SPX Corporation (“SPX”) announced today that it has entered into a
binding agreement to sell 100% of the issued and outstanding stock
of its wholly-owned subsidiary, SPX Transformer Solutions, Inc., to
GE-Prolec Transformers, Inc. (together with its affiliates, “Prolec
GE”), a subsidiary of a joint venture between GE (NYSE: GE) and
Xignux S.A. de C.V. for a cash purchase price of $645 million. SPX
anticipates that after taxes on a gain from the sale, net proceeds
will be approximately $540 million. The purchase price is subject
to customary net working capital and similar adjustments at
closing. The transaction is anticipated to close during the second
half of 2021, subject to the satisfaction of typical closing
conditions, including antitrust regulatory review. SPX Corporation
was represented by J.P. Morgan Securities LLC as exclusive
financial adviser, and by K&L Gates LLP as legal adviser.
Gene Lowe, President & CEO of SPX commented, “I am very
proud of the accomplishments of the SPX Transformer Solutions team
which has substantially increased the operational performance of
the business and continued to drive improvements to deliver value
for customers. As a key provider of high-quality, sustainable
solutions for the delivery of electrical energy, Prolec GE is an
excellent fit to lead the next phase of growth and value for SPX
Transformer Solutions’ customers and employees alike.”
Mr. Lowe continued, “This transaction is a significant step in
SPX’s value creation journey that further focuses our strategy on
growth in our HVAC and Detection & Measurement segments. By
concentrating our capital and management resources on these
technology-focused, high margin, niche platforms, SPX can further
accelerate our strategic initiatives to drive significant value for
shareholders, and create additional opportunities for employees and
customers.”
Ricardo Suarez, CEO of Prolec GE commented, “I am very excited
about the opportunities this transaction creates for all of our
stakeholders. Prolec GE’s vision is to be recognized as the most
reliable and strategic partner to our customers for innovative and
sustainable energy solutions. The combined entity will remain a
strong partner to its customers and will be better suited to
continue delivering quality products and supporting the evolution
of the grid in the US and the rest of the Americas. We look forward
to welcoming the SPX Transformer Solutions team to the Prolec GE
family.”
2021 Guidance Update:
SPX is updating its 2021 guidance for the
anticipated sale of SPX Transformer Solutions. SPX now anticipates
completion of the transaction to occur in the second half of 2021
and, as such, expects to account for the results of SPX Transformer
Solutions as discontinued operations when it reports second quarter
2021 results in early August 2021. SPX plans to update its segment
reporting structure to eliminate the Engineered Solutions segment,
and to report the results of its Process Cooling business within
its HVAC segment.
SPX now anticipates Adjusted earnings per share*
for the full-year 2021 in a range of $2.17 to $2.37 compared with
prior guidance of $3.06 to $3.26. SPX anticipates adjusted revenue*
of approximately $1.25 billion, compared with prior guidance of
$1.7 billion, and adjusted operating income margin* of
approximately 11-12%, consistent with prior guidance.
Segment and consolidated performance, on a
year-over-year basis, is expected to be as follows (changes
underlined):
|
Adjusted Revenue* |
|
Adjusted Segment Income Margin %* |
HVAC |
$770-780 million (including Process Cooling) (vs. prior “Growth of
mid-to-high single digits %” over 2020 level of ~$591 million –
which did not include Process Cooling). |
|
Approximately 14.5%(vs. prior “modest increase” from 2020 level of
~16.4%). |
Detection & Measurement |
~$460-470 million (Unchanged - vs. prior “Growth of high
teens-to-low 20s % including 2020 and 2021 acquisitions
impact”) |
|
Approximately 20.5%(Unchanged – vs. prior “modest decrease” from
2020 level of ~20.9%) |
SPX Consolidated |
Approximately $1.25 billion(vs. prior ~$1.6 billion) |
|
Approximately 17%(vs. prior “modest increase” from 2020 level of
~15.3%) |
Conference Call: SPX management plans to host a
conference call today at 8:30 a.m. (EDT) to discuss details of this
transaction and the implications for SPX’s future strategy,
including an update to 2021 full-year guidance and longer-term
targets. The call will be simultaneously webcast via SPX’s website
at www.spx.com and the slide presentation will be available in the
Investor Relations section of the site.
Conference callDial in:
877-341-7727From outside the United States: +1
262-558-6098Participant code: 5640048
A replay of the call will be
available by telephone through June, 15 2021.
To listen to a replay of the callDial
in: 855-859-2056From outside the United States: +1
404-537-3406Participant code: 5640048
About SPX Corporation: SPX Corporation is a
supplier of highly engineered products and technologies, holding
leadership positions in the HVAC and detection and measurement
markets. Based in Charlotte, North Carolina, SPX Corporation had
more than 4,500 employees in 15 countries. SPX Corporation is
listed on the New York Stock Exchange under the ticker symbol
“SPXC.” For more information, please visit www.spx.com. References
in this press release to “we” and “our,” other than in Mr. Suarez’s
comments, are to SPX Corporation.
About Prolec GE: Prolec GE designs,
manufactures, and sells products and solutions for the generation,
transmission, and distribution of electrical energy. With more than
50 years’ experience in the industry, Prolec GE is an important
player in the Mexican market and a key participant in the rest of
the Americas with business units in Mexico, United States, and
Brazil. It has an installed base in more than 35 countries and
employs more than 6,800 people. www.prolec.energy
* Non-GAAP financial measure. Our non-GAAP financial guidance
excludes items, which would be included in our GAAP financial
measures that we do not consider indicative of our on-going
performance; and are calculated in a manner consistent with the
presentation of the similarly titled historical non-GAAP measures
presented in SPX’s press release dated May 6, 2021 which reported
its results for the quarter ended April 3, 2021, other than the
treatment of SPX Transformer Solutions, Inc. as a discontinued
operation. These items include, but are not limited to, acquisition
costs, costs associated with dispositions, the results of our South
African operations, and potential non-cash income or expense items
associated with changes in market interest rates and actuarial or
other data related to our pension and postretirement plans, as the
ultimate aggregate amounts associated with these items are out of
our control and/or cannot be reasonably predicted. Accordingly, a
reconciliation of our non-GAAP financial guidance to the nearest
corresponding GAAP financial measures is not practicable. Full-year
guidance excludes impacts from future acquisitions, dispositions
(other than the disposition of SPX Transformer Solutions, Inc.) and
related transaction costs, restructuring costs, incremental impacts
of tariffs and trade tensions on market demand and costs subsequent
to the end of the first quarter, the impact of foreign exchange
rate changes subsequent to the end of the first quarter, impacts
from further spread of COVID-19, and asbestos liability,
environmental and litigation charges. Management of SPX believes it
is useful to provide investors with these metrics, which it uses to
measure the overall performance of our continuing businesses. These
non-GAAP financial measures may not be comparable to similarly
titled measures reported by other companies.
Forward-looking Statements.
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities 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. In addition to our updated 2021 financial guidance, the
words “believe,” “expect,” “anticipate,” “project” and similar
expressions identify our other forward-looking statements. Please
read these forward-looking statements in conjunction with our
documents filed with the Securities and Exchange Commission,
including our most recent annual report on Form 10-K and quarterly
report on Form 10-Q. These filings identify important risk factors
and other uncertainties that could cause actual results to differ
from those contained in the forward-looking statements, including
the following: the impact of the COVID-19 pandemic and governmental
and other actions taken in response; the uncertainty of claims
resolution with respect to the large power projects in South
Africa, as well as claims with respect to asbestos, environmental
and other contingent liabilities; cyclical changes and specific
industry events in our markets; changes in anticipated capital
investment and maintenance expenditures by customers; availability,
limitations or cost increases of raw materials and/or commodities
that cannot be recovered in product pricing; the impact of
competition on profit margins and our ability to maintain or
increase market share; inadequate performance by third-party
suppliers and subcontractors for outsourced products, components
and services; cyber-security risks; risks with respect to the
protection of intellectual property, including with respect to our
digitalization initiatives; the impact of overruns, inflation and
the incurrence of delays with respect to long-term fixed-price
contracts; defects or errors in current or planned products;
domestic economic, political, legal, accounting and business
developments adversely affecting our business, including regulatory
changes; changes in worldwide economic conditions; uncertainties
with respect to our ability to identify acceptable acquisition
targets; uncertainties surrounding timing and successful completion
of any announced acquisition or disposition transactions (including
the disposition of SPX Transformer Solutions, Inc.), including
uncertainties with respect to obtaining (and the timing of)
necessary regulatory approvals; uncertainties with respect to
integrating acquisitions and achieving cost savings or other
benefits from acquisitions; the impact of retained liabilities of
disposed businesses; potential labor disputes; and extreme weather
conditions and natural and other disasters.
Actual results may differ materially from these
statements. Although SPX 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.
Statements in this press release speak only as
of the date of this press release, and SPX disclaims any
responsibility to update or revise such statements except as may be
required by law.
Investor and Media Contacts:Paul Clegg, VP,
Investor Relations and CommunicationsPhone: 980-474-3806E-mail:
spx.investor@spx.com
Nick Illuminati, Manager, Investor RelationsPhone:
980-474-3806E-mail: spx.investor@spx.com
Source: SPX Corporation
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