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SPX's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: SPW

Portions of our presentation and comments today are forward looking and subject to Safe Harbor provisions. Please also note the risk factors in our most recent SEC filings.

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

Christopher J. Kearney

Thanks, Ryan, and good morning, everyone. Thanks for joining us on the call. As you know, 2012 is a year of transition for our company as we focus on executing many significant strategic actions. The investments we're making to transform the company had a dilutive impact on our Q1 financial results. However, we expect to see a positive benefit from these actions over the balance of 2012 and beyond. We believe these actions will allow us to leverage the positive trends we're seeing across many of our key end markets.

I'll begin this morning with a strategic update and look at credit trends at our key end markets. Patrick and Jeremy will then provide a detailed analysis of our financial results.

Looking first at ClydeUnion. As expected during the quarter, we took aggressive actions to address the operational execution challenges that ClydeUnion faced prior to our acquisition of this business. One key area of focus was supply chain. As part of this process, we made a significant working capital investment in the business to accelerate component supply. A large portion of the working capital was funded by the seller in accordance with the final purchase agreement.

In addition to the working capital investment, we implemented a new flatter organizational structure, and we begun to streamline the factory execution. ClydeUnion's Q1 sales were below our expectations and our business results were diluted to the quarter. However, we expect significant improvements over the remainder of the year. Q1 order trends were strong, driven by an increase in aftermarket orders. And the initial customer response to this acquisition has been extremely positive.

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