SPX Reports First Quarter 2021 Results

Q1 2021 GAAP EPS of $0.60; Q1 2021 Adjusted EPS* of $0.68;
Updating 2021 Full-Year Guidance for Sealite Acquisition;  
Anticipate Full-Year Adjusted EPS* in a Range of $3.06-$3.26

CHARLOTTE, N.C., May 06, 2021 (GLOBE NEWSWIRE) -- SPX Corporation (NYSE:SPXC) today reported results for the first quarter ended April 3, 2021.

Gene Lowe, President and CEO, remarked, “I am pleased with our solid first quarter results. Our HVAC and Detection & Measurement segments delivered strong revenue and earnings growth, with significant organic and inorganic contributions. We also generated substantial cash flow and continued to improve our already strong balance sheet and available capital.”

“During the quarter, we continued to execute on our value creation framework with the acquisition of Sealite Pty and related entities – our second acquisition in our Aids to Navigation platform (AtoN), which is within our Detection & Measurement segment. Over the last three years we have transformed our AtoN platform from a largely domestic obstruction lighting business into the global leader for highly engineered end-to-end AtoN solutions with significantly higher growth potential.”

Mr. Lowe continued, “We are updating our guidance for the acquisition of Sealite, and now anticipate full-year 2021 Adjusted EPS in a range of $3.06-$3.26, or approximately 13% year-on-year earnings growth at the midpoint. Looking ahead, we remain well-positioned to capitalize on both organic and strategic inorganic opportunities and will continue to invest in our continuous improvement and digital initiatives.”

First Quarter 2021 Overview:

For the first quarter of 2021, the company reported revenue of $398.5 million and operating income of $31.7 million, compared with revenue of $367.4 million and operating income of $32.3 million in the first quarter of 2020. Diluted income per share from continuing operations in the first quarter of 2021 was $0.60, compared with a diluted income per share from continuing operations of $0.49 in the first quarter of 2020.

SPX’s adjusted revenue* was $397.8 million and adjusted operating income* was $42.2 million, compared with adjusted revenue* of $365.3 million and adjusted operating income* of $39.2 million in the first quarter of 2020. Adjusted income per share* in the first quarter of 2021 was $0.68, compared with $0.62 in the first quarter of 2020.

First Quarter Financial Comparison:

GAAP Results:

Adjusted Results:

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

HVAC

Revenue for Q1 2021 was $146.5 million, compared with $118.5 million in Q1 2020, an increase of 23.6%, primarily from an organic increase of 22.9% with the remaining 0.7% due to currency fluctuation. The organic increase was driven by higher sales of the segment’s cooling and heating products. Sales of cooling products in the Americas were strong as were sales in the Asia Pacific region, which were negatively impacted by the COVID-19 pandemic in 2020. Sales of heating products were up due to higher winter heating demand in 2021.

Segment income in Q1 2021 was $24.2 million, compared to $15.0 million in Q1 2020. Adjusted segment income*, which excludes intangible amortization expense of $0.7 million, was $24.9 million, or 17.0% of revenue. This compares with adjusted segment income* of $15.9 million, or 13.4% of revenue in Q1 2020, which excludes intangible amortization expense and acquisition related costs of $0.9 million. The increase in adjusted segment income* and 360 basis points increase in adjusted segment income margin* were due primarily to the increase in revenues noted above.

Detection & Measurement

Revenue for Q1 2021 was $111.6 million, compared with $91.9 million in Q1 2020, an increase of 21.4%, including a 6.7% increase in organic revenue, a 12.9% increase from the acquisitions of ULC and Sensors & Software, and a 1.8% favorable impact related to currency fluctuation. The organic increase was primarily the result of higher sales of location and inspection equipment.  

Segment income in Q1 2021 was $20.0 million, compared to $18.2 million in Q1 2020. Adjusted segment income*, which excludes intangible amortization expense and acquisition related costs of $4.0 million, was $24.0 million, or 21.5% of revenue. This compares with adjusted segment income* of $20.0 million, or 21.8% of revenue, in Q1 2020, which excludes intangible amortization expense of $1.8 million. The increase in adjusted segment income* was due to the increase in revenues noted above, with the 30 basis points decline in margin due primarily to a less favorable mix of sales from project-oriented businesses, and a lower initial margin from the ULC acquisition, which was completed in Q3 2020.

Engineered Solutions

Revenue in Q1 2021 was $139.7 million, compared with $154.9 million in Q1 2020, a decrease of 9.8%. This decrease was due to lower sales of process cooling products for large projects compared with the first quarter of 2020.

Segment income in Q1 2021 was $10.0 million, or 7.2% of revenue, compared with segment income of $17.9 million, or 11.6% of revenue, in Q1 2020. The decrease in income and 440 basis point decline in margin were due primarily to the decrease in revenues noted above, and, to a lesser extent, less favorable mix and production efficiency in our Transformers business.

Other

Other, which includes the South African operations, had revenue of $0.7 million in Q1 2021, compared with $2.1 million in Q1 2020. This decrease was due to lower sales related to large power projects in the latter stages of completion.

Other incurred a loss in Q1 2021 of $4.6 million, compared with a loss of $4.3 million in Q1 2020. The increased loss was due to higher professional fees.

Financial Update: As of April 3, 2021, SPX had total outstanding debt of $391.5 million and total cash of $106.9 million. During Q1 2021, SPX generated net operating cash from continuing operations of $63.7 million due primarily to the timing of milestones on several project sales. Net leverage as of quarter end was 1.4x and increases to 1.7x when including the pro forma impact of the Sealite acquisition, which occurred on April 19, 2021.

2021 Guidance Update:

SPX is updating its 2021 guidance for the acquisition of Sealite Pty and related entities. SPX now anticipates Adjusted earnings per share* in a range of $3.06 to $3.26, or a $0.06 increase from prior guidance of $3.00 to $3.20. The company continued to anticipate 2021 adjusted revenue of approximately $1.6 billion, and adjusted operating income margin* of 11-12%.

Segment and company performance, on a year-over-year basis, is expected to be as follows (changes underlined):

Non-GAAP Presentation: To provide additional clarity to its operating results, the company discusses results that include “adjusted” non-GAAP financial measures. Adjusted results for the company exclude, among other items, the effect of the South African operations, categorized as “Other” in the company’s segment reporting structure. The company reports separately on the results of the “Other” category. The company anticipates reporting the results of the business included in the “Other” category as discontinued operations, at such time as it meets the accounting requirements for this treatment.

Form 10-Q: The company expects to file its quarterly report on Form 10-Q for the quarter ended April 3, 2021 with the Securities and Exchange Commission on or before May 13, 2021. 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 4:30 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: 8374545

A replay of the call will be available by telephone through Thursday, May 13, 2021.

To listen to a replay of the call
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Participant code: 8374545

Upcoming Investor Events:  Company management plans to conduct virtual meetings with investors during the second quarter of 2021 and SPX will also be participating in the UBS Global Industrials & Transportation Virtual Conference on June 8th.

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 $1.6 billion in annual revenue in 2020 and more than 4,500 employees in 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; 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, the results of our South African operations, 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.   Full-year guidance excludes 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 first quarter, the impact of foreign exchange rate changes subsequent to the end of the first quarter, impacts from further spread of COVID-19, and asbestos liability, environmental and litigation charges.

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: the impact of the COVID-19 pandemic and governmental and other actions taken in response; the uncertainty of claims resolution with respect to the large power projects in South Africa, as well as claims with respect to asbestos, environmental and other contingent liabilities; 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; 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; 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 the company’s 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 “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 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

Nick Illuminati, Manager, Investor Relations
Phone: 980-474-3806
E-mail: spx.investor@spx.com 

Source: SPX Corporation