Earnings per Share from Continuing Operations of $0.76
CHARLOTTE, N.C., April 29 /PRNewswire-FirstCall/ -- SPX Corporation (NYSE: SPW) today reported results for the first quarter ended March 28, 2009:
- Revenues decreased 13.9% to $1.16 billion from $1.35 billion in the year-ago quarter. Organic revenues* declined 7.5%, completed acquisitions increased reported revenues by 0.2%, and the impact of currency fluctuations decreased reported revenues by 6.6%.
- Segment income and margins were $125.8 million and 10.8%, compared with $160.4 million and 11.9% in the year-ago quarter.
- Diluted net income per share from continuing operations was $0.76, compared with $1.15 in the year-ago quarter. The current year quarter included the following notable items:
- Special charges of $11.9 million, or $0.15 per share, related to restructuring actions,
- Other expense of $12.3 million, or $0.16 per share, related primarily to foreign currency fluctuations, and
- A tax benefit of $5.2 million, or $0.10 per share, related to the finalization of certain tax matters.
- Net cash used in continuing operations was $35.3 million, compared with net cash from continuing operations of $1.0 million in the year-ago quarter. The decrease in cash flow was due primarily to decreased operating income and increased cash restructuring spend.
- Free cash flow from continuing operations* during the quarter was a negative $50.6 million, compared with a negative $18.9 million in the year-ago quarter. The decrease was due primarily to the items noted above, offset partially by lower capital expenditures in 2009.
Chris Kearney, Chairman, President and CEO said, "We continue to face very difficult conditions in many of our key end markets, as our customers deal with the economic recession and its impact on their businesses. While the current environment remains challenging, our cost control activities are taking hold, and we continue to execute on strategic restructuring actions to improve SPX for the future.
"We believe we are well-positioned to execute on the long-term growth opportunities in our three core end markets, global infrastructure, process equipment and diagnostic tools, and our financial strength provides us the flexibility to weather this economic downturn," Kearney concluded.
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS
Flow Technology
Revenues for the first quarter of 2009 were $394.0 million compared to $492.1 million in the first quarter of 2008, a decrease of $98.1 million, or 19.9%. Organic revenues declined 9.8% in the quarter, driven primarily by softness in the dehydration, industrial and food and beverage markets. The impact of currency fluctuations decreased revenues by 10.1% from the year-ago quarter.
Segment income was $50.1 million, or 12.7% of revenues, in the first quarter of 2009 compared to $46.7 million, or 9.5% of revenues, in the first quarter of 2008. Segment income and margins were favorably impacted by improvement from the APV acquisition and the oil and gas end markets, offset by the softness noted above. In addition, the 2008 results included a charge of $7.5 million representing the excess fair value of inventory acquired in the APV acquisition.
Test and Measurement
Revenues for the first quarter of 2009 were $196.0 million compared to $270.0 million in the first quarter of 2008, a decrease of $74.0 million, or 27.4%. Organic revenues declined 21.3% in the quarter, driven primarily by the continued difficulties being experienced by global vehicle manufacturers and their dealer service networks. The impact of currency fluctuations decreased revenues by 6.9% from the year-ago quarter, while acquisitions contributed 0.8% to reported revenues.
Segment income was $5.8 million, or 3.0% of revenues, in the first quarter of 2009 compared to $23.9 million, or 8.9% of revenues, in the first quarter of 2008. Segment income and margins declined due to the organic and currency related declines noted above.
Thermal Equipment and Services
Revenues for the first quarter of 2009 were $342.2 million compared to $346.8 million in the first quarter of 2008, a decrease of $4.6 million, or 1.3%. Organic revenue growth was 4.2% in the quarter, driven primarily by increased sales of thermal equipment into the power generation market. The impact of currency fluctuations decreased reported revenues by 5.5% from the year-ago quarter.
Segment income was $21.4 million, or 6.3% of revenues, in the first quarter of 2009 compared to $36.4 million, or 10.5% of revenues, in the first quarter of 2008. The decrease in segment income and margins was due primarily to unfavorable product mix as compared to the year-ago quarter. The decline in revenues attributable to currency fluctuations also contributed to the lower segment income.
Industrial Products and Services
Revenues for the first quarter of 2009 were $229.8 million compared to $241.0 million in the first quarter of 2008, a decrease of $11.2 million, or 4.6%. Organic revenues declined 3.5% in the quarter, driven primarily by softness in the hydraulic tools product line. The impact of currency fluctuations decreased revenues by 1.1% from the year-ago quarter.
Segment income was $48.5 million, or 21.1% of revenues, in the first quarter of 2009 compared to $53.4 million, or 22.2% of revenues, in the first quarter of 2008. The decrease in segment income and margins was driven largely by the organic decline in the hydraulic tools product line noted above.
OTHER ITEMS
Share Repurchase Plan: On September 19, 2008, the company announced that it had adopted a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, to facilitate the repurchase of up to 3.0 million shares of its common stock on or before October 30, 2009, in accordance with a share repurchase program authorized by its Board of Directors.
On December 18, 2008, the company announced that the repurchases under that plan had been completed, and that it had adopted an additional written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, to facilitate the repurchase of up to 3.0 million additional shares of its common stock on or before December 31, 2009, in accordance with a share repurchase program authorized by its Board of Directors.
During the first quarter, the company repurchased 2.4 million shares of its common stock for $105.4 million, completing this latest share repurchase plan.
Dividend: On February 23, 2009, the Board of Directors announced a quarterly dividend of $0.25 per common share payable on April 2, 2009, to shareholders of record on March 13, 2009. The fourth quarter 2008 dividend of $0.25 per common share was paid on January 2, 2009.
Discontinued Operations: During the third quarter of 2008, the company committed to a plan to divest a product line, previously reported in its Flow Technology segment. The sale of this product line was completed in the first quarter of 2009.
During the fourth quarter of 2008, the company committed to a plan to divest a product line which was previously reported in its Industrial Products and Services segment. This sale is expected to be completed in 2009.
The financial condition, results of operations, cash flows and any gain realized or loss anticipated or realized from the sale of the product lines discussed above 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 28, 2009 with the Securities and Exchange Commission by May 1, 2009. 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.
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 energy efficient 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 more than 17,000 people worldwide in over 40 countries. Visit 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, 2008. 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. 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, March 29,
2009 2008
---------- ----------
Revenues $1,162.0 $1,349.9
Costs and expenses:
Cost of products sold 829.9 946.1
Selling, general and administrative 242.5 290.3
Intangible amortization 5.2 6.7
Special charges, net 11.9 0.7
---- ---
Operating income 72.5 106.1
Other income (expense), net (12.3) 5.6
Interest expense (23.0) (31.1)
Interest income 2.1 2.3
Equity earnings in joint ventures 10.8 11.6
---- ----
Income from continuing operations before
income taxes 50.1 94.5
Income tax provision (12.1) (30.1)
----- -----
Income from continuing operations 38.0 64.4
Income (loss) from discontinued operations,
net of tax (1.6) 3.4
Loss on disposition of discontinued
operations, net of tax (12.1) (3.2)
----- ----
Income (loss) from discontinued
operations (13.7) 0.2
----- ---
Net income 24.3 64.6
Less: Net income (loss) attributable to non
controlling interest (0.1) 3.2
----- -----
Net income attributable to SPX Corporation $24.4 $61.4
===== =====
Amounts attributable to SPX Corporation
common shareholders:
Income from continuing operations for diluted
income per share $38.4 $62.4
Discontinued operations, net of tax (14.0) (1.0)
----- ----
Net income for diluted income per share $24.4 $61.4
===== =====
Basic income per share of common stock
Income from continuing operations
attributable to SPX Corporation common
shareholders $0.77 $1.17
Loss from discontinued operations
attributable to SPX Corporation common
shareholders (0.28) (0.02)
----- -----
Net income per share attributable
to SPX Corporation common
shareholders $0.49 $1.15
===== =====
Weighted average number of common shares
outstanding - basic 49.952 53.158
Diluted income per share of common stock
Income from continuing operations
attributable to SPX Corporation common
shareholders $0.76 $1.15
Loss from discontinued operations
attributable to SPX Corporation common
shareholders (0.28) (0.02)
----- -----
Net income per share attributable
to SPX Corporation common
shareholders $0.48 $1.13
===== =====
Weighted average number of common shares
outstanding - diluted 50.278 54.144
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
March 28, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and equivalents $430.9 $475.9
Accounts receivable, net 1,221.8 1,306.9
Inventories, net 649.1 667.0
Other current assets 130.7 180.6
Deferred income taxes 80.1 101.5
Assets of discontinued operations 53.2 96.8
---- ----
Total current assets 2,565.8 2,828.7
Property, plant and equipment
Land 35.9 36.3
Buildings and leasehold improvements 224.0 223.7
Machinery and equipment 677.2 678.3
----- -----
937.1 938.3
Accumulated depreciation (442.3) (437.7)
------ ------
Net property, plant and equipment 494.8 500.6
Goodwill 1,757.2 1,779.7
Intangibles, net 631.7 646.8
Other assets 384.5 382.3
----- -----
TOTAL ASSETS $5,834.0 $6,138.1
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $545.3 $634.0
Accrued expenses 995.4 1,156.2
Income taxes payable 41.9 24.6
Short-term debt 135.3 112.9
Current maturities of long-term debt 76.4 76.4
Liabilities of discontinued operations 10.7 20.2
---- ----
Total current liabilities 1,805.0 2,024.3
Long-term debt 1,270.5 1,155.4
Deferred and other income taxes 87.5 124.7
Other long-term liabilities 787.7 788.9
----- -----
Total long-term liabilities 2,145.7 2,069.0
Equity:
SPX Corporation shareholders' equity:
Common stock 975.2 972.3
Paid-in capital 1,392.7 1,393.9
Retained earnings 2,252.7 2,240.5
Accumulated other comprehensive loss (243.6) (179.9)
Common stock in treasury (2,523.7) (2,416.0)
-------- --------
Total SPX Corporation shareholders'
equity 1,853.3 2,010.8
Noncontrolling interest 30.0 34.0
---- ----
Total equity 1,883.3 2,044.8
------- -------
TOTAL LIABILITIES AND EQUITY $5,834.0 $6,138.1
======== ========
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Three months ended
----------------------
March 28, March 29,
2009 2008
---------- ----------
Cash flows from (used in) operating
activities:
Net income $24.3 $64.6
Less: Income (loss) from discontinued
operations, net of tax (13.7) 0.2
----- ---
Income from continuing operations 38.0 64.4
Adjustments to reconcile income from
continuing operations to net cash from
(used in) operating activities
Special charges, net 11.9 0.7
Deferred and other income taxes - (16.8)
Depreciation and amortization 25.1 26.6
Pension and other employee benefits 13.9 15.1
Stock-based compensation 9.2 16.0
Other, net 18.9 2.8
Changes in operating assets and
liabilities, net of effects from acquisitions
and divestitures
Accounts receivable and other assets 40.6 (88.1)
Inventories 11.4 (39.6)
Accounts payable, accrued expenses
and other (186.5) 22.5
Cash spending on restructuring actions (17.8) (2.6)
----- ----
Net cash from (used in) continuing operations (35.3) 1.0
Net cash used in discontinued operations (3.9) (6.7)
---- ----
Net cash used in operating activities (39.2) (5.7)
Cash flows from (used in) investing
activities:
Decrease in restricted cash 7.8 -
Business acquisitions and investments, net
of cash acquired - (0.4)
Capital expenditures (15.3) (19.9)
----- -----
Net cash used in continuing operations (7.5) (20.3)
Net cash from (used in) discontinued
operations 18.6 (1.6)
---- ----
Net cash from (used in) investing activities 11.1 (21.9)
Cash flows from (used in) financing
activities:
Borrowings under revolving loan facilities 297.0 436.0
Repayments under revolving loan facilities (182.0) (316.0)
Borrowings under trade receivables
agreement 75.0 70.0
Repayments under trade receivables
agreement (42.0) (116.0)
Net repayments under other financing
arrangements (11.1) (20.3)
Purchases of common stock (113.2) -
Minimum tax withholdings paid on behalf
of employees for net share settlements,
net of proceeds from the exercise
of employee stock options and other (5.6) (0.5)
Purchase of noncontrolling interest in
subsidiary (3.2) -
Dividends paid (13.1) (13.2)
----- -----
Net cash from continuing operations 1.8 40.0
Net cash from (used in) discontinued
operations 0.2 (0.2)
--- ----
Net cash from financing activities 2.0 39.8
Change in cash and equivalents due to
changes in foreign exchange rates (18.9) 18.5
Net change in cash and equivalents (45.0) 30.7
Consolidated cash and equivalents, beginning
of period 475.9 354.1
----- -----
Consolidated cash and equivalents, end of
period $430.9 $384.8
====== ======
Cash and equivalents of continuing operations $430.9 $384.8
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited; in millions)
Three months ended
---------------------
March 28, March 29,
2009 2008 %
--------- ---------- ---
Flow Technology
Revenues $394.0 $492.1 -19.9%
Gross profit 130.5 146.8
Selling, general and administrative expense 77.6 97.1
Intangible amortization expense 2.8 3.0
--- ---
Segment income $50.1 $46.7 7.3%
===== =====
as a percent of revenues 12.7% 9.5%
Test and Measurement
Revenues $196.0 $270.0 -27.4%
Gross profit 53.0 84.5
Selling, general and administrative expense 45.5 58.6
Intangible amortization expense 1.7 2.0
--- ---
Segment income $5.8 $23.9 -75.7%
==== =====
as a percent of revenues 3.0% 8.9%
Thermal Equipment and Services
Revenues $342.2 $346.8 -1.3%
Gross profit 72.8 89.9
Selling, general and administrative expense 50.8 52.0
Intangible amortization expense 0.6 1.5
--- ---
Segment income $21.4 $36.4 -41.2%
===== =====
as a percent of revenues 6.3% 10.5%
Industrial Products and Services
Revenues $229.8 $241.0 -4.6%
Gross profit 78.5 85.2
Selling, general and administrative expense 29.9 31.6
Intangible amortization expense 0.1 0.2
--- ---
Segment income $48.5 $53.4 -9.2%
===== =====
as a percent of revenues 21.1% 22.2%
Total segment income $125.8 $160.4
Corporate expenses 23.3 30.2
Pension and postretirement expense 8.9 7.4
Stock-based compensation expense 9.2 16.0
Special charges, net 11.9 0.7
---- ---
Consolidated Operating Income $72.5 $106.1 -31.7%
===== ======
SPX CORPORATION AND SUBSIDIARIES
ORGANIC REVENUE GROWTH RECONCILIATION
(Unaudited)
Three Months ended March 28, 2009
--------------------------------------------
Organic
Net Revenue
Revenue Foreign Growth
Decline Acquisitions Currency (Decline)
------- ------------ -------- ---------
Flow Technology (19.9)% -% (10.1)% (9.8)%
Test and Measurement (27.4)% 0.8% (6.9)% (21.3)%
Thermal Equipment and
Services (1.3)% -% (5.5)% 4.2%
Industrial Products and
Services (4.6)% -% (1.1)% (3.5)%
Consolidated (13.9)% 0.2% (6.6)% (7.5)%
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
Three months ended
------------------------------
March 28, 2009 March 29, 2008
-------------- --------------
Net cash from (used in) continuing operations $(35.3) $1.0
Capital expenditures - continuing operations (15.3) (19.9)
----- -----
Free cash flow used in continuing
operations $(50.6) $(18.9)
====== ======
SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)
Three months ended
March 28, 2009
--------------
Beginning cash and equivalents $475.9
Operational cash flow (35.3)
Capital expenditures (15.3)
Decrease in restricted cash 7.8
Borrowings under revolving loan facilities 297.0
Repayments under revolving loan facilities (182.0)
Net repayments under other financing arrangements (11.1)
Net borrowing under trade receivable agreement 33.0
Purchases of common stock (113.2)
Minimum tax withholdings paid on behalf of employees
for net share settlements, net of proceeds from
the exercise of employee stock options and other (5.6)
Purchase of noncontrolling interest in subsidiary (3.2)
Dividends paid (13.1)
Cash from discontinued operations 14.9
Change in cash due to change in foreign exchange rates (18.9)
-----
Ending cash and equivalents $430.9
======
Debt at Debt at
12/31/2008 Borrowings Repayments Other 3/28/2009
---------- ---------- ---------- ----- ---------
Term loan $675.0 $- $- $- $675.0
Domestic revolving
loan facility 65.0 297.0 (182.0) - 180.0
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 - 75.0 (42.0) - 33.0
Other indebtedness 55.2 - (11.1) 0.6 44.7
---- --- ----- --- ----
Totals $1,344.7 $372.0 $(235.1) $0.6 $1,482.2
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