Good day, and welcome to the Regal Second Quarter 2021 Earnings Conference Call. All participants will be on listen-only mode. Should you need assistance please signal a conference specialist or press the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To withdraw your question please press star then two. Please note this is being recorded. I would now like to turn the conference over to Mr. Robert Barry, Vice President of Investor Relations. Please go ahead. Great. Thanks, Ian. Good morning, everyone. Welcome to Regal Beloit Second Quarter 2021 Earnings Call. Joining me today are Louis Pinkham, our Chief Executive Officer, and Robert Rehard, our Vice President and Chief Financial Officer. Before turning the call over to Louis, I'd like to remind you that the statements made in this conference call that are not historical in nature are forward-looking statements. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results, and actual results could differ materially from those expressed or implied in forward-looking statements. For a list of factors that could cause actual results to differ materially from projected results, please refer to today's earnings release and our SEC filings. On slide three, we state that we are presenting certain non-GAAP financial measures in this presentation. We believe that these are useful financial measures to provide you with additional insight into our operating performance and for helping investors understand and compare our operating results across accounting periods and in the same manner as management. Please read the slide for information regarding these non-GAAP financial measures, and please see the appendix for reconciliations of these measures to the most comparable measures in accordance with GAAP. On slide four, we provide some additional disclosures related to the planned merger with Rexnord's PMC business. On slide five, let me briefly review the agenda for today's call. Louis will lead off with his opening comments and an overview of our 2Q results. Robert Rehard will provide our second quarter financial results in more detail and discuss our 2021 guidance. Louis will then come back to provide an update on our planned merger with Rexnord PMC. We will then move to Q&A, after which Louis will have some closing remarks. With that, I will turn the call over to Louis. Great. Thanks, Rob. Good morning, everyone. Thanks for joining us to discuss our second quarter earnings and to get an update on our business. Thank you for your interest in Regal. Building on the solid momentum we had in first quarter, Regal delivered accelerating top-line growth, significant margin gains, and strong free cash flow in the second quarter. Organic growth was 37%, and adjusted operating margin rose nearly 500 basis points, resulting in 140% adjusted EPS growth, which is the second quarter in a row that we achieved record results. I am also incredibly pleased to report that based on our second quarter performance and the margins implied in the 2021 guidance we shared last night, that we are hitting our operating margin expansion target under our 300 -in -3 plan well ahead of schedule. As a reminder, at our March 2020 Investor Day, we outlined a plan to raise our adjusted operating margin by 300 basis points over three years using 2019 as a baseline. Many factors allowed us to outperform our 300 -in -3 goal, but I believe Regal's focus on 80/20 principles is chief among them. Underlining the strength of this performance is that it was achieved while confronting steep inflationary headwinds, scattered supply chain disruptions, and lingering COVID impacts. I believe demonstrating very strong execution by our global Regal team. Before getting into more detail on our second quarter results, I want to thank all my Regal colleagues around the world for their hard work and resourcefulness as they remain focused on serving our customers, executing on our restructuring plans, and cultivating new growth opportunities. I'm also pleased to report that Regal continues to mature its various growth initiatives. While recovering end markets boosted our growth rate, Regal also continued to achieve share gains in all of our segments during the second quarter. I want to emphasize that we are definitely gaining momentum and share through our focused approach in the industrial powertrain, which I have an example of in the next slide. In addition to a great second quarter, I'm excited to update you on our planned merger with Rexnord PMC. With all required regulatory approvals now obtained and efforts by our dedicated integration planning team well underway, we are on track to likely close in late third quarter or early fourth quarter of this year. I'll come back with a more detailed update on the merger later in the call. Turning to our results. I think a standout positive in second quarter was Regal delivering 37% organic top-line growth with all four segments contributing. Essentially all our markets supported this positive performance. Because COVID distorts the comparisons with 2020, it is notable that our sales in the second quarter were up almost 4% versus 2019. A few highlights by vertical include our unit material handling business, which was up nearly 30%, our alternative energy business within PTS posted revenue that was a multiple of the levels seen in the prior year, and our North America residential HVAC business was up over 40% in the quarter. Notably, we started to see better momentum in our commercial HVAC business and expect the non-res end market, which represents about 12% of Regal sales, to be a nice source of growth for us in 2022. Regionally, our China business was also a very strong contributor, up more than 60% in the quarter. Our China team continues to execute at a high level, capitalizing on recovering end market demand while also driving nice share gain. While 37% organic sales growth will be hard to beat, I am confident we'll continue to see strong momentum in the back half given strong order rates in the second quarter and as we entered the third quarter. Orders in second quarter were up 57% on a daily basis and are tracking up at a mid-20s pace in July. Our orders were up 22% versus second quarter 2019. Notably, we think strength in our residential HVAC and pool pump businesses is set to continue through the second half, which is an improvement versus our more cautious stance on these markets when we spoke last quarter. This strength is driven by robust orders and a sizable backlog. Our sense that underlying demand remains healthy, a regulatory change in our pool business, and the HVAC channel in particular remaining understocked. In fact, the restock in resi HVAC we had anticipated in the first half of this year may be deferred to the first half of 2022 as we and the market balance accelerated demand and supply. We also see momentum building in our later cycle general industrial business and in the food and beverage and hospitality markets, among others, as we move into the back half and look ahead to 2022. Rob will share more thoughts on the cadence of recovery in our end markets later in the call. Turning to margins, Regal posted a record 14% adjusted operating margin in the quarter. The addition of sizable volume gains, a steady cadence of progress on our 80/20 productivity initiatives, executing our multi-year restructuring program, and gains from our efforts around lean resulted in significant second quarter margin expansion. Regal’s adjusted operating margin rose 460 basis points versus the prior year second quarter and is up 300 basis points versus the second quarter in 2019. As I noted earlier, this strong margin performance is happening despite facing supply chain challenges, mainly in certain electronic components, and significant inflationary pressures. This is where 80/20 is really helping us make better strategic pricing decisions and allocate resources to our highest value opportunities. Along with our hedge programs and buy ahead strategies and our teams executing a wide range of mitigating strategies with urgency and discipline, I am pleased that Regal was able to achieve price cost neutrality in the quarter. Before turning it over to Rob, I would like to share more detail about a significant order we received in the quarter in our PTS business, which highlights the power of offering an integrated powertrain solution and how Regal is leveraging its technology leadership and application expertise to create value-added solutions for our customers. In this example, our customer is a leading player in the resource recovery market, which essentially turns waste into energy as a replacement for coal. The customer was designing a next generation product and was looking for shorter lead times, improved ease of installation, and real-time monitoring and support functionality. Our Regal solution, pictured here, integrates our motor, a series of critical components along the industrial powertrain, and our Perceptiv remote monitoring sensor technology to create a solution that meets all the customer's needs while also lowering net material content and is expected to save the customer up to $1 million annually. This custom solution is an example of how Regal's ability to sell an integrated solution of powertrain and IoT-enabled sensing components created superior value for our customer. Regal's capability in this regard are strong and will be enhanced materially with the addition of Rexnord PMC, reinforces our confidence in the cross-marketing synergies that underpin our strategic rationale for doing the merger with PMC in the first place. With the addition of Rexnord PMC, we'll be able to do this in a wider array of applications and in an expanded set of end markets. Now I'll turn the call over to Rob, who will take you through the financials in more detail and discuss our guidance before I come back to update you on the Rexnord merger. Thanks, Louis. Good morning, everyone. As you can see, Regal had very strong results in Q2. Let's discuss our results by segment, and then I'll walk through our latest guidance, including some high-level thoughts on end market outlooks for this year and for 2022. Starting with Power Transmission Solutions, or PTS, organic sales in the second quarter were up 33.1% from the prior year on broad-based strength, but with particularly strong performance in the alternative energy and U.S. general industrial markets, and in our conveying business. Pruning actions were approximately 280 basis points of top-line headwind in the quarter. Operating margin in the quarter for PTS was 19.4%, up 580 basis points compared to the prior year, a record level for this segment for the second quarter in a row and above our expectations. Orders in PTS for the quarter were up nearly 40% and are tracking up mid-30s in July, both on a daily basis. Order strength in the second quarter and in July was broad based. Turning to Climate Solutions, organic sales in the second quarter were up 43.4% from the prior year, which was slightly above our expectations. The increase was primarily driven by our North America residential HVAC business, further demand recovery in Europe, and continued strength in the general industrial and commercial refrigeration end markets. Pruning actions were approximately 350 basis points of top-line headwind in the quarter. The adjusted operating margin in the quarter for Climate was 18.4%, up 600 basis points versus the prior year period. Strong volumes, favorable mix, and continued cost reductions were all margin tailwinds. While our two-way material price formulas continued to lag material inflation in the quarter, we saw non-contracted price increases help bridge the gap so that we ended in a neutral price cost position for the quarter. We continue to anticipate that price actions under our two-way material price formulas will catch up during the third quarter. Orders in Climate for the second quarter were up 80% on a daily basis on broad-based strength. Orders in July are pacing up high teens. For residential HVAC in particular, orders in the second quarter were up over 60% on a daily basis. While that pace has moderated slightly in July, based on our current backlog and what we're hearing from our OEM customers, our assessment is that end-user demand remains healthy. Our view that the channel is still largely in an understocked position, and we anticipate healthy growth rates in our residential HVAC business for the remainder of this year, despite the tougher back half comps. Note that this is a positive revision versus our prior view. Turning to Commercial Systems, organic sales in the second quarter were up 49.6% from the prior year. Strength in the quarter was broad based, but was particularly good in the North America general industrial end market, in our pool pump business, and in China. Notably, sales in pool pump were up almost 50% in the second quarter, benefiting from strong consumer demand, healthy sales of new products that are supporting share gains, and some restock activity. We think the outlook for pool remains healthy, aided by these same drivers, and we now expect healthy growth in this business for the remainder of this year, even as comps toughen. 80/20 pruning was a 140 basis point headwind in the quarter. The adjusted operating margin in the quarter for Commercial Systems was 11.6%, up 560 basis points compared to the prior year. This margin was up primarily due to favorable volume and mix. Our teams have done a great job managing through the ongoing freight and logistics challenges to minimize the impact to the business. Orders in Commercial for the quarter were up nearly 70% on a daily basis, reflecting broad-based strength. For July, orders are tracking up high 20s%, also on broad-based strength. In Industrial Systems, organic sales in the second quarter were up 15.2% versus the prior year. The segment saw strength in the data center market and improving demand in the North America general industrial market. Pruning actions during the quarter were approximately 190 basis points of top-line headwind. The adjusted operating margin in the quarter for Industrial was 2.3%. While volume, cost reductions, and mix were all tailwinds for Industrial in the quarter, the business encountered larger than anticipated disruptions in its Mexico supply chain, and also faced COVID-related headwinds in India that resulted in a six-week closure of the facility. We are happy to report that this site is once again fully operational. While these temporary unexpected setbacks may have delayed some of the efficiency gains we expected from transitioning to our new TerraMAX platform, we firmly believe that the structural changes we have put in place at Industrial and are continuing to implement, will enable this business to achieve meaningful profit improvement within the next 12- 18 months. As we look ahead to the remaining quarters of 2021, we believe Industrial can deliver margin progress versus the first half, and we would expect performance at a mid-single-digit level for the back half of 2021. Orders in Industrial for the quarter were up approximately 45% on a daily basis, with order rates in July tracking in the mid to high single digits on broad-based strength. On the following slide, we highlight some key financial metrics for your review. A couple notable highlights. First, our free cash flow of $74 million, or 90% of adjusted net income, is a strong result that reflects some incremental pressure on working capital, given the higher volumes. We continue to expect cash conversion above 100% for the year. We further delevered the balance sheet and ended the quarter with net debt to adjusted EBITDA of 0.7x. Moving to the outlook. With two quarters behind us and COVID-related impacts significantly diminished, we are in a position to provide annual guidance. We expect 2021 adjusted diluted earnings per share in a range of $8.70- $9, which would represent growth of 53% year-over-year at the midpoint. This implies revenue growth in the high teens. At the bottom of this page, we've included some additional assumptions that can be used when modeling 2021. Furthermore, and consistent with what we previously communicated, we expect to take actions in 2021 that will result in annualized cost savings of $25 million, of which we achieved roughly $6 million in Q2, and for modeling purposes, I would assume the remainder of roughly $13 million occurs ratably during the year. On the next slide, and as Louis highlighted in his opening remarks, we wanted to provide an update on our 300-in-3 initiative we laid out at our Investor Day in March of last year. The many changes we've implemented over the past couple years have resulted in hitting that goal in less than two years. While improved volume has certainly contributed to hitting these goals this year, if you compare our sales results to 2019 levels, you'll find growth largely aligned with the assumptions we included in our Investor Day projections. The key drivers of our margin improvement include the decentralization of the business, driving increased accountability and P&L ownership at every level of the organization, a focus on 80/20, utilizing policy deployment to affect strategic initiatives and drive above-plan performance, the Regal Business System, and executing and exceeding our cost out opportunities in the areas of footprint consolidation, product rationalization, and best value country sourcing. While we are not planning to update our Investor Day targets at this time, we still have line of sight to continued margin improvement through the cycle. We see this as great momentum as we move closer to the successful merger with Rexnord PMC. Before turning it back over to Louis, I want to spend a few minutes sharing some details on our end market exposures. We thought this would be helpful as you start to develop estimates for post-2021 growth rates. A few things I think are worth highlighting on this slide. One, roughly half of our sales are into the consumer, general industrial, and non-residential construction end markets, which represent approximately 21%, 19%, and 12% of our sales respectively. Second, the other 50% of our sales are made into a diverse array of end markets. Third, while our residential HVAC and residential pool markets tend to garner outsized attention from the investment community, these markets represent only about 25% of our sales, with residential pool being 4%. We classify these sales mostly in the consumer end market, plus modest exposure to residential new construction, consistent with demand for these products being mostly replacement driven. Lastly, as we think about where we are in the cycle for our principal end markets, we expect that roughly 30% have not started to recover, or only in the earliest stages of recovery, and so are unlikely to see a material uptick in demand until 2022. These include our sales into the non-residential end market, hospitality, much of food and beverage, oil and gas, and the more capital spending driven parts of general industrial. We also believe our exposures in alternative energy and data center, while posting strong growth in 2020 and 2021, have ample runway to continue growing at very healthy rates in 2022 as well. To be clear, we expect all of our markets to be strong in 2022, but we are highlighting markets we expect to accelerate since they will still be rebounding. For reference, I'll add that Rexnord PMC business has roughly 15% of its sales into the aerospace end market, plus 6% into non-res, and 20% into food and beverage. We also see significant opportunities for accelerating end market demand to benefit that business in 2022. Beyond end market tailwinds, as you know, we have spent a lot of time over the last two years making investments and structural changes in the business that will enable more robust outgrowth. We expect to see increasing benefits from these efforts in the coming years, including in 2022. Now I will turn the call back over to Louis. Thanks, Rob. I'd like to spend a few minutes updating you on our planned merger with Rexnord's PMC business. First, as I mentioned earlier, we now have all required regulatory approvals needed to close. One key remaining step is shareholder approval of both Regal and Rexnord, and we announced last week that our special shareholder meeting is scheduled for September 1. In light of this information, we now expect the transaction to close sometime in the second half of 2021. The precise timing will depend on the IRS letter ruling, but late in the third quarter or early in the fourth quarter seem most likely. Second, our dedicated integration planning team is working diligently to ensure we hit the ground running on synergy realization when we close. I feel very good about the team's efforts on this front and remain highly confident we'll meet or exceed our estimates for synergies. Third, while we are not providing an update regarding the private letter ruling from the IRS that is being sought in connection with this transaction, I'll note, as more fully described in the proxy statement we filed with the SEC on July 21st, we believe that based on recent share ownership information and assuming receipt of the IRS private letter ruling, we are still on track to be within the dividend range provided when we announced the transaction in February with a midpoint of roughly $300 million. Lastly, with the strength of Regal's 2021 anticipated performance and the strength of the Rexnord PMC performance as communicated by Rexnord last week, we are feeling even more confident in the timing of this merger and the opportunity for shareholder value creation. As a result, we are raising our estimated pro forma adjusted sales and EBITDA estimates for 2022. We now expect approximately $5 billion in pro forma revenue versus $4.5 billion when we announced the transaction. We now expect adjusted EBITDA in excess of $1 billion, up from approximately $940 million communicated in February. In addition, while we're not raising our estimated synergies or quantifying the cross-marketing synergies we've identified, wins like the one we shared earlier with the resource recovery OEM make us more confident about the enhanced value proposition we will have post-closing. Being able to sell customers a complete, integrated industrial powertrain solution across a wider array of applications and end markets will meaningfully help new Regal grow above market and was a central strategic consideration for us pursuing the merger in the first place. With that, I'll turn it back over to the operator. Operator, we are now ready to take questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you’re using a speaker phone please pick up your handset before pressing the keys. To withdraw your question please press star then two. At this time we will pause momentarily to assemble our roster. It looks like our first question comes from Michael Halloran of Baird. Please proceed. Hey, good morning, everyone. Good morning, Michael. Let's start on the margin side. Obviously, really good job this quarter and for the last couple of years, I guess. Could we talk a little bit more about the PTS margins? Those were quite the jump here. Maybe a little bit more detail on what the big factors were that were driving that jump, but maybe more importantly, how should I think about sustainability on a forward basis at that margin run rate? Is this the right run rate to think about, or is there some puts and takes in there that we need to think about on a forward basis? Yeah, let me start with that, Mike. First of all, I think our PTS business is performing incredibly well, firing on all cylinders. It's really driven. They've embraced 80/20 incredibly well, not only from the standpoint of SKU reduction, footprint rationalization, but also then leveraging the industrial powertrain and focusing our efforts on gaining share and growing. I would tell you, although we are seeing in the second half that we'll see a little bit of a balance, these margins are sustainable and will actually improve further. We've got a high 30s gross margin business, especially then with the combination with Rexnord PMC, we'll be taking them over 40. I would just add to Mike for a second on that one. Certainly some mix impacted the quarter in terms of some of the key drivers that we highlighted during the call that were in my remarks, in terms of solar and material handling, in particular that were nice margin drivers for us. As you look out through the remainder of the year, while we do see that these are largely sustained margin rates, we don't expect them to continue quite at the rate that we saw as we exited the second quarter, but certainly above historical levels and so still very nice improvement. Okay, thanks for that. Appreciate it. A follow-up here then, just more broadly as you think about the margins. Pretty impressive that price cost neutral in the quarter considering all the headwinds out there and considering the timing of when the material price formula is kind of normalized. As you're looking towards the back half of the year here, maybe just a little deeper discussion on how you think that price cost equation starts layering out through the year as maybe some of this catch-up materializes and depending on inflation factors. Sure. It really is nice to see that we were able to, as you point out, achieve price cost neutrality in the first half now. And we're still saying that we expect to be price cost neutral for the back half. Now, in our Climate and Commercial businesses in particular, we're still catching up on our two-way material price formulas, and we do expect those to largely catch up in the third quarter. Also, as it relates to additional inflation flowing through, we do expect additional inflation to flow through the business as we enter the second half or as we move through the second half. However, we feel confident in our ability and honestly, it's a new way of and muscle that we have now and discipline within the team to be able to capture price, that we will be able to offset that and remain neutral, as I said, in the second half. It's not easy, that's for sure, but it's a little easier when your customers expect it. They know the inflation's there. The competitors generally are following. 80/20 is really helping us make these strategic pricing decisions now. Sometimes you have to go to your customers more than once to get the price, and that's what the teams are doing today. We're managing through this, which is why we achieved what we did in the second quarter. I would expect that to largely be the case as we move through the rest of the year. Appreciate it, gentlemen. Thank you. Thanks, Mike. Thanks. Our next question comes from Jeff Hammond of KeyBanc Capital Markets. Please proceed. Can you hear me? Yeah. Good morning, Jeff. Oh, hey. I noticed in the presentation you mentioned buyback, and my understanding, I think you're precluded, but it just doesn't seem like the market is giving you kind of full credit here for what you're executing on internally and the portfolio change, just wondering how you're thinking about buyback and how quickly you can kind of step in once the deal closes. Sure. You're right. We have been somewhat limited on what we can do between now and the merger close. Big picture, we're not averse to stock purchases, and we do plan to maintain a balanced approach to capital deployment once we get past the close. That's the way we're thinking about it, and we're not coming off that position. We can get back into buying back stocks should we decide to do so afterwards. We can be more precise on timing, of course, after the close. Jeff, I appreciate you acknowledging the stock performance because we certainly see it as well. Our team is solely focused on driving stronger, more profitable growth and improving our overall performance. That's where our focus is. We think we're doing a nice job and with the merger with Rexnord, we'll become even stronger as a company, and we'll be recognized for that performance. Okay, great. You gave the guidance on the high teens growth. Are there any segments that are going to be notably above that or below that? You gave a lot of good detail on the order trends, just trying to get a sense of any outliers within that growth rate. Sure, Jeff. The way I think about it is in this order from highest to lowest from a segment perspective as we work through the back half of the year. I would say the highest growth that we would expect would be coming through on the Commercial segment, followed by Climate, then PTS, and lastly, Industrial. In that order is the way I would look at the back half. Okay, that's helpful. Then just a quick last one. You mentioned the supply chain issues in Industrial in Mexico. I'm just wondering what's unique about that. You got a lot of facilities in Mexico and other businesses as well. Just trying to understand that better. Yeah. If you remember, Jeff, we've been going through a transition. We've established a new product offering, our TerraMAX product, which is ramping up in Mexico. We also, because of the tariffs that were put in place, we transitioned a significant amount of production from China into Mexico. The supply chain is a little bit more deeply rooted in China, and we are doing more work to localize that in the North American market. As compared to some of our other businesses, I still say the core advantage of and differentiator of Regal is our global supply chain and our global manufacturing footprint. I remind you, that was true for every business except for Industrial that was producing almost completely out of China and India. This is why it's having now with establishing that capability in Mexico, it's having a little bit more pressure on the Industrial Business than the others. Okay. That's very helpful. Thanks. Yeah. Thanks, Jeff. Our next question comes from Christopher Glynn of Oppenheimer. Please proceed. Thanks. Good morning. Morning. Lots of praise for the momentum, just by incorporation here. I did want to ask about the gross margin down not quite a couple points sequentially. I know price cost went from a slight positive to neutral. I think growth also brought in too. Maybe you had rich mix spearheading growth more in the first quarter. Just curious thoughts around that and second-half gross margin. Yeah. I'll kick it up there and thanks for the comments. We do feel like we're gaining momentum, and that's good news. We are a gross margin-driven organization. We talk about gross margins constantly. Yes. Gross margins, they're only down about 100 basis points from Q1 to Q2. Not the 200 that you referenced, but nevertheless, still down. Certainly, mix has an impact, but really the main impact is the inflationary aspect and price cost neutrality. At a certain point, you're not able to get the full level of leverage from a neutral price cost. That was really the major headwind. I will say that the fact that one of our facilities in India and our Industrial Business was shut down for six weeks, that was definitely burdensome. That facility, fortunately, is back up and running, although, just because of the situation in India, 50% production on first shift and 50% on second. We're now back to 100% production. Our comments around the supply chain in Mexico for Industrial certainly had some influence as well. The main driver is material inflation and neutrality on price capture. Okay, thanks. On the SG&A, do you see the first half run rates as pretty stable, maybe tick up just a bit in the back half? Yeah, I think there will be a little bit of an uptick, but not much. We're still working. The teams are managing SG&A very tightly. We do expect that SG&A should remain fairly close to what we saw in the first half. Slight uptick, but not much. I would expect that to be a nice source as we move into the second half. Okay. A lot of companies talk about lean discreetly. Your parlance is 80/20. Just curious, do lean principles kind of roll up into your 80/20 paradigm? I'll say it this way. We call it the Regal Business System. I know many companies state that as well. 80/20 is our steering wheel. It directs us to where we need to focus. Lean gets us our focus on process in driving waste, overburden, and variation out so we can be more efficient and productive. They go hand in hand at Regal. I'll tell you, I couldn't be more proud of the momentum our team is gaining across Regal with driving lean and 80/20. You will see more benefit from that in the future from Regal. Thank you. Yep, thanks. Our next question comes from Joe Ritchie of Goldman Sachs. Please proceed. Thanks. Good morning, everyone. Morning, Joe. Hey, guys. Kudos on the accomplishments, particularly in the margins and being able to do that and in such a short time period. I guess what really stands out to me is the fact that Industrial is still sitting at low single-digit margins, and I think you guys have kind of called out an 8%-11% entitlement longer term, and you were still able to achieve those margins. I guess my question is, as you're thinking about the path forward for Industrial, one, do you still believe 8%-11% is the right entitlement? Secondly, how do we get there? Yeah. No, we do still feel that 8%-11% is the right entitlement. It's gonna take a little bit longer than we anticipated because of the impacts and the headwinds of this first quarter. With the COVID related disruption in India, that had a pretty significant impact, and then the supply chain infrastructure challenges being the main impact of Q2. We believe, though, that going forward with our efforts to reinstall our TerraMAX product line out of Monterrey, and then our focus in the supply chain of reducing our overall cost and logistics of getting material into Mexico to build into the marketplace, and then better managing, and they've come a long way, but continuing to better manage our gross margin and 80/20 efforts, we have a path to 8%-11%. The stumble of second quarter certainly slows that process down a bit, but we feel really confident in our ability to continue to recover with, we believe, mid-single digit operating margins in the second half of this year, and strengthening into 2022. Great. No, that's helpful context. Thanks, Louis. I guess my follow on slide 16, laying out where your end markets are. Obviously pretty bullish that 30% are just starting to inflect, and you're still expecting positive growth for all of them in 2022. I guess just maybe if I was just thinking about the residential HVAC piece, which is going to face some pretty tough comps. I guess what gives you the confidence that that piece of your business can grow in 2022? Yeah. A couple of things. Certainly for the rest of this year, price is going to be a benefit. Our OEMs have come out with a pretty bullish perspective. Beyond 2021, we would say that there will still be strength in resi new construction. We believe that the work from home initiatives, and therefore reinvestment back in the home, will be nothing but an uplift and continued momentum for us. Lastly, with the infrastructure bill probably being passed, we think there's going to be some stimulus tailwinds as well. Do we think it's going to be elevated growth? No. I think we'll be back to a normal growth level in 2022, but we still feel pretty strong that the market will continue into 2022. Okay, great. Thanks, guys. Thank you. Thank you. As a reminder, if you have a question, please press star, then one. Next question is going to come from Nigel Coe of Wolfe Research. Please proceed. Thanks. Good morning. Good morning. This might be the last quarter of Regal Beloit, end of an era. Just maybe, Louis, just talk about what you consider to be normal growth rates. I think it's a little bit different to what we've been used to in the past for Regal. That'd be sort of a follow-on question to Joe. On the margin targets, getting there one year early is great, but when you take a step back, what went better versus plan? Certainly wasn't volumes, certainly wasn't input costs. Where did you overdrive versus your original targets? Yeah. I think there's two questions there, Nigel, and thank you for your comments, and we're very excited about the merger with Rexnord PMC, and it's going to transform the future of Regal, and Rexnord PMC for that matter. Thank you for acknowledging that. From a how do we think about growth going forward, I feel our teams are doing a phenomenal job of building the muscle needed to outgrow our market. Our internal goals are to outgrow our markets by 50%. You've heard me say in the past that I like to shoot for the moon, so I end up on the roof, because if you shoot for the roof, you'll not move at all. Our team is getting our arms around how do we outgrow. We've gained some nice share this year in every segment. Back to the question on resi HVAC that we had in the last question. We believe that 2022 is going to be strong because we're also gaining some share there. These are benefits for Regal. The way I think about it is, expect market growth and then we will outgrow those markets by at least a positive up to 50%. That's our focus. From a gross margin perspective or a margin perspective and what went better. I'll tell you, 80/20 is our life. It directs us, it points us where we need to spend our energy and effort, and it's all around where we'll be able to provide more value to our customer, but also get the return of value as well. That has been a major driver. I will also say the restructuring efforts, especially in our PTS business, are performing slightly better than we originally anticipated, that has been a boon for PTS. Again, they're hitting on all cylinders, and I believe we have a clear path, especially with Rexnord PMC, to get our gross margins there into the 40s. That's how I would think about it, Nigel. Hopefully that helps. Yeah, it does help. Thanks, Louis. On the 80/20, you're still seeing significant sort of impacts to revenues, and it's about 2 points of sort of 80/20 impact to revenues. I know this is a continuous process and it will probably continue, where do you see that impact landing in 2022? Do you think we're down to sort of a more normalized level, or do you still think we're going to be doing some heavy lifting on the revenue portfolio? I'm going to speak really just to Regal right now. I think that's the point of your question, Nigel. I'd tell you, certainly, I would expect slightly lower than two. I would say still between one and two. No negative to the past. What we think is value today is quite different. I still think we have runway on 80/20. Part of that runway means that we will prune some business in order to achieve better performance and to put our focus on our highly valued customers. We're not going to be down to zero in 2022. I'd say one, slightly above one, is how I would think about it. Okay. My final question is, you referred to the regulatory change in the pool market, which I assume is the variable speed pump regulation, which went effective on the July 19th, so we're beyond that point. I think there's a little bit, maybe some concern that perhaps there's a pre-buy and then there might be a bit of an air pocket. Doesn't sound like you've seen that. Maybe just confirm that. The demand in the market is strong, whether it's work from home and greater investment in activities at the home. We're hearing that contractors are hiring more and it takes multiple quarters to get a pool put into your backyard. We see the demand very strong. No, we don't think there's going to be a major concern about the pre-buy. I will tell you that we feel really good about our new solution going into that space. We will be the leader in the market with a higher efficiency, lower noise solution in a smaller footprint, and we believe we will gain some share from this exercise. I couldn't be more excited about. Now, remember, residential pool is only 4% of Regal, but that's still, everything's material and 4% is good, and we look forward to continued strength through H2 of this year, and we believe, although more moderated, there will be growth in 2022 as well. Yeah, 4% when it's up 50% is a meaningful number. Thanks for the detail, Louis, and good luck with getting Rexnord's PMC closed. Yeah, thank you very much. All right. At this time, this concludes our question and answer session. I would now like to turn the conference back over to Mr. Louis Pinkham for any closing remarks. Thank you, operator. Having delivered a strong second quarter and with great momentum entering the third, plus our plan to close the Rexnord merger shortly, I've never been more excited about Regal's future. We're continuing to transform our cost structure, and we're making progress building Regal's growth muscle, in many cases, by leveraging our technology expertise to address rising demand for more energy efficient products and solutions. The addition of Rexnord PMC and the combined organization's enhanced ability to deliver leading industrial powertrain solutions should only brighten our growth prospects further. I look forward to keeping you updated on our progress towards the close of the merger and on all the transformation initiatives underway at Regal. Thank you again for joining us today and for your interest in Regal. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.