| Key Figures (US$ million) | ||
|---|---|---|
| First quarter ended | ||
| 28.3.2020 | 30.3.2019 | |
| Orders | 317.0 | 357.7 |
| Of Which: | ||
| Food & Beverage | 125.2 | 153.1 |
| Industrial | 191.8 | 204.6 |
| Revenues | 289.5 | 373.4 |
| Of Which: | ||
| Food & Beverage | 137.8 | 172.5 |
| Industrial | 151.7 | 200.9 |
| Cost of Products Sold | 188.4 | 250.0 |
| Gross Profit | 101.0 | 123.4 |
| Selling, General & Admin Expenses | 85.2 | 87.5 |
| Operating Income | 8.6 | 28.0 |
| Net Income/(Loss) attributable to SPX Flow | (5.3) | 19.5 |
Source: SPX Flow Q1 2020 results.
COMMENT.
Improved gross margin was a high point in what was generally a tough first quarter of fiscal 2020 for SPX Flow that saw its revenues decline 22.5% to US$289.5 million and the company post a net loss of US$5.3 million.
The revenue reverse was 19.6% on an organic basis, driven by a fall in large dry-dairy projects, weak demand for most of its industrial product lines and a lower starting backlog year-over-year.
Orders were also back significantly falling 11.4%, 10.1% organically, to US$317.0 million. The decline was attributed to a lower level of Food and Beverage systems orders, along with reduced demand for components and aftermarket parts across both of the company's reporting segments.
Gross profit fell 18.2% to US$101.0 million on the back of the reduced sales volumes, but the associated margin increased 90 points to 34.9%. SPX Flow linked the margin improvement to a higher quality of revenue, improved operating execution and favourable net price/cost benefits.
Operating income plummeted 69.3% on the prior year comparator to US$8.6 million impacted by US$2.6 million of restructuring charges, a US$1.9 million non-cash impairment charge and US$0.8 million dollars of professional fees supporting the company's enterprise strategy and long-term value creation planning.
Marc Michael, SPX Flow's president and CEO, said the company was in a strong financial position fortified by the net proceeds from the recent completion of the sale of its Power & Energy business.
He said while orders had slowed significantly in March and April due to the Covid-19 pandemic, the company was confident that its product range would remain in demand in the longer term.
“We are managing the near-term demand environment prudently and have conducted a robust cash sensitivity analysis across various economic scenarios,” he said. “Currently, we are operating with the assumption that revenue will decrease 15%–20% year-over-year.”