Slide 1: 2011 Second Quarter Results
2011 Second Quarter Results INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 3, 2011 1
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 and are thus prospective. These forward-looking statements are subject to risks, u
Slide 3: Introductory Comments
Introductory Comments INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 3
Slide 4: Second Quarter Opening Remarks
Second Quarter Opening Remarks Adjusted EPS and Revenue results exceeded company guidance 16% Revenue growth: Organic revenue growth in 3 of 4 segments Backlog increased 10% year-over-year and was flat sequentially Margin performance impacted by lower margin revenue mix and raw material price inflat
Slide 5: Q2 Revenue by Region
Q2 Revenue by Region Q2 Year-Over-Year Change Q2 2011 Revenue Q2 2011 Q2 2011 Q2 2011 by Geography +18% +25% (9%) Americas 51% Europe 25% Middle East Asia Pacific & Africa 15% 9% Q2 2011 +42% Q2 Sales Into the United States and Europe Increased Year-Over-Year; Q2 Revenue Into Emerging Markets Increa
Slide 6: Backlog
Backlog Aging of Q2 2011 Ending Backlog Quarter End Backlog 2011 58% ($ billions) 2012 and Beyond 42% $3.0 $3.0 $3.0 $2.9 $2.7 Q2 2011 Ending Backlog by Geography Europe 22% South Americas Africa 35% 22% Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Middle Asia East Pacific 4% 17% Backlog Growth in Flow T
Slide 7: 2011 Guidance Update
2011 Guidance Update 2011 EPS* Guidance Range $4.80 EPS Mid-Point $4.60 $4.55 $4.55 $4.50 $4.50 $4.40 $4.40 $4.40 $4.35 $4.35 $4.25 $4.25 $4.20 $4.20 $4.20 $4.00 Jan 19 Feb 17 May 4 Aug 3* *2011 EPS Guidance is on an adjusted basis as of August 3, 2011 Note: See appendix for non-GAAP reconciliations
Slide 8: Balance Sheet and Debt Ratios
Balance Sheet and Debt Ratios ($ millions) Debt to Capital Key Balance Sheet Accounts 35% 35% 4/2/11 7/2/11 Ca s h $372 $395 Tota l As s ets $6,104 $6,248 Q1 2011 Q2 2011 Debt to Bank EBITDA (1) Tota l Debt $1,222 $1,247 2.1x 2.1x 1.5x 1.5x Tota l Equi ty $2,223 $2,294 Q1 2011 Q2 2011 (1) Net and Gr
Slide 9: Q2 Financial Analysis
Q2 Financial Analysis INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 9
Slide 10: Q2 Adjusted Earnings Per Share
Q2 Adjusted Earnings Per Share Q2 2010 Q2 2011 GAAP EPS from continuing operations $ 1.40 $ 0.62 Q2 2011 Non-Cash Asset Impairment Charge 0.29 Q2 2010 tax benefits (0.40) Adjusted EPS from continuing operations $ 1.00 $ 0.91 Adjusted Q2 2011 EPS Excludes a $0.29 Per Share Non-Cash Asset Impairment C
Slide 11: Q2 Adjusted Earnings Per Share
Q2 Adjusted Earnings Per Share Q2 Adjusted Earnings Per Share Year-Over-Year Bridge Q2 2010 Adjusted EPS $1.00 $1.00 $0.91 Guidance range: Segment Income ($0.04) $0.80 to $0.90 Special Charges ($0.06) Reduced tax rate $0.09 Net other items ($0.08) Q2 2010 Q2 2011 Q2 2011 Adjusted EPS $0.91 Note: See
Slide 12: Consolidated Q2 Financial Analysis
Consolidated Q2 Financial Analysis ($ millions) Revenue 16% revenue growth: Segment Margins 7% organic growth 3% acquisition growth $1,384 6% currency benefit $1,189 180 points of margin contraction: 11.4% Due primarily to margin declines in 9.6% late cycle, power related businesses Q2 2010 Q2 2011
Slide 13: Flow Technology Q2 Analysis
Flow Technology Q2 Analysis ($ millions) Revenue 29% revenue growth: Segment Margins 14.2% organic growth $493 6.1% increase from acquisitions 8.2% currency benefit $383 25% increase in segment income 11.8% 11.5% 30 points of margin contraction: Unfavorable revenue mix Raw material cost inflation Q2
Slide 14: Flow Technology Backlog Analysis
Flow Technology Backlog Analysis ($ millions) Quarter End Backlog Q2 2011 Backlog Commentary 7% sequential increase: Strong demand for food & beverage $907 $848 components, increasing demand for $772 $789 food & beverage systems $636 Strong replacement demand in oil and gas markets Steady increase i
Slide 15: Thermal Equipment & Services Q2 Analysis
Thermal Equipment & Services Q2 Analysis ($ millions) Revenue Segment Margins 10% revenue growth: $432 3.5% organic growth $392 6.6% currency benefit 12.5% 27% decrease in segment income 8.3% 420 points of margin contraction: Decline in higher margin revenue from dry cooling projects and evaporative
Slide 16: Thermal Equipment & Services Backlog Analysis
Thermal Equipment & Services Backlog Analysis ($ millions) Quarter End Backlog Q2 2011 Backlog Commentary Backlog declined 11% sequentially: $1,597 $1,666 $1,625 $1,624 $1,448 Q2 project execution End market activity for late cycle power generation equipment remained depressed Timing of orders is un
Slide 17: Test & Measurement Q2 Analysis
Test & Measurement Q2 Analysis ($ millions) Revenue Segment Margins 20% revenue growth: $288 8.0% organic growth $240 6.5% increase from acquisition 9.9% 10.1% 5.6% currency benefit 22% increase in segment income 20 points of margin expansion Q2 2010 Q2 2011 8% Organic Revenue Growth; 22% Increase i
Slide 18: Industrial Products & Services Q2 Analysis
Industrial Products & Services Q2 Analysis ($ millions) Revenue Segment Margins 1% revenue decline: 2% organic revenue decline $173 1% currency benefit $171 10.2% 38% decrease in segment income: 6.4% 380 points of margin contraction: Lower pricing on power transformer shipments $3.5m of costs associ
Slide 19: Industrial Products & Services Backlog Analysis
Industrial Products & Services Backlog Analysis ($ millions) Quarter End Backlog Q2 2011 Backlog Commentary Segment backlog increased 23% sequentially: $494 $403 Positive order trends across $369 $359 $359 most key businesses $27m solar crystal grower order 10% increase in transformer backlog Q2 201
Slide 20: Power Transformer Business Update
Power Transformer Business Update Returned to organic revenue growth in Q2 2011: Expect organic revenue growth to accelerate in 2H 2011 driven by increased volume Backlog increased 10% sequentially: Primarily driven by large power transformer orders Modest increase in medium power transformer backlo
Slide 21: Free Cash Flow
Free Cash Flow ($ millions) $300 $220 to $260 1H 2011 Free Cash Flow: $206 $200 Consistent with historical seasonality Increased capital investment vs. $100 1H 2010 $37 $18 2011E Free Cash Flow: $0 Elevated capital spending at $150m ~$30m of restructuring spend -$37 -$52 -$100 Q1 Q1 Q2 Q2 2010 2011E
Slide 22: Credit Facility Refinancing
Credit Facility Refinancing $1.8b senior secured credit facilities with a 5 year term: $600m multi-currency revolver: • $300m domestic revolver • $300m global revolver $1.2b instrument for performance letters of credit and guarantees $1.0b accordion option to support acquisition strategy Key improve
Slide 23: 2011 Guidance
2011 Guidance INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 23
Slide 24: First Half vs. Second Half Comparisons
First Half vs. Second Half Comparisons Adjusted Earnings Per Share Revenue First Half First Half Second Half Second Half $3.00* $2,979* $2,613 $2,583 $2.24 $2,273 $1.38 $1.40 2010 2011E 2010 2011E *Based on 2011E full year adjusted EPS guidance mid-point Note: See appendix for non-GAAP reconciliatio
Slide 25: First Half vs. Second Half Comparisons
First Half vs. Second Half Comparisons Organic Revenue Change 1H 2011 vs. 2H 2011E 1H 2011 2H 2011E 13% to 16% 17% 15% 14% 9% to 8% to 8% to 13% 10% 11% 3% to 6% 7% 5% -5% -3% -3% Flow Technology Test & Measurment Thermal Equipment Industrial Products SPX Total and Services and Services Note: See ap
Slide 26: Q3 2011 Targets
Q3 2011 Targets ($ millions, except per share data) Q3 2010 Q3 2011E Revenue $1,288 total growth: +9% to +13% Segment Income $158 $142 to $147 Segment Income Margin 12.2% 9.8% to 10.3% Earnings Per Share $1.11* $1.00 to $1.10 * - Adjusted EPS. Excludes $0.33 per share of one-time charges associated
Slide 27: Q4 2011 Qualitative Comments
Q4 2011 Qualitative Comments Historical 35% to 40% of SPX full year EPS is concentrated in the fourth quarter: Expect ~45% of 2011E EPS to be generated in Q4 2011 Targeting double-digit organic growth in Q4 2011: Expect high single digit to double digit organic growth across all four segments Timing
Slide 28: Full Year Segment Targets
Full Year Segment Targets Previous Revenue Growth Targets Current Revenue Growth Targets +21% to +23% +15% to +17% to +20% +19% +13% to +18% +8% to +4% to +10% +9% +3% to +4% to +8% +6% Flow Technology Test & Measurement Industrial Products Thermal Equipment and Services and Services Margin Target 1
Slide 29: 2011 Consolidated Financial Targets
2011 Consolidated Financial Targets Revenue $5.5b to $5.6b total growth: +13% to 15% organic growth: +7% to +9% Segment Income Margin 10.7% to 11.0% modest decline Adjusted Earnings Per Share $4.25 to $4.55 ~22% increase vs. 2010 Free Cash Flow $220m to $260m ~107% of net income Capital Spending ~$1
Slide 30: 2011 Guidance Upsides & Downsides
2011 Guidance Upsides & Downsides 2011 Guidance potential negative impacts potential positive impacts earnings per share: – dispositions + acquisitions $4.25 to $4.55 – Flow end market slowdowns + stronger short cycle demand – large project timing delays free cash flow: $220m to $260m uncertainties
Slide 31: Executive Summary
Executive Summary INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 31
Slide 32: Executive Summary
Executive Summary Earnings Per Share* Experiencing strong growth in early cycle peak earnings businesses; recovery in late cycle power was in 2008 businesses has been mixed $6.53 Expect stronger 2nd half, with a particularly strong fourth quarter to drive full year 2011 $4.85 organic revenue and ear
Slide 33: Questions?
Questions? INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 33
Slide 34: Appendix
Appendix INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 34
Slide 35: EPS Mid-Point Model
EPS Mid-Point Model ($ millions, except share data) 2010 2011E Revenue $4,887 $5,562 Segment income margin 11.5% $560 10.9% $603 Corporate expense (96) (105) Pension / PRHC (52) (37) Stock-based compensation (31) (42) Impairment of goodwill and other intangibles (2) (1) Special charges (36) (24) Ope
Slide 36: Q2 2011 Backlog by Segment
Q2 2011 Backlog by Segment 7/2/2011 Ba ckl og Va ri a nce to Q1 2011 Va ri a nce to Q2 2010 Flow Technology $907 7% 43% Thermal Equipment & Services $1,448 -11% -9% Test & Measurement $180 17% 26% Industrial Products & Services $494 23% 34% Consolidated SPX $3,029 0% 11% August 2011 36
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL August 2011 37
Slide 38: Q2 2011 Organic Revenue Growth Reconciliation
Q2 2011 Organic Revenue Growth Reconciliation Quarter Ended July 2, 2011 Net Revenue Acquisitions/ Change Divestitures Currency Organic Flow Technology 28.5% 6.1% 8.2% 14.2% Thermal Equipment & Services 10.1% 0.0% 6.6% 3.5% Test & Measurement 20.1% 6.5% 5.6% 8.0% Industrial Products & Services -1.2%
Slide 39: Q1 Free Cash Flow Reconciliation
Q1 Free Cash Flow Reconciliation ($ millions) Q1 2010 Q1 2011 Net cash from continuing operations $ (35) $ (25) Capital expenditures $ (16) $ (12) Free cash flow from continuing operations $ (52) $ (37) August 2011 39
Slide 40: Q2 Free Cash Flow Reconciliation
Q2 Free Cash Flow Reconciliation ($ millions) Q2 2010 Q2 2011 Net cash from continuing operations $ 49 $ 48 Capital expenditures $ (12) $ (31) Free cash flow from continuing operations $ 37 $ 18 August 2011 40
Slide 41: Full Year Free Cash Flow Reconciliation
Full Year Free Cash Flow Reconciliation ($ millions) 2010 2011E Guidance Range Net cash from continuing operations $ 257 $ 370 to $ 410 Capital expenditures $ (76) $ (150) $ (150) Free cash flow from continuing operations $ 181 $ 220 to $ 260 Add back: Payments on early termination of swap agreeemen
Slide 42: Debt Reconciliations
Debt Reconciliations ($ millions) 4/2/2011 7/2/2011 Short-term debt $ 88 $ 135 Current maturities of long-term debt 23 1 Long-term debt 1,111 1,111 Gross Debt $ 1,222 $ 1,247 Less: Puchase card program and extended A/P programs $ (30) $ (43) Adjusted Gross Debt $ 1,192 $ 1,204 Less: Cash in excess o
Slide 43: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2010 LTM 2011E Revenues $4,887 $5,196 $5,562 Net Income $194 $162 $227 Income tax provision (benefit) 53 58 102 Interest expense 82 94 96 Income before interest and taxes $329 $314 $425 Depreciation and intangible amortization expense 113 116 122 EBITDA from
Slide 44: Adjusted EPS
Adjusted EPS Q2 2010 1H 2010 Q3 2010 Q2 2011 1H 2011 GAAP EPS from continuing operations $1.40 $1.78 $0.78 $0.62 $1.11 non-cash asset impairment 0.29 0.29 tax benefits (0.40) (0.40) refinancing charges $0.33 Adjusted EPS from continuing operations $1.00 $1.38 $1.11 $0.91 $1.40 August 2011 44
Slide 45: Adjusted EPS
Adjusted EPS 2011E 2006 2007 2008 2009 2010 Mid-Point GAAP EPS from continuing operations $ 3.74 $ 5.33 $ 4.68 $ 0.95 $ 3.86 $ 4.11 refinancing charges - - - - 0.33 asset impairments - 0.05 2.21 3.40 - 0.29 tax benefits (0.85) (0.59) (0.47) (0.43) (0.57) legal matters 0.27 0.06 0.11 - - other (0.08)