SPX Reports Record 1999 Fourth Quarter and Full Year Results
8 February 2000
SPX Reports Record 1999 Fourth Quarter and Full Year Results
Fourth Quarter Internal Growth of 15.0% Drives EPS Up 88%
MUSKEGON, Mich., Feb. 8 -- SPX Corporation today
announced fourth quarter and full year 1999 financial results(a). Fourth
quarter 1999 revenue grew 13.4% (15.0% internal), operating margins improved
by 490 basis points to 13.6%, and earnings per share before unusual gains and
charges improved by 115%. For the full year 1999 pro forma revenues were up
7.7% (internal 6.7%), pro forma operating margins improved by 470 basis points
to 13.0%, and pro forma earnings per share before unusual gains and charges
improved by 102%. The fourth quarter 1999 is the 16th consecutive quarter
that SPX has exceeded consensus earnings estimates.
John B. Blystone, Chairman, President and Chief Executive Officer of SPX
said, "We're extremely pleased with the strong performance across the entire
business in 1999. New technology, new product introductions and product line
expansions will continue to play a key role in exceeding our internal growth
targets within each of our four segments. The escalating growth in storage
area networks, the demand for integrated building life-safety systems, and
increased worldwide demand for transformers underscore our confidence in our
commitment to earnings per share of $5.80 for 2000."
EARNINGS PER SHARE
* Reported fourth quarter 1999 diluted earnings per share of $(0.49)
includes unusual charges totaling $1.89 per share as described below. The
resulting $1.40 per share for the fourth quarter 1999 is a 115% improvement
over pro forma $0.65 per share before unusual items for fourth quarter 1998.
Fourth quarter reported earnings per share includes the following:
- A $45.2 million after-tax, $1.46 per share loss, on the sale of Best
Power.
- A $6.0 million after-tax, or $0.19 per share extraordinary charge for
the early extinguishment of debt related to the use of the cash proceeds from
the sale of Best Power.
- Previously announced fourth quarter restructuring charges totaling
$12.2 million pretax ($7.3 million after-tax), or $0.24 per share.
* Reported full year earnings per share of $3.27 includes unusual gains,
losses and charges totaling a net $1.79 per share. The resulting $5.06 per
share for the year is a 102% improvement over pro forma earnings per share of
$2.50 for the full year 1998.
REVENUES
* Revenues for the fourth quarter grew by 13.4% to $725.1 million,
compared to pro forma fourth quarter 1998 revenues of $639.4 million.
Internal revenue growth for the quarter was 15.0%.
* Reported 1999 annual revenues were $2.7 billion, up 7.7% from pro forma
1998 annual revenues of $2.5 billion. Internal revenue growth for the full
year 1999 was 6.7%.
* The following schedule summarizes revenue growth by segment for the
fourth quarter and full year:
Pro Forma Revenue Fourth Quarter 1999 Full Year 1999
Growth By Segment Reported Internal Reported Internal
Technical Products
and Systems 6.5% 13.8% 8.7% 9.1%
Industrial Products
and Services 12.8 5.1 3.1 2.0
Service Solutions 30.4 30.4 14.4 10.5
Vehicle Components -0.6 12.4 4.7 6.5
Total 13.4% 15.0% 7.7% 6.7%
- Technical Products and Systems: Strong internal growth was driven by
domestic and international demand for fire detection and life-safety products,
sales of digital TV transmission systems, and the successful introduction of a
new generation of transit fare collection systems.
- Industrial Products and Services: Internal revenue growth was
attributed to power transformers, laboratory equipment, and electric motors.
Reported revenues for the fourth quarter reflect the acquisition of North
American Transformer in September 1999.
- Service Solutions: Record internal revenue growth for Service
Solutions was the result of very strong Dealer Equipment and Services
activity, sales of new warranty tools and several new electronic diagnostic
tools.
- Vehicle Components: New programs for P-2000 die-castings, increased
sales to European manufacturers, and sales of new filtration products
generated growth in this segment significantly above market rates. Reported
fourth quarter revenue growth was reduced by the sale of Acutex in the third
quarter.
OPERATING MARGINS
* Fourth quarter operating margins, before special charges, improved by
490 basis points to 13.6%, compared to 8.7% for the fourth quarter 1998. Full
year operating margins, before special charges, improved 470 basis points to
13.0%, compared to 8.3% for the full year 1998. Operating margins improved in
all four segments for the quarter and full year.
Pro Forma Operating Fourth Quarter Full Year
Margin By Segment 1999 1998 1999 1998
Technical Products
and Systems 17.5% 6.1% 15.5% 8.0%
Industrial Products
and Services 19.1 13.4 18.0 14.2
Service Solutions 9.4 8.2 8.8 7.3
Vehicle Components 14.4 12.8 14.0 13.2
EVA
* EVA improved by $25.4 million for the fourth quarter 1999, resulting in
EVA improvement of $70.6 million for the full year. The company expects to be
EVA positive in the first quarter of this year, two years ahead of its
original commitment of 2002.
CASH FLOW
* The company generated EBIT of $99.7 million and EBITDA of $125.9
million, before unusual items, for the fourth quarter 1999, compared to EBIT
of $64.7 million and EBITDA of $89.7 million for the pro forma fourth quarter
1998. Full year EBIT before unusual items, improved by 52% to $381.4 million
compared to $251.0 million for the full year 1998. Full year EBITDA before
unusual items, improved by 36% to $486.8 million compared to $358.0 million
for the full year 1998.
- Fourth quarter 1999 pro forma EBITDA margins, before unusual items,
improved by 340 basis points to 17.4% compared to 14.0% for 1998.
- Full year pro forma EBITDA margins, before unusual items, improved by
380 basis points to 18.0%, compared to 14.2% in 1998.
- Cash from operations for the full year 1999 was $211.8 million,
capital spending was $102.0 million, resulting in free cash flow of $109.8
million or 108% of reported net income. Excluding restructuring spending,
free cash flow was $150.9 million or 149% of reported net income.
- For 1999, the company reduced net debt by $409.4 million or 28%.
SPX Corporation is a global provider of industrial products and services,
technical products and systems, service solutions and vehicle components. The
Internet address for SPX Corporation's home page is http://www.spx.com
Certain statements in this press release are forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and are subject to the safe harbor created thereby. Please refer to
the Company's Form 10-KA for 1998 and the Company's 1999 Third Quarter Form
10-Q for discussion of certain important factors that relate to forward
looking statements contained in this press release. Although the Company
believes that the expectations reflected in any such forward looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct.
(a) On October 6, 1998, SPX Corporation merged with General Signal
Corporation in a reverse acquisition. As a result, the historical financial
results of General Signal became the accounting history of the combined
company through the third quarter of 1998.
SPX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ in millions, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
1999 1998 1999 1998
Revenues $725.1 $639.4 $2,712.3 $1,825.4
Costs and expenses:
Cost of products sold 486.1 494.6 1,809.8 1,271.9
Selling, general and
administrative 129.5 181.8 508.3 471.8
Goodwill/intangible amortization 11.0 10.3 42.4 19.5
Special charges 12.2 101.7 38.4 101.7
Operating income 86.3 (149.0) 313.4 (39.5)
Other income, net 16.2 (0.5) 64.3 (0.5)
Equity in earnings of EGS 8.9 9.8 34.7 40.2
Interest expense, net (26.9) (32.3) (117.6) (45.1)
Income before income taxes 84.5 (172.0) 294.8 (44.9)
Provision for income taxes (93.6) 52.0 (187.3) 3.2
Net income before
extraordinary item (9.1) (120.0) 107.5 (41.7)
Extraordinary item, net of tax (6.0) - (6.0) -
Net Income $(15.1) $(120.0) $101.5 $(41.7)
Basic income per share $(0.49) $(3.99) $3.30 $(1.94)
Weighted average number of basic
common shares outstanding 31.032 30.072 30.765 21.546
Diluted income per share $(0.49) $(3.99) $3.27 $(1.94)
Weighted average number of diluted
common shares outstanding 31.032 30.072 31.055 21.546
SPX CORPORATION
PRO FORMA CONDENSED STATEMENTS OF INCOME
($ in millions, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
1999 1998 % 1999 1998 %
Revenues $725.1 $639.4 13.4% $2,712.3 $2,519.4 7.7%
Cost of sales 486.1 434.2 1,809.8 1,712.4
Selling, general &
administrative 129.5 139.5 508.3 555.3
Goodwill/Intangible
amortization 11.0 10.3 42.4 41.9
Special charges
and gains 12.2 204.4 38.4 197.3
Operating income 86.3 (149.0) 157.9% 313.4 12.5 2407.4%
as a percent of
revenues 11.9% -23.3% 11.6% 0.5%
Other income, net 16.2 (0.5) 64.3 1.0
Equity in earnings
of EGS 8.9 9.8 34.7 40.2
Interest expense,
net (26.9) (32.3) (117.6) (122.2)
Income before
income taxes 84.5 (172.0) 294.8 (68.5)
Income taxes (93.6) 52.0 (187.3) 10.5
Net income before
extraordinary item (9.1) (120.0) 107.5 (58.0)
Extraordinary item,
net of tax (6.0) - (6.0) -
Net Income $(15.1) $(120.0) $101.5 $(58.0)
Diluted income
per share $(0.49) $(3.99) $3.27 $(1.88)
Weighted average
number of shares 31.032 30.072 31.055 30.801
Notes:
1. 1999 operating results represents actual operating results.
2. 1998 operating results are pro forma and reflect the Merger of SPX and
General Signal and related financings as if they had occurred as of the
beginning of 1998.
SPX CORPORATION
PRO FORMA STATEMENTS OF OPERATING INCOME BY SEGMENT
($ in millions, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
1999 1998 % 1999 1998 %
Service
Solutions
Revenues $204.7 $157.0 30.4% $699.6 $611.3 14.4%
Gross profit 48.9 49.1 191.9 179.9
Selling, general
& admin. 25.6 32.3 113.8 119.3
Goodwill/
intangible
amortization 4.1 4.0 16.4 15.8
Operating income $19.2 $12.8 50.0% $61.7 $44.8 37.7%
as a percent
of revenues 9.4% 8.2% 8.8% 7.3%
Vehicle
Components
Revenues $89.0 $89.5 -0.6% $386.7 $369.5 4.7%
Gross profit 21.8 19.3 88.0 81.5
Selling,
general &
admin 6.5 5.4 24.1 22.6
Goodwill/
intangible
amortization 2.5 2.4 9.8 10.3
Operating
income $12.8 $11.5 11.3% $54.1 $48.6 11.3%
as a percent
of revenues 14.4% 12.8% 14.0% 13.2%
Industrial
Products and
Services
Revenues $230.3 $204.1 12.8% $844.9 $819.8 3.1%
Gross profit 84.9 67.6 306.3 281.8
Selling,
general &
admin 38.4 38.1 145.2 156.4
Goodwill/
intangible
amortization 2.6 2.1 8.9 9.2
Operating
income $43.9 $27.4 60.2% $152.2 $116.2 31.0%
as a percent
of revenues 19.1% 13.4% 18.0% 14.2%
Technical
Products
and Systems
Revenues $201.1 $188.8 6.5% $781.1 $718.8 8.7%
Gross profit 86.2 69.2 319.1 264.1
Selling,
general &
admin 49.2 55.9 190.6 199.9
Goodwill/
intangible
amortization 1.8 1.8 7.3 6.9
Operating
income $35.2 $11.5 206.1% $121.2 $57.3 111.5%
as a
percent
of revenues 17.5% 6.1% 15.5% 8.0%
Corporate
Expenses $12.6 $7.8 $37.4 $57.1
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.