UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 16, 2022
SPX FLOW, INC.
(Exact Name of Registrant as specified in Charter)
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| Delaware | | 1-37393 | | 47-3110748 |
| (State or Other Jurisdiction of | | (Commission File Number) | | (I.R.S. Employer |
| Incorporation) | | | | Identification No.) |
13320 Ballantyne Corporate Place
Charlotte, North Carolina 28277
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code (704) 752-4400
NOT APPLICABLE
(Former Name or Former Address if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, Par Value $0.01 | | FLOW | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company: ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On February 16, 2022, SPX FLOW, Inc. (the “Company”) issued the press release attached as Exhibit 99.1 hereto and incorporated herein by reference.
The press release incorporated by reference into this Item 2.02 contains disclosure regarding organic revenue growth (decline), defined as net revenue growth (decline), excluding the effects of (i) foreign currency fluctuations and (ii) business acquisitions which occurred in the third quarter of 2020 and first and second quarters of 2021. Such amounts, for purposes of this reconciliation, include revenues from continuing operations only. The Company’s management believes that this metric is a useful financial measure for investors in evaluating its operating performance because excluding the effects of currency fluctuations and business acquisitions, when read in conjunction with the Company’s revenues, presents a useful tool to evaluate the Company’s ongoing operations and provides investors with a tool they can use to evaluate the Company’s management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors the Company’s management uses in internal evaluations of the overall performance of its business.
The press release also contains disclosures regarding (i) free cash flow from operations, defined as net cash from operating activities reduced by cash paid for capital expenditures, and (ii) adjusted free cash flow from operations, defined as free cash flow from operations excluding cash spending on restructuring actions, cash spending on certain mergers and acquisitions ("M&A") activities, cash spending on strategic actions, and discrete cash tax payments. Such amounts, for purposes of these reconciliations, relate to continuing operations only. The Company’s management believes that these free cash flow and adjusted free cash flow metrics are useful financial measures for investors in evaluating the cash flow performance of multi-industrial companies, since the measures provide insight into the cash flow available to fund such things as equity repurchases, dividends, mandatory and discretionary debt reduction and acquisitions or other strategic investments. In addition, although the use of these cash flow metrics is limited by the fact that the measures can exclude certain cash items within management’s discretion, free cash flow and adjusted free cash flow from operations are factors used by the Company’s management in internal evaluations of the overall performance of its business.
In the three and twelve months ended December 31, 2021, respectively, we recognized the following within results of continuing operations (amounts in millions):
i.charges and fees of $12.6 and $15.9 associated with strategic actions including, in 2021, professional fees incurred in connection with a merger agreement entered into with an affiliate of Lone Star Funds ("Lone Star"), wherein upon closing, Lone Star will acquire all of the Company's outstanding common shares in exchange for a cash purchase price of $86.50 per share, and as described further in Note 1 to the consolidated financial statements included in our 2021 Annual Report on Form 10-K, as of and for the year ended December 31, 2021,
ii.charges of $0.2 and $5.8 associated with certain M&A activities including, among other M&A-related costs, certain costs related to business acquisitions consummated in January 2021 and May 2021,
iii.restructuring and other related charges (credits) of $(1.4) and $12.7, as described further in Note 8 to our consolidated financial statements referred to above,
iv.the gain on sale of the primary assets of a product line of $0.0 and $5.6, as described further in Note 4 to our consolidated financial statements referred to above,
v.transition services income of $0.2 and $1.9, recognized as a component of “Other income, net” in our consolidated financial statements, under an agreement entered into in connection with the sale of our former Power and Energy reportable segment and as described further in Note 4 to our consolidated financial statements referred to above,
vi.amortization of the inventory fair value step-up adjustments of $0.0 and $1.9 in the Company’s Precision Solutions segment related to business acquisitions which occurred in the first half of 2021, as described further in Note 4 to our consolidated financial statements referred to above,
vii.intangible amortization expense of $4.3 (consisting of $1.5 in our Nutrition and Health segment and $2.8 in our Precision Solutions segment), and $17.9 (consisting of $6.3 in our Nutrition and Health segment and $11.6 in our Precision Solutions segment),
viii.the fair value adjustments (gains) related to an equity security of $2.8 and $11.9, as described further in Note 17 to our consolidated financial statements referred to above,
ix.fourth quarter mark-to-market pension adjustments (credits in 2021) of $2.2 and $2.2, as described further in Note 11 to our consolidated financial statements referred to above,
x.certain gains on asset sales and other, net, of $0.0 and $2.2, recognized as a component of “Other income, net” in our consolidated financial statements, and which related primarily to the sale of certain machinery and equipment and real property previously owned by the Company,
xi.a loss on early extinguishment of debt of $0.0 and $12.4, as described further in Note 13 to our consolidated financial statements referred to above, and
xii.certain discrete income tax charges, representing the difference between the tax provision recognized in our consolidated financial statements referred to above for the periods and a tax provision calculated at a 28% effective tax rate.
To aid investors who seek comparability period-to-period, the Company, in the press release and related schedules incorporated by reference into this Item 2.02, adjusted certain metrics to exclude the above items, as well as the results of discontinued operations for certain of the adjusted metrics. These metrics include disclosure of:
1.adjusted segment income, which is defined as segment income from continuing operations only, and excludes (i) intangible amortization expense and (ii) amortization of inventory fair value step-up adjustments;
2.adjusted operating income, which is defined as operating income from continuing operations only, and excludes (i) charges and fees associated with strategic actions, (ii) charges associated with certain M&A activities, (iii) restructuring and other related charges (credits), (iv) asset impairment charges (applicable in 2020 only), (v) loss (gain) on sale of business and product line assets, (vi) a reduction of SG&A costs associated with transition services income, to net such income, recognized in “Other income, net”, against SG&A expense where the underlying costs of providing such services are reported, (vii) the amortization of the inventory fair value step-up adjustment related to business acquisitions which occurred in the first and second quarters of 2021, and (viii) intangible amortization, each as described above and each of which is presented on a continuing operations basis only, for purposes of this adjusted operating income reconciliation;
3.EBITDA, determined including only the results of continuing operations, which is defined as net income attributable to SPX FLOW, Inc. from continuing operations, and excludes the income tax provision, net interest expense, and depreciation and amortization, each of which includes only the results of continuing operations, for purposes of this EBITDA reconciliation;
4.adjusted EBITDA from continuing operations, which is defined as EBITDA, calculated including the results of continuing operations only, and excludes (i) charges and fees associated with strategic actions, (ii) charges associated with certain M&A activities, (iii) restructuring and other related charges (credits), (iv) asset impairment charges (applicable in 2020 only), (v) fair value adjustments related to an equity security, (vi) mark-to-market pension adjustments, (vii) the gain on sale of the primary assets of a product line, (viii) certain gains on asset sales and other, net, (ix) loss on early extinguishment of debt, and (x) the amortization of the inventory fair value step-up adjustments related to business acquisitions which occurred in the first and second quarters of 2021, with each of the items recognized during the three and twelve months ended December 31, 2021 as described above and each of which is presented on a continuing operations basis only, for purposes of this adjusted EBITDA reconciliation; and
5.adjusted diluted earnings per share (“EPS”) from continuing operations, which is defined as diluted EPS from continuing operations attributable to SPX FLOW, Inc., and excludes the dilutive EPS effects of each of the items excluded from adjusted EBITDA noted in item (4) above, on a net of tax basis, and also excludes the dilutive EPS effects of intangible amortization expense, and other discrete income tax charges, each as described above.
The Company views each of the above measures, when read in conjunction with its comparable GAAP number or amount, as giving investors a useful tool to assess the health and prospects of the Company. Additionally, the Company’s management uses each of these adjusted metrics as a measure of the Company’s performance.
None of the non-GAAP measures described above is a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), and such measures should not be considered a substitute for, and should be used in combination with, the GAAP number or amount from which each is reconciled. Non-GAAP measures used by the Company may not be comparable to similarly titled measures reported by other companies.
Refer to the tables included in the press release for the components of each of the Company’s non-GAAP numbers or amounts referred to above, and for the reconciliations of these numbers or amounts from their respective most comparable GAAP measures.
The information in this Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this
Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits. | | | | | | | | |
| Exhibit | | |
| Number | | Description |
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| | Press Release dated February 16, 2022, furnished solely pursuant to Item 2.02 of Form 8-K. |
| 104 | | Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | SPX FLOW, Inc. |
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| Date: February 16, 2022 | By: | /s/ Jaime M. Easley |
| | | Jaime M. Easley |
| | | Vice President, Chief Financial Officer and Chief Accounting Officer |
