SPX Reports Record First Quarter EPS of $1.20
25 April 2000
SPX Reports Record First Quarter EPS of $1.20
Internal Growth of 7.1% Drives EPS Up 26.3%
MUSKEGON, Mich., April 25 SPX Corporation (NYSE: SPW)
today announced first quarter 2000 financial results. First quarter 2000
results include 7.1% internal revenue growth, operating margin improvement of
140 points to 12.3%, an increase in earnings per share of 26.3%, and EVA
improvement of $7.0 million. This is the 17th consecutive quarter that SPX
has exceeded consensus earnings estimates.
John B. Blystone, Chairman, President and Chief Executive Officer of SPX
said, "The year is off to an excellent start. Industry response to
technological developments in fibre channel switches, strong demand for medium
and large-power transformers, and new product offerings in service solutions,
building life-safety systems and other businesses, provide a strong foundation
for continued internal growth during the year."
"We continue to be successful finding strategic acquisitions for our
businesses. During the quarter we obtained new technology with the
acquisitions of Fenner Fluid Power, Engelhard Sensor Technologies, Fluid
Technologies and the Harris Corporation antenna business."
Earnings Per Share -- Reported first quarter 2000 diluted earnings per
share of $1.20 is a 26.3% improvement over first quarter 1999 earnings per
share of $0.95, despite the 881,000 increase in shares outstanding.
-- The reported earnings per share of $1.20 is prior to the $8.8 million
after-tax, or $0.28 per share, extraordinary charge for the early
extinguishment of debt related to the refinancing of the company's $1.3
billion credit facility during the first quarter of 2000.
-- First quarter 1999 diluted earnings per share of $1.01 included net
after-tax non-recurring items of $0.06 per share. The company sold Dual-Lite
and a 50% interest in a joint venture at a gain of $29.0 million pretax ($10.4
million after-tax), or $0.34 per share. Restructuring costs and incremental
costs related to fourth quarter 1998 actions totaled $14.6 million pretax
($8.7 million after-tax), or $0.28 per share.
Revenues -- Revenues for the first quarter were $627.8 million, compared
to first quarter 1999 revenues of $646.9 million. Reported revenues reflect
the sale of Best Power, Dual-Lite, and Acutex, as well as the acquisition of
North American Transformer during 1999. Internal growth for the quarter,
excluding the impact of acquisitions and divestitures, was 7.1%.
First Quarter 2000
Revenue Growth By Segment Reported Internal
Technical Products and Systems -28.2% 6.9%
Industrial Products and Services 9.3% 2.2%
Service Solutions 12.9% 12.9%
Vehicle Components -4.1% 8.8%
Consolidated -3.0% 7.1%
-- Technical Products and Systems: Internal growth was driven by domestic
and international demand for fire detection and life-safety products, TV cable
pressurization products and sales of new generation transit fare collection
systems.
-- Industrial Products and Services: Sales of medium and large-power
transformers, hydraulic systems and laboratory equipment contributed to
internal revenue growth in the quarter.
-- Service Solutions: New electronic diagnostic tools, strong Dealer
Equipment and Services activity and sales of new warranty tools provided
double-digit internal revenue growth for Service Solutions.
-- Vehicle Components: In the vehicle components segment, new programs
for P-2000 die-castings, increased sales to European manufacturers, and sales
of new filtration products generated internal growth.
Operating Margins -- First quarter operating margins improved by 140
points to 12.3%, compared to 10.9% for the first quarter 1999.
First Quarter
Operating Margin By Segment 2000 1999
Technical Products and Systems 16.5% 8.2%
Industrial Products and Services 17.1% 17.1%
Service Solutions 8.0% 8.8%
Vehicle Components 11.6% 14.0%
Consolidated 12.3% 10.9%
Cash Flow -- The company generated EBIT of $86.4 million and EBITDA of
$113.2 million for the first quarter 2000, compared to EBIT of $81.2 million
and EBITDA of $107.7 million for the first quarter 1999.
-- First quarter 2000 EBITDA margins improved by 140 points to 18.0%
compared to 16.6% for first quarter 1999.
-- Cash from operations for the quarter was $17.7 million and capital
spending was $29.6 million. The company expects free cash flow for the year
2000 to approximate $200 million.
-- Cash restructuring spending for the quarter was $2.8 million.
-- During the quarter, the company purchased 465,600 shares of its stock
in the open market for a total consideration of $36.8 million.
-- The company spent $81.3 million for acquisitions during the quarter.
SPX Corporation is a global provider of technical products and systems,
industrial products and services, service solutions and vehicle components.
The Internet address for SPX Corporation's home page is http://www.spx.com .
Certain statements in this press release are forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and are subject to the safe harbor created thereby. Please refer to
the Company's Form 10-K for 1999 for discussion of certain important factors
that relate to forward looking statements contained in this press release.
Although the Company believes that the expectations reflected in any such
forward looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct.
SPX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($ in millions, except per share data)
Three months ended
March 31,
----------------------------
2000 1999
--------- ---------
Revenues $ 627.8 $ 646.9
Costs and expenses:
Cost of products sold 421.6 432.9
Selling, general and administrative 119.4 132.8
Goodwill/intangible amortization 9.6 10.6
Special charges - 14.6
--------- ---------
Operating income 77.2 56.0
Other (expense) income, net (0.1) 30.3
Equity in earnings of EGS 9.3 9.3
Interest expense, net (22.3) (32.1)
--------- ---------
Income before income taxes 64.1 63.5
Provision for income taxes (26.3) (32.6)
--------- ---------
Income before loss on early
extinguishment of debt 37.8 30.9
Loss on early extinguishment of
debt, net of tax (8.8) -
--------- ---------
Net income $ 29.0 $ 30.9
Basic income per share of common stock
Income before loss on
early extinguishment
of debt $ 1.22 $ 1.01
Loss on early
extinguishment of debt (0.28) -
--------- ---------
Net income per share $ 0.94 $ 1.01
--------- ---------
Weighted average number of
common shares outstanding 30.920 30.475
Diluted income per share of common stock
Income before loss on early
extinguishment of debt $ 1.20 $ 1.01
Loss on early extinguishment
of debt (0.28) -
--------- ---------
Net income per share $ 0.92 $ 1.01
--------- ---------
Weighted average number of
common shares outstanding 31.588 30.707
SPX CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in millions)
March 31, December 31,
2000 1999
------------- -------------
ASSETS (Unaudited)
Current assets:
Cash and equivalents $ 32.6 $ 78.8
Accounts receivable 488.2 473.7
Inventories 294.2 274.0
Prepaid and other current assets 54.6 39.2
Deferred income taxes and refunds 116.1 110.8
------------- -------------
Total current assets 985.7 976.5
Property, plant and equipment 827.8 799.8
Accumulated depreciation (374.0) (355.1)
------------- -------------
Net property, plant and
equipment 453.8 444.7
Goodwill and intangible
assets, net 1,106.4 1,103.6
Investment in EGS 84.3 82.6
Net assets of business acquired 64.0 -
Other assets 248.3 238.6
-------------- -------------
Total assets $ 2,942.5 $ 2,846.0
-------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
maturities of
long-term debt $ 105.4 $ 97.7
Accounts payable 283.5 238.3
Accrued expenses 287.3 343.5
Income taxes payable 37.6 75.4
-------------- --------------
Total current liabilities 713.8 754.9
Long-term debt, less current
maturities 1,153.3 1,017.0
Deferred income taxes 330.3 322.4
Other long-term liabilities 195.4 199.4
-------------- --------------
Total long-term liabilities 1,679.0 1,538.8
Shareholders' equity:
Common stock 356.4 354.9
Paid-in capital 496.0 489.7
Retained earnings (deficit) 17.3 (11.7)
Unearned compensation (15.4) (19.1)
Accumulated other comprehensive
income (16.6) (13.0)
Common stock in treasury (288.0) (248.5)
-------------- --------------
Total shareholders' equity 549.7 552.3
Total liabilities and
shareholders' equity $ 2,942.5 $ 2,846.0
-------------- --------------
SPX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
($ in millions)
Three months ended
March 31,
2000 1999
Cash flows from operating activities:
Net income $ 29.0 $ 30.9
Adjustments to reconcile net income to net
cash from operating activities -
Special charges - 14.6
Earnings of EGS, net of distributions (2.6) (1.3)
Loss on early extinguishment of debt,
net of tax 8.8 -
Gain on business divestitures - (29.0)
Deferred income taxes 2.6 28.1
Depreciation 17.2 15.9
Amortization of goodwill and intangibles 9.6 10.6
Employee benefits (7.3) (4.3)
Other, net (3.6) 1.5
Changes in operating assets and liabilities, net of
effects from acquisitions and divestitures:
Accounts receivable (13.2) (12.1)
Inventories (18.6) (11.8)
Accounts payable 43.9 11.9
Accrued expenses (57.8) (48.7)
Other, net 9.7 17.0
------- -------
Net cash from operating activities before
taxes on sale of Best Power 17.7 23.3
Taxes paid on the sale of Best Power (69.0) -
------- -------
(51.3) 23.3
Cash flows from (used in) investing activities:
Business divestitures - 64.2
Business acquisitions (81.3) -
Capital expenditures (29.6) (26.2)
Other, net - 5.2
-------- -------
Net cash from (used in) investing activities (110.9) 43.2
Cash flows from (used in) financing activities:
Net borrowings under revolving credit agreement 71.0 15.0
Borrowings under other debt agreements 505.5 -
Net (payments) under other debt agreements (432.5) (106.9)
Treasury stock purchased (36.8) -
Common stock issued under stock
incentive programs 8.8 5.4
Treasury stock issued to defined benefit plans - 28.5
Dividends paid - -
------ -------
Net cash from (used in) financing activities 116.0 (58.0)
Net increase (decrease) in cash and equivalents (46.2) 8.5
Cash and equivalents, beginning of period 78.8 70.3
Cash and equivalents, end of period $ 32.6 $ 78.8
SPX CORPORATION
STATEMENTS OF OPERATING INCOME BY SEGMENT
(Unaudited)
($ in millions)
Three months ended
March 31,
2000 1999 %
Technical Products and Systems
Revenues $ 135.9 $ 189.2 -28.2%
Gross profit 58.2 71.2
Selling, general & administrative 35.3 53.7
Goodwill/intangible amortization 0.4 1.9
--------- ---------
Operating income $ 22.4 $ 15.6 43.6%
--------- ---------
as a percent of revenues 16.5% 8.2%
Industrial Products and Services
Revenues $ 224.9 $ 205.8 9.3%
Gross profit 80.4 73.9
Selling, general & administrative 39.3 36.7
Goodwill/intangible amortization 2.7 2.1
--------- ---------
Operating income $ 38.4 $ 35.1 9.4%
--------- ---------
as a percent of revenues 17.1% 17.1%
Service Solutions
Revenues $ 168.9 $ 149.6 12.9%
Gross profit 47.2 46.4
Selling, general & administrative 29.6 29.1
Goodwill/intangible amortization 4.1 4.1
--------- ---------
Operating income $ 13.5 $ 13.2 2.3%
--------- ---------
as a percent of revenues 8.0% 8.8%
Vehicle Components
Revenues $ 98.1 $ 102.3 -4.1%
Gross profit 20.4 22.5
Selling, general & administrative 6.7 5.7
Goodwill/intangible amortization 2.4 2.5
--------- ----------
Operating income $ 11.3 $ 14.3 -21.0%
--------- ----------
as a percent of revenues 11.6% 14.0%
Corporate expenses $ 8.4 $ 7.6
SPX CORPORATION
1st QUARTER RECONCILIATION OF
RESULTS ON A COMPARABLE BASIS EXCLUDING UNUSUAL ITEMS
(Unaudited)
($ in millions, except per share amounts)
Three months ended
March 31,
2000 1999
Income before income taxes $ 64.1 $ 63.5
Special charges and gains:
Restructuring and other special charges - 14.6
(Gain) on disposition of Dual-Lite/Koyo - (29.0)
----------- -------------
Pretax income excluding unusual items 64.1 49.1
Income taxes (26.3) (19.9)
------------ -------------
Net income from continuing operations
excluding unusual items $ 37.8 $ 29.2
------------ -------------
EPS from continuing operations
excluding unusual items $ 1.20 $ 0.95
------------ -------------
Shares Outstanding 31.588 30.707