SPX Announces Agreement to Purchase CUES, Inc.

Charlotte, North Carolina, UNITED STATES

Highly Complementary Transaction Expected to Close in Q2 2018;
Substantially Strengthens SPX’s Global Position in Pipe Inspection Equipment;
Expected to be Modestly Accretive to 2018 Adjusted EPS* Guidance

CHARLOTTE, N.C., April 23, 2018 (GLOBE NEWSWIRE) -- SPX Corporation (“SPX”) (NYSE:SPXC) today announced that it has entered into a definitive agreement to purchase CUES, Inc. (“CUES”) a leading manufacturer of pipeline inspection and rehabilitation equipment, headquartered in Orlando, Florida. 

Under the agreement, a subsidiary of SPX will be merged with CUES’ parent company, ELXSI Corporation (“ELXSI”).  As a result of the merger, stockholders of ELXSI will receive cash consideration equal to $51 per share of common stock outstanding as of the effective time of the merger, or a total of approximately $189 million.  ELXSI’s common stock is currently quoted on the Pink Open Market operated by OTC Markets Group, Inc. under the ticker “ELXS”.  ELXSI’s financial statements can be found at www.otcmarkets.com under the ticker “ELXS”.  A more detailed description of the transaction, including a summary of ELXSI’s rights with respect to an unsolicited acquisition proposal, is provided in SPX’s Form 8-K filed today with the United States Securities and Exchange Commission, which includes a copy of the agreement as an Exhibit.

“We are very excited about welcoming CUES to the SPX team,” said Gene Lowe, President and CEO of SPX. “CUES’ leading brand and technology in the pipe inspection equipment market add a highly complementary solution to our Radiodetection business and bring another market-leading product portfolio to our Detection & Measurement segment.  We expect the combination of our respective businesses to create a stronger, more competitive inspection solution for customers, with meaningful growth and margin opportunities.”

Mr. Lowe continued, “We expect this transaction to be an excellent value-creation opportunity for investors.  Along with our recent purchase of Schonstedt Instrument Company, we are off to a solid start in our deployment of available capital while maintaining a strong balance sheet and cash generation profile.”

“The combination of CUES with SPX’s Radiodetection business is an excellent fit,” said Sandy Milley, President and CEO of ELXSI.  “Bringing together CUES’ strong reputation for high quality pipe inspection equipment and services with SPX’s global footprint and marketing infrastructure is a natural step in taking CUES to the next level of growth and performance.  I’m very excited about the numerous opportunities this transaction creates for our employees and customers alike, and personally look forward to working with the SPX team to build an even stronger, more valuable platform.” Mr. Milley will remain with ELXSI following the closing of the transaction and will continue to lead the CUES business.

ELXSI’s 2017 annual net sales were approximately $90 million, and following completion of the transaction, ELXSI’s results will be reported with SPX’s Radiodetection business within its Detection & Measurement segment.  

The acquisition is expected to be modestly accretive to SPX’s previously announced 2018 guidance for Adjusted EPS* in a range of $2.03 to $2.18.  SPX anticipates excluding the effect of one-time costs and purchase accounting items associated with the transaction when reporting adjusted results.

The transaction is expected to close in Q2 2018 and is subject to regulatory approval, customary closing conditions, and approval by ELXSI’s stockholders.  Under the terms of the definitive agreement ELXSI may, until June 7, 2018 (which period may be extended under certain circumstances by up to 15 days) entertain and engage in negotiations with respect to unsolicited acquisition proposals which constitute or may be reasonably expected to lead to superior proposals and, in certain circumstances, terminate the agreement to accept a superior acquisition proposal subject to the payment of a termination fee.  The Board of Directors of both SPX and ELXSI have unanimously approved the transaction and stockholders of ELXSI collectively holding more than a majority of the outstanding voting power have tendered stockholder consents to SPX approving the transaction.  These consents terminate if ELXSI terminates the agreement to accept a superior offer.  SPX has customary matching rights with respect to superior offers under the terms of the agreement.

About SPX Corporation:  SPX Corporation is a supplier of highly engineered products and technologies, holding leadership positions in the HVAC, detection and measurement, and engineered solutions markets. Based in Charlotte, North Carolina, SPX Corporation had approximately $1.4 billion in annual revenue in 2017 and more than 5,000 employees in about 14 countries. SPX Corporation is listed on the New York Stock Exchange under the ticker symbol “SPXC.”  For more information, please visit www.spx.com.

About CUES, Inc:  CUES is a leading manufacturer of closed circuit television video (CCTV) inspection, rehabilitation, pipe profiling equipment and pipeline inspection/asset management software for sanitary and storm sewers, industrial process lines, and water lines. With headquarters and manufacturing located in Orlando, Florida, CUES has over 70,000 square feet of dedicated production capacity with over approximately 365 employees to serve and support customers. Additional facilities with stocking warehouses and service personnel are located in California, Georgia, Wisconsin, Oregon, and Toronto, Canada.  For more information, please visit www.cuesinc.com.

* Non-GAAP Financial measure. SPX’s non-GAAP financial guidance excludes items, which would be included in financial measures presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), that it does not consider indicative of its on-going performance. These items include, but are not limited to, transaction and acquisition costs, costs associated with dispositions, the results of its South African projects, and potential non-cash income or expense items associated with changes in market interest rates and actuarial or other data related to its pension and postretirement plans, as the ultimate aggregate amounts associated with these items are out of SPX’s control and/or cannot be reasonably predicted. Accordingly, a reconciliation of such non-GAAP financial guidance to the nearest corresponding GAAP financial measures is not practicable.

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. Please read these statements in conjunction with the SPX’s documents filed with the Securities and Exchange Commission, including the SPX’s annual reports on Form 10-K, and any amendments thereto, and quarterly reports on Form 10-Q. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements, including the risk that SPX may fail to successfully complete or integrate acquisitions. Actual results may differ materially from these statements. The words “believe,” “expect,” “anticipate,” “project” and similar expressions identify forward-looking statements. Although SPX 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 SPX’s current complement of businesses, which is subject to change.

Statements in this press release speak only as of the date of this press release, and SPX disclaims any responsibility to update or revise such statements.

SOURCE SPX Corporation.

Investor and Media Contacts:
Paul Clegg, Vice President, Investor Relations and Communications
Phone: 980-474-3806
E-mail: spx.investor@spx.com

Pat Uotila, Manager, Investor Relations
Phone: 980-474-3806
E-mail: spx.investor@spx.com