Regal Beloit Q1 Profit Down 12%, But Results Beats View

(RTTNews) - Power generation products manufacturer Regal Beloit Corp. (RBC) on Monday reported a 12 percent decline in profit for the first quarter from last year, as higher sales were offset by an increase in one-time expenses and lower margins.

However, both revenue and adjusted earnings per share for the quarter beat analysts' expectations. Looking ahead, the company forecast earnings for the second quarter in line with Street estimates.

For the first quarter, net income attributable to Regal Beloit was $43.8 million or $0.96 per share, down from $49.5 million or $1.09 per share in the prior-year quarter.

The latest quarter's results include restructuring costs of $0.06 per share as well as purchase accounting and transaction costs of $0.02 per share. The prior-year quarter's results included restructuring costs of $0.01 per share and a tax benefit of $0.02 per share.

Excluding items, adjusted net income for the quarter was $1.04 per share, compared to $1.08 per share in the year-ago period. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.03 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 3 percent to $801.2 million from $778.2 million in the same quarter last year and beat analysts' consensus revenue estimate of $794.06 million.

Mark Gliebe, Chairman and CEO of Regal Beloit said, "We had solid results in a number of our key businesses in the first quarter including North American HVAC, power generation, Europe and China. Our profitability for the quarter was in line with our expectations as we continued to execute on our Simplification initiative by consolidating our manufacturing footprint, our design platforms and our ERP systems."

Foreign currency exchange rates negatively impacted total net sales for the quarter by 1.0 percent, excluding the businesses acquired within the last year, and also negatively impacted international sales by 2.9 percent.

Net sales to regions outside the U.S. were flat compared to the year-ago period and represented 33.9 percent of the company's total net sales.

Electrical segment's sales for the quarter rose 4 percent from the prior-year quarter to $736.8 million and included $23.4 million from businesses acquired within the last year. Mechanical segment sales declined 4 percent to $64.4 million, including a 7 percent decline in North American sales.

The company's gross margin for the quarter declined 130 basis points from the year-ago period to 24.3 percent.

Looking ahead to the second quarter, Regal Beloit forecast earnings in a range of $1.19 to $1.27 per share, and adjusted earnings of $1.24 to $1.32 per share. Analysts expect the company to report earnings of $1.26 per share for the quarter.

Gliebe added, "The first quarter was a good start to the year. In the second quarter, we expect modest growth and normal seasonality in our HVAC business, continued growth in power generation and slight growth in our commercial and industrial business."

RBC closed Monday's regular trading session at $74.90, down $0.35 or 0.47 percent on a volume of 141,257 shares. However, in after-hours, the stock gained $0.35 or 0.47 percent to $75.25.