Slide 1: SPX Technologies Q3 2022 Earnings Presentation
SPX Technologies Q3 2022 Earnings Presentation November 3, 2022 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 – Q3 2022
Executive Summary – Q3 2022 Strong 3Q results Solid performances in HVAC and D&M Reducing complexity / legacy exposure Completed Corporate Reorganization Divested all asbestos liabilities and assets Demand outlook remains healthy Organically, orders up 21% and backlog up 39% Raising
Slide 5: Q3 2022 Results Summary
Q3 2022 Results Summary ($ millions) Q3 2022 Strong organic revenue growth (~19%) HVAC and Detection & Measurement */ Margin* Solid contribution from acquistions Cincinnati Fan, ECS and ITL Robust profit and margin growth 76% growth in Adj. Operating Income* 340 bps margin* expansion O
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Resu
Slide 7: Divestiture of Asbestos Assets & Liabilities
Divestiture of Asbestos Assets & Liabilities Strengthens and simplifies enterprise Improve growth focus $139m contribution Annual EPS accretion of $0.08-$0.10 Reduce ― 100% cash conversion Reduce cash Administrative outflow burden Eliminates cash settlements Frees up resources for growth f
Slide 8: Q3 Financial Review
Q3 Financial Review Mike Reilly
Slide 9: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q3 2021 Q3 2022 GAAP EPS from continuing operations $0.30 $0.27 Amortization $0.09 $0.11 Acquisition/Transaction-related $0.08 ($0.01) Non-service pension1 $0.00 $0.05 Asbestos related2 $0.00 $0.27 Other3 ($0.03) $0.12 Adj EPS from continuing operations4 $0.44 $0.81 Q3 20
Slide 10: Adjusted Q3 2022 Results
Adjusted Q3 2022 Results ($ millions) Q3 Adjusted Results: Q3 2022 29.7% year-over-year increase: / * 19.2% organic increase with contributions from all platforms 12.4% acquisition impact (Cincinnati Fan, ECS and ITL) -1.9% currency impact from stronger USD Q3 Adjusted Segment Income* and Ma
Slide 11: Summary Q3 2022 Adjusted Segment Results
Summary Q3 2022 Adjusted Segment Results Q3 2022 Y/Y % Y/Y Change Change in Adjusted Segment Segment in Revenue Income Margin* HVAC 27.0% 130 bps Detection & Measurement 34.1% 420 bps Total SPX 29.7% +250 bps Organic 19.2% Acquisitions 12.4% Currency -1.9% *Adjusted results are non-GAAP financial me
Slide 12: HVAC Q3 2022 Results
HVAC Q3 2022 Results ($ millions) Q3 Revenue: Q3 2022 27.0% year-over-year Increase: / * 16.3% organic increase driven by growth in both Heating and Cooling 11.3% acquisition impact (Cincinnati Fan) -0.6% currency impact (Strong USD) Q3 Adjusted Segment Income* and Margin*: $9.5m increase
Slide 13: Detection & Measurement Q3 2022 Results
Detection & Measurement Q3 2022 Results ($ millions) Q3 Revenue: Q3 2022 34.1% year-over-year increase: / * 24.0% organic increase with growth across all platforms 14.4% acquisition impact (ECS and ITL) -4.3% currency impact from stronger USD Q3 Adjusted Segment Income* and Margin*: $12.2m
Slide 14: Financial Position and Liquidity Review
Financial Position and Liquidity Review Mike Reilly
Slide 15: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q2 2022 Q3 2022 ($millions) Q2 2022 Q3 2022 Short-term debt $2 $2 Current maturities of long-term debt 13 0 Long-term debt 225 245 1.4x 1.3x Total Debt $240 $247 Less: Cash on hand ** (193) (187) 0.3x 0.3x Net Debt $47 $60 Gross
Slide 16: 2022 Guidance (Updates in Bold)
2022 Guidance (Updates in Bold) Revenue Segment Income Margin $900-$920m (+$13m) ~14.0% HVAC ($885-$910m prior) (14.0% prior) Detection & $525-$545m (+$5m) 20.0%-21.0% Measurement ($520-$540m prior) (19.0-21.0% prior) $1.43-$1.47 (+$18m) ~16.5% Total SPX Adjusted ($1.41-$1.45B prior) (16
Slide 17: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 18: Market Commentary
Market Commentary Market Comments Cooling: ‒ Continued solid demand in Americas / Asia ‒ Labor constraints moderating Heating: ‒ Demand remains healthy / No material order cancellations ‒ Production constraint challenges easing Run-rate: ‒ Broad strength in Location & Inspection ‒ Regional var
Slide 19: Executive Summary
Executive Summary Strong Q3 results Eliminated legacy asbestos exposure Increasing full-year 2022 guidance Remain well-positioned for growth Progressing Towards “SPX 2025” Targets November 3, 2022 19
Slide 20: Questions
Questions
Slide 21: Appendix
Appendix
Slide 22: Modeling Considerations – Full Year 2022
Modeling Considerations – Full Year 2022 Metric Considerations Corporate expense $49-51m Long-term incentive comp $11.5-12.5m Restructuring costs $1m Interest cost ~$8m Other income/(expense), and Non-service pension $5-6m benefit/(expense) Tax rate 21-22% Capex $13-15m Cash cost of pension + OPEB $
Slide 23: End Market Exposure
End Market Exposure ~$1.45 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 27% 19% 13% 41% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 4% Gov't Regulated, Institutional, 12% 21% Office / Ret
Slide 24: Acquisition History
Acquisition History Business Date Segment Platform Revenue* Schonstedt 03/01/2018 D&M Location & Inspection ~$10m Cues 06/07/2018 D&M Location & Inspection ~$100m Sabik 02/01/2019 D&M AtoN ~$25m-$30m SGS Refrigeration 07/08/2019 HVAC Cooling HVAC ~$15m Patterson-Kelley 11/13/2019 HVAC Heating HVAC ~
Slide 25: 2022 Adjusted EPS Guidance - Key Drivers
2022 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $2.95 • Accelerated project-related sales • Moderating supply chain challenges and input costs $2.90 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $2.85 • Unfa
Slide 26: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations 34% 31% 23% 23% 23% 22% 24% 21% Q1 Q2 Q3 Q4 2020 2021 November 3, 2022 26
Slide 27: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD Segment income $ 42.3 $ 37.3 $ 32.9 $ 61.4 $ 173.9 $ 30.2 $ 48.1 $ 56.6 $ 134.9 Corporate expense (14.4) (13.6) (11.9) (20.6) (60.5) (16.6) (16.4) (17.2) (50.2) Long-term incentive compensation expense (2.7) (3
Slide 28: Adjusted SPX 2021 Results by Quarter
Adjusted SPX 2021 Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2021 Segment Income $ 42.3 $ 37.3 $ 32.9 $ 61.4 $ 173.9 Exclude: One time acquisition related costs 0.7 0.9 3.3 0.3 5.2 Exclude: Intangible amortization 4.0 6.5 5.5 5.6 21.6 Adjusted Segment Income $ 47.0 $ 44.7 $ 41.7 $ 67.3 $ 200.7 Oper
Slide 29: Adjusted SPX 2022 YTD Results by Quarter
Adjusted SPX 2022 YTD Results by Quarter ($ millions) Q1 Q2 Q3 2022 Segment Income $ 30.2 $ 48.1 $ 56.6 $ 134.9 Exclude: One time acquisition related costs 0.1 0.9 0.1 1.1 Exclude: Intangible amortization 9.3 7.1 6.7 23.1 Adjusted Segment Income $ 39.6 $ 56.1 $ 63.4 $ 159.1 Operating Income from Con
Slide 30: HVAC Segment Results – 2021-2022
HVAC Segment Results – 2021-2022 ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 9 Months Revenue $175.6 $185.4 $179.3 $211.8 $752.1 $193.1 $218.7 $227.8 $639.6 GAAP Segment Income 22.3 25.9 23.0 33.0 104.2 15.2 25.6 30.9 71.7 Exclude: Acquisition related costs - - - 0.1 0.1 - - - - Exclude: Intangib
Slide 31: D&M Segment Results – 2021-2022
D&M Segment Results – 2021-2022 ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 9 Months Revenue $111.6 $111.2 $106.4 $138.2 $467.4 $114.0 $135.3 $142.7 $392.0 GAAP Segment Income 20.0 11.4 9.9 28.4 69.7 15.0 22.5 25.7 63.2 Exclude: Acquisition related costs 0.7 0.9 3.3 0.2 5.1 0.1 0.9 0.1 1.1 Exclud
Slide 32: Q3 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q3 2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted (1) ($ millions) Segment income $ 56.6 $ 6.8 $ 63.4 (2) Corporate expense (17.2) 5.0 (12.2) (3) Long-term incentive compensation expense (2.1) (0.8) (2.9) Special charges, net — — — Other operating expense, net — — — Operatin
Slide 33: Q3 2021 U.S. GAAP to Adjusted EPS Reconciliation
Q3 2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted Segment income (1) $ 32.9 $ 8.8 $ 41.7 ($ millions) (2) Corporate expense (11.9) 0.9 (11.0) Long-term incentive compensation expense (3.4) — (3.4) (3) Impairment of goodwill and intangible assets (24.3) 24.3 — Special charges
Slide 34: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Nine months ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 Operating income $ 37.3 $ 17.7 $ 75.9 $ 59.8 (1) Include - TSA Income 0.6 — 2.4 — Exclude: (2) Acquisition related and other costs (
Slide 35: Q3 2022 Non-GAAP Reconciliation - Organic Revenue
Q3 2022 Non-GAAP Reconciliation - Organic Revenue Three months ended October 1, 2022 Detection & HVAC Measurement Consolidated Net Revenue Growth 27.0 % 34.1 % 29.7 % Exclude: Foreign Currency (0.6) % (4.3) % (1.9) % Exclude: Acquisitions 11.3 % 14.4 % 12.4 % Organic Revenue Growth 16.3 % 24.0 % 19.
Slide 36: U.S. GAAP Adjusted Segment Income Reconciliation
U.S. GAAP Adjusted Segment Income Reconciliation ($ millions) CONSOLIDATED SPX: Three months ended Nine months ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 Total segment income $ 56.6 $ 32.9 $ 134.9 $ 112.5 (1) Exclude: Acquisition related costs (0.1) (3.3) (1.1) (4.9) (2) E
Slide 37: U.S. GAAP to Adjusted Segment Income Reconciliations
U.S. GAAP to Adjusted Segment Income Reconciliations ($ millions) HVAC REPORTABLE SEGMENT: Three months ended October 1, 2022 October 2, 2021 Segment income $ 30.9 $ 23.0 (2) Exclude: Amortization expense (2.2) (0.6) Adjusted segment income $ 33.1 $ 23.6 as a percent of segment revenues 14.5 % 13.2
Slide 38: Q3 2022 Debt Reconciliation
Q3 2022 Debt Reconciliation ($ millions) Q3 2022 Short-term debt $ 1.9 Current maturities of long-term debt 0.4 Long-term debt 244.6 Gross debt 246.9 plus: other adjustment (1) (1.2) Adjusted gross debt 245.7 less: cash and equivalents (2) (186.7) Adjusted net debt $ 59.0 1) Includes unamortized deb
Slide 39: Q3 2022 Consolidated Adjusted EBITDA Reconciliation
Q3 2022 Consolidated Adjusted EBITDA* Reconciliation Last 12 ($ millions) Months ended October 1, 2022 Net Income attributable to SPX Corporation common shareholders $ 33.9 Income tax provision 3.5 Interest expense 9.5 Income before interest and taxes 46.9 Depreciation and amortization 47.4 EBITDA 9
Slide 40: Q3 2022 Adjusted Free Cash Flow Reconciliation
Q3 2022 Adjusted Free Cash Flow Reconciliation ($ millions) Q3 2022 Operating cash flow from continuing operations $ (5.9) Capital expenditures (4.0) Free cash flow from continuing operations (9.9) Adjustments* 7.9 Adjusted free cash flow from continuing operations $ (2.0) * Adjustments align with o