BELOIT, Wis., May 2, 2011 /PRNewswire/ -- Regal Beloit
Corporation (NYSE: RBC) today reported financial results for the
first quarter ended April 2, 2011.
Net sales of $662.7 million
increased 30.6% compared to $507.3
million for the first quarter of 2010. Diluted
earnings per share were $0.99
compared to $0.98 for the first
quarter of 2010.
"In line with our guidance, sales across all business units
improved over the first quarter 2010," commented Mr. Mark Gliebe, Chief Executive Officer.
"However, we faced continued inflationary pressure on input
costs, especially costs for copper and steel. We are
implementing our previously announced price increases that were
effective beginning in March 2011 to
help offset these cost increases. Additionally we incurred
significant transaction-related expenses as we prepare for the
closing of the acquisition of A.O. Smith's motor business."
NET SALES
|
|
(In
millions)
|
|
|
|
Three Months
Ended
|
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
%
Change
|
|
|
Net Sales
|
|
$
662.7
|
|
$
507.3
|
|
30.6%
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Segment:
|
|
|
|
|
|
|
|
|
Electrical
segment
|
|
$
594.3
|
|
$
457.2
|
|
30.0%
|
|
|
Mechanical
segment
|
|
$
68.4
|
|
$
50.1
|
|
36.5%
|
|
|
|
|
|
|
|
|
|
|
Net sales for the first quarter 2011 increased $155.3 million compared to the first quarter of
2010, including $91.2 million of
incremental sales from the six businesses acquired in 2010 (the
"acquired businesses"). Sales growth was driven by increased
demand in nearly all end markets including strong demand for energy
efficient products.
In the Electrical segment, net sales for the first quarter 2011
increased $137.1 million compared to
the first quarter 2010, including $81.3
million of incremental net sales from the acquired
businesses. North American residential HVAC motor net sales
increased 17.9% in the first quarter 2011 compared to the first
quarter 2010. North American commercial and industrial net
sales increased 12.8% for the first quarter compared to the first
quarter 2010 driven by improving economic conditions, the impact of
the EISA legislation and a strong recovery in our generator
business.
In the Mechanical segment, net sales for the first quarter of
2011 increased $18.3 million compared
to the first quarter 2010, including $9.9 million of incremental net sales from
the acquired businesses. This increase was driven primarily
by improving demand in later cycle end markets and improving demand
in Europe.
Net sales to regions outside of the
United States were 36.9% of total net sales for the first
quarter 2011 compared to 27.1% of total net sales for the first
quarter 2010. First quarter 2011 net sales of high efficiency
products were 18.0% of total net sales as compared to 17.7% in the
first quarter of 2010.
GROSS PROFIT
|
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
|
Gross Profit
|
|
$
164,811
|
|
$
130,915
|
|
|
As a percentage of
net sales
|
|
24.9%
|
|
25.8%
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
Electrical
segment
|
|
$
145,605
|
|
$
117,050
|
|
|
As a
percentage of net sales
|
|
24.5%
|
|
25.6%
|
|
|
Mechanical
segment
|
|
$
19,206
|
|
$
13,865
|
|
|
As a
percentage of net sales
|
|
28.1%
|
|
27.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
Operating Expenses
|
|
$
100,691
|
|
$
68,150
|
|
As a percentage of
net sales
|
|
15.2%
|
|
13.4%
|
|
|
|
|
|
|
|
Operating Expenses by
Segment:
|
|
|
|
|
|
Electrical
segment
|
|
$
90,092
|
|
$
60,710
|
|
As a
percentage of net sales
|
|
15.2%
|
|
13.3%
|
|
Mechanical
segment
|
|
$
10,599
|
|
$
7,440
|
|
As a
percentage of net sales
|
|
15.5%
|
|
14.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
Income from
Operations
|
|
$
64,120
|
|
$
62,765
|
|
As a percentage of
net sales
|
|
9.7%
|
|
12.4%
|
|
|
|
|
|
|
|
Income from Operations by
Segment:
|
|
|
|
|
|
Electrical
segment
|
|
$
55,513
|
|
$
56,340
|
|
As a
percentage of net sales
|
|
9.3%
|
|
12.3%
|
|
Mechanical
segment
|
|
$
8,607
|
|
$
6,425
|
|
As a
percentage of net sales
|
|
12.6%
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses for the first quarter 2011 increased
$32.5 million including (i)
$20.1 million related to the acquired
businesses, ($2.4 million of which
was intangible amortization), and (ii) an incremental $5.1 million of acquisition-related expenses.
Net interest expense for the first quarter 2011 was $4.8 million, compared to $4.4 million for the first quarter 2010. The
effective tax rate for the first quarter 2011 was 31.2% which was
in line with prior guidance.
Net income attributable to Regal Beloit Corporation for the
first quarter 2011 was $38.8 million,
a 2.9% increase compared to $37.8
million for the first quarter 2010. Fully diluted
earnings per share for the first quarter 2011 were $0.99 compared to $0.98 for the first quarter 2010.
Net cash provided by operating activities was $56.2 million for the first quarter 2011, an
increase of 26.7% compared to the first quarter 2010. Capital
expenditures were $27.7 million which
included the purchase of our factory in Faridabad, India which was previously leased. Cash
and investments totaled $259.5
million at April 2, 2011, an
increase of $28.6 million from
January 1, 2011.
"Looking back on the quarter we are encouraged by the
strength in our sales growth but are disappointed with our margin
performance which was negatively impacted by commodity inflation,"
continued Mr. Gliebe. "As we look forward to the second
quarter we are expecting to see the normal seasonal improvement in
our HVAC sales which can be impacted by the weather. Steel
input costs will be a significant headwind and copper costs remain
at elevated levels. We anticipate starting to realize
the benefit of previously announced price increases and seeing
improved contributions from our 2010 acquisitions.
Accordingly, we are projecting second quarter diluted
earnings per share of $1.22 to $1.28
per share. Our guidance for the second quarter includes
similar levels of acquisition related expense, but does not include
the impact of closing on the acquisition of the A.O. Smith motor
business.
Regal Beloit will hold a
conference call pertaining to this news release at 9:00 AM CDT (10:00 AM
EDT) on Tuesday, May 3, 2011.
To listen to the call and view the presentation slides via
the internet, please go to http://www.regalbeloit.com/ or at:
http://www.videonewswire.com/event.asp?id=78815. Individuals
who would like to participate by phone should dial 800-860-2442,
referencing Regal Beloit. International callers should dial
412-858-4600, referencing Regal Beloit.
A telephone replay of the call will be available through
May 11, 2011 at 877-344-7529,
conference ID 450370. International callers should call
412-317-0088 using the same conference ID. A webcast replay
will be available until August 3,
2011 and can be accessed at
http://www.regalbeloit.com/rbceventspresentations.htm or at
http://www.videonewswire.com/event.asp?id=78815.
Regal Beloit Corporation is a leading manufacturer of electric
motors, mechanical and electrical motion controls 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. Regal Beloit's common stock is a
component of the S&P Mid Cap 400 Index and the Russell 2000
Index.
CAUTIONARY STATEMENT
The following is a cautionary statement made under the Private
Securities Litigation Reform Act of 1995: With the exception of
historical facts, the statements contained in this press release
may be forward looking statements. 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: actions taken by our competitors and our ability to
effectively compete in the increasingly competitive global electric
motor, power generation and mechanical motion control industries;
our ability to develop new products based on technological
innovation and the marketplace acceptance of new and existing
products; fluctuations in commodity prices and raw material costs;
our dependence on significant customers; issues and costs arising
from the integration of acquired companies and businesses,
including the timing and impact of purchase accounting adjustments;
difficulties consummating the pending acquisition of the Electrical
Products Company of A.O. Smith Corporation that may have a negative
impact on our results of operations; our dependence on key
suppliers and the potential effects of supply disruptions;
infringement of our intellectual property by third parties,
challenges to our intellectual property, and claims of infringement
by us of third party technologies; increases in our overall debt
levels as a result of acquisitions or otherwise and our ability to
repay principal and interest on our outstanding debt; product
liability and other litigation, or the failure of our products to
perform as anticipated, particularly in high volume applications;
economic changes in global markets where we do business, such as
reduced demand for the products we sell, currency exchange rates,
inflation rates, interest rates, recession, foreign government
policies and other external factors that we cannot control;
unanticipated liabilities of acquired businesses; cyclical
downturns affecting the global market for capital goods;
difficulties associated with managing foreign operations; and 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 March 2, 2011 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 presentation are made only as of their
respective dates, and we undertake no obligation to update these
statements to reflect subsequent events or circumstances.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
Unaudited
Dollars in Thousands, Except
Dividends Declared and Per Share Data
|
|
|
|
Three Months
Ended
|
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
|
Net Sales
|
|
$
662,655
|
|
$
507,318
|
|
|
Cost of Sales
|
|
497,844
|
|
376,403
|
|
|
Gross Profit
|
|
164,811
|
|
130,915
|
|
|
Operating Expenses
|
|
100,691
|
|
68,150
|
|
|
Income From
Operations
|
|
64,120
|
|
62,765
|
|
|
Interest Expense
|
|
5,091
|
|
5,061
|
|
|
Interest Income
|
|
317
|
|
641
|
|
|
Income Before Taxes &
Noncontrolling Interests
|
|
59,346
|
|
58,345
|
|
|
Provision For Income
Taxes
|
|
18,523
|
|
18,477
|
|
|
Net Income
|
|
40,823
|
|
39,868
|
|
|
Less: Net Income Attributable to
Noncontrolling
Interests, net of
tax
|
|
1,986
|
|
2,106
|
|
|
Net Income Attributable to
Regal Beloit Corporation
|
|
$
38,837
|
|
$
37,762
|
|
|
Earnings Per Share of Common
Stock:
|
|
|
|
|
|
|
Basic
|
|
$
1.01
|
|
$
1.01
|
|
|
Assuming
Dilution
|
|
$
0.99
|
|
$
0.98
|
|
|
Cash Dividends
Declared
|
|
$
0.17
|
|
$
0.16
|
|
|
Weighted Average Number of
Shares Outstanding:
|
|
|
|
|
|
|
Basic
|
|
38,626,711
|
|
37,446,007
|
|
|
Assuming
Dilution
|
|
39,131,722
|
|
38,622,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION
Unaudited
Dollars in Thousands
|
|
|
|
Mechanical
Segment
|
Electrical
Segment
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
April 2,
2011
|
|
April 3,
2010
|
|
|
Net Sales
|
|
$
68,365
|
|
$
50,073
|
|
$
594,290
|
|
$
457,245
|
|
|
Income from
Operations
|
|
$
8,607
|
|
$
6,425
|
|
$
55,513
|
|
$
56,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
Dollars in Thousands
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
April 2,
2011
|
|
January 1,
2011
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and
Investments
|
|
$
259,457
|
|
$
230,858
|
|
|
Trade Receivables, less
Allowances
of $11,765 in 2011 and $10,637 in 2010
|
|
393,374
|
|
331,017
|
|
|
Inventories
|
|
401,234
|
|
390,587
|
|
|
Prepaid Expenses and Other
Current Assets
|
|
113,332
|
|
135,589
|
|
|
Total Current
Assets
|
|
1,167,397
|
|
1,088,051
|
|
|
|
|
|
|
|
|
|
Property, Plant, Equipment and
Noncurrent Assets
|
|
1,376,740
|
|
1,361,085
|
|
|
Total Assets
|
|
$
2,544,137
|
|
$
2,449,136
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts
Payable
|
|
$
262,340
|
|
$
231,705
|
|
|
Other Accrued
Expenses
|
|
171,879
|
|
159,000
|
|
|
Current Maturities of
Debt
|
|
19,190
|
|
8,637
|
|
|
Total Current
Liabilities
|
|
453,409
|
|
399,342
|
|
|
|
|
|
|
|
|
|
Long-Term Debt
|
|
430,780
|
|
428,256
|
|
|
Other Noncurrent
Liabilities
|
|
215,550
|
|
224,376
|
|
|
Equity:
|
|
|
|
|
|
|
Total Regal Beloit
Corporation Shareholders' Equity
|
|
1,407,788
|
|
1,361,960
|
|
|
Noncontrolling
Interests
|
|
36,610
|
|
35,202
|
|
|
Total Equity
|
|
1,444,398
|
|
1,397,162
|
|
|
Total Liabilities and
Equity
|
|
$
2,544,137
|
|
$
2,449,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW
Unaudited
Dollars in Thousands
|
|
|
|
Three Months
Ended
|
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
40,823
|
|
$
39,868
|
|
Adjustments to reconcile
net income to net cash provided
by operating activities (net of acquisitions):
|
|
|
|
|
|
Depreciation and
amortization
|
|
21,599
|
|
17,025
|
|
Excess tax benefits from
share-based compensation
|
|
(410)
|
|
(670)
|
|
Loss on disposition of
property, net
|
|
187
|
|
-
|
|
Share-based compensation
expense
|
|
1,755
|
|
1,357
|
|
Change in assets and
liabilities
|
|
(7,753)
|
|
(13,215)
|
|
Net cash provided by
operating activities
|
|
56,201
|
|
44,365
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
(27,729)
|
|
(11,241)
|
|
Purchases of investment
securities
|
|
-
|
|
(98,133)
|
|
Sales of investment
securities
|
|
55,998
|
|
69,069
|
|
Business acquisitions, net
of cash acquired
|
|
(8,597)
|
|
-
|
|
Sale of property, plant
and equipment
|
|
16
|
|
-
|
|
Net cash provided by (used
in) investing activities
|
|
19,688
|
|
(40,305)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
Net proceeds from
(repayments of) short-term borrowings
|
|
10,022
|
|
(1,661)
|
|
Payments of long-term
debt
|
|
(49)
|
|
(46)
|
|
Net proceeds (repayments)
under revolving credit facility
|
|
2,845
|
|
(2,863)
|
|
Dividends paid to
shareholders
|
|
(6,561)
|
|
(5,981)
|
|
Proceeds from the exercise
of stock options
|
|
566
|
|
1,223
|
|
Excess tax benefits from
share-based compensation
|
|
410
|
|
670
|
|
Net cash provided by (used
in) financing activities
|
|
7,233
|
|
(8,658)
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATES ON
CASH
|
|
1,804
|
|
318
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash and cash equivalents
|
|
84,926
|
|
(4,280)
|
|
Cash and cash equivalents
at beginning of period
|
|
174,531
|
|
262,422
|
|
Cash and cash equivalents
at end of period
|
|
$
259,457
|
|
$
258,142
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Regal Beloit Corporation