SPX Corporation (NYSE:SPXC) Q3 2017 Earnings Conference Call Transcript

Nov 02, 2017 • 04:45 pm ET

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SPX Corporation (NYSE:SPXC) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 SPX Corporation Earnings Conference Call. (Operator Instructions). Also as a reminder, this conference call is being recorded.

I would now like to turn the call over to your host, to Paul Clegg, VP of IR and Communications. Sir, you may begin.

Executive
Paul Clegg

Thank you, Dillon, and good after, everyone. Thanks for joining us. With me on the call today are Gene Lowe, our President and CEO; Scott Sproule, our CFO.

A press release containing our third quarter 2017 results was issued just after the market close. You can find the release and our earnings slide presentation as well as a link to a live webcast of this call in the Investor Relations section of our website at spx.com. I encourage you to follow along with the slide presentation during our prepared remarks. A replay of the webcast will be available on our website until November 9.

As a reminder, portions of our presentation and comments are forward-looking and subject to safe harbor provisions. Please also note the risk factors in our most recent SEC filings.

Our comments today will largely focus on adjusted financial results. Specifically, we will focus on adjusted core operating results, which exclude the results of the South African projects, and we will separately provide an update on those projects.

Additionally, Q3 2017 core segment income excludes a gain related to a contract settlement within our Engineered Solutions segment. Other adjustments to our GAAP results this quarter consist of an adjustment for non-service pension items, including a gain and certain favorable discrete tax items. You can find reconciliations of all adjusted figures to their respective GAAP measures in the appendix to today's presentation. Finally, we plan to be on the road this month, meeting with investors.

And with that, I'll turn the call over to Gene.

Executive
Gene Lowe

Thanks, Paul. Good afternoon, everyone. Thanks for joining us. On the call today, we'll provide you with a brief update on our overall results, segment performances and end-market conditions before going into Q&A.

During the third quarter, our core businesses continued to perform well. The initiatives we've been implementing since the spin have helped drive significant segment income growth, and each of our segments is now contributing meaningfully to our overall profitability, exceeding our ROIC targets and driving shareholder value. Strong operational execution resulted in more than 300 basis points of operating margin expansion.

Our solid balance sheet and core cash flow performance leave us well positioned to execute on both our organic and inorganic growth plans. And our South African project initiatives remain on track. Overall, we are very pleased with the performance of our company.

Based on the strength of our year-to-date results and our visibility into customer demand for Q4, we're increasing our full year guidance for 2017 adjusted EPS to a range of $1.70 to $1.80.

Turning to our results. We reported adjusted earnings per share of $0.36. Adjusted operating income grew 75% to approximately $25 million on