Regal-Beloit (NYSE: RBC) reported Q3 EPS of $1.73, $0.53 better than the analyst estimate of $1.20. Revenue for the quarter came in at $758.2 million versus the consensus estimate of $704.21 million.

Key financial results for the third quarter 2020 included:

• Total net sales of $758.2 million decreased 1.8% from the prior year. Excluding the negative impacts of 0.2% from foreign currency and 0.1% from businesses to be divested/exited, sales declined 1.5% on an organic basis.
• Income from operations was $90.0 million or 11.9% of net sales. Adjusted income from operations rose $15.7 million or 19.3% from a year ago, to $97.0 million, on a net sales decline of 1.8%. Adjusted operating margin of 12.8% was up 230 basis points versus the prior year's 10.5%.
• Net cash provided by operating activities was $120.3 million and capital expenditures totaled $9.3 million, resulting in free cash flow of $111.0 million, which is 170.8% of adjusted net income.
• While no shares were repurchased in the third quarter, the Company has decided to resume its stock repurchase program.

Summarizing Regal's third quarter 2020 performance, CEO Louis Pinkham commented, "I am very proud of our team for driving significant year-over-year operating profit improvement on down sales. Despite facing ongoing personal and professional challenges related to COVID, our Regal associates continued to execute a range of restructuring actions, and drive 80/20 deeper into our organization, resulting in significant operating income growth, margin expansion, and FCF generation – even as the top line faced COVID-related declines. There is no question that we are transforming the cost structure of Regal and have a path to further material improvements."

Mr. Pinkham went on to comment, "As I look across our segments, it's also encouraging to see more bright spots than in recent quarters, with two of our four segments – Climate and Commercial – returning to positive sales growth during the quarter, Industrial close to flat, and PTS significantly narrowing its rate of decline. The order story is also brighter, with growth rates turning positive in the quarter, and a recovery in the key N.A. general industrial market in PTS still to come. Notably, our N.A. residential HVAC business saw its orders rise almost 30% in September, with October up over 20%. I remain incredibly proud of how our Regal associates continue to execute, with a sense of urgency, to best serve our customers, improve profitability, sustain healthy FCF, and pursue strategic growth opportunities – many tied to improving safety and energy efficiency."

GUIDANCE:

Regal-Beloit sees Q4 2020 EPS of $1.46-$1.66, versus the consensus of $1.23.

Regal-Beloit sees FY2020 EPS of $5.45-$5.65, versus the consensus of $4.68.

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