BELOIT, Wis., Aug. 4, 2011 /PRNewswire/ -- Regal Beloit
Corporation (NYSE: RBC) today reported financial results for the
second quarter ended July 2, 2011.
Net sales of $681.8 million
increased 16.7% compared to $584.2
million for the second quarter of 2010. Diluted
earnings per share were $0.88
compared to $1.07 for the second
quarter of 2010. The decrease was primarily driven by the
previously announced incremental warranty expense of $28.0 million (or $0.44 diluted earnings per share). Excluding the
incremental warranty accrual of $28.0
million, second quarter 2011 diluted earnings per share
would have been $1.32.
"Outside of the disappointing news regarding the warranty
expense, we were pleased with our second quarter results.
Excluding the incremental warranty expense, our earnings would have
come in slightly higher than our earlier guidance." commented Mr.
Mark Gliebe, Chief Executive
Officer. "The balance of our businesses paid off with strong
sales growth in our North American Commercial and Industrial
businesses, our Mechanical business and our International-based
businesses offsetting weaker sales in HVAC. The other
positive news is that we have made real progress in our pursuit to
close the acquisition of A.O. Smith's Electrical Products Company.
We believe we will close the transaction within the
month."
NET SALES
|
|
(In
millions)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
% Change
|
|
July 2, 2011
|
|
July 3, 2010
|
|
% Change
|
|
Net Sales
|
|
$
681.8
|
|
$
584.2
|
|
16.7%
|
|
$
1,344.4
|
|
$
1,091.5
|
|
23.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
segment
|
|
$
611.3
|
|
$
522.8
|
|
16.9%
|
|
$
1,205.6
|
|
$
980.0
|
|
23.0%
|
|
Mechanical
segment
|
|
$
70.5
|
|
$
61.4
|
|
14.8%
|
|
$
138.8
|
|
$
111.5
|
|
24.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for the second quarter 2011 increased $97.6 million compared to the second quarter of
2010, including $60.0 million of
incremental sales from the five businesses acquired in 2010 (the
"acquired businesses"). Sales growth was primarily driven by
increased demand for North American commercial and industrial
motors, generators, and mechanical products and higher
international sales growth.
In the Electrical segment, net sales for the second quarter 2011
increased $88.5 million compared to
the second quarter 2010, including $60.0
million of incremental net sales from the acquired
businesses. North American residential HVAC net sales
decreased 9.7% in the second quarter 2011 compared to the second
quarter 2010, due primarily to the reduced federal tax incentives
for high efficiency products and continued weakness in the housing
market. North American commercial and industrial net sales
increased 19.9% for the second quarter 2011 compared to the second
quarter 2010 driven by improving economic conditions, the impact of
the EISA legislation which increased the sales of energy efficient
motors and a strong recovery in our generator business.
In the Mechanical segment, net sales for the second quarter of
2011 increased $9.1 million compared
to the second quarter 2010. This increase was driven
primarily by improving demand in later cycle end markets.
Net sales to regions outside of the
United States were 36.6% of total net sales for the second
quarter 2011 compared to 31.7% of total net sales for the second
quarter 2010. Second quarter 2011 net sales of high
efficiency products were 17.8% of total net sales and increased
9.6% compared to the second quarter 2010. The impact of
foreign currency exchange rates increased total net sales by 2.5%
for the second quarter 2011 compared to the second quarter
2010.
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
(In
thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
Gross Profit
|
|
$
150,669
|
|
$
143,504
|
|
$
315,480
|
|
$
274,419
|
|
As a percentage of net
sales
|
|
22.1%
|
|
24.6%
|
|
23.5%
|
|
25.1%
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
Electrical
segment
|
|
$
130,298
|
|
$
125,748
|
|
$
275,903
|
|
$
242,798
|
|
As a percentage of
net sales
|
|
21.3%
|
|
24.1%
|
|
22.9%
|
|
24.8%
|
|
Mechanical
segment
|
|
$
20,371
|
|
$
17,756
|
|
$
39,577
|
|
$
31,621
|
|
As a percentage of
net sales
|
|
28.9%
|
|
28.9%
|
|
28.5%
|
|
28.4%
|
|
|
|
|
|
|
|
|
|
|
The $28 million increased warranty
accrual was reflected in the Electrical segment's Cost of Sales in
the second quarter 2011. Excluding the $28 million increased warranty accrual, the Gross
Profit as a percentage of net sales in the second quarter 2011
would have been 26.2% and year to date 2011 would have been 25.5%.
The Gross Profit as a percentage of net sales for the
Electrical segment in the second quarter 2011 would have been 25.9%
and year to date 2011 would have been 25.2%.
OPERATING
EXPENSES
|
|
(In
thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
Operating Expenses
|
|
$
95,860
|
|
$
76,705
|
|
$
196,551
|
|
$
144,855
|
|
As a percentage of net
sales
|
|
14.1%
|
|
13.1%
|
|
14.6%
|
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses by
Segment:
|
|
|
|
|
|
|
|
|
|
Electrical
segment
|
|
$
85,374
|
|
$
66,913
|
|
$
175,466
|
|
$
127,618
|
|
As a percentage of
net sales
|
|
14.0%
|
|
12.8%
|
|
14.6%
|
|
13.0%
|
|
Mechanical
segment
|
|
$
10,486
|
|
$
9,792
|
|
$
21,085
|
|
$
17,237
|
|
As a percentage of
net sales
|
|
14.9%
|
|
16.0%
|
|
15.2%
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
(In
thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
Income from
Operations
|
|
$
54,809
|
|
$
66,799
|
|
$
118,929
|
|
$
129,564
|
|
As a percentage of net
sales
|
|
8.0%
|
|
11.4%
|
|
8.9%
|
|
11.9%
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations by
Segment:
|
|
|
|
|
|
|
|
|
|
Electrical
segment
|
|
$
44,924
|
|
$
58,835
|
|
$
100,437
|
|
$
115,180
|
|
As a percentage of
net sales
|
|
7.4%
|
|
11.3%
|
|
8.3%
|
|
11.8%
|
|
Mechanical
segment
|
|
$
9,885
|
|
$
7,964
|
|
$
18,492
|
|
$
14,384
|
|
As a percentage of
net sales
|
|
14.0%
|
|
13.0%
|
|
13.3%
|
|
12.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses for the second quarter 2011 increased
$19.2 million including (i)
$10.5 million related to the acquired
businesses, ($2.4 million of which
was intangible amortization), and (ii) an incremental $1.5 million of acquisition-related expenses.
Net interest expense for the second quarter 2011 was
$4.4 million, compared to
$4.0 million for the second quarter
2010. The effective tax rate for the second quarter 2011 was 28.6%
as compared to 31.9% in the second quarter 2010, due to changes in
the global distribution of income.
Net income attributable to Regal Beloit Corporation for the
second quarter 2011 was $34.3 million
compared to $41.7 million for the
second quarter 2010. Fully diluted earnings per share for the
second quarter 2011 were $0.88
compared to $1.07 for the second
quarter 2010.
Net cash provided by operating activities was $53.4 million for the second quarter 2011.
Capital expenditures were $10.8
million. Cash and investments totaled $275.3 million at July 2,
2011, an increase of $44.4
million from January 1,
2011.
"As we look forward to the third quarter we are excited and
optimistic about the closing of the A.O. Smith transaction and the
integration of our two teams. Our financing is in place and
our teams have done much of the upfront integration planning."
continued Mr. Gliebe. "In terms of our business outlook,
while we see continuing softness in our HVAC business, we are also
seeing continuing strength in our commercial and industrial and
mechanical businesses. Accordingly, we are projecting third
quarter diluted earnings per share of $1.11
to $1.17. Our guidance for the third quarter does not
include the impact of closing on the acquisition of the Electrical
Products Company of A. O. Smith but
does include an incremental $4.4
million interest expense related to acquisition financing."
Regal Beloit will hold a
conference call pertaining to this news release at 9:00 AM CDT (10:00 AM
EDT) on Friday, August 5,
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=80923. 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
November 5, 2011, at 877-344-7529,
conference ID 10002134. International callers should call
412-317-0088 using the same conference ID. A webcast replay
will be available until November 5,
2011, and can be accessed at
http://www.regalbeloit.com/rbceventspresentations.htm or at
http://www.videonewswire.com/event.asp?id=80923.
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; unanticipated costs or
expenses we may incur related to product warranty issues; 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
|
|
Six Months Ended
|
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
|
Net Sales
|
|
$
681,785
|
|
$
584,181
|
|
$
1,344,440
|
|
$
1,091,499
|
|
|
Cost of Sales
|
|
531,116
|
|
440,677
|
|
1,028,960
|
|
817,080
|
|
|
Gross Profit
|
|
150,669
|
|
143,504
|
|
315,480
|
|
274,419
|
|
|
Operating Expenses
|
|
95,860
|
|
76,705
|
|
196,551
|
|
144,855
|
|
|
Income From
Operations
|
|
54,809
|
|
66,799
|
|
118,929
|
|
129,564
|
|
|
Interest Expense
|
|
4,814
|
|
4,480
|
|
9,905
|
|
9,541
|
|
|
Interest Income
|
|
419
|
|
514
|
|
736
|
|
1,155
|
|
|
Income Before Taxes &
Noncontrolling Interests
|
|
50,414
|
|
62,833
|
|
109,760
|
|
121,178
|
|
|
Provision For Income
Taxes
|
|
14,429
|
|
20,058
|
|
32,952
|
|
38,535
|
|
|
Net Income
|
|
35,985
|
|
42,775
|
|
76,808
|
|
82,643
|
|
|
Less: Net Income Attributable to
Noncontrolling Interests, net of tax
|
|
1,655
|
|
1,055
|
|
3,641
|
|
3,161
|
|
|
Net Income Attributable to
Regal Beloit Corporation
|
|
$
34,330
|
|
$
41,720
|
|
$
73,167
|
|
$
79,482
|
|
|
Earnings Per Share of Common
Stock:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.89
|
|
$
1.09
|
|
$
1.89
|
|
$
2.10
|
|
|
Assuming
Dilution
|
|
$
0.88
|
|
$
1.07
|
|
$
1.87
|
|
$
2.05
|
|
|
Cash Dividends
Declared
|
|
$
0.18
|
|
$
0.17
|
|
$
0.35
|
|
$
0.33
|
|
|
Weighted Average Number of
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
38,667,034
|
|
38,310,371
|
|
38,646,873
|
|
37,878,189
|
|
|
Assuming
Dilution
|
|
39,212,535
|
|
38,954,418
|
|
39,182,215
|
|
38,796,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION
Unaudited
Dollars in Thousands
|
|
|
|
Mechanical Segment
|
Electrical Segment
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
|
Net Sales
|
|
$
70,471
|
|
$
61,391
|
|
$
611,314
|
|
$
522,790
|
|
|
Income from
Operations
|
|
9,885
|
|
7,964
|
|
44,924
|
|
58,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mechanical
Segment
|
Electrical
Segment
|
|
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
July 2,
2011
|
|
July 3,
2010
|
|
July 2,
2011
|
|
July 3,
2010
|
|
|
Net Sales
|
|
$
138,836
|
|
$
111,464
|
|
$
1,205,604
|
|
$
980,035
|
|
|
Income from
Operations
|
|
18,492
|
|
14,384
|
|
100,437
|
|
115,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
Dollars in Thousands
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
July 2, 2011
|
|
January 1, 2011
|
|
Current Assets:
|
|
|
|
|
|
Cash and
Investments
|
|
$
275,348
|
|
$
230,858
|
|
Trade Receivables, less
Allowances of $10,646 in 2011 and $10,637 in 2010
|
|
410,565
|
|
331,017
|
|
Inventories
|
|
436,375
|
|
390,587
|
|
Prepaid Expenses and Other
Current Assets
|
|
117,426
|
|
135,589
|
|
Total Current
Assets
|
|
1,239,714
|
|
1,088,051
|
|
|
|
|
|
|
|
Property, Plant, Equipment and
Noncurrent Assets
|
|
1,406,829
|
|
1,361,085
|
|
Total Assets
|
|
$
2,646,543
|
|
$
2,449,136
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Accounts
Payable
|
|
$
279,311
|
|
$
231,705
|
|
Other Accrued
Expenses
|
|
196,884
|
|
159,000
|
|
Current Maturities of
Debt
|
|
14,282
|
|
8,637
|
|
Total Current
Liabilities
|
|
490,477
|
|
399,342
|
|
|
|
|
|
|
|
Long-Term Debt
|
|
428,044
|
|
428,256
|
|
Other Noncurrent
Liabilities
|
|
247,457
|
|
224,376
|
|
Equity:
|
|
|
|
|
|
Total Regal Beloit
Corporation Shareholders' Equity
|
|
1,442,037
|
|
1,361,960
|
|
Noncontrolling Interests
|
|
38,528
|
|
35,202
|
|
Total Equity
|
|
1,480,565
|
|
1,397,162
|
|
Total Liabilities and
Equity
|
|
$
2,646,543
|
|
$
2,449,136
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW
Unaudited
Dollars in Thousands
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 2, 2011
|
|
July 3, 2010
|
|
July 2, 2011
|
|
July 3, 2010
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
35,985
|
|
$
42,775
|
|
$
76,808
|
|
$
82,643
|
|
Adjustments to reconcile
net income to net cash provided by operating activities (net
of acquisitions):
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
22,027
|
|
18,874
|
|
43,626
|
|
35,899
|
|
Excess tax benefits from
stock-based compensation
|
|
(593)
|
|
(741)
|
|
(1,003)
|
|
(1,411)
|
|
Loss on disposition of
property, net
|
|
301
|
|
1,368
|
|
488
|
|
1,368
|
|
Stock-based compensation
expense
|
|
4,480
|
|
1,708
|
|
6,235
|
|
3,065
|
|
Change in assets and
liabilities
|
|
(8,825)
|
|
(8,622)
|
|
(16,578)
|
|
(21,837)
|
|
Net cash provided by
operating activities
|
|
53,375
|
|
55,362
|
|
109,576
|
|
99,727
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
(10,796)
|
|
(6,991)
|
|
(38,525)
|
|
(18,232)
|
|
Purchases of investment
securities
|
|
-
|
|
(89,744)
|
|
-
|
|
(187,877)
|
|
Sales of investment
securities
|
|
-
|
|
62,460
|
|
55,998
|
|
131,529
|
|
Business acquisitions, net
of cash acquired
|
|
(13,456)
|
|
(75,863)
|
|
(22,053)
|
|
(75,863)
|
|
Sale of property, plant
and equipment
|
|
193
|
|
67
|
|
209
|
|
67
|
|
Net cash used in investing
activities
|
|
(24,059)
|
|
(110,071)
|
|
(4,371)
|
|
(150,376)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Repayments of convertible
debt
|
|
-
|
|
(38,728)
|
|
-
|
|
(38,728)
|
|
Net (repayments of)
proceeds from short-term borrowings
|
|
(4,904)
|
|
(7,072)
|
|
5,118
|
|
(8,733)
|
|
Payments of long-term
debt
|
|
(39)
|
|
(57)
|
|
(88)
|
|
(103)
|
|
Net repayments under
revolving credit facility
|
|
(2,845)
|
|
-
|
|
-
|
|
(2,863)
|
|
Dividends paid to
shareholders
|
|
(6,569)
|
|
(5,997)
|
|
(13,130)
|
|
(11,978)
|
|
Proceeds from the exercise
of stock options
|
|
1,190
|
|
1,766
|
|
1,756
|
|
2,989
|
|
Excess tax benefits from
stock-based compensation
|
|
593
|
|
741
|
|
1,003
|
|
1,411
|
|
Financing fees
paid
|
|
(1,874)
|
|
-
|
|
(1,874)
|
|
-
|
|
Net cash used in financing
activities
|
|
(14,448)
|
|
(49,347)
|
|
(7,215)
|
|
(58,005)
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATES ON
CASH
|
|
1,023
|
|
(1,584)
|
|
2,827
|
|
(1,266)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash and cash equivalents
|
|
15,891
|
|
(105,640)
|
|
100,817
|
|
(109,920)
|
|
Cash and cash equivalents
at beginning of period
|
|
259,457
|
|
258,142
|
|
174,531
|
|
262,422
|
|
Cash and cash equivalents
at end of period
|
|
$ 275,348
|
|
$
152,502
|
|
$ 275,348
|
|
$
152,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Regal Beloit Corporation