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Regal Beloit Corporation (RBC - Analyst Report) reported fourth quarter 2012 earnings of 70 cents per share compared to 80 cents in the year-ago quarter. Excluding one-time items, adjusted earnings were 76 cents per share in the reported quarter vis-à-vis 93 cents in the year-earlier quarter. The adjusted earnings exceeded the Zacks Consensus Estimate by a couple of cents.

For full year 2012, the company reported record earnings of $4.64 per share compared to $3.79 in the previous year. Excluding one-time items, adjusted earnings in 2012 were $4.73 per share versus $4.71 in 2011. The adjusted earnings for full year 2012 were ahead of the Zacks Consensus Estimate by 2 cents.


Net sales dipped 1.6% year over year to $715.6 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 grew slightly. However, Regal Beloit witnessed low demand for its other businesses.

For full year 2012, net sales surged 12.8% year over year to $3.2 billion as both the operating segments recorded healthy growth.  

Segment Analysis

Revenues from the Electrical segment declined 2.0% year over year to $646.9 million in fourth quarter 2012 as the North American commercial and industrial motor net sales decreased 1.4%. For full year 2012, net sales from the segment climbed 13.3% year over year to $2.9 billion on the back of accretive effect of the acquisitions.

Net sales in the Mechanical segment increased 3.0% year over year in the quarter to $68.7 million on accretive acquisitions. For full year 2012, segment net sales rose 7.9% due to the positive impact of acquisitions.

Balance Sheet and Cash flows

At year-end 2012, Regal Beloit’s cash and cash equivalents were $375.3 million versus $142.6 million in the previous year, largely due to proceeds from the secondary offering and strong cash flow. Long-term debt at year-end 2012 was $754.7 million versus $909.2 million in the prior-year period.

Net cash provided by operating activities in the quarter was $75.5 million compared with $89.0 million in the year-ago quarter. For full year 2012, net cash provided by operating activities was $351.7 million compared to $265.2 million in 2011. Free cash flow represented 174.6% and 137.7% of net income for the reported quarter and year, respectively.  


Management remains bullish about a relatively strong performance in first quarter 2013, with GAAP earnings in the range of $1.08 to $1.16 per share and adjusted earnings within $1.10 to $1.18. However, the company needs to be wary of tough competition from other players in the industry such as ESCO Technologies Inc. (ESE - Snapshot Report), Koninklijke Philips Electronics NV (PHG - Analyst Report), and Siemens Aktiengesellschaft , each carrying a Zacks Rank #2 (Buy). Regal Beloit currently has a Zacks Rank #3 (Hold).

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