Spx Technologies, Inc. · NYSE:SPXC

Spx Technologies — Investor Presentation (May 2023)

59 slides from Spx Technologies's investor presentation, May 2023

  1. Slide 1: SPX Technologies Investor Presentation May 2023

    SPX Technologies Investor Presentation May 2023 SPX Corporation 2019 Investor Event - New York

  2. Slide 2: SPX Technologies Overview

    SPX4 TECHNOLOGIES SPX Technologies Overview

  3. 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%  $1.63B Revenue*  ~3,300 employees  NYSE Ticker: SPXC * Midpoint of 2023 guidance as presented May 4, 2023 †Based on management esti

  4. 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

  5. Slide 5: Strong Product Offerings and Attractive Market Dynamics

    Strong Product Offerings and Attractive Market Dynamics 2022 2022 REVENUE FROM REPLACEMENT SALES† ADJUSTED REVENUE EBITDA MARGIN* ~2/3  Cooling towers  Refrigeration  Engineered air movement $914m mid-teens 2022 REVENUE FROM #1 OR #2 MARKET POSITION†  Process Cooling  Boilers  Electrical heati

  6. 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

  7. Slide 7: 2023+ Initiatives

    2023+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service Robotics SEALITE ECS Digital CINCINNATI FAN Sourcing ITL AI Loyalty May 2023 7

  8. 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 May 2023 8

  9. Slide 9: Momentum in Digital

    Momentum in Digital Driving Customer Value Through Focus on Technology May 2023 9

  10. Slide 10: 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 May 2023 10

  11. Slide 11: SPX 2025

    SPX4 TECHNOLOGIES SPX 2025

  12. Slide 12: SPX Strategic Portfolio Transformation Continues

    SPX Strategic Portfolio Transformation Continues Pre-Transformers Sale (2020A)1 2022A 2025 Targets Revenue $1.56B $1.46B ~$2.0B Gross margin % 31.0% ~480bps 35.8% ~+400bps ~40% Segment Income % 15.3% ~180bps 17.1% ~+300bps ~20% Adj. Operating Income % 10.9% 12.8% ~+300bps ~16% Long-term Growth % ~1-

  13. Slide 13: Focused, Market-Leading Growth Platforms

    Focused, Market-Leading Growth Platforms Detection & Measurement (~$580M)(1) HVAC (~$1,045M)(1) Location & Inspection ~$1.63 Billion(1) Cooling  Premium engineered niches  Technology / innovation focus Aids to Navigation  ~90% Market Leadership (#1 or #2) Heating  High replacement revenue (~2/3)

  14. 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 ~$1.63 Billion* 1700.0 Process Cooling 1600.0 ~$1.46 Billion 1500.0 1400.0 Process Cooling 1300.0 ~$1.22 Billion 1200.0 ~9% 1100.0 Process Cooling HVAC HVAC (~$935m)* 1000.0 HVAC 900.0 ($796m)

  15. Slide 15: Segment Overview

    Segment Overview  HVAC  Detection & Measurement

  16. Slide 16: HVAC

    SPX4 TECHNOLOGIES HVAC

  17. Slide 17: HVAC Segment Overview

    HVAC Segment Overview 2021 2022 2023E 2022 Revenue by Product Adjusted segment income % ($ millions) Heating ~$1,045 2022 Cooling $914 Products Revenue Products $752 41% $914m 59% ~17.8% 14% 15% 2022 Revenue by Geography ~3% 2021 2022 2023E Gross Margin% 30% 30% - Adjusted EBITDA* $116 $145 - ~8% ~8

  18. Slide 18: HVAC Cooling Overview

    HVAC Cooling Overview 2022 Revenue by Product  Cooling products used in non-residential, commercial Parts & Service construction, process cooling and refrigeration applications 29% Package 2022 Cooling Revenue Towers &  Well-recognized product brands: Marley and Recold $537m Refrigeration 71%  We

  19. 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

  20. 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

  21. Slide 21: Heating Product Examples

    Heating Product Examples Residential Boilers Commercial Boilers Electrical Heating Products  High efficiency natural gas  High efficiency natural gas  Standard cast iron  Standard cast iron Digital  Unique hybrid design wall heaters  Gas combi boilers Wash-down, corrosion resistant heaters Tre

  22. Slide 22: Detection & Measurement

    SPX4 TECHNOLOGIES Detection & Measurement

  23. Slide 23: Detection & Measurement Segment Overview

    Detection & Measurement Segment Overview 2022 Revenue by Product 2021 2022 2023E Adjusted segment income % ($ millions) Aids to Navigation Location & ~$580 Long-Term (“AtoN”), CommTech, Inspection $547 Revenue 2022 $467 and Transportation Equipment Growth ~2-6% Revenue 52% $547m 48% 20% 21% ~21% 202

  24. 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

  25. Slide 25: Location & Inspection – Key Products

    Location & Inspection – Key Products Location Equipment Inspection Equipment Full Lifecycle Infrastructure Solutions Provider for Location & Inspection Markets May 2023 25

  26. Slide 26: AtoN, CommTech, and Transportation

    AtoN, CommTech, and Transportation 2022 Revenue by Product CommTech  CommTech : A leading global supplier of spectrum monitoring, Transportation 20% 27%* communication intelligence and geolocation technologies 2022 Revenue  Aids to Navigation: Global Leader in terrestrial obstruction lighting, $28

  27. 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 May 2023 27

  28. Slide 28: CommTech – Key Capabilities & Solutions

    CommTech – Key Capabilities & Solutions Spectrum Monitoring Communications (SMS) Intelligence NEW PIC Spectrum monitoring leader with expanding COMINT presence May 2023 28

  29. 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

  30. Slide 30: Financial Performance & Capital Allocation

    Financial Performance & Capital Allocation

  31. 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

  32. Slide 32: Financial Position - Capital Structure & Liquidity Update

    Financial Position - Capital Structure & Liquidity Update ($millions) Q4 2022 Q1 2023 1.5-2.5x Short-term debt $2 $69 Pro Forma w/ TAMCO Current maturities of long-term debt 2 3 Long-term debt 243 242 Total Debt $247 $314 1.1x 1.2x 0.8x Less: Cash on hand (157) (213) 0.4x 0.4x Net Debt (Cash) $90 $1

  33. Slide 33: 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

  34. Slide 34: Building Strategic Platforms

    Building Strategic Platforms

  35. Slide 35: SPX Business Value Model

    SPX Business Value Model Disciplined Business System Strategic Acquisition Approach Superior Performance Strategic Organic Sales Growth (Innovation, Product Mgmt.) Organic / Inorganic SPX has acquired Revenue Growth Continuous Improvement ~$415M of revenue SEALITE (Lean, 80/20) in ~4 years Margin Ex

  36. Slide 36: 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

  37. Slide 37: Building Strategic Platforms – Aids to Navigation

    Building Strategic Platforms – Aids to Navigation SEALITE ITL Terrestrial Marine Obstruction Airfield Ground and Bolt-on Terrestrial Obstruction Lighting Lighting Marine Obstruction Obstruction Lighting Lighting Transformed ~$40-50m Obstruction Lighting Business into ~$150m Global Leader in Aids to

  38. Slide 38: 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 May

  39. Slide 39: Building Strategic Platforms - Cooling

    Building Strategic Platforms - Cooling Open and Close Loop Cooling Engineered Air Movement >$660m Leading Position in Industrial Custom fans, High Performance Packaged Cooling Refrigeration blowers, and Industrial and Revenue* Towers Products critical exhaust Commercial Air systems Control Solutions

  40. Slide 40: ASPEQ Heating Group

    ASPEQ Heating Group Company Profile Headquarters: St. Louis, Missouri Description: Leader in electrical heating providing solutions for high-value applications in industrial and commercial markets.  $418m purchase price  Anticipated closing late Q2, subject to HSR  >$120m annualized revenue  Gro

  41. Slide 41: Executive Summary

    SPX4 TECHNOLOGIES Executive Summary

  42. Slide 42: Executive Summary

    Executive Summary  Balanced business portfolio with attractive and diverse end market drivers  Strong balance sheet, significant capital availability, and cash generation  Effective business system and continued focus on growth accelerators, including inorganic opportunities Significant Value Cre

  43. Slide 43: Appendix

    SPX4 TECHNOLOGIES Appendix

  44. Slide 44: 2023 Guidance

    2023 Guidance Revenue Segment Income Margin  $1,035-$1,055m  17.25%-18.25% HVAC Prior $935-$955m Prior 15.25%-16.00% Detection &  $570-$590m  20.50%-21.50% Measurement Prior $565-$585m Prior 20.50%-21.50%  $1.61-1.65b  18.50%-19.50% Total SPX Prior $1.50-1.54b Prior 17.00%-18.00% Adj. Operatin

  45. Slide 45: Modeling Considerations – Full Year 2023

    Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $48-52m Long-term incentive comp $13-14m Restructuring costs $1-2m Interest cost ~$10-11m Other income/(expense), and Non-service pension benefit/(expense) $4-6m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OP

  46. Slide 46: 2023 Adjusted EPS Guidance - Key Drivers

    2023 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $3.95 • Accelerated project-related sales • Moderating supply chain challenges and input costs $3.88 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $3.80 • Unfa

  47. Slide 47: End Market Exposure

    End Market Exposure ~$1.46 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 28% 17% 13% 42% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 3% Gov't Regulated, Institutional, 12% 21% Office / Ret

  48. Slide 48: Divestiture of Asbestos Assets & Liabilities

    Divestiture of Asbestos Assets & Liabilities  Strengthens and simplifies enterprise Improve growth focus  $139m contribution  Annual EPS accretion of $0.08-$0.10 Reduce ― 100% cash conversion Reduce cash Administrative outflow burden  Eliminates cash settlements  Frees up resources for growth f

  49. Slide 49: Segment Income Phasing and Reconciliations

    Segment Income Phasing and Reconciliations 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 May 2023 49

  50. 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

  51. Slide 51: 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% May 2023 51

  52. Slide 52: 2020 Historical Reconciliation

    2020 Historical Reconciliation* Adjustments as Non-GAAP Adjusted asas As reported reported reported 12/31/2020 12/31/2020 12/31/2020 Revenue(1) 1,559.5 (4.0) 1,555.5 (2) Segment Income 203.7 34.6 238.3 Corporate expense(3) (44.8) 1.7 (43.1) Long-term incentive compensation (14.0) - (14.0) (4) Impair

  53. Slide 53: 2022 U.S. GAAP to Adjusted EPS Reconciliation

    2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 249.6 $ — $ 249.6 (1) Corporate expense (68.6) 18.2 (50.4) Acquisition related costs (2) (1.9) 1.9 — Long-term incentive compensation expense (3) (10.9) (0.8) (11.7) Amortization of intangible asset

  54. Slide 54: 2021 U.S. GAAP to Adjusted EPS Reconciliation

    2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 200.6 $ — $ 200.6 Corporate expense (1) (60.5) 8.6 (51.9) Acquisition related and other costs (2) (5.1) 5.1 — Long-term incentive compensation expense (12.8) — (12.8) Amortization of intangible asse

  55. Slide 55: U.S. GAAP to Adjusted Operating Income Reconciliation

    U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Twelve months ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Operating income (loss) $ (24.9) $ 13.9 $ 51.0 $ 73.7 Include - TSA Income (1) 0.5 0.9 2.9 0.9 Exclude: Acquisition relate

  56. Slide 56: Q4 2022 Debt Reconciliation

    Q4 2022 Debt Reconciliation ($ millions) Q4 2022 Short-term debt $ 1.8 Current maturities of long-term debt 2.0 Long-term debt 243.0 Gross debt 246.8 Plus: adjustment associated with credit agreement⁽ⁱ⁾ (1.1) Adjusted gross debt 245.7 Less: cash and equivalents (156.6) Adjusted net debt $ 89.1 ⁽ⁱ⁾In

  57. Slide 57: Q1 2023 Debt Reconciliation

    Q1 2023 Debt Reconciliation ($ millions) Q1 2023 Short-term debt $ 68.9 Current maturities of long-term debt 3.5 Long-term debt 241.5 Gross debt 313.9 (1) plus: adjustment associated with credit agreement (1.2) Adjusted gross debt 312.7 less: cash and equivalents (212.2) Adjusted net debt $ 100.5 (1

  58. Slide 58: 2022 Adjusted EBITDA Reconciliation

    2022 Adjusted EBITDA* Reconciliation ($ millions) FY 2022 Net Income $ 0.2 Income tax provision 7.3 Interest expense 9.3 Income before interest and taxes 16.8 Depreciation and amortization 46.4 EBITDA 63.2 Adjustments: Losses on disposition of assets outside the ordinary course of business 19.6 Impa

  59. Slide 59: 2022 Adjusted Free Cash Flow Reconciliation

    2022 Adjusted Free Cash Flow Reconciliation ($ millions) FY 2022 Operating cash flow used in continuing operations $ (115.2) Capital expenditures (15.9) Free cash flow used in continuing operations (131.1) Adjustments* 228.1 Adjusted free cash flow from continuing operations $ 97.0 * Adjustments ali

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