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SPX Flow Inc, USA
COMPANY PROFILE
SPX Flow Inc, USA Profile
SPX Flow, formed as a spin-off from SPX Corp in 2015, is a global supplier of flow components, process equipment and turn-key systems, along with the related aftermarket parts and services. Its product portfolio encompasses pumps, filters, separators, valves, mixers, air dryers, hydraulic tools, homogenisers and heat exchangers. The company has three reporting segments: Food & Beverage; Power & Energy, and, Industrial. SPX Flow has approximately 8000 employees with operations in more than 35 countries. Analysis
In fiscal 2015 SPX Flow recorded revenues of US$2.4 billion, a decrease of 13.8% on the comparable figure a year earlier when part of SPX Corp. The drop was attributed primarily to the strengthening of the US dollar during the period and lower sales of power and energy pumps, largely reflecting the impact of lower oil prices. In the company’s Food & Beverage segment revenues fell 8.5% to US$886.3 million reflecting negative currency impacts. Despite the overall decline, the sector saw higher sales of systems in Europe and Asia Pacific, although these were partially offset by reduced component sales in North America. In the Power & Energy segment comparative sales were down 24.8% to US$723.0 million mainly due to lower oil industry spending, while in the Industrial division currency impacts were attributed as the main factor behind the 7.1% fall to US$779.2 million. SPX Flow’s segment income and margin declined to US$301.7 million and 12.6% respectively, compared to US$391.0 million and 14.1% in the prior year, due primarily to the organic revenue decline partially offset by improved operating and project execution performance in the Food and Beverage division. The company incurred special charges of US$42.6 million for the period, compared to US$14.2 million in the prior year. During 2015, these included US$23.0 million of charges for restructuring actions related to the ongoing closures of two European manufacturing facilities. SPX Flow’s income before taxes decreased 41.2% in 2015 to US$137.2 million, primarily as a result of a decline in segment profitability, increases in impairments of intangible assets, special charges and third party interest expense. Net income was 35.7% lower at US$87.4 million. Key Figures (US$ million) SPX Flow Inc
COMMENT SPX Flow completed the spin-off from its SPX Corp parent in September 2015 to become a standalone company purely focused on flow applications. In February 2016, the company announced its intention to further optimise its global footprint, streamline business processes and reduce its selling, general and administrative expenses through a global realignment programme. The two year realignment programme is forecast to result in a 10–15% reduction in both headcount and manufacturing footprint to generate cost savings of at least US$110 million. The programme includes developing the company’s aftermarket sales and expanding certain of its high-value product lines into adjacent markets. As part of realigning its manufacturing presence, SPX Flow has begun a multi-year plan to expand its manufacturing presence at a new facility in Bydgoszcz, Poland, to replace its current plants in Unna, Germany and Kolding, Denmark. Fiscal 2016 has also seen SPX Flow open an innovation centre in Shanghai, China. While confident of its long term future, SPX Flow is forecasting an 8–12% decline in revenues in the current year compared with fiscal 2015. The anticipated downturn reflects the continuing uncertainties in the oil industry that are expected to impact spending by its Power and Energy segment customers by around 10%. A reduction in dairy commodity prices is expected to reduce the company’s Food & Beverage segment revenues by a similar amount. n
Year ended 31.12 2015 2014
2013
Revenue Of Which: Food & Beverage Power & Energy Industrial
2388.5 2769.6
Costs of Products Sold
1596.3
1833.1
1906.8
Gross Profit
792.2
936.5
898.0
Segment Income Of Which: Food & Beverage Power & Energy Industrial
301.7
391.0
337.1
Operating Income/(Loss) Net Income
886.3 968.9 723.0 961.6 779.2 839.1
106.9 99.3 87.5 168.7 107.3 123.0
2804.8 970.0 997.5 837.3
90.4 127.4 119.3
145.5
254.6
231.2
87.4
135.9
132.5
Contact Details
Chair: Christopher Kearney President and CEO: Marcus Michael Address: 13320 Ballantyne Corporate Place Tel: +1 704 808 3000 Charlotte, NC 28277, USA Web: www.spxflow.com 6
Pump Industry Analyst
June 2016
SPX Flow Inc, USA Profile
SPX Flow, formed as a spin-off from SPX Corp in 2015, is a global supplier of flow components, process equipment and turn-key systems, along with the related aftermarket parts and services. Its product portfolio encompasses pumps, filters, separators, valves, mixers, air dryers, hydraulic tools, homogenisers and heat exchangers. The company has three reporting segments: Food & Beverage; Power & Energy, and, Industrial. SPX Flow has approximately 8000 employees with operations in more than 35 countries. Analysis
In fiscal 2015 SPX Flow recorded revenues of US$2.4 billion, a decrease of 13.8% on the comparable figure a year earlier when part of SPX Corp. The drop was attributed primarily to the strengthening of the US dollar during the period and lower sales of power and energy pumps, largely reflecting the impact of lower oil prices. In the company’s Food & Beverage segment revenues fell 8.5% to US$886.3 million reflecting negative currency impacts. Despite the overall decline, the sector saw higher sales of systems in Europe and Asia Pacific, although these were partially offset by reduced component sales in North America. In the Power & Energy segment comparative sales were down 24.8% to US$723.0 million mainly due to lower oil industry spending, while in the Industrial division currency impacts were attributed as the main factor behind the 7.1% fall to US$779.2 million. SPX Flow’s segment income and margin declined to US$301.7 million and 12.6% respectively, compared to US$391.0 million and 14.1% in the prior year, due primarily to the organic revenue decline partially offset by improved operating and project execution performance in the Food and Beverage division. The company incurred special charges of US$42.6 million for the period, compared to US$14.2 million in the prior year. During 2015, these included US$23.0 million of charges for restructuring actions related to the ongoing closures of two European manufacturing facilities. SPX Flow’s income before taxes decreased 41.2% in 2015 to US$137.2 million, primarily as a result of a decline in segment profitability, increases in impairments of intangible assets, special charges and third party interest expense. Net income was 35.7% lower at US$87.4 million. Key Figures (US$ million) SPX Flow Inc
COMMENT SPX Flow completed the spin-off from its SPX Corp parent in September 2015 to become a standalone company purely focused on flow applications. In February 2016, the company announced its intention to further optimise its global footprint, streamline business processes and reduce its selling, general and administrative expenses through a global realignment programme. The two year realignment programme is forecast to result in a 10–15% reduction in both headcount and manufacturing footprint to generate cost savings of at least US$110 million. The programme includes developing the company’s aftermarket sales and expanding certain of its high-value product lines into adjacent markets. As part of realigning its manufacturing presence, SPX Flow has begun a multi-year plan to expand its manufacturing presence at a new facility in Bydgoszcz, Poland, to replace its current plants in Unna, Germany and Kolding, Denmark. Fiscal 2016 has also seen SPX Flow open an innovation centre in Shanghai, China. While confident of its long term future, SPX Flow is forecasting an 8–12% decline in revenues in the current year compared with fiscal 2015. The anticipated downturn reflects the continuing uncertainties in the oil industry that are expected to impact spending by its Power and Energy segment customers by around 10%. A reduction in dairy commodity prices is expected to reduce the company’s Food & Beverage segment revenues by a similar amount. n
Year ended 31.12 2015 2014
2013
Revenue Of Which: Food & Beverage Power & Energy Industrial
2388.5 2769.6
Costs of Products Sold
1596.3
1833.1
1906.8
Gross Profit
792.2
936.5
898.0
Segment Income Of Which: Food & Beverage Power & Energy Industrial
301.7
391.0
337.1
Operating Income/(Loss) Net Income
886.3 968.9 723.0 961.6 779.2 839.1
106.9 99.3 87.5 168.7 107.3 123.0
2804.8 970.0 997.5 837.3
90.4 127.4 119.3
145.5
254.6
231.2
87.4
135.9
132.5
Contact Details
Chair: Christopher Kearney President and CEO: Marcus Michael Address: 13320 Ballantyne Corporate Place Tel: +1 704 808 3000 Charlotte, NC 28277, USA Web: www.spxflow.com 6
Pump Industry Analyst
June 2016