Slide 1: SPX Technologies Q1 2023 Earnings Presentation
SPX Technologies Q1 2023 Earnings Presentation May 4, 2023
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
Executive Summary Very strong Q1 2023 Performance Strong revenue growth in both segments Significant margin outperformance in HVAC Acquisitions further strengthen HVAC TAMCO (Cooling); ASPEQ purchase agreement (Heating) >$170m in run-rate revenue/accretive to segment margin and growth
Slide 5: Q1 2023 Results Summary
Q1 2023 Results Summary ($ millions) Q1 2023 Revenue Strong organic revenue growth (30%+) Adjusted Operating Income / Margin* HVAC and Detection & Measurement Robust profit and margin growth 132% growth in Adj. Operating Income* 640 bps margin* expansion Strong Execution in Both Segments *
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Sustainability Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Results/account
Slide 7: Building Strategic Platforms - Cooling
Building Strategic Platforms - Cooling CINCINNATI FAN Open and Close Loop Cooling Engineered Air Movement >$660m >$50m* Revenue* Leading Position in Industrial Custom fans, High Performance Packaged Cooling Refrigeration blowers, and Industrial and Comprehensive Towers Products critical exhaust Comm
Slide 8: ASPEQ Heating Group
ASPEQ Heating Group Company Profile Headquarters: St. Louis, Missouri Description: Leader in electrical heating solutions for high- value applications in industrial and commercial markets. $418m purchase price Anticipated closing late Q2, subject to HSR >$120m annualized revenue Growth rate/
Slide 9: Q1 Financial Review
Q1 Financial Review Mark Carano
Slide 10: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q1 2022 Q1 2023 GAAP EPS from continuing operations $0.28 $0.84 Amortization $0.15 $0.10 Acquisition-related $0.03 $0.03 Non-service pension & other* ($0.06) ($0.04) Adj EPS from continuing operations $0.40 $0.93 Q1 2023 Adjusted EPS of $0.93 Note: Adjusted results are no
Slide 11: Q1 2023 Results
Q1 2023 Results ($ millions) Q1 Revenue: Q1 2023 Revenue 30.2% year-over-year increase: Consolidated Segment Income / Margin* 30.6% organic increase with broad strength in HVAC and Detection & Measurement 0.7% acquisition impact (ITL) -1.1% currency impact Q1 Consolidated Segment Income* and
Slide 12: HVAC Q1 2023 Results
HVAC Q1 2023 Results ($ millions) Q1 Revenue: Q1 2023 30.3% year-over-year increase: Revenue Segment Income / Margin 30.9% organic increase driven by growth in both Heating and Cooling -0.6% currency impact Q1 Segment Income and Margin: $27.1m increase in Segment Income 830 bps increase in
Slide 13: Detection & Measurement Q1 2023 Results
Detection & Measurement Q1 2023 Results ($ millions) Q1 Revenue: Q1 2023 Revenue 30.0% year-over-year increase: Segment Income / Margin 30.1% organic increase with broad strength across segment 1.8% acquisition impact (ITL) -1.9% currency impact Q1 Segment Income and Margin: $7.7m increase
Slide 14: Financial Position and Liquidity Review
Financial Position and Liquidity Review Mark Carano
Slide 15: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q4 2022 Q1 2023 ($millions) Q4 2022 Q1 2023 Short-term debt $2 $69 Pro Forma Current maturities of long-term debt 2 3 w/ TAMCO Long-term debt 243 242 Total Debt $247 $314 1.2x 0.8x 1.1x Less: Cash on hand ** (157) (213) 0.4x 0.4x
Slide 16: 2023 Guidance
2023 Guidance Revenue Segment Income Margin $1,035-$1,055m 17.25%-18.25% HVAC Prior $935-$955m Prior 15.25%-16.00% Detection & $570-$590m 20.50%-21.50% Measurement Prior $565-$585m Prior 20.50%-21.50% $1.61-1.65b 18.50%-19.50% Total SPX Prior $1.50-1.54b Prior 17.00%-18.00% Adj. Operatin
Slide 17: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 18: Market Commentary
Market Commentary Market Comments Cooling: ‒ Overall solid demand in Americas ‒ Labor and supply chain improving overall Heating: ‒ Stable orders / No material cancelations ‒ Labor and supply chain improving overall Run-rate: ‒ Location & Inspection orders solid (regional variances) ‒ Infrastr
Slide 19: Summary
Summary Very strong start to 2023 Delivering on inorganic growth initiative Updated 2023 guidance reflects ~ 25% Adjusted EPS* growth Progressing Towards “SPX 2025” Targets Well Positioned to Continue Value-Creation Journey *Adjusted results are non-GAAP financial measures. Reconciliations o
Slide 20: Appendix
SPX4 TECHNOLOGIES Appendix
Slide 21: Modeling Considerations – Full Year 2023
Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $48-52m Long-term incentive comp $13-14m Restructuring costs $1-2m Interest cost ~$10-11m Other income/(expense), and Non-service pension benefit/(expense) $4-6m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OP
Slide 22: End Market Exposure ~$1.46 Billion
End Market Exposure ~$1.46 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 28% 17% 13% 42% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 3% Gov't Regulated, Institutional, 12% 21% Office / Ret
Slide 23: 2023 Adjusted EPS Guidance - Key Drivers
2023 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $3.95 • Accelerated project-related sales • Moderating supply chain challenges and input costs $3.88 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $3.80 • Unfa
Slide 24: Segment Income Phasing
Segment Income Phasing 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 May 4, 2023 24
Slide 25: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter ($ millions) 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Segment income $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 $ 74.4 Corporate expense (16.6) (16.4) (17.2) (18.4) (68.6) (14.6) Acquisition related and other costs (0.1) (0.9) (0.1) (0.8) (1.9) (0.6) Long-term incentive compensati
Slide 26: Adjusted SPX Results by Quarter
Adjusted SPX Results by Quarter ($ millions, except per share values) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 HVAC segment income $ 20.6 $ 28.3 $ 33.1 $ 53.5 $ 135.5 $ 47.7 Detection & Measurement segment income 19.0 27.8 30.3 37.0 114.1 26.7 Consolidated segment income $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 $ 7
Slide 27: HVAC Segment Results
HVAC Segment Results ($ millions) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Revenue $193.1 $218.7 $227.8 $274.2 $913.8 $251.6 Segment income $20.6 $28.3 $33.1 $53.5 $135.5 $47.7 11% 13% 15% 20% 15% 19% May 4, 2023 27
Slide 28: Detection & Measurement Segment Results
Detection & Measurement Segment Results ($ millions) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Revenue $114.0 $135.3 $142.7 $155.1 $547.1 $148.2 Segment income $19.0 $27.8 $30.3 $37.0 $114.1 $26.7 17% 21% 21% 24% 21% 18% May 4, 2023 28
Slide 29: Q1 2023 U.S. GAAP to Adjusted EPS Reconciliation
Q1 2023 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions, except per Segment income $ 74.4 $ — $ 74.4 share values) Corporate expense (1) (14.6) 1.6 (13.0) Acquisition-related costs (2) (0.6) 0.6 — Long-term incentive compensation expense (3.1) — (3.1) Amortization of i
Slide 30: Q1 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q1 2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions, except per Segment income $ 39.6 $ — $ 39.6 share values) Corporate expense (1) (16.6) 5.2 (11.4) Acquisition-related costs (2) (0.1) 0.1 — Long-term incentive compensation expense (3.1) — (3.1) Amortization of i
Slide 31: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation Three months ended ($ millions) April 1, 2023 April 2, 2022 Operating income $ 49.8 $ 11.4 Include - TSA Income (1) 0.1 0.9 Exclude: Acquisition-related and other costs (2) (2.1) (4.4) Other operating income (3) — 0.9 Amortization expense (4) (6.
Slide 32: Q1 2023 Non-GAAP Reconciliation - Organic Revenue
Q1 2023 Non-GAAP Reconciliation - Organic Revenue Three months ended April 1, 2023 Detection & HVAC Measurement Consolidated Net Revenue Growth 30.3 % 30.0 % 30.2 % Exclude: Foreign Currency (0.6) % (1.9) % (1.1) % Exclude: Acquisitions - % 1.8 % 0.7 % Organic Revenue Growth 30.9 % 30.1 % 30.6 % May
Slide 33: Q1 2023 Debt Reconciliation
Q1 2023 Debt Reconciliation ($ millions) Q1 2023 Short-term debt $ 68.9 Current maturities of long-term debt 3.5 Long-term debt 241.5 Gross debt 313.9 (1) plus: adjustment associated with credit agreement (1.2) Adjusted gross debt 312.7 less: cash and equivalents (212.2) Adjusted net debt $ 100.5 (1
Slide 34: Q1 2023 Adjusted EBITDA Reconciliation
Q1 2023 Adjusted EBITDA* Reconciliation ($ millions) Last 12 Months Net Income** $ 31.6 Income tax provision 16.0 Interest expense 9.3 Income before interest and taxes 56.9 Depreciation and amortization 43.1 EBITDA 100.0 Adjustments: Loss on disposition of assets outside the ordinary course of busin
Slide 35: Q1 2023 Adjusted Free Cash Flow Reconciliation
Q1 2023 Adjusted Free Cash Flow Reconciliation ($ millions) Q1 2023 Operating cash flow from continuing operations $ 0.8 Capital expenditures (4.0) Free cash flow used in continuing operations (3.2) Adjustments* (2.1) Adjusted free cash flow used in continuing operations $ (1.1) * Adjustments align