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SPX Corp, USA
COMPANY PROFILE
SPX Corp, USA Profile
SPX Corp is a multi-industry manufacturer operating in more than 35 countries with approximately 14 000 employees. Its business is divided into two reportable segments, Flow Technology and Thermal Equipment & Services, while it has remaining operations (classified as All Other) that it refers to as Industrial Products & Services. Its pump operations are concentrated in its Flow Technology division. The segment also offers filters, valves, mixers, plate heat exchangers and dehydration equipment. Core pump brands include SPX Flow Technology, APV, ClydeUnion, Waukesha Cherry-Burrell, Bran+Luebbe, Johnson Pump and Plenty. Analysis
SPX Corp posted revenues of US$4.7 billion in fiscal 2013, a decrease of 2.4% on the year prior. The result reflected a decline in organic revenues and, to a lesser extent, the impact of a stronger US dollar (primarily versus the South African Rand). Revenues were down in both of SPX’s reportable segments, partially offset by an 11.7% increase to US$735.0 million in its Industrial Products & Services businesses. In its Flow Technology segment revenues were down 1.6% on the fiscal 2012 comparator at US$2.6 billion. The fall stemmed from lower sales of food and beverage systems projects in the Asia Pacific region and of Clyde Union’s original equipment oil & gas pumps. These declines were offset partially by an increase in sales of valves, closures and other components into oil & gas markets primarily in North America and Europe, as well as increased food & beverage systems revenues in Europe. Despite the dip in revenues, SPX recorded a 3.3% year-on-year increase in gross profit to US$1.4 billion. The upturn in gross profit reflected improved operating performance from the Flow Technology segment and the Industrial Products businesses. The Flow Technology segment posted a segment profit of US$308.3 million, a gain of 8.1% on the year earlier. SPX attributed the upturn to improved operating execution at a number of businesses within the segment, cost reductions associated with restructuring initiatives implemented at Clyde Union, and the increased sales of oil & gas components at its European and US facilities. These offset lower revenues and execution challenges on certain large food and beverage systems projects. SPX’s net income for fiscal 2013 was US$212.6 million, up 16.0% on the 2012 figure. The company didn’t make any acquisitions during the year. In contrast, it divested two non-core Industrial businesses in 2013 and is in the process of divesting some others.
COMMENT Over the past decade SPX has pursued a strategy of focusing on its higher growth markets, primarily through concentrating on flow-related products requiring engineered system solutions and components. Divestitures have played a key role in this process. Since the end of 2004, the company has sold more than 20 businesses for gross proceeds of approximately US$5 billion. These funds have been redeployed primarily on share repurchases, acquisitions, debt reduction and its annual dividend. As a result of these changes, SPX’s product offerings are now concentrated in three primary end user markets: power & energy, food & beverage, and industrial flow markets. The company believes each of these markets has good prospects driven by population growth, the expanding middle class, environmental and sustainability efforts, new infrastructure builds in developing economies and the replacement of aged infrastructure in developed economies. A further arm of SPX’s current strategy is a focus on building its aftermarket service business within these markets, as these typically have higher returns. In fiscal 2013 SPX went through a process of operational realignment designed to improve its efficiency and customer focus. This emphasis on efficiencies is continuing into fiscal 2014 through plans to better align the company’s global corporate structure with its new operational structure. ■
Key Figures (US$ million) SPX Corp 2013
2012
Revenues Of Which: Flow Technology
4717.2
4831.0
2638.0
Costs of Products Sold Gross Profit
Year ended 31.12 2011
2010
2009
4272.9
3821.0
3870.3
2682.2
2042.0
1662.2
1634.1
3359.5
3517.4
3066.4
n/a
n/a
1357.6
1313.6
1206.5
n/a
n/a
Selling, General & Admin Expenses
956.0
1112.6
897.4
n/a
n/a
Segment Income Of Which: Flow Technology
494.5
472.5
482.3
n/a
n/a
308.3
285.1
268.4
215.6
210.9
Operating Income/(Loss)
329.6
(142.4)
237.0
322.4
215.7
Net Income
212.6
183.2
176.2
225.0
(73.8)
Contact Details
Chair, President and CEO: Chief Financial Officer: Address:
6
Pump Industry Analyst
Christopher Kearney Jeremy Smeltser 13320 Ballantyne Corporate Place Charlotte NC 28277, USA
Tel: +1 704 752 4400 Web: www.spx.com
April 2014
SPX Corp, USA Profile
SPX Corp is a multi-industry manufacturer operating in more than 35 countries with approximately 14 000 employees. Its business is divided into two reportable segments, Flow Technology and Thermal Equipment & Services, while it has remaining operations (classified as All Other) that it refers to as Industrial Products & Services. Its pump operations are concentrated in its Flow Technology division. The segment also offers filters, valves, mixers, plate heat exchangers and dehydration equipment. Core pump brands include SPX Flow Technology, APV, ClydeUnion, Waukesha Cherry-Burrell, Bran+Luebbe, Johnson Pump and Plenty. Analysis
SPX Corp posted revenues of US$4.7 billion in fiscal 2013, a decrease of 2.4% on the year prior. The result reflected a decline in organic revenues and, to a lesser extent, the impact of a stronger US dollar (primarily versus the South African Rand). Revenues were down in both of SPX’s reportable segments, partially offset by an 11.7% increase to US$735.0 million in its Industrial Products & Services businesses. In its Flow Technology segment revenues were down 1.6% on the fiscal 2012 comparator at US$2.6 billion. The fall stemmed from lower sales of food and beverage systems projects in the Asia Pacific region and of Clyde Union’s original equipment oil & gas pumps. These declines were offset partially by an increase in sales of valves, closures and other components into oil & gas markets primarily in North America and Europe, as well as increased food & beverage systems revenues in Europe. Despite the dip in revenues, SPX recorded a 3.3% year-on-year increase in gross profit to US$1.4 billion. The upturn in gross profit reflected improved operating performance from the Flow Technology segment and the Industrial Products businesses. The Flow Technology segment posted a segment profit of US$308.3 million, a gain of 8.1% on the year earlier. SPX attributed the upturn to improved operating execution at a number of businesses within the segment, cost reductions associated with restructuring initiatives implemented at Clyde Union, and the increased sales of oil & gas components at its European and US facilities. These offset lower revenues and execution challenges on certain large food and beverage systems projects. SPX’s net income for fiscal 2013 was US$212.6 million, up 16.0% on the 2012 figure. The company didn’t make any acquisitions during the year. In contrast, it divested two non-core Industrial businesses in 2013 and is in the process of divesting some others.
COMMENT Over the past decade SPX has pursued a strategy of focusing on its higher growth markets, primarily through concentrating on flow-related products requiring engineered system solutions and components. Divestitures have played a key role in this process. Since the end of 2004, the company has sold more than 20 businesses for gross proceeds of approximately US$5 billion. These funds have been redeployed primarily on share repurchases, acquisitions, debt reduction and its annual dividend. As a result of these changes, SPX’s product offerings are now concentrated in three primary end user markets: power & energy, food & beverage, and industrial flow markets. The company believes each of these markets has good prospects driven by population growth, the expanding middle class, environmental and sustainability efforts, new infrastructure builds in developing economies and the replacement of aged infrastructure in developed economies. A further arm of SPX’s current strategy is a focus on building its aftermarket service business within these markets, as these typically have higher returns. In fiscal 2013 SPX went through a process of operational realignment designed to improve its efficiency and customer focus. This emphasis on efficiencies is continuing into fiscal 2014 through plans to better align the company’s global corporate structure with its new operational structure. ■
Key Figures (US$ million) SPX Corp 2013
2012
Revenues Of Which: Flow Technology
4717.2
4831.0
2638.0
Costs of Products Sold Gross Profit
Year ended 31.12 2011
2010
2009
4272.9
3821.0
3870.3
2682.2
2042.0
1662.2
1634.1
3359.5
3517.4
3066.4
n/a
n/a
1357.6
1313.6
1206.5
n/a
n/a
Selling, General & Admin Expenses
956.0
1112.6
897.4
n/a
n/a
Segment Income Of Which: Flow Technology
494.5
472.5
482.3
n/a
n/a
308.3
285.1
268.4
215.6
210.9
Operating Income/(Loss)
329.6
(142.4)
237.0
322.4
215.7
Net Income
212.6
183.2
176.2
225.0
(73.8)
Contact Details
Chair, President and CEO: Chief Financial Officer: Address:
6
Pump Industry Analyst
Christopher Kearney Jeremy Smeltser 13320 Ballantyne Corporate Place Charlotte NC 28277, USA
Tel: +1 704 752 4400 Web: www.spx.com
April 2014