Slide 1: SPX Corporation 2011 Third Quarter Results
SPX Corporation 2011 Third Quarter Results GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS November 2, 2011 1 September 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 November 2011 3
Slide 4: Third Quarter Opening Remarks
Third Quarter Opening Remarks 9% increase in adjusted earnings per share: Adjusted EPS and segment margin results exceeded company guidance 8% revenue growth: Sales into emerging markets increased 29% Growth driven by Flow Technology and Test & Measurement segments Results in power related businesse
Slide 5: Consolidated Q3 Financial Analysis
Consolidated Q3 Financial Analysis ($ millions) Revenue 8% revenue growth: Segment Margins 4% organic growth 3% currency benefit $1,387 1% acquisition growth $1,288 90 points of margin decline: 12.2% 11.3% Due primarily to margin declines in late cycle, power related businesses Q3 2010 Q3 2011 Q3 Re
Slide 6: Q3 Revenue by Region
Q3 Revenue by Region Q3 Year-Over-Year Change Q3 2011 Revenue Q3 2011 Q3 2011 Q3 2011 by Geography +7% +7% +8% North America Europe 45% 24% South Asia Pacific America 19% Middle East 4% & Africa 8% Q3 2011 +10% Q3 Sales Into All Key Regions Increased Year-Over-Year; Emerging Market Revenue Accounted
Slide 7: Backlog
Backlog ($ billions) Quarter End Backlog Sequential Change $3.0 $3.0 $3.0 $2.9 $2.8 5% currency decline: South African Rand Euro Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 4% organic decline: Decline in Thermal segment Aging of Q3 2011 Ending Backlog backlog offset an increase in Flow segment backlog 2
Slide 8: 2011 EPS Guidance Update
2011 EPS Guidance Update 2011 EPS* Guidance Range $4.80 EPS Mid-Point $4.60 $4.55 $4.55 $4.55 $4.50 $4.50 $4.45 $4.40 $4.40 $4.40 $4.35 $4.35 $4.35 $4.25 $4.25 $4.20 $4.20 $4.20 $4.00 Jan 19 Feb 17 May 4 Aug 3* Nov 2* *2011 EPS Guidance is on an adjusted basis and assumes exchange rates from late Oc
Slide 9: Q3 Financial Analysis
Q3 Financial Analysis INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 9
Slide 10: Q3 2011 Earnings Per Share
Q3 2011 Earnings Per Share Q3 2011 GAAP EPS from continuing operations $ 1.19 Net tax benefits $ (0.41) CLYDEUNION acquisition related charges $ 0.43 Adjusted EPS from continuing operations $ 1.21 Q3 2011 Adjusted EPS Excludes $0.41 of Net Tax Benefits and $0.43 of Acquisition Related Charges Novemb
Slide 11: Q3 Adjusted Earnings Per Share
Q3 Adjusted Earnings Per Share Q3 Adjusted Earnings Per Share Year-Over-Year Bridge Guidance range: $1.00 to $1.10 Q3 2010 adjusted EPS $1.11 $1.11 $1.21 Segment income Flow Technology $0.15 Test & Measurement $0.15 Thermal Equipment & Services ($0.25) Industrial Products & Services ($0.07) Reduced
Slide 12: Flow Technology Q3 Analysis
Flow Technology Q3 Analysis ($ millions) Revenue 20% revenue growth: Segment Margins 16% organic growth $528 4% currency benefit $439 20% increase in segment income 13.3% 13.3% Margins flat: Increased percentage of lower margin systems revenue offset leverage on organic revenue growth Q3 2010 Q3 201
Slide 13: Flow Technology Food & Beverage Systems
Flow Technology Food & Beverage Systems ($ millions) Annual Systems Revenue 2011E Systems Revenue by Type +70% to +80% Dairy & Dairy Food Liquid Powder 32% 20% $293 $270 Dairy $232 Turnkey Food 14% 3% Pharma Fats & Oils 4% Cheese Beverage 13% 4% 10% 2008 2009 2010 2011E 14% 14% 18% ~25% % of Flow Te
Slide 14: Infant Formula Contract Award
Infant Formula Contract Award SPX Awarded Contract to Establish Powder Infant Formula Plant in New Zealand Contract valued at >$30m SPX scope: Designing and installing all technologies required to convert fresh milk into dry powder infant formula Constructing 27,000 square foot facility This Highly
Slide 15: Flow Technology Backlog Analysis
Flow Technology Backlog Analysis ($ millions) Quarter End Backlog Q3 2011 Backlog Commentary Components Systems 3% organic backlog growth: Demand remained at a high level $318 $308 across key end markets and $295 geographies $250 $283 4% currency decline $554 $589 $592 $522 $506 Q3 2010 Q4 2010 Q1 2
Slide 16: Thermal Equipment & Services Q3 Analysis
Thermal Equipment & Services Q3 Analysis ($ millions) Revenue Segment Margins 1% revenue decline: 4% organic decline $439 $434 3% currency benefit 13.7% 32% decrease in segment income 9.4% 430 points of margin decline: Decline in higher margin power generation projects Organic volume decline Q3 2010
Slide 17: Thermal Equipment & Services Backlog Analysis
Thermal Equipment & Services Backlog Analysis ($ millions) Quarter End Backlog Q3 2011 Commentary Thermal Backlog Medupi/Kusile Project Backlog Backlog declined 18% sequentially: 11% organic decline 7% currency decline $747 $741 $685 $642 Year-to-date orders through Q3 $509 increased 1% over last ye
Slide 18: Test & Measurement Q3 Analysis
Test & Measurement Q3 Analysis ($ millions) Revenue Segment Margins $256 12% revenue growth: $228 5% organic growth 5% increase from acquisition 11.5% 2% currency benefit 7.8% 65% increase in segment income 370 points of margin expansion Q3 2010 Q3 2011 Note: See appendix for non-GAAP reconciliation
Slide 19: Industrial Products & Services Q3 Analysis
Industrial Products & Services Q3 Analysis ($ millions) Revenue 8% organic revenue decline: Segment Margins Timing of power transformer and crystal grower shipments Decline in sales of aerospace $184 components $170 11.8% 9.5% 26% decrease in segment income: 230 points of margin decline: Lower volum
Slide 20: Industrial Products & Services Backlog Analysis
Industrial Products & Services Backlog Analysis ($ millions) Quarter End Backlog Q3 2011 Backlog Commentary $494 $490 37% year-over-year increase $403 $359 $359 Power transformer trends: Replacement demand for power transformers remains robust Gradual, moderate increase in average price of new order
Slide 21: 2011 Guidance
2011 Guidance INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 21
Slide 22: Q4 2011 Targets
Q4 2011 Targets ($ millions, except per share data) Q4 2010 Q4 2011E Revenue $1,325 total growth: +11% to +15% Segment Income $160 $185 to $200 Segment Income Margin 12.1% 12.7% to 13.2% Earnings Per Share $1.13* $1.75 to $1.95 * Adjusted EPS, see appendix for non-GAAP reconciliation Targeting 11% t
Slide 23: Q4 Earnings Per Share Bridge
Q4 Earnings Per Share Bridge Q4 Earnings Per Share Year-Over-Year Bridge $1.75 to $1.95 Q4 2010 adjusted EPS* $1.13 $1.13 Segment Income $0.45 Reduced special charges $0.17 Net other items $0.10 Q4 2011 EPS mid-point guidance $1.85 Q4 2010* Q4 2011E * Adjusted EPS, see appendix for non-GAAP reconcil
Slide 24: 2011 Consolidated Financial Targets
2011 Consolidated Financial Targets Revenue ~$5.5b total growth: +11% to 12% organic growth: +7% to +8% Segment Income Margin 10.8% to 11.0% modest decline Adjusted Earnings Per Share $4.35 to $4.55 ~23% increase vs. 2010 Free Cash Flow $220m to $260m ~107% of net income Note: see appendix for non-G
Slide 25: Free Cash Flow
Free Cash Flow ($ millions) $300 $220 to $260 $175 to $215 $206 $200 $174 $100 $80 $37 $33 $18 $0 -$37 -$52 -$100 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2010* 2011E 2010 2011 2010 2011 2010 2011 2010* 2011E *Includes $100m voluntary pension contribution Note: See appendix for non-GAAP reconciliations 2011 Free Cas
Slide 26: Balance Sheet and Debt Ratios
Balance Sheet and Debt Ratios ($ millions) Debt to Capital Key Balance Sheet Accounts 35% 35% 7/2/2011 10/1/2011 Ca s h $395 $396 Q2 2011 Q3 2011 Tota l As s ets $6,248 $6,186 Debt to Bank EBITDA (1) 2.1x 2.0x Tota l Debt $1,247 $1,202 1.5x 1.4x Tota l Equi ty $2,294 $2,264 Q2 2011 Q3 2011 (1) Net a
Slide 27: CLYDEUNION Acquisition Update
CLYDEUNION Acquisition Update Executed amended purchase agreement Completed financing structure : $300m 18-month term loan $500m 5-year term loan Average interest rate: <3% Received antitrust clearance from the U.S. and Norway: Approvals from China and the French Ministry of Defense still required I
Slide 28: Executive Summary
Executive Summary INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 28
Slide 29: Key Flow Technology Acquisitions
Key Flow Technology Acquisitions Food & Beverage Power & Energy Industrial Markets Note: CLYDEUNION acquisition targeted to close in Q4 2011 Since 2005, 85% of Acquisition Capital Has Been Focused on Strategically Expanding Flow Technology Segment November 2011 29
Slide 30: Pro Forma SPX-CLYDEUNION Revenue Profile
Pro Forma SPX-CLYDEUNION Revenue Profile 2011E Pro Forma 2010 Pro Forma Revenue by Segment Revenue % by Geography Thermal 45% 25% Equipment & Flow Services Technology 27% 43% Test & 16% Measurement 17% Industrial Products & 4% Services 13% 10% The Acquisition of CLYDEUNION Will Increase Flow Technol
Slide 31: Executive Summary
Executive Summary Earnings Per Share* $6.53 Focused on fourth quarter operating $4.35 to execution $4.85 $4.55 $3.90 Targeting 23% EPS growth in 2011E $3.62 $3.07 Investing in long-term strategy: CLYDEUNION acquisition Large Power Transformer expansion 2006 2007 2008 2009 2010 2011E *As adjusted num
Slide 32: Questions?
Questions? INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 32
Slide 33: Appendix
Appendix INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 33
Slide 34: EPS Mid-Point Model
EPS Mid-Point Model ($ millions, except share data) 2010 2011E Revenue $4,887 $5,475 Segment income margin 11.5% $560 10.9% $597 Corporate expense (96) (102) Pension / PRHC (52) (36) Stock-based compensation (31) (42) Impairment of goodwill and other intangibles (2) 0 Special charges (36) (25) Opera
Slide 35: Full Year Segment Targets
Full Year Segment Targets Previous Revenue Growth Targets Current Revenue Growth Targets +21% to +21% to +23% +22% +17% to +19% +16% to +17% +8% to +10% +4% to +4% to +5% +6% +2% to +3% Flow Technology Test & Measurement Industrial Products Thermal Equipment and Services and Services Margin Target 1
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL November 2011 36
Slide 37: Q3 2011 Organic Revenue Growth Reconciliation
Q3 2011 Organic Revenue Growth Reconciliation Quarter Ended October 1, 2011 Net Revenue Acquisitions/ Change Divestitures Currency Organic Flow Technology 20.4% 0.5% 3.6% 16.3% Thermal Equipment & Services -1.1% 0.0% 2.5% -3.6% Test & Measurement 12.3% 5.0% 2.5% 4.8% Industrial Products & Services -
Slide 38: 2010 Free Cash Flow Reconciliation
2010 Free Cash Flow Reconciliation ($ millions) Full Year Q1 2010 Q2 2010 Q3 2010 Q4 2010 2010 Net cash from continuing operations $ (25) $ 49 $ 20 $ 214 $ 257 Capital expenditures (12) (12) (12) (40) (76) Payments on early termination of swap agreements - - 25 - 25 Adjusted free cash flow from cont
Slide 39: 2011 Free Cash Flow Reconciliation
2011 Free Cash Flow Reconciliation ($ millions) Full Year Q1 2011 Q2 2011 Q3 2011 Q4 2011E 2011E Net cash from continuing operations $ (35) $ 48 $ 111 $ 250 $ 375 Capital expenditures (16) (31) (31) (57) (135) Adjusted free cash flow from continuing operations $ (51) $ 18 $ 80 $ 193 $ 240 Note: Q4 2
Slide 40: 2011 Free Cash Flow Guidance Range
2011 Free Cash Flow Guidance Range ($ millions) Q4 2011E Full Year 2011E Net cash from continuing operations $ 225 $ 275 $ 350 $ 400 Capital expenditures (50) (60) (130) (140) Adjusted free cash flow from continuing operations $ 175 $ 215 $ 220 $ 260 November 2011 40
Slide 41: Debt Reconciliations
Debt Reconciliations ($ millions) 7/2/2011 10/1/2011 Short-term debt $ 135 $ 86 Current maturities of long-term debt 1 1 Long-term debt 1,111 1,115 Gross Debt $ 1,247 $ 1,202 Less: Puchase card program and extended A/P programs $ (43) $ (39) Adjusted Gross Debt $ 1,204 $ 1,163 Less: Cash in excess o
Slide 42: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2010 LTM 2011E Revenues $4,887 $5,196 $5,475 Net Income $194 $162 $226 Income tax provision (benefit) 53 58 97 Interest expense 82 94 95 Income before interest and taxes $329 $314 $418 Depreciation and intangible amortization expense 113 116 121 EBITDA from c
Slide 43: Q3 and Q4 2010 Adjusted EPS
Q3 and Q4 2010 Adjusted EPS Q3 2010 Q4 2010 GAAP EPS from continuing operations $0.78 $1.30 tax benefits (0.17) refinancing charges $0.33 Adjusted EPS from continuing operations $1.11 $1.13 November 2011 43
Slide 44: Full Year Adjusted EPS
Full Year 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 $ 4.14 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) (0.41) legal matters 0.27 0.06 0.