Delaware | 1-6948 | 38-1016240 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
Exhibit Number | Description | |
99.1 |
SPX CORPORATION | ||
(Registrant) | ||
Date: May 3, 2018 | By: | /s/ Scott W. Sproule |
Scott W. Sproule | ||
Vice President, Chief Financial Officer and | ||
Treasurer |
Exhibit Number | Description | |
99.1 |
($ millions) | Q1 2018 | Q1 2017 | ||||||
Revenue | $351.9 | $340.6 | ||||||
Segment Income | 37.0 | 34.3 | ||||||
Operating Income | 19.3 | 19.1 |
($ millions) | Q1 2018 | Q1 2017 | ||||||
Core Revenue* | $337.6 | $322.4 | ||||||
Core Segment Income* | 41.6 | 38.7 | ||||||
Adjusted Operating Income* | 26.5 | 23.5 |
Revenue | Segment Income Margin % | ||
HVAC | Organic growth* rate within long-term range of 2.0%-4.0% | Approximately 100 basis point increase | |
Detection & Measurement | Organic growth* rate within long-term range of approximately 2.0%-6.0% | Approximately 50 to 100 basis point increase | |
Engineered Solutions (Core)* | Segment (core) revenue decline* in high-single digits %; modest growth in transformer revenue; organic decline* in process cooling resulting from operating model changes | Approximately 80-130 basis point increase |
SPX CORPORATION AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Unaudited; in millions, except per share amounts) | |||||||
Three months ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Revenues | $ | 351.9 | $ | 340.6 | |||
Costs and expenses: | |||||||
Cost of products sold | 261.8 | 252.5 | |||||
Selling, general and administrative | 68.6 | 68.3 | |||||
Intangible amortization | 0.2 | 0.2 | |||||
Special charges, net | 2.0 | 0.5 | |||||
Operating income | 19.3 | 19.1 | |||||
Other income (expense), net | 1.0 | (2.0 | ) | ||||
Interest expense | (4.3 | ) | (4.0 | ) | |||
Interest income | 0.5 | 0.4 | |||||
Income from continuing operations before income taxes | 16.5 | 13.5 | |||||
Income tax provision | (4.1 | ) | (3.2 | ) | |||
Income from continuing operations | 12.4 | 10.3 | |||||
Income (loss) from discontinued operations, net of tax | — | — | |||||
Gain on disposition of discontinued operations, net of tax | — | 7.1 | |||||
Income from discontinued operations, net of tax | — | 7.1 | |||||
Net income | $ | 12.4 | $ | 17.4 | |||
Basic income per share of common stock: | |||||||
Income from continuing operations | $ | 0.29 | $ | 0.24 | |||
Income from discontinued operations | — | 0.17 | |||||
Net income per share | $ | 0.29 | $ | 0.41 | |||
Weighted-average number of common shares outstanding — basic | 42.772 | 42.108 | |||||
Diluted income per share of common stock: | |||||||
Income from continuing operations | $ | 0.28 | $ | 0.24 | |||
Income from discontinued operations | — | 0.16 | |||||
Net income per share | $ | 0.28 | $ | 0.40 | |||
Weighted-average number of common shares outstanding — diluted | 44.353 | 43.454 |
SPX CORPORATION AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited; in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 103.7 | $ | 124.3 | |||
Accounts receivable, net | 214.7 | 267.5 | |||||
Contract assets | 98.3 | — | |||||
Inventories, net | 109.3 | 143.0 | |||||
Other current assets (includes income taxes receivable of $41.8 and $62.4 at March 31, 2018 and December 31, 2017, respectively) | 72.5 | 97.7 | |||||
Total current assets | 598.5 | 632.5 | |||||
Property, plant and equipment: | |||||||
Land | 16.4 | 15.8 | |||||
Buildings and leasehold improvements | 122.7 | 120.5 | |||||
Machinery and equipment | 333.2 | 330.4 | |||||
472.3 | 466.7 | ||||||
Accumulated depreciation | (286.5 | ) | (280.1 | ) | |||
Property, plant and equipment, net | 185.8 | 186.6 | |||||
Goodwill | 349.3 | 345.9 | |||||
Intangibles, net | 128.8 | 117.6 | |||||
Other assets | 697.4 | 706.9 | |||||
Deferred income taxes | 52.3 | 50.9 | |||||
TOTAL ASSETS | $ | 2,012.1 | $ | 2,040.4 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 145.0 | $ | 159.7 | |||
Contract liabilities | 88.5 | — | |||||
Accrued expenses | 180.8 | 292.6 | |||||
Income taxes payable | 2.2 | 1.2 | |||||
Short-term debt | 6.8 | 7.0 | |||||
Current maturities of long-term debt | 4.9 | 0.5 | |||||
Total current liabilities | 428.2 | 461.0 | |||||
Long-term debt | 344.9 | 349.3 | |||||
Deferred and other income taxes | 33.0 | 29.6 | |||||
Other long-term liabilities | 872.8 | 885.8 | |||||
Total long-term liabilities | 1,250.7 | 1,264.7 | |||||
Equity: | |||||||
Common stock | 0.5 | 0.5 | |||||
Paid-in capital | 1,300.4 | 1,309.8 | |||||
Retained deficit | (730.9 | ) | (742.3 | ) | |||
Accumulated other comprehensive income | 254.5 | 250.1 | |||||
Common stock in treasury | (491.3 | ) | (503.4 | ) | |||
Total equity | 333.2 | 314.7 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 2,012.1 | $ | 2,040.4 |
SPX CORPORATION AND SUBSIDIARIES | |||||||||||||
RESULTS OF REPORTABLE SEGMENTS | |||||||||||||
(Unaudited; in millions) | |||||||||||||
Three months ended | |||||||||||||
March 31, 2018 | April 1, 2017 | Δ | %/bps | ||||||||||
HVAC reportable segment | |||||||||||||
Revenues | $ | 127.7 | $ | 110.1 | $ | 17.6 | 16.0% | ||||||
Gross profit | 41.6 | 38.2 | 3.4 | ||||||||||
Selling, general and administrative expense | 22.9 | 21.6 | 1.3 | ||||||||||
Intangible amortization expense | 0.1 | 0.1 | — | ||||||||||
Income | $ | 18.6 | $ | 16.5 | $ | 2.1 | 12.7% | ||||||
as a percent of revenues | 14.6 | % | 15.0 | % | -40 bps | ||||||||
Detection & Measurement reportable segment | |||||||||||||
Revenues | $ | 65.6 | $ | 53.6 | $ | 12.0 | 22.4% | ||||||
Gross profit | 29.6 | 24.8 | 4.8 | ||||||||||
Selling, general and administrative expense | 13.9 | 13.6 | 0.3 | ||||||||||
Intangible amortization expense | — | — | — | ||||||||||
Income | $ | 15.7 | $ | 11.2 | $ | 4.5 | 40.2% | ||||||
as a percent of revenues | 23.9 | % | 20.9 | % | 300 bps | ||||||||
Engineered Solutions reportable segment | |||||||||||||
Revenues | $ | 158.6 | $ | 176.9 | $ | (18.3 | ) | (10.3)% | |||||
Gross profit | 18.9 | 25.1 | (6.2 | ) | |||||||||
Selling, general and administrative expense | 16.1 | 18.4 | (2.3 | ) | |||||||||
Intangible amortization expense | 0.1 | 0.1 | — | ||||||||||
Income | $ | 2.7 | $ | 6.6 | $ | (3.9 | ) | (59.1)% | |||||
as a percent of revenues | 1.7 | % | 3.7 | % | -200 bps | ||||||||
Consolidated Revenues | $ | 351.9 | $ | 340.6 | $ | 11.3 | 3.3% | ||||||
Consolidated Segment Income | 37.0 | 34.3 | 2.7 | 7.9% | |||||||||
as a percent of revenues | 10.5 | % | 10.1 | % | 40 bps | ||||||||
Total income for reportable segments | $ | 37.0 | $ | 34.3 | $ | 2.7 | |||||||
Corporate expense | 11.8 | 11.4 | 0.4 | ||||||||||
Pension and postretirement expense | — | 0.1 | (0.1 | ) | |||||||||
Long-term incentive compensation expense | 3.9 | 3.2 | 0.7 | ||||||||||
Special charges, net | 2.0 | 0.5 | 1.5 | ||||||||||
Consolidated operating income | $ | 19.3 | $ | 19.1 | $ | 0.2 | 1.0% | ||||||
as a percent of revenues | 5.5 | % | 5.6 | % | -10 bps |
SPX CORPORATION AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited; in millions) | |||||||
Three months ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Cash flows from (used in) operating activities: | |||||||
Net income | $ | 12.4 | $ | 17.4 | |||
Less: Income from discontinued operations, net of tax | — | 7.1 | |||||
Income from continuing operations | 12.4 | 10.3 | |||||
Adjustments to reconcile income from continuing operations to net cash from operating activities: | |||||||
Special charges, net | 2.0 | 0.5 | |||||
Deferred and other income taxes | (1.3 | ) | (3.9 | ) | |||
Depreciation and amortization | 6.6 | 6.3 | |||||
Pension and other employee benefits | 2.3 | 4.2 | |||||
Long-term incentive compensation | 3.9 | 3.2 | |||||
Other, net | 0.3 | 1.6 | |||||
Changes in operating assets and liabilities, net of effects from an acquisition and divestitures: | |||||||
Accounts receivable and other assets | 23.6 | 33.7 | |||||
Inventories | (3.6 | ) | (13.2 | ) | |||
Accounts payable, accrued expenses and other | (43.1 | ) | (36.7 | ) | |||
Cash spending on restructuring actions | (0.4 | ) | (0.6 | ) | |||
Net cash from continuing operations | 2.7 | 5.4 | |||||
Net cash used in discontinued operations | (0.4 | ) | (3.7 | ) | |||
Net cash from operating activities | 2.3 | 1.7 | |||||
Cash flows from (used in) investing activities: | |||||||
Proceeds from company-owned life insurance policies, net | 0.2 | — | |||||
Business acquisition, net of cash acquired | (16.3 | ) | — | ||||
Capital expenditures | (3.2 | ) | (2.2 | ) | |||
Net cash used in continuing operations | (19.3 | ) | (2.2 | ) | |||
Net cash used in discontinued operations | — | — | |||||
Net cash used in investing activities | (19.3 | ) | (2.2 | ) | |||
Cash flows from (used in) financing activities: | |||||||
Borrowings under senior credit facilities | — | — | |||||
Repayments under senior credit facilities | — | (4.3 | ) | ||||
Net borrowings (repayments) under other financing arrangements | (0.4 | ) | 1.7 | ||||
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other | (3.2 | ) | (2.5 | ) | |||
Net cash used in continuing operations | (3.6 | ) | (5.1 | ) | |||
Net cash used in discontinued operations | — | — | |||||
Net cash used in financing activities | (3.6 | ) | (5.1 | ) | |||
Change in cash and equivalents due to changes in foreign currency exchange rates | — | (1.3 | ) | ||||
Net change in cash and equivalents | (20.6 | ) | (6.9 | ) | |||
Consolidated cash and equivalents, beginning of period | 124.3 | 99.6 | |||||
Consolidated cash and equivalents, end of period | $ | 103.7 | $ | 92.7 |
SPX CORPORATION AND SUBSIDIARIES | ||||
CASH AND DEBT RECONCILIATION | ||||
(Unaudited; in millions) | ||||
Three months ended | ||||
March 31, 2018 | ||||
Beginning cash and equivalents | $ | 124.3 | ||
Cash from continuing operations | 2.7 | |||
Capital expenditures | (3.2 | ) | ||
Proceeds from company-owned life insurance policies, net | 0.2 | |||
Business acquisition, net of cash acquired | (16.3 | ) | ||
Net borrowings under other financing arrangements | (0.4 | ) | ||
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options | (3.2 | ) | ||
Cash used in discontinued operations | (0.4 | ) | ||
Change in cash due to changes in foreign currency exchange rates | — | |||
Ending cash and equivalents | $ | 103.7 |
Debt at | Debt at | |||||||||||||||||||
December 31, 2017 | Borrowings | Repayments | Other | March 31, 2018 | ||||||||||||||||
Revolving loans | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Term loan | 350.0 | — | — | — | 350.0 | |||||||||||||||
Trade receivables financing arrangement | — | — | — | — | — | |||||||||||||||
Other indebtedness | 9.1 | 12.7 | (13.1 | ) | 0.1 | 8.8 | ||||||||||||||
Less: Deferred financing costs associated with the term loan | (2.3 | ) | — | — | 0.1 | (2.2 | ) | |||||||||||||
Totals | $ | 356.8 | $ | 12.7 | $ | (13.1 | ) | $ | 0.2 | $ | 356.6 |
SPX CORPORATION AND SUBSIDIARIES | |||||||
NON-GAAP RECONCILIATION - ORGANIC REVENUE | |||||||
HVAC AND DETECTION & MEASUREMENT SEGMENTS | |||||||
(Unaudited) | |||||||
Three months ended March 31, 2018 | |||||||
HVAC | Detection & Measurement | ||||||
Net Revenue Growth | 16.0 | % | 22.4 | % | |||
Exclude: Foreign Currency | 1.1 | % | 2.8 | % | |||
Exclude: Acquisition | — | % | 1.5 | % | |||
Organic Revenue Growth | 14.9 | % | 18.1 | % |
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
Impact of ASC 606 Adoption | |||||||||||
Three months ended March 31, 2018 | |||||||||||
(Unaudited; in millions) | |||||||||||
Reported | Effect of ASC 606 Adoption (1) | Under Prior Revenue Recognition Guidance | |||||||||
Revenues | $ | 351.9 | $ | (21.4 | ) | $ | 330.5 | ||||
Net Income | 12.4 | (1.5 | ) | 10.9 | |||||||
(1) Effect of ASC 606 Adoption related solely to our Engineered Solutions reportable segment. |
SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||
NON-GAAP RECONCILIATION - REVENUE AND SEGMENT INCOME | |||||||||||||||||
(Unaudited; in millions) | |||||||||||||||||
CONSOLIDATED SPX: | Three months ended | ||||||||||||||||
March 31, 2018 | April 1, 2017 | ||||||||||||||||
Consolidated revenue | $ | 351.9 | $ | 340.6 | |||||||||||||
Exclude: South African projects | 14.3 | 18.2 | |||||||||||||||
Core revenue | $ | 337.6 | $ | 322.4 | |||||||||||||
Total segment income | $ | 37.0 | $ | 34.3 | |||||||||||||
Exclude: Losses from South African projects | (4.3 | ) | (4.4 | ) | |||||||||||||
Exclude: One time acquisition related costs (1) | (0.3 | ) | — | ||||||||||||||
Core segment income | $ | 41.6 | $ | 38.7 | |||||||||||||
as a percent of Core revenues (2) | 12.3 | % | 12.0 | % | |||||||||||||
ENGINEERED SOLUTIONS SEGMENT: | Three months ended | DETECTION & MEASUREMENT SEGMENT: | Three months ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | ||||||||||||||
Engineered Solutions revenue | $ | 158.6 | $ | 176.9 | Detection & Measurement Segment income | $ | 15.7 | $ | 11.2 | ||||||||
Exclude: South African projects | 14.3 | 18.2 | Exclude: One time acquisition related costs (1) | (0.3 | ) | — | |||||||||||
Engineered Solutions (Core) revenue | $ | 144.3 | $ | 158.7 | Detection & Measurement adjusted segment income | $ | 16.0 | $ | 11.2 | ||||||||
as a percent of Detection & Measurement revenues (2) | 24.4 | % | 20.9 | % | |||||||||||||
Engineered Solutions Segment income | $ | 2.7 | $ | 6.6 | |||||||||||||
Exclude: Losses from South African projects | (4.3 | ) | (4.4 | ) | |||||||||||||
Engineered Solutions (Core) income | $ | 7.0 | $ | 11.0 | |||||||||||||
as a percent of Engineered Solutions (Core) revenues (2) | 4.9 | % | 6.9 | % | |||||||||||||
(1) Represents additional "Cost of products sold" recorded during the three months ended March 31, 2018 related to the step-up of inventory (to fair value) acquired in connection with the March 1, 2018 Schonstedt transaction. | |||||||||||||||||
(2) See "Results of Reportable Segments" for applicable percentages based on GAAP results. |
SPX CORPORATION AND SUBSIDIARIES | ||||||||
NON-GAAP RECONCILIATION - OPERATING INCOME | ||||||||
(Unaudited; in millions) | ||||||||
Three months ended | ||||||||
March 31, 2018 | April 1, 2017 | |||||||
Operating income | $ | 19.3 | $ | 19.1 | ||||
Adjustments: | ||||||||
Losses from South African projects (1) | 5.9 | 4.4 | ||||||
One time acquisition related costs (2) | 1.3 | — | ||||||
Adjusted operating income | $ | 26.5 | $ | 23.5 | ||||
as a percent of Core revenues (3) | 7.8 | % | 7.3 | % | ||||
(1) Adjustment relates to the removal of South African projects (inclusive of restructuring charges of $1.6 recorded during the three months ended March 31, 2018). | ||||||||
(2) One time acquisition costs include transaction related costs (e.g., professional fees) and an inventory step-up charge for the Schonstedt acquisition. | ||||||||
(3) See "Results of Reportable Segments" for applicable percentages based on GAAP results. |
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||
Three Months Ended March 31, 2018 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 37.0 | $ | 4.6 | $ | 41.6 | |||||
Corporate expense (2) | (11.8 | ) | 1.0 | (10.8 | ) | ||||||
Long-term incentive compensation expense | (3.9 | ) | — | (3.9 | ) | ||||||
Special charges, net (3) | (2.0 | ) | 1.6 | (0.4 | ) | ||||||
Operating income | 19.3 | 7.2 | 26.5 | ||||||||
Other income, net (4) | 1.0 | 0.3 | 1.3 | ||||||||
Interest expense, net | (3.8 | ) | — | (3.8 | ) | ||||||
Income from continuing operations before income taxes | 16.5 | 7.5 | 24.0 | ||||||||
Income tax provision (5) | (4.1 | ) | (0.3 | ) | (4.4 | ) | |||||
Income from continuing operations | 12.4 | 7.2 | 19.6 | ||||||||
Dilutive shares outstanding | 44.353 | 44.353 | |||||||||
Earnings per share from continuing operations | $ | 0.28 | $ | 0.44 | |||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects ($4.3) and inventory step-up charges ($0.3) related to the Schonstedt acquisition. | |||||||||||
(2) Adjustment represents removal of acquisition related expenses incurred during the period. | |||||||||||
(3) Adjustment represents removal of restructuring charges associated with the South African projects. | |||||||||||
(4) Adjustment represents removal of non-service pension and postretirement items. | |||||||||||
(5) Adjustment represents the tax impact of items (1) through (4) above and the removal of tax charges associated with the impact of U.S. tax reform. |
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||
Three Months Ended April 1, 2017 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 34.3 | $ | 4.4 | $ | 38.7 | |||||
Corporate expense | (11.4 | ) | — | (11.4 | ) | ||||||
Pension and postretirement expense | (0.1 | ) | — | (0.1 | ) | ||||||
Long-term incentive compensation expense | (3.2 | ) | — | (3.2 | ) | ||||||
Special charges, net | (0.5 | ) | — | (0.5 | ) | ||||||
Operating income | 19.1 | 4.4 | 23.5 | ||||||||
Other expense, net (2) | (2.0 | ) | 2.0 | — | |||||||
Interest expense, net (3) | (3.6 | ) | 0.2 | (3.4 | ) | ||||||
Income from continuing operations before income taxes | 13.5 | 6.6 | 20.1 | ||||||||
Income tax provision (4) | (3.2 | ) | (0.6 | ) | (3.8 | ) | |||||
Income from continuing operations | 10.3 | 6.0 | 16.3 | ||||||||
Dilutive shares outstanding | 43.454 | 43.454 | |||||||||
Earnings per share from continuing operations | $ | 0.24 | $ | 0.38 | |||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects. | |||||||||||
(2) Adjustment represents removal of non-service pension and postretirement items and removal of foreign currency losses associated with the South African projects. | |||||||||||
(3) Adjustment represents removal of interest expense incurred in connection with borrowings under a line of credit in South Africa. | |||||||||||
(4) Adjustment represents the tax impact of items (1) through (3) above. |
SPX CORPORATION AND SUBSIDIARIES | ||||
NON-GAAP RECONCILIATION - FREE CASH FLOW | ||||
(Unaudited; in millions) | ||||
Three months ended | ||||
March 31, 2018 | ||||
Net operating cash flow from continuing operations | $ | 2.7 | ||
Capital expenditures - continuing operations | (3.2 | ) | ||
Free cash flow used in continuing operations | $ | (0.5 | ) |