SPX TECHNOLOGIES, INC. CHARLOTTE, N.C., April 29, 2015 /PRNewswire/ -- SPX Corporation (NYSE: SPW) today reported results for the quarter ended March 28, 2015.
First Quarter 2015 Overview:
-- Revenues declined 12.1% to $0.95 billion from $1.08 billion in the
year-ago quarter. The impact of the stronger U.S. dollar on foreign
currencies decreased revenues by 6.4%. Organic revenues* decreased 5.7%,
due primarily to lower power and energy revenue in the Flow and Thermal
segments, largely reflecting the impact of lower oil prices on customer
capital spending decisions and on-going weakness in power generation
markets.
-- Segment income and margins declined to $75.5 million and 8.0%, compared
to $98.7 million and 9.2% in the year-ago quarter, due primarily to the
organic revenue decline.
-- Diluted net loss per share from continuing operations was ($0.17) in Q1
2015 as compared to diluted net income of $6.59 per share in Q1 2014.
-- The Q1 2015 results included $0.22 per share of costs associated
with the planned spin-off of the Flow business.
-- The Q1 2014 results included a gain of $7.00 per share on the sale
of the company's joint venture interest in EGS Electrical Group,
LLC, a charge of $0.45 per share related to the early extinguishment
of debt, and pension expense of $0.24 per share associated with the
completion of a voluntary lump-sum offering.
-- Net cash used in continuing operations was $108.3 million, compared to
$58.6 million in Q1 2014.
-- Free cash flow used in continuing operations* was $122.7 million,
compared to $69.9 million in Q1 2014. The year-over-year variance in
free cash flow was due primarily to working capital performance, lower
operating profit and currency translation headwinds.
"As expected, our Q1 results reflect the strengthening of the U.S. dollar, the impact of lower oil prices on our customers' capital spending decisions and on-going weakness in power generation markets. Broadly speaking, these factors have caused many of our customers to re-evaluate their capital spending budgets, leading to delayed order placement and project timing. As a result, Q1 orders across our power and energy businesses were down double-digits over the prior year and significantly lower than anticipated. These declines offset strong order growth in our Food and Beverage business, both sequentially and year-over-year. Our Food and Beverage business also delivered solid revenue growth and strong margin improvement during the quarter," said Chris Kearney, Chairman, President and CEO of SPX.
Kearney continued, "Given the slower than expected start to the year and the uncertain timing of our customers' capital investments in oil and oil-related markets, we have implemented cost reduction initiatives and increased our planned restructuring actions for the year. Our revised full year targets reflect these changes, as well as the strengthening of the U.S. dollar. For 2015, we now expect organic revenue to be flat to down 4% with total revenue down 6% to 10%, including a 6% currency headwind. And we expect to modestly improve segment income margins over the prior year."
"From a strategic perspective, we are focused on executing the spin-off of our Flow business and remain on track to complete the spin transaction in the third quarter. We believe this is a unique opportunity to create value for our shareholders at both future companies, SPX FLOW, Inc. and the new SPX Corporation."
2015 Financial Modeling Approach:
The company updated its 2015 financial modeling targets for revenue, segment income, consolidated EBITDA((2) )and other reasonably predictable items. SPX management does not believe it is useful to provide 2015 EPS guidance given its plan to complete the spin-off of its Flow business in Q3 2015 and the uncertain timing of related financial impacts.
Updated 2015 Financial Modeling Targets:
Total revenues vs. 2014 (6%) to (10%)
----------------------- ------------
Currency impact to revenues ~(6%)
--------------------------- ----
Organic revenues flat to (4%)
---------------- -----------
Segment Income margin vs. 2014 +~10 points
------------------------------ -----------
Free Cash Flow Conversion (1) ~100% of Net Income
---------------------------- -------------------
Special Charges (Restructuring) $25m to $30m
------------------------------ ------------
Consolidated EBITDA (2) $500m to $540m
---------------------- --------------
Flow Technology
Revenues for Q1 2015 were $530.8 million, compared to $616.7 million in Q1 2014, a decrease of $85.9 million, or 13.9%. Currency fluctuations decreased revenues 8.3%, or $51.4 million, while organic revenues* declined 5.6%, or $34.5 million. The decrease in organic revenues was due primarily to a double-digit decline in power and energy sales, largely reflecting the impact of lower oil prices. This decline was offset partially by a year-over-year increase in sales of food and beverage components and systems.
Segment income was $59.3 million, or 11.2% of revenues, in Q1 2015, compared to $66.2 million, or 10.7% of revenues, in Q1 2014. Segment income was lower versus the prior year due primarily to currency fluctuations and the organic decline in power and energy revenues, partially offset by improved operational performance within the food and beverage business, as well as cost reductions associated with restructuring actions completed in the prior year. Segment income margins increased 50 points driven by the food and beverage business, which saw a sharp increase in year-over-year operating margins, reflecting disciplined order selectivity and improved large project execution.
Thermal Equipment and Services
Revenues for Q1 2015 were $247.2 million, compared to $279.6 million in Q1 2014, a decrease of $32.4 million, or 11.6%. Organic revenues* declined 6.8%, or $19.1 million, while currency fluctuations decreased revenues by 4.8%, or $13.3 million. The organic revenue decline was concentrated in power generation markets and due primarily to lower sales of heat exchangers in Asia Pacific and a reduction in revenue associated with the large power projects in South Africa. These declines were partially offset by increased global sales of package cooling towers.
The segment recorded a loss of ($2.8) million in Q1 2015 compared to income of $9.2 million, or 3.3% of revenues, in Q1 2014. The decrease in segment income was due primarily to a decline of approximately $8.0 million of income related to the large power projects in South Africa and the organic revenue declines described above. In addition, a reduced volume of higher margin, cooling tower reconstruction projects led to an unfavorable sales mix as compared to the prior year. These declines were partially offset by increased income and margins within the segment's personal comfort heating businesses.
Industrial Products and Services and Other
Revenues for Q1 2015 were $168.9 million, compared to $180.8 million in Q1 2014, a decline of $11.9 million, or 6.6%. Organic revenues* declined 4.4%, while currency fluctuations decreased revenues by 2.2%. The organic revenue decline was due primarily to lower sales of fare collection systems, power transformers and communication technologies, partially offset by an increase in sales of portable cable and pipe locators.
Segment income was $19.0 million, or 11.2% of revenues, in Q1 2015, compared to $23.3 million, or 12.9% of revenues, in Q1 2014. The decline in segment income was due primarily to the organic revenue declines in fare collection systems and communication technologies.
OTHER ITEMS
Dividend: On February 27, 2015, the company announced that its Board of Directors declared a quarterly dividend of $0.375 per common share to shareholders of record on March 16, 2015, which was paid on April 1, 2015.
Form 10-Q: The company expects to file its quarterly report on Form 10-Q for the quarter ended March 28, 2015 with the Securities and Exchange Commission no later than May 7, 2015. This press release should be read in conjunction with that filing, which will be available on the company's website at www.spx.com, in the Investor Relations section.
About SPX: Based in Charlotte, North Carolina, SPX Corporation (NYSE: SPW) is a global multi-industry manufacturing leader with approximately $5 billion in annual revenue, operations in more than 35 countries and over 14,000 employees. The company's highly-specialized, engineered products and technologies are concentrated in flow technology and energy infrastructure. Many of SPX's innovative solutions are playing a role in helping to meet rising global demand for electricity and processed foods and beverages. The company's products include food processing systems, critical flow components for oil and gas processing, power transformers for utility companies, and cooling systems for power plants. For more information, please visit www.spx.com.
*Non-GAAP number. See attached schedules for reconciliation to most comparable GAAP number.
((1)) Excludes costs and cash flows related to executing the spin-off of the Flow business*
((2)) Consolidated EBITDA as defined by SPX's credit facilities*
Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Please read these results in conjunction with the company's documents filed with the Securities and Exchange Commission, including the company's annual reports on Form 10-K, and any amendments thereto, and quarterly reports on Form 10-Q. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. Actual results may differ materially from these statements. The words "expect," "anticipate," "project" and similar expressions identify forward-looking statements. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company's current complement of businesses, which is subject to change. Also, there can be no assurance as to when the company's planned spin-off will be completed, if at all, or if the spin-off will be completed in the form contemplated. Even if the transaction is completed as and on the timetable currently contemplated, the two publicly-traded companies may not realize some of or all projected benefits, or expenses relating to the spin-off may be significantly higher than projected. Following completion of the spin-off, there can be no guarantee the combined value of the common stock of the two publicly traded companies will equal or exceed the value of our stock had the spin-off not occurred. Statements in this press release speak only as of the date of this press release, and SPX disclaims any responsibility to update or revise such statements.
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three months ended
------------------
March 28, 2015 March 29, 2014
-------------- --------------
Revenues $946.9 $1,077.1
Costs and expenses:
Cost of products sold 685.0 775.6
Selling, general and administrative 233.2 267.5
Intangible amortization 7.3 8.3
Special charges, net 6.6 10.0
--- ----
Operating income 14.8 15.7
Other income, net 0.8 490.6
Interest expense (16.8) (19.3)
Interest income 1.1 2.2
Loss on early extinguishment of debt - (32.5)
--- -----
Income (loss) from continuing operations before income taxes (0.1) 456.7
Income tax provision (9.5) (160.0)
---- ------
Income (loss) from continuing operations (9.6) 296.7
Income from discontinued operations, net of tax - 0.1
Gain (loss) on disposition of discontinued operations, net of tax (0.4) 21.0
---- ----
Income (loss) from discontinued operations, net of tax (0.4) 21.1
---- ----
Net income (loss) (10.0) 317.8
Less: Net loss attributable to noncontrolling interests (2.9) (0.4)
---- ----
Net income (loss) attributable to SPX Corporation common shareholders $(7.1) $318.2
===== ======
Amounts attributable to SPX Corporation common shareholders:
Income (loss) from continuing operations, net of tax $(6.7) $297.1
Income (loss) from discontinued operations, net of tax (0.4) 21.1
---- ----
Net income (loss) $(7.1) $318.2
===== ======
Basic income (loss) per share of common stock:
Income (loss) from continuing operations attributable to SPX Corporation common shareholders $(0.17) $6.72
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders (0.01) 0.47
----- ----
Net income (loss) per share attributable to SPX Corporation common shareholders $(0.18) $7.19
====== =====
Weighted average number of common shares outstanding - basic 40.503 44.236
Diluted income (loss) per share of common stock:
Income (loss) from continuing operations attributable to SPX Corporation common shareholders $(0.17) $6.59
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders (0.01) 0.47
----- ----
Net income (loss) per share attributable to SPX Corporation common shareholders $(0.18) $7.06
====== =====
Weighted average number of common shares outstanding - diluted 40.503 45.082
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
March 28, December 31,
2015 2014
---- ----
ASSETS
Current assets:
Cash
and
equivalents $363.1 $427.6
Accounts
receivable,
net 1,026.2 1,067.4
Inventories,
net 525.4 497.8
Other
current
assets 150.5 98.5
Deferred
income
taxes 128.0 123.8
----- -----
Total
current
assets 2,193.2 2,215.1
Property, plant and equipment:
Land 54.8 56.4
Buildings
and
leasehold
improvements 352.6 361.8
Machinery
and
equipment 824.3 825.9
----- -----
1,231.7 1,244.1
Accumulated
depreciation (574.0) (573.2)
------ ------
Property,
plant
and
equipment,
net 657.7 670.9
Goodwill 1,401.0 1,455.4
Intangibles,
net 791.0 831.0
Other
assets 736.9 729.8
----- -----
TOTAL
ASSETS $5,779.8 $5,902.2
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts
payable $432.8 $462.0
Accrued
expenses 846.1 892.3
Income
taxes
payable 42.9 43.7
Short-
term
debt 298.5 181.1
Current
maturities
of
long-
term
debt 37.7 30.8
---- ----
Total
current
liabilities 1,658.0 1,609.9
Long-
term
debt 1,149.9 1,157.8
Deferred
and
other
income
taxes 283.1 294.9
Other
long-
term
liabilities 1,001.1 1,018.5
------- -------
Total
long-
term
liabilities 2,434.1 2,471.2
Equity:
SPX Corporation shareholders' equity:
Common
stock 1,009.2 1,008.2
Paid-
in
capital 1,618.4 1,600.8
Retained
earnings 2,615.3 2,637.8
Accumulated
other
comprehensive
income
(loss) (68.0) 62.6
Common
stock
in
treasury (3,487.1) (3,491.5)
-------- --------
Total
SPX
Corporation
shareholders'
equity 1,687.8 1,817.9
Noncontrolling
interests (0.1) 3.2
---- ---
Total
equity 1,687.7 1,821.1
TOTAL
LIABILITIES
AND
EQUITY $5,779.8 $5,902.2
======== ========
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Three months ended
------------------
March 28, 2015 March 29, 2014
-------------- --------------
Cash flows used in operating activities:
Net income (loss) $(10.0) $317.8
Less: Income (loss) from discontinued operations, net of tax (0.4) 21.1
---- ----
Income (loss) from continuing operations (9.6) 296.7
Adjustments to reconcile income (loss) from continuing operations
to net cash used in operating activities:
Special charges, net 6.6 10.0
Gain on asset sales - (491.5)
Loss on early extinguishment of debt - 32.5
Deferred and other income taxes (0.3) (58.3)
Depreciation and amortization 25.0 27.6
Pension and other employee benefits 6.7 24.8
Stock-based compensation 23.6 24.7
Other, net 1.9 0.2
Changes in operating assets and liabilities, net of effects from divestiture:
Accounts receivable and other assets (52.4) (22.4)
Inventories (44.4) (50.4)
Accounts payable, accrued expenses and other (61.5) 156.8
Cash spending on restructuring actions (3.9) (9.3)
---- ----
Net cash used in continuing operations (108.3) (58.6)
Net cash used in discontinued operations (0.5) (2.0)
---- ----
Net cash used in operating activities (108.8) (60.6)
Cash flow from (used in) investing activities:
Proceeds from asset sales and other - 575.7
Increase in restricted cash (0.1) (0.1)
Capital expenditures (14.4) (11.3)
Net cash from (used in) continued operations (14.5) 564.3
Net cash from discontinued operations - 38.3
--- ----
Net cash from (used in) investing activities (14.5) 602.6
Cash flows from (used in) financing activities:
Repurchase of senior notes (includes premiums paid of $30.6) - (530.6)
Borrowings under senior credit facilities 196.0 -
Repayments under senior credit facilities (119.0) -
Borrowings under trade receivables agreement 70.0 -
Repayments under trade receivables agreement (25.0) -
Net repayments under other financing arrangements (4.3) (53.9)
Purchases of common stock - (134.3)
Minimum withholdings paid on behalf of employees for net share settlements, net (5.2) (11.5)
Financing fees paid - (0.4)
Dividends paid (15.6) (11.7)
Net cash from (used in) continuing operations 96.9 (742.4)
Net cash used in discontinued operations - -
--- ---
Net cash from (used in) financing activities 96.9 (742.4)
Change in cash and equivalents due to changes in foreign currency exchange rates (38.1) (5.4)
Net change in cash and equivalents (64.5) (205.8)
Consolidated cash and equivalents, beginning of period 427.6 691.8
Consolidated cash and equivalents, end of period $363.1 $486.0
====== ======
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF REPORTABLE SEGMENTS AND OTHER OPERATING SEGMENTS
(Unaudited; in millions)
Three months ended
------------------
March 28, 2015 March 29, 2014 Increase %/bps
(Decrease)
---------
Flow Technology reportable segment
Revenues $530.8 $616.7 $(85.9) -13.9%
Gross profit 172.4 192.4 (20.0)
Selling, general and administrative expense 107.3 119.5 (12.2)
Intangible amortization expense 5.8 6.7 (0.9)
Income $59.3 $66.2 $(6.9) -10.4%
===== ===== =====
as a percent of revenues 11.2% 10.7% 50 bps
Thermal Equipment and Services reportable segment
Revenues $247.2 $279.6 $(32.4) -11.6%
Gross profit 41.1 54.6 (13.5)
Selling, general and administrative expense 42.8 44.1 (1.3)
Intangible amortization expense 1.1 1.3 (0.2)
Income (loss) $(2.8) $9.2 $(12.0) -130.4%
===== ==== ======
as a percent of revenues -1.1% 3.3% -440 bps
Industrial Products and Services and Other
Revenues $168.9 $180.8 $(11.9) -6.6%
Gross profit 48.4 55.6 (7.2)
Selling, general and administrative expense 29.0 32.0 (3.0)
Intangible amortization expense 0.4 0.3 0.1
Income $19.0 $23.3 $(4.3) -18.5%
===== ===== =====
as a percent of revenues 11.2% 12.9% -170 bps
Consolidated Revenues $946.9 $1,077.1 $(130.2) -12.1%
Consolidated Segment Income 75.5 98.7 (23.2) -23.5%
as a percent of revenues 8.0% 9.2% -120 bps
------------------------ --- --- --------
Total income for reportable and other operating segments $75.5 $98.7 $(23.2)
Corporate expenses 29.2 28.5 0.7
Pension and postretirement expense 1.3 19.8 (18.5)
Stock-based compensation expense 23.6 24.7 (1.1)
Special charges, net 6.6 10.0 (3.4)
Consolidated Operating Income $14.8 $15.7 $(0.9) -5.7%
===== ===== =====
as a percent of revenues 1.6% 1.5% 10 bps
SPX CORPORATION AND SUBSIDIARIES
ORGANIC REVENUE RECONCILIATION
(Unaudited)
Three months ended March 28, 2015
---------------------------------
Net Revenue Foreign Organic Revenue
Decline Acquisitions Currency Decline
------- ------------ -------- -------
Flow Technology reportable segment (13.9)% - % (8.3)% (5.6)%
Thermal Equipment and Services reportable segment (11.6)% - % (4.8)% (6.8)%
Industrial Products and Services and Other (6.6)% - % (2.2)% (4.4)%
Consolidated (12.1)% - % (6.4)% (5.7)%
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
Three months ended
------------------
March 28, 2015 March 29, 2014
-------------- --------------
Net cash used in continuing operations $(108.3) $(58.6)
Capital expenditures - continuing operations (14.4) (11.3)
----- -----
Free cash flow used in continuing operations $(122.7) $(69.9)
======= ======
SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)
Three months ended
March 28, 2015
--------------
Beginning cash and equivalents $427.6
Cash used in continuing operations (108.3)
Increase in restricted cash (0.1)
Capital expenditures (14.4)
Borrowings under senior credit facilities 196.0
Repayments under senior credit facilities (119.0)
Net borrowings under trade receivables agreement 45.0
Net repayments under other financing arrangements (4.3)
Minimum withholdings paid on behalf of employees for net share settlements, net (5.2)
Dividends paid (15.6)
Cash used in discontinued operations (0.5)
Change in cash and equivalents due to changes in foreign currency exchange rates (38.1)
-----
Ending cash and equivalents $363.1
======
Debt at Debt at
December 31, 2014 Borrowings Repayments Other March 28, 2015
----------------- ---------- ---------- ----- --------------
Domestic revolving loan facility $133.0 $196.0 $(119.0) $ - $210.0
Term loan 575.0 - - - 575.0
6.875% senior notes, due in August 2017 600.0 - - - 600.0
Trade receivables financing arrangement 10.0 70.0 (25.0) - 55.0
Other indebtedness 51.7 0.2 (4.5) (1.3) 46.1
---- --- ---- ---- ----
Totals $1,369.7 $266.2 $(148.5) $(1.3) $1,486.1
======== ====== ======= ===== ========
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED EBITDA RECONCILIATION
(Unaudited; in millions)
2015
Mid-Point Target
----------------
Net income $177.0
Income tax provision 80.0
Net interest expense 68.0
----
Income before interest
and taxes 325.0
Depreciation and
amortization expense 104.0
-----
EBITDA 429.0
Adjustments:
Non-cash compensation
expense 57.0
Extraordinary non-
recurring cash charges 33.0
Joint venture EBITDA
adjustments 1.0
---
Consolidated EBITDA* $520.0
======
*Consolidated EBITDA as defined in the credit facility. The $520.0
represents the mid-point of our 2015 Consolidated EBITDA target of $500.0
to $540.0.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/spx-reports-first-quarter-2015-results-300073941.html
SOURCE SPX Corporation
