Wisconsin | 1-7283 | 39-0875718 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(a) | Not Applicable |
(b) | Not Applicable |
(c) | Not Applicable |
(d) | Exhibits. The following exhibits are being furnished herewith: |
![]() | ![]() |
• | Strong Organic Sales Growth |
• | Operating Margin Up 80 Basis Points |
• | Diluted Earnings Per Share Up 27% |
• | Board of Directors Approved New Share Purchase Authorization |
• | 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. |
• | 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%. |
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 | )% |
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 | % |
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