Spx Technologies, Inc. · NYSE:SPXC

Spx Technologies — Investor Presentation (September 2023)

62 slides from Spx Technologies's investor presentation, September 2023

  1. Slide 1: SPX Technologies Investor Presentation

    SPX Technologies Investor Presentation September 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%  $1.74B Revenue*  +4,000 employees  NYSE Ticker: SPXC * Midpoint of 2023 guidance as presented August 2, 2023 †Based on management e

  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 20231 REVENUE FROM REPLACEMENT SALES2 ADJUSTED REVENUE EBITDA MARGIN ~2/3  Cooling towers  Refrigeration Engineered air movement  $1,135m low-20s REVENUE FROM #1 OR #2 MARKET POSITION2  Process Cooling  Boilers  Electrical heating ~90% 

  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: Revenue & Margin Enhancement

    2023+ Initiatives Revenue & Margin Enhancement - Tools & Drivers Product Technology M&A Channel CI Innovation Lean Geography Software Service SEALITE Robotics ECS CINCINNATI FAN Digital ITL Sourcing AI Loyalty September 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 September 2023 8

  9. Slide 9: Focused, Market-Leading Growth Platforms

    Focused, Market-Leading Growth Platforms Detection & Measurement ($598M)(1) HVAC ($1,135M)(1) Location & Inspection $1.74 Billion(1) Cooling  Premium engineered niches  Technology / innovation focus Aids to Navigation  ~90% Market Leadership (#1 or #2) Heating  High replacement revenue (~2/3) IT

  10. Slide 10: Momentum in Digital

    Momentum in Digital Driving Customer Value Through Focus on Technology September 2023 10

  11. Slide 11: 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 September 2023 11

  12. Slide 12: SPX 2025

    SPX4 TECHNOLOGIES SPX 2025

  13. Slide 13: SPX Strategic Portfolio Transformation Continues

    SPX Strategic Portfolio Transformation Continues 2021 2023 Current Guidance* 2025 Targets Revenue $1.22B $1.74B ~$2.0B Gross margin % 35.4% ~38% ~40% Segment Income %† 16.4% ~20% ~20% Adj. Operating Income %† 11.1% ~16.1% ~16% Long-term Growth % ~2-4% ~3-5% ~3-5% Adj. EPS $2.33 ~$4.22 +$5.00 *Midpoi

  14. Slide 14: SPX Long-Term Targets – Revenue

    SPX Long-Term Targets – Revenue SPX TODAY SPX TARGET 100.0 '16-'23 CAGR ~$2.0 Billion 000.0 900.0 800.0 ~$1.74 Billion* 700.0 Process Cooling 600.0 ~$1.46 Billion 500.0 400.0 Process Cooling 300.0 ~$1.22 Billion 200.0 ~10% 100.0 Process Cooling HVAC HVAC (~$1,020m)* 000.0 HVAC 900.0 ($796m) HVAC 800

  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 Revenue 2022 Revenue by Product Adjusted segment income % ** ($ millions) ~$1,135 Heating 2022 Cooling $914 Products Revenue Products $752 41% $914m 59% ~20% 14% 15% 2022 Revenue by Geography ~3% 2021 2022 2023E Gross Margin% 30% 30% - Adjusted EBITDA* $116 $145 - ~8% ~89% *Non

  18. Slide 18: HVAC Cooling Overview

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

  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 Wash-down, corrosion Digital  Standard cast iron  Standard cast iron resistant heaters wall heaters  Unique hybrid design  Gas combi boilers 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 Adjusted segment income %** ($ millions) Aids to Navigation Location & ~$598 $547 (“AtoN”), CommTech, 2022 Inspection $467 and Transportation Equipment Revenue 52% 48% $547m 20% 21% ~20% 2022 Revenue by Geography ~19% 2021 2022 2023E G

  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 September 2023 25

  26. Slide 26: AtoN, CommTech, and Transportation

    AtoN, CommTech, and Transportation 2022 Revenue by Product CommTech  Aids to Navigation: Global Leader in terrestrial obstruction lighting, Transportation 20% 27%* marine aids-to-navigation, and airfield ground lighting solutions 2022 Revenue  CommTech : A leading global supplier of spectrum monit

  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 September 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 September 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) Q1 2023 Q2 2023 ($millions) Q1 2023 Q2 2023 2.5 Short-term debt $69 $132 2 Current maturities of long-term debt 3 11 1.5 Long-term debt 242 533 1 2.1x Total Debt $314 $676 1.8x 0.5 1.2x Less: Cash on hand ** (213) (95) 0.4x Net D

  33. Slide 33: Financial Position – Outlook

    Financial Position – Outlook Bank Net Leverage* 3 1.5x-2.5x 2.5 2 1.5 ~2.5x 1.8x 1 ~1.5x 0.5 0 Q2 2023 Q4 2023E** LT Target Anticipate Low-End of Target Leverage Range by Year-End * Calculated as provided in SPX Technologies’ credit facility agreement. ** Based on management estimate debt pay down a

  34. Slide 34: 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

  35. Slide 35: Building Strategic Platforms

    Building Strategic Platforms

  36. Slide 36: SPX Business Value Model

    SPX Business Value Model Disciplined Business System Strategic Acquisition Approach Superior Performance Strategic Organic Sales Growth SPX has acquired ~$535M of Organic / Inorganic (Innovation, Product Mgmt.) revenue in ~5 years Revenue Growth Continuous Improvement SEALITE (Lean, 80/20) ITL ECS M

  37. Slide 37: 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

  38. Slide 38: Building Strategic Platforms – Aids to Navigation

    Building Strategic Platforms – Aids to Navigation Obstruction Lighting Marine & Airfield Lighting ITL SEALITE Terrestrial Bolt-on Terrestrial Airfield Ground and Marine Obstruction Obstruction Lighting Obstruction Marine Obstruction Lighting Lighting Lighting Transformed ~$40-50m obstruction lightin

  39. Slide 39: 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 Sept

  40. Slide 40: Building Strategic Platforms - Cooling

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

  41. Slide 41: Building Strategic Platforms – HVAC Heating

    Building Strategic Platforms – HVAC Heating Hydronic Heating Electrical Heating Leading Position High-efficiency Leader in High-quality in Residential Commercial Supplemental High-efficiency Electric Heating Boilers Boilers Electric Heat for Commercial for Industrial and >$500M high-value Commercial

  42. Slide 42: Executive Summary

    SPX4 TECHNOLOGIES Executive Summary

  43. Slide 43: Executive Summary

    Executive Summary  Balanced business portfolio with attractive and diverse end market drivers  Effective business system and continued focus on growth accelerators, including inorganic opportunities  Strong cash generation and solid balance sheet support growth investments Significant Value Creat

  44. Slide 44: Appendix

    SPX4 TECHNOLOGIES Appendix

  45. Slide 45: 2023 Guidance

    2023 Guidance Detection & Total SPX HVAC Measurement Revenue $1.72-1.75b $1,125-$1,145m $590-$605m Prior $1.68-1.72b $1,110-$1,130m $570-$590m Segment Income Margin % ~20% ~20% ~20% Prior 18.75%-19.75% 18.00%-19.00% 20.50%-21.50% Adj. Operating Income* $277-$285m SPX 2025 Targets Prior $255-$270m Re

  46. Slide 46: Modeling Considerations – Full Year 2023

    Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $51-52m Long-term incentive comp $13-14m Restructuring costs $0-1m Interest cost ~$25m Other income/(expense), and Non-service pension benefit/(expense) $3-5m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OPEB

  47. Slide 47: 2023 Adjusted EPS Guidance - Key Drivers

    2023 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $4.30 • Accelerated project-related sales • Moderating supply chain challenges and input costs $4.22 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $4.15 • Unfa

  48. Slide 48: End Market Exposure

    End Market Exposure ~$1.74 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 25% 21% 13% 41% Water/Wastewater, 7% Hospitality, 1% Utility, 12% Healthcare, 4% Data Centers, 4% Office / Retail, 5% Gov’t & Regulated, Institutional, 5% 22% Light Mfg / Other 7

  49. Slide 49: Segment Income Phasing

    Segment Income Phasing 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 September 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: GAAP Reconciliation Results by Quarter

    GAAP Reconciliation Results by Quarter 2022 2023 ($ millions) Q1 Q2 Q3 Q4 FY Q1 Q2 YTD Segment income* $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 $ 74.4 $ 84.4 $ 158.8 Corporate expense (16.6) (16.4) (17.2) (18.4) (68.6) (14.6) (16.6) (31.2) Acquisition related and other costs (0.1) (0.9) (0.1) (0.8) (1.9)

  52. Slide 52: 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% June 2023 52

  53. Slide 53: Q2 2023 U.S. GAAP to Adjusted EPS Reconciliation

    Q2 2023 U.S. GAAP to Adjusted EPS Reconciliation ($ millions, GAAP Adjustments Adjusted except per share values) Segment income $ 84.4 $ — $ 84.4 Corporate expense (1) (16.6) 5.1 (11.5) Acquisition-related costs (2) (1.5) 1.5 — Long-term incentive compensation expense (3.5) — (3.5) Amortization of i

  54. Slide 54: Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation

    Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation ($ millions, GAAP Adjustments Adjusted except per Segment income $ 56.1 $ — $ 56.1 share values) Corporate expense (1) (16.4) 5.1 (11.3) Acquisition-related costs (2) (0.9) 0.9 — Long-term incentive compensation expense (2.5) — (2.5) Amortization of i

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

    U.S. GAAP to Adjusted Operating Income Reconciliation Three months ended Six months ended ($ millions) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Operating income $ 51.3 $ 27.2 $ 101.1 $ 38.6 Include - TSA Income (1) 0.1 0.9 0.2 1.8 Exclude: Acquisition-related and other costs (2) (6.5) (5.

  56. Slide 56: Adjusted SPX 2021 Results by Quarter

    Adjusted SPX 2021 Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2021 HVAC segment income $ 23.0 $ 26.6 $ 23.6 $ 34.5 $ 107.7 Detection & Measurement segment income 24.0 18.1 18.0 32.8 92.9 Consolidated segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 Operating income from continuing operations $ 25.

  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: Q2 2023 Debt Reconciliation

    Q2 2023 Debt Reconciliation ($ millions) Q2 2023 Short-term debt $ 132.0 Current maturities of long-term debt 10.5 Long-term debt 533.1 Gross debt 675.6 (1) plus: adjustment associated with credit agreement (0.1) Adjusted gross debt 675.5 less: cash and equivalents (94.8) Adjusted net debt $ 580.7 (

  59. Slide 59: Adjusted EBITDA Reconciliation

    Adjusted EBITDA* Reconciliation ($ millions) 2022 2023 Q3 Q4 Q1 Q2 LTM** Net income (loss) $ 3.1 $ (27.3) $ 42.8 $ 36.0 $ 54.6 Income tax provision (benefit) (2.5) 2.8 11.3 7.8 19.4 Interest expense 2.6 2.0 2.4 5.4 12.4 Income (loss) before interest and taxes 3.2 (22.5) 56.5 49.2 86.4 Depreciation a

  60. Slide 60: Q2 2023 Adjusted Free Cash Flow Reconciliation

    Q2 2023 Adjusted Free Cash Flow Reconciliation ($ millions) Q2 2023 Operating cash flow from continuing operations $ 73.8 Capital expenditures (4.7) Free cash flow from continuing operations 69.1 Adjustments* 5.5 Adjusted free cash flow from continuing operations $ 74.6 *Adjustments represent the re

  61. Slide 61: Slide 61

  62. Slide 62: SAIDOTONHOSAL

    SAIDOTONHOSAL i. XdsS

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