Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Presentation (March 2021)
56 slides from Spx Technologies's investor presentation, March 2021
Slide 1: SPX Corporation Investor Presentation
SPX Corporation Investor Presentation March 2021 SPX Corporation 2019 Investor Event - New York
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, prospective M&A activity, and financial projections, are forward-looking statements within the meaning of Section
Slide 3: Executive Management
Executive Management Gene Lowe Jamie Harris President and CEO Treasurer and CFO March 2021 3
Slide 4: SPX Corporation Overview
SPX4 SPX Corporation Overview
Slide 5: Company Overview
Company Overview Headquartered in Charlotte, NC 2020 Adjusted Revenue* by Region A leading supplier of: 89% 7% HVAC products Detection & Measurement technologies, and Engineered Solutions 4% ~$1.6b Adjusted Revenue* in 2020 ~4,500 employees NYSE Ticker: SPXC SPX is a Leading Supplier
Slide 6: Attractiveness of SPX for Long-Term Holders
Attractiveness of SPX for Long-Term Holders Attractive Core Well positioned key platforms in growth markets Growth Favorable long-term secular trends and business mix; growth initiatives in early innings Cash Flow >100% conversion of adjusted net income* Business System Consistent repeatable process
Slide 7: Strong Product Offerings and Attractive Market Dynamics
Strong Product Offerings and Attractive Market Dynamics 2020 ADJUSTED 2020 REVENUE FROM REPLACEMENT SALES† REVENUE EBITDA MARGIN* Cooling towers Refrigeration $591m 18% 70% Boilers Electrical heating 2020 REVENUE FROM #1 OR #2 MARKET POSITION† Location & inspection Fare collection $387m
Slide 8: Transformation of SPX
Transformation of SPX Adjusted Operating Income Margin* Revenue ~$1.6B 12% 10% ~12.0% 8% 11.3% 10.9% 6% 10.1% 8.8% 4% 7.0% 2% 3.7% 0% 2015*2015 2016*2016 2017 2017* 2018 2018* 2019 2019* 2020 2020* 20212021 (as reported (as reported (as reported (as reported Guidance Guidance 2/23/17) 2/25/16) 2/23/
Slide 9: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Focus in HVAC and D&M • Integrity • Significant capital to deploy • Results/a
Slide 10: 2021+ Initiatives
2021+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service Robotics Digital Sourcing AI Loyalty March 2021 10
Slide 11: Growth & Margin Accretive Investment Focus
Growth & Margin Accretive Investment Focus Growth Investment Focus Zone SPX has acquired ~$225M of revenue in ~3 years 50% 44% 2020 Gross Margin 40% 34% 30% 20% 20% 10% 0% HVAC Detection & Engineered Solutions Measurement March 2021 11
Slide 12: Segment Overview
Segment Overview HVAC Detection & Measurement Engineered Solutions
Slide 13: HVAC
SPX4 HVAC
Slide 14: HVAC Segment Overview
HVAC Segment Overview Revenue 2020 Revenue by Product Adjusted segment income* % $587 $593 $591 Heating 2020 Cooling Products Products $511 Revenue 50% $591m 50% 16.3% 16.4% 16.0% 14.5% 2020 Revenue by Geography ($ millions) 7% 2017 2018 2019 2020 Segment GM% 32% 32% 33% 34% Segment EBITDA* $80 $95
Slide 15: Cooling Products Overview
Cooling Products Overview 2020 Revenue by Product Parts & Service Cooling products used in non-residential, commercial 14% construction, process cooling and refrigeration applications 2020 Package Cooling Revenue Towers & Well-recognized product brands: Marley and Recold $297m Refrigeration 86%
Slide 16: Cooling Product Examples
Cooling Product Examples Marley NC Cooling Tower Marley MH Element Fluid Cooler Marley MD Everest Tower Recold Fluid Cooler High efficiency Industrial and process cooling Suitable for larger applications High performance design Low drift rates High performance copper coils 85% more coo
Slide 17: Heating Products Overview
Heating Products Overview 2020 Revenue by Product North American businesses with strong brands Electrical Heating Products used in residential and non-residential 2020 Products markets and sold primarily through distributors 28% Boiler Revenue Systems $294m 72% Demand for boiler systems is sea
Slide 18: Heating Product Examples
Heating Product Examples Residential Boilers Commercial Boilers Electrical Heating Products High efficiency natural gas High efficiency natural gas Digital Standard cast iron Standard cast iron wall heaters Unique hybrid design Gas Combi boilers Wash-down, corrosion resistant heaters Tre
Slide 19: Detection & Measurement
SPX4 Detection & Measurement
Slide 20: Detection & Measurement Segment Overview
Detection & Measurement Segment Overview Revenue 2020 Revenue by Product Fare Collection Adjusted segment income* % Technologies 16% $385 $387 2020 Location & Revenue Inspection $321 $387m Equipment $260 Communication 56% Technologies & ATON 23.7% 20.9% 28% 25.3% 22.5% 2020 Revenue by Geography ($ m
Slide 21: Location & Inspection Overview
Location & Inspection Overview 2020 Revenue by Product A leading global supplier of location & inspection Location equipment for underground infrastructure 2020 44% Revenue Inspection $218m 56% Continuous new product enhancement and loyal customer base 2020 Revenue by Geography Key demand driv
Slide 22: Location & Inspection – Key Products
Location & Inspection – Key Products Location Equipment Inspection Equipment Full Lifecycle Infrastructure Solutions Provider for Location & Inspection Markets March 2021 22
Slide 23: Communication Technologies Overview
Communication Technologies Overview 2020 Revenue by Product TCI : A leading global supplier of spectrum monitoring, Aids to communication intelligence and geolocation technology Navigation 2020 SMS & (ATON) Revenue Comm. Int.* 69% Aids to Navigation (ATON): A leading global supplier of Flash $10
Slide 24: Communication Technologies Products
Communication Technologies Products SMS & Communications Terrestrial Obstruction Marine Obstruction Intelligence Lighting Lighting Our Communication Technologies Solutions are Adapting to Serve Evolving and Complex Customer Needs March 2021 24
Slide 25: Transportation
Transportation Genfare is a leading North American supplier in fare collection: Historical market position concentrated on fare box installations Rapidly evolving technology in the market has driven a transformation in our business: Evolved from “farebox supplier” to “fare collection system
Slide 26: Transportation Products: Next Generation Fare Collection
Transportation Products: 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
Slide 27: Engineered Solutions
SPX4 Engineered Solutions
Slide 28: Engineered Solutions Segment Overview
Engineered Solutions Segment Overview Revenue 2020 Revenue by Product Segment income % Process Cooling $578 26% $561 $537 $549 2020 Revenue $578m Transformers 10.5% 74% 7.9% 7.8% 6.5% 6.5% 7.8% 2020 Revenue by Geography ($ millions) 2017 2018 2019 2020 Segment GM% 17% 16% 18% 21% 100% Segment EBITDA
Slide 29: Transformers Overview
Transformers Overview Transformer Business SPX is a leading supplier of power transformers into North America with strong brand equity Customers include: Public and private electric utilities Independent power producers Large industrial sites Two primary manufacturing locations: Waukes
Slide 30: Transformer Product and Service Examples
Transformer Product and Service Examples Transformer Service Large Power (High Voltage) Transformer March 2021 30
Slide 31: Process Cooling Overview
Process Cooling Overview 2020 Revenue by Product Cooling Based in the U.S., a leading global manufacturer of cooling Towers towers and parts & components 31% 2020 Parts & Revenue $150m Services Continuous new product enhancements and exceptional 69% quality equipment for more than a century La
Slide 32: Process Cooling – Key New Products
Process Cooling – Key New Products Gear Reducer Air Flow Components Heat Transfer Media Aftermarket Service and Components is Focus Area of New Product Initiatives March 2021 32
Slide 33: Financial Performance & Capital Allocation
Financial Performance & Capital Allocation
Slide 34: Capital Allocation Discipline
Capital Allocation Discipline Methodology Expected Outcome 1) Utilize strategic planning process to evaluate Quantify projected future cash flows and future revenue and earnings growth estimate total company valuation 2) Maintain target capital structure Net Debt to EBITDA(1) target range: 1.5x
Slide 35: Capital Structure
Capital Structure Leverage Ratios ($millions) Q3 2020 Q4 2020 2.16x 1.95x 1.5-2.5x 1.85x Short-term debt $108 $101 1.65x Current maturities of long-term debt 6 7 Long-term debt 350 304 Total Debt $464 $412 Less: Cash on hand (71) (68) Net Debt $393 $344 Q3 2020 Q4 2020 LT Target Gross Leverage Bank
Slide 36: 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 37: Building Strategic Platforms – Location & Inspection
Building Strategic Platforms – Location & Inspection Note: Based on approximate run-rate revenue prior to COVID-19 pandemic March 2021 37
Slide 38: Building Strategic Platforms – Aids to Navigation
Building Strategic Platforms – Aids to Navigation Flash Technology Obstruction Sabik Market Leading Lighting Equipment Marine Lighting Products Global Leader in Aid to Navigation Lighting Solutions March 2021 38
Slide 39: Building Strategic Platforms – HVAC Cooling and Heating
Building Strategic Platforms – HVAC Cooling and Heating Strengthened Industrial Refrigeration Solutions Accelerated Growth Strategy in Commercial High Efficiency Boilers March 2021 39
Slide 40: Environmental Social & Governance (ESG) Commitment
Environmental Social & Governance (ESG) Commitment E Efficiency and safety-focused product innovation Highly efficient, innovative solutions for the maintenance of critical infrastructure S Ethics-centered compliance training Talent development and Diversity & Inclusion initiatives G Stron
Slide 41: Executive Summary
SPX4 Executive Summary
Slide 42: Executive Summary
Executive Summary Balanced business portfolio with attractive and diverse end market drivers Strong balance sheet, liquidity and cash generation Effective business system and continued focus on growth accelerators, including inorganic opportunities Significant Value Creation Opportunity March
Slide 43: Appendix
SPX4 Appendix
Slide 44: 2021 Guidance
2021 Guidance Revenue Segment Income Margin HVAC Growth of Low-to-Mid Single Digits % Modest increase Detection & Growth of Low to Mid Teens % Approximately flat Measurement (including the effect of 2020 acquisitions) Engineered Growth of Low Single Digits % Approximately flat Solutions
Slide 45: Modeling Considerations – Full Year 2021
Modeling Considerations – Full Year 2021 Metric Considerations Corporate Expense $46-49m Long-term incentive comp ~$14-15m Restructuring costs $1-2m Interest cost $13-14m Equity earnings in JV, Other income/(expense), $3-5m and Non-service pension benefit/(expense) Tax rate ~21-23% Capex ~$20m Cash
Slide 46: 2021 Adjusted EPS Guidance - Key Drivers
2021 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $3.20 • Stronger-than-normal seasonal heating demand • Accelerating non-residential activity • Moderating input cost trends • Accelerated project-related sales $3.10 Base Case • Weaker-than normal seasonal h
Slide 47: FY 2016-2020 Adjusted Segment EBITDA to U.S. GAAP Reconciliation
FY 2016-2020 Adjusted Segment EBITDA to U.S. GAAP Reconciliation ($ millions) HVAC Segment FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 Segment income $ 96.9 $ 95.4 $ 90.0 $ 74.1 $ 8 Exclude: Depreciation & amortization (6.8) (6.6) (5.4) (5.5) ( Adjusted HVAC Segment EBITDA $ 103.7 $ 102.1 $ 95.4 $ 79.6
Slide 48: FY 2020 Adjusted Earnings Per Share to U.S. GAAP Reconciliation
FY 2020 Adjusted Earnings Per Share to U.S. GAAP Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 203.7 $ 34.6 $ 238.3 Corporate expense (2) (44.8) 1.7 (43.1) Long-term incentive compensation expense (14.0) - (14.0) (3) Impairment of intangible assets (0.7) 0.7 - (4) Specia
Slide 49: FY 2019 Adjusted Earnings Per Share to U.S. GAAP Reconciliation
FY 2019 Adjusted Earnings Per Share to U.S. GAAP Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 174.0 $ 57.0 $ 231.0 (2) Corporate expense (46.7) 2.6 (44.1) Long-term incentive compensation expense (13.6) - (13.6) Special charges, net (3) (4.0) 3.0 (1.0) Other operating e
Slide 50: FY 2018 Adjusted Earnings Per Share to U.S. GAAP Reconciliation
FY 2018 Adjusted Earnings Per Share to U.S. GAAP Reconciliation GAAP Adjustments Adjusted ($ millions) (1) Segment income $ 181.4 $ 25.2 $ 206.6 (2) Corporate expense (49.1) 5.5 (43.6) Long-term incentive compensation expense (15.5) - (15.5) (3) Special charges, net (3.7) 2.4 (1.3) Loss on sale of d
Slide 51: FY 2017 Adjusted Earnings Per Share to U.S. GAAP Reconciliation
FY 2017 Adjusted Earnings Per Share to U.S. GAAP Reconciliation As Reported in Form 10-K for the Year Ended December 31, 2018 ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 124.9 $ 57.4 $ 182.3 Corporate expense (46.2) (0.9) (47.1) Long-term incentive compensation expense (15.8) — (15.8
Slide 52: FY 2016 Adjusted Earnings Per Share to U.S. GAAP Reconciliation
FY 2016 Adjusted Earnings Per Share to U.S. GAAP Reconciliation As Reported in Form 10-K for the Year Ended December 31, 2016 ($ millions) GAAP Adjustments Adjusted Segment income $ 142.8 $ 14.5 $ 157.3 Corporate expense (41.7) — (41.7) Pension and postretirement income (expense) (15.4) 16.0 0.6 Lon
Slide 53: FY 2020, 2019 and 2018 Adjusted Revenue and Segment Income Reconciliation
FY 2020, 2019 and 2018 Adjusted Revenue and Adjusted Segment Income to U.S. GAAP Reconciliation CONSOLIDATED SPX: Twelve months ended December 31, 2020 December 31, 2019 December 31, 2018 ($ millions) U.S. GAAP revenue $1,559.5 $1,520.9 $1,512.6 Exclude: Other (1) 4.0 (6.1) 72.1 Adjusted revenue $1,
Slide 54: FY 2016-2020 Consolidated EBITDA to U.S. GAAP Reconciliation
FY 2016-2020 Consolidated EBITDA to U.S. GAAP Reconciliation ($ millions) FY 2020 FY 2019 FY 2018 (1) Adjusted net income excluding amortization $ 128.0 $ 124.1 $ 101.2 $ Exclude: Interest expense (18.2) (19.3) (25.4) Exclude: Tax expense (23.2) (28.5) (20.0) Exclude: Depreciation & amortization (27
Slide 55: FY 2016 Engineered Solutions Adjusted Revenue Reconciliation
FY 2016 Engineered Solutions Adjusted Revenue, Adjusted Gross Profit and Adjusted Segment Income to U.S. GAAP Reconciliation ($ millions) FY 2016 Engineered Solutions and "Other"* revenue $ 736.4 Exclude: South African projects 83.3 Engineered Solutions adjusted revenue $ 653.1 Engineered Solutions
Slide 56: FY 2015 Adjusted Operating Income to U.S. GAAP Reconciliation
FY 2015 Adjusted Operating Income to U.S. GAAP Reconciliation (As Reported) ($ millions) Full Year 2015 Operating Loss $ (170.0) Exclude: South African projects 120.5 Certain corporate expenses (1) 80.2 Spin-related costs (2) 3.5 Asset impairments 13.7 Non-service pension expense 15.0 Core Adjusted