Slide 1: Q4 2020 Earnings Presentation
Q4 2020 Earnings Presentation February 23, 2021 SPX Corporation 2019 Investor Event - New York
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 – 2020 Results and 2021 Outlook
Executive Summary – 2020 Results and 2021 Outlook Solid performance in 2020 Growth in revenue, segment income and Adjusted EPS Targeting double-digit earnings growth in 2021 Focused on value creation initiatives Continuous improvement, digital, and acquisitions Well-Positioned to Continue
Slide 5: Adjusted Q4 and 2020 Year/Year Summary
Adjusted Q4 and 2020 Year/Year Summary ($ millions) Q4 Full-Year Modest Q4 revenue increase Adjusted Revenue $1,556 Adjusted Segment Income Margin $1,527 Acquisitions more than offset softer $445 $456 non-resi HVAC sales and timing 15.1% 15.3% impact of project sales in Detection 17.8% & Measure
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Focus in HVAC and D&M • Integrity • Significant capital to deploy • Results/a
Slide 7: 2021+ Initiatives
2021+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service Robotics Digital Sourcing AI Loyalty February 23, 2021 7
Slide 8: Q4 Financial Review
Q4 Financial Review Jamie Harris
Slide 9: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q4 2019 Q4 2020 2019 2020 GAAP EPS from continuing operations $0.76 $0.58 $1.71 $2.20 Other segment (South Africa) $0.00 $0.06 $0.79 $0.31 Acquisition-related $0.01 $0.05 $0.09 $0.06 Non-service pension items & other $0.14 $0.11 $0.02 $0.00 Amortization $0.05 $0.09 $0.15
Slide 10: Adjusted Q4 and 2020 Year/Year Results
Adjusted Q4 and 2020 Year/Year Results ($ millions) Q4 Adjusted Results: Q4 Full-Year $1,556 Adjusted Revenue $1,527 2.5% year-over-year increase in Adjusted Adjusted Operating Income Margin Revenue: 4.5% acquisition impact (ULC Robotics and PK) $445 $456 (2.4%) organic* decrease*due to lower
Slide 11: Summary of Q4 and 2020 Adjusted Segment Results
Summary of Q4 and 2020 Adjusted Segment Results Q4’2020 2020 Y/Y % Y/Y Change Y/Y % Y/Y Change Change in Adjusted Change in Adjusted Segment in Revenue Segment Margin* in Revenue Segment Margin* HVAC (4.4)% (130) bps (0.4)% 10 bps Detection & Measurement 17.5% (160) bps 0.6% (280) Bps Engineered Sol
Slide 12: HVAC Q4 and 2020 Year/Year Results
HVAC Q4 and 2020 Year/Year Results ($ millions) Q4 Revenue: Q4 Full-Year (4.4%) year-over-year decrease: $593 $591 Revenue 3.0% acquisition impact from P-K (7.9%) organic decrease* due to lower Cooling $194 $185 and Heating volumes 0.5% currency impact 20.2% 18.9% 16.3% 16.4% $39m $97m $97m
Slide 13: Detection & Measurement Q4 and 2020 Year/Year Results
Detection & Measurement Q4 and 2020 Year/Year Results ($ millions) Q4 Revenue: Q4 Full-Year Revenue $385 $387 17.5% year-over-year increase: Adjusted Segment Income Margin* 2.6% organic increase* due primarily to strong year-end shipments in Radiodetection, CUES and $118 23.7% Flash 20.9% 13.9
Slide 14: Engineered Solutions Q4 and 2020 Year/Year Results
Engineered Solutions Q4 and 2020 Year/Year Results Q4 Revenue: Q4 Full-Year ($ millions) 1.3% year-over-year increase: $578 Revenue $549 Due to improved volumes in Segment Income Margin Transformers and Process Cooling 10.5% $151 $153 7.8% Q4 Segment Income and Margin: 61m 10.7% 10.3% $43m $0.
Slide 15: Financial Position and Liquidity Review
Financial Position and Liquidity Review Jamie Harris
Slide 16: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update Leverage Ratios* ($millions) Q3 2020 Q4 2020 2.16x 1.85x 1.95x Short-term debt $108 $101 1.65x Current maturities of long-term debt 6 7 Long-term debt 350 304 Total Debt $464 $412 Less: Cash on hand (71) (68) Net Debt $393 $344 Q3 2020 Q4 202
Slide 17: 2021 Guidance
2021 Guidance Revenue Segment Income Margin HVAC Growth of Low-to-Mid Single Digits % Modest increase Detection & Growth of Low to Mid Teens % Approximately flat Measurement (including the effect of 2020 acquisitions) Engineered Growth of Low Single Digits % Approximately flat Solutions
Slide 18: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 19: Market Commentary
Market Commentary Market Comments Cooling: Non-residential activity showing early signs of improvement HVAC Heating: solid recent demand trends; weather influenced seasonal demand Detection & Locator demand continues solid recovery Measurement Healthy frontlog of projects; delivery timing re
Slide 20: Executive Summary
Executive Summary Solid 2020 performance in challenging environment Anticipate double-digit earnings growth in 2021 Focused on growth accelerators Strong balance sheet and liquidity Well-Positioned to Continue Value Creation Journey in 2021+ February 23, 2021 20
Slide 21: Questions
SPX4 Questions
Slide 22: Appendix
SPX4 Appendix
Slide 23: Modeling Considerations – Full Year 2021
Modeling Considerations – Full Year 2021 Metric Considerations Corporate Expense $46-49m Long-term incentive comp ~$14-15m Restructuring costs $1-2m Interest cost $13-14m Equity earnings in JV, Other income/(expense), $3-5m and Non-service pension benefit/(expense) Tax rate ~21-23% Capex ~$20m Cash
Slide 24: 2021 Adjusted EPS Guidance - Key Drivers
2021 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $3.20 • Stronger-than-normal seasonal heating demand • Accelerating non-residential activity • Moderating input cost trends • Accelerated project-related sales $3.10 Base Case • Weaker-than normal seasonal h
Slide 25: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations ($ millions) Q1 Q2 Q3 Q4 2020 GAAP 46.6 47.6 44.4 65.1 203.7 Exclude "Other" (4.5) (4.2) (5.3) (5.3) (19.3) Exclude: One time acquisition 34% 32% related costs (0.1) (1.2) (1.3) Exclude: Intangible amortization (2.6) (2.4) (3.3) (5.7) (14.0) 24% 23
Slide 26: Other Segment Results – 2019 and 2020 by Quarter
Other Segment Results – 2019 and 2020 by Quarter ($ millions) Q1 Q2 Q3 Q4 2019 Revenue (10.0) 0.1 5.5 (1.7) (6.1) Segment Income (21.3) (9.7) (5.4) (7.2) (43.6) Q1 Q2 Q3 Q4 2020 Revenue 2.1 0.7 0.5 0.7 4.0 Segment Income (4.5) (4.2) (5.3) (5.3) (19.3) February 23, 2021 26
Slide 27: Q4 2020 U.S. GAAP to Adjusted EPS Reconciliation
Q4 2020 U.S. GAAP to Adjusted EPS Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 65.1 $ 12.2 $ 77.3 Corporate expense (2) (14.7) 0.8 (13.9) Long-term incentive compensation expense (3.8) - (3.8) (3) Impairment of intangible assets (0.7) 0.7 - (4) Special charges, net (1.6
Slide 28: Q4 2019 U.S. GAAP to Adjusted EPS Reconciliation
Q4 2019 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) (1) Segment income $ 69.5 $ 9.9 $ 79.4 Corporate expense (2) (13.8) 0.6 (13.2) Long-term incentive compensation expense (3.5) - (3.5) (3) Special charges, net (0.6) 0.5 (0.1) Operating income 51.6 11.0 62.6 (4) O
Slide 29: 2020 U.S. GAAP to Adjusted EPS Reconciliation
2020 U.S. GAAP to Adjusted EPS Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 203.7 $ 34.6 $ 238.3 Corporate expense (2) (44.8) 1.7 (43.1) Long-term incentive compensation expense (14.0) - (14.0) (3) Impairment of intangible assets (0.7) 0.7 - (4) Special charges (3.2) 0.
Slide 30: 2019 U.S. GAAP to Adjusted EPS Reconciliation
2019 U.S. GAAP to Adjusted EPS Reconciliation ($ millions) GAAP Adjustments Adjusted (1) Segment income $ 176.5 $ 54.5 $ 231.0 (2) Corporate expense (46.7) 2.6 (44.1) Long-term incentive compensation expense (13.6) - (13.6) (3) Special charges, net (4.4) 3.4 (1.0) Other operating expenses (4) (1.8)
Slide 31: Q4 and FY 2020 and 2019 U.S. GAAP to Adjusted Operating Income Reconciliation
Q4 and FY 2020 and 2019 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Twelve months ended December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Operating income $ 34.9 $ 51.6 $ 132.0 $ 110.0 Exclude: (1) Aggregate operating loss of the South
Slide 32: Q4 2020 Non-GAAP Reconciliation - Organic Revenue
Q4 2020 Non-GAAP Reconciliation - Organic Revenue Three months ended December 31, 2020 Detection & Engineered HVAC Measurement Solutions SPX Corporation Net Revenue Growth (Decline) (4.4) % 17.5 % 1.3 % 2.5 % Exclude: Foreign Currency 0.5 % 1.0 % - % 0.4 % Exclude: Acquisitions 3.0 % 13.9 % - % 4.5
Slide 33: Adjusted Revenue and Adjusted Segment Income Reconciliation
Q4 and FY 2020 and 2019 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliation ($ millions) CONSOLIDATED SPX: Three months ended Twelve months ended December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Consolidated revenue $ 456.8 $ 443.4 $ 1,559.5 $ 1,520.9 Excl
Slide 34: Adjusted Segment Income Reconciliations
Q4 and FY 2020 and 2019 U.S. GAAP to Adjusted Segment Income Reconciliations ($ millions) HVAC REPORTABLE SEGMENT: Three months ended Twelve months ended December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 HVAC segment income $ 33.9 $ 38.1 $ 93.4 $ 95.4 (1) Exclude: One-time acqu
Slide 35: Q4 2020 Debt Reconciliation
Q4 2020 Debt Reconciliation ($ millions) Q 4 2020 Short-term debt 101.2 Current maturities of long-term debt 7.2 (1) Long-term debt 305.4 Gross debt 413.8 plus: adjustment associated with acquistions 25.5 less: purchase card program and extended payables (1.7) Adjusted gross debt 437.6 less: cash an
Slide 36: 2020 Consolidated Adjusted EBITDA Reconciliation
2020 Consolidated Adjusted EBITDA* Reconciliation ($ millions) FY 2020 Net Income attributable to SPX Corporation common shareholders $ 97.2 Income tax provision 15.8 Interest expense 18.4 Income before interest and taxes 131.4 Depreciation and amoritization 41.7 EBITDA 173.1 Adjustments: Non-cash c
Slide 37: 2020 Adjusted Free Cash Flow Reconciliation
2020 Adjusted Free Cash Flow Reconciliation ($ millions) 2020 Operating cash flow from continuing operations 131.1 Capital expenditures (21.5) Free cash flow from continuing operations 109.6 Adjustments* 13.7 Adjusted free cash flow $ 123.3 * Adjustments align with our reconciliation of GAAP to Adju