Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Baird 2013 Industrial Conference
26 slides from Spx Technologies's conference presentation, Nov 5, 2013
Slide 1: SPX Investor Presentation - 2013 Baird Industrial Conference
SPX Investor Presentation 2013 Baird Industrial Conference
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 and are thus prospective. These forward-looking statements are subject to risks, u
Slide 3: Strategic Transformation
Strategic Transformation 1997-2004 2005-2011 2012 & Beyond Focus on Diversification Focus on Strategic Markets Focus on Flow Platforms Diversification: >100 acquisitions; divestitures of legacy businesses ClydeUnion Acquisition APV Acquisition Additional United Dominion Service Divestitures Acquisit
Slide 4: Current Situation
Current Situation Key Investor Messages Improved operational performance in Q3: Segment margins improved 70 points year-over-year and 140 points sequentially $141m of free cash flow Transitioning to new operational alignment and executing restructuring actions Backlog increased sequentially Divestin
Slide 5: Financial Position
Financial Position ($ millions) 6/29/2013 9/28/2013 2013 Capital Allocation Priorities 1) Operational improvements and organic Cash $353 $491 growth initiatives: Restructuring actions Accounts $1,237 $1,200 Capital expenditures Receivable Innovation Total Assets $6,400 $6,549 2) Annual dividend ($1
Slide 6: 2013 Earnings Accretive Actions
2013 Earnings Accretive Actions Action Estimated EPS Benefit 1) ~$35m of annual cost savings from 2013 Annualized: ~$0.60 per share restructuring actions 2014E Incremental Benefit: ~$0.35 per share Annualized: ~$0.26 per share 2) $200m of share repurchases 2014E Incremental Benefit: ~$0.10 per share
Slide 7: Capital Allocation Discipline
Capital Allocation Discipline Methodology Expected Outcome 1) Utilize strategic planning process to evaluate Quantify projected future cash flows and future revenue and earnings growth estimate total company valuation 2) Maintain target capital structure and Gross Debt to EBITDA(1) target range: 1.5
Slide 8: Historical Capital Allocation
Historical Capital Allocation Share Repurchases & Dividends ~45m shares repurchased (2005-today) $3.0b Annual dividend of $1 per share Total Capital Allocated: ~$6.1b Acquisitions 85% of acquisition capital has focused on $1.9b building out Flow Technology platforms Divestiture proceeds: ~$4.3b Net
Slide 9: New Operational Leadership Alignment
New Operational Leadership Alignment Key Leadership Changes Two senior operational positions created: David Kowalski promoted to President of Global Manufacturing Operations Ross Skelton promoted to Chief Commercial Officer The Flow Technology segment’s reporting units are now aligned by end market:
Slide 10: Flow Technology: End Market Trends
Flow Technology: End Market Trends Ross Skelton, Chief Commercial Officer
Slide 11: Attractiveness of Flow Space
Attractiveness of Flow Space Definition of Flow Space Technology Examples pumps valves Market sectors that require highly engineered system solutions and components which enable our customers to: process, transport, meter, filter or dehydrate… …fluids, gases and powders across a variety of applicati
Slide 12: Flow End Market Development
Flow End Market Development Flow Acquisitions Year Business Primary Market Revenue by End Market 1998 Lightnin Mixers Industrial Flow 2004 2000 Copes Vulcan Valves Power & Energy ($ millions) 2012 2001 Waukesha Cherry-Burrell Food & Beverage 2001 Bran & Luebbe Pumps Power & Energy $947 2001 Dollinge
Slide 13: Flow Technology Segment Overview
Flow Technology Segment Overview Food & Beverage Power & Energy Industrial Flow 2012 Revenue: $947m 2012 Revenue: $876m 2012 Revenue: $859m Key Products Key Products Key Products Pumps Valves Pumps Pumps Heat Exchangers Valves Heat Exchangers Mixers Heat Exchangers Mixers Dispersion Filtration Filtr
Slide 14: Key Flow Technology Food & Beverage Offerings
Key Flow Technology Food & Beverage Offerings Full Line Systems Components Liquid Processing Separation & Dispersion Mixing Clarification Drying & Evaporation Pumps Valves Heat Exchangers Extraction & Distillation Our Technology Offerings Include Full-Line Process Systems and Process Components Nove
Slide 15: Flow Technology: Food & Beverage Market
Flow Technology: Food & Beverage Market Flow’s 2012 Food & Beverage Revenue Market Overview Non-Dairy Food & Beverage Regulated, global industry in which customers Dairy 46% demand highly engineered, turn-key solutions $947m 48% Personal Care Competitors include GEA, Tetra Pak, Alfa Laval, 6% Sudmo
Slide 16: Key Flow Technology Power & Energy Offerings
Key Flow Technology Power & Energy Offerings multi-stage pumps valves closures reciprocating oil pump multi-stage, vertical pump dehydration & filtration Complementary Products With Very Good Potential for Revenue Synergies Through Cross-Selling Opportunities, Channel Combinations and Key Customer A
Slide 17: Flow Technology: Power & Energy Market
Flow Technology: Power & Energy Market Flow’s 2012 Power & Energy Revenue Power & Energy Overview Upstream Oil & Gas Large, global markets in which customers demand Downstream 32% highly engineered technology solutions $876m Oil & Gas 40% Power Competitors include Flowserve, Sulzer, KSB, Generation
Slide 18: Key Flow Technology Industrial Offerings
Key Flow Technology Industrial Offerings strategic growth mixers pumps heat exchangers air treatment opportunities Expand product offerings geographically Add adjacent technologies to broaden product portfolio Extend vertically in select end markets Fragmented competitor and adjacent supplier enviro
Slide 19: Flow Technology: Industrial Flow Markets
Flow Technology: Industrial Flow Markets Flow’s 2012 Industrial Revenue Industrial Flow Markets Overview General Industrial; 32% Compressed Air; Large, global markets in which customers demand 20% highly engineered technology solutions $859m Other; 5% $860m Water; 6% Chemical; 18% Fragmented, region
Slide 20: Flow Technology Sequential Analysis
Flow Technology Sequential Analysis Sequential Backlog Change Sequential Revenue & Margins ($ millions) ($ millions) $730 to $1,359 $1,337 $1,318 $1,392 $750 $613 $653 $652 Backlog Revenue +6% Sequential Operating 13.4% to Change Margins 12.8% 13.7% 9.0% 10.2% -2% -1% -5% Q4 2012 Q1 2013 Q2 2013 Q3
Slide 21: Questions?
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Slide 22: Appendix
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Slide 23: 2013 Full Year Targets
2013 Full Year Targets Full Year EPS from Continuing Operations ($ millions) 2012 Mid-Point Guidance Model 2013E Revenue & 2013E Segment Targets Revenue $4,736 Income % (1) Segment income % 10.5% Corporate expense ($109) $2,682 (1%) to 0% Pension & post retirement health care ($25) Flow Technology 1
Slide 24: Financial Position
Financial Position ($ millions) 6/29/2013 9/28/2013 2013 Capital Allocation Priorities 1) Operational improvements and organic Cash $353 $491 growth initiatives: Restructuring actions Accounts $1,237 $1,200 Capital expenditures Receivable Innovation Total Assets $6,400 $6,549 2) Annual dividend ($1
Slide 25: Projected Liquidity
Projected Liquidity Projected Liquidity ($ millions) Amount Cash on Hand at September 28, 2013 $491 Q4 2013E Cash Outflows and Inflows 2013 targeted share repurchases remaining ($55) Planned dividend payments ($12) Q4 projected free cash flow from continuing operations $183 Q4 projected free cash fl
Slide 26: 2013 Adjusted Free Cash Flow Reconciliation
2013 Adjusted Free Cash Flow Reconciliation 2013 Adjusted Free Cash Flow ($ millions) Three Months Ended Nine Months Ended September 28, 2013 September 28, 2013 Full Year 2013E Net cash from continuing operations $149 ($150) $45 to $75 Tax payment on the gain from the sale of Service Solutions $0 $1