Industrial equipment manufacturer
Regal Beloit Corporation
) reported first quarter 2013 net income of $50.7 million or
$1.09 per share compared to $49.9 million or $1.16 per share in
the year-ago quarter. The year-over-year decrease in earnings per
share was primarily due to higher outstanding shares in the
reported quarter. The reported earnings missed the Zacks
Consensus Estimate by 6 cents. Excluding one-time items, adjusted
earnings for first quarter 2013 were $1.08 per share vis-à-vis
$1.15 per share in the year-earlier quarter.
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Net sales declined 3.7% year over year to $778.2 million in the
reported quarter due to the continued challenging macroeconomic
environment. Unico, the wholly-owned subsidiary of the company,
recorded strong sales during the quarter, while the residential
HVAC (heating, ventilation, and air conditioning) business
expanded slightly. However, Regal Beloit witnessed low demand for
its other businesses.
Revenues from the
segment declined 2.8% year over year to $711.0 million as the
U.S. commercial and industrial markets performed below
expectations. However, revenue from the North American
residential HVAC sub-segment increased 3.5% year over year.
Net sales in the
segment were down 12.2% year over year to $67.2 million despite
By geographic divisions, sales from outside the U.S. accounted
for 33.6% of the total revenue and decreased 6.8% year over year.
By product class, net sales of high efficiency products were up
3.5% and contributed 19.6% to total sales in the reported
Regal Beloit's gross profit for the reported quarter was $199.5
million versus $197.6 million in the year-ago quarter. While
gross profit of the Electrical segment increased to $181.3
million from $178.8 million in the prior-year quarter, it
decreased marginally in the Mechanical segment to $18.2 million
from $18.8 million in the year-earlier quarter.
Total operating profit declined to $75.9 million in first quarter
2013 from $79.1 million in the year-ago period. By segments,
operating profit decreased to $67.3 million in the Electrical
segment from $69.4 million, while Mechanical segment's operating
profit was down from $9.7 million to $8.6 million in the reported
Balance Sheet and Cash flows
At quarter-end, Regal Beloit's cash and cash equivalents were
$411.9 million with long-term debt of $754.5 million.
Net cash provided by operating activities in the quarter was
$66.0 million compared with $68.5 million in the year-ago
quarter. Free cash flow represented 91.7% of net income for the
Management expects the listless demand in the North American
commercial and industrial markets to continue in the second
quarter, adversely affecting its performance in both its
operating segments. Regal Beloit also expects unfavorable market
dynamics in the HVAC sub-segment. Consequently, the company
expects GAAP earnings in the range of $1.17 to $1.25 per share
and adjusted earnings within $1.19 to $1.27.
Regal Beloit currently has a Zacks Rank #3 (Hold). Other players
in the industry worth mentioning include
Alamo Group, Inc.
AO Smith Corp.
), each carrying a Zacks Rank #2 (Buy).