Power generation products manufacturer Regal Beloit Corp. (RBC) reported Sunday a 14% year-over-year decline in profit for the third quarter, hurt by higher expenses as a percentage of sales and a 25% sales decline, despite a gross margin improvement of 290 basis points. The company also provided earnings forecast for the fourth quarter, in line with current analysts' expectations.
In a statement, chairman and chief executive officer, Henry Knueppel said, "We are pleased to report another sequential improvement in earnings and cash flow. These improvements were driven primarily by continued penetration of our new energy efficiency products and execution of our previously announced plant rationalizations and productivity efforts. We also benefited from temporary tail winds in commodity costs and tax settlements."
The Beloit, Wisconsin-based company reported net income of $31.15 million or $0.82 per share for the third quarter, down from $36.14 million or $1.07 per share in the prior-year quarter.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.83 per share for the third quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter dropped 25% to $465.19 million from $620.61 million in the same quarter last year, but marginally missed ten Wall Street analysts' consensus estimate of $467.61 million.
Sales for the third quarter include $11.7 million of sales attributable to Dutchi acquisition completed in October 2008 and the Customer Power Technology acquisition completed on January 2009.
Sales for the electrical segment decreased 24.2% from the prior-year quarter to $422.01 million, while mechanical segment sales for the quarter totaled $45.92 million, down 32.6% from the corresponding quarter last year.
Income from operations for the third quarter dropped to $48.32 million or 10.4% of sales, from $65.73 million or 10.6% of sales, in the prior-year quarter, while total operating expenses was $65.55 million or 14.1% of sales, compared to $67.06 million or 10.8% of sales, in the year-ago quarter.
Gross profit for the quarter was $113.87 million, down from $132.80 million in the comparable quarter a year ago, while gross profit margin increased 290 basis points to 24.5% from last year's 21.4%.
The company ended the third quarter with cash and cash equivalents of $354.31 million, compared to $113.72 million at end of the prior-year quarter.
For the nine-month period, the company reported net income of $60.39 million or $1.71 per share, down from $104.88 million or $3.14 per share in the prior-year period.
Net sales for the year-to-date period dropped to $1.36 billion from $1.76 million in the same period last year.
"Looking forward to the fourth quarter, ending January 2, 2010, we are expecting the normal seasonal slowing in terms of revenues. We are expecting to see the continued benefits from our cost reduction efforts, plant rationalizations and sales of energy efficient products," Knueppel added.
For the fourth quarter, the company anticipates earnings in a range of $0.59 to $0.66 per share. Analysts expect the company to report earnings of $0.59 per share for the second quarter.
RBC closed Friday's regular trading session at $46.88, down $1.33 or 2.76% on a volume of 0.41 million shares, higher than the three-month average volume of 0.38 million shares.
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