Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Electrical Products Group Conference 2011
36 slides from Spx Technologies's conference presentation, May 16, 2011
Slide 1: Electrical Products Group
Electrical Products Group INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 16, 2011 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 2011 3
Slide 4: SPX Transformation
SPX Transformation 1912-1996 2005-Today 1997-2004 U.S. Automotive Global, Multi-Industry Supplier Supplier Diversified Idustrial Manufacturer Of Engineered Solutions Focus on Executing Long-Term Strategy, Cyclical Recovery Focus on 3 Strategic Markets Diversification, Focus on >100 Acquisitions Stru
Slide 5: Key End Market Drivers
Key End Market Drivers Power & Energy Food & Beverage Vechicle Service Electricity Demand Customer Globalization, New Vehicle Platforms Emerging Markets Retrofit and Refurbishment Increasing Electronic of Aged Infrastructure Sustainability & Complexity of Vehicles Environmental Considerations Emergi
Slide 6: Strategic Overview
Strategic Overview Growth Initiatives Internal Focus Develop Continue LEAN Innovative Solutions Journey Expand Customer Migrate to Relevance Shared Services Broaden Geographic Promoting Presence Brand Localize Content One with Global Expertise Global Operating System Power & Food & Vehicle Energy Be
Slide 7: Revenue by Region
Revenue by Region Emerging Market Revenue % 2010 Revenue % by Geography of Total Reported Revenue $1.2b 48% 24% 25% 22% 23% $0.6b 17% 15% 14% 18% 2% 2005 2006 2007 2008 2009 2010 8% Globalization has Improved Growth Prospects; Emerging Markets have Provided Growth Opportunities May 2011 7
Slide 8: Global Business Systems & Services
Global Business Systems & Services Americas Global Headquarters Segment Leadership EMEA N.A. IT Support Shared Service Center Charlotte, NC Manchester, UK • Process Streamline • Variability • Mitigate Risk • Scale Leverage • Synergies • Efficiencies • Cost Improve • Quality • Performance Asia Pacifi
Slide 9: Financial Performance
Financial Performance ($ billions; except per share data) peak revenue & EPS achieved in 2008 Revenue EPS* $5.8 Actions Since Late 2008 ~$5.5 $4.8 $4.9 Structural improvements: $4.5 $6.53 >$100m of restructuring actions $3.9 Reduced tax rate 300 points $3.5 $4.85 $4.25 to Reduced debt & interest exp
Slide 10: Medium Term Growth Drivers
Medium Term Growth Drivers INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 10
Slide 11: Medium Term Growth Drivers
Medium Term Growth Drivers Cyclical recovery, particularly in power-related businesses Expansion in large power transformers Expansion in food & beverage systems Robust OEM new vehicle launch forecast Margin expansion across all four segments Strategic acquisitions Innovation focus Targeting 5% Orga
Slide 12: Cyclical Analysis of Primary End Markets
Cyclical Analysis of Primary End Markets Recovery Stage Later Vehicle Service Diagnostic Tools Food & Beverage & Equipment Components Recovery Stage Middle HVAC & Other Infrastructure Food & Beverage Power Systems Recovery Stage Generation Power T&D Early Oil & Gas Late Cycle Mid Cycle Early Cycle N
Slide 13: U.S. Power Transformer Market
U.S. Power Transformer Market Base Giga-Voltage Ampere (GVA) per Year Additions 200 180 Electricity demand: 160 Load growth on the grid Transformer GVA Installed 140 120 100 Increased industrial utilization 80 60 New housing starts 40 20 0 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986
Slide 14: North American Transformer Market
North American Transformer Market ($ billions) Annual Market Size Growth Rate % 35% $4.0 30% $3.5 25% $3.0 20% $2.5 15% $2.0 10% $1.5 5% $1.0 0% $0.5 -5% $0.0 -10% 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E Source: Frost & Sullivan2009 World Power Transformer Market; Market Overvi
Slide 15: Historical Financial Results for SPX Transformer Business
Historical Financial Results for SPX Transformer Business ($ millions) Quarterly Backlog Value Full Year Revenue Full Year Operating Margin % $481 $393 $376 $348 $283 $250 ~$250 $209 $224 $194 30% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E Note: 2011E as of 5/4/2011 Cyclical Recovery Unde
Slide 16: Large Power Expansion
Large Power Expansion 140k square foot (~50%) expansion of power transformer facility in Waukesha, WI Estimated total investment: ~$70m Government subsidies: $25m Estimated net investment: ~$45m Construction underway: On schedule to being shipping units in 2012 Awarded 7 large transformer orders to
Slide 17: Power Plant Offerings
Power Plant Offerings Power Generation Plant Goal Natural Gas Nuclear Coal-Fired Solar Geothermal Wet & Dry Stationary Heat Rotating Heat Polution Control Process Large Power Cooling Systems Exchangers Exchangers Systems Solutions Transformers Thermal Equipment & Flow Technology Industrial Products
Slide 18: Power Projects >$15m in Q1 Ending Backlog
Power Projects >$15m in Q1 Ending Backlog natural gas solar coal geothermal Evaporative nuclear oil Cold End Cooling Retrofit Cooling Solution 6 Heat Exchanger or Pollution Control Retrofits 2 Dry Cooling 4 Dry Cooling Projects Projects 3 Evaporative Cooling Retrofits Heat Nuclear Exchangers Nuclear
Slide 19: Power Generation Infrastructure Investment Needs
Power Generation Infrastructure Investment Needs ($ billions) China $2,222 Western Europe $1,774 North America $1,624 Other Asia Pacific $1,278 India $967 Eastern Europe $665 Latin America $403 Power Infrastructure Investment 2010-2035 Power Infrastructure Investment 2010-2020 Middle East $358 Afric
Slide 20: Power Plant Age and New Capacity Projections
Power Plant Age and New Capacity Projections Projected Power Generation Additions (GW) Power Plant Age in 2008 2010 - 2020 2020 - 2030 2010 - 2020 2020 - 2030 322 520 498 729 Developed Markets Emerging Markets 38% 39% 62% 61% 2010 - 2020 2020 - 2030 1st Half of Life 190 282 2nd Half of Life 2010 - 2
Slide 21: Efficiency and Emissions
Efficiency and Emissions The Efficiency-Emissions Connection Emissions Source: IEA “Focus on Clean Coal” 2006 A 1% Increase in Efficiency is Equal to a 2% to 3% Reduction in Emissions May 2011 21
Slide 22: Cooling System Efficiency
Cooling System Efficiency As cooling tower efficiency increases, water consumption decreases 75% efficiency 100% efficiency Source: IEA “Focus on Clean Coal” 2006 Retrofitting Aged Cooling Systems can Result in Efficiency Gains and Reduced Water Consumption May 2011 22
Slide 23: Dairy Products Factory Project
Dairy Products Factory Project SPX Awarded >$15m Contract to Design, Manufacture and Install Process Solutions For a New Dairy Products Factory in Turkey Projected Daily Production in The Dairy Products Factory Goal 240 Tons 50 Tons per day per day 120 Tons 8 Tons 15 Tons 1,000,000 per day per day p
Slide 24: Forecasted Growth Rates of UHT Milk
Forecasted Growth Rates of Ultra High Temperature (UHT) Milk 2010 to 2015 CAGR 5.5% to 11% 3.5% to 5.4% 2.1% to 3.4% 0.0% to 2.0% -0.1% to -5.0% data not available Source: Euromonitor International; Retail Value, US$, Fixed 2010 Ex. Rates Sales of Long-Life UHT Milk Expected to Grow Fastest in Emerg
Slide 25: Vehicle Service Solutions
Vehicle Service Solutions Vehicle Service Solutions Goal Diagnostics & Technical Specialty Service Dealer Equipment Electric Vehicle Aftermarket System Solutions Information Tools & Services Solutions Diagnostics OEM Dealerships SPX Is a Leading Global Supplier of Specialized Service Solutions for V
Slide 26: New Vehicle Model Launch Forecast
New Vehicle Model Launch Forecast New Model Launches Average New Model Average New Model Introductions: 1990 to 2010: Introductions: 2011E to 2014E 37 per year 45 per year 60 56 49 48 50 48 43 42 43 39 41 39 41 41 40 40 40 38 38 35 35 36 35 34 32 31 31 32 30 26 21 21 20 10 0 2011E 2012E 2013E 2014E
Slide 27: Expected Replacement Rates for Select OEMs
Expected Replacement Rates for Select OEMs Cumulative Replacement Rates % of 2009 CY Volume Replaced in Model Year 2011E – 2014E Honda 129% Ford 120% Nissan 116% Industry Average 109% GM 109% Korean 107% Toyota 106% European 101% Chrysler 96% 0% 20% 40% 60% 80% 100% 120% 140% Source: BofA Merrill Ly
Slide 28: Executive Summary
Executive Summary INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 28
Slide 29: Executive Summary
Executive Summary ($ billions; except per share data) peak revenue & EPS achieved in 2008 Medium Term Growth Drivers Revenue $5.8 Cyclical recovery, particularly in power- EPS* related businesses ~$5.5 $4.8 $4.9 Expansion in large power transformers $4.5 $6.53 Expansion in food & beverage systems $3
Slide 30: Questions
Questions INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 30
Slide 31: Coal-Fired Power Generation
Coal-Fired Power Generation Items shaded in green highlight SPX products SPX Supplies Critical Heat Exchange Technology to the Steam Turbine Island of a Coal-Fired Power Plant May 2011 31
Slide 32: Nuclear Power Generation
Nuclear Power Generation Items shaded in green highlight SPX products SPX Supplies Critical Heat Exchange Technology to the Steam Turbine Island of a Nuclear Power Plant May 2011 32
Slide 33: Combined Cycle Power Generation
Combined Cycle Power Generation Items shaded in green highlight SPX products SPX Supplies Critical Heat Exchange Technology to the Steam Turbine Island of a Combined Cycle Power Plant May 2011 33
Slide 34: Solar Power Generation
Solar Power Generation Items shaded in green highlight SPX products SPX Supplies Critical Heat Exchange Technology to the Steam Turbine Island of a Nuclear Power Plant May 2011 34
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations INFRASTRUCTURE X PROCESS SOLUTIONS X DIAGNOSTIC SYSTEMS COMPANY CONFIDENTIAL May 2011 35
Slide 36: 2006 to 2010 Adjusted EPS
2006 to 2010 Adjusted EPS 2006 2007 2008 2009 2010 GAAP EPS from continuing operations $ 3.74 $ 5.33 $ 4.68 $ 0.95 $ 3.86 refinancing charges - - - - 0.33 asset impairments - 0.05 2.21 3.40 - tax benefits (0.85) (0.59) (0.47) (0.43) (0.57) legal matters 0.27 0.06 0.11 - - other (0.08) - - - - Adjust