Delaware | 1-37393 | 47-3110748 | ||
(State or Other Jurisdiction of | (Commission File Number) | (I.R.S. Employer | ||
Incorporation) | Identification No.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing 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)) |
Exhibit | |||
Number | Description | ||
99.1 | Press Release issued May 4, 2016, furnished solely pursuant to Item 2.02 of Form 8-K. |
SPX FLOW, Inc. | ||
Date: May 4, 2016 | By: | /s/ Jeremy W. Smeltser |
Jeremy W. Smeltser | ||
Vice President and | ||
Chief Financial Officer |
Exhibit | |||
Number | Description | ||
99.1 | Press Release issued May 4, 2016, furnished solely pursuant to Item 2.02 of Form 8-K. |
● | Realignment Program on Track, $41 Million of Realignment Charges in Q1 2016 | |
○ | Targeting at Least $110 Million Reduction in Cost Structure by end of 2017 | |
● | First Quarter Adjusted EPS of $0.02, Excludes $(0.77) of Realignment Charges | |
● | Backlog Increased 4% Sequentially |
• | Revenues declined 11.6% to $505.0 million, from $571.2 million in the year-ago quarter. The impact of the stronger U.S. Dollar versus foreign currencies decreased revenues by 2.4%, or $13.5 million, and organic revenues* decreased 9.2%, primarily due to impacts from lower oil and dairy prices. |
• | Operating loss and margin were $(21.9) million and (4.3)%, compared to operating income and margin of $35.6 million and 6.2% in the year-ago quarter, due primarily to $41.0 million of charges related to the company's previously announced realignment program and the organic revenue decline. Excluding charges related to the realignment program, adjusted operating income* and margin were $19.1 million and 3.8%. |
• | Diluted net loss per share was $(0.75), including special charges of $(0.77) per share related to the realignment program. Excluding charges related to the realignment program, adjusted earnings per share* were $0.02 in Q1 2016. |
• | Net cash used in operating activities was $68.3 million, due in part to the timing of cash on large projects, interest payments related to our senior notes, pension benefit payments to certain former officers of the company and cash outflows related to the realignment program. |
• | Free cash flow* usage was $84.8 million, primarily due to the operating cash usage mentioned above, as well as $16.5 million in capital expenditures, primarily related to the new manufacturing facility in Poland. |
2016 Full Year Financial Guidance | |||
($ millions; except per share data) | GAAP Basis | Adjusted Basis(1) | |
Revenue vs. Prior Year | $2,100 to $2,200 | $2,100 to $2,200 | |
Special charges | ~$60 | $0 | |
Operating income | $108 to $128 | $168 to $188 | |
Earnings per share | $0.75 to $1.05 | $1.85 to $2.15 | |
Free cash flow* | $10 to $30 | $155 to $175 | |
EBITDA* | $175 to $195 | $235 to $255 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS | |||||||
(Unaudited; in millions, except per share amounts) |
Three months ended | |||||||
April 2, 2016 | March 28, 2015 | ||||||
Revenues | $ | 505.0 | $ | 571.2 | |||
Costs and expenses: | |||||||
Cost of products sold | 345.8 | 382.9 | |||||
Selling, general and administrative | 134.4 | 142.9 | |||||
Intangible amortization | 5.7 | 6.0 | |||||
Special charges, net | 41.0 | 3.8 | |||||
Operating income (loss) | (21.9 | ) | 35.6 | ||||
Other income (expense), net | (2.5 | ) | 6.1 | ||||
Related party interest expense, net | — | (7.3 | ) | ||||
Other interest expense, net | (14.4 | ) | (0.3 | ) | |||
Income (loss) before income taxes | (38.8 | ) | 34.1 | ||||
Income tax benefit (provision) | 6.7 | (11.0 | ) | ||||
Net income (loss) | (32.1 | ) | 23.1 | ||||
Less: Net loss attributable to noncontrolling interests | (1.0 | ) | (0.3 | ) | |||
Net income (loss) attributable to SPX FLOW, Inc. | $ | (31.1 | ) | $ | 23.4 | ||
Basic income (loss) per share of common stock | $ | (0.75 | ) | $ | 0.57 | ||
Diluted income (loss) per share of common stock | $ | (0.75 | ) | $ | 0.57 | ||
Weighted average number of common shares outstanding - basic | 41.232 | 40.809 | |||||
Weighted average number of common shares outstanding - diluted | 41.232 | 40.932 |
SPX FLOW, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Unaudited; in millions) |
April 2, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 220.4 | $ | 295.9 | |||
Accounts receivable, net | 502.9 | 483.9 | |||||
Inventories, net | 331.0 | 305.2 | |||||
Other current assets | 72.7 | 72.4 | |||||
Total current assets | 1,127.0 | 1,157.4 | |||||
Property, plant and equipment: | |||||||
Land | 38.0 | 37.7 | |||||
Buildings and leasehold improvements | 226.0 | 224.9 | |||||
Machinery and equipment | 480.5 | 483.9 | |||||
744.5 | 746.5 | ||||||
Accumulated depreciation | (323.9 | ) | (314.1 | ) | |||
Property, plant and equipment, net | 420.6 | 432.4 | |||||
Goodwill | 1,033.2 | 1,023.4 | |||||
Intangibles, net | 581.1 | 579.4 | |||||
Other assets | 115.3 | 111.6 | |||||
TOTAL ASSETS | $ | 3,277.2 | $ | 3,304.2 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 219.1 | $ | 227.1 | |||
Accrued expenses | 463.6 | 467.3 | |||||
Income taxes payable | 24.3 | 31.7 | |||||
Short-term debt | 38.4 | 28.0 | |||||
Current maturities of long-term debt | 15.5 | 10.3 | |||||
Total current liabilities | 760.9 | 764.4 | |||||
Long-term debt | 989.3 | 993.8 | |||||
Deferred and other income taxes | 141.1 | 142.0 | |||||
Other long-term liabilities | 133.4 | 133.4 | |||||
Total long-term liabilities | 1,263.8 | 1,269.2 | |||||
Equity: | |||||||
SPX FLOW, Inc. shareholders’ equity: | |||||||
Common stock | 0.4 | 0.4 | |||||
Paid-in capital | 1,627.3 | 1,621.7 | |||||
Retained earnings (accumulated deficit) | (10.0 | ) | 21.1 | ||||
Accumulated other comprehensive loss | (370.6 | ) | (382.7 | ) | |||
Common stock in treasury | (4.0 | ) | (1.4 | ) | |||
Total SPX FLOW, Inc. shareholders' equity | 1,243.1 | 1,259.1 | |||||
Noncontrolling interests | 9.4 | 11.5 | |||||
Total equity | 1,252.5 | 1,270.6 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 3,277.2 | $ | 3,304.2 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
RESULTS OF REPORTABLE SEGMENTS | |||||||
(Unaudited; in millions) |
Three months ended | |||||||||||||
April 2, 2016 | March 28, 2015 | Δ | %/bps | ||||||||||
Food and Beverage reportable segment | |||||||||||||
Revenues | $ | 184.8 | $ | 210.1 | $ | (25.3 | ) | -12.0% | |||||
Gross profit | 55.8 | 64.5 | (8.7 | ) | |||||||||
Selling, general and administrative expense | 36.6 | 40.1 | (3.5 | ) | |||||||||
Intangible amortization expense | 1.8 | 2.0 | (0.2 | ) | |||||||||
Income | $ | 17.4 | $ | 22.4 | $ | (5.0 | ) | -22.3% | |||||
as a percent of revenues | 9.4 | % | 10.7 | % | -130bps | ||||||||
Power and Energy reportable segment | |||||||||||||
Revenues | $ | 149.7 | $ | 173.4 | $ | (23.7 | ) | -13.7% | |||||
Gross profit | 42.5 | 55.8 | (13.3 | ) | |||||||||
Selling, general and administrative expense | 37.8 | 37.2 | 0.6 | ||||||||||
Intangible amortization expense | 2.5 | 2.6 | (0.1 | ) | |||||||||
Income | $ | 2.2 | $ | 16.0 | $ | (13.8 | ) | -86.3% | |||||
as a percent of revenues | 1.5 | % | 9.2 | % | -770bps | ||||||||
Industrial reportable segment | |||||||||||||
Revenues | $ | 170.5 | $ | 187.7 | $ | (17.2 | ) | -9.2% | |||||
Gross profit | 60.9 | 68.0 | (7.1 | ) | |||||||||
Selling, general and administrative expense | 40.1 | 40.8 | (0.7 | ) | |||||||||
Intangible amortization expense | 1.4 | 1.4 | — | ||||||||||
Income | $ | 19.4 | $ | 25.8 | $ | (6.4 | ) | -24.8% | |||||
as a percent of revenues | 11.4 | % | 13.7 | % | -230bps | ||||||||
Consolidated and Combined Revenues | $ | 505.0 | $ | 571.2 | $ | (66.2 | ) | -11.6% | |||||
Consolidated and Combined Segment Income | 39.0 | 64.2 | (25.2 | ) | -39.3% | ||||||||
as a percent of revenues | 7.7 | % | 11.2 | % | -350bps | ||||||||
Total income for reportable segments | $ | 39.0 | $ | 64.2 | $ | (25.2 | ) | ||||||
Corporate expense | 18.9 | 23.8 | (4.9 | ) | |||||||||
Pension and postretirement expense | 1.0 | 1.0 | — | ||||||||||
Special charges, net | 41.0 | 3.8 | 37.2 | ||||||||||
Consolidated and Combined Operating Income (Loss) | $ | (21.9 | ) | $ | 35.6 | $ | (57.5 | ) | -161.5% | ||||
as a percent of revenues | (4.3 | )% | 6.2 | % | -1050bps |
SPX FLOW, INC. AND SUBSIDIARIES | |||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS | |||
(Unaudited; in millions) |
Three months ended | |||||||
April 2, 2016 | March 28, 2015 | ||||||
Cash flows from (used in) operating activities: | |||||||
Net income (loss) | $ | (32.1 | ) | $ | 23.1 | ||
Adjustments to reconcile net income (loss) to net cash from (used in) operating activities: | |||||||
Special charges, net | 41.0 | 3.8 | |||||
Deferred income taxes | (13.8 | ) | (2.9 | ) | |||
Depreciation and amortization | 17.1 | 14.6 | |||||
Stock-based compensation | 6.9 | — | |||||
Pension and other employee benefits | 2.9 | 0.8 | |||||
Gain on asset sales and other, net | (1.3 | ) | — | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and other assets | (10.3 | ) | (36.9 | ) | |||
Inventories | (21.5 | ) | (6.9 | ) | |||
Accounts payable, accrued expenses and other | (50.7 | ) | 7.3 | ||||
Cash spending on restructuring actions | (6.5 | ) | (2.7 | ) | |||
Net cash from (used in) operating activities | (68.3 | ) | 0.2 | ||||
Cash flows used in investing activities: | |||||||
Proceeds from asset sales and other, net | 2.0 | — | |||||
Increase in restricted cash | (0.2 | ) | (0.1 | ) | |||
Capital expenditures | (16.5 | ) | (11.6 | ) | |||
Net cash used in investing activities | (14.7 | ) | (11.7 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under senior credit facilities | 7.0 | — | |||||
Repayments of senior credit facilities | (5.0 | ) | — | ||||
Borrowings under trade receivables financing arrangement | 22.0 | — | |||||
Repayments of trade receivables financing arrangement | (13.0 | ) | — | ||||
Borrowings under other financing arrangements | 1.1 | 0.1 | |||||
Repayments of other financing arrangements | (1.8 | ) | (0.7 | ) | |||
Minimum withholdings paid on behalf of employees for net share settlements, net | (2.8 | ) | — | ||||
Dividends paid to noncontrolling interests in subsidiary | (1.2 | ) | (0.5 | ) | |||
Change in former parent company investment | — | 10.9 | |||||
Net cash from financing activities | 6.3 | 9.8 | |||||
Change in cash and equivalents due to changes in foreign currency exchange rates | 1.2 | (7.2 | ) | ||||
Net change in cash and equivalents | (75.5 | ) | (8.9 | ) | |||
Consolidated and combined cash and equivalents, beginning of period | 295.9 | 216.6 | |||||
Consolidated and combined cash and equivalents, end of period | $ | 220.4 | $ | 207.7 |
SPX FLOW, INC. AND SUBSIDIARIES | ||||||||
ORGANIC REVENUE RECONCILIATION | ||||||||
(Unaudited) |
Three months ended April 2, 2016 | ||||||||||||
Net Revenue Decline | Acquisitions | Foreign Currency | Organic Revenue Decline | |||||||||
Food and Beverage reportable segment | (12.0 | )% | — | % | (2.1 | )% | (9.9 | )% | ||||
Power and Energy reportable segment | (13.7 | )% | — | % | (2.8 | )% | (10.9 | )% | ||||
Industrial reportable segment | (9.2 | )% | — | % | (2.2 | )% | (7.0 | )% | ||||
Consolidated and combined | (11.6 | )% | — | % | (2.4 | )% | (9.2 | )% |
SPX FLOW, INC. AND SUBSIDIARIES | ||||
CASH AND DEBT RECONCILIATION | ||||
(Unaudited; in millions) |
Three months ended | |||
April 2, 2016 | |||
Beginning cash and equivalents | $ | 295.9 | |
Net cash used in operating activities | (68.3 | ) | |
Proceeds from asset sales and other, net | 2.0 | ||
Increase in restricted cash | (0.2 | ) | |
Capital expenditures | (16.5 | ) | |
Net borrowings under senior credit facilities | 2.0 | ||
Net borrowings under trade receivables financing arrangement | 9.0 | ||
Net repayments of other financing arrangements | (0.7 | ) | |
Minimum withholdings paid on behalf of employees for net share settlements, net | (2.8 | ) | |
Dividends paid to noncontrolling interests in subsidiary | (1.2 | ) | |
Change in cash and equivalents due to changes in foreign currency exchange rates | 1.2 | ||
Ending cash and equivalents | $ | 220.4 |
Debt at | Debt at | ||||||
April 2, 2016 | December 31, 2015 | ||||||
Domestic revolving loan facility | $ | 2.0 | $ | — | |||
Term loan | 400.0 | 400.0 | |||||
6.875% senior notes | 600.0 | 600.0 | |||||
Trade receivables financing arrangement | 9.0 | — | |||||
Other indebtedness | 36.9 | 37.3 | |||||
Totals | $ | 1,047.9 | $ | 1,037.3 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
ADJUSTED OPERATING INCOME RECONCILIATION | |||||||
(Unaudited; in millions) |
Three months ended | |||||||
April 2, 2016 | March 28, 2015 | ||||||
Operating income (loss) | $ | (21.9 | ) | $ | 35.6 | ||
Special charges related to realignment program | 41.0 | — | |||||
Adjusted operating income | $ | 19.1 | $ | 35.6 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
ADJUSTED DILUTED EARNINGS PER SHARE RECONCILIATION | |||||||
(Unaudited) |
Three months ended | |||||||
April 2, 2016 | March 28, 2015 | ||||||
Diluted earnings (loss) per share | $ | (0.75 | ) | $ | 0.57 | ||
Special charges related to realignment program, net of tax | 0.77 | — | |||||
Adjusted diluted earnings per share | $ | 0.02 | $ | 0.57 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
FREE CASH FLOW RECONCILIATION | |||||||
(Unaudited; in millions) | |||||||
Three months ended | |||||||
April 2, 2016 | March 28, 2015 | ||||||
Net cash from (used in) operating activities | $ | (68.3 | ) | $ | 0.2 | ||
Capital expenditures | (16.5 | ) | (11.6 | ) | |||
Free cash flow used in operations | $ | (84.8 | ) | $ | (11.4 | ) |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
ADJUSTED OPERATING INCOME RECONCILIATION | |||||||
(Unaudited; in millions) |
2016 | |||
Mid-Point Target | |||
Operating income | $ | 118 | |
Special charges related to realignment program | 60 | ||
Adjusted operating income | $ | 178 |
SPX FLOW, INC. AND SUBSIDIARIES | |||||||
ADJUSTED DILUTED EARNINGS PER SHARE RECONCILIATION | |||||||
(Unaudited) |
2016 | |||
Mid-Point Target | |||
Diluted earnings per share | $ | 0.90 | |
Special charges related to realignment program, net of tax | 1.10 | ||
Adjusted diluted earnings per share | $ | 2.00 |
SPX FLOW, INC. AND SUBSIDIARIES | ||
ADJUSTED FREE CASH FLOW RECONCILIATION | ||
(Unaudited; in millions) |
2016 | |||
Mid-Point Target | |||
Net cash from operating activities | $ | 79 | |
Capital expenditures | (60 | ) | |
Free cash flow from operations | 19 | ||
Cash outflows related to realignment program | 105 | ||
Pension payments to former officers, net of tax benefit | 41 | ||
Adjusted free cash flow from operations | $ | 165 |
SPX FLOW, INC. AND SUBSIDIARIES | |||
EBITDA AND ADJUSTED EBITDA RECONCILIATION | |||
(Unaudited; in millions) |
2016 | |||
Mid-Point Target | |||
Net income | $ | 37 | |
Income tax expense | 20 | ||
Interest expense | 59 | ||
Depreciation and amortization | 70 | ||
EBITDA | 185 | ||
Special charges related to realignment program | 60 | ||
ADJUSTED EBITDA | $ | 245 |