Exhibit 99.1
Contact: | Jeremy W. Smeltser (Investors) |
| 704-752-4478 |
| E-mail: investor@spx.com |
| |
| Tina Betlejewski (Media) |
| 704-752-4454 |
| E-mail: spx@spx.com |
SPX REPORTS FIRST QUARTER 2007 RESULTS
Revenues up 13%, Segment Margins Improve 110 Points to 9.8%, EPS up 45% to $0.55
Raises 2007 EPS Guidance Range to $4.45 to $4.65 from $3.85 to $3.95
CHARLOTTE, NC — May 2, 2007 — SPX Corporation (NYSE:SPW) today reported results for the first quarter ended March 31, 2007:
· Revenues increased 13.0% to $1.08 billion from $0.95 billion in the year-ago quarter. Organic revenue growth* was 7.7%, while completed acquisitions and the impact of currency fluctuations increased reported revenues by 2.3% and 3.0%, respectively.
· Segment income and margins were $105.3 million and 9.8%, compared with $82.5 million and 8.7% in the year-ago quarter. The increase in segment income and margins was driven by improvements across each of the company’s four business segments.
· Diluted net income per share from continuing operations (the basis of the company’s guidance) was $0.55, compared with $0.38 in the year-ago quarter. The effective tax rate for the quarter was 34.3%, slightly below the company’s previous expectations of 35% to 36%. The company’s updated expectation for the 2007 effective tax rate is 33% to 34%.
· Net income was $29.2 million, or $0.49 per share, compared with $21.7 million, or $0.35 per share in the year-ago quarter.
· Net cash used in continuing operations was $15.1 million, compared with $114.2 million in the year-ago quarter. Free cash flow* from continuing operations was a negative $27.2 million, compared with a negative $124.4 million in the year-ago quarter. The first quarter of 2007 included an advanced tax payment of $37.5, while the first quarter of 2006 included a payment of $84.3 million related to accreted interest on the redemption of convertible notes.
* Non-GAAP number. See attached financial schedules for reconciliation to most comparable GAAP number.
Chris Kearney, President and CEO said, “SPX’s first quarter performance marked a strong start to 2007. We achieved or exceeded our operating targets for organic growth, margin improvement and earnings, highlighted by a 45% increase in earnings per share from continuing operations.”
Kearney continued, “We have also made progress from a strategic and capital allocation perspective, completing the sale of our Contech automotive components business and returning
capital to our shareholders by repurchasing 3.0 million shares of our common stock for $210.6 million year to date.”
“In addition, we are raising our earnings per share guidance range to $4.45 to $4.65 from the previous range of $3.85 to $3.95. This 17% increase is driven by multiple positive factors: our continued robust order trends in global infrastructure, particularly power and energy markets, our ability to execute on this demand through a constant focus on our operating initiatives, our recent share repurchases, and a lower effective tax rate due to our expanding global presence,” Kearney concluded.
SEGMENT HIGHLIGHTS
Flow Technology
Revenues in the first quarter of 2007 were $274.4 million compared to $218.0 million in the first quarter of 2006, an increase of $56.4 million, or 25.9%. The increase was due to organic revenue growth of 10.7%, growth from the fourth quarter 2006 Custos acquisition of 11.6% and currency fluctuations of 3.6%. The organic growth was related primarily to continued strong demand in the power, mining, oil and gas, and dehydration markets.
Segment income was $37.6 million, or 13.7% of revenues, in the first quarter of 2007 compared to $28.0 million, or 12.8% of revenues, in the first quarter of 2006. The increase in segment income and margins was due primarily to the organic growth noted above and efficiencies achieved from continuous improvement initiatives.
Test and Measurement
Revenues in the first quarter of 2007 were $258.2 million compared to $256.8 million in the first quarter of 2006, an increase of $1.4 million, or 0.5%. The increase was due to currency fluctuations which increased reported revenue by 3.3%, offset partially by an organic decline of 1.8% due to the timing of OEM program launches and minor product line dispositions which reduced reported revenues by 1.0%.
Segment income was $25.9 million, or 10.0% of revenues, in the first quarter of 2007 compared to $24.0 million, or 9.3% of revenues, in the first quarter of 2006. The increase in segment income and margins was due largely to improved profitability in the portable cable and pipe locator product lines, driven by new product introductions, favorable product mix and efficiencies achieved from continuous improvement initiatives.
Thermal Equipment and Services
Revenues in the first quarter of 2007 were $333.7 million compared to $283.1 million in the first quarter of 2006, an increase of $50.6 million, or 17.9%. The increase was due primarily to organic revenue growth of 14.0%, related largely to the continued strong global demand for cooling and power equipment and thermal service and repair work. Currency fluctuations increased revenues by 3.9% from the year-ago quarter.
Segment income was $15.8 million, or 4.7% of revenues, in the first quarter of 2007 compared to $11.7 million, or 4.1% of revenues, in the first quarter of 2006. Segment income and margins increased due primarily to the organic growth and improved operating execution in wet and dry cooling equipment product lines.
Industrial Products and Services
Revenues in the first quarter of 2007 were $211.6 million compared to $195.6 million in the first quarter of 2006, an increase of $16.0 million, or 8.2%. The increase was due primarily to organic revenue growth of 7.7%, driven most notably by increased demand for power transformers and aerospace components. Currency fluctuations increased revenues by 0.5% from the year-ago quarter.
Segment income was $26.0 million, or 12.3% of revenues, in the first quarter of 2007 compared to $18.8 million, or 9.6% of revenues, in the first quarter of 2006. The increase in segment income and margins was driven by the strong organic growth in the end markets noted above, and manufacturing efficiencies achieved from continuous improvement initiatives, partially offset by a $3.6 million charge related to a legacy legal matter.
OTHER ITEMS
Discontinued Operations: During the third quarter of 2006, the company committed to a plan to divest its Contech automotive components business, previously reported in its Industrial Products and Services segment. In April 2007, the company completed the sale of Contech for net proceeds of $139.4 million. The financial condition, results of operations, and cash flows of Contech have been reported as discontinued operations in the attached condensed consolidated financial statements.
Share Repurchases: During the first quarter of 2007, the company repurchased 2.3 million shares of its common stock for $164.7 million. Year-to-date through May 2, 2007, the company has repurchased 3.0 million shares of its common stock for $210.6 million. The company’s 10b5-1 trading plan that was announced in March 2007 has been completed.
Class Action Settlements: On April 13, 2007, the U.S. District Court for the Western District of North Carolina entered an Order and Final Judgment in each of the securities class action and the tag-along ERISA class action, approving the settlement of each case and dismissing the settled claims with prejudice. The company expects to make the previously accrued net settlement payment of $5.1 million to the settlement fund in the second quarter of 2007.
Dividend: On February 22, 2007, the Board of Directors announced a quarterly dividend of $0.25 per common share payable to shareholders of record on March 15, 2007. This first quarter 2007 dividend was paid on April 2, 2007.
Form 10-Q: The company expects to file its quarterly report on Form 10-Q for the quarter ended March 31, 2007 with the Securities and Exchange Commission by May 4, 2007. This news release
should be read in conjunction with that filing, which will be available on the company’s website at www.spx.com, in the Investor Relations section.
SPX Corporation is a Fortune 500 multi-industry manufacturing leader. The company offers highly-specialized engineered solutions to solve critical problems for customers.
SPX is focused on providing solutions that support the expansion of global infrastructure, with particular emphasis on the growing worldwide demand for energy and power. Its innovative and environmentally friendly product portfolio includes cooling systems for all types of power plants throughout the world; custom engineered pumps, valves and mixers that assist a variety of flow processes including oil and gas exploration, distribution and refinement; handheld diagnostic tools that aid in vehicle maintenance and repair, and power transformers that regulate voltage for electrical transmission and distribution by utility companies.
SPX is headquartered in Charlotte, North Carolina and employs over 14,000 people worldwide in over 20 countries. Visit www.spx.com. (NYSE: SPW)
Certain statements in this press release, including any statements as to future results of operations and financial projections, 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 read these results in conjunction with the company’s documents filed with the Securities and Exchange Commission, including the company’s annual report on Form 10-K for the year ended December 31, 2006. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. Actual results may differ materially from these statements. The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. Particular risks facing the company include economic, business and other risks stemming from its international operations, legal and regulatory risks, costs of raw materials, pricing pressures, pension funding requirements, integration of acquisitions and changes in the economy. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company’s current complement of businesses, which is subject to change.
