I want to thank you for joining the Regal Rexnord session today. Joining us, we have Louis Pinkham, who's the CEO, Robert Rehard, who's the CFO. Rob Barry is in the crowd somewhere, too. Lewis is giving some prepared remarks here, and then we're gonna dive into the Q&A. Have a pretty lively session, so any questions you might have, use the card in front of you, send me an email. If you raise your hand, I'll also call on you. Do it the old way. Louis, floor is yours. Great. Thanks, Mike, and good afternoon, everyone. It's really a pleasure to be here, and thanks for your interest in Regal Rexnord. I will call your attention to the disclosures for reference on this page, and then we'll jump right in. I want to spend a few minutes introducing the company, as many may be new to our story, and we have been undergoing so much change over the past couple of years. Putting aside our industrial segment sale that we announced last month, we have approximately $6.2 billion of sales organized in three segments: products that convert energy to power, products that transmit power, and products that apply power to discrete automation and related applications. Our PES segment focuses on premium efficiency, electric motors, related drives, and air moving equipment, often used in residential and commercial HVAC in a variety of general commercial applications. Our IPS segment sells highly engineered components used to transmit power, and increasingly we sell these integrated with our motors in a subsystem called a powertrain. Our AMC segment is focused on discrete factory automation components and systems, including actuators, high precision servo motors and drives, a variety of conveying related components and subsystems as related to software and controls as well. This slide breaks down our revenue across our three segments by geography and by end market. This slide really charts the transformation journey we've been on since I joined as CEO 4+ years ago. By decentralizing our organization, bringing in a lot of new leadership talent, rigorously applying 80/20, and executing on two significant M&A transactions, Rexnord PMC, and Altra. We have taken our gross margins from 26% to 34%, our EBITDA margins from 14% to 21%, and our free cash flow from just under $300 million to what is on track this year to be over $650 million. The majority of this margin expansion has been organic. One significant driver was restructuring our footprint, including closing over 20 plants and reducing our manufacturing footprint on our legacy business by roughly 25%. The remainder of my presentation will focus on sharing how we bridge from our expected performance in 2023 to the targets outlined here for 2025. That is consistent market outgrowth, 40% gross margins, 25% Adjusted EBITDA margins, and roughly $1 billion of annual free cash flow. We have many sustainable competitive advantages at Regal Rexnord, including global scale, a large installed base, very strong brand and strong channels to market, as well as a deep domain expertise of our focused markets. Nearly 40% of our sales are in end markets with secular demand tailwinds, and roughly 50%, if you include residential HVAC, with its consistent regulatory-driven march to ever higher energy efficiency, which aligns well with Regal Rexnord's products. The business should also benefit from increasingly stronger regulatory and secular trends, including electrification, increasing levels of global factory automation, and an aging population. Leveraging the strong foundation of our business, we have a clear framework to accelerate above-market growth. 80/20 guides our strategy in everything we do, which means over-servicing our Quad 1 customers, customers that see value in our products, which help them solve their problems, and value they're willing to pay for, alignment of which is in gross margins. We focus on growing our wallet share by over-servicing our best customers. Second, we dedicate resources to finding new customers that resemble Quad 1 customers or what we call perfect prospects. Third, we are doubling our new vitality and have doubled it in the last three years, driven by voice of the customer. Lastly, we are making digital and e-commerce investments to make it easier for current and prospective customers to interact with Regal Rexnord. Shifting to margin, we have many levers under our control to drive meaningful higher margin growth. What should stand out is a clear path to 40% gross margins in 2025 that is mostly volume independent. Much of it is tied to M&A synergies, along with new product and other mixed tailwinds, and our many 80/20 and lean initiatives. That said, if we do have volume tailwinds, that should help us further. Strong growth margin expansion, net of planned SG&A growth investments, translates into 400 basis points of Adjusted EBITDA margin growth. We feel very good about these goals and have a strong track record of executing these actions as we have done in the past. Our many levers to improve outgrowth and margins, along with steadily falling interest costs as we pay down our debt with strong free cash flow, in addition to a couple other drivers, bridges us to $1 billion of free cash flow in 2025, up from an expected $650 million in 2023. Notably, we do show some very modest growth benefit in this bridge, but it's not a key driver of free cash flow, and so if we can gain more than one or two points, we'll see additional upside. To be clear, though, we are not guiding these values for sale growth at this time. The values are simply illustrative and are meant to convey that we have a lot of value creation opportunity that is not volume dependent. On this slide, we highlight the material shift in our enterprise value from debt and towards equity as we generate cash and pay down debt. As noted among assumptions on the right, we are factoring minimal top-line growth and assuming a steady EV/EBITDA Multiple. While we left specific numbers off the chart, the point I would like to convey is one of sizable magnitude in a positive direction for our equity as we pay down our debt. Now, think what if could happen if we also saw margin expansion and multiple expansion, which of course, we expect we should. We think Regal Rexnord is a compelling value creation opportunity. Starts with a strong business. We are executing many initiatives to improve our outgrowth. We have made a ton of progress on margins. We know how to do this, and we will continue to do this. Lastly, cash flows are very strong and getting stronger, which in the next couple of years can create tremendous value for our shareholders as we pay down our debt, and over the longer horizon, deploy capital to augment our growth. Great, and thank you. Thanks, Louis. Again, as a reminder, if you have any questions, let me know. I'll make sure we feed them in there. Let's talk on the short term. Obviously, that's pretty front and center on people's minds as we sit here today. You know, the guidance was brought in, put some expectations out for 2024 in a very loose manner. Let's start in the short term here. When you think about what you're seeing from a demand perspective today, what's changed from what your thinking was maybe two, three, four months ago? Yeah, you know, so we've seen significant headwind pressure in our consumer markets, which impacts our PES segment in particular. As we exited Q2, and Q2 was a very strong demand quarter for us, orders continued to be strong. Where we saw a slowdown coming out of July was in the book ship part of our business, especially in our automation and motion control or our factory automation, and that dropped pretty significantly. And we think there's a normalization of lead times. Mm-hmm. As what drove that reduction. And, the other piece was in our industrial powertrain business, where the distribution business reduced inventory levels, so destocked in our general industrial space. Now, that also put a little bit of pressure on margins because the aftermarket tends to be a higher margin segment for us, and so those were the two main drivers. You know, when you think of the overall business right now in 2023, our AMC segment is up 5%. Mm-hmm. Our IPS segment is relatively flat, and our PES segment has dealt with significant destock and is down 17%-18%. And that's been the drivers we've been dealing with, but in Q3, a little bit of destock in general industrial and automation that we didn't anticipate. As you headed into October, though, things started to stabilize a little bit sequentially, right? We did. We saw, and as we said on our earnings call, we saw October orders up in our IPS segment year-over-year and sequentially improved in AMC and PES. That gives us confidence in the guide that we gave for Q4. So there's a couple competing dynamics as we think about next year, right? On one hand, there's some softening of trends that you're seeing in some of your more industrial-oriented businesses, not all. On the other hand, consumer, and similarly, you're getting some consumer pushouts. On the other hand, a lot of your portfolio has gone through a destocking headwind this year, t hat should be something of a tailwind, or at least mitigate some of those demand pieces into next year. Maybe try to tie those pieces together for us. Yeah, you know, and we, we actually even showed a slide- Yep. ... in our third quarter, Slide 12, by the way, if you're curious. Yeah. Not that it's been a source of- Yeah. ... conversation. I think there was maybe some misunderstanding of what- Yeah. ... we were presenting on that slide. What we were trying to present there is what, how those markets will impact Regal. So a great example of it: we called out that next year, the consumer market should be positive for us, and it should be. 12% of our business is consumer, pool and residential HVAC. There's been significant destock in those channels. We'd say more than 50% of the decline year-over-year was a destock decline. Mm. So therefore, we see that as a positive. So PES, as we think about PES right now, and I'm not guiding on sales right now, because we're going through our normal cadence, we're disciplined in our approach. We'll go through operating plans through the month of November. We'll come out with clear guidance at our earnings call in January. But PES, we've right now feel like PES is likely up next year- Yeah. ... because of that destocking. AMC year to date is up 5%. AMC has a lot of tailwinds in secular markets that we play in: data centers, medical, alternative energy, factory automation. These are secular drivers, and we believe 70% of that segment is driven by secular driver. We believe that market should be up for us next year. IPS, general industrial, we're not quite ready. Yeah. Could be down. Yeah. And on the AMC piece, too, I mean, there's a dichotomy. Some of those longer cycle things are still... You're seeing the activity. Doesn't necessarily mean in orders yet, but you know what the projects are. You know they're coming, the health there. Some of the shorter cycle stuff is where you're seeing the volatility, and part of that is that lead time normalization, right? Yeah, that's spot on. I mean, again, when you look at the three segments, our backlog is pretty much back at where we would expect back for the PES segment. But our IPS backlog and our AMC backlog is up 45%-50% higher than what normal rates would expect, even with growth over the last few years. And so, we're seeing line of sight to the longer cycle. Aerospace and defense is up 20% for us this year. We're expecting it up mid-teens next year. These are markets we really like, will continue to grow in, and so we're seeing some tailwinds. It's not a huge part of our portfolio, but it's sufficient enough, and in AMC, that would give us some confidence that AMC should grow next year. When do you think you're at the point where the sell in and the sell out dynamics are a lot more aligned? You know, again, by, by segment. PES, it's there. Yeah. AMC, IPS, I'd say through 2024. Yeah, when you... We were talking the other day, one of the interesting comments was on the pool side of things. As a proof point, you were seeing the distribution aftermarket piece of that... I mean, that's already normalized. Normalized before the OE side, and the OE side is starting to normalize, which- Yeah. ... I'm guessing is similar on the HVAC piece, or at least directionally, and- Yeah. ... another vote of confidence on that side. Yeah, that's right. So actually, we, as I had shared, the pool distribution was actually up for us in Q3 year-over-year. Yeah. Actually, HVAC distribution was up for us- Mm-hmm. ... in Q3. Now, residential HVAC OEMs, they're still bleeding down the backlog or, sorry, the inventory levels. In particular, air handling, I think we're through that for the most part. So the air conditioning side, I think furnace probably still has another quarter or so. Yep. I believe pool OEM still has some time to work through, and it's about 2% of Regal. Yeah. I'm not really exactly sure when that will fully work through. Yeah, but as an implication of how much that's hurt on a year-over-year basis, I mean, that used to be mid- to upper-teens percent of your portfolio, and the destocking has been just a sizable impact that should at least normalize somewhat. Yeah, no, for sure. So the other part of the quarter was that there was, essentially, you managed your operations to meet customer demand when there were some hiccups associated with some pretty significant plant consolidations. Now, you've gone through a bunch of plant consolidations in your time here. Yeah. The facility movement's something you guys are really good at. So talk about what happened this quarter, talk about repeatability on a forward basis, and, you know, just that discussion of how well you have your hands around all of these moving pieces, 'cause there is a lot going on right now- Yeah. ... at Regal. Yeah. I, I, you know, again, we have a full-time integration team- Mm-hmm. ... that drives this, and these are senior leaders, directors of ops. They know how to do this work. We've reduced 20 facilities over the last four years, reduced our footprint by 25%. We know how to do this. And by the way, most of the margin improvement we've seen over the last four years has come from those activities. What happened in the quarter? We took on four relatively complex projects, all happening at the same time. We felt we were managing them quite well, but then there's, you know, there's always a pitch plant and a catch plant. And the catch plant, our labor productivity wasn't ramping up as quickly as we anticipated, and so to continue to service our customer, we paid more overtime, we had more labor than we anticipated, and then we also—there were some material mapping that needed to occur, so we paid some expedited freight as well- Okay. ... to service our customer. That was about a $10 million headwind in the quarter, and not incredibly impactful to our, you know, $340 million of EBITDA in the quarter, but still it was- Relevant. It had an impact, right? And so we manage it very closely. We think that headwind will continue into next quarter with about $6 million. But we learned a couple things: complexity and number of moves, and that when things are struggling, you don't pile on more. Mm. You pull back a little bit, and you stabilize and then add on. And so we've looked at our plans for 2024. We feel really good about the balancing of quarters in 2024, how much we're taking on, and we've got a great team that's executing well. So you know, it was a little stumble in Q3, but they'll jump right back. Yeah. Let's go back to the prior conversation. Just have a quick question. Any context for the visibility that you have, why it's been a little more challenging? It's a, what caught you off guard? Yeah. Short cycle business, so the visibility is not that high, so maybe you can just talk to that. And is there anything you can do to maybe tighten up or get a little bit more? Yeah. So you know, and really not an excuse, 'cause we will figure this out, but we acquired $2 billion of incremental revenue- Yeah. ... in March, and that's 40% of our sales. And especially in our automation and motion control business, we're learning that it's not only the backlog that you enter the quarter with, it's the book ship in the quarter and the importance of really being close to the distribution channel on that book ship. So we entered the quarter with our AMC business at about 80%. And one of the things I think Regal has brought to AMC very quickly, to the A&S side, that, but AMC, is helping them improve their throughput through their factories. And so we cleared... Remember I said Q2 was a very strong quarter. I think we surprised a few distributors by how much we were able to ship out- Mm. ... in Q2 in July. So what happened was, our book ship dropped by 50% unexpected. We didn't see it. Part of the answer was they had more in inventory than they needed. They didn't need any more. So that had an implication. You know, one of the things I think we do well at Regal is we try to apply lean to every process, and so we've already worked through some Kaizen events to look at waste, overburden, and variation about how do we put these forecasts together, in particular on the AMC side. So I know it will improve. But that was a bit of the visibility that we missed, and, you know, we own it. That's not gonna happen again. Part of it is you're just short cycle, and your visibility on a lot of your products is low to begin with, right? Well, that is for sure. Yeah. But one of the ways we try to manage through that is staying very, very well connected with the channel. IPS, it's a little easier because we can see 40%-50%, but we saw inventories drop through the quarter, and the messaging was, there's also some uncertainties out there, market uncertainties. July started much stronger, and then August and September slowed down quickly. But, you know, what was striking though, too, through this whole process is the conviction in the journey on the margins has not changed. No. And the conviction in the market outgrowth has also not changed. So let's take those into two buckets. Sure. One, let's start with market outgrowth. What are the pieces that give you confidence that you're gonna be able to do that two, three points above your end markets with time? What are the drivers? Yeah, you know, a couple. First, very focused on NPD and vitality. Mm. So three years ago, we were single digits of vitality. We're at about 13%, 12%-13% now. We have absolutely path to mid-20s by 2025. That vitality is now bringing new product. We're listening to our customer and their need and bringing them value in their solution. That's one. Two is, you know, we've got now this great portfolio of businesses, and when you look at the industrial powertrain, we're certainly the leader in that space, and we have scale and scope that allows us to go into an end user or an OEM to drive demand creation, because we bring expertise in their application, and we can sell a subsystem or design a subsystem that optimizes performance, that increases reliability, and improves energy efficiency, all the drivers that they're looking for. So that will benefit. And then thirdly, when you look at the Altra A&S business, they went to market individually as three different divisions. But with my industrial powertrain solutions business, I can pull forward linear motion solution, servo motors and controls, and motion control solution. And so that cross sale is an absolute benefit. And we talked a little bit about this on the earnings call, of just the value of the stronger portfolio, and one example is our aerospace and defense. It's about $350 million of our business. It's grown 20% this year. About 5% of that 20% comes directly from NPD, from vitality. We know it, we see it, because these are new products that we've just sold. But on top of that, we're now talking with Tier 1 OEMs about opportunities of selling a subsystem, linear actuator, motion control solution, that we never had those opportunities before. That's gonna help us with the outgrowth. Yeah, two things there. One, I mean, I think the sub-solution, sub-modules, however you want to put it, is an increasing thematic that we're hearing more component-oriented manufacturers talk about: advantage of scale over time in those spaces. What also strikes me is the innovation comments in there. You know, I've covered Regal a long time, and that innovation engine changed, right? Used to swing for the fences, a lot more singles and doubles now... maybe talk about what that itself can bring. You talked about the vitality piece, but what are the tangible examples of some wins you've had- Yeah. ... in the marketplace with that innovation curve? Oh, sure. So, very tangible is that we'll go into next year with our COPRA air moving system. We now take the strength of our motor technology and the strength of our impeller technology, we combine them. We're really the only global supplier that has that skill set, and we now have a smaller platform solution with 10% higher energy efficiency and 15%-20% higher airflow for the applications that I serve. That's an example of bringing the strengths of technology that's gonna allow us to grow. And we have a funnel of roughly $50 million. We'll do probably $6 million or $7 million of sales this year. We expect to do at least double that next year, and that's a new product that we're launching this year in 2023. I have multiple other- Yeah. ... examples of that, but that's, that's our approach. And to your point is, we don't want home runs, we want singles and doubles. And I've got 22 divisions, and I'll get a single from each one this year, and now I've got five home run. Yeah. Gotcha. Margins. Yes. You know, the messaging on the margins from day one has not changed. No. Maybe talk about two things here. One, why the confidence level that this is an entitled 40% margin, gross margin business, 25% margin, EBITDA margin business? Why is that the right and entitled, that's the place for you to be? You know, I'm gonna try to even overly simplify it, because think about where we were when I started at Regal with PTS gross margins at 33%, then we got it to 38%. Then we merged with Rexnord, and we got them to 40%. Altra's PT side was 33%. Mm-hmm. We're gonna move them to 40, no question. The A&S side of Altra was high... low 40s. Yep. Then they had some pressure, they had some headwind pressures around the electronic supply chain, and it dropped to about 36. We're moving that back already, and it's gonna get to 40+ our capabilities around 80/20 that we're bringing to the table, that, you know, Altra team, and it's a great team, but they felt every customer and every product was great. And we think that's true too, but some are greater, and that's where we're gonna put our focus. We're very confident in getting AMC into that, you know, low-mid 40s, IPS to that back to that 40 range. And I'm perfectly fine with PES in the low 30s. Mm-hmm. Now, then I grow all three. That, rounded together, gets me to 40 and 25% EBITDA. Then on top of that, you have all of the footprint changes you're making, all of the factory floor, the operational improvement, the sourcing changes that are making. Yeah. You know, we talked earlier, those are a lot of things happening at the same time. But I also know that you're pretty methodical about the planning cadence of this. So how far out does that stretch for you, from a timing, visibility, whatever, perspective for the in-your-control organizational changes you're making? So, I'll put it in three buckets. When I think about the synergies of Altra, most of the organizational changes are in place. Yeah. Maybe 10% left to do. When I think about direct material and indirect material, we're gaining momentum and feel good about our path. And then footprint, it's that is planned out through the end of 2025, early 2026. So we have plans on every site, and we'll come out with a little bit more clarity of the percentage, but it'll be very similar to likely 25% square footage reduction over the next two and a half, three years. So let's do some 2024 bridge work here on in-control stuff. Ignoring market factors, as we sit here today, you have about $18 million of headwind associated with the operational challenges back half of the year that should go away next year. You have what's the synergy expectation for next year? $90. About $90 million of synergies, and then this year you've paid about $600 million of that down. Right. Next year, you're paying probably that plus something and the industrial side. Right. Those three pieces alone should drive something healthy from an earnings perspective, regardless of demand. Any other factors we should be thinking about in the thought process of that? You know, the way you described it is spot on. We are very focused on reducing our debt. We believe our net debt leverage will be at 3 by the end of the year and into the 2s. Mm-hmm. ... in 2025. 3 at the end of 2024 and into the 2s in 2025. The way, the only other piece as I think about your bridge is, we also don't include the Altra Q1 quarter- Correct. ... EBITDA, because we didn't own Altra- Correct. ... until the 25th of March, and so that's also a benefit. So even without volume, we will see EPS growth next year, no question. The cash flow side, right? Yeah. I mean, the cash flow this year was very strong. Yeah. It should accelerate into next year, and, I mean, that's a pretty healthy compounding cash flow to hit your 2025 targets. Yeah. So maybe just, Rob, briefly touch on why you're so confident the cash flow can accelerate. Yeah. So, I mean, if you think about it like this: so let's use 650 as our jump-off point for this year. You know, it's... we'll get, you know, next year, we're gonna probably do another $125 million-$150 million of inventory, source of cash of inventory. We've got about—we expect to get about $200 million, right on track to that this year, for working capital benefit or inventory in particular. And then you get the extra quarter of- Yep. ... Altra adding on to that. And there's, you know, there's about, you know, a hundred million dollars of less cash interest taxes, or cash interest, and along with the tax impact that we see coming at us, and then, you know, CapEx should be about the same. So if you add all that stuff up, keep restructuring, cash restructuring about the same, you're a little over eight hundred million dollars when you're talking about 2024. So $650-$800 to $1 billion+. Yeah, to $1 billion+. Pretty good trajectory. Anyways, we're out of time. Really appreciate the Regal team for joining us today. Thank you. Management will be available just outside here in Salon Room C for a breakout session. My left, your right. Thank-