CHARLOTTE, N.C., Oct. 30,
2019 /PRNewswire/ -- SPX FLOW, Inc. (NYSE: FLOW), a leading
provider of process solutions, today reported results for the
quarter ended September 28, 2019.
"Our third quarter results underscore the progress we've made on
our strategic transformation to a premier process solutions
enterprise. Additionally, our operational performance in the period
demonstrates the ability of our team to execute on many levels in a
volatile economic environment," said Marc
Michael, President and CEO. "I want to thank our teams
across the enterprise for their hard work, tireless effort and
positive contributions to the quarter. In Q3 we delivered
$384 million of revenue with a gross
margin of 35.1% and segment income margin of 14.6%. This
level of margin performance along with strong cash conversion in
the period demonstrates the higher quality of revenue profile we've
been working toward. It also illustrates the potential to
create long-term value by focusing our strategy on serving
customers in select process applications. Importantly, we
remain committed to strengthening our financial position, as
evidenced by continued debt reduction and net leverage down to 1.7x
at the end of the period."
"I'm especially pleased with our Q3 performance in light of the
macro-economic headwinds. Through the first nine months of
2019, the global slowdown in industrial demand and on-going tariff
and trade discussions have impacted our customers' capital spending
decisions and led to lower order levels versus 2018. In the third
quarter, orders decreased 4% year-over-year organically with the
decline across most of our short-cycle product lines. On a
sequential basis, the trend was more encouraging with organic
orders flat as an increase in liquid processing system orders
offset a decrease in short-cycle orders for process components and
industrial products. Despite the challenging demand
environment, our team continues to remain selective on orders,
yielding a higher quality backlog and increasing our ability to
perform more consistently at a higher level."
"Based on our third quarter results and outlook for the balance
of the year, we raised the low end of our full year guidance range
for revenue, adjusted EBITDA and adjusted EPS from continuing
operations. At the mid-point, we are now targeting revenue of
~$1,505 million, adjusted EBITDA of
~$183 million and adjusted EPS* of
~$1.90 per share."
"On the strategic front, our team has been working with
various external partners to develop a deeper assessment of the
process solutions market along with targeted strategies in select
micro verticals and detailed plans for long-term growth. In
support of our enterprise strategy, we continue to be innovative
with our organizational design and operating model with emphasis on
driving a higher level of accountability, enabling cross-functional
teamwork in focused product groups and building core capabilities
around customer intimacy, velocity and vitality."
"The divestiture of our Power and Energy business remains on
track and we are in the latter stages of the sale process.
Jose Larios and his team are doing an exceptional job running
the business while also managing the due diligence of the sale
process. They delivered a strong operational performance in
the quarter that included solid EBITDA growth and margin expansion,
along with 9% order growth versus the prior year. Upon completion
of the divestiture, we plan to prioritize net proceeds on debt
reduction along with return to shareholders and organic
investments. As that milestone draws closer, we have begun
executing on our 2%-3% cost productivity goal."
"As we plan for 2020, we intend to be deliberate with respect to
recent quarterly order levels, trends in industrial markets and the
overall macro-economic environment. We plan to take a
balanced approach as we manage our business through the near-term
demand environment, both ensuring we prudently manage cost while
investing at appropriate levels to deliver a world class customer
experience while driving long-term growth at double-digit ROIC to
create value for shareholders," concluded Michael.
Third Quarter 2019 Consolidated Results (continuing
operations unless otherwise noted)
$ millions; except
per share data
|
Q3
2019
|
|
Q3
2018
|
|
Variance
|
|
Organic
Variance
|
Backlog
|
$
|
481.0
|
|
|
$
|
620.1
|
|
|
(22.4)
|
%
|
|
(18.6)
|
%
|
Orders
|
350.1
|
|
|
375.8
|
|
|
(6.8)
|
%
|
|
(4.1)
|
%
|
Revenues
|
383.5
|
|
|
406.7
|
|
|
(5.7)
|
%
|
|
(2.9)
|
%
|
Operating
income
|
26.4
|
|
|
45.0
|
|
|
(41.3)
|
%
|
|
|
Margin %
|
6.9
|
%
|
|
11.1
|
%
|
|
-420bps
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations, net of tax
|
$
|
16.7
|
|
|
$
|
25.9
|
|
|
(35.5)
|
%
|
|
|
Income (loss) from
discontinued operations, net of tax
|
(48.3)
|
|
|
6.8
|
|
|
|
|
|
Net income
attributable to SPX FLOW
|
(31.6)
|
|
|
32.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
0.39
|
|
|
$
|
0.61
|
|
|
(36.1)
|
%
|
|
|
Diluted EPS from
discontinued operations
|
(1.13)
|
|
|
0.16
|
|
|
|
|
|
|
Diluted
EPS
|
(0.74)
|
|
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
from (used in) continuing operations
|
$
|
32.7
|
|
|
$
|
(0.7)
|
|
|
|
|
|
|
Operating Cash Flow
from discontinued operations
|
22.2
|
|
|
30.1
|
|
|
(26.2)
|
%
|
|
|
Operating Cash
Flow
|
54.9
|
|
|
29.4
|
|
|
86.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow* -
Total company
|
$
|
48.2
|
|
|
$
|
24.5
|
|
|
96.7
|
%
|
|
|
Note: The commentary below is compared to the prior year
period. Organic changes exclude the effects of currency
fluctuations.
- Backlog decreased (18.6)% organically due in large part the
company's strategy to methodically reduce its exposure to large,
dry-dairy applications and focus on growing orders in higher value,
liquid-processing applications. In addition, the broad global
slowdown across industrial markets and the impact of tariff and
trade discussions on customers' spending decisions led to
moderation in the order run-rate for food and beverage process
components and industrial products throughout 2019, contributing to
the organic decline in backlog.
- Orders declined (4.1)% organically. This decline was
broad-based across short-cycle industrial products and food and
beverage process components and due in large part to the global
industrial slowdown and the impact from tariff and trade discussion
on customers' capital spending decisions. From a geographic
perspective, order declines were concentrated in Europe and North America. In contrast,
orders for Food and Beverage liquid-processing systems grew
double-digits, led by strong growth in Asia Pacific, most notably in China.
- Revenues declined (2.9)% organically, due predominately to a
lower level of revenue from large dry-dairy projects, as
anticipated and consistent with the company's strategy described
above. That decline was offset partially by organic growth in
food and beverage process components and modest growth in global
aftermarket sales across all product lines.
- Gross profit increased $2.8
million and gross margins expanded 270 points to 35.1%
driven by a higher quality of revenue, net price/cost benefits and
overall solid operational execution.
- Operating income was $26.4
million, or 6.9% of revenues. This reflects discrete
actions management is taking to simplify the business and position
it for targeted growth in high quality micro-verticals within
process solutions market and customer segments. Specifically,
in Q3 2019 the Company recorded a non-cash impairment charge of
$10.8 million related to a corporate
asset classified as held for sale and incurred $5.0 million of professional fees related
primarily to on-going development of the enterprise strategy and
long-term growth plan. In addition, Q3 2019 operating income
included a normalized level of variable incentive compensation
expense as compared to the prior year.
- Diluted earnings per share from continuing operations were
$0.39 and included:
-
- A non-cash impairment charge of $(0.18) per share related to a corporate asset
classified as held for sale.
- Professional fees of $(0.08) per
share related primarily to on-going development of the company's
enterprise strategy and long-term growth plan.
- Discrete and other tax items totaling a net credit of
$0.06 per share as compared to the
Company's guidance.
- Excluding the items noted above, adjusted earnings per share*
from continuous operations were $0.59.
- Free cash flow* generated across all operations was
$48.2 million, including investments
of $6.7 million on capital
expenditures and $2.7 million on
restructuring actions.
Third Quarter 2019
Results by Segment
|
|
Food and
Beverage
|
|
$ millions
|
Q3
2019
|
|
Q3
2018
|
|
Variance
|
|
Organic
Variance
|
Backlog
|
$
|
248.1
|
|
|
$
|
343.3
|
|
|
(27.7)
|
%
|
|
(23.2)
|
%
|
Orders
|
160.2
|
|
|
157.9
|
|
|
1.5
|
%
|
|
3.9
|
%
|
Revenues
|
178.9
|
|
|
194.8
|
|
|
(8.2)
|
%
|
|
(5.4)
|
%
|
Income
|
27.1
|
|
|
27.4
|
|
|
(1.1)
|
%
|
|
|
As a percent of
revenues
|
15.1
|
%
|
|
14.1
|
%
|
|
100bps
|
|
|
Note: The commentary below is compared to the prior year
period. Organic changes exclude the effects of currency
fluctuations.
- Backlog decreased (23.2)% organically due largely to strong
project execution combined with a lower level of new system orders,
consistent with the Company's strategy to methodically reduce its
exposure to dry-dairy applications and increase its focus on liquid
processing applications. To a lesser extent, the backlog for
process components declined.
- Orders grew 3.9% organically, driven by strong order growth in
liquid-processing systems in Asia
Pacific and, to a lesser extent, a modest increase in global
aftermarket orders. This growth was partially offset by a
lower level of process component orders, reflecting the on-going
impact from tariff and trade discussions on customers capital
spending decisions, particularly in North
America.
- Revenues declined (5.4)% organically, due to a lower level of
revenue from large dry-dairy systems, as anticipated, partially
offset by growth in process component shipments and aftermarket
sales.
- Segment income was $27.1 million
and margins expanded 100 points to 15.1%. The margin
improvement was driven by strong operational and project execution
on a higher quality of revenue, savings from cost reduction actions
and net price benefits. These improvements were partially
offset by a normalized level of variable incentive compensation as
compared to the prior year.
Industrial
|
|
$ millions
|
Q3
2019
|
|
Q3
2018
|
|
Variance
|
|
Organic
Variance
|
Backlog
|
$
|
232.9
|
|
|
$
|
276.8
|
|
|
(15.9)
|
%
|
|
(12.9)
|
%
|
Orders
|
189.9
|
|
|
217.9
|
|
|
(12.8)
|
%
|
|
(10.0)
|
%
|
Revenues
|
204.6
|
|
|
211.9
|
|
|
(3.4)
|
%
|
|
(0.6)
|
%
|
Income
|
28.7
|
|
|
29.5
|
|
|
(2.7)
|
%
|
|
|
As a percent of
revenues
|
14.0
|
%
|
|
13.9
|
%
|
|
10bps
|
|
|
Note: The commentary below is compared to the prior year
period. Organic changes exclude the effects of currency
fluctuations.
- Backlog decreased (12.9)% organically reflecting the broad,
global industrial slowdown and the impact of tariff and trade
discussions on customers' spending decisions in 2019 which has led
to a lower level of demand for short-cycle industrial products and
small-to-medium sized capital projects.
- Orders declined (10.0)% organically. This decline was
broad-based across the industrial product lines, mostly notably
pumps and dehydration equipment, and reflects the broader global
industrial slowdown described above.
- Revenues declined (0.6)% organically due to a lower level of
pump shipments, partially offset by growth in mixers
shipments.
- Segment income decreased $(0.8)
million, however, margins expanded 10 points to 14.0%.
The margin improvement was driven by a higher quality of
revenue and net price benefits. These improvements were
partially offset by a normalized level of variable incentive
compensation as compared to the prior year.
OTHER ITEMS
Form 10-Q: The company expects to file its quarterly
report on Form 10-Q for the quarter ended September 28, 2019
with the Securities and Exchange Commission on October 30,
2019. This news release should be read in conjunction with that
filing, which will be available on the company's website at
www.spxflow.com, in the Investor Relations section.
Discontinued Operations - Impairment Charge: As of
September 28, 2019, management has
evaluated indicators of fair value of the Company's discontinued
operations, including indications of fair value received from third
parties in connection with the marketing of the business through
the end of the third quarter. Based on developments associated with
the marketing and sale process that arose during the Company's
third quarter, and indications of fair value received through the
conclusion of the third quarter, the Company recorded a pre-tax
charge of $52.0 million to reduce the
carrying value of the net assets of discontinued operations,
including relevant foreign currency translation adjustment
balances, to estimated fair value less costs to sell.
Discontinued Operations - Legal Settlement: During the
first quarter of 2019, the Company received a payment demand from a
customer related to a project in the Power and Energy business
which is classified as discontinued operations. The demand and
related claims arose from the Company's supply of equipment used in
a series of long-term nuclear power projects that are substantially
complete in terms of our production, revenue recognition and
receipt of payment. On September 30,
the Company entered into a settlement agreement with the customer
and paid $17.0 million in accordance
with the terms of the agreement. Accordingly, the Company recorded
a charge of $17.0 million to cost of
products sold within the results of discontinued operations,
related to the settlement. The liability associated with this
agreement was recorded as a component of "Accrued expenses" of
discontinued operations of the Company as of September 28, 2019. The agreement releases
the Company from further claims by the customer, beyond the
ordinary warranty obligations that are associated with the
underlying project.
About SPX FLOW, Inc.: Based in Charlotte, North Carolina, SPX FLOW,
Inc. (NYSE: FLOW) innovates with customers to help feed and
enhance the world by designing, delivering and servicing high value
process solutions at the heart of growing and sustaining our
diverse communities. The company's product offering is concentrated
in process technologies that perform mixing, blending, fluid
handling, separation, thermal heat transfer and other activities
that are integral to processes performed across a wide variety of
sanitary and industrial markets. SPX FLOW has
approximately $1.5 billion in annual revenues with
operations in more than 30 countries and sales in more than 150
countries. To learn more about SPX FLOW, please visit
www.spxflow.com.
*Non-GAAP measure. See attached schedules for reconciliation
from most comparable GAAP measure. Management believes these
Non-GAAP metrics are commonly used financial measures for investors
to evaluate our operating performance for the periods presented,
and when read in conjunction with our condensed consolidated
financial statements, present a useful tool to evaluate continuing
operations and provide investors with metrics they can use to
evaluate our management of the business from period to period. In
addition, these are some of the factors we use in internal
evaluations of the overall performance of our business.
Non-GAAP financial guidance measures 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 adjustments for certain items that are out of SPX FLOW's
control and/or cannot be reasonably predicted. Accordingly, a
reconciliation of the non-GAAP financial guidance to the nearest
corresponding GAAP financial measures is not practicable.
Management acknowledges that there are many items that impact a
company's reported results and the adjustments reflected in these
Non-GAAP measures are not intended to present all items that may
have impacted these results. In addition, these Non-GAAP measures
are not necessarily comparable to similarly-titled measures used by
other companies.
Note: Net leverage is as defined by the company's credit
facility.
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities
Exchange 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 its annual report on Form 10-K for the year
ended December 31, 2018. 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 "expect," "anticipate,"
"plan," "target," "project," "believe" 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. These statements are only predictions.
Actual events or results may differ materially because of market
conditions or other factors, and forward-looking statements should
not be relied upon as a prediction of actual results. All the
forward-looking statements in this press release are qualified in
their entirety by reference to the factors discussed under the
heading "Risk Factors" in the 2018 Form 10-K and in any other
documents filed by the company with the Securities and Exchange
Commission that describe risks and factors that could cause results
to differ materially from those projected in these forward-looking
statements. These risk factors may not be exhaustive. Further, the
company operates in a continually changing business environment and
cannot predict new risk factors that may arise as a result of these
changes. In addition, estimates of future operating results are
based on the company's current complement of continuing operations,
which is subject to change, and the company cannot assure that the
portion of the former Power and Energy reportable segment being
held for sale will be sold in the anticipated time period, or at
all, and the terms of any such sale if it is completed. Statements
in this press release speak only as of the date of this press
release, and SPX FLOW disclaims any responsibility to update or
revise such statements.
Investor Contact:
Stewart
Honeycutt
Director, FP&A and Investor Relations
704-752-4472
investor@spxflow.com
SPX FLOW, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited; in
millions, except per share amounts)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September 28,
2019
|
|
September 29,
2018
|
|
September 28,
2019
|
|
September 29,
2018
|
Revenues
|
$
|
383.5
|
|
|
$
|
406.7
|
|
|
$
|
1,142.3
|
|
|
$
|
1,182.1
|
|
Cost of products
sold
|
248.9
|
|
|
274.9
|
|
|
753.7
|
|
|
796.1
|
|
Gross
profit
|
134.6
|
|
|
131.8
|
|
|
388.6
|
|
|
386.0
|
|
Selling, general and
administrative
|
94.3
|
|
|
83.3
|
|
|
278.0
|
|
|
276.1
|
|
Intangible
amortization
|
2.9
|
|
|
3.3
|
|
|
8.6
|
|
|
10.0
|
|
Asset impairment
charges
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
—
|
|
Restructuring and
other related charges
|
0.2
|
|
|
0.2
|
|
|
7.1
|
|
|
2.9
|
|
Operating
income
|
26.4
|
|
|
45.0
|
|
|
84.1
|
|
|
97.0
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
0.1
|
|
|
(1.2)
|
|
|
7.3
|
|
|
(3.3)
|
|
Interest expense,
net
|
(6.5)
|
|
|
(8.2)
|
|
|
(22.5)
|
|
|
(26.5)
|
|
Income from
continuing operations before income taxes
|
20.0
|
|
|
35.6
|
|
|
68.9
|
|
|
67.2
|
|
Income tax
provision
|
(2.5)
|
|
|
(9.6)
|
|
|
(24.7)
|
|
|
(14.8)
|
|
Income from
continuing operations
|
17.5
|
|
|
26.0
|
|
|
44.2
|
|
|
52.4
|
|
Income (loss) from
discontinued operations, net of tax
|
(48.1)
|
|
|
6.5
|
|
|
7.5
|
|
|
18.8
|
|
Net income
(loss)
|
(30.6)
|
|
|
32.5
|
|
|
51.7
|
|
|
71.2
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
1.0
|
|
|
(0.2)
|
|
|
1.2
|
|
|
0.1
|
|
Net income (loss)
attributable to SPX FLOW, Inc.
|
$
|
(31.6)
|
|
|
$
|
32.7
|
|
|
$
|
50.5
|
|
|
$
|
71.1
|
|
|
|
|
|
|
|
|
|
Amounts attributable
to SPX FLOW, Inc. common shareholders:
|
|
|
|
|
|
|
|
Income from
continuing operations, net of tax
|
$
|
16.7
|
|
|
$
|
25.9
|
|
|
$
|
43.0
|
|
|
$
|
51.7
|
|
Income (loss) from
discontinued operations, net of tax
|
(48.3)
|
|
|
6.8
|
|
|
7.5
|
|
|
19.4
|
|
Net income (loss)
attributable to SPX FLOW, Inc.
|
$
|
(31.6)
|
|
|
$
|
32.7
|
|
|
$
|
50.5
|
|
|
$
|
71.1
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
per share of common stock:
|
|
|
|
|
|
|
|
Income per share from
continuing operations
|
$
|
0.39
|
|
|
$
|
0.61
|
|
|
$
|
1.01
|
|
|
$
|
1.23
|
|
Income (loss) per
share from discontinued operations
|
(1.13)
|
|
|
0.16
|
|
|
0.18
|
|
|
0.46
|
|
Net income (loss) per
share attributable to SPX FLOW, Inc.
|
$
|
(0.74)
|
|
|
$
|
0.77
|
|
|
$
|
1.19
|
|
|
$
|
1.69
|
|
Diluted income (loss)
per share of common stock:
|
|
|
|
|
|
|
|
Income per share from
continuing operations
|
$
|
0.39
|
|
|
$
|
0.61
|
|
|
$
|
1.01
|
|
|
$
|
1.21
|
|
Income (loss) per
share from discontinued operations
|
(1.13)
|
|
|
0.16
|
|
|
0.17
|
|
|
0.46
|
|
Net income (loss) per
share attributable to SPX FLOW, Inc.
|
$
|
(0.74)
|
|
|
$
|
0.77
|
|
|
$
|
1.18
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic
|
42.434
|
|
|
42.229
|
|
|
42.418
|
|
|
42.169
|
|
Weighted average
number of common shares outstanding - diluted
|
42.697
|
|
|
42.696
|
|
|
42.630
|
|
|
42.607
|
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited;
in millions)
|
|
|
September 28,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
217.6
|
|
|
$
|
197.0
|
|
Accounts receivable,
net
|
261.0
|
|
|
278.4
|
|
Contract
assets
|
32.8
|
|
|
33.8
|
|
Inventories,
net
|
212.9
|
|
|
220.5
|
|
Other current
assets
|
29.6
|
|
|
33.3
|
|
Assets of
discontinued operations - current
|
612.8
|
|
|
244.4
|
|
Total current
assets
|
1,366.7
|
|
|
1,007.4
|
|
Property, plant and
equipment:
|
|
|
|
Land
|
23.2
|
|
|
23.9
|
|
Buildings and
leasehold improvements
|
167.8
|
|
|
175.5
|
|
Machinery and
equipment
|
314.6
|
|
|
336.8
|
|
|
505.6
|
|
|
536.2
|
|
Accumulated
depreciation
|
(283.3)
|
|
|
(284.9)
|
|
Property, plant and
equipment, net
|
222.3
|
|
|
251.3
|
|
Goodwill
|
534.7
|
|
|
550.4
|
|
Intangibles,
net
|
206.7
|
|
|
219.2
|
|
Other
assets
|
186.0
|
|
|
111.1
|
|
Assets of
discontinued operations - long-term
|
—
|
|
|
412.4
|
|
TOTAL
ASSETS
|
$
|
2,516.4
|
|
|
$
|
2,551.8
|
|
|
|
|
|
LIABILITIES,
MEZZANINE EQUITY AND EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
145.5
|
|
|
$
|
157.0
|
|
Contract
liabilities
|
105.1
|
|
|
136.4
|
|
Accrued
expenses
|
154.2
|
|
|
149.0
|
|
Income taxes
payable
|
21.8
|
|
|
26.7
|
|
Short-term
debt
|
25.6
|
|
|
26.0
|
|
Current maturities of
long-term debt
|
0.1
|
|
|
20.8
|
|
Liabilities of
discontinued operations - current
|
224.6
|
|
|
133.4
|
|
Total current
liabilities
|
676.9
|
|
|
649.3
|
|
Long-term
debt
|
693.3
|
|
|
718.3
|
|
Deferred and other
income taxes
|
41.8
|
|
|
71.5
|
|
Other long-term
liabilities
|
106.7
|
|
|
67.5
|
|
Liabilities of
discontinued operations - long-term
|
—
|
|
|
60.6
|
|
Total long-term
liabilities
|
841.8
|
|
|
917.9
|
|
Mezzanine
equity
|
20.2
|
|
|
21.5
|
|
Equity:
|
|
|
|
SPX FLOW, Inc.
shareholders' equity:
|
|
|
|
Common
stock
|
0.4
|
|
|
0.4
|
|
Paid-in
capital
|
1,672.8
|
|
|
1,662.6
|
|
Accumulated
deficit
|
(223.6)
|
|
|
(265.6)
|
|
Accumulated other
comprehensive loss
|
(462.8)
|
|
|
(430.7)
|
|
Common stock in
treasury
|
(19.3)
|
|
|
(13.9)
|
|
Total SPX FLOW, Inc.
shareholders' equity
|
967.5
|
|
|
952.8
|
|
Noncontrolling
interests
|
10.0
|
|
|
10.3
|
|
Total
equity
|
977.5
|
|
|
963.1
|
|
TOTAL LIABILITIES,
MEZZANINE EQUITY AND EQUITY
|
$
|
2,516.4
|
|
|
$
|
2,551.8
|
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
RESULTS OF
REPORTABLE SEGMENTS
|
(Unaudited; in
millions)
|
|
|
As of and for the
three months
ended
|
|
|
|
|
|
As of and for the
nine months
ended
|
|
|
|
|
|
September 28,
2019
|
|
September 29,
2018
|
|
Change
|
|
%/bps
|
|
September 28,
2019
|
|
September 29,
2018
|
|
Change
|
|
%/bps
|
Food and
Beverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
|
$
|
248.1
|
|
|
$
|
343.3
|
|
|
$
|
(95.2)
|
|
|
(27.7)%
|
|
$
|
248.1
|
|
|
$
|
343.3
|
|
|
$
|
(95.2)
|
|
|
(27.7)%
|
Orders
|
160.2
|
|
|
157.9
|
|
|
2.3
|
|
|
1.5%
|
|
467.1
|
|
|
528.4
|
|
|
(61.3)
|
|
|
(11.6)%
|
Revenues
|
178.9
|
|
|
194.8
|
|
|
(15.9)
|
|
|
(8.2)%
|
|
530.0
|
|
|
548.9
|
|
|
(18.9)
|
|
|
(3.4)%
|
Gross
profit
|
61.0
|
|
|
59.6
|
|
|
1.4
|
|
|
|
|
167.0
|
|
|
173.6
|
|
|
(6.6)
|
|
|
|
as a percent of
revenues
|
34.1
|
%
|
|
30.6
|
%
|
|
|
|
350bps
|
|
31.5
|
%
|
|
31.6
|
%
|
|
|
|
(10)bps
|
Selling, general and
administrative
expense
|
32.4
|
|
|
30.3
|
|
|
2.1
|
|
|
|
|
102.9
|
|
|
102.6
|
|
|
0.3
|
|
|
|
as a percent of
revenues
|
18.1
|
%
|
|
15.6
|
%
|
|
|
|
250bps
|
|
19.4
|
%
|
|
18.7
|
%
|
|
|
|
70bps
|
Intangible
amortization expense
|
1.5
|
|
|
1.9
|
|
|
(0.4)
|
|
|
|
|
4.5
|
|
|
5.7
|
|
|
(1.2)
|
|
|
|
Income
|
$
|
27.1
|
|
|
$
|
27.4
|
|
|
$
|
(0.3)
|
|
|
(1.1)%
|
|
$
|
59.6
|
|
|
$
|
65.3
|
|
|
$
|
(5.7)
|
|
|
(8.7)%
|
as a percent of
revenues
|
15.1
|
%
|
|
14.1
|
%
|
|
|
|
100bps
|
|
11.2
|
%
|
|
11.9
|
%
|
|
|
|
(70)bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
|
$
|
232.9
|
|
|
$
|
276.8
|
|
|
$
|
(43.9)
|
|
|
(15.9)%
|
|
$
|
232.9
|
|
|
$
|
276.8
|
|
|
$
|
(43.9)
|
|
|
(15.9)%
|
Orders
|
189.9
|
|
|
217.9
|
|
|
(28.0)
|
|
|
(12.8)%
|
|
596.3
|
|
|
656.1
|
|
|
(59.8)
|
|
|
(9.1)%
|
Revenues
|
204.6
|
|
|
211.9
|
|
|
(7.3)
|
|
|
(3.4)%
|
|
612.3
|
|
|
633.2
|
|
|
(20.9)
|
|
|
(3.3)%
|
Gross
profit
|
73.6
|
|
|
72.2
|
|
|
1.4
|
|
|
|
|
221.6
|
|
|
212.4
|
|
|
9.2
|
|
|
|
as a percent of
revenues
|
36.0
|
%
|
|
34.1
|
%
|
|
|
|
190bps
|
|
36.2
|
%
|
|
33.5
|
%
|
|
|
|
270bps
|
Selling, general and
administrative
expense
|
43.5
|
|
|
41.3
|
|
|
2.2
|
|
|
|
|
129.6
|
|
|
131.1
|
|
|
(1.5)
|
|
|
|
as a percent of
revenue
|
21.3
|
%
|
|
19.5
|
%
|
|
|
|
180bps
|
|
21.2
|
%
|
|
20.7
|
%
|
|
|
|
50bps
|
Intangible
amortization expense
|
1.4
|
|
|
1.4
|
|
|
—
|
|
|
|
|
4.1
|
|
|
4.3
|
|
|
(0.2)
|
|
|
|
Income
|
$
|
28.7
|
|
|
$
|
29.5
|
|
|
$
|
(0.8)
|
|
|
(2.7)%
|
|
$
|
87.9
|
|
|
$
|
77.0
|
|
|
$
|
10.9
|
|
|
14.2%
|
as a percent of
revenues
|
14.0
|
%
|
|
13.9
|
%
|
|
|
|
10bps
|
|
14.4
|
%
|
|
12.2
|
%
|
|
|
|
220bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Backlog
|
$
|
481.0
|
|
|
$
|
620.1
|
|
|
$
|
(139.1)
|
|
|
(22.4)%
|
|
$
|
481.0
|
|
|
$
|
620.1
|
|
|
$
|
(139.1)
|
|
|
(22.4)%
|
Consolidated
Orders
|
350.1
|
|
|
375.8
|
|
|
(25.7)
|
|
|
(6.8)%
|
|
1,063.4
|
|
|
1,184.5
|
|
|
(121.1)
|
|
|
(10.2)%
|
Consolidated
Revenues
|
383.5
|
|
|
406.7
|
|
|
(23.2)
|
|
|
(5.7)%
|
|
1,142.3
|
|
|
1,182.1
|
|
|
(39.8)
|
|
|
(3.4)%
|
Consolidated
Segment Income
|
55.8
|
|
|
56.9
|
|
|
(1.1)
|
|
|
(1.9)%
|
|
147.5
|
|
|
142.3
|
|
|
5.2
|
|
|
3.7%
|
as a percent of
revenues
|
14.6
|
%
|
|
14.0
|
%
|
|
|
|
60bps
|
|
12.9
|
%
|
|
12.0
|
%
|
|
|
|
90bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income for
reportable segments
|
$
|
55.8
|
|
|
$
|
56.9
|
|
|
$
|
(1.1)
|
|
|
|
|
$
|
147.5
|
|
|
$
|
142.3
|
|
|
$
|
5.2
|
|
|
|
Corporate
expense
|
18.1
|
|
|
11.4
|
|
|
6.7
|
|
|
|
|
44.8
|
|
|
41.5
|
|
|
3.3
|
|
|
|
Pension and
postretirement
service costs
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
|
|
0.7
|
|
|
0.9
|
|
|
(0.2)
|
|
|
|
Asset impairment
charges
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
|
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
|
Restructuring and
other related
charges
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
|
|
7.1
|
|
|
2.9
|
|
|
4.2
|
|
|
|
Consolidated
Operating
Income
|
$
|
26.4
|
|
|
$
|
45.0
|
|
|
$
|
(18.6)
|
|
|
(41.3)%
|
|
$
|
84.1
|
|
|
$
|
97.0
|
|
|
$
|
(12.9)
|
|
|
(13.3)%
|
as a percent of
revenues
|
6.9
|
%
|
|
11.1
|
%
|
|
|
|
(420)bps
|
|
7.4
|
%
|
|
8.2
|
%
|
|
|
|
(80)bps
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September 28,
2019
|
|
September 29,
2018
|
|
September 28,
2019
|
|
September 29,
2018
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(30.6)
|
|
|
$
|
32.5
|
|
|
$
|
51.7
|
|
|
$
|
71.2
|
|
Less: Income (loss)
from discontinued operations, net of tax
|
(48.1)
|
|
|
6.5
|
|
|
7.5
|
|
|
18.8
|
|
Income from
continuing operations
|
17.5
|
|
|
26.0
|
|
|
44.2
|
|
|
52.4
|
|
Adjustments to
reconcile income from continuing operations to net cash
from operating activities:
|
|
|
|
|
|
|
|
Restructuring and
other related charges
|
0.2
|
|
|
0.2
|
|
|
7.1
|
|
|
2.9
|
|
Asset impairment
charges
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
—
|
|
Deferred income
taxes
|
(12.5)
|
|
|
3.3
|
|
|
(4.0)
|
|
|
4.9
|
|
Depreciation and
amortization
|
9.5
|
|
|
10.3
|
|
|
28.9
|
|
|
31.6
|
|
Stock-based
compensation
|
3.2
|
|
|
3.3
|
|
|
9.4
|
|
|
11.6
|
|
Pension and other
employee benefits
|
0.5
|
|
|
0.6
|
|
|
1.5
|
|
|
4.3
|
|
Loss (gain) on asset
sales and other, net
|
(0.2)
|
|
|
—
|
|
|
(0.4)
|
|
|
0.1
|
|
Gain on change in
fair value of investment in equity security
|
—
|
|
|
—
|
|
|
(7.8)
|
|
|
—
|
|
Changes in operating
assets and liabilities, net of effects from discontinued
operations:
|
|
|
|
|
|
|
|
Accounts receivable
and other assets
|
(8.1)
|
|
|
(8.0)
|
|
|
37.0
|
|
|
(21.7)
|
|
Contract assets and
liabilities, net
|
(3.4)
|
|
|
(9.5)
|
|
|
(27.4)
|
|
|
(10.4)
|
|
Inventories
|
13.4
|
|
|
3.9
|
|
|
1.2
|
|
|
(30.3)
|
|
Accounts payable,
accrued expenses and other
|
4.5
|
|
|
(29.4)
|
|
|
(41.4)
|
|
|
(47.1)
|
|
Cash spending on
restructuring actions
|
(2.7)
|
|
|
(1.4)
|
|
|
(6.0)
|
|
|
(9.9)
|
|
Net cash from (used
in) continuing operations
|
32.7
|
|
|
(0.7)
|
|
|
53.1
|
|
|
(11.6)
|
|
Net cash from
discontinued operations
|
22.2
|
|
|
30.1
|
|
|
46.0
|
|
|
59.6
|
|
Net cash from
operating activities
|
54.9
|
|
|
29.4
|
|
|
99.1
|
|
|
48.0
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Proceeds from asset
sales and other, net
|
0.3
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
Capital
expenditures
|
(4.9)
|
|
|
(4.0)
|
|
|
(17.4)
|
|
|
(12.3)
|
|
Net cash used in
continuing operations
|
(4.6)
|
|
|
(4.0)
|
|
|
(16.4)
|
|
|
(12.3)
|
|
Net cash used in
discontinued operations
|
(1.8)
|
|
|
(0.9)
|
|
|
(4.6)
|
|
|
(5.0)
|
|
Net cash used in
investing activities
|
(6.4)
|
|
|
(4.9)
|
|
|
(21.0)
|
|
|
(17.3)
|
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
|
Borrowings under
amended and restated senior credit facilities
|
12.0
|
|
|
—
|
|
|
134.0
|
|
|
—
|
|
Repayments of amended
and restated senior credit facilities
|
(27.0)
|
|
|
—
|
|
|
(34.0)
|
|
|
—
|
|
Borrowings under
former senior credit facilities
|
—
|
|
|
14.0
|
|
|
33.0
|
|
|
69.8
|
|
Repayments of former
senior credit facilities
|
—
|
|
|
(19.0)
|
|
|
(173.0)
|
|
|
(134.8)
|
|
Borrowings under
former trade receivables financing arrangement
|
—
|
|
|
14.0
|
|
|
54.0
|
|
|
79.5
|
|
Repayments of former
trade receivables financing arrangement
|
—
|
|
|
(17.0)
|
|
|
(54.0)
|
|
|
(79.5)
|
|
Borrowings under
other financing arrangements
|
2.2
|
|
|
6.5
|
|
|
2.8
|
|
|
10.2
|
|
Repayments of other
financing arrangements
|
—
|
|
|
(0.6)
|
|
|
(3.2)
|
|
|
(4.2)
|
|
Financing fees
paid
|
(0.6)
|
|
|
—
|
|
|
(3.3)
|
|
|
—
|
|
Minimum withholdings
paid on behalf of employees for net share
settlements, net
|
(0.2)
|
|
|
(0.2)
|
|
|
(5.4)
|
|
|
(4.6)
|
|
Dividends paid to
noncontrolling interests in subsidiary
|
—
|
|
|
—
|
|
|
(1.0)
|
|
|
(2.2)
|
|
Net cash used in
continuing operations
|
(13.6)
|
|
|
(2.3)
|
|
|
(50.1)
|
|
|
(65.8)
|
|
Net cash used in
discontinued operations
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.3)
|
|
|
(0.5)
|
|
Net cash used in
financing activities
|
(13.7)
|
|
|
(2.5)
|
|
|
(50.4)
|
|
|
(66.3)
|
|
Change in cash, cash
equivalents and restricted cash due to changes in
foreign currency exchange rates
|
0.2
|
|
|
(5.3)
|
|
|
(2.6)
|
|
|
(6.6)
|
|
Net change in cash,
cash equivalents and restricted cash
|
35.0
|
|
|
16.7
|
|
|
25.1
|
|
|
(42.2)
|
|
Consolidated cash,
cash equivalents and restricted cash, beginning of
period
|
204.4
|
|
|
206.0
|
|
|
214.3
|
|
|
264.9
|
|
Consolidated cash,
cash equivalents and restricted cash, end of period
|
$
|
239.4
|
|
|
$
|
222.7
|
|
|
$
|
239.4
|
|
|
$
|
222.7
|
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
ORGANIC REVENUE
RECONCILIATION
|
(Unaudited)
|
|
|
Three months ended
September 28, 2019
|
|
Net Revenue
Decline
|
|
Foreign
Currency
|
|
Organic Revenue
Decline
|
Food and
Beverage
|
(8.2)
|
%
|
|
(2.8)
|
%
|
|
(5.4)
|
%
|
Industrial
|
(3.4)
|
%
|
|
(2.8)
|
%
|
|
(0.6)
|
%
|
Consolidated
|
(5.7)
|
%
|
|
(2.8)
|
%
|
|
(2.9)
|
%
|
|
Nine months ended
September 28, 2019
|
|
Net Revenue
Decline
|
|
Foreign
Currency
|
|
Organic Revenue
Decline
|
Food and
Beverage
|
(3.4)
|
%
|
|
(3.3)
|
%
|
|
(0.1)
|
%
|
Industrial
|
(3.3)
|
%
|
|
(3.3)
|
%
|
|
—
|
%
|
Consolidated
|
(3.4)
|
%
|
|
(3.4)
|
%
|
|
—
|
%
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
CASH, DEBT AND NET
DEBT RECONCILIATION
|
(Unaudited; in
millions)
|
|
|
|
|
|
Nine months
ended
|
|
|
|
September 28,
2019
|
|
|
Beginning cash, cash
equivalents and restricted cash
|
$
|
214.3
|
|
|
|
|
|
|
|
Net cash from
operating activities of continuing operations
|
53.1
|
|
|
|
Net cash from
operating activities of discontinued operations
|
46.0
|
|
|
|
Proceeds from asset
sales and other, net
|
1.0
|
|
|
|
Capital expenditures
of continuing operations
|
(17.4)
|
|
|
|
Capital expenditures
of discontinued operations
|
(4.6)
|
|
|
|
Borrowings under
amended and restated senior credit facilities
|
134.0
|
|
|
|
Repayments of amended
and restated senior credit facilities
|
(34.0)
|
|
|
|
Borrowings under
former senior credit facilities
|
33.0
|
|
|
|
Repayments of former
senior credit facilities
|
(173.0)
|
|
|
|
Borrowings under
former trade receivables financing arrangement
|
54.0
|
|
|
|
Repayments of former
trade receivables financing arrangement
|
(54.0)
|
|
|
|
Borrowings under
other financing arrangements
|
2.8
|
|
|
|
Repayments of other
financing arrangements
|
(3.2)
|
|
|
|
Financing fees
paid
|
(3.3)
|
|
|
|
Minimum withholdings
paid on behalf of employees for net share settlements,
net
|
(5.4)
|
|
|
|
Dividends paid to
noncontrolling interests in subsidiary
|
(1.0)
|
|
|
|
Net cash used in
financing activities of discontinued operations
|
(0.3)
|
|
|
|
Change in cash, cash
equivalents and restricted cash due to changes in foreign
currency
exchange rates
|
(2.6)
|
|
|
|
|
|
|
|
Ending cash, cash
equivalents and restricted cash
|
$
|
239.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and Net Debt
at
|
|
September 28,
2019
|
|
December 31,
2018
|
Term loan
|
$
|
100.0
|
|
|
$
|
—
|
|
Former term
loan
|
—
|
|
|
140.0
|
|
5.625% senior notes,
due in August 2024
|
300.0
|
|
|
300.0
|
|
5.875% senior notes,
due in August 2026
|
300.0
|
|
|
300.0
|
|
Other indebtedness -
continuing operations
|
26.2
|
|
|
33.1
|
|
Other indebtedness -
discontinued operations
|
3.9
|
|
|
4.2
|
|
Less: deferred
financing fees
|
(7.2)
|
|
|
(8.0)
|
|
Total debt
|
$
|
722.9
|
|
|
$
|
769.3
|
|
|
|
|
|
Total debt
|
$
|
722.9
|
|
|
$
|
769.3
|
|
Less: debt under
purchase card program
|
(24.7)
|
|
|
(23.0)
|
|
Less: cash and
equivalents - continuing operations
|
(217.6)
|
|
|
(197.0)
|
|
Less: cash and
equivalents - discontinued operations
|
(20.7)
|
|
|
(16.3)
|
|
Net debt
|
$
|
459.9
|
|
|
$
|
533.0
|
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
FREE CASH FLOW
RECONCILIATION
|
(Unaudited; in
millions)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September 28,
2019
|
|
September 29,
2018
|
|
September 28,
2019
|
|
September 29,
2018
|
Net cash from
operating activities - continuing and discontinued
operations
|
$
|
54.9
|
|
|
$
|
29.4
|
|
|
$
|
99.1
|
|
|
$
|
48.0
|
|
Capital expenditures
- continuing and discontinued operations
|
(6.7)
|
|
|
(4.9)
|
|
|
(22.0)
|
|
|
(17.3)
|
|
Free cash flow from
operations - continuing and discontinued
operations
|
$
|
48.2
|
|
|
$
|
24.5
|
|
|
$
|
77.1
|
|
|
$
|
30.7
|
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
EBITDA
RECONCILIATION
|
(Unaudited; in millions)
|
|
|
Three months
ended(1)
|
|
Nine months
ended(1)
|
|
September 28,
2019
|
|
September 29,
2018
|
|
September 28,
2019
|
|
September 29,
2018
|
Net income (loss)
attributable to SPX FLOW, Inc.
|
$
|
(31.6)
|
|
|
$
|
32.7
|
|
|
$
|
50.5
|
|
|
$
|
71.1
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
(7.1)
|
|
|
9.2
|
|
|
(22.7)
|
|
|
21.9
|
|
Interest expense,
net
|
9.3
|
|
|
11.3
|
|
|
31.7
|
|
|
36.2
|
|
Depreciation and
amortization
|
9.5
|
|
|
14.6
|
|
|
36.7
|
|
|
44.4
|
|
EBITDA
|
(19.9)
|
|
|
67.8
|
|
|
96.2
|
|
|
173.6
|
|
Impairment
charge
|
52.0
|
|
|
—
|
|
|
52.0
|
|
|
—
|
|
Asset impairment
charges
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
—
|
|
Claim settlement
|
17.0
|
|
|
—
|
|
|
17.0
|
|
|
—
|
|
Charges and fees
associated with strategic actions
|
2.9
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
Fair value adjustment
related to an equity security
|
—
|
|
|
—
|
|
|
(7.8)
|
|
|
—
|
|
Non-cash compensation
expense
|
3.4
|
|
|
3.7
|
|
|
10.2
|
|
|
15.2
|
|
Non-service pension
and postretirement related costs
|
0.2
|
|
|
0.3
|
|
|
0.8
|
|
|
1.5
|
|
Interest
income
|
2.2
|
|
|
1.9
|
|
|
6.0
|
|
|
5.1
|
|
Losses (gains) on
asset sales and other, net
|
(0.2)
|
|
|
—
|
|
|
(0.4)
|
|
|
0.2
|
|
Restructuring and
other related charges
|
0.2
|
|
|
0.2
|
|
|
7.1
|
|
|
3.9
|
|
Foreign exchange
losses
|
0.2
|
|
|
2.5
|
|
|
1.8
|
|
|
6.5
|
|
Other
|
0.2
|
|
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
Bank consolidated
EBITDA
|
$
|
69.0
|
|
|
$
|
76.6
|
|
|
$
|
200.7
|
|
|
$
|
206.6
|
|
|
|
|
|
|
|
|
|
(1) Includes
the results of continuing operations and discontinued
operations
|
SPX FLOW, INC. AND
SUBSIDIARIES
|
ADJUSTED DILUTED
EARNINGS PER SHARE RECONCILIATION
|
(Unaudited)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September 28,
2019
|
|
September 28,
2019
|
Diluted earnings
(loss) per share attributable to SPX FLOW, Inc.
|
$
|
(0.74)
|
|
|
$
|
1.18
|
|
Less: Diluted
earnings (loss) per share from discontinued operations
|
(1.13)
|
|
|
0.17
|
|
Diluted earnings per
share from continuing operations
|
0.39
|
|
|
1.01
|
|
Certain restructuring
and other related charges, net of tax
|
—
|
|
|
0.11
|
|
Charges and fees
associated with strategic actions, net of tax
|
0.08
|
|
|
0.10
|
|
Fair value adjustment
related to an equity security, net of tax
|
—
|
|
|
(0.13)
|
|
Discrete tax charges
(benefits)
|
(0.06)
|
|
|
0.07
|
|
Impairment of
corporate asset held for sale, net of tax
|
0.18
|
|
|
0.18
|
|
Adjusted diluted
earnings per share
|
$
|
0.59
|
|
|
$
|
1.34
|
|
View original
content:http://www.prnewswire.com/news-releases/spx-flow-reports-third-quarter-2019-financial-results-300947762.html
SOURCE SPX FLOW, Inc.