Regal Beloit Corporation Announces Third Quarter 2012 Financial Results
200 State St.
Beloit, WI, 53511
Press release date: October 29, 2012
· Record Third Quarter Sales and Earnings
· Another Quarter of Strong Free Cash Flow
BELOIT, WI - Regal Beloit Corporation (NYSE: RBC) today reported financial results for the third quarter ended September 29, 2012. Net sales of $779.5 million increased 5.8% compared to $736.9 million for the third quarter of 2011. Diluted earnings per share were $1.29 for the third quarter of 2012 compared to diluted earnings per share of $1.13 for the third quarter of 2011.
"Despite challenging global economic conditions, Regal delivered another strong operating performance in the third quarter, in line with our earlier guidance" commented Mr. Mark Gliebe, Chairman and Chief Executive Officer. "We experienced slight growth in our residential HVAC business however most of our other businesses around the world saw slowing demand. We made substantial progress during the quarter on our previously announced restructuring plans to rationalize our manufacturing operations, reduce our global footprint and produce synergy savings. Further, we have been proactively controlling our expenses during these uncertain times. Our teams did a nice job of protecting our margins in spite of softer demand and we delivered another quarter of free cash flow exceeding net income," continued Mr. Gliebe.
Adjusted diluted earnings per share** were $1.32 for the third quarter of 2012, after adding $0.08 of restructuring charges for announced facility closures and other restructuring activities and subtracting $0.05 for the prior year tax adjustment. This compares to adjusted diluted earnings per share of $1.31 in the third quarter of 2011 .
Electrical segment net sales in the third quarter 2012 included $179.4 million from the businesses acquired within the last twelve months ("acquired businesses"). Excluding the acquired businesses, Electrical segment net sales declined 9.2% as a result of declining net sales in the Commercial and Industrial and Asian businesses. North American residential HVAC motor net sales increased 0.4% for the third quarter 2012 compared to the third quarter 2011. North American commercial and industrial motor net sales decreased 6.4% for the third quarter 2012 compared to the third quarter of 2011, adjusting for the divested business.
Mechanical segment net sales for the third quarter 2012 included $11.1 million from the acquired businesses. Excluding the impact of the acquired and divested businesses, Mechanical segment sales in North America decreased 0.9%.
Third quarter 2012 net sales to regions outside the United States decreased 9.4% compared to third quarter 2011 and represented 31.4% of total net sales. Sales of high efficiency products were 21.8% of net sales in the third quarter 2012. Excluding acquired businesses, the impact of foreign currency exchange rates decreased total net sales by 1.7% for the third quarter 2012 compared to the third quarter 2011.
Electrical segment operating expenses for the third quarter 2012 included $18.5 million from the acquired businesses, restructuring expenses of $2.4 million, and minimal acquisition related expenses. In the third quarter 2011, Electrical segment operating expenses included EPC operating expenses of $10.0 million, a gain of $6.5 million on the divested business, and acquisition related expenses of $5.9 million. Mechanical segment operating expenses for the third quarter included an incremental $1.0 million from the acquired businesses.
The effective tax rate for the third quarter 2012 was 24.5% compared to 30.3% for the third quarter 2011 driven primarily by the qualification in China of a high technology tax incentive for two of our facilities that resulted in a retroactive benefit of $2.3 million and additional future benefits. Interest expense was flat compared to third quarter 2011.
Net cash provided by operating activities was $71.8 million, an increase of $5.1 million from the prior year. Cash flow from operations was used to fund capital expenditures, pay dividends and reduce debt. Capital expenditures in the third quarter 2012 were $21.3 million including the completion of two factories in China, partially offset by $4.7 million of government grants.
"Since the latter half of the third quarter, we've seen further economic weakening and increased uncertainty. These conditions are impacting our business in most areas of the world," Gliebe said. "For the fourth quarter, we are anticipating our typical seasonal sales declines with modest year-over-year growth in our residential HVAC business. However, the overall slowing demand in our other markets will put pressure on our operating performance. We will focus on executing on our restructuring plans and simplifying the Company which should keep us nimble and generate future savings."
"Including $0.09 of anticipated expense from these restructuring activities, our earnings guidance for the fourth quarter of 2012 is $0.58 to $0.66 per share. Excluding the $0.09 of restructuring expense, our adjusted EPS guidance is $0.67 to $0.75," continued Mr. Gliebe.
Regal will hold a conference call at 9:00 AM CDT (10:00 AM EDT) on Tuesday, October 30, 2012, to discuss the earnings release. 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=89749. Individuals who would like to participate by phone should dial 800-860-2442, referencing Regal. International callers should dial 412-858-4600, referencing Regal.
A telephone replay of the call will be available through December 30, 2012, at 877-344-7529, conference ID 10019118. International callers should call 412-317-0088 using the same conference ID. A webcast replay will be available until December 30, 2012, and can be accessed at http://www.regalbeloit.com/rbceventspresentations.htm or at http://www.videonewswire.com/event.asp?id=89749.
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.