Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Presentation (January 2010)
113 slides from Spx Technologies's investor presentation, January 2010
Slide 1: 2010 Investor Presentation
2010 Investor Presentation GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 1
Slide 2: Introductions
Introductions Chris Kearney Chairman, President and Chief Executive Officer Patrick O’Leary EVP and Chief Financial Officer Scott Sproule VP of Finance Ryan Taylor Director of Investor Relations January 2010 2
Slide 3: Forward-Looking Statements
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 state
Slide 4: Agenda
Agenda 1) SPX Overview 2) 2010 Financial Targets 3) Capital Structure and Liquidity 4) Gl b l M Global Market k tTTrends d 5) Questions January 2010 4
Slide 5: Introductory Comments
Introductory Comments GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 5
Slide 6: SPX Overview
SPX Overview Global, multi-industry manufacturer Strategically Focused on of highly specialized, engineered 3 Global Markets solutions infrastructure process equipment 2010E revenue: ~$5b power & energy food & beverage ~16k global employees: • ~20% 20% in China Operations in over 40 countrie
Slide 7: Strategic Transformation
Strategic Transformation 2004 Revenue Mix INFRASTRUCTURE Security Cooling Systems, Heat Exchangers, EST, VANCE Power Transformers, HVAC Equipment 24% 10% Compaction Machinery BOMAG 9% Exited $5.7b 15% DIAGNOSTIC TOOLS Focus Service Solutions Businesses Auto Components CONTECH, FILTRAN 8% for Growth
Slide 8: Capital Allocation
Capital Allocation 2005 tto 2009E Capital Allocation Share Repurchases 44% Acquisition criteria: Strategic to three core end markets Dividends 7% Accretive to earnings within the first $4.6B 12 months Generate returns above SPX SPX’ss cost of Acquisitions 20% capital within a reasonable time
Slide 9: Strategic Acquisitions
Strategic Acquisitions infrastructure process equipment diagnostic di ti tools t l power & energy food & beverage vehicle service 2010 ~$65m 2008 ~$10m Year Acquired: 2009 Annual Revenue: ~$125m $125m Johnson J h Controls C t l European Diagnostics 2007 ~$80m 2007 ~$800m $800m 2007 ~$25m Johnson Pum
Slide 10: Key End Markets
Key End Markets 2009E Pro Forma Revenue by End Market Primary Demand Drivers General Industrial Growing g world p population p with 16% emerging middle class Infrastructure Food & Beverage 55% Advancement of developing countries 14% Replacement of aged infrastructure Tools & Diagnostics 15%
Slide 11: Primary Technology Offerings
Primary Technology Offerings infrastructure process equipment diagnostic di ti tools t l power & energy food & beverage vehicle service Cooling Systems Engineered Components OEM Professional Heat Exchangers Skidded Systems Aftermarket Professional Power Transformers Full-Line Full Line Systems After
Slide 12: Revenue by Region
Revenue by Region 2004 2009E 2004 2009E $920 $1,320 $2,380 $2,900 20% 27% 49% 70% 2004 2009E $305 $700 7% 14% 2004 2009E $20 $70 <1% 2% 2004 2009E $100 $370 2% 8% Note: Data from continuing operations; 2009E as of 10/28/2009 51% of 2009E Revenue Outside North America; 22% of Revenue from Sales Into
Slide 13: Global Business Systems and Services
Global Business Systems and Services Developing p g Market New Product Expansion Development Placeholder Placeholder text text LEAN Placeholder Operational Placeholder Supply-Chain Management Improvements text Excellence text Placeholder Placeholder text text IT Infrastructure Organizational and Imp
Slide 14: Global Business Systems and Services
Global Business Systems and Services Manchester, UK 2010 / 2011 Charlotte, NC Shanghai 2002 2007 Migrating to Regional Shared Service Centers January 2010 14
Slide 15: Financial Performance
Financial Performance R Revenue &S Segmentt IIncome M Margins i Organic (1%) to 6% 10% 10% 6% ~(15%) Revenue (6%) Global Recession ($ billions) $5.9 ~$4.8 $4 8 ~$4 9 ~$4.9 $4.6 $3.9 $3.5 13.7% 13 2% 13.2% 12.2% 12.2% 11.4% 11.8% 2005 2006 2007 2008 2009E 2010E N t D Note: Data t ffrom continuing ti
Slide 16: 2010 Financial Targets
2010 Financial Targets GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 16
Slide 17: Mid to Late Cycle Exposure
Mid to Late Cycle Exposure 2010E Revenue by Cycle Key mid to late cycle products: • Cooling systems (power generation) • Heat exchangers (power generation) Mid to Late Cycle • Power transformers (power T&D) Early Cycle • Processing systems (food & beverage) • Processing equipment (oil & gas) • OEM
Slide 18: Backlog
Backlog Year-End Backlog 2010E Revenue ($ billions) $3.4 $3.1 New Orders Expected $2.6 63% $2.0 $1.3 $4.9B 2005 2006 2007 2008 2009E (1) Delivering D li i off Backlog 37% Thermal Flow Industrial (1) 12/31/2009 backlog estimate as of 1/20/2010 N t Data Note: D t from f continuing ti i operations; ti
Slide 19: Backlog
Backlog 2009E Backlog by Geography (1) Backlog Aging (1) 2010 Americas 59% 30% EMEA Excl. South Africa 27% $3.1B $3.1B Other Asia 3% China 13% 2012 and Beyond 18% South Africa 2011 27% 23% (1) 2009E backlog estimate as of 1/20/2010 N t Data Note: D t from f continuing ti i operations; ti Test T t an
Slide 20: Kendal Power Station
Kendal Power Station Six Co-Located Power Plants, 4.1 Gigawatts; Built Between 1982 and 1993, First Unit Went Online in 1988 January 2010 20
Slide 21: South Africa, Medupi and Kusile Projects
South Africa, Medupi and Kusile Projects Eskom Build Schedule SPX Estimated Revenue Recognition Medupi p Kusile ($ millions) Year Megawatts Megawatts 2012 738 ~$260 2013 738 ~$230 $230 ~$230 2014 1,476 723 2015 738 723 2016 738 723 ~$85 ~$100 2017 1,446 2018 723 4,428 4,338 2009E 2010E 2011E 2012E 2
Slide 22: Financial Reporting Segments
Financial Reporting Segments % of 2010E Revenue % of 2010E Segment Income Thermal Flow Thermal Flow Equipment Technology Equipment Technology 35% 33% 34% 39% $4.9b Industrial Test & Products Measurement Industrial Test & 14% 18% Products Measurement 14% 13% N t D Note: Data t ffrom continuing ti i o
Slide 23: Flow Technology Product Overview
Flow Technology Product Overview 2009E Revenue by Product Engineered g Components 80% Pumps Process Regulating Butterfly Valves Valves Valves Homogenizers Mixers Skidded and Full-Line Full Line Systems 20% Note: Data from continuing g operations p C Compressors H tE Heat Exchangers h Diverse Offerin
Slide 24: Flow Technology Revenue Breakdown
Flow Technology Revenue Breakdown 2009E P Pro F Forma 2009E P Pro F Forma Revenue by End Market Revenue by Region Food & Beverage Americas 39% 35% General Mining 5% Industrial 24% EMEA Chemical 41% 8% Asia- Power Pacific Generation Oil & Gas 24% 9% 15% N t D Note: Data t ffrom continuing ti i operat
Slide 25: Regional Re-Organization
Regional Re-Organization Americas: EMEA: 35% of 41% of ‘09E Sales ’09E Sales Asia-Pac: 24% of ’09E Sales N t D Note: Data t ffrom continuing ti i operations, ti pro forma f for f Gerstenberg G t b Schroeder S h d acquisition; i iti 2009E estimate ti t as off 1/20/2009 Globally Integrating Operations
Slide 26: Gerstenberg Schroeder
Gerstenberg Schroeder Revenue by Region 2008 revenue: ~$65m Europe 49% A leading global manufacturer of food processing equipment Products include scraped surface heat exchanger technology and emulsifying ROW equipment 12% Americas 24% Installations in 120 countries Asia 15% Revenue by Produ
Slide 27: Flow Technology: 2010 Financial Targets
Flow Technology: 2010 Financial Targets ($ millions) Revenue & Segment Income Margins 12/31/2009E backlog: $567 $2,000 16.4% $1,999 17% 80% of business is short-cycle (2%) to $1 800 $1,800 $1 645 ~$1,645 +3% 16% 3% acquisition i iti growth: th $1,600 15% 15.6% • 30 points dilutive to margins $
Slide 28: Thermal Equipment Product Overview
Thermal Equipment Product Overview 2009E Pro Forma Revenue by Product Personal Comfort Heating Dry Cooling 16% 43% Cooling Systems Heat Exchangers & 50% Pollution Poll tion Control Systems S stems 34% Evaporative Cooling 57% Stationary Heat Exchangers Regenerative Preheater Evaporative Cooling Syste
Slide 29: Thermal Revenue Breakdown
Thermal Revenue Breakdown 2009E P Pro F Forma 2009E P Pro F Forma Revenue by End Market Revenue by Region Power Generation 67% Americas EMEA 43% 45% Industrial 8% HVAC Asia- 25% Pacific 12% Note: Data from continuing operations, pro forma for SPX Heat Transfer Inc. acquisition Significant Global Pre
Slide 30: SPX Heat Transfer Inc.
SPX Heat Transfer Inc.: 2009E Sales by Region Acquired in December 2009 Based in Tulsa, Oklahoma N th North America A leading North American supplier of heat transfer 82% technology into the power generation industry Installed base of more than 10 10,000 000 units $125m ROW 4% South America
Slide 31: Thermax SPX Energy Technologies LTD. (India J/V)
Thermax SPX Energy Technologies LTD. (India J/V) SPX Products Included in the Joint Venture Thermax is a leading provider of equipment into the power generation market in India and Southeast Asia Thermax holds 51% interest, SPX holds 49% interest Joint venture leverages existing relationship:
Slide 32: Thermal Equipment: 2010 Financial Targets
Thermal Equipment: 2010 Financial Targets ($ millions) Revenue & Segment Income Margins 12/31/2009E backlog: $2B $2,000 +5% to 15% $1,800 $1,561 $1,690 ~$1,575 10% 14% 48% or $940m of the backlog $1,600 13% expected to be converted to $1,328 $1,400 12% revenue in 2010 12.1% $1,200 11% $1,000 ~11
Slide 33: Test & Measurement Product Overview
Test & Measurement Product Overview 2009E Revenue by Product Electronic Diagnostic Tools 38% Electronic Diagnostic Tool Electronic Diagnostic Tool Fare Box Hard Systems T l Tools 9% 38% Information & Services 15% Fare Box System Cable and Pipe Locator Note: Data from continuing g operations p Provid
Slide 34: Test & Measurement Revenue Breakdown
Test & Measurement Revenue Breakdown 2009E Revenue 2009E Revenue by End Market by Region Vehicle Tools & Diagnostics Asia- 84% Pacific 8% Americas A i 59% Telecom 7% EMEA Transportation 33% 9% Note: o e Data a a from o co continuing u g ope operations a o s Leading Global Provider of Essential Tools
Slide 35: Service Solutions Overview
Service Solutions Overview 2009E Revenue by Market Key market drivers: Aftermarket OEM & D OEMs Dealers l 37% 63% New vehicle platforms Increasing electronic complexity of vehicles 2009E Revenue by Product Environmental regulations Electronic Diagnostics Hard Tools 46% 36% Emerging global ma
Slide 36: Service Solutions Footprint at End of 2009
Service Solutions Footprint at End of 2009 Manufacturing Distribution Sites closed since 2008: Tempe,p Arizona Southfield, Michigan Allen Park, Michigan Houston, Texas Warren, Michigan Yantai, China Park Drive, Minnesota Ingolstadt, Germany Frankfurt, Frankfurt Germany Sites reconf
Slide 37: Service Solutions OEM Customers
Service Solutions OEM Customers 2010E Revenue by Customer Select OEM Customers GM, Ford, Aftermarket Fiat/Chrysler 37% 18% VW, BMW, Nissan Honda, Toyota 17% Other OEMs 28% SPX is a Global Provider to OEMs and Their Dealer Networks; Well Positioned to Grow Globally with Many OEMs January 2010 37
Slide 38: SPX Service Solutions Products & Services
SPX Service Solutions Products & Services Integrated Solutions for Service Readiness, Vehicle Diagnosis and Repair Enabling Technicians to Diagnose and Repair Customer Vehicles Quickly and Accurately January 2010 38
Slide 39: Select OEM Program Examples
Select OEM Program Examples SPX Role: Global Diagnostics SPX Role: Global Service Readiness • Vehicle Communications Interface • Global Tools & Equipment • Next Generation Software Platform • Diagnostic Information • Diagnostics Authoring • Warranty Optimization SPX Role: Global Service Readin
Slide 40: Test & Measurement: 2010 Financial Targets
Test & Measurement: 2010 Financial Targets ($ millions) Revenue & Segment Income Margins $1,500 20% Primarily short cycle business $1 300 $1,300 18% $1,050 $1,080 $1,100 16% Expect mid to high single digit $1,100 +5% to 14% organic growth driven by: 14.2% 10% $900 ~$800 12% • Aftermarket recover
Slide 41: Industrial Products Overview
Industrial Products Overview P Power T Transformers f H d li T Hydraulic Tools l 2009E Revenue by Product Power Transformers 47% Aerospace Other Components Aerospace Components Broadcast Antennas 10% 13% Crystal Growers Hydraulic 6% Broadcast Tools Equipment 13% 11% Note: Data from continuing g oper
Slide 42: Industrial Revenue Breakdown
Industrial Revenue Breakdown 2009E Revenue 2009E Revenue by End Market by Region Power & Energy Americas 57% 86% Aerospace 12% Other Infrastructure General 17% EMEA Industrial Asia- 7% 14% Pacific 7% Note: Data from continuing g operations p 86% North American Revenue Base; Power and Energy Infrastr
Slide 43: Power Transformers: US Market
Power Transformers: US Market SPX Power Transformer Revenue ($ millions) $500 $420 ~$375 $290 ~$250 2006 2007 2008 2009E 2010E N t 2009E as off 10/28/2009 Note: Expecting Revenue to Decline by 33% in 2010 Driven by Reduced Volume and Pricing January 2010 43
Slide 44: Industrial Products: 2010 Financial Targets
Industrial Products: 2010 Financial Targets ($ millions) Revenue & Segment Income Margins 12/31/2009E backlog: $393 $1,200 30% $1 067 $1,067 $1,000 80% or $315m of the backlog $865 25% ~$800 (11%) to expected to be converted to $742 $800 23.0% (16%) revenue in 2010 20% $600 ~19.0% 17.3% 15% Re
Slide 45: 2010 Financial Targets by Segment
2010 Financial Targets by Segment 2010E % Change 2010E Segment in Total Revenue Income % Key Drivers Gerstenberg Schroeder acquisition Flow Late cycle oil & gas and mining markets (2%) to 3% 11.5% to 12.5% down year-over-year Technology Short cycle order trends SPX Heat Transfer Inc. acquisi
Slide 46: Restructuring
Restructuring ($ millions) 2009E R Restructuring t t i E Expense Test & Flow Measurement Technology 41% 39% 2008 & 2009 restructuring: • 16 facility closures ~$70 ~$70 • 15% global employee reduction Industrial Thermal Products Equipment 4% 16% ~$35 $17 2010 restructuring: Acquisition integrat
Slide 47: 2010 Consolidated Financial Targets
2010 Consolidated Financial Targets 2010 ($ millions, except per share data) Target Range Comments Revenue $4,800 to $5,025 Organic: (1%) to (6%) FX: +1% to 2% Acquisition: +3% to 4% Segment Income Margin 10.0% to 11.0% Earnings Per Share $2.90 to $3.30 (15%) to (25%) decline EPS Mid-Point: $3.10 Fr
Slide 48: 2010 Q1 Targets
2010 Q1 Targets Q1 2009 Q1 2010E ($ millions, except per share data) R Revenue $1 160 $1,160 (6%) tto (9%) Segment Income $ $126 $87 to $92 Segment Income % 10.9% 8.1% to 8.5% EPS $0.77 $0.20 to $0.30 Note: Data from continuing g operations p Targeting Q1 EPS to be Between $0.20 and $0.30 Per Share
Slide 49: 1H vs. 2H EPS Analysis
1H vs. 2H EPS Analysis EPS as a % of Full Year 2010 1H vs. 2H Drivers Thermal Equipment: • South Africa projects weighted to 2H • Personal comfort heating businesses 57% 59% seasonally stronger in 2H 66% 64% ~70% 70% Test & Measurement: • OEM programs for 2011 model year introductions expected p
Slide 50: 2010 Q1 and Full Year EPS Bridge
2010 Q1 and Full Year EPS Bridge Q1 Full Year 2009 earnings g per p share $0.76 $3.90 * Flow, Thermal, & Test & Measurement ($0.09) $0.05 Industrial Products & Services ($0.47) (1.06) Net change in segment income ($0.56) ($1.00) Reduced special charges $0.07 $0.47 Increased pension expense ($0.06) (
Slide 51: 2010 Full Year Guidance
2010 Full Year Guidance Potential Positive Impacts Stronger organic revenue Lower tax rate Earnings Per Share: Foreign exchange fluctuations Raw material cost changes $2.90 to $3.30 Acquisitions / share repurchases Potential Negative Impacts Free Cash Flow: Softer organic revenue $160m t
Slide 52: Capital Structure & Liquidity
Capital Structure & Liquidity GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 52
Slide 53: Capital Structure
Capital Structure Ending Q3 2009 Recapitalized in 2005 Capital Structure Refinanced $2b global credit facility in 2007: – $600m revolver Debt 37% Equity – $$750m term loan 63% – $950m guarantee facility – 2012 maturity Issued $500m senior notes in 2007: – 2014 maturity Minimal debt payments
Slide 54: Capital Allocation
Capital Allocation Gross Capital Leverage Allocation Focus Debt to EBITDA* 2.3x > 2.0x Debt reduction 1.9x 1 6x 1.6x 1.8x Strategic acquisitions 1.1x 1.3x < 2.0x 2 0x Share repurchases 2007 2008 2009* Net Leverage Gross Leverage Target gross leverage range: 1.5x to 2.0x *Gross G oss leverage
Slide 55: Projected Liquidity
Projected Liquidity ($ millions) Amount 2009E Estimated cash on hand at 12/31/2009 $523 $ Available, committed credit lines 421 Total 12/31/2009 Estimated Availability $944 2010E Projected 2010 free cash flow $180 Minimum remaining debt payments (75) Expected dividend payments (50) Projected 12 Mont
Slide 56: Global Market Trends
Global Market Trends GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 56
Slide 57: Key End Markets
Key End Markets 2009E Pro Forma Revenue by End Market Primary Demand Drivers General Industrial Growing g world p population p with 16% emerging middle class Infrastructure Food & Beverage 55% Advancement of developing countries 14% Replacement of aged infrastructure Tools & Diagnostics 15%
Slide 58: Population Growth and Emerging Middle Class
Population Growth and Emerging Middle Class (billions) Middle Class 1.2 +1.0 Billion Growth 2.2 3.3 +0.9 Billion Urbanized Growth 4.2 6.7 +0.9 Billion World Population 7.6 2020 2008 Source: Division of the Department of Economic and Social Affairs of the United Nations Secretariat; World Bank Develo
Slide 59: Economically Active Population Growth 2008 to 2030
Economically Active Population Growth 2008 to 2030 Predicted change in the economically active population Predicted size of economically between 2008 and 2030 active population in 2030 (millions) Japan -16% 1000 India +60% 900 Russia -15% 15% 800 700 600 Germany -11% 500 400 Italy -4% 300 China +8%
Slide 60: Per Capita Income by Region 2007 - 2030
Per Capita Income by Region 2007 - 2030 Africa 1.6% India India 5.2% % CAGR 2030 2007 Other Asia 2007-2030 2.4% Latin America 1.8% China China 5.5% Middle East 2.5% Eastern Europe 3 5% 3.5% Developed Pacific 1.3% Western Europe 1.2% North America 1.3% $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,0
Slide 61: GDP Forecasts by Region 2007 - 2015
GDP Forecasts by Region 2007 - 2015 Developed Pacific 2.3% Western Europe 2.3% North America 2.9% Latin America 3.1% Eastern Europe 3.3% Russia 3.3% Middle East 4.5% Africa 4.7% India India 7.0% China China 8.8% S Source: WEO 2009 C Copyright i ht OECD/IEA OECD/IEA, 2009; 2009 Table T bl 3, 3 page 6
Slide 62: Number of People Without Electricity
Number of People Without Electricity (millions) 21 5 2008 2030 1.7 1.6 195 73 o 614 489 34 13 587 698 S Source: WEO 2009 C Copyright i ht OECD/IEA OECD/IEA, 2009; 2009 Figure Fi 2.1, 2 1 page 131, 131 as modified difi d by b SPX C Corporation ti Worldwide, 1.5 Billion People Without Access to Electr
Slide 63: Undernourishment in 2009, By Region
Undernourishment in 2009, By Region (millions) Asia & the Pacific: 642 Developed Countries: 15 Near East & North Africa: 42 L ti America Latin A i & the th CCaribbean: ibb 53 Sub-Saharan Africa: 265 S Source: Food F d and dAAgriculture i lt O Organization i ti off th the U United it d N Nations; ti
Slide 64: Regulatory Environment
Regulatory Environment U.S. standards: CAFE & EP: Europe: 20-20 by 2020 SPX opportunity: SPX opportunity: • Diagnostic g tool programs p g • Renewable ppower infrastructure • Aged infrastructure upgrades Japan: p subsidies for solar SPX opportunity: • Solar power infrastructure China:
Slide 65: Power & Energy Infrastructure
2009E Pro Forma Revenue by End Market Infrastructure 55% $2B Power & Energy 76% P Power & Energy E Infrastructure I f t t GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS Note: Data from continuing operations; 2009E as of 10/28/2009 January 2010 65
Slide 66: World Electricity Consumption
World Electricity Consumption S Source: WEO 2009 C Copyright i ht OECD/IEA OECD/IEA, 2009; 2009 Figure Fi 3.6, 3 6 page 158, 158 as modified difi d by b SPX C Corporation ti IEA Estimates that Global Electricity Demand Fell 1.6% in 2009, The First Contraction Since the End of World War II January 20
Slide 67: U.S. Electricity Consumption
U.S. Electricity Consumption S Source: U.S. US E Energy IInformation f ti Administration Ad i i t ti U.S. Electricity Demand Declined 3.6% in 2009; Demand Expected to Increase in 2010 and 2011 January 2010 67
Slide 68: World Electricity Generation by Fuel Source
World Electricity Generation by Fuel Source Oil Bi Biomass 2007 Other Renewables 2015 2030 Nuclear Hydro Gas Coal - 4,000 8,000 12,000 16,000 S Source: WEO 2009 C Copyright i ht OECD/IEA OECD/IEA, 2009; 2009 Figure Fi 1.14, 1 14 page 97, 97 as modified difi d by b SPX C Corporation ti World Electric
Slide 69: Global Energy Infrastructure Investment
Global Energy Infrastructure Investment ($ trillions) Cumulative Energy Energy-Supply Supply Infrastructure Investment by Region, 2008 - 2030 Coal and Biofuels Biofuels, 4% Transmission: $1 15% Gas, 20% $5 Power, Generation: $14 53% 52% $6 Oil, 23% Distribution: 33% S Source: WEO 2009 C Copyright i
Slide 70: Power Generation Capacity Additions 2008-2030
Power Generation Capacity Additions 2008-2030 China: OECD 1,326 GW, Europe: 28% 712 GW, 15% OECD North America: 4,800 4 800 698 GW, GW 15% GW Rest of World: 383 GW, 8% Africa: 181 GW, 4% India: Russia: 455 GW, 9% 201 GW, 4% Latin America: 213 GW, 4% Other Asia: Middle East: 371 GW, 8% 260 GW, 5% S S
Slide 71: Aging of Power Fleet
Aging of Power Fleet Percent of Installed Capacity (GW) US Power Industry: Reaching 40 Years of Age by Year Operational Capacity in 2009 2007 2011 50% 257 2015 Units 45% 40% (Megawatts) 119,793 484 35% Units 30% 84,734 25% 20% 15% 10% 5% 0% Americas Russia Rest of 30 to 39 Years Old 40 Years and Old
Slide 72: Aging US Transformers
Aging US Transformers Base Giga-Voltage Ampere (GVA) per Year Additions 200 180 160 alled 140 mer GVA Insta 120 100 80 Transform 60 40 20 0 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 Year S Source: Hartford H f dS Steam B Boiler il Concentration of Investmen
Slide 73: Aging US Transformers: Failure Rate Forecast
Aging US Transformers Failure Rate Forecast 4.5 4.0 3.5 sformer GVA A 3.0 2.5 2.0 Trans 1.5 1.0 0.5 0.0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2013 1964 1968 1971 1974 1977 2007 2010 S Source: Hartford f d Steam S Boiler il Rate of Failure Expected to Increase Over the Next 5 Years January 201
Slide 74: SPX Power & Energy Revenue Breakdown
SPX Power & Energy Revenue Breakdown 2009E P Power & E Energy 2009E P Power & E Energy Revenue by Market Revenue by Product Heat Exchangers / Cooling Systems Pollution Control Systems 27% Mining 30% 4% Power Oil & Gas Generation 13% 65% $2b $2b Crystal Growers Other 4% Transmission & Distribution Po
Slide 75: SPX Power Infrastructure
SPX Power Infrastructure Geo- SPX Product Offerings Coal Gas/Oil Nuclear Wind Solar Biomass Thermal Dry Cooling System Evaporative Cooling System Rotating Heat Exchanger Stationary Heat Exchanger Plate Heat Exchanger Pollution Control System Valves Pumps Filtration Equipment Crystal Growing Systems
Slide 76: SPX Power Orders >$20m in 2009 Ending Backlog
SPX Power Orders >$20m in 2009 Ending Backlog Coal: Combined Cycle: Natural Draft Dry Cooling Geothermal: Coal: Cooling Towers System Cold End System Heat Exchangers Pollution Control Systems Combined Cycle: Nuclear: Dry Cooling Coal: Squib Valves System Flue Gas for 8 plants Discharge System Natura
Slide 77: Strategic Actions in Power and Energy
Strategic Actions in Power and Energy Thermax J/V in India SPX Heat Transfer Inc. acquisition q ((Yuba)) New product introduction: • Air cooled condenser wind boost modification • Solar steam generator Modified Air Cooled Condenser • Indirect Dry Cooling Tower Solar Steam Generator Indirect Dr
Slide 78: Strategic Actions in Power and Energy
Strategic Actions in Power and Energy Power transformers: • 5 year project to develop smaller, more efficient superconducting transformer: $11m grant by the US Department of Energy • Potential large power capacity expansion: $12m U.S. Recover Act Advanced Energy Manufacturing Tax Credit Focuse
Slide 79: Process Equipment
2009E Pro Forma Revenue by End Market Food & Beverage 14% $0.7B P Process Equipment E i t GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS Note: Data from continuing operations; 2009E as of 10/28/2009 January 2010 79
Slide 80: Food & Beverage Equipment Market
Food & Beverage Equipment Market Food & Beverage Capital Spending Forecast $6,000 Capital p Spend p 100% % Change $5,000 80% 60% ex (EUR m) $4,000 Change 40% $3,000 20% Cape $2,000 0% $1 000 $1,000 -20% 20% $0 -40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E Source: Nomura; compan
Slide 81: Food & Beverage Equipment Market Drivers
Food & Beverage Equipment Market Drivers Production of value added or higher g q quality ypproducts Enhanced hygienic standards and regulatory controls Energy efficiency and waste reduction Economic expansion in developing regions New plant production Global Customer Base Including Many Le
Slide 82: Dairy Industry
Dairy Industry SPX 2009E Food & Beverage Thousands of Tons Revenue by Market China Liquid Milk Production 50 000 50,000 43,044 Dairy 50% 40,000 39,441 30,000 34,940 28,517 $0.7b , 20,000 22 929 22,929 ` 17,818 10,000 Food & Beverage 50% 0 2003 2004 2005 2006 2007 2008e Milk Production N Note: D Data
Slide 83: Diagnostic Tools
2009E Pro Forma Revenue by End Market $0.7B Tools & Diagnostics 15% Diagnostic Tools GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS Note: Data from continuing operations; 2009E as of 10/28/2009 January 2010 83
Slide 84: Regulatory Proposals
Regulatory Proposals Fuel Efficiency Standard Proposed CAFE Standards 40 (miles per gallon) 39 0 39.0 38 Environmental Protection Agency 36 36.4 35.5 34 Proposed first ever vehicle 35.2 34 4 34.4 emissions standard 32 33.6 32.6 30.0 30 30.6 31.4 Proposed substituting current air 29.8 condition r
Slide 85: New Vehicle Platform Projections
New Vehicle Platform Projections Cumulative Output in MM units Projected % of Sales 4 From New Platforms 2009 to 2015 Volkswagen V lk 85% 3 GM Ford Hyundai 82% Toyota Renault R lt / Ni Nissan 71% Honda 2 Ford 62% GM 55% Renault/Nissan 1 Chrysler/Fiat Toyota 32% Hyundai Honda 26% 0 2009
Slide 86: Electric Vehicle Launches
Electric Vehicle Launches 2010: 3 electric vehicle l launches h expected t d 2011: 12 electric vehicle launches expected 2012: 6 electric vehicle launches expected S Source: SPX M Managementt estimates ti t b based d on OEM customer t iindications di ti 21 Electric Vehicle Launches Expected Ov
Slide 87: Increasing Complexity of Vehicles
Increasing Complexity of Vehicles Increase in # of Electronic Components Luxury Vehicle: 59 ECUs Mid-Size: 15 ECUs 6 ECUs Compact: 6 ECUs 1990 2010 Increase in Vehicle Technology vs. Skilled Technicians V hi l Vehicle Technology Technician Skills 1990 2010 S Source: Service S i S Solutions l ti OEM
Slide 88: New Product Developments
New Product Developments HFO - 1234yf Electric Car Home Air Conditioning Battery Lift Charging Station Service Unit New Product Development Focused on Shifting Market Dynamics January 2010 88
Slide 89: Estimated Increase in Light Duty Fleet
Estimated Increase in Light Duty Fleet Increases in the number of vehicles in China and India should lead to development and # of Vehicles I300 In Use U opportunity pp y in vehicle service industry y (in millions) +10x over 2007 250 200 2007 150 2015 2030 100 +8x over 2007 50 0 European United Sta
Slide 90: India
India GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 90
Slide 91: India
India Favorable demographics in India: • 7% GDP growth projected from 2007 to 2015 • Increase in pper capita p disposable p income byy 8% over the p past five yyears • Middle to very rich class expected to grow 300% between 2005 and 2015 Interesting potential parallels to our experience in China
Slide 92: India: Power & Energy Infrastructure Market
India: Power & Energy Infrastructure Market infrastructure ~7% annual electricity growth power & energy Projected to add 455 GW of new p y between 2008 to 2020 capacity India Power Generating Capacity India Power Generating Capacity (in gigawatts) by power source 591 Coal 52% 253 156 Nuclear 3%
Slide 93: India: Processed Food & Beverage Market
India: Processed Food & Beverage Market process equipment India food industry expected to grow food & beverage 43% from 2009 to 2015 Multi-National food & beverage manufacturers expanding into India Indian Food Industry ($ billions) Demand for processed foods being $318 driven by: $258 • Rapid
Slide 94: India: Automotive Market
India: Automotive Market Car parc expected to grow ~60% from 2008 to 2012 diagnostic tools OEMs in India indicating plans for dealership vehicle service expansion over time Multi Multi-National National OEMs expanding into India Tata launching Nano in India: • Expected to launch globally Ind
Slide 95: Wireless Innovation
Wireless Innovation GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 95
Slide 96: Wireless Innovation
Wireless Innovation Traditional Antenna SPX Dielectric Antenna Differentiators 6X to 13X greater coverage Power efficient Scalable capacity Improved call quality Wireless Innovation for the World’s Rural Population January 2010 96
Slide 97: Predicted Coverage Illustration
Predicted Coverage Illustration 10 Sites: Standard Network 10 Sites: Network with SPX Antenna Note: Single sector trial results extended to the State of Maine SPX Dielectric’s Wireless Antenna is Expected to Help Connect Rural and Underserved Communities January 2010 97
Slide 98: Executive Summary
Executive Summary GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 98
Slide 99: Executive Summary
Executive Summary Successful transformation of SPX from 2005-2008: • 84% of 2009E revenue from Infrastructure, Process Equipment & Diagnostic Tools Managed prudently through recession and expect 1H 2010 to be bottom of the cycle: • 2010 mid-point EPS guidance of $3.10 per share • Short-cycle bus
Slide 100: Questions?
Questions? GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 100
Slide 101: Appendix
Appendix GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 101
Slide 102: Full Year Mid-Point Target Financial Model
Full Year Mid-Point Target Financial Model ($ millions millions, except per share data) 2009E Guidance 2010E Guidance Mid-Point Mid-Point Revenue $4,825 $4,915 Segment income margin 12.2% 10.5% p Corporate expense p ((85)) ((90)) Pension / PRHC (37) (52) Stock-based compensation (28) (30) Special ch
Slide 103: Q3 and Q4E 2009 Backlog
Q3 and Q4E 2009 Backlog Q3 2009 Q4 2009E % Change Thermal $2,096 $1,973 -6% Flow $ $616 $ $567 -8% Industrial $381 $393 3% SPX Total $3 204 $3,204 $3 074 $3,074 -4% 4% Note: Data from continuing operations; 2009E estimated as of 1/20/2009 January 2010 103
Slide 104: 2010E Full Year Segment Targets
2010E Full Year Segment Targets Total Revenue Segment Income Change Margins Flow Technology (2%) to 3% 11.5% to 12.5% Th Thermal lPProducts d t 5% tto 10% 9 5% tto 10 9.5% 10.5% 5% Test & Measurement 5% to 10% 7% to 8% Industrial Products (11%) to (16%) 10.3% to 11.3 Consolidated (1%) to 4% 10.0% to
Slide 105: 2009E Free Cash Flow Reconciliation
2009E Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2009E Guidance Range Net cash from continuing g operations p $ 440 $ 450 Capital expenditures $ (100) $ (90) Free cash flow from continuing operations $ 340 $ 360 Note: Data fr
Slide 106: 2010E Free Cash Flow Reconciliation
2010E Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2010E Guidance Range Net cash from continuing g operations $ 260 $ 290 Capital expenditures $ (100) $ (90) Free cash flow from continuing operations $ 160 $ 200 Note: Data from
Slide 107: Organic Revenue Growth Reconciliation
Organic Revenue Growth Reconciliation Net Revenue Acquisitions Foreign Organic Growth/(Decline) and Other Currency Growth/(Decline) 2005 6.2% 0.5% 0.0% 5.7% 2006 11.8% 1.4% 0.7% 9.7% 2007 15.7% 3.2% 2.7% 9.8% 2008 28.0% 20.3% 1.5% 6.2% 2009E ((17%) %) to ((18%) %) 0.0% % ~(2.5%) ( %) ((14%) %) to ((
Slide 108: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2008 2009E Revenues $5,856 $4,825 Nett IIncome N $248 $194 Income tax provision (benefit) 153 97 Interest expense 116 84 Income before interest and taxes $517 $375 p Depreciation and intangible g amortization expense p 105 109 EBITDA from continuing operation
Slide 109: Debt Reconciliations
Debt Reconciliations ($ millions) 12/31/2008 9/26/2009 Short-term debt $ 113 $ 45 Current maturities of long-term debt 76 76 o g te debt Long-term 1,155 , 55 1,125 , 5 Gross Debt $ 1,345 $ 1,246 Less: Puchase card program and extended A/P programs $ (48) $ (24) Adjusted Gross Debt $ 1 297 1,297 $ 1
Slide 110: 2006 Adjusted Earnings Per Share
2006 Adjusted Earnings Per Share FY 2006 GAAP EPS from continuing operations $3.74 Q2 Tax Accrual Reversal (0 57) (0.57) Q2 VSI Legal Settlement 0.20 Q4 Miscellaneous Tax Benefits (0.28) Q4 C harges Q g for Legacy g y Legal g Matters 0.07 Loss from operations discontinued in 2007 (0.08) Adjusted EPS
Slide 111: 2007 Adjusted Earnings Per Share
2007 Adjusted Earnings Per Share FY 2007 GAAP EPS from continuing operations $5.23 Q3 Tax Benefits (0.34) Q4 Tax Benefits (0.25) Q4 Asset Impairment 0.05 Q4 Legacy Legal Matters (Corporate Expense) 0.06 Adjusted EPS from continuing operations $4.75 Businesses discontinued during 2008 0.10 Adusted EP
Slide 112: 2008 Adjusted Earnings Per Share
2008 Adjusted Earnings Per Share FY 2008 GAAP EPS from continuing operations $4.68 Q3 tax benefits (0.47) Q3 legal matter 0.11 Q4 asset impairment Q p 2.21 Adjusted EPS from continuing operations $6.53 Note: Data from continuing operations January 2010 112
Slide 113: Global Infrastructure x Process Equipment x Diagnostic Tools
GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2010 113