Slide 1: Q2 2021 Earnings Presentation
Q2 2021 Earnings Presentation August 5, 2021 SPX Corporation 2019 Investor Event - New York
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 – Q2 2021
Executive Summary – Q2 2021 Solid results HVAC particularly strong Robust / growing backlog Outlined growth strategy post sale of Transformers Continuing to execute: first CommTech platform acquisition Building strategic momentum Progress on internal initiatives Strong balance sheet
Slide 5: Q2 2021 Results Summary
Q2 2021 Results Summary ($ millions) Q2 2021 Year-to-Date Strong adjusted revenue growth (~15%) Both organic and acquisitions contributed significantly Adjusted segment income grew ~16% HVAC segment margin increase driven largely by Heating Detection & Measurement segment margin decline dr
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Strategic platforms • Integrity • Significant capital to deploy • Results/acc
Slide 7: Launching Fourth Annual Sustainability Report
Launching Fourth Annual Sustainability Report E Lower energy, GHG and waste usage Recycling/repurposing cooling tower fill S Well received D&I initiative and programming Enhanced training/development opportunities G 44% of Board female Diverse backgrounds SPX Products and Culture Support
Slide 8: Building Strategic Platforms – CommTech
Building Strategic Platforms – CommTech (US) (UK) Acquired Feb 2019 ~$40-60m Legacy Business ~$14m* ~$40-50m* ~25-30m* Spectrum Monitoring Tactical Data Links and and COMINT Solutions RF Countermeasures Broad Provider of Spectrum Monitoring and COMINT Solutions Significant Runway to Grow Presence in
Slide 9: Q2 Financial Review
Q2 Financial Review Jamie Harris
Slide 10: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q2 2020 Q2 2021 GAAP EPS from continuing operations $0.33 $0.32 Other segment (South Africa) $0.07 $0.07 Acquisition-related - $0.03 Non-service pension items & other $(0.10) $(0.04) Amortization $0.04 $0.11 Adj EPS from continuing operations $0.34 $0.49 Q2 2021 Adjusted
Slide 11: Adjusted Q2 2021 Results
Adjusted Q2 2021 Results ($ millions) Q2 Adjusted Revenue: Q2 2021 Year-to-Date 15.3% year-over-year increase: 9.6% organic* increase due to strong HVAC performance 6.1% acquisition impact (Sealite, ULC, SenSoft) (0.4)% currency & other impact† Q2 Adjusted Operating Income and Margin: Marg
Slide 12: Summary Q2 2021 Adjusted Segment Results
Summary Q2 2021 Adjusted Segment Results Q2 2021 Y/Y % Y/Y Change Change in Adjusted Segment in Revenue Segment Margin* HVAC 12.2% 180 bps Detection & Measurement 20.7% (290) bps Total Adjusted SPX* 15.3% 10 bps Note: Adjusted results are non-GAAP financial measures that exclude, among other items,
Slide 13: HVAC Q2 2021 Results
HVAC Q2 2021 Results ($ millions) Q2 Revenue: Q2 2021 Year-to-Date 12.2% year-over-year increase: 14.1% organic* increase primarily due to higher volumes in our Heating platform (1.9%) currency & other impact† Q2 Adjusted Segment Income and Margin: $5.8m increase in Adjusted Segment Income
Slide 14: Detection & Measurement Q2 2021 Results
Detection & Measurement Q2 2021 Results ($ millions) Q2 Revenue: Q2 2021 Year-to-Date 20.7% year-over-year increase: 1.6% organic* increase primarily due to strong sales in Location & Inspection, partially offset by lower project-related volumes 17.2% acquisition impact (Sealite, ULC, Sensors
Slide 15: Financial Position and Guidance Update
Financial Position and Guidance Update Jamie Harris
Slide 16: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update Pro Forma with Pro Forma with ($millions) Q1 2021 Q2 2021 Sealite ECS 2.2x 2.1x Short-term debt $100 $168 1.8x Current maturities of long-term debt 9 10 1.7x Long-term debt 283 238 Total Debt $392 $417 1.9x 1.9x 1.6x Less: Cash on hand (107)
Slide 17: 2021 Guidance (Changes Underlined)
2021 Guidance (Changes Underlined) Revenue Segment Income Margin HVAC ~$770-780 million (including Process Cooling) ~14.5% Detection & ~$465-475 million ~20.5% Measurement (prior ~$460-470 million) Total SPX Adjusted ~$1.25 billion ~17.0% Adjusted Operating Income Margin of ~11-12%; Adju
Slide 18: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 19: Market Commentary
Market Commentary Market Comments Cooling: ‒ Momentum building in non-residential recovery ‒ Strong bookings/growing lead times in Americas and APAC Heating: ‒ Strong demand/pricing trends ‒ Weather remains key Q4 driver Run-rate: ‒ Strong Location & Inspection demand exceeds 2019 levels ‒ Ste
Slide 20: Well-Positioned for Infrastructure Spending
Well-Positioned for Infrastructure Spending Water & Wastewater General Construction (heavy civil, housing) Public Transit Renewables (wind) Telecom (5G), Airports, Ports Institutional (K-12, gov’t, healthcare) Infrastructure-centric R&D August 5, 2021 20
Slide 21: SPX Strategic Portfolio Transformation Continues
SPX Strategic Portfolio Transformation Continues Pre-Sale Post-Sale 2025 Targets Adj. Revenue ~$1.7B ~$1.25B ~$2.0B Gross margin % ~32.5% ~450bps ~37.0% ~+300bps ~40% Adj. Segment Income % ~15.5% ~150bps ~17.0% ~+300bps ~20% Adj. Operating Income % ~11.5% ~11.5% ~+450bps ~16% Long-term Growth % ~1-4
Slide 22: Focused, Market-Leading Growth Platforms
Focused, Market-Leading Growth Platforms Detection & Measurement (~$470M)(1) HVAC (~$775M)(1) ~$1.25 Billion(1) Location & Inspection Cooling Premium engineered niches Technology / innovation focus Aids to Navigation ~90% Market Leadership (#1 or #2) Heating High replacement revenue (~70%)
Slide 23: Realizing SPX 2025 Vision
Realizing SPX 2025 Vision 2021 Pro Forma Adjusted EPS $0.25-$0.30* $2.60-$2.65 SPX 2025 $2.17-$2.37 $2.25-$2.45 Better organic growth Margin expansion via continuous improvement Growth via M&A (significant investment capacity) Significant scale opportunities Prior 2021 Current 2021 Pro Forma
Slide 24: Executive Summary
Executive Summary Solid Q2 results / well-positioned for full-year Executing on growth strategy (ECS acquisition) Increasing 2021 guidance Multiple points of leverage to infrastructure Well-Positioned for Continued Value Creation August 5, 2021 24
Slide 25: Questions
SPX4 Questions
Slide 26: Modeling Considerations – Full Year 2021
Modeling Considerations – Full Year 2021 Metric Considerations Corporate expense ~$50m, including TSA income Long-term incentive comp ~$13m Restructuring costs ~$1m Interest cost ~$13m Other income/(expense), and Non-service pension $6-8m benefit/(expense) Tax rate ~19-21% Capex ~$15m Cash cost of p
Slide 27: 2021 Adjusted EPS Guidance - Key Drivers
2021 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $2.45 • Stronger-than-normal seasonal heating demand • Accelerating non-residential activity • Moderating input cost trends • Accelerated project-related sales $2.35 Base Case • Weaker-than normal seasonal h
Slide 28: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations ($ millions) 35% 34% 22% 23% 24% 20% 21% 21% Q1 Q2 Q3 Q4 2019 2020 August 5, 2021 28
Slide 29: HVAC Segment Results – 2019, 2020, and YTD by Quarter
HVAC Segment Results – 2019, 2020, and YTD by Quarter ($ millions) Q1 Q2 Q3 Q4 2019 Revenue $167.6 $165.3 $167.8 $238.0 $738.7 GAAP Segment Income 19.2 18.8 22.2 42.9 103.1 Exclude: One time acquisition related costs - - - - - Exclude: Intangible amortization 0.1 0.1 0.1 1.1 1.4 Adjusted Segment Inc
Slide 30: Adjusted SPX Results – 2019, 2020, and YTD by Quarter
Adjusted SPX Results – 2019, 2020, and YTD by Quarter ($ millions) Q1 Q2 Q3 Q4 2019 Revenue $242.7 $267.2 $270.9 $336.8 $1,117.6 Adjusted Revenue (exclude "Other") 252.7 267.0 265.5 338.5 1,123.7 Segment Income 14.9 30.8 37.3 58.2 141.2 Exclude: "Other" segment income 21.3 9.7 5.4 7.2 43.6 Exclude:
Slide 31: Q2 2021 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income (1) $ 32.9 $ 11.3 $ 44.2 Corporate expense (2) (13.3) 1.2 (12.1) Long-term incentive compensation expense (3.3) - (3.3) Special charges, net (3) (0.7) 0.1 (0.6) Other operating expense (2.7) - (2.7
Slide 32: Q2 2020 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2020 U.S. GAAP to Adjusted EPS Reconciliation ($ millions) GAAP Adjustments Adjusted (1) Segment income $ 31.3 $ 6.7 $ 38.0 (2) Corporate expense (9.7) 0.1 (9.6) Long-term incentive compensation expense (3.1) - (3.1) Special charges, net (1.0) - (1.0) Operating income 17.5 6.8 24.3 Other income,
Slide 33: Q2 2021 U.S. GAAP to Adjusted Operating Income Reconciliation
Q2 2021 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Six months ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Operating income $ 12.9 $ 17.5 $ 32.9 $ 33.6 Exclude: Aggregate operating losses of the South Africa business (1) (4.0) (4.3) (9.1) (8.
Slide 34: Q2 2021 Non-GAAP Reconciliation - Organic Revenue
Q2 2021 Non-GAAP Reconciliation - Organic Revenue Three months ended July 3, 2021 Detection & HVAC Measurement SPX Adjusted Net Revenue Growth 12.2 % 20.7 % 15.3 % Exclude: Foreign Currency 0.8 % 1.9 % 1.3 % Exclude: Acquisitions - % 17.2 % 6.1 % Exclude: Settlement of legacy dry cooling contract (2
Slide 35: Adjusted Revenue and Adjusted Segment Income Reconciliation
Q2 2021 and 2020 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliation ($ millions) CONSOLIDATED SPX: Three months ended Six months ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Consolidated revenue $ 296.7 $ 258.0 $ 584.6 $ 514.8 (1) Exclude: "Other" operating segme
Slide 36: Adjusted Segment Income Reconciliations
Q2 2021 and 2020 U.S. GAAP to Adjusted Segment Income Reconciliations ($ millions) HVAC REPORTABLE SEGMENT: Three months ended Six months ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 HVAC segment income $ 25.4 $ 19.6 $ 47.7 $ 37.3 (1) Exclude: Acquisition related costs - - - (0.1) (2)
Slide 37: Pro Forma 2021 Adjusted EPS Calculation
Pro Forma 2021 Adjusted EPS Calculation ($ millions) FY 2021 Current midpoint guidance $2.35 Full-year benefit of 2021 acquisitions(1) $0.04 Normalized corporate costs(2) $0.05 Benefit of using cash proceeds from sale of Transformers(3) $0.19 Pro forma Adj EPS from continuing operations ~$2.63* *Ran
Slide 38: Q2 2021 Debt Reconciliation
Q2 2021 Debt Reconciliation ($ millions) Q 2 2021 Short-term debt $ 168.3 Current maturities of long-term debt 10.4 Long-term debt 238.0 Gross debt 416.7 plus: adjustment associated with acquisitions and other (1) 79.0 Adjusted gross debt 495.7 less: cash and equivalents (2) (68.6) Adjusted net debt
Slide 39: Q2 2021 Consolidated Adjusted EBITDA Reconciliation
Q2 2021 Consolidated Adjusted EBITDA* Reconciliation ($ millions) Last 12 Months Net Income attributable to SPX Corporation common shareholders $ 135.7 Income tax provision (18.2) Interest expense 16.5 Income before interest and taxes 134.0 Depreciation and amortization 47.9 EBITDA 181.9 Adjustments
Slide 40: YTD 2021 Adjusted Free Cash Flow Reconciliation
YTD 2021 Adjusted Free Cash Flow Reconciliation ($ millions) Six months ended July 3, 2021 June 27, 2020 Operating cash flow from continuing operations $ 38.9 $ (9.9) Capital expenditures (4.2) (8.3) Free cash flow from continuing operations 34.7 (18.2) Adjustments* (3.4) 3.2 Adjusted free cash flow