Q2 GAAP EPS of $0.62; Adjusted EPS* of $0.64
Balanced Portfolio Supported Strong Q2 Results
Successfully Navigating COVID-19 ChallengesCHARLOTTE, N.C., July 30, 2020 (GLOBE NEWSWIRE) — SPX Corporation (NYSE:SPXC) today reported results for the quarter ended June 27, 2020. Gene Lowe, President and CEO, remarked, “I am very pleased with our second quarter performance, which reflects solid operational execution and highlights the strengths of our balanced portfolio and our business system, which has allowed us to quickly adapt to changing conditions. Although we experienced COVID-19 pandemic-related headwinds during Q2, we maintained stable revenues and adjusted operating income.” Mr. Lowe continued, “As we assess the key drivers of our performance for the second half of 2020, we see continued risks associated with the spread of COVID-19 in our largest market, the United States. However, we have multiple tools to continue successfully navigating through the pandemic, and anticipate generating significant cash and profits during the remainder of the year. We ended the second quarter with a very strong balance sheet and available liquidity, positioning us for continued capital deployment, including attractive acquisition opportunities that accelerate our strategic growth plans.” Second Quarter 2020 Overview:For the second quarter of 2020, the company reported revenue of $373.2 million and operating income of $34.4 million, compared with revenue of $372.4 million and operating income of $26.3 million in the second quarter of 2019. Diluted income per share from continuing operations in the second quarter of 2020 was $0.62, compared with a diluted income per share from continuing operations of $0.43 in the second quarter of 2019.SPX’s adjusted revenue* was $371.2 million and adjusted operating income* was $41.5 million, compared with adjusted revenue* of $371.6 million and adjusted operating income* of $40.7 million in the second quarter of 2019. Adjusted income per share* in the second quarter of 2020 was $0.64, compared with $0.67 in the second quarter of 2019. Second Quarter and Year-to-Date Financial Comparison:GAAP Results:Adjusted Results:* Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.HVACRevenue for Q2 2020 was $132.3 million, compared with $130.9 million in Q2 2019, an increase of 1.1%, including a 10.4% increase from acquisitions and a 0.4% unfavorable impact related to currency fluctuation. Organic revenue* decreased 8.9%, primarily reflecting an increase in international cooling volumes, more than offset by a decline in demand for heating products, including a negative impact of the COVID-19 pandemic on customer demand.Segment income in Q2 2020 was $18.2 million, compared to $16.7 million in Q2 2019. Adjusted segment income*, which excludes intangible amortization expense of $0.7 million, was $18.9 million, or 14.3% of revenue. This compares with adjusted segment income* of $16.8 million, or 12.8% of revenue in Q2 2019, which excludes intangible amortization expense of $0.1 million. The increase in adjusted segment income* and 150 basis points increase in adjusted segment income margin* were due to stronger operational execution and a more favorable product mix in our domestic cooling business.Detection & MeasurementRevenue for Q2 2020 was $92.1 million, compared with $101.7 million in Q2 2019, a decrease of 9.4%, including a 0.5% unfavorable impact related to currency fluctuation. Organic revenue* decreased 8.9%, largely due to lower sales of Communication Technologies and Locators products, with a significant portion of the decrease attributable to lower customer demand and project order delays associated with the COVID-19 pandemic. Segment income in Q2 2020 was $16.0 million, compared to $21.7 million in Q2 2019. Adjusted segment income*, which excludes intangible amortization expense of $1.7 million, was $17.7 million, or 19.2% of revenue. This compares with adjusted segment income* of $24.9 million, or 24.5% of revenue, in Q2 2019, which excludes intangible amortization expense of $2.3 million and acquisition-related costs of $0.9 million. The 530 basis points decrease in adjusted segment income margin* was driven primarily by the decrease in volumes noted above and a less favorable business mix associated with lower shipments of higher margin products. Engineered SolutionsRevenue in Q2 2020 was $146.8 million, compared with $139.0 million in Q2 2019, an increase of 5.6%, which included an organic increase of 5.9% and a 0.3% unfavorable impact related to currency fluctuation. The organic increase was driven by higher revenue in our Transformers business, associated with higher manufacturing throughput due to improved execution. Segment income in Q2 2020 was $17.6 million, or 12.0% of revenue, compared with segment income of $13.0 million, or 9.4% of revenue, in Q2 2019. The increase in income and margin was driven by a more favorable sales mix, improved pricing discipline, and improved throughput at the Transformers business’s manufacturing facilities.All OtherAll Other, which includes the South African and Heat Transfer operations, had revenue of $2.0 million in Q2 2020, compared with $0.8 million in Q2 2019. The increase was due largely to a prior-year adjustment that reduced the cumulative revenue associated with the South African projects by $6.0 million in Q2 2019.All Other incurred a loss in Q2 2020 of $4.2 million, compared with a loss of $10.0 million in Q2 2019. The decrease in the loss was due primarily to the revenue adjustment noted above associated with the South African projects in the prior year period.Financial Update:As of June 27, 2020, SPX had total outstanding debt of $517.9 million and total cash of $190.2 million. During Q2 2020, SPX generated net operating cash from continuing operations of $27.1 million. Net leverage, as calculated under the company’s bank credit agreement, was 1.5x, a modest reduction from Q1 2020.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 June 27, 2020 with the Securities and Exchange Commission on or before August 6, 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: 3089269A replay of the call will be available by telephone through Thursday, August 6th.To listen to a replay of the call
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Participant code: 3089269Upcoming Investor Events: Company management plans to conduct virtual meetings with investors during the third quarter of 2020 and SPX will also be virtually participating in the Ideas Conference on August 27th, the Vertical Annual Global Industrials Conference on September 9th, and the Sidoti Fall Conference on September 23rd. 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 2019 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 report on Form 10-K and its most recent quarterly report on Form 10-Q. 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: spx.investor@spx.comPat Uotila, Manager, Investor Relations
Phone: 980-474-3806
E-mail: spx.investor@spx.com
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