Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Merger or Acquisition (June 2021)
23 slides from Spx Technologies's merger presentation, Jun 9, 2021
Slide 1: Divestiture of Transformers Business & Strategic Update
SPX Corporation Divestiture of Transformers Business & Strategic Update June 9, 2021 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 the completion, and the timing of completion, of the sale of the Transformers business, future market conditions, results of operations, products introductions, and financial projections
Slide 3: Divestiture Aligns with SPX Strategy
Divestiture Aligns with SPX Strategy Why divest? More strategically focused business Higher margins and attractive growth. Less cyclicality Core segments focused on product management, innovation and digital solutions Significant investment opportunities for accelerating growth Why now?
Slide 4: Transaction Overview
Transaction Overview • Stock sale of Transformer Solutions to Prolec GE for $645M in cash CONSIDERATION • Adjusted EBITDA Multiple of ~10.5x (LTM 3/31/2021E) • Estimated net after tax cash proceeds ~$540M • Expected to close in 2H 2021, subject to customary closing conditions and regulatory approval
Slide 5: Increased Capital Availability and Financial Flexibility
Increased Capital Availability and Financial Flexibility ~$170M Net Cash Position After Taxes & Fees Pro Forma Available Capital (Year-End 2021)(1) ($millions) Sealite Sale Net 3.0x Q1 2021 Pro Forma Acquisition Proceeds Short-term debt $(100) $ 96 $ (4) ~$930M Current maturities of long-term (9) -
Slide 6: SPX Strategic Portfolio Transformation Continues
SPX Strategic Portfolio Transformation Continues Current Post-Sale 2025 Targets Adj. Revenue ~$1.7B ~$1.25B ~$2.0B Gross margin % ~32.5% ~450bps ~37.0% ~+300bps ~40% Adj. Segment Income % ~15.5% ~150bps ~17.0% ~+300bps ~20% Adj. Operating Income % ~11.5% ~11.5% ~+450bps ~16% Long-term Growth % ~1-4%
Slide 7: Focused, Market-Leading Growth Platforms
Focused, Market-Leading Growth Platforms Detection & Measurement (~$465M)(1) HVAC (~$775M)(1) ~$1.25 Billion(1) Location & Inspection Cooling Premium engineered niches Technology / innovation focus Aids to Navigation ~90% Market Leadership (#1 or #2) Heating High replacement revenue (~70%)
Slide 8: HVAC Segment – Overview
HVAC Segment – Overview Cooling (~$445m)(1) Heating (~$330m )(1) Heat Rejection Boilers Electric Heat Cooling Tower Evaporative Condenser Fluid Cooler Residential Large Commercial / High-Efficiency Hazardous, Wall, Convection Core Assets Leading position in packaged cooling and field Broad scope
Slide 9: HVAC Segment – Focused Growth Strategy
HVAC Segment – Focused Growth Strategy Cooling Heating Fluid coolers and refrigeration growth 1 1 High-efficiency / Commercial NPI (channel and product) Organic 2 Geographic channel expansion 2 Digital contractor conversions and program 3 New product offerings 3 Increase penetration at top distribut
Slide 10: Detection & Measurement Segment – Overview
Detection & Measurement Segment – Overview Location & Inspection (~$260m)(1) Aids to Navigation (~$100m)(1) Commtech / Transport (~$105m) Location Technologies Inspection Robotics AOL(2) Marine AGL(2) CommTech Transportation Mobile Airfield Signals Intelligence Precision, Ferrous, GPR Water, Wastewa
Slide 11: Detection & Measurement – Focused Growth Strategy
Detection & Measurement – Focused Growth Strategy Location & Inspection Aids to Navigation CommTech / Transport 1 Global sales coverage 1 Mobile airfield solutions 1 CommTech global coverage Organic 2 Strategic NPD (adjacent locator 2 Global cross-selling 2 New products launch applications, crossbor
Slide 12: Building Strategic Platforms
Building Strategic Platforms Detection & Measurement HVAC Location & Inspection Aids-to-Navigation Heating / Cooling Strategic Location Inspection Marine AtoN & Airfield High-efficiency Industrial Add-ons Expansion Ground Lighting Commercial Boilers Refrigeration 2018 2018 2019 2020 2021 Transformed
Slide 13: 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 ~$260M of revenue (Lean, 80/20) in ~3 years Margin Expansion
Slide 14: SPX Long-Term Targets – Revenue
SPX Long-Term Targets – Revenue 2100.0 SPX TODAY SPX TARGET ~$2.0 Billion 2000.0 1900.0 1800.0 1700.0 1600.0 1500.0 1400.0 ~$1.25 Billion '16-'21 CAGR 1300.0 1200.0 Process Cooling 1100.0 1000.0 900.0 800.0 HVAC 4.4% 700.0 ($632m) 600.0 500.0 HVAC 400.0 ($510m) 300.0 D&M 200.0 15.5% ($466m) 100.0 D&
Slide 15: SPX Long-Term Targets – Margin
SPX Long-Term Targets – Margin 36% 37% Gross 35% 33% 34% 33% ~+450bps Margin 32% 31% 31% 29% 29% ~40%+ 28% 17% 17% 17% Adj. Segment 16% Income* 15% 15% 15% 15% ~+150bps 14% 14% ~20%+ 13% 13% 2016 2017 2018 2019 2020 2021E SPX Future GM% (w/o Transformers) GM% (w/Transformers) Adj. Segment Income % (
Slide 16: 2021 Guidance
2021 Guidance (Changes Available in Appendix) Revenue Segment Income Margin HVAC ~$770-780 million (including Process Cooling) ~14.5% Detection & ~$460-470 million ~20.5% Measurement ~17.0% Total SPX Adjusted ~$1.25 billion (~+150bps vs. prior) Adjusted Operating Income Margin of ~11-12%
Slide 17: Executive Summary
Executive Summary More focused business and strategy Higher margins, attractive growth, less cyclicality Active pipeline / redeployment opportunities Targeting Substantial Growth Through 2025 June 9, 2021 17
Slide 18: Questions
SPX4 Questions
Slide 19: Appendix
SPX4 Appendix
Slide 20: Updated 2021 Guidance vs Prior
Updated 2021 Guidance vs Prior Adjusted Adjusted Segment Revenue Income Margin % Comments New Prior New Prior HVAC ~$770-780m Growth of mid-to- ~14.5% Modest Added Process Cooling to HVAC, increasing high single digits % increase revenue, and decreasing margin. D&M ~$460-470m Growth of high ~20.5% M
Slide 21: Adjusted Revenue and Segment Income Reconciliation – 2016-2020
Adjusted Revenue and Segment Income Reconciliation – 2016-2020 ADJUSTED REVENUE AND SEGMENT INCOME ($ in m illio ns , e xc e pt pe r s ha re da ta ) 2016 2017 2018 2019 2020 REVENUE U.S. GAAP revenue $ 1,472.3 $ 1,425.8 $ 1,512.6 $ 1,520.9 $ 1,559.5 Exclude: SPX Transformer Solutions $ 372.5 $ 361.4
Slide 22: Transformers and Process Cooling Revenue Detail
Transformers and Process Cooling Revenue Detail $ in millions Q1’19 Q2’19 Q3’19 Q4’19 FY 2019 Transformers 98.8 104.6 93.5 106.6 403.5 Process Cooling 39.2 34.4 27.6 44.2 145.4 Q1’20 Q2’20 Q3’20 Q4’20 FY 2020 Transformers 110.6 113.9 95.1 107.8 427.4 Process Cooling 44.3 32.9 28.1 44.9 150.1 Q1’21 T
Slide 23: Modeling Considerations – Full Year 2021
Modeling Considerations – Full Year 2021 Metric Considerations Corporate Expense ~$50m, including TSA income Long-term incentive comp ~$13m Restructuring costs ~$1m Interest cost ~$13m Equity earnings in JV, Other income/(expense), $3-5m and Non-service pension benefit/(expense) Tax rate ~21-23% Cap