Slide 1: 2015 First Quarter Results
2015 First Quarter Results April 29, 2015 April 29, 2015 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: 2015 Financial Modeling Approach
2015 Financial Modeling Approach In 2015 we are focused on both continued operational improvement and achieving the strategic milestone of separating SPX into two strong, standalone public companies. We are providing financial modeling targets for revenue, segment income, EBITDA and other reason
Slide 4: Introductory Comments
Introductory Comments Chris Kearney, Chairman, President and CEO COMPANY April 29, 2015 CONFIDENTIAL
Slide 5: Update on Spin-Off of Flow
Update on Spin-Off of Flow Accomplishments to date: Determined company names: SPX Corporation and SPX FLOW, Inc. Appointed IBM executive Anne Altman to the current Board of Directors and continue to identify additional Board of Director Candidates for both future companies Determined Tier I
Slide 6: Consolidated Q1 Results
Consolidated Q1 Results Q1 Year-Over-Year Analysis Revenue ($ millions) Revenue: Operating Margin (12%) year-over-year decline: (6%) currency impact (6%) organic decline due to lower power and energy revenue, $1,077 largely reflecting the impact of lower oil prices on our customers’ $947 capit
Slide 7: Flow End Market Trends
Flow End Market Trends Food & Beverage Power & Energy Industrial Flow Oil & Gas Components Overall, fairly steady demand Sharp year-over-year decline in versus the prior year Experienced a slowdown in demand upstream and pipeline orders for components in North America Some delays in order pl
Slide 8: Thermal End Market Trends
Thermal End Market Trends HVAC Power Generation Personal comfort heating: Sluggish demand in North American and EMEA for thermal equipment, both for new capacity and Strong Q1 demand, consistent refurbishment of aged power plants with prior year, driven by extended winter Lower oil prices im
Slide 9: Backlog
Backlog Sequential Backlog Analysis ($ millions) Sequential Analysis $2,100 $2,064 Total Organic Currency Change Change Impact $336 $339 Industrial Flow +1% +6% (5%) $615 $563 Thermal * Thermal* (8%) (3%) (5%) $1,162 Industrial +1% +1% (0%) Flow $1,149 SPX Total* (2%) +3% (4%) Q4 2014 Q1 2015 *Exclu
Slide 10: Restructuring Actions
Restructuring Actions Estimated Restructuring Over the Balance of 2015 2015 Full Year Target: ($ millions) $25 to Increased full year restructuring expense $32 $30 target to a range of $25m to $30m $23 $23 Restructuring actions to be concentrated in Q2-Q4E power and energy businesses within Flow
Slide 11: Financial Analysis
Financial Analysis Jeremy Smeltser April 29, 2015 COMPANY CONFIDENTIAL
Slide 12: Q1 2015 Earnings Per Share
Q1 2015 Earnings Per Share Q1 2015 EPS Analysis EPS EPS from continuing operations ($0.17) As reported $5m pre-tax costs recorded in corporate expense Spin related costs $0.22 $5m of discrete tax items related to legal entity reorganization EPS from continuing operations, $0.05 excluding spin
Slide 13: Flow Technology Q1 Results
Flow Technology Q1 Results Q1 Year-Over-Year Analysis Revenue decreased (14%): Revenue ($ millions) (8%) currency impact Operating Margins (6%) organic decline: Double-digit organic decline in Power & Energy $617 Single-digit organic growth in Food & Beverage $531 Segment income decreased ($
Slide 14: Flow Technology Backlog
Flow Technology Backlog Sequential Backlog Analysis ($ millions) Quarter End Backlog Q1 ending backlog increased 1%, or $13m, sequentially: $1,149 $1,162 6% or $68m organic increase: Organic growth across all three of Flow’s end market platforms (5%) or ($55m) currency impact Q4 2014 Q1 2015
Slide 15: Thermal Equipment & Services Q1 Results
Thermal Equipment & Services Q1 Results As Reported Core Thermal Segment* ($ millions) ($ millions) Revenue Revenue Operating Margins Operating Profit Margins South Africa Projects (1) $280 Profit/ $251 $247 Revenue Loss $233 (4%) or ($11m) revenue decline due Q1 2014 $29 $0 3.3% 3.6% 2.4% to curr
Slide 16: Thermal Equipment & Services Backlog
Thermal Equipment & Services Backlog Sequential Backlog Analysis ($ millions) Core Backlog South Africa Backlog Estimated future contract adjustments in South Africa Core backlog down (8%) or ($52m), sequentially: $615 (5%) due to currency $563 (3%) organic decline, primarily in cooling tower
Slide 17: Industrial Products & Services Q1 Results
Industrial Products & Services Q1 Results Q1 Year-Over-Year Analysis ($ millions) Revenue Revenue decreased (7)%: Operating Margins (2%) currency impact (4%) organic decline: $181 $169 Decline in sales of fare collection systems, power transformers and communication technologies 12.9% 11.2% Se
Slide 18: Industrial Products & Services Backlog
Industrial Products & Services Backlog Sequential Backlog Analysis ($ millions) Quarter End Backlog Total backlog up 1% sequentially: $336 $339 Modest increase in communication technologies and power transformer backlogs Power transformer backlog provides good visibility to shipments over the
Slide 19: Q2 2015 Financial Modeling Targets
Q2 2015 Financial Modeling Targets Financial Metric Q2 2014 Q2 2015 Targets Commentary ($ millions) (7%) currency impact Revenue $1,195 (11%) to (13%) (4%) to (6%) organic decline ~($7) currency impact Segment Income $128 $86 to $96 Organic decline in Flow Power & Energy Expect revenue dec
Slide 20: 2015 Financial Modeling Targets
2015 Financial Modeling Targets 2015 Financial Target SPX Consolidated FLOW THERMAL INDUSTRIAL Total Revenue Variance To Prior Year (6%) to (10%) (9%) to (12%) (4%) to (8%) (2%) to +2% Currency Impact To Revenue ~(6%) ~ (8%) ~(5%) ~(2%) Organic Revenue Growth flat to (4%) (1%) to (4%) flat to (4%) f
Slide 21: Sequential Analysis
Sequential Analysis Segment Income Phasing ($ millions) Key 2H 2015 revenue drivers: Thermal Equipment: seasonality of personal comfort heating businesses and package cooling business 2013 2014 2015 Mid-Point Flow Technology: Increase in food & beverage system revenue from recent orders; seasona
Slide 22: Future Company Profiles
Future Company Profiles SPX FLOW Inc. New SPX Corporation Chairman: Michael Mancuso Chairman, President and CEO: Chris Kearney President and CEO: Gene Lowe VP and Chief Financial Officer: Jeremy Smeltser VP and Chief Financial Officer: Scott Sproule 2015E Consolidated EBITDA (1): ~$360m
Slide 23: Financial Position
Financial Position ($ millions) 12/31/14 3/28/15 Update on Q1 Ending Financial Position Q1 ending cash of $363m Cash $428 $363 Accounts $1,067 $1,026 Q1 free cash flow usage of $123m: Receivable Q1 free cash flow performance seasonally weak Low level of operating profit and timing of cash To
Slide 24: Executive Summary
Executive Summary COMPANY CONFIDENTIAL
Slide 25: Executive Summary
Executive Summary Key Investor Messages We have made significant progress over the last several years to simplify and strengthen SPX The spin-off will result in two independent, publicly traded companies with increased strategic flexibility: SPX FLOW, Inc.: Pure-play flow company with diversif
Slide 26: Questions
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Slide 27: Appendix
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Slide 28: Pro Forma Future Company Reconciliations
Pro Forma Future Company Reconciliations NOTE: Pro Forma 2015 estimates for revenue and consolidated EBITDA are based on SPX’s 2015 mid-point financial targets as categorized in the proposed future structure and inclusive of estimated stand-alone costs ($ millions) SPX FLOW, Inc. SPX Corporation Rev
Slide 29: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ mil l i ons ) LTM 2015E Net Income $73 $177 Income tax provision 60 80 Net interest expense 67 68 Income before interest and taxes $200 $325 Depreciation and intangible amortization expense 107 104 EBITDA $307 $429 Adjustments: Non-cash compensation expense 54 5
Slide 30: Q1 2015 Organic Revenue Growth Reconciliation
Q1 2015 Organic Revenue Growth Reconciliation Q1 2015 Organic Growth Reconciliation Three months ended March 28, 2015 Net Revenue Foreign Organic Revenue Decline Currency Decline Flow Technology (13.9) % % (8.3) % (5.6) % Thermal Equipment and Services (11.6) % % (4.8) % (6.8) % Industrial Products
Slide 31: Free Cash Flow
Free Cash Flow Reconciliation to GAAP Cash Flow Statement ($ millions) Q1 2015 Net cash from continuing operations ($108) Capital expenditures ($14) Free cash flow from continuing operations ($123) April 29, 2015 31
Slide 32: Debt Reconciliation
Debt Reconciliation Debt Reconciliation as of March 28, 2015 ($ millions) 3/28/2015 Short-term debt $ 299 Current maturities of long-term debt 38 Long-term debt 1,150 Gross Debt $ 1,486 Less: Purchase card program and extended A/P programs (28)3 Adjusted Gross Debt $ 1,458 Less: Cash in excess of $5
Slide 33: Reconciliation of "Thermal Core" Results
Reconciliation of “Thermal Core” Results (Unaudited; in millions) Three months ended March 28, 2015 March 29, 2014 Δ %/bps Thermal Equipment and Services Revenues $ 247.2 $ 279.6 $ (32.4) -11.6% Operating Profit (Loss) (2.8) 9.2 (12.0) as a percent of revenues -1.1% 3.3% -440 bps (1) South Africa Pr