) reported second-quarter 2014 adjusted earnings of $1.26 per
share, which handily surpassed the Zacks Consensus Estimate of
$1.20. The company's GAAP earnings per share surged 54% year over
year to $1.25 per share.
Spx Corporation - Earnings Surprise |
The company's adjusted earnings include a charge of 10 cent per
share related to the power projects in South Africa and a tax gain
of 9 cents a share.
The earnings improvement was primarily driven by strength in the
company's Industrial Products and Services business. Moreover, the
organizational and restructuring initiatives undertaken last year
aided its operating performance by optimizing the cost structure
across the globe.
Revenues for the quarter rose 1.5% year over year to $1.18
billion. Organic revenues for the quarter increased marginally by
0.1% year over year. The organic revenues benefited from growth in
all the businesses except the power projects in South Africa, which
led to a decline of about $30 million. The top line gained from
favorable currency translation of 1.4%. Revenues lagged the Zacks
Consensus Estimate of $1.21 billion.
Flow Technology revenues for the quarter increased 1.2% year
over year to $661.4 million. Organic revenues decreased 1.3%, while
favorable currency translations increased revenues by 2.5%. The
contraction in organic revenues was primarily due to reduced
industrial mixers sales. However, this was offset by increased
sales of oil & gas aftermarket services, power and energy
valves, industrial flow components, as well as increased sales of
food and beverage systems especially in Asia Pacific.
Revenues for the
Thermal Equipment and Services
segment declined 6.6% year over year to $327.3 million. Organic
revenues for the segment decreased 6.1%, while adverse currency
fluctuations decreased revenues by 0.5%. The organic revenue
decline was due to the expected slowdown in large power projects in
South Africa. However, the increased demand for the cooling
equipments in Asia Pacific and products for personal comfort
heating in the U.S. was a positive.
Revenues in the
Industrial Products and Services and Other
segment increased 20.7% year over year to $191.0 million. Organic
revenues for the segment increased 19.4% year over year. Organic
revenues were driven by strength across all the businesses in the
segment, especially in its power transformer shipment division.
Cash Flow & Balance Sheet
Exiting the quarter, the company had cash and cash equivalents
of $466.2 million compared with $691.8 million as on Dec 31, 2013.
Net cash from operating activities for the quarter was negative
$41.4 million, narrower than negative $243.7 million in the
prior-year period. The company had a long-term debt of $1,181.3
million, compared with $1,090.0 million as on Dec 31,
In the quarter, the company's operating income increased to
$123.0 million from $115.0 million in the prior-year quarter,
whereas the operating margins expanded from 9.9% to 10.4%.
In April, SPX completed the divestment of its Precision
Components business for $63.0 million. Apart from this, the company
repurchased 1.368 million shares for $140.1 million.
Following the earnings release, the company also provided its
outlook for fiscal 2014. The company now expects revenue growth to
be in the range of 3% to 5%, narrowed from the previously provided
range of 2% to 6%. SPX reiterated its outlook for adjusted earnings
from continuing operations to be in the range of $5.00 to $5.50 a
share. The company expects margins to improve by 80 basis points in
SPX currently carries a Zacks Rank #4 (Sell). Some better-ranked
stocks that can be considered at the moment include China
Automotive Systems Inc. (
), Meritor, Inc. (
) and Twin Disc (
). All three hold a Zacks Rank #2 (Buy).
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