Slide 1: 2009 Q4 and Full Year Results
2009 Q4 and Full Year Results GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS February 25, 2010 1
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements contained in this presentation that are not historical facts, facts including any statements as to future market conditions, results of operations and financial projections, are forward-looking statements and are thus prospective. These forward-looking
Slide 3: Introductory Comments
Introductory Comments February 25, 2010 3
Slide 4: Mid to Late Cycle Exposure
Mid to Late Cycle Exposure 2010E Revenue by Cycle Key mid to late cycle products: • Cooling systems (power generation) • Heat exchangers (power generation) Mid to Late Cycle • Power transformers (power T&D) Early Cycle • Processing systems (food & beverage) • Processing equipment (oil & gas) • OEM
Slide 5: Strategic Transformation
Strategic Transformation 2004 Revenue Mix INFRASTRUCTURE Security Cooling Systems, Heat Exchangers, EDWARDS, VANCE Power Transformers, HVAC Equipment 24% 10% Compaction Machinery BOMAG 9% Exited $5.7b 15% DIAGNOSTIC TOOLS Focus Service Solutions Businesses Auto Components CONTECH, FILTRAN 8% for Gro
Slide 6: Capital Allocation
Capital Allocation 2005 tto 2009 Capital Allocation Share Repurchases 44% Acquisition criteria: Strategic to three core end markets Dividends 7% Accretive to earnings within the first $4.6B 12 months Generate returns above SPX SPX’ss cost of Acquisitions 20% capital within a reasonable time
Slide 7: Strategic Acquisitions and Joint Venture
Strategic Acquisitions and Joint Venture infrastructure process equipment diagnostic di ti tools t l power & energy food & beverage vehicle service 2010 ~$65m 2008 ~$10m Year Acquired: 2009 Annual Revenue: ~$125m Johnson J h Controls C t l European Diagnostics 2007 ~$80m 2007 ~$800m $800m India Join
Slide 8: Key End Markets
Key End Markets 2009 Pro Forma Revenue by End Market Primary Demand Drivers General Industrial Growing g world p population p with 16% emerging middle class Infrastructure Food & Beverage 55% Advancement of emerging countries 14% Replacement of aged infrastructure Tools & Diagnostics 15% Gov
Slide 9: Revenue by Region
Revenue by Region 2004 2009 2004 2009 $920 $1,320 $2,380 $2,900 20% 27% 49% 70% 2004 2009 $305 $700 7% 14% 2004 2009 $20 $70 <1% 2% 2004 2009 $100 $370 2% 8% Note: Data from continuing operations; 2004 as reported 51% of 2009 Revenue Outside North America; 22% of Revenue from Sales Into Developing M
Slide 10: Global Business Systems and Services
Global Business Systems and Services Developing p g Market New Product Expansion Development Placeholder Placeholder text text LEAN Placeholder Operational Placeholder Supply-Chain Management Improvements text Excellence text Placeholder Placeholder text text IT Infrastructure Organizational and Imp
Slide 11: Financial Performance
Financial Performance R Revenue &S Segmentt IIncome M Margins i Organic (1%) to 5% 10% 9% 7% (15%) Revenue (6%) Global Recession ($ billions) $5.9 $4 9 $4.9 ~$4 9 ~$4.9 $4.6 $3.9 $3.5 13.7% 13 2% 13.2% 12.2% 12.1% 11.4% 10.5% 2005 2006 2007 2008 2009 2010E N t D Note: Data t ffrom continuing ti i op
Slide 12: Balance Sheet and Debt Ratios
Balance Sheet and Debt Ratios ($ millions) Debt to Capital Key Balance Sheet Accounts 40% 40% 12/31/08 12/31/09 Cash $476 $523 Total Assets $6 138 $6,138 $5 724 $5,724 Q4 2008 Q4 2009 Debt to Bank EBITDA (1) Total Debt $1,345 $1,279 2.1x 1.6x Total Equity $2,045 $1,902 Net Leverage Gross Leverage 1.
Slide 13: Q4 Financial Analysis
Q4 Financial Analysis February 25, 2010 13
Slide 14: 2009 Adjusted EPS
2009 Adjusted EPS Q4 2009 FY 2009 (1) GAAP EPS from continuing operations $ (1.63) $ 0.93 Q4 asset impairments $ 3.39 $ 3.40 Q4 tax benefits (0.43) (0.43) Q4 anti-dilutive earnings g impact p on share calculation 0.02 - Adjusted EPS from continuing operations $ 1.35 $ 3.90 (1) Diluted loss per share
Slide 15: Q4 Adjusted EPS
Q4 Adjusted EPS Year-Over-Year Q4 Adjusted EPS Changes to EPS Q4 2008 Adjusted EPS $2.03 34% $2.03 Segment income ($0.70) $1.35 Special charges ($0.14) Reduced share count $0.09 Other items items, net $0 07 $0.07 Q4 2009 Adjusted EPS $1.35 Q4 2008 Q4 2009 Note: Data from continuing opera
Slide 16: Consolidated Q4 Financial Results
Consolidated Q4 Financial Results ($ millions) Q4 Revenue and Segment Income Margins Sequential Backlog 12% $3,204 4% $1,506 $3,086 $1,324 15.0% 12 7% 12.7% Q4 2008 Q4 2009 Q3 2009 Q4 2009 17% organic decline: Industrial backlog increased 3% – Industrial segment declined 36% (t (transformers f &
Slide 17: Flow Technology: Q4 Financial Results
Flow Technology: Q4 Financial Results ($ millions) Q4 Revenue and Segment Income Margins Sequential Backlog 9% 6% $479 $438 $ $616 $579 14.9% 14.3% Q4 2008 Q4 2009 Q3 2009 Q4 2009 15% organic decline: Orders increased 10% from Q3, – Declines across all key end markets flat year-over-year – Reven
Slide 18: Thermal: Q4 Financial Results
Thermal: Q4 Financial Results ($ millions) Q4 Revenue and Segment Income Margins Sequential Backlog $497 $488 2% 6% $2 096 $2,096 $1,973 14.1% 12.9% Q4 2008 Q4 2009 Q3 2009 Q4 2009 8% organic decline: $36m indirect dry cooling system order for a – 10% organic decline in cooling systems coal-fire
Slide 19: Test & Measurement: Q4 Financial Results
Test & Measurement: Q4 Financial Results ($ millions) Q4 Revenue and Segment Income Margins 17% organic decline: 12% $250 $219 – Weakness in global sales to OEMs and their dealer networks 8.9% 170 points of margin expansion: 7.2% – Organic growth in higher margin niche businesses (Radiodetection
Slide 20: Industrial: Q4 Financial Results
Industrial: Q4 Financial Results ($ millions) Q4 Revenue and Segment Income Margins Sequential Backlog $279 36% $393 3% $381 $179 24.1% 13.1% Q4 2008 Q4 2009 Q3 2009 Q4 2009 36% organic decline: Received $30 order for crystal growers – Competitive pricing and reduced sales in Q4 (China solar cus
Slide 21: Equity Earnings
Equity Earnings ($ millions) Q4 Equity Earnings Full Year Equity Earnings $46 $12 40% 35% $8 $29 Q4 2008 Q4 2009 2008 2009 EGS Joint Venture with Emerson Electric is Primary Equity Earnings Contributor February 25, 2010 21
Slide 22: Full Year Adjusted EPS
Full Year Adjusted EPS Year-Over-Year Adjusted EPS Changes to EPS Q4 2008 Adjusted EPS $6.48 40% $6.48 Segment income ($2.59) Special charges ($0.68) $3.90 Reduced share count $0.31 Reduced corporate expense $0 $0.29 29 Other items, net $0.09 2008 2009 Q4 2009 Adjusted j EPS $3.90 Note
Slide 23: Consolidated Full Year Financial Results
Consolidated Full Year Financial Results ($ millions) Revenue Segment Income & Margin $5,838 17% $800 27% $4,851 $587 13.7% 12.1% 2008 2009 2008 2009 14.5% organic decline: 27% decline in segment income – Declines across all 4 segments Segment income margins – Industrial and Test & Measurement
Slide 24: Full Year Segment Results
Full Year Segment Results ($ millions) 2008 2009 Flow Technology R Revenue $1,999 $1 999 $1,634 $1 634 14% organici d decline li Segment Income % 12.2% 12.9% +70 points Thermal Equipment Revenue $1,690 $1 690 $1,601 $1 601 4% organic decline Segment Income % 12.1% 10.7% (140) points Test & Measureme
Slide 25: Free Cash Flow and Capital Allocation
Free Cash Flow and Capital Allocation GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL February 25, 2010 25
Slide 26: Free Cash Flow
Free Cash Flow ($ millions) Q4 Free Cash Flow Full Year Free Cash Flow $369 $291 $218 $193 Q4 2008 Q4 2009 2008 2009 Q4 2009 Capital Spending: $33 2009 Free Cash Flow: Early cash receipts in the last week of 190% conversion of Net Income 2009 drove higher than anticipated free 2009 Capital
Slide 27: 2009 Capital Allocation
2009 Capital Allocation ($ millions) Break Down of 2009 Capital Allocation Share Acquisition Repurchases $131 $113 36% 30% $369 14% 20% Dividends Debt Reduction $50 $74 $369m of Available Capital Was Used in 2009; 44% Returned to Shareholders Through Dividends and Share Repurchases February 25, 2010
Slide 28: Liquidity
Liquidity ($ millions) 2009 Amount Cash on hand at 12/31/2009 $ 523 Available, committed credit lines 422 Total 12/31/2009 Liquidity $ 945 2010E 2010 free cash flow guidance mid-point $ 180 Minimum debt payments (75) Expected dividend payments (50) Projected 12 Month Liquidity Situation $ 1,000 1 00
Slide 29: 2010 Financial Targets
2010 Financial Targets February 25, 2010 29
Slide 30: Consolidated 2010 Full Year Financial Targets
Consolidated 2010 Full Year Financial Targets 2010 ($ millions, except per share data) Target Range Comments Revenue $4,800 to $5,025 Organic: (1%) to (6%) FX: +1% to 2% Acquisition: +3% to 4% Segment Income Margin 10.0% to 11.0% Earnings Per Share $2.90 to $3.30 (15%) to (25%) decline EPS Mid-Point
Slide 31: 2010 Q1 Targets
2010 Q1 Targets Q1 2009 Q1 2010E ($ millions, except per share data) R Revenue $1 160 $1,160 (6%) tto (9%) Segment Income $ $126 $87 to $92 Segment Income % 10.9% 8.1% to 8.5% EPS $0.76 $0.20 to $0.30 Note: Data from continuing g operations p Targeting Q1 EPS to be Between $0.20 and $0.30 Per Share
Slide 32: 2010 Q1 and Full Year EPS Bridge
2010 Q1 and Full Year EPS Bridge Q1 Full Year 2009 earnings g per p share $0.76 $3.90 * Flow, Thermal, & Test & Measurement ($0.09) $0.10 Industrial Products & Services ($0.47) (1.08) Net change in segment income ($0.56) ($0.98) Reduced special charges $0.07 $0.51 Increased pension expense ($0.06) (
Slide 33: 2010 Full Year Guidance
2010 Full Year Guidance Potential Positive Impacts Stronger organic revenue Lower tax rate Earnings Per Share: Foreign exchange fluctuations Raw material cost changes $2.90 to $3.30 Acquisitions / share repurchases Potential Negative Impacts Free Cash Flow: Softer organic revenue $160m t
Slide 34: Executive Summary
Executive Summary February 25, 2010 34
Slide 35: Executive Summary
Executive Summary Successful transformation of SPX from 2005-2008: • 84% of 2009 revenue from 3 strategic markets Managed prudently through 2009 and expect 1H 2010 to be bottom of the cycle: • 2010 mid-point EPS guidance of $3.10 per share • Early-cycle businesses stabilizing, mid to late-cycle
Slide 36: Questions
Questions February 25, 2010 36
Slide 37: Appendix
Appendix February 25, 2010 37
Slide 38: Full Year Mid-Point Target Financial Model
Full Year Mid-Point Target Financial Model ($ millions millions, except per share data) 2009 Adjusted j 2010E Guidance Earnings Mid-Point Revenue $4,851 $4,915 Segment income margin 12.1% 10.5% p Corporate expense p ((84)) ((90)) Pension / PRHC (38) (52) Stock-based compensation (28) (30) Special ch
Slide 39: 2010E Full Year Segment Targets
2010E Full Year Segment Targets Total Revenue Segment Income Change Margins Flow Technology (1%) to 4% 11.5% to 12.5% Thermal Products 4% to 9% 9.5% to 10.5% Test & Measurement 4% to 9% 7% to 8% Industrial Products (11%) to (16%) 10.3% to 11.3 Consolidated (1%) to (6%) 10.0% to 11.0% Note: Data from
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL February 25, 2010 40
Slide 41: Q4 2009 Organic Revenue Growth Reconciliation
Q4 2009 Organic Revenue Growth Reconciliation Quarter Ended December 31, 2009 Net Revenue Acquisitions/ Foreign Organic Growth Divestitures Currency Growth Flow -8.6% 0.0% 5.9% -14.5% Test -12.4% 0.0% 4.3% -16.7% Thermal -1.8% 1.1% 4.8% -7.7% Industrial -36.0% 0.0% 0.3% -36.3% Consolidated -12.1% 0.
Slide 42: 2009 Organic Revenue Growth Reconciliation
2009 Organic Revenue Growth Reconciliation Year Ended December 31, 2009 Net Revenue Acquisitions/ Foreign Organic Growth Divestitures Currency Growth Flow -18.2% 0.0% -4.3% -13.9% Test -26.3% 0.6% -3.1% -23.8% Thermal -5.3% 0.3% -1.5% -4.1% Industrial -23.2% 0.0% -0.5% -22.7% Consolidated -16.9% 0.2
Slide 43: Q4 Free Cash Flow Reconciliation
Q4 Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) Q4 2008 Q4 2009 Net cash from continuing operations $ 258 $ 226 Capital expenditures $ (40) $ (33) Free cash flow from continuing operations $ 218 $ 193 February 25, 2010 43
Slide 44: Full Year Free Cash Flow Reconciliation
Full Year Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2008 2009 Net cash from continuing g operations p $ 407 $ 462 Capital expenditures $ (116) $ (93) Free cash flow from continuing operations $ 291 $ 369 February 25, 2010 44
Slide 45: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2008 2009 2010E Revenues $5,856 $4,851 $4,915 Net IIncome N $248 $33 $157 Income tax provision (benefit) 153 47 82 Interest expense 116 92 90 Income before interest and taxes $517 $172 $329 Depreciation ep ec a o a and d intangible a gbe a amortization o a o
Slide 46: Debt Reconciliations
Debt Reconciliations ($ millions) 12/31/2008 12/31/2009 Short-term debt $ 113 $ 74 Current maturities of long-term debt 76 76 g Long-term debt 1,155 1,129 Gross Debt $ 1,345 $ 1,279 Less: Puchase card program and extended A/P programs $ (48) $ (26) j Adjusted Gross Debt $ 1,297 , $ 1,253 , Less: Cas
Slide 47: 2009 Adjusted EPS
2009 Adjusted EPS Q4 2009 FY 2009 (1) GAAP EPS from continuing operations $ (1.63) $ 0.93 Q4 asset impairments $ 3.39 $ 3.40 Q4 tax benefits (0.43) (0.43) Q4 anti-dilutive earnings g impact p on share calculation 0.02 - Adjusted EPS from continuing operations $ 1.35 $ 3.90 (1) Diluted loss per share
Slide 48: 2008 Adjusted Earnings Per Share
2008 Adjusted Earnings Per Share Q4 2008 FY 2008 GAAP EPS from continuing operations ($0.20) $4.64 Q3 tax benefits (0.47) Q3 legal matter 0.11 Q4 asset impairment Q p 2.23 2.20 Adjusted EPS from continuing operations $2.03 $6.48 Note: Data from continuing operations February 25, 2010 48
Slide 49: 2010E Free Cash Flow Reconciliation
2010E Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2010E Guidance Range Net cash from continuing g operations $ 260 $ 290 Capital expenditures $ (100) $ (90) Free cash flow from continuing operations $ 160 $ 200 Note: Data from
Slide 50: Organic Revenue Growth Reconciliation
Organic Revenue Growth Reconciliation Net Revenue Acquisitions Foreign Organic Growth/(Decline) and Other Currency Growth/(Decline) 2005 6.2% 1.2% -0.1% 5.1% 2006 11.8% 1.6% 0.6% 9.5% 2007 15 7% 15.7% 4 1% 4.1% 2 7% 2.7% 8 9% 8.9% 2008 28.5% 20.4% 1.5% 6.6% 2009 -16.9% 0.2% -2.6% -14.5% 2010E (1%) t
Slide 51: February 25, 2010
February 25, 2010 51