BELOIT, Wis., July 31 /PRNewswire-FirstCall/ -- Regal Beloit
Corporation (NYSE:RBC) today reported record financial results for
the second quarter ended June 30, 2007. This performance was lead
by the strong performance of our industrial businesses, dampened by
the impact of a continuing weak residential HVAC market and
commodity inflation. The Company's initiatives continued to have a
significant impact on our performance. New products and acquisition
growth fueled sales, while Lean Six Sigma and productivity projects
contributed to operating margins. Net sales increased 5.6% to
$459.8 million from $435.3 million in the second quarter of 2006.
In the Electrical Segment, sales increased 6.1% as non-HVAC motor
and generator sales increases of 9.7% and 22.3% respectively,
partially offset by a 10.7% decline in residential HVAC revenues.
Segment sales growth was also aided by $11.4 million of acquired
sales attributed to the Sinya motor business that was purchased on
May 1, 2006. Sales in the Mechanical Segment increased 2.1% from
the prior year period; however, second quarter 2006 sales also
included $1.7 million of sales related to the Company's cutting
tool business. Substantially, all of the assets of the Company's
cutting tools business were sold in May, 2006. The gross profit
margin for the second quarter of 2007 was 22.6% as compared to the
23.9% reported for the second quarter of 2006. The reduction was a
result of continued increases in material costs and the fixed
overhead absorption impact of a $25.5 million reduction in finished
goods inventory. These factors were partially offset by higher
selling prices and productivity improvements. Income from
operations was $60.1 million or 13.1% of sales, a 3.8% increase
over the $57.9 million or 13.3% of sales reported for the second
quarter of 2006. The results for the second quarter of 2006
included, on a pretax basis, a $1.6 million gain from the sale of
excess property. Costs for the restructuring activities in the
Electrical Segment were consistent with the prior year levels. Net
income in the second quarter of 2007 was $36.3 million, an 8.8%
increase from $33.3 million reported in the second quarter of 2006.
Diluted earnings per share increased 7.1% to $1.06 as compared to
$0.99 for the second quarter of 2006. "We are pleased to report
record results for the second quarter despite a continuation of a
challenging residential HVAC market and significant raw material
inflation," commented Henry W. Knueppel, Chairman and CEO, "The
strength of the industrial and power generation business coupled
with the impact of our strategic initiatives led to this
performance." "We continue to be very encouraged about the future
for our Company." Knueppel added. "The impact of our global
capabilities, energy efficiency oriented new products and other
strategic initiatives position us well to continue to provide high
levels of return to shareholders. As we look specifically at the
third quarter, we expect continued strength in the industrial and
power generation businesses, but little improvement in the
residential HVAC market. The headwind on commodities will actually
get worse as the current spike in prices combine with higher hedge
prices. While we are taking pricing actions they will not offset
this cost push for the quarter. We have also embedded in our
current estimate a one time pretax charge of $1.8 million or $.033
per share due to the expected settlement of the Enron lawsuit. As
such, we expect earnings per share in the third quarter to be in
the range of $.87 to $.93." Regal Beloit will be holding a
conference call to discuss second quarter financial results at 1:30
PM CT (2:30 PM EDT) today. Interested parties should call
877-209-9920. A replay of the call will be available through August
15, 2007 at 800-475-6701, access code 881234. Regal Beloit
Corporation is a leading manufacturer of mechanical and electrical
motion control and power generation products serving markets
throughout the world. Regal Beloit is headquartered in Beloit,
Wisconsin, and has manufacturing, sales, and service facilities
throughout the United States, Canada, Mexico, Europe and Asia.
CAUTIONARY STATEMENT This news release contains "forward-looking
statements" as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements represent our management's
judgment regarding future events. In many cases, you can identify
forward-looking statements by terminology such as "may," "will,"
"plan," "expect," "anticipate," "estimate," "believe," or
"continue" or the negative of these terms or other similar words.
Actual results and events could differ materially and adversely
from those contained in the forward-looking statements due to a
number of factors, including: -- unanticipated fluctuations in
commodity prices and raw material costs; -- cyclical downturns
affecting the global market for capital goods; -- economic changes
in global markets where we do business, such as currency exchange
rates, inflation rates, interest rates, recession, foreign
government policies and other external factors that we cannot
control; -- unexpected issues and costs arising from the
integration of acquired companies and businesses; -- actions taken
by our competitors; -- unanticipated costs associated with
litigation matters; -- marketplace acceptance of new and existing
products including the loss of, or a decline in business from, any
significant customers; -- the impact of capital market transactions
that we may effect; -- difficulties in staffing and managing
foreign operations; -- the availability and effectiveness of our
information technology systems; -- other risks and uncertainties
including but not limited to those described in Item 1A-Risk
Factors of the Company's Annual Report on Form 10-K filed on
February 28, 2007 and from time to time in our reports filed with
U.S. Securities and Exchange Commission. All subsequent written and
oral forward-looking statements attributable to us or to persons
acting on our behalf are expressly qualified in their entirety by
the applicable cautionary statements. The forward-looking
statements included in this news release are made only as of their
respective dates, and we undertake no obligation to update these
statements to reflect subsequent events or circumstances. See also
Item 1A - Risk Factors in the Company's Annual Report on Form 10-K
filed on February 28, 2007. STATEMENTS OF INCOME In Thousands of
Dollars (Unaudited) Three Months Ended Six Months Ended June 30,
July 1, June 30, July 1, 2007 2006 2007 2006 Net Sales $459,795
$435,269 $878,441 $833,595 Cost of Sales 355,919 331,244 677,338
636,290 Gross Profit 103,876 104,025 201,103 197,305 Operating
Expenses 43,821 46,159 93,717 95,821 Income From Operations 60,055
57,866 107,386 101,484 Interest Expense 4,425 5,454 9,491 10,249
Interest Income 241 140 330 260 Income Before Taxes & Minority
Interest 55,871 52,552 98,225 91,495 Provision For Income Taxes
18,973 18,847 33,663 33,189 Income Before Minority Interest 36,898
33,705 64,562 58,306 Minority Interest in Income, Net of Tax 645
396 1,496 1,209 Net Income $36,253 $33,309 $63,066 $57,097 Earnings
Per Share of Common Stock: Basic $1.15 $1.08 $2.02 $1.86 Assuming
Dilution $1.06 $0.99 $1.86 $1.71 Cash Dividends Declared $0.15
$0.14 $0.29 $0.27 Weighted Average Number of Shares Outstanding:
Basic 31,546,970 30,816,156 31,180,641 30,759,004 Assuming Dilution
34,177,529 33,644,909 33,862,524 33,301,719 CONDENSED BALANCE
SHEETS In Thousands of Dollars ASSETS (Unaudited) (Audited) Current
Assets: June 30, December 30, 2007 2006 Cash and Cash Equivalents
$53,136 $36,520 Receivables and Other Current Assets 325,833
263,470 Inventories 235,848 275,138 Total Current Assets 614,817
575,128 Net Property, Plant and Equipment 274,078 268,880 Goodwill
546,251 546,152 Other Noncurrent Assets 50,890 53,359 Total Assets
$1,486,036 $1,443,519 Liabilities and Shareholders' Investment
Accounts Payable $133,592 $108,050 Commercial Paper Borrowings
9,650 49,000 Other Current Liabilities 118,269 101,491 Long-Term
Debt 292,103 323,946 Other Noncurrent Liabilities 117,370 111,057
Shareholders' Investment 815,052 749,975 Total Liabilities and
Shareholders' Investment $1,486,036 $1,437,519 SEGMENT INFORMATION
In Thousands of Dollars (Unaudited) Mechanical Segment Second
Quarter Ending Six Months Ending June 30, July 1, June 30, July 1,
2007 2006 2007 2006 Net Sales $54,136 $53,042 $105,982 $106,003
Income from Operations 8,954 7,134 15,280 10,841 Electrical Segment
Second Quarter Ending Six Months Ending June 30, July 1, June 30,
July 1, 2007 2006 2007 2006 Net Sales $405,659 $ 382,227 $ 772,459
$ 727,592 Income from Operations 51,101 50,732 92,106 90,643
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands of
Dollars (Unaudited) Six Months Ended June 30, 2007 July 1, 2006
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $63,066 $57,097
Adjustments to reconcile net income to net cash provided by
operating activities; net of effect of acquisitions Depreciation
and amortization 20,367 16,826 Minority interest 1,496 1,209 Excess
tax benefit from stock-based compensation (6,590) (1,750) Loss
(gain) on sale of assets 51 (1,850) Stock-based compensation
expense 1,871 1,725 Change in assets and liabilities, net 19,849
(37,027) Net cash provided by operating activities 100,110 36,230
CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant
and equipment (17,863) (17,873) Purchases of short-term
investments, net - (10,263) Business acquisitions, net of cash
acquired (2,425) (10,962) Sale of property, plant and equipment -
15,541 Net cash used in investing activities (20,288) (23,557) CASH
FLOWS FROM FINANCING ACTIVITIES: Net proceeds from short-term
borrowing 8,200 - Payments of long-term debt (278) (241) Net
repayments under revolving credit facility (31,600) (38,600) Net
(repayments) proceeds from commercial paper borrowings (39,350)
20,000 Dividends paid to shareholders (8,709) (7,980) Proceeds from
the exercise of stock options 1,403 4,239 Excess tax benefits from
stock-based compensation 6,590 1,750 Distributions to minority
partners (106) - Financing fees paid (551) - Net cash used in
financing activities (64,401) (20,832) EFFECT OF EXCHANGE RATE ON
CASH 1,195 (18) Net increase (decrease) in cash and cash
equivalents 16,616 (8,177) Cash and cash equivalents at beginning
of period 36,520 32,747 Cash and cash equivalents at end of period
$53,136 $24,570 DATASOURCE: Regal Beloit Corporation CONTACT: David
A. Barta, Vice President, Chief Financial Officer, +1-608-361-7412
Web site: http://www.regal-beloit.com/
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