Regal Beloit Corporation is a leading manufacturer of electrical and mechanical motion control and power generation products serving markets throughout the world. Regal Beloit is headquartered in Beloit, Wisconsin, and has manufacturing, sales, and service facilities throughout North America and in Mexico, Europe and Asia.
Industry:MACH-ELECTRICAL Sector: Industrial Products Fiscal Year End:December Last Reported Quarter:12/31/11 Next EPS Date:02/06/12
Capital Structure Solvency and Cash Flow
Balance Sheet and Cash Flow
Cash, cash equivalents and investments amounted to $328.0 million at the end of 3Q10 versus $327.1 million at the end of 2Q10. Inventories at the end of the quarter were $340.6 million versus $308.3 million at the end of 2Q10. Long-term debt at the end of the quarter stood at $425.9 million versus $426.6 million at the end of 2Q10. During the quarter, convertible debt repaid was $0.5 million and business acquisitions, net of cash acquired, were $31.4 million.
At the end of 3Q10, working capital was $725.3 million, up 8.3% from $670.3 million at the end of FY10. Current ratio (ratio of current assets to current liabilities) was 2.8:1 versus 3.2:1 at the previous year-end.
Cash flow from operations in 3Q10 increased to $48.9 million from $110.2 million 3Q09. The decrease stemmed from higher net income which was more than offset by a reduction in the cash provided from working capital.
Outlook: At the Investors and Analysts Conference, management stated that capital expenditure is expected to rise to 4.0% of sales in FY11 versus the normalized range of 2.0%-3.0%, due to the relocation of two plants in China and one in India. Going forward in FY12, management expects capital expenditures to fall in the normalized range. Management acknowledged that the Company is currently under-leveraged with 3Q10 net debt-to-capital of 6.0%, which is below the Company’s capacity of 30.0%-50.0%.
Management anticipates acquisition to add approximately $10.0 million to sales in 4Q10 and approximately $80.0 million in FY11. The acquisition is expected to add $0.8 to FY11 earnings.
Dividend
On October 29, 2010, the Company announced that the Board of Directors, declared a dividend of $.17 per share payable on January 14, 2011, to shareholders of record at the close of business on December 30, 2010.
Last edited Mon Jan 10, 2011 03:51 AM by SreelaBose (Zacks Investment Research)
Governance Social Responsibility and Employee Relations
On April 15, 2010, Regal Beloit Corp. announced that Chief Financial Officer David Barta will leave the company, effective May 14, 2010. The company said it will immediately begin a search for Barta’s successor.
Last edited Mon Apr 26, 2010 05:33 AM by PushpanjaliBanerjee (Zacks Investment Research)
Acquisitions Divestitures and Joint Ventures
Acquisition
On December 23, 2010, the Company announced the closing of its previously announced acquisition of Unico Inc., which manufactures a full range of AC and DC drives, motor controllers, and other accessories ideally suited for most industrial and commercial applications. On December 1, 2010, Regal Beloit also announced that it would acquire Unico Inc., which is expected to become accretive to earnings per share by approximately $0.7 in FY11.
On December 13, 2010, Regal Beloit announced that it has entered into an agreement to acquire 100% of the stock and assets of the Electrical Products Company (EPC) from A.O. Smith Corporation for $875.0 million, including $700.0 million of cash and approximately $175.0 million in shares of Regal Beloit common stock.
EPC manufactures and sells a full line of motors for hermetic, pump, distribution, HVAC and general industrial applications. The Company projects annual sales to grow by $700.0 million in the first full year, following the acquisition, excluding one-time transaction-related expenses and purchase accounting adjustments.
On November 1, 2010, the Company announced that it has acquired 55.0% of Elco Group B.V. (Elco), which manufactures and sells motors, fans and blowers and has manufacturing facilities in Italy, China, and Brazil.
Last edited Mon Jan 10, 2011 03:53 AM by SreelaBose (Zacks Investment Research)
• Raw Material Costs: Raw material cost comprises approximately 75.0% of cost of goods sold. Increase in steel prices and uneven copper price have adversely affected the profitability.
• Macroeconomic industrial cycles: Regal Beloit’s cyclical business is dependent on industrial and consumer spending. The results of the Company were negatively impacted by macroeconomic industrial cycles both in domestic and international market.
• Intense Competition: Regal Beloit is operating in a highly competitive industry. Some of the competitors in electric motor, power generation and mechanical motion control markets enjoy greater financial and other resources than the Company. Regal Beloit's present and target markets are occupied by motor companies, following a strategy of capturing market share by sacrificing margins.
• Acquisition Risk: A significant portion of Regal Beloit’s growth is derived from acquisitions. The Company has to identify and successfully integrate suitable acquisitions for its acquisition oriented growth strategy.
Last edited Mon Jan 10, 2011 03:56 AM by SreelaBose (Zacks Investment Research)
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