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New words:
Decision, discretionary, immaterial, immaterially, mentioned, Red, retired, retirement, scheduled, Sea, shannon
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anthony, colucci, remeasured, vesting
Financial report summary
?Competition
SPX FLOWRisks
- Supply chain issues, including shortages of adequate component supply, that increase our costs or cause delays in our ability to fulfill orders, or a failure by us to estimate customer demand properly, could have an adverse impact on our business and operating results and our relationships with customers.
- Deterioration of, or instability in, the domestic and international economy and challenging end-market conditions could impact our ability to grow the business and adversely impact our ability to execute our strategy, financial condition, results of operations and cash flows.
- Disruptions in global oil markets have adversely affected our business and results of operations and similar events in the future may adversely affect our business and results.
- Uncertainty over global tariffs, or the financial impact of tariffs, may negatively affect our results.
- We may not be able to fully realize expected cost savings from our ASCEND transformation program and from restructuring actions.
- Logistics challenges, including global freight capacity shortages, could increase our freight costs or cause delays in our ability to fulfill orders and could have an adverse impact on our business and operating results.
- Collection risk for receivables in foreign jurisdictions.
- If we fail to retain the agents and distributors upon whom we rely to market our products and services, we may be unable to effectively market our products and services and our revenue and profitability may decline.
- Cybersecurity vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, operations, products, solutions, services and data.
- Our business operates in highly competitive markets, so we may be forced to cut prices or incur additional costs.
- Our international operations pose political, currency and other risks.
- Our customers and other business partners often require terms and conditions that expose us to significant risks and liabilities.
- Imposition of climate-related laws and regulations that disadvantage the oil & gas industry compared to other industries or consumer behavior that reduces demand for petroleum products may have an adverse impact on our results of operations.
- If we fail to develop new products, or customers do not accept our new products, our business could be adversely affected.
- Our growth strategy includes strategic acquisitions, which we may not be able to consummate or successfully integrate.
- We may not be able to realize planned benefits from acquired companies.
- The indemnification provisions of acquisition agreements may result in unexpected liabilities.
- Divestitures and discontinued operations could negatively impact our business, and retained liabilities from businesses that we have sold could adversely affect our financial results.
- Our goodwill and other intangible assets represent a substantial amount of our total assets.
- We are subject to many laws and regulations that may change in ways that are detrimental to our competitiveness or results.
- Legal compliance risks could result in significant costs to our business or cause us to restrict current activities or curtail growth plans.
- Health, safety and environmental laws and regulations may result in additional costs.
- Costs and liabilities arising from legal proceedings could be material and adversely impact our financial results.
- Our indebtedness could harm our operating flexibility and competitive position.
- The financial and other covenants in our debt agreements may adversely affect us.
- We may incur increased interest expense as a result of our variable rate debt.
- The market price of our common stock may be volatile.
- Because our quarterly revenues and operating results may vary significantly in future periods, our stock price may fluctuate.
- Various provisions and laws could delay or prevent a change of control.
- Geopolitical unrest and terrorist activities may cause the economic conditions in the U.S. or abroad to deteriorate, which could harm our business.
- Our inability to attract, develop and retain qualified employees could have a material adverse impact on our operations.
- Our intellectual property portfolio may not prevent competitors from developing products and services similar to or duplicative to ours, and the value of our intellectual property may be negatively impacted by external dependencies.
- Our competitors or other persons could assert that we have infringed their intellectual property rights.
Management Discussion
- (1) Results are from continuing operations and exclude the financial results of previously divested businesses reported as discontinued operations. The summation of the individual components may not equal the total due to rounding.
- Consolidated net sales for the second quarter of fiscal 2024 were $138 million, a decrease of $4 million or 2% compared to the prior-year comparable period. The effect of the weakening U.S. dollar on foreign currency rates compared to the second quarter of fiscal 2023 was immaterial and the divestiture of the Cortland Industrial business during the fourth quarter of fiscal 2023 unfavorably impacted sales by $6 million or 4%, resulting in organic sales growth of 2% year-over-year. Management refers to sales adjusted to exclude the impact of these items (foreign currency changes and recent acquisitions and divestitures) as "organic sales" (which we formerly referred to as "core sales"). In the second quarter of fiscal 2024, product sales declined 3%, with an immaterial impact from foreign currency, and the divestiture of Cortland Industrial unfavorably impacting sales by $6 million, or 6%, resulting in product organic sales growth of 2%. The product organic sales growth is attributed to the impact of pricing actions and mix in IT&S products. Service sales increased 1% compared to the prior-year period, favorably impacted by foreign currency rates of approximately $0.4 million, or 1%, resulting in 1% organic sales decline year-over-year. Gross profit as a percentage of sales was approximately 52% for the second quarter fiscal 2024 compared to 50% in the second quarter of fiscal 2023. The increase in gross profit as a percentage of sales was driven by operational improvements related to ASCEND, favorable sales mix, the impact of pricing actions, and the disposition of the Cortland Industrial business. Operating profit for the second quarter of fiscal year 2024 was $30 million, an increase of $16 million compared to the second quarter fiscal 2023. The increase in operating profit was driven by the aforementioned benefits in gross profit, as well as the decrease in Selling, general & administrative expense ("SG&A") by approximately $14 million year-over-year. The SG&A decreases were a result of $10 million in lower ASCEND transformation program charges, $3 million of lower restructuring charges, and decreases in personnel cost and indirect spend as the Company continues to responsibly manage its discretionary spending.
- Consolidated net sales for the first half of fiscal 2024 were $280 million, a decrease of $1 million compared to the first half of fiscal 2023. The effect of the weakening U.S. dollar on foreign currency rates compared to the first half of fiscal 2023 favorably impacted net sales by $3 million, or 1%, and the divestiture of Cortland Industrial unfavorably impacted sales by $13 million, or 5%, resulting in organic sales growth of 4%. Compared to the prior-year period, in the first half of fiscal 2024, product sales declined 2%, with the effect of foreign currency rates unfavorably impacting sales by $1 million, or 1%, and the divestiture of Cortland Industrial unfavorably impacting product sales by $13 million, or 6%, resulting in product organic sales growth of 3%. Service sales increased 7% compared to the prior-year period, favorably impacted by foreign currency rates of approximately $1 million, or 1%, resulting in 5% organic sales decline year-over-year. Year-to-date gross profit as a percentage of sales of 52% was approximately 300 basis points higher in fiscal 2024 compared to approximately 49% in the first half of fiscal 2023. The gross profit percent increase is driven by operational improvement, favorable sales mix and the disposition of the Cortland Industrial business in the fourth quarter or fiscal 2023. SG&A has decreased $22 million year-over-year as a result of $18 million of lower ASCEND transformation program charges, restructuring charges, bad debt benefit and personnel costs from actions taken in the ASCEND transformation program.