Slide 1: 2010 First Quarter Results
2010 First Quarter Results GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS May 5, 2010 1
Slide 2: Forward Looking Statements
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 and are thus prospective. These forward-looking state
Slide 3: Introductory Comments
Introductory Comments May 5, 2010 3
Slide 4: End Market Update
End Market Update Early cycle markets in various stages of recovery: • General industrial 2010E Revenue • Vehicle service aftermarket • Food & beverage: “components” Early Cycle Mid-to-late cycle markets remain impacted by the $4.9B recession: • Power generation • Power transmission & distributi
Slide 5: Backlog
Backlog Sequential Backlog Change ($ billions) Q1 Thermal backlog: $1,785m 10% 10% $3.4 6% 6% $3.1 (8%) organic decline $2.9 $2.6 (2%) currency impact $2.0 Q1 Flow backlog: $620m 7% 7% 6% organic growth 3% acquisition growth (2%) currency impact 2006 2007 2008 2009 Q1 2010 Q1 Industr
Slide 6: 2010E Revenue Visibility
2010E Revenue Visibility 2010E Revenue New Orders Delivering of Expected Backlog 44% 34% 56% of 2010E revenue has been booked or is in order backlog $4.9B ~2/3rds of annual revenue comes from short cycle orders Q1 2010 Revenue 22% Note: Data from continuing operations Visibility to 2010E Revenue
Slide 7: Q1 Financial Results
Q1 Financial Results ($ millions, except per share data) Q1 2009 Q1 2010 2010 vs. 2009 Revenue $1,160 $1,086 6% decline Segment Income $126 $106 16% decline Segment Income Margin 10.9% 9.8% (110) points Earnings Per Share $0.77 $0.37 52% decline Free Cash Flow ($50) ($37) 27% improvement Note: Data
Slide 8: 2010 Full Year Guidance
2010 Full Year Guidance EPS Guidance Bridge Previous Guidance Mid-Point $3.10 Earnings Per Share: Segment Income: Operations $0.27 $3.00 to $3.30 Foreign currency ($0.09) Tax rate: Healthcare tax expense ($0.12) Free Cash Flow: Q1 discrete tax benefits $0.07 $180m to $220m Other expens
Slide 9: Gerstenberg Schroeder Acquisition
Gerstenberg Schroeder Acquisition Revenue by Region Europe 49% 2009 revenue: ~$70m A leading global manufacturer ROW of food processing equipment 12% Americas 24% Asia 15% Revenue by Product Type Components 47% Skidded Spare Systems Parts Scraped surface Emulsifying 27% 26% heat exchanger System
Slide 10: Balance Sheet and Debt Ratios
Balance Sheet and Debt Ratios ($ millions) Debt to Capital Key Balance Sheet Accounts 40% 41% 12/31/09 4/3/10 Cash $523 $464 Total Assets $5,724 $5,662 Q4 2009 Q1 2010 Debt to Bank EBITDA (1) Total Debt $1,279 $1,313 2.2x 2.1x Total Equity $1,882 $1,857 Net Leverage 1.5x Gross Leverage 1.3x Q4 2009
Slide 11: Q1 Financial Analysis
Q1 Financial Analysis May 5, 2010 11
Slide 12: Earnings Per Share
Earnings Per Share Year-Over-Year Q1 EPS Changes to EPS $0.77 52% 52% Q1 2009 EPS $0.77 Industrial segment income ($0.43) $0.37 Other segment income $0.13 Healthcare tax expense (1) ($0.12) Other Items, Net $0.02 Q1 2009 Q1 2010 Q1 2010 EPS $0.37 (1) $6m of healthcare tax expense related
Slide 13: Q1 Consolidated Results
Q1 Consolidated Results ($ millions) Revenue Segment Income 6% 6% 16% 16% $1,160 $126 $1,086 $106 10.9% 9.8% Q1 2009 Q1 2010 Q1 2009 Q1 2010 12% organic decline: Segment margins declined 110 points: Industrial segment: 24% organic decline Volume and pricing decline in Flow segment: 15% org
Slide 14: Flow Technology: Q1 Financial Results
Flow Technology: Q1 Financial Results ($ millions) Revenue Segment Income 10% 10% 18% 18% $394 $50 $354 $41 12.7% 11.7% Q1 2009 Q1 2010 Q1 2009 Q1 2010 15% organic decline: 100 points of margin contraction: Lower sales into the oil & gas market Primarily due to reduced volumes Large scale
Slide 15: Thermal: Q1 Financial Results
Thermal: Q1 Financial Results ($ millions) Revenue Segment Income 3% 3% 47% 47% $32 $342 $353 $21 8.9% 6.3% Q1 2009 Q1 2010 Q1 2009 Q1 2010 7.4% organic decline: 260 points of margin expansion: Lower wet cooling system sales SPX Heat Transfer Inc. acquisition (Yuba) 8% acquisition growth:
Slide 16: Test & Measurement: Q1 Financial Results
Test & Measurement: Q1 Financial Results ($ millions) Revenue Segment Income 4% 4% 131% 131% $196 $204 $13 $6 6.6% 3.0% Q1 2009 Q1 2010 Q1 2009 Q1 2010 2% organic growth: 360 points of margin expansion: Increased global aftermarket sales to the Restructuring savings vehicle service industry
Slide 17: Industrial: Q1 Financial Results
Industrial: Q1 Financial Results ($ millions) Revenue Segment Income 24% 24% $49 59% 59% $227 $174 21.5% $20 11.6% Q1 2009 Q1 2010 Q1 2009 Q1 2010 24% organic decline: 990 points of margin contraction: Reduced volume and price of power Reduced volume and price of power transformers shipments
Slide 18: Equity Earnings
Equity Earnings ($ millions) Q1 Equity Earnings Full Year Equity Earnings $11 19% 19% 4% 4% $9 $29 $28 Q1 2009 Q1 2010 2009 2010E EGS Joint Venture Serves Diverse End Markets; SPX’s Portion of the EGS Financial Results is Reported on a One Quarter Lag May 5, 2010 18
Slide 19: Free Cash Flow
Free Cash Flow ($ millions) Q1 Free Cash Flow Full Year Free Cash Flow $369 $180 to $220 ($37) ($50) Q1 2009 Q1 2010 2009 2010E Q1 2010 Capital Spending: $12 2010E Free Cash Flow: 110% to 135% conversion of Net Income Q1 2010 Cash Restructuring: $11 Capital spending: $90 to $100 Restruct
Slide 20: 2010 Financial Targets
2010 Financial Targets May 5, 2010 20
Slide 21: 2010 Q2 Targets
2010 Q2 Targets Q2 2009 Q2 2010E ($ millions, except per share data) Revenue $1,194 +1% to +5% Segment Income $ $136 $120 to $130 Segment Income % 11.4% 10.0% to 10.5% EPS $0.80 $0.65 to $0.75 Note: Data from continuing operations Targeting Q2 EPS to be Between $0.65 and $0.75 Per Share May 5, 2010
Slide 22: Full Year Segment Targets
Full Year Segment Targets Previous Targets Updated Targets Flow Technology Revenue (1%) to +4% 0% to +4% Segment Income % 11.5% to 12.5% 12.6% to 13.3% Thermal Equipment Revenue +4% to 9% 0% to +4% Segment Income % 9.5% to 10.5% 9.5% to 10.5% Test & Measurement Revenue +4% to 9% +5% to 9% Segment In
Slide 23: Consolidated 2010 Full Year Financial Targets
Consolidated 2010 Full Year Financial Targets 2010 ($ millions, except per share data) Target Range Comments Revenue (1%) to +3% Organic: (5%) to (1%) FX: (1%) to 0% Acquisition: +3% to +4% Segment Income Margin 10.4% to 11.2% (170) to (90) points Earnings Per Share $3.00 to $3.30 (15%) to (23%) dec
Slide 24: 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 $3.00 to $3.30 Acquisitions / share repurchases Potential Negative Impacts Free Cash Flow: Softer organic revenue $180m t
Slide 25: Executive Summary
Executive Summary May 5, 2010 25
Slide 26: Executive Summary
Executive Summary Global economic recover is underway: • Early cycle markets at various stages of recovery • Mid-to-late cycle markets still impacted by the recession Q1 results exceeded our guidance Raised full year EPS by $0.05 and Free Cash Flow by $20m: • 2010E EPS Mid-Point: $3.15 • 2010E
Slide 27: Questions
Questions GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL May 5, 2010 27
Slide 28: Appendix
Appendix GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL May 5, 2010 28
Slide 29: Full Year Mid-Point Target Financial Model
Full Year Mid-Point Target Financial Model ($ millions, except per share data) 2009 Adjusted 2010E Guidance Earnings Mid-Point Revenue $4,851 $4,890 Segment income margin 12.1% 10.8% Corporate expense (84) (90) Pension / PRHC (38) (54) Stock-based compensation (28) (32) Special charges (73) (35) Ope
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL May 5, 2010 30
Slide 31: Q1 2010 Organic Revenue Growth Reconciliation
Q1 2010 Organic Revenue Growth Reconciliation Quarter Ended April 3, 2010 Net Revenue Acquisitions/ Foreign Change Divestitures Currency Organic Flow -10.2% 0.6% 4.5% -15.3% Test 4.3% 0.0% 2.1% 2.2% Thermal 3.3% 8.2% 2.5% -7.4% Industrial -23.6% 0.0% 0.1% -23.7% Consolidated -6.4% 2.6% 2.6% -11.6% N
Slide 32: Q1 Free Cash Flow Reconciliation
Q1 Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) Q1 2009 Q1 2010 Net cash from continuing operations $ (35) $ (25) Capital expenditures $ (15) $ (12) Free cash flow from continuing operations $ (50) $ (37) May 5, 2010 32
Slide 33: Full Year Free Cash Flow Reconciliation
Full Year Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2009 2010E Guidance Range Net cash from continuing operations $ 462 $ 280 to $ 310 Capital expenditures $ (93) $ (100) to $ (90) Free cash flow from continuing operations $
Slide 34: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2008 2009 2010E Revenues $5,856 $4,851 $4,915 Net Income $248 $33 $157 Income tax provision (benefit) 153 47 82 Interest expense 116 92 90 Income before interest and taxes $517 $172 $329 Depreciation and intangible amortization expense 105 106 109 EBITDA from
Slide 35: Debt Reconciliations
Debt Reconciliations ($ millions) 12/31/2009 4/3/2010 Short-term debt $ 74 $ 102 Current maturities of long-term debt 76 76 Long-term debt 1,129 1,135 Gross Debt $ 1,279 $ 1,313 Less: Puchase card program and extended A/P programs $ (26) $ (29) Adjusted Gross Debt $ 1,253 $ 1,284 Less: Cash in exces
Slide 36: 2009 Adjusted EPS
2009 Adjusted EPS FY 2009 GAAP EPS from continuing operations $ 0.93 Q4 asset impairments $ 3.40 Q4 tax benefits (0.43) Q4 anti-dilutive earnings impact on share calculation - Adjusted EPS from continuing operations $ 3.90 Note: Data from continuing operations May 5, 2010 36
Slide 37: May 5, 2010
May 5, 2010 37