Regal-Beloit (RBC) Tops Q2 EPS by 24c; Raises Outlook

Regal-Beloit (NYSE: RBC) reported Q2 EPS of $2.28, $0.24 better than the analyst estimate of $2.04. Revenue for the quarter came in at $886.9 million versus the consensus estimate of $824.59 million.

CEO Louis Pinkham commented, "Regal's performance in Q2 was very strong – setting a record for operating margin two quarters in a row and exceeding our expectations – with organic sales growth YOY approaching 40% and up low-single digits compared to 2019. This drove adjusted operating margin expansion of nearly 500 basis points versus prior year to a record 14.0%, resulting in adjusted earnings per share growth of 140% YOY and up 53% to 2019."

"The guidance we\'re providing for 2021 reflects strong top line growth due to market strength as well as share gains, along with continued margin improvement from our multi-year transformation activities. Our targeted mid-point for adjusted 2021 EPS of $8.85 represents 53% growth versus 2020 and 61% versus 2019. In addition, the combination of our 2Q results plus our performance expectations for the second half of this year equate to delivering on our "300-in-3" margin expansion plan well ahead of our three year target. Clearly, the structural changes we\'ve implemented over the last couple years have dramatically transformed Regal."

"As I look ahead, I am highly enthusiastic about our upcoming merger with Rexnord PMC, which is on track to close in the second half of 2021, having now received all required regulatory approvals. At this time, we are awaiting the private letter ruling from the IRS and our shareholder vote scheduled for September 1st. With three months of additional integration planning under our belt, I am even more confident that the combination will deliver tremendous value to all of our stakeholders, driven by best-in-class cost synergies and substantial cross-marketing opportunities. We will leverage Regal's and Rexnord\'s unparalleled capabilities across the Industrial Powertrain, and continue to deliver the most energy-efficient solutions for our customers."

Mr. Pinkham went on to comment, "Based on strengthening performance at Regal and at Rexnord PMC, and factoring our previously disclosed merger synergy expectations, we now expect the pro forma business to generate more than $1 Billion of adjusted EBITDA in 2022, ahead of our initial expectations."

GUIDANCE:

Regal-Beloit sees FY2021 EPS of $8.70-$9.00, versus the consensus of $7.80.

For earnings history and earnings-related data on Regal-Beloit (RBC) click here.

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