BELOIT, Wis., Nov. 5, 2018
/PRNewswire/ -- Regal Beloit Corporation (NYSE: RBC) today
reported third quarter 2018 diluted earnings per share of
$1.17, down 16% from the prior
year. Third quarter 2018 adjusted diluted earnings per share*
were $1.67, up 23% from the prior
year.
Key financial results for the third quarter 2018 included:
- Total net sales of $925.4 million
increased 8.0% from the prior year and included a negative 0.9%
impact from foreign currency, a negative 0.4% impact from the
business to be exited**, and a positive 4.1% impact from
acquisitions, net of divestitures. The result was a positive
organic sales growth rate of 5.2%.
- Income from operations was $69.4
million or 7.5% of net sales. Adjusted income from
operations was $106.5 million or
11.6% of adjusted net sales.
- Net cash provided by operating activities was $106.0 million and capital expenditures totaled
$18.7 million, resulting in free cash
flow of $87.3 million or 133.3% of
adjusted net income.
Third quarter 2018 segment results versus the prior year third
quarter included:
- Commercial and Industrial Systems Segment net sales were
$462.3 million, an increase of 13.3%.
Acquisitions, net of divestitures had a positive impact of 8.5%.
Foreign currency had a negative 1.3% impact. The result was a
positive organic sales growth rate of 6.1% driven by strength in a
number of end markets including distribution, power generation, oil
& gas and commercial HVAC. Operating margin was 7.6%. Excluding
$1.9 million in restructuring and
related costs and $0.2 million in
purchase accounting and transaction costs, adjusted operating
margin was 8.1%.
- Climate Solutions Segment net sales were $255.4 million, a decrease of 0.2%. The business
to be exited had a negative 0.9% impact. Foreign currency had a
negative 0.7% impact. The result was an organic sales growth rate
of 1.4% driven by strength in North American residential HVAC and
commercial refrigeration partially offset by weakness in
international markets. Operating margin was 2.3%. Excluding
impairment and exit related costs of $34.9
million, restructuring and related costs of $0.3 million, and operating income from the
business to be exited of $0.3
million, adjusted operating margin was 16.7% of adjusted net
sales.
- Power Transmission Solutions Segment net sales were
$207.7 million, an increase of 7.7%.
Foreign currency had a negative 0.4% impact. The result was a
positive organic sales growth rate of 8.1% driven by increased
demand in oil & gas, distribution and material handling.
Operating margin was 13.5%. Excluding restructuring and related
costs of $0.1 million, adjusted
operating margin was 13.6%.
*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.
**The business to be exited is the residential hermetic motor
components business referenced by the Company in its second quarter
2018 earnings release dated August 6,
2018.
"We had another strong quarter with organic sales up 5.2% and
adjusted EPS up 23%," said Regal Chairman and CEO Mark Gliebe. "We continue to drive operating
margin improvement with strong volume, incremental price and
manufacturing productivity, despite the commodity inflation and
tariff headwinds.
2018 Outlook
"Through the first three quarters of 2018, organic sales were
up nearly 6% and adjusted earnings per share were up 23%. As we
enter the fourth quarter, we are pleased to see continued order
strength in most end markets. We expect the benefits from our price
actions will continue to offset commodity inflation and tariff
headwinds. For the year, we are again increasing the midpoint of
our 2018 adjusted diluted earnings per share guidance and narrowing
the range to $5.85 to $5.95. We expect 2018 to be a record year in both
sales and earnings," continued Mr. Gliebe.
The Company forecasts 2018 GAAP diluted earnings per share of
$5.11 to $5.21. 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 $0.10 per
share, gain on sale of assets of $0.01 per share, CEO transition costs of
$0.07 per share, net income from the
business to be exited of $0.02 per
share, provisional benefit of the new U.S. tax legislation of
$0.15 per share, and impairment and
exit related costs of $0.61 per
share.
Conference Call
Regal will hold a conference call to discuss the earnings
release at 9:00 AM CDT (10:00 AM EDT) on Monday,
November 5, 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 1.888.317.6003 (U.S. callers)
or 1.412.317.6061 (international callers) and enter 2908615# when
prompted.
A webcast replay will be available at the link above, and a
telephone replay will be available at 1.877.344.7529 (U.S. callers)
or 1.412.317.0088 (international callers), replay access code
10125335#. Both will be accessible until February 5, 2019.
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. We create a better tomorrow by developing and responsibly
producing energy-efficient products and systems.
Our 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 worldwide. 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
|
|
|
Nine Months
Ended
|
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
Net Sales
|
|
$
|
925.4
|
|
|
$
|
856.9
|
|
|
$
|
2,763.9
|
|
|
$
|
2,539.6
|
|
Cost of
Sales
|
|
682.8
|
|
|
630.0
|
|
|
2,039.0
|
|
|
1,874.4
|
|
Gross
Profit
|
|
242.6
|
|
|
226.9
|
|
|
724.9
|
|
|
665.2
|
|
Operating
Expenses
|
|
155.0
|
|
|
132.6
|
|
|
449.5
|
|
|
412.7
|
|
Goodwill
Impairment
|
|
9.5
|
|
|
—
|
|
|
9.5
|
|
|
—
|
|
Asset
Impairments
|
|
8.7
|
|
|
—
|
|
|
8.7
|
|
|
—
|
|
Total Operating
Expenses
|
|
173.2
|
|
|
132.6
|
|
|
467.7
|
|
|
412.7
|
|
Income from
Operations
|
|
69.4
|
|
|
94.3
|
|
|
257.2
|
|
|
252.5
|
|
Other Expenses,
net
|
|
0.4
|
|
|
0.3
|
|
|
1.2
|
|
|
0.7
|
|
Interest
Expense
|
|
13.7
|
|
|
13.5
|
|
|
40.9
|
|
|
42.6
|
|
Interest
Income
|
|
1.0
|
|
|
0.7
|
|
|
1.8
|
|
|
2.7
|
|
Income before
Taxes
|
|
56.3
|
|
|
81.2
|
|
|
216.9
|
|
|
211.9
|
|
Provision for Income
Taxes
|
|
3.6
|
|
|
17.6
|
|
|
37.6
|
|
|
46.4
|
|
Net Income
|
|
52.7
|
|
|
63.6
|
|
|
179.3
|
|
|
165.5
|
|
Less: Net Income
Attributable to Noncontrolling Interests
|
|
1.4
|
|
|
1.4
|
|
|
3.7
|
|
|
4.0
|
|
Net Income
Attributable to Regal Beloit Corporation
|
|
$
|
51.3
|
|
|
$
|
62.2
|
|
|
$
|
175.6
|
|
|
$
|
161.5
|
|
Earnings Per Share
Attributable to Regal Beloit Corporation:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.18
|
|
|
$
|
1.40
|
|
|
$
|
4.01
|
|
|
$
|
3.62
|
|
Assuming
Dilution
|
|
$
|
1.17
|
|
|
$
|
1.39
|
|
|
$
|
3.98
|
|
|
$
|
3.59
|
|
Cash Dividends
Declared Per Share
|
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
$
|
0.82
|
|
|
$
|
0.76
|
|
Weighted Average
Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
43.4
|
|
|
44.4
|
|
|
43.8
|
|
|
44.7
|
|
Assuming
Dilution
|
|
43.8
|
|
|
44.8
|
|
|
44.1
|
|
|
45.0
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
Unaudited
|
(Dollars in
Millions)
|
|
|
Sep 29,
2018
|
|
|
Dec 30,
2017
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
184.4
|
|
|
$
|
139.6
|
|
Trade Receivables,
less Allowances
of $16.1 Million in 2018 and $11.3 Million in
2017
|
|
582.9
|
|
|
506.3
|
|
Inventories
|
|
791.0
|
|
|
757.1
|
|
Prepaid Expenses and
Other Current Assets
|
|
171.6
|
|
|
171.4
|
|
Total Current
Assets
|
|
1,729.9
|
|
|
1,574.4
|
|
|
|
|
|
|
Net Property, Plant,
Equipment and Noncurrent Assets
|
|
2,871.4
|
|
|
2,813.8
|
|
Total
Assets
|
|
$
|
4,601.3
|
|
|
$
|
4,388.2
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
Payable
|
|
$
|
415.3
|
|
|
$
|
384.3
|
|
Other Accrued
Expenses
|
|
245.8
|
|
|
226.5
|
|
Current Maturities of
Debt
|
|
0.6
|
|
|
101.2
|
|
Total Current
Liabilities
|
|
661.7
|
|
|
712.0
|
|
|
|
|
|
|
Long-Term
Debt
|
|
1,278.3
|
|
|
1,039.9
|
|
Other Noncurrent
Liabilities
|
|
301.8
|
|
|
281.6
|
|
Equity:
|
|
|
|
|
Total Regal Beloit
Corporation Shareholders' Equity
|
|
2,332.5
|
|
|
2,325.5
|
|
Noncontrolling
Interests
|
|
27.0
|
|
|
29.2
|
|
Total
Equity
|
|
2,359.5
|
|
|
2,354.7
|
|
Total Liabilities and
Equity
|
|
$
|
4,601.3
|
|
|
$
|
4,388.2
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
Unaudited
|
(Dollars in
Millions)
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
52.7
|
|
|
$
|
63.6
|
|
|
$
|
179.3
|
|
|
$
|
165.5
|
|
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
|
|
35.3
|
|
|
34.3
|
|
|
106.3
|
|
|
103.1
|
|
(Gain) Loss on
Disposal of Assets, Net
|
|
1.1
|
|
|
(1.7)
|
|
|
3.5
|
|
|
(2.0)
|
|
Gain on Disposal of
Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
Impairment and Exit
Related Costs
|
|
34.9
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
Share-Based
Compensation Expense
|
|
3.3
|
|
|
3.2
|
|
|
10.5
|
|
|
10.3
|
|
Exit of
Business
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
|
Change in Operating
Assets and Liabilities
|
|
(21.3)
|
|
|
(13.3)
|
|
|
(84.2)
|
|
|
(45.7)
|
|
Net Cash Provided by
Operating Activities
|
|
106.0
|
|
|
86.1
|
|
|
250.3
|
|
|
235.0
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Additions to
Property, Plant and Equipment
|
|
(18.7)
|
|
|
(15.3)
|
|
|
(59.2)
|
|
|
(49.0)
|
|
Net Sales of
Investment Securities
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
Business
Acquisitions, Net of Cash Acquired
|
|
—
|
|
|
—
|
|
|
(161.5)
|
|
|
—
|
|
Proceeds from Sale of
Assets
|
|
4.0
|
|
|
4.6
|
|
|
4.4
|
|
|
5.9
|
|
Proceeds Received
from Disposal of Businesses
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
1.1
|
|
Net Cash Used in
Investing Activities
|
|
(14.7)
|
|
|
(10.1)
|
|
|
(215.8)
|
|
|
(42.0)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net Borrowings
(Repayments) Under Revolving Credit Facility
|
|
(168.3)
|
|
|
13.6
|
|
|
25.6
|
|
|
11.5
|
|
Net (Repayments)
Borrowings from Short-Term Borrowings
|
|
0.1
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
—
|
|
Proceeds
from Long-Term Debt
|
|
900.0
|
|
|
—
|
|
|
900.2
|
|
|
0.3
|
|
Repayments of
Long-Term Debt
|
|
(786.2)
|
|
|
(100.1)
|
|
|
(786.3)
|
|
|
(212.2)
|
|
Dividends Paid to
Shareholders
|
|
(12.2)
|
|
|
(11.7)
|
|
|
(35.1)
|
|
|
(33.1)
|
|
Payments of
Contingent Consideration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3)
|
|
Proceeds from the
Exercise of Stock Options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Repurchase of Common
Stock
|
|
(7.2)
|
|
|
(24.1)
|
|
|
(78.3)
|
|
|
(45.1)
|
|
Distributions to
Noncontrolling Interest
|
|
(1.6)
|
|
|
(11.7)
|
|
|
(1.6)
|
|
|
(11.7)
|
|
Shares Surrendered
for Taxes
|
|
(0.5)
|
|
|
(0.3)
|
|
|
(3.4)
|
|
|
(3.7)
|
|
Purchase of
Subsidiary Shares from Noncontrolling Interest
|
|
(0.8)
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
Financing fees paid
|
|
(3.5)
|
|
|
—
|
|
|
(3.5)
|
|
|
—
|
|
Net Cash Provided By
(Used In) Financing Activities
|
|
(80.2)
|
|
|
(134.4)
|
|
|
16.2
|
|
|
(298.9)
|
|
EFFECT OF EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS
|
|
(2.3)
|
|
|
1.3
|
|
|
(5.9)
|
|
|
8.0
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
8.8
|
|
|
(57.1)
|
|
|
44.8
|
|
|
(97.9)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
175.6
|
|
|
243.7
|
|
|
139.6
|
|
|
284.5
|
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
184.4
|
|
|
$
|
186.6
|
|
|
$
|
184.4
|
|
|
$
|
186.6
|
|
SEGMENT
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
Net Sales
|
|
$
|
462.3
|
|
|
$
|
408.0
|
|
|
$
|
255.4
|
|
|
$
|
256.0
|
|
|
$
|
207.7
|
|
|
$
|
192.9
|
|
|
$
|
925.4
|
|
|
$
|
856.9
|
|
Net Sales for
Business to be Exited
|
|
—
|
|
|
—
|
|
|
(11.0)
|
|
|
(13.4)
|
|
|
—
|
|
|
—
|
|
|
(11.0)
|
|
|
(13.4)
|
|
Adjusted Net
Sales*
|
|
462.3
|
|
|
408.0
|
|
|
244.4
|
|
|
242.6
|
|
|
207.7
|
|
|
192.9
|
|
|
914.4
|
|
|
843.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Margin
|
|
7.6
|
%
|
|
7.2
|
%
|
|
2.3
|
%
|
|
15.3
|
%
|
|
13.5
|
%
|
|
13.3
|
%
|
|
7.5
|
%
|
|
11.0
|
%
|
Adjusted Operating
Margin*
|
|
8.1
|
%
|
|
7.5
|
%
|
|
16.7
|
%
|
|
16.2
|
%
|
|
13.6
|
%
|
|
11.9
|
%
|
|
11.6
|
%
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales
Growth*
|
|
6.1
|
%
|
|
4.0
|
%
|
|
1.4
|
%
|
|
2.8
|
%
|
|
8.1
|
%
|
|
12.8
|
%
|
|
5.2
|
%
|
|
5.5
|
%
|
Acquisitions, Net of
Divestitures
|
|
8.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.1
|
%
|
|
—
|
%
|
Business to be
Exited
|
|
—
|
%
|
|
—
|
%
|
|
(0.9)
|
%
|
|
(1.0)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.4)
|
%
|
|
(0.4)
|
%
|
Foreign Currency
Impact
|
|
(1.3)
|
%
|
|
0.8
|
%
|
|
(0.7)
|
%
|
|
0.4
|
%
|
|
(0.4)
|
%
|
|
0.9
|
%
|
|
(0.9)
|
%
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
Net Sales
|
|
$
|
1,345.3
|
|
|
$
|
1,196.6
|
|
|
$
|
792.6
|
|
|
$
|
774.2
|
|
|
$
|
626.0
|
|
|
$
|
568.8
|
|
|
$
|
2,763.9
|
|
|
$
|
2,539.6
|
|
Net Sales for
Business to be Exited
|
|
—
|
|
|
—
|
|
|
(42.9)
|
|
|
(49.7)
|
|
|
—
|
|
|
—
|
|
|
(42.9)
|
|
|
(49.7)
|
|
Adjusted Net
Sales*
|
|
1,345.3
|
|
|
1,196.6
|
|
|
749.7
|
|
|
724.5
|
|
|
626.0
|
|
|
568.8
|
|
|
2,721.0
|
|
|
2,489.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Margin
|
|
7.1
|
%
|
|
6.3
|
%
|
|
10.4
|
%
|
|
14.3
|
%
|
|
12.8
|
%
|
|
11.6
|
%
|
|
9.3
|
%
|
|
9.9
|
%
|
Adjusted Operating
Margin*
|
|
7.7
|
%
|
|
7.1
|
%
|
|
15.7
|
%
|
|
15.5
|
%
|
|
12.8
|
%
|
|
11.2
|
%
|
|
11.1
|
%
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales
Growth
|
|
5.8
|
%
|
|
3.3
|
%
|
|
3.3
|
%
|
|
5.2
|
%
|
|
9.1
|
%
|
|
3.3
|
%
|
|
5.8
|
%
|
|
3.9
|
%
|
Acquisitions, Net of
Divestitures
|
|
5.4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(1.6)
|
%
|
|
2.6
|
%
|
|
(0.4)
|
%
|
Business to be
Exited
|
|
—
|
%
|
|
—
|
%
|
|
(1.1)
|
%
|
|
(1.2)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.5)
|
%
|
|
(0.3)
|
%
|
Foreign Currency
Impact
|
|
1.2
|
%
|
|
(0.3)
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
1.0
|
%
|
|
(0.1)
|
%
|
|
0.9
|
%
|
|
(0.2)
|
%
|
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 of America ("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
margin, adjusted net sales, adjusted net income attributable to
Regal Beloit Corporation, free cash flow, free cash flow as a
percentage of adjusted net income attributable to Regal Beloit
Corporation, adjusted income before taxes, adjusted provision for
income taxes and adjusted effective tax rate. 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 and adjusted operating margin to help us manage and
evaluate our business and make operating decisions, while adjusted
diluted earnings per share, adjusted net sales, adjusted net income
attributable to Regal Beloit Corporation, free cash flow, free cash
flow as a percentage of adjusted net income attributable to Regal
Beloit Corporation, adjusted income before taxes, adjusted
provision for income taxes and adjusted effective tax rate 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 ("acquisitions, net of
divestitures") and excluding sales from the business to be exited
recorded prior to the first anniversary of the exit and excluding
the impact of foreign currency translation. The impact of foreign
currency translation is determined by translating the respective
period's organic sales using the 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
|
|
|
Nine Months
Ended
|
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
|
Sep 29,
2018
|
|
|
Sep 30,
2017
|
|
GAAP Diluted Earnings
Per Share
|
|
$
|
1.17
|
|
|
$
|
1.39
|
|
|
$
|
3.98
|
|
|
$
|
3.59
|
|
Restructuring and
Related Costs
|
|
0.03
|
|
|
0.03
|
|
|
0.09
|
|
|
0.20
|
|
Purchase Accounting
and Transaction Costs
|
|
0.01
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
Provisional Benefit
of the New US Tax Legislation
|
|
(0.15)
|
|
|
—
|
|
|
(0.15)
|
|
|
—
|
|
Gain on Sale of
Assets
|
|
—
|
|
|
(0.05)
|
|
|
(0.01)
|
|
|
(0.06)
|
|
Net Income from
Business to be Exited
|
|
—
|
|
|
(0.01)
|
|
|
(0.02)
|
|
|
(0.01)
|
|
Impairment and Exit
Related Costs
|
|
0.61
|
|
|
—
|
|
|
0.61
|
|
|
—
|
|
Adjusted Diluted
Earnings Per Share
|
|
$
|
1.67
|
|
|
$
|
1.36
|
|
|
$
|
4.59
|
|
|
$
|
3.72
|
|
ADJUSTED INCOME
FROM OPERATIONS
|
|
|
|
Three Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
GAAP Income from
Operations
|
|
$
|
35.3
|
|
|
$
|
29.5
|
|
|
$
|
6.0
|
|
|
$
|
39.1
|
|
|
$
|
28.1
|
|
|
$
|
25.7
|
|
|
$
|
69.4
|
|
|
$
|
94.3
|
|
Restructuring and
Related Costs
|
|
1.9
|
|
|
1.2
|
|
|
0.3
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|
2.3
|
|
|
1.6
|
|
Purchase Accounting
and Transaction Costs
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Gain on Sale of
Assets
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8)
|
|
|
—
|
|
|
(3.1)
|
|
Operating Income from
Business to be Exited
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.2)
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.2)
|
|
Impairment and Exit
Related Costs
|
|
—
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
Adjusted Income from
Operations
|
|
$
|
37.4
|
|
|
$
|
30.4
|
|
|
$
|
40.9
|
|
|
$
|
39.2
|
|
|
$
|
28.2
|
|
|
$
|
23.0
|
|
|
$
|
106.5
|
|
|
$
|
92.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
%
|
|
7.6
|
%
|
|
7.2
|
%
|
|
2.3
|
%
|
|
15.3
|
%
|
|
13.5
|
%
|
|
13.3
|
%
|
|
7.5
|
%
|
|
11.0
|
%
|
Adjusted Operating
Margin %
|
|
8.1
|
%
|
|
7.5
|
%
|
|
16.7
|
%
|
|
16.2
|
%
|
|
13.6
|
%
|
|
11.9
|
%
|
|
11.6
|
%
|
|
11.0
|
%
|
ADJUSTED INCOME
FROM OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
GAAP Income from
Operations
|
|
$
|
94.9
|
|
|
$
|
75.8
|
|
|
$
|
82.3
|
|
|
$
|
110.9
|
|
|
$
|
80.0
|
|
|
$
|
65.8
|
|
|
$
|
257.2
|
|
|
$
|
252.5
|
|
Restructuring and
Related Costs
|
|
3.9
|
|
|
9.8
|
|
|
1.4
|
|
|
2.0
|
|
|
0.2
|
|
|
0.7
|
|
|
5.5
|
|
|
12.5
|
|
Purchase Accounting
and Transaction Costs
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
Gain on Disposal of
Business
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
Gain on Sale of
Assets
|
|
(0.4)
|
|
|
(0.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8)
|
|
|
(0.4)
|
|
|
(3.5)
|
|
Operating Income from
Business to be Exited
|
|
—
|
|
|
—
|
|
|
(1.2)
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
(1.2)
|
|
|
(0.3)
|
|
Impairment and Exit
Related Costs
|
|
—
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
Adjusted Income from
Operations
|
|
$
|
103.7
|
|
|
$
|
84.9
|
|
|
$
|
117.4
|
|
|
$
|
112.6
|
|
|
$
|
80.2
|
|
|
$
|
63.6
|
|
|
$
|
301.3
|
|
|
$
|
261.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
%
|
|
7.1
|
%
|
|
6.3
|
%
|
|
10.4
|
%
|
|
14.3
|
%
|
|
12.8
|
%
|
|
11.6
|
%
|
|
9.3
|
%
|
|
9.9
|
%
|
Adjusted Operating
Margin %
|
|
7.7
|
%
|
|
7.1
|
%
|
|
15.7
|
%
|
|
15.5
|
%
|
|
12.8
|
%
|
|
11.2
|
%
|
|
11.1
|
%
|
|
10.5
|
%
|
FREE CASH
FLOW
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
Net Cash Provided by
Operating Activities
|
|
$
|
106.0
|
|
|
$
|
86.1
|
|
|
$
|
250.3
|
|
|
$
|
235.0
|
|
Additions to Property
Plant and Equipment
|
|
(18.7)
|
|
|
(15.3)
|
|
|
(59.2)
|
|
|
(49.0)
|
|
Free Cash
Flow
|
|
$
|
87.3
|
|
|
$
|
70.8
|
|
|
$
|
191.1
|
|
|
$
|
186.0
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Attributable to Regal Beloit Corporation
|
|
$
|
51.3
|
|
|
$
|
62.2
|
|
|
$
|
175.6
|
|
|
$
|
161.5
|
|
Goodwill
Impairment
|
|
9.5
|
|
|
—
|
|
|
9.5
|
|
|
—
|
|
Asset
Impairments
|
|
8.7
|
|
|
—
|
|
|
8.7
|
|
|
—
|
|
Tax Effect from
Impairments
|
|
(4.0)
|
|
|
—
|
|
|
(4.0)
|
|
|
—
|
|
Adjusted Net Income
Attributable to Regal Beloit Corporation 1
|
|
$
|
65.5
|
|
|
$
|
62.2
|
|
|
$
|
189.8
|
|
|
$
|
161.5
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow as a
Percentage of Adjusted Net Income Attributable to Regal Beloit
Corporation
|
|
133.3
|
%
|
|
113.8
|
%
|
|
100.7
|
%
|
|
115.2
|
%
|
|
|
|
|
|
|
|
|
|
1
The Net Income Attributable to Regal Beloit Corporation is adjusted
for goodwill and asset impairments related to the business to be
exited and used in the Free Cash Flow Calculation.
|
ADJUSTED EFFECTIVE
TAX RATE
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
|
Sep 29,
2018
|
|
Sep 30,
2017
|
Income before
Taxes
|
|
$
|
56.3
|
|
|
$
|
81.2
|
|
|
$
|
216.9
|
|
|
$
|
211.9
|
|
Provision for Income
Taxes
|
|
3.6
|
|
|
17.6
|
|
|
37.6
|
|
|
46.4
|
|
Effective Tax
Rate
|
|
6.4
|
%
|
|
21.7
|
%
|
|
17.3
|
%
|
|
21.9
|
%
|
|
|
|
|
|
|
|
|
|
Income before
Taxes
|
|
$
|
56.3
|
|
|
$
|
81.2
|
|
|
$
|
216.9
|
|
|
$
|
211.9
|
|
Impairment and Exit
Related Costs
|
|
34.9
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
Adjusted Income
before Taxes
|
|
$
|
91.2
|
|
|
$
|
81.2
|
|
|
$
|
251.8
|
|
|
$
|
211.9
|
|
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
|
$
|
3.6
|
|
|
$
|
17.6
|
|
|
$
|
37.6
|
|
|
$
|
46.4
|
|
Tax Effect from
Impairment and Exit Related Costs
|
|
8.2
|
|
|
—
|
|
|
8.2
|
|
|
—
|
|
Provisional Benefit
of the New US Tax Legislation
|
|
6.6
|
|
|
—
|
|
|
6.6
|
|
|
—
|
|
Adjusted Provision
for Income Taxes
|
|
$
|
18.4
|
|
|
$
|
17.6
|
|
|
$
|
52.4
|
|
|
$
|
46.4
|
|
|
|
|
|
|
|
|
|
|
Adjusted Effective
Tax Rate
|
|
20.2
|
%
|
|
21.7
|
%
|
|
20.8
|
%
|
|
21.9
|
%
|
2018 ADJUSTED
ANNUAL GUIDANCE
|
|
Minimum
|
|
Maximum
|
2018 Diluted EPS
Annual Guidance
|
|
$
|
5.11
|
|
|
$
|
5.21
|
|
Restructuring and
Related Costs
|
|
0.14
|
|
|
0.14
|
|
Purchase Accounting
and Transaction Costs
|
|
0.10
|
|
|
0.10
|
|
Provisional Benefit
of the New US Tax Legislation
|
|
(0.15)
|
|
|
(0.15)
|
|
Gain on Sale of
Assets
|
|
(0.01)
|
|
|
(0.01)
|
|
Net Income from
Business to be Exited
|
|
(0.02)
|
|
|
(0.02)
|
|
Impairment and Exit
Related Costs
|
|
0.61
|
|
|
0.61
|
|
CEO Transition
Costs
|
|
0.07
|
|
|
0.07
|
|
2018 Adjusted Diluted
EPS Annual Guidance
|
|
$
|
5.85
|
|
|
$
|
5.95
|
|
ORGANIC SALES
GROWTH
|
|
Three Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
Net Sales Three
Months Ended Sep 29, 2018
|
|
$
|
462.3
|
|
|
$
|
255.4
|
|
|
$
|
207.7
|
|
|
$
|
925.4
|
|
Net Sales from
Business Acquired
|
|
(34.7)
|
|
|
—
|
|
|
—
|
|
|
(34.7)
|
|
Net Sales from
Business to be Exited
|
|
—
|
|
|
(11.0)
|
|
|
—
|
|
|
(11.0)
|
|
Impact from Foreign
Currency Exchange Rates
|
|
5.3
|
|
|
1.7
|
|
|
0.8
|
|
|
7.8
|
|
Organic Sales Three
Months Ended Sep 29, 2018
|
|
$
|
432.9
|
|
|
$
|
246.1
|
|
|
$
|
208.5
|
|
|
$
|
887.5
|
|
|
|
|
|
|
|
|
|
|
Net Sales Three
Months Ended Sep 30, 2017
|
|
$
|
408.0
|
|
|
$
|
256.0
|
|
|
$
|
192.9
|
|
|
$
|
856.9
|
|
Net Sales from
Business to be Exited
|
|
—
|
|
|
(13.4)
|
|
|
—
|
|
|
(13.4)
|
|
Adjusted Net Sales
Three Months Ended Sep 30, 2017
|
|
$
|
408.0
|
|
|
$
|
242.6
|
|
|
$
|
192.9
|
|
|
$
|
843.5
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Sep 29, 2018 Organic Sales Growth %
|
|
6.1
|
%
|
|
1.4
|
%
|
|
8.1
|
%
|
|
5.2
|
%
|
Three Months Ended
Sep 29, 2018 Net Sales Growth %
|
|
13.3
|
%
|
|
(0.2)
|
%
|
|
7.7
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
ORGANIC SALES
GROWTH
|
|
Nine Months
Ended
|
|
|
Commercial &
Industrial Systems
|
|
Climate
Solutions
|
|
Power Transmission
Solutions
|
|
Total
Regal
|
Net Sales Nine Months
Ended Sep 29, 2018
|
|
$
|
1,345.3
|
|
|
$
|
792.6
|
|
|
$
|
626.0
|
|
|
$
|
2,763.9
|
|
Net Sales from
Business Acquired
|
|
(64.8)
|
|
|
—
|
|
|
—
|
|
|
(64.8)
|
|
Net Sales from
Business to be Exited
|
|
—
|
|
|
(42.9)
|
|
|
—
|
|
|
(42.9)
|
|
Impact from Foreign
Currency Exchange Rates
|
|
(14.4)
|
|
|
(1.3)
|
|
|
(5.5)
|
|
|
(21.2)
|
|
Organic Sales Nine
Months Ended Sep 29, 2018
|
|
$
|
1,266.1
|
|
|
$
|
748.4
|
|
|
$
|
620.5
|
|
|
$
|
2,635.0
|
|
|
|
|
|
|
|
|
|
|
Net Sales Nine Months
Ended Sep 30, 2017
|
|
$
|
1,196.6
|
|
|
$
|
774.2
|
|
|
$
|
568.8
|
|
|
$
|
2,539.6
|
|
Net Sales from
Business to be Exited
|
|
—
|
|
|
(49.7)
|
|
|
—
|
|
|
(49.7)
|
|
Adjusted Net Sales
Nine Months Ended Sep 30, 2017
|
|
$
|
1,196.6
|
|
|
$
|
724.5
|
|
|
$
|
568.8
|
|
|
$
|
2,489.9
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended Sep
29, 2018 Organic Sales Growth %
|
|
5.8
|
%
|
|
3.3
|
%
|
|
9.1
|
%
|
|
5.8
|
%
|
Nine Months Ended Sep
29, 2018 Net Sales Growth %
|
|
12.4
|
%
|
|
2.4
|
%
|
|
10.1
|
%
|
|
8.8
|
%
|
View original
content:http://www.prnewswire.com/news-releases/regal-beloit-corporation-announces-third-quarter-2018-financial-results-300743499.html
SOURCE Regal Beloit Corporation