Spx Technologies, Inc. · NYSE:SPXC

Spx Technologies — Investor Presentation (March 2023)

58 slides from Spx Technologies's investor presentation, March 2023

  1. Slide 1: SPX Technologies Investor Presentation

    SPX Technologies Investor Presentation March 2023 SPX Corporation 2019 Investor Event - New York

  2. Slide 2: SPX Technologies Overview

    SPX4 TECHNOLOGIES SPX Technologies Overview

  3. Slide 3: Company Overview

    Company Overview 2022 Revenue by Region†  Headquartered in Charlotte, NC ~85% 89% ~10% 6%  Focused, market-leading platforms:  HVAC  Detection & Measurement ~5%  $1.52B Revenue*  ~3,300 employees  NYSE Ticker: SPXC * Midpoint of 2023 guidance as presented February 23, 2023 †Based on managemen

  4. Slide 4: Attractiveness of SPX for Long-Term Holders

    Attractiveness of SPX for Long-Term Holders Attractive Core Well positioned key platforms in growth markets Favorable long-term secular trends and business mix; Growth growth initiatives in early innings Cash Flow Solid Free Cash Flow Conversion Business System Consistent repeatable process to drive

  5. Slide 5: Strong Product Offerings and Attractive Market Dynamics

    Strong Product Offerings and Attractive Market Dynamics 2022 2022 REVENUE FROM REPLACEMENT SALES† ADJUSTED REVENUE EBITDA MARGIN* ~2/3  Cooling towers  Refrigeration  Engineered air movement $914m mid-teens 2022 REVENUE FROM #1 OR #2 MARKET POSITION†  Process Cooling CINCINNATI FAN  Boilers  E

  6. 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

  7. Slide 7: 2023+ Initiatives

    2023+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service Robotics SEALITE Digital ECS CINCINNATI FAN Sourcing AI ITL Loyalty March 2023 7

  8. Slide 8: Focus on Sustainability

    Focus on Sustainability …In What We Make… Our products enable Lower Clean Connectivity Clean Safety Emissions Water Energy …And How We Make It… Core # 190 of 500 Diversity & Engagement Continuous Minimize Values Inclusion Improvement Waste March 2023 8

  9. Slide 9: Well-Positioned for Infrastructure Spending

    Well-Positioned for Infrastructure Spending  Water & Wastewater  General Construction (heavy civil, housing)  Public Transit ITL  Renewables (wind) SEALITE ECS  Telecom (5G), Airports, Ports  Institutional (K-12, gov’t, healthcare) CINCINNATI FAN  Infrastructure-centric R&D March 2023 9

  10. Slide 10: SPX 2025

    SPX4 TECHNOLOGIES SPX 2025

  11. Slide 11: SPX Strategic Portfolio Transformation Continues

    SPX Strategic Portfolio Transformation Continues Pre-Transformers Sale (2020A)1 2022A 2025 Targets Revenue $1.56B $1.46B ~$2.0B Gross margin % 31.0% ~480bps 35.8% ~+400bps ~40% Segment Income % 15.3% ~180bps 17.1% ~+300bps ~20% Adj. Operating Income % 10.9% 12.8% ~+300bps ~16% Long-term Growth % ~1-

  12. Slide 12: Focused, Market-Leading Growth Platforms

    Focused, Market-Leading Growth Platforms Detection & Measurement (~$575M)(1) HVAC (~$945M)(1) Location & Inspection ~$1.52 Billion(1) Cooling  Premium engineered niches CINCINNATI FAN  Technology / innovation focus Aids to Navigation  ~90% Market Leadership (#1 or #2) Heating  High replacement r

  13. Slide 13: SPX Long-Term Targets – Revenue

    SPX Long-Term Targets – Revenue SPX TODAY SPX TARGET 2100.0 '16-'23 CAGR ~$2.0 Billion 2000.0 1900.0 1800.0 1700.0 1600.0 ~$1.52 Billion* 1500.0 ~$1.46 Billion Process Cooling 1400.0 Process Cooling 1300.0 ~$1.22 Billion 1200.0 ~7% 1100.0 Process Cooling HVAC HVAC (~$835m)* 1000.0 HVAC 900.0 ($796m)

  14. Slide 14: 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

  15. Slide 15: Segment Overview

    Segment Overview  HVAC  Detection & Measurement

  16. Slide 16: HVAC

    SPX4 TECHNOLOGIES HVAC

  17. Slide 17: HVAC Segment Overview

    HVAC Segment Overview 2021 2022 2023E 2022 Revenue by Product Adjusted segment income* % ($ millions) $914 ~$945 Heating 2022 Cooling $752 Products Revenue Products 41% $914m 59% ~15.6% 14% 15% 2022 Revenue by Geography ~3% 2021 2022 2023E Gross Margin% 30% 30% - Adjusted EBITDA* $116 $145 - ~8% ~89

  18. Slide 18: HVAC Cooling Overview

    HVAC Cooling Overview 2022 Revenue by Product  Cooling products used in non-residential, commercial Parts & Service construction, process cooling and refrigeration applications 29% Package 2022 Cooling Revenue Towers &  Well-recognized product brands: Marley and Recold $537m Refrigeration 71%  We

  19. Slide 19: Cooling Product Examples

    Cooling Product Examples Marley NC Cooling Tower Marley MH Element Fluid Cooler Engineered Air Quality High-Value Components  High efficiency  Industrial and process cooling  Custom Fans & Blowers  Gearboxes, motors, drives  Low drift rates  High performance copper coils  Two stage filtration

  20. Slide 20: HVAC Heating Overview

    HVAC Heating Overview 2022 Revenue by Product  North American businesses with strong brands Electric Heating 2022 Products  Large installed base / established spec position 27% Boiler Systems Revenue 73% $377m  Products used in residential and non-residential markets and sold primarily through di

  21. Slide 21: Heating Product Examples

    Heating Product Examples Residential Boilers Commercial Boilers Electrical Heating Products  High efficiency natural gas  High efficiency natural gas  Standard cast iron  Standard cast iron Digital  Unique hybrid design wall heaters  Gas combi boilers Wash-down, corrosion resistant heaters Tre

  22. Slide 22: Detection & Measurement

    SPX4 TECHNOLOGIES Detection & Measurement

  23. Slide 23: Detection & Measurement Segment Overview

    Detection & Measurement Segment Overview 2022 Revenue by Product 2021 2022 2023E Adjusted segment income* % ($ millions) Aids to Navigation Location & ~$575 Long-Term (“AtoN”), CommTech, Inspection $547 Revenue 2022 $467 and Transportation Equipment Growth ~2-6% Revenue 52% $547m 48% 20% 21% ~21% 20

  24. Slide 24: Location & Inspection Overview

    Location & Inspection Overview 2022 Revenue by Product  A leading global supplier of location & inspection equipment for underground infrastructure 2022 Location Revenue Inspection 50% 50%  Global distribution / established channels $262m  Integrated hardware and software solutions 2022 Revenue b

  25. Slide 25: Location & Inspection – Key Products

    Location & Inspection – Key Products Location Equipment Inspection Equipment Full Lifecycle Infrastructure Solutions Provider for Location & Inspection Markets March 2023 25

  26. Slide 26: AtoN, CommTech, and Transportation

    AtoN, CommTech, and Transportation 2022 Revenue by Product CommTech  CommTech : A leading global supplier of spectrum monitoring, Transportation 20% 27%* communication intelligence and geolocation technologies 2022 Revenue  Aids to Navigation: Global Leader in terrestrial obstruction lighting, $28

  27. Slide 27: Aids to Navigation – Key End Markets

    Aids to Navigation – Key End Markets Terrestrial Obstruction Marine Obstruction Airfield Ground Lighting Lighting Lighting Global Leader with Full Product Range March 2023 27

  28. Slide 28: CommTech – Key Capabilities & Solutions

    CommTech – Key Capabilities & Solutions Spectrum Monitoring Communications (SMS) Intelligence NEW PIC Spectrum monitoring leader with expanding COMINT presence March 2023 28

  29. Slide 29: Transportation – Next Generation Fare Collection

    Transportation – Next Generation Fare Collection Mobile Legacy Farebox Fast Fare Farebox Fast Fare-e Ticketing Point-of-Sale e-Fare Cloud-Based Infrastructure Software Service and as a Service Support Fare Collection Suite of Products Integrated with Back-End Support; We Believe This is the New Indu

  30. Slide 30: Financial Performance & Capital Allocation

    Financial Performance & Capital Allocation

  31. Slide 31: 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

  32. Slide 32: Financial Position - Capital Structure & Liquidity Update

    Financial Position - Capital Structure & Liquidity Update ($millions) Q3 2022 Q4 2022 1.5-2.5x Short-term debt $2 $2 Current maturities of long-term debt 0 2 Long-term debt 245 243 1.3x Total Debt $247 $247 1.1x Less: Cash on hand (187) (157) 0.4x 0.3x Net Debt (Cash) $60 $90 Q3 2022 Q4 2022 Gross L

  33. Slide 33: SPX Acquisition Approach

    SPX Acquisition Approach Qualitative Quantitative  Focused on building existing platforms  Revenue transaction size $20-$200 million  Existing markets or close adjacencies (primary focus); opportunistically consider larger targets  Engineered products  Cash ROIC ≥ double digits 3-5 yrs  Attrac

  34. Slide 34: Building Strategic Platforms

    Building Strategic Platforms

  35. Slide 35: SPX Business Value Model

    SPX Business Value Model Disciplined Business System Strategic Acquisition Approach Superior Performance Strategic Organic Sales Growth (Innovation, Product Mgmt.) Organic / Inorganic SPX has acquired Revenue Growth Continuous Improvement ~$365M of revenue in ~4 years SEALITE (Lean, 80/20) Margin Ex

  36. Slide 36: Reinvesting Proceeds of Transformers Sale

    Reinvesting Proceeds of Transformers Sale ~$540m* net proceeds CAPITAL ~$320m deployed ~60% SEGMENT Low $40Ms Transformers INCOME † High $20Ms ~60% Recent Acquisitions** ~10% MARGIN High teens % +800 bps ~2% GROWTH ~4%+ ~Double • Net after-tax proceeds received for sale of Transformer Solutions (Oct

  37. Slide 37: Building Strategic Platforms – Location & Inspection

    Building Strategic Platforms – Location & Inspection Location Equipment Inspection Equipment $~100m $~10m* $~10m* $~100m* $~40m* Location & Specialized GPR Location Water & Waste Gas Utility Inspection Ferrous Locators Equipment Water Pipeline Pipeline Transformed ~$100m Equipment Inspection Inspect

  38. Slide 38: Building Strategic Platforms – Aids to Navigation

    Building Strategic Platforms – Aids to Navigation SEALITE ITL $~40-50m $~25-30m* $~30-40m* ~$18m* Marine Obstruction Airfield Ground and Terrestrial Lighting Bolt-on Terrestrial Transformed ~$40-50m Obstruction Lighting Marine Obstruction Obstruction Lighting Lighting Obstruction Lighting Business i

  39. Slide 39: Building Strategic Platforms – CommTech

    Building Strategic Platforms – CommTech ECS 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 Product/Technology Synergies Driving Substan

  40. Slide 40: Building Strategic Platforms – HVAC Cooling

    Building Strategic Platforms – HVAC Cooling CINCINNATI FAN $~430m $~15m* $~60-70m* Leading Position in Industrial Custom fans, blowers, Strengthened Industrial Packaged Cooling and Refrigeration Products and critical exhaust Field Erected Towers systems Refrigeration Solutions and Accelerated Growth

  41. Slide 41: Building Strategic Platforms – HVAC Heating

    Building Strategic Platforms – HVAC Heating Acquired Feb 2019 ~$180-200m ~$40m* ~25-30m* Leading Position in High-efficiency Residential Boilers Commercial Boilers Accelerated Growth Strategy in Commercial High Efficiency Boilers Opportunity for Core Consolidation / Product Add-Ons * Approximate ann

  42. Slide 42: Executive Summary

    SPX4 TECHNOLOGIES Executive Summary

  43. Slide 43: End Market Exposure

    End Market Exposure ~$1.46 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 28% 17% 13% 42% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 3% Gov't Regulated, Institutional, 12% 21% Office / Ret

  44. Slide 44: Executive Summary

    Executive Summary  Balanced business portfolio with attractive and diverse end market drivers  Strong balance sheet, significant capital availability, and cash generation  Effective business system and continued focus on growth accelerators, including inorganic opportunities Significant Value Cre

  45. Slide 45: Appendix

    SPX4 TECHNOLOGIES Appendix

  46. Slide 46: 2023 Guidance

    2023 Guidance* Revenue Segment Income Margin  $935-$955m  15.25%-16.0% HVAC 2022 Actual $914m 2022 Actual 14.8% Detection &  $565-$585m  20.5%-21.5% Measurement 2022 Actual $547m 2022 Actual 20.9%  $1.50-1.54b  17.0%-18.0% Total SPX 2022 Actual $1.46b 2022 Actual 17.1% Adj. Operating Income**

  47. Slide 47: Modeling Considerations – Full Year 2023

    Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $44-46.5m Long-term incentive comp $13-14m Restructuring costs $1m Interest cost ~$7m Other income/(expense), and Non-service pension benefit/(expense) $6.5-8m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OPEB

  48. Slide 48: 2023 Adjusted EPS Guidance - Key Drivers

    2023 Adjusted EPS Guidance* - Key Drivers • Favorable economic policy/infrastructure stimulus $3.55 • Accelerated project-related sales • Moderating supply chain challenges and input costs $3.43 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $3.30 • Unf

  49. Slide 49: Segment Income Phasing and Reconciliations

    Segment Income Phasing and Reconciliations 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 March 2023 49

  50. Slide 50: GAAP Reconciliation Results by Quarter

    GAAP Reconciliation Results by Quarter ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 Corporate expense (14.4) (13.6) (11.9) (20.6) (60.5) (16.6) (16.4) (17.2) (18.4) (68.6) Acquisition related and other cos

  51. Slide 51: Segment Results – 2021-2022

    Segment Results – 2021-2022 ($ millions) HVAC D&M 2021 2022 2021 2022 Revenue 752.1 913.8 467.4 547.1 Segment income 107.7 135.5 92.9 114.1 % of revenue 14.3% 14.8% 19.9% 20.9% Depreciation 8.1 9.0 9.8 6.5 Adjusted EBITDA 115.8 144.5 102.7 120.6 % of revenue 15.4% 15.8% 22.0% 22.0% March 2023 51

  52. Slide 52: 2020 Historical Reconciliation

    2020 Historical Reconciliation* Adjustments as Non-GAAP Adjusted asas As reported reported reported 12/31/2020 12/31/2020 12/31/2020 Revenue(1) 1,559.5 (4.0) 1,555.5 (2) Segment Income 203.7 34.6 238.3 Corporate expense(3) (44.8) 1.7 (43.1) Long-term incentive compensation (14.0) - (14.0) (4) Impair

  53. Slide 53: 2022 U.S. GAAP to Adjusted EPS Reconciliation

    2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 249.6 $ — $ 249.6 (1) Corporate expense (68.6) 18.2 (50.4) Acquisition related costs (2) (1.9) 1.9 — Long-term incentive compensation expense (3) (10.9) (0.8) (11.7) Amortization of intangible asset

  54. Slide 54: 2021 U.S. GAAP to Adjusted EPS Reconciliation

    2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 200.6 $ — $ 200.6 Corporate expense (1) (60.5) 8.6 (51.9) Acquisition related and other costs (2) (5.1) 5.1 — Long-term incentive compensation expense (12.8) — (12.8) Amortization of intangible asse

  55. Slide 55: U.S. GAAP to Adjusted Operating Income Reconciliation

    U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Twelve months ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Operating income (loss) $ (24.9) $ 13.9 $ 51.0 $ 73.7 Include - TSA Income (1) 0.5 0.9 2.9 0.9 Exclude: Acquisition relate

  56. Slide 56: Q4 2022 Debt Reconciliation

    Q4 2022 Debt Reconciliation ($ millions) Q4 2022 Short-term debt $ 1.8 Current maturities of long-term debt 2.0 Long-term debt 243.0 Gross debt 246.8 Plus: adjustment associated with credit agreement⁽ⁱ⁾ (1.1) Adjusted gross debt 245.7 Less: cash and equivalents (156.6) Adjusted net debt $ 89.1 ⁽ⁱ⁾In

  57. Slide 57: 2022 Adjusted EBITDA Reconciliation

    2022 Adjusted EBITDA* Reconciliation ($ millions) FY 2022 Net Income $ 0.2 Income tax provision 7.3 Interest expense 9.3 Income before interest and taxes 16.8 Depreciation and amortization 46.4 EBITDA 63.2 Adjustments: Losses on disposition of assets outside the ordinary course of business 19.6 Impa

  58. Slide 58: 2022 Adjusted Free Cash Flow Reconciliation

    2022 Adjusted Free Cash Flow Reconciliation ($ millions) FY 2022 Operating cash flow used in continuing operations $ (115.2) Capital expenditures (15.9) Free cash flow used in continuing operations (131.1) Adjustments* 228.1 Adjusted free cash flow from continuing operations $ 97.0 * Adjustments ali

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