Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Electrical Products Group Conference 2013
34 slides from Spx Technologies's conference presentation, May 20, 2013
Slide 1: Electrical Products Group Presentation
Electrical Products Group Presentation Chris Kearney, Chairman, President and CEO May 20, 2013
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: Key 2013 Messages
Key 2013 Messages Near Term Focus Focused on improving operational performance: Targeting 40 to 80 points of improvement in segment income margins $30m+ of restructuring actions planned for 2013 New leadership with proven track records for operational improvement at underperforming businesses $450m
Slide 4: 2013 Restructuring Actions
2013 Restructuring Actions ($ millions) 2013E restructuring expense: $30m+ Estimated savings: 2013E: ~$15m Restructuring Annualized: ~$30m Expense $15 to $20 Key 2013 actions: $10 to Thermal Segment: $15 o Reduce fixed cost base at power-related businesses located in Europe Flow Segment: o ClydeUnio
Slide 5: Capital Allocation
Capital Allocation 2013 Capital Allocation Priorities 1) Operational improvements and organic growth initiatives: Historical Capital Allocation Methodology Restructuring actions Target Gross Leverage: Capital expenditures 1.5x to 2.5x Innovation 2) Annual dividend ($1 per share, paid quarterly) Gros
Slide 6: 2013 Projected Liquidity
2013 Projected Liquidity Projected Liquidity ($ millions) Amount Expected Timing Cash on Hand at March 30, 2013 $755 2013E Cash Outflows 2013 voluntary pension contribution ($250) completed April 2013 2013 targeted share repurchases, net of Q1 repurchases ($173) opportunistic Planned dividend paymen
Slide 7: 2013 Earnings Accretive Actions
2013 Earnings Accretive Actions Action Annualized EPS Benefit 1) ~$30m of annual savings from restructuring ~$0.50 per share 2) $200m of share repurchases ~$0.26 per share 3) $250m voluntary pension funding ~$0.24 per share ($160m net of cash tax benefit) 4) ~$600m of projected cash on hand to be de
Slide 8: Strategic Transformation
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Slide 9: Strategic Transformation
Strategic Transformation 1997-2004 2005-2011 2012 & Beyond Focus on Diversification Focus on Strategic Markets Focus on Flow Platforms Diversification: >100 acquisitions; divestitures of legacy businesses ClydeUnion Acquisition APV Acquisition United Dominion Service Solutions Acquisition Divestitur
Slide 10: Strategic Transformation: 2005 to Today
Strategic Transformation: 2005 to Today ($ millions) Acquisition legend: Teradyne* $40 Flow Technology Thermal Equipment Matra* Gerstenberg Murdoch $37 $31 $7 Industrial Products 15 Acquisitions Test & Measurement JC Diagnostics* Anhydro e&e $40 $59 $14 Total Purchase Cartool* Johnson Pump APV Autob
Slide 11: Key Divestitures
Key Divestitures ($ millions) Quarter Annual Gross EBITDA Business Sold Primary End Market Completed Revenue Proceeds Multiple Building Life Security & 1) EST Q1 2005 $438 $1,395 ~15.5x Commercial Construction 2) Bomag Q1 2005 Construction $506 $486 (1) ~10.5x Laboratory & 3) Kendro Q2 2005 $371 $82
Slide 12: Strategic Transformation: Revenue Breakdown
Strategic Transformation 2004 Revenue Breakdown 2012 Revenue Breakdown Laboratory Equipment Other Flow Auto 7% 7% Compaction 8% Flow 53% Equipment 14% Industrial 9% 18% Security $5.7b $5.1b 10% Infrastructure Vehicle Service 24% 15% Niche Industrial Thermal 6% 29% Exited businesses Continue to Focus
Slide 13: Segment Income Development
Segment Income Development ($ millions, except per share data) $800 $600 Flow Technology Test & Measurement $400 ~25% ~61% Industrial Products & Services Thermal Equipment & Services $200 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013E Flow Technology earnings $1.70 $2.05 $2.81 $3.91 $3.38 $3.46 $4
Slide 14: Flow Technology Financial Performance
Flow Technology Financial Performance Organic Revenue Change low to mid 8% 9% 15% 8% (14%) (4%) 15% 5% single digits +1% to Revenue ($ millions) recession $2,682 +5% Segment Income % 16.4% $1,999 $2,042 15.6% $1,634 $1,662 14.4% APV ClydeUnion $1,070 12.9% 13.0% 13.1% 12.2% 11.6% to $734 $815 12.0%
Slide 15: Attractiveness of Flow Space
Attractiveness of Flow Space Definition of Flow Space Technology Examples pumps valves Market sectors that require highly engineered system solutions and components which enable our customers to: process, transport, meter, filter or dehydrate… …fluids, gases and powders across a variety of applicati
Slide 16: Flow End Market Development
Flow End Market Development Flow Acquisitions Year Business Primary Market Revenue by End Market 1998 Lightnin Mixers Industrial Flow 2004 2000 Copes Vulcan Valves Power & Energy ($ millions) 2012 2001 Waukesha Cherry-Burrell Food & Beverage 2001 Bran & Luebbe Pumps Industrial Flow $947 2001 Dolling
Slide 17: Flow Technology Food & Beverage Expansion
Flow Technology Food & Beverage Expansion 2008 2009 2010 2011 2012 2013 and beyond Focus on organic Gerstenberg Murdoch Seital growth and margin butter, fats & oils engineering separation improvement: defining processing expertise technology acquisition 1) grow installed New Zealand expands F&B expa
Slide 18: Flow Technology Power & Energy Expansion
Flow Technology Power & Energy Expansion 2010 2011 2012 2013 2014 ClydeUnion future expectations defining valves margin improvement acquisition multi-product offerings / expanded niche filtration revenue synergies position into global platform Acquisitions beyond 2013 dehydration added highly engine
Slide 19: Flow Technology Segment Overview
Flow Technology Segment Overview 2012 Revenue by End Market 2012 Revenue by Geography Food & Beverage 35% Power & Energy 33% 26% 33% $2.7b 28% 4% 9% Industrial Flow Processes 32% SPX Flow Technology is a Leading Global Supplier of Engineered Products and Solutions In the Food & Beverage, Power & Ene
Slide 20: Flow Technology Segment Overview
Flow Technology Segment Overview Food & Beverage Power & Energy Industrial Flow 2012 Revenue: $947m 2012 Revenue: $876m 2012 Revenue: $859m Key Products Key Products Key Products Pumps Valves Pumps Pumps Heat Exchangers Valves Heat Exchangers Mixers Heat Exchangers Mixers Dispersion Filtration Filtr
Slide 21: Flow Technology: Food & Beverage Market
Flow Technology: Food & Beverage Market Flow’s 2012 Food & Beverage Revenue Market Overview Non-Dairy Food & Beverage Regulated, global industry in which customers Dairy 46% demand highly engineered, turn-key solutions $947m 48% Personal Care Competitors include GEA, Tetra Pak, Alfa Laval, 6% Sudmo
Slide 22: Key Flow Technology Food & Beverage Offerings
Key Flow Technology Food & Beverage Offerings Full Line Systems Components Liquid Processing Separation & Dispersion Mixing Clarification Drying & Evaporation Pumps Valves Heat Exchangers Extraction & Distillation Our Technology Offerings Include Full-Line Process Systems and Process Components May
Slide 23: Flow Technology: Power & Energy Market
Flow Technology: Power & Energy Market Flow’s 2012 Power & Energy Revenue Power & Energy Overview Upstream Oil & Gas Large, global markets in which customers demand Downstream 32% highly engineered technology solutions $876m Oil & Gas 40% Power Competitors include Flowserve, Sulzer, KSB, Generation
Slide 24: Key Flow Technology Power & Energy Offerings
Key Flow Technology Power & Energy Offerings multi-stage pumps valves closures reciprocating oil pump multi-stage, vertical pump dehydration & filtration Complementary Products With Very Good Potential for Revenue Synergies Through Cross-Selling Opportunities, Channel Combinations and Key Customer A
Slide 25: Flow Technology: Industrial Flow Markets
Flow Technology: Industrial Flow Markets Flow’s 2012 Industrial Revenue Industrial Flow Markets Overview General Industrial; 32% Compressed Air; Large, global markets in which customers demand 20% highly engineered technology solutions $859m Other; 5% $860m Water; 6% Chemical; 18% Fragmented, region
Slide 26: Key Flow Technology Industrial Offerings
Key Flow Technology Industrial Offerings strategic growth mixers pumps heat exchangers air treatment opportunities Expand product offerings geographically Add adjacent technologies to broaden product portfolio Extend vertically in select end markets Fragmented competitor and adjacent supplier enviro
Slide 27: Executive Summary
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Slide 28: Key 2013 Messages
Key 2013 Messages Near Term Focus Focused on improving operational performance: Targeting 40 to 80 points of improvement in segment income margins $30m+ of restructuring actions planned for 2013 New leadership at underperforming businesses $450m capital allocation plans for 2013: $250m voluntary pen
Slide 29: Questions?
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Slide 30: Appendix
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Slide 31: 2013 Adjusted Free Cash Flow Guidance Reconciliation
2013 Adjusted Free Cash Flow Guidance Reconciliation 2013 Adjusted Free Cash Flow Guidance ($ millions) Q1 2013 Q2 to Q4 2013E Full Year 2013E Net cash from operations ($57) $112 to $152 $55 to $95 Tax payment on the gain from the sale of Service Solutions $115 $0 $0 $115 $115 Voluntary pension cont
Slide 32: 2005 to 2012 Flow Organic Growth
2005 to 2012 Flow Organic Growth Flow Segment - Organic Revenue Reconciliation 2005 2006 2007 2008 2009 2010 2011 2012 Net Revenue Change 8.4% 11.2% 31.2% 86.8% -18.2% 1.7% 22.8% 31.4% Acquisitions/Divestitures 0.0% 0.9% 14.0% 78.9% 0.0% 5.6% 4.3% 29.2% Currency 0.1% 1.0% 2.5% -0.1% -4.3% 0.2% 3.4%
Slide 33: Bank EBITDA Reconciliation
Bank EBITDA Reconciliation ($ millions) LTM 2013E Net Income $248 $206 Income tax provision (benefit) 15 65 Interest expense 115 107 Income before interest and taxes $378 $379 Depreciation, intangible amortization expense and write off of goodwill and intangibles 401 119 EBITDA from continuing opera
Slide 34: Debt Reconciliation
Debt Reconciliation ($ millions) 3/30/2013 Short-term debt $ 31 Current maturities of long-term debt 9 Long-term debt 1,652 Gross Debt $ 1,691 Less: Puchase card program and extended A/P programs (26) Adjusted Gross Debt $ 1,665 Less: Cash in excess of $50 (705) Adjusted Net Debt $ 960 Note: Debt as