Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Presentation (November 2023)
60 slides from Spx Technologies's investor presentation, November 2023
Slide 1: SPX Technologies Investor Presentation
SPX Technologies Investor Presentation November 2023 SPX Corporation 2019 Investor Event - New York
Slide 2: SPX Technologies Overview
SPX4 TECHNOLOGIES SPX Technologies Overview
Slide 3: Company Overview
Company Overview 2022 Revenue by Region† ❑ Headquartered in Charlotte, NC ~85% 89% ~10% 6% ❑ Focused, market-leading platforms: ✓ HVAC ✓ Detection & Measurement ~5% ❑ $1.75B Revenue* ❑ +4,000 employees ❑ NYSE Ticker: SPXC * Midpoint of 2023 guidance as presented November 2, 2023 †Based on management
Slide 4: Attractiveness of SPX for Long-Term Holders
Attractiveness of SPX for Long-Term Holders Attractive Core Well positioned key platforms in growth markets Favorable long-term secular trends and business mix; Growth growth initiatives in early innings Cash Flow Solid free cash flow conversion Business System Consistent repeatable process to drive
Slide 5: Strong Product Offerings and Attractive Market Dynamics
Strong Product Offerings and Attractive Market Dynamics 20231 REVENUE FROM REPLACEMENT SALES2 ADJUSTED REVENUE EBITDA MARGIN ~2/3 ✓ Cooling towers ✓ Refrigeration ✓ Engineered air movement $1,135m low-20s REVENUE FROM #1 OR #2 MARKET POSITION2 ✓ Process Cooling ✓ Boilers ✓ Electrical heating ~90% ✓
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Resu
Slide 7: 2023+ Initiatives
2023+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service SEALITE Robotics ECS CINCINNATI FAN Digital ITL Sourcing AI Loyalty November 2023 7
Slide 8: Focus on Sustainability
Focus on Sustainability …In What We Make… Our products enable Lower Clean Connectivity Clean Safety Emissions Water Energy …And How We Make It… Core # 190 of 500 Diversity & Engagement Continuous Minimize Values Inclusion Improvement Waste November 2023 8
Slide 9: Focused, Market-Leading Growth Platforms
Focused, Market-Leading Growth Platforms Detection & Measurement ($615M)(1) HVAC ($1,135M)(1) Location & Inspection $1.75 Billion(1) Cooling ▪ Premium engineered niches ▪ Technology / innovation focus Aids to Navigation ▪ ~90% Market Leadership (#1 or #2) Heating ▪ High replacement revenue (~2/3) IT
Slide 10: Momentum in Digital
Momentum in Digital Driving Customer Value Through Focus on Technology November 2023 10
Slide 11: Well-Positioned for Infrastructure Spending
Well-Positioned for Infrastructure Spending ❑ Water & Wastewater ❑ General Construction (heavy civil, housing) ❑ Public Transit SEALITE ❑ Renewables (wind) ECS ❑ Telecom (5G), Airports, Ports ❑ Institutional (K-12, gov’t, healthcare) ❑ Infrastructure-centric R&D November 2023 11
Slide 12: SPX 2025
SPX4 TECHNOLOGIES SPX 2025
Slide 13: SPX Strategic Portfolio Transformation Continues
SPX Strategic Portfolio Transformation Continues 2021 2023 Current Guidance* 2025 Targets Revenue $1.22B $1.75B ~$2.0B Gross margin % 35.4% ~38% ~40% Segment Income %† 16.4% ~20% ~20% Adj. Operating Income %† 11.1% ~16.3% ~16% Long-term Growth % ~2-4% ~3-5% ~3-5% Adj. EPS $2.33 ~$4.27 +$5.00 *Midpoi
Slide 14: SPX Long-Term Targets – Revenue
SPX Long-Term Targets – Revenue SPX TODAY SPX TARGET 2100.0 '16-'23 CAGR ~$2.0 Billion 2000.0 1900.0 1800.0 ~$1.75 Billion* 1700.0 Process Cooling 1600.0 ~$1.46 Billion 1500.0 1400.0 Process Cooling 1300.0 ~$1.22 Billion 1200.0 ~10% 1100.0 Process Cooling HVAC HVAC (~$1,020m)* 1000.0 HVAC 900.0 ($79
Slide 15: Segment Overview
Segment Overview ❑ HVAC ❑ Detection & Measurement
Slide 16: HVAC
SPX4 TECHNOLOGIES HVAC
Slide 17: HVAC Segment Overview
HVAC Segment Overview Revenue 2022 Revenue by Product Adjusted segment income % ** ($ millions) ~$1,135 Heating 2022 Cooling $914 Products Revenue Products $752 41% $914m 59% ~20% 14% 15% 2022 Revenue by Geography ~3% 2021 2022 2023E Gross Margin% 30% 30% - Adjusted EBITDA* $116 $145 - ~8% ~89% *Non
Slide 18: HVAC Cooling Overview
HVAC Cooling Overview 2022 Revenue by Product ❑ Cooling products used in non-residential, commercial, Parts & Service industrial, process cooling and refrigeration applications 29% Package 2022 Cooling Revenue Towers & ❑ Well-recognized product brands: Marley and Recold $537m Refrigeration 71% ❑ Wel
Slide 19: Cooling Product Examples
Cooling Product Examples Marley NC Cooling Tower Marley MH Element Fluid Cooler Engineered Air Movement High-Value Components ✓ High efficiency ✓ Industrial and process cooling ✓ Custom Fans & Blowers ✓ Gearboxes, motors, drives ✓ Low drift rates ✓ High performance copper coils ✓ Two stage filtratio
Slide 20: HVAC Heating Overview
HVAC Heating Overview 2022 Revenue by Product ❑ North American businesses with strong brands Electric Heating 2022 Products ❑ Large installed base / established spec position 27% Boiler Systems Revenue 73% $377m ❑ Products used in residential and non-residential markets and sold primarily through di
Slide 21: Heating Product Examples
Heating Product Examples Residential Boilers Commercial Boilers Electrical Heating Products ✓ High efficiency natural gas ✓ High efficiency natural gas Wash-down, corrosion Digital ✓ Standard cast iron ✓ Standard cast iron resistant heaters wall heaters ✓ Unique hybrid design ✓ Gas combi boilers Tre
Slide 22: Detection & Measurement
SPX4 TECHNOLOGIES Detection & Measurement
Slide 23: Detection & Measurement Segment Overview
Detection & Measurement Segment Overview 2022 Revenue by Product Adjusted segment income %** ($ millions) Location & ~$615 Aids to Navigation $547 (“AtoN”), CommTech, 2022 Inspection $467 and Transportation Revenue Equipment 52% $547m 48% 20% 21% ~20% 2022 Revenue by Geography ~19% 2021 2022 2023E G
Slide 24: Location & Inspection Overview
Location & Inspection Overview 2022 Revenue by Product ❑ A leading global supplier of location & inspection equipment for underground infrastructure 2022 Location Revenue Inspection 50% 50% ❑ Global distribution / established channels $262m ❑ Integrated hardware and software solutions 2022 Revenue b
Slide 25: Location & Inspection – Key Products
Location & Inspection – Key Products Location Equipment Inspection Equipment Full Lifecycle Infrastructure Solutions Provider for Location & Inspection Markets November 2023 25
Slide 26: AtoN, CommTech, and Transportation
AtoN, CommTech, and Transportation 2022 Revenue by Product CommTech ❑ Aids to Navigation: Global Leader in terrestrial obstruction lighting, Transportation 20% 27%* marine aids-to-navigation, and airfield ground lighting solutions 2022 Revenue ❑ CommTech : A leading global supplier of spectrum monit
Slide 27: Aids to Navigation – Key End Markets
Aids to Navigation – Key End Markets Terrestrial Obstruction Marine Obstruction Airfield Ground Lighting Lighting Lighting Global Leader with Full Product Range November 2023 27
Slide 28: CommTech – Key Capabilities & Solutions
CommTech – Key Capabilities & Solutions Spectrum Monitoring Communications (SMS) Intelligence NEW PIC Spectrum monitoring leader with expanding COMINT presence November 2023 28
Slide 29: Transportation – Next Generation Fare Collection
Transportation – Next Generation Fare Collection Mobile Legacy Farebox Fast Fare Farebox Fast Fare-e Ticketing Point-of-Sale e-Fare Cloud-Based Infrastructure Software Service and as a Service Support Fare Collection Suite of Products Integrated with Back-End Support; We Believe This is the New Indu
Slide 30: Financial Performance & Capital Allocation
Financial Performance & Capital Allocation
Slide 31: Capital Allocation Discipline
Capital Allocation Discipline Methodology Expected Outcome 1) Utilize strategic planning process to evaluate ▪ Quantify projected future cash flows and future revenue and earnings growth estimate total company valuation 2) Maintain target capital structure ▪ Net Debt to EBITDA(1) target range: 1.5x
Slide 32: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q2 2023 Q3 2023 ($millions) 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
Slide 33: Financial Position – Outlook
Financial Position – Outlook Bank Net Leverage* 3 1.5x-2.5x 2.5 2 1.5 ~2.5x 1 1.7x ~1.5x 0.5 0 Q3 2023 Q4 2023E** LT Target Anticipate Low-End of Target Leverage Range by Year-End * Calculated as provided in SPX Technologies’ credit facility agreement. ** Based on management estimate debt pay down a
Slide 34: SPX Acquisition Approach
SPX Acquisition Approach Qualitative Quantitative ❑ Focused on building existing platforms ❑ Revenue transaction size $20-$200 million ✓ Existing markets or close adjacencies (primary focus); opportunistically consider larger targets ❑ Engineered products ❑ Cash ROIC ≥ double digits 3-5 yrs ❑ Attrac
Slide 35: Building Strategic Platforms
Building Strategic Platforms
Slide 36: SPX Business Value Model
SPX Business Value Model Disciplined Business System Strategic Acquisition Approach Superior Performance Strategic Organic Sales Growth SPX has acquired ~$535M of Organic / Inorganic (Innovation, Product Mgmt.) revenue in ~5 years Revenue Growth Continuous Improvement SEALITE (Lean, 80/20) ITL ECS M
Slide 37: Building Strategic Platforms – Location & Inspection
Building Strategic Platforms – Location & Inspection Location Equipment Inspection Equipment Location & Specialized GPR Location Water & Waste Gas Utility Inspection Ferrous Locators Equipment Water Pipeline Pipeline Equipment Inspection Inspection & Equipment Remediation Transformed ~$100m locator
Slide 38: Building Strategic Platforms – Aids to Navigation
Building Strategic Platforms – Aids to Navigation Obstruction Lighting Marine & Airfield Lighting ITL SEALITE Terrestrial Bolt-on Terrestrial Airfield Ground and Marine Obstruction Obstruction Lighting Obstruction Marine Obstruction Lighting Lighting Lighting Transformed ~$40-50m obstruction lightin
Slide 39: Building Strategic Platforms – CommTech
Building Strategic Platforms – CommTech ECS Legacy Business Acquired Feb 2019 Spectrum Monitoring Tactical Data Links and ~25-30m* ~$40-50m* and COMINT Solutions RF Countermeasures Broad provider of spectrum monitoring and COMINT solutions Product/Technology Synergies Driving Substantial Growth Nove
Slide 40: Building Strategic Platforms - Cooling
Building Strategic Platforms - Cooling Open and Close Loop Cooling Engineered Air Movement Leading Position in Industrial Custom fans, High Performance Packaged Cooling Refrigeration blowers, and Industrial and Towers Products critical exhaust Commercial Air >$660m Revenue* systems Control Solutions
Slide 41: Building Strategic Platforms – HVAC Heating
Building Strategic Platforms – HVAC Heating Hydronic Heating Electrical Heating Leading Position High-efficiency Leader in High-quality in Residential Commercial Supplemental High-efficiency Electric Heating Boilers Boilers Electric Heat for Commercial for Industrial and >$500M high-value Commercial
Slide 42: Executive Summary
SPX4 TECHNOLOGIES Executive Summary
Slide 43: Executive Summary
Executive Summary ❑ Balanced business portfolio with attractive and diverse end market drivers ❑ Effective business system and continued focus on growth accelerators, including inorganic opportunities ❑ Strong cash generation and solid balance sheet support growth investments Significant Value Creat
Slide 44: Appendix
SPX4 TECHNOLOGIES Appendix
Slide 45: 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 46: 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 47: 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 48: End Market Exposure
End Market Exposure ~$1.75 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 25% 21% 13% 41% Water/Wastewater, 7% Hospitality, 1% Utility, 12% Healthcare, 4% Data Centers, 4% Office / Retail, 5% Gov’t & Regulated, Institutional, 5% 22% Light Mfg / Other 7
Slide 49: Segment Income Phasing
Segment Income Phasing 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 November 2023 49
Slide 50: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 Corporate expense (14.4) (13.6) (11.9) (20.6) (60.5) (16.6) (16.4) (17.2) (18.4) (68.6) Acquisition related and other cos
Slide 51: 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 52: Segment Results – 2021-2022
Segment Results – 2021-2022 ($ millions) HVAC D&M 2021 2022 2021 2022 Revenue 752.1 913.8 467.4 547.1 Segment income 107.7 135.5 92.9 114.1 % of revenue 14.3% 14.8% 19.9% 20.9% Depreciation 8.1 9.0 9.8 6.5 Adjusted EBITDA 115.8 144.5 102.7 120.6 % of revenue 15.4% 15.8% 22.0% 22.0% June 2023 52
Slide 53: 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 54: 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 55: 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 56: Adjusted SPX 2021 Results by Quarter
Adjusted SPX 2021 Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2021 HVAC segment income $ 23.0 $ 26.6 $ 23.6 $ 34.5 $ 107.7 Detection & Measurement segment income 24.0 18.1 18.0 32.8 92.9 Consolidated segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 Operating income from continuing operations $ 25.
Slide 57: Q2 2023 Debt Reconciliation
Q2 2023 Debt Reconciliation ($ millions) Q2 2023 Short-term debt $ 132.0 Current maturities of long-term debt 10.5 Long-term debt 533.1 Gross debt 675.6 (1) plus: adjustment associated with credit agreement (0.1) Adjusted gross debt 675.5 less: cash and equivalents (94.8) Adjusted net debt $ 580.7 (
Slide 58: 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 59: 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 60: 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
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