Regal Beloit Beats, Profit Improved - Analyst Blog
02 5월 2012 - 8:30PM
Zacks
Regal Beloit Corporation (RBC), a
leading manufacturer of electrical and mechanical motion control
products posted its first quarter 2012 financial results on May 1,
2012. Diluted earnings per share reported in the quarter were
$1.16; beating both the Zacks Consensus Estimate of $1.10 and the
year-ago earnings of 99 cents per share. The results were ahead of
the company’s guidance range of $1.07 to $1.13 per share.
The record performance in the
quarter was attributed to the development in its North American
commercial and industrial, mechanical and global Unico businesses
which neutralized the downturn in HVAC and China market. The
company benefited from minimized income tax spending and the sale
of assets.
Revenue
Net sales spiked 22% year over year
to $807.9 million, although the sales missed the Zacks Consensus
Estimate of $823 million. The growth was triggered by the company’s
recent acquisitions and expanded operations. The negative foreign
currency translation reduced the net sales by 0.6% from the
year-ago quarter.
Segment
Analysis
Revenues from the Electrical
segment climbed 23.1% year over year to $731.4 million, driven by
its business acquisition. However, excluding the business
acquirement, the North American residential HVAC motor sales
declined by 30.2% due to a declining trend in its demand for
residential HVAC equipment and unfavorable effect of the R22 dry
ship. The North American commercial and industrial motor net sales
jumped 7% year over year in the quarter.
Net sales in the mechanical segment
hiked 11.9% year over year to $76.5 million, driven by the growth
of its acquired businesses. Sales from the North America Mechanical
segment improved 8.7%, offsetting the downturn in the market of
Europe and Asia. The sales outside the United States grew 13.2%
year over year.
Margins
Gross profit in the quarter was
$197.6 million, up 20% year over year while gross margin dropped to
24.5% in the first quarter from 24.9% a year ago. The margin
decline was led by weak HVAC motor sales and the mix effect of R22
dry ship conversion. Operating margin in the quarter was 9.8% as
compared to 9.7% in the year-ago quarter.
On a segmental basis, the gross
margin of the Electrical Segment was reduced by 0.1% to 24.4% from
the year-ago quarter. The Mechanical Segment’s gross margin showed
a decline from 28.1% in year-ago quarter to 24.5% in the current
quarter.
Operating margin of the Electrical
Segment in the quarter surged from 9.3% to 9.5%. Mechanical Segment
reported 12.7% operating margin versus 12.6% in the year-ago
quarter.
Balance Sheet and Cash
flows
Exiting the first quarter, Regal
Beloit’s cash and cash equivalents proliferated by 15.1%
sequentially to $164.2 million. Long-term debt at the end of 1Q12
was $971.0 million versus $909.2 million at the end of
4Q11.
Net cash flow from operating
activities in the quarter was $68.2 million, up 22% from the
year-ago quarter. The effective tax rate was 26.3% versus 31.2% in
the prior year quarter.
Dividend
Regal Beloit Corporation declared a
dividend of 19 cents per share, which increased by 1 cent per share
from the prior dividend. The dividend will be paid on July 13, 2012
to shareholders of record as on June 29, 2012.
Guidance
Management expects that the
Commercial and Industrial sectors would grow in the second
quarter 2012. Additionally, revenues for the HVAC segment are
expected to be low in the upcoming quarter due to the adverse
effect of R22 mix. Regal Beloit also expects the earnings per share
to be within the $1.42 to $1.48 range for the second quarter of
fiscal 2012.
Our
Recommendation
Regal Beloit currently has a Zacks
Rank# 4 which implies a short-term (1-3 months) ‘Sell’ rating on
the stock.
REGAL BELOIT (RBC): Free Stock Analysis Report
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