CHARLOTTE, N.C., July 29 /PRNewswire-FirstCall/ -- SPX Corporation (NYSE: SPW) today reported results for the second quarter ended June 27, 2009:
- Revenues decreased 20.7% to $1.19 billion from $1.5 billion in the year-ago quarter. Organic revenues* declined 14.8%, completed acquisitions increased reported revenues by 0.2%, and the impact of currency fluctuations decreased reported revenues by 6.1%.
- Segment income and margins were $135.9 million and 11.4%, compared with $205.9 million and 13.7% in the year-ago quarter.
- Diluted net income per share from continuing operations was $0.80, compared with $1.65 in the year-ago quarter. The current year quarter included special charges of $23.3 million, or $0.30 per share, related to restructuring actions.
- Net cash from continuing operations was $61.9 million, compared with $48.5 million in the year-ago quarter. The increase in cash flow was due primarily to improved working capital management, offset partially by lower earnings and increased spend on restructuring.
- Free cash flow from continuing operations* during the quarter was $32.3 million, compared with $23.1 million in the year-ago quarter. The increase was due primarily to the items noted above, offset partially by higher capital expenditures in 2009.
"The global economic environment remains challenging. We are seeing some stabilization of short-cycle order rates from Q1 to Q2, but the levels are still depressed. We are also seeing strong quoting activity in our longer-cycle project businesses, but face delays in order placements for certain large projects," said Chris Kearney, Chairman, President and CEO.
"Given this, we are lowering our earnings guidance range to $4.00 to $4.30 per share from $4.40 to $4.80 per share. Our cash flow guidance range remains at $230 to $270 million," Kearney said.
"We have a strong working capital focus and intend to maintain our substantial liquidity. Furthermore, we continue to be committed to growing and strategically investing in developing economies such as China, India, Russia and South Africa," he added.
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS
Flow Technology
Revenues for the second quarter of 2009 were $396.2 million compared to $534.5 million in the second quarter of 2008, a decrease of $138.3 million, or 25.9%. Organic revenues declined 17.4%, driven primarily by softness in the dehydration, industrial, mining and food and beverage markets, partially offset by growth in the oil and gas market. The impact of currency fluctuations decreased revenues by 8.5% from the year-ago quarter.
Segment income was $48.5 million, or 12.2% of revenues, in the second quarter of 2009 compared to $69.7 million, or 13.0% of revenues, in the second quarter of 2008. Segment income and margins declined primarily due to the organic and currency declines noted above.
Test and Measurement
Revenues for the second quarter of 2009 were $207.6 million compared to $320.0 million in the second quarter of 2008, a decrease of $112.4 million, or 35.1%. Organic revenues declined 29.4% in the quarter, driven primarily by the continued difficulties being experienced by vehicle manufacturers and their dealer service networks. The impact of currency fluctuations decreased revenues by 6.6% from the year-ago quarter, while acquisitions contributed 0.9% to reported revenues.
Segment income was $13.3 million, or 6.4% of revenues, in the second quarter of 2009 compared to $36.6 million, or 11.4% of revenues, in the second quarter of 2008. Segment income and margins declined due to the organic and currency related declines noted above. As compared to Q1 2009, segment margins improved 340 basis points as benefits were realized from cost reduction and restructuring initiatives.
Thermal Equipment and Services
Revenues for the second quarter of 2009 were $368.9 million compared to $409.4 million in the second quarter of 2008, a decrease of $40.5 million, or 9.9%. Organic revenues declined 4.3% in the quarter, driven primarily by project timing. The impact of currency fluctuations decreased reported revenues by 5.6% from the year-ago quarter.
Segment income was $27.5 million, or 7.5% of revenues, in the second quarter of 2009 compared to $45.6 million, or 11.1% of revenues, in the second 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 second quarter of 2009 were $220.8 million compared to $241.0 million in the second quarter of 2008, a decrease of $20.2 million, or 8.4%. Organic revenues declined 7.4% in the quarter, driven primarily by softness in the hydraulic tools and solar crystal grower product lines. The impact of currency fluctuations decreased revenues by 1.0% from the year-ago quarter.
Segment income was $46.6 million, or 21.1% of revenues, in the second quarter of 2009 compared to $54.0 million, or 22.4% of revenues, in the second quarter of 2008. The decrease in segment income and margins was driven largely by the organic declines noted above. In addition, the second quarter of 2009 included a charge of $3.3 million related to a product liability matter.
OTHER ITEMS
Dividend: On May 29, 2009, the Board of Directors announced a quarterly dividend of $0.25 per common share payable on July 2, 2009, to shareholders of record on June 15, 2009. The first quarter 2009 dividend of $0.25 per common share was paid on April 2, 2009.
Discontinued Operations: During the fourth quarter of 2008 and second quarter of 2009, the company committed to plans to divest two distinct product lines which were previously reported in the Industrial Products and Services segment. These sales are expected to be completed during the next twelve months.
The financial condition, results of operations, cash flows and losses anticipated 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 June 27, 2009 with the Securities and Exchange Commission by August 6, 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 has employees in over 40 countries worldwide. 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 Six months ended
------------------ ----------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
---- ---- ---- ----
Revenues $1,193.5 $1,504.9 $2,353.1 $2,849.9
Costs and expenses:
Cost of products sold 845.4 1,043.8 1,673.0 1,985.7
Selling, general and
administrative 242.1 290.6 484.1 580.5
Intangible amortization 5.2 6.6 10.4 13.3
Special charges, net 23.3 4.2 35.2 4.9
---- --- ---- ---
Operating income 77.5 159.7 150.4 265.5
Other income (expense), net (1.6) (4.2) (13.8) 1.5
Interest expense (22.8) (29.3) (45.8) (60.4)
Interest income 2.1 1.9 4.2 4.2
Equity earnings in joint
ventures 5.5 11.6 16.3 23.2
--- ---- ---- ----
Income from continuing
operations before income
taxes 60.7 139.7 111.3 234.0
Income tax provision (21.6) (49.4) (33.9) (79.4)
----- ----- ----- -----
Income from continuing
operations 39.1 90.3 77.4 154.6
Income (loss) from
discontinued operations,
net of tax 0.5 4.2 (1.4) 7.7
Income (loss) on disposition
of discontinued operations,
net of tax (6.5) 0.1 (18.6) (3.1)
---- --- ----- ----
Income (loss) from
discontinued operations (6.0) 4.3 (20.0) 4.6
---- --- ----- ---
Net income 33.1 94.6 57.4 159.2
Less: Net income (loss)
attributable to
noncontrolling interests (0.3) (0.2) (0.4) 3.0
----- ----- ----- ------
Net income attributable to
SPX Corporation $33.4 $94.8 $57.8 $156.2
===== ===== ===== ======
Amounts attributable to
SPX Corporation common
shareholders:
Income from continuing
operations, net of tax $39.5 $90.4 $78.3 $152.8
Income (loss) from
discontinued operations,
net of tax (6.1) 4.4 (20.5) 3.4
---- --- ----- ---
Net income $33.4 $94.8 $57.8 $156.2
===== ===== ===== ======
Basic income per share of
common stock
Income from continuing
operations attributable
to SPX Corporation
common shareholders $0.81 $1.68 $1.58 $2.86
Income (loss) from
discontinued operations
attributable to SPX
Corporation common
shareholders (0.13) 0.09 (0.41) 0.06
----- ---- ----- ----
Net income per share
attributable to SPX
Corporation common
shareholders $0.68 $1.77 $1.17 $2.92
===== ===== ===== =====
Weighted average number of
common shares outstanding
- basic 49.021 53.656 49.484 53.407
Diluted income per share of
common stock
Income from continuing
operations attributable
to SPX Corporation
common shareholders $0.80 $1.65 $1.57 $2.81
Income (loss) from
discontinued operations
attributable to SPX
Corporation common
shareholders (0.12) 0.08 (0.41) 0.06
----- ---- ----- ----
Net income per share
attributable to SPX
Corporation common
shareholders $0.68 $1.73 $1.16 $2.87
===== ===== ===== =====
Weighted average number
of common shares
outstanding - diluted 49.424 54.646 49.848 54.395
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
June 27, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and equivalents $434.5 $475.9
Accounts receivable, net 1,210.2 1,306.0
Inventories 616.6 666.8
Other current assets 106.3 180.6
Deferred income taxes 73.0 101.3
Assets of discontinued operations 61.8 108.2
---- -----
Total current assets 2,502.4 2,838.8
Property, plant and equipment
Land 36.8 36.3
Buildings and leasehold improvements 226.7 223.5
Machinery and equipment 693.0 677.9
----- -----
956.5 937.7
Accumulated depreciation (448.1) (437.3)
------ ------
Net property, plant and equipment 508.4 500.4
Goodwill 1,772.3 1,769.8
Intangibles, net 640.2 646.8
Other assets 386.6 382.3
----- -----
TOTAL ASSETS $5,809.9 $6,138.1
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $476.8 $633.7
Accrued expenses 984.1 1,153.6
Income taxes payable 43.9 24.5
Short-term debt 135.2 112.9
Current maturities of long-term debt 76.0 76.4
Liabilities of discontinued operations 15.1 23.9
---- ----
Total current liabilities 1,731.1 2,025.0
Long-term debt 1,238.8 1,155.4
Deferred and other income taxes 83.8 124.0
Other long-term liabilities 782.3 788.9
----- -----
Total long-term liabilities 2,104.9 2,068.3
Equity:
SPX Corporation shareholders' equity:
Common stock 976.0 972.3
Paid-in capital 1,401.7 1,393.9
Retained earnings 2,273.8 2,240.5
Accumulated other comprehensive loss (185.0) (179.9)
Common stock in treasury (2,523.5) (2,416.0)
-------- --------
Total SPX Corporation shareholders' equity 1,943.0 2,010.8
Noncontrolling interests 30.9 34.0
---- ----
Total equity 1,973.9 2,044.8
------- -------
TOTAL LIABILITIES AND EQUITY $5,809.9 $6,138.1
======== ========
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Six months ended
----------------
June 27, June 28,
2009 2008
---- ----
Cash flows from (used in) operating
activities:
Net income $57.4 $159.2
Less: Income (loss) from discontinued
operations, net of tax (20.0) 4.6
----- ---
Income from continuing operations 77.4 154.6
Adjustments to reconcile income from
continuing operations to net cash from
operating activities
Special charges, net 35.2 4.9
Gain on sale of product line (1.4) -
Deferred and other income taxes 4.4 (10.7)
Depreciation and amortization 51.9 54.7
Pension and other employee benefits 27.7 20.7
Stock-based compensation 15.3 25.7
Other, net 14.1 16.3
Changes in operating assets and
liabilities, net of effects from
acquisitions and divestitures
Accounts receivable and other assets 88.4 (178.0)
Inventories 56.3 (64.9)
Accounts payable, accrued expenses
and other (310.6) 37.3
Cash spending on restructuring actions (31.8) (10.4)
----- -----
Net cash from continuing operations 26.9 50.2
Net cash from (used in) discontinued
operations 8.2 (7.3)
--- ----
Net cash from operating activities 35.1 42.9
Cash flows from (used in) investing
activities:
Proceeds from asset sales and other 1.6 -
Decrease in restricted cash 9.9 -
Business acquisitions and investments,
net of cash acquired - 0.4
Capital expenditures (44.9) (45.3)
----- -----
Net cash used in continuing operations (33.4) (44.9)
Net cash from (used in) discontinued
operations 18.5 (2.9)
---- ----
Net cash used in investing activities (14.9) (47.8)
Cash flows from (used in) financing
activities:
Borrowings under senior credit facilities 272.0 592.0
Repayments under senior credit facilities (200.8) (475.8)
Borrowings under trade receivables
agreement 112.0 151.0
Repayments under trade receivables
agreement (60.0) (221.0)
Net repayments under other financing
arrangements (18.3) (19.7)
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) 47.5
Purchase of noncontrolling interest in
subsidiary (3.2) -
Dividends paid (25.2) (26.5)
----- -----
Net cash from (used in) continuing operations (42.3) 47.5
Net cash from discontinued operations 0.2 -
--- ---
Net cash from (used in) financing activities (42.1) 47.5
Change in cash and equivalents due to changes
in foreign exchange rates (19.5) 22.9
Net change in cash and equivalents (41.4) 65.5
Consolidated cash and equivalents, beginning
of period 475.9 354.1
----- -----
Consolidated cash and equivalents, end
of period $434.5 $419.6
====== ======
Cash and equivalents of continuing operations $434.5 $419.6
SPX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited; in millions)
Three months ended Six months ended
------------------ ----------------
June 27, June 28, June 27, June 28,
2009 2008 % 2009 2008 %
---- ---- --- ---- ---- ---
Flow Technology
Revenues $396.2 $534.5 -25.9% $790.2 $1,026.6 -23.0%
Gross profit 136.9 174.8 267.4 321.6
Selling, general and
administrative expense 85.6 102.0 163.2 199.1
Intangible amortization
expense 2.8 3.1 5.6 6.1
--- --- --- ---
Segment income $48.5 $69.7 -30.4% $98.6 $116.4 -15.3%
===== ===== ===== ======
as a percent of
revenues 12.2% 13.0% 12.5% 11.3%
Test and Measurement
Revenues $207.6 $320.0 -35.1% $403.6 $590.0 -31.6%
Gross profit 59.1 94.7 112.1 179.2
Selling, general and
administrative expense 44.1 56.1 89.6 114.7
Intangible
amortization expense 1.7 2.0 3.4 4.0
--- --- --- ---
Segment income $13.3 $36.6 -63.7% $19.1 $60.5 -68.4%
===== ===== ===== =====
as a percent of
revenues 6.4% 11.4% 4.7% 10.3%
Thermal Equipment
and Services
Revenues $368.9 $409.4 -9.9% $711.1 $756.2 -6.0%
Gross profit 79.6 105.4 152.4 195.3
Selling, general and
administrative expense 51.5 58.4 102.3 110.4
Intangible amortization
expense 0.6 1.4 1.2 2.9
--- --- --- ---
Segment income $27.5 $45.6 -39.7% $48.9 $82.0 -40.4%
===== ===== ===== =====
as a percent of
revenues 7.5% 11.1% 6.9% 10.8%
Industrial Products
and Services
Revenues $220.8 $241.0 -8.4% $448.2 $477.1 -6.1%
Gross profit 75.6 88.5 154.0 172.8
Selling, general and
administrative expense 28.9 34.4 58.3 65.4
Intangible
amortization expense 0.1 0.1 0.2 0.3
--- --- --- ---
Segment income $46.6 $54.0 -13.7% $95.5 $107.1 -10.8%
===== ===== ===== ======
as a percent of
revenues 21.1% 22.4% 21.3% 22.4%
Total segment income $135.9 $205.9 $262.1 $366.0
Corporate expenses 19.2 24.7 42.5 54.9
Pension and
postretirement expense 9.8 7.6 18.7 15.0
Stock-based compensation
expense 6.1 9.7 15.3 25.7
Special charges, net 23.3 4.2 35.2 4.9
---- --- ---- ---
Consolidated Operating
Income $77.5 $159.7 -51.5% $150.4 $265.5 -43.4%
===== ====== ====== ======
SPX CORPORATION AND SUBSIDIARIES
ORGANIC REVENUE GROWTH RECONCILIATION
(Unaudited)
Three Months ended June 27, 2009
--------------------------------
Net Revenue Foreign Organic Revenue
Decline Acquisitions Currency Decline
----------- ------------ -------- ---------------
Flow Technology (25.9)% -% (8.5)% (17.4)%
Test and Measurement (35.1)% 0.9% (6.6)% (29.4)%
Thermal Equipment and
Services (9.9)% -% (5.6)% (4.3)%
Industrial Products and
Services (8.4)% -% (1.0)% (7.4)%
Consolidated (20.7)% 0.2% (6.1)% (14.8)%
Six months ended June 27, 2009
------------------------------
Net Revenue Foreign Organic Revenue
Decline Acquisitions Currency Decline
----------- ------------ -------- ---------------
Flow Technology (23.0)% -% (9.2)% (13.8)%
Test and Measurement (31.6)% 0.9% (6.7)% (25.8)%
Thermal Equipment and
Services (6.0)% -% (5.5)% (0.5)%
Industrial Products and
Services (6.1)% -% (1.0)% (5.1)%
Consolidated (17.4)% 0.2% (6.4)% (11.2)%
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
Three months ended Six months ended
------------------ ----------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
---- ---- ---- ----
Net cash from continuing
operations $61.9 $48.5 $26.9 $50.2
Capital expenditures -
continuing operations (29.6) (25.4) (44.9) (45.3)
----- ----- ----- -----
Free cash flow from (used
in) continuing operations $32.3 $23.1 $(18.0) $4.9
===== ===== ====== ====
SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)
Six months ended
June 27,2009
------------
Beginning cash and
equivalents $475.9
Operational cash flow 26.9
Capital expenditures (44.9)
Decrease in restricted
cash 9.9
Proceeds from asset
sales and other 1.6
Borrowings under senior
credit facilities 272.0
Repayments under senior
credit facilities (200.8)
Net repayments under
other financing
arrangements (18.3)
Net borrowing under
trade receivable
agreement 52.0
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 (25.2)
Cash from discontinued
operations 26.9
Change in cash due to
changes in foreign
exchange rates (19.5)
-----
Ending cash and
equivalents $434.5
======
Debt at Debt at
12/31/2008 Borrowings Repayments Other 6/27/2009
---------- ---------- ---------- ----- ---------
Term loan $675.0 $- $(18.8) $- $656.2
Domestic revolving
loan facility 65.0 272.0 (182.0) - 155.0
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 - 112.0 (60.0) - 52.0
Other indebtedness 55.2 - (18.3) 0.4 37.3
---- --- ----- --- ----
Totals $1,344.7 $384.0 $(279.1) $0.4 $1,450.0
======== ====== ======= ==== ========
SPX CORPORATION AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(Unaudited; in millions)
2009E Guidance Range
--------------------
Net cash from continuing operations $330.0 $360.0
Capital expenditures (100.0) (90.0)
------ -----
Free cash flow from continuing operations $230.0 $270.0
====== ======
