NEWS RELEASE
SPX FLOW Announces Multi-Year Plan to Expand Manufacturing Presence in Poland
CHARLOTTE, N.C., Oct. 27, 2015 /PRNewswire/ -- SPX FLOW, Inc. (NYSE: FLOW) today announced a multi-year plan to expand its manufacturing presence at a new facility in Bydgoszcz, Poland and reduce its overall, global manufacturing overhead. As part of the initial phase of this plan, during 2016 the company intends to shift production to Bydgoszcz, Poland from its manufacturing facilities in Unna, Germany and Kolding, Denmark and close the Unna and Kolding facilities. Discussions with the works councils at the Unna and Kolding locations are underway.
The company anticipates opportunities beyond the initial phase of this plan, to shift additional manufacturing to Poland and further reduce overhead. Once fully optimized, the transition of manufacturing to Poland is expected to result in approximately 100 points of segment margin improvement, or approximately $25 million of segment income per year, at current revenue volumes.
In the third quarter 2015, the company recorded $24 million of special charges related to the two planned facility closures which was not included in the company's previously issued Q3 2015 financial targets.
Chris Kearney, Chairman, President and CEO said, "Given the current challenging demand environment across our end markets and low expectations for growth in 2016, we are aggressively moving forward on plans to optimize our global footprint, reduce manufacturing overhead and improve productivity. We are investing in capacity expansions in Poland, Korea and the Middle East that we believe will improve our competitive position and enable us to better serve our customers. As we execute on these plans our highest priority remains providing our customers with industry leading products and services, delivered on-time."
As part of the multi-year plan to reduce manufacturing overhead and optimize its global footprint, the company is constructing a 300,000 square foot facility in Bydgoszcz, Poland near its European Distribution Center and existing manufacturing facility, which has a strong track record for high quality manufacturing and on-time delivery for valves, heat exchangers, pumps, and skidded systems.
Once the new facility is built and local works council negotiations are complete, the company intends to transition the manufacturing operations from Unna, Germany, Kolding, Denmark and the existing plant in Bydgoszcz, Poland into the newly constructed manufacturing facility. The company plans to retain its customer service, sales, engineering and aftermarket personnel in Unna and Kolding.
During the transition, normal operations are expected to continue at the Unna and Kolding facilities. Should the need arise, the company has well-established locations in other parts of the world with the capability and capacity to supply the products currently manufactured in the Unna and Kolding facilities. This transition of these two facilities is anticipated to be completed near the end of 2016.
The new facility in Poland is designed to have capacity beyond the initial consolidation phase. The company expects to fill this capacity through a combination of additional footprint rationalizations and potential organic growth. The company intends to continue evaluating additional opportunities for overhead reduction and improved productivity.
The net investment on this multi-year plan to shift manufacturing activities to Poland and capitalize on economies of scale is expected to be between $60 and $65 million, including a net capital investment of approximately $20 million and special charges of $40 to $45 million. The majority of this investment is expected to be recorded in the second half of 2015 and the first half of 2016. Additionally, the company has been granted up to $25 million in tax incentives from the Polish government, which will offset a portion of the investment over time.
SPX FLOW Chairman, President and Chief Executive Officer Chris Kearney and Vice President and Chief Financial Officer Jeremy Smeltser will provide additional details related to this plan along with the company's third quarter earnings during a conference call on Wednesday, October 28, 2015 at 8:30 a.m. Eastern time.
Those interested in participating in the conference call should dial in five minutes prior to the start of the call. The call will be simultaneously webcast via the company's website at www.spxflow.com and the slide presentation will be available in the Investor Relations section of the site.
Conference Call:
Dial in: 877-787-3040
From outside the United States: +1 530-379-4719
Conference ID: 57671011
A replay of the call will be available by telephone through Saturday, November 7.
To listen to a replay of the call:
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Conference ID: 57671011
About SPX FLOW, Inc.:
Based in Charlotte, North Carolina, SPX FLOW is a leading global supplier of highly engineered flow components, process equipment and turn-key systems, along with the related aftermarket parts and services, into the food and beverage, power and energy and industrial end markets. SPX FLOW has approximately $2.5 billion in annual revenues and approximately 8,000 employees with operations in over 35 countries and sales in over 150 countries around the world. To learn more about SPX FLOW, please visit our website at www.spxflow.com.
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. These statements include, but are not limited to, statements relating to (1) progress in, completion of, operation of, or transition of operations to, the Bydgoszcz, Poland facility, (2) closure of the company's manufacturing facilities in Unna, Germany and Kolding, Denmark, or (3) other related matters described above. The words "believe," "expect," "anticipate," "plan" 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. In addition, estimates of future operating results are based on the company's current complement of businesses, which is subject to change. Please read this press release in conjunction with the company's documents filed with the Securities and Exchange Commission. 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. 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 and Media Contact:
Ryan Taylor, Vice President, Communications, Market Insights and Financial Planning
Phone: 704-752-4486
E-mail: investor@spxflow.com
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SOURCE SPX FLOW, Inc.