Regal Beloit Corporation (RBC) has reported 5.99 percent fall in profit for the quarter ended Oct. 01, 2016. The company has earned $59.60 million, or $1.32 a share in the quarter, compared with $63.40 million, or $1.41 a share for the same period last year. On an adjusted basis, earnings per share were at $1.31 for the quarter compared with $1.43 in the same period last year.

Revenue during the quarter dropped 8.24 percent to $809.60 million from $882.30 million in the previous year period. Gross margin for the quarter expanded 129 basis points over the previous year period to 28.62 percent. Total expenses were 88.91 percent of quarterly revenues, up from 88.65 percent for the same period last year. That has resulted in a contraction of 25 basis points in operating margin to 11.09 percent.

Operating income for the quarter was $89.80 million, compared with $100.10 million in the previous year period.

However, the adjusted operating income for the quarter stood at $89.70 million compared to $101.30 million in the prior year period. At the same time, adjusted operating margin contracted 40 basis points in the quarter to 11.08 percent from 11.48 percent in the last year period.

"Our results for the third quarter were generally in line with our expectations. Sales were down due to weak global industrial end markets and the ongoing challenges in oil & gas, but were partially offset by a strong HVAC cooling season," said Regal chairman and chief executive officer Mark Gliebe. "Despite the weaker sales, we maintained our operating margin as compared to the prior year and generated very strong free cash flow, which we used to pay down $105 million of debt in the quarter."

For financial year 2016, Regal Beloit Corporation projects diluted earnings per share to be in the range of $4.45 to $4.55. The company projects diluted earnings per share to be in the range of $4.40 to $4.50 on adjusted basis.

The company has spent $29.50 million cash to meet investing activities during the nine month period as against cash outgo of $1,464 million in the last year period. It has incurred net capital expenditure of $44.50 million on net basis during the nine month period, down 22.74 percent or $13.10 million from year ago period.

The company has spent $265.80 million cash to carry out financing activities during the nine month period as against cash inflow of $1,124 million in the last year period.

Cash and cash equivalents stood at $281.60 million as on Oct. 01, 2016, up 10.60 percent or $27 million from $254.60 million on Oct. 03, 2015.

Working capital declines
Regal Beloit Corporation has witnessed a decline in the working capital over the last year. It stood at $898 million as at Oct. 01, 2016, down 18.73 percent or $206.90 million from $1,104.90 million on Oct. 03, 2015. Current ratio was at 2.28 as on Oct. 01, 2016, down from 2.62 on Oct. 03, 2015.

Cash conversion cycle (CCC) has decreased to 58 days for the quarter from 114 days for the last year period. Days sales outstanding went up to 61 days for the quarter compared with 58 days for the same period last year.

Days inventory outstanding has decreased to 54 days for the quarter compared with 107 days for the previous year period. At the same time, days payable outstanding went up to 57 days for the quarter from 52 for the same period last year.

Debt comes down
Regal Beloit Corporation has recorded a decline in total debt over the last one year. It stood at $1,510.50 million as on Oct. 01, 2016, down 16.72 percent or $303.20 million from $1,813.70 million on Oct. 03, 2015. Total debt was 33.74 percent of total assets as on Oct. 01, 2016, compared with 37.18 percent on Oct. 03, 2015. Debt to equity ratio was at 0.72 as on Oct. 01, 2016, down from 0.89 as on Oct. 03, 2015. Interest coverage ratio deteriorated to 6.24 for the quarter from 6.63 for the same period last year.