.4 1.8 3.5 4.9
Actuarial loss on pension and postretirement benefit obligation 0.2
Zurn PEX loss contingency 10.1
Other expense, net (1) 2.2 3.0 1.5 10.8
Tax effect on above items (3.4 ) (3.3 ) (16.5 ) (10.4 )
Adjusted net income $ 18.7   $ 13.6   $ 65.5   $ 43.1  
 
Weighted-average number of shares outstanding (in thousands)
Basic 96,789 66,724 95,591 66,724
Effect of dilutive stock options 3,489   5,491   4,077   5,266  
Diluted 100,278   72,215   99,668   71,990  
 
Adjusted earnings per share - diluted $ 0.19 $ 0.19 $ 0.66 $ 0.60
Net income per share - diluted (in accordance with GAAP) $ 0.09 $ 0.08 $ 0.26 $ 0.30
(1)   Other expense, net for the quarter ended December 29, 2012, consists of foreign currency transaction losses of $1.7 million, loss on sale of assets of $0.1 million and other miscellaneous losses of $0.4 million. Other expense, net for the quarter ended December 31, 2011, consists of management fee expense of $0.7 million, foreign currency translation losses of $2.7 million, and miscellaneous other income of $0.4 million. Other expense, net for the first nine months of fiscal 2013, consists of management fee expense of $15.0 million to terminate our management agreement with Apollo, foreign currency transaction losses of $6.6 million, a CDSOA recovery of $16.6 million, a $4.0 million gain on the sale of property, plant and equipment and other miscellaneous losses of $0.5 million. Other expense, net for the first nine months of fiscal 2012, consisted of management fee expense of $2.2 million, foreign currency transaction losses of $8.0 million, loss on sale of property, plant and equipment of $0.8, a CDSOA recovery of $0.5 million and other miscellaneous losses of $0.3 million.
 

Rexnord Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in Millions)

(Unaudited)

   
Third Quarter Ended Nine Months Ended
December 29, 2012   December 31, 2011 December 29, 2012   December 31, 2011
Net income $ 9.2 $ 5.6 $ 26.2 $ 21.3
Other comprehensive income (loss):
Foreign currency translation adjustments 0.7 (8.3 ) (5.7 ) (11.6 )
Unrealized gain on interest rate derivatives, net of tax 1.1 2.8
Change in pension and other postretirement defined benefit plans, net of tax 0.3   0.3   0.9   0.9  
Other comprehensive income (loss), net of tax 1.0   (6.9 ) (4.8 ) (7.9 )
Total comprehensive income (loss) $ 10.2   $ (1.3 ) $ 21.4   $ 13.4  
 

Rexnord Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in Millions, except share amounts)

(Unaudited)

   
December 29, 2012 March 31, 2012
Assets
Current assets:
Cash and cash equivalents $ 452.5 $ 298.0
Receivables, net 295.9 337.9
Inventories, net 356.9 320.3
Other current assets 49.8   62.1  
Total current assets 1,155.1 1,018.3
Property, plant and equipment, net 412.5 419.2
Intangible assets, net 627.3 647.1
Goodwill 1,121.2 1,114.7
Insurance for asbestos claims 42.0 42.0
Other assets 48.8   49.6  
Total assets $ 3,406.9   $ 3,290.9  
Liabilities and stockholders' equity (deficit)
Current liabilities:
Current maturities of debt $ 21.9 $ 10.3
Trade payables 180.3 215.6
Compensation and benefits 52.8 61.8
Current portion of pension and postretirement benefit obligations 6.4 6.3
Interest payable 19.9 49.9
Other current liabilities 132.5   124.7  
Total current liabilities 413.8 468.6
 
Long-term debt 2,115.4 2,413.4
Pension and postretirement benefit obligations 149.7 160.5
Deferred income taxes 226.8 245.7
Reserve for asbestos claims 42.0 42.0
Other liabilities 34.6   41.5  
Total liabilities 2,982.3 3,371.7
 
Stockholders' equity (deficit):
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: 97,970,674 at
December 29, 2012 and 67,741,271 at March 31, 2012 1.0 0.7
Additional paid-in capital 781.4 298.6
Retained deficit (335.4 ) (361.6 )
Accumulated other comprehensive loss (16.1 ) (11.3 )
Treasury stock at cost; 900,904 shares at December 29, 2012 and March 31, 2012 (6.3 ) (6.3 )
Total Rexnord stockholders' equity (deficit) 424.6 (79.9 )
Non-controlling interest   (0.9 )
Total stockholders' equity (deficit) 424.6   (80.8 )
Total liabilities and stockholders' equity (deficit) $ 3,406.9   $ 3,290.9  
 

Rexnord Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in Millions)

(Unaudited)

 
Nine Months Ended
December 29, 2012   December 31, 2011
Operating activities
Net income $ 26.2 $ 21.3
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 45.2 45.9
Amortization of intangible assets 38.7 37.6
Amortization of deferred financing costs 3.0 5.8
(Gain) loss on dispositions of property, plant and equipment (4.0 ) 0.8
Non-cash loss on divestiture 4.5
Deferred income taxes (12.9 ) (1.9 )
Other non-cash charges 8.0 20.7
Loss on debt extinguishment 24.0 0.7
Stock-based compensation expense 5.4 2.7
Changes in operating assets and liabilities:
Receivables 36.2 9.2
Inventories (41.6 ) (10.6 )
Other assets (0.9 ) (16.5 )
Accounts payable (33.5 ) (16.6 )
Accruals and other (44.7 ) (42.9 )
Cash provided by operating activities 49.1 60.7
 
Investing activities
Expenditures for property, plant and equipment (41.5 ) (39.0 )
Acquisitions, net of cash (21.1 ) (256.8 )
Loan receivable for financing under New Market Tax Credit incentive program (9.7 ) (17.9 )
Proceeds from dispositions of property, plant and equipment 6.1 5.6
Proceeds from divestiture, net of cash 2.3   3.4  
Cash used for investing activities (63.9 ) (304.7 )
 
Financing activities
Proceeds from borrowings of long-term debt 15.4 24.7
Repayments of long-term debt (308.1 ) (4.0 )
Proceeds from borrowings of short-term debt 10.2 165.8
Repayments of short-term debt (5.1 ) (102.0 )
Payment of deferred financing fees (2.0 ) (3.5 )
Payment of early redemption premium on long-term debt (17.6 )
Proceeds from issuance of common stock 458.3
Proceeds from exercise of stock options 2.3
Excess tax benefit on exercise of stock options 17.2    
Cash provided by financing activities 170.6 81.0
Effect of exchange rate changes on cash and cash equivalents (1.3 ) (2.4 )
Increase (decrease) in cash and cash equivalents 154.5 (165.4 )
Cash and cash equivalents at beginning of period 298.0   391.0  
Cash and cash equivalents at end of period $ 452.5   $ 225.6  
 

Rexnord Corporation and Subsidiaries

Supplemental Data

(in Millions)

(Unaudited)

 
Fiscal 2013
Q1   Q2   Q3   Q4   Total
Net sales
Process & Motion Control $ 313.9 $ 309.1 $ 302.9 $ 925.9
Water Management 179.7 190.4 168.8 538.9
Corporate          
Total $ 493.6   $ 499.5   $ 471.7     $ 1,464.8  
 
Adjusted EBITDA
Process & Motion Control $ 74.2 $ 77.7 $ 74.9 $ 226.8
Water Management 29.3 30.5 23.7 83.5
Corporate (6.0 ) (7.7 ) (6.6 )   (20.3 )
Total $ 97.5   $ 100.5   $ 92.0     $ 290.0  
 
Adjusted EBITDA %
Process & Motion Control 23.6 % 25.1 % 24.7 % 24.5 %
Water Management 16.3 % 16.0 % 14.0 % 15.5 %
Total (including Corporate) 19.8 % 20.1 % 19.5 % 19.8 %
 
Fiscal 2012
Q1 Q2 Q3 Q4 Total
Net sales
Process & Motion Control $ 324.7 $ 310.3 $ 316.5 $ 359.2 $ 1,310.7
Water Management 145.0 138.2 169.4 180.9 633.5
Corporate          
Total $ 469.7   $ 448.5   $ 485.9   $ 540.1   $ 1,944.2  
 
Adjusted EBITDA
Process & Motion Control $ 71.5 $ 73.5 $ 76.3 $ 95.6 $ 316.9
Water Management 27.8 22.9 20.2 25.4 96.3
Corporate (6.2 ) (6.1 ) (7.1 ) (7.9 ) (27.3 )
Total $ 93.1   $ 90.3   $ 89.4   $ 113.1   $ 385.9  
 
Adjusted EBITDA %
Process & Motion Control 22.0 % 23.7 % 24.1 % 26.6 % 24.2 %
Water Management 19.2 % 16.6 % 11.9 % 14.0 % 15.2 %
Total (including Corporate) 19.8 % 20.1 % 18.4 % 20.9 % 19.8 %
 




7 of 8

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,217.57 +243.26 1.43%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,571.2870 +22.0610 0.48%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs