Slide 1: Q4 2018 Earnings Presentation
Q4 2018 Earnings Presentation February 14, 2019
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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as am
Slide 3: Introductory Comments
Introductory Comments Gene Lowe February 14, 2019
Slide 4: Performance Highlights
Performance Highlights Full-Year 2018 Adjusted EPS* of $2.20, +26% Adjusted segment income* grew $22 million Robust demand and volumes in HVAC Solid Detection & Measurement margin performance Solid financial condition provides substantial capital for value creation initiatives Adjusted F
Slide 5: Adjusted Results Q4 2018 and Full-Year 2018
Adjusted Results Q4 2018 and Full-Year 2018 Year-over-Year Analysis Q4 Full-Year ($ millions) Adjusted Revenue Adjusted Q4 operating income growth of Adjusted Operating Income Margin 52% $429 $1,441 $1,332 Adjusted Q4 operating income margin $379 expansion of 350 basis points driven by 14.1%† 10
Slide 6: Value Creation Roadmap
Value Creation Roadmap Organic Growth SPX Business System New products Policy deployment New channels Operational excellence Adjacent markets Due diligence/integration Inorganic Growth Culture & Values Focus in HVAC and D&M Leadership development Significant capital to deploy Res
Slide 7: Q4 Financial Review
Q4 Financial Review Scott Sproule February 14, 2019
Slide 8: Earnings Per Share
Earnings Per Share Q4 and Full-Year 2018 Adjusted EPS Q4 2018 Q4 2017 FY 2018 FY 2017 GAAP EPS from continuing operations $0.88 $1.35 $1.75 $1.91 South Africa and Heat Transfer ($0.03) ($0.73) $0.26 ($0.11) Acquisition-related $0.07 NA $0.22 NA Non-service pension & other* $(0.03) ($0.03) $(0.03) ($
Slide 9: Adjusted Results Q4 2018 and Full-Year 2018
Adjusted Results Q4 2018 and Full-Year 2018 Year-over-Year Analysis Q4 Adjusted Revenue: Q4 Full-Year ($ millions) Adjusted Revenue 13.0% year-over-year increase: Adjusted Segment Income Margin 6.3% acquisition impact $429 $1,441 6.7% increase primarily due to strong $1,332 $379 performance in
Slide 10: HVAC Results Q4 2018 and Full-Year 2018
HVAC Results Q4 2018 and Full-Year 2018 Year-over-Year Analysis ($ millions) Q4 Revenue: Q4 Full-Year 13.3% year-over-year increase Revenue Segment Income Margin 13.9% organic increase*, with significant $582 growth in heating volumes and solid cooling sales growth $511 (0.6%) unfavorable curr
Slide 11: Detection & Measurement Adjusted Results Q4 2018 and Full-Year 2018
Detection & Measurement Adjusted Results Q4 2018 and Full-Year 2018 Year-over-Year Analysis ($ millions) Q4 Adjusted Revenue: Q4 Full-Year 28.7% year-over-year increase: Adjusted Revenue* $321 31.9% increase from acquisitions Adjusted Segment Income Margin* (2.3%) organic decrease* due to timi
Slide 12: Engineered Solutions Q4 2018 and Full-Year 2018 Results
Engineered Solutions Q4 2018 and Full-Year 2018 Results Year-over-Year Analysis Q4 Full-Year ($ millions) Q4 Revenue: Revenue Segment Income Margin 4.4% year-over-year increase: $561 $537 Higher Process Cooling volumes; modestly higher Transformer $143 $149 revenues 7.9% 6.5% Q4 Segment Income a
Slide 13: Financial Position, Liquidity Review and 2019 Guidance
Financial Position, Liquidity Review and 2019 Guidance Scott Sproule February 14, 2019
Slide 14: Financial Position
Financial Position Capital Structure Update Leverage Ratios* ($ millions) FYE 2018 Incl. Sabik Short-term debt $ 31.9 2.7x Financing 2.3x 1.9x 2.0x 1.5-2.5x Current maturities of long-term debt 18.0 1.7x Long-term debt 331.9 Total Debt $ 381.8 Less: Cash on hand (68.8) Q3'18 Q4'18 Pro forma LT Targe
Slide 15: 2019 Adjusted Guidance Excluding Amortization (Including Sabik)
2019 Adjusted Guidance Excluding Amortization (Including Sabik) Revenue Segment Income Margin In a range of 15.5-16.0%, or +25 bps HVAC In a range of $570-580 million at midpoint vs 2018 Detection & In a range of 23-24%, ex In a range of a $385-395 million Measurement amortization Engineered
Slide 16: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe February 14, 2019
Slide 17: Market Commentary
Market Commentary Market Comments Cooling: Commercial and institutional markets remain healthy HVAC Heating: 2018 seasonal demand above long-term average Detection & Strong project conversion; frontlog activity remains strong Measurement Run-rate markets remain solid Transformers Key custo
Slide 18: Executive Summary
Executive Summary Operational and cash flow performance remains strong On track for sustainable double digit earnings growth Substantial available capital to deploy by end of 2020 Acquisition integrations going well; M&A pipeline robust Continuing to Execute on Plan for Significant Value Cre
Slide 19: Questions
Questions February 14, 2019
Slide 20: Appendix
Appendix February 14, 2019
Slide 21: 2019 Adjusted EPS Guidance - Key Drivers
2019 Adjusted EPS Guidance - Key Drivers • Favorable Economic Policy/Infrastructure Stimulus $2.65 • Stronger-Than-Normal Seasonal Heating Demand • Commercial Growth Accelerates • Greater-Than-Anticipated Price-Cost Tailwinds • Accelerated Project-Related Sales $2.58 Base Case • Weaker-Than-Anticipa
Slide 22: Adjusted Segment Income Phasing
Adjusted* Segment Income Phasing ($ millions) Q1 2018 Q2 2018 Q3 2018 Q4 2018 37% GAAP 37.0 41.0 29.6 70.9 Exclude: "All other" (4.1) (4.4) (8.0) (2.4) 31% Exclude: One time (0.3) (1.8) (2.9) (0.9) acquisition related costs 25% 22% 23% 22% Adjusted $41.4 $47.2 $40.5 $74.2 20% 20% % of full-year 20%
Slide 23: 2019 Modeling Considerations
2019 Modeling Considerations Metric Commentary/Assumptions Corporate costs Low $40Ms Long-term incentive comp $14-15M Restructuring costs $1M Interest cost $21-22M Equity earnings, other $4-5M Tax rate Approximately 23% Capex $15-17M Cash cost of pension + OPEB Approximately $16M D&A Approximately $
Slide 24: 2018 Engineered Solutions Quarterly Results
2018 Engineered Solutions Quarterly Results Q 1 2018 Q 2 2018 Q 3 2018 Q 4 2018 FY 2018 REVENUE $ 127.9 $ 135.3 $ 124.7 $ 149.1 $ 537.0 INCOME $ 6.9 $ 10.4 $ 6.4 $ 11.3 $ 35.0 as a percent of segment revenue 5.4 % 7.7 % 5.1 % 7.6 % 6.5 % February 14, 2019 24
Slide 25: Q4 2018 U.S GAAP to Adjusted Earnings Per Share Reconciliation
Q4 2018 U.S GAAP to Adjusted Earnings Per Share Reconciliation GAAP Adjustments Adjusted ($ millions, except (1) Segment income $ 70.9 $ 3.3 $ 74.2 per share values) Corporate expense (2) (13.7) 2.4 (11.3) Long-term incentive compensation expense (3.1) — (3.1) (3) Special charges, net (1.7) 1.0 (0.7
Slide 26: Q4 2017 U.S GAAP to Adjusted Earnings Per Share Reconciliation
Q4 2017 U.S GAAP to Adjusted Earnings Per Share Reconciliation GAAP Adjustments Adjusted ($ millions, except per share values) Segment income (1) $ 24.5 $ 32.6 $ 57.1 Corporate expense (12.5) (0.3) (12.8) Long-term incentive compensation expense (5.4) — (5.4) Special charges, net (2) (0.7) 0.7 — Ope
Slide 27: FY 2018 U.S GAAP to Adjusted Earnings Per Share Reconciliation
FY 2018 U.S GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except GAAP Adjustments Adjusted per share values) Segment income (1) $ 178.5 $ 24.8 $ 203.3 Corporate expense (2) (48.5) 4.9 (43.6) Long-term incentive compensation expense (15.5) — (15.5) Special charges, net (3) (6.3) 5.0
Slide 28: FY 2017 U.S GAAP to Adjusted Earnings Per Share Reconciliation
FY 2017 U.S GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except GAAP Adjustments Adjusted per share values) (1) Segment income $ 124.9 $ 56.8 $ 181.7 Corporate expense (46.2) (0.9) (47.1) Long-term incentive compensation expense (15.8) — (15.8) Pension service cost (0.3) — (0.3) S
Slide 29: Q4 and FY 2018 and 2017 U.S. GAAP to Adjusted Operating Income Reconciliation
Q4 and FY 2018 and 2017 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Fiscal Year December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Operating income $ 52.2 $ 5.9 $ 107.6 $ 59.9 Exclude: Aggregate losses of the South Africa and Heat Transf
Slide 30: Q4 2018 U.S. GAAP Revenue to Organic Revenue Reconciliation
Q4 2018 U.S. GAAP Revenue to Organic Revenue Reconciliation Three months ended December 31, 2018 Detection & HVAC Measurement Net Revenue Growth 13.3 % 28.7 % ** Exclude: Foreign Currency (0.6) % (0.9) % Exclude: Acquisitions — % 31.9 % Organic Revenue Growth (Decline) 13.9 % (2.3) % ** Represents r
Slide 31: Adjusted Revenue and Adjusted Segment Income Reconciliation
Q4 and FY 2018 and 2017 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliation CONSOLIDATED SPX: Three months ended Fiscal Year December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Consolidated revenue $ 445.0 $ 387.0 $ 1,538.6 $ 1,425.8 Exclude: "All Other" oper
Slide 32: Q4 and FY 2018 Adjusted Income Excluding Deal Related Amortization
Q4 and FY 2018 Adjusted Income Excluding Deal Related Amortization ADJUSTED OPERATING INCOME Q 4 2018 FY 2018 ($ millions) Adjusted operating income $ 59.1 $ 142.9 Exclude: Deal related amortization cost 1.5 3.3 Adjusted operating income excluding deal amortization cost $ 60.5 $ 146.2 as a percent o
Slide 33: Q4 2018 Debt Reconciliation
Q4 2018 Debt Reconciliation ($ millions) Q4 2018 Short-term debt $ 31.9 Current maturities of long-term debt 18.0 Long-term debt (1) 331.9 Gross debt 381.8 Less: Purchase card program and extended payables (2.5) Adjusted gross debt 379.3 Less: Cash and equivalents (68.8) Adjusted net debt $ 310.5 1)
Slide 34: FY 2018 Consolidated Adjusted EBITDA Reconciliation
FY 2018 Consolidated Adjusted EBITDA Reconciliation ($ millions) FY 2018 Net income from continuing operations attributable to SPX Corporation $ 78.2 common shareholders Income tax provision (benefit) $ 1.4 Interest expense 21.5 Income from continuing operations before interest and taxes 101.1 Depre
Slide 35: FY 2018 U.S. GAAP to Adjusted Free Cash Flow from Continuing Operations
FY 2018 U.S. GAAP to Adjusted Free Cash Flow from Continuing Operations ($ millions) FY 2018 Net operating cash flow from continuing operations $ 112.9 Capital expenditures - continuing operations (12.4) Free cash flow used in continuing operations 100.5 Adjustment for "All other" 22.3 Adjusted free