CHARLOTTE, N.C., March 30, 2020 /PRNewswire/ --
- Completes Key Strategic Move Towards Building a Premier
Process Solutions Enterprise:
-
- Business profile now concentrated in essential sanitary and
industrial process applications where customers value SPX FLOW's
deep application knowledge, technical engineering and process
expertise
- Cross-functional growth teams established to target higher
quality of revenue and expand presence in micro-verticals where
growth is driven by secular trends around health, safety and
sustainability
- Strengthens Financial Position and Liquidity:
-
- >$1.1 billion of
liquidity
- No significant debt maturities until 2024
- Net leverage and interest coverage ratios well below debt
covenants in credit facilities
- Attractive free cash flow profile through a business cycle
- Updates Capital Allocation Priorities:
-
- Continue to invest in business to improve velocity, vitality
and customer intimacy
- Targeting $300 million debt
reduction in 2020
- Announces authorization for future share repurchases of up to
$150 million
- Withdraws Full Year 2020 Guidance Due to COVID-19 Global
Impact and Macro-Economic Uncertainty:
-
- People-first culture and business operating system helping
navigate through global pandemic
- Prioritizing the health, safety and well-being of our employees
and stakeholders
- Strong presence in sanitary and specialty industrial
markets
- Nearly all manufacturing and service locations remain open
SPX FLOW, Inc. (NYSE: FLOW), a leading provider of premier
process solutions, announced today that it completed the sale of
its Power and Energy segment to funds managed by affiliates of
Apollo Global Management, Inc. with net proceeds totaling
approximately $400 million after
adjustments, fees and taxes.
By completing the sale of its Power and Energy business, the
company's exposure to oil and power generation is de minimis. SPX
FLOW's remaining revenue profile is comprised of approximately 50%
sales into sanitary markets (such as food and beverage,
pharmaceuticals, water and personal care) and approximately 50%
sales into industrial markets (such as specialty chemical
processing, air treatment and mining).
The net proceeds from the sale further strengthen the company's
financial position. Net debt and interest coverage ratios are well
below the company's debt covenants and liquidity is in excess of
$1.1 billion (including more than
$600 million of cash on hand and a
$500 million undrawn, global
revolver). This provides ample flexibility to maintain a
conservative balance sheet while prudently investing in the
business and opportunistically returning capital to
shareholders.
In line with management's commitment to prioritize the use of
divestiture proceeds on debt reduction and a return to
shareholders, the company also announced today its intention to
reduce total debt by $300 million, or
more than 40%, to approximately $400
million in 2020. Additionally, management intends to
return cash to shareholders through share repurchases over time.
The company will continue to assess market and business conditions
in connection with its capital allocation plans.
Journey to High Performance
"Since the start of 2016,
SPX FLOW has been on an accelerated pace of transformation focused
on creating a high-performing, operating enterprise. In 2016 and
2017, the work done to realign our global footprint, transition to
an operating structure and aggressively reduce debt improved the
health of our business and provided a solid foundation. In 2018, we
matured our business operating system and focused on growth in our
high value product lines. 2019 represented a pivot point for our
business as we simultaneously improved operational performance and
executed strategic moves to build a premier process solutions
enterprise," said Marc Michael, SPX
FLOW President and Chief Executive Officer.
"Today's announcement of completing the Power and Energy
divestiture marks a significant milestone on our quest to build a
premier process solutions enterprise that innovates with customers
to provide process solutions and lifecycle support in essential
sanitary and specialty industrial applications."
"I want to recognize our deal team and external partners who
worked tirelessly over the past year to carve out and execute this
highly complex deal in a difficult economy. I also want to
recognize Jose Larios for his
outstanding leadership and thank the entire Power and Energy team
for their steadfast support of customers through the divestiture
process, as well as the team's valuable contributions to SPX FLOW
over the years. Many of the people in that business were part of
our family for decades and we wish them all the best as they chart
a new course as an independent company," said Mr. Michael.
Financial Strength and Ample Liquidity
"Upon
completing the divestiture, SPX FLOW received approximately
$400 million in net cash proceeds
which immediately bolsters our financial position and provides
ample liquidity at a very opportune time," said Jaime Easley, SPX FLOW Vice President and Chief
Financial Officer. "We now have more than $1.1 billion of available liquidity with no
significant debt maturities until 2024. The strength of our balance
sheet puts us on solid footing amid the COVID-19 global pandemic.
We have the financial flexibility to invest in our business,
further delever our balance sheet to maintain conservative debt
ratios, appropriately return capital to shareholders and evaluate
strategic, value creation opportunities while prudently managing
capital and liquidity through the current economic
environment."
Navigating the COVID-19 Global Pandemic
"Our hard work
over the past four years has improved our capability to navigate
this uncertain, unpredictable and rapidly changing social and
economic environment caused by the COVID-19 global pandemic," said
Mr. Michael. "In normal times and especially in times of crisis,
our engineering solutions, high quality products, aftermarket parts
and technical services are critical to support the production of
essential items such as water, foods, beverages, agriculture,
medicine, personal care goods, cleaning supplies, chemicals,
critical infrastructure and packaging materials. As governments
across the world mandate complete or partial shutdowns for
non-essential businesses, SPX FLOW is, in most cases, considered an
essential business for the role we play to support our customers,
channel partners and end users who feed and enhance the world and
deliver life's essential elements to consumers."
"As we manage through this crisis, I have been extremely
impressed with the level of engagement and swift execution from our
cross-functional business continuity and crisis management teams
who are meeting frequently to ensure the health, safety and
well-being of all our employees and stakeholders. We have applied
the learnings from our experience in China and Korea to swiftly and proactively
implement measures across our operations aimed at protecting health
and minimizing the spread of the virus in our communities across
the world. Additionally, we have implemented programs to provide
employees stability when work has been temporarily disrupted, to
keep ongoing work environments clean and healthy and enable
business continuity to our customers, channel partners and
suppliers. This process, while difficult from a personal and
operational perspective, is demonstrating the resiliency and
determination of our workforce and highlighting our emphasis on
building a people-first culture," continued Mr. Michael.
"In light of the significant uncertainties associated with
COVID-19 pandemic and wide range of potential impacts to the global
economy, we are withdrawing our previously issued 2020 full year
guidance. On our upcoming Q1 2020 earnings call, in addition
to the first quarter results, we intend to provide a comprehensive
update on the market environment and our expectations for the
balance of 2020," Mr. Michael added.
Executive Summary
"In closing, as a result of our
accelerated transformation efforts and strategic actions SPX FLOW
is now a premier process solutions enterprise serving customers in
high quality sanitary and specialty industrial applications. SPX
FLOW plays an integral role in helping feed and enhance the world
by innovating with customers to blend, mix and control the measured
movements of life's essential elements. We are focused on further
penetrating micro-verticals where our technical expertise is highly
valued and where market growth is supported by secular trends. In
addition, we established growth teams to empower decision making,
drive accountability and enable cross-functional teamwork which
enhances our core capabilities around customer intimacy, velocity
and vitality."
"We intend to operate prudently through this turbulent and
difficult time, managing elements within our control to deliver for
our customers and drive continuous improvement. We have a nimble
organizational design, global operating capabilities and a
high-quality leadership team which enables us to rapidly stimulate
change."
"I want to thank our teams across the enterprise for their
engagement and commitment during this unprecedented time. We are
excited about the future and remain focused on delivering long-term
value for all stakeholders by creating an engaging, people-first
culture, enhancing our customers' experience and making high
quality investment decisions," concluded Mr. Michael.
Share Repurchase Authorization
The company's Board of
Directors authorized the company to repurchase shares of its common
stock up to $150 million over a
period expiring at the earlier of December
31, 2021 or such earlier time determined by the Board in its
sole discretion. Under this authorization, the company may
repurchase shares in open market, privately negotiated or other
transactions. The company's management is authorized to determine
the timing and amount of the transactions based on its evaluation
of market conditions, capital alternatives, and other factors.
Repurchases may be made under plans established under SEC Rule
10b5-1(c), which plans, once appropriately established, would
permit the company to repurchase shares at times when it otherwise
would be precluded from doing so under insider trading laws. The
repurchase program may be suspended or discontinued at any
time.
About SPX FLOW, Inc.:
Based in Charlotte, North Carolina, SPX FLOW,
Inc. (NYSE: FLOW) innovates with customers to help feed and
enhance the world by designing, delivering and servicing high value
solutions at the heart of growing and sustaining our diverse
communities. The company's product offering is concentrated in
rotating, actuating and hydraulic technologies, as well as
automated process systems, into food and beverage and industrial
markets. SPX FLOW has approximately $1.5
billion in annual revenues with operations in more than 30
countries and sales in more than 100 countries. To learn more about
SPX FLOW, please visit www.spxflow.com.
Forward-looking Statements
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, including its annual report on
form 10-K for the year ended December 31,
2019. 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," "plan," "target," "project," "believe" 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. These statements
are only predictions. Actual events or results may differ
materially because of market conditions or other factors, and
forward-looking statements should not be relied upon as a
prediction of actual results. All the forward-looking statements in
this press release are qualified in their entirety by reference to
the factors discussed under the heading "Risk Factors" in the
company's most recent Form 10-K and in any other documents filed by
the company with the Securities and Exchange Commission that
describe risks and factors that could cause actual results to
differ materially from those projected in these forward-looking
statements. These risk factors may not be exhaustive. In addition
to these factors, the matters addressed in these forward-looking
statements are subject to uncertainties arising from the current
COVID-19 pandemic, including the impact of the pandemic or related
government responses on our businesses, the businesses of our
customers and vendors and the global economy generally, other
impacts to our supply chain and employee mobility, and whether our
businesses and those of our customers will continue to be treated
as "essential" operations under government orders restricting
business activities or, even if so treated, whether health and
safety concerns might otherwise require operations to be halted for
some period of time. Further, the company operates in a continually
changing business environment and cannot predict new risk factors
that may arise as a result of these and other changes. 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 Contacts:
Scott
Gaffner
VP, Investor Relations and Strategic Insights
704-752-4485
investor@spxflow.com
Stewart Honeycutt
Director, FP&A and Investor Relations
704-752-4472
Media Contact:
Melissa
Buscher
Chief Communications Officer
704-540-2160
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SOURCE SPX FLOW, Inc.