RBC – Market expectations are for Uniform ROA compression, but management is confident about their growth potential, leverage levels, and restructuring efforts

• Regal Beloit Corporation (RBC:USA) trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 14.5x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about the growth potential of new markets, their leverage levels, and the progress of their business review and restructuring efforts
• Specifically, management is confident in the growth potential of new markets, and they are confident that the 80/20 and Lean principles ensure they make good and timely data-driven decisions. In addition, they are confident their business review and restructuring efforts will allow them to operate more efficiently and provide a clear path to sustained financial performance, and they are confident that they are focused on improving operational performance. Moreover, they are confident their debt-to-adjusted EBITDA ratio was at 1.9x to end the quarter, and that they continue to find cost-out opportunities in the C&I segment.