Slide 1: SPX Technologies Q3 2023 Earnings Presentation
SPX Technologies Q3 2023 Earnings Presentation November 2, 2023
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: Executive Summary
Executive Summary ❑ Strong Q3 2023 performance ✓ Significant y/y revenue and margin growth ✓ Solid performance from acquisitions ❑ Increasing full-year guidance midpoint ✓ Strong performance across both segments ✓ Adjusted EPS* growth of ~38% ❑ Settlement brings South Africa involvement to end ✓ Eli
Slide 5: Q3 2023 Results Summary
Q3 2023 Results Summary ($ millions) Q3 2023 Revenue ❑ Revenue growth of 21% Adjusted Operating Income / Margin* ✓ Strength in both segments ✓ Strong organic* and inorganic growth ❑ Strong margin performance continues ✓ 57% growth in Adj. Operating Income* ✓ 390 bps of margin* expansion Strong Deman
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Sustainability Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Results/account
Slide 7: Q3 Financial Review
Q3 Financial Review Mark Carano
Slide 8: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q3 2022 Q3 2023 GAAP EPS from continuing operations $0.27 $0.76 Amortization $0.11 $0.24 Acquisition-related ($0.01) $0.05 Asbestos-related $0.27 - Non-service pension & other* $0.17 $0.01 Adj. EPS from continuing operations $0.81 $1.06 Q3 2023 Adjusted EPS of $1.06 Note:
Slide 9: Q3 2023 Results
Q3 2023 Results ($ millions) Q3 Revenue: Q3 2023 Revenue ❑ 21.1% year-over-year increase: Consolidated Segment Income / Margin* ✓ 10.5% organic increase with strength in both HVAC and Detection & Measurement ✓ 10.0% acquisition impact (TAMCO & ASPEQ) ✓ 0.6% currency impact Q3 Consolidated Segment In
Slide 10: HVAC Q3 2023 Results
HVAC Q3 2023 Results ($ millions) Q3 Revenue: Q3 2023 Revenue ❑ 27.0% year-over-year increase: Segment Income / Margin ✓ 10.6% organic increase driven by Cooling ✓ 16.3% acquisition impact (TAMCO & ASPEQ) ✓ 0.1% currency impact Q3 Segment Income and Margin: ❑ $25.2m increase in Segment Income ❑ 570
Slide 11: Detection & Measurement Q3 2023 Results
Detection & Measurement Q3 2023 Results ($ millions) Q3 2023 Revenue Q3 Revenue: Segment Income / Margin ❑ 11.8% year-over-year increase: ✓ 10.4% organic increase due to growth across all platforms; significant project deliveries ✓ 1.4% currency impact Q3 Segment Income and Margin: ❑ $3.0m increase
Slide 12: Financial Position and Liquidity Review
Financial Position and Liquidity Review Mark Carano
Slide 13: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q2 2023 Q3 2023 Q2 2023 Q3 2023 2.5 Short-term debt $132 $130 2 Current maturities of long-term debt 11 14 1.5 Long-term debt 533 530 1 2.1x 2.0x Total Debt $676 $674 1.8x 1.7x 0.5 Less: Cash on hand ** (95) (102) Net Debt $581 $
Slide 14: 2023 Guidance
2023 Guidance Detection & Total SPX HVAC Measurement Revenue $1.74-1.77b $1,125-$1,145m $610-$620m Prior $1.72-1.75b $1,125-$1,145m $590-$605m Segment Income Margin %* ~20% ~20% ~20% Prior ~20% ~20% ~20% Adj. Operating Income* $283-$288m SPX 2025 Targets Prior $277-$285m Revenue $2.0B Adj. Operating
Slide 15: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 16: Market Commentary
Market Commentary Market Comments ❑ Cooling: ‒ Strong demand trends in Americas (data centers, semiconductors, etc.) ‒ Improved labor and supply chain support growth initiatives ❑ Heating: ‒ Channel balanced; backlog normalizing ‒ Normalization of supply chain and labor ❑ Run-rate: ‒ Steady bookings
Slide 17: Summary
Summary ❑ Continued strong performance and outlook ❑ Updated guidance reflects ~38% Adjusted EPS* growth ❑ Attractive acquisition pipeline ❑ Settlement ends involvement in South Africa Well-Positioned to Continue Value-Creation Journey *Adjusted results are non-GAAP financial measures. Reconciliatio
Slide 18: Appendix
SPX4 TECHNOLOGIES Appendix
Slide 19: Modeling Considerations – Full Year 2023
Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $51.5-52.5m Long-term incentive comp $13.0-13.5m Restructuring costs $0 Interest cost $25.0-25.5m Other income/(expense), and Non-service pension benefit/(expense) $3.5-4.0m Tax rate 24.0%-24.5% Capex ~$25m Cash cost of
Slide 20: 2023 Adjusted EPS Guidance - Key Drivers
2023 Adjusted EPS Guidance - Key Drivers • Favorable economic trends $4.32 • Accelerated project sales • Favorable heating season $4.27 Base Case • Unfavorable heating season • Delayed project-related sales $4.22 • Unfavorable economic trends Note: Adjusted results are non-GAAP financial measures. R
Slide 21: Consolidated Segment Income Phasing
Consolidated Segment Income Phasing 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 November 2, 2023 22
Slide 22: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter 2022 2023 ($ millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD Consolidated Segment income* $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 $ 74.4 $ 84.4 $ 91.6 $ 250.4 Corporate expense (16.6) (16.4) (17.2) (18.4) (68.6) (14.6) (16.6) (13.0) (44.2) Acquisition related and other costs
Slide 23: Adjusted SPX Results by Quarter
Adjusted SPX Results by Quarter ($ millions, except per share values) 2022 2023 Q1 Q2 Q3 Q4 2022 Q1 Q2 Q3 YTD HVAC segment income $ 20.6 $ 28.3 $ 33.1 $ 53.5 $ 135.5 $ 47.7 $ 55.2 $ 58.3 $ 161.2 Detection & Measurement segment income 19.0 27.8 30.3 37.0 114.1 26.7 29.2 33.3 89.2 Consolidated segment
Slide 24: HVAC Segment Results
HVAC Segment Results ($ millions) 20222022 2023 2023 Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4 2022 2022 Q1 Q1 Q2 Q3 Q2 YTD YTD Revenue Revenue $193.1 $193.1 $218.7 $218.7 $227.8 $227.8 $274.2$274.2 $913.8$913.8 $251.6 $251.6 $269.0 $269.0 $289.2 $520.6 $809.8 Segment income income $20.6 $20.6 $28.3 $28.3 $33.1$33.1 $
Slide 25: Detection & Measurement Segment Results
Detection & Measurement Segment Results ($ millions) 20222022 2023 2023 Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4 2022 2022 Q1 Q1 Q2 Q3 Q2 YTD YTD Revenue Revenue $114.0 $114.0 $135.3 $135.3 $142.7 $142.7 $155.1$155.1 $547.1$547.1 $148.2 $148.2 $154.3 $154.3 $159.5 $302.5 $462.0 Segment income income $19.0 $19.0 $27.8
Slide 26: Q3 2023 U.S. GAAP to Adjusted EPS Reconciliation
Q3 2023 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions, except per Segment income $ 91.6 $ — $ 91.6 share values) Corporate expense (1) (13.0) 0.6 (12.4) Acquisition-related costs (2) (2.9) 2.9 — Long-term incentive compensation expense (3.4) — (3.4) Amortization of i
Slide 27: Q3 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q3 2022 U.S. GAAP to Adjusted EPS Reconciliation ($ millions, GAAP Adjustments Adjusted except per Segment income $ 63.4 $ — $ 63.4 share values) Corporate expense (1) (17.2) 5.0 (12.2) Acquisition-related costs (2) (0.1) 0.1 — Long-term incentive compensation expense (3) (2.1) (0.8) (2.9) Amortizat
Slide 28: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation Three months ended Nine months ended ($ millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Operating income $ 57.7 $ 37.3 $ 158.8 $ 75.9 Include - TSA Income (1) 0.1 0.6 0.3 2.4 Exclude: Acquisition-related and other
Slide 29: Q3 2023 Non-GAAP Reconciliation - Organic Revenue
Q3 2023 Non-GAAP Reconciliation - Organic Revenue Three months ended September 30, 2023 Detection & HVAC Measurement Consolidated Net Revenue Growth 27.0 % 11.8 % 21.1 % Exclude: Foreign Currency 0.1 % 1.4 % 0.6 % Exclude: Acquisitions 16.3 % - % 10.0 % Organic Revenue Growth 10.6 % 10.4 % 10.5 % No
Slide 30: Q3 2023 Debt Reconciliation
Q3 2023 Debt Reconciliation ($ millions) Q3 2023 Short-term debt $ 130.1 Current maturities of long-term debt 14.0 Long-term debt 529.8 Gross debt 673.9 (1) Plus: adjustment associated with credit agreement - Adjusted gross debt 673.9 Less: cash and equivalents (100.9) Adjusted net debt $ 573.0 (1)
Slide 31: Adjusted EBITDA Reconciliation
Adjusted EBITDA* Reconciliation ($ millions) 2022 2023 Q4 Q1 Q2 Q3 YTD LTM** Net income (loss) $ (27.3) $ 42.8 $ 36.0 $ (20.4) $ 58.4 $ 31.1 Income tax provision 2.8 11.3 7.8 12.4 31.5 34.3 Interest expense 2.0 2.4 5.4 10.2 18.0 20.0 Income (loss) before interest and taxes (22.5) 56.5 49.2 2.2 107.9
Slide 32: Q3 2023 Adjusted Free Cash Flow Reconciliation
Q3 2023 Adjusted Free Cash Flow Reconciliation ($ millions) Q3 2023 Operating cash flow from continuing operations $ 45.4 Capital expenditures (7.8) Free cash flow from continuing operations 37.6 Adjustments* 1.0 Adjusted free cash flow from continuing operations $ 38.6 *Adjustments represent the re