Rexnord Corporation Second Quarter Fiscal 2014 Results

Rexnord Corporation (NYSE:RXN):

Second Quarter Highlights
  • Net sales increased 3% (+3% core sales) to $515 million
  • Income from operations increased 10% to $73 million year-over-year resulting in a 90 basis point increase in operating margin to 14%
  • Adjusted earnings per share increased 29% from the prior year to $0.31
  • Debt refinancing will provide annualized EPS accretion of $0.30; $0.18 benefit to fiscal year 2014
  • Adjusted EBITDA of $103 million resulting in an adjusted EBITDA margin of 20%

Todd A. Adams, President and Chief Executive Officer, commented, "We delivered a solid second quarter as operating earnings grew 10% and adjusted earnings per share increased 29% on 3% core sales growth. During the quarter we completed a debt refinancing that significantly improves our free cash flow, provides $0.30 of annualized EPS accretion and extends our debt maturity profile. We also completed accretive acquisitions within our Aerospace and Zurn businesses allowing us to expand our served markets and product offerings in these growth end-markets. In Process and Motion Control, core sales grew 1% and our adjusted EBITDA margin was 25% amidst stable demand within our industrial end-markets. Water Management core sales grew 6% year-over-year driven by high single digit growth in our Zurn business and single digit growth in our VAG business while posting a 1.16 book to bill ratio (1.15 in the first half of fiscal 2014). Looking to our second half, we believe we can continue to outperform our served markets in both segments, drive margin improvement and deliver solid free cash flow."

Third Quarter and Fiscal 2014 Outlook and Guidance

Adams continued, "We are increasing our full year adjusted EPS guidance range by $0.20, to $1.32 - $1.38, reflecting the partial year benefits of the debt refinancing and our latest outlook. With respect to our third quarter, we anticipate sales to be in the range of $495 million to $505 million and adjusted EPS in the range of $0.29 - $0.32.

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