Regal Beloit Corporation reported first quarter 2019 diluted earnings per share of $1.99, up 52 percent from the prior year. First quarter 2019 adjusted diluted earnings per share were $1.43, up 13 percent from the prior year.
Key financial results for the first quarter 2019 included:
- Total net sales of $853.8 million decreased 2.8 percent from the prior year and included a negative 1.7 percent impact from foreign currency, a negative 4.0 percent impact from the businesses divested/to be exited, and a positive 3.9 percent impact from acquisitions. The result was a negative organic sales growth rate of 1.0 percent.
- Income from operations was $120.6 million or 14.1 percent of net sales, up 410 basis points from prior year. Adjusted income from operations was $91.2 million or 11.0 percent of adjusted net sales, up 60 basis points from prior year.
- Debt decreased $91.8 million from $1,307.1 million at the end of 2018 to $1,215.3 million. Net debt decreased $107.5 million from $1,058.5 million at the end of 2018 to $951.0 million.
- Debt to EBITDA was 2.3, down from 2.7 at the end of 2018. Net debt to adjusted EBITDA was 1.8, down from 2.0 at the end of 2018.
First quarter 2019 segment results versus the prior year first quarter included:
- Commercial and Industrial Systems Segment net sales were $380.3 million, a decrease of 8.1 percent. Acquisitions had a positive impact of 8.3 percent, businesses divested/to be exited had a negative 8.0 percent impact, and foreign currency had a negative 2.1 percent impact. The result was a negative organic sales growth rate of 6.3 percent as strength in commercial HVAC and North American industrial markets was more than offset by the timing on large power generation projects—expected to ship in the second half of 2019, weakness in China, and weakness in the North American pool pump market. Operating margin was 14.1 percent. Excluding net adjustments of $30.7 million, adjusted operating margin was 6.0 percent of adjusted net sales.
- Climate Solutions Segment net sales were $263.3 million, an increase of 1.3 percent. The businesses divested/to be exited had a negative 1.1 percent impact, and foreign currency had a negative 1.2 percent impact. The result was an organic sales growth rate of 3.6 percent driven by strength in North American residential HVAC and commercial refrigeration, partially offset by weakness in international markets. Operating margin was 14.8 percent. Adjusted operating margin was 15.7 percent of adjusted net sales.
- Power Transmission Solutions Segment net sales were $210.2 million, an increase of 2.6 percent. The businesses divested/to be exited had a 0.6 percent impact, and foreign currency had a negative 1.4 percent impact. The result was a positive organic sales growth rate of 3.4 percent driven by increased demand in distribution, metals, and oil & gas markets, partially offset by weakness in agriculture and beverage markets. Operating margin was 13.4 percent. Including net adjustments of $1.3 million, adjusted operating margin was 14.4 percent of adjusted net sales.
"The first quarter was a solid start to the year for Regal. We were able to increase adjusted operating margin by 60 basis points and drive adjusted EPS up 13%, overcoming slight market headwinds specifically in our C&I business" says Regal CEO Louis Pinkham.
"We are reaffirming our adjusted diluted earnings per share guidance of $6.15 to $6.55, which would make 2019 another record year for earnings," adds Pinkham.
The Company forecasts 2019 GAAP diluted earnings per share of $6.68 to $7.08. The difference between the GAAP diluted earnings per share guidance and the adjusted diluted earnings per share guidance relates to expected restructuring and related costs of $0.18 per share, gain on businesses divested and assets to be exited of $0.74 per share, net income from businesses to be divested\exited of $0.05 per share, and remaining CEO transition costs of $0.08 per share.
