Regal Beloit Corporation Announces Third Quarter 2013 Financial Results

BELOIT, Wis., Oct. 28, 2013 /PRNewswire/ -- Regal Beloit Corporation (NYSE: RBC) today reported financial results for the third quarter 2013. Net sales for the third quarter 2013 were $768.2 million compared to $779.5 million for the third quarter 2012.  Net income for the third quarter 2013 was $52.6 million compared to $54.3 million for the third quarter 2012.  Diluted earnings per share for the third quarter 2013 were $1.16, reflecting the higher share count, compared to $1.29 for the third quarter of 2012.

"Our operating results for the third quarter were in line with our expectations and, including the added benefit from a lower than expected tax provision, we achieved the high end of our guidance for the quarter," said Regal Chairman and CEO Mark Gliebe.  "Sales in our North American commercial and industrial motor business were down slightly, offset by stronger sales in our power generation businesses.    We experienced a sales decline in our North American residential HVAC business, however, revenues in non-HVAC residential, Unico and China were all up year over year."

*This earnings release includes non-GAAP financial measures.  Schedules that reconcile these non-GAAP financial measures to the most comparable GAAP figures are included with this earnings release. 

Electrical segment net sales in the third quarter 2013 included $5.6 million from businesses acquired within the last year.  North American residential HVAC net sales decreased 3.6% for the third quarter 2013 compared to the third quarter of 2012.  North American commercial and industrial motor net sales decreased 2.5%, of which 1.6% was related to the expiration of our supply agreement with the purchaser of our divested pool and spa business.

Mechanical segment net sales in North America decreased 11.4% for the third quarter 2013, primarily due to weaker demand from oil and gas customers.

Third quarter 2013 net sales to regions outside the United States increased 2.7% compared to third quarter 2012 and represented 33.2% of total net sales.  Foreign currency exchange rates negatively impacted total net sales by 1.1% and international sales by 3.4% for the third quarter 2013 compared to the third quarter 2012.

In the third quarter 2013, sales of high efficiency products represented 21.5% of net sales.

Electrical segment gross profit for the third quarter 2013 included $1.2 million of restructuring expenses, as well as a LIFO benefit of $0.9 million resulting from lower commodity costs.  Third quarter 2012 Electrical segment gross profit included $2.8 million of restructuring expense and $2.4 million of LIFO expense.  

For the third quarter 2013, no restructuring costs were incurred in operating expenses.  Electrical segment operating expenses for the third quarter 2012 included $2.4 million of restructuring charges.

The effective tax rate for the third quarter 2013 was 21.6% compared to 24.5% for the third quarter 2012.   The change in the third quarter effective rate was primarily driven by the favorable adjustments related to the finalization of the 2012 U.S. Federal income tax return and the global distribution of earnings compared to the third quarter 2012.

For the third quarter 2013, net cash provided by operating activities was $81.2 million. For the third quarter 2013, free cash flow* represented 122.8% of net income.  

"Our fourth quarter guidance includes our typical seasonality in residential HVAC, strong growth in our power generation businesses and modest growth in China. In our North American commercial and industrial motors business we expect performance similar to what we experienced in the third quarter," continued Mark Gliebe.  "In the fourth quarter, we expect diluted earnings per share to be $0.77 to $0.85 which benefits from an expected income tax rate of approximately 18%.  Adding back $0.05 of restructuring charges, adjusted diluted earnings per share is expected to be $0.82 to $0.90."

Regal management will hold a conference call to discuss the earnings release at 9:00 AM CDT (10:00 AM EDT) on Tuesday, October 29, 2013.  Individuals who would like to participate by phone should dial 888-317-6003 and enter 9199842# when prompted.  International callers should dial 412-317-6061 and enter 9199842# when prompted.  To view the presentation during the call, please follow this link to Regal's Investors page: http://investors.regalbeloit.com/phoenix.zhtml?c=116222&p=irol-presentations.

To listen to the live audio and view the presentation via the internet, please go to:  http://www.videonewswire.com/event.asp?id=96311. 

A telephone replay of the call will be available through January 29, 2014, at 877-344-7529, conference ID 10034719.  International callers should call 412-317-0088 using the same conference ID.  A webcast replay will be available until January 29, 2014, and can be accessed at http://investors.regalbeloit.com/phoenix.zhtml?c=116222&p=irol-calendarPast or at http://www.videonewswire.com/event.asp?id=96311.

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.

CAUTIONARY STATEMENT

The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this press release may be forward looking statements.  Forward-looking statements represent our management's judgment regarding future events.  In many cases, you can identify forward-looking statements by terminology such as "may," "will,"  "plan," "expect," "anticipate," "estimate," "believe," or "continue" or the negative of these terms or other similar words.  Actual results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors, including: uncertainties regarding our ability to execute our restructuring plans within expected costs and timing; actions taken by our competitors and our ability to effectively compete in the increasingly competitive global electric motor, power generation and mechanical motion control industries; our ability to develop new products based on technological innovation and the marketplace acceptance of new and existing products; fluctuations in commodity prices and raw material costs; our dependence on significant customers; issues and costs arising from the integration of acquired companies and businesses, including the timing and impact of purchase accounting adjustments; unanticipated costs or expenses we may incur related to product warranty issues; our dependence on key suppliers and the potential effects of supply disruptions; infringement of our intellectual property by third parties, challenges to our intellectual property, and claims of infringement by us of third party technologies; increases in our overall debt levels as a result of acquisitions or otherwise and our ability to repay principal and interest on our outstanding debt; product liability and other litigation, or the failure of our products to perform as anticipated, particularly in high volume applications; economic changes in global markets where we do business, such as reduced demand for the products we sell, currency exchange rates, inflation rates, interest rates, recession, foreign government policies and other external factors that we cannot control; unanticipated liabilities of acquired businesses; cyclical downturns affecting the global market for capital goods; difficulties associated with managing foreign operations; and other risks and uncertainties including but not limited to those described in Item 1A-Risk Factors of the Company's Annual Report on Form 10-K(A) filed on March 26, 2013  and from time to time in our reports filed with U.S. Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.  The forward-looking statements included in this presentation are made only as of their respective dates, and we undertake no obligation to update these statements to reflect subsequent events or circumstances.

NON-GAAP MEASURES

Unaudited
(Dollars in Millions)

We prepare financial statements in accordance with accounting principles generally accepted in the United States (GAAP).  We also disclose adjusted diluted earnings per share (EPS), adjusted gross profit, adjusted gross profit as a percentage of net sales, adjusted income from operations, free cash flow and free cash flow as a percentage of net income attributable to Regal Beloit Corporation (collectively, "non-GAAP financial measures"). We use these measures in our internal performance reporting and for reports to the Board of Directors.  We also periodically disclose certain of these measures in our quarterly earnings releases, on investor conference calls, and in investor presentations and similar events. We believe that these non-GAAP financial measures are useful measures for providing investors with additional insight into our operating performance. This additional information is not meant to be considered in isolation or as a substitute for our results of operations prepared and presented in accordance with GAAP.  Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment adjusted for grants received for capital expenditures.

SOURCE Regal Beloit Corporation