Regal Beloit Posts Loss In Q4, But Results Beat View; Sees Weak Q1

(RTTNews) - Power generation products manufacturer Regal Beloit Corp. (RBC) on Monday reported a loss for the fourth quarter, reflecting goodwill and asset impairments that more than offset higher revenues.

However, both revenue and adjusted earnings beat analysts' expectations. Looking ahead, the company forecast earnings for the first quarter below Street estimates.

For the fourth quarter, net loss attributable to Regal Beloit was $33.2 million or $0.74 per share, compared to net income of $29.9 million or $0.70 per share in the prior-year quarter. The latest quarter's results include goodwill and intangible asset impairments of $74.7 million after tax, or $1.65 per share.

Excluding items, adjusted net income for the quarter was $0.97 per share, compared to $0.76 per share in the year-ago period. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.84 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 2 percent to $727.3 million from $715.6 million in the same quarter last year and beat analysts' consensus revenue estimate of $715.69 million.

Mark Gliebe, Chairman and CEO of Regal Beloit said, "We had modest revenue growth and double digit growth in adjusted earnings. We experienced revenue growth in our North American residential HVAC, power generation, oil and gas and China based businesses, which offset weaker revenue in our North American commercial & industrial motors and our India and Australia based businesses."

Foreign currency exchange rates negatively impacted total net sales by 0.9 percent and international sales by 2.5 percent. Net sales to regions outside the United States represented 34.1 percent of the company's total net sales.

Electrical segment's sales for the quarter rose 3 percent from the prior-year quarter to $664.9 million, while mechanical segment sales declined 9 percent to $62.4 million.

The company's gross margin for the quarter rose 200 basis points from the year-ago period to 24.5 percent.

For fiscal 2013, net income attributable to Regal Beloit was $120.0 million or $2.64 per share, down from $195.6 million or $4.64 per share in the prior year. Adjusted earnings for the year were $4.36 per share, compared to $4.73 per share in the previous year. Net sales for the year declined 2 percent to $3.10 billion from $3.17 billion last year.

Street expected the company to earn $4.24 per share for the year on revenues of $3.09 billion.

Looking ahead to the first quarter of fiscal 2014, Regal Beloit forecast earnings in a range of $0.90 to $0.98 per share, adjusted earnings of $0.99 to $1.07 per share, and modest revenue growth. Analysts expect the company to report earnings of $1.15 per share for the quarter on revenues of $797.32 million.

Gliebe added, "Our first quarter guidance includes our typical seasonality in residential HVAC, modest growth in our commercial and industrial motors businesses and continued growth in both our China and global power generation businesses. We expect our markets in India and Australia to remain challenged."

The company also projects margin headwinds that are expected to moderate by the end of the second quarter.

RBC closed Monday's regular trading session at $73.52, up $0.89 or 1.23 percent on a volume of 493,180 shares.