Q1 GAAP EPS of $0.50; Adjusted EPS* of $0.62
Solid First Quarter Performance
Withdrawing 2020 Guidance on Near-Term Uncertainty
Well-Positioned to Navigate Challenging Environment; Substantial Available LiquidityCHARLOTTE, N.C., April 30, 2020 (GLOBE NEWSWIRE) — SPX Corporation (NYSE:SPXC) today reported results for the quarter ended March 28, 2020. Gene Lowe, President and CEO, remarked, “SPX’s first quarter 2020 performance was strong overall. Our Engineered Solutions segment generated a significant increase in segment income, partially offset by the impact of lower weather-driven demand of HVAC heating products compared with the strong prior-year winter. During the quarter, we experienced only a modest impact from the COVID-19 crisis. However, the effect accelerated during March and April, as actions to slow the rate of infection grew outside of China. As a result of the current uncertain economic environment, we are withdrawing our full-year 2020 guidance.”Mr. Lowe continued, “We believe that SPX is well positioned to manage through the current difficult environment with our strong balance sheet and liquidity position, our high portion of replacement sales, and our leadership role in niche markets for products and services that are essential to critical infrastructure. Our business system has enabled us to adapt successfully to a rapidly changing environment by leveraging the processes and practices we have put in place company-wide to drive efficiencies. Additionally, our team remains keenly focused on managing the levers in our control to mitigate the effect of near-term economic weakness, while continuing to make employee safety our top priority, and protecting SPX’s ability to react quickly in a recovery.”First Quarter 2020 Overview:For the first quarter of 2020, the company reported revenue of $369.3 million and operating income of $32.7 million, compared with revenue of $343.6 million and operating income of $3.0 million in the first quarter of 2019. Diluted income per share from continuing operations in the first quarter of 2020 was $0.50, compared with a diluted income per share of $0.01 in the first quarter of 2019.SPX’s adjusted revenue* was $365.3 million and adjusted operating income* was $39.2 million, compared with adjusted revenue* of $351.5 million and adjusted operating income* of $31.9 million in the first quarter of 2019. Adjusted income per share* in the first quarter of 2020 was $0.62, compared with $0.51 in the first quarter of 2019. First Quarter Financial Comparisons:GAAP Results:Adjusted Results:* Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.HVACRevenue for Q1 2020 was $118.5 million, compared with $128.4 million in Q1 2019, a decrease of 7.7%, including an 8.5% increase from acquisitions and a 0.5% unfavorable impact related to currency fluctuation. Organic revenue* decreased 15.7%, primarily reflecting a decrease in seasonal market demand for heating products. A decline in international cooling volumes associated with the COVID-19 pandemic was largely offset by higher sales of cooling products in the Americas region.Segment income in Q1 2020 was $15.0 million, compared to $18.4 million in Q1 2019. Adjusted segment income*, which excludes intangible amortization expense of $0.8 million and acquisition related costs of $0.1 million, was $15.9 million, or 13.4% of revenue. This compares with adjusted segment income* of $18.5 million, or 14.4% of revenue in Q1 2019, which excludes intangible amortization expense of $0.1 million. The decrease in adjusted segment income* and 100 basis point decrease in adjusted segment income margin* was due to lower sales volumes of heating products.Detection & MeasurementRevenue for Q1 2020 was $91.9 million, compared with $85.1 million in Q1 2019, an increase of 8.0%, including a 2.5% increase from the Sabik acquisition and a 0.9% unfavorable impact related to currency fluctuation. Organic revenue* increased 6.4%, largely due to the timing of project-related sales compared with 2019. Segment income in Q1 2020 was $18.2 million, compared to $17.0 million in Q1 2019. Adjusted segment income*, which excludes intangible amortization expense of $1.8 million, was $20.0 million, or 21.8% of revenue. This compares with adjusted segment income* of $19.8 million, or 23.3% of revenue, in Q1 2019, which excludes intangible amortization expense of $1.5 million and acquisition related costs of $1.3 million. The 150 basis point decrease in adjusted segment income margin* was driven primarily by a less favorable business mix. Engineered SolutionsRevenue in Q1 2020 was $154.9 million, compared with $138.0 million in Q1 2019, an increase of 12.2%. The increase was driven by higher revenue in our Transformers business and, to a lesser extent, in our process cooling business. Segment income in Q1 2020 was $17.9 million, or 11.6% of revenue, compared with segment income of $8.0 million, or 5.8% of revenue, in Q1 2019. The increase in income and margin was driven primarily by the higher revenue noted above.All OtherAll Other, which includes the South African and Heat Transfer operations, had revenue of $4.0 million in Q1 2020, compared with ($7.9) million in Q1 2019. The increase was due largely to a prior-year asset impairment that reduced the cumulative revenue associated with the South African projects by $17.5 million.All Other incurred a loss in Q1 2020 of $3.9 million, compared with a loss of $22.6 million in Q1 2019. The decrease in the loss was due primarily to the asset impairment noted above associated with the South African projects in the prior year period.Financial Update:As of March 28, 2020, SPX had total outstanding debt of $511.5 million and total cash of $163.1 million. During Q1 2020, SPX generated net operating cash from continuing operations of $2.7 million, including net cash usage associated with the South African operations of approximately $3 million. Net leverage, as calculated under the company’s bank credit agreement, was 1.6x, unchanged from the end of 2019.Non-GAAP Presentation: To provide additional clarity to its operating results, the company discusses results that include “adjusted” non-GAAP financial measures. Adjusted results for the company exclude, among other items, the effect of the South African and Heat Transfer operations, categorized as “All Other” in the company’s segment reporting structure. The company reports separately on the results of the “All Other” category. The company anticipates reporting the results of businesses included in the “All Other” category as discontinued operations, at such time as they meet the accounting requirements for this treatment.Form 10-Q: The company expects to file its quarterly report on Form 10-Q for the quarter ended March 28, 2020 with the Securities and Exchange Commission on or before May 11, 2020. 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.Conference Call: SPX will host a conference call at 4:45 p.m. (EDT) today to discuss first quarter results. The call will be simultaneously webcast via the company’s website at www.spx.com and the slide presentation will be available in the Investor Relations section of the site.Conference call
Dial in: 877-341-7727
From outside the United States: +1 262-558-6098
Participant code: 3364666A replay of the call will be available by telephone through Thursday, May 7th.To listen to a replay of the call
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Participant code: 3364666Upcoming Investor Events: Company management plans to conduct virtual meetings with investors during the second quarter of 2020 and SPX will also be virtually participating in the Oppenheimer Industrial Growth Conference on May 5th. In addition, SPX will be virtually hosting SPX Corporation’s Annual Meeting of Stockholders on Thursday, May 14th at 8am eastern time. About SPX Corporation: SPX Corporation is a supplier of highly engineered products and technologies, holding leadership positions in the HVAC, detection and measurement, and engineered solutions markets. Based in Charlotte, North Carolina, SPX Corporation had approximately $1.5 billion in annual revenue in 2020 and over 4,500 employees in 17 countries. SPX Corporation is listed on the New York Stock Exchange under the ticker symbol “SPXC.” For more information, please visit www.spx.com.*Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Actual results may differ materially from these statements. The words “believe,” “expect,” “anticipate,” “project” and similar expressions identify forward-looking statements. Please read these forward-looking statements in conjunction with the company’s documents filed with the Securities and Exchange Commission, including the company’s most recent annual reports on Form 10-K. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. In addition to the risks and uncertainties identified in those filings, the forward-looking statements contained in this press release are subject to risks and uncertainties related to the COVID-19 pandemic, including the impact of the pandemic or related government responses on the company’s businesses, the businesses of its customers and vendors, and whether the company’s businesses and those of its customers and vendors will continue to be treated as “essential” operations under government orders restricting business activities or, even if so treated, whether health and safety concerns might otherwise require certain of the company’s operations to be halted for some period of time. 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, forward-looking statements 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.SOURCE SPX Corporation.Investor and Media Contacts:
Paul Clegg, VP, Investor Relations and Communications
Phone: 980-474-3806
E-mail: [email protected]Pat Uotila, Manager, Investor Relations
Phone: 980-474-3806
E-mail: [email protected]
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