Slide 1: SPX Technologies Q2 2023 Earnings Presentation
SPX Technologies Q2 2023 Earnings Presentation August 2, 2023
Slide 2: Forward-looking statements
Certain statements contained in this presentation that are not historical facts, including any statements as to future market conditions, results of operations, products introductions, and financial projections, are forward-looking statements within the meaning of Section 27A of the Securities Act
Slide 3: Introductory Comments
Introductory Comments Gene Lowe
Slide 4: Executive Summary
Executive Summary Very strong Q2 2023 performance Strong revenue growth in both segments Significant margin outperformance in HVAC Value creation initiatives driving durable improvements HVAC Cooling achieved highest level of operational performance Increasing full-year guidance Strong
Slide 5: Q2 2023 Results Summary
Q2 2023 Results Summary ($ millions) Q2 2023 Revenue Strong organic revenue growth* (~15%) Adjusted Operating Income / Margin* HVAC and Detection & Measurement Robust profit and margin growth 64% growth in Adj. Operating Income* 450 bps of margin* expansion Strong Growth Led by HVAC *Adjus
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Sustainability Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Results/account
Slide 7: Q2 Financial Review
Q2 Financial Review Mark Carano
Slide 8: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q2 2022 Q2 2023 GAAP EPS from continuing operations $0.41 $0.82 Amortization $0.12 $0.19 Acquisition-related $0.01 $0.11 Non-service pension & other* $0.17 ($0.06) Adj EPS from continuing operations $0.71 $1.06 Q2 2023 Adjusted EPS of $1.06 Note: Adjusted results are non-
Slide 9: Q2 2023 Results
Q2 2023 Results Q2 Revenue: Q2 2023 ($ millions) Revenue 19.6% year-over-year increase: Consolidated Segment Income / Margin* 14.6% organic increase with broad strength in HVAC and Detection & Measurement 5.3% acquisition impact (TAMCO & ASPEQ) -0.3% currency impact Q2 Consolidated Segment I
Slide 10: HVAC Q2 2023 Results
HVAC Q2 2023 Results ($ millions) Q2 Revenue: Q2 2023 23.0% year-over-year increase: Revenue Segment Income / Margin 15.0% organic increase driven by Cooling 8.6% acquisition impact (TAMCO & ASPEQ) -0.6% currency impact Q2 Segment Income and Margin: $26.9m increase in Segment Income 760
Slide 11: Detection & Measurement Q2 2023 Results
Detection & Measurement Q2 2023 Results ($ millions) Q2 Revenue: Q2 2023 Revenue 14.0% year-over-year increase: Segment Income / Margin 14.0% organic increase driven primarily by strong project deliveries; growth across all platforms Q2 Segment Income and Margin: $1.4m increase in Segment Inco
Slide 12: Financial Position and Liquidity Review
Financial Position and Liquidity Review Mark Carano
Slide 13: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q1 2023 Q2 2023 ($millions) Q1 2023 Q2 2023 2.5 Short-term debt $69 $132 2 Current maturities of long-term debt 3 11 1.5 Long-term debt 242 533 1 2.1x Total Debt $314 $676 1.8x 0.5 1.2x Less: Cash on hand ** (213) (95) 0.4x Net D
Slide 14: 2023 Guidance
2023 Guidance Detection & Total SPX HVAC Measurement Revenue $1.72-1.75b $1,125-$1,145m $590-$605m Prior $1.68-1.72b $1,110-$1,130m $570-$590m Segment Income Margin % ~20% ~20% ~20% Prior 18.75%-19.75% 18.00%-19.00% 20.50%-21.50% Adj. Operating Income* $277-$285m SPX 2025 Targets Prior $255-$270m Re
Slide 15: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 16: Market Commentary
Market Commentary Market Comments Cooling: ‒ Strong demand trends in Americas (data centers, semiconductors, etc.) ‒ Improving labor and supply chain support growth initiatives Heating: ‒ Channel balanced; orders steady ‒ Normalization of supply chain and labor Run-rate: ‒ Steady bookings ‒ Li
Slide 17: Summary
Summary Continued strong performance and outlook Durable progress on key initiatives (Growth, CI, Digital) Updated guidance reflects ~36% Adjusted EPS* growth Attractive acquisition pipeline Well Positioned to Continue Value-Creation Journey *Adjusted results are non-GAAP financial measures.
Slide 18: Appendix
SPX4 TECHNOLOGIES Appendix
Slide 19: Modeling Considerations – Full Year 2023
Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $51-52m Long-term incentive comp $13-14m Restructuring costs $0-1m Interest cost ~$25m Other income/(expense), and Non-service pension benefit/(expense) $3-5m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OPEB
Slide 20: 2023 Adjusted EPS Guidance - Key Drivers
2023 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $4.30 • Accelerated project-related sales • Moderating supply chain challenges and input costs $4.22 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $4.15 • Unfa
Slide 21: Segment Income Phasing
Segment Income Phasing 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 August 2, 2023 21
Slide 22: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter 2022 2023 ($ millions) Q1 Q2 Q3 Q4 FY Q1 Q2 YTD Segment income* $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 $ 74.4 $ 84.4 $ 158.8 Corporate expense (16.6) (16.4) (17.2) (18.4) (68.6) (14.6) (16.6) (31.2) Acquisition related and other costs (0.1) (0.9) (0.1) (0.8) (1.9)
Slide 23: Adjusted SPX Results by Quarter
Adjusted SPX Results by Quarter ($ millions, except per share values) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Q2 YTD HVAC segment income $ 20.6 $ 28.3 $ 33.1 $ 53.5 $ 135.5 $ 47.7 $ 55.2 $ 102.9 Detection & Measurement segment income 19.0 27.8 30.3 37.0 114.1 26.7 29.2 55.9 Consolidated segment income $ 39.6
Slide 24: HVAC Segment Results
HVAC Segment Results ($ millions) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Q2 YTD Revenue $193.1 $218.7 $227.8 $274.2 $913.8 $251.6 $269.0 $520.6 Segment income $20.6 $28.3 $33.1 $53.5 $135.5 $47.7 $55.2 $102.9 11% 13% 15% 20% 15% 19% 21% 20% August 2, 2023 24
Slide 25: Detection & Measurement Segment Results
Detection & Measurement Segment Results ($ millions) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Q2 YTD Revenue $114.0 $135.3 $142.7 $155.1 $547.1 $148.2 $154.3 $302.5 Segment income $19.0 $27.8 $30.3 $37.0 $114.1 $26.7 $29.2 $55.9 17% 21% 21% 24% 21% 18% 19% 19% August 2, 2023 25
Slide 26: Q2 2023 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2023 U.S. GAAP to Adjusted EPS Reconciliation ($ millions, GAAP Adjustments Adjusted except per share values) Segment income $ 84.4 $ — $ 84.4 Corporate expense (1) (16.6) 5.1 (11.5) Acquisition-related costs (2) (1.5) 1.5 — Long-term incentive compensation expense (3.5) — (3.5) Amortization of i
Slide 27: Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation ($ millions, GAAP Adjustments Adjusted except per Segment income $ 56.1 $ — $ 56.1 share values) Corporate expense (1) (16.4) 5.1 (11.3) Acquisition-related costs (2) (0.9) 0.9 — Long-term incentive compensation expense (2.5) — (2.5) Amortization of i
Slide 28: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation Three months ended Six months ended ($ millions) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Operating income $ 51.3 $ 27.2 $ 101.1 $ 38.6 Include - TSA Income (1) 0.1 0.9 0.2 1.8 Exclude: Acquisition-related and other costs (2) (6.5) (5.
Slide 29: Q2 2023 Non-GAAP Reconciliation - Organic Revenue
Q2 2023 Non-GAAP Reconciliation - Organic Revenue Three months ended July 1, 2023 Detection & HVAC Measurement Consolidated Net Revenue Growth 23.0 % 14.0 % 19.6 % Exclude: Foreign Currency (0.6) % - % (0.3) % Exclude: Acquisitions 8.6 % - % 5.3 % Organic Revenue Growth 15.0 % 14.0 % 14.6 % August 2
Slide 30: Q2 2023 Debt Reconciliation
Q2 2023 Debt Reconciliation ($ millions) Q2 2023 Short-term debt $ 132.0 Current maturities of long-term debt 10.5 Long-term debt 533.1 Gross debt 675.6 (1) plus: adjustment associated with credit agreement (0.1) Adjusted gross debt 675.5 less: cash and equivalents (94.8) Adjusted net debt $ 580.7 (
Slide 31: Adjusted EBITDA Reconciliation
Adjusted EBITDA* Reconciliation ($ millions) 2022 2023 Q3 Q4 Q1 Q2 LTM** Net income (loss) $ 3.1 $ (27.3) $ 42.8 $ 36.0 $ 54.6 Income tax provision (benefit) (2.5) 2.8 11.3 7.8 19.4 Interest expense 2.6 2.0 2.4 5.4 12.4 Income (loss) before interest and taxes 3.2 (22.5) 56.5 49.2 86.4 Depreciation a
Slide 32: Q2 2023 Adjusted Free Cash Flow Reconciliation
Q2 2023 Adjusted Free Cash Flow Reconciliation ($ millions) Q2 2023 Operating cash flow from continuing operations $ 73.8 Capital expenditures (4.7) Free cash flow from continuing operations 69.1 Adjustments* 5.5 Adjusted free cash flow from continuing operations $ 74.6 *Adjustments represent the re