Spx Technologies, Inc. · NYSE:SPXC

Spx Technologies — Investor Presentation (December 2024)

50 slides from Spx Technologies's investor presentation, December 2024

Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 o
Slide 4: Company Overview
Company Overview 2023 Revenue by Geography (Destination) ▪ Headquartered in Charlotte, NC ▪ Focused, market-leading segments: » HVAC » Detection & Measurement ▪ ~$2.0B Revenue1 ▪ 4,000+ employees ▪ NYSE Ticker: SPXC 80% 12% 8% 1 2024 revenue guidance midpoint A Leading Supplier of HVAC and Detection
Slide 5: SPX Technologies - Investment Case
SPX Technologies - Investment Case Attractive Core Well-positioned key platforms in growth markets Favorable secular trends and business mix; growth Growth initiatives in early innings Cash Flow Solid free cash flow conversion Business System Consistent repeatable process to drive improvement Capita
Slide 6: SPX Products are Everywhere
SPX Products are Everywhere Detection & Measurement HVAC 5 6 6 8 4 7 7 5 1 1 D&M 4 HVAC 1 Precision Locator 1 Cooling Tower 2 Gas Line Robot 2 Hydronics 3 Wastewater Robot 2 3 Floor Heater 2 4 Spectrum Monitoring 4 Radiant Heater 3 5 Obstruction Lighting 5 Damper 6 Marine Lighting 3 6 Air Handling U
Slide 7: Balanced and Attractive End Markets
Balanced and Attractive End Markets 2024 Revenue1 Hospitality/Other 3% Office/Retail 5% Transportation 7% Data Center 7% Communications 5% Light Manufacturing 7% Water 6% Industrial Resi 21% 7% Lab & Healthcare 9% Government 6% Institutional 9% Energy & Utility 8% Non-Residential Industrial Resi Sma
Slide 8: Strong Product Offerings and Attractive Market Dynamics
Strong Product Offerings and Attractive Market Dynamics 20242 Revenue from replacement sales1 Segment HVAC Revenue Margin ~2/3 ▪ Cooling Towers ▪ Electric Heating Revenue from #1 or #2 market position1 $1,375M 23.5% ▪ Engineered Air Movement 90% ▪ Hydronics MARLEY SGS REFRIGERATION CINCINNATI FAN TA
Slide 9: SPX Technologies at a Glance
SPX Technologies at a Glance1 ~$2.0B ~$420M ~21% ~$5.53 FY 2024E FY 2024E FY 2024E FY 2024E Revenue Adj. EBITDA Adj. EBITDA Margin Adj. EPS APA 8% EMEA D&M 12% 31% Engineered Leading Tech- Niches Positions Enabled Revenue Revenue by by Segment Geography (Destination) HVAC 69% Moats Sustainable Ameri
Slide 10: Strong Track Record
Strong Track Record 1 1 Adj. EBITDA and Margin Adj. Earnings Per Share ($ M/%) ($/Share) $5.53 $420 $4.31 $310 ~21% $3.10 $207 18% $161 $2.33 14% 13% 2024E 2 2 2021 2022 2023 2021 2022 2023 2024E 1 Adjusted results are non-GAAP measures. Reconciliations from US GAAP financial measures are available
Slide 11: The Path Forward
The Path Forward Adjusted EBITDA1 ($ M) 2x+ New Product $310 Development Digital Commercial Continuous $390M Excellence Improvement Strategic Talent M&A 2023A Medium Term 1 Adjusted results are non-GAAP measures. Reconciliations of non-GAAP future measures to US GAAP financial measures are not pract
Slide 12: Value Creation Framework and Targets
Value Creation Framework and Targets Strong Foundation Business System Target Model Engineered Niches Leading Positions Excellence Growth 15%+ Adj. EBITDA1 Growth Tech-Enabled Digital Strategic M&A Moats Continuous Improvement New Product Development 20%+ Adj. EBITDA1 Margin Talent Commercial Sustai
Slide 13: Sustainability that Creates Value in…
Sustainability that Creates Value in… …what we make… …and how we make it Lower Core Emissions Values Diversity & Safety Inclusion Clean Engagement Water Targeted Emissions Continuous Connectivity Reduction1 Improvement Clean Energy Minimize Waste 30% 1 Reduce Scope 1 and 2 GHG emissions intensity (r
Slide 15: HVAC Segment Overview
HVAC Segment Overview 2023 Revenue by Product Segment Growth ($ M) Medium-term Cooling Organic Targets 2023 Revenue $1.1B 61% ~60% $1,375 Replacement 5-6% Heating Revenue1 $1,122 39% ~24% $914 21-25% 21% 15% 2023 Revenue by eography 2022 2023 2024E 2 (destination) Revenue Segment income % 1 Manageme
Slide 16: SPX HVAC Products are Everywhere
SPX HVAC Products are Everywhere Air Handling Unit Duct Heater Critical Exhaust Damper Cooling Tower Radiant Heat Floor Heater ydronics Illustrative example. SPX’s HVAC products are used in a variety of end markets. INVESTOR PRESENTATION | COPYRIGHT © 2024 SPX TECHNOLOGIES 16 |
Slide 17: Attractive Fundamentals in HVAC
Attractive Fundamentals in HVAC Strong Diversified Favorable Sector Attributes End Markets Growth Trends Large addressable market Technology 4-5% Operationally critical applications Industrial Numerous specialty niches Institutional Substantial installed base Market CAGR1 Commercial Extensive afterm
Slide 18: Supported by Near-term Megatrends
Supported by Near-term Megatrends Electrification & Decarbonization Semiconductors ~50% Portion of industrial energy use having $39B Available subsidies for domestic high or medium potential for electrification semiconductor production in CHIPS Act AI Investments Reshoring ~2x Heat rejection require
Slide 19: HVAC - Key Value Creation Drivers
HVAC - Key Value Creation Drivers SPX BUSINESS SYSTEM Continuous Growth Digital Improvement perational Technology- Channel xcellence enabled Deepen partnerships Improve service Create enhanced customer with manufacturing reps and reduce cost productivity across value chain and specifying engineers A
Slide 21: Detection & Measurement Segment Overview
Detection & Measurement Segment Overview 2023 Revenue by Product Segment Growth ($ M) Medium-term Location & Inspection Equipment Organic Targets 2023 Revenue $619M 43% ~70% $619 AtoN, CommTech, Replacement $610 4-6% and Transportation Revenue1 57% $547 ~22% 21% 22-24% 19% 2023 Revenue by 2024E 2 eo
Slide 22: SPX Detection & Measurement Segment
SPX Detection & Measurement Segment High value business platforms providing specialized field-deployed tools and technologies that enhance the safety, quality, productivity and performance of critical infrastructure systems Location & Inspection Aids to Navigation ommunication Transportation echnolo
Slide 23: SPX Products are Everywhere
SPX Products are Everywhere Obstruction Lighting Marine Lighting Spectrum Monitoring System Fare Collection System Precision Utility Locator Wastewater Robot Gas Line Robot INVESTOR PRESENTATION | COPYRIGHT © 2024 SPX TECHNOLOGIES 23 |
Slide 24: Attractive Secular Drivers and End Markets
Attractive Secular Drivers and End Markets Strong Attractive Favorable Secular Drivers End Markets Growth Trends nergy 3-5% Population Growth & Demographics Water Urbanization & Aging Infrastructure Government Market CAGR1 Safety & Sustainability Communications Automation, Digital & AI Transportatio
Slide 25: Key Megatrends
Key Megatrends $30B ~50% Cost to industry annually from Obstruction lighting systems in US utility damages yet to be converted to LED 1.8M 40,000+ Miles of municipal wastewater and lateral Specific US infrastructure projects and pipe in US with average age of 45 years awards totaling $400B from 2021
Slide 26: How Does D&M Win?
How Does D&M Win? SPX BUSINESS SYSTEM Growth M&A Digital Strategic Market Platform Embedded Digital Expansion Accelerators Technologies ▪ Attractive end markets and adjacencies ▪ Proven compounder strategy ▪ Operator productivity ▪ High value customer segments ▪ Proprietary deal flow ▪ Predictive an
Slide 28: Disciplined Balance Sheet Utilization
Disciplined Balance Sheet Utilization Net Leverage1 Target Range: 1.5-2.5x Efficiently operate within target range 2.5x 2.1x of 1.5-2.5x 1.7x 1.6x 1.7x 1.5x 1.4x Return-driven capital 0.4x deployment Strong free cash flow Transformers divestiture generation -0.9x Year-end 2015 2016 2017 2018 2019 20
Slide 29: Free Cash Flow Generation Enables Growth Strategy
Free Cash Flow Generation Enables Growth Strategy Adj. Free Cash Flow1 Conversion (% of Adj. Net Income1) 95% 95-100% Solid Adj. Free Cash Flow2 Performance ~90% ▪ Target 95-100% conversion of adj. net income2 ▪ Focused working capital optimization ▪ Return-driven CapEx investments to facilitate gro
Slide 30: Growth-Oriented Capital Allocation
Growth-Oriented Capital Allocation Capital Deployed 2021-2024E1 Strategic Acquisitions 90% Priorities ▪ Strategic acquisitions ~$1.3B ▪ Return-driven CapEx investments to facilitate organic growth Return of ▪ Opportunistic return of capital to Capital 3% shareholders CapEx 7% 1 Assumes $40M of CapEx
Slide 31: 2024 Guidance Update
2024 Guidance1 Update Detection & Total SPX HVAC Measurement Revenue $1.970-$2.000b $1,365-$1,385m $605-$615m Prior $1.970-$2.020b $1,365-$1,405m $605-$615m Segment Income Margin1 22.6%-23.2% 23.25%-23.75% 21.25%-22.00% Prior 22.3%-23.3% 23.00%-24.00% 20.75%-21.75% Adj. B DA1 $410-$430m Prior $410-$
Slide 33: M&A Track Record
M&A Track Record (Revenue1 in $ M) HVAC Segment Detection & Measurement Segment ~$850 ~$500 ~$270 ~$345 Heating Cooling L&I AtoN CommTech Transport 1 2024 guidance midpoint model Building “Platforms of Scale” INVESTOR PRESENTATION | COPYRIGHT © 2024 SPX TECHNOLOGIES 33 |
Slide 34: What Makes a Good SPX M&A Target?
What Makes a Good SPX M&A Target? Strategic Framework Focus Areas Assessment Criteria ✓ Sizable TAM Engineered Niches Leading Positions HVAC ✓ Less-Cyclical ✓ Attractive Growth & Tech-Enabled Margin Opportunities Moats D&M ✓ Achievable Synergies Sustainable ✓ Cash ROIC > WACC INVESTOR PRESENTATION |
Slide 35: M&A Playbook … Managing Risk & Unlocking Value
M&A Playbook … Managing Risk & Unlocking Value Due Diligence Integration FUNCTIONAL EXPERTISE ▪ Target Identification DEFINED PROCESS & BUSINESS UNIT ▪ Business Continuity OWNERSHIP PLAYBOOK ▪ Strategic ▪ Strategic Objectives Assessment ▪ Deliver Synergies ▪ Data Validation & ▪ Fit for Purpose Hypot
Slide 36: M&A - Key Performance Metrics
M&A - Key Performance Metrics 1.5-2.0x 1 $1.6B $113M typical purchase capital deployed average price multiple since 2018 deal size reduction through synergies ~$650M 8x-12x $8B+ acquired revenue typical Adj. EBITDA2 increase in and 20%+ Adj. purchase addressable EBITDA2 price market margin multiples
Slide 37: Ample Room for Growth
Ample Room for Growth HVAC D&M Product New Business Adjacency Addition / Extension Core NEW Creation New Products Addressable $11B+ $4B+ Adjacent Markets Market1 PRODUCTS for Growth in using Existing Markets New Products ▪ L&I, AtoN, Inorganic ▪ EAM, Electric Heat & CommTech & Core Focus Cooling Exp
Slide 38: M&A Case Studies - HVAC
M&A Case Studies - HVAC Engineered Air Movement 1 Electric Heat 2 Leading fans, blowers, and Leader in supplemental critical exhaust systems electric heat for commercial applications Industrial and commercial dampers and air control solutions High quality electric heating for industrial and High per
Slide 39: M&A Case Studies – Detection & Measurement Location & Inspection
M&A Case Studies – Detection & Measurement Location & Inspection Leading electromagnetic locator brand Water / Wastewater pipeline inspection & remediation Specialized ferrous locators Gas pipeline inspection & remediation Leading GPR equipment $270M+ Solution provider for full lifecycle management
Slide 40: M&A Case Studies – Detection & Measurement
M&A Case Studies – Detection & Measurement Aids to Navigation Communication Technologies Obstruction Lighting Marine & Airfield Lighting Spectrum Monitoring and Terrestrial Airfield Ground COMINT Solutions Obstruction Lighting and Marine Obstruction Lighting Tactical Data Links and RF Bolt-on Terres
Slide 42: Summary & Conclusion
Summary & Conclusion Solid base of attractive growth businesses Successful and effective growth and capital deployment Significant further Business System and continuous improvement opportunities Large M&A pipeline with strong execution capabilities Strong cash generation and disciplined balance she
Slide 44: Modeling Considerations – Full-Year 2024
Modeling Considerations – Full-Year 2024 Metric Considerations Corporate expense $48.0-50.0m Long-term incentive comp $14.0-15.5m Restructuring costs $1.0-2.0m Interest cost $44.0-46.0m Other income/(expense), and Non-service pension benefit/(expense) $0.0-2.5m Tax rate 24.0%-25.0% Capex ~$40m Cash
Slide 45: FY 2023 U.S. GAAP to Adjusted EPS Reconciliation
FY 2023 U.S. GAAP to Adjusted EPS Reconciliation ($ M) GAAP Adjustments Adjusted Segment income $ 353.2 $ — $ 353.2 Corporate expense (1) (58.4) 8.1 (50.3) Acquisition-related and other costs (2) (5.8) 5.8 — Long-term incentive compensation expense (13.4) — (13.4) Amortization of acquired intangible
Slide 46: FY 2022 U.S. GAAP to Adjusted EPS Reconciliation
FY 2022 U.S. GAAP to Adjusted EPS Reconciliation ($ M) GAAP Adjustments Adjusted Segment income $ 249.6 $ — $ 249.6 Corporate expense (1) (68.6) 18.2 (50.4) Acquisition-related and other costs (2) (1.9) 1.9 — Long-term incentive compensation expense (3) (10.9) (0.8) (11.7) Amortization of acquired i
Slide 47: FY 2021 U.S. GAAP to Adjusted EPS Reconciliation
FY 2021 U.S. GAAP to Adjusted EPS Reconciliation ($ M) GAAP Adjustments Adjusted Segment income $ 200.6 $ — $ 200.6 Corporate expense (1) (60.5) 8.6 (51.9) Acquisition related and other costs (2) (5.1) 5.1 — Long-term incentive compensation expense (12.8) — (12.8) Amortization of intangible assets (
Slide 48: FY 2016 U.S. GAAP to Adjusted EPS Reconciliation
FY 2016 U.S. GAAP to Adjusted EPS Reconciliation ($ M) GAAP Adjustments Adjusted Segment income (1) $ 142.8 $ 14.5 $ 157.3 Corporate expense (41.7) — (41.7) Pension and postretirement income (expense)(2) (15.4) 16.0 0.6 Long-term incentive compensation expense (13.7) — (13.7) Special charges, net (5
Slide 49: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ M) 2016 2021 2022 2023 FY FY FY FY Net income (loss) $ (67.6) $ 425.4 $ 0.2 $ 89.9 Exclude: Income tax provision (9.1) (10.9) (7.3) (41.6) Interest expense, net (14.0) (12.6) (7.6) (25.5) Amortization expense (1) (2.8) (21.6) (28.6) (44.0) Depreciation expense (23.7
Slide 50: 2021-2023 Adjusted FCF Reconciliation
2021-2023 Adjusted FCF Reconciliation ($ M) FY 2021 FY 2022 FY 2023 Operating cash flow from (used in) continuing operations $ 131.2 $ (115.2) $ 243.8 Capital expenditures (9.6) (15.9) (23.9) Free cash flow from (used in) continuing operations 121.6 (131.1) 219.9 Adjustments* (18.1) 228.1 10.2 Adjus

SPX Technologies — Investor Presentation (December 2024) on 6ix

Spx Technologies — Investor Presentation (December 2024)

Slide 1: Investor Presentation

Slide 2: Safe Harbor Statement

Slide 3: SPX Technologies Overview

Slide 4: Company Overview

Slide 5: SPX Technologies - Investment Case

Slide 6: SPX Products are Everywhere

Slide 7: Balanced and Attractive End Markets

Slide 8: Strong Product Offerings and Attractive Market Dynamics

Slide 9: SPX Technologies at a Glance

Slide 10: Strong Track Record

Slide 11: The Path Forward

Slide 12: Value Creation Framework and Targets

Slide 13: Sustainability that Creates Value in…

Slide 14: HVAC Segment

Slide 15: HVAC Segment Overview

Slide 16: SPX HVAC Products are Everywhere

Slide 17: Attractive Fundamentals in HVAC

Slide 18: Supported by Near-term Megatrends

Slide 19: HVAC - Key Value Creation Drivers

Slide 20: Detection & Measurement

Slide 21: Detection & Measurement Segment Overview

Slide 22: SPX Detection & Measurement Segment

Slide 23: SPX Products are Everywhere

Slide 24: Attractive Secular Drivers and End Markets

Slide 25: Key Megatrends

Slide 26: How Does D&M Win?

Slide 27: Financial Performance & Capital Allocation

Slide 28: Disciplined Balance Sheet Utilization

Slide 29: Free Cash Flow Generation Enables Growth Strategy

Slide 30: Growth-Oriented Capital Allocation

Slide 31: 2024 Guidance Update

Slide 32: Building Strategic Platforms

Slide 33: M&A Track Record

Slide 34: What Makes a Good SPX M&A Target?

Slide 35: M&A Playbook … Managing Risk & Unlocking Value

Slide 36: M&A - Key Performance Metrics

Slide 37: Ample Room for Growth

Slide 38: M&A Case Studies - HVAC

Slide 39: M&A Case Studies – Detection & Measurement Location & Inspection

Slide 40: M&A Case Studies – Detection & Measurement

Slide 41: Summary & Conclusion

Slide 42: Summary & Conclusion

Slide 43: Appendix

Slide 44: Modeling Considerations – Full-Year 2024

Slide 45: FY 2023 U.S. GAAP to Adjusted EPS Reconciliation

Slide 46: FY 2022 U.S. GAAP to Adjusted EPS Reconciliation

Slide 47: FY 2021 U.S. GAAP to Adjusted EPS Reconciliation

Slide 48: FY 2016 U.S. GAAP to Adjusted EPS Reconciliation

Slide 49: Adjusted EBITDA Reconciliation

Slide 50: 2021-2023 Adjusted FCF Reconciliation