CHARLOTTE, N.C., Feb. 10, 2016 /PRNewswire/ — SPX FLOW, Inc. (NYSE: FLOW) today reported results for the quarter ended December 31, 2015 and provided 2016 financial guidance.
Fourth Quarter 2015 Overview:
Full Year 2015 Overview:
“Our fourth quarter results reflect the challenging economic environment in our key end markets and the impact of the stronger U.S. dollar. In particular, reduced prices for oil and dairy commodities have significantly impacted our customers’ operating and capital spending decisions,” said Marc Michael, President and Chief Executive Officer. “On a positive note, orders in the fourth quarter were stable sequentially and our cash generation in the quarter was strong, giving us sufficient financial flexibility to invest in our business.”
“Looking at 2016, we do not anticipate any meaningful recovery in our key end markets. Notwithstanding the challenging economic environment, I am driving a higher level of accountability and a greater sense of urgency throughout the organization to improve our competitive position and operational execution. I firmly believe we will create significant value over the next 12 to 24 months by growing our bottom line.”
Michael continued, “At the outset of this year, our executive team established realignment and strategic enterprise initiatives that we expect will improve our competitive position and reduce our cost structure by $110 million as we exit 2017. These initiatives, some of which began last year, include strategically realigning our footprint, streamlining our business processes and improving our working capital performance. In addition, we continue to invest in attractive growth opportunities with an emphasis on growing our aftermarket business. We are aligning our compensation and incentive programs with our enterprise initiatives. And we are increasing our focus on employee engagement and talent development.”
“As we execute on our realignment and strategic enterprise initiatives, we expect to see incremental financial benefits, quarter-to-quarter, as the year progresses and into next year. We also expect to be in an even better competitive position to deliver our high quality products, meet our customers’ needs and leverage our strong brands. Ultimately we expect to drive a higher, more sustainable return profile across our business. We are committed to these initiatives and confident in our ability to execute them.”
Fourth Quarter 2015 Results by Segment
Food and Beverage
Revenues for Q4 2015 were $222.1 million, compared to $246.6 million in Q4 2014, a decrease of $24.5 million, or 9.9%. Currency fluctuations decreased revenues 8.6%, or $21.2 million, and organic revenues* declined 1.3%, or $3.3 million. The decline in organic revenues was due primarily to lower sales of components, particularly in North America, partially offset by increased systems revenue.
Segment income was $26.7 million, or 12.0% of revenues, in Q4 2015, compared to $31.7 million, or 12.9% of revenues, in Q4 2014. Segment income and margins decreased due primarily to the revenue declines described above as well as an unfavorable revenue mix.
Power and Energy
Revenues for Q4 2015 were $190.0 million, compared to $257.5 million in Q4 2014, a decrease of $67.5 million, or 26.2%. Currency fluctuations decreased revenues 4.9%, or $12.5 million, and organic revenues* declined 21.3%, or $55.0 million. The decline in organic revenue was due largely to the impact of low, volatile and uncertain oil prices which significantly reduced both operational and capital spending by end customers, particularly for projects related to upstream oil applications.
Segment income was $18.8 million, or 9.9% of revenues, in Q4 2015, compared to $52.7 million, or 20.5% of revenues, in Q4 2014. The decrease in segment income and margin was due primarily to the organic revenue decline described above as well as competitive price pressures and lower utilization rates at certain of our manufacturing locations.
Revenues for Q4 2015 were $200.6 million, compared to $218.4 million in Q4 2014, a decline of $17.8 million, or 8.2%. Currency fluctuations decreased revenues 6.0%, or $13.1 million, and organic revenues* declined 2.2%, or $4.7 million. The organic revenue decline was due primarily to decreased sales of hydraulic technology equipment into the oil and gas market.
Segment income was $27.0 million, or 13.5% of revenues, in Q4 2015, compared to $31.3 million, or 14.3% of revenues, in Q4 2014. The decline in segment income and margin was due primarily to the organic revenue decline described above.
Form 10-K: The company expects to file its annual report on Form 10-K for the year ended December 31, 2015 with the Securities and Exchange Commission in mid-February 2016. This press 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.
Impairment Charges: In the fourth quarter of 2015, the company recorded an impairment charge of $7.7 related to certain technology and trademarks of a business within the Food and Beverage reportable segment.
About SPX FLOW, Inc.: Based in Charlotte, North Carolina, SPX FLOW is a leading global supplier of highly engineered flow components, process equipment and turn-key systems, along with the related aftermarket parts and services, into the food and beverage, power and energy and industrial end markets. SPX FLOW has more than $2 billion in annual revenues and approximately 8,000 employees with operations in over 35 countries and sales in over 150 countries around the world. To learn more about SPX FLOW, please visit our website at www.spxflow.com.
*Non-GAAP number. See attached schedules for reconciliation to most comparable GAAP number.
Certain statements in this press release are forward-looking statements within the meaning of 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. 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,” “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. In addition, estimates of future operating results are based on the company’s current complement of businesses, which is subject to change. 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 and Media Contact:
Ryan Taylor, Vice President, Communications, Market Insights and Financial Planning