Ready? All right. I think we're about ready to begin. Good morning, everybody. Welcome to Regal Rexnord's 2022 Investor Day. I'm Robert Barry, Vice President, Investor Relations. On behalf of everybody at Regal Rexnord, thank you. Welcome. Appreciate your interest in the company. Before getting underway, let me just take a minute to review today's agenda. Excited to have a number of our Executive Team members with us here today, many of whom are actually new to the company over the last few years. We'll start the day with CEO Louis Pinkham, who will provide an update on our strategy with a particular focus on our plans to accelerate organic growth. Following Louis will be our CHRO, Cheryl Lewis. Our strategic paths all start with talent, and so Cheryl will be highlighting our philosophy, investments, and focus in this area. Gennaro Colacino, our Vice President of the Regal Rexnord Business System, will then discuss our business system and how we're leveraging it along with a host of lean tools in 80/20 to drive organic growth and raise margins. We'll then get into our segment discussions, beginning with Motion Control Solutions or MCS. MCS President, Kevin Zaba, will kick us off, and then hand off to Jerry Morton, who leads integration, to provide an update on our progress driving growth and cost synergies from our recent transactions. Following Kevin and Jerry will be Audie Cash, our Interim President of Climate Solutions, and then Scott Brown, who leads our Commercial Systems segment. Please note that we will have a brief, segment-specific Q&A session after each of the three segment presentations. We'll also take a short break, roughly around 9:40 A.M. between the ME and MCS Q&A session and the Climate Solutions presentation. After the segments, we'll hear from Justin Baier, our VP, Strategy and Business Development, who will discuss our capital allocation plans, in particular, a focus on inorganic growth. We'll conclude with Rob Rehard, our Chief Financial Officer, who will provide a financial update, including our new three-year outlook. Louis Pinkham will then follow with a few closing comments, after which we will have a general Q&A session. Note that we will be taking questions from our virtual participants who can go to our website under Events and Presentations, register for the event, and submit a question via the event page. You can also email questions to me if you'd like, robert.barry@regalrexnord.com. While we are scheduled to end at 11:45 A.M., if there is interest, we're happy to stay around a little bit longer and continue to entertain some questions. Lastly, just a couple of housekeeping items. I'll draw your attention to our forward-looking statements and our non-GAAP disclosures. Then, before handing it off to Louis, just a quick safety message. If there is an alarm that goes off, we will just pause in place to await instructions. If we do need to evacuate the premises, the best route is directly behind you, out back by the elevators, stair A, next to where you came up. There are also alternative exits out these doors and down the halls to stair B or back to the right, stair C. With that, I am happy to turn it over to our CEO, Louis Pinkham. Great. Thanks, Rob, and good morning, everyone. Good morning to those who are here with us, as well as to those who are joining us virtually. Thank you for taking the time to learn more about Regal Rexnord and our plans to continue to transform the business into a faster growing, more profitable, and higher return enterprise. I'm thrilled to be here today for a host of reasons. First, it's great to be in person at the New York Stock Exchange, meeting with many of our investors and analysts face-to-face. Second, I'm excited to be here with so many of our key leaders. At Regal Rexnord, we believe the key to great execution starts with great talent. Since we have had a number of new executives join our team over the last few years, I am pleased you will have the opportunity to hear from them directly today. Finally, I am excited to be discussing the many actions we are taking to continue to transform Regal Rexnord. While we have made a lot of progress on our journey, I believe you will discover this morning that in many respects, our transformation momentum is really just starting to accelerate, and I expect that you will leave today with a clearer understanding of how we are driving profitable growth. To provide some context, I'm going to start with commitments we made at our last Investor Day in March of 2020, roughly a year after I became CEO. While the scope of our transformation was and continues to be all-encompassing, our initial focus was margin improvement, while simultaneously repositioning the enterprise to enable faster organic and inorganic growth and continuing to deliver the robust free cash flow that has long been a hallmark of Regal. We set a number of targets in March 2020, with perhaps the most memorable being 303 plan to expand adjusted operating margins by 300 basis points in three years. As you can see on this slide, I am proud to report that we outperformed on all of the metrics. We hit our 303 goal one year ahead of schedule and are on track to have raised our adjusted operating margin by 450 basis points by the end of this year. We also put our new M&A processes and objectives to the test, successfully completing a transformational merger with Rexnord PMC, plus a highly strategic acquisition of Arrowhead, now our automation solutions business. Both transactions are yielding returns well above our initial expectations. I attribute this strong performance first and foremost to our Regal Rexnord team. A team of disciplined people with disciplined thinking, driving disciplined actions and results. We started our transformation journey just over three years ago when I became CEO. Despite its many strengths, including technology leadership and strong cash flow, legacy Regal was not growing, not maximizing its margin potential, and had a mixed M&A track record. Those days are long behind us. We set aggressive goals to completely transform this business, and that is what we've been doing. Positioning the company to grow faster, achieve higher margins, generate more cash flow, and earn higher returns. We decentralized to get closer to our customers, drive customer intimacy, and gain valuable voice of the customer, the critical input that powers our new product development engine. We raised transparency and accountability by moving from three P&Ls to 18 business units and over 60 plant or large product line P&Ls, which supports our data-driven approach to running the business. We launched 80/20, transformative for Regal and now for Regal Rexnord. Applying disciplined analytics to our product and customer data to identify our most valuable opportunities towards which we direct a majority of our resources to drive profitable growth. Meaningful for Regal Rexnord. Talent, it all starts here. Having the right people on the bus enables everything we do strategically, operationally, and culturally. Cheryl Lewis, our CHRO, will soon be discussing all the new talent we've brought to Regal Rexnord and our approach to talent as a critical strategic growth driver. Our segment leaders and I will be discussing the many growth investments we've been making, in particular around product management and new product development, all directed using 80/20 principles. Lastly, M&A. You will hear from Justin Baier, our Vice President of Business Development and Strategy, who will elaborate on our M&A processes and opportunities. Those who have been following us have already had a chance to see their impact in our Rexnord PMC and Arrowhead transactions. Now, if you want proof our transformation playbook is having an impact, look at our gross margin performance. On track to be up nearly 600 basis points over the last three years. To put it simply, Regal Rexnord today is a higher performing enterprise than it was three years ago. Yet we have still so much opportunity ahead of us. Our transformation journey today would not have been successful if its execution wasn't guided by our Regal Rexnord values. Our values serve as guideposts for how we run the business, acting with integrity, responsibility to safety, sustainability, and community, diversity, engagement, and inclusion, our talent. Customer success, innovation with purpose, continuous improvement. RBS, performance, a passion to win, all with a sense of urgency. They are all relevant to who we are at Regal Rexnord. There are two values in particular that I will highlight, given our focus today on how we are accelerating growth, and they are customer success and innovation with purpose. Purposeful innovation is about providing products and solutions that our customers value and are willing to pay for. We measure the value our customer sees in our products through our gross margins. Our goal is to help our customers to be successful and in turn, drive profitable growth for Regal Rexnord. You will hear this theme underpin all of our discussions today. Before we get into the depth of our discussion about accelerating profitable growth, some context on Regal. This slide depicts Regal Rexnord using some key metrics that we believe investors find useful. A few characteristics stand out. Motion Control Solutions is roughly half of our business. Our end market exposures are balanced by their stage in the macro cycle, a really nice attribute that helps reduce volatility in our business. A balanced set of end markets, of which we would describe that roughly 30% currently benefit from secular growth tailwinds. More on that later. Lastly, geography. Weighted to North America, which we believe positions us nicely as reshoring gains traction. As you can see from this slide, we have a flexible global manufacturing footprint, which is a true competitive advantage for Regal Rexnord. This advantage has become crystal clear to us in the last year as we have navigated through an incredibly challenging supply chain, freight, and logistics environment. Regal Rexnord has had its challenges, but we see ample evidence across our portfolio where we have gained market share by being able to serve our customers when others could not. Our flexible global manufacturing footprint has been a clear growth enabler for Regal Rexnord. At the same time, there is still so much room for us to optimize our footprint, which is a key part of our MCS merger synergies. Powerful brands. Many are decades, even centuries old. They help anchor our many leading market positions. Our brands are recognized, trusted emblems of quality, reliability, technology leadership, and energy efficiency. They are valuable assets that differentiate us. Another important growth driver for Regal Rexnord is our ability to help our customers address a number of important industry trends. Because many of our products and subsystems are needle moving when it comes to realizing energy efficiency gains, Regal Rexnord has a meaningful role to play in helping our customers address rising demand for more energy efficient solutions, such as a commercial office building looking to secure a LEED certification, or in a warehouse where hundreds of motors are powering conveying systems on a 24/7 basis, and owners want to lower their energy costs and green their operations. Many of our customers are navigating evolving regulations related to decarbonization. For example, in January 2023, the minimum efficiency standard for residential unitary HVAC systems in the United States is rising across the country, and the test of whether OEMs meet the standard is also becoming more stringent. We are helping our customers meet this change with a combination of existing products plus highly innovative new products that are already being sold as integrated subsystems. You'll hear more about this from Audie C ash, who runs our climate business. Electrification. Another meaningful trend as the world looks to decarbonize. Clearly, we have a big role to play with our existing and expanding motor, motion control, subsystem, and entire industrial powertrain solutions, and will be a common theme through the presentation. Lastly, digital. We live in a digital world where B2 B interactions expect B to C level of engagement. In addition, there are compelling business cases for leveraging data collected from our products to perform diagnostics and prognostics that make our customers' operations more efficient and productive. Kevin Zaba, our MCS President, will touch more on this trend in this section. Bringing Regal Rexnord's technology leadership to bear on helping our customers address the important global trends I just discussed aligns with our business purpose. We create a better tomorrow by energy efficiently converting power into motion. Our purpose is integrated into our new product development processes, such that no new product development happens at Regal Rexnord without considering the energy efficiency opportunity and implications. You will see evidence of that today in many of our new products we discuss. At Regal Rexnord, we are innovating for a sustainable world. We consider environmental, social, and governance attributes both from a growth and an impact perspective. How do ESG factors help us grow? How do ESG factors make sure that Regal Rexnord is impacting our communities and the world in a more responsible and helpful way? Environmental impact is the cornerstone of our ESG strategy. We are addressing rising global demand for more environmentally friendly products, but also committed to doing our part as a good corporate citizen to reduce global warming. Social considerations, diversity, engagement, and inclusion, chief among them, are part of our culture, but also make us more effective problem solvers, more creative new product developers, members of a workplace our associates are proud to be a part of. Lastly, our externally acknowledged top-ranked governance practices maximize risk-adjusted returns for our key stakeholders, critical to ensuring that our 60-plus year enterprise will be around and thriving for at least another 60 years. I am proud that today, Regal Rexnord is announcing a commitment to achieve carbon neutrality in our operations across scopes 1 and 2 by 2032, and to be net zero across scopes 1, 2, and 3 by 2050. Our 2050 goal will be aligned with third-party validation by Science Based Targets. Since the merger with Rexnord PMC in October of 2021, we have been aligning our environmental data, training relevant associates on carbon reduction levers, and identifying and quantifying actions to support a path to net zero. We establish key performance indicators and a cadence of review to ensure that we progress to our net zero goals. Let's talk about all that we aim to achieve, embodied here in our mission to be the most compelling choice for our key stakeholders, our customers, our associates, and our customers. True to our data-driven management style, we measure success towards achieving our mission with quantifiable metrics: market share, gross margin, associate retention, engagement, and performance, and particularly relevant to this audience, achieving top quartile total shareholder returns, which we will do by accelerating profitable growth and wisely deploying earned capital. A lot of context, but I hope you find it useful in understanding who we are, getting a better sense of our culture, and better understanding how we run the business. Now let's turn to profitable growth, where we plan to spend the rest of this morning. At the top of this slide, we list our growth enablers. As I mentioned earlier, it all starts with great talent. 80/20, which helps us identify and align our resources to pursue our best opportunities. Finally, digital customer intimacy. Digital is about making it easy for customers to interact with us throughout the entire customer value stream. Digital is also a product, really a suite of value-added services, sensing, monitoring, diagnostics, even prognostics, where we go to market under the Perceptiv brand. Collectively, these enablers help us facilitate our focus efforts to drive profitable growth. The first of which is directing the majority of our investments, both organic and inorganic, to secular growth markets, aerospace, e-commerce, alternative energy, food and beverage. Second, creating value-added new products and subsystems. The industrial powertrain, chief among them. We are also working on many more. These are identified by raising customer intimacy and then leveraging voice of the customer to drive purposeful innovation. Value in the eyes of our customers, to help solve their problems and differentiate us from our competitors, driving stickiness and opportunity for further growth. Third, using the Regal Rexnord Business System to methodically remove waste, variation, and overburden from all processes. That raises our customer service levels, quality and lead time, on-time delivery, in-stock levels, which helps us gain share. It also lowers our costs, which benefits margin and growth. Growth by reinforcing our ability to provide our customers with great value. Lastly, by deploying our strong free cash flow and leveraging our clean balance sheet to fuel inorganic growth and return capital to our shareholders. How does this all happen? Well, at Regal Rexnord, we believe that best-in-class strategic execution starts with great talent. Strategy then structure. Do we have in place the organizational structure what's necessary to effectively execute on our strategy? In the last three years, we have added a lot of new talent to the Regal Rexnord team. 50% of our executive leadership team is new. Legacy talents with deep product, customer, and domain expertise, along with new perspectives and subject matter expertise from new talent is a powerful combination. Which is why it's an area I spend a disproportionate amount of my time. Cheryl and I spend hours assessing each final stage candidate for all vice president above roles at Regal Rexnord. This mindset is one we have cascaded throughout the organization. Talent acquisition and management are key factors driving our performance. 80/20 has been, and I believe will be one of the most profound growth enablers for our business. For those less familiar with the mechanics, it's about ranking customers and products by sales, taking the intersection of the top 20% in each group, and then focusing the majority of our resources on these Quad 1 customers, our highly valued customers buying our A products. When we first started to leverage 80/20 back in 2019, it was as much about redirecting resources from Quad 4 as it was about investing in Quad 1. Indeed, we were actively pruning many Quad 4 SKUs and transactions. As our approach to 80/20 has matured, it is increasingly about evaluating our best opportunities with greater precision, and then raising the bar on what it means to over-serve our Quad 1 customers, such as by identifying differentiated products and solutions that help them solve their specific challenges, along with aligning our manufacturing operations to prioritize them with dedicated manufacturing lines and leading service levels. We can't be everything to everyone, but we try to be for our Quad 1 customers. 80/20 is also about using more cost-effective means to serve our Quad 3 customers. Our valued customers buying our AC products, our HVAC products through distribution and lower cost digital channels. Our Commercial segment in particular is seeing very strong results in this regard. Let's talk in a little more detail about our digital strategy. It is an area where we have been investing significantly, and you will hear more about it from Kevin Zaba and Scott Brown. Our mantra in digital is make it easy. Make it easy for our customers to interact with Regal Rexnord across the entire value stream. We are improving the value our customers experience at each digital touch point we have with them, from search to product configuration, procurement, installation, operation, and replacement, all by creating an intimate, personalized, and differentiated experience, which is driving retention and raising our growth. Our digital strategy is also based on product, where we go to market under the Perceptiv brand. We'll discuss more on this enabler later in the presentation, especially as it links to the industrial powertrain. One of our key strategic objectives is raising our exposure to end markets with secular growth tailwinds. We estimate that today about 30% of our sales are to these end markets, which are summarized on this slide. Aerospace, alternative energy, parts of food and beverage, warehouse, and e-commerce are examples. Our objective is to raise these exposures to at least 35% by directing an outsized percentage of our growth investments to serving these markets. Likely of greater impact will be our inorganic growth actions. Our recent acquisition of Arrowhead is a great example. That transaction raised our exposure to the beverage and aluminum can market, which is expected to see strong tailwinds for the foreseeable future, propelled by a secular shift from single-use plastics to aluminum cans. One area we see high margin growth opportunities is in certain motor-related applications. This may be a surprising message to some investors who view electric motors as commodities. The reality is, we see attractive opportunities to provide unique value add in most of our motors portfolio, and we have the gross margins to prove it. You will see that most of our sales are in the categories where we have sustainable differentiation. Our unique value add is tied to a number of factors. Often acting in combination with each other, ranging from technology leadership to deep domain expertise in particular applications, channel strength, aftermarket breadth, our leading scale and high service levels. The chart on the right helps characterize our motors portfolio, which represents roughly 40% of our sales. In the category we have labeled special purpose, we have deep domain expertise and differentiate with product solutions specific to a particular application. Annuity products have a long tail of associated aftermarket sales that carry margins well above fleet average. While the industrial powertrain is our motor sold with related critical power transmission components as part of an integrated subsystem. The remaining 22% labeled Other represents approximately 9% of Regal Rexnord sales and a much smaller percentage of our EBITDA. These are products where we have been and will continue to leverage our 80/20 approach towards evolving this part of the portfolio over time to further improve margin and product differentiation, and likely will become an even smaller percentage of our portfolio. In short, Regal is no longer your granddad's motor company. Another key accelerator is rising vitality rates, which are forecasted to grow from 15% today to nearly 30% by 2025, measured as a% of our OEM sales. To leverage the customer intimacy we are cultivating, and the voice of the customer it enables, we have been investing heavily in product management and new product development teams, augmenting our new product development engine and launching new differentiated products into the market. Some examples of these products are pictured on this slide. Many of them are examples of our new subsystem offerings, which help raise the value add we are offering to our customers, creating stickier relationships and justifying higher margins. You will hear more about these products and many more in our segment presentations. A great example of a powerful differentiated subsystem is in the industrial powertrain, comprised of the motor and the critical power transmission components that connect it to the work being done. We are the only North America supplier with as broad a capability to create powertrain subsystems, and the unique value add to customers is high. Benefits include greater reliability, energy efficiency, and operating performance. Customers also tell us that they are looking to staff fewer in-house engineering resources, and we help them achieve this goal by selling them entire optimized subsystem solutions. While it's still early days, and this is a longer cycle sale, we are encouraged by our pipeline and a string of early wins. Where our differentiation really gets magnified is adding sensors and data analytics to create an intelligent powertrain. Analytics, w e are in the best position to provide because nobody knows our powertrain components and how they work together better than we do. Sold under the Perceptiv brand, this is part of our digital strategy, a portfolio of services that includes sensing, monitoring, diagnostics, and prognostics, which can be applied to any standalone product, subsystem, or industrial powertrain solution. Perceptiv products easily integrate with end user facility management systems so that the customer can optimize the performance of their systems. Kevin and Jerry will share more on the powertrain in their sections. The Regal Rexnord Business System is our philosophy for continuous improvement, and it applies as much, if not more, to helping us grow as it does to making us more efficient and improving our cost position. Our 80/20 framework and our lean tools go hand in hand. At a high level, 80/20 directs us to the most valuable opportunities, and lean allows us to pursue them efficiently and productively. Removing waste, variation, and overburden from all processes not only raises our inefficiency and lowers cost, but it improves our service levels, which helps us grow. In many cases, our value proposition to customers can be as much about availability as about features, functionality, or cost. Our VP of RBS, Gennaro Colacino, will share more on this shortly. The focus of our discussion today is accelerating profitable growth. Please do not lose sight of the substantial opportunity that remains on margins. Rob, in his section, will provide more details. In short, we have a path to 37% gross margins by 2025, with further runway thereafter. We see much of that progress dropping to the EBITDA line. Some of the key drivers on this page, I will flag merger synergies, 80/20, mixed positive new products, and RBS as chief among them. All are expected to contribute. I want to spend a minute specifically on gross margin because it really is a key metric for how we run the business. In short, we are gross margin zealots. If you look at the bar chart on the right, it tells the story of our transformation and the progress we have made. What at the end of 2022 is on track to be nearly 600 basis points of improvement in the last three years. It's about cost and growth. On the cost side, our restructuring efforts, lean, best value country sourcing, synergies. Gross margin is also telling the story of our increasingly differentiated offering of our teams leveraging VoC to innovate with purpose, of 80/20 directing us to the best opportunities. It is the progress we have made, are making, will make on these factors that fills me with so much enthusiasm about the profitable growth opportunities at Regal Rexnord. Let's quickly focus, shift focus to our inorganic growth opportunity. When you consider our strong and rising free cash flow and clean balance sheet, we have a tremendous opportunity to create value through inorganic growth, in particular M&A. Justin Baier will share more in his presentation, but this visual summarizes the message, and it's pretty powerful. The green circles reflect our organic EPS growth outlook. The blue ones dimension our earnings potential from deploying half of our forecasted 2022- 2025 free cash flow towards acquisitions while making some reasonable assumption about M&A metrics, including leverage. As you can see from the slide, so much potential, and I believe a critical component of the Regal Rexnord investment thesis. The key is finding the right opportunities which we are working, but rest assured, we will be disciplined. I believe with the merger and acquisitions we completed in 2021, we have proven that we know how to integrate and acquire. If there is an overarching message that I wanna leave you with today, it's that we see many opportunities to create significant value for our stakeholders over the next three years. Accelerating organic growth, a path to 37% gross margins with similar progress at the EBITDA margin line. Approximately $15 of earnings per share and a path to $1 billion of free cash flow annually. An incredible progression. As I stand here today and consider what is listed on this slide, combined with the strength of our team, and then consider the multiple at which we're trading, I see tremendous opportunity for value creation. A tremendous opportunity for controllable value creation. My team and I are very excited to share more detail today with you on how we're going to achieve that. With that, I would like to introduce Cheryl Lewis, a critical partner on our team. Thanks, Louis. Good morning. I'm Cheryl Lewis, the Chief HR Officer for Regal Rexnord. I joined the organization in March of 2020. Prior to Regal Rexnord, I spent a decade with Illinois Tool Works, ITW, where I was leading the HR function for a $2 billion segment. Prior to ITW, I spent several years with Alcan Packaging, and prior to that, 18 years with Panduit, a privately held billion-dollar global industrial manufacturer. As you heard from Louis, strategy, then structure. The structural foundation on which our Regal Rexnord strategic vision sits is on attracting, developing, and retaining great talent. In fact, I've often talked about the fact that I was drawn to this leadership opportunity because of the strong alignment with Lewis and the leadership team when it comes to great talent being a critical input to being able to execute our strategic objectives. How do we think about great talent at Regal Rexnord? It's defined through the lens of our values and encompasses some key characteristics that uniquely define who we are and how we achieve our business strategy. We put safety first. Safety is a responsibility of all of our associates. We act with integrity, always. We seek and leverage diverse perspectives. Not only do our teams have a diverse view when it comes to their experiences, perspectives, and backgrounds, however, our leaders also engage our team members to drive innovation, solve customer problems, and to make Regal Rexnord a great place to work. We are data-driven, P&L savvy, and operate with an entrepreneurial spirit. We have a strong passion to win, and we execute with urgency in order to compete in the markets that we serve. The common thread is how our great talent leverages our Regal Rexnord values with discipline. We believe that disciplined people engage in disciplined thought and take disciplined action to achieve disciplined performance. The graphic on this slide represents our talent management process. It starts in the upper right corner with talent planning, which is defined based on our long-term strategic goals and our annual policy deployment, then followed by our structure. After our businesses set their strategic goals, we drive deep into the understanding if they have the human resource capabilities to put up against these strategies and be successful. We spend just as much time talking about business strategy as we do the talent within our organization. Next is talent acquisition. Since successful execution starts with talent, a key metric for our leaders is what percentage of the seats are filled with the right talent. We talk about what are the specific steps that each of our leaders are taking to address their talent gaps. We hold ourselves accountable for taking action on people decision. When we do have talent gaps, not only do we hire for our needs today, but we also identify individuals who have the potential to grow and develop within Regal Rexnord. We utilize personality assessments to gain insights on a candidate's natural tendencies and their way of working within the Regal Rexnord values and culture. We also use a panel interviewing process that goes deep into the candidate's career history, and we can learn about what has shaped them professionally. We feel strongly that the time we invest in talent acquisition process will pay dividends in the long run. Next is performance management, which involves a disciplined process of linking individual goals to our business strategy. As you will hear from our next presenter, one of the critical steps of our executive planning process is alignment, ensuring that our strategic alignment links to individuals' goals. Next is succession planning. It's a critical component in our strategic planning process. We need to ensure that we have the right people for today and that we're developing our talent for the future. This requires us to build and have visibility to our talent pipeline. This is where talent development comes in. Defining through a disciplined process the development opportunities that each associate has to not only perform more effectively in their role today, but also preparing them to advance in the organization for the future. We utilize stretch assignments as a key development tool, and we are an organization in which we believe in failing fast, however, learning quick. We encourage our associates to get out of their comfort zones, build resilience, and take calculated risk. As our next presenter will soon discuss, this is our plan-do-check-act philosophy when it comes to talent management. Our talent strategy is a balance between developing our internal talent and, when necessary, infusing high-quality external talent to bring in diverse experiences, perspectives, backgrounds, and skills necessary in transforming our business. As you can see, we have been actively infusing external talent into our leadership ranks. Starting at the top with our executive leadership team, half of our executive leaders are new to the organization since 2019, while a little over 50% of our P&L leaders who are running our 18 business units are also new. Lastly, over 40% of our vice presidents are new at Regal Rexnord. These changes are precipitating a similar talent evolution throughout the organization, and I believe these new perspectives and skills, combined with our existing talent, will accelerate our transformation journey. This is a pendulum, and although it's weighted towards acquiring new talent, it will eventually swing as our ultimate goal is to develop our future leadership talent from within. For Regal Rexnord's human resources function, understanding the business and being a business partner that is driving our talent strategy is our new way of working. This has required me to put in place an all-new experienced HR organization over the past two and a half years. Louis and I talk about the partnership between the P&L leader, the Finance leader, and the HR leader as a three-legged stool. It's imperative that this team balances the strategy, the P&L, and the talent agenda simultaneously in order for us to achieve our goals. Our talent strategy includes driving a culture of inclusion in which each of our 29,000 associates feel valued and actively contributing to our business objectives. We have placed more intentional focus on leadership development, which ranges from training to mentoring and proactively and thoughtfully managing career paths. Lastly, in order to execute our talent strategy, we have made a sizable investment in our HR technology to facilitate every stage of our talent management process with an eye towards making our processes easier and enabling a more robust data analytic capability. In summary, our HR organization is experiencing a complete transformation in our talent processes, systems, and people in order to build a sustainable structure that will enable us to scale the business and maximize our human capital potential. We believe diversity, engagement, and inclusion benefits all of our stakeholders. DE&I raises our performance. DE&I improves the quality of our work for our associates. DE&I better aligns Regal Rexnord with the communities in which we work and live. On the right-hand side is a list of some of the initiatives we are actively engaged in to advance our DE&I objectives. As we all know, tone is set at the top. This executive leadership team fully embraces the value of DE&I and is actively leaning into discussions with our associates in order to better understand their unique needs and enhance our culture as a great place to work. As I think about the future of Regal Rexnord, I'm excited about the tremendous opportunities that are ahead of us. Because of these investments that we've made in talent, I am confident in our ability to capitalize on them. With that, I'd like to turn it over to my colleague, Gennaro Colacino. Good morning. I'm Gennaro Colacino, the Vice President of the Regal Rexnord Business System. By way of background, my career has largely been in P&L leadership as well as deployment of continuous improvement business management systems. Prior to joining Regal, I was at Triumph Group as the President of Geared and Mechanical Solutions. Prior to Triumph Group, I was at L3Harris, Danaher, where I spent the majority of my career, as well as Pratt & Whitney, now a Raytheon Technologies company. Today I'm gonna introduce our RBS Regal Rexnord business system and two critical structural elements, our RBS 80/20 framework and policy deployment. These are our growth and alignment at Regal Rexnord execution methodologies. The Regal Rexnord business system is our business management and continuous improvement system. If you reference the image on the left, it all begins in the center and is aligned with our Regal Rexnord values and a shared culture across our 29,000 associates. Moving outward, our focus is on stakeholder success, ensures that our goal setting and execution is balanced across all three stakeholders to drive sustainable value creation. Those three stakeholders are our associates, our customers, and our shareholders. First, for our associates. RBS enables leadership and ownership at all levels of the organization. Second, our customers. This is about understanding and optimizing the full customer value stream from the time we first engage with the customer all the way through product delivery and aftermarket services. Third, maximizing shareholder value through lean transformation and leveraging 80/20 growth. We then leverage a measurement system of safety, quality, delivery, cost, and growth in that priority order to evaluate our progress on meeting stakeholder expectations and then drive that throughout the business in our daily management systems. The engine that drives this methodology is our people, planning, process, and performance cycle. People involves a focus on talent management and engagement across the entire enterprise to enable our vision. As Cheryl articulated, we start with talent. It is the foundation of good execution. Next, planning. This includes execution of our executive planning process that ensures linkage of our strategic plan through to each segment, division, business unit, all the way down to the plant floor to drive a common and aligned set of goals. Process. A focus on process deployment and improvement to most efficiently execute our objectives. For performance, we follow a Plan-D o-C heck-A ct approach. We have a regular cadence of reviews that measures performance. It starts all the way down at the tactical level of every manufacturing cell and functional area across the business, and then builds up through the site level, the business unit level, and the segment level to assess progress and make adjustments as necessary to achieve or exceed our goals. What's critical is that this PDCA approach is data-driven, team-oriented, and highly structured, which means the entire organization leverages a common approach to management at all levels of the organization. Finally, the foundation of the Regal Rexnord Business System is our 80/20 growth focus and our perpetual drive for continuous improvement. As stated, the Regal Rexnord Business System and the 80/20 framework is a foundational element of our system and directs us towards our best opportunities. It begins on the left with strategic intent. This set of highly analytical processes leverages voice of the customer, plus data on the revenue and profitability of our customers, our markets, and our products to define our most valuable opportunities going forward. After which, we can articulate a clear growth strategy for pursuing these opportunities, what we call our strategic growth intent. As we move into the next stage, the simplification cycle, this is where we align product excellence, operational excellence, and commercial excellence to ensure the full customer value stream is optimized to best support our Quad 1 sales. As Louis mentioned, Quad 1 is the intersection of our A products and our A customers and the source of our best opportunities. Product excellence is focused on product line simplification. Operational excellence includes forming dedicated production lines in our plants to accelerate our Quad 1 orders and really where the application of lean transformation is driven within each of our factories. Commercial excellence involves optimizing factors such as our go-to-market approach. All of this is to make sure we are overserving again our Quad 1 opportunities, which are our best opportunities. The final step of the framework is invest to grow. Once core product effectiveness is achieved, we can then build upon that foundation with new product development and M&A. These accelerate growth by pursuing opportunities beyond our core. This complete and consistent framework across the business enables us to more effectively execute our 80/20 plan, drive progress within the most profitable growth vectors that we see in our strategy. In order to then effectively align the full organization and continuously drive our long-term strategic plan, we leverage a process that's known as policy deployment. Policy deployment is about identifying a focused set of critical and stretch annual objectives that materially progress us on our long-term strategic goals. In other words, policy deployment ensures that we're working on our long-term strategy each and every day across the business. It is managed through a specific framework on the left that is known as an X-Matrix, and it is critical to note that policy deployment flows directly from our strategic plan, leveraging our 80/20 framework, and is a key element of our executive planning process. The X-Matrix is read starting at the six o'clock position on the bottom, where we clearly articulate our three-year breakthrough objectives. These are our long-term strategic goals. Moving clockwise, we develop our annual breakthrough objectives. These are the current year stretch goals that once achieved will materially progress us towards our three-year long-term objectives. Next, at the 12:00 position, are our annual improvement priorities. These are our key processes that require development or improvement in order to achieve our annual objectives. Developing and improving these processes is how we build process-focused, sustainable competitive advantage. This really is the magic of policy deployment. It builds upon itself. Year after year, we progress the organization's capability in particular areas to meet our strategic plan. Finally, at the 3:00 position are our targets to improve. These are the key metrics that we use to progress each improvement priority. Each of the improvement priorities that we execute have a specified owner, a cross-functional team that is responsible for executing to an action plan and achieving the intended goals. Again, a successful PD initiative must deliver two items. First, develop a new process or capability across the organization. Second, an intended business outcome. Growth above market, margin expansion, and/or trade working capital improvement. Policy deployment is also supported by our PDCA management approach, which, as I mentioned, involves a regular cadence of reviews to measure progress as well as course correct as we learn more throughout the year. It is in this Plan-Do-Check-Act management system that underpins effective execution across the business. In summary, everything I've been discussing, the Regal Rexnord Business System, our RBS 80/20 framework, and policy deployment all provide the enterprise a consistent structure to articulate and execute the growth initiatives that you will now hear from each of the segment leads. With that, I'd like to introduce Kevin Zaba. Thanks, Gennaro, and good morning, everyone. My name is Kevin Zaba, and I am the President of the Motion Control Solutions segment. I have been with Regal Rexnord for eight years, starting as the President of the PMC segment of Rexnord and then joining Regal Rexnord as the President of MCS last October. I've spent my entire career helping industrial manufacturers solve their most difficult challenges, including more than 20 years at Rockwell Automation in various services and product businesses and a career start as an engineer at The Boeing Company. I will be teaming this morning with Jerry Morton, our President of Integration, and I'll begin with an MCS overview and discuss our growth strategy. Jerry will provide an update on our PMC and Arrowhead integration and its synergy realization efforts. Let me start by providing you with some fundamentals of the $2.3 billion MCS segment and what differentiates us in the market today. First, on the right-hand side of the chart is our broad portfolio of premium components, subsystems, and services, each associated with an industry-leading brand that carries a proven reputation for high quality and reliability. The majority of our sales today, about 85%, come from our highly engineered premium quality power transmission components, plus a growing set of digital condition monitoring products. The merger of Rexnord PMC and Regal PTS expanded our ability to address the full spectrum of motion control applications, which now includes heavy, medium, and light duty applications. In the middle of the page is our subsystem offering. This portfolio has been greatly enhanced by our recent M&A transactions and encompasses powertrains, our modular ModSort parcel handling offering, modular Arrowhead conveyors, and Busse palletizers and depalletizers. Subsystems represent a smaller percentage of our overall segment sales today, just about 10%, but we expect them to play a significant role in our future growth story as they move us up the value chain and enhance our value proposition in many of our targeted, faster-growing secular end markets such as food, beverage, alternative energy, and e-commerce. Rounding our portfolio is an important set of value-added services, ranging from repair, field services like startups and asset management, and an expanding set of digital services, including remote condition assessment and monitoring. We've been selling our brands for as long as 130 years. They are trusted market leaders, have sticky customer loyalty, and a tremendous installed base. These differentiators allow us to capture first-fit specifications with high repeatability at our OEMs and a leading position at our highly valued distributor partners that enables a consistent flow of high-margin aftermarket sales. Our historical differentiators are amplified by our modern digital customer experience and digitally connected products. You know, we started investing in our digital capabilities in the early in the IoT cycle and are now well-positioned for NextGen growth. Now let me highlight a few sales segmentation details for MCS. In the chart on the left, you'll see a nicely distributed mix of end markets. Cut another way, our secular end market exposure, consisting of food and beverage, aerospace, e-commerce, and alternative energy, is approximately 39% of our segment sales today. In the middle is our regional segmentation based on our sales destination. About two-thirds of our sales are in North America, and the remaining balance split between EMEA, mostly in Europe, and APAC, rest of world. On the right, you'll note our channels to market are well-balanced between OEM direct and distribution sales. We really like this channel mix as it balances a continuous seeding of our installed base with a consistent high-quality annuity stream of high margin aftermarket sales. Though this segment has a history of strong financial performance, as shown in this pro forma financial view, that includes legacy Rexnord PMC, Regal PTS, and Arrowhead Systems. Our strong sales performance in 2021 and 2022 year to date is helped by healthy end markets and successful price capture. more significantly, a host of wallet share gains tied to our 80/20 differentiated service initiative with highly valued customers and early great successes with powertrain and merger-related cross-sell initiatives. Our strong adjusted EBITDA margin performance is underpinned by a healthy top line, our 80/20 simplification efforts, solid RBS continuous improvement savings, and in 2022, significant M&A cost synergy benefits, which Jerry will elaborate on in his section shortly. Though as shown on the charts on the right, we do expect 2022 to be another period of record sales and adjusted EBITDA margin performance, with MCS segment sales expected to grow by approximately high single digits% and our adjusted EBITDA margin to continue to expand versus our pro forma 2021 results to roughly 26%. This positions us well for next gen growth. Before I talk more about our future growth playbook, I thought it'd be very helpful to dimension the large core growth opportunity in our current served markets and to share our outlook for market growth over the next three years in our top five end markets. We estimate our total current available market at about $30 billion annually. Yes, it's a very large opportunity space, but still with plenty of room for us to grow profitably. While we are a leading player with $2.3 billion in sales, the market is very fragmented beyond the space occupied by MCS and other large cross-category players, with more than half of the market literally comprised of hundreds of smaller players. We see much of this as capturable space for us. In fact, our successful 80/20 differentiated service powertrain and cross-selling initiatives have been focused on capturing component and subsystem wallet share in this fragmented portion of the market. Our core differentiators and our initiative successes, combined with an expected aggregated market growth of our top 5 end markets in the mid-single-digit range, as shown on the right side of the chart, will serve as the foundation for our growth playbook. With that said, we will take a disciplined approach to growth as we are not trying to boil the ocean, the increasing sophistication around how we use our 80/20 growth tools will direct us to the most valuable and highest return opportunities in this very large market. Now let me transition to our growth playbook, which starts with the foundation that I introduced on the last slide. Pursuing attractive opportunities identified by our 80/20 strategic content framework and our 80/20 differentiated service initiative that focuses on capturing wallet share gains at both highly valued existing and prospective highly valued new customers. We're gonna build on this foundation with four additional amplifying initiatives. First, increasing our secular market exposure through expanded component and subsystem sales in faster-growing food, beverage, e-commerce, warehouse, aerospace, and alternative energy end markets. Second, leveraging our strong NPD pipeline to double our new product vitality index at OEMs from approximately 8%- 16% by 2025. Third is expanding our Perceptiv Digital experience and our connected solutions to increase customer productivity and uptime in Regal Rexnord competitive differentiation. Fourth is leveraging the unique capabilities of the Regal Rexnord industrial powertrain to win more applications with more content at targeted end-market customer, end customers. Next, I will provide you with some additional color on each of these four initiatives supports our clear path to accelerated growth. Though as noted, we are increasing our growth emphasis on the more stable but faster-growing secular end markets. While secular already represents a healthy 39% of our end market exposure, we see a combination of internal and external drivers shifting our long-term secular exposure to greater than 50% of MCS segment sales. Now, let me highlight a few of the growth drivers in these three areas of focus. First is conveyance. We expect a steady increase in consumer demand for packaged foods, new food and beverage packaging designs that minimize natural resource consumption, such as the shift from single-use plastics to aluminum cans, and e-commerce transactions will result in steady investments in unit handling systems that contain significant MCS component and subsystem content. We are driving a strong component and subsystem NPD funnel and focused cross-selling efforts to capitalize on these market drivers. Second is aerospace. We anticipate continued recovery and a steady rise in regional and global passenger traffic, as well as our desire to develop new designs that raise energy efficiency and lower carbon emissions will fuel demand for MCS new and aftermarket components at OEMs and Tier 1 and 2 suppliers globally. We also have a strong NPD funnel here, expecting to double new product vitality that will expand our potential ship set for targeted aircraft and open new regional opportunities for us. Third is the renewable space. We primarily serve alternative energy end markets today with our mechanical components portfolio. We expect an accelerating demand at our leading customers who are responding to expanding government incentive programs and social pressures to set and achieve increasingly aggressive net zero goals. Our NPD funnel has a number of ready-to-launch component and subsystem offerings in support of already known new design specifications, and we have already landed a number of first-fit wins with our industrial powertrain here. Certainly, some compelling external and internal drivers that will favorably reshape our end market exposure in the coming years. Now, a significant driver of our MCS growth playbook is a focus on new product development and our target to double our new product vitality at OEMs from 8% to about 16% by 2025. As you heard from Louis and Gennaro, and we'll hear from my fellow segment leaders as well, our NPD efforts are rooted in voice of the customer, guided and refined by our data-driven 80/20 growth tools, and supported by heightened investments in product management, RD&E, and digital. Currently, our strategic intent is focused on solutions for secular end markets, powertrain, and digital, with about 80% of our NPD impact expected to land in those categories. On this slide, we share examples of some notable new products launching in 2022 and illustrate how our NPD programs sit along an impact continuum from incremental, which are simply line extensions, to strategic, which are new products to RRX, to breakthrough categories, which are products that are unique to the marketplace. For our 2022 new product releases, we expect about 30% of our NPD impact to come from incremental categories and 70% from the strategic and breakthrough category. This is also relatively the same mix for our future product and technology roadmaps. Now let me highlight a few of our exciting new products launched or launching in 2022. Number one is a cam follower for the aerospace industry. This product was built from a combination of legacy Regal and Rexnord technologies. It uses patented Rexline coating to eliminate grease for lubrication, a tremendous maintenance saver for our customers. Number two is a new ModSort offering. The first release introduced increased throughput by 25% for small parcels during the last mile phase of a warehouse sortation process, a productivity maximizer for these customers. The second release increased the weight limits of the product handled, broadening its servable market to include food and beverage case handling applications now, and our Arrowhead Conveyor business is our very first customer for this offering. Number three is a small horsepower gear motor powertrain. It was purpose-built for a warehouse conveyor OEM to replace an existing offering that was expecting frequent failures. It's an uptime maximizer for our customers. Number four, a modular plastic belt for the consumer packaged goods industries. It was designed to self-clear package jam-ups that arise around curves and could stop production lines or damage product packaging. Another uptime maximizer for our customers. Number five is a unique product to the market, the new Perceptiv Airmax Pro Smart Breather for industrial gearboxes. You know, a breather stops dust, water, and other particles from contaminating the oil of a gearbox, which can eventually seize the drive. The Airmax Pro monitors breather health, and using an IoT connection, notifies the maintenance technician when it's time to replace. It's a very simple but a powerful uptime maximizer as well. Finally, number six is our new Rex Pro Chain Link, a first-of-its-kind innovation that allows a large steel chain to be repaired on-site versus having to be sent out for repair, reducing the time to repair a broken chain by over 90%. A dramatic productivity and uptime maximizer, and also a great example of how by listening to our customers, we are driving meaningful proprietary value add, even in products that on their surface may not appear ripe for innovation. An impactful set of innovations that provide you with a glimpse of our path towards doubling vitality over the next few years into products that also support our gross margin goals. Well, as you heard from Louis, creating a digital customer experience is a central differentiating strategy for Regal Rexnord. We bring all the elements of our digital customer experience together under the Perceptiv Digital Experience platform, as represented by this circular graphic on the right-hand side of the chart. We continue to see our customers rapidly increase their digital interactions with us at every step of their value chain, so we are accelerating our digital investments to enhance customer value at each digital touch point. These enhancements include, first, a personalized and differentiated experience, starting with their unique customer type, whether they are an OEM, an end user, or a distributor. Further personalization by using historic and real-time data from each interaction with us to establish a digital twin or a digital replica of the customer, allowing us to anticipate a need and even make a proactive product or aftermarket service recommendation based on their search. The next is a consistent and high-quality customer experience, whether our customers interact with us online, offline, or through some combination of both, which is often referred to as omnichannel enablement. Third, an expanded set of digital tools that allows our customers to complete more of the value chain step online, like self-configuring a complex product, you know, that they are researching. Now, foundational to achieving a consistent customer experience is ensuring that our digital applications, connected products and data is synchronized and easy to use, so we're investing in technologies to ensure this data is linked across our enterprise. By digitizing our business model in ways that will create frictionless world-class customer experiences, our digital capabilities are a source of competitive advantage and a key tool for driving profitable growth for the segment. Now, we are also accelerating our digitally connected products and services portfolio to match the evolving needs of our customers and to further enhance the unique advantages of the Regal Rexnord industrial powertrain that I will discuss shortly. The merger of Regal and Rexnord PMC brought together a broad set of complementary digital technologies, products and services. We are focusing on bringing these digital assets together under our Perceptiv digital platform and enhancing them to generate additional customer value by enabling maximum productivity, uptime, safety, responsibility, and sustainability. While the digital condition monitoring and predictive maintenance market is very vast, we are focusing our efforts specifically around sensing and communicating data insights for power transmission components and subsystems, which is best represented by the Regal Rexnord industrial powertrain example that's shown on the chart. In this example, we're using Perceptiv and third-party sensors to monitor the most common failure modes of each component and communicating its health status and predictive alerts via Perceptiv Gateway seamlessly integrated into the customer's on-premise control system, cloud application, and/or through our Perceptiv IoT portal. While our current digital insights are mainly of a preventative maintenance nature, our NPD investments will shift our insight capabilities towards the predictive or prognostic realm for both our components and our industrial powertrain. An additional scalability of solutions will match our customers at different points on the digital maintenance and reliability maturity curve. We continue to digitize our products because we're able to demonstrate to our customers that we understand their specific applications very well and can present them with proactive ways to solve their problems that make them grow more profitably, which in turn makes us a very valuable partner and that they want to grow their spend with. The powertrain, you know, we see an untapped growth potential for our Regal Rexnord industrial powertrain. Let me provide you with a better understanding of how we view the opportunity, our approach to capturing it, the value we see Regal Rexnord providing, and some early successes that we're seeing today. As a brief reminder, the Regal Rexnord powertrain is comprised of an electric motor and the power transmission components that connect the motor to the work being done. This is a subsystem that sits at the heart of thousands of industrial applications, spanning nearly all of our end markets. As we look across our markets and applications, we see these integrated powertrain opportunities continue to present themselves, along with a growing need for powertrain design improvements. These design improvements will yield better outcomes for our customers, you know, overall. Already, 60% of the Regal Rexnord portfolio is utilized in these types of applications. You know, said another way, 60% of the motors and power transmission components in our portfolio today can plausibly be sold as part of a powertrain subsystem. When applying this definition across the global motor and power transmission components markets, we estimate there is a $20 billion market opportunity for our powertrain solutions. This opportunity is reinforced with our VoC for our most strategic customers, who increasingly are asking us for additional solutions to maximize productivity and the overall performance and reliability of their manufacturing equipment. They see a powertrain subsystem designed and supported from a single trusted manufacturer as one important means to accomplish this objective, and Regal Rexnord is uniquely qualified to deliver this value. Let me show you why and explain how we're approaching this opportunity next. As you can see from the chart on the right, Regal Rexnord is the only supplier who possesses all the critical components necessary to build a premium industrial powertrain subsystem today. Our position strengthened substantially with the merger of the Regal and Rexnord PMC portfolios and truly creates unmatched capabilities across the industrial powertrain application space. Specifically, the legacy Regal brought motors and PT leadership in light and medium duty applications, and legacy Rexnord PMC brought PT leadership in heavy duty applications and a broader conveying components portfolio. Together, we create a highly reliable, robust powertrain solution set capable of scaling across a very wide range of applications and end markets. Since the merger, we've completed an extensive EOPC process focused on simplifying and aligning our powertrain solution set with the most valuable customer needs. This resulted in three primary solution sets that we call bundled, optimized, and intelligent, and this is how we are now bringing our powertrains to market. In a bundled solution, Regal Rexnord's experienced application and industry specialists identified the very best components from our portfolio that match the powertrain requirements. This solution is converted to a bundled powertrain package with a single bill of material, and the components can either be kitted or assembled based on the customer's installation preferences. In an optimized solution, we partner with our customers early in the design phases of a new product launch or a retrofit project to create an engineered powertrain subsystem solution which is optimized specifically for their application. This solution can be packaged under a single part number as well, which allows for ease of procuring and complying with the optimized specifications over the entire life of the system or the subsystem. Lastly is our intelligent offering, which incorporates our Perceptiv Digital products and services along with a bundled or optimized solution, and we add sensing and monitoring capabilities to the powertrain, providing the customer with a continuous knowledge of subsystem health that can easily integrate into their customer's automation maintenance or their reliability programs. Now to pursue this cross-segment opportunity, we established a dedicated team focused exclusively on driving our powertrain growth. It's built from top talent from across the Regal Rexnord enterprise, and it makes it easier for customers to engage with Regal Rexnord and to solve their powertrain needs. This team provides application design assistance, product management, and sales and customer support exclusively for powertrain opportunities. Our customer success team approach and our unmatched powertrain portfolio, you know, truly sets us apart from our peers, and it creates a value proposition that has already resonated in the market in driving needle-moving commercial synergies across the enterprise. Let me walk you through a few of these examples right now. We really are experiencing great early success with our industrial powertrain approach. As shown as examples on the slide, we are winning solutions in a diverse set of end markets across small, medium, and large scale operations. I'm gonna focus on two of these examples to provide a better understanding of how we're able to bring these solutions to our customers. First is a cooling tower application, which is the first product picture, you know, on the chart. A historically strong application area for a legacy Rexnord for gearbox and coupling components, but was missing a motor offering. The inclusion of a Marathon motor in the portfolio allowed our team to design and deliver a complete optimized powertrain subsystem, providing our customer now with more scalable, reliable powertrain package while reducing the complexity of the buying process for this powertrain. You know, this solution represents a $5 million-$10 million annual sales opportunity for us. In the second example, which is the second product picture, we worked with an innovative company who's bringing a new renewable energy technology to the world and was quickly trying to finalize their system design as time to market was very critical for them. They desired a single source of powertrain expertise versus the inefficient multi-vendor approach they were currently using. You know, our Regal Rexnord team worked shoulder to shoulder with their systems engineering team to create an optimized powertrain using standard and customized Regal Rexnord components and Perceptiv intelligence to seamlessly integrate with their control system. This solution represents a $10 million-$15 million annual sales opportunity. You can see that each of these examples has a unique story behind them, but the common thread is our ability to tailor solutions that create tremendous customer value via our unmatched powertrain portfolio, expertise, and eighty/twenty differentiated service model. With that, I'm gonna pause and turn things over to Jerry Morton, who will update you on our M&A integration and synergy realization activities. Jerry? Thank you, Kevin. Good morning, everyone. I'm Jerry Morton, President of Integration for Regal Rexnord. After spending 20+ years at Emerson in a variety of technical and management roles, I joined Regal Rexnord as part of the acquisition of the Emerson Power Transmission Solutions business, or PTS, in 2015. I led the combined PTS business from 2017 until we closed the Rexnord PMC merger in October 2021. Since that point, I've been dedicated to the successful integration of the Rexnord PMC and Arrowhead businesses. When we concluded our initial due diligence of Rexnord PMC, we knew the synergies were strong, announcing a targeted $120 million of cost synergies on an annualized run rate basis by year three or 2024. Measured as a% of target sales, these are top-quartile synergies for the industrial sector. As we proceed down the path of integration, we found the businesses to be even more synergistic than originally projected. We now expect to achieve that $120 million of cost synergies exiting year two, a full year ahead of schedule, and to achieve an additional $30 million of cost synergies in the original three-year timeframe with upside across all synergy categories. Our original synergy goal for year one of $70 million remains unchanged, though we do expect to realize more of the $70 million within the year than originally planned. Just to be clear, all of these synergy timelines and values are on an annualized run rate basis. This level of performance is soundly best in class across industrials, and I believe even more remarkable given the challenging operating environment in which we are experiencing. I would attribute this very strong performance to a couple of factors. One is the larger than anticipated impact from Regal Rexnord's business system and our 80/20 tools. Second, to the integration team's disciplined execution utilizing policy deployment and plan do check act management approach, which we apply as rigorously to integration activities as we do to managing our core operations. Bigger picture, this execution demonstrates that we know how to integrate even large scale complex transactions. In addition to the compelling cost synergies, after less than one year owning PMC and Arrowhead, we also have clear line of sight to significant commercial synergies. As you can see in the chart to the right, we previously communicated that we expect to realize at least $10 million of cross-selling synergies this year. That number is now larger. After including other commercial synergies tied to both transactions, we now expect to realize $30 million of sales synergies this year on an annualized run rate basis. As we look out to 2025, we expect to realize at least $125 million of sales synergies related to these two transactions. This is needle-moving to MCS growth rates over the period. Four major levers are driving our forecast. One is minimal OEM overlap between PMC and legacy Regal PTS, estimated at only 10%, which is teeing up sizable cross-marketing opportunities. Second, adding Arrowhead to our legacy conveying business is allowing us to move up the value chain to create differentiated subsystems, which I will elaborate on shortly. Third is powertrain, which, as Kevin covered in his section, is expected to be a game changer for us over time. Finally, the synergistic nature of the PMC and legacy PTS sourcing processes and manufacturing operations are allowing us to raise our service levels, which in this supply chain constrained environment is especially impactful and is helping us gain share. As I just mentioned, the Arrowhead conveyor acquisition enhances our ability to engineer value-added subsystems in the conveying space, where we possess considerable domain expertise and see accretive growth rates in our e-commerce and food and beverage end markets. In particular, Arrowhead's capabilities, plus our ModSort offering, is highly synergistic. At the 2020 Investor Day, we introduced ModSort, a highly engineered module that adds precision sorting capabilities to a conveyor line. That business has grown sevenfold compared to where it was in 2019. Arrowhead's controls, system design, and manufacturing capabilities, in combination with ModSort, is enabling a robust new pipeline of proprietary subsystems. An example is pictured here in the upper right. The benefits we see here are substantial. As presented on the lower right, we believe the pipeline of new products can double the size of our conveying subsystems business over the next three years. Suffice it to say, we are extremely pleased with what we are seeing from the addition of Arrowhead. It is a great example of using M&A to add highly accretive adjacent capabilities. More broadly, Arrowhead provides further evidence that Regal Rexnord is building a strong track record of high return M&A related capital deployment. At this point, I'll turn it back to Kevin to conclude our MCS presentation. Yeah. Thanks, Jerry, and thanks for the great work by you and the team to keep the synergies on track and make us even a better segment. Yeah, we use this session today to provide you with highlights of where the MCS segment is currently and where we are heading over the next few years to deliver above-market sales growth and margin expansion. We summarize our plans to outgrow in four ways, increasing secular market exposure with an expanded component and subsystem offerings, doubling our new product vitality and strategic breakthrough innovations, expanding our digital customer experience and solutions to create next gen value, and leveraging the differentiated capabilities of the Regal Rexnord powertrain. We also summarize the opportunity for margin expansion through merger synergy overdrive, RBS actions, and our margin-accretive new product portfolio. I'd like to thank you for your time today, and now Jerry and I look forward to answering any immediate questions that any of you may have. Great. Thank you. We have a few minutes for Q&A. We have some colleagues here with mics. Just please wait for the mic until you ask your question. We can start here with Julian. All right. Thanks a lot. Good morning, and thanks for the presentation. Maybe just a question around the sort of the current year, because you've got very good synergy numbers in the EBITDA, but the margin expansion is quite limited. Help us kind of understand or quantify, if you like, the moving parts that are mostly offsetting that synergy tailwind. You know, you've got decent organic growth, high synergies, but the margins are up, you know, a few tens of basis points in the segment this year. Just trying to understand sort of what the offsets are and how those might look into next year. Do we wanna handle more specific in the financial? Yeah, I think. Yeah. Yeah. I think you're right. There certainly is some nice improvement in margins that we're seeing this year. You know, it has taken us a little bit of time to get up to speed and realize some of those synergies. We still fully expect to get that $70 million exit rate, but as we've been talking about, as we've been going through the year, you know, we started off a little bit slower as some of those early synergies started to materialize, but now we're starting to pick up speed. We do expect to get a little more this year than we had originally anticipated, but still exit at the $70 million. Absolutely have a path to the 26% EBITDA that we communicated today and maybe a little north of that. Thanks, Rob. Is it something around, I don't know, you know, price cost is a big headwind or kind of broader supply chain efficiency? Just 'cause if you back out the synergy, the base business, the margins are, you know, lower, I suppose. Sure. There is certainly some. Now, we've been price cost positive as we've been talking about, but it's gaining the leverage on that price because of some of the other inflation that's been impacting the business, such as freight, labor, and the rest of the inflation that we've been seeing. The supply chain challenges have certainly weighed on that, and that has limited some of the margin expansion that we would have naturally expected. Great. I think we'll go next to Mike in the back there. Hey, thanks everyone. A couple interrelated questions here. How purpose-built is the overall powertrain solution at this point? You know, you obviously have the components. It feels like the Perceptiv and the sensors are the tie that binds everything together. I'm guessing there's a lot of customization that needs to happen depending on what the solution set looks like. When you think about this as, you know, just a series of components that you're able to put together in a cohesive way versus purpose-building it for a solution to drive that extra level of efficiency, could you just maybe talk through how you think about that in some way or form, and how you think about it across applications? Certainly. We've been taking an approach that, first, we try to look at our, you know, lead customers or, you know, our A customers for what their powertrain needs might be. I mean, like I said, the market is vast. There are powertrains. You just start to look at all the different applications, and there are tens of thousands of potential. We want to stay very disciplined with the way that we're approaching this, starting with top highest priority customers, and then working with those to create a more standardized offering set that could be more broadly used, you know, at other customers today. We are taking this year to figure out, you know, all the best opportunities for us. There are a lot of one-off, but you see some of the sizable opportunities we generated, you know, $5 million, $10 million, $15 million at a particular customer as the basis point, which allows us to standardize down the road. You know, today, they are more purpose-built for particular strategic customers that we're focusing on, but we'll standardize those, you know, for a broader application in the future. So- Hey, Mike, let me add to that as well. I totally agree with the commentary from Kevin, but I'm gonna give you an example. There was an example of a customer that was using a product that had too large of oversized motor and an undersized gearbox. We came in, evaluated the application, designed it specific for that application, but still using our A products, bundled it and optimized it, and then sold it. We're seeing more of those types of opportunities. There's no question it's gonna be purpose-designed, but it's preferably using with our A product. The value proposition then is that you can, because you have the knowledge base of all of these different components, that you can come in and give the right solution set to the base of clients, that somebody else who just does a couple of them or is just- Right. Trying to assemble it won't have that same expertise. Exactly. You see that often if you deal with multi-vendor, that was the second application. You know, I think in this case there were five. We were one of the vendors, but for some of the components, there were four others that we're having conversations. If you don't design together and if you don't have the knowledge, it's complex. I mean, there is a lot of engineering to optimize the powertrain that allows us to bring it together and have one complete design versus five individual components that come together, right, individually to see how it might operate. I think we have one time for one more. Nigel? Thanks. The 25 revenue synergies, the 125, is that a cumulative number or was that what you expect to capture within 2025? You wanna talk [audio distortion]? Yeah. The 125 is an exit run rate, annualized run rate basis. Okay, great. 125. Yes. How do you define breakthroughs? I mean, two of your six innovations you highlighted for this year were breakthroughs. How is that like a revenue sort of number where above a certain thresholds you it's a breakthrough or is it just simply new product, new markets? Yeah, that's essentially we define it as new products, new markets. You know, for us, they typically will have higher potential impact. Have to invest a bit more in those because they are significantly new versus just bringing it new for us into a portfolio with some you know, unique differentiator. Yeah, our expectations are they're new to the marketplace at the time they're launched. Okay, thanks. Great. Thanks. I think we'll leave it there. We have time for a short break now. To keep us on track, we will resume promptly at 10:00 A.M., in about 14 minutes. Thanks. We're going to start back up again here in 30 seconds with Audie Cash, who runs our Climate Solutions business. Yeah. Good morning, everybody. I'm Audie C ash. Really excited to be here today. I am the acting President of our Climate Solutions business. I've been at Regal Rexnord for nearly two years. I joined the organization as the leader of our North American OEM business. As interim President, I'm taking a more global view, obviously, and I look forward to sharing our potential. As for my pre-Regal background, I was SVP and general manager of lighting controls at Acuity Brands, and also really started my career in engineering and product marketing, really in the commercial connected building space. With revenues over $1 billion, Climate Solutions is a leading provider of electronic variable speed motors, blowers, air moving subsystems, and electronic drives, mainly for applications in residential and light commercial HVAC, including heat pumps and commercial refrigeration. The business continues to demonstrate record-setting revenue, and we expect to see new record sales in 2022, driven by share gains and price capture across all of our business units. What differentiates us is our technology leadership, particularly in the realms of energy efficiency, drives and motors, emission reduction solutions for air and water heating, and a set of solutions that generate superior aftermarket channel position, plus a global manufacturing footprint that allows us to deliver leading service levels. All of these things help us to gain share, and we are particularly excited about our expanding content on heat pumps, which look to accelerate in response to global trends towards decarbonization. This slide provides a quick orientation on the business. As you can see, Climate revenue is primarily geographically weighted to North America with a focus on the consumer end market through our residential HVAC offering. While this is our legacy, our focus is on differentiation. A key element of our strategy is increasing customer and geographic diversity, which we will achieve by leveraging our technology leadership to create proprietary subsystems, many applicable and relevant adjacencies in new geographies. Financial performance has been very strong. With record sales and adjusted EBITDA margins in 2021, this year we expect to hit a new sales record, but with some temporary pressure on margins tied to inflation and proactive service that we have provided to some of our most important customers. A key driver of our sales performance has been share gains in our technology leadership and differentiated service. In this constrained global supply environment, our ability to deliver when our competitors have not, has helped us gain share. Our largest end market is the U.S. consumer, which drives our residential HVAC business. We believe that the long-term growth characteristics of this market are highly attractive, with consistent mid-single digit growth over the long term, driven by favorable demographics and regulatory tailwinds tied to decarbonization and rising energy efficiency goals. In addition to the healthy fundamental growth over time in residential HVAC, our diversification efforts are raising our exposure to secular growth tailwinds and expanding our customer and geographic diversity. Since the topic is top of mind, likely top of mind, I will say that our near-term view of the U.S. residential HVAC market is only for modest growth, reflecting tough compares and moderating consumer confidence levels. That said, we do see meaningful outgrowth opportunities, which will be the focus of the rest of the presentation. We see several growth drivers over the next few years, some of which are accelerating, and many of which we believe will contribute to substantial outgrowth. First, the large U.S. residential HVAC installed base continues to shift to electronic motors, largely tied to rising minimum efficiency standards, often referred to as the SEER rating. As the leader in electronic HVAC motors, we see mix tailwind tied to this evolution. Second, we aim to leverage our technology leadership to pursue attractive subsystem opportunities on a global basis. Third, we have a meaningful role to play as our consumers and their customers look to lower carbon emissions, both by raising energy efficiency and by shifting to electronic technologies in HVAC and water heating. Our new compressor drive technology and what we are doing with heat pumps are both highly relevant in this regard. Great examples of new subsystems that we are rolling out and also presenting sizable opportunities for us to grow outside the United States with new customers. Climate Solutions continues to benefit from the methodical conversion of the U.S. residential HVAC installed base from legacy induction or mechanical motors, sometimes called PSC, to newer, more efficient electronically controlled motors called ECM. As the leader in electronic motors, this shift presents tremendous mix positive annuity benefits for Regal Rexnord, with the current U.S. installed base still roughly at 70% on legacy motors. We are also actively working with our distribution channel partners to not only accelerate ECM conversion, but also for Regal Rexnord to earn a larger share of these aftermarket volumes. In particular, we are winning in this space with our proprietary programmable motor technology, which makes it really easy for HVAC contractors to service failed motors. It's aptly named ECM Made Easy, and it is helping us drive mix positive ECM aftermarket share gains. See, it benefits the contractor because they can carry one motor on their truck to replace numerous PSC SKUs and competitive ECM motors, thereby reducing the amount of inventory they have to carry, and it often saves them a trip back to the distributor to find a motor when they need to service a home. This share gain is evident in the chart to the right, which tracks our ECM unit volume growth versus the broader unit volumes as disclosed by AHRI. As you can see, we are winning where we want to win, in the richer mix of electronic motors. Part of our growth strategy is to continue to offer valuable subsystems, which can involve leveraging proven technologies in new global markets and entering new markets and new applications. Pictured here is our FASCO brand gas pre-mix blower, which is used in water heating applications. Our proprietary technology in this blower optimizes the mixture of gas and air to provide a very efficient burn for the gas system, while also limiting the degree of gas emissions produced. We are the market leader in this application in the United States, but have only recently started to sell it in Europe, opening up a large new market for us using proven technology. While gas applications are slowly declining, our geographic expansion is providing meaningful offsets. In fact, we see net growth in these premix subsystems as we gain a larger share of the global gas market. In addition, this subsystem is intelligent and communicating. Leveraging our Regal Rexnord Perceptiv technologies, this FASCO blower can communicate with building automation systems and support monitoring and diagnostics. Lastly, and probably most importantly, this solution positions us well with new partners in Europe. European customers who are developing heat pump solutions as well for large scale water heating applications. Again, a large opportunity for us that I will discuss shortly. As many of you are aware, coming in January, U.S. federal regulations are raising the minimum efficiency standard measured as the SEER rating, and this will be applied to all air conditioners and heat pumps sold across the country. It's important to note that the test used to measure the efficiency of this equipment is also becoming more stringent, which may disqualify equipment that is currently rated at or above the new minimum efficiency standard. We expect the combination of the higher efficiency standard and the more stringent test to accelerate our adoption or the adoption of our efficient ECM motors. Unitary HVAC systems, including the indoor air handler and outdoor compressor, include several motors, and in some cases, lower SEER systems use a mix of mechanical and electronic motors. We believe the SEER change will lead OEMs to use more ECM content throughout in both indoor and outdoor parts of the system, specifically in the base tier. Mid-tier and premium systems today, for the most part, feature ECM indoors and out. We are particularly well-positioned from an ECM perspective given our technology leadership and global scale, which can be real differentiators for our customers given the large scale nationwide impact of the upcoming standard and test regime change. While accelerating ECM adoption is a big positive, we see much more meaningful upside related to the SEER change as we look at the subsystem we just launched, called Frontier. Frontier is an electronic drive that works with constant speed compressors to modulate their performance in real time, essentially making them variable speed. While we do not sell compressors, we are the leader in variable speed and power management technology, so leveraging this experience to add variable speed performance to compressors is a natural adjacency for us. Frontier has meaningful energy efficiency implications to the total system and allows OEMs to meet the new minimum efficiency standards without upgrading their compressors. A significant cost savings for them, but also an upside for us since the Frontier drive is meaningfully new content in each AC heat pump system sold. A real win-win. Frontier also has benefits related to coil and cabinet size, driving second derivative benefits from lower material, lower weight, and therefore lower freight costs for our customers and the end consumer. We have already sold Frontier to a leading, North American OEM and are in active discussions with several others. We are very optimistic about the opportunity here, and we expect we'll add 200-300 basis points to our segment growth rates with further upside. Some OEMs are choosing to address the 2023 minimum efficiency standard by derating their higher SEER systems. We expect OEMs that are taking this approach may consider Frontier before 2025, when the low GWP regulatory change will require an even more significant redesign. Therefore, our technology, testing labs, and service capability position us well to capture more of the subsystem opportunity over time. Notably, Frontier Drive is also relevant to heat pumps. In addition to unitary AC applications providing a meaningful step change in our per unit heat pump content as well. Needless to say, we are extremely excited about our prospects with Frontier. Another great example of Regal Rexnord's focused NPD efforts through the use of policy deployment to achieve breakthrough performance and subsystem adoption with our highly valued Quad 1 customers. We are leveraging technology where we can lead with differentiated solutions. There is a lot of momentum behind raising efficiencies in water heating as well. This presents a large opportunity for us. As you can see in the diagram below on the left-hand side, today the market is split about evenly between gas and electric water heaters. We ship about 1 million blowers for gas water heaters, but have no content on electric water heating. However, as the water heating industry has experimented with heat pumps, they use that technology to heat up their tanks, delivering up to three times the efficiency of mainstream electric tanks. This step change in efficiency is driving a slow but steady migration towards electric heat pump water heaters, and we believe over time our markets will move in that direction. Federal, state, and utility incentives are helping accelerate this trend. As is the recent Inflation Reduction Act that was signed into law in August, which offers $1,700 per water heater under the high efficiency home rebate or $2,000 under 25C, the very popular energy efficiency tax incentive. This is all great news for Regal Rexnord because we have content in heat pump water heaters. As you can see on the right-hand side of the drawing of the schematic, the migration is expected to raise our addressable market by 9 million units, which will likely occur over the next decade. Now, that could accelerate based on other regulatory actions. We expect to continue serving the small portion of gas water heating market that we have today. For technical reasons, this portion of the market will likely be the last to convert to electric. As an emerging trend and really exciting opportunity for us in the long term is heat pumps in Europe. Driven by decarbonization and waning natural gas availability, the EU will install 2.5 million units this year, growing to a newly installed rate of 4 million units per year. This means that the heat pump market will go from 17 million units to 50 million units by 2023, according to the European Heat Pump Association. At this point, we have zero content in these technology spaces, but our commercial synergies and technology capability will allow us to enter this space in the coming year. The systems being contemplated specifically relate to replacing boilers with heat pumps to provide water heating and space cooling. As you can see in the diagram below, we see the potential of $50-$150 of Regal Rexnord heat pump content per system with one system per residence. Our intent is to grow in this market as we have in the U.S. with our leading technologies. The market is facing a dramatic shift with a heightened sense of urgency related to the situation in the Ukraine and rising energy availability concerns. We are internally organizing our teams to engage in this potentially high growth area and look forward to updating you on how we see this playing out as we gain more visibility. A few things I would like to leave with you today. One, Climate Solutions enjoys a strong market position, especially in North America, relevant proprietary technologies, and excellent long-term end market conditions. Second, a number of regulatory tailwinds exist, including the 2023 SEER change and 2025 regulatory change in the U.S. market, and moves in Europe to drive energy efficiency and reduce the dependence on fossil fuels. Third, we may see opportunities for above-market growth tied to decarbonization, including our Frontier compressor drive, leading electronic motor portfolio, and significant content on more efficient heat pumps. Lastly, our subsystem strategy is set to drive robust share gains, in some cases from leveraging proven technologies in new markets and with new customers. Our focus is, of course, on profitable growth, and we are excited about the many strategies we have to pursue it, many also tied to market and customer diversification. Thank you very much, and I look forward to your questions. Great. Thanks, Audie. We have a few minutes to take some questions specifically on the climate segment. Do you wanna start back there with Mike? You know, your opening line was that one of your focuses was on expanding the reach globally. Maybe just talk about resource allocation towards that goal. How much of this is the heat pump opportunity in Europe? What kind of resources are you bringing to bear? Anything along the lines to help understand what kind of level of intent there is around that. It's a good question. We have a policy deployment, you know, policy approach within Regal Rexnord that allows us to put our best resources and focus our resources on the best growth opportunities for the business. Specifically in heat pump water heating, where we have some customer intimacy today, we already have a team dedicated to that gas heat pump business. We're gonna continue to drive their roadmaps towards the heat pump space. In Europe, where we see a lot of potential, we are going to repurpose engineering resources and product management resources through our policy deployment approach to add more focus to that European marketplace. We have a footprint in Europe today, and we'll supplement it with engineering talent around the world, whether it's our design centers in India or design centers in North America, to make sure we can get to the market pretty quickly on that. Julian. Thanks very much. Maybe already talk a little bit about the margin profile you expect in this transition to heat pumps. You know, I think it's an area that's got a lot of attention from investors and companies. Just wondering kind of will there be a land grab, maybe people try and get, you know, their foot in the door to maximize volume share early on, you know, how you see that playing out? You know, what kind of profitability are you willing to kind of accept to make sure you can grow share in that heat pump space and make inroads? Yeah. You know, our view about heat pumps is that the technology in general is designed to be variable speed. That leads to electronics and electronic controls, which are generally better margin products for us, better margin solutions. Our investment in Frontier Drive, which is applicable to air conditioning and heat pump applications in North America, is meaningful content improvement, and of course, hits our margin profiles for growth in the business. We're gonna continue to apply 80/20 to opportunities that come our way. I don't know, specifically about all the ways we're going to play in heat pumps as the market evolves, but I would expect that we would bring discipline to that and only pursue margin-accretive applications for us. Mr. Joe. Hey, good morning. You mentioned that ECM is 30% penetrated now. What do you see that going to through this year change in, you know, maybe three, five years out? Is there a big opportunity with the refrigeration change and kind of the next step, you know, that these OEMs design for you to kinda grab content or share? Yeah. With every change, I'll take the last part of your question first. With every change in regulatory restrictions on equipment, we always get an opportunity to gain share. You know, it takes a lot of work for our customer base to redesign and retest and requalify. And because of our lab and domain expertise, we do get a lot of opportunities to get designed in. And that's our primary focus right now, specifically with the drive and with some ECM motors that, you know, we're continuing to evolve, whether it's communicating or you know, sort of making them even more efficient for certain applications. With respect to the share gain over time, right now it's 30% because it's such a large base of installed equipment. If you could just kinda roll the clock forward and think about the installed equipment five years from now, from 10 years from now, it's definitely going 50/50 to going 70/30 the other way, just as people replace equipment. 2023 does drive more energy-efficient motors for sure in the application. It also drives variable speed drive connectivity and even variable speed compressors. There's a lot of variable speed technology going in. I would say 2025 is probably a watershed moment for the industry in a lot of ways because it does require a much more ground-up look at system design, and I think we'll see a lot more ECM content at that point. In the end, I know our customers are excited about ECM motors because it allows them programmability and flexibility versus PSC, which were very specific purpose-built motors. They all like the flexibility and programmability of the technology. Great. Maybe time for one more. Did you have a question, Nigel? Oh, you're good. Okay. Anyone else? Maybe we could just leave it there and move on to Scott Brown in Commercial Systems. Good morning, everyone. I'm Scott Brown. I'm the President of Commercial Systems, and I've been with Regal for 17 years, and before that I was 17 years with General Electric. Commercial Systems is just over $1 billion in sales and is a leading global. Provider of highly engineered motors and air moving subsystems, mainly for the general commercial HVAC, and consumer end markets, with the latter mostly focused on pool. The strategic focus of our product portfolio is premium efficiency motors and subsystems, specialized fan filter systems, and a high-speed pump vacuum blower systems. Increasingly, we are designing our products and our subsystems at lower weights, in smaller form factors, and with higher efficiency, energy efficiency, which drives meaningful benefits for our customers, and because of the technical complexities of these designs, widens our competitive advantage. On this slide, you can see that we are a business weighted to commercial end markets in North America. Now, what truly differentiates us is that in these markets, we have the products and subsystems known for unmatched quality, reliability, energy efficiency, and increasingly higher power densities. Service levels are also a key part of our value proposition and have become a real competitive advantage through our 80/20 RBS actions and our digital investments. We are gaining share by delivering when our competitors have not been able to, and we are leveraging this performance to create stronger, stickier customer relationships. Two years ago, at our last Investor Day, I shared our growth and margin improvement plans for Commercial Systems, which included a target for the through the cycle adjusted operating margins of 10%-13%. Well, in the second quarter, we achieved an adjusted operating margin of nearly 14%, which is almost 17% on an adjusted EBITDA basis. That is also roughly where we expect to end this year, but with material further upside clearing our sights moving into 2023. To be candid, Commercial Systems is a fundamentally different business than it was three years ago. In many regards, I believe it is the poster child for 80/20, which in addition to RBS and a growing pipeline of margin-accretive new products, is moving our margins higher. Organic top-line performance has also been strong and differentiated, aided by new products, digital investments, and a significant infusion of new talent, particularly in the realms of product management and engineering. Together, these investments and a reinvigorated growth-focused culture are creating a growth engine flywheel that is gaining momentum. I also want to point out that the team achieved all this despite COVID and unprecedented inflation and supply chain challenges. I'm really proud of our team, of the high-performance culture we are building, and for Commercial Systems to be contributing meaningfully to the performance of Regal Rexnord. I'm also excited because on many fronts, we are just getting started. Regarding end markets, we have strong positions in the commercial, non-residential, and consumer markets, where our products and subsystems are often supporting commercial HVAC, pool pump, and then a wide variety of other commercial applications. From a strategic growth perspective, we're focused on taking proven technologies sold in our core markets and leveraging them more intentionally in markets with secular growth tailwinds, including data centers, clean rooms, food and beverage, and e-commerce. Collectively, our sales into secular growth end markets today is roughly 25%, and we foresee a strong growth outlook for this part of our portfolio. An increasing focus on energy efficiency is a common refrain from our customers, making our technology leadership in this regard a key growth driver. We also see a compelling growth opportunity with small and medium customers across a wide range of general, commercial, and industrial end markets. These customers value the quality and the reliability of our offering, and we are having an incredible success serving them through a dramatically enhanced online channel where we've made significant investments. As we continue transforming this business, we're seeing many opportunities to accelerate the mix-positive growth, and these are all policy deployment strategic initiatives. The first is our digital investments. High-margin, small, medium customers in general commercial and industrial markets that have historically been underserved by us represent a sizable mix-positive growth opportunity, which we are pursuing through a best-in-class digital experience along with the entire value stream. Second, it's about new products. New product sales this year will be 3x what they were three years ago, and our hopper is continuing to build. We are creating a sustainable mix positive growth engine as we move from our current 12% vitality to over 25% in 2025. Trends towards decarbonization and energy efficiency are big opportunities for us. We are the energy efficiency leaders. When customers need a reliable, cost-competitive, step function improvement in energy efficiency, we are always at the table. This is our reputation in the marketplace, and it comes from proven experience across many applications. We are well-positioned to distance our lead and take share. Finally, subsystems. As customers focus more on their core competencies, they're looking to shift more of their engineering work to us by sourcing subsystems instead of components. Regal Rexnord is the only supplier with the critical technologies of energy-efficient motors, controls, air moving, powertrain, and digital twin modeling. We are accelerating our investments on these fronts and building subsystem solution teams to accelerate our growth. Now, let me elaborate more on these strategic policy deployment initiatives in the following slides. We made digital investments along the entire lead to cash value stream to serve high-margin small and medium customers in a very user-friendly manner, which is also highly cost-effective for Regal Rexnord, an incredible win-win for us and our customers. This initiative is a great example how we use 80/20 growth framework to define an opportunity that was essentially hidden but brought into plain view. We identified strong alignment between our value proposition and unaddressed customer needs. We are bringing technology leadership, reliability, and deep domain expertise in a broad set of end markets to a large, diverse group of smaller, less technically sophisticated customers, but who have a rising need for sales and technical support to ensure they are getting the right solution. We decided to address this market where we have been significantly under-penetrated compared to our leading position in North America using a lower cost but user-friendly content and feature-rich digital channel. We did it by leveraging Regal Rexnord's enterprise-wide IT platforms because you need scale for these investments in world-class platforms, and Regal Rexnord has these platforms. An e-commerce supply chain team leveraged our already extensive North American supply chain structure and then built in differentiated fulfillment capabilities to ensure we have the right inventory close to these customers at the lead times expected. A new digital solutions team created differentiated virtual personalized experiences that are benchmarking very favorably versus our competitors. Lastly, we aligned our sales incentives with our large third-party rep channel to direct these smaller customers into our now greatly enhanced digital channel. The bottom line, we've got tremendous success. As you can see from the org, from the chart on the right, we expect our digital perfect prospect efforts focused on the small medium customer segment to capture approximately $80 million of share gains this year, and then to nearly double by 2025. Shifting to our new product development engine. We have driven our vitality to 12% today, and we are on our way to 25% in three years. I will echo comments from those before me about good executing starting with great talent. I've watched it unfold in Commercial Systems. We have made significant investments in product management, a function that never existed before in our segment, and the results are making a meaningful impact. We are shifting to high-scale global product platforms with defined multiyear product roadmaps, a departure from our historical approach. We are using 80/20 to focus on GDP+ end markets and where customers value energy efficiency, a good alignment between our core competencies and growth objectives. Increasingly, our new product development engine is focused on subsystems because we can create differentiated value add by leveraging our motors, our controls, and our air moving technology leadership at a time when customers are looking to shed their internal resources and the demand for energy efficiency applications is rising. We're doing so using multidisciplinary and cross-functional solution teams that can bring together the voice of the customer with what historically have been siloed engineering resources focused on specific components rather than subsystems. This has required a cultural shift, which is never easy, but is now resulting in a truly integrated and optimized subsystems that address real customer needs. I will discuss a couple examples later on in my presentation. These significant investments in the critical technologies, skills, and unique in-house capabilities, along with our new approach, is what will move us to 25% vitality in 2025. An example of our leadership in energy efficiency is the lineup of super premium efficient permanent magnet variable speed motors. Each level of efficiency shown in the chart on the right equates to around 10%-15% greater efficiency. Now, many players claim to meet higher efficiency targets, but they often do so by adding significant cost, complexity, and sometimes size and weight to the motor. Our unique core competency is being able to deliver a reliable motor at levels of super premium efficiency and still be cost competitive, while also providing desirable weight and form factor. In addition, we can do so across many different applications. We have the broadest range of proven affordable super premium motors with the next generation of ultra-premium on the horizon. When Louis discussed motors with an annuity in his section, this is a great example. This offering is differentiated and is poised to deliver margin accretive outgrowth for Commercial Systems. Here is a great example of our solutions teams delivering a proprietary air moving subsystem solution. Shown in the top right is a typical motor blower combination. Historically, if you wanted higher efficiency, you offered deeper axial length. That's because the solution was developed by impeller designers who optimized the impeller and then asked the motor suppliers for a motor. The motor designers picked a motor that could best bolt onto the impeller. There was no optimization of the integrated system. What happened on the far right is our proprietary solution, leveraging our deep motor, air moving, and controls expertise to build a subsystem that optimizes for total system efficiency as well as axial length and cost-effectiveness. This system design required trade-offs at the component level that optimize the airflow of the total system using the least amount of energy in the shortest length possible and at the lowest cost. This subsystem is opening up a new $250 million market for us. We launched in the fourth quarter and already have committed orders that should support needle-moving growth rates for our segment. Another great example of leveraging existing Regal Rexnord capabilities and our solution team is our new high-speed motor, motorized subsystem platform. We have been the leader in HVAC chiller compressor motors for many years, serving the global commercial HVAC market. The next generation chiller platforms require motors to rotate at dramatically higher speeds in order to improve energy efficiency and increase power density. That is, provide much more power in a smaller form factor. Traditional motors run at 1,800-3,600 rotations per minute. Our chiller compressor motors run at 25,000-30,000 rotations per minute. Very few suppliers can reliably design and manufacture such motors, but we do. We are the clear leader here, presenting some exciting opportunities for us. This is another example of motors that are differentiated. It is also a great example of how Regal Rexnord has a meaningful role to play creating a greener world, and as an example of our business purpose in action. What I believe is even more exciting is what is illustrated in this slide, is that we are leveraging our 80/20 tools to think about where else we can find alignment between the core competency underpinning our new chiller technology and customer needs in another application or market. The dark blue rendering is our motor drawn on the same scale as the typical competitor offering depicted in the white. These motors typically can weigh up to 1,000 lbs. Our solution is 50% smaller, 65% lighter, and 35% less energy versus previous solutions. Notably, the space savings also allows end users to more easily retrofit the applications. The motor is also intelligent. It is enabled with our Perceptiv IoT capabilities, and so it can alert users in advance of potential breakdowns, helping them avoid costly downtime. These unique differentiators of energy efficiency, space saving, and intelligence are opening up opportunities for us outside of our traditional commercial HVAC chiller market, and in this case, in aeration, oxygen generation, vacuum pumps, and air compressors from water treatment plants to hydrogen fuel cell manufacturing. As a result, we estimate that our servable market is rising by $300 million in markets growing at double-digit rates. As you can see in the last two examples, our unique ability to build effective subsystem solution teams is creating differentiated value for customers across a wide range of end markets. These teams are allowing us to execute innovation with purpose faster than our competitors. Beyond these few examples I share today, we also have active incubator programs in solar pumps, boiler draft inducer subsystems, and powertrains, all expected to contribute to our rising vitality. In short, we are delivering. The business has undergone a dramatic transformation, leveraging 80/20 and RBS to dramatically alter our growth trajectory. What is so exciting is that I feel our momentum is just starting to build. Digital investments are allowing us to earn our rightful share in the attractive, historically underserved small and medium customer commercial markets, and doing so profitably. Our new product engine continues to power up. Our vitality is on track to double over the next three years to 25%. In many cases, we are leveraging proprietary improvement technologies to enter new markets and open up significant new opportunities for growth. Most importantly, we believe we are building a unique culture, one that is allowing us to innovate faster than our competitors that will remain a sustaining competitive advantage and difficult for others to copy. Thank you for your time today, and with that, we'll open it up for questions. Great. Thanks. We have a few minutes for questions on, Commercial Systems. Start with Nigel. Thanks. A question on 80/20. You mentioned it seems like there's a bit more opportunity for 80/20 in Commercial than maybe Climate and MCS. What kind of headwinds should we expect in growth from 80/20 initiatives at the top line? Yeah. You should actually expect the opposite of headwinds from 80/20. We were focused from the start. We did some pruning and some pricing realignment as we started to segment our businesses, but we're now focused on over-serving those Quad 1s. We see growth opportunities just from that, from us being able to do it. When I say over-serve and when I say we segment our businesses, we aligned resources in the organization to our Quad 1s. Before, it first is being watered down over many different customers and products. We see opportunities with that over-service that we can get growth from it. I actually see it moving to growth, if that was your question. It is, yes. Does that mean the broader question would be, are we now beyond these, you know, 100 basis points plus type headwinds from 80/20? Yeah. You know, for the most part, we will constantly be using 80/20, though, to look at the profile of our business and look at our Quad 4 and start moving things more and more to our Quad 1. Should you model still probably about 100 basis points over the next three years? Probably. You should see greater offsets in what we're doing in our Quad 1 activities to outgrow. We're expecting outgrowth overall, markets at 3%-4%, our growth at 5%-6%. We look at 80/20 as a growth enabler for Regal Rexnord. Any other questions? Could actually maybe sneak one in from online here. Doubling product vitality over the next few years, pretty impressive. How do you expect that to impact the margin profile going forward? All of our new product introductions are margin accretive to Regal Rexnord. That's a requirement coming in. With that, naturally, with that vitality, that's gonna mix us up in the business. Yeah. I I wanna add on here too. I mean, this is our and Rob's gonna use a very similar statement. This is our diamond in the rough business. I've been saying it for a number of quarters. I really hope our investors and our analysts understand where this business was three years ago to where it is today, 12% vitality, 2% three years ago, 12% today, going to 25%. The potential for us to grow with new product, expand our served markets, serve a more differentiated portfolio of customers, earn greater gross margins through differentiated technology. This segment probably is strongest of all of ours, and so again, our diamond in the rough. Great. I think we will leave it there and move on to Justin Baier and our M&A strategy section. Thanks, Scott. Good morning. My name is Justin Baier. I'm the Vice President of Business Development and Strategy. I joined Regal Rexnord in 2020, in February of 2020. I was previously the Vice President of Strategic Development at Fortive and spent time on Whirlpool's M&A and Strategy team. Prior to Whirlpool, I spent a decade in consulting, supporting leading multinational companies with their growth and M&A efforts, with the majority of that time at the Boston Consulting Group. Since joining in 2020, we've overhauled the M&A function at Regal Rexnord with a focus on linking M&A to our broader enterprise strategy and then establishing clear processes, standard tools, and quantifiable metrics to drive higher returns on the capital we deploy towards inorganic growth. This starts with defining an M&A strategy, which is anchored to a long-term vision of what we want Regal Rexnord to look like in the future. GDP+ growth, more exposure to secular growth drivers, and mid-30s% or higher gross margins, and then outlining how M&A will help us evolve towards those measurable guideposts. With that vision defined, we then put the standard work in place to identify targets that can help us realize it. For example, detailed analysis of markets and targets, teardowns of key growth drivers to assess their sustainability, and analysis of competitive differentiation. Once attractive markets and targets are identified, we cultivate a funnel of targets through a formal process established at the segment and corporate levels. Targets are ranked and prioritized on key criteria such as fit, synergy potential, and actionability with the best opportunities pursued through the appropriate channels. Once a deal becomes live, we have rigorous tools and criteria to support diligence and assess valuation. As important, once a deal closes, a formal integration management office is established. It resides in the relevant segment and establishes integration and synergy realization plans and metrics. These are reviewed according to a regular monthly cadence at the most senior levels, consistent with our plan, do, check, act management approach. This end-to-end M&A toolkit is already showing its values in the deals we've executed in the last two years and gives us a great deal of confidence to continue deploying capital M&A in a value-accretive manner. We have three focus areas for M&A. Each potential target's a candidate for one of these categories, which helps guide the criteria for its evaluation. For example, we expect higher ROIC for bolt-ons, driven largely by higher synergy expectations than we would for a more adjacent play. With regards to the three areas, let me provide a bit more color. Bolt-ons. These are deals driven by our segments that close strategic gaps in their portfolios, such as expanding geographic reach or plugging a product gap. Adjacencies. The goal is to add differentiated, highly engineered products with secular growth exposure that fit neatly into our existing portfolio. Arrowhead's a great example of this as it checked all those boxes. Its products are highly engineered. They address a secular shift from single-use plastic bottles to aluminum cans. Because they sit adjacent to legacy Regal conveying modules, they allow us to move up the value chain by offering new conveyance subsystems. Transformative moves. This is all about finding opportunities to fundamentally transform the Regal Rexnord portfolio, especially related to growth and margins. The Rexnord PMC merger is a good example as it fundamentally reshaped our mix and margins and unlocked the industrial powertrain opportunity to drive additional growth. To be clear, while we're open to transformative deals, even targets that may warrant the creation of a new platform, we would expect them to be aligned with or sit clearly adjacent to our existing offerings. The consistent theme throughout these focus areas is our goal of mixing up our secular exposure and growth while maintaining our focus on margins. Next, I want to speak to how we screen deals as we intentionally cast a wide net to ensure we get visibility to a range of options as we think about our portfolio longer term. As I alluded to earlier, alignment with our long-term vision for the company is the first screen and primarily involves clearing hurdles for growth, margins, and probable synergies. This disciplined approach ensures that we do not dedicate resources to a deal that will never clear these hurdles. After that pre-screen, we look at the target's markets and expect GDP+ growth, secular tailwinds, limited risk of disruption, and further deal runway. We will not invest in a target that plays in an unattractive market, even if the target itself appears attractive on various dimensions. We believe a challenged market will eventually catch up to any company. We then look at the target's competitive position. It must have differentiated products with long-term sustainable advantage, factors likely consistent with 35%+ gross margins. If the market and target are attractive, we then look at fit. There must be strategic logic for the asset to be part of our portfolio. Many targets we see have attractive growth and margins, but unless their performance is meaningfully enhanced by becoming part of Regal Rexnord, we will pass on the opportunity. The last hurdle is deal economics. As fit would imply, we want to see significant synergy potential. We look for adjusted EPS accretion in year one and want ROIC to exceed WACC by 200 basis points by year three for a bolt-on and year five for a more strategic target. The key message is that we are data-driven, selective, and disciplined. Another example of the Regal Rexnord Business System at play and consistent with how we run our entire business. With this disciplined process, the vast majority of targets we review never clear that vision state pre-screen, with fewer than 5% ever being reviewed at the final deal level. When you consider our cash flow generation, balance sheet capacity, and disciplined approach, the potential we have to drive incremental earnings power by deploying capital to M&A is meaningful, potentially even transformational, as illustrated on this slide. Let me walk you through it. As we've shared today, on an organic basis, our target for 2025 adjusted EPS is roughly $15 per share, indicated in the smallest green circle on the right. Using what I believe investors would consider to be very reasonable assumptions for deal and synergy metrics, and assuming we deploy roughly 50% of our next three-year forecast cash flow towards M&A and access our borrowing capacity at the levels implied by the net debt to EBITDA metrics indicated in the diagram, the successively large blue circles offer a visual representation of how much impact M&A can augment our earnings power. I will conclude by emphasizing that we will be selective and disciplined in our approach to M&A. We're confident in our M&A toolkit, both in the screening and diligence processes we deploy and the criteria we use, as well as in our ability to integrate and deliver synergy. I think the Rexnord PMC merger and Arrowhead acquisition offer clear evidence of our capabilities here, and we look forward to continuing to leverage them to thoughtfully deploy capital with the goal of building a faster growing, higher margin, and more cash generative Regal Rexnord. Thank you. With that, I'd like to turn the floor over to Rob. Thanks, Justin, and good morning, everyone. I'm Rob Rehard. I'm the CFO for Regal Rexnord. Hey, echoing other presenters, I'm very happy to be here with you today. While I know many of you from the conferences that we attend, it's great to see you in person along with the new faces in the room who may be new to our story. I'll start with some key messages. I hope a number of these are now apparent based on what our team has presented this morning, and a few I will certainly elaborate in a little more detail. If you take away only one thing from today's presentation, it really should be this first bullet. We have many levers to pull to accelerate profitable growth across the portfolio, which is why I am confident in our forecast for a 4%-6% organic growth CAGR over the next three years, which we clearly expect can equate to GDP+ growth rates. Second, a significant opportunity to keep raising our gross margin to 37% by 2025, but with further runway beyond that level. A dynamic that goes hand in hand with our expectation for faster growth, given gross margin is, in part, a reflection of how our customers value our offering. We have a clear line of sight to $1 billion in annual free cash flow by 2025. Speaking of that level of cash flow, when combined with our clean balance sheet, gives us lots of flexibility, and we expect sizable upside from strategic capital deployment, which can continue to transform our business, potentially in quite a profound manner, as you saw from the visuals in both Louis and Justin's presentations. On the topic of capital deployment, I think we're developing a track record of great performance. You heard from Jerry that we're exceeding our merger cost synergy goals and now have line of sight to significant revenue synergies. Here's a more structured look at how we've been performing across all key metrics we originally shared regarding the merger with Rexnord PMC. As you can see, we expect to outperform on nearly all metrics. The teams have done a great job, and I think really demonstrates that we can integrate large, complex businesses and do so while continuing to deliver great execution on our core operations. Regarding core performance, this page certainly speaks to that. How we've been performing with the legacy business with a boost from M&A in our 2022 estimates. I'm proud to say it has been a really good story, one that clearly shows we are transforming the business. Since 2019, sales have grown at a 5% organic CAGR. Gross margin is on track to be up roughly 600 basis points with adjusted EBITDA margin also expected to be up as much. What I believe is even more remarkable is that this performance occurred despite COVID, despite supply chain challenges, in the face of unprecedented inflation, and all while raising growth investment in the business. Echoing our earlier comments on talent, I think this performance speaks to the power of our team and to the team's ability to leverage the substantial resources at their disposal to realize the potential inherent in our business. For those of you who have followed our story, you know that strong free cash flow has long been a hallmark of Regal Rexnord, of Legacy Regal and Rexnord, and together, our prospects on this front are even stronger. This is apparent in the chart on the left, which also highlights our consistent cash conversion rates above 100%, which we also expect to deliver this year and throughout the forecast period. On the right, you can see the strength of our balance sheet. Despite completing a transformational merger and a strategic acquisition of a near adjacency asset in 2021, our balance sheet remains under levered at only 1.4x on a pro forma basis as of our second quarter report. The balance sheet strength is testament to our strong free cash flows and to the approach we used to affect the Rexnord PMC merger using a Reverse Morris Trust or RMT structure. Further enhancing our flexibility is our maturity profile. Presented on the lower right-hand side of this slide, you can see that we have no significant debt maturities until 2027. Regarding our guidance for 2022, we are taking this opportunity to reiterate what we committed to when we reported second quarter and factoring performance since that report. That includes revenue of approximately $5.2 billion, adjusted earnings per share in a range of $10.20-$10.80, and adjusted EBITDA margin of approximately 21% and free cash flow conversion of 100%. Order performance in August and early September continued to support a book-to-bill at approximately 1.0. As expected, supply chain challenges persist but are consistent with our prior expectations. Our backlog also remains at elevated levels versus history, creating a sizable opportunity for future top-line performance as the supply chain and logistics challenges we face start to abate. As Jerry mentioned in his section, we are tracking above our prior expectations on merger synergies, but still expect to realize $70 million of synergies on an annual run rate basis as we exit 2022. However, given the team's outperformance, we now expect to realize $120 million of synergies on an annual run rate basis as we exit 2023, a full year ahead of schedule, and to realize $150 million on a run rate basis exiting 2024, another $30 million above original synergy expectations. Beyond that, we now expect $125 million of revenue synergies on an annual run rate basis as we exit 2025 related to both the PMC and Arrowhead transactions. Finally, on an earnings per share basis, we continue to see a path to adjusted EPS above our guidance midpoint, assuming conditions that we are seeing today do not change materially in the remaining months of the year. Looking beyond 2022, as Louis highlighted at the end of his presentation, we now expect to achieve revenue of $6 billion by 2025, which embeds a 4%-6% organic growth CAGR in the 2022-2025 period. That growth assumption has us outgrowing our end markets by at least 50% over the forecast period. A reflection of our growth drivers gaining momentum, benefits from our 80/20 actions, higher secular end market exposure, mixed positive new products, and rising vitality in addition to RBS-related tailwinds. We expect organic growth rates will be lower than the three-year CAGR in 2023 due to tough compares in some of our end markets and a moderating macro outlook with higher organic growth rates in the 2024 and 2025 periods. Note, however, that our forecast assumes slow growth in 2023, not a recession. I will also remind you, as I said earlier, we have roughly double the amount of backlog we would historically carry. Given our expectation that we do not see this backlog coming down dramatically as we exit 2022, this could provide a nice tailwind as we enter 2023. Turning to EBITDA margin, we expect to achieve a 25% adjusted EBITDA margin by 2025. A key driver is expected to be mix, both customer and product, driven by our 80/20 growth initiatives and a healthy mix positive new product pipeline. Remember, any new product launch at Regal Rexnord must have a gross margin above 30%-35% or 40%-45% for our MCS business. Merger synergies are also expected to be a significant margin driver in addition to RBS benefits and ongoing restructuring actions. Notably, the total benefits from our growth, mix, synergy, and cost actions leave us ample room to invest in growing the business. On the lower left-hand side of this chart, we are providing updated expectations for how our segment margins will track through our planning horizon. I'll highlight that our expectation for commercial is roughly 400 basis points higher at each end of the range on an operating margin equivalent basis compared to the view provided at our last Investor Day, with MCS roughly 700 basis points higher compared to the prior operating margin equivalent basis for our legacy Regal power transmission business. For commercial, this is a quantifiable way of demonstrating how our business is really a diamond in the rough. We believe the step change in margin expectations at our motion control business is truly remarkable, and speaks to the power of the merger with Rexnord PMC of our team's integration execution, and of the many organic actions both taken and planned that are accelerating profitable growth in that business. As has been mentioned, Regal Rexnord has a long track record of strong cash flow generation. Our team is well-positioned to take cash flows to another level. We have line of sight to generating annual cash flow of $1 billion by 2025. Principal drivers include merger synergies, mixed positive organic growth, and RBS actions while continuing to operate an asset-light manufacturing operation with CapEx as a percentage of sales forecast to remain at roughly 2% over the forecast period. We would also expect working capital to provide a nice tailwind. Considering limited visibility on when the persistent supply chain challenges we are facing may end, we felt it prudent to assume working capital neutrality through at least the first half of 2023, and then steady progress to more normalized working capital levels, or more specifically, inventory levels over the next 18 months or so. Even so, with this degree of cash flow potential and our clean balance sheet. It really does mean that capital deployment can be a significant positive driver of the Regal Rexnord investment case. Let's talk briefly about how we are thinking about capital deployment. The message is really about driving growth, funding organic growth investment, investing for inorganic growth, and then returning cash to shareholders through both opportunistic purchases of our shares and maintain a reasonably competitive dividend. I think it's fair to say that while we are likely to allocate capital across all these categories going forward, we do have a bias towards growing the business. Our performance over the last few years in this regard is presented on the lower half of the page, and I believe is consistent with this growth bias. On this page, we add some dimension to our capital deployment opportunity as it stands today, aggregating our expected next three-year cash flows, plus our balance sheet capacity, and an assumption of adding approximately 2.5 turns of leverage equates to over $6 billion of capacity, the majority of which is expected to be available for M&A, along with opportunistic stock repurchases. Really quite powerful, and perhaps even more so when viewed from the perspective of potential earnings per share upside, which Justin shared. While we do have a growth bias with our capital deployment, dividends will remain an important component of our strategy, and to that extent, we aim to maintain a reasonably competitive yield. As you can see, we have a long track record of consistently raising the dividend, which has grown at roughly 6% CAGR over the last decade plus. As you heard from Louis, total shareholder return or TSR is one of the key quantifiable metrics on which we measure our success tracking to our mission to become the most compelling choice for our key stakeholders. As you can see on this chart, our TSR performance has significantly outperformed both the S&P 500 and the S&P 400 industrial sector since 2018. It's also notable that by early to mid-2020, the degree of TSR outperformance started to accelerate and separate Regal Rexnord from the broader market, which I would attribute to our transformation starting to become more apparent in our differentiated financial performance. I will conclude here, as Louis did, on how we envision the company in three years. A powerful transformation story summarized in a handful of critical metrics. $6 billion in sales, GDP+ sales growth characteristics, 37% gross margins, and 25% EBITDA margins, $15 of earnings power, $1 billion of annual free cash flow, really powerful. Powering this performance is all that you heard today. An exceptional team of disciplined people driving disciplined thought and disciplined actions. An 80/20 approach to growth, a continuous improvement mindset, acting with urgency to innovate with purpose, and create a Regal Rexnord that helps its customers, creates opportunity for its associates, and produces best-in-class returns for our shareholders. With that, I will turn it back over to Louis for a few closing comments. Great. Thanks, Rob. A lot of ground has been covered, and in some respects, there's really not a lot more to say because I think the numbers speak for themselves. Though I will add one more number, the multiple at which we are trading, which I believe suggests the risk-adjusted return on Regal Rexnord today looks incredibly compelling. I'm going to leave the valuation math to all of you here. Beyond these headline numbers, there are really two other things that I hope you take away from this morning. One is how much opportunity we have to grow this business at attractive margins. We are doubling vitality. We are investing to raise our secular exposure to over 35%. Digital is becoming a game changer for us. We are taking our 80/20 efforts to another level, moving far beyond cutting the data to prune lower value business by using 80/20 in a much more sophisticated way across the entire customer value stream to drive growth. The second thing that I hope you take away on top of the strong performance is the power of our team and all that we are doing with talent. I am so glad you got to hear from other members of our leadership team because I really do believe we are building something special at Regal Rexnord. An increasingly diverse, highly engaged team of disciplined people committed to leveraging 80/20 lean and our plan do check act management cadence to make sure Regal Rexnord is a higher return enterprise for all of our stakeholders, for our customers, for our associates, and for our shareholders. It is the power of the team and culture we are building that gives me confidence that we can deliver all of the compelling initiatives and financial metrics that you have heard from us today. With that, Rob and I and our broader team will be happy to take some more questions, and Rob Barry will moderate for us. Thank you. Thanks, Louis. Thanks, Rob. Shall we start down here in the front with Julian? Thanks very much. Maybe one question on the organic growth commentary in the sort of nearer terms. I think this year is high single digit growth. Next year is sort of 3%-4%. You know, any color you could give us on price versus volume assumption within those two numbers? Yeah. What we've assumed is, look, you're gonna get a bit of a headwind as MPS turn negative. You know, we did it. We assumed that price would remain relatively flat through the horizon, through the period. You know, with commodities falling like they are, you know, remember that we hedge our commodities, copper and aluminum, about six quarters out. So there's about a four-month lag. Sorry, on the two-way material price formulas that come through, plus then you have the hedging impact. So we're not gonna see much of that benefit as we kinda go through the first four-six months of the year. That's the way we built it, really with a price neutral mindset. Maybe just two quick ones. Are the orders year-on-year? I think you talked about the book-to-bill in Q3. Are the orders kind of flattish year-on-year? Is that the right way to think about it? For Louis, I don't think you had as much of a ROIC target today, so that's maybe one difference in terms of the framework of plan versus two years ago. Maybe any color on that. I'll take the first part. Yes, orders are largely in line with expectations. As I said, they're about 1.0 on a book to bill. They've certainly have softened, moderated a bit, which is in line with what we expected them to do. The good news is that a lot of our larger customers are telling us that the inventory levels remain relatively low, and they're still a fairly robust demand. I think there's just some concerns about the macro softening that's going on right now, and there's less desire to build some inventory. At the end of the day, it is negative. It's a bit negative, which is what we expected, but our book to bill remains strong. Our backlog, it continues to be really strong, certainly at historic levels. To answer your question on return on invested capital, there's just maybe, Julian, just so many metrics we're gonna show you at one time. It's absolutely part of how we run our business. All of our executives are measured on ROIC and the improvement goals for ROIC. So it's not at all not a priority for us. We recognize the benefits of driving to an ROIC target, and we've been exceeding them for the last three years, and we expect to keep driving to exceed our targets going forward. Next, maybe go to Nigel down in the front, and then maybe next over here on this side. Thanks. Go ahead, Nigel. Nice presentation. Really well done. Very clear messages. One thing I just wanna clarify is, looking at this framework here, you know, I get the $6 billion plus with just the organic growth, and so you layer 25% EBITDA margins on $6 billion, you get to $15 per share. You talk about half of the free cash flow going to M&A. Just to clarify that point, there's no M&A in this framework that you're laying out here. Obviously, if that's the case, you're delevering the balance sheet pretty aggressively within this framework. Just wondering, you know, the second question I have is, you know, Louis, you're right, you mentioned the multiple is egregiously low. What's the policy here towards buybacks? You wanna. Go ahead, and I'll go next. The 50% on the slide that Justin shared, the 50% of free cash flow was for illustrative purposes. It's not the goal. It was just for illustration only. Yes, we would delever significantly over this horizon if nothing new comes into the portfolio. Nothing was modeled in this three-year forecast period. Yeah. To add on to that, you know, we do believe that M&A is going to be a critical part of our longer term growth strategies. It's not embedded in this framework, but it's an important part of what it's gonna take to continue to drive the strength of Regal Rexnord. We will be disciplined. We will follow our very clear criteria and hurdles and metrics to make a decision on any acquisition. If we don't find an asset, though, would we consider a more accelerating buybacks? Absolutely. We're not gonna build up cash on our balance sheet. That's not our priority here. We think we've proven, certainly in 2021 with the merger and the acquisition, that we know how to identify good assets and then integrate them. Our goal is to strengthen Regal Rexnord through M&A. A lot of work to be done here for us, for sure. Next down, then. Thanks. You just answered the first part, so I'll just ask the second part. Is there a certain valuation, and obviously you don't have to get into the exact numbers, but where repurchases actually become a higher priority than M&A? And I know you talked about M&A being a bias, but... Well, you know, I don't remember who asked me at the second quarter earnings call when our stock price got down to 110, why you didn't buy back more. I said, "Well, you know, during the closed period, I can't, but I should have, if I could've, but I couldn't." Hopefully that makes sense. Okay. You know, our business should be much stronger than 110 stock price, where it got to in Q2 when the macro environment was pretty pressured. That might give you an indicator of how we think. Great. I actually have a couple from online that I wanna work in here. One is just can you clarify the timing of the $70 million of synergies? Are those going to be back-end weighted to 4Q? Yeah. They are a little more back-end weighted on the $70 million. As I said, you know, we are tracking a little bit ahead of where we said we might be, as we exit the year. We'll still be at the $70 million on the exit rate, but expect to get a little bit of that earlier in the cycle than what we thought. That means kinda late Q3, and then early kinda Q4, we'll get a little more there, but still plan to exit about the same rate. Great. We had a question on industrial. Can you talk about industrial and how taking a strategic action with it could help advance you to the vision state? Yeah. You know, I've said this a number of times before, we love all of our businesses. Industrial as a business, I think has come a long way in three years. Now, realize industrial from an EBITDA perspective is a small part of Regal Rexnord. We're still focused operationally on industrial, and so we didn't highlight it in today, in today's review because we have so many other great growth opportunities across Regal Rexnord. For now, that's gonna be all I'm gonna say about industrial. It's a solid business. It's performing much better than it has, and we still have a path to improve performance. Great. Actually, I have another one too. Can you talk about the outlook for the supply chain? It sounds like you're not assuming any improvement. You know, right now we're not seeing a lot of improvement. It's pretty tough. Maybe where we've seen some improvement is in logistics, but not in the supply chain itself. We do see a bit more light at the end of the tunnel on improvement going into next year. The one area we will not see improvement, our expectation, is around electronics. 2023 is gonna continue to be constrained, and we've done a lot over the last 12 months to better work with our suppliers, but it's still gonna be a challenging supply chain in electronics. Great. One in the back there from, Mike. You know, if I look at all the different segment commentary and the segment presentations, probably a better way to put it, a massive emphasis seems to be had on the subsystem approach. You know, maybe just talk a little bit about the genesis of this, how much R&D dollars you think it's consuming now versus before. Just kinda frame up why this emphasis and focus, what it means for margins kind of at a high level. Then I suppose part of this comes back to the industrial powertrain and the thought process there, where you have all of these great components, what can we do to make it better and maybe add value to our customers and drive some more margins for ourselves. Maybe just some thoughts more broadly on that and what that means for the organization. Yeah. It's, you know, it's a great question, Mike. We believe the subsystem gets us closer to the end user. We're an organization that needs to better understand their needs and solve their problems with total solutions. I think a great example of it, although industrial powertrain we have the broadest portfolio, and we understand the applications well, and we can optimize the solution better than anyone else, but an even just as good of an example was Scott's example of the global motor impeller. This is pretty much an industrial powertrain. It just happens to be a motor with an impeller solution, right? So it's Sorry, it's a subsystem similar to an industrial powertrain, a motor with an impeller. Historically, what would happen, an impeller supplier would just bolt on a motor and not give you an optimized solution. We're providing in the market the smallest footprint and the highest energy efficiency because we have technology expertise in the impeller as well as technology expertise in the motor to give a subsystem solution at strong gross margins. We draw the line, and this is CEO and CFO dictate, which is, "Don't bring us any new product development product solution that doesn't have a gross margin for Regal Rexnord that's accretive to your business." That's a line focus. 80/20 helps us here a lot, though, because what we do is we look at Quad 1 and we said, "Who are those customers? What are their needs?" We prioritize them and we bring them value. I'm honestly not so worried about the gross margin opportunity because it will come because we're solving tough problems for our highly valued customers. Hopefully that gives you a perspective. We think it gets us much closer to the end user, and the customer. Well, that helps a lot. The follow-up question is, if I think back to the last Analyst Day, in recognizing, you know, I guess, what you're now calling Regal Rexnord Business System is a journey. There's no real end goal. How far do you think you are in putting those 80/20, those lean principles through the organization today versus a while back? Obviously, the color around the quads and how you're dictating your investment focus, all very helpful. Do you think that's pervasive through the organization yet? How much more do you think you have to do to get everyone thinking on that same page? Yeah, I would say yes and no. So a couple of comments here. We did talk about the Regal Rexnord Business System at the last Investor Day, but it was highly focused from an 80/20 perspective on Quad 4 and our pruning needs of Quad 4. Today, it's a totally different storyline at Regal Rexnord. That 80/20 framework is how we think strategically about where we're going for the future. I'd say it's pretty well embedded, but there's still opportunity. Focusing on the strategic elements and then optimizing around product, commercial and operational. We've come a long way there, but there's still more opportunity. Lean in parallel, we've come a long way as well. We have over 100 tools in our toolkit today, whereas before it was, you know, a handful. We have thousands of tool champions across our 29,000 associates. I feel like we're probably even a little bit further ahead on lean than we are at fully leveraging the 80/20 growth framework. There's still opportunity there. I'll sneak one more in from online. It sounds like mix is the main margin driver. Please clarify. Yeah, you know, mix is certainly gonna help us going forward. The synergies, PMC merger synergies is gonna certainly be a significant benefit. New product and mix is definitely going to help. Great. Anyone else in the room? Otherwise, I think that we are in good shape. Thanks, everybody, for attending. I believe we have a box lunch outside, if you'd like, for those with us. Certainly available. The team will be available afterwards and certainly follow up with me if you have any subsequent questions. Thanks, everyone.