Back to top

Analyst Blog

Industrial equipment manufacturer Regal Beloit Corporation (RBC - Analyst Report) 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.

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.

Segment Analysis

Revenues from the Electrical 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 Mechanical segment were down 12.2% year over year to $67.2 million despite accretive acquisitions.

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 quarter.  

Margins

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 quarter.

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 reported quarter.  

Guidance

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. (ALG - Snapshot Report), Komatsu Ltd. (KMTUY), and AO Smith Corp. (AOS - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%