Slide 1: Q1 2017 Earnings Presentation
Q1 2017 Earnings Presentation May 4, 2017
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 ame
Slide 3: Introductory Comments
Introductory Comments Gene Lowe May 4, 2017
Slide 4: Quarter Highlights
Quarter Highlights Performance and Accomplishments Strong operating performance Margin expansion across all three segments Solid cash flow generation Strategic initiatives on track Well positioned to achieve full-year targets Note: Core results are non-GAAP financial measures that exclude
Slide 5: Core Q1 2017 Results
Core Q1 2017 Results Year-over-Year Analysis ($ millions) Operating model changes in Engineered Solutions were Core Revenue* Adjusted Operating Income Margin* primary driver of significant operating profit increase 190 basis points of Adjusted operating income $340 $322 margin* expansion Adjus
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: Q1 Financial Review
Q1 Financial Review Scott Sproule May 4, 2017
Slide 8: Earnings Per Share
Earnings Per Share Q1 2017 Adjusted EPS Q1 2017 GAAP EPS from continuing operations $0.24 South African projects $0.12 Non-service pension items $0.02 Adjusted EPS from continuing operations $0.38 *Non-GAAP financial measure. Reconciliations from US GAAP financial measures are available in the Appen
Slide 9: Core Q1 2017 Results
Core Q1 2017 Results Year-over-Year Analysis ($ millions) Q1 Core Revenue: Core Revenue* Core Segment Income Margin* (5.2%) year-over-year decline: (2.8%) organic decline*, primarily due operating model shift within Engineered Solutions $340 (1.9%) Dry Cooling impact – sold Q1’16 $322 (0.5%)
Slide 10: HVAC Q1 2017 Results
HVAC Q1 2017 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue Segment Income Margin (1.3%) year-over-year decline: (0.5%) organic decline* primarily driven lower heating $112 $110 demand (0.8%) currency impact 14.2% 15.0% Q1 Segment Income and Margin: $0.6m increase in segmen
Slide 11: Detection & Measurement Q1 2017 Results
Detection & Measurement Q1 2017 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue Segment Income Margin (3.2%) year-over-year decline: (0.5%) organic decrease* primarily due to lower sales of $55 $54 communication technologies projects partially offset by stronger sales of bus far
Slide 12: Engineered Solutions (Core) Q1 2017 Results
Engineered Solutions (Core) Q1 2017 Results Year-over-Year Analysis ($ millions) Q1 Core Revenue: Core Revenue* (8.3%) year-over-year decline: Core Segment Income Margin* (4.9%) organic decline*, driven by operating model and business focus changes (3.8%) Dry Cooling impact - sold Q1’16 $173
Slide 13: Financial Position & Liquidity Review
Financial Position & Liquidity Review Scott Sproule May 4, 2017
Slide 14: Financial Position: Capital Structure Update
Financial Position Capital Structure Update Leverage Ratios ($ millions) Q1 2017 Short-term debt $ 17.1 2.4x 2.5x 2.1x 2.2x 1.5-2.5x Current maturities of long-term debt 18.0 Long-term debt 319.4 Gross Debt $ 354.5 Less: Cash on hand (92.7) Q4'16 Q1'17 LT Target Net Debt $ 261.8 Bank Net Leverage* G
Slide 15: Financial Position: Cash Flow & Liquidity
Financial Position Cash Flow & Liquidity ($ in millions) Core Free Cash Flow* of approximately Term Debt Repayment Schedule $16.5 million during first quarter; historically ($ in millions) a cash use quarter Projecting $400 million of capacity for capital allocation through 2020 Growth investm
Slide 16: Market Outlook & Executive Summary
Market Outlook & Executive Summary Gene Lowe May 4, 2017
Slide 17: Market Commentary
Market Commentary Market Comments Cooling: Favorable commercial market trends continue HVAC Heating: Muted heating demand in Q1 Detection & Steady demand in run-rate end markets Measurement Project bookings trending in positive direction Transformers Stable lead times and pricing for mediu
Slide 18: 2017 Core Guidance (No Change)
2017 Core Guidance (No Change) Segment Income Revenue Margin HVAC Organic growth* at lower end of LT range of 2-4% ~16% Detection & Organic growth* towards middle of LT range of 2-6% 21 - 22% Measurement Segment revenue decline in mid-single digits % Engineered Solutions Flat Transformer
Slide 19: Executive Summary
Executive Summary Strong start to 2017 – reaffirming Core* guidance Continued healthy margin expansion in each segment Solid cash flow performance Progressing on strategy *Core results are non-GAAP financial measures that exclude the results of the South African projects. Executing on Value
Slide 20: Questions
Questions May 4, 2017
Slide 21: Core Revenue & Segment Income U.S. GAAP Reconciliation
Core Revenue & Segment Income U.S. GAAP Reconciliation ($ millions) Q1 2016 Q1 2017 GAAP SA Projects Core GAAP SA Projects Core Revenue HVAC 111.6 111.6 110.1 110.1 D&M 55.4 55.4 53.6 53.6 Engineered Solutions 193.6 (20.5) 173.1 176.9 (18.2) 158.7 Total SPX $360.6 ($20.5) $340.1 $340.6 ($18.2) $322.
Slide 22: Core Segment Income Phasing
Core Segment Income Phasing ($ millions) Q1 2016 Q2 2016 Q3 2016 Q4 2016 GAAP 29.8 32.2 26.0 54.8 Less: South 40% 38% African 3.4 2.9 3.5 4.7 Projects Core $33.2 $35.1 $29.5 $59.5 24% % of full-year 21% 22% 19% 38% 21% 21% 22% 19% 16% Q1 2015 Q2 2015 Q3 2015 Q4 2015 GAAP 17.2 24.6 (60.4) 57.4 Less:
Slide 23: Q1 2017 GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2017 GAAP to Adjusted Earnings Per Share U.S. GAAP Reconciliation ($ millions, except per share values) GAAP Adjustments Adjusted Segment income $ 34.3 $ 4.4 $ 38.7 Corporate expense (11.4) — (11.4) Pension and postretirement income (expense) (1.4) 1.5 0.1 Long-term incentive compensation expense
Slide 24: Q1 2016 GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2016 GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except per share values) GAAP Adjustments Adjusted Segment income $ 29.8 $ 3.4 $ 33.2 Corporate expense (11.4) — (11.4) Pension and postretirement income (expense) (1.0) 1.1 0.1 Long-term incentive compensation expense (2.7) — (
Slide 25: Q1 2017 Adjusted Operating Income U.S. GAAP Reconciliation
Q1 2017 Adjusted Operating Income U.S. GAAP Reconciliation ($ millions) Three months ended April 1, 2017 April 2, 2016 Operating income $ 17.8 $ 28.1 Adjustments: Losses from South African projects 4.4 3.4 Non-service pension and postretirement items 1.5 1.1 Gain on sale of Dry Cooling — (17.9) Non-
Slide 26: Q1 2017 Organic Revenue U.S. GAAP Reconciliation
Q1 2017 Organic Revenue U.S. GAAP Reconciliation Detection & Engineered HVAC Measurement Solutions Consolidated Net Revenue Decline (1.3) % (3.2) % (8.6) % (5.5) % Adjustment to Exclude South African projects - % - % (0.3) % (0.3) % Core Revenue Decline (1.3) % (3.2) % (8.3) % (5.2) % Exclude: Forei
Slide 27: Debt Reconciliation
Debt Reconciliation ($ millions) April 1, 2017 Short-term debt $ 17.1 Current maturities of long-term debt 18.0 Long-term debt(1) 320.9 Adjusted Gross Debt 356.0 Less: Purchase card program and extended payables (3.6) Adjusted Gross Debt 352.4 Less: Cash in excess of $50.0 (42.7) Adjusted Net Debt $
Slide 28: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ millions) Q2 2016 Q3 2016 Q4 2016 Q1 2017 LTM Net income (loss) from continuing operations attributable to SPX $ 4.4 $ 2.6 $ (3.0) $ 10.3 Corporation common shareholders Income tax provision (benefit) 2.6 - (1.0) 3.2 Interest expense 3.8 3.8 3.7 4.0 Income (loss
Slide 29: Free Cash Flow U.S. GAAP Reconciliation
Free Cash Flow U.S. GAAP Reconciliation ($ millions) Q1 2017 Net operating cash flow from continuing operations $ 5.4 Capital expenditures - continuing operations (2.2) Free cash flow from continuing operations 3.2 Adjustment for South African projects 13.3 Core free cash flow from continuing operat