BELOIT, Wis., Oct. 31 /PRNewswire-FirstCall/ — REGAL-BELOIT CORPORATION (NYSE:RBC) today reported strong increases in net sales and earnings for the third quarter ended September 30, 2006. Net sales increased 21.2% to $419.3 million from $345.9 million in the third quarter of 2005. Net income increased 60.5% to $29.7 million as compared to $18.5 million in the comparable period of 2005. Diluted earnings per share increased 50.8% to $.89 as compared to $.59 for the third quarter of 2005.
In the Electrical Segment, sales increased 24.9% to $370.4 million. Included in the results for the quarter were $11.7 million of sales attributable to the Sinya motor business acquired during the second quarter of 2006. The sales increase was again driven by strong channel demand in commercial and industrial motors, generators, and HVAC motors. Sales in the Mechanical Segment decreased 0.8% to $48.9 million. Sales in the Mechanical Segment were impacted by the May 2006 sale of the Cutting Tools business which reduced sales by approximately $3.9 million from the comparable period of 2005.
The gross profit margin for the third quarter of 2006 was 24.6%, which is a 250 basis point improvement over the gross profit margin of 22.1% in the third quarter of 2005. The increase was a result of higher volume, productivity and positive product mix, offset, in part, by continued increases in raw material costs. Income from operations was $53.0 million (12.7% of sales), a 53.2% increase over the $34.6 million (10.0% of sales) reported for the third quarter of 2005. As a result of the 2006 implementation of FAS 123R, operating expenses for the third quarter of 2006 included $.8 million of expense related to equity compensation as compared to $.1 million in the third quarter of 2005. Net income in the third quarter of 2006 was $29.7 million, a 60.5% increase from the $18.5 million reported in the third quarter of 2005.
“We are extremely pleased with our record third quarter performance. Solid markets for our products coupled with contributions from our strategic initiatives provided the basis for our strong results,” said Henry Knueppel, Chairman and Chief Executive Officer. “While the housing related and HVAC markets were more challenging, the contributions from new and higher value content products more than offset those market challenges.”
“We expect normal seasonal sales in the fourth quarter, noting that HVAC business will face a tougher comparison because of the strong sales in the fourth quarter of 2005,” Knueppel added. “Based on this view of our markets and the continued contributions from our strategic initiatives, we are forecasting fourth quarter earnings per share to be in the range of $.64 to $.71 per share. Overcoming a difficult fourth quarter comparison and targeting new records for fourth quarter sales and earnings is a testament to the strength of our people and our initiatives.”
REGAL-BELOIT will be holding a telephone conference call pertaining to this news release at 1:30 PM CST (2:30 PM EST) on Tuesday, October 31, 2006. Interested parties should call 866-868-1109, access code 16108930. A replay of the call will be available through November 10, 2006 at 877-213-9653, access code 16108930.
REGAL-BELOIT CORPORATION is a leading manufacturer of mechanical and electrical 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 the United States, Canada, Mexico, Europe and Asia.