SPX Reports First Quarter 2018 Results - SPX Technologies in Charlotte, NC

Q1
GAAP
EPS
of
$0.28;
Adjusted
EPS*
of
$0.44
Solid
Growth
in
HVAC
and
Detection
&
Measurement
On
Track
to
Achieve
Full-Year
Adjusted
EPS*
Guidance
Range
of
$2.03-$2.18

CHARLOTTE,
N.C.,
May
03,
2018
(GLOBE
NEWSWIRE)
—
SPX
Corporation
(NYSE:SPXC)
today
reported
results
for
the
quarter
ended
March
31,
2018.

Gene
Lowe,
President
and
CEO,
remarked,
“I
am
very
pleased
with
our
solid
operating
results
in
the
first
quarter,
which
provided
a
strong
start
to
2018.
Our
HVAC
segment
saw
significant
improvement
in
revenue
due
to
higher
heating
volumes,
and
our
Detection
&
Measurement
segment
continued
to
benefit
from
strong
sales
of
communication
technologies
products.
We
remain
on
track
to
achieve
our
full-year
2018
guidance.”

Mr.
Lowe
continued,
“We
have
also
made
significant
progress
on
our
capital
deployment
plans,
closing
one
acquisition,
and
announcing
an
agreement
for
a
second.
Both
are
attractive
companies
and
highly
complementary
fits
with
our
Radiodetection
business
within
our
Detection
&
Measurement
segment.
These
proprietary
transactions
position
us
to
create
higher
value
solutions
for
customers
and
drive
meaningful
growth
in
earnings
and
cash
generation.
As
we
continue
executing
on
our
growth
initiatives,
we
are
committed
to
maintaining
a
solid
balance
sheet,
while
deploying
additional
capital
to
drive
value
for
shareholders.”

First
Quarter
2018
Overview:

For
the
first
quarter
of
2018
the
company
reported
revenue
of
$351.9
million
and
operating
income
of
$19.3
million,
compared
with
$340.6
million
and
$19.1
million,
respectively,
in
the
first
quarter
of
2017.
Net
earnings
per
share
from
continuing
operations
were
$0.28,
compared
with
$0.24
for
the
first
quarter
of
2017.

SPX
Core
revenue*
was
$337.6
million
and
Adjusted
operating
income*
was
$26.5
million
in
the
first
quarter
of
2018,
compared
with
$322.4
million
and
$23.5
million,
respectively,
in
the
first
quarter
of
2017.
Adjusted
earnings
per
share*
for
the
first
quarter
of
2018
were
$0.44,
compared
with
$0.38
for
the
first
quarter
of
2017.

First
Quarter
Financial
Comparisons:

GAAP
Results:

($ millions)	Q1 2018		Q1 2017
Revenue	$	351.9	$	340.6
Segment Income		37.0		34.3
Operating Income		19.3		19.1

*
Non-GAAP
financial
measure.
See
attached
schedules
for
reconciliation
to
most
comparable
GAAP
financial
measure.

Adjusted
Results:

($ millions)	Q1 2018		Q1 2017
Core Revenue*	$	337.6	$	322.4
Core Segment Income*		41.6		38.7
Adjusted Operating Income*		26.5		23.5

*
Non-GAAP
financial
measure.
See
attached
schedules
for
reconciliation
to
most
comparable
GAAP
financial
measure.

HVAC

Revenue
for
Q1
2018
was
$127.7
million,
compared
with
$110.1
million
in
Q1
2017,
an
increase
of
16.0%,
including
a
1.1%
increase
from
currency
fluctuations.
Organic
revenue*
increased
14.9%,
due
primarily
to
higher
customer
demand
for
our
heating
products
associated
with
colder
weather
during
the
quarter.

Segment
income
was
$18.6
million,
or
14.6%
of
revenue,
in
Q1
2018,
compared
with
$16.5
million,
or
15.0%
of
revenue,
in
Q1
2017,
with
the
decrease
in
margins
largely
due
to
a
less
favorable
sales
mix
and
higher
freight
costs.

Detection
&
Measurement

Revenue
for
Q1
2018
was
$65.6
million,
compared
with
$53.6
million
in
Q1
2017,
an
increase
of
22.4%
including
a
2.8%
increase
from
currency
fluctuations
and
a
1.5%
increase
from
our
acquisition
of
Schonstedt
Instrument
Company,
which
closed
in
March
2018.
Organic
revenue*
increased
18.1%
primarily
reflecting
higher
communication
technologies
product
sales.

Segment
income
was
$15.7
million
in
Q1
2018.
Adjusted
segment
income*,
which
excludes
$0.3
million
of
acquisition-related
costs
in
Q1
2018,
was
$16.0
million,
or
24.4%
of
revenue.
This
compares
with
segment
income
of
$11.2
million,
or
20.9%
of
revenue,
in
Q1
2017.
The
350
basis
point
increase
in
margins
was
driven
by
a
higher
profit
contribution
from
communication
technologies
products
sales.

Engineered
Solutions

Revenue
for
Q1
2018
was
$158.6
million,
compared
with
$176.9
million
in
Q1
2017,
a
decrease
of
10.3%,
driven
primarily
by
lower
sales
of
process
cooling
products,
timing
of
transformer
deliveries,
and
lower
sales
related
to
the
power
projects
in
South
Africa,
partially
offset
by
the
impact
of
the
adoption
of
the
new
revenue
recognition
standard
ASC
606**,
and
a
weaker
U.S
dollar
versus
the
South
African
Rand.
Revenues
in
the
segment’s
process
cooling
business
continue
to
be
impacted
by
a
shift
in
its
sales
model,
which
is
now
focused
more
on
high-margin
components
and
services
and
less
on
low-margin
construction
projects.

Segment
income
was
$2.7
million,
or
1.7%
of
revenue,
in
Q1
2018,
compared
with
segment
income
of
$6.6
million,
or
3.7%
of
revenue,
in
Q1
2017.
The
decrease
in
segment
income
margins
of
200
basis
points
was
driven
primarily
by
a
less
favorable
sales
mix
within
the
segment’s
Transformer
business.

Engineered
Solutions
(Core)

Excluding
the
results
of
the
South
African
projects,
Engineered
Solutions
recorded
Core
revenue*
for
Q1 2018
of
$144.3
million,
compared
with
$158.7
million
in
Q1 2017,
a
decrease
of
9.1%.
This
decline
was
driven
primarily
by
lower
sales
of
process
cooling
products,
and
timing
of
transformer
deliveries,
partially
offset
by
the
impact
of
the
adoption
of
the
new
revenue
recognition
standard
ASC
606**
and
a
modest
benefit
from
currency
fluctuation.

Engineered
Solutions’
Core
income*
for
Q1 2018
was
$7.0
million,
or
4.9%
of
revenue,
compared
with
$11.0
million,
or
6.9%
of
revenue,
in
Q1 2017.
The
decrease
in
segment
income
margins*
of
approximately
200
basis
points
was
driven
primarily
by
the
less
profitable
sales
mix
within
the
segment’s
Transformer
business.

South
African
Projects

Revenue
attributable
to
the
South
African
projects
for
Q1
2018
was
$14.3
million,
compared
with
$18.2
million
in
Q1
2017.
Losses
for
these
projects
recorded
in
our
Engineered
Solutions
segment
in
Q1
2018
were
$4.3
million,
compared
with
a
loss
of
$4.4
million
in
Q1
2017.

Financial
Update:

As
of
March
31,
2018,
SPX
had
total
outstanding
debt
of
$356.6
million
and
total
cash
and
equivalents
of
$103.7
million.
During
the
first
quarter
of
2018,
free
cash
flow
used
in
continuing
operations*
totaled
$0.5
million
and
included
net
cash
used
for
the
South
African
projects
of
$5.5
million,
net
of
a
tax
benefit.
Net
leverage,
as
calculated
under
the
company’s
bank
credit
agreement,
was
1.5x,
similar
to
Q4
2017.

Reaffirming
2018
Guidance:

SPX
is
reaffirming
its
2018
guidance
for
Core
revenue*
in
a
range
of
$1.35
to
$1.40
billion
with
Core
segment
income
margin*
of
approximately
14.0-14.5%. We
continue
to
expect
Adjusted
operating
income
margin*
of
approximately
10%
and Adjusted
earnings
per
share*
in
a
range
of
$2.03
to
$2.18.
This
guidance
does
not
reflect
the
impact
of
acquisitions,
and
we
currently
anticipate
updating
guidance
for
announced
acquisitions
later
in
Q2
2018.

Segment
performance,
on
a
year-over-year
basis,
is
expected
to
be
as
follows:

	Revenue	Segment Income Margin %
HVAC	Organic growth* rate within long-term range of 2.0%-4.0%	Approximately 100 basis point increase
Detection & Measurement	Organic growth* rate within long-term range of approximately 2.0%-6.0%	Approximately 50 to 100 basis point increase
Engineered Solutions (Core)*	Segment (core) revenue decline* in high-single digits %; modest growth in transformer revenue; organic decline* in process cooling resulting from operating model changes	Approximately 80-130 basis point increase

Non-GAAP
Presentation:
The
results
and
guidance
in
this
release
include
non-GAAP
financial
measures,
including
“Core”
results,
“organic
revenue
increase
(decrease),”
“Adjusted
operating
income
(loss),”
and
“Adjusted
earnings
(loss)
per
share.”
To
provide
clarity
to
its
operating
results,
the
company
reports
“Core”
results,
which
exclude
the
effect
of
the
South
African
projects,
and
separately
reports
on
the
progress
and
results
associated
with
the
South
African
projects.
Other
items
adjusted
out
of
segment
income,
operating
income,
and
earnings
per
share
consist
of
certain
acquisition-related
costs
in
Q1
2018,
and
non-service
pension
items
and
various
other
tax
items
in
Q1
2018
and
Q1
2017.

Form
10-Q:
The
company
expects
to
file
its
quarterly
report
on
Form
10-Q
for
the
quarter
ended
March
31,
2018
with
the
Securities
and
Exchange
Commission
on
or
before
May
10,
2018.
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
will
host
a
conference
call
at
4:45
p.m.
(EDT)
today
to
discuss
first
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.

Conference
call
Dial
in:
877-341-7727
From
outside
the
United
States:
+1
262-558-6098
Participant
code:
5297349

A
replay
of
the
call
will
be
available
by
telephone
through
Thursday,
May
10th.

To
listen
to
a
replay
of
the
call
Dial
in:
855-859-2056
From
outside
the
United
States:
+1
404-537-3406
Participant
code:
5297349

Upcoming
Investor
Events:
Company
management
plans
to
be
on
the
road
during
May
meeting
with
investors,
including
attending
the
Oppenheimer
Industrial
Growth
Conference
in
New
York
City
on
May
9^th.

About
SPX
Corporation: SPX
Corporation
is
a
supplier
of
highly
engineered
products
and
technologies,
holding
leadership
positions
in
the
HVAC,
detection
and
measurement,
and
engineered
solutions
markets.
Based
in
Charlotte,
North
Carolina,
SPX
Corporation
had
approximately
$1.4
billion
in
annual
revenue
in
2017
and
more
than
5,000
employees
in
14
countries.
SPX
Corporation
is
listed
on
the
New
York
Stock
Exchange
under
the
ticker
symbol
“SPXC.”
For
more
information,
please
visit

www.spx.com.

*Non-GAAP
financial
measure.
See
attached
schedules
for
reconciliation
to
most
comparable
GAAP
financial
measure.
**See
attached
schedule
for
the
impact
of
the
adoption
of
ASC
606
on
SPX’s
reported
results.

Note:
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.
These
items
include,
but
are
not
limited
to,
acquisition
costs,
costs
associated
with
dispositions,
the
results
of
our
South
African
projects,
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
nearest
corresponding
GAAP
financial
measures
is
not
practicable.

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
read
these
results
in
conjunction
with
the
company’s
documents
filed
with
the
Securities
and
Exchange
Commission,
including
the
company’s
most
recent
annual
reports
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.
Actual
results
may
differ
materially
from
these
statements.
The
words
“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.
In
addition,
estimates
of
future
operating
results
are
based
on
the
company’s
current
complement
of
businesses,
which
is
subject
to
change.

Statements
in
this
press
release
speak
only
as
of
the
date
of
this
press
release,
and
SPX
disclaims
any
responsibility
to
update
or
revise
such
statements.

SOURCE
SPX
Corporation.

Investor
and
Media
Contacts:
Paul
Clegg,
VP,
Investor
Relations
and
Communications
Phone:
980-474-3806
E-mail:

spx.investor@spx.com

Pat
Uotila,
Manager,
Investor
Relations
Phone:
980-474-3806
E-mail:

spx.investor@spx.com



SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)

	Three months ended
	March 31, 2018			April 1, 2017

Revenues	$	351.9		$	340.6
Costs and expenses:
Cost of products sold		261.8			252.5
Selling, general and administrative		68.6			68.3
Intangible amortization		0.2			0.2
Special charges, net		2.0			0.5
Operating income		19.3			19.1

Other income (expense), net		1.0			(2.0	)
Interest expense		(4.3	)		(4.0	)
Interest income		0.5			0.4
Income from continuing operations before income taxes		16.5			13.5
Income tax provision		(4.1	)		(3.2	)
Income from continuing operations		12.4			10.3

Income (loss) from discontinued operations, net of tax		—			—
Gain on disposition of discontinued operations, net of tax		—			7.1
Income from discontinued operations, net of tax		—			7.1

Net income	$	12.4		$	17.4

Basic income per share of common stock:
Income from continuing operations	$	0.29		$	0.24
Income from discontinued operations		—			0.17
Net income per share	$	0.29		$	0.41

Weighted-average number of common shares outstanding — basic		42.772			42.108

Diluted income per share of common stock:
Income from continuing operations	$	0.28		$	0.24
Income from discontinued operations		—			0.16
Net income per share	$	0.28		$	0.40

Weighted-average number of common shares outstanding — diluted		44.353			43.454

SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)

	March 31, 2018			December 31, 2017
ASSETS
Current assets:
Cash and equivalents	$	103.7		$	124.3
Accounts receivable, net		214.7			267.5
Contract assets		98.3			—
Inventories, net		109.3			143.0
Other current assets (includes income taxes receivable of $41.8 and $62.4 at March 31, 2018 and December 31, 2017, respectively)		72.5			97.7
Total current assets		598.5			632.5
Property, plant and equipment:
Land		16.4			15.8
Buildings and leasehold improvements		122.7			120.5
Machinery and equipment		333.2			330.4
		472.3			466.7
Accumulated depreciation		(286.5	)		(280.1	)
Property, plant and equipment, net		185.8			186.6
Goodwill		349.3			345.9
Intangibles, net		128.8			117.6
Other assets		697.4			706.9
Deferred income taxes		52.3			50.9
TOTAL ASSETS	$	2,012.1		$	2,040.4

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	145.0		$	159.7
Contract liabilities		88.5			—
Accrued expenses		180.8			292.6
Income taxes payable		2.2			1.2
Short-term debt		6.8			7.0
Current maturities of long-term debt		4.9			0.5
Total current liabilities		428.2			461.0

Long-term debt		344.9			349.3
Deferred and other income taxes		33.0			29.6
Other long-term liabilities		872.8			885.8
Total long-term liabilities		1,250.7			1,264.7


Equity:
Common stock		0.5			0.5
Paid-in capital		1,300.4			1,309.8
Retained deficit		(730.9	)		(742.3	)
Accumulated other comprehensive income		254.5			250.1
Common stock in treasury		(491.3	)		(503.4	)
Total equity		333.2			314.7
TOTAL LIABILITIES AND EQUITY	$	2,012.1		$	2,040.4


SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)

	Three months ended
	March 31, 2018				April 1, 2017
Cash flows from (used in) operating activities:
Net income	$	12.4			$	17.4
Less: Income from discontinued operations, net of tax		—				7.1
Income from continuing operations		12.4				10.3
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Special charges, net		2.0				0.5
Deferred and other income taxes		(1.3	)			(3.9	)
Depreciation and amortization		6.6				6.3
Pension and other employee benefits		2.3				4.2
Long-term incentive compensation		3.9				3.2
Other, net		0.3				1.6
Changes in operating assets and liabilities, net of effects from an acquisition and divestitures:
Accounts receivable and other assets		23.6				33.7
Inventories		(3.6	)			(13.2	)
Accounts payable, accrued expenses and other		(43.1	)			(36.7	)
Cash spending on restructuring actions		(0.4	)			(0.6	)
Net cash from continuing operations		2.7				5.4
Net cash used in discontinued operations		(0.4	)	`		(3.7	)
Net cash from operating activities		2.3				1.7

Cash flows from (used in) investing activities:
Proceeds from company-owned life insurance policies, net		0.2				—
Business acquisition, net of cash acquired		(16.3	)			—
Capital expenditures		(3.2	)			(2.2	)
Net cash used in continuing operations		(19.3	)			(2.2	)
Net cash used in discontinued operations		—				—
Net cash used in investing activities		(19.3	)			(2.2	)

Cash flows from (used in) financing activities:
Borrowings under senior credit facilities		—				—
Repayments under senior credit facilities		—				(4.3	)
Net borrowings (repayments) under other financing arrangements		(0.4	)			1.7
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other		(3.2	)			(2.5	)
Net cash used in continuing operations		(3.6	)			(5.1	)
Net cash used in discontinued operations		—				—
Net cash used in financing activities		(3.6	)			(5.1	)
Change in cash and equivalents due to changes in foreign currency exchange rates		—				(1.3	)
Net change in cash and equivalents		(20.6	)			(6.9	)
Consolidated cash and equivalents, beginning of period		124.3				99.6
Consolidated cash and equivalents, end of period	$	103.7			$	92.7

SPX CORPORATION AND SUBSIDIARIES
RESULTS OF REPORTABLE SEGMENTS
(Unaudited; in millions)

	Three months ended
	March 31, 2018			April 1, 2017			Δ			*%/bps*
HVAC reportable segment

Revenues	$	127.7		$	110.1		$	17.6		16.0	%
Gross profit		41.6			38.2			3.4
Selling, general and administrative expense		22.9			21.6			1.3
Intangible amortization expense		0.1			0.1			—
Income	$	18.6		$	16.5		$	2.1		12.7	%
as a percent of revenues		14.6	%		15.0	%				-40 bps

Detection & Measurement reportable segment

Revenues	$	65.6		$	53.6		$	12.0		22.4	%
Gross profit		29.6			24.8			4.8
Selling, general and administrative expense		13.9			13.6			0.3
Intangible amortization expense		—			—			—
Income	$	15.7		$	11.2		$	4.5		40.2	%
as a percent of revenues		23.9	%		20.9	%				300 bps

Engineered Solutions reportable segment

Revenues	$	158.6		$	176.9		$	(18.3	)	(10.3	)%
Gross profit		18.9			25.1			(6.2	)
Selling, general and administrative expense		16.1			18.4			(2.3	)
Intangible amortization expense		0.1			0.1			—
Income	$	2.7		$	6.6		$	(3.9	)	(59.1	)%
as a percent of revenues		1.7	%		3.7	%				-200 bps

Consolidated Revenues	$	351.9		$	340.6		$	11.3		*3.3*	%
Consolidated Segment Income		37.0			34.3			2.7		*7.9*	%
as a percent of revenues		10.5	%		10.1	%				40 bps

Total income for reportable segments	$	37.0		$	34.3		$	2.7
Corporate expense		11.8			11.4			0.4
Pension and postretirement expense		—			0.1			(0.1	)
Long-term incentive compensation expense		3.9			3.2			0.7
Special charges, net		2.0			0.5			1.5
Consolidated operating income	$	19.3		$	19.1		$	0.2		1.0	%
as a percent of revenues		5.5	%		5.6	%				-10 bps

SPX CORPORATION AND SUBSIDIARIES
CASH AND DEBT RECONCILIATION
(Unaudited; in millions)


	Three months ended
	March 31, 2018
Beginning cash and equivalents	$	124.3
Cash from continuing operations		2.7
Capital expenditures		(3.2	)
Proceeds from company-owned life insurance policies, net		0.2
Business acquisition, net of cash acquired		(16.3	)
Net borrowings under other financing arrangements		(0.4	)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options		(3.2	)
Cash used in discontinued operations		(0.4	)
Change in cash due to changes in foreign currency exchange rates		—
Ending cash and equivalents	$	103.7


	Debt at										Debt at
	December 31, 2017			Borrowings		Repayments			Other		March 31, 2018
Revolving loans	$	—		$	—	$	—		$	—	$	—
Term loan		350.0			—		—			—		350.0
Trade receivables financing arrangement		—			—		—			—		—
Other indebtedness		9.1			12.7		(13.1	)		0.1		8.8
Less: Deferred financing costs associated with the term loan		(2.3	)		—		—			0.1		(2.2	)
Totals	$	356.8		$	12.7	$	(13.1	)	$	0.2	$	356.6

SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – ORGANIC REVENUE
HVAC AND DETECTION & MEASUREMENT SEGMENTS
(Unaudited)

	Three months ended March 31, 2018
	HVAC		Detection & Measurement

Net Revenue Growth	16.0	%	22.4	%

Exclude: Foreign Currency	1.1	%	2.8	%

Exclude: Acquisition	—	%	1.5	%

Organic Revenue Growth	14.9	%	18.1	%

SPX CORPORATION AND SUBSIDIARIES
Impact of ASC 606 Adoption
Three months ended March 31, 2018
(Unaudited; in millions)

	Reported		Effect of ASC 606 Adoption ⁽¹⁾			Under Prior Revenue Recognition Guidance
Revenues	$	351.9	$	(21.4	)	$	330.5
Net Income		12.4		(1.5	)		10.9

⁽¹⁾ Effect of ASC 606 Adoption related solely to our Engineered Solutions reportable segment

SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – REVENUE AND SEGMENT INCOME
(Unaudited; in millions)



CONSOLIDATED SPX:	Three months ended
	March 31, 2018			April 1, 2017
Consolidated revenue	$	351.9		$	340.6

Exclude: South African projects		14.3			18.2

Core revenue	$	337.6		$	322.4


Total segment income	$	37.0		$	34.3

Exclude: Losses from South African projects		(4.3	)		(4.4	)

Exclude: One time acquisition related costs ⁽¹⁾		(0.3	)		—

Core segment income	$	41.6		$	38.7
as a percent of Core revenues ⁽²⁾		12.3	%		12.0	%



ENGINEERED SOLUTIONS SEGMENT:	Three months ended						DETECTION & MEASUREMENT SEGMENT:	Three months ended
	March 31, 2018			April 1, 2017				March 31, 2018			April 1, 2017
Engineered Solutions revenue	$	158.6		$	176.9		Detection & Measurement Segment income	$	15.7		$	11.2

Exclude: South African projects		14.3			18.2		Exclude: One time acquisition related costs ⁽¹⁾		(0.3	)		—

Engineered Solutions (Core) revenue	$	144.3		$	158.7		Detection & Measurement adjusted segment income	$	16.0		$	11.2
							as a percent of Detection & Measurement revenues ⁽²⁾		24.4	%		20.9	%

Engineered Solutions Segment income	$	2.7		$	6.6

Exclude: Losses from South African projects		(4.3	)		(4.4	)

Engineered Solutions (Core) income	$	7.0		$	11.0
as a percent of Engineered Solutions (Core) revenues ⁽²⁾		4.9	%		6.9	%

⁽¹⁾ Represents additional “Cost of products sold” recorded during the three months ended March 31, 2018 related to the step-up of inventory (to fair value) acquired in connection with the March 1, 2018 Schonstedt transaction.

⁽²⁾ See “Results of Reportable Segments” for applicable percentages based on GAAP results.


SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – OPERATING INCOME
(Unaudited; in millions)


	Three months ended
	March 31, 2018			April 1, 2017
Operating income	$	19.3		$	19.1

Adjustments:
Losses from South African projects ⁽¹⁾		5.9			4.4

One time acquisition related costs ⁽²⁾		1.3			—

Adjusted operating income	$	26.5		$	23.5
as a percent of Core revenues ⁽³⁾		7.8	%		7.3	%


⁽¹⁾ Adjustment relates to the removal of South African projects (inclusive of restructuring charges of $1.6 recorded during the three months ended March 31, 2018).

⁽²⁾ One time acquisition costs include transaction related costs (e.g., professional fees) and an inventory step-up charge for the Schonstedt acquisition.

⁽³⁾ See “Results of Reportable Segments” for applicable percentages based on GAAP results.


SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – EARNINGS PER SHARE
Three Months Ended March 31, 2018
(Unaudited; in millions, except per share values)


	GAAP			Adjustments			Adjusted
Segment income ⁽¹⁾	$	37.0		$	4.6		$	41.6
Corporate expense ⁽²⁾		(11.8	)		1.0			(10.8	)
Long-term incentive compensation expense		(3.9	)		—			(3.9	)
Special charges, net ⁽³⁾		(2.0	)		1.6			(0.4	)
Operating income		19.3			7.2			26.5

Other income, net ⁽⁴⁾		1.0			0.3			1.3
Interest expense, net		(3.8	)		—			(3.8	)
Income from continuing operations before income taxes		16.5			7.5			24.0
Income tax provision ⁽⁵⁾		(4.1	)		(0.3	)		(4.4	)
Income from continuing operations		12.4			7.2			19.6

Dilutive shares outstanding		44.353						44.353

Earnings per share from continuing operations	$	0.28					$	0.44

⁽¹⁾ Adjustment represents the removal of operating losses associated with the South African projects ($4.3) and inventory step-up charges ($0.3) related to the Schonstedt acquisition.

⁽²⁾ Adjustment represents removal of acquisition related expenses incurred during the period.

⁽³⁾ Adjustment represents removal of restructuring charges associated with the South African projects.

⁽⁴⁾ Adjustment represents removal of non-service pension and postretirement items.

⁽⁵⁾ Adjustment represents the tax impact of items (1) through (4) above and the removal of tax charges associated with the impact of U.S. tax reform.


SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – EARNINGS PER SHARE
Three Months Ended April 1, 2017
(Unaudited; in millions, except per share values)


	GAAP			Adjustments			Adjusted
Segment income ⁽¹⁾	$	34.3		$	4.4		$	38.7
Corporate expense		(11.4	)		—			(11.4	)
Pension and postretirement expense		(0.1	)		—			(0.1	)
Long-term incentive compensation expense		(3.2	)		—			(3.2	)
Special charges, net		(0.5	)		—			(0.5	)
Operating income		19.1			4.4			23.5

Other expense, net ⁽²⁾		(2.0	)		2.0			—
Interest expense, net ⁽³⁾		(3.6	)		0.2			(3.4	)
Income from continuing operations before income taxes		13.5			6.6			20.1
Income tax provision ⁽⁴⁾		(3.2	)		(0.6	)		(3.8	)
Income from continuing operations		10.3			6.0			16.3

Dilutive shares outstanding		43.454						43.454

Earnings per share from continuing operations	$	0.24					$	0.38

⁽¹⁾ Adjustment represents the removal of operating losses associated with the South African projects.

⁽²⁾ Adjustment represents removal of non-service pension and postretirement items and removal of foreign currency losses associated with the South African projects.

⁽³⁾ Adjustment represents removal of interest expense incurred in connection with borrowings under a line of credit in South Africa.

⁽⁴⁾ Adjustment represents the tax impact of items (1) through (3) above.


SPX CORPORATION AND SUBSIDIARIES
NON-GAAP RECONCILIATION – FREE CASH FLOW
(Unaudited; in millions)


	Three months ended
	March 31, 2018

Net operating cash flow from continuing operations	$	2.7

Capital expenditures – continuing operations		(3.2	)

Free cash flow used in continuing operations	$	(0.5	)

Source:
SPX
Corporation

Footer

About SPX

Useful Links