SPX Technologies, Inc. (NYSE:SPXC) (“SPX”, the “Company”, “we” or
“our”) today reported results for the second quarter ended July 1,
2023.
Gene Lowe, President and CEO, remarked, “I am
very pleased with our Q2 and year-to-date results, which were
driven by overall strong demand and execution. Our HVAC Cooling
platform, in particular, continued to achieve strong performance
facilitated by our investments in efficiency and continuous
improvement, and benefited from a high level of backlog and more
stable labor and supply chain conditions.”
Mr. Lowe continued, “Considering our strong
year-to-date results and outlook, we are raising our full-year 2023
guidance for Adjusted EPS* to a range of $4.15-$4.30, reflecting
year-over-year growth at the midpoint of approximately 36%.”
Mr. Lowe further commented, “With a strong
backlog, solid order trends, and outstanding operational
performance in our plants, I feel confident in our ability to
achieve our updated guidance and to continue progressing toward our
‘SPX 2025’ target of $5 per share of Adjusted EPS*.”
Second Quarter 2023 Overview:
For the second quarter of 2023, the company
reported revenue of $423.3 million and operating income of $51.3
million, compared with revenue of $354.0 million and operating
income of $27.2 million in the second quarter of 2022. Diluted
income per share from continuing operations in the second quarter
of 2023 was $0.82, compared with $0.41 in the second quarter of
2022.
Adjusted operating income* was $69.4 million,
compared with $42.2 million in the second quarter of 2022. Adjusted
earnings per share* in the second quarter of 2023 was $1.06,
compared with $0.71 in the second quarter of 2022. Adjusted
operating income* and Adjusted earnings per share* exclude
amortization expense, and acquisition and strategic
transformation-related costs, among other items.
Second Quarter and Year-to-Date Financial
Comparisons:
($ millions) |
|
Q2 2023 |
|
Q2 2022 |
|
2023 YTD |
|
2022 YTD |
Revenue |
|
$ |
423.3 |
|
$ |
354.0 |
|
$ |
823.1 |
|
$ |
661.1 |
Consolidated
operating income |
|
|
51.3 |
|
|
27.2 |
|
|
101.1 |
|
|
38.6 |
Income from continuing operations |
|
|
38.3 |
|
|
19.1 |
|
|
77.4 |
|
|
32.1 |
Consolidated segment income* |
|
|
84.4 |
|
|
56.1 |
|
|
158.8 |
|
|
95.7 |
Adjusted operating income* |
|
|
69.4 |
|
|
42.2 |
|
|
127.7 |
|
|
67.3 |
* Non-GAAP financial measure. See attached
schedules for reconciliation of each historical non-GAAP measure to
the respective most comparable GAAP financial measure.
HVAC Segment
Revenue for the second quarter of 2023 was
$269.0 million, compared with $218.7 million in the second quarter
of 2022, an increase of 23.0%, including a 15.0% increase in
organic revenue, a 8.6% increase from the acquisitions of TAMCO and
ASPEQ, and a 0.6% unfavorable impact related to the translation
effect of currency fluctuation. The organic increase in revenue was
associated with price increases, and volume increases resulting
from greater plant throughput and more stable labor and supply
chain environments.
Segment income in the second quarter of 2023 was
$55.2 million, or 20.5% of revenue. This compares with segment
income of $28.3 million, or 12.9% of revenue in the second quarter
of 2022. The increase in segment income and 760 basis points
increase in segment income margin were primarily due to price
increases and greater absorption of manufacturing costs resulting
from the higher volumes and more stable labor and supply chain
environments.
Detection & Measurement
Segment
Revenue for the second quarter of 2023 was
$154.3 million, compared with $135.3 million in the second quarter
of 2022, an increase of 14.0%. This increase, all of which was
organic, was primarily due to the execution of large projects
within the communication technologies, transportation and aids to
navigation businesses.
Segment income for the second quarter of 2023
was $29.2 million, or 18.9% of revenue. This compares with segment
income of $27.8 million, or 20.5% of revenue in the second quarter
of 2022. The increase in segment income was due to the higher
revenue noted above. The decrease of 160 basis points in segment
income margin was primarily due to less favorable sales mix
resulting from the higher volume of large project revenues.
Financial Update: As of July 1,
2023, SPX Technologies had total outstanding debt of $675.6 million
and total cash of $95.6 million. During the second quarter of 2023,
SPX’s net operating cash flow from continuing operations totaled
$73.8 million. Capital expenditures for continuing operations for
the second quarter of 2023 were $4.7 million.
2023 Guidance Update:
SPX is updating full-year 2023 guidance, and is
now targeting consolidated revenue of approximately $1.72-$1.75
billion ($1.68-$1.72 billion prior), an adjusted operating income
margin* of approximately 16.00%-16.25% (15.00%-15.75% prior), and
adjusted earnings per share* in a range of $4.15-$4.30 ($3.90-$4.05
prior).
Segment and company performance is expected to be
as follows:
|
|
Revenue |
|
Segment Income Margin % |
HVAC |
|
$1,125-$1,145 million($1,110-$1,130 million prior) |
|
~20%(18.0%-19.0% prior) |
Detection & Measurement |
|
$590-$605 million($570-$590 million prior) |
|
~20%(20.50%-21.50% prior) |
Total SPX |
|
$1.72-$1.76 billion($1.68-$1.72 billion prior) |
|
~20%(18.75%-19.75% prior) |
Form 10-Q: The company expects to
file its quarterly report on Form 10-Q for the quarter ended July
1, 2023 with the Securities and Exchange Commission on or before
August 10, 2023. This press 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.
Conference Call: SPX
Technologies will host a conference call at 4:45 p.m. (EDT) today
to discuss second quarter results. The call will be simultaneously
webcast via the company's website at www.spx.com and the slide
presentation will be available in the Investor Relations section of
the site.
Call Access: To access the call
by phone, please go to this link
https://register.vevent.com/register/BId6ac9e388ea7423cb9d1e2d994018d6d
and you will be provided with dial-in details. To avoid delays, we
encourage participants to dial into the conference call fifteen
minutes ahead of the scheduled start time. A replay of the webcast
will also be available for a limited time at www.spx.com.
Upcoming Investor Events:
Company management plans to conduct virtual meetings with investors
during the third quarter of 2023 and the company will also be
participating virtually in the Seaport Annual Summer Conference on
August 23rd and the Jefferies Industrial Conference in New York on
September 6th.
About SPX Technologies, Inc.:
SPX Technologies, Inc. is a diversified, global supplier of highly
engineered products and technologies, holding leadership positions
in the HVAC and detection and measurement markets. Based in
Charlotte, North Carolina, SPX Technologies, Inc. has more than
4,000 employees in 15 countries. SPX Technologies, Inc. is listed
on the New York Stock Exchange under the ticker symbol “SPXC.” For
more information, please visit www.spx.com.
Non-GAAP Financial Information:
This press release contains certain non-GAAP financial measures,
including total segment income, adjusted operating income, adjusted
income from continuing operations before income taxes, adjusted
income from continuing operations, adjusted earnings per share from
continuing operations (or, adjusted EPS) and organic revenue
growth. These non-GAAP financial measures do not provide investors
with an accurate measure of, and should not be used as a substitute
for, the comparable financial measures as determined in accordance
with accounting principles generally accepted in the United States
(“GAAP”). The Company believes these non-GAAP financial measures,
when read in conjunction with the comparable GAAP financial
measures, give investors a useful tool to assess and understand the
Company’s overall financial performance, because they exclude items
of income or expense that the Company believes are not reflective
of its ongoing operating performance, allowing for a better
period-to-period comparison of operations of the Company.
Additionally, the Company’s management uses these non-GAAP
financial measures as measures of the Company’s performance. The
Company acknowledges that there are many items that impact a
company’s reported results and the adjustments reflected in these
non-GAAP measures are not intended to present all items that may
have impacted these results. In addition, these non-GAAP measures
are not necessarily comparable to similarly titled measures used by
other companies.
Refer to the tables included in this press
release for the components of each of the non-GAAP financial
measures, and for the reconciliations of historical non-GAAP
financial measures to their respective comparable GAAP measures.
Our non-GAAP financial guidance excludes items, which would be
included in our GAAP financial measures, that we do not consider
indicative of our on-going performance; and are calculated in a
manner consistent with the presentation of the similarly titled
historical non-GAAP measures presented in this press release. These
items include, but are not limited to, acquisition costs, costs
associated with dispositions, and potential non-cash income or
expense items associated with changes in market interest rates and
actuarial or other data related to our pension and postretirement
plans, as the ultimate aggregate amounts associated with these
items are out of our control and/or cannot be reasonably predicted.
Accordingly, a reconciliation of our non-GAAP financial guidance to
the most comparable GAAP financial measures is not practicable.
Full-year guidance excludes changes in the number of shares
outstanding; impacts from future acquisitions, dispositions and
related transaction costs, restructuring costs, incremental impacts
of tariffs and trade tensions on market demand and costs subsequent
to the end of the second quarter, the impact of foreign exchange
rate changes subsequent to the end of the second quarter, and
environmental and litigation charges.
Forward Looking Statements:
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and 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 most recent annual report on
Form 10-K. These filings identify important risk factors and other
uncertainties that could cause actual results to differ from those
contained in the forward-looking statements, including the
following: cyclical changes and specific industry events in the
Company’s markets; changes in anticipated capital investment and
maintenance expenditures by customers; availability, limitations or
cost increases of raw materials and/or commodities that cannot be
recovered in product pricing; the impact of competition on profit
margins and the Company’s ability to maintain or increase market
share; inadequate performance by third-party suppliers and
subcontractors for outsourced products, components and services and
other supply-chain risks; the uncertainty of claims resolution with
respect to the large power projects in South Africa, as well as
claims with respect to, environmental and other contingent
liabilities; the impact of climate change and any legal or
regulatory actions taken in response there to; cyber-security
risks; risks with respect to the protection of intellectual
property, including with respect to the Company’s digitalization
initiatives; the impact of overruns, inflation and the incurrence
of delays with respect to long-term fixed-price contracts; defects
or errors in current or planned products; the impact of the
pandemic and governmental and other actions taken in response;
domestic economic, political, legal, accounting and business
developments adversely affecting the Company’s business, including
regulatory changes; changes in worldwide economic conditions;
uncertainties with respect to SPX Technologies’ ability to identify
acceptable acquisition targets; uncertainties surrounding timing
and successful completion of any announced acquisition or
disposition transactions, including with respect to integrating
acquisitions and achieving cost savings or other benefits from
acquisitions; the impact of retained liabilities of disposed
businesses; potential labor disputes; and extreme weather
conditions and natural and other disasters.
Actual results may differ materially from these
statements. The words “guidance,” “believe,” “expect,”
“anticipate,” “project” and similar expressions identify
forward-looking statements. 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.
Statements in this press release speak only as
of the date of this press release, and SPX Technologies disclaims
any responsibility to update or revise such statements, except as
required by law.
SOURCE SPX Technologies, Inc.
Investor and Media Contacts:
Paul Clegg, VP, Investor Relations and Communications Garrett
Roelofs, Assistant Manager, Investor Relations Phone: 980-474-3806
E-mail: spx.investor@spx.com Source: SPX Technologies, Inc.
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited;
in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
July 1, 2023 |
|
July 2, 2022 |
|
July 1, 2023 |
|
July 2, 2022 |
|
|
|
|
|
|
|
|
Revenues |
$ |
423.3 |
|
|
$ |
354.0 |
|
|
$ |
823.1 |
|
|
$ |
661.1 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of products sold |
|
259.7 |
|
|
|
229.4 |
|
|
|
509.6 |
|
|
|
432.5 |
|
Selling, general and administrative |
|
100.8 |
|
|
|
88.3 |
|
|
|
194.6 |
|
|
|
172.5 |
|
Intangible amortization |
|
11.5 |
|
|
|
7.1 |
|
|
|
17.8 |
|
|
|
16.4 |
|
Special charges, net |
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
Other operating expense, net |
|
— |
|
|
|
1.9 |
|
|
|
— |
|
|
|
1.0 |
|
Operating income |
|
51.3 |
|
|
|
27.2 |
|
|
|
101.1 |
|
|
|
38.6 |
|
|
|
|
|
|
|
|
|
Other income
(expense), net |
|
— |
|
|
|
(1.7 |
) |
|
|
2.5 |
|
|
|
4.8 |
|
Interest
expense |
|
(5.4 |
) |
|
|
(2.3 |
) |
|
|
(7.8 |
) |
|
|
(4.7 |
) |
Interest
income |
|
0.2 |
|
|
|
0.3 |
|
|
|
0.7 |
|
|
|
0.4 |
|
Income from continuing operations before income taxes |
|
46.1 |
|
|
|
23.5 |
|
|
|
96.5 |
|
|
|
39.1 |
|
Income tax
provision |
|
(7.8 |
) |
|
|
(4.4 |
) |
|
|
(19.1 |
) |
|
|
(7.0 |
) |
Income from continuing operations |
|
38.3 |
|
|
|
19.1 |
|
|
|
77.4 |
|
|
|
32.1 |
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gain (loss)
on disposition of discontinued operations, net of tax |
|
(2.3 |
) |
|
|
(6.1 |
) |
|
|
1.4 |
|
|
|
(7.7 |
) |
Income (loss) from discontinued operations, net of tax |
|
(2.3 |
) |
|
|
(6.1 |
) |
|
|
1.4 |
|
|
|
(7.7 |
) |
|
|
|
|
|
|
|
|
Net
income |
$ |
36.0 |
|
|
$ |
13.0 |
|
|
$ |
78.8 |
|
|
$ |
24.4 |
|
|
|
|
|
|
|
|
|
Basic income
per share of common stock: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.84 |
|
|
$ |
0.42 |
|
|
$ |
1.70 |
|
|
$ |
0.71 |
|
Income (loss) from discontinued operations, net of tax |
|
(0.05 |
) |
|
|
(0.13 |
) |
|
|
0.03 |
|
|
|
(0.17 |
) |
Net income per share |
$ |
0.79 |
|
|
$ |
0.29 |
|
|
$ |
1.73 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding — basic |
|
45.533 |
|
|
|
45.444 |
|
|
|
45.457 |
|
|
|
45.500 |
|
|
|
|
|
|
|
|
|
Diluted
income per share of common stock: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.82 |
|
|
$ |
0.41 |
|
|
$ |
1.66 |
|
|
$ |
0.69 |
|
Income (loss) from discontinued operations, net of tax |
|
(0.05 |
) |
|
|
(0.13 |
) |
|
|
0.03 |
|
|
|
(0.16 |
) |
Net income per share |
$ |
0.77 |
|
|
$ |
0.28 |
|
|
$ |
1.69 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding — diluted |
|
46.627 |
|
|
|
46.289 |
|
|
|
46.500 |
|
|
|
46.370 |
|
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Unaudited;
in millions) |
|
|
|
|
|
July 1, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and equivalents |
$ |
87.1 |
|
|
$ |
147.8 |
|
Accounts receivable, net |
|
281.5 |
|
|
|
263.5 |
|
Contract assets |
|
36.5 |
|
|
|
23.9 |
|
Inventories, net |
|
299.6 |
|
|
|
244.0 |
|
Other current assets |
|
34.3 |
|
|
|
41.9 |
|
Total current assets |
|
739.0 |
|
|
|
721.1 |
|
Property,
plant and equipment: |
|
|
|
Land |
|
17.2 |
|
|
|
13.9 |
|
Buildings and leasehold improvements |
|
73.3 |
|
|
|
63.7 |
|
Machinery and equipment |
|
253.3 |
|
|
|
233.4 |
|
|
|
343.8 |
|
|
|
311.0 |
|
Accumulated depreciation |
|
(209.1 |
) |
|
|
(201.1 |
) |
Property, plant and equipment, net |
|
134.7 |
|
|
|
109.9 |
|
Goodwill |
|
679.9 |
|
|
|
455.3 |
|
Intangibles,
net |
|
705.6 |
|
|
|
401.6 |
|
Other
assets |
|
195.1 |
|
|
|
197.4 |
|
Deferred
income taxes |
|
3.1 |
|
|
|
2.7 |
|
Assets of
DBT and Heat Transfer |
|
44.2 |
|
|
|
42.9 |
|
TOTAL
ASSETS |
$ |
2,501.6 |
|
|
$ |
1,930.9 |
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
131.0 |
|
|
$ |
124.5 |
|
Contract liabilities |
|
71.0 |
|
|
|
52.8 |
|
Accrued expenses |
|
131.2 |
|
|
|
148.0 |
|
Income taxes payable |
|
13.9 |
|
|
|
4.7 |
|
Short-term debt |
|
132.0 |
|
|
|
1.8 |
|
Current maturities of long-term debt |
|
10.5 |
|
|
|
2.0 |
|
Total current liabilities |
|
489.6 |
|
|
|
333.8 |
|
|
|
|
|
Long-term
debt |
|
533.1 |
|
|
|
243.0 |
|
Deferred and
other income taxes |
|
75.7 |
|
|
|
34.8 |
|
Other
long-term liabilities |
|
202.9 |
|
|
|
208.3 |
|
Liabilities
of DBT and Heat Transfer |
|
27.7 |
|
|
|
31.8 |
|
Total long-term liabilities |
|
839.4 |
|
|
|
517.9 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
Common stock |
|
0.5 |
|
|
|
0.5 |
|
Paid-in capital |
|
1,341.5 |
|
|
|
1,338.3 |
|
Retained earnings (deficit) |
|
27.2 |
|
|
|
(51.6 |
) |
Accumulated other comprehensive income |
|
262.5 |
|
|
|
257.5 |
|
Common stock in treasury |
|
(459.1 |
) |
|
|
(465.5 |
) |
Total stockholders' equity |
|
1,172.6 |
|
|
|
1,079.2 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
2,501.6 |
|
|
$ |
1,930.9 |
|
|
|
|
|
|
|
|
|
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
RESULTS OF
REPORTABLE SEGMENTS |
(Unaudited;
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
Six months ended |
|
|
|
|
|
|
July 1, 2023 |
|
July 2, 2022 |
|
Δ |
|
%/bps |
|
July 1, 2023 |
|
July 2, 2022 |
|
Δ |
|
%/bps |
HVAC
reportable segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
269.0 |
|
|
$ |
218.7 |
|
|
$ |
50.3 |
|
|
23.0 |
% |
|
$ |
520.6 |
|
|
$ |
411.8 |
|
|
$ |
108.8 |
|
|
26.4 |
% |
Gross
profit |
|
|
99.1 |
|
|
|
63.8 |
|
|
|
35.3 |
|
|
|
|
|
187.4 |
|
|
|
118.7 |
|
|
|
68.7 |
|
|
|
Selling,
general and administrative expense |
|
|
43.9 |
|
|
|
35.5 |
|
|
|
8.4 |
|
|
|
|
|
84.5 |
|
|
|
69.8 |
|
|
|
14.7 |
|
|
|
Income |
|
$ |
55.2 |
|
|
$ |
28.3 |
|
|
$ |
26.9 |
|
|
95.1 |
% |
|
$ |
102.9 |
|
|
$ |
48.9 |
|
|
$ |
54.0 |
|
|
110.4 |
% |
as a percent of revenues |
|
|
20.5 |
% |
|
|
12.9 |
% |
|
|
|
760bps |
|
|
19.8 |
% |
|
|
11.9 |
% |
|
|
|
790bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Detection & Measurement reportable
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
154.3 |
|
|
$ |
135.3 |
|
|
$ |
19.0 |
|
|
14.0 |
% |
|
$ |
302.5 |
|
|
$ |
249.3 |
|
|
$ |
53.2 |
|
|
21.3 |
% |
Gross
profit |
|
|
65.6 |
|
|
|
61.7 |
|
|
|
3.9 |
|
|
|
|
|
127.2 |
|
|
|
110.9 |
|
|
|
16.3 |
|
|
|
Selling,
general and administrative expense |
|
|
36.4 |
|
|
|
33.9 |
|
|
|
2.5 |
|
|
|
|
|
71.3 |
|
|
|
64.1 |
|
|
|
7.2 |
|
|
|
Income |
|
$ |
29.2 |
|
|
$ |
27.8 |
|
|
$ |
1.4 |
|
|
5.0 |
% |
|
$ |
55.9 |
|
|
$ |
46.8 |
|
|
$ |
9.1 |
|
|
19.4 |
% |
as a percent of revenues |
|
|
18.9 |
% |
|
|
20.5 |
% |
|
|
|
-160bps |
|
|
18.5 |
% |
|
|
18.8 |
% |
|
|
|
-30bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Revenues |
|
$ |
423.3 |
|
|
$ |
354.0 |
|
|
$ |
69.3 |
|
|
19.6 |
% |
|
$ |
823.1 |
|
|
$ |
661.1 |
|
|
$ |
162.0 |
|
|
24.5 |
% |
Consolidated Operating Income |
|
|
51.3 |
|
|
|
27.2 |
|
|
|
24.1 |
|
|
88.6 |
% |
|
|
101.1 |
|
|
|
38.6 |
|
|
|
62.5 |
|
|
161.9 |
% |
as a percent of revenues |
|
|
12.1 |
% |
|
|
7.7 |
% |
|
|
|
440bps |
|
|
12.3 |
% |
|
|
5.8 |
% |
|
|
|
650bps |
Consolidated Segment Income |
|
|
84.4 |
|
|
|
56.1 |
|
|
|
28.3 |
|
|
50.4 |
% |
|
|
158.8 |
|
|
|
95.7 |
|
|
|
63.1 |
|
|
65.9 |
% |
as a percent of revenues |
|
|
19.9 |
% |
|
|
15.8 |
% |
|
|
|
410bps |
|
|
19.3 |
% |
|
|
14.5 |
% |
|
|
|
480bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income |
|
$ |
51.3 |
|
|
$ |
27.2 |
|
|
$ |
24.1 |
|
|
|
|
$ |
101.1 |
|
|
$ |
38.6 |
|
|
$ |
62.5 |
|
|
|
Exclude: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense |
|
|
16.6 |
|
|
|
16.4 |
|
|
|
0.2 |
|
|
|
|
|
31.2 |
|
|
|
33.0 |
|
|
|
(1.8 |
) |
|
|
Acquisition-related and other costs(1) |
|
|
1.5 |
|
|
|
0.9 |
|
|
|
0.6 |
|
|
|
|
|
2.1 |
|
|
|
1.0 |
|
|
|
1.1 |
|
|
|
Long-term incentive compensation expense |
|
|
3.5 |
|
|
|
2.5 |
|
|
|
1.0 |
|
|
|
|
|
6.6 |
|
|
|
5.6 |
|
|
|
1.0 |
|
|
|
Amortization of intangible assets(2) |
|
|
11.5 |
|
|
|
7.1 |
|
|
|
4.4 |
|
|
|
|
|
17.8 |
|
|
|
16.4 |
|
|
|
1.4 |
|
|
|
Special charges, net |
|
|
— |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
|
|
— |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
Other operating expense, net |
|
|
— |
|
|
|
1.9 |
|
|
|
(1.9 |
) |
|
|
|
|
— |
|
|
|
1.0 |
|
|
|
(1.0 |
) |
|
|
Consolidated segment income |
|
$ |
84.4 |
|
|
$ |
56.1 |
|
|
$ |
28.3 |
|
|
50.4 |
% |
|
$ |
158.8 |
|
|
$ |
95.7 |
|
|
$ |
63.1 |
|
|
65.9 |
% |
as a percent of revenues |
|
|
19.9 |
% |
|
|
15.8 |
% |
|
|
|
410bps |
|
|
19.3 |
% |
|
|
14.5 |
% |
|
|
|
480bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents certain
acquisition-related costs incurred of $1.5 and $2.1 during the
three and six months ended July 1, 2023, respectively, and $0.9 and
$1.0 during the three and six months ended July 2, 2022,
respectively, including additional “Cost of products sold” related
to the step-up of inventory (to fair value) acquired in connection
with the ASPEQ acquisition of $1.1 during the three and six months
ended July 1, 2023 and the ITL acquisition of $0.9 and $1.0 during
the three and six months ended July 2, 2022, respectively. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Represents
amortization expense associated with acquired intangible
assets. |
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited;
in millions) |
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Six months
ended |
|
July 1, 2023 |
|
July 2, 2022 |
|
July 1, 2023 |
|
July 2, 2022 |
Cash
flows from (used in) operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
36.0 |
|
|
$ |
13.0 |
|
|
$ |
78.8 |
|
|
$ |
24.4 |
|
Less: Gain
(loss) from discontinued operations, net of tax |
|
(2.3 |
) |
|
|
(6.1 |
) |
|
|
1.4 |
|
|
|
(7.7 |
) |
Income from
continuing operations |
|
38.3 |
|
|
|
19.1 |
|
|
|
77.4 |
|
|
|
32.1 |
|
Adjustments
to reconcile income from continuing operations to net cash from
(used in) operating activities: |
|
|
|
|
|
|
|
Special charges, net |
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
Gain on change in fair value of equity security |
|
— |
|
|
|
— |
|
|
|
(3.6 |
) |
|
|
(4.4 |
) |
Deferred and other income taxes |
|
(6.9 |
) |
|
|
(13.3 |
) |
|
|
(10.4 |
) |
|
|
(9.0 |
) |
Depreciation and amortization |
|
16.0 |
|
|
|
11.6 |
|
|
|
26.7 |
|
|
|
25.6 |
|
Pension and other employee benefits |
|
2.2 |
|
|
|
4.7 |
|
|
|
5.7 |
|
|
|
6.3 |
|
Long-term incentive compensation |
|
3.5 |
|
|
|
2.5 |
|
|
|
6.6 |
|
|
|
5.6 |
|
Other, net |
|
(1.5 |
) |
|
|
0.4 |
|
|
|
(3.0 |
) |
|
|
1.0 |
|
Changes in
operating assets and liabilities, net of effects from acquisitions
and divestitures: |
|
|
|
|
|
|
|
Accounts receivable and other assets |
|
20.0 |
|
|
|
(15.4 |
) |
|
|
4.9 |
|
|
|
(5.0 |
) |
Inventories |
|
(5.8 |
) |
|
|
(19.3 |
) |
|
|
(27.0 |
) |
|
|
(44.9 |
) |
Accounts payable, accrued expenses and other |
|
8.0 |
|
|
|
(25.1 |
) |
|
|
(2.7 |
) |
|
|
(90.6 |
) |
Cash spending on restructuring actions |
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.3 |
) |
Net cash
from (used in) continuing operations |
|
73.8 |
|
|
|
(34.9 |
) |
|
|
74.6 |
|
|
|
(83.5 |
) |
Net cash
used in discontinued operations |
|
(1.8 |
) |
|
|
(4.4 |
) |
|
|
(7.0 |
) |
|
|
(13.0 |
) |
Net cash
from (used in) operating activities |
|
72.0 |
|
|
|
(39.3 |
) |
|
|
67.6 |
|
|
|
(96.5 |
) |
|
|
|
|
|
|
|
|
Cash
flows from (used in) investing activities: |
|
|
|
|
|
|
|
Proceeds related to company-owned life insurance policies, net |
|
0.9 |
|
|
|
1.6 |
|
|
|
1.0 |
|
|
|
1.6 |
|
Business acquisitions, net of cash acquired |
|
(547.1 |
) |
|
|
0.4 |
|
|
|
(547.1 |
) |
|
|
(41.4 |
) |
Capital expenditures |
|
(4.7 |
) |
|
|
(3.9 |
) |
|
|
(8.7 |
) |
|
|
(6.0 |
) |
Net cash
used in continuing operations |
|
(550.9 |
) |
|
|
(1.9 |
) |
|
|
(554.8 |
) |
|
|
(45.8 |
) |
Net cash
used in discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13.9 |
) |
Net cash
used in investing activities |
|
(550.9 |
) |
|
|
(1.9 |
) |
|
|
(554.8 |
) |
|
|
(59.7 |
) |
|
|
|
|
|
|
|
|
Cash
flows from (used in) financing activities: |
|
|
|
|
|
|
|
Borrowings under senior credit facilities |
|
800.0 |
|
|
|
— |
|
|
|
820.0 |
|
|
|
— |
|
Repayments under senior credit facilities |
|
(420.0 |
) |
|
|
(3.2 |
) |
|
|
(420.0 |
) |
|
|
(6.3 |
) |
Borrowings under trade receivables arrangement |
|
14.0 |
|
|
|
— |
|
|
|
61.0 |
|
|
|
— |
|
Repayments under trade receivables arrangement |
|
(31.0 |
) |
|
|
— |
|
|
|
(31.0 |
) |
|
|
— |
|
Net repayments under other financing arrangements |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.2 |
) |
Payment of contingent consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
Minimum withholdings paid on behalf of employees for net share
settlements, net of proceeds from the exercise of employee stock
options |
|
1.7 |
|
|
|
1.2 |
|
|
|
(2.4 |
) |
|
|
(5.2 |
) |
Financing Fees Paid |
|
(1.3 |
) |
|
|
— |
|
|
|
(1.3 |
) |
|
|
— |
|
Repurchases of common stock |
|
— |
|
|
|
(33.7 |
) |
|
|
— |
|
|
|
(33.7 |
) |
Net cash
from (used in) continuing operations |
|
363.3 |
|
|
|
(35.7 |
) |
|
|
426.2 |
|
|
|
(46.7 |
) |
Net cash
from discontinued operations |
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
0.3 |
|
Net cash
from (used in) financing activities |
|
363.3 |
|
|
|
(35.0 |
) |
|
|
426.2 |
|
|
|
(46.4 |
) |
Change in
cash and equivalents due to changes in foreign currency exchange
rates |
|
(1.5 |
) |
|
|
1.9 |
|
|
|
(0.5 |
) |
|
|
1.8 |
|
Net change
in cash and equivalents |
|
(117.1 |
) |
|
|
(74.3 |
) |
|
|
(61.5 |
) |
|
|
(200.8 |
) |
Consolidated
cash and equivalents, beginning of period |
|
212.7 |
|
|
|
269.5 |
|
|
|
157.1 |
|
|
|
396.0 |
|
Consolidated
cash and equivalents, end of period |
$ |
95.6 |
|
|
$ |
195.2 |
|
|
$ |
95.6 |
|
|
$ |
195.2 |
|
|
Six months ended |
|
July 1, 2023 |
|
July 2, 2022 |
Components of cash and equivalents: |
|
|
|
Cash and equivalents |
$ |
87.1 |
|
$ |
189.8 |
Cash and
equivalents included in assets of DBT and Heat Transfer |
|
8.5 |
|
|
5.4 |
Total cash
and equivalents |
$ |
95.6 |
|
$ |
195.2 |
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CASH AND
DEBT RECONCILIATION |
(Unaudited;
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
|
|
|
|
|
|
|
July 1, 2023 |
|
|
|
|
|
|
|
|
Beginning
cash and equivalents |
|
$ |
157.1 |
|
|
|
|
|
|
|
|
|
Cash from
continuing operations |
|
|
74.6 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(8.7 |
) |
|
|
|
|
|
|
|
|
Business
acquisitions, net of cash acquired |
|
|
(547.1 |
) |
|
|
|
|
|
|
|
|
Proceeds
from company-owned life insurance policies, net |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
Borrowings
under senior credit facilities |
|
|
820.0 |
|
|
|
|
|
|
|
|
|
Repayments
under senior credit facilities |
|
|
(420.0 |
) |
|
|
|
|
|
|
|
|
Borrowings
under trade receivables agreement |
|
|
61.0 |
|
|
|
|
|
|
|
|
|
Repayments
under trade receivables arrangement |
|
|
(31.0 |
) |
|
|
|
|
|
|
|
|
Net
repayments under other financing arrangements |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
Minimum
withholdings paid on behalf of employees for net share settlements,
net of proceeds from the exercise of employee stock options |
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
Financing
fees paid |
|
|
(1.3 |
) |
|
|
|
|
|
|
|
|
Cash used in
discontinued operations |
|
|
(7.0 |
) |
|
|
|
|
|
|
|
|
Change in
cash due to changes in foreign currency exchange rates |
|
|
(0.5 |
) |
|
|
|
|
|
|
|
|
Ending cash
and equivalents |
|
$ |
95.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
at |
|
|
|
|
|
|
|
Debt
at |
|
|
December 31, 2022 |
|
Borrowings |
|
Repayments |
|
Other |
|
July 1, 2023 |
Revolving loans |
|
$ |
— |
|
|
$ |
520.0 |
|
$ |
(420.0 |
) |
|
$ |
— |
|
|
$ |
100.0 |
|
Term
loans |
|
|
245.0 |
|
|
|
300.0 |
|
|
— |
|
|
|
— |
|
|
|
545.0 |
|
Trade
receivables financing arrangement |
|
|
— |
|
|
|
61.0 |
|
|
(31.0 |
) |
|
|
— |
|
|
|
30.0 |
|
Other
indebtedness |
|
|
2.5 |
|
|
|
0.2 |
|
|
(0.3 |
) |
|
|
0.1 |
|
|
|
2.5 |
|
Less:
Deferred financing costs associated with the term loans |
|
|
(0.7 |
) |
|
|
— |
|
|
— |
|
|
|
(1.2 |
) |
|
|
(1.9 |
) |
Totals |
|
$ |
246.8 |
|
|
$ |
881.2 |
|
$ |
(451.3 |
) |
|
$ |
(1.1 |
) |
|
$ |
675.6 |
|
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
NON-GAAP
RECONCILIATION - ORGANIC REVENUE |
HVAC AND
DETECTION & MEASUREMENT REPORTABLE SEGMENTS |
(Unaudited) |
|
|
|
|
|
|
|
|
Three months ended July 1, 2023 |
|
|
|
HVAC |
|
Detection &Measurement |
|
Net Revenue Growth |
|
23.0 |
|
% |
14.0 |
% |
|
|
|
|
|
|
Exclude:
Foreign Currency |
|
(0.6 |
) |
% |
— |
% |
|
|
|
|
|
|
Exclude:
Acquisitions |
|
8.6 |
|
% |
— |
% |
|
|
|
|
|
|
Organic
Revenue Growth |
|
15.0 |
|
% |
14.0 |
% |
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
NON-GAAP
RECONCILIATION - ADJUSTED OPERATING INCOME |
(Unaudited;
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
July 1, 2023 |
|
July 2, 2022 |
|
July 1, 2023 |
|
July 2, 2022 |
Operating income |
|
$ |
51.3 |
|
|
$ |
27.2 |
|
|
$ |
101.1 |
|
|
$ |
38.6 |
|
|
|
|
|
|
|
|
|
|
Include -
TSA Income(1) |
|
|
0.1 |
|
|
|
0.9 |
|
|
|
0.2 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
Exclude: |
|
|
|
|
|
|
|
|
Acquisition-related and other costs(2) |
|
|
(6.5 |
) |
|
|
(5.1 |
) |
|
|
(8.6 |
) |
|
|
(9.5 |
) |
|
|
|
|
|
|
|
|
|
Other operating expense(3) |
|
|
— |
|
|
|
(1.9 |
) |
|
|
— |
|
|
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
Amortization expense(4) |
|
|
(11.5 |
) |
|
|
(7.1 |
) |
|
|
(17.8 |
) |
|
|
(16.4 |
) |
|
|
|
|
|
|
|
|
|
Adjusted
operating income |
|
$ |
69.4 |
|
|
$ |
42.2 |
|
|
$ |
127.7 |
|
|
$ |
67.3 |
|
as a percent of revenues |
|
|
16.4 |
% |
|
|
11.9 |
% |
|
|
15.5 |
% |
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
(1)Represents
transition services income related to the Asbestos Portfolio Sale
for the three and six months ended July 1, 2023 and the Transformer
Solutions disposition for the three and six months ended July 2,
2022. Amounts recorded in non-operating income for U.S. GAAP
purposes. The Asbestos Portfolio Sale and Transformer Solutions
disposition are described in the Company’s most recent Form
10-K. |
|
|
|
|
|
|
|
|
|
(2)For the three
and six months ended July 1, 2023, represents (i) acquisition and
strategic/transformation related costs of $5.0 and $6.5,
respectively, (ii) certain integration costs of $0.4 and $1.0,
respectively, and (iii) an inventory step-up charge of $1.1 related
to the ASPEQ acquisition. For the three and six months ended July
2, 2022, represents (i) acquisition and strategic/transformation
related costs of $4.0 and $8.1, respectively, (ii) costs associated
with our South Africa business that could not be allocated to
discontinued operations for U.S. GAAP purposes of $0.2 and $0.4,
respectively, and (iii) inventory step-up charges of $0.9 and $1.0,
respectively, related to our ITL acquisition. |
|
|
|
|
|
|
|
|
|
(3)For the three
and six months ended July 2, 2022, represents (i) a gain of $0.4
and $1.3, respectively, related to a revision of the liability
associated with contingent consideration on a recent acquisition
and (ii) a charge of $2.3 related to revisions of recorded
liabilities for asbestos-related claims. |
|
|
|
|
|
|
|
|
|
(4)Represents
amortization expense associated with acquired intangible
assets. |
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
NON-GAAP
RECONCILIATION - EARNINGS PER SHARE |
Three Months
Ended July 1, 2023 |
(Unaudited;
in millions, except per share values) |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
Adjustments |
|
Adjusted |
Segment income |
$ |
84.4 |
|
|
$ |
— |
|
|
$ |
84.4 |
|
Corporate expense(1) |
|
(16.6 |
) |
|
|
5.1 |
|
|
|
(11.5 |
) |
Acquisition-related costs(2) |
|
(1.5 |
) |
|
|
1.5 |
|
|
|
— |
|
Long-term incentive compensation expense |
|
(3.5 |
) |
|
|
— |
|
|
|
(3.5 |
) |
Amortization of intangible assets(3) |
|
(11.5 |
) |
|
|
11.5 |
|
|
|
— |
|
Operating income |
|
51.3 |
|
|
|
18.1 |
|
|
|
69.4 |
|
|
|
|
|
|
|
Other income, net(4) |
|
— |
|
|
|
1.2 |
|
|
|
1.2 |
|
Interest expense, net |
|
(5.2 |
) |
|
|
— |
|
|
|
(5.2 |
) |
Income from continuing operations before income
taxes |
|
46.1 |
|
|
|
19.3 |
|
|
|
65.4 |
|
Income tax provision(5) |
|
(7.8 |
) |
|
|
(8.1 |
) |
|
|
(15.9 |
) |
Income from continuing operations |
|
38.3 |
|
|
|
11.2 |
|
|
|
49.5 |
|
|
|
|
|
|
|
Diluted
shares outstanding |
|
46.627 |
|
|
|
|
|
46.627 |
|
|
|
|
|
|
|
Earnings per share from continuing operations |
$ |
0.82 |
|
|
|
|
$ |
1.06 |
|
|
|
|
|
|
|
(1)Adjustment
represents the removal of acquisition and strategic/transformation
related expenses ($5.0) and a reclassification of transition
services income ($0.1) from “Other income, net.” |
|
(2)Adjustment
represents the removal of (i) an inventory step-up charge of $1.1
related to the ASPEQ acquisition and (ii) integration costs of $0.4
within the HVAC reportable segment. |
|
(3)Adjustment
represents the removal of amortization expense associated with
acquired intangible assets of $4.3 and $7.2 within the Detection
& Measurement and HVAC reportable segments, respectively. |
|
|
|
|
|
|
(4)Adjustment
represents the removal of (i) non-service pension and
postretirement charges of $1.2, (ii) the reclassification of income
related to a transition services agreement ($0.1) to “Corporate
expense,” and (iii) the removal of a charge related to the Asbestos
Portfolio Sale ($0.1). |
|
|
|
|
|
|
(5)Adjustment
primarily represents the tax impact of items (1) through (4) above
and the removal of certain discrete income tax benefits that are
considered non-recurring. |
|
|
|
|
|
|
SPX
TECHNOLOGIES, INC. AND SUBSIDIARIES |
NON-GAAP
RECONCILIATION - EARNINGS PER SHARE |
Three Months
Ended July 2, 2022 |
(Unaudited;
in millions, except per share values) |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
Adjustments |
|
Adjusted |
Segment income |
$ |
56.1 |
|
|
$ |
— |
|
|
$ |
56.1 |
|
Corporate expense(1) |
|
(16.4 |
) |
|
|
5.1 |
|
|
|
(11.3 |
) |
Acquisition-related costs(2) |
|
(0.9 |
) |
|
|
0.9 |
|
|
|
— |
|
Long-term incentive compensation expense |
|
(2.5 |
) |
|
|
— |
|
|
|
(2.5 |
) |
Amortization of intangible assets(3) |
|
(7.1 |
) |
|
|
7.1 |
|
|
|
— |
|
Special charges, net |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
Other operating expense, net(4) |
|
(1.9 |
) |
|
|
1.9 |
|
|
|
— |
|
Operating income |
|
27.2 |
|
|
|
15.0 |
|
|
|
42.2 |
|
|
|
|
|
|
|
Other income (expense), net(5) |
|
(1.7 |
) |
|
|
2.9 |
|
|
|
1.2 |
|
Interest expense, net |
|
(2.0 |
) |
|
|
— |
|
|
|
(2.0 |
) |
Income from continuing operations before income
taxes |
|
23.5 |
|
|
|
17.9 |
|
|
|
41.4 |
|
Income tax provision(6) |
|
(4.4 |
) |
|
|
(4.0 |
) |
|
|
(8.4 |
) |
Income from continuing operations |
|
19.1 |
|
|
|
13.9 |
|
|
|
33.0 |
|
|
|
|
|
|
|
Diluted
shares outstanding |
|
46.289 |
|
|
|
|
|
46.289 |
|
|
|
|
|
|
|
Earnings per share from continuing operations |
$ |
0.41 |
|
|
|
|
$ |
0.71 |
|
|
|
|
|
|
|
(1)Adjustment
represents the removal of acquisition and strategic/transformation
related expenses ($4.0), costs associated with our South Africa
business that could not be allocated to discontinued operations for
U.S. GAAP purposes ($0.2), as well as a reclassification of
transition services income ($0.9) from “Other income (expense),
net.” |
|
(2)Adjustment
represents the removal of an inventory step-up charge related to
the ITL acquisition of $0.9 within the Detection & Measurement
reportable segment. |
|
(3)Adjustment
represents the removal of amortization expense associated with
acquired intangible assets of $2.7 and $4.4 within the HVAC and
Detection & Measurement reportable segments, respectively. |
|
|
|
|
|
|
(4)Adjustment
represents the removal of (i) a charge of $2.3 related to revisions
of recorded liabilities for asbestos-related claims and (ii) a gain
of $0.4 related to a revision of the liability associated with
contingent consideration on a recent acquisition. |
|
|
|
|
|
|
(5)Adjustment
represents the removal of a pension plan settlement and
mark-to-market pension losses of $3.8, partially offset by the
reclassification of income related to a transition services
agreement ($0.9) to “Corporate expense.” |
|
|
|
|
|
|
(6)Adjustment
represents the tax impact of items (1) through (5) above. |
|
|
|
|
|
|
SPX Technologies (NYSE:SPXC)
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