Slide 1: Q4 2016 Earnings Presentation
Q4 2016 Earnings Presentation February 23, 2017
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 ame
Slide 3: Introductory Comments
Introductory Comments Gene Lowe February 23, 2017
Slide 4: Quarter and Full-Year Highlights
Quarter and Full-Year Highlights Q4 2016 Full-Year 2016 Strong margin performance helped offset weaker Significant profit margin improvement despite demand in HVAC Heating orders and project timing mixed end market conditions in Detection & Measurement Transformer business margins exceeded our
Slide 5: Core Results Q4 2016 and Full-Year 2016
Core Results Q4 2016 and Full-Year 2016 Year-over-Year Analysis Q4 Full-Year ($ millions) Revenue 2016 revenue comparison affected by Adjusted Operating Income* Margin sale of Dry Cooling business (Q1 2016) $1,532 $445 Strong operational performance $1,389 $378 helped offset effects of: Lower
Slide 6: Value Creation in Core Businesses
Value Creation in Core Businesses Grow HVAC platform: Grow Detection & Measurement platform: Measurement New product development Continue to upgrade installed base Detection & HVAC New product launches Channel development Expand vertically and geographically Geographic expansion Extend
Slide 7: SPX “Year 1” Key Value Creation Accomplishments
SPX “Year 1” Key Value Creation Accomplishments Delivering Operational Excellence Building Large Project Backlog Driving Operational Initiatives Driving year-over-year margin Robust fare collection activity Transformer business achieved long- expansion term margin target of 10% ahead of Enhanc
Slide 8: Transformation of SPX Power Segment End Market Mix
Transformation of SPX Power Segment End Market Mix – Core Results $931m Core Revenues* 2016 Actions $653m Core Revenues* (~1% Core Income*) (~5% Core Income*) Industrial • Sale of Dry Cooling business; Equipment closed Q1 2016 Industrial 18% Equipment Process Cooling Transformers • Sale of European
Slide 9: Profitability Profile
Profitability Profile ~8.5% Adjusted 7.0% Adjusted Operating Margin* Operating Margin* 5.1% Adjusted Operating Margin* $1.63 EPS $1.47 $1.50 EPS $1.10 $1.10 EPS* EPS Midpoint 2016 2016 2017 Guidance** Actual Continuing Midpoint Guidance *Core results are non-GAAP financial measures that exclude the
Slide 10: Q4 Financial Review
Q4 Financial Review Scott Sproule February 23, 2017
Slide 11: Earnings Per Share
Earnings Per Share Q4 and Full-Year 2016 Adjusted EPS Q4 2016 FY 2016 GAAP EPS from continuing operations ($0.07) $0.30 South African projects $0.11 $0.34 Non-service pension items $0.19 $0.27 Net gain on sale of Dry Cooling business NA ($0.43) Non-cash intangible impairment & other† $0.46 $0.99 Adj
Slide 12: Core Results Q4 2016 and Full-Year 2016
Core Results Q4 2016 and Full-Year 2016 Year-over-Year Analysis Q4 Revenue: Q4 Full-Year ($ millions) Revenue (15.2%) year-over-year decline: Segment Income Margin (4.1%) decline from sale of Dry Cooling $1,532 business $445 $1,389 (10.1%) organic decrease* primarily from $378 remaining portio
Slide 13: HVAC Results Q4 2016 and Full-Year 2016
HVAC Results Q4 2016 and Full-Year 2016 Year-over-Year Analysis ($ millions) Q4 Full-Year Q4 Revenue: Revenue (0.8%) year-over-year decline: Segment Income Margin $529 $510 0.7% organic growth* driven by strong HVAC cooling sales partially offset by lower HVAC heating demand $160 $159 (1.5%) c
Slide 14: Detection & Measurement Results Q4 2016 and Full-Year 2016
Detection & Measurement Results Q4 2016 and Full-Year 2016 Year-over-Year Analysis ($ millions) Q4 Revenue: Q4 Full-Year (11.6%) year-over-year decline: Revenue Segment Income Margin (8.6%) organic decline* largely due to elongated sales cycle in certain project- $232 oriented end markets $226 $
Slide 15: Engineered Solutions (Core) Results Q4 2016 and Full-Year 2016
Engineered Solutions (Core) Results Q4 2016 and Full-Year 2016 Year-over-Year Analysis ($ millions) Q4 Revenue: Q4 Full-Year (26.8%) year-over-year decline: Revenue Segment Income Margin $770 (8.4%) decline from sale of Dry Cooling (18.4%) organic decline* primarily due to lower $653 $218 U.S.
Slide 16: Financial Position and Liquidity Review
Financial Position and Liquidity Review Scott Sproule February 23, 2017
Slide 17: Financial Position
Financial Position Capital Structure Update Leverage Ratios ($ millions) Q3 2016 Q4 2016 2.9x 2.6x 2.4x 1.5-2.5x Short-term debt $15 $15 2.1x Current maturities of long-term debt 18 18 Long-term debt 331 324 Gross Debt $364 $356 Less: Cash on hand (83) (100) Q3'16 Q4'16 LT Target (As Reported) Net D
Slide 18: Financial Position
Financial Position Capital Structure Update ($ in millions) Term Debt Repayment Schedule 2016 Core Free Cash Flow* of approximately ($ in millions) $75 million reflecting 120% conversion of Adjusted Net Income* Projecting $400 million of capacity for capital allocation through 2020 $298 Growth
Slide 19: Market Outlook & Executive Summary
Market Outlook & Executive Summary Gene Lowe February 23, 2017
Slide 20: Market Commentary
Market Commentary Market Comments Cooling: Favorable commercial market demand HVAC Heating: Variable weather QTD 2017 Detection & Steady run-rate demand in primary markets Measurement Long sales cycle continues for certain products, but converting to backlog Transformers Stable lead times
Slide 21: 2017 Core Guidance
2017 Core Guidance Segment Income Revenue Margin HVAC Organic growth* at lower end of LT range of 2-4% Approximately 16% Detection & Organic growth* towards middle of LT range of 2-6% 21-22% Measurement Segment revenue decline in mid-single digits % Engineered Solutions Flat Transformer
Slide 22: 2017 Adjusted EPS Guidance - Key Drivers
2017 Adjusted EPS* Guidance - Key Drivers • Accelerated Tax Reform/Favorable Economic Policy $1.70 • Lower Interest Rates • Colder Winter Weather • Commercial Growth Accelerates $1.63 Base Case • Commercial Growth Decelerates • Commodity Inflation/Pass-Throughs • Warmer Winter Weather $1.55 • Unfavo
Slide 23: Executive Summary
Executive Summary 2016 actions have strengthened SPX Increased operating margins Stronger cash flows Attractive end markets Strong balance sheet and substantial capacity to execute organic and inorganic growth opportunities February 23, 2017 23
Slide 24: Questions
Questions February 23, 2017 SPX
Slide 25: Appendix
Appendix February 23, 2017
Slide 26: Q4 and Full-Year 2016 South African Projects
Q4 and Full-Year 2016 South African Projects ($ millions) Q4 2016 FY 2016 Revenue Segment Income Revenue Segment Income Engineered Solutions 177.6 8.8 736.4 17.3 Exclude: South African Projects (17.8) 4.7 (83.3) 14.5 Engineered Solutions (Core) $159.8 $13.5 $653.1 $31.8 Results In-Line with Expectat
Slide 27: 2017 Modeling Considerations
2017 Modeling Considerations Metric Commentary/Assumptions Corporate costs Approximately $40M Long-term incentive comp $14-15M Restructuring costs $1-2M Interest cost $15-16M Tax rate Approximately 30% Capex $14-18M Cash cost of pension + OPEB Approximately $19M: ongoing cash cost approximately $16M
Slide 28: Core Revenue & Segment Income U.S. GAAP Reconciliation
Core Revenue & Segment Income U.S. GAAP Reconciliation ($ millions) Q4 2016 Q4 2015 GAAP SA Projects Core GAAP SA Projects Core Revenue HVAC 159.1 159.1 160.4 160.4 D&M 58.6 58.6 66.3 66.3 Engineered Solutions 177.6 (17.8) 159.8 241.7 (23.3) 218.4 Total SPX $395.3 ($17.8) $377.5 $468.4 ($23.3) $445.
Slide 29: Core Segment Income Phasing
Core Segment Income Phasing ($ millions) Q1 2016 Q2 2016 Q3 2016 Q4 2016 GAAP 29.8 32.2 26.0 54.8 Less: South 40% 38% African 3.4 2.9 3.5 4.7 Projects Core $33.2 $35.1 $29.5 $59.5 24% % of full-year 21% 22% 19% 38% 21% 21% 22% 19% 16% Q1 2015 Q2 2015 Q3 2015 Q4 2015 GAAP 17.2 24.6 (60.4) 57.4 Less:
Slide 30: Segment Revenue
Core Revenue and Segment Income 2015 and 2016 $ in millions 2016 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY HVAC 111.6 121.9 116.9 159.1 509.5 107.7 118.3 142.7 160.4 529.1 Revenue Detection & Measurement 55.4 60.1 52.3 58.6 226.4 51.9 58.2 55.9 66.3 232.3 Engineered Solutions (Core) 173.1 169.9 150.3 159.8
Slide 31: Q4 2016 GAAP to Adjusted Earnings Per Share Reconciliation
Q4 2016 GAAP to Adjusted Earnings Per Share U.S. GAAP Reconciliation ($ millions, except per share values) GAAP Adjustme nts Adjuste d Segment income $ 54.8 $ 4.7 $ 59.5 Corporate expense (12.1) — (12.1) Pension and postretirement income (expense) (10.8) 11.0 0.2 Long-term incentive compensation exp
Slide 32: Full-Year 2016 GAAP to Adjusted Earnings Per Share Reconciliation
Full-Year 2016 GAAP to Adjusted Earnings Per Share U.S. GAAP Reconciliation ($ millions, except GAAP Adjustme nts Adjuste d per share values) Segment income $ 142.8 $ 14.5 $ 157.3 Corporate expense (41.7) — (41.7) Pension and postretirement income (expense) (15.4) 16.0 0.6 Long-term incentive compen
Slide 33: Adjusted Operating Income U.S. GAAP Reconciliation
Adjusted Operating Income U.S. GAAP Reconciliation ($ millions) Three months e nde d Twe lve months e nded December 31, 2016 December 31, 2015 December 31, 2016 De ce mbe r 31, 2015 Operating income (loss) $ 1.8 $ 25.7 $ 55.0 $ (122.2) Adjustments: South African projects 4.7 5.6 14.5 120.5 Non-servi
Slide 34: Q4 2016 Organic Revenue U.S. GAAP Reconciliation
Q4 2016 Organic Revenue U.S. GAAP Reconciliation Dete ction & Engine e re d HVAC Me asure me nt Solutions Consolidate d % Net Revenue Decline (0.8) % (11.6) % (26.5) % (15.6) % Adjustment for South African projects - % - % (0.3) % 0.4 % Core Revenue Decline (0.8) % (11.6) % (26.8) % (15.2) % Exclude
Slide 35: 2016 Full-Year Organic Revenue U.S. GAAP Reconciliation
2016 Full-Year Organic Revenue U.S. GAAP Reconciliation Dete ction & Engine e re d HVAC Me asure me nt Solutions Consolidate d Net Revenue Decline (3.7) % (2.5) % (7.7) % (5.6) % Adjustment for South African projects - % - % (7.5) % (3.7) % Core Revenue Decline (3.7) % (2.5) % (15.2) % (9.3) % Exclu
Slide 36: Debt Reconciliation
Debt Reconciliation ($ millions) December 31, 2016 Short-term debt $ 14.8 Current maturities of long-term debt 17.9 (1) Long-term debt 325.2 Adjusted Gross Debt 357.9 Less: Purchase card program and extended payables (3.9) Adjusted Gross Debt 354.0 Less: Cash in excess of $50.0 (49.6) Adjusted Net D
Slide 37: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ millions) Q 3 YTD Q 4 2016 LTM $ 18.9 $ (86.1) Net income (loss) attributable to SPX Corporation common shareholders Income tax provision (benefit) 6.1 (1.0) Interest expense 11.1 3.7 Income (loss) before interest and taxes 36.1 (83.4) Depreciation and amortizat
Slide 38: Free Cash Flow U.S. GAAP Reconciliation
Free Cash Flow U.S. GAAP Reconciliation ($ millions) FY 2016 Net cash used from continuing operations $ 53.4 Capital expenditures - continuing operations (11.7) Free cash flow used in continuing operations 41.7 Adjustment for South African projects 33.1 Free cash flow used in continuing operations e