Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Day (September 2014)
154 slides from Spx Technologies's investor day presentation, Sep 9, 2014
Slide 1: SPX Investor Presentation
SPX Investor Presentation September 9, 2014 COMPANY CONFIDENTIAL
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,
Slide 3: Agenda
Agenda 1) 8:00 – 8: 15: SPX Overview and Strategic Transformation Jeremy Smeltser 2) 8:15 – 10:15: Flow Technology End Markets Marc Michael, David Wilson, Tony Renzi 3) 10:15 – 10:30: Break 4) 10:30 – 11:50: Thermal & Industrial, Global Manufacturing Gene Lowe, David Kowalski 5) 11:50 – 12:15 : Pick
Slide 4: Executive Management
Executive Management Jeremy Smeltser: Vice President, Chief Financial Officer Jeremy Smeltser was appointed vice president, chief financial officer of SPX Corporation in August 2012 and was named an officer of the company in April 2009. Prior to this, he spent a decade serving the company in various
Slide 5: Executive Management
Executive Management Marc Michael: President, Flow Food and Beverage Marc Michael is president of Flow Food and Beverage at SPX and is responsible for enhancing SPX’s execution on its Food and Beverage system projects and strategically growing the company’s presence in Food and Beverage aftermarket
Slide 6: SPX Overview and Strategic Transformation
SPX Overview and Strategic Transformation Jeremy Smeltser, VP and CFO COMPANY CONFIDENTIAL
Slide 7: Strategic Transformation
Strategic Transformation 1997-2004 2005-2011 2012 & Beyond Focus on Diversification Focus on Strategic Markets Focus on Flow End Market Platforms Diversification: >100 acquisitions; divestitures of legacy businesses ClydeUnion Acquisition APV Acquisition EGS, TPS & Precision United Dominion Service
Slide 8: Strategic Transformation
Strategic Transformation 2004 Revenue Mix 2014E Revenue Mix Laboratory Auto Equipment Other 8% 7% 7% Compaction Flow Flow Equipment 14% Industrial 56% 9% 16% $5.7b ~$4.9b Security 10% Infrastructure Vehicle Service 24% 15% Niche Industrial 6% Thermal 28% Exited businesses Note: 2014E as of July 30,
Slide 9: Segment Income Development
Segment Income Development Segment Income Earnings Impact $800 ($ millions) Since 2008, growth and investment in $600 Flow segment, combined with capital allocation actions have largely offset… $400 ~25% (1) ~65% (1) … the earnings declines at our Thermal $200 Peak of and Industrial segments rel
Slide 10: Flow Overview
Flow Overview Flow 2014E Revenue by End Market Market sectors that require engineered solutions which enable our customers to: Food & Power & process, transport, meter, filter or dehydrate… Beverage Energy …fluids, gases and powders across a 36% 34% variety of applications ~$2.75b Strategic
Slide 11: Organizational Advancement
Organizational Advancement 1997 to 2004 2005 to 2011 2012 to 2014 future stateState Future 9 Growth Platforms 3 Core Platforms 3 Key End Markets 5 Reporting Segments 4 Reporting Segments 3 Reporting Segments Continue to align SPX around its 2004 Revenue* Industrial 2011 Revenue Industrial 2013 Reven
Slide 12: SPX Operational Leadership
SPX Operational Leadership Chris Kearney Chairman, President and CEO Tony Renzi Marc Michael David Wilson Gene Lowe David Kowalski President, Global President, President, President, President, Manufacturing Operations and Flow Power & Energy Flow Food & Beverage Flow Industrial Thermal Group Industr
Slide 13: Recent Highlights
Recent Highlights 1) Improved operating performance over last five quarters: Transitioned to new operational alignment in 2H 2013 5 consecutive quarters of year-over-year margin expansion 2) Increased and improved order backlog: Disciplined order acceptance and improved commercial initiatives
Slide 14: Flow Food & Beverage
Flow Food & Beverage Marc Michael, President
Slide 15: Flow Food & Beverage Initiatives
Flow Food & Beverage Initiatives 1) Prioritize system selectivity 1) Innovation and new product development 2) Further expansion into emerging markets 2) Aftermarket service model 3) Intensify focus on component sales 3) Improve project execution 4) Key account management Organic Revenue Growth Impr
Slide 16: Food & Beverage Overview
Food & Beverage Overview 2014E Food & Beverage Revenue by Market Market Overview Food Dairy 26% Regulated, global industry in which customers 63% demand highly engineered, turn-key solutions ~$1b Beverage 7% Personal Care Competitors include GEA, Tetra Pak, Alfa Laval, 4% Krones, Idex, Sudmo (Pe
Slide 17: Customer Examples and Application Capabilities
Customer Examples and Application Capabilities Customer Examples Dairy Foods Beverages Personal Care/Other Infant Formula Vegetable Fats Soft Drinks Silica & Industrial powders Milk & Whey Powders Margarines Tea & Coffee Drinks Extraction, Recovery of Dairy Ingredients Baby Food
Slide 18: Primary Locations
Process Technology sites consist primarily of engineering & project management Primary Locations Mechanical Component sites consist primarily of manufacturing & product development EMEA Process Technology 1.Soeberg, Denmark Americas Asia Pacific 2.Silkeborg, Denmark Process Technology Process Techno
Slide 19: Key Food & Beverage Offerings
Key Food & Beverage Offerings Process Technology Mechanical 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 Septembe
Slide 20: Innovation Centers
Innovation Centers Innovation = Insight + Execution with the purpose of creating something new to provide value to customers and generate value for SPX shareholders The Silkeborg Innovation Centre is One of SPX’s Most Comprehensive R&D Facilities and Critical to Our Success September 9, 2014 20
Slide 21: Innovation Examples
Innovation Examples Integrated (Wet&Dry) Dairy drives New Dryer air distributer enhances productivity, safety solutions and plant performance and customer Components / Aftermarket content attraction in Dry Dairy & Food Homogenizer pressure and capacity Unique Thermal Infusion System improvements to
Slide 22: Assessment of Large Project Capabilities – Year Ago
Assessment of Large Project Capabilities – 1 Year Ago Rapid strategic and organic growth in our process technology business significantly increased the scope of opportunities, which led to some nice wins and some challenges that we have learned from Assessment of project selectivity one year ago
Slide 23: Flow Food & Beverage Global Leadership Team
Flow Food & Beverage Global Leadership Team Marc Michael President, Flow Food & Beverage Chris McVicker Chief Financial Officer Peter Ryan John Watkins Anthonie Lombard John Greaves General Counsel VP, Global VP, Engineering & VP, Operations Project Management Product Development Charlene Miraglia V
Slide 24: Key New Hires
Key New Hires 1) John Watkins, VP of Global Project Management: Over 25 years of global EPC experience KBR, Shaw Group, Jacobs Engineering 2) Anthonie Lombard, VP of Engineering and Product Development: Over 25 years of global R&D and engineering management experience NALCO, ECOLAB, ITT (Xyl
Slide 25: Stage Gates for Large Project Opportunities
Stage Gates for Large Project Opportunities Project Selectivity Project Execution • Planning • Scope Validation 1 1 • Opportunity Qualification 2 • Plan Approval 2 • Opportunity Evaluation 3 • Design & Procurement 3 • Solution Development 4 • Construction • Quote Approval 4 5 • Commissioning • Closi
Slide 26: Global Dairy Market: Retail Sales Growth
Global Dairy Market: Retail Sales Growth Dynamic growth expected in global dairy market Shift in regional market value contribution: North America’s and Western Europe’s share of the global market is expected to shrink Asia Pacific, Latin America and Middle East expected to account for highe
Slide 27: Recent Dairy Processing System Order
Recent Dairy Processing System Order Project Details ~$28m order for a new greenfield dairy in Belarus Expected production capacity: 500 tons of milk per day Consumer dairy products to include: Liquid baby food Wide range of yogurts Cottage cheese Extended shelf life milk Ultra high
Slide 28: Dairy Industry Trends
Dairy Industry Trends Countries with fresh milk surplus Countries with fastest growing demand for dairy products 1. The availability of raw, fresh milk is limited in locations where demand is rising 2. As such, suppliers from regions where fresh milk is plentiful are processing the fresh milk into p
Slide 29: Process Technologies
Process Technologies General Cost Breakdown Integrated Dairy Example General Milk Processing Butter Processing SPX Process Equipment ~25% Raw Milk Silo PHE Milk Separator PHE Cream Cream Tank Butter System Butter 3rd Party Pass-Through Milk Powder Processing Content ~50% SPX Engineering ~25% Milk Po
Slide 30: China Market Dynamics
China Market Dynamics Key China Market Drivers Growth Expectations by China Dairy Sector 1. Rising disposable incomes and emerging middle 2013 to 2018E 2013 to 2018E class expected to drive continued growth in milk Total Growth CAGR and nutritious milk-based products Infant Milk Formula 84% 13% 2.
Slide 31: Regulatory Developments Related to China Infant Formula Market
Regulatory Developments Related to China Infant Formula Market June 2013: China’s cabinet announces detailed plans to improve the quality of domestic baby milk powder July 2013: U.K. imposes limits on infant formula purchases and Hong Kong restricts the amount of infant formula allowed to be tra
Slide 32: China Infant Milk Formula Market
China Infant Milk Formula Market China Infant Formula Market Trends ($ millions) Upcoming baby boom expected to drive a Sales of Infant Milk Formula $28,547 13% CAGR in sales of infant milk formula $25,363 from 2013-2018 $22,340 $19,531 Total market expected to more than $16,945 double to ~$28 b
Slide 33: Synutra France International – Brittany, France
Synutra France International – Brittany, France Project Details Total investment: ~$135m SPX is providing turn-key process equipment with >$50m of value assigned to this project Convert fresh milk and liquid whey into high quality powdered infant formula and whey protein products for export to
Slide 34: East China Central Plant (Shanghai)
East China Central Plant (Shanghai) Project Details Total plant investment: ~$275m SPX is providing turn-key process equipment with >$60m of value assigned to this project Biggest dairy plant in China with > 2.4 million liters of daily product output Produces over 30 high-quality dairy produ
Slide 35: SPX Technologies Utilized in Bright Dairy Plant
SPX Technologies Utilized in Bright Dairy Plant >8,000 valves >500 pumps >160 agitators & >40 plate heat 18 UHT skids 15 homogenizers 3 separators instant mixers exchangers Dairy Project in Shanghai Utilizes Multiple SPX Process Technologies; SPX Technician On-Site to Provide Customer Service Suppor
Slide 36: Aftermarket Opportunity
Aftermarket Opportunity Where Do Our Customers Need Our Help? Reduce Downtime & Maintain 24/7 operating environment Business Risk While also ensuring equipment and process quality / integrity Outsource Non-core Gain self-sufficiency in routine maintenance areas Functions Outsource for specia
Slide 37: First 10 Years of Aftermarket Opportunity
First 10 Years of Aftermarket Opportunity for a Typical Food & Beverage System Original System System Upgrade / Re-rate Capital Purchase Consumable Capital Purchase Periodic Automation HMG Block Critical Warranty Automation Membranes Hardware Spares Support Software Licenses PHE Pack Upgrade 0 5 10
Slide 38: Flow Food & Beverage Initiatives
Flow Food & Beverage Initiatives 1) Prioritize system selectivity 1) Innovation and new product development 2) Further expansion into emerging markets 2) Aftermarket service model 3) Intensify focus on component sales 3) Improve project execution 4) Key account management Organic Revenue Growth Impr
Slide 39: Food & Beverage Questions?
SI><. Food & Beverage Questions?
Slide 40: Flow Industrial
Flow Industrial David Wilson, President COMPANY CONFIDENTIAL
Slide 41: Flow Industrial Initiatives
Flow Industrial Initiatives 1) Geographic expansion 1) Product management and innovation 2) Adjacent market opportunities 2) Front end eTools development 3) Key account and channel development 3) Aftermarket service model Organic Revenue Growth Increase Customer Relevance FLOW INDUSTRIAL Operational
Slide 42: Flow Industrial Overview
Flow Industrial Overview Flow Industrial Overview 2014E Revenue by Geography Dehydration Mixers Heat Exchangers Pumps 43% 24% < 27% 2% 4% A leading supplier of industrial flow components with a high degree of engineering and application expertise 2014E Revenue by Product Well recognized brands w
Slide 43: Flow Industrial End Market Overview
Flow Industrial End Market Overview 2014E Revenue by End Market Customer Examples Chemical Air Treatment Processing 30% 39% Other: (HVAC, Pulp & Paper, General) Marine 11% Water Mining 10% 4% 6% Note: 2014E as of July 30, 2014 Large, Diversified Customer Base in a Variety of Industrial End Markets S
Slide 44: Flow Industrial Product and Market Matrix
Flow Industrial Product and Market Matrix HVAC, Chemical Air Marine & Water & Mining & Pulp & Paper, Processing Treatment General Shipbuilding Wastewater Minerals Mixers Heat Exchange Dehydration Pumps Currently Serve Attractive Growth Markets With Strength in Chemical Processing and Mining; Opportu
Slide 45: Mixer Business Overview
Mixer Business Overview 2014E Revenue by Product Product Examples Top-Entry Mixers Side-Entry Mixers Short Cycle "Portables" 25% Long Cycle "Heavies" 58% Sanitary Mixers Portable Mixers Aftermarket Parts & Service 17% Note: 2014E as of July 30, 2014 A Leading Global Supplier of Top-Entry, Side-Entry
Slide 46: “Heavies”: Large, Highly Engineered Mixers
“Heavies”: Large, Highly Engineered Mixers Our Large Mixers Are Used in Processes that Require Blending, Solids Suspension, Mass Transfer and Heat Transfer September 9, 2014 46
Slide 47: Dehydration Business Overview
Dehydration Business Overview 2014E Revenue by Product Product Examples Desiccant Compressed Air Dryers NGV Fueling Station Dryers Industrial Product Group 55% Engineered Product Group 15% Energy Saving Refrigerated Air Dryer Filters Aftermarket Parts & Service 30% Note: 2014E as of July 30, 2014 A
Slide 48: Industrial Pump Business Overview
Industrial Pump Business Overview 2014E Revenue by Geography Product Examples Centrifugal pumps EMEA 71% Americas Gear pumps Rotary lobe pumps 15% APAC 14% Note: 2014E as of July 30, 2014 A Niche Supplier of Industrial Pumps in Diverse End Market Applications September 9, 2014 48
Slide 49: Heat Exchanger Business Overview
Heat Exchanger Business Overview 2014E Revenue by End Market Product Examples Industrial Plate Heat Exchangers (Gasketed, Semi-Welded, Brazed) Sanitary Plate Heat Exchangers General Industrial Marine 21% 33% Food & Beverage 17% Welded (Hybrid) Plate Refrigeration Heat Exchangers 3% Power HVAC Oil &
Slide 50: Flow Industrial Primary Locations
Flow Industrial Primary Locations Americas EMEA Asia Pacific 1.Rochester, NY 1.Orebro, Sweden 1.Busan, Korea 2.Hanover Park, IL 2.Ekero, Sweden 2.Xidu, China 3.Cannonsburg, PA 3.Kolding, Denmark 3.Singapore 4.Newport, NC 4.Erpe Mere, Belgium 4.Sydney, Australia 5.Goldsboro, NC 5.Etten-Leur, Netherla
Slide 51: Flow Industrial Global Leadership Team
Flow Industrial Global Leadership Team David Wilson President, Flow Industrial Brian Wood Chief Financial Officer Nicole Tharrington Ron Port Bernie Gigas Tim Comfort General Counsel VP, End Market & VP, Engineering & VP, Operations Business Development Product Development Lisa Kirby VP, Human Resou
Slide 52: Megatrends Benefiting Flow Industrial End-Markets
Megatrends Benefiting Flow Industrial End-Markets Demographics: Urbanization, infrastructure development, emerging global middle-class Economics: High-growth emerging markets, stable GDP in advanced economies, geopolitical dynamics Energy: Energy savings & cost optimization, energy security Efficien
Slide 53: Industry Trends
Industry Trends Urbanization and industrialization driving chemical and water investments in emerging markets Abundant shale gas in North America is yielding low cost feedstocks for chemical industry Natural gas as transportation fuel small, but growing fast Global LNG trade network boosting
Slide 54: Geographic Expansion Opportunities
Geographic Expansion Opportunities Americas EMEA Asia Pacific Mixers Traditionally Strong Heat Exchangers Geographic Expansion Dehydration Opportunity Pumps Opportunities to Leverage Footprint, Develop New Channels and Distribute Resources & Capabilities September 9, 2014 54
Slide 55: Increasing Customer Relevance
Increasing Customer Relevance Past: “Reactive” Present: “Proactive” Future: “Partner” Focused on Improving Customer Experience and Becoming Easier to Do Business With September 9, 2014 55
Slide 56: Aftermarket Growth: Dehydration Case Study
Aftermarket Growth: Dehydration Case Study History & Insights Dehydration benefits from a large installed base which provides high aftermarket potential Our engineered products aftermarket business in the U.S. provides a model to leverage across portfolio: 100% 1. Product registration and e-Comm
Slide 57: eBusiness: Mixers Case Study
eBusiness: Mixers Case Study History & Insights Share of Business Mixer business benefits from high degree of automation = Prior State from initial quote through final production = Current State Nearly 100% of orders currently placed via e-Sales and over 70% processed automatically through produ
Slide 58: Innovation and Adjacent Markets
Innovation and Adjacent Markets Focused Innovation and Product Development Given attractive CNG fuel market potential…. SPX developed a next generation suite of fuel station tower dryers Improved performance and energy efficiency Equipped with high performance particulate and oil removal filtr
Slide 59: Operational Focus
Operational Focus Operating Measurement Illustrative Scorecard Example Site Supplier OTD Customer OTD Productivity Implemented consistent operational metrics in Site 1 Q1 2014 in conjunction with Global Site 2 Manufacturing Organization: Site 3 Monthly reporting Site 4 Increased accountability
Slide 60: Factory Planning Initiative
Factory Planning Initiative Before Machining Assembly Welding Painting Packing Testing Purchase Raw Material & Components Ship Key changes in approach: Transitioned from spreadsheet based orientation to a standardized SAP process orientation Analyzing and reducing queue times on routings and wor
Slide 61: Flow Industrial Initiatives
Flow Industrial Initiatives 1) Geographic expansion 1) Product management and innovation 2) Adjacent market opportunities 2) Front end eTools development 3) Key account and channel development 3) Aftermarket service model Organic Revenue Growth Increase Customer Relevance FLOW INDUSTRIAL Operational
Slide 62: Flow Industrial: Questions?
Flow Industrial: Questions? COMPANY CONFIDENTIAL
Slide 63: Flow Power & Energy
Flow Power & Energy Tony Renzi, President
Slide 64: Flow Power & Energy Initiatives
Flow Power & Energy Initiatives 1) Disciplined order acceptance 1) Combining product offerings 2) Key account management 2) Improving on-time customer delivery 3) Expanding channel partners 3) Expanding aftermarket footprint and 4) Expanding configured-to-order business capabilities Organic Revenue
Slide 65: Flow Power & Energy Global Leadership Team
Flow Power & Energy Global Leadership Team Tony Renzi Scott Sproule President, Flow Power & Energy Chief Financial Officer Greg Fedders Darren Dickson Dan Cassens General Counsel VP, Global Project Management VP, Operations Scott Roy VP, Human Resources Jim Stanczak Colin Elocate Bruce Freeland Sue
Slide 66: Flow Power & Energy Revenue Breakdown
Flow Power & Energy Revenue Breakdown 2013 Revenue by End Market 2013 Revenue by Geography Midstream Upstream 35% 28% Oil & Gas Oil & Gas 20% 41% ~$900m 21% Downstream Oil & Gas 15% 16% Conventional Power Nuclear 12% Power 12% ~75% of Revenue from Sales into Oil & Gas Markets; Strong Presence in Nor
Slide 67: Flow Technology: Power & Energy Market
Flow Technology: Power & Energy Market End User Examples Recent Market Trends Oil & Gas Demand for oil pipeline valves at a high level Aftermarket order activity is steady Experiencing order delays for OE pumps due to political uncertainty, financing and lack of growth in global oil and gas de
Slide 68: Flow Power & Energy Product Offering
Flow Power & Energy Product Offering pumps 2013 Revenue by Product Valves; 23% Pumps; 59% Filtration; 7% B&L Systems; 4% Closures; 4% Other; 4% valves closures filtration and strainers dehydration & dryers mixers & heat exchangers Complementary Products With Very Good Potential for Revenue Synergies
Slide 69: Manufacturing and Engineering Sites
Flow Power & Energy Manufacturing and Engineering Sites Manufacturing & Engineering Glasgow Penistone Killarney Brixworth Norderstedt Burlington Newbury Annecy McKean Houston New Delhi Bangalore North America: Europe: Asia Pacific: Houston 301k ft2: valves Glasgow 821k ft2: pumps New Delhi 215k ft2:
Slide 70: Flow Power & Energy Service Centers
Flow Power & Energy Service Centers Service Centers Aberdeen Norway Glasgow Calgary Penistone Burlington Annecy Salt Lake City Battle Creek Turkey Philadelphia Zhengzhou Los Angeles Algeria Houston Baton Rouge New Delhi Abu Dhabi Dubai Malaysia Singapore Indonesia Angola Johannesburg Note: Includes
Slide 71: Cost Reduction Initiatives
Cost Reduction Initiatives ~550 headcount reductions primarily Battlecreek, MI Facility Closure at ClydeUnion facilities in Europe and North America Total net headcount reduction of ~132 Service center retained >$40 ($ millions) Backlog and new orders transferred to various locations: $24
Slide 72: ClydeUnion Analysis
ClydeUnion Analysis Integration Analysis Commercial Strategy Acquired in Q4 2011 for $744m Realigned ClydeUnion’s commercial organization Reduced headcount by ~25% Expanding configured to order product offering Successfully executed the acquired backlog Improving operational performance
Slide 73: ClydeUnion’s Pump Technologies are Key to Commercial Strategy
ClydeUnion’s Pump Technologies are Key to Flow P&E Commercial Strategy Hydraulic BB1 Pipeline Pump Nuclear Safety Pump Submersible Pump for Subsea Applications BB3 Pump BB5 Heavy Duty Pump September 9, 2014 73
Slide 74: Flow Power & Energy Growth Initiatives
Flow Power & Energy Growth Initiatives Organic Growth Initatives Transition mix from “engineered to order” to “configured to order” Leverage combined technology offerings Increase penetration in profitable market segments (i.e. aftermarket, pipeline, subsea, nuclear power) Expand global serv
Slide 75: Configured to Order Product Offering
Configured to Order Product Offering Benefits of a Configured to Order Product Offering Reduces risk of cost overruns & quality issues Complex Processes Product Variability Improves productivity: High Execution Risk Repeatable design & manufacturing allows for Small Market Size greater
Slide 76: Oil & Gas Product Portfolio
Oil & Gas Product Portfolio Key Oil & Gas Products valves booster pumps surge relief control skid Gate valves Surge relief valves Closures Booster pumps Transfer pumps filters pigging system chemical injection system Injection pumps Plate heat exchangers Filters Power transformers
Slide 77: Floating Production, Storage and Offloading (FPSO) Offering
Floating Production, Storage and Offloading (FPSO) Offering SPX Product Offering for FPSO: water injection pumps oil transfer pumps seawater booster pumps dosing pumps plate heat exchangers filtration SPX has a Broad Product Offering for FPSO Platforms September 9, 2014 77
Slide 78: Liquid Pump Station Offering
Liquid Pump Station Offering SPX Product Offering for Pump Station: gate valves control valves mainline oil pumps oil booster pumps dosing pumps/chemical injection filtration mixers power transformer SPX has a Broad Product Offering for Liquid Pump Platforms September 9, 2014 78
Slide 79: Pipeline Expansion Expectations
Pipeline Expansion Expectations Major Customer Illustration Customer expects: ~$36b growth investment plan through 2017 “Record portfolio of attractive investment opportunities” 1.7m barrels per day of incremental market volume Key areas of focus: New market access in West and East coast
Slide 80: Expanded Valve Channel with Distributor Relationship
Expanded Valve Channel with Distributor Relationship Valve Distributor Agreement Finalized first major distribution agreement for valves in Q2 2014 Establishes a major valve stocking distributor to better support reduced lead time opportunities for pipeline valves Stocking program includes:
Slide 81: Houston Valve Facility: Capacity Expansion
Houston Valve Facility: Capacity Expansion 4-Phase Plan Details Revenue has more than doubled in 3 years Description Investment Timing Extended lead times and facility constraints expected to benefit from 2014 capital investments Phase 1 welding ~$2m complete Revenue Phase 2 machining ~$8m Q4 20
Slide 82: Aftermarket Strategy
Aftermarket Strategy Aftermarket Strategy Apply global aftermarket growth plan across all relevant brands Expand service center network to leverage existing footprint and increase presence in key markets Portfolio-based target markets: Pipeline (pumps, valves) Offshore Platform (ClydeUnion
Slide 83: Aftermarket Strategy
Aftermarket Strategy Hub and Spoke Approach HUB: Super Center depot regionally based where product density is greatest SPOKE: Frontline location nearby customers’ sites; minimal capabilities, high customer intimacy Increased ability to meet customer needs Local capabilities and presence also
Slide 84: Aftermarket Footprint
Aftermarket Footprint ABERDEEN Norway GLASGOW CALGARY Penistone BURLINGTON Annecy Salt Lake City Battle Creek Tulsa Turkey Philadelphia LOS ANGELES Algeria Zhengzhou HOUSTON BATON ROUGE New Delhi Xidu Abu Dhabi DUBAI Singapore Port Harcourt Existing Site Indonesia Existing site to be expanded in 201
Slide 85: Typical Oil & Gas Pump Lifecycle
Typical Oil & Gas Pump Lifecycle 25 Year Pump Timeline Original Equipment Customer Value Add Purchase Upgrade / Re-rate Insurance Consumable Stock Consumable Shelf Stock Consumable Spares Spares Spares Spares Spares Spares Spares 0 5 10 15 20 25 years years years years years Site Site Overhaul o Sit
Slide 86: Aftermarket Websites
Aftermarket Websites Microsites developed for each service center Allowing for customization and localization Personal approach to our customers Increased Customer Awareness Through Regional Service Center Websites September 9, 2014 86
Slide 87: Project Examples
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Slide 88: Enhanced Oil Recovery Project
Enhanced Oil Recovery Project $16m order for 134 metering pumps to be manufactured in Germany and delivered in China Represents the largest order to ever be delivered from our Nordestedt, Germany facility Installed new assembly line with the assistance of Global Manufacturing Operations team
Slide 89: Canadian Pipeline Project
Canadian Pipeline Project $16m order for 14 ClydeUnion pipeline pump trains to be used in high speed (6,000 rpm) and high horse-power applications Pipeline project in Western Canada To execute the order, we are using bare shaft pumps produced in Penistone, England and packaged in Burlington, C
Slide 90: Flow Power & Energy Initiatives
Flow Power & Energy Initiatives 1) Disciplined order acceptance 1) Combining product offerings 2) Key account management 2) Improving on-time customer delivery 3) Expanding channel partners 3) Expanding aftermarket footprint and 4) Expanding configured-to-order business capabilities Organic Revenue
Slide 91: Flow Power & Energy Questions?
Flow Power & Energy Questions?
Slide 92: Thermal Group
Thermal Group Gene Lowe COMPANY CONFIDENTIAL
Slide 93: Thermal Group Overview
Thermal Group Overview Thermal Group Overview Business Overview: 2014E Revenue Breakdown A leading, global supplier of cooling technologies and heat exchangers into power & energy, HVAC Thermal Core and industrial markets Business 86% Large installed base and strong brand reputation ~$1.1b Mar
Slide 94: SPX Cooling Technologies
SPX Cooling Technologies Package Cooling Wet Cooling Dry Cooling closed loop, open circuit cooling tower closed loop, open circuit cooling tower closed loop, air cooled condensor Primary Advantages: Primary Advantages: Primary Advantages: Efficient, lower capital investment Efficient, lower capital
Slide 95: SPX Heat Exchanger and Filter Product Offerings
SPX Heat Exchanger and Filter Product Offerings Key Heat Exchanger and Filter Products Turbine Feedwater Condenser Heater Pulse Jet Fabric Filter Electrostatic Precipitator Air Preheater Moisture Separator Reheater Product Offering Includes Stationary and Regenerative Heat Exchangers, Filter Systems
Slide 96: Thermal Group Revenue Profile
Thermal Group Revenue Profile 2014E Revenue by End Market 2014E Revenue by Geography U.S. Coal Natural Gas 37% 33% 4% ROW Coal 12% Nuclear 33% 5% Renewables 15% $1.1B 5% 1% Industrial HVAC 14% 8% 20% Oil & Gas 14% Note: 2014E as of July 30, 2014 Diverse End Market Exposure and Global Capabilities Se
Slide 97: South Africa Update
Kendall Power Station 4,100 MW South Africa Update COMPANY CONFIDENTIAL
Slide 98: South Africa Overview
South Africa Overview Historical Information Established a presence in South Africa as Kusile Medupi Kendall DB Thermal in 1970 Power Station Power Station Power Station Supplied the Dry Cooling System to Eskom’s 4,100 MW Kendall Power Station project, started in 1982 and completed in 1993 DB Th
Slide 99: South Africa Projects: Overview
South Africa Projects: Overview South Africa Project Overview Eskom is a state-owned South African utility Alstom and Mitsubishi Hitachi are the contractors Medupi and Kusile are the two mega-projects: Twelve, 800 mega-watt coal fired plants (six at each project site) SPX awarded contracts
Slide 100: South Africa Projects: Revenue Profile
South Africa Projects: Revenue Profile Remaining Project Timeline ~$200m of estimated future revenue ($ millions) $260 Four primary phases to these projects: $222 $202 $194 1. Manufacturing: ~85% complete today…expect to be essentially finished by end of 2015 $140 $110 2. Construction: Currently
Slide 101: South Africa Projects: Construction in Process
South Africa Projects: Construction in Process Pulse Jet Fabric Filter Air Cooled Condenser Early Stages of Erection are Underway September 9, 2014 101
Slide 102: Thermal Core Business
Thermal Core Business 86% Thermal Core Business South Africa 14% COMPANY CONFIDENTIAL
Slide 103: Thermal Core Business Initiatives
Thermal Core Business Initiatives Situation Overview Key initiatives positively impacting core business: Reduced cost structure Returned to order growth Innovations gaining commercial traction Key Initiatives are Having a Positive Impact on Core Thermal Business September 9, 2014 103
Slide 104: Cost Reduction Initiatives
Cost Reduction Initiatives Thermal Group Restructuring Summary of key actions: ($ millions) $22 Reorganized management team $16 $16 Streamlined into “One Cooling” business Targeting headcount reduction of ~220 (~175 already achieved) 2013 - 2014E 2014E Annualized Evaluating additional action
Slide 105: Commercial Growth Initiatives
Commercial Growth Initiatives Channel Expansion and Marketing Initiatives: Implemented value selling tools and installed base programs Building channels to target adjacent geographies and increase higher margin aftermarket and parts Thermal Orders (1) Year-Over-Year Variance “One Cooling”: 11%
Slide 106: Thermal Group Backlog
Thermal Group Backlog Sequential Backlog Analysis ($ millions) Core Backlog South Africa Backlog Estimated contract price adjustments to South Africa backlog $535 $546 $500 $522 $493 Core backlog up 11% versus the prior year $192 $165 $149 $135 ~$90 $124 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Cor
Slide 107: End Market Development
End Market Development 2010 Revenue by End Market 2014E Revenue by End Market Non-Power Revenue: Non-Power Revenue: 19% of total ~42% of total Power Generation Power HVAC 81% Generation 16% 58% Oil & Gas / Petrochem HVAC 14% 8% Industrial Industrial Oil & Gas / Data 9% 2% Petrochem Centers 9% 4% Not
Slide 108: Innovation Initiatives: Package Cooling
Innovation Initiatives: Package Cooling Package Towers: Strengthened core NC product line with ultra quiet and efficiency technologies Extended product range by developing new offerings (MD, MHF) Key innovations driving sustained growth Innovation has Led to Market Share Gains Over the Past
Slide 109: Innovation Initiatives: ModuleAir
Innovation Initiatives: ModuleAirTM ModuleAirTM air cooled condenser: Construction savings of up to 25% as compared to standard A-frame Shorter, safer construction time Enhanced annual average power plant output Several patents in process Gaining commercial traction: Commissioned first
Slide 110: Innovation Initiatives: Modular Wet Cooling
Innovation Initiatives: Modular Wet Cooling Strong Value Proposition: Speed, Quality, Lower Labor, Reduced Risk; Customer Reaction has Been Very Positive September 9, 2014 110
Slide 111: Innovation Initiatives: ClearSky
Innovation Initiatives: ClearSkyTM ClearSkyTM (plume abated cooling): Hybrid wet/dry technology that virtually eliminates plume We have established blue chip references and won several additional orders Strong pipeline for new opportunities Patent protected Recently Announced a New Award o
Slide 112: Thermal Group Financial Analysis
Thermal Group Financial Analysis Full Year Financial Analysis ($ millions) Core Revenue 2014 Expectations: South Africa Projects 1% to 3% total revenue growth: >10% core revenue growth $1,221 +1% to $1,069 +3% $84m decline in revenue from South Africa projects >10% $961 $875 Targeting >10% b
Slide 113: Thermal Group: Executive Summary
Thermal Group: Executive Summary Situation Overview Key initiatives positively impacting core business: Reduced cost structure Returned to order growth Innovations gaining commercial traction South Africa power projects ramping down: Aggressively managing projects, but challenges remain
Slide 114: Thermal Group: Questions?
Thermal Group: Questions? SPX Marley cooling towers are installed on the top of ONE World Trade Center COMPANY CONFIDENTIAL
Slide 115: Personal Comfort Heating
Personal Comfort Heating David Kowalski
Slide 116: Personal Comfort Heating
Personal Comfort Heating Key Product Offerings wash-down, corrosion resistant heaters digital wall heaters residential boilers commercial boilers aluminum convection heaters Broad Product Offering of Heating Solutions for Residential and Commercial Applications September 9, 2014 116
Slide 117: Marley Engineered Products Heaters
Marley Engineered Products Heaters at Ralph Wilson Stadium in Orchard Park, NY A Leading U.S. Supplier of Hydronic Comfort Heating Products; A Strong Player in Electric Comfort Heating September 9, 2014 117
Slide 118: Personal Comfort Heating
Personal Comfort Heating Business Overview 2014E Revenue Breakdown Strong brand reputation in North America Comfort Residential Heating Boilers Products Sell primarily through distribution with end customers 47% 33% concentrated in the Northeast and Midwest A highly seasonal, short-cycle, busi
Slide 119: Personal Comfort Heating
Personal Comfort Heating Finanical Overview ($ millions) Revenue +2% to +3% $275 Steady, low-single digit, revenue growth in a $270 $270 $263 mature end market environment $260 Growth initiatives focused on product line expansion opportunties and sales channel management 2009 2010 2011 2012 2013
Slide 120: Industrial Products and Services
Industrial Products and Services
Slide 121: Industrial Products & Services Overview
Industrial Products & Services Overview Segment Overview 2013 Revenue by Business 2013 revenue: $735m Niche businesses concentrated in the United Transformer States with leading market positions and attractive Solutions profitability and cash flow characteristics Communication 48% Technologies 7
Slide 122: SPX Transformer Solutions
SPX Transformer Solutions Medium Power Transformers Extremely High Voltage (EHV) Power Transformers 10 to 100 MVA 100 to 500 MVA A Leading Supplier of Power Transformers into the North American Power Grid September 9, 2014 122
Slide 123: SPX Transformer Solutions
SPX Transformer Solutions Business Overview 2014E Revenue Breakdown SPX is a leading supplier of power transformers into North America with strong brand equity for quality and Medium Transformers reliability (10 to 100 mVA) 70% Large Transformers Customers include: (100 to 500 mVA) 18% Public
Slide 124: SPX Transformer Solutions
SPX Transformer Solutions Finanical Overview ($ millions) End market trends: Replacement demand has been strong Revenue Market pricing challenging, market lead times stable +8% to +10% $376 $353 Our focus has been on driving higher levels of $310 operational efficiency and reducing cost, wit
Slide 125: SPX Hydraulic Technologies
SPX Hydraulic Technologies Power Tools & Systems Hydraulic Bolting Systems Rail Systems Hydraulic Technologies Delivers High Density Power and Control Systems to Customers in Global Industrial, Infrastructure and Power & Energy Markets September 9, 2014 125
Slide 126: SPX Hydraulic Technologies
SPX Hydraulic Technologies Business Overview 2014E Revenue by End Market 2014E Revenue by Geography Industrial 36% 43% Infrastructure 23% 11% 53% Power & Mobile Energy 14% 20% Note: 2014E as of July 30, 2014 Hydraulic Technologies Delivers High Density Power and Control Systems to Customers in Globa
Slide 127: SPX Hydraulic Technologies
SPX Hydraulic Technologies Finanical Overview ($ millions) ~11% revenue CAGR over the last 5 years: Acquired Torque Tension Systems in 2010 Revenue +2% to Steady organic growth, above GDP $167 +3% $160 $149 Operating performance has continued to improve with productivity at an all time high
Slide 128: Radiodetection
Radiodetection Locators Dry Air Inspection Products Apply to Oil & Gas, Telecom, Water & Sewage and Electrical Transmission Markets September 9, 2014 128
Slide 129: Radiodetection
Radiodetection Business Overview 2014E Revenue by Product 2014E Revenue by Geography 41% Locators Inspection 70% 9% 19% Dry Air 40% (other) 21% Note: 2014E as of July 30, 2014 A Leading Global Supplier of Underground Pipe and Conduit Detection Equipment September 9, 2014 129
Slide 130: Radiodetection
Radiodetection Finanical Overview ($ millions) +3% to ~8% revenue CAGR over the last 5 years +5% $96 Revenue $90 $86 Global infrastructure growth has led to increased demand for locator and inspection products $76 $71 Low manufacturing overhead provides high operating leverage on sales growth
Slide 131: TCI International
TCI International 2014E Revenue by Technology Offering Key Product Offerings Spectrum Monitoring Systems (SMS) SMS COMINT 77% 12% HFMF 11% 2014E Revenue by Geography Communications Intelligence (COMINT) 2% 29% 22% 47% TCI Note: 2014E as of July 30, 2014 A Recognized Leader in Radio Monitoring and Ge
Slide 132: TCI Financial Analysis
TCI Financial Analysis Historical Financial Analysis ($ millions) Expansion of mobile wireless driving growth in Revenue 0% to spectrum monitoring market +5% $52 $49 $44 $45 Anti-terrorism and drug interdiction efforts drive increased demand for communication intelligence $37 technology Contra
Slide 133: Genfare Overview
Genfare Overview 1) Leading North American supplier of farebox units used in public transportation (primarily buses): Historical market position concentrated on hardware oriented farebox installations on buses 2) Rapidly evolving technology in the market has driven significant changes in Genfare o
Slide 134: Genfare Technology Innovation
Genfare Technology Innovation Legacy Farebox Fast Fare Box Fast Fare-eTM e-FareTM E-ticketing Point of Sale Cloud Based Software Support Fast Fare Suite of Products Integrated With Back-End Support is Creating a New Industry Standard September 9, 2014 134
Slide 135: Genfare Financial Analysis
Genfare Financial Analysis ($ millions) Customers are primarily U.S. cities; Federal Revenue Funding through the U.S. Highway Bill is essential $75 +3% to The revitalization of urban centers and the influx $71 +10% of young professional ridership has increased $69 $67 demand $53 New found popu
Slide 136: Global Manufacturing Operations (GMO)
Global Manufacturing Operations (GMO) David Kowalski COMPANY CONFIDENTIAL COMPANY CONFIDENTIAL
Slide 137: Global Manufacturing Operations Initiatives
Global Manufacturing Operations Initiatives GLOBAL MANUFACTURING OPERATIONS Re-energize Continuous Improvement Renew Focus on Global Supply Chain 1) Utilize standard systems 1) Global focus on savings and supplier performance 2) Consistent operating metric scorecard 2) Enhance certification and rati
Slide 138: Progress to Date
Progress to Date Established Global Manufacturing Operations leadership team Evaluated footprint initiatives …finalizing initial action plans: Paced by physical expansion efforts, followed by potential facility consolidations Defined and implemented a consistent set of metrics across the org
Slide 139: Global Manufacturing Operations Team
Global Manufacturing Operations Team David Kowalski President, Global Manufacturing Operations and Industrial Products & Services Steve Wells Barry McGinley Dace Richardson VP, Global Continuous VP, Global Operations & VP, Global Suppy Chain Improvement and Quality Advanced anufacturing Chris Walmes
Slide 140: Introductions: Barry McGinley and Steve Wells
Introductions: Barry McGinley and Steve Wells Barry McGinley, Steve Wells, VP Global Supply Chain VP Global Quality & Continuous Improvement Over 20 years of experience in Supply 30 years in Operations and Engineering: Chain, Project Management, Engineering Goodrich/United Technologies and Bus
Slide 141: Global Manufacturing Footprint Strategy
Global Manufacturing Footprint Strategy Strategic Approach Expansion Actions Under Review Identify lower cost manufacturing solutions Two major initiatives to “prime the pump”: that can be implemented quickly, with limited business disruption: Bydgoszcz, Poland: Expand from 121k sq. ft. leased
Slide 142: Preliminary Footprint Optimization Plan
Preliminary Footprint Optimization Plan Houston: China: Market growth opportunities in Successful track record in certain oil & gas for valves, pumps and product lines aftermarket service Continued localization to reduce Poland Consolidation of multiple sites lead times and cost Expansion
Slide 143: Bydgoszcz History and Planned Expansion
Bydgoszcz History and Planned Expansion Products Currently Manufactured in Bydgoszcz Facility aquired with APV in 2007, process capabilities have led to volume increasing 3X to $60m today 110,000 sq. ft. of factory space to be expanded to 300,000 sq. ft. F&B heat F&B pumps F&B valves F&B skids e
Slide 144: Bydgoszcz Planned Expansion
Bydgoszcz Planned Expansion Land Purchased in Q3 2014 September 9, 2014 144
Slide 145: Global Manufacturing Operations: Summary Evaluation
Global Manufacturing Operations: Summary Evaluation High return on investment opportunities in low cost Footprint and high growth potential regions Future State Expect phased approach over the next 2-3 years; continued restructuring expense Simplified organization Only ~30% of total sourcing
Slide 146: Questions?
Questions? David Kowalski COMPANY COMPANYCONFIDENTIAL CONFIDENTIAL
Slide 147: Delavan Plant Tours
Delavan Plant Tours David Kowalski
Slide 148: Delavan, Wisconsin
Delavan, Wisconsin Established in 1977 as Superior Stainless Acquired by SPX in 2001 with United Dominion Two buildings; ~300k square feet of manufacturing space ~400 employees, skilled workforce Products manufactured primarily in stainless alloys >85% of sales into Food & Beverage marke
Slide 149: Delavan History
Delavan History ~$210m in revenue ~$100m in revenue 149 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Delavan’s Sales and Production Capabilities have Expanded Significantly Over Time With Limited Capacity Investment September 9, 2014 149
Slide 150: Pumps & Valves Manufactured at the Sugar Creek Facility
Pumps & Valves Manufactured at the Sugar Creek Facility Food & Beverage Pharmaceutical Industrial F&B Lobe Food & Beverage Universal PD Pump PD Pump PD Pump Pump Centrifugal Pump Centrifugal Pump Continuous Process Butterfly Pressure Relief Shut-Off, Divert Throttling/Regulating Minimal Spill Mix Pr
Slide 151: Sugar Creek Plant
Sugar Creek Plant September 9, 2014 151
Slide 152: Primary Products Made at Hobbs Facility
Primary Products Made at Hobbs Facility Scraped Surface Heat Exchanger Homogenizer Metering Pump Skidded System Vertical Scraped Surface Heat Exchanger Bacon Press Heavy Duty Components and Skids are Manufactured and Assembled at the Hobbs Facility September 9, 2014 152
Slide 153: Hobbs Plant
Hobbs Plant on Be: Midwest Service Center Fx 86S hd ging otsor BL ting Jee l ‘Shaft Machining Cell Raw Partto Finich Part {ovation Center Tube Machining Cl | sector naw Pate Fh Pat Tew Pitt Phish Part a ooh LL] See] = scrapes MAINTENANCE [ee i| Assembly Rubber Rotor Zz, press RENTAL els EQUIPMENT Si
Slide 154: COMPANY CONFIDENTIAL
COMPANY CONFIDENTIAL