UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 2018
SPX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 1-6948 | 38-1016240 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
13320-A Ballantyne Corporate Place
Charlotte, North Carolina 28277
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (980) 474-3700
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On February 15, 2018, SPX Corporation (the “Company”) issued the press release attached as Exhibit 99.1 hereto and incorporated herein by reference.
The press release incorporated by reference into this Item 2.02 contains certain non-GAAP financial measures, including disclosure regarding “Core revenues” and “Core segment income (loss)”, defined as revenues and segment income (loss) for the Company and its Engineered Solutions segment excluding the results of the South African projects. The South African projects have a finite life and, thus, are expected to have a diminishing impact on the Company’s and the Engineered Solutions segment’s operating results over the long-term. The Company’s management believes it is useful to investors to disclose revenues and segment income (loss) without the results of the South African projects to provide investors with metrics that the Company’s management uses to measure the overall performance of its core businesses. Additionally, during 2017, we included an adjustment to Core segment income (loss) associated with the exclusion of a non-recurring gain on a contract settlement within our Engineered Solutions segment. Core revenues and Core segment income (loss) do not provide investors with an accurate measure of, and should not be used as substitutes for, the Company’s revenues and operating income (loss) and the Engineered Solutions segment’s revenues and income (loss) as determined in accordance with accounting principles generally accepted in the United States (“GAAP”), and may not be comparable to similarly titled measures reported by other companies.
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding adjusted operating income (loss) and adjusted earnings (loss) per share, defined as operating income (loss) and diluted net income (loss) per share from continuing operations excluding the following items: (a) results of the South African projects, (b) non-service pension and postretirement expense (income), (c) gain (loss) related to acquisitions/divestitures, (d) non-cash intangible impairment charges, (e) a non-recurring gain on a contract settlement (see above), (f) non-cash charges associated with the amendment/refinancing of the senior credit agreement, (g) a non-recurring gain on interest rate swaps as these swaps no longer qualified for hedge accounting in connection with the amendment of our senior credit agreement, and (h) the removal of a tax benefit associated with worthless stock deductions, tax charges associated with the impact of the new U.S. tax act, and the removal of certain other discrete tax benefits, each, as applicable, as well as (i) the income tax impact of items (a) through (g). In addition to the Company’s South African projects, the Company’s management views the impact related to each of the other items as not indicative of the Company’s ongoing performance. The Company believes that inclusion of only the service cost and prior service cost components of pension and postretirement expense better reflects the ongoing costs of providing pension and postretirement benefits to its employees. Other components of GAAP pension and postretirement expense (income) are mainly driven by market performance, and the Company manages these separately from the operational performance of its business. The Company believes adjusted operating income (loss) and adjusted earnings (loss) per share, when read in conjunction with operating income (loss) and diluted net income (loss) per share from continuing operations, gives 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 adjusted operating income (loss) and adjusted earnings (loss) per share as measures of the Company’s performance. The adjusted operating income (loss) and adjusted earnings (loss) per share measures do not provide investors with an accurate measure of the actual operating income (loss) and diluted net income (loss) per share from continuing operations reported by the Company and should not be considered as substitutes for operating income (loss) and diluted net income (loss) per share from continuing operations as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding organic revenue growth (decline), defined as revenue growth (decline) excluding the effects of foreign currency fluctuations and acquisitions/divestitures, as applicable. In addition, the company has excluded the impact of the revenue reduction that resulted from the fourth quarter 2017 revision to the expected revenues and profits on our large power projects in South Africa. The Company’s management believes that organic revenue growth (decline) is a useful financial measure for investors in evaluating operating performance for the periods presented, because excluding the effect of currency fluctuations, acquisitions/divestitures, and the revenue revisions associated with our large power projects in South Africa, when read in conjunction with the Company’s revenues, presents a useful tool to evaluate the Company’s ongoing operations and provides investors with a tool they can use to evaluate the Company’s management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors the Company’s management uses in internal evaluations of the overall performance of its business. This metric, however, should not be considered a substitute for revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
2
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding free cash flow from (used in) continuing operations, defined as net cash from (used in) continuing operations less capital expenditures of continuing operations. The Company’s management believes that free cash flow from (used in) continuing operations is a useful financial measure for investors in evaluating the cash flow performance of multi-industrial companies, since it provides insight into the cash flow available to fund such things as mandatory and discretionary debt reduction, equity repurchases, and acquisitions or other strategic investments. Free cash flow from (used in) continuing operations is not a measure of financial performance under GAAP. This measure should not be considered a substitute for net cash flow from (used in) continuing operations, as determined in accordance with GAAP, but rather should be used in combination with cash flows from (used in) operating activities as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
Refer to the tables included in the press release for the components of each of the Company’s non-GAAP financial measures referred to above, and for the reconciliations of these numbers to their respective comparable GAAP measures.
The information in this Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | |
99.1 | Press Release issued February 15, 2018, furnished solely pursuant to Item 2.02 of Form 8-K | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SPX CORPORATION | ||
(Registrant) | ||
Date: February 15, 2018 | By: | /s/ Scott W. Sproule |
Scott W. Sproule | ||
Vice President, Chief Financial Officer and | ||
Treasurer | ||
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | ||
Exhibit 99.1
SPX Reports Fourth Quarter and Full-Year 2017 Results
Q4 and Full-Year 2017 GAAP EPS of $1.35 and $1.91
Q4 and Full-Year 2017 Adjusted EPS* of $0.60 and $1.78
Introducing 2018 Full-Year Adjusted EPS* Guidance Range of $2.03-$2.18
Increasing Capital Availability through 2020 by 50% to More than $600 Million
CHARLOTTE, N.C., February 15, 2018 /Globe Newswire/ -- SPX Corporation (NYSE:SPXC) today reported results for the fourth quarter and the year ended December 31, 2017.
Gene Lowe, President and CEO, said “I am very pleased with our company’s strong financial performance in 2017, which was driven by a significant increase in Detection & Measurement revenues and strong margin improvement in our Engineered Solutions segment, associated with the repositioning of our process cooling business. In South Africa, we remain on track to substantially complete our role in the projects next year, and we are reducing our expectations for future cash usage associated with South Africa to $25-$30 million.”
Mr. Lowe continued, “Our 2018 guidance reflects our expectations for another year of significant growth in adjusted EPS to a range of $2.03-$2.18. With our strong balance sheet and solid operational and cash flow trends, we are well positioned to increase our level of investment in initiatives to drive sustainable double-digit earnings growth. We are raising our long-term targets for capital available to deploy through 2020 by 50%, to more than $600 million, and are raising our 2020 target for Adjusted EPS to a range of $2.65-$2.90, from $2.25-$2.50 previously.”
Fourth Quarter 2017 Overview:
For the fourth quarter of 2017, the company reported revenue of $387.0 million and operating income of $1.7 million, compared with revenue of $395.3 million and operating income of $1.8 million, respectively, in the fourth quarter of 2016. Net income per share from continuing operations in the fourth quarter of 2017 was $1.35, compared with a net loss per share of $0.07 in the fourth quarter of 2016.
SPX Core revenue* was $395.8 million and adjusted operating income* was $40.3 million, compared with Core revenue* of $377.5 million and adjusted operating income* of $43.6 million in the fourth quarter of 2016. Adjusted earnings per share* in the fourth quarter of 2017 were $0.60, compared with $0.69 in the fourth quarter of 2016.
Full-Year 2017 Overview:
For the full-year 2017, the company reported revenue of $1.4 billion and operating income of $54.8 million, compared with revenue of $1.5 billion and operating income of $55.0 million in 2016. Net earnings per share from continuing operations in 2017 were $1.91, compared with $0.30 in 2016.
SPX Core revenue* for 2017 was $1.4 billion and adjusted operating income* was $120.8 million, compared with Core revenue* of $1.4 billion and adjusted operating income* of $97.2 million in 2016. Adjusted earnings per share* in 2017 were $1.78, compared with $1.47 in 2016.
Fourth Quarter and Full-Year Financial Comparisons:
GAAP Results:
($ millions) | Q4 2017 | Q4 2016 | FY 2017 | FY 2016 | ||||||||||||
Revenue | $387.0 | $395.3 | $1,425.8 | $1,472.3 | ||||||||||||
Segment Income | 24.5 | 54.8 | 124.9 | 142.8 | ||||||||||||
Operating Income | 1.7 | 1.8 | 54.8 | 55.0 | ||||||||||||
Adjusted Results:
($ millions) | Q4 2017 | Q4 2016 | FY 2017 | FY 2016 | ||||||||||||
Core Revenue* | $395.8 | $377.5 | $1,396.7 | $1,389.0 | ||||||||||||
Core Segment Income* | 57.3 | 59.5 | 182.7 | 157.3 | ||||||||||||
Adjusted Operating Income* | 40.3 | 43.6 | 120.8 | 97.2 | ||||||||||||
*Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.
HVAC
Revenue for Q4 2017 was $161.2 million, compared with $159.1 million in Q4 2016, an increase of 1.3%. Excluding a 0.8% increase related to currency fluctuation, organic revenue* increased 0.5% primarily reflecting an increase in sales of cooling products, partially offset by a decline in heating products.
Segment income in Q4 2017 was $26.6 million, or 16.5% of revenue, compared with $31.6 million, or 19.9% of revenue in Q4 2016. The decline in segment income margins of approximately 340 basis points was driven by a less profitable sales mix and lower fixed cost absorption due to lower sales volumes of heating products. A charge associated with legal matters also negatively affected Q4 segment margins, but was a non-recurring item.
Full-year revenue increased modestly to $511.0 million in 2017, from $509.5 million in 2016, due primarily to stronger HVAC cooling shipments partially offset by a decline in heating product sales. Segment income margins decreased 120 basis points to 14.5% of revenues.
Detection & Measurement
Revenue in Q4 2017 was $75.3 million, compared with $58.6 million in Q4 2016, an increase of 28.5%. Excluding a 1.7% increase related to currency fluctuation, organic revenue* increased 26.8% reflecting an increase across all product lines with particular strength in fare collection systems and communication technologies products.
Segment income in Q4 2017 was $18.4 million, or 24.4% of revenue, compared with $14.4 million, or 24.6% of revenue, in Q4 2016. Higher segment income was driven by the revenue increase noted above.
Full-year revenue increased 15.0% to $260.3 million in 2017, from $226.4 million in 2016, due primarily to stronger sales of fare collection systems and communication technologies products. Segment income margins increased 440 basis points to 24.4% of revenues.
Engineered Solutions
Revenue in Q4 2017 was $150.5 million, compared with $177.6 million in Q4 2016, a decrease of 15.3%. The decrease was driven primarily by a $23.4 million, or 13.2%, reduction in revenue associated with a charge related to the South African projects, which is discussed further below, and a decline in organic revenue* of 2.7% driven primarily by the business model shift the company has been executing in process cooling, partially offset by higher transformer revenues.
Segment loss in Q4 2017 was $20.5 million, compared with segment income of $8.8 million, or 5.0% of revenue in Q4 2016. The decline in segment income was driven by a $29.9 million charge associated with our South African projects.
Full-year revenue declined 11.1% to $654.5 million in 2017, from $736.4 million in 2016, due primarily to a reduction in revenue of $36.9 million, associated with South African project charges. A segment loss of $12.6 million in 2017 compared to segment income of $17.3 million in 2016, was due primarily to South African project charges of $52.8 million in 2017.
Engineered Solutions (Core)
Excluding the results of the South African projects, Engineered Solutions recorded Core revenue* in Q4 2017 of $159.3 million, compared with $159.8 million in Q4 2016, a decrease of 0.3%. Excluding the effect of currency fluctuations, organic revenue* declined 0.6% due primarily to the business model shift in process cooling.
Core income* in Q4 2017 was $12.3 million, or 7.7% of revenue, compared with $13.5 million, or 8.4% of revenue, in Q4 2016. The reduction in Core income* and 70 basis points decline in Core income margin* were primarily due to a less favorable product mix.
Full-year Core revenue* declined 4.2% to $625.4 million in 2017 from $653.1 million in 2016, due primarily to the business model shift the company has been executing in process cooling. Segment income margins* increased 230 basis points to 7.2% of revenues.
South African Projects
During Q4 2017, the company recorded a charge of $29.9 million to revise the amount of expected revenue and costs on the projects in South Africa, which resulted in a reduction in revenue of $23.4 million and an increase in cost of $6.5 million. Additionally, the company recognized a net tax benefit of $65.9 million associated with the write off of historical investments in its South African holding company for US tax purposes.
When developing projections of future net cash usage associated with South Africa, the company considers a number of potential factors. Based on current projections, and a larger tax benefit than had previously been assumed, the company is reducing its expectations for net cash usage through completion of the projects to $25 to $30 million, and continues to anticipate substantial completion of its role in the projects by the end of 2019.
Revenue attributable to the large South African projects for Q4 2017 was negative $8.8 million, compared with revenue of $17.8 million in Q4 2016. Losses for these projects recorded in our Engineered Solutions segment in Q4 2017 were $32.8 million, compared with a loss of $4.7 million in Q4 2016.
Financial Update:
As of December 31, 2017, SPX had total outstanding debt of $356.8 million and total cash of $124.3 million. During the full-year 2017, SPX generated net operating cash from continuing operations* of $54 million, including net cash usage associated with South Africa of $49.5 million, which is net of a tax benefit. Capital expenditures for continuing operations were $11 million. Net leverage as calculated under the company’s new bank credit agreement was 1.5x, compared with 2.1x at the end of Q3 2017.
2018 Guidance:
SPX is targeting 2018 Core revenue* in a range of $1.35 to $1.40 billion with Core segment income margin* of 14.0-14.5%. Adjusted operating income margin* is expected to be approximately 10%. Adjusted earnings per share* is expected to be in a range of $2.03 to $2.18.
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. Additionally, 2017 Core segment income and Engineered Solutions (Core) income also exclude a gain related to a contract settlement within our Engineered Solutions segment. Other items adjusted out of operating income and earnings per share consist of a loss on the refinancing of the senior credit agreement and gain on interest rate swaps in Q4 2017, non-service pension items, the previously discussed net tax benefit associated with South Africa recorded in Q4 2017, and various other tax items in 2017 and 2016, non-cash impairment charges on intangible assets recorded in Q1 and Q4 2016, the gain, and the adjustments thereto, on the sale of Dry Cooling that were recorded during each of the first three quarters of 2016, and a loss on early extinguishment of debt that was recorded in Q3 2016.
Form 10-K: The company expects to file its annual report on Form 10-K for the year ended December 31, 2017 with the Securities and Exchange Commission on or before March 1, 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 fourth quarter results and 2018 financial guidance. 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: 5392409
A replay of the call will be available by telephone through Thursday, February 22nd.
To listen to a replay of the call
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Participant code: 5392409
Upcoming Investor Events: Company management plans to meet with various investors during February.
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 about 15 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.
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, transaction and 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 annual reports on Form 10-K, and any amendments thereto, and quarterly reports on Form 10-Q. 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 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited; in millions, except per share amounts) | |||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||
Revenues | $ | 387.0 | $ | 395.3 | $ | 1,425.8 | $ | 1,472.3 | |||||||
Costs and expenses: | |||||||||||||||
Cost of products sold | 306.1 | 281.3 | 1,095.6 | 1,096.5 | |||||||||||
Selling, general and administrative | 78.4 | 85.4 | 282.3 | 301.0 | |||||||||||
Intangible amortization | 0.1 | 0.2 | 0.6 | 2.8 | |||||||||||
Impairment of intangible assets | — | 26.1 | — | 30.1 | |||||||||||
Special charges, net | 0.7 | 0.5 | 2.7 | 5.3 | |||||||||||
Gain on contract settlement | — | — | 10.2 | — | |||||||||||
Gain on sale of dry cooling business | — | — | — | 18.4 | |||||||||||
Operating income | 1.7 | 1.8 | 54.8 | 55.0 | |||||||||||
Other income (expense), net | 1.1 | (2.5 | ) | (2.0 | ) | (0.3 | ) | ||||||||
Interest expense | (4.2 | ) | (3.7 | ) | (17.1 | ) | (14.8 | ) | |||||||
Interest income | 0.4 | 0.4 | 1.3 | 0.8 | |||||||||||
Loss on amendment/refinancing of senior credit agreement | (0.9 | ) | — | (0.9 | ) | (1.3 | ) | ||||||||
Income (loss) from continuing operations before income taxes | (1.9 | ) | (4.0 | ) | 36.1 | 39.4 | |||||||||
Income tax (provision) benefit | 61.9 | 1.0 | 47.9 | (9.1 | ) | ||||||||||
Income (loss) from continuing operations | 60.0 | (3.0 | ) | 84.0 | 30.3 | ||||||||||
Loss from discontinued operations, net of tax | — | (4.0 | ) | — | (16.6 | ) | |||||||||
Income (loss) on disposition of discontinued operations, net of tax | (1.4 | ) | (79.1 | ) | 5.3 | (81.3 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | (1.4 | ) | (83.1 | ) | 5.3 | (97.9 | ) | ||||||||
Net income (loss) | 58.6 | (86.1 | ) | 89.3 | (67.6 | ) | |||||||||
Less: Net loss attributable to noncontrolling interests | — | — | — | (0.4 | ) | ||||||||||
Net income (loss) attributable to SPX Corporation common shareholders | 58.6 | (86.1 | ) | 89.3 | (67.2 | ) | |||||||||
Adjustment related to redeemable noncontrolling interest | — | — | — | (18.1 | ) | ||||||||||
Net income (loss) attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 58.6 | $ | (86.1 | ) | $ | 89.3 | $ | (85.3 | ) | |||||
Amounts attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest: | |||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 60.0 | $ | (3.0 | ) | $ | 84.0 | $ | 12.6 | ||||||
Income (loss) from discontinued operations, net of tax | (1.4 | ) | (83.1 | ) | 5.3 | (97.9 | ) | ||||||||
Net income (loss) | $ | 58.6 | $ | (86.1 | ) | $ | 89.3 | $ | (85.3 | ) | |||||
Basic income (loss) per share of common stock: | |||||||||||||||
Income (loss) from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.41 | $ | (0.07 | ) | $ | 1.98 | $ | 0.30 | ||||||
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders | (0.03 | ) | (1.99 | ) | 0.13 | (2.35 | ) | ||||||||
Net income (loss) per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.38 | $ | (2.06 | ) | $ | 2.11 | $ | (2.05 | ) | |||||
Weighted-average number of common shares outstanding — basic | 42.613 | 41.828 | 42.413 | 41.610 | |||||||||||
Diluted income (loss) per share of common stock: | |||||||||||||||
Income (loss) from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.35 | $ | (0.07 | ) | $ | 1.91 | $ | 0.30 | ||||||
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders | (0.03 | ) | (1.99 | ) | 0.12 | (2.32 | ) | ||||||||
Net income (loss) per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.32 | $ | (2.06 | ) | $ | 2.03 | $ | (2.02 | ) | |||||
Weighted-average number of common shares outstanding — diluted | 44.401 | 41.828 | 43.905 | 42.161 | |||||||||||
SPX CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited; in millions) | ||||||||
December 31, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 124.3 | $ | 99.6 | ||||
Accounts receivable, net | 267.5 | 251.7 | ||||||
Inventories, net | 143.0 | 145.7 | ||||||
Other current assets (includes income taxes receivable of $62.4 and $1.2 at December 31, 2017 and 2016, respectively) | 97.7 | 30.6 | ||||||
Total current assets | 632.5 | 527.6 | ||||||
Property, plant and equipment: | ||||||||
Land | 15.8 | 15.4 | ||||||
Buildings and leasehold improvements | 120.5 | 117.3 | ||||||
Machinery and equipment | 330.4 | 329.8 | ||||||
466.7 | 462.5 | |||||||
Accumulated depreciation | (280.1 | ) | (267.0 | ) | ||||
Property, plant and equipment, net | 186.6 | 195.5 | ||||||
Goodwill | 345.9 | 340.4 | ||||||
Intangibles, net | 117.6 | 117.9 | ||||||
Other assets | 706.9 | 680.5 | ||||||
Deferred income taxes | 50.9 | 50.6 | ||||||
TOTAL ASSETS | $ | 2,040.4 | $ | 1,912.5 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 159.7 | $ | 137.6 | ||||
Accrued expenses | 292.6 | 304.3 | ||||||
Income taxes payable | 1.2 | 1.7 | ||||||
Short-term debt | 7.0 | 14.8 | ||||||
Current maturities of long-term debt | 0.5 | 17.9 | ||||||
Total current liabilities | 461.0 | 476.3 | ||||||
Long-term debt | 349.3 | 323.5 | ||||||
Deferred and other income taxes | 29.6 | 42.4 | ||||||
Other long-term liabilities | 885.8 | 878.7 | ||||||
Total long-term liabilities | 1,264.7 | 1,244.6 | ||||||
Equity: | ||||||||
Common stock | 0.5 | 0.5 | ||||||
Paid-in capital | 1,309.8 | 1,307.9 | ||||||
Retained deficit | (742.3 | ) | (831.6 | ) | ||||
Accumulated other comprehensive income | 250.1 | 235.1 | ||||||
Common stock in treasury | (503.4 | ) | (520.3 | ) | ||||
Total equity | 314.7 | 191.6 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 2,040.4 | $ | 1,912.5 | ||||
SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||
RESULTS OF REPORTABLE SEGMENTS | ||||||||||||||||||||||||||||||
(Unaudited; in millions) | ||||||||||||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | Δ | %/bps | December 31, 2017 | December 31, 2016 | Δ | %/bps | |||||||||||||||||||||||
HVAC reportable segment | ||||||||||||||||||||||||||||||
Revenues | $ | 161.2 | $ | 159.1 | $ | 2.1 | 1.3 | % | $ | 511.0 | $ | 509.5 | $ | 1.5 | 0.3 | % | ||||||||||||||
Gross profit | 49.9 | 54.8 | (4.9 | ) | 163.0 | 172.9 | (9.9 | ) | ||||||||||||||||||||||
Selling, general and administrative expense | 23.2 | 23.1 | 0.1 | 88.5 | 92.3 | (3.8 | ) | |||||||||||||||||||||||
Intangible amortization expense | 0.1 | 0.1 | — | 0.4 | 0.4 | — | ||||||||||||||||||||||||
Income | $ | 26.6 | $ | 31.6 | $ | (5.0 | ) | (15.8 | )% | $ | 74.1 | $ | 80.2 | $ | (6.1 | ) | (7.6 | )% | ||||||||||||
as a percent of revenues | 16.5 | % | 19.9 | % | -340 bps | 14.5 | % | 15.7 | % | -120 bps | ||||||||||||||||||||
Detection & Measurement reportable segment | ||||||||||||||||||||||||||||||
Revenues | $ | 75.3 | $ | 58.6 | $ | 16.7 | 28.5 | % | $ | 260.3 | $ | 226.4 | $ | 33.9 | 15.0 | % | ||||||||||||||
Gross profit | 33.4 | 28.4 | 5.0 | 119.5 | 105.0 | 14.5 | ||||||||||||||||||||||||
Selling, general and administrative expense | 15.0 | 13.9 | 1.1 | 56.0 | 59.1 | (3.1 | ) | |||||||||||||||||||||||
Intangible amortization expense | — | 0.1 | (0.1 | ) | 0.1 | 0.6 | (0.5 | ) | ||||||||||||||||||||||
Income | $ | 18.4 | $ | 14.4 | $ | 4.0 | 27.8 | % | $ | 63.4 | $ | 45.3 | $ | 18.1 | 40.0 | % | ||||||||||||||
as a percent of revenues | 24.4 | % | 24.6 | % | -20 bps | 24.4 | % | 20.0 | % | 440 bps | ||||||||||||||||||||
Engineered Solutions reportable segment | ||||||||||||||||||||||||||||||
Revenues | $ | 150.5 | $ | 177.6 | $ | (27.1 | ) | (15.3 | )% | $ | 654.5 | $ | 736.4 | $ | (81.9 | ) | (11.1 | )% | ||||||||||||
Gross profit (loss) | (2.4 | ) | 30.8 | (33.2 | ) | 47.7 | 97.7 | (50.0 | ) | |||||||||||||||||||||
Selling, general and administrative expense | 18.1 | 22.0 | (3.9 | ) | 70.4 | 78.6 | (8.2 | ) | ||||||||||||||||||||||
Intangible amortization expense | — | — | — | 0.1 | 1.8 | (1.7 | ) | |||||||||||||||||||||||
Gain on contract settlement | — | — | — | 10.2 | — | 10.2 | ||||||||||||||||||||||||
Income (loss) | $ | (20.5 | ) | $ | 8.8 | $ | (29.3 | ) | (333.0 | )% | $ | (12.6 | ) | $ | 17.3 | $ | (29.9 | ) | (172.8 | )% | ||||||||||
as a percent of revenues | (13.6 | )% | 5.0 | % | -1860 bps | (1.9 | )% | 2.3 | % | -420 bps | ||||||||||||||||||||
Consolidated Revenues | $ | 387.0 | $ | 395.3 | $ | (8.3 | ) | (2.1 | )% | $ | 1,425.8 | $ | 1,472.3 | $ | (46.5 | ) | (3.2 | )% | ||||||||||||
Consolidated Segment Income | 24.5 | 54.8 | (30.3 | ) | (55.3 | )% | 124.9 | 142.8 | (17.9 | ) | (12.5 | )% | ||||||||||||||||||
as a percent of revenues | 6.3 | % | 13.9 | % | -760 bps | 8.8 | % | 9.7 | % | -90 bps | ||||||||||||||||||||
Total income for reportable segments | $ | 24.5 | $ | 54.8 | $ | (30.3 | ) | $ | 124.9 | $ | 142.8 | $ | (17.9 | ) | ||||||||||||||||
Corporate expense | 12.5 | 12.1 | 0.4 | 46.2 | 41.7 | 4.5 | ||||||||||||||||||||||||
Pension and postretirement expense | 4.2 | 10.8 | (6.6 | ) | 5.4 | 15.4 | (10.0 | ) | ||||||||||||||||||||||
Long-term incentive compensation expense | 5.4 | 3.5 | 1.9 | 15.8 | 13.7 | 2.1 | ||||||||||||||||||||||||
Impairment of intangible assets | — | 26.1 | (26.1 | ) | — | 30.1 | (30.1 | ) | ||||||||||||||||||||||
Special charges, net | 0.7 | 0.5 | 0.2 | 2.7 | 5.3 | (2.6 | ) | |||||||||||||||||||||||
Gain on sale of dry cooling business | — | — | — | — | 18.4 | (18.4 | ) | |||||||||||||||||||||||
Consolidated operating income | $ | 1.7 | $ | 1.8 | $ | (0.1 | ) | (5.6 | )% | $ | 54.8 | $ | 55.0 | $ | (0.2 | ) | (0.4 | )% | ||||||||||||
as a percent of revenues | 0.4 | % | 0.5 | % | -10 bps | 3.8 | % | 3.7 | % | 10 bps | ||||||||||||||||||||
SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||
(Unaudited; in millions) | ||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income (loss) | $ | 58.6 | $ | (86.1 | ) | $ | 89.3 | $ | (67.6 | ) | ||||||||
Less: Income (loss) from discontinued operations, net of tax | (1.4 | ) | (83.1 | ) | 5.3 | (97.9 | ) | |||||||||||
Income (loss) from continuing operations | 60.0 | (3.0 | ) | 84.0 | 30.3 | |||||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash from operating activities: | ||||||||||||||||||
Special charges, net | 0.7 | 0.5 | 2.7 | 5.3 | ||||||||||||||
Gain on asset sales | — | (0.9 | ) | — | (0.9 | ) | ||||||||||||
Gain on sale of dry cooling business | — | — | — | (18.4 | ) | |||||||||||||
Impairment of intangible assets | — | 26.1 | — | 30.1 | ||||||||||||||
Loss on amendment/refinancing of senior credit agreement | 0.9 | — | 0.9 | 1.3 | ||||||||||||||
Deferred and other income taxes | (20.3 | ) | (6.8 | ) | (21.0 | ) | — | |||||||||||
Depreciation and amortization | 6.3 | 6.3 | 25.2 | 26.5 | ||||||||||||||
Pension and other employee benefits | 6.6 | 12.9 | 14.9 | 24.8 | ||||||||||||||
Long-term incentive compensation | 5.4 | 3.5 | 15.8 | 13.7 | ||||||||||||||
Other, net | 1.8 | 3.0 | 4.7 | 3.2 | ||||||||||||||
Changes in operating assets and liabilities, net of effects from divestitures: | ||||||||||||||||||
Accounts receivable and other assets | (84.8 | ) | (82.5 | ) | (102.8 | ) | (28.7 | ) | ||||||||||
Inventories | 21.7 | 19.7 | 4.5 | 8.5 | ||||||||||||||
Accounts payable, accrued expenses and other | 59.9 | 86.2 | 28.3 | (40.2 | ) | |||||||||||||
Cash spending on restructuring actions | (1.6 | ) | (0.3 | ) | (3.0 | ) | (2.1 | ) | ||||||||||
Net cash from continuing operations | 56.6 | 64.7 | 54.2 | 53.4 | ||||||||||||||
Net cash used in discontinued operations | (0.5 | ) | (12.6 | ) | (6.6 | ) | (46.9 | ) | ||||||||||
Net cash from operating activities | 56.1 | 52.1 | 47.6 | 6.5 | ||||||||||||||
Cash flows from (used in) investing activities: | ||||||||||||||||||
Proceeds from asset sales | — | 0.4 | — | 48.1 | ||||||||||||||
Increase in restricted cash | (0.3 | ) | — | (0.3 | ) | — | ||||||||||||
Capital expenditures | (2.6 | ) | (3.9 | ) | (11.0 | ) | (11.7 | ) | ||||||||||
Net cash from (used in) continuing operations | (2.9 | ) | (3.5 | ) | (11.3 | ) | 36.4 | |||||||||||
Net cash used in discontinued operations | — | (28.6 | ) | — | (30.9 | ) | ||||||||||||
Net cash from (used in) investing activities | (2.9 | ) | (32.1 | ) | (11.3 | ) | 5.5 | |||||||||||
Cash flows used in financing activities: | ||||||||||||||||||
Borrowings under senior credit facilities | 358.2 | — | 404.6 | 56.2 | ||||||||||||||
Repayments under senior credit facilities | (336.3 | ) | (4.4 | ) | (395.8 | ) | (65.0 | ) | ||||||||||
Borrowings under trade receivables agreement | 4.0 | 28.0 | 74.0 | 72.0 | ||||||||||||||
Repayments under trade receivables agreement | (35.0 | ) | (28.0 | ) | (74.0 | ) | (72.0 | ) | ||||||||||
Net repayments under other financing arrangements | (2.3 | ) | (3.0 | ) | (10.1 | ) | (10.1 | ) | ||||||||||
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other | (0.2 | ) | — | (1.3 | ) | (1.6 | ) | |||||||||||
Financing fees paid | (3.6 | ) | — | (3.6 | ) | — | ||||||||||||
Net cash used in continuing operations | (15.2 | ) | (7.4 | ) | (6.2 | ) | (20.5 | ) | ||||||||||
Net cash used in discontinued operations | — | — | — | — | ||||||||||||||
Net cash used in financing activities | (15.2 | ) | (7.4 | ) | (6.2 | ) | (20.5 | ) | ||||||||||
Change in cash and equivalents due to changes in foreign currency exchange rates | (0.9 | ) | 3.6 | (5.4 | ) | 6.7 | ||||||||||||
Net change in cash and equivalents | 37.1 | 16.2 | 24.7 | (1.8 | ) | |||||||||||||
Consolidated cash and equivalents, beginning of period | 87.2 | 83.4 | 99.6 | 101.4 | ||||||||||||||
Consolidated cash and equivalents, end of period | $ | 124.3 | $ | 99.6 | $ | 124.3 | $ | 99.6 | ||||||||||
SPX CORPORATION AND SUBSIDIARIES | ||||
CASH AND DEBT RECONCILIATION | ||||
(Unaudited; in millions) | ||||
Twelve months ended | ||||
December 31, 2017 | ||||
Beginning cash and equivalents | $ | 99.6 | ||
Cash from continuing operations | 54.2 | |||
Increase in restricted cash | (0.3 | ) | ||
Capital expenditures | (11.0 | ) | ||
Borrowings under senior credit facilities | 404.6 | |||
Repayments under senior credit facilities | (395.8 | ) | ||
Net repayments under other financing arrangements | (10.1 | ) | ||
Minimum withholdings paid on behalf of employees for net share settlements and other | (1.3 | ) | ||
Financing fees paid | (3.6 | ) | ||
Cash used in discontinued operations | (6.6 | ) | ||
Change in cash due to changes in foreign currency exchange rates | (5.4 | ) | ||
Ending cash and equivalents | $ | 124.3 | ||
Debt at | Debt at | |||||||||||||||||||
December 31, 2016 | Borrowings | Repayments | Other | December 31, 2017 | ||||||||||||||||
Domestic revolving loan facility | $ | — | $ | 54.6 | $ | (54.6 | ) | $ | — | $ | — | |||||||||
Term loan | 341.2 | 350.0 | (341.2 | ) | — | 350.0 | ||||||||||||||
Trade receivables financing arrangement | — | 74.0 | (74.0 | ) | — | — | ||||||||||||||
Other indebtedness | 16.6 | 38.7 | (48.8 | ) | 2.6 | 9.1 | ||||||||||||||
Less: Deferred financing costs associated with the Term loan | (1.6 | ) | — | — | (0.7 | ) | (2.3 | ) | ||||||||||||
Totals | $ | 356.2 | $ | 517.3 | $ | (518.6 | ) | $ | 1.9 | $ | 356.8 | |||||||||
SPX CORPORATION AND SUBSIDIARIES | ||||||||||||
NON-GAAP RECONCILIATION - ORGANIC REVENUE | ||||||||||||
HVAC, DETECTION & MEASUREMENT, AND ENGINEERED SOLUTIONS SEGMENTS | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended December 31, 2017 | ||||||||||||
HVAC | Detection & Measurement | Engineered Solutions | ||||||||||
Net Revenue Growth (Decline) | 1.3 | % | 28.5 | % | (15.3 | ) | % | |||||
Exclude: Foreign Currency | 0.8 | % | 1.7 | % | 0.6 | % | ||||||
Exclude: South Africa revenue revision | — | % | — | % | (13.2 | ) | % | |||||
Organic Revenue Growth (Decline) | 0.5 | % | 26.8 | % | (2.7 | ) | % | |||||
SPX CORPORATION AND SUBSIDIARIES | |||
NON-GAAP RECONCILIATION - ENGINEERED SOLUTIONS (CORE) ORGANIC REVENUE | |||
(Unaudited) | |||
Three months ended | |||
December 31, 2017 | |||
Engineered Solutions Segment Net Revenue Decline | (15.3 | ) | % |
Adjustment to Exclude South African projects | (15.0 | ) | % |
Engineered Solutions (Core) Net Revenue Decline | (0.3 | ) | % |
Exclude: Foreign Currency | 0.3 | % | |
Engineered Solutions (Core) Organic Revenue Decline | (0.6 | ) | % |
SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||||
NON-GAAP RECONCILIATION - REVENUE AND SEGMENT INCOME | ||||||||||||||||
(Unaudited; in millions) | ||||||||||||||||
CONSOLIDATED SPX: | Three months ended | Twelve months ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Consolidated revenue | $ | 387.0 | $ | 395.3 | $ | 1,425.8 | $ | 1,472.3 | ||||||||
Exclude: South African projects (1) | (8.8 | ) | 17.8 | 29.1 | 83.3 | |||||||||||
Core revenue | $ | 395.8 | $ | 377.5 | $ | 1,396.7 | $ | 1,389.0 | ||||||||
Total segment income | $ | 24.5 | $ | 54.8 | $ | 124.9 | $ | 142.8 | ||||||||
Exclude: South African projects (1) | (32.8 | ) | (4.7 | ) | (68.0 | ) | (14.5 | ) | ||||||||
Exclude: Contract settlement gain | — | — | 10.2 | — | ||||||||||||
Core segment income | $ | 57.3 | $ | 59.5 | $ | 182.7 | $ | 157.3 | ||||||||
as a percent of Core revenues (2) | 14.5 | % | 15.8 | % | 13.1 | % | 11.3 | % | ||||||||
ENGINEERED SOLUTIONS SEGMENT: | Three months ended | Twelve months ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Engineered Solutions revenue | $ | 150.5 | $ | 177.6 | $ | 654.5 | $ | 736.4 | ||||||||
Exclude: South African projects (1) | (8.8 | ) | 17.8 | 29.1 | 83.3 | |||||||||||
Engineered Solutions (Core) revenue | $ | 159.3 | $ | 159.8 | $ | 625.4 | $ | 653.1 | ||||||||
Engineered Solutions Segment income (loss) | $ | (20.5 | ) | $ | 8.8 | $ | (12.6 | ) | $ | 17.3 | ||||||
Exclude: South African projects (1) | (32.8 | ) | (4.7 | ) | (68.0 | ) | (14.5 | ) | ||||||||
Exclude: Contract settlement gain | — | — | 10.2 | — | ||||||||||||
Engineered Solutions (Core) income | $ | 12.3 | $ | 13.5 | $ | 45.2 | $ | 31.8 | ||||||||
as a percent of Engineered Solutions (Core) revenues (2) | 7.7 | % | 8.4 | % | 7.2 | % | 4.9 | % | ||||||||
(1) For the three and twelve months ended December 31, 2017, we made revisions to our estimates of expected revenues and costs on our large power projects in South Africa. As a result of these revisions, we reduced revenues for the projects during the three and twelve months ended December 31, 2017 by $23.4 and $36.9, respectively, and increased the loss on the projects by $29.9 and $52.8, respectively. | ||||||||||||||||
(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 | Twelve months ended | |||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Operating income | $ | 1.7 | $ | 1.8 | $ | 54.8 | $ | 55.0 | ||||||||
Adjustments: | ||||||||||||||||
South African projects (1) | 33.4 | 4.7 | 69.4 | 14.5 | ||||||||||||
Non-service pension and postretirement items | 5.2 | 11.0 | 6.8 | 16.0 | ||||||||||||
Contract settlement gain | — | — | (10.2 | ) | — | |||||||||||
Gain on sale of Dry Cooling | — | — | — | (18.4 | ) | |||||||||||
Non-cash impairment of intangible assets | — | 26.1 | — | 30.1 | ||||||||||||
Adjusted operating income | $ | 40.3 | $ | 43.6 | $ | 120.8 | $ | 97.2 | ||||||||
as a percent of Core revenues (2) | 10.2 | % | 11.5 | % | 8.6 | % | 7.0 | % | ||||||||
(1) For the three and twelve months ended December 31, 2017, we made revisions to our estimates of expected revenues and costs on our large power projects in South Africa. As a result of these revisions, we reduced revenues for the projects during the three and twelve months ended December 31, 2017 by $23.4 and $36.9, respectively, and increased the loss on the projects by $29.9 and $52.8, respectively. | ||||||||||||||||
(2) 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 December 31, 2017 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 24.5 | $ | 32.8 | $ | 57.3 | |||||
Corporate expense | (12.5 | ) | — | (12.5 | ) | ||||||
Pension and postretirement income (expense) (2) | (4.2 | ) | 5.2 | 1.0 | |||||||
Long-term incentive compensation expense | (5.4 | ) | — | (5.4 | ) | ||||||
Special charges, net (3) | (0.7 | ) | 0.6 | (0.1 | ) | ||||||
Operating income | 1.7 | 38.6 | 40.3 | ||||||||
Other income (expense), net (4) | 1.1 | (2.3 | ) | (1.2 | ) | ||||||
Interest expense, net (5) | (3.8 | ) | 0.1 | (3.7 | ) | ||||||
Loss on amendment/refinancing of senior credit agreement (6) | (0.9 | ) | 0.9 | — | |||||||
Income (loss) from continuing operations before income taxes | (1.9 | ) | 37.3 | 35.4 | |||||||
Income tax (provision) benefit (7) | 61.9 | (70.6 | ) | (8.7 | ) | ||||||
Income from continuing operations | 60.0 | (33.3 | ) | 26.7 | |||||||
Dilutive shares outstanding | 44.401 | 44.401 | |||||||||
Earnings per share from continuing operations | $ | 1.35 | $ | 0.60 | |||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects. | |||||||||||
(2) Adjustment represents the removal of non-service pension and postretirement items. | |||||||||||
(3) Adjustment represents removal of restructuring charges associated with the South African projects. | |||||||||||
(4) Adjustment represents removal of a gain on interest rate swaps as these swaps no longer qualified for hedge accounting in connection with an amendment to our senior credit agreement, partially offset by foreign currency losses associated with the South African projects. | |||||||||||
(5) Adjustment relates to the removal of interest expense incurred in connection with borrowings under a line of credit in South Africa. | |||||||||||
(6) Adjustment represents the removal of a non-cash charge associated with an amendment to our senior credit agreement. | |||||||||||
(7) Adjustment represents the tax impact of items (1) through (6) above, the tax benefit associated with worthless stock deduction related to South Africa, net tax charges associated with the impact of U.S. tax reform, and the removal of certain favorable discrete tax items. | |||||||||||
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||
Twelve months ended December 31, 2017 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 124.9 | $ | 57.8 | $ | 182.7 | |||||
Corporate expense | (46.2 | ) | — | (46.2 | ) | ||||||
Pension and postretirement income (expense) (2) | (5.4 | ) | 6.8 | 1.4 | |||||||
Long-term incentive compensation expense | (15.8 | ) | — | (15.8 | ) | ||||||
Special charges, net (3) | (2.7 | ) | 1.4 | (1.3 | ) | ||||||
Operating income | 54.8 | 66.0 | 120.8 | ||||||||
Other expense, net (4) | (2.0 | ) | (1.4 | ) | (3.4 | ) | |||||
Interest expense, net (5) | (15.8 | ) | 0.6 | (15.2 | ) | ||||||
Loss on amendment/refinancing of senior credit agreement (6) | (0.9 | ) | 0.9 | — | |||||||
Income from continuing operations before income taxes | 36.1 | 66.1 | 102.2 | ||||||||
Income tax benefit (provision) (7) | 47.9 | (71.8 | ) | (23.9 | ) | ||||||
Income from continuing operations | 84.0 | (5.7 | ) | 78.3 | |||||||
Dilutive shares outstanding | 43.905 | 43.905 | |||||||||
Earnings per share from continuing operations | $ | 1.91 | $ | 1.78 | |||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects, and a gain on a contract settlement within our Engineered Solutions reportable segment. | |||||||||||
(2) Adjustment represents the removal of non-service pension and postretirement items. | |||||||||||
(3) Adjustment represents removal of restructuring charges associated with the South African projects. | |||||||||||
(4) Adjustment represents removal of a gain on interest rate swaps, as these swaps no longer qualified for hedge accounting in connection with an amendment to our senior credit agreement, partially offset by foreign currency losses associated with the South African projects. | |||||||||||
(5) Adjustment relates to the removal of interest expense incurred in connection with borrowings under a line of credit in South Africa. | |||||||||||
(6) Adjustment represents the removal of a non-cash charge associated with an amendment to our senior credit agreement. | |||||||||||
(7) Adjustment represents the tax impact of items (1) through (6) above, tax benefit associated with worthless stock deduction related to South Africa, net tax charges associated with the impact of U.S. tax reform, and the removal of certain favorable discrete tax items. | |||||||||||
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||
Three Months Ended December 31, 2016 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 54.8 | $ | 4.7 | $ | 59.5 | |||||
Corporate expense | (12.1 | ) | — | (12.1 | ) | ||||||
Pension and postretirement income (expense) (2) | (10.8 | ) | 11.0 | 0.2 | |||||||
Long-term incentive compensation expense | (3.5 | ) | — | (3.5 | ) | ||||||
Impairment of intangible assets (3) | (26.1 | ) | 26.1 | — | |||||||
Special charges, net | (0.5 | ) | — | (0.5 | ) | ||||||
Operating income | 1.8 | 41.8 | 43.6 | ||||||||
Other expense, net | (2.5 | ) | — | (2.5 | ) | ||||||
Interest expense, net (4) | (3.3 | ) | 0.2 | (3.1 | ) | ||||||
Income (loss) from continuing operations before income taxes | (4.0 | ) | 42.0 | 38.0 | |||||||
Income tax (provision) benefit (5) | 1.0 | (9.5 | ) | (8.5 | ) | ||||||
Income (loss) from continuing operations | (3.0 | ) | 32.5 | 29.5 | |||||||
Dilutive shares outstanding (6) | 41.828 | 42.950 | |||||||||
Earnings (loss) per share from continuing operations | $ | (0.07 | ) | $ | 0.69 | ||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects. | |||||||||||
(2) Adjustment represents the removal of non-service pension and postretirement items. | |||||||||||
(3) Adjustment represents the removal of a non-cash impairment charge associated with our Heat Transfer business. | |||||||||||
(4) Adjustment relates to the removal of interest expense incurred in connection with borrowings under a line of credit in South Africa. | |||||||||||
(5) Adjustment represents the tax impact of the items noted in (1) through (4) above. | |||||||||||
(6) Dilutive shares outstanding used to calculate adjusted earnings per share reflect the dilutive impact of the adjustments. | |||||||||||
SPX CORPORATION AND SUBSIDIARIES | |||||||||||
NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||
Twelve months ended December 31, 2016 | |||||||||||
(Unaudited; in millions, except per share values) | |||||||||||
GAAP | Adjustments | Adjusted | |||||||||
Segment income (1) | $ | 142.8 | $ | 14.5 | $ | 157.3 | |||||
Corporate expense | (41.7 | ) | — | (41.7 | ) | ||||||
Pension and postretirement income (expense) (2) | (15.4 | ) | 16.0 | 0.6 | |||||||
Long-term incentive compensation expense | (13.7 | ) | — | (13.7 | ) | ||||||
Special charges, net | (5.3 | ) | — | (5.3 | ) | ||||||
Impairment of intangible assets (3) | (30.1 | ) | 30.1 | — | |||||||
Gain on sale of dry cooling business (4) | 18.4 | (18.4 | ) | — | |||||||
Operating income | 55.0 | 42.2 | 97.2 | ||||||||
Other income (expense), net (5) | (0.3 | ) | 2.1 | 1.8 | |||||||
Interest expense, net (6) | (14.0 | ) | 0.2 | (13.8 | ) | ||||||
Loss on amendment/refinancing of senior credit agreement (7) | (1.3 | ) | 1.3 | — | |||||||
Income from continuing operations before income taxes | 39.4 | 45.8 | 85.2 | ||||||||
Income tax provision (8) | (9.1 | ) | (14.1 | ) | (23.2 | ) | |||||
Income from continuing operations | 30.3 | 31.7 | 62.0 | ||||||||
Less: Net loss attributable to redeemable noncontrolling interest (9) | (0.4 | ) | 0.3 | (0.1 | ) | ||||||
Net income from continuing operations attributable to SPX Corporation common shareholders | 30.7 | 31.4 | 62.1 | ||||||||
Adjustment related to redeemable noncontrolling interest (9) | (18.1 | ) | 18.1 | — | |||||||
Net income from continuing operations attributable to SPX Corporation common shareholders after adjustment to redeemable noncontrolling interest | 12.6 | 49.5 | 62.1 | ||||||||
Dilutive shares outstanding | 42.161 | 42.161 | |||||||||
Earnings per share from continuing operations | $ | 0.30 | $ | 1.47 | |||||||
(1) Adjustment represents the removal of operating losses associated with the South African projects. | |||||||||||
(2) Adjustment represents the removal of non-service pension and postretirement items. | |||||||||||
(3) Adjustment represents the removal of a non-cash impairment charge associated with our Heat Transfer business. | |||||||||||
(4) Adjustment represents removal of gain on sale of dry cooling business | |||||||||||
(5) Adjustment represents removal of foreign currency losses associated with the South African projects. | |||||||||||
(6) Adjustment relates to the removal of interest expense incurred in connection with borrowings under a line of credit in South Africa. | |||||||||||
(7) Adjustment represents the removal of a non-cash charge associated an amendment to the senior credit agreement. | |||||||||||
(8) Adjustment represents the tax impact of the items noted in (1) through (7) above. | |||||||||||
(9) Adjustment represents removal of noncontrolling interest amounts associated with the South Africa projects. | |||||||||||
SPX CORPORATION AND SUBSIDIARIES | ||||
NON-GAAP RECONCILIATION - FREE CASH FLOW FROM CONTINUING OPERATIONS | ||||
(Unaudited; in millions) | ||||
Twelve months ended | ||||
December 31, 2017 | ||||
Net operating cash from continuing operations | $ | 54.2 | ||
Capital expenditures - continuing operations | (11.0 | ) | ||
Free cash flow from continuing operations | $ | 43.2 | ||