Slide 1: Q3 2020 Earnings Presentation
Q3 2020 Earnings Presentation October 29, 2020 SPX Corporation 2020 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: Q3 Performance Highlights
Q3 Performance Highlights Strong Q3 and YTD execution and performance, despite continued pandemic headwinds in certain areas ULC acquisition adds attractive adjacency in Location & Inspection and positions SPX for multiple product development opportunities Full-year 2020 Adjusted EPS anticipat
Slide 5: Adjusted Q3 2020 Year-Over-Year Summary
Adjusted Q3 2020 Year-Over-Year Summary ($ millions) Q3 Year-to-Date Adjusted Revenue $1,082 $1,099 Strong results in HVAC and Adjusted Operating Income Margin Engineered Solutions Increases in revenue, Adjusted $359 $363 Operating Income and Margin 10.9% 10.9% 10.1% YTD 2020 results exceed pr
Slide 6: Current Environment Update/Changes in Last 90 Days
Current Environment Update/Changes in Last 90 Days Facilities operational; safety protocols effective ‒ Continuous monitoring and review HVAC: stronger-than-anticipated results ‒ Overall strong execution in Cooling, moderating non-residential demand ‒ Heating pre-season orders solid Detection
Slide 7: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Focus in HVAC and D&M • Integrity • Significant capital to deploy • Results/a
Slide 8: ULC Robotics Company Profile
ULC Robotics Company Profile Headquarters: Hauppauge, New York LTM Sales: ~$40M Description: Leading developer of robotic systems, machine CISBOT – Robotics as a Service learning applications and inspection technology for energy, utility and industrial sectors Acquisition Rationale: Attractive gro
Slide 9: Location & Inspection Platform
Location & Inspection Platform Location Equipment Inspection & Remediation AI/ Equipment Software Services Robotics Built ~$95m business into ~$240m market- leading Location & Inspection platform High value applications for managing and maintaining critical infrastructure Approaching ~60% of Det
Slide 10: Q3 Financial Review
Q3 Financial Review Jamie Harris
Slide 11: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q3 2020 Q3 2019 GAAP EPS from continuing operations $0.49 $0.47 South Africa and Heat Transfer $0.09 $0.07 Acquisition-related $0.01 $0.01 Non-service pension items & other* $(0.01) $0.02 Amortization $0.06 $0.03 Adjusted EPS from continuing operations $0.64 $0.60 Solid G
Slide 12: Summary of Q3 2020 Adjusted Segment Results
Summary of Q3 2020 Adjusted Segment Results Y/Y % Y/Y Change Change in Adjusted Segment in Revenue Segment Margin* HVAC 10.3% 160 bps Detection & Measurement (12.7%) (330) bps Engineered Solutions 1.7% 260 bps Total Adjusted SPX 1.1% 50 bps Note: Adjusted results are non-GAAP financial measures that
Slide 13: Adjusted Q3 2020 Year-Over-Year Results
Adjusted Q3 2020 Year-Over-Year Results ($ millions) Q3 adjusted Revenue: Q3 Year-to-Date 1.1% year-over-year increase: $1,082 $1,099 Adjusted Revenue (2.4%) organic* due to lower volumes in Adjusted Segment Income Margin Detection & Measurement 3.2% acquisition impact $359 $363 0.3% currenc
Slide 14: HVAC Q3 2020 Year-Over-Year Results
HVAC Q3 2020 Year-Over-Year Results ($ millions) Q3 Revenue: Q3 Year-to-Date Revenue 10.3% year-over-year increase: Adjusted Segment $399 $405 4.0% organic* due to stronger international Income Margin* Cooling volumes, partially offset by lower $155 domestic Heating and Cooling volumes $140 6.
Slide 15: Detection & Measurement Q3 2020 Year-Over-Year Results
Detection & Measurement Q3 2020 Year-Over-Year Results ($ millions) Q3 Revenue: Q3 Year-to-Date Revenue (12.7%) year-over-year decrease: Adjusted Segment Income Margin* (16.7%) organic* due largely to delays of project sales $284 associated with the pandemic, and lower obstruction $269 lighting
Slide 16: Engineered Solutions Q3 2020 Year-Over-Year Results
Engineered Solutions Q3 2020 Year-Over-Year Results ($ millions) Q3 Revenue: Q3 Year-to-Date 1.7% year-over-year increase: $425 Revenue $398 1.8% due to more favorable pricing and mix in Segment Income Margin Transformers (0.1%) currency impact Q3 Segment Income and Margin: $121 $123 10.5% $
Slide 17: Financial Position and Liquidity Review
Financial Position and Liquidity Review Jamie Harris
Slide 18: Financial Position - Capital Structure Update
Financial Position - Capital Structure Update Leverage Ratios* ($millions) Q2 2020 Q3 2020 2.4x 2.2x Short-term debt $266.8 $108.0 1.9x 1.5-2.5x Current maturities of long-term debt 4.1 5.6 1.5x Long-term debt 247.0 350.3 Total Debt $517.9 $463.9 Less: Cash on hand (190.2) (70.7) Net Debt $327.7 $39
Slide 19: Outlook Discussion – Q4 and Full-Year 2020
Outlook Discussion – Q4 and Full-Year 2020 Anticipate Adjusted EPS for 2020 to be modestly-higher than 2019; and, anticipate solid cash generation for Q4 and full-year 2020 Anticipate Q4 2020 revenue decline of low-single digit % ‒ HVAC: mid-single digit to high-single digit % decline ‒ Detectio
Slide 20: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 21: Market Commentary
Market Commentary Market Comments Cooling: Softening non-residential activity HVAC Heating: channel stable; weather-dependent winter Detection & Locator demand exhibiting solid recovery; varied geographic strength Measurement Healthy frontlog of projects; delayed project sales beginning to d
Slide 22: Executive Summary
Executive Summary Strong execution and performance in Q3 and year-to-date Anticipate solid earnings and cash generation for full-year 2020 Accelerating growth and continuous improvement initiatives following pandemic-related slowdown Well-Positioned to Continue Growth Journey in 2021+ October
Slide 23: Questions
SPX4 Questions
Slide 24: Appendix
SPX4 Appendix
Slide 25: Modeling Considerations
Modeling Considerations Metric Considerations Incremental/ Decremental Margins Q4’20 FY’20 Corporate Expense $13.0-14.0m $42-43m HVAC Low-30s% Long-term incentive comp $3.5-4.0m ~$14m Detection & Measurement ~50% Restructuring costs $0.5m $2m Engineered Interest cost $4.0-4.5m $18.5-19m Low-20s% Sol
Slide 26: End Market Exposures (2019)
End Market Exposures* (2019) Total 2019 Revenue of $1.5 Billion 52% Wastewater / Water, 6% 29% Utility, Light Mfg. / Other, 5% 33% Healthcare, 3% Hospitality, 3% Data Center / Lab, 3% 11% Institutional, 9% Gov't Regulated, 8% Office / Retail, 7% 13% End Markets Resi Non-resi Gov't, Regulated and Uti
Slide 27: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations ($ millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 GAAP 20.8 41.4 42.9 68.9 37% Exclude: "All other" (22.6) (10.0) (5.7) (7.4) 34% Exclude: One time acquisition (1.3) (0.9) - (0.2) related costs Exclude: Intangible amortization (1.6) (2.4) (2.0) (2.9) 23
Slide 28: Q3 2020 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Q3 2020 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustme nts Adjusted (1) Segment income $ 44.2 $ 8.8 $ 53.0 (2) Corporate expense (10.4) 0.7 (9.7) Long-term incentive compensation expense (3.4) - (3.4) Special charges, net (0.4) (0.4) Operating income 30.0 9.5 39.5
Slide 29: Q3 2019 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Q3 2019 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustments Adjuste d (1) Segment income $ 42.9 $ 7.7 $ 50.6 (2) Corporate expense (10.0) 0.2 (9.8) Long-term incentive compensation expense (3.3) - (3.3) (3) Special charges, net (2.0) 1.6 (0.4) Operating income 27.6
Slide 30: Q3 and YTD 2020 and 2019 U.S. GAAP to Adjusted Operating Income Reconciliation
Q3 and YTD 2020 and 2019 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Thre e months ende d Nine months e nded Se ptember 26, 2020 Septe mbe r 28, 2019 Se ptember 26, 2020 Septe mbe r 28, 2019 Operating income $ 30.0 $ 27.6 $ 97.1 $ 56.9 Exclude: Aggregate operating losses of th
Slide 31: Q3 2020 U.S. GAAP Revenue to Organic Revenue Reconciliation
Q3 2020 U.S. GAAP Revenue to Organic Revenue Reconciliation ($ millions) October 29, 2020 31
Slide 32: Adjusted Revenue and Adjusted Segment Income Reconciliation
Q3 and YTD 2020 and 2019 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliation CONSOLIDATED SPX: Three months ende d Nine months ende d ($ millions) Se pte mber 26, 2020 Septe mbe r 28, 2019 Septe mbe r 26, 2020 S epte mbe r 28, 2019 Consolidated revenue $ 363.4 $ 364.8 $ 1,105.9
Slide 33: Q3 2020 Debt Reconciliation
Q3 2020 Debt Reconciliation ($ millions) Q3 2020 Short-term debt $ 108.0 Current maturities of long-term debt 5.6 (1) Long-term debt 350.3 Gross debt 463.9 Less: Purchase card program and extended payables (1.7) Adjsuted gross debt 462.2 (2) Less: Cash and equivalents (68.7) Adjusted net debt $ 393.
Slide 34: Q3 2020 Consolidated Adjusted EBITDA Reconciliation
Q3 2020 Consolidated Adjusted EBITDA Reconciliation Last 12 Months ($ millions) Net income attributable to SPX Corporation common shareholders $ 98.0 Income tax provision 20.9 Interest expense 19.4 Income before interest and taxes 138.3 Depreciation and amortization 38.4 EBITDA 176.7 Adjustments: No
Slide 35: Adjusted Free Cash Flow Reconciliation
Q2 2020 Adjusted Free Cash Flow from Continuing Operations to U.S. GAAP Reconciliation ($ millions) Q3 2020 Operating cash flow from continuing operations $ 31.1 Capital expenditures - continuing operations (5.6) Free cash flow used in continuing operations 25.5 Adjustment for "All other"* 5.7 Adjus