Slide 1: Q1 2019 Earnings Presentation
Q1 2019 Earnings Presentation May 2, 2019 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, and financial projections, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as am
Slide 3: Introductory Comments
Introductory Comments Gene Lowe
Slide 4: Q1 Performance Highlights
Q1 Performance Highlights Solid start to 2019, on track to achieve full-year targets Strong year-over-year adjusted revenue and adjusted operating profit growth 90 basis points year-over-year adjusted operating margin expansion Financial condition provides substantial capital for strategic i
Slide 5: Adjusted Q1 2019 Year-Over-Year Summary
Adjusted Q1 2019 Year-Over-Year Summary ($ millions) Adjusted Revenue Revenue growth across all three reportable Adjusted Operating Income Margin segments $352 $321 9.5% adjusted revenue growth 9.1% Detection & Measurement and Engineered 8.2% Solutions were primary drivers of adjusted operatin
Slide 6: 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 • Leadership development • Significant capital to deplo
Slide 7: Q1 Financial Review
Q1 Financial Review Scott Sproule
Slide 8: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q1 2019 Q1 2018 GAAP EPS from continuing operations $0.01 $0.28 South Africa and Heat Transfer* $0.47 $0.08 Acquisition-related $0.06 $0.02 Non-service pension & other** ($0.06) $0.05 Amortization $0.03 - Adjusted EPS from continuing operations $0.51 $0.43 Adjusted EPS Gr
Slide 9: Adjusted Q1 2019 Year-Over-Year Results
Adjusted Q1 2019 Year-Over-Year Results Q1 Adjusted Revenue: Adjusted Revenue ($ millions) Adjusted Segment Income Margin 9.5% year-over-year increase: 7.5% acquisition impact $352 2.5% organic increase*, primarily due to volumes in HVAC and $321 Engineered Solutions (0.5%) unfavorable curre
Slide 10: HVAC Q1 2019 Year-Over-Year Results
HVAC Q1 2019 Year-Over-Year Results Revenue ($ millions) Segment Income Margin Q1 Revenue: 0.5% year-over-year increase: 1.0% organic increase* primarily driven by $128 $128 higher heating volumes (0.5%) unfavorable currency impact 14.6% 14.3% Q1 Segment Income and Margin: $0.2m decrease in
Slide 11: Detection & Measurement Q1 2019 Year-Over-Year Results
Detection & Measurement Q1 2019 Year-Over-Year Results ($ millions) Q1 Revenue: Revenue Adjusted Segment Income Margin* 29.7% year-over-year increase: 34.2% increase from acquisitions $85 (3.4%) organic decrease* primarily due to timing of $66 project revenues (1.1%) unfavorable currency imp
Slide 12: Engineered Solutions Q1 2019 Year-Over-Year Results
Engineered Solutions Q1 2019 Year-Over-Year Results Q1 Revenue: Revenue ($ millions) Segment Income Margin 8.0% year-over-year increase: Improved volumes in Transformers and Process $138 $128 Cooling Q1 Segment Income and Margin: 5.3% 5.8% $1.2m increase in segment income 50 basis points of
Slide 13: Financial Position and Liquidity Review
Financial Position and Liquidity Review Scott Sproule
Slide 14: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update Leverage Ratios* ($millions) 2.1x 1.5-2.5x Q4 2018 Q1 2019 1.9x 1.9x 1.7x Short-term debt $31.9 $75.0 Current maturities of long-term debt 18.0 14.2 Long-term debt 331.9 332.3 Total Debt $381.8 $421.5 Less: Cash on hand (68.8) (39.0) Net Debt
Slide 15: 2019 Adjusted Guidance (No Change)
2019 Adjusted Guidance (No Change) Revenue Segment Income Margin In a range of 15.5-16.0%, or +25 bps HVAC In a range of $570-580 million at midpoint vs 2018 Detection & In a range of 23-24%, ex In a range of a $385-395 million Measurement amortization Engineered In a range of $530-540 mil
Slide 16: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 17: Market Commentary
Market Commentary Market Comments Cooling: Commercial and institutional markets remain steady HVAC Heating: Seasonal demand remains a key driver; commercial markets steady Detection & Favorable run-rate markets Measurement Frontlog activity remains strong for project markets Transformers K
Slide 18: Executive Summary
Executive Summary Strong start to 2019 – on track for double-digit EPS growth Healthy overall revenue growth and margin expansion Solid balance sheet and liquidity profile Acquisition integrations going well; M&A pipeline active Creating Value for Shareholders and Executing on Plans to Drive
Slide 19: Questions
SPX4 Questions
Slide 20: Appendix
SPX4 Appendix
Slide 21: 2019 Adjusted EPS Guidance - Key Drivers
2019 Adjusted EPS Guidance - Key Drivers • Favorable Economic Policy/Infrastructure Stimulus $2.65 • Stronger-Than-Normal Seasonal Heating Demand • Commercial Growth Accelerates • Greater-Than-Anticipated Price-Cost Tailwinds • Accelerated Project-Related Sales $2.58 Base Case • Weaker-Than-Anticipa
Slide 22: Adjusted Segment Income Phasing
Adjusted Segment Income Phasing ($ millions) Q1 2018 Q2 2018 Q3 2018 Q4 2018 GAAP 37.0 41.0 29.6 70.9 Exclude: "All other" (4.1) (4.4) (8.0) (2.4) 37% Exclude: One time acquisition (0.3) (1.8) (2.9) (0.9) 31% related costs Exclude: Intangible amortization (0.1) (0.5) (1.3) (1.3) 25% Adjusted $41.5 $
Slide 23: 2019 Modeling Considerations
2019 Modeling Considerations Metric Commentary/Assumptions Corporate costs Low $40Ms Long-term incentive comp $14-15M Restructuring costs $1M Interest cost $20-21M Equity earnings, other $4-5M Tax rate 22-23% Capex $15-17M Cash cost of pension + OPEB Approximately $16M D&A Approximately $32M, mostly
Slide 24: Q1 2019 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2019 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 20.8 $ 25.5 $ 46.3 (2) Corporate expense (12.4) 1.6 (10.8) Long-term incentive compensation expense (3.5) — (3.5) Special charges, net (0.1) — (0.1) Other operating expenses (3
Slide 25: Q1 2018 U.S. GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2018 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustments Adjusted (1) Segment income $ 37.0 $ 4.5 $ 41.5 (2) Corporate expense (11.8) 0.8 (11.0) Long-term incentive compensation expense (3.9) — (3.9) (3) Special charges, net (2.0) 1.6 (0.4) Operating income 19.3
Slide 26: Q1 2019 and 2018 U.S. GAAP to Adjusted Operating Income Reconciliation
Q1 2019 and 2018 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended March 30, 2019 March 31, 2018 Operating income $ 3.0 $ 19.3 Exclude: Aggregate operating losses of the South Africa and Heat Transfer businesses (1) (22.6) (5.5) (2) One time acquisition related co
Slide 27: Q1 2019 U.S. GAAP Revenue to Organic Revenue Reconciliation
Q1 2019 U.S. GAAP Revenue to Organic Revenue Reconciliation ($ millions) Three months ended March 30, 2019 Detection & HVAC Measurement Engineered Solutions Adjusted SPX Net Revenue Growth 0.5 % 29.7 % 8.0 % 9.5 % Exclude: Foreign Currency (0.5) % (1.1) % — % (0.5) % Exclude: Acquisitions — % 34.2 %
Slide 28: Q1 2019 and 2018 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliations
Q1 2019 and 2018 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliations CONSOLIDATED SPX: Three months ended ($ millions) March 30, 2019 March 31, 2018 Consolidated revenue $ 343.6 $ 351.9 Exclude: "All Other" operating segments (1) (7.9) 30.8 Adjusted consolidated revenue $ 351.5
Slide 29: Q1 2019 Debt Reconciliation
Q1 2019 Debt Reconciliation ($ millions) Q1 2019 Short-term debt $ 75.0 Current maturities of long-term debt 14.2 Long-term debt (1) 334.0 Gross debt 423.2 Less: Purchase card program and extended payables (2.5) Adjusted gross debt 420.7 Less: Cash and equivalents (39.0) Adjusted net debt $ 381.7 1)
Slide 30: Q1 2019 Consolidated Adjusted EBITDA Reconciliation
Q1 2019 Consolidated Adjusted EBITDA Reconciliation Last 12 ($ millions) Months Net income from continuing operations attributable to SPX Corporation $ 68.0 common shareholders Income tax provision (benefit) 1.9 Interest expense 22.5 Income from continuing operations before interest and taxes 92.4 D
Slide 31: Q1 2019 Adjusted Free Cash Flow from Continuing Operations to U.S. GAAP Reconciliation
Q1 2019 Adjusted Free Cash Flow from Continuing Operations to U.S. GAAP Reconciliation ($ millions) Q1 2019 Net operating cash flow from continuing operations $ 11.5 Capital expenditures - continuing operations (3.7) Free cash flow used in continuing operations 7.8 Adjustment for "All other" 6.2 Adj