RBC RBC Bearings Incorporated

BELOIT, Wis., Oct. 31, 2011 /PRNewswire/ -- Regal Beloit Corporation (NYSE: RBC) today reported financial results for the third quarter ended October 1, 2011.  Net sales of $736.9 million increased 24.7% compared to $590.8 million for the third quarter 2010.   Diluted earnings per share for the third quarter 2011 were $1.13 compared to $1.14 for the third quarter 2010.  Diluted earnings per share for the third quarter 2011 included a gain on a business divestiture and purchase accounting adjustments and transaction costs related to the acquisition of the A.O. Smith Electric Products Company (EPC), as detailed below:

"It was an exciting quarter for Regal Beloit," commented Mark Gliebe, Chief Executive Officer.  "On top of strong overall performance from our operations, we closed on the acquisition of EPC which is the largest acquisition in the Company's history.   Our Commercial and Industrial, Mechanical, International and EPC businesses performed exceptionally well in the quarter offsetting continued weakness in residential HVAC sales.   Additionally, our free cash flow for the quarter was well in excess of net income.   Overall, we were pleased with our performance in the quarter."

*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.

Net sales for the third quarter 2011 increased $146.1 million compared to the third quarter 2010 driven primarily by incremental sales from EPC since August 22, 2011 and the other businesses acquired within the last twelve months (the "acquired businesses").  

In the Electrical segment, net sales for the third quarter 2011 increased $139.7 million compared to the third quarter 2010, including $144.5 million of incremental net sales from the acquired businesses.  North American residential HVAC net sales, excluding net sales from the acquired businesses, decreased 20.3% in the third quarter 2011 compared to the third quarter 2010, due primarily to reduced federal tax incentives for high efficiency products, the impact of the growth of R22 systems and continued weakness in the housing market.  North American commercial and industrial net sales, excluding net sales from the acquired businesses, increased 14.8% in the third quarter 2011 compared to the third quarter 2010, driven primarily by improving economic conditions, sales of new energy efficient products, pricing initiatives to offset commodity inflation, and increased sales in the generator business.  

In the Mechanical segment, net sales for the third quarter 2011 increased $6.4 million or 10.2% compared to the third quarter 2010.  This increase was driven primarily by improving demand in later cycle end markets.

Net sales to regions outside of the United States were 35.9% of total net sales for the third quarter 2011 compared to 31.0% of total net sales for the third quarter 2010.  Third quarter 2011 net sales of high efficiency products were 15.4% of total net sales and increased 0.2% compared to the third quarter 2010.  The impact of foreign currency exchange rates increased total net sales by 1.8% for the third quarter 2011 compared to the third quarter 2010.

Gross profit was $179.6 million, or 24.4% of net sales, for the third quarter 2011 compared to $144.7 million, or 24.5% of net sales, for the third quarter 2010. Cost of sales for the third quarter 2011 included expenses of $10.3 million related to EPC purchase accounting adjustments to inventories.  Excluding this expense, adjusted gross profit was $189.9 million, or 25.8% of net sales, for the third quarter 2011.  Gross profit was $495.1 million, or 23.8% of net sales, for the nine months ended October 1, 2011 compared to $419.1 million, or 24.9% of net sales, for the nine months ended October 2, 2010.  Cost of sales for the nine months ended October 1, 2011 included the $10.3 million of purchase accounting adjustments and $28.0 million of incremental warranty expenses accrued in the second quarter 2011.  Excluding these expenses, adjusted gross profit was $533.4 million, or 25.6% of net sales, for the nine months ended October 1, 2011.      

Operating expenses for the third quarter 2011 increased $26.7 million primarily due to $21.9 million related to the acquired businesses, and an incremental $5.6 million of acquisition-related expenses.

Net interest expense for the third quarter 2011 increased $5.9 million compared to the third quarter 2010 primarily due to interest on additional borrowings incurred to finance the EPC acquisition.  The effective tax rate for the third quarter 2011 was 30.3%, consistent with the third quarter 2010.

Net income attributable to Regal Beloit Corporation for the third quarter 2011 was $45.7 million compared to $44.7 million for the third quarter 2010.  Diluted earnings per share for the third quarter 2011 were $1.13 compared to $1.14 for the third quarter 2010.

Net cash provided by operating activities was $66.7 million for the third quarter 2011 as compared to $48.9 million for the third quarter 2010.  Capital expenditures were $5.9 million for the third quarter 2011.  

"As we look forward to the fourth quarter," commented Mr. Gliebe, "we are expecting continued strength in our C&I, Mechanical and India based businesses.   However, we also expect further weakness in residential HVAC demand and a general slowdown in our China based businesses. Accordingly, we are projecting fourth quarter adjusted diluted earnings per share of  $0.67 to $0.73, which excludes  purchase accounting adjustments related to the acquisition of EPC, which we anticipate will be approximately $0.25 per share.  I am pleased with the performance and progress we are making in 2011," added Gliebe.  "We enter the fourth quarter with real momentum from the largest acquisition in the Company's history.  Despite challenges in a few end markets, we continue to grow the Company, improve our performance and position Regal Beloit for continued success."

Regal Beloit will hold a conference call pertaining to this news release at 10:00 AM CDT (11:00 AM EDT) on Tuesday, November 1, 2011. To listen to the call and view the presentation slides via the internet, please go http://www.regalbeloit.com/ or at: http://www.videonewswire.com/event.asp?id=83183.  Individuals who would like to participate by phone should dial 866-524-3160, referencing Regal Beloit.  International callers should dial 412-317-6760, referencing Regal Beloit.  

A telephone replay of the call will be available through February 1, 2012, at 877-344-7529, conference ID 10005959.  International callers should call 412-317-0088 using the same conference ID.  A webcast replay will be available until February 1, 2012, and can be accessed at http://www.regalbeloit.com/rbceventspresentations.htm  or at http://www.videonewswire.com/event.asp?id=83183.

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; 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 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