Revenues up 29%, Segment Income up 40%, EPS up 37%
Raises 2008 EPS Guidance Range to $6.40 to $6.60 from $6.20 to $6.40
CHARLOTTE, N.C., July 30 /PRNewswire-FirstCall/ -- SPX Corporation
(NYSE: SPW) today reported results for the second quarter ended June 28,
2008:
-- Revenues increased 28.8% to $1.56 billion from $1.21 billion in the
year-ago quarter. Organic revenue growth* was 3.7%, while completed
acquisitions and the impact of currency fluctuations increased reported
revenues by 20.6% and 4.5%, respectively.
-- Segment income and margins were $209.3 million and 13.4%, compared with
$149.2 million and 12.4% in the year-ago quarter.
-- Diluted net income per share from continuing operations was $1.70,
compared with $1.24 in the year-ago quarter. This increase was driven
primarily by the increased segment income noted above, most notably
from the company's power and process equipment end markets.
-- Net cash from continuing operations was $47.5 million, compared with
$80.8 million in the year-ago quarter. 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 $22.0
million, compared with $63.5 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, "Our second quarter
results marked another period of significant revenue and earnings growth
for SPX. Demand for our engineered products was strong and our segment
income continued to increase. Our earnings per share of $1.70 represents a
37 percent increase over the same period in 2007 and revenue grew 29
percent.
"Based on these results and current trends, we are raising our earnings
per share guidance range to $6.40 to $6.60 from the previous range of $6.20
to $6.40. This is the second time we've raised our guidance range this
year, and this new guidance would reflect an earnings increase of
approximately 34 percent over last year," Kearney added.
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS
Flow Technology
Revenues for the second quarter of 2008 were $546.5 million compared to
$278.1 million in the second quarter of 2007, an increase of $268.4
million, or 96.5%. The increase was due primarily to the fourth quarter
2007 acquisition of APV, which contributed $217.1 million of revenues
during the quarter. Additionally, organic revenue growth* was 14.4% 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
3.5% from the year-ago quarter.
Segment income was $70.1 million, or 12.8% of revenues, in the second
quarter of 2008 compared to $44.5 million, or 16.0% of revenues, in the
second quarter of 2007. Segment income and margins were favorably impacted
by organic growth and manufacturing efficiencies achieved from operating
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 second quarter of 2008 were $324.2 million compared to
$288.5 million in the second quarter of 2007, an increase of $35.7 million,
or 12.4%. The increase was due primarily to acquisitions completed in the
second half of 2007. The impact of currency fluctuations increased reported
revenues by 4.7%, offset partially by organic revenue declines* of 2.8% due
primarily to reduced volumes in the North American automotive aftermarket.
Segment income was $36.9 million, or 11.4% of revenues, in the second
quarter of 2008 compared to $32.6 million, or 11.3% of revenues, in the
second 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 second quarter of 2008 were $409.4 million compared to
$388.1 million in the second quarter of 2007, an increase of $21.3 million,
or 5.5%. The impact of currency fluctuations increased reported revenues by
7.1% from the year-ago quarter, while organic revenue* declined 1.6%. The
organic revenue decline was primarily driven by timing and the uneven
nature of large project business in the segment.
Segment income was $45.6 million, or 11.1% of revenues, in the second
quarter of 2008 compared to $37.8 million, or 9.7% of revenues, in the
second quarter of 2007. The increase in segment income and margins was due
primarily to favorable project mix and improved operating performance
across the segment's product lines. In addition, the benefit of foreign
currency fluctuations noted above favorably impacted segment income in the
second quarter of 2008.
Industrial Products and Services
Revenues for the second quarter of 2008 were $276.1 million compared to
$253.2 million in the second quarter of 2007, an increase of $22.9 million,
or 9.0%. The increase was due primarily to organic revenue growth* of 7.8%,
driven primarily by increased demand for solar and broadcast equipment, as
well as hydraulic tools. The impact of currency fluctuations increased
revenues by 1.2% from the year-ago quarter.
Segment income was $56.7 million, or 20.5% of revenues, in the second
quarter of 2008 compared to $34.3 million, or 13.5% of revenues, in the
second quarter of 2007. The increase in segment income and margins was
driven largely by the organic growth noted above, improved pricing in power
transformers, as well as manufacturing efficiencies achieved from operating
initiatives across the segment.
OTHER ITEMS
Dividend: On May 30, 2008, the Board of Directors announced a quarterly
dividend of $0.25 per common share to shareholders of record on June 16,
2008. The second quarter 2008 dividend of $0.25 per common share was paid
on July 2, 2008.
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. This sale was completed on July 3, 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 June 28, 2008 with the Securities and Exchange
Commission by August 7, 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 power
plants throughout the world; custom engineered process equipment that
assists a variety of flow processes including food and beverage
manufacturing, oil and gas exploration, distribution and refinement and
power generation; 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 Six months ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Revenues $1,556.2 $1,207.9 $2,948.7 $2,223.0
Costs and expenses:
Cost of products sold 1,084.1 879.7 2,064.8 1,617.7
Selling, general and
administrative 298.3 215.7 596.0 435.0
Intangible amortization 6.6 4.6 13.3 8.7
Special charges, net 4.2 1.2 4.9 1.5
Operating income 163.0 106.7 269.7 160.1
Other expense, net (3.7) (0.2) (1.2) (2.0)
Interest expense (29.3) (15.5) (60.4) (32.3)
Interest income 1.9 0.7 4.2 4.1
Equity earnings in joint ventures 11.6 9.9 23.2 20.0
Income from continuing
operations before income
taxes 143.5 101.6 235.5 149.9
Income tax provision (50.7) (30.4) (80.9) (47.0)
Income from continuing
operations 92.8 71.2 154.6 102.9
Income from discontinued
operations, net of tax 1.9 0.2 4.7 4.0
Gain (loss) on disposition of
discontinued operations, net of
tax 0.1 (7.5) (3.1) (13.8)
Gain (loss) from discontinued
operations 2.0 (7.3) 1.6 (9.8)
Net income $94.8 $63.9 $156.2 $93.1
Basic income per share of common
stock
Income from continuing
operations $1.75 $1.27 $2.93 $1.80
Income (loss) from discontinued
operations 0.04 (0.13) 0.03 (0.17)
Net income per share $1.79 $1.14 $2.96 $1.63
Weighted average number of common
shares outstanding - basic 53.095 55.837 52.836 57.214
Diluted income per share of common
stock
Income from continuing
operations $1.70 $1.24 $2.85 $1.75
Income (loss) from discontinued
operations 0.04 (0.12) 0.03 (0.16)
Net income per share $1.74 $1.12 $2.88 $1.59
Weighted average number of common
shares outstanding - diluted 54.499 57.286 54.274 58.697
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
June 28, December 31,
2008 2007
ASSETS
Current assets:
Cash and equivalents $419.6 $354.1
Accounts receivable, net 1,463.7 1,281.1
Inventories, net 764.3 692.1
Other current assets 149.4 116.2
Deferred income taxes 108.7 96.5
Assets of discontinued operations 165.5 156.3
Total current assets 3,071.2 2,696.3
Property, plant and equipment Land 37.7 37.9
Buildings and leasehold improvements 247.8 234.3
Machinery and equipment 672.5 620.2
958.0 892.4
Accumulated depreciation (453.0) (410.1)
Net property, plant and equipment 505.0 482.3
Goodwill 1,991.2 1,943.9
Intangibles, net 711.9 710.2
Other assets 410.3 404.7
TOTAL ASSETS $6,689.6 $6,237.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $706.8 $725.5
Accrued expenses 1,167.0 1,038.6
Income taxes payable 15.0 7.5
Short-term debt 305.0 255.0
Current maturities of long-term debt 78.8 78.9
Liabilities of discontinued operations 61.8 65.6
Total current liabilities 2,334.4 2,171.1
Long-term debt 1,212.5 1,234.7
Deferred and other income taxes 246.1 240.7
Other long-term liabilities 569.9 574.5
Total long-term liabilities 2,028.5 2,049.9
Minority interest 14.8 10.4
Shareholders' equity:
Common stock 970.4 963.5
Paid-in capital 1,356.6 1,296.0
Retained earnings 2,175.3 2,045.9
Accumulated other comprehensive income 130.7 38.1
Common stock in treasury (2,321.1) (2,337.5)
Total shareholders' equity 2,311.9 2,006.0
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $6,689.6 $6,237.4
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Six months ended
June 28, 2008 June 30, 2007
Cash flows from (used in) operating
activities:
Net income $156.2 $93.1
Less: Income (loss) from discontinued
operations, net of tax 1.6 (9.8)
Income from continuing operations 154.6 102.9
Adjustments to reconcile income from
continuing operations to net cash
used in operating activities
Special charges, net 4.9 1.5
Deferred and other income taxes (22.9) 20.0
Depreciation and amortization 55.7 37.0
Pension and other employee
benefits 20.7 30.5
Stock-based compensation 25.9 23.5
Other, net 17.7 13.8
Changes in operating assets and
liabilities, net of effects
from acquisitions and divestitures
Accounts receivable and other (177.7) 7.9
Inventories (69.4) (55.9)
Accounts payable, accrued expenses
and other 43.8 (90.0)
Cash spending on restructuring
actions (10.0) (1.5)
Net cash from continuing operations 43.3 89.7
Net cash from (used in) discontinued
operations (0.4) 44.4
Net cash from operating activities 42.9 134.1
Cash flows from (used in) investing
activities:
Proceeds from asset sales and
other 1.2 1.2
Capital expenditures (46.3) (28.2)
Net cash used in continuing
operations (45.1) (27.0)
Net cash from (used in) discontinued
operations (2.7) 135.8
Net cash from (used in) investing
activities (47.8) 108.8
Cash flows from (used in) financing
activities:
Borrowing under revolving loan
facilities 592.0 40.0
Repayments under revolving loan
facilities (457.0) (69.5)
Borrowings under trade receivable
agreement 151.0 302.0
Repayments under trade receivable
agreement (221.0) (226.0)
Net borrowings (repayments) under
other financing arrangements (38.4) (15.6)
Purchases of common stock - (468.7)
Proceeds from the exercise of
employee stock options and other 47.5 88.7
Dividends paid (26.5) (29.8)
Net cash from (used in) continuing
operations 47.6 (378.9)
Net cash used in discontinued
operations (0.1) (5.8)
Net cash from (used in) financing
activities 47.5 (384.7)
Change in cash and equivalents due to
changes in foreign exchange rates 22.9 6.3
Net change in cash and equivalents 65.5 (135.5)
Consolidated cash and equivalents,
beginning of period 354.1 477.2
Consolidated cash and equivalents,
end of period $419.6 $341.7
Cash and equivalents of continuing
operations $419.6 $341.7
Cash and equivalents of discontinued
operations $- $-
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited; in millions)
Three months ended
June 28, June 30,
2008 2007 %
Flow Technology
Revenues $546.5 $278.1 96.5%
Gross profit 177.4 94.7
Selling, general and administrative
expense 104.2 48.8
Intangible amortization expense 3.1 1.4
Segment income $70.1 $44.5 57.5%
as a percent of revenues 12.8% 16.0%
Test and Measurement
Revenues $324.2 $288.5 12.4%
Gross profit 95.8 84.2
Selling, general and administrative
expense 56.9 50.2
Intangible amortization expense 2.0 1.4
Segment income $36.9 $32.6 13.2%
as a percent of revenues 11.4% 11.3%
Thermal Equipment and Services
Revenues $409.4 $388.1 5.5%
Gross profit 105.4 85.6
Selling, general and administrative
expense 58.4 46.2
Intangible amortization expense 1.4 1.6
Segment income $45.6 $37.8 20.6%
as a percent of revenues 11.1% 9.7%
Industrial Products and Services
Revenues $276.1 $253.2 9.0%
Gross profit 95.7 67.8
Selling, general and administrative
expense 38.9 33.3
Intangible amortization expense 0.1 0.2
Segment income $56.7 $34.3 65.3%
as a percent of revenues 20.5% 13.5%
Total segment income $209.3 $149.2
Corporate expenses 24.7 20.9
Pension and postretirement expense 7.6 10.7
Stock-based compensation expense 9.8 9.7
Special charges, net 4.2 1.2
Consolidated Operating Income $163.0 $106.7 52.8%
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited; in millions)
Six months ended
June 28, June 30,
2008 2007 %
Flow Technology
Revenues $1,050.5 $528.8 98.7%
Gross profit 326.0 181.0
Selling, general and administrative
expense 203.8 96.5
Intangible amortization expense 6.1 2.3
Segment income $116.1 $82.2 41.2%
as a percent of revenues 11.1% 15.5%
Test and Measurement
Revenues $598.9 $528.6 13.3%
Gross profit 181.7 158.2
Selling, general and administrative
expense 116.4 99.1
Intangible amortization expense 4.0 2.7
Segment income $61.3 $56.4 8.7%
as a percent of revenues 10.2% 10.7%
Thermal Equipment and Services
Revenues $756.2 $700.8 7.9%
Gross profit 195.3 149.2
Selling, general and administrative
expense 110.4 92.1
Intangible amortization expense 2.9 3.2
Segment income $82.0 $53.9 52.1%
as a percent of revenues 10.8% 7.7%
Industrial Products and Services
Revenues $543.1 $464.8 16.8%
Gross profit 185.6 124.9
Selling, general and administrative
expense 74.3 64.1
Intangible amortization expense 0.3 0.5
Segment income $111.0 $60.3 84.1%
as a percent of revenues 20.4% 13.0%
Total segment income $370.4 $252.8
Corporate expenses 54.9 46.3
Pension and postretirement expense 15.0 21.4
Stock-based compensation expense 25.9 23.5
Special charges, net 4.9 1.5
Consolidated Operating Income $269.7 $160.1 68.5%
SPX CORPORATION AND SUBSIDIARIES
ORGANIC REVENUE GROWTH RECONCILIATION
(Unaudited)
Three Months ended June 28, 2008
Organic
Net Acqui- Revenue
Revenue sitions, Foreign Growth
Growth net Currency (Decline)
Flow Technology 96.5 % 78.6 % 3.5 % 14.4 %
Test and Measurement 12.4 % 10.5 % 4.7 % (2.8)%
Thermal Equipment and Services 5.5 % - % 7.1 % (1.6)%
Industrial Products and Services 9.0 % - % 1.2 % 7.8 %
Consolidated 28.8 % 20.6 % 4.5 % 3.7 %
Six Months ended June 28, 2008
Organic
Net Acqui- Revenue
Revenue sitions, Foreign Growth
Growth net Currency (Decline)
Flow Technology 98.7 % 84.5 % 4.3 % 9.9 %
Test and Measurement 13.3 % 11.7 % 4.6 % (3.0)%
Thermal Equipment and Services 7.9 % - % 6.7 % 1.2 %
Industrial Products and Services 16.8 % - % 1.2 % 15.6 %
Consolidated 32.6 % 22.9 % 4.5 % 5.2 %
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
Three months Six months
ended ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Net cash from continuing operations $47.5 $80.8 $43.3 $89.7
Capital expenditures - continuing
operations (25.5) (17.3) (46.3) (28.2)
Free cash flow from (used in)
continuing operations $22.0 $63.5 $(3.0) $61.5
SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)
Six months ended
June 28, 2008
Beginning cash $354.1
Operational cash flow 43.3
Capital expenditures (46.3)
Proceeds from asset sales and other 1.2
Borrowings under revolving loan facilities 592.0
Repayments under revolving loan facilities (457.0)
Net repayments under other financing
arrangements (38.4)
Net repayments under trade receivable
agreement (70.0)
Proceeds from the exercise of
employee stock options and other 47.5
Dividends paid (26.5)
Cash used in discontinued operations (3.2)
Change in cash due to change in
foreign exchange rates 22.9
Ending cash $419.6
Debt at Borrow- Debt at
12/31/2007 ings Repayments Other 6/28/2008
Term loan $750.0 $- $(18.8) $- $731.2
Domestic revolving loan
facility 115.0 492.0 (457.0) - 150.0
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 70.0 151.0 (221.0) - -
Other indebtedness 84.1 - (19.6) 1.1 65.6
Totals $1,568.6 $743.0 $(716.4) $1.1 $1,596.3
SOURCE SPX Corporation
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Related links:
http://www.spx.com
CONTACT:
Jeremy W. Smeltser (Investors),
+1-704-752-4478, investor@spx.com; or Jennifer H. Epstein
(Media), +1-704-752-7403, jennifer.epstein@spx.com, both of SPX
Corporation
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