SPX Corporation Exceeds First Call Estimates
16 July 1998
SPX Corporation Exceeds First Call Estimates Despite the Impact of GM Strike
MUSKEGON, Mich., July 16 -- SPX Corporation today
announced second quarter 1998 financial results. Second quarter performance
exceeds First Call's consensus estimate even after absorbing the shortfalls
associated with the strike at General Motors. This marks the tenth
consecutive quarter of year-over-year operational improvement. Highlights
follow:
EARNINGS PER SHARE - Performance exceeded First Call's consensus estimate
despite the impact of the strike at General Motors.
* Reported second quarter earnings per share of $.78 is after $.30 per
share of costs related to the Echlin transaction. To be comparable
with First Call estimates this $.30 per share loss should be added to
reported earnings per share.
* The conclusion of the Echlin transaction produced a net $7.1 million
pretax gain ($4.5 million after-tax), or $.37 per share, for the six
months ended June 30, 1998. The investment in Echlin stock was
liquidated during the second quarter.
REVENUES - Revenues of $231.6 million were flat versus second quarter 1997
revenues of $230.2 million after absorbing strike related shortfalls. For the
first six months of 1998 revenues increased 4.2% over comparable 1997 pro
forma revenues.
* Service Solutions revenues grew 5% to $170.8 million compared with
second quarter 1997 revenues of $162.1 million.
* For the first six months of 1998, Service Solutions revenues increased
9.0% to $333.2 million over comparable 1997 revenues.
* Service Solutions results do not include revenues from the recent
acquisitions of The Valley Forge Group and Tecnotest that will be
included beginning in the third quarter 1998. Annualized revenues from
these acquisitions will be approximately $55 million.
* Vehicle Components revenues, including the impact of the strike at GM,
were $60.8 million for the second quarter, down 11% against comparable
1997 revenues.
* For the first six months of 1998, Vehicle Components revenues decreased
6% to $128.8 million compared to 1997 pro forma revenues.
OPERATING MARGIN - Second quarter consolidated operating margin, before
unusual items, increased to 10.4% compared to 9.3% in the second quarter of
1997.
* Service Solutions operating margin rose to 12.1% from 10.9% in the
second quarter of 1997.
* Vehicle Components achieved a 14.0% operating margin, flat with the
second quarter of 1997.
* Margin improvement is the result of ongoing efforts to increase
productivity through quality initiatives, operational excellence, and
cost management.
EVA - EVA improved by $3.1 million in the second quarter, bringing total
EVA improvement since the program was started in 1996 to $54.3 million.
OTHER SECOND QUARTER HIGHLIGHTS
* The company completed the acquisition of The Valley Forge Group and
Tecnotest.
* During the second quarter the company repurchased 352,100 shares for a
total cost of $25.2 million, an average price per share of $71.66.
Commenting on the company's second quarter financial results, John B.
Blystone, Chairman, President and Chief Executive Officer of SPX Corporation
said, "We are pleased with our second quarter performance in a very
competitive market. The operational improvements we have made to increase the
profitability of our business allowed us to continue our string of year over
year quarterly earnings increases, notwithstanding the strike at GM. The
acquisition of Tecnotest and Valley Forge will further strengthen our business
and help drive growth in our Service Solutions segment."
SPX Corporation is a global provider of Vehicle Service Solutions to
franchised dealers and independent service locations, Service Support to
Vehicle Manufacturers, and Vehicle Components to the worldwide motor vehicle
industry. The Internet address for SPX Corporation's home page is
http://www.spx.com.
Statements in this press announcement that are not strictly historical
are "forward-looking" statements within the meaning of the Safe Harbor
provisions of the federal securities laws. Investors are cautioned that such
statements are solely predictions and speak only as of the date of this
release. Actual results may differ materially due to risks and uncertainties
that are described in the Company's Form 10-K for 1997 and the Company's 1998
Second Quarter Form 10-Q which will be filed within the next three weeks.
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended
June 30 June 30
1998 1997 1998 1997
Revenues $231,654 $230,263 $462,018 $466,925
Costs and expenses:
Cost of products sold 165,461 166,079 332,686 340,246
Selling, general and
administrative 41,178 41,841 83,406 87,230
Goodwill/intangible
amortization 753 818 1,563 1,780
Minority and equity
interests 82 67 157 97
Special charges and
(gains) 5,691 - (7,092) 6,500
Operating income $ 18,489 $ 21,458 $ 51,298 $ 31,072
Other expense (income),
net (726) (458) (1,473) (72,694)
Interest expense, net 4,206 2,924 7,924 7,252
Income before income
taxes $ 15,009 $ 18,992 $ 44,847 $ 96,514
Provision for income
taxes 5,403 7,027 16,145 49,844
Income before extraordinary
item $ 9,606 $ 11,965 $ 28,702 $ 46,670
Extraordinary item,
net of tax - - - (10,330)
Net income $ 9,606 $ 11,965 $ 28,702 $ 36,340
Basic income (loss) per share:
Income before extraordinary
item $ 0.81 $ 0.90 $ 2.40 $ 3.44
Extraordinary item,
net of tax - - - (0.76)
Net income $ 0.81 $ 0.90 $ 2.40 $ 2.68
Weighted average number of
common shares
outstanding 11,917 13,251 11,972 13,571
Diluted income (loss) per share:
Income before extraordinary
item $ 0.78 $ 0.88 $ 2.33 $ 3.33
Extraordinary item,
net of tax - - - (0.74)
Net income $ 0.78 $ 0.88 $ 2.33 $ 2.59
Weighted average number of
common shares
outstanding 12,246 13,670 12,342 14,040
Business Segments: Three months Six months
ended June 30, ended June 30,
1998 1997 1998 1997
Revenues: (in millions) (in millions)
Service Solutions $ 170.8 $ 162.1 $ 333.2 $ 305.9
Vehicle Components 60.8 68.1 128.8 161.0
Total $ 231.6 $ 230.2 $ 462.0 $ 466.9
Operating income (loss):
Service Solutions $ 20.7 $ 17.6 $ 36.4 $ 21.2
Vehicle Components 8.5 9.6 18.0 21.2
General Corporate (10.7) (5.7) (3.1) (11.3)
Total $ 18.5 $ 21.5 $ 51.3 $ 31.1