Regal Beloit Reports First Quarter 2011 Financial Results

BELOIT, Wis., May 2, 2011 /PRNewswire/ -- Regal Beloit Corporation (NYSE: RBC) today reported financial results for the first quarter ended April 2, 2011.  Net sales of $662.7 million increased 30.6% compared to $507.3 million for the first quarter of 2010.   Diluted earnings per share were $0.99 compared to $0.98 for the first quarter of 2010.  

"In line with our guidance, sales across all business units improved over the first quarter 2010," commented Mr. Mark Gliebe, Chief Executive Officer.  "However, we faced continued inflationary pressure on input costs, especially costs for copper and steel.  We are implementing our previously announced price increases that were effective beginning in March 2011 to help offset these cost increases.  Additionally we incurred significant transaction-related expenses as we prepare for the closing of the acquisition of A.O. Smith's motor business."

Net sales for the first quarter 2011 increased $155.3 million compared to the first quarter of 2010, including $91.2 million of incremental sales from the six businesses acquired in 2010 (the "acquired businesses").  Sales growth was driven by increased demand in nearly all end markets including strong demand for energy efficient products.  

In the Electrical segment, net sales for the first quarter 2011 increased $137.1 million compared to the first quarter 2010, including $81.3 million of incremental net sales from the acquired businesses.  North American residential HVAC motor net sales increased 17.9% in the first quarter 2011 compared to the first quarter 2010.  North American commercial and industrial net sales increased 12.8% for the first quarter compared to the first quarter 2010 driven by improving economic conditions, the impact of the EISA legislation and a strong recovery in our generator business.  

In the Mechanical segment, net sales for the first quarter of 2011 increased $18.3 million compared to the first quarter 2010, including $9.9 million of incremental net sales from the acquired businesses.  This increase was driven primarily by improving demand in later cycle end markets and improving demand in Europe.

Net sales to regions outside of the United States were 36.9% of total net sales for the first quarter 2011 compared to 27.1% of total net sales for the first quarter 2010.  First quarter 2011 net sales of high efficiency products were 18.0% of total net sales as compared to 17.7% in the first quarter of 2010.

Operating expenses for the first quarter 2011 increased $32.5 million including (i) $20.1 million related to the acquired businesses, ($2.4 million of which was intangible amortization), and (ii) an incremental $5.1 million of acquisition-related expenses.

Net interest expense for the first quarter 2011 was $4.8 million, compared to $4.4 million for the first quarter 2010. The effective tax rate for the first quarter 2011 was 31.2% which was in line with prior guidance.  

Net income attributable to Regal Beloit Corporation for the first quarter 2011 was $38.8 million, a 2.9% increase compared to $37.8 million for the first quarter 2010.  Fully diluted earnings per share for the first quarter 2011 were $0.99 compared to $0.98 for the first quarter 2010.

Net cash provided by operating activities was $56.2 million for the first quarter 2011, an increase of 26.7% compared to the first quarter 2010.  Capital expenditures were $27.7 million which included the purchase of our factory in Faridabad, India which was previously leased.  Cash and investments totaled $259.5 million at April 2, 2011, an increase of $28.6 million from January 1, 2011.

"Looking back on the quarter we are encouraged by the strength in our sales growth but are disappointed with our margin performance which was negatively impacted by commodity inflation," continued Mr. Gliebe.   "As we look forward to the second quarter we are expecting to see the normal seasonal improvement in our HVAC sales which can be impacted by the weather.  Steel input costs will be a significant headwind and copper costs remain at elevated levels.  We anticipate starting  to realize the benefit of previously announced price increases and seeing improved contributions from our 2010 acquisitions.  Accordingly, we are projecting second quarter diluted earnings per share of $1.22 to $1.28 per share.  Our guidance for the second quarter includes similar levels of acquisition related expense, but does not include the impact of closing on the acquisition of the A.O. Smith motor business.

Regal Beloit will hold a conference call pertaining to this news release at 9:00 AM CDT (10:00 AM EDT) on Tuesday, May 3, 2011.   To listen to the call and view the presentation slides via the internet, please go to http://www.regalbeloit.com/ or at: http://www.videonewswire.com/event.asp?id=78815.  Individuals who would like to participate by phone should dial 800-860-2442, referencing Regal Beloit. International callers should dial 412-858-4600, referencing Regal Beloit.  

A telephone replay of the call will be available through May 11, 2011 at 877-344-7529, conference ID 450370. International callers should call 412-317-0088 using the same conference ID.  A webcast replay will be available until August 3, 2011 and can be accessed at http://www.regalbeloit.com/rbceventspresentations.htm  or at http://www.videonewswire.com/event.asp?id=78815.

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: 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; difficulties consummating the pending acquisition of the Electrical Products Company of A.O. Smith Corporation that may have a negative impact on our results of operations; 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 filed on March 2, 2011 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.

SOURCE Regal Beloit Corporation