Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Morgan Stanley China Industrials Summit (May 2011)
48 slides from Spx Technologies's conference presentation, May 27, 2011
Slide 1: China Industrials Summit
China Industrials Summit INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 27, 2011 1
Slide 2: Forward-looking statements disclaimer
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: Introductory Comments
Introductory Comments INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 3
Slide 4: SPX Transformation
SPX Transformation 1912-1996 2005-Today 1997-2004 U.S. Automotive Global, Multi-Industry Supplier Supplier Diversified Industrial Manufacturer Of Engineered Solutions Focus on Executing Long-Term Strategy, Cyclical Recovery Focus on 3 Strategic Markets Diversification, Focus on >100 Acquisitions Str
Slide 5: Key End Market Drivers
Key End Market Drivers Power & Energy Food & Beverage Vehicle Service Electricity Demand Customer Globalization, New Vehicle Platforms Emerging Markets Retrofit and Refurbishment Increasing Electronic of Aged Infrastructure Sustainability & Complexity of Vehicles Environmental Considerations Emergin
Slide 6: Primary Technology Offerings
Primary Technology Offerings Infrastructure Power & Energy Cooling Systems Heat Exchangers Power Transformers Process Solutions Food & Beverage Engineered Components Skidded Systems Full-Line Systems Diagnostic Tools Vehicle Service OEM Professional Aftermarket Professional Aftermarket Do-it-Yoursel
Slide 7: Strategic Overview
Strategic Overview Growth Initiatives Internal Focus Develop Continue LEAN Innovative Solutions Journey Expand Customer Migrate to Relevance Shared Services Broaden Geographic Promote Presence Brand Localize Content One with Global Expertise Global Operating System Power & Food & Vehicle Energy Beve
Slide 8: Revenue by Region
Revenue by Region Emerging Market Revenue % 2010 Revenue % by Geography of Total Reported Revenue $1.2b 48% 24% 25% 22% 23% $0.6b 17% 15% 14% 18% 2% 2005 2006 2007 2008 2009 2010 8% Globalization has Improved Growth Prospects; Emerging Markets have Provided Growth Opportunities May 2011 8
Slide 9: SPX Asia Pacific
SPX Asia Pacific SPX Asia Pacific Revenue SPX Asia Pacific Revenue +58% Thermal $854 $825 Equipment $729 30% $643 $665 $542 Flow Technology 50% Test & Measurement 10% Industrial Products 10% 2005 2006 2007 2008 2009 2010 Sales Into Asia Pacific Increased 58% From 2005 to 2010; All 4 Segments Represe
Slide 10: SPX Asia Pacific
SPX Asia Pacific 2010 Asia Pacific Revenue % Breakdown As a % of 2010 Asia Pacific Revenue 6% 12% 5% 60% 6% 11% SPX Presence ~3,500 Employees in 11 Countries, China Represents Largest Market; In Process of Building a Centralized Manufacturing Campus in FOHO May 2011 10
Slide 11: Financial Performance
Financial Performance (chart: $ billions; except per share data) peak revenue & EPS achieved in 2008 Revenue EPS* $5.8 Actions Since Late 2008 ~$5.5 $4.8 $4.9 Structural improvements: $4.5 $6.53 >$100m of restructuring actions $3.9 Reduced tax rate 300 points $3.5 $4.85 $4.25 to Reduced debt & inter
Slide 12: Cyclical Analysis of Primary End Markets
Cyclical Analysis of Primary End Markets Recovery Stage Later Vehicle Service Diagnostic Tools Food & Beverage & Equipment Components Recovery Stage Middle HVAC & Other Infrastructure Food & Beverage Power Systems Recovery Stage Generation Power T&D Early Oil & Gas Late Cycle Mid Cycle Early Cycle N
Slide 13: Medium Term Growth Drivers
Medium Term Growth Drivers Cyclical recovery, particularly in power-related businesses Expansion in large power transformers Expansion in food & beverage systems Robust OEM new vehicle launch forecast Margin expansion across all four segments Strategic acquisitions Innovation focus We Believe SPX is
Slide 14: Business Matrix: % of 2010 revenue
Business Matrix: % of 2010 revenue Reporting Segment Flow Thermal Equipment Test & Industrial Products Technology & Services Measurement & Services End Market 34% 33% 19% 14% Power & Energy 36% 6% 23% 7% HVAC & Other Infrastructure 4% 8% 3% 2% 17% Food & Beverage 16% 16% Vehicle Service 16% 16% Indu
Slide 15: Flow Technology
Flow Technology INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 15
Slide 16: Global Flow Technology Overview
Global Flow Technology Overview pumps 2010 Revenue by End Market valves Dairy, Food & Beverage 45% homogenizers General Industrial mixers 22% Power Generation heat exchangers Compressed Oil & Gas 6% Air Infrastructure 11% 8% 8% filters Dairy, Food & Beverage is Largest End Market; Diverse Offering o
Slide 17: Global Flow Technology Revenue by Region
Global Flow Technology Revenue by Region Emerging Market Revenue % of 2010 Revenue % by Geography Flow Technology Reported Revenue >$500m 32% 30% 35% ~$200m 31% 30% 23% 22% 19% 25% 6% 2005 2006 2007 2008 2009 2010 7% Globalization has Improved Growth Prospects; Emerging Markets Represent More than 3
Slide 18: Global Flow Technology Historical Financial Results
Global Flow Technology Historical Financial Results ($ millions) Long-term targets: Average annual revenue growth: 4% to 6% Revenue Segment income margins: 14% to 16% Segment Margins APV Acquisition Gerstenberg, Anhydro & Murdoch 12/31/2007 Acquisitions 2010-2011 $1,999 +15% to +20% 16.4% $1,634 $1,
Slide 19: Food & Beverage Expansion
Food & Beverage Expansion 2001-2007 2008-Today U.S. Based Supplier of Global Supplier Food & Beverage Components Of Full-Line, Automated Solutions >$800m in Revenue >50% International Expanded Systems Capabilties Globalization & Systems Acquired Waukesha Cherry-Burrell and Bran & Luebbe businesses i
Slide 20: Emerging Markets: Dairy Products Factory Example
Emerging Markets: Dairy Products Factory Example Example of Daily Production in a Dairy Products Factory Goal 240 Tons 50 Tons per day per day 120 Tons 8 Tons 15 Tons 1,000,000 per day per day per day liters per day Milk Juice Yogurt Cheese Butter Whey Powder Acquisitions Have Expanded SPX’s Capabil
Slide 21: New Zealand: B.W. Murdoch Acquisition
New Zealand: B.W. Murdoch Acquisition Strategic Rationale ~$15m of annual revenue Increases capabilities in New Zealand Provides design, fabrication and plant engineering solutions to the dairy, beverage and bio-tech industries New Zealand is one of the world’s leading exporters of dairy products En
Slide 22: Flow Technology Asia Pacific Overview
Flow Technology Asia Pacific Overview Flow Technology Flow Technology Asia Pacific Revenue Asia Pacific Backlog APV Acquisition 12/31/2007 ~$470 +55% $437 $423 $406 $146 $151 $138 $127 $115 $97 $207 $169 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011E 2009 2010 2010 2010 2010 2011 Note: 2011E as of
Slide 23: Flow Technology Asia Pacific
Flow Technology Asia Pacific 2010 Revenue by End Market 2010 Revenue % by Geography Food & 6% 17% Beverage 49% 7% 42% 12% Power & Industrial Energy 42% 9% 16% Food & Beverage is our Largest End Market in Asia Pacific; China Represents Largest Regional Market May 2011 23
Slide 24: China Manufacturing Development
China Manufacturing Development Xidu Campus: 34k Square Meters Conslidated Legacy Flow Assembly from Minhang District into Xidu Consolidated APV Beijing into Xidu Acquired APV’s Xidu & Beijing Manufacturing Assembly & light manufacturing in Minhang District 2007 2008 2009 2010 2011 Note: Arrow is fo
Slide 25: Asia Pacific Localization
Asia Pacific Localization 2010 Revenue by Customer* Advancing localization efforts Indigenous Customer 75% Continue to develop local talent to support growth Leverage recent food & beverage Multi- acquisitions National Customer 25% Other strategic actions *Management estimate More than 75% of Sales
Slide 26: Asia Pacific Localization Progress
Asia Pacific Localization Progress (Food & Beverage Systems) Customer benefits: Asia Pacific Quicker time to market Localization Progress Increased production consistency Reduced cost of ownership Material 100% Engineering Reduced level of training 90% Assembly 80% 70% Key results: 60% 50% Average l
Slide 27: Forecasted Growth Rates of UHT Milk
Forecasted Growth Rates of Ultra High Temperature (UHT) Milk 2010 to 2015 CAGR 5.5% to 11% 3.5% to 5.4% 2.1% to 3.4% 0.0% to 2.0% -0.1% to -5.0% data not available Source: Euromonitor International; Retail Value, US$, Fixed 2010 Ex. Rates Sales of Long-Life UHT Milk Expected to Grow Fastest in Asia
Slide 28: Asia Pacific Food & Beverage Systems
Asia Pacific Food & Beverage Systems Recent Large Project Awards 2010 Systems Revenue Beverages 27% Dairy Products 62% Brewery 5% Other 6% Dairy Products Beverages/Brewery Other Butter Blend System Dairy Markets Have Driven Growth in Asia Pacific Food & Beverage Processing Systems May 2011 28
Slide 29: Flow Technology Summary
Flow Technology Summary Revenue has doubled since 2005 Nearly 50% of Flow business is in the global Food & Beverage market Global presence has increased: Asia Pacific: 25% of 2010 revenue Emerging markets: 30% of 2010 revenue Expanding local capabilities to support regional markets Flow Technology S
Slide 30: Cross Segment Collaboration
Cross Segment Collaboration >$100m in New Orders Thermal Equipment Flow Technology & Services recognized opportunity to awarded serve customers with broader 5 dry cooling projects SPX technology offering with Flow Technology’s Asian EPC customers introduced Asian EPC customers projects are in the Mi
Slide 31: Global Dry Cooling
Global Dry Cooling INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 31
Slide 32: Power Plant Technologies
Power Plant Technologies Power Generation Plant Goal Natural Gas Power Plant in Mexico Coal Fired Power Plant in Europe Natural Gas Nuclear Coal-Fired Solar Geothermal Wet & Dry Stationary Heat Rotating Heat Polution Control Process Large Power Cooling Systems Exchangers Exchangers Systems Solutions
Slide 33: Dry Cooling Overview
Dry Cooling Overview SPX Installed Base Revenue 19 GW 29 GW $390 $410 $389 $391 ~$390 $334 $255 43 GW 2005 2006 2007 2008 2009 2010 2011E Note: 2011E as of 5/04/2011 SPX is a Leading Global Supplier of Dry Cooling Systems; Over 40 Years of Dry Cooling Experience May 2011 33
Slide 34: Power Plant Cooling Options
Power Plant Cooling Options Once Through Cooling Evaporatve Cooling Dry Cooling direct pull of water from an Closed loop, with an open closed loop air cooled adjacent body of water circuit cooling tower condensor system (no cooling tower) Primary Advantages: Primary Advantages: Primary Advantages: e
Slide 35: Power Plant Cooling Options
Power Plant Cooling Options Evaporative Cooling Dry Cooling Coal-Fired Power Plant in the United States Natural Gas Power Plant in the Middle East Coal-Fired Power Plant in the United States Coal-Fired Power Plant in South Africa SPX Offers a Broad Range of Evaporative and Dry Cooling Solutions Dry
Slide 36: Primary Dry Cooling Technologies
Primary Dry Cooling Technologies Air Cooled Condensor Indirect Dry Cooling Hexacool primarily used in large primarily used in large primarily used in small coal and gas power plants coal power plants biomass power plants also suitable for solar and combines dry cooling with a modular design provides
Slide 37: Dry Cooling End Market Breakdown
Dry Cooling End Market Breakdown 2009-2010 Revenue by End Market Coal Plants 60% Gas Plants Natural Gas Power Plant in the United States 33% Biomass 7% Coal-Fired Power Plant in China Emerging Markets Have Favored Coal Fired Power Generation; Natural Gas Expected to Increase as a % of Revenue in 201
Slide 38: Dry Cooling Projects >$15m in Q1 Ending Backlog
Dry Cooling Projects >$15m in Q1 Ending Backlog Natural gas (2) 4 4 Natural gas (3) Solar Coal Coal >50% of current projects are for natural gas power plants 2 Coal Natural gas 3 Current Projects Illustrate Global Capabilities and Diverse Power Generation Offerings May 2011 38
Slide 39: Dry Cooling Operating Locations
Dry Cooling Operating Locations Engineering Manufacturing Brussels Project Management Germany Hungary Italy Zhangjiakou New Jersey Beijing Tianjin South Africa Global Capabilities Makes SPX Dry Cooling an Attractive Partner for Global Customers May 2011 39
Slide 40: Power Generation Infrastructure Investment Needs
Power Generation Infrastructure Investment Needs ($ billions) China $2,222 Western Europe $1,774 North America $1,624 Other Asia Pacific $1,278 India $967 Eastern Europe $665 Latin America $403 Power Infrastructure Investment 2010-2035 Power Infrastructure Investment 2010-2020 Middle East $358 Afric
Slide 41: Power Plant Age and New Capacity Projections
Power Plant Age and New Capacity Projections Projected Power Generation Additions (GW) Power Plant Age in 2008 2010 - 2020 2020 - 2030 2010 - 2020 2020 - 2030 322 520 498 729 Developed Markets Emerging Markets 38% 39% 62% 61% 2010 - 2020 2020 - 2030 1st Half of Life 190 282 2nd Half of Life 2010 - 2
Slide 42: Dry Cooling Addressable Opportunities
Dry Cooling Addressable Opportunities # of Worldwide Dry Cooling Projects at Power Plants >250 Mega Watts Typical project length: 18-24 months Competitive global marketplace Timing of projects difficult to predict 47 46 46 39 37 39 29 28 29 24 23 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 43: Projected Dry Cooling Regional Trends
Projected Dry Cooling Regional Trends 2011 to 2014 Proposal Pipeline Projected regional trends: Expect China to continue to be a China meaningful, competitive market 31% opportunity India, the Middle East and South America appear to be attractive growth regions EMEA Americas Expect North American an
Slide 44: SPX Dry Cooling Summary
SPX Dry Cooling Summary Dry Cooling SPX is a leading global supplier of dry cooling with over 40 years of experience Applications include gas, coal, solar, and biomass power plants as well as petro-chemical and other large, industrial facilities Dry cooling technology requires >95% less water than t
Slide 45: Executive Summary
Executive Summary INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 45
Slide 46: Executive Summary
Executive Summary ($ billions; except per share data) peak revenue & EPS achieved in 2008 Medium Term Growth Drivers Revenue $5.8 Cyclical recovery, particularly in power- EPS* related businesses ~$5.5 $4.8 $4.9 Expansion in large power transformers $4.5 $6.53 Expansion in food & beverage systems $3
Slide 47: Appendix
Appendix INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 47
Slide 48: 2006 to 2010 Adjusted EPS
2006 to 2010 Adjusted EPS 2006 2007 2008 2009 2010 GAAP EPS from continuing operations $ 3.74 $ 5.33 $ 4.68 $ 0.95 $ 3.86 refinancing charges - - - - 0.33 asset impairments - 0.05 2.21 3.40 - tax benefits (0.85) (0.59) (0.47) (0.43) (0.57) legal matters 0.27 0.06 0.11 - - other (0.08) - - - - Adjust
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