Revenues up 37%, Segment Income up 56%, EPS up 115%
Raises 2008 EPS Guidance Range to $6.20 to $6.40 from $6.00 to $6.20
CHARLOTTE, N.C., April 30 /PRNewswire-FirstCall/ -- SPX Corporation
(NYSE: SPW) today reported results for the first quarter ended March 29,
2008:
-- Revenues increased 37.2% to $1.39 billion from $1.02 billion in the
year-ago quarter. Organic revenue growth* was 7.1%, while completed
acquisitions and the impact of currency fluctuations increased
reported revenues by 25.6% and 4.5%, respectively. Revenues from
operations discontinued during the quarter were $17.4 million.
-- Segment income and margins were $161.1 million and 11.6%, compared
with $103.6 million and 10.2% in the year-ago quarter.
-- Diluted net income per share from continuing operations was $1.14,
compared with $0.53 in the year-ago quarter. The first quarter 2008
results include an effective tax rate of 32.8%, which represents a
benefit of $0.04 per share as compared to the expected 35.0% effective
tax rate.
-- Net cash used in continuing operations was $27.6 million, compared
with $6.4 million in 2007. The decline in cash flow was due primarily
to working capital investments to support organic growth and the
integration of the recent APV acquisition.
-- Free cash flow from continuing operations* during the quarter was a
negative $48.4 million, compared with a negative $17.3 million in the
year-ago quarter. The decrease was due primarily to the items noted
above and increased capital expenditures in 2008 to support continued
growth in the company.
Chris Kearney, Chairman, President and CEO said, "SPX's first quarter
performance marked a strong start to 2008 as we built on the momentum
established in 2007. Our earnings per share of $1.14 represents a 115
percent increase over the same period last year, and we had revenue growth
of 37 percent during the quarter.
"At this time, we are raising our earnings per share guidance range to
$6.20 to $6.40 from the previous range of $6.00 to $6.20. The increase is
driven by several positive factors, including our solid first quarter
results; our continued robust order trends in our global infrastructure
markets; and our ability to execute on this demand through a constant focus
on our operating initiatives," Kearney added.
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS
Flow Technology
Revenues for the first quarter of 2008 were $504.0 million compared to
$250.7 million in the first quarter of 2007, an increase of $253.3 million,
or 101.0%. The increase was due primarily to the fourth quarter 2007
acquisition of APV, which contributed $227.0 million of revenues during the
quarter. Additionally, organic revenue growth* was 4.7% in the quarter,
driven primarily by strong demand in the power, oil and gas, and sanitary
markets. The impact of currency fluctuations increased revenues by 5.2%
from the year- ago quarter.
Segment income was $46.0 million, or 9.1% of revenues, in the first
quarter of 2008 compared to $37.7 million, or 15.0% of revenues, in the
first quarter of 2007. Segment income and margins were favorably impacted
by organic growth and manufacturing efficiencies achieved from continuous
improvement initiatives. Segment margins were negatively impacted by
significantly lower margins at APV, more than offsetting the improvement in
the remainder of the segment.
Test and Measurement
Revenues for the first quarter of 2008 were $274.7 million compared to
$240.1 million in the first quarter of 2007, an increase of $34.6 million,
or 14.4%. The increase was due primarily to acquisitions completed in the
second half of 2007. The impact of currency fluctuations increased reported
revenues by 4.6%, offset partially by organic revenue declines* of 3.2% due
primarily to reduced volumes in the North American aftermarket.
Segment income was $24.4 million, or 8.9% of revenues, in the first
quarter of 2008 compared to $23.8 million, or 9.9% of revenues, in the
first quarter of 2007. Segment income increased primarily due to the 2007
acquisitions and benefit of foreign currency fluctuations noted above,
offset partially by declines associated with difficult conditions in the
domestic automotive market and additional costs associated with investments
to expand in Asia Pacific.
Thermal Equipment and Services
Revenues for the first quarter of 2008 were $346.8 million compared to
$312.7 million in the first quarter of 2007, an increase of $34.1 million,
or 10.9%. The impact of currency fluctuations increased reported revenues
by 6.1% from the year-ago quarter, while organic revenue growth* was 4.8%.
The organic revenue growth was primarily driven by continued strong power
market demand for cooling systems.
Segment income was $36.4 million, or 10.5% of revenues, in the first
quarter of 2008 compared to $16.1 million, or 5.1% of revenues, in the
first quarter of 2007. The increase in segment income and margins was due
primarily to the organic growth noted above, favorable project mix, and
improved operating performance in the cooling equipment and heating product
lines. In addition, the benefit of foreign currency fluctuations noted
above favorably impacted segment income in the first quarter of 2008.
Industrial Products and Services
Revenues for the first quarter of 2008 were $267.0 million compared to
$211.6 million in the first quarter of 2007, an increase of $55.4 million,
or 26.2%. The increase was due primarily to organic revenue growth* of
24.9%, driven by increased demand for domestic power transformers as well
as the majority of other products in the segment. The impact of currency
fluctuations increased revenues by 1.3% from the year-ago quarter.
Segment income was $54.3 million, or 20.3% of revenues, in the first
quarter of 2008 compared to $26.0 million, or 12.3% of revenues, in the
first quarter of 2007. The increase in segment income and margins was
driven largely by the organic growth in power transformers from pricing and
volume, as well as manufacturing efficiencies achieved from continuous
improvement initiatives across the segment. In addition, the first quarter
of 2007 included a charge of $3.6 million related to a legacy product
liability matter.
OTHER ITEMS
Dividend: On February 21, 2008, the Board of Directors announced a
quarterly dividend of $0.25 per common share to shareholders of record on
March 14, 2008. The first quarter 2008 dividend of $0.25 per common share
was paid on April 1, 2008.
Acquisition: On December 31, 2007, the company completed the
acquisition of APV for $524.2 million. APV, a global manufacturer of
process equipment and engineered solutions primarily for the sanitary
market, had revenues of approximately $876.0 million in the twelve months
prior to acquisition, and is being integrated into and reported in the Flow
Technology segment.
Discontinued Operations: During the first quarter of 2008, the company
committed to a plan to divest its vibration test equipment product line,
which was previously reported in the Test and Measurement segment. It is
anticipated that a sale will be completed in 2008.
During the third quarter of 2007, the company committed to a plan to
divest its air filtration product line, which was previously reported in
the Flow Technology segment. It is anticipated that a sale will be
completed in the first half of 2008.
The financial condition, results of operations, and cash flows of the
vibration test equipment and air filtration product lines have been
reported as discontinued operations in the attached condensed consolidated
financial statements.
Form 10-Q: The company expects to file its quarterly report on Form
10-Q for the quarter ended March 29, 2008 with the Securities and Exchange
Commission by May 8, 2008. This press release should be read in conjunction
with that filing, which will be available on the company's website at
http://www.spx.com , in the Investor Relations section.
SPX Corporation is a Fortune 500 multi-industry manufacturing leader.
The company offers highly-specialized engineered solutions to solve
critical problems for customers.
SPX is focused on providing solutions that support the expansion of
global infrastructure, with particular emphasis on the growing worldwide
demand for energy and power. Its innovative product portfolio, containing
many environmentally friendly products, includes cooling systems for all
types of power plants throughout the world; custom engineered pumps, valves
and mixers that assist a variety of flow processes including oil and gas
exploration, distribution and refinement; handheld diagnostic tools that
aid in vehicle maintenance and repair; and power transformers that regulate
voltage for electrical transmission and distribution by utility companies.
SPX is headquartered in Charlotte, North Carolina and employs over
17,000 people worldwide in over 35 countries. Visit http://www.spx.com . (NYSE:
SPW)
-- Non-GAAP number. See attached financial schedules for reconciliation
to most comparable GAAP number.
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 report
on Form 10-K for the year ended December 31, 2007. 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
"believe," "expect," "anticipate," "estimate," "guidance," "target" 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.
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three months ended
March 29, March 31,
2008 2007
Revenues $1,392.5 $1,015.1
Costs and expenses:
Cost of products sold 980.7 738.0
Selling, general and administrative 297.7 219.3
Intangible amortization 6.7 4.1
Special charges, net 0.7 0.3
Operating income 106.7 53.4
Other income (expense), net 2.5 (1.8)
Interest expense (31.1) (16.8)
Interest income 2.3 3.4
Equity earnings in joint ventures 11.6 10.1
Income from continuing operations
before income taxes 92.0 48.3
Income tax provision (30.2) (16.6)
Income from continuing operations 61.8 31.7
Income from discontinued operations,
net of tax 2.8 3.8
Loss on disposition of discontinued
operations, net of tax (3.2) (6.3)
Loss from discontinued operations (0.4) (2.5)
Net income $61.4 $29.2
Basic income per share of common stock
Income from continuing operations $1.18 $0.54
Loss from discontinued operations (0.01) (0.04)
Net income per share $1.17 $0.50
Weighted average number of common
shares outstanding - basic 52.578 58.606
Diluted income per share of common stock
Income from continuing operations $1.14 $0.53
Loss from discontinued operations (0.01) (0.04)
Net income per share $1.13 $0.49
Weighted average number of common
shares outstanding - diluted 54.049 60.123
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
March 29, December 31,
2008 2007
ASSETS
Current assets:
Cash and equivalents $384.8 $354.1
Accounts receivable, net 1,392.6 1,281.1
Inventories, net 738.5 692.1
Other current assets 115.0 116.2
Deferred income taxes 104.0 96.5
Assets of discontinued operations 161.5 156.3
Total current assets 2,896.4 2,696.3
Property, plant and equipment
Land 39.5 37.9
Buildings and leasehold improvements 245.7 234.3
Machinery and equipment 652.3 620.2
937.5 892.4
Accumulated depreciation (436.0) (410.1)
Net property, plant and equipment 501.5 482.3
Goodwill 2,004.8 1,943.9
Intangibles, net 725.0 710.2
Other assets 409.3 404.7
TOTAL ASSETS $6,537.0 $6,237.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $738.8 $725.5
Accrued expenses 1,075.4 1,038.6
Income taxes payable 24.2 7.5
Short-term debt 313.2 255.0
Current maturities of long-term debt 79.0 78.9
Liabilities of discontinued operations 66.4 65.6
Total current liabilities 2,297.0 2,171.1
Long-term debt 1,231.3 1,234.7
Deferred and other income taxes 222.2 240.7
Other long-term liabilities 592.3 574.5
Total long-term liabilities 2,045.8 2,049.9
Minority interest 14.4 10.4
Shareholders' equity:
Common stock 968.8 963.5
Paid-in capital 1,318.9 1,296.0
Retained earnings 2,094.0 2,045.9
Accumulated other comprehensive income 142.1 38.1
Common stock in treasury (2,344.0) (2,337.5)
Total shareholders' equity 2,179.8 2,006.0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,537.0 $6,237.4
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Three months ended
March 29, March 31,
2008 2007
Cash flows from (used in) operating
activities:
Net income $61.4 $29.2
Less: Loss from discontinued
operations, net of tax (0.4) (2.5)
Income from continuing operations 61.8 31.7
Adjustments to reconcile income from
continuing operations to net cash
used in operating activities
Special charges, net 0.7 0.3
Deferred and other income taxes 2.8 (19.5)
Depreciation and amortization 27.6 18.1
Pension and other employee benefits 15.1 16.7
Stock-based compensation 16.1 13.8
Other, net 4.8 11.2
Changes in operating assets and
liabilities, net of effects
from acquisitions and divestitures
Accounts receivable and other (90.6) 62.7
Inventories (42.6) (56.8)
Accounts payable, accrued expenses
and other (20.9) (83.6)
Cash spending on restructuring actions (2.4) (1.0)
Net cash used in continuing operations (27.6) (6.4)
Net cash used in discontinued operations (1.5) (14.3)
Net cash used in operating activities (29.1) (20.7)
Cash flows from (used in) investing activities:
Business acquisitions and
investments, net of cash acquired (0.4) (1.7)
Capital expenditures (20.8) (10.9)
Net cash used in continuing operations (21.2) (12.6)
Net cash used in discontinued operations (0.7) (1.5)
Net cash used in investing activities (21.9) (14.1)
Cash flows from (used in) financing activities:
Borrowing under senior credit facilities 436.0 -
Repayments of senior credit facilities (316.0) (45.1)
Borrowings under trade receivables
agreement 70.0 60.0
Repayments under trade receivables
agreement (116.0) (45.0)
Net repayments under other
financing arrangements (20.4) (24.1)
Purchases of common stock - (140.6)
Proceeds from the exercise of
employee stock options and other 22.9 49.4
Dividends paid (13.2) (14.8)
Net cash from (used in) continuing
operations 63.3 (160.2)
Net cash used in discontinued operations (0.1) (0.7)
Net cash from (used in) financing activities 63.2 (160.9)
Change in cash and equivalents due to
changes in foreign exchange rates 18.5 5.0
Net change in cash and equivalents 30.7 (190.7)
Consolidated cash and equivalents,
beginning of period 354.1 477.2
Consolidated cash and equivalents,
end of period $384.8 $286.5
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited; in millions)
Three months ended
March 29, March 31,
2008 2007 %
Flow Technology (1)
Revenues $504.0 $250.7 101.0%
Gross profit 148.6 86.3
Selling, general and administrative
expense 99.6 47.7
Intangible amortization expense 3.0 0.9
Segment income $46.0 $37.7 22.0%
as a percent of revenues 9.1% 15.0%
Test and Measurement (1)
Revenues $274.7 $240.1 14.4%
Gross profit 85.9 74.0
Selling, general and administrative
expense 59.5 48.9
Intangible amortization expense 2.0 1.3
Segment income $24.4 $23.8 2.5%
as a percent of revenues 8.9% 9.9%
Thermal Equipment and Services (1)
Revenues $346.8 $312.7 10.9%
Gross profit 89.9 63.6
Selling, general and administrative
expense 52.0 45.9
Intangible amortization expense 1.5 1.6
Segment income $36.4 $16.1 126.1%
as a percent of revenues 10.5% 5.1%
Industrial Products and Services
Revenues $267.0 $211.6 26.2%
Gross profit 89.9 57.1
Selling, general and administrative
expense 35.4 30.8
Intangible amortization expense 0.2 0.3
Segment income $54.3 $26.0 108.8%
as a percent of revenues 20.3% 12.3%
Total segment income $161.1 $103.6 55.5%
Corporate expenses 30.2 25.4
Pension and postretirement expense 7.4 10.7
Stock-based compensation expense 16.1 13.8
Special charges, net 0.7 0.3
Consolidated Operating Income (1) $106.7 $53.4 99.8%
(1) Excludes results of discontinued operations.
SPX CORPORATION AND SUBSIDIARIES
ORGANIC REVENUE GROWTH RECONCILIATION
(Unaudited)
Three Months ended March 29, 2008
Organic
Net Acquisi- Revenue
Revenue tions, Foreign Growth
Growth Net Currency (Decline)
Flow Technology 101.0% 91.1% 5.2% 4.7%
Test and Measurement 14.4% 13.0% 4.6% (3.2)%
Thermal Equipment and Services 10.9% - % 6.1% 4.8%
Industrial Products and Services 26.2% - % 1.3% 24.9%
Consolidated 37.2% 25.6% 4.5% 7.1%
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
Three months ended
March 29, March 31,
2008 2007
Net cash used in continuing operations $(27.6) $(6.4)
Capital expenditures - continuing operations (20.8) (10.9)
Free cash flow used in continuing
operations $(48.4) $(17.3)
SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)
Three months ended
March 29, 2008
Beginning cash $354.1
Operational cash flow (27.6)
Business acquisitions and
investments, net of cash acquired (0.4)
Capital expenditures (20.8)
Borrowing of senior credit facilities 436.0
Repayments of senior credit facilities (316.0)
Net repayments under other financing arrangements (20.4)
Net repayments under trade receivables agreement (46.0)
Proceeds from the exercise of
employee stock options and other 22.9
Dividends paid (13.2)
Cash used in discontinued operations (2.3)
Change in cash due to change in foreign exchange rates 18.5
Ending cash $384.8
Debt at Borrow- Repay- Debt at
12/31/2007 ings ments Other 3/29/2008
Term loan $750.0 $- $- $- $750.0
Domestic revolving loan
facility 115.0 336.0 (316.0) - 135.0
Global revolving loan
facility - 100.0 - - 100.0
7.625% senior notes 500.0 - - - 500.0
7.50% senior notes 28.2 - - - 28.2
6.25% senior notes 21.3 - - - 21.3
Trade receivables financing
arrangement 70.0 70.0 (116.0) - 24.0
Other indebtedness 84.1 - (20.4) 1.3 65.0
Totals $1,568.6 $506.0 $(452.4) $1.3 $1,623.5
SOURCE SPX Corporation
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Related links:
http://www.spx.com
CONTACT:
Investors, Jeremy W. Smeltser,
+1-704-752-4478, investor@spx.com; or Media, Jennifer H. Epstein,
+1-704-752-7403, jennifer.epstein@spx.com, both of SPX
Corporation
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