Regal Beloit Corporation (RBC - Free Report) reported mixed results for the second quarter of 2018.
On a GAAP basis, the industrial goods manufacturer reported net income of $65.9 million or $1.50 per share compared with $53 million or $1.18 per share in the year-earlier quarter. The improvement came on the back of higher revenues across segments.
Adjusted earnings were $1.60 per share compared with $1.29 in the year-ago quarter. However, the bottom line missed the Zacks Consensus Estimate of $1.61.
Net sales increased to $959.7 million from $869.2 million in the year-earlier quarter, driven by strong organic sales growth across all three operating segments. Moreover, quarterly revenues beat the Zacks Consensus Estimate of $953.7 million.
GAAP operating income improved to $99.6 million from $83.2 million in the prior-year quarter. Adjusted operating income was $106.1 million compared with $90.6 million in the year-ago quarter. Adjusted operating margin came in at 11.1%, up 70 basis points year over year.
Revenues from Power Transmission Solutions increased 11.6% year over year to $213.4 million. Sales were driven by rise in demand in the oil & gas, material handling, and aerospace end markets. Operating margin at the segment increased to 11.8% from 11.6% in the prior-year quarter.
Net sales from Commercial and Industrial Systems were $469 million, up 15.1% year over year, driven by strength in commercial HVAC (heating, ventilation and air conditioning), oil & gas and power generation and Asia. Operating margin at the segment increased to 6.5% from 5.1% in the prior-year quarter.
Net sales from Climate Solutions improved 2.5% year over year to $277.3 million owing to strength in North American residential HVAC, somewhat offset by weakness in the Middle East and residential hermetic motor components. Operating margin of the segment increased to 15.9% from 14.9% in the year-ago quarter.
Balance Sheet and Cash Flow
As on Jun 30, 2018, Regal Beloit’s cash and cash equivalents were $175.6 million while long-term debt was $1,235.1 million.
Net cash from operating activities for the first six months of 2018 totaled $144.3 million, down from $148.9 million in the year-ago period.
Free cash flow for the reported quarter amounted to $80.6 million or 122.3% of net income compared with the respective tallies of $81.7 million and 154.2% in the prior-year period. During the quarter, Regal Beloit repurchased 579,005 shares for $46.1 million.
For 2018, Regal Beloit currently expects its adjusted earnings per share in the range of $5.70-$6.00. The company projects GAAP earnings per share between $4.78 and $5.08, down from prior expectations of $5.29-$5.69.
Regal Beloit currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks are Altra Industrial Motion Corp. (AIMC - Free Report) , Pentair plc (PNR - Free Report) and Roper Technologies, Inc. (ROP - Free Report) . While Altra Industrial Motion sports a Zacks Rank #1 (Strong Buy), Pentair and Roper Technologies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion surpassed estimates thrice in the trailing four quarters with an average beat of 4.01%.
Pentair exceeded estimates thrice in the trailing four quarters with an average beat of 2.50%.
Roper Technologies surpassed estimates in each of the trailing four quarters with an average beat of 4.48%.
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