Spx Technologies, Inc. · NYSE:SPXC

Spx Technologies — Investor Presentation (May 2016)

39 slides from Spx Technologies's investor presentation, May 2016

1. Slide 1: May 2016

   May 2016

2. 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,

3. Slide 3: SPX Corporation: Company Overview

   SPX Corporation: Company Overview May 2016

4. Slide 4: Company Overview

   Company Overview The “New” SPX Corporation  Headquartered in Charlotte, NC 2015 Revenue by Region  A leading supplier of: 71% 16%  HVAC products,  Detection & Measurement technologies, and  Power equipment 10%  ~$1.7b of revenue in 2015  ~6,000 employees 0%  NYSE Ticker: SPXC 3% SPX Corporat

5. Slide 5: Key Product Offerings and Financial Profile by Segment

   Key Product Offerings and Financial Profile by Segment  Package cooling units 2015:  Fluid coolers  $529m revenue  Residential and non-residential boilers  Electrical heating products  Segment Income margin: 15%  Locators 2015:  Fare collection systems  $232m revenue  Communication technol

6. Slide 6: Value Creation in Core Businesses

   Value Creation in Core Businesses Grow HVAC platform: Grow Detection & Measurement platform: Measurement New product development Continue to upgrade installed base Detection &   HVAC  New product launches in 2016  Channel development  Expand vertically and geographically  Geographic expansion

7. Slide 7: Value Creation Key Accomplishments

   Value Creation Key Accomplishments  Launch of new evaporative  New Genfare Link fare collection  Engaged BNP Paribas to pursue condenser product (industrial system installed in key reference sale of European-based portion refrigeration) market of our power generation business  Launch of new high

8. Slide 8: Segment Overview

   Segment Overview May 2016 Ga SPX

9. Slide 9: HVAC Segment Overview

   HVAC Segment Overview ($ millions) 2014 2015 3-Yr Target Revenue $536 $529 2-4% CAGR 2015 Segment Income % 13.0% 15.2% 15-16% Heating Cooling Revenue 54% 46% $529 2016 Outlook Considerations  EMEA and APAC market environments APAC  Timing of start of Q4’15 winter heating EMEA 8% season 5% New Buil

10. Slide 10: Heating Products Overview

    Heating Products Overview  North American businesses with strong brands  Products used in residential and non-residential markets 2015 Revenue Breakdown and sold primarily through distributors  End customers concentrated in the Northeast and Midwest Boiler Systems $286m 66% Electrical  Demand fo

11. Slide 11: Heating Product Examples

    Heating Product Examples Residential Boilers Commercial Boilers Electrical Heating Products  Standard cast iron  Standard cast iron Digital wall heaters  High efficiency  High efficiency  Natural gas and oil  Natural gas and oil Wash-down, corrosion resistant heaters Aluminum convection heater

12. Slide 12: Cooling Products Overview

    Cooling Products Overview 2015 Revenue Breakdown  Cooling products used in non-residential, commercial construction, Package process cooling and refrigeration applications Cooling Towers $243m Parts and  Well-recognized product brands: Marley and Recold 84% Service 16%  Well-established sales cha

13. Slide 13: Cooling Product Examples

    Cooling Product Examples Over 90 Years of Experience Engineering and Manufacturing Cooling Towers; Marley Sets a High Standard for Efficiency and Quality May 2016 13

14. Slide 14: Detection & Measurement Segment Overview

    Detection & Measurement Segment Overview Fare Collection Locators & Inspection Technologies ($ millions) 2014 2015 3-Yr Target Equipment 17% 45% Revenue $244 $232 2-6% CAGR 2015 Segment Income % 22.6% 19.8% 22-24% Revenue Communication $232 Technologies 38% 2016 Outlook Considerations  U.S. federal

15. Slide 15: Locators & Inspection Equipment

    Locators & Inspection Equipment 2015 Revenue by Product  Based in the U.K., a leading global supplier of underground pipe and Locators Inspection 10% conduit locators and inspection equipment 70% $104m  Continuous new product enhancements and loyal customer base Dry Air 20%  ~6% revenue CAGR from

16. Slide 16: Communication Technologies

    Communication Technologies 2015 Revenue by Product SMS &  A leading global supplier of spectrum monitoring (SMS) and COMINT Obstruction communications intelligence (COMINT) systems 55% Lighting $89m Products 45%  A leading North American supplier of obstruction lighting products  Key demand drive

17. Slide 17: Communication Technologies

    Communication Technologies Spectrum Monitoring (SMS) Communications Intelligence (COMINT) From Borders to Battlefields and From Urban Landscapes to Wide Open Spaces, Our Products Empower Customers to Monitor, Analyze and Manage the RF Spectrum May 2016 17

18. Slide 18: Communication Technologies

    Communication Technologies Flash Lighting Systems Flash Lighting Systems We Provide High-Quality LED and Xenon Lighting Systems for a Variety of Tower Applications May 2016 18

19. Slide 19: Fare Collection Technologies

    Fare Collection Technologies  A leading North American supplier in fare collection:  Historical market position concentrated on fare box installations  Rapidly evolving technology in the market has driven a transformation in our business:  Evolved from “fare box supplier” to “fare collection sys

20. Slide 20: Next Generation Fare Collection System

    Next Generation Fare Collection System Legacy Farebox Fast Fare Box Fast Fare-eTM e-FareTM E-ticketing Point-of-Sale Cloud-Based Software Support Fast Fare Suite of Products Integrated With Back-End Support; We Believe This is The New Industry Standard May 2016 20

21. Slide 21: Base Power Overview

    Base Power Overview Power Generation Transformers ($ millions) 2014 2015 3-Yr Target 60% 40% Revenue $1,097 $931 (3%)-0% CAGR 2015 Segment Income % 3.5% 1.1% 4-5% Revenue $931 2016 Outlook Considerations  Transformer pricing and lead times  Impact of transformers’ operational initiatives APAC 11%

22. Slide 22: Power Transformers

    Power Transformers  SPX is a leading supplier of power transformers into North America with strong brand equity  Locations: Waukesha, WI and Goldsboro, NC  Demand largely driven by replacement of aging installed base:  Average age of installed base is ~40 years  Recent end market trends:  Repl

23. Slide 23: Power Generation Equipment

    Power Generation Equipment Hybrid Cooling (ClearSky)  Leading supplier of cooling systems, large scale heat exchangers and pollution control systems  Highly engineered products  Equipment and technological solutions for several types of power generation plants  Large installed base with recurrin

24. Slide 24: South Africa

    South Africa May 2016

25. Slide 25: South African Projects Overview

    South African Projects Overview Medupi & Kusile Power Stations  Medupi and Kusile are the two mega-projects:  Twelve 800 mega-watt coal-fired plants (six at each project site)  Eskom is a state-owned South African utility  Alstom and Mitsubishi Hitachi are the primary contractors Boiler Island T

26. Slide 26: Q1 Results & 2016 Guidance

    Q1 Results & 2016 Guidance May 2016

27. Slide 27: Core Q1 2016 Results

    Core Q1 2016 Results Year-over-Year Analysis ($ millions)  Solid organic growth in HVAC segment and Revenue margin expansion for both Heating and Adjusted Operating Income Margin* Cooling $362 $369  Strong revenue and segment income performance in Detection & Measurement 3.0% segment -0.4%  Solid

28. Slide 28: HVAC Q1 2016 Results

    HVAC Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue  +3.6% year-over-year improvement: Segment Income Margin  +4.3% organic growth primarily driven by higher sales of cooling products $108 $112  (0.7%) currency impact Q1 Segment Income and Margin: 14.2% 12.0%  $3.0m inc

29. Slide 29: Detection & Measurement Q1 2016 Results

    Detection & Measurement Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue  +6.7% year-over-year growth: Segment Income Margin  +7.9% organic growth with contributions from multiple product lines within the $55 $52 segment  (1.2%) currency impact 19.9% Q1 Segment Income and

30. Slide 30: Base Power Q1 2016 Results

    Base Power Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue  Performance approximately flat: Segment Income Margin  +0.6% organic increase, with transformers sales growth largely offset by a challenging $203 $202 environment in power generation  (1.0%) currency impact -1.0

31. Slide 31: Market Commentary

    Market Commentary Segment/Business Commentary  Cooling: Solid on strength of commercial market HVAC  Heating: Muted by warm winter; operational efficiencies driving segment income growth Detection &  Demand for run-rate products remains steady Measurement  Robust frontlog activity; timing of cer

32. Slide 32: 2016 Guidance – Core

    2016 Guidance – Core Revenue Segment Income Margin  Towards the lower-end of LT annual  Flat (favorable margin project in HVAC growth targets of 2-4% 3Q’15 affects comparisons)  At least 100 bps increase driven by Detection &  In-line with LT annual growth targets of commercial efforts in fare c

33. Slide 33: 2016 Modeling Considerations

    2016 Modeling Considerations Metric Commentary/Assumptions Corporate costs ~$40M Non-cash stock comp $13-15M Restructuring costs ~$5M Interest cost $13-14M Tax rate 35-40%, jurisdictionally sensitive Capex $18-20M Cash cost of pension + OPEB ~$16M ongoing cash cost D&A $30-32M, mostly in COGS Share

34. Slide 34: Financial Position & Capital Allocation

    Financial Position & Capital Allocation May 2016

35. Slide 35: Financial Position

    Financial Position Capital Structure Update Leverage Ratios ($ millions) Q1 2016 Short-term debt & other $38 2.8x 2.8x Current maturities of long-term debt 14 Long-term debt 338 2.5x 2.5x 1.5-2.5x Gross Debt $390 Less: Cash on hand (98) Q4'15 Q1'16 LT Target Net Debt $292 Bank Net Leverage* Gross Le

36. Slide 36: Financial Position

    Financial Position Capital Structure Update ($ millions) Term Debt Repayment Schedule Term Debt Cash Other ST Debt $24 $40 300 250 200 $350 $350 150 $289 100 $101 $98 50 $9 $18 $18 $18 0 Q4'15 Q1'16 2016 2017 2018 2019 2020 No Significant Debt Repayment Requirement Until 2020 May 2016 36

37. Slide 37: 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  Net Debt to EBITDA(1) target range: 1.5x

38. Slide 38: Capital Allocation: Incremental Liquidity of $200m by YE 2018

    Capital Allocation Capital Allocation Strategy Incremental Liquidity of $200m by YE 2018 • Growth Investments in Core Businesses • Return of Capital to Shareholders • Reduction in Debt and Equivalents Expect At Least $200m of Cumulative Incremental Liquidity by Year-End 2018 May 2016 38

39. Slide 39: SPX

    SPX

SPX — Investor Presentation (May 2016) on 6ix