SPX Corp. (SPW) reported its fourth-quarter and fiscal 2013 results. Fourth-quarter earnings came in at $1.85 a share which surpassed the Zacks Consensus Estimate of $1.81 by 2.2%. In the prior-year quarter, the company reported net loss of $5.56 a share. The prior-year quarter included a non-cash impairment charge of $285.9 million, or $5.19 per share net of tax, associated with the Thermal Equipment and Services segment and a mark-to-market pension charge of $149.9 million, or $1.96 per share net of tax.
Revenues for the fourth quarter contracted 3.4% to $1.32 billion versus $1.37 billion reported in the prior-year quarter. Organic revenues for the quarter declined 3% year over year. The company reported weak revenue across two of its three reporting segments and an unfavorable currency translation of 0.4% also impacted the top line. Revenues were also below the Zacks Consensus Estimate of $1.33 billion.
Segments
Flow Technology revenues for the fourth quarter declined 1.1% to $720.0 million compared with $728.2 million in the prior-year quarter. Organic revenues decreased 1.2%, while currency fluctuations increased revenues by 0.1%. The contraction in organic revenues was primarily attributable to a lower level of OE pump sales resulting from increased discipline in order acceptance of OE pump contracts as well as fewer nuclear project opportunities. However, this was offset by increased sales of oil & gas aftermarket services and pipeline valves, as well as increased sales of food and beverage systems and components.
Revenues for the Thermal Equipment and Services segment declined 18.4% year over year to $364.7 million. Organic revenues for the segment decreased 16.9%, while currency fluctuations decreased revenues by 1.5%. The organic revenue decline was due to lower sales of power generation equipment, the expected decline of residential boiler sales related to the relief efforts of Hurricane Sandy in 2012 and a slowdown in revenue from large power projects in South Africa.
Revenues in the Industrial Products and Services and Other segment increased 22.6% to $234.3 million compared with $191.1 million in the prior-year quarter. Organic revenues for the segment increased 22.4%, while currency fluctuations increased revenues by 0.2%. Revenue was driven by organic revenue growth across its business, led by a significant increase in sales of power transformers.
Margins
Gross margin for the quarter increased 218 basis points (bps) to 30.1%, primarily due to favorable currency fluctuations and lower cost of products. For the fourth quarter, the company reported an operating income of $131.7 million compared with a loss of $313.1 million in the prior-year period.
Cash Flow & Balance Sheet
Exiting the quarter, the company had cash and cash equivalents of $691.8 million. Cash from operating activities for the quarter was $262.8 million, reflecting an increase of 17.8%. The company had a long term debt of $1.1 billion as on Dec 31, 2013 which was lower by 33.9% compared to Dec 31, 2012.
Outlook
Following the earnings release, the company provided an outlook for fiscal 2014. The company expects revenue growth to be in the range of 2% to 6% while adjusted earnings from continuing operations are expected to be in the range of $5.00 to $5.50 a share.
SPX Corporation currently carries a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include Motorcar Parts of America Inc. (MPAA), having a Zacks Rank #1 (Strong Buy), and Douglas Dynamic, Inc. (PLOW) and Genuine Parts Company (GPC), both carrying a Zacks Rank #2 (Buy).
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