Slide 1: Q1 2018 Earnings Presentation
Q1 2018 Earnings Presentation May 3, 2018
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, and financial projections, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as am
Slide 3: Introductory Comments
Introductory Comments Gene Lowe May 3, 2018
Slide 4: Quarter Highlights
Quarter Highlights Performance and Accomplishments Solid start to the year, well-positioned to achieve full-year targets Strong overall revenue growth Margin expansion continued Significant progress on capital deployment plans Announced two proprietary, highly complementary acquisitions On
Slide 5: Core Q1 2018 Summary
Core Q1 2018 Summary Year-over-Year Analysis ($ millions) HVAC and Detection & Measurement segments Core Revenue* Adjusted Operating Income Margin* were primary drivers of solid growth in revenues and Adjusted operating income* $322 $338 4.7% Core revenue growth Adjusted operating income* grow
Slide 6: Value Creation Roadmap
Value Creation Roadmap Organic Growth SPX Business System New products Policy deployment New channels Operational excellence Adjacent markets Due diligence/integration Inorganic Growth Culture & Values Focus in HVAC and D&M Leadership development Significant capital to deploy Res
Slide 7: (Core) Engineered Solutions Segment Value Creation
(Core) Engineered Solutions Segment Value Creation Anticipating (Core) Engineered Solutions Segment Income 2-3% Annual Revenue Growth ($ U.S. millions) after 2018 $50 $40 $30 $20 $10 $0 2015A 2016A 2017A 2018E** 2020E** Core Operating Margin ~1% 4.9% 7.2% 8.0-8.5% 9.0-10.0% As Reported Note: Core re
Slide 8: Schonstedt Overview
Schonstedt Overview Company Profile Headquarters: Kearneysville, West Virginia 2017 Sales: $9M MPX-Rex Combo Kit XTpc Pipe and Cable Locator Employees: 25 Manufacturing: 25,000 sq. ft. facility Description: Manufacturer of magnetic locator products used for locating underground utilities and other b
Slide 9: CUES Overview
CUES Overview Company Profile Headquarters: Orlando, Florida CUES Digital Universal Camera 2017 Sales: ~$86M Employees: 365 Manufacturing: 70,000 sq. ft. facility Description: Leading manufacturer of inspection and Mobile Inspection Units rehabilitation equipment. Transaction Close: Anticipated late
Slide 10: 2016-2018 SPX Adjusted EBITDA Performance
2016-2018 SPX Adjusted EBITDA Performance Adjusted EBITDA Adjusted EBITDA Margin % ~10% ($ MMs) Mid Higher $160s 14% + ~40 bps $175 12% 12% $150 10% $143 10% 9% $125 $100 $126 8% $75 6% $50 4% $25 2% $0 0% 2016A* 2017A* 2018E** 2018 Exit 2016A* 2017A* 2018E** 2018 Exit Rate with Rate with Schonstedt
Slide 11: Q1 Financial Review
Q1 Financial Review Scott Sproule May 3, 2018
Slide 12: Earnings Per Share
Earnings Per Share Q1 2018 Adjusted EPS Q1 2018 Q1 2017 GAAP EPS from continuing operations $0.28 $0.24 South African projects $0.10 $0.12 Non-service pension items & other** $0.03 $0.02 Tax reform-related adjustment $0.03 - Adjusted EPS from continuing operations $0.44 $0.38 *Non-GAAP financial mea
Slide 13: Core Q1 2018 Results
Core Q1 2018 Results Year-over-Year Analysis ($ millions) Q1 Core Revenue: Core Revenue Core Segment Income Margin 4.7% year-over-year increase: 3.4% increase, primarily due to improved volumes in HVAC and Detection & Measurement segments, partially offset by $338 lower revenues in Engineered So
Slide 14: HVAC Q1 2018 Results
HVAC Q1 2018 Results Year-over-Year Analysis ($ millions) Revenue Q1 Revenue: Segment Income Margin 16.0% year-over-year increase: 14.9% organic increase* primarily driven by higher $128 heating volumes on colder weather $110 1.1% currency impact 15.0% 14.6% Q1 Segment Income and Margin: $2.
Slide 15: Detection & Measurement Q1 2018 Results
Detection & Measurement Q1 2018 Results Year-over-Year Analysis ($ millions) Revenue Q1 Revenue: Adjusted Segment Income Margin* 22.4% year-over-year increase: 18.1% organic increase* primarily due to higher sales of $66 communication technologies $54 2.8% currency impact (primarily UK pound)
Slide 16: Engineered Solutions (Core) Q1 2018 Results
Engineered Solutions (Core) Q1 2018 Results Year-over-Year Analysis ($ millions) Core Revenue Q1 Core Revenue: Core Segment Income Margin (9.1%) year-over-year decline: Driven primarily by lower project revenues, partially offset by $159 $144 the favorable effect of the adoption of ASC 606 Q1 Co
Slide 17: Financial Position & Liquidity Review
Financial Position & Liquidity Review Scott Sproule May 3, 2018
Slide 18: Financial Position
Financial Position Capital Structure & Liquidity Update Leverage Ratios ($millions) Q4 2017 Q1 2018 2.3x 2.2x Short-term debt $7.0 $6.8 1.5-2.5x Current maturities of long-term debt 0.5 4.9 1.5x 1.5x Long-term debt 349.3 344.9 Total Debt $356.8 $356.6 Less: Cash on hand (124.3) (103.7) Net Debt $232
Slide 19: 2018 Core Guidance (No Change)
2018 Core Guidance (No Change) Revenue Segment Income Margin 100 basis points increase HVAC Organic growth* within LT range of 2.0-4.0% (~15.5%) Detection & 50-100 basis points increase Organic growth* within LT range of 2.0-6.0% Measurement (~25.0-25.5%) Segment revenue decline* in high-s
Slide 20: 2020 Targets Excluding M&A Amortization
2020 Targets Excluding M&A Amortization Focus on Cash Returns from Capital Deployment Adjusted Earnings Per Share Prior 2020 Adjusted EPS** guidance of $2.65 - $2.90 $2.90-$3.10 included M&A-related amortization $2.65-$2.90 A look at cash returns from capital deployment $1.78 provides a better v
Slide 21: Market Outlook & Executive Summary
Market Outlook & Executive Summary Gene Lowe May 3, 2018
Slide 22: Market Commentary
Market Commentary Market Comments Cooling: Commercial and Institutional market trends remain favorable HVAC Heating: More normalized winter weather improved demand profile Detection & Favorable project and run-rate markets Measurement U.S infrastructure plan could provide backdrop to acceler
Slide 23: Executive Summary
Executive Summary Strong start to 2018 – On track for 18% Adjusted EPS* Growth Healthy overall margin expansion and profit growth Solid balance sheet and liquidity profile Creating shareholder value through thoughtful organic and inorganic growth investments Executing on plans to drive sus
Slide 24: Questions
Questions May 3, 2018
Slide 25: Appendix
Appendix May 3, 2018
Slide 26: Cash Flow & Liquidity
Cash Flow & Liquidity ($ in millions) ($ in millions) Core Free Cash Flow* generation of $5M during Term Debt Repayment Schedule first quarter; historically a cash use quarter Targeting 110% Core Free Cash Flow* Conversion Projecting $600 million of capacity for capital $298 allocation through
Slide 27: Core Segment Income Phasing
Core Segment Income Phasing ($ millions) Q1 2017 Q2 2017 Q3 2017 Q4 2017 GAAP 34.3 20.7 45.4 24.5 38% Exclude: South African (4.4) (26.6) (4.2) (32.8) Projects 31% Exclude: Contract - - 10.2 - 26% Settlement 22% 22% Core 38.7 47.3 $39.4 57.3 21% 21% % of full-year 21% 26% 22% 31% 19% Q1 2016 Q2 2016
Slide 28: Full-Year 2017 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Full-Year 2017 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except GAAP Adjustments Adjusted per share values) Segment income (1) $ 124.9 $ 57.8 $ 182.7 Corporate expense (46.2) — (46.2) Pension and postretirement income (expense) (0.3) — (0.3) Long-term incentive compensatio
Slide 29: Full-Year 2016 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Full-Year 2016 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except GAAP Adjustments Adjusted per share values) Segment income (1) $ 142.8 $ 14.5 $ 157.3 Corporate expense (41.7) — (41.7) Pension and postretirement income (expense) (0.4) — (0.4) Long-term incentive compensatio
Slide 30: Q1 2018 GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2018 GAAP to Adjusted Earnings Per Share U.S. GAAP Reconciliation GAAP Adjustments Adjusted ($ millions, except (1) per share values) Segment income $ 37.0 $ 4.6 $ 41.6 Corporate expense (2) (11.8) 1.0 (10.8) Long-term incentive compensation expense (3.9) — (3.9) (3) Special charges, net (2.0) 1.
Slide 31: Q1 2017 GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2017 GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except per share values) ` GAAP Adjustments Adjusted Segment income (1) $ 34.3 $ 4.4 $ 38.7 Corporate expense (11.4) — (11.4) Pension and postretirement expense (0.1) — (0.1) Long-term incentive compensation expense (3.2) — (3.2
Slide 32: Q1 2018 Adjusted Operating Income U.S. GAAP Reconciliation
Q1 2018 Adjusted Operating Income U.S. GAAP Reconciliation ($ millions) Three months ended March 31, 2018 April 1, 2017 Operating income $ 19.3 $ 19.1 Adjustments: Losses from South African projects (1) 5.9 4.4 One time acquisition related costs (2) 1.3 — Adjusted operating income $ 26.5 $ 23.5 (3)
Slide 33: Engineered Solutions Impact of ASC 606 Adoption
Engineered Solutions Impact of ASC 606 Adoption ($ millions, except per share values) Three months ended March 31, 2018 (Unaudited; in millions) Effect of ASC 606 Under Prior Revenue (1) Reported Adoption Recognition Guidance Revenues $ 351.9 $ (21.4) $ 330.5 Net Income 12.4 (1.5) 10.9 (1) Effect of
Slide 34: Q1 2018 Organic Revenue U.S. GAAP Reconciliation
Q1 2018 Organic Revenue U.S. GAAP Reconciliation Three months ended March 31, 2018 Detection & HVAC Measurement Net Revenue Growth 16.0 % 22.4 % Exclude: Foreign Currency 1.1 % 2.8 % Exclude: Acquisition — % 1.5 % Organic Revenue Growth 14.9 % 18.1 % May 3, 2018 34
Slide 35: Core Revenue and Segment Income U.S. GAAP Reconciliation
Core Revenue and Segment Income U.S. GAAP Reconciliation CONSOLIDATED SPX: Three months ended March 31, 2018 April 1, 2017 Consolidated revenue $ 351.9 $ 340.6 Exclude: South African projects 14.3 18.2 Core revenue $ 337.6 $ 322.4 Total segment income $ 37.0 $ 34.3 Exclude: Losses from South African
Slide 36: Full-Year Adjusted EBITDA to U.S. GAAP Reconciliation
Full-Year Adjusted EBITDA to U.S. GAAP Reconciliation ($ millions) FY 2017 FY 2016 Consolidated revenue $ 1,425.8 $ 1,472.3 Exclude: South African projects (1) 29.1 83.3 Core Revenues $ 1,396.7 $ 1,389.0 Adjusted Operating income (1) (2) $ 119.1 $ 96.2 Adjustments: Depreciation & amortization 25.2 2
Slide 37: Engineered Solutions (Core) Segment Income to U.S. GAAP Reconciliation
Engineered Solutions (Core) Segment Income to U.S. GAAP Reconciliation ENGINEERED SOLUTIONS SEGMENT: (as reported in $ millions) FY 2017 FY 2016 FY 2015 Engineered Solutions revenue $ 654.5 $ 736.4 $ 957.9 Exclude: South African projects 29.1 83.3 27.3 Engineered Solutions (Core) revenue $ 625.4 $ 6
Slide 38: Debt Reconciliation
Debt Reconciliation ($ millions) Q1 2018 Short-term debt $ 6.8 Current maturities of long-term debt 4.9 Long-term debt (1) 347.1 Gross debt 358.8 Less: Purchase card program and extended payables (2.5) Adjusted gross debt 356.3 Less: Cash and equivalents (103.7) Adjusted net debt $ 252.6 1) Excludes
Slide 39: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ millions) Q2 2017 Q3 2017 Q4 2017 Q1 2018 LTM Net income (loss) from continuing operations attributable to SPX $ (8.3) $ 22.0 $ 60.0 $ 12.4 Corporation common shareholders Income tax provision (benefit) 6.0 4.8 (61.9) 4.1 Interest expense 4.6 4.3 4.2 4.3 Income
Slide 40: U.S. GAAP to Core Free Cash Flow from Continuing Operations
U.S. GAAP to Core Free Cash Flow from Continuing Operations ($ millions) Q1 2018 Net operating cash flow from continuing operations $ 2.7 Capital expenditures - continuing operations (3.2) Free cash flow used in continuing operations (0.5) Adjustment for South African projects 5.5 Core free cash flo