Slide 1: SPX Corporation 2012 First Quarter Results
SPX Corporation 2012 First Quarter Results May 2, 2012 1 January 2012 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 May 2012 3
Slide 4: Strategic Update
Strategic Update Flow Sale of Service Solutions Infrastructure Technology & Capital Allocation ClydeUnion integration Production underway at Sale pending regulatory under way: new large power approval; expect to transformer plant complete in Q2 or Q3 Q1 working capital investment Joint Venture with
Slide 5: Q1 End Market Trends
Q1 End Market Trends 1. Flow End Markets Food & Beverage: Strong component demand in Americas & Asia; Quoting activity for systems remains robust Oil & Gas: Price of oil continuing to drive capital investment Industrial: Emerging markets continue to drive investment; North America gaining momentum 2
Slide 6: Q1 Revenue by Region
Q1 Revenue by Region Q1 Year-Over-Year Change* Q1 2012 Revenue +7% (9%) +20% by Geography North America Europe 46% 21% South Asia Pacific America 21% Middle East 2% & Africa 10% +9% *Excludes ClydeUnion revenue 31% of Revenue from Sales to Emerging Markets; Highlighted by Strong Growth in Asia Pacif
Slide 7: Backlog
Backlog ($ millions) Quarterly Backlog Q1 2012 Sequential Analysis SPX ClydeUnion Total backlog increased 5%: 3% organic growth 2% currency benefit $530 $510 $2,598 Segment backlog change: $2,476 Thermal Equipment & Services +7% Flow Technology +6% Industrial Products & Services (3%) Q4 2011 Q1 2012
Slide 8: Financial Analysis
Financial Analysis INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 8
Slide 9: Q1 Earnings Per Share
Q1 Earnings Per Share Q1 2012 Earnings per share $0.26 Less: income from discontinued operations ($0.09) Includes a net ($0.06) impact Earnings per share from continuing operations $0.17 from strategic actions Impact from Strategic Actions: Total dilution from ClydeUnion acquisition (1) ($0.19) Star
Slide 10: Q1 Earnings Per Share (from continuing operations)
Q1 Earnings Per Share (from continuing operations) Q1 Earnings Per Share Year-Over-Year Bridge $1 Q1 2011 EPS $0.37 $0 $0.37 Thermal segment income ($0.14) $0 $0.17 Impact of strategic actions ($0.06) $0 $0 Q1 2012 EPS $0.17 $0 Q12011 Q1 2011 Q1 Q12012 2012 Year-Over-Year Decline in Thermal Segment
Slide 11: Consolidated Q1 Financial Analysis
Consolidated Q1 Financial Analysis ($ millions) Revenue Segment Margins 18% revenue growth: 7% organic growth $1,165 13% acquisition growth $985 (2%) currency impact 10.7% 0.12 (1) Segment income margin: 0.1 7.6% 0.08 310 points of dilution: 0.06 0.04 Thermal segment margins 0.02 ~100 points of acqu
Slide 12: Thermal Equipment & Services Q1 Analysis
Thermal Equipment & Services Q1 Analysis ($ millions) Revenue (1.5%) decline in revenue: Segment Margins 2% organic growth (2%) currency impact $325 (1%) other (1) $321 52% decrease in segment income 6.5% 3.2% 330 points of margin decline: Reduction of higher margin retrofit projects Heating busines
Slide 13: Thermal Equipment & Services Backlog Analysis
Thermal Equipment & Services Backlog Analysis ($ millions) Quarter End Backlog Core Backlog Medupi/Kusile Project Backlog 7% sequential growth: 3.6% organic growth $685 3.6% currency benefit $642 $509 $482 $460 Awarded ~$40m dry cooling contract for a U.S. natural gas, $939 $806 $683 $595 $649 combi
Slide 14: Industrial Products & Services Q1 Analysis
Industrial Products & Services Q1 Analysis ($ millions) Revenue Segment Margins 7% organic revenue growth: >30% revenue growth in power $217 transformer business $204 Double-digit growth in sales of hydraulic and communication technologies 13.5% 11.9% 160 points of margin decline: Q1 2011 included a
Slide 15: Industrial Products & Services Backlog Analysis
Industrial Products & Services Backlog Analysis ($ millions) Quarter End Backlog 3% sequential decline: Q1 execution $509 $511 $490 Project timing $474 $418 Power transformer trends: Backlog flat sequentially Replacement demand for power transformers remains robust Modest increase in average price Q
Slide 16: Power Transformer Solutions Business
Power Transformer Solutions Business Backlog year over year revenue variance 38% 33% 34% 23% 7% 0% 6% -16% -29% -27% -24% -31% -45% -40% -49% Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 12+ 6-9 4-6 6-9 8-12 Backlog L
Slide 17: Flow Technology Q1 Analysis
Flow Technology Q1 Analysis ($ millions) Revenue 38% revenue growth: Segment Margins 10% organic growth $628 29% acquisition growth (2%) currency impact $503 $456 Core margins declined 150 points: 12.4% Reduced sales volume and weak 10.9% (1) 8.4% results in Europe 250 points of margin dilution from
Slide 18: Flow Technology Backlog Analysis
Flow Technology Backlog Analysis ($ millions) Quarter End Backlog Q1 2012 Backlog Commentary Components Systems ClydeUnion $1,524 6% sequential growth: $1,440 4% organic growth $530 +4% $510 1% acquisition growth (Seital) $848 1% currency impact $415 +7% $292 $388 Strong demand across key end market
Slide 19: ClydeUnion Q1 2012 Financial Analysis
ClydeUnion Q1 2012 Financial Analysis ($ millions) Q1 2012 comments +4% from Q4 2011; Ending Backlog $530 good order momentum Revenue $125 +24% year-over-year operational challenges Operating Profit ($2) $3m of intangible amortization expense Purchase Accounting ($7) inventory and backlog step-up ch
Slide 20: ClydeUnion Working Capital
ClydeUnion Working Capital ($ millions) $250 $211 $200 $187 $153 $155 $146 $150 Accounts Receivable $100 Inventory $50 $74 Accounts Payable $60 $64 $50 $50 $0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 -$50 ($63) -$100 ($73) ($79) ($69) ($82) Working Capital Metrics Have Built Up Significantly Over the
Slide 21: ClydeUnion Integration Update
ClydeUnion Integration Update Business Challenges Improvement Initiatives streamlined management structure; organizational alignment evaluating restructuring actions market approach & implemented contract approval process; increased pricing; order acceptance process realigning sales team in Q2 suppl
Slide 22: ClydeUnion Commercial Update
ClydeUnion Commercial Update ($ millions) Revenue +30% to +40% Q1 orders up 7% year over year driven $402 $430 by aftermarket orders Q1 ending backlog up 4% sequentially: 73% of Q2-Q4 revenue forecast is in the ending Q1 backlog 2010 2011 2012E Backlog Integration of ClydeUnion provides a $530 found
Slide 23: Free Cash Flow and Capital Allocation
Free Cash Flow and Capital Allocation INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 23
Slide 24: Free Cash Flow
Free Cash Flow Organic Revenue Growth Q1 Free Cash Flow 13% ClydeUnion SPX, excluding ClydeUnion 6% 7% Q1 2011 Q1 2012 4% (1) ($34) 3% ($60) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 ($155) (1) Includes $27m contribution from seller Note: see appendix for reconciliations to GAAP Expect Q1 2012 Working
Slide 25: Projected Liquidity
Projected Liquidity ($ millions) Estimated Cash on Hand at 3/31/2012 $337 Available Credit Lines $431 Estimated Q2-Q4 2012 Free Cash Flow ~$350 Regular Quarterly Dividend (2) ~($38) After-Tax Proceeds from Sale of Service Solutions ~$1,000 Estimated Debt Repayment ($350) Estimated Remaining Share Re
Slide 26: Leverage Ratios
Leverage Ratios Debt to EBITDA* Gross Leverage > 2.5x Gross Leverage Capital allocation focus: Net Leverage 3.5x Debt repayment Non-leveraging strategic 2.5x Gross Leverage acquisitions using cash on hand Target Range: 1.5x 1.5x to 2.5x Capital allocation focus: Strategic acquisitions 0.5x Share rep
Slide 27: Q2 and Full Year 2012 Targets
Q2 and Full Year 2012 Targets INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 27
Slide 28: Q2 2012 Targets
Q2 2012 Targets ($ millions) Q2 2012 Q2 2011 Targets comments Revenue $1,137 $1,275 to $1,325 +12% to 17% expect increases in Flow and Industrial Segment Income* $117 $118 to $125 segments to be largely offset by a decline in the Thermal segment ~(100) pts due to acquisition dilution Segment Income
Slide 29: 2012 Full Year Segment Targets
2012 Full Year Segment Targets Thermal Equipment Industrial Products Flow Technology & Services & Services Revenue Revenue Revenue +35% to +40% (7%) to (12%) +10% to +15% Segment Income Margin Segment Income Margin Segment Income Margin 11.2% to 11.7% 7.6% to 8.1% 13.2% to 13.7% Note: ~100 points of
Slide 30: 2012 Pro Forma Modeling Framework
2012 Pro Forma Modeling Framework ($ millions) Previous 2012 Pro Forma Updated 2012 Pro Forma Modeling Framework (1) Modeling Framework (1) Revenue $5,050 to $5,300 $5,150 to $5,400 Segment Income % 10.9% to 11.4% 10.5% to 11.0% Interest Expense $105m Tax Rate 28% 28% Share Count ~47m ~47m Cash on H
Slide 31: Executive Summary
Executive Summary INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 31
Slide 32: Key Growth Drivers
Key Growth Drivers Flow Technology: Building global Power & Energy platform: Oil & Gas market growth ClydeUnion integration; revenue & cost synergies Continued growth in Food & Beverage business Additional strategic acquisitions Power transformers: Large power transformer expansion Price recovery in
Slide 33: Executive Summary
Executive Summary 2012 is a year of transition focused on strategic advancements Q1 performance reflects strategic Infrastructure investments and bottom of the cycle results in the Thermal segment Expect significant sequential improvement in earnings per share Positive trends in key end markets 2012
Slide 34: Questions?
Questions? INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 34
Slide 35: Appendix
Appendix INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 35
Slide 36: Historical Quarterly Results Restated for Industrial Products & Services Segment
Historical Quarterly Results Restated for Industrial Products & Services Segment ($ millions) Revenue Segment Margins $245 $212 $217 $204 $204 13.5% 13.1% 12.6% 11.5% 11.9% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 May 2012 36
Slide 37: Seital Acquisition Overview
Seital Acquisition Overview Company Overview Revenue by End Market Based in Italy, Seital is a leading global supplier of separation technology Dairy 48% Its primary end market is food & beverage for applications including dairy, wine, beverages and fats & oils Pharma & Other 9% 2011 Financial Infor
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2012 38
Slide 39: Q1 2012 Organic Revenue Growth Reconciliation
Q1 2012 Organic Revenue Growth Reconciliation Quarter Ended March 31, 2012 Net Revenue Acquisitions/ Change Divestitures Currency Organic Flow Technology 37.8% 29.2% -1.8% 10.4% Thermal Equipment & Services -1.5% -0.9% -2.3% 1.7% Industrial Products & Services 6.3% 0.0% -0.3% 6.6% Consolidated SPX 1
Slide 40: Free Cash Flow
Free Cash Flow ($ millions) Q1 2011 Q1 2012 Net cash from continuing operations $ (19) $ (194) Capital expenditures (15) (22) Free cash flow from continuing operations $ (34) $ (215) May 2012 40
Slide 41: Q2 to Q4 2012E Free Cash Flow
Q2 to Q4 2012E Free Cash Flow ($ millions) Q2 to Q4 2012E Net cash from continuing operations $ 450 Capital expenditures (100) Free cash flow from continuing operations $ 350 May 2012 41
Slide 42: Debt Reconciliations
Debt Reconciliations ($ millions) 3/31/2012 Short-term debt $ 191 Current maturities of long-term debt 331 Long-term debt 1,597 Gross Debt $ 2,119 Less: Puchase card program and extended A/P programs $ (38) Adjusted Gross Debt $ 2,081 Less: Cash in excess of $50 $ (287) Adjusted Net Debt $ 1,794 Not
Slide 43: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) LTM Net Income $171 Income tax provision (benefit) 34 Interest expense 102 Income before interest and taxes $307 Depreciation and intangible amortization expense 120 EBITDA from continuing operations $426 Adjustments: Amortization and write-off of intangibles
Slide 44: Consolidated Organic Growth Reconciliation
Consolidated Organic Growth Reconciliation Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Organic Growth 2.5% 6.4% 3.8% 12.5% 6.7% Acquisition Growth 3.1% 2.4% 0.2% 1.7% 13.2% Currency Impact 2.2% 6.0% 2.5% -1.0% -1.6% Total Revenue Growth 7.8% 14.8% 6.5% 13.2% 18.3% May 2011 44