Regal Beloit 2Q Beats Estimate - Analyst Blog
05 8월 2011 - 5:37PM
Zacks
Regal Beloit Corporation (RBC) posted its
earnings per share (excluding the incremental warranty accrual) of
$1.32 in the second quarter of fiscal 2011 compared with $10.7 per
share in the year-earlier quarter, ahead of management’s guidance
range of $1.22 - $1.28 and the Zacks Consensus Estimates of
$1.25.
Including the impact of incremental warranty accrual, the
company’s earnings per share were 88 cents.
Revenues
The company generated net sales of $681.8 million, up 16.7% from
the year-earlier quarter; missed the Zacks Consensus Estimate of
$715 million. The growth was powered by a rise in demand for North
American commercial and industrial motors, generators, and
mechanical products.
Of the total sales, $60 million was attributed to the businesses
acquired in 2010.
On a segmental basis, revenues from Electrical segment sales
improved 16.9% from the year-earlier quarter to $611.3 million, led
by a growth in North American commercial and industrial businesses
partially offset by a decrease in revenues from North American
residential HVAC (Heating, Ventilation, and Air Conditioning).
Mechanical segment sales were up 14.8% from the year-earlier
quarter to $70.5 million, reflecting improvement in later cycle end
markets.
Regal Beloit’s international operations continued to grow, which
led to an increase in international sales to 36.6% of total sales
from 31.7% of total sales in the year-earlier quarter.
Margins
Gross margin declined to 22.1%, from 24.6% in the year- earlier
quarter, due to an incremental warranty expense, which in turn
contracted gross margin of the Electrical segment.
Operating margin also fell 340 basis points from the
year-earlier quarter to 6.9%, due to an expense pertaining to the
acquired businesses and lower gross margins.
Balance Sheet and Cash flows
Regal Beloit ended the year with cash, cash equivalents and
investments of $275.3 million, up from $259.5 million at the end of
the previous quarter. As of July 2, 2011, long-term debt was $428
million, down from $430.8 million at the end of the previous
quarter.
During the quarter, the company generated $53.4 million of cash
from operating activities and used $10.8 million for capital
expenditure.
Acquisition
During the quarter, Regal Beloit Corporation acquired Australian
Fan and Motor Company, which manufactures and distributes an
extensive range of direct drive blowers, fan decks, axial fans and
sub fractional motors.
The company also acquired Virginia-based Ramu Inc., a motor and
control technology company controlled by the venture capital firm
Khosla Ventures.
Guidance
With expectations of improvement in its commercial and
industrial and mechanical businesses and considering its weakness
in the HVAC business, Regal Beloit projected earnings per share in
the range of $1.11 to $1.17 for the third quarter of fiscal
2011.
Management stated that the company expects to close the
acquisition of Electrical Products Company from A.O. Smith
Corporation (AOS) in the month of August.
Headquartered in Beloit, Wisconsin, Regal Beloit is a leading
manufacturer of electrical and mechanical motion control products,
with manufacturing, sales, and service facilities throughout the
U.S., Canada, Mexico, Europe, and Asia.
We are encouraged by the company’s strategic acquisition
activities, but remain concerned about the pressure on margins. We
continue to maintain a Neutral recommendation on Regal Beloit,
supported by Zacks #3 Rank (short-term Hold rating).
SMITH (AO) CORP (AOS): Free Stock Analysis Report
REGAL BELOIT (RBC): Free Stock Analysis Report
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