Regal Beloit Corporation Announces Fourth Quarter 2018 Financial Results

BELOIT, Wis., Feb. 4, 2019 /PRNewswire/ -- Regal Beloit Corporation (NYSE: RBC) today reported fourth quarter 2018 diluted earnings per share of $1.28, up 11% from the prior year. Fourth quarter 2018 adjusted diluted earnings per share* were $1.41, up 23% from the prior year. Full year 2018 diluted earnings per share were $5.26, up 11% from the prior year. Full year 2018 adjusted diluted earnings per share were $6.00, up 23% from the prior year.

Key financial results for the fourth quarter 2018 included:

    --  Total net sales of $881.7 million increased 7.4% from the prior year and
        included a negative 1.4% impact from foreign currency, a negative 0.4%
        impact from the businesses divested/to be exited, and a positive 3.9%
        impact from acquisitions. The result was a positive organic sales growth
        rate of 5.2%.
    --  Income from operations was $89.8 million or 10.2% of net sales, up 60
        basis points from prior year. Adjusted income from operations was $92.9
        million or 10.7% of adjusted net sales, up 80 basis points from prior
        year.
    --  Net cash provided by operating activities was $112.4 million and capital
        expenditures totaled $18.4 million, resulting in free cash flow of $94.0
        million or 169.1% of net income.
    --  Repurchased 645,349 shares for a total of $49.5 million.

Fourth quarter 2018 segment results versus the prior year fourth quarter included:

    --  Commercial and Industrial Systems Segment net sales were $436.7 million,
        an increase of 7.1%. Acquisitions had a positive impact of 7.7%, and
        foreign currency had a negative 1.8% impact. The result was a positive
        organic sales growth rate of 1.3% driven by strength in power
        generation, oil & gas, and commercial HVAC partially offset by weakness
        in Asia. Operating margin was 7.4%. Excluding $1.7 million in
        restructuring and related costs and other net adjustments of $0.3
        million, adjusted operating margin was 7.8%.
    --  Climate Solutions Segment net sales were $232.2 million, an increase of
        7.3%. The business to be exited had a negative 0.9% impact, and foreign
        currency had a negative 1.2% impact. The result was an organic sales
        growth rate of 9.4% driven by strength in North American residential
        HVAC and commercial refrigeration partially offset by weakness in
        international markets. Operating margin was 14.3%. Excluding
        restructuring and related costs of $0.4 million and other net
        adjustments of negative $0.3 million, adjusted operating margin was
        15.0% of adjusted net sales.
    --  Power Transmission Solutions Segment net sales were $212.8 million, an
        increase of 8.2%. Foreign currency had a negative 0.7% impact. The
        result was a positive organic sales growth rate of 9.0% driven by
        increased demand in distribution and oil & gas. Operating margin was
        11.5%. Excluding restructuring and related costs of $0.1 million and
        other net adjustments of $0.9 million, adjusted operating margin was
        11.9%.

*This earnings release includes non-GAAP financial measures. Descriptions of why we believe these non-GAAP measures are useful and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included with this earnings release.

"The fourth quarter was a strong close to a record year. Organic sales were up 5.2% and adjusted EPS were up 23%," said Regal Chairman and CEO Mark Gliebe. "We ended the year with organic sales up 5.7% and adjusted EPS of $6.00, up 23%. Further we had the second consecutive year of improving adjusted operating margin and the eighth consecutive year of free cash flow exceeding adjusted net income."

2019 Outlook

"Looking forward, we are entering the new year with momentum. Overall, we expect continued growth in 2019 despite tougher year-over-year comparisons. We expect a carryover price benefit from 2018, and we expect to see a positive impact from our new products targeted for the upcoming energy efficiency regulations. For 2019, our guidance assumes total year organic growth to be up low to mid-single digits, and we are expecting a third consecutive year of improvement in our adjusted operating margin."

We are expecting adjusted diluted earnings per share of $6.15 to $6.55, which would make 2019 another record year for earnings," continued Mr. Gliebe.

The Company forecasts 2019 GAAP diluted earnings per share of $6.59 to $6.99. The difference between the GAAP diluted earnings per share guidance and the adjusted diluted per share guidance relates to expected restructuring and related costs of $0.18 per share, gain on the sale of assets related to the recent divestiture of the engineered drives and control systems business of $0.70 per share, and remaining CEO transition costs of $0.08 per share.

The Company's 2019 guidance excludes the sales and earnings from a number of businesses that have been or are expected to be divested or exited. The divestiture or exit of some of these businesses has not been previously disclosed. Please see the table in the appendix for details.

Conference Call

Regal will hold a conference call to discuss the earnings release at 9:00 am CST (10:00 am EST) on Tuesday, February 5, 2019. To listen to the live audio and view the presentation during the call, please visit Regal's Investors website: http://investors.regalbeloit.com. To listen by phone or to ask the presenters a question, dial 1.888.317.6003 (U.S. callers) or 1.412.317.6061 (international callers) and enter 8263623# when prompted.

A webcast replay will be available at the link above, and a telephone replay will be available at 1.877.344.7529 (U.S. callers) or 1.412.317.0088 (international callers), replay access code 10127498#. Both will be accessible until May 7, 2019.

About the Company

Regal Beloit Corporation (NYSE: RBC) is a leading manufacturer of electric motors and controls, power generation products and power transmission products serving customers throughout the world. We create a better tomorrow by developing and responsibly producing energy-efficient products and systems.

Our company is comprised of three operating segments: Commercial and Industrial Systems, Climate Solutions and Power Transmission Solutions. Regal is headquartered in Beloit, Wisconsin and has manufacturing, sales and service facilities worldwide. For more information, visit RegalBeloit.com.

CAUTIONARY STATEMENT

The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this release may be forward-looking statements. Forward-looking statements represent our management's judgment regarding future events. In many cases, you can identify forward-looking statements by terminology such as "may," "will," "expect," "intend," "estimate," "forecast," "anticipate," "believe," "should," "project" or "plan" or the negative of these terms or other similar words. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to: uncertainties regarding our ability to execute our restructuring plans within expected costs and timing; our overall debt levels and our ability to repay principal and interest on our outstanding debt; actions taken by our competitors and our ability to effectively compete in the increasingly competitive global electric motor, drives and controls, power generation and power transmission industries; our ability to develop new products based on technological innovation and marketplace acceptance of new and existing products; fluctuations in commodity prices and raw material costs; our dependence on significant customers; risks associated with global manufacturing; issues and costs arising from the integration of acquired companies and businesses and the timing and impact of purchase accounting adjustments; prolonged declines in one or more markets we serve; economic changes in global markets where we do business, such as reduced demand for the products we sell, currency exchange rates, inflation rates, interest rates, recession, government policies, including policy changes affecting taxation, trade, tariffs, immigration, customs, border actions and the like, and other external factors that we cannot control; product liability and other litigation, or claims by end users, government agencies or others that our products or our customers' applications failed to perform as anticipated, particularly in high volume applications or where such failures are alleged to be the cause of property or casualty claims; unanticipated liabilities of acquired businesses; unanticipated adverse effects or liabilities from business exits or divestitures; unanticipated costs or expenses we may incur related to product warranty issues; our dependence on key suppliers and the potential effects of supply disruptions; infringement of our intellectual property by third parties, challenges to our intellectual property, and claims of infringement by us of third party technologies; effects on earnings of any significant impairment of goodwill or intangible assets; losses from failures, breaches, attacks or disclosures involving our information technology infrastructure and data; cyclical downturns affecting the global market for capital goods; and other risks and uncertainties including but not limited to those described in "Item 1A-Risk Factors" of the Company's Annual Report on Form 10-K filed on February 27, 2018 and from time to time in our reports filed with U.S. Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. The forward-looking statements included in this release are made only as of their respective dates, and we undertake no obligation to update these statements to reflect subsequent events or circumstances.



     
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME



     Unaudited



     (Amounts in Millions, Except per Share Data)




                                                                         Three Months Ended                           Twelve Months Ended


                                                             Dec 29,                         Dec 30,        Dec 29,                       Dec 30,
                                                                2018                             2017            2018                           2017




     Net Sales                                                      $
         
              881.7                          $
            820.7                $
        
        3,645.6  $
        3,360.3



     Cost of Sales                                            642.0                                  602.3                                 2,681.0              2,476.7




     Gross Profit                                             239.7                                  218.4                                   964.6                883.6



     Operating Expenses                                       149.9                                  139.8                                   599.4                552.5



     Goodwill Impairment                                                                                                                     9.5



     Asset Impairments                                                                                                                       8.7



      Total Operating Expenses                                 149.9                                  139.8                                   617.6                552.5


      Income from Operations                                    89.8                                   78.6                                   347.0                331.1



     Other Expenses, net                                        0.3                                    0.3                                     1.5                  1.0



     Interest Expense                                          14.3                                   13.5                                    55.2                 56.1



     Interest Income                                            0.1                                    0.5                                     1.9                  3.2




     Income before Taxes                                       75.3                                   65.3                                   292.2                277.2


      Provision for Income Taxes                                18.8                                   12.7                                    56.4                 59.1




     Net Income                                                56.5                                   52.6                                   235.8                218.1


      Less: Net Income
       Attributable to
       Noncontrolling Interests                                  0.9                                    1.1                                     4.6                  5.1


      Net Income Attributable to
       Regal Beloit Corporation                                       $
         
              55.6                           $
            51.5                  $
        
        231.2    $
        213.0



      Earnings Per Share
       Attributable to Regal
       Beloit Corporation:



     Basic                                                           $
         
              1.29                           $
            1.16                   $
        
        5.30     $
        4.78




     Assuming Dilution                                               $
         
              1.28                           $
            1.15                   $
        
        5.26     $
        4.74



      Cash Dividends Declared Per
       Share                                                          $
         
              0.28                           $
            0.26                   $
        
        1.10     $
        1.02



      Weighted Average Number of
       Shares Outstanding:



     Basic                                                     43.1                                   44.3                                    43.6                 44.6




     Assuming Dilution                                         43.4                                   44.7                                    43.9                 44.9


                                           CONDENSED CONSOLIDATED
                                            BALANCE SHEETS

    ---


              Unaudited


               (Dollars in Millions)


                                                                  Dec 29,                  Dec 30,
                                                                     2018                      2017




              ASSETS



              Current Assets:


               Cash and Cash Equivalents                                    $
       
       248.6                    $
       139.6


               Trade Receivables, less
                Allowances                                          551.9                             506.3
       of $13.3 Million in 2018 and
        $11.3 Million in 2017



              Inventories                                          767.2                             757.1


               Prepaid Expenses and Other
                Current Assets                                      233.0                             171.4



               Total Current Assets                               1,800.7                           1,574.4




               Net Property, Plant,
                Equipment and Noncurrent
                Assets                                            2,806.1                           2,813.8



              Total Assets                                               $
       
       4,606.8                  $
       4,388.2





               LIABILITIES AND EQUITY


               Current Liabilities:



              Accounts Payable                                             $
       
       424.8                    $
       384.3


               Other Accrued Expenses                               241.2                             226.5


               Current Maturities of Debt                             0.5                             101.2



               Total Current Liabilities                            666.5                             712.0





              Long-Term Debt                                     1,306.6                           1,039.9


               Other Noncurrent Liabilities                         295.2                             281.6



              Equity:


               Total Regal Beloit
                Corporation Shareholders'
                Equity                                            2,310.5                           2,325.5


               Noncontrolling Interests                              28.0                              29.2




              Total Equity                                       2,338.5                           2,354.7


               Total Liabilities and Equity                               $
       
       4,606.8                  $
       4,388.2


                     CONDENSED CONSOLIDATED
                      STATEMENTS OF CASH FLOW

    ---


       Unaudited


        (Dollars in Millions)


                                                             Three Months Ended                             Twelve Months Ended


                                                 Dec 29,                          Dec 30,          Dec 29,                      Dec 30,
                                                    2018                              2017              2018                          2017



                     CASH FLOWS FROM OPERATING
                      ACTIVITIES:



       Net Income                                        $
        
                56.5                              $
              52.6            $
     
         235.8  $
     218.1


        Adjustments to Reconcile Net
         Income and Changes in
         Assets and Liabilities (Net
         of Acquisitions and
         Divestitures) to Net Cash
         Provided by Operating
         Activities:


        Depreciation and
         Amortization                               36.1                                      34.1                                  142.4            137.2


        (Gain) Loss on Disposal of
         Assets, Net                               (2.4)                                    (0.5)                                   1.1            (2.5)


        Gain on Disposal of
         Businesses                                                                                                                               (0.1)


        Impairment and Exit Related
         Costs                                                                                                                     34.9


        Share-Based Compensation
         Expense                                     6.4                                       3.3                                   16.9             13.6



       Exit of Business                                                                                                                            3.9


        Change in Operating Assets
         and Liabilities                            15.8                                    (32.6)                                (68.4)          (78.3)



        Net Cash Provided by
         Operating Activities                      112.4                                      56.9                                  362.7            291.9


                     CASH FLOWS FROM INVESTING
                      ACTIVITIES:


        Additions to Property, Plant
         and Equipment                            (18.4)                                   (16.2)                                (77.6)          (65.2)


        Net Sales of Investment
         Securities                                                                                                                 0.5


        Business Acquisitions, Net
         of Cash Acquired                                                                                                       (161.5)


        Proceeds from Sale of Assets                 5.6                                       0.4                                   10.0              6.3


        Proceeds Received from
         Disposal of Businesses                      0.7                                                                             0.7              1.1



        Net Cash Used in Investing
         Activities                               (12.1)                                   (15.8)                               (227.9)          (57.8)


                     CASH FLOWS FROM FINANCING
                      ACTIVITIES:


        Net Borrowings (Repayments)
         Under Revolving Credit
         Facility                                   53.0                                     (9.7)                                  78.6              1.8


        Net (Repayments) Borrowings
         from Short-Term Borrowings                (0.1)                                      0.5                                  (0.7)             0.5


           Proceeds from Long-Term
            Debt                                                                                                                  900.2              0.3


        Repayments of Long-Term
         Debt                                     (25.1)                                   (65.1)                               (811.4)         (277.3)


        Dividends Paid to
         Shareholders                             (12.1)                                   (11.4)                                (47.2)          (44.5)


        Payments of Contingent
         Consideration                                                                                                                            (5.3)


        Proceeds from the Exercise
         of Stock Options                                                                                                                           0.4


        Repurchase of Common Stock                (49.5)                                                                        (127.8)          (45.1)


        Distributions to
         Noncontrolling Interest                                                            (5.7)                                 (1.6)          (17.4)


        Shares Surrendered for Taxes               (0.1)                                    (0.3)                                 (3.5)           (4.0)


        Purchase of Subsidiary
         Shares from Noncontrolling
         Interest                                                                                                                 (0.8)


           Financing fees paid                                                                                                    (3.5)



        Net Cash Used in Financing
         Activities                               (33.9)                                   (91.7)                                (17.7)         (390.6)


                     EFFECT OF EXCHANGE RATES ON
                      CASH AND CASH EQUIVALENTS    (2.2)                                      3.6                                  (8.1)            11.6



        Net Increase (Decrease) in
         Cash and Cash Equivalents                  64.2                                    (47.0)                                 109.0          (144.9)


        Cash and Cash Equivalents at
         Beginning of Period                       184.4                                     186.6                                  139.6            284.5



        Cash and Cash Equivalents at
         End of Period                                   $
        
                248.6                             $
              139.6            $
     
         248.6  $
     139.6



     
                SEGMENT INFORMATION



     Unaudited



     (Dollars in Millions)


                                                                                                                                           
            
         Three Months Ended


                                                     Commercial & Industrial Systems                                   Climate Solutions                                              Power Transmission Solutions                      
       
                Total Regal


                                         Dec 29,                                     Dec 30,                 Dec 29,                           Dec 30,                        Dec 29,                                      Dec 30,          Dec 29,                        Dec 30,
                                            2018                                         2017                     2018                               2017                            2018                                          2017              2018                          2017




     Net Sales                                    $
              
                436.7                                        $
              407.7                                                  $
              
                232.2                                       $
      216.4                          $
     
     212.8                $
              196.6     $
       
       881.7   $
       820.7


      Net Sales for Businesses
       Divested/to be Exited               (0.1)                                                    (0.4)                                        (9.7)                                                            (10.7)                                                                                          (9.8)             (11.1)



      Adjusted Net Sales*                          $
              
                436.6                                        $
              407.3                                                  $
              
                222.5                                       $
      205.7                          $
     
     212.8                $
              196.6     $
       
       871.9   $
       809.6




      GAAP Operating Margin                  7.4                                               5.9
          %                                         14.3                                                               14.1                        11.5
                                       
           %                                                                                             
           %                                                                 %                                                                   %                   
          %
                                                                                                                                                                                                                                                  %                                     12.2                        10.2       9.6
            %


      Adjusted Operating Margin*             7.8                                               6.1
          %                                         15.0                                                               15.3                        11.9
                                       
           %                                                                                             
           %                                                                 %                                                                   %                   
          %
                                                                                                                                                                                                                                                  %                                     12.2                        10.7       9.9
            %




      Components of Net Sales:


      Organic Sales Growth*                  1.3                                               8.8
          %                                          9.4                                                                2.7                         9.0                                      11.9                         5.2
                                       
           %                                                                                             
           %                                                                 %                  
           %                                        %                   
          %      7.9
            %



     Acquisitions                           7.7                                                           %                                                               %                                                %                                          %                          %                  3.9
                                       
           %                                                                                                                                                                                                                                                               
          %                         %


      Businesses Divested/to be                                          %                          (0.1)                                        (0.9)                                                             (2.7)                                              %                          %                (0.4)              (0.9)
       Exited                                                                                           %                                    
           %                                                                 %                                                                                       
          %                  %


      Foreign Currency Impact              (1.8)                                              1.7
          %                                        (1.2)                                                               0.6                       (0.7)
                                       
           %                                                                                             
           %                                                                 %                                                                   %                   
          %
                                                                                                                                                                                                                                                  %                                      1.3                       (1.4)      1.3
            %





     
                SEGMENT INFORMATION



     Unaudited



     (Dollars in Millions)


                                                                                                                                           
            
         Twelve Months Ended


                                                     Commercial & Industrial Systems                                   Climate Solutions                                              Power Transmission Solutions                      
       
                Total Regal


                                         Dec 29,                                     Dec 30,                 Dec 29,                           Dec 30,                        Dec 29,                                      Dec 30,          Dec 29,                        Dec 30,
                                            2018                                         2017                     2018                               2017                            2018                                          2017              2018                          2017




     Net Sales                                  $
              
                1,782.0                                      $
              1,604.3                                                $
              
                1,024.8                                       $
      990.6                          $
     
     838.8                $
              765.4   $
       
       3,645.6 $
       3,360.3


      Net Sales for Businesses
       Divested/to be Exited               (1.4)                                                    (1.9)                                       (52.6)                                                            (60.4)                                                                                         (54.0)             (62.3)



      Adjusted Net Sales*                        $
              
                1,780.6                                      $
              1,602.4                                                  $
              
                972.2                                       $
      930.2                          $
     
     838.8                $
              765.4   $
       
       3,591.6 $
       3,298.0




      GAAP Operating Margin                  7.1                                               6.2
          %                                         11.3                                                               14.3                        12.4
                                       
           %                                                                                             
           %                                                                 %                                                                   %                   
          %
                                                                                                                                                                                                                                                  %                                     11.7                         9.5       9.9
            %


      Adjusted Operating Margin*             7.7                                               6.9
          %                                         15.5                                                               15.5                        12.6
                                       
           %                                                                                             
           %                                                                 %                                                                   %                   
          %                  %
                                                                                                                                                                                                                                                  %                                     11.4                        11.0                10.4




      Components of Net Sales:


      Organic Sales Growth                   4.7                                               4.7
          %                                          4.6                                                                4.6                         9.1                                       5.3                         5.7
                                       
           %                                                                                             
           %                                                                 %                  
           %                                        %                   
          %      4.8
            %



     Acquisitions                           6.0                                                           %                                                               %                                                %                                          %                (1.2)                        2.9               (0.3)
                                       
           %                                                                                                                                                                                                                                           %                   
          %                  %


      Businesses Divested/to be                                          %                          (0.1)                                        (1.1)                                                             (1.5)                                              %                          %                (0.5)              (0.5)
       Exited                                                                                           %                                    
           %                                                                 %                                                                                       
          %                  %


      Foreign Currency Impact                0.5                                               0.2
          %                                        (0.1)                                                               0.1                         0.5                                       0.2                         0.3
                                       
           %                                                                                             
           %                                                                 %                  
           %                                        %                   
          %      0.2
            %

NON-GAAP MEASURES AND OTHER DEFINITIONS
Unaudited
(Dollars in Millions, Except per Share Data)

We prepare financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We also periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentations and similar events that may be considered "non-GAAP" financial measures. This additional information is not meant to be considered in isolation or as a substitute for our results of operations prepared and presented in accordance with GAAP.

In this earnings release, we disclose the following non-GAAP financial measures, and we reconcile these measures in the tables below to the most directly comparable GAAP financial measures: adjusted diluted earnings per share (both historical and projected), adjusted income from operations, adjusted operating margin, adjusted net sales, adjusted net income attributable to Regal Beloit Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income before taxes, adjusted provision for income taxes, adjusted effective tax rate, net sales from ongoing business, adjusted income from operations of ongoing business, ongoing business adjusted operating margin and adjusted diluted earnings per share for ongoing business. We believe that these non-GAAP financial measures are useful measures for providing investors with additional information regarding our results of operations and for helping investors understand and compare our operating results across accounting periods and compared to our peers. Our management primarily uses adjusted income from operations and adjusted operating margin to help us manage and evaluate our business and make operating decisions, while adjusted diluted earnings per share, adjusted net sales, adjusted net income attributable to Regal Beloit Corporation, free cash flow, free cash flow as a percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income before taxes, adjusted provision for income taxes, adjusted effective tax rate, net sales from ongoing business, adjusted income from operations of ongoing business, ongoing business adjusted operating margin and adjusted diluted earnings per share for ongoing business are primarily used to help us evaluate our business and forecast our future results. Accordingly, we believe disclosing and reconciling each of these measures helps investors evaluate our business in the same manner as management.

In addition to these non-GAAP measures, we also use the term "organic sales" to refer to GAAP sales from existing operations excluding sales from acquired businesses recorded prior to the first anniversary of the acquisition ("net sales from business acquired") and excluding sales from business divested/to be exited ("net sales from business divested/to be exited") recorded prior to the first anniversary of the exit and excluding the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period's organic sales using the currency exchange rates that were in effect during the prior year periods. We use the term "organic sales growth" to refer to the increase in our sales between periods that is attributable to organic sales. For further clarification, we may use the term "acquisition growth" to refer to the increase in our sales between periods that is attributable to acquisition sales.


                     ADJUSTED DILUTED
                      EARNINGS PER
                      SHARE                      Three Months Ended                            Twelve Months Ended

    ---

                                      Dec 29,                         Dec 30,          Dec 29,                     Dec 30,
                                         2018                             2017              2018                         2017



        GAAP Diluted
         Earnings Per
         Share                                $
        
                1.28                             $
              1.15            $
     
         5.26  $
     4.74


        Restructuring and
         Related Costs                   0.04                                     0.02                                  0.13            0.22


        Purchase
         Accounting and
         Transaction Costs                                                                                            0.09


        Gain on Sale of
         Assets                        (0.04)                                  (0.01)                               (0.05)         (0.07)


        Net (Income) Loss
         from Businesses
         Divested/to be
         Exited                        (0.01)                                    0.01                                (0.03)           0.01


        CEO Transition
         Costs                           0.07                                                                          0.07


        Impairment and
         Exit Related
         Costs                                                                                                        0.61


        Impact of the New
         US Tax
         Legislation                     0.07                                   (0.02)                               (0.08)         (0.02)


        Adjusted Diluted
         Earnings Per
         Share                                $
        
                1.41                             $
              1.15            $
     
         6.00  $
     4.88



              
                ADJUSTED INCOME FROM OPERATIONS




                                                                                                                                            
          
          Three Months Ended


                                                                       Commercial & Industrial Systems                          Climate Solutions                                  Power Transmission Solutions                     
     
         Total Regal


                                                            Dec 29,                                    Dec 30,         Dec 29,                       Dec 30,                 Dec 29,                                   Dec 30,          Dec 29,              Dec 30,
                                                               2018                                        2017             2018                           2017                     2018                                       2017              2018                2017



               GAAP Income from
                Operations                                          $
              
                32.1                                 $
              24.0                                       $
              
               33.3                                $
     30.6                  $
     
     24.4            $
           24.0  $
     
     89.8 $
     78.6


               Restructuring and
                Related Costs                                   1.7                                                1.1                                     0.4                                                     0.5                          0.1                                            2.2            1.6


               Purchase
                Accounting and
                Transaction Costs                               0.1                                                                                                                                                                                                                        0.1


               Gain on Sale of
                Assets                                        (1.5)                                             (0.4)                                  (0.7)                                                                                                                            (2.2)         (0.4)


               Operating (Income)
                Loss from
                Businesses
                Divested/to be
                Exited                                        (0.1)                                                                                    (0.7)                                                    0.4                                                                      (0.8)           0.4


               CEO Transition
                Costs                                           1.8                                                                                       1.1                                                                                 0.9                                            3.8


               Adjusted Income
                from Operations                                     $
              
                34.1                                 $
              24.7                                       $
              
               33.4                                $
     31.5                  $
     
     25.4            $
           24.0  $
     
     92.9 $
     80.2





    GAAP Operating                                             7.4%                                       5.9%           14.3%                         14.1%                   11.5%                                     12.2%             10.2
     Margin %                                                                                                                                                                                                                                                             %
                                                                                                                                                                                                                                              %                           9.6


    Adjusted Operating                                         7.8%                                       6.1%           15.0%                         15.3%                   11.9%                                     12.2%             10.7
     Margin %                                                                                                                                                                                                                                                             %
                                                                                                                                                                                                                                              %                           9.9



              
                ADJUSTED INCOME FROM OPERATIONS




                                                                                                                                                    
      
               Twelve Months Ended


                                                                       Commercial & Industrial Systems                           Climate Solutions                                            Power Transmission Solutions                     
     
            Total Regal


                                                            Dec 29,                                  
     Dec 30,         Dec 29,                       
      Dec 30,                        Dec 29,                                    Dec 30,            Dec 29,               
     Dec 30,
                                                               2018                                        2017             2018                              2017                            2018                                        2017                2018                     2017



               GAAP Income from
                Operations                                          $
              
                127.0                                 $
              99.8                                                $
              
               115.6                                  $
      141.5                            $
     
     104.4             $
           89.8   $
     
     347.0 $
     331.1


               Restructuring and
                Related Costs                                   5.6                                               10.9                                        1.8                                                             2.5                            0.3                                   0.7                    7.7            14.1




               Purchase
                Accounting and
                Transaction Costs                               5.4                                                                                                                                                                                                                                                  5.4


               Gain on Disposal
                of Business                                                                                                                                                                                                                                                                 (0.1)                                (0.1)


               Gain on Sale of
                Assets                                        (1.9)                                             (1.1)                                     (0.7)                                                                                                                             (2.8)                 (2.6)          (3.9)


               Operating (Income)
                Loss from
                Businesses
                Divested/to be
                Exited                                                                                            0.2                                      (1.9)                                                            0.1                                                                                     (1.9)            0.3


               CEO Transition
                Costs                                           1.8                                                                                          1.1                                                                                           0.9                                                         3.8


               Impairment and
                Exit Related
                Costs                                                                                                                                      34.9                                                                                                                                                     34.9



               Adjusted Income
                from Operations                                     $
              
                137.9                                $
              109.8                                                $
              
               150.8                                  $
      144.1                            $
     
     105.6             $
           87.6   $
     
     394.3 $
     341.5





    GAAP Operating                                             7.1%                                       6.2%           11.3%                            14.3%                          12.4%                                      11.7%                9.5
     Margin %                                                                                                                                                                                                                                      
         %                           9.9
         %


    Adjusted Operating                                         7.7%                                       6.9%           15.5%                            15.5%                          12.6%                                      11.4%               11.0                                  10.4
     Margin %                                                                                                                                                                                                                                      
         %                                    %


                     FREE CASH FLOW                                                    Three Months Ended                                                                      Twelve Months Ended

    ---

                                                                   Dec 29,                                               Dec 30,                                       Dec 29,                       Dec 30,
                                                                      2018                                                   2017                                           2018                           2017



        Net Cash Provided by
         Operating Activities                                                $
              
                112.4                                                                       $
              56.9              $
     
        362.7  $
     291.9


        Additions to Property Plant
         and Equipment                                              (18.4)                                                            (16.2)                                                          (77.6)         (65.2)




       Free Cash Flow                                                        $
              
                94.0                                                                       $
              40.7              $
     
        285.1  $
     226.7





        GAAP Net Income
         Attributable to Regal
         Beloit Corporation                                                   $
              
                55.6                                                                       $
              51.5              $
     
        231.2  $
     213.0


        Goodwill Impairment                                                                                                                                                                              9.5


        Asset Impairments                                                                                                                                                                                8.7


        Tax Effect from Impairments                                                                                                                                                                    (4.0)



        Adjusted Net Income
         Attributable to Regal
         Beloit Corporation(1)                                                $
              
                55.6                                                                       $
              51.5              $
     
        245.4  $
     213.0





        Free Cash Flow as a
         Percentage of Adjusted Net                                                                                                        %                                                                              %
         Income Attributable to                                          %                                                                                                                                 %
         Regal Beloit Corporation                                    169.1                                                               79.0                                                            116.2           106.4





        (1) The Net Income Attributable to Regal Beloit Corporation is adjusted for goodwill and asset impairments related to the business to be exited and used in the Free Cash Flow Calculation.


                     ADJUSTED
                      EFFECTIVE TAX
                      RATE                     Three Months Ended                         Twelve Months Ended

    ---

                                    Dec 29,                         Dec 30,       Dec 29,                     Dec 30,
                                       2018                             2017           2018                         2017



        Income before
         Taxes                              $
        
                75.3                          $
              65.3            $
      
       292.2  $
      277.2


        Provision for
         Income Taxes                  18.8                                  12.7                                  56.4            59.1



        Effective Tax                  25.0                                  19.4                                  19.3
         Rate                                                                  %                                                   %
                                          %                                                                         %           21.3




        Income before
         Taxes                              $
        
                75.3                          $
              65.3            $
      
       292.2  $
      277.2


        Impairment and
         Exit Related
         Costs                                                                                                   34.9


        Adjusted Income
         before Taxes                       $
        
                75.3                          $
              65.3            $
      
       327.1  $
      277.2





        Provision for
         Income Taxes                       $
        
                18.8                          $
              12.7             $
      
       56.4   $
      59.1


        Tax Effect from
         Impairment and
         Exit Related
         Costs                                                                                                    8.2


        Impact of the New
         US Tax
         Legislation                  (3.0)                                  1.0                                   3.6             1.0


        Adjusted
         Provision for
         Income Taxes                       $
        
                15.8                          $
              13.7             $
      
       68.2   $
      60.1





        Adjusted                       21.0                                  21.0                                  20.8
         Effective Tax                                                         %                                                   %
         Rate                             %                                                                         %           21.7


                     2019 ADJUSTED
                      ANNUAL GUIDANCE Minimum         Maximum

    ---

        2019 Diluted EPS
         Annual Guidance                      $
     6.59                 $
     6.99


        Restructuring
         and Related
         Costs                           0.18                    0.18


        Gain on Sale of
         Assets                        (0.70)                 (0.70)


        CEO Transition
         Costs                           0.08                    0.08


        2019 Adjusted
         Diluted EPS
         Annual Guidance                      $
     6.15                 $
     6.55


                            ORGANIC SALES
                             GROWTH                                      
              
              Three Months Ended

    ---

                                             Commercial &              Climate Solutions                              Power
                                              Industrial                                                           Transmission
                                                Systems                                                              Solutions               Total Regal



               Net Sales Three
                Months Ended
                Dec 29, 2018                                $
       436.7                                                            $
       232.2               $
            212.8    $
       881.7


               Net Sales from
                Business
                Acquired                           (31.4)                                                                                                         (31.4)


               Net Sales from
                Businesses
                Divested/to
                be Exited                           (0.1)                                        (9.7)                                                             (9.8)


               Impact from
                Foreign
                Currency
                Exchange Rates                        7.2                                           2.5                                                1.4             11.1


               Organic Sales
                Three Months
                Ended Dec 29,
                2018                                        $
       412.4                                                            $
       225.0               $
            214.2    $
       851.6





               Net Sales Three
                Months Ended
                Dec 30, 2017                                $
       407.7                                                            $
       216.4               $
            196.6    $
       820.7


               Net Sales from
                Businesses
                Divested/to
                be Exited                           (0.4)                                       (10.7)                                                            (11.1)



               Adjusted Net
                Sales Three
                Months Ended
                Dec 30, 2017                                $
       407.3                                                            $
       205.7               $
            196.6    $
       809.6





    Three Months
     Ended Dec 29,                                                                                                                                     %
     2018 Organic
     Sales Growth %                       1.3
            %                                  9.4
          %                                               9.0      5.2
          %


    Three Months
     Ended Dec 29,                                                                                                                                     %
     2018 Net Sales
     Growth %                             7.1
            %                                  7.3
          %                                               8.2      7.4
          %




                            ORGANIC SALES
                             GROWTH                                      
              
              Twelve Months Ended

    ---

                                             Commercial &              Climate Solutions                              Power
                                              Industrial                                                           Transmission
                                                Systems                                                              Solutions               Total Regal



               Net Sales
                Twelve Months
                Ended Dec 29,
                2018                                      $
       1,782.0                                                          $
       1,024.8               $
            838.8  $
       3,645.6


               Net Sales from
                Business
                Acquired                           (96.2)                                                                                                         (96.2)


               Net Sales from
                Businesses
                Divested/to
                be Exited                           (1.4)                                       (52.6)                                                            (54.0)


               Impact from
                Foreign
                Currency
                Exchange Rates                      (7.4)                                          1.2                                              (4.1)          (10.3)


               Organic Sales
                Twelve Months
                Ended Dec 29,
                2018                                      $
       1,677.0                                                            $
       973.4               $
            834.7  $
       3,485.1





               Net Sales
                Twelve Months
                Ended Dec 30,
                2017                                      $
       1,604.3                                                            $
       990.6               $
            765.4  $
       3,360.3


               Net Sales from
                Businesses
                Divested/to
                be Exited                           (1.9)                                       (60.4)                                                            (62.3)



               Adjusted Net
                Sales Twelve
                Months Ended
                Dec 30, 2017                              $
       1,602.4                                                            $
       930.2               $
            765.4  $
       3,298.0





    Twelve Months
     Ended Dec 29,                                                                                                                                     %
     2018 Organic
     Sales Growth %                       4.7
            %                                  4.6
          %                                               9.1      5.7
          %


    Twelve Months
     Ended Dec 29,                                      %                                                                                              %
     2018 Net Sales
     Growth %                                      11.1                                   3.5
          %                                               9.6      8.5
          %

The following tables outline by quarter and full year the 2018 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and actual performance.


                                               Commercial &            Climate             Power
                                                Industrial            Solutions         Transmission
                                                  Systems                                 Solutions            Total Regal





                            Fiscal 2018 First
                             Quarter Schedule
                             for Ongoing
                             Business


               Net Sales Three
                Months Ended
                March 31, 2018                              $
      414.0                                $
      259.9               $
         204.9  $
      878.8


               Net Sales from
                Businesses
                Divested/to be
                Exited                               (33.5)                     (18.0)                                           (51.5)



               Net Sales from
                Ongoing Business                            $
      380.5                                $
      241.9               $
         204.9  $
      827.3




               GAAP Income from
                Operations Three
                Months Ended
                March 31, 2018                               $
      29.1                                 $
      32.3                $
         26.8   $
      88.2


               Restructuring and
                Related Costs                           1.3                         0.4                                               1.7


               Income from
                Operations of
                Businesses
                Divested/to be
                Exited                                (3.3)                      (1.6)                                            (4.9)



               Adjusted Income
                from Operations
                of Ongoing
                Business                                     $
      27.1                                 $
      31.1                $
         26.8   $
      85.0





    Ongoing Business
     Adjusted                                             %                          %                                   %            %
     Operating Margin
     %                                                 7.1                        12.9                                 13.1          10.3




                            Fiscal 2018 Second
                             Quarter Schedule
                             for Ongoing
                             Business


               Net Sales Three
                Months Ended June
                30, 2018                                    $
      469.0                                $
      277.3               $
         213.4  $
      959.7


               Net Sales from
                Businesses
                Divested/to be
                Exited                               (33.6)                     (19.2)                                           (52.8)



               Net Sales from
                Ongoing Business                            $
      435.4                                $
      258.1               $
         213.4  $
      906.9




               GAAP Income from
                Operations Three
                Months Ended June
                30, 2018                                     $
      30.5                                 $
      44.0                $
         25.1   $
      99.6


               Restructuring and
                Related Costs                           0.7                         0.7                                  0.1           1.5


               Purchase
                Accounting and
                Transaction Costs                       5.1                                                                          5.1


               Income from
                Operations of
                Businesses
                Divested/to be
                Exited                                (3.0)                      (2.1)                                            (5.1)



               Adjusted Income
                from Operations
                of Ongoing
                Business                                     $
      33.3                                 $
      42.6                $
         25.2  $
      101.1





    Ongoing Business
     Adjusted                                             %                          %                                   %            %
     Operating Margin
     %                                                 7.6                        16.5                                 11.8          11.1


                                               Commercial &            Climate             Power
                                                Industrial            Solutions         Transmission
                                                  Systems                                 Solutions             Total Regal





                            Fiscal 2018 Third
                             Quarter Schedule
                             for Ongoing
                             Business


               Net Sales Three
                Months Ended
                September 29,
                2018                                        $
      462.3                                $
       255.4               $
         207.7  $
      925.4


               Net Sales from
                Businesses
                Divested/to be
                Exited                               (34.7)                     (13.3)                                            (48.0)



               Net Sales from
                Ongoing Business                            $
      427.6                                $
       242.1               $
         207.7  $
      877.4




               GAAP Income from
                Operations Three
                Months Ended
                September 29,
                2018                                         $
      35.3                                  $
       6.0                $
         28.1   $
      69.4


               Restructuring and
                Related Costs                           1.9                         0.3                                   0.1           2.3


               Purchase
                Accounting and
                Transaction Costs                       0.2                                                                           0.2


               Impairment and
                Exit Related
                Costs                                                             34.9                                               34.9


               Income from
                Operations of
                Businesses
                Divested/to be
                Exited                                (3.0)                      (1.5)                                             (4.5)



               Adjusted Income
                from Operations
                of Ongoing
                Business                                     $
      34.4                                 $
       39.7                $
         28.2  $
      102.3





    Ongoing Business
     Adjusted                                             %                          %                                    %            %
     Operating Margin
     %                                                 8.0                        16.4                                  13.6          11.7




                            Fiscal 2018 Fourth
                             Quarter Schedule
                             for Ongoing
                             Business


               Net Sales Three
                Months Ended
                December 29, 2018                           $
      436.7                                $
       232.2               $
         212.8  $
      881.7


               Net Sales from
                Businesses
                Divested/to be
                Exited                               (35.6)                     (11.2)                                            (46.8)



               Net Sales from
                Ongoing Business                            $
      401.1                                $
       221.0               $
         212.8  $
      834.9




               GAAP Income from
                Operations Three
                Months Ended
                December 29, 2018                            $
      32.1                                 $
       33.3                $
         24.4   $
      89.8


               Restructuring and
                Related Costs                           1.7                         0.4                                   0.1           2.2


               Purchase
                Accounting and
                Transaction Costs                       0.1                                                                           0.1


               Gain on Sale of
                Assets                                (1.5)                      (0.7)                                             (2.2)


               CEO Transition
                Costs                                   1.8                         1.1                                   0.9           3.8


               Income from
                Operations of
                Businesses
                Divested/to be
                Exited                                (3.0)                      (1.6)                                             (4.6)



               Adjusted Income
                from Operations
                of Ongoing
                Business                                     $
      31.2                                 $
       32.5                $
         25.4   $
      89.1





    Ongoing Business
     Adjusted                                             %                          %                                    %            %
     Operating Margin
     %                                                 7.8                        14.7                                  11.9          10.7


                                                 Commercial &              Climate Solutions            Power
                                                  Industrial                                         Transmission
                                                    Systems                                            Solutions               Total Regal





                            Fiscal 2018 Full
                             Year Schedule for
                             Ongoing Business


               Net Sales Twelve
                Months Ended
                December 29, 2018                             $
       1,782.0                                        $
       1,024.8               $
         838.8  $
       3,645.6


               Net Sales from
                Businesses
                Divested/to be
                Exited                                (137.4)                                (61.7)                                             (199.1)



               Net Sales from
                Ongoing Business                              $
       1,644.6                                          $
       963.1               $
         838.8  $
       3,446.5




               GAAP Income from
                Operations Twelve
                Months Ended
                December 29, 2018                               $
       127.0                                          $
       115.6               $
         104.4    $
       347.0


               Restructuring and
                Related Costs                             5.6                                    1.8                                     0.3           7.7


               Purchase
                Accounting and
                Transaction Costs                         5.4                                                                                        5.4


               Gain on Sale of
                Assets                                  (1.5)                                 (0.7)                                               (2.2)


               CEO Transition
                Costs                                     1.8                                    1.1                                     0.9           3.8


               Impairment and
                Exit Related
                Costs                                                                          34.9                                                 34.9


               Income from
                Operations of
                Businesses
                Divested/to be
                Exited                                 (12.3)                                 (6.8)                                              (19.1)



               Adjusted Income
                from Operations
                of Ongoing
                Business                                        $
       126.0                                          $
       145.9               $
         105.6    $
       377.5





    Ongoing Business
     Adjusted                                                                                     %                                      %            %
     Operating Margin
     %                                         7.7
            %                                  15.1                                    12.6          11.0


                     2018 ADJUSTED DILUTED EARNINGS  Twelve Months Ended
                      PER SHARE FOR ONGOING BUSINESS  December 29, 2018

    ---



        Adjusted Diluted Earnings Per
         Share                                                    $
         6.00


        Earnings Per Share from
         Businesses Divested/to be
         Exited                                          (0.25)


        Adjusted Diluted Earnings Per
         Share for Ongoing Business                               $
         5.75

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SOURCE Regal Beloit Corporation