SPX Corporation Reports Second Quarter EPS of $1.34 Per Share
26 July 1999
SPX Corporation Reports Second Quarter EPS of $1.34 Per Share; Pro Forma Revenue Growth of 6%
MUSKEGON, Mich., July 26 -- SPX Corporation today
announced second quarter 1999 earnings per share of $1.34 including net after-
tax unusual gains of $0.04 per share. The resulting $1.30 per share is a 53%
improvement over the comparable pro forma earnings in the second quarter 1998,
and 37% over the first quarter 1999.
FINANCIAL HIGHLIGHTS:
On October 6, 1998, SPX Corporation merged with General Signal Corporation
in a reverse acquisition. As a result, the historical financial results of
General Signal became the accounting history of the combined company through
the third quarter of 1998. Accordingly, the comparison of the historical
financial results for the second quarter does not provide a basis for
meaningful analysis of the operations of the business. The following
discussion compares the second quarter 1999 to the second quarter 1998 pro
forma results.
Earnings Per Share -- Second quarter diluted earnings per share of $1.34
includes net after-tax unusual gains of $0.04 per share. The resulting $1.30
per share for the second quarter of 1999, is a 53% improvement over pro forma
$0.85 per share before unusual items for second quarter 1998.
* In June 1999, the company sold marketable securities obtained in
connection with a recent technology acquisition at a gain of $7.6 million
pretax ($4.5 million after-tax), or $0.15 per share.
* Second quarter restructuring costs and incremental costs related to
fourth quarter 1998 actions totaled $5.5 million pretax ($3.3 million after-
tax), or $0.11 per share.
Revenues -- Revenues for the second quarter grew by 6% to $671.4 million,
compared to second quarter 1998 pro forma revenues of $633.4 million.
* Service Solutions revenues for the second quarter 1999 were $170.3
million, an 11.5% improvement over second quarter 1998 pro forma revenues of
$152.8 million. This double-digit growth is the result of strong
international sales from new customers and the addition of new business from
the 1998 acquisitions of Valley Forge and Tecnotest.
* Vehicle Components revenues for the second quarter were $105.3 million,
a 14.3% improvement over second quarter 1998 pro forma revenues of $92.1
million. The increase in revenues during the quarter was driven by new
programs, increased sales to European manufacturers and the impact of the GM
strike in 1998.
* Industrial Products and Services revenues for the second quarter 1999
were $207.3 million, flat compared with second quarter 1998 pro forma revenues
of $208.6 million. Second quarter revenue improvements in transformers,
motors and lab equipment were offset by the closure of unprofitable operations
identified in the December 1998 restructuring plan.
* Technical Products and Systems revenues for the second quarter 1999
were $188.5 million, a 4.8% improvement over second quarter 1998 pro forma
revenues of $179.9 million. Growth in this segment was generated by strong
domestic and international market demand for building life safety systems and
digital TV transmission systems, and sales of a new generation of transit fare
collection systems.
Operating Margins -- Operating margins, before unusual items, improved by
340 basis points to 13.3% for the second quarter 1999 compared to 9.9% for the
pro forma second quarter 1998. Margin improvement was largely driven by the
benefits of restructuring actions under way throughout the businesses.
Pro Forma Operating Second Quarter
Margin By Segment 1999 1998
Service Solutions 8.8% 8.2%
Vehicle Components 14.2 13.9
Industrial Products and Services 17.0 16.7
Technical Products and Systems 17.1 8.9
EVA -- EVA improved by $11.6 million for the second quarter 1999, for a
year to date EVA improvement of $23.2 million.
* The company expects to be EVA positive early in 2000 ahead of its
original commitment of 2002.
* The company's success with EVA is directly attributable to its high
level of participation in EVA compensation. The company currently has more
than 60% of its workforce on an EVA compensation plan and has targeted a
participation level of 75% by year-end 2000.
Cash Flow -- The company generated EBIT of $97.9 and EBITDA of $123.6
million for the second quarter 1999, excluding unusual charges, compared to
EBIT of $73.2 million and EBITDA of $99.9 million for the pro forma second
quarter 1998.
* The company reduced net debt by $33.7 million during the quarter, and
$134.1 million for the first six months of 1999.
Commenting on the company's financial results, John B. Blystone, Chairman,
President and Chief Executive Officer said, "Our team exceeded its commitments
again this quarter with very strong earnings per share, revenue growth of 6%,
operating income improvement of approximately 43% year-on-year, and EVA
improvement of $11.6 million. Our success is a direct result of implementing
our Value Improvement Process(TM) -- and today all four business segments
reported year over year operating income improvements. We expect 1999 to be a
record year and our results to date reinforce our confidence in our earnings
estimate of $5.00 per share for the full year."
SPX Corporation is a global provider of industrial products and services,
technical products and systems, service solutions and vehicle components. The
Internet address for SPX Corporation's home page is http://www.spx.com.
Certain statements in this press release are forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended and are subject to the safe harbor created thereby. Please refer to
the company's Form 10-K for 1998 and the Company's 1999 First Quarter Form
10-Q for discussion of certain important factors that relate to forward
looking statements contained in this press release. Although the company
believes that the expectations reflected in any such forward looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct.
SPX CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
($ In Millions, Except Per Share Data)
Three months ended June 30, Six months ended June 30,
1999 1998 % 1999 1998 %
Growth Growth
Revenues $671.4 $401.7 67.1% $1,318.3 $776.1 69.9%
Cost of sales 446.5 257.0 879.4 505.8
Selling, general &
administrative 125.3 96.1 258.1 187.6
Goodwill/Intangible
amortization 10.4 3.2 21.0 6.1
Special charges 5.5 - 20.1 -
Operating income $83.7 $45.4 84.4% $139.7 $76.6 82.4%
as a percent
of revenues 12.5% 11.3% 10.6% 9.9%
Other income, net 8.0 - 38.3 -
Equity in earnings
of EGS 8.3 10.0 17.6 20.0
Interest
expense, net (30.0) (5.4) (62.1) (8.6)
Income before
income taxes 70.0 50.0 133.5 88.0
Income taxes (28.4) (19.2) (61.0) (33.8)
Net income $41.6 $30.8 $72.5 $54.2
Diluted income
per share $1.34 $1.67 $2.35 $2.84
Weighted average number of
Shares 31.083 18.488 30.895 19.082
Notes:
1. 1999 operating results include both SPX and former General Signal
businesses.
2. 1998 operating results reflect only the former General Signal
operations, as the Merger of SPX and General Signal in the fourth
quarter of 1998 was accounted for as a reverse acquisition.
SPX CORPORATION
PRO FORMA CONDENSED STATEMENTS OF INCOME
(Unaudited)
($ In Millions, Except Per Share Data)
Three months ended June 30, Six months ended June 30,
1999 1998 % 1999 1998 %
Growth Growth
Revenues $671.4 $633.4 6.0% $1,318.3 $1,238.2 6.5%
Cost of sales 446.5 422.9 879.4 839.5
Selling, general &
administrative 125.3 137.6 258.1 271.4
Goodwill/Intangible
amortization 10.4 10.5 21.0 20.7
Special charges
and gains 5.5 5.7 20.1 (7.1)
Operating income $83.7 $56.7 47.6% $139.7 $113.7 22.9%
as a percent
of revenues 12.5% 9.0% 10.6% 9.2%
Other income, net 8.0 0.8 38.3 1.5
Equity in earnings
of EGS 8.3 10.0 17.6 20.0
Interest
expense, net (30.0) (30.0) (62.1) (57.8)
Income before
income taxes 70.0 37.5 133.5 77.4
Income taxes (28.4) (15.1) (61.0) (30.8)
Net income $41.6 $22.4 $72.5 $46.6
Diluted income
per share $1.34 $0.73 $2.35 $1.48
Weighted average number
of shares 31.083 30.734 30.895 31.423
Notes:
1. 1999 operating results represents actual operating results.
2. 1998 operating results are pro forma and reflect the Merger of SPX and
General Signal and related financings as if they had occurred as of the
beginning of 1998.
SPX CORPORATION
PRO FORMA STATEMENT OF OPERATING RESULTS BY SEGMENT
(Unaudited)
($ In Millions)
Three months ended June 30, Six months ended June 30,
1999 1998 % 1999 1998 %
Growth Growth
Service Solutions
Revenues $170.3 $152.8 11.5% $319.9 $298.5 7.2%
Gross profit 49.3 45.0 95.7 85.9
Selling, general &
administrative 30.2 28.6 59.3 57.5
Goodwill/intangible
amortization 4.1 3.8 8.2 7.5
Operating income $15.0 $12.6 19.0% $28.2 $20.9 34.9%
as a percent
of revenues 8.8% 8.2% 8.8% 7.0%
Vehicle Components
Revenues $105.3 $92.1 14.3% $207.6 $193.0 7.6%
Gross profit 23.5 21.0 46.0 43.3
Selling, general &
administrative 6.2 5.6 11.9 11.5
Goodwill/intangible
amortization 2.4 2.6 4.9 5.1
Operating income $14.9 $12.8 16.4% $29.2 $26.7 9.4%
as a percent
of revenues 14.2% 13.9% 14.1% 13.8%
Industrial Products and Services
Revenues $207.3 $208.6 -0.6% $413.1 $406.5 1.6%
Gross profit 74.5 76.6 148.4 143.7
Selling, general &
administrative 37.2 39.3 73.9 78.2
Goodwill/intangible
amortization 2.1 2.4 4.2 4.7
Operating income $35.2 $34.9 0.9% $70.3 $60.8 15.6%
as a percent
of revenues 17.0% 16.7% 17.0% 15.0%
Technical Products and Systems
Revenues $188.5 $179.9 4.8% $377.7 $340.2 11.0%
Gross profit 77.6 67.9 148.8 125.8
Selling, general &
administrative 43.6 50.2 97.3 95.3
Goodwill/intangible
amortization 1.8 1.7 3.7 3.4
Operating income $32.2 $16.0 101.3% $47.8 $27.1 76.4%
as a percent
of revenues 17.1% 8.9% 12.7% 8.0%
Notes:
1. 1999 operating results represent actual operating results.
2. The 1998 operating results are pro forma and reflect the Merger of SPX
and General Signal and related financings as if they had occurred as of
the beginning of 1998.
3. All special charges and gains are included in corporate expenses, and
are not allocated to the company's operating segments.