BELOIT, Wis., Aug. 6, 2018 /PRNewswire/ -- Regal Beloit
Corporation (NYSE: RBC) today reported second quarter 2018 diluted
earnings per share of $1.50, up 27%
from the prior year. Second quarter 2018 adjusted diluted
earnings per share* were $1.60, up
24% from the prior year.
Key financial results for the second quarter 2018 included:
- Total net sales of $959.7 million
increased 10.4% from the prior year and included a positive 1.3%
impact from foreign currency translation and a positive 3.5% impact
from acquisitions, net of divestitures. The result was a positive
organic sales growth rate of 5.7%.
- Income from operations was $99.6
million or 10.4% of net sales, up 80 basis points from prior
year. Adjusted income from operations was $106.1 million or 11.1% of net sales, up 70 basis
points from prior year.
- Net cash provided by operating activities was $101.8 million and capital expenditures totaled
$21.2 million, resulting in free cash
flow of $80.6 million or 122.3% of
net income.
- Repurchased 579,005 shares for a total of $46.1 million.
- The Board of Directors on July 24,
2018 approved a new $250
million share purchase authorization replacing the previous
authorization.
Second quarter 2018 segment results versus the prior year second
quarter included:
- Commercial and Industrial Systems Segment net sales were
$469.0 million, an increase of 15.1%.
Acquisitions, net of divestitures had a positive impact of 7.4%.
Foreign currency had a positive 2.1% translation impact. The result
was a positive organic sales growth rate of 5.7% driven by strength
in a number of end markets including power generation, oil &
gas, commercial HVAC, and Asia.
Operating margin was 6.5%. Excluding $5.1
million in purchase accounting and transaction costs,
$0.7 million in restructuring and
related costs and a $0.1 million gain
on sale of assets, adjusted operating margin was 7.7%.
- Climate Solutions Segment net sales were $277.3 million, an increase of 2.5%. Foreign
currency had a positive 0.1% translation impact. The result was an
organic sales growth rate of 2.4% driven by strength in North
American residential HVAC partially offset by weakness in the
Middle East and residential
hermetic motor components. Operating margin was 15.9%. Excluding
restructuring and related costs of $0.7
million, adjusted operating margin was 16.1%.
- Power Transmission Solutions Segment net sales were
$213.4 million, an increase of 11.6%.
Foreign currency had a positive 1.2% translation impact. The result
was a positive organic sales growth rate of 10.4% driven by
increased demand in the oil & gas, material handling, and
aerospace end markets. Operating margin was 11.8%. Excluding
restructuring and related costs of $0.1
million, adjusted operating margin was 11.8%.
*This earnings release includes non-GAAP financial
measures. Descriptions of why we believe these non-GAAP
measures are useful and reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP measures are included
with this earnings release.
"We had a strong second quarter with organic sales up 5.7%,
adjusted operating margin up 70 basis points and adjusted EPS up
24%," said Regal Chairman and CEO Mark
Gliebe. "We are driving the operating margin improvement
with strong volume, incremental price increases and manufacturing
productivity, despite the commodity inflation headwind.
2018 Outlook
"We had a solid first half of 2018. We are pleased to
see continued order strength entering the third quarter, and we
continue to expect mid-single digit organic sales growth for the
full year. While our input costs remain inflationary, we
expect the benefits from our price actions will offset the
commodity inflation headwind. As a result, we are narrowing
our 2018 adjusted diluted earnings per share to $5.70 to $6.00, which would make 2018 a record year in
both sales and earnings," continued Mr. Gliebe.
The Company forecasts 2018 GAAP diluted earnings per share of
$4.78 to $5.08. The difference between the GAAP
diluted earnings per share guidance and the adjusted diluted per
share guidance relates to expected restructuring and related costs
of $0.14 per share, purchase
accounting and transaction costs of $0.11 per share, gain on sale of assets of
$0.01 per share, and impairment and
exit related costs of $0.68 per
share.
The impairment and exit related costs are attributable to an
anticipated second half 2018 exit of the non-core residential
hermetic motor components business. As of June 30, 2018, the year to date sales and
adjusted operating profit of this business were $31.9 million and $0.9
million, respectively.
Conference Call
Regal will hold a conference call to discuss the earnings
release at 9:00 AM CDT (10:00 AM EDT) on Tuesday,
August 7, 2018. To listen to the live audio and view the
presentation during the call, please visit Regal's Investors
website: http://investors.regalbeloit.com. To listen by phone or to
ask the presenters a question, dial 888.317.6003 (U.S. callers) or
1.412.317.6061 (international callers) and enter 9721798# when
prompted.
A webcast replay will be available at the link above, and a
telephone replay will be available at 877.344.7529 (U.S. callers)
or 1.412.317.0088 (international callers), replay access code
10122178#. Both will be accessible until November 6, 2018.
About the Company
Regal Beloit Corporation (NYSE: RBC) is a leading manufacturer
of electric motors, electrical motion controls, power generation
and power transmission products serving markets throughout the
world. The Company is comprised of three business
segments: Commercial and Industrial Systems, Climate Solutions
and Power Transmission Solutions. Regal is headquartered in
Beloit, Wisconsin, and has
manufacturing, sales and service facilities throughout the United States, Canada, Mexico, Europe and Asia. For more information,
visit RegalBeloit.com.
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 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," "expect," "intend," "estimate,"
"forecast," "anticipate," "believe," "should," "project" or "plan"
or the negative of these terms or other similar words. These
forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties, assumptions and other
factors, some of which are beyond our control, which could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements, including but not limited to:
uncertainties regarding our ability to execute our restructuring
plans within expected costs and timing; increases in our overall
debt levels as a result of the acquisition of the Power
Transmission Solutions business of Emerson Electric Co. ("PTS") or
otherwise and our ability to repay principal and interest on our
outstanding debt; actions taken by our competitors and our ability
to effectively compete in the increasingly competitive global
electric motor, drives and controls, power generation and power
transmission industries; our ability to develop new products based
on technological innovation and marketplace acceptance of new and
existing products; fluctuations in commodity prices and raw
material costs; our dependence on significant customers; risks
associated with global manufacturing; issues and costs arising from
the integration of acquired companies and businesses including PTS
and the timing and impact of purchase accounting adjustments;
prolonged declines in oil and gas up stream capital spending;
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, government policies,
including policy changes affecting taxation, trade, immigration and
the like, and other external factors that we cannot control;
product liability and other litigation, or claims by end users,
government agencies or others that our products or our customers'
applications failed to perform as anticipated, particularly in high
volume applications or where such failures are alleged to be the
cause of property or casualty claims; unanticipated liabilities of
acquired businesses; 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; effects on earnings of any significant
impairment of goodwill or intangible assets; losses from failures,
breaches, attacks or disclosures involving our information
technology infrastructure and data; cyclical downturns affecting
the global market for capital goods; 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 February 27, 2018 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 release are made only as of their respective
dates, and we undertake no obligation to update these statements to
reflect subsequent events or circumstances.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
Unaudited
|
|
|
|
(Amounts in Millions,
Except per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
Net Sales
|
|
$
|
959.7
|
|
|
$
|
869.2
|
|
|
$
|
1,838.5
|
|
|
$
|
1,682.7
|
|
Cost of
Sales
|
|
712.3
|
|
|
646.4
|
|
|
1,356.2
|
|
|
1,244.4
|
|
Gross
Profit
|
|
247.4
|
|
|
222.8
|
|
|
482.3
|
|
|
438.3
|
|
Operating
Expenses
|
|
147.8
|
|
|
139.6
|
|
|
294.5
|
|
|
280.1
|
|
Income from
Operations
|
|
99.6
|
|
|
83.2
|
|
|
187.8
|
|
|
158.2
|
|
Other Expenses,
net
|
|
0.4
|
|
|
0.2
|
|
|
0.8
|
|
|
0.4
|
|
Interest
Expense
|
|
14.2
|
|
|
14.7
|
|
|
27.2
|
|
|
29.1
|
|
Interest
Income
|
|
0.6
|
|
|
1.0
|
|
|
0.8
|
|
|
2.0
|
|
Income before
Taxes
|
|
85.6
|
|
|
69.3
|
|
|
160.6
|
|
|
130.7
|
|
Provision for Income
Taxes
|
|
18.3
|
|
|
15.0
|
|
|
34.0
|
|
|
28.8
|
|
Net Income
|
|
67.3
|
|
|
54.3
|
|
|
126.6
|
|
|
101.9
|
|
Less: Net Income
Attributable to Noncontrolling Interests
|
|
1.4
|
|
|
1.3
|
|
|
2.3
|
|
|
2.6
|
|
Net Income
Attributable to Regal Beloit Corporation
|
|
$
|
65.9
|
|
|
$
|
53.0
|
|
|
$
|
124.3
|
|
|
$
|
99.3
|
|
Earnings Per Share
Attributable to Regal Beloit Corporation:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
$
|
2.83
|
|
|
$
|
2.22
|
|
Assuming
Dilution
|
|
$
|
1.50
|
|
|
$
|
1.18
|
|
|
$
|
2.81
|
|
|
$
|
2.20
|
|
Cash Dividends
Declared Per Share
|
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
$
|
0.54
|
|
|
$
|
0.50
|
|
Weighted Average
Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
43.8
|
|
|
44.7
|
|
|
44.0
|
|
|
44.8
|
|
Assuming
Dilution
|
|
44.1
|
|
|
45.1
|
|
|
44.3
|
|
|
45.1
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
Unaudited
|
|
|
|
(Dollars in
Millions)
|
|
|
|
|
|
Jun 30,
2018
|
|
Dec 30,
2017
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
175.6
|
|
|
$
|
139.6
|
|
Trade Receivables,
less Allowances of $11.4 Million in 2018 and $11.3 Million in
2017
|
|
607.7
|
|
|
506.3
|
|
Inventories
|
|
785.3
|
|
|
757.1
|
|
Prepaid Expenses and
Other Current Assets
|
|
155.7
|
|
|
171.4
|
|
Total Current
Assets
|
|
1,724.3
|
|
|
1,574.4
|
|
|
|
|
|
|
Net Property, Plant,
Equipment and Noncurrent Assets
|
|
2,910.4
|
|
|
2,813.8
|
|
Total
Assets
|
|
$
|
4,634.7
|
|
|
$
|
4,388.2
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
Payable
|
|
$
|
438.6
|
|
|
$
|
384.3
|
|
Other Accrued
Expenses
|
|
229.0
|
|
|
226.5
|
|
Current Maturities of
Debt
|
|
100.5
|
|
|
101.2
|
|
Total Current
Liabilities
|
|
768.1
|
|
|
712.0
|
|
|
|
|
|
|
Long-Term
Debt
|
|
1,235.1
|
|
|
1,039.9
|
|
Other Noncurrent
Liabilities
|
|
290.8
|
|
|
281.6
|
|
Equity:
|
|
|
|
|
Total Regal Beloit
Corporation Shareholders' Equity
|
|
2,310.0
|
|
|
2,325.5
|
|
Noncontrolling
Interests
|
|
30.7
|
|
|
29.2
|
|
Total
Equity
|
|
2,340.7
|
|
|
2,354.7
|
|
Total Liabilities and
Equity
|
|
$
|
4,634.7
|
|
|
$
|
4,388.2
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
67.3
|
|
|
$
|
54.3
|
|
|
$
|
126.6
|
|
|
$
|
101.9
|
|
Adjustments to
Reconcile Net Income and Changes in Assets and Liabilities (Net of
Acquisitions and Divestitures) to Net Cash Provided by Operating
Activities:
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
36.2
|
|
|
34.4
|
|
|
71.0
|
|
|
68.8
|
|
(Gain) Loss on
Disposal of Assets, Net
|
|
2.2
|
|
|
(0.2)
|
|
|
2.4
|
|
|
(0.3)
|
|
Gain on Disposal of
Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
Exit of
Business
|
|
—
|
|
|
3.9
|
|
|
—
|
|
|
3.9
|
|
Share-Based
Compensation Expense
|
|
3.8
|
|
|
4.1
|
|
|
7.2
|
|
|
7.1
|
|
Change in Operating
Assets and Liabilities
|
|
(7.7)
|
|
|
1.9
|
|
|
(62.9)
|
|
|
(32.4)
|
|
Net Cash Provided by
Operating Activities
|
|
101.8
|
|
|
98.4
|
|
|
144.3
|
|
|
148.9
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Additions to
Property, Plant and Equipment
|
|
(21.2)
|
|
|
(16.7)
|
|
|
(40.5)
|
|
|
(33.7)
|
|
Net Sales of
Investment Securities
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
Business
Acquisitions, Net of Cash Acquired
|
|
(161.5)
|
|
|
—
|
|
|
(161.5)
|
|
|
—
|
|
Proceeds from Sale of
Assets
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
|
1.3
|
|
Proceeds Received
from Disposal of Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
Net Cash Used in
Investing Activities
|
|
(182.6)
|
|
|
(16.4)
|
|
|
(201.1)
|
|
|
(31.9)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net Borrowings
(Repayments) Under Revolving Credit Facility
|
|
152.9
|
|
|
(8.9)
|
|
|
193.9
|
|
|
(2.1)
|
|
Net (Repayments)
Borrowings from Short-Term Borrowings
|
|
(0.3)
|
|
|
0.3
|
|
|
(0.7)
|
|
|
0.1
|
|
Proceeds from
Long-Term Debt
|
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
Repayments of
Long-Term Debt
|
|
—
|
|
|
(62.0)
|
|
|
(0.1)
|
|
|
(112.1)
|
|
Dividends Paid to
Shareholders
|
|
(11.4)
|
|
|
(10.6)
|
|
|
(22.9)
|
|
|
(21.4)
|
|
Payments of
Contingent Consideration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3)
|
|
Proceeds from the
Exercise of Stock Options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Repurchase of Common
Stock
|
|
(45.1)
|
|
|
(21.0)
|
|
|
(71.1)
|
|
|
(21.0)
|
|
Shares Surrendered
for Taxes
|
|
(2.0)
|
|
|
(2.3)
|
|
|
(2.9)
|
|
|
(3.4)
|
|
Net Cash Provided By
(Used In) Financing Activities
|
|
94.3
|
|
|
(104.2)
|
|
|
96.4
|
|
|
(164.5)
|
|
EFFECT OF EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS
|
|
(7.8)
|
|
|
3.6
|
|
|
(3.6)
|
|
|
6.7
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
5.7
|
|
|
(18.6)
|
|
|
36.0
|
|
|
(40.8)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
169.9
|
|
|
262.3
|
|
|
139.6
|
|
|
284.5
|
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
175.6
|
|
|
$
|
243.7
|
|
|
$
|
175.6
|
|
|
$
|
243.7
|
|
SEGMENT
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Commercial &
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
Net Sales
|
|
$
|
469.0
|
|
|
$
|
407.4
|
|
|
$
|
277.3
|
|
|
$
|
270.5
|
|
|
$
|
213.4
|
|
|
$
|
191.3
|
|
|
$
|
959.7
|
|
|
$
|
869.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Margin
|
|
6.5
|
%
|
|
5.1
|
%
|
|
15.9
|
%
|
|
14.9
|
%
|
|
11.8
|
%
|
|
11.6
|
%
|
|
10.4
|
%
|
|
9.6
|
%
|
Adjusted Operating
Margin*
|
|
7.7
|
%
|
|
6.7
|
%
|
|
16.1
|
%
|
|
15.2
|
%
|
|
11.8
|
%
|
|
11.7
|
%
|
|
11.1
|
%
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales
Growth*
|
|
5.7
|
%
|
|
4.3
|
%
|
|
2.4
|
%
|
|
6.5
|
%
|
|
10.4
|
%
|
|
3.5
|
%
|
|
5.7
|
%
|
|
4.8
|
%
|
Acquisitions, Net of
Divestitures
|
|
7.4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(2.0)
|
%
|
|
3.5
|
%
|
|
(0.5)
|
%
|
Foreign Currency
Impact
|
|
2.1
|
%
|
|
(1.1)
|
%
|
|
0.1
|
%
|
|
(0.2)
|
%
|
|
1.2
|
%
|
|
(0.5)
|
%
|
|
1.3
|
%
|
|
(0.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
Commercial &
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
Net Sales
|
|
$
|
883.0
|
|
|
$
|
788.6
|
|
|
$
|
537.2
|
|
|
$
|
518.2
|
|
|
$
|
418.3
|
|
|
$
|
375.9
|
|
|
$
|
1,838.5
|
|
|
$
|
1,682.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Margin
|
|
6.7
|
%
|
|
5.9
|
%
|
|
14.2
|
%
|
|
13.9
|
%
|
|
12.4
|
%
|
|
10.7
|
%
|
|
10.2
|
%
|
|
9.4
|
%
|
Adjusted Operating
Margin*
|
|
7.5
|
%
|
|
6.9
|
%
|
|
14.4
|
%
|
|
14.2
|
%
|
|
12.4
|
%
|
|
10.8
|
%
|
|
10.6
|
%
|
|
10.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales
Growth
|
|
5.7
|
%
|
|
3.0
|
%
|
|
3.1
|
%
|
|
5.1
|
%
|
|
9.6
|
%
|
|
(0.8)
|
%
|
|
5.8
|
%
|
|
2.8
|
%
|
Acquisitions, Net of
Divestitures
|
|
3.8
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(2.3)
|
%
|
|
1.8
|
%
|
|
(0.5)
|
%
|
Foreign Currency
Impact
|
|
2.5
|
%
|
|
(0.9)
|
%
|
|
0.5
|
%
|
|
(0.3)
|
%
|
|
1.7
|
%
|
|
(0.5)
|
%
|
|
1.7
|
%
|
|
(0.6)
|
%
|
NON-GAAP MEASURES AND OTHER DEFINITIONS
Unaudited
(Dollars in Millions, Except per Share Data)
We prepare financial statements in accordance with accounting
principles generally accepted in the
United States ("GAAP"). We also periodically disclose
certain financial measures in our quarterly earnings releases, on
investor conference calls, and in investor presentations and
similar events that may be considered "non-GAAP" financial
measures. This additional information is not meant to be considered
in isolation or as a substitute for our results of operations
prepared and presented in accordance with GAAP.
In this earnings release, we disclose the following non-GAAP
financial measures, and we reconcile these measures in the tables
below to the most directly comparable GAAP financial measures:
adjusted diluted earnings per share (both historical and
projected), adjusted income from operations, adjusted operating
income, adjusted operating margin, free cash flow, and free cash
flow as a percentage of net income attributable to Regal Beloit
Corporation. We believe that these non-GAAP financial measures are
useful measures for providing investors with additional information
regarding our results of operations and for helping investors
understand and compare our operating results across accounting
periods and compared to our peers. Our management primarily uses
adjusted income from operations, adjusted operating income and
adjusted operating margin to help us manage and evaluate our
business and make operating decisions, while adjusted diluted
earnings per share, free cash flow and free cash flow as a
percentage of net income are primarily used to help us evaluate our
business and forecast our future results. Accordingly, we believe
disclosing and reconciling each of these measures helps investors
evaluate our business in the same manner as management.
In addition to these non-GAAP measures, we also use the term
"organic sales" to refer to GAAP sales from existing operations
excluding sales from acquired businesses recorded prior to the
first anniversary of the acquisition less the amount of sales
attributable to any divested businesses ("acquisition sales"), and
the impact of foreign currency translation. The impact of foreign
currency translation is determined by translating the respective
period's sales (excluding acquisition sales) using the same
currency exchange rates that were in effect during the prior year
periods. We use the term "organic sales growth" to refer to the
increase in our sales between periods that is attributable to
organic sales. For further clarification, we may use the term
"acquisition growth" to refer to the increase in our sales between
periods that is attributable to acquisition sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED DILUTED
EARNINGS PER SHARE
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
GAAP Diluted Earnings
Per Share
|
|
$
|
1.50
|
|
|
$
|
1.18
|
|
|
$
|
2.81
|
|
|
$
|
2.20
|
|
Restructuring and
Related Costs
|
|
0.03
|
|
|
0.12
|
|
|
0.06
|
|
|
0.17
|
|
Purchase Accounting
and Transaction Costs
|
|
0.08
|
|
|
—
|
|
|
0.08
|
|
|
—
|
|
Gain on Sale of
Assets
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Adjusted Diluted
Earnings Per Share
|
|
$
|
1.60
|
|
|
$
|
1.29
|
|
|
$
|
2.94
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Commercial
&
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
GAAP Income from
Operations
|
|
$
|
30.5
|
|
|
$
|
20.6
|
|
|
$
|
44.0
|
|
|
$
|
40.4
|
|
|
$
|
25.1
|
|
|
$
|
22.2
|
|
|
$
|
99.6
|
|
|
$
|
83.2
|
|
Restructuring and
Related Costs
|
|
0.7
|
|
|
6.9
|
|
|
0.7
|
|
|
0.6
|
|
|
0.1
|
|
|
0.2
|
|
|
1.5
|
|
|
7.7
|
|
Purchase Accounting
and Transaction Costs
|
|
5.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
Gain on Sale of
Assets
|
|
(0.1)
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
(0.3)
|
|
Adjusted Income from
Operations
|
|
$
|
36.2
|
|
|
$
|
27.2
|
|
|
$
|
44.7
|
|
|
$
|
41.0
|
|
|
$
|
25.2
|
|
|
$
|
22.4
|
|
|
$
|
106.1
|
|
|
$
|
90.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
%
|
|
6.5%
|
|
5.1%
|
|
15.9%
|
|
14.9%
|
|
11.8%
|
|
11.6%
|
|
10.4
|
%
|
|
9.6
|
%
|
Adjusted Operating
Margin %
|
|
7.7%
|
|
6.7%
|
|
16.1%
|
|
15.2%
|
|
11.8%
|
|
11.7%
|
|
11.1
|
%
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
Commercial
&
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
GAAP Income from
Operations
|
|
$
|
59.6
|
|
|
$
|
46.3
|
|
|
$
|
76.3
|
|
|
$
|
71.8
|
|
|
$
|
51.9
|
|
|
$
|
40.1
|
|
|
$
|
187.8
|
|
|
$
|
158.2
|
|
Restructuring and
Related Costs
|
|
2.0
|
|
|
8.6
|
|
|
1.1
|
|
|
1.7
|
|
|
0.1
|
|
|
0.6
|
|
|
3.2
|
|
|
10.9
|
|
Purchase Accounting
and Transaction Costs
|
|
5.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
Gain on Disposal of
Business
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
Gain on Sale of
Assets
|
|
(0.4)
|
|
|
(0.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
(0.4)
|
|
Adjusted Income from
Operations
|
|
$
|
66.3
|
|
|
$
|
54.5
|
|
|
$
|
77.4
|
|
|
$
|
73.5
|
|
|
$
|
52.0
|
|
|
$
|
40.6
|
|
|
$
|
195.7
|
|
|
$
|
168.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
%
|
|
6.7%
|
|
5.9%
|
|
14.2%
|
|
13.9%
|
|
12.4%
|
|
10.7%
|
|
10.2
|
%
|
|
9.4
|
%
|
Adjusted Operating
Margin %
|
|
7.5%
|
|
6.9%
|
|
14.4%
|
|
14.2%
|
|
12.4%
|
|
10.8%
|
|
10.6
|
%
|
|
10.0
|
%
|
FREE CASH
FLOW
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
|
Jun 30,
2018
|
|
Jul 1,
2017
|
Net Cash Provided by
Operating Activities
|
|
$
|
101.8
|
|
|
$
|
98.4
|
|
|
$
|
144.3
|
|
|
$
|
148.9
|
|
Additions to Property
Plant and Equipment
|
|
(21.2)
|
|
|
(16.7)
|
|
|
(40.5)
|
|
|
(33.7)
|
|
Free Cash
Flow
|
|
$
|
80.6
|
|
|
$
|
81.7
|
|
|
$
|
103.8
|
|
|
$
|
115.2
|
|
Free Cash Flow as a
Percentage of Net Income Attributable to Regal Beloit
Corporation
|
|
122.3
|
%
|
|
154.2
|
%
|
|
83.5
|
%
|
|
116.0
|
%
|
2018 ADJUSTED
ANNUAL GUIDANCE
|
|
Minimum
|
|
Maximum
|
2018 Diluted EPS
Annual Guidance
|
|
$
|
4.78
|
|
|
$
|
5.08
|
|
Restructuring and
Related Costs
|
|
0.14
|
|
|
0.14
|
|
Purchase Accounting
and Transaction Costs
|
|
0.11
|
|
|
0.11
|
|
Gain on Sale of
Assets
|
|
(0.01)
|
|
|
(0.01)
|
|
Impairment and Exit
Related Costs
|
|
0.68
|
|
|
0.68
|
|
2018 Adjusted Diluted
EPS Annual Guidance
|
|
$
|
5.70
|
|
|
$
|
6.00
|
|
ORGANIC SALES
GROWTH
|
|
Three Months
Ended
June 30,
2018
|
|
|
|
Commercial
&
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
Net Sales
|
|
$
|
469.0
|
|
|
$
|
277.3
|
|
|
$
|
213.4
|
|
|
$
|
959.7
|
|
|
Net Sales from
Business Acquired
|
|
(30.1)
|
|
|
—
|
|
|
—
|
|
|
(30.1)
|
|
|
Impact from Foreign
Currency Exchange Rates
|
|
(8.4)
|
|
|
(0.3)
|
|
|
(2.3)
|
|
|
(11.0)
|
|
|
Adjusted Net
Sales
|
|
$
|
430.5
|
|
|
$
|
277.0
|
|
|
$
|
211.1
|
|
|
$
|
918.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales Three
Months Ended July 1, 2017
|
|
$
|
407.4
|
|
|
$
|
270.5
|
|
|
$
|
191.3
|
|
|
$
|
869.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
%
|
|
5.7
|
%
|
|
2.4
|
%
|
|
10.4
|
%
|
|
5.7
|
%
|
|
Net Sales Growth
%
|
|
15.1
|
%
|
|
2.5
|
%
|
|
11.6
|
%
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
ORGANIC SALES
GROWTH
|
|
Six Months
Ended
June 30,
2018
|
|
|
|
Commercial
&
Industrial
Systems
|
|
Climate
Solutions
|
|
Power
Transmission
Solutions
|
|
Total
Regal
|
|
Net Sales
|
|
$
|
883.0
|
|
|
$
|
537.2
|
|
|
$
|
418.3
|
|
|
$
|
1,838.5
|
|
|
Net Sales from
Business Acquired
|
|
(30.1)
|
|
|
—
|
|
|
—
|
|
|
(30.1)
|
|
|
Impact from Foreign
Currency Exchange Rates
|
|
(19.7)
|
|
|
(2.8)
|
|
|
(6.3)
|
|
|
(28.8)
|
|
|
Adjusted Net
Sales
|
|
$
|
833.2
|
|
|
$
|
534.4
|
|
|
$
|
412.0
|
|
|
$
|
1,779.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales Six Months
Ended July 1, 2017
|
|
$
|
788.6
|
|
|
$
|
518.2
|
|
|
$
|
375.9
|
|
|
$
|
1,682.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
%
|
|
5.7
|
%
|
|
3.1
|
%
|
|
9.6
|
%
|
|
5.8
|
%
|
|
Net Sales Growth
%
|
|
12.0
|
%
|
|
3.7
|
%
|
|
11.3
|
%
|
|
9.3
|
%
|
|
View original
content:http://www.prnewswire.com/news-releases/regal-beloit-corporation-announces-second-quarter-2018-financial-results-300692713.html
SOURCE Regal Beloit Corporation