Regal Beloit Q3 Profit Tops View, But Sales Miss; Provides Rosy Outlook

(RTTNews) - Power generation products manufacturer Regal Beloit Corp. (RBC) reported Monday a profit for the third quarter that decreased from last year, reflecting higher expenses and a sales decline. Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates by a whisker. The company also provided earnings forecast for the fourth quarter, above Street view.

"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," CEO Mark Gliebe said in a statement.

The Beloit, Wisconsin-based company reported net income of $52.6 million or $1.16 per share for the third quarter, lower than $54.3 million or $1.29 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $1.18 per share, compared to last year's $1.32 per share.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 1.4 percent to $768.2 million from $779.5 million in the same quarter last year, and missed thirteen Wall Street analysts' consensus estimate of $771.70 million by a whisker.

Foreign currency exchange rates negatively impacted total net sales by 1.1 percent and international sales by 3.4 percent.

Sales for the electrical segment for the quarter edged down 0.1 percent from the prior-year quarter to $707.5 million, and mechanical segment sales totaled $60.7 million, down 14.7 percent from last year.

Geographically, total international sales increased 2.7 percent from the year-ago quarter and represented 33.2 percent of total net sales.

Operating margins contracted 40 basis points to 10.3 percent as operating expenses increased 130 basis points, partially offset by a 90 basis points improvement in gross margins.

"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," Gliebe noted.

Looking ahead to the fourth quarter, the company anticipates adjusted earnings in a range of $0.82 to $0.90 per share. Analysts expect the company to report earnings of $0.78 per share for the quarter.

"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," Gliebe added.

RBC closed Monday's regular trading session at $72.76, up $0.07 or 0.10% on a volume of 0.87 million shares.