Slide 1: 2010 Second Quarter Results
2010 Second Quarter Results GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS August 4, 2010 1
Slide 2: Forward Looking Statements
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 state
Slide 3: Introductory Comments
Introductory Comments August 4, 2010 3
Slide 4: Q2 Financial Results
Q2 Financial Results ($ millions, except per share data) Q2 2009 Q2 2010 2010 vs. 2009 Revenue $1,194 $1,190 2% organic decline Segment Income $136 $136 flat Segment Income Margin 11.4% 11.4% flat (1) Earnings Per Share $0.80 $1.00 +25% Q2 2010 EPS adjusted Free Cash Flow $32 $36 +11% (1) Adjusted E
Slide 5: End Market Update
End Market Update Early cycle businesses in various stages of recovery: • General industrial 2010E Revenue • Diagnostic tools & equipment for vehicle service • Food & beverage: components Early Cycle Mid-to-late cycle businesses remain depressed: $4.9B • Power generation • Power transmission & d
Slide 6: Notable New Large Contracts > $10m
Notable New Large Contracts > $10m Food & Beverage: Butter Processing System $10m+ Coal Power: Dry Cooling System $34m Solar Power: Crystal Growers $18m Combined Cycle Power: Dry Cooling System Combined Cycle Power: $22m Dry Cooling System $41m (1) Flow Technology Thermal Equipment Industrial Produc
Slide 7: Backlog
Backlog Q2 2010 Backlog by Segment ($ millions) Flow 3% organic decline 23% 6% 6% 3% currency decline $3,291 $2,917 Thermal $2,745 59% $831 Industrial 13% $806 (9%) from Q1 $737 Test & Measurement 5% Q2 2010 $2,460 Backlog by Geography $2,111 (5%) from Q1 $2,008 Americas South 33% Africa 27% Q2
Slide 8: 2010E Revenue Visibility
2010E Revenue Visibility 2010E Revenue 1H 2010 Delivering of Revenue Backlog 47% 27% 74% of 2010E revenue has been booked or is in order backlog $4.9B New Orders Expected 26% Note: Data from continuing operations Visibility to 2010E Revenue Improving; 2H Revenue Remains Sensitive to Short Cycle Or
Slide 9: 2010 Full Year Guidance
2010 Full Year Guidance 2010E EPS Guidance Bridge Earnings Per Share: Previous Guidance Mid-Point $3.15 Segment Income: Previous: $3.00 to $3.30 Operations $0.22 Foreign currency ($0.10) Updated: $3.30 to $3.50 (1) Tax Rate $0.06 Other items, net $0.07 Free Cash Flow: (1) Adjusted EPS Guid
Slide 10: Balance Sheet and Debt Ratios
Balance Sheet and Debt Ratios ($ millions) Debt to Capital Key Balance Sheet Accounts 41% 41% 4/3/10 7/3/10 Cash $464 $408 Total Assets $5,662 $5,558 Q1 2010 Q2 2010 Debt to Bank EBITDA (1) Total Debt $1,313 $1,282 2.2x 2.2x Total Equity $1,847 $1,837 Net Leverage 1.5x 1.6x Gross Leverage Q1 2010 Q2
Slide 11: Q2 Financial Analysis
Q2 Financial Analysis August 4, 2010 11
Slide 12: Q2 2010 Adjusted EPS
Q2 2010 Adjusted EPS Q2 2010 GAAP EPS from continuing operations $ 1.40 Q2 tax benefits (0.40) Adjusted EPS from continuing operations $ 1.00 Note: Data from continuing operations Adjusted Q2 EPS Excludes $0.40 per Share of Tax Benefits Related to Audits of 2006 and 2007 U.S. Income Tax Returns Augu
Slide 13: Earnings Per Share
Earnings Per Share Year-Over-Year Q2 EPS Changes to EPS 25% 25% $1.00 Q2 2009 EPS $0.80 $0.80 Thermal segment income $0.28 Lower restructuring expense $0.25 Test & Measurement segment income $0.14 Power transformer operating profit ($0.46) Q2 2009 Q2 2010 Adjusted (1) Other items, net ($
Slide 14: Q2 Consolidated Results
Q2 Consolidated Results ($ millions) Revenue Segment Income $1,194 $1,190 $136 $136 11.4% 11.4% Q2 2009 Q2 2010 Q2 2009 Q2 2010 3% growth from acquisitions Operating improvement in Thermal Equipment and Test & Measurement 2% organic decline segments offset declines in Industrial 2% currency
Slide 15: Flow Technology: Q2 Financial Results
Flow Technology: Q2 Financial Results ($ millions) Revenue Segment Income 3% 3% 7% 7% $396 $383 $49 $45 12.2% 11.8% Q2 2009 Q2 2010 Q2 2009 Q2 2010 6% organic decline: 7% decline in segment income: Sales into the oil & gas market declined Organic revenue decline Sales of food & beverage sy
Slide 16: Flow Technology: Sequential Analysis
Flow Technology: Sequential Analysis ($ millions) Revenue and Segment Income Margins Backlog $636 8% 8% $620 3% 3% $383 $354 11.7% 11.8% Q1 2010 Q2 2010 Q1 2010 Q2 2010 8% increase in revenue 5% organic increase in backlog: 10 points of margin expansion Increased orders in Asia-Pacific $10
Slide 17: Thermal: Q2 Financial Results
Thermal: Q2 Financial Results ($ millions) Revenue Segment Income $393 7% 7% 78% 78% $369 $49 $28 12.4% 7.5% Q2 2009 Q2 2010 Q2 2009 Q2 2010 3% organic growth: 490 points of margin expansion: Increased sales of power generation Improved project execution equipment into China and South Africa
Slide 18: Thermal: Sequential Analysis
Thermal: Sequential Analysis ($ millions) Revenue and Segment Income Margins Backlog $1,785 $393 11% 11% $1,597 11% 11% $353 $800 12.4% $730 (9%) 8.9% $985 $867 (12%) Q1 2010 Q2 2010 Q1 2010 Q2 2010 Rest of World South Africa 11% revenue growth: 7% organic decline: Project timing Orders impr
Slide 19: Test & Measurement: Q2 Financial Results
Test & Measurement: Q2 Financial Results ($ millions) Revenue Segment Income $240 16% 16% 78% 78% $208 $24 $13 9.9% 6.4% Q2 2009 Q2 2010 Q2 2009 Q2 2010 18% organic growth: 350 points of margin expansion: Increased sales to OEMs and Leverage on organic revenue growth dealership networks Re
Slide 20: Test & Measurement: Sequential Analysis
Test & Measurement: Sequential Analysis ($ millions) Revenue and Segment Income Margins 17% revenue growth: 17% 17% Increased sales to OEMs and $240 dealership networks $204 Increased sales of fare collection systems 9.9% 330 points of margin expansion: 6.6% Leverage on organic growth In
Slide 21: Industrial: Q2 Financial Results
Industrial: Q2 Financial Results ($ millions) Revenue Segment Income 22% 22% $47 62% 62% $221 $173 21.1% $18 10.2% Q2 2009 Q2 2010 Q2 2009 Q2 2010 22% organic decline: 1,090 points of margin contraction: Reduced volume and price of Reduced volume and price of power transformers shipments pow
Slide 22: Industrial: Sequential Analysis
Industrial: Sequential Analysis ($ millions) Revenue and Segment Income Margins Backlog 0.3% $358 $369 $174 $173 0.3% 3% 3% 11.6% 10.2% Q1 2010 Q2 2010 Q1 2010 Q2 2010 Modest revenue decline $18m crystal grower contract 140 points of margin contraction: Transformer backlog declined 6%: Pri
Slide 23: Equity Earnings
Equity Earnings ($ millions) Q2 Equity Earnings Full Year Equity Earnings 31% 31% 10% 10% $32 $29 $7.2 $5.5 Q2 2009 Q2 2010 2009 2010E Note: SPX reports its portion of the EGS joint venture financial results on a one quarter lag The EGS Joint Venture Completed a Bolt-On Acquisition in Q2; End Market
Slide 24: Free Cash Flow
Free Cash Flow ($ millions) $369 2010E Free Cash Flow: 2009 $180 to 105% to 125% conversion of Net Income 2010 $220 Capital spending: $90 to $100 Restructuring spend: $35 to $45 $36 Decline in full year free cash flow due $32 primarily to lower segment income and working capital investment
Slide 25: 2010 Financial Targets
2010 Financial Targets August 4, 2010 25
Slide 26: Q3 2010 Targets
Q3 2010 Targets Q3 2009 Q3 2010E ($ millions, except per share data) Revenue $1,174 +8% to +13% Segment Income $ $156 $143 to $153 Segment Income % 13.3% 11.2% to 11.7% EPS $0.98 $1.00 to $1.10 Note: Data from continuing operations Targeting Q3 EPS to be Between $1.00 and $1.10 Per Share August 4, 2
Slide 27: Full Year Segment Targets
Full Year Segment Targets Previous Targets Updated Targets Flow Technology Revenue 0% to +4% 1% to +3% Segment Income % 12.6% to 13.3% 12.6% to 13.0% Thermal Equipment Revenue 0% to +4% 0% to +2% Segment Income % 9.5% to 10.5% 10.7% to 11.1% Test & Measurement Revenue +5% to 9% +6% to 8% Segment Inc
Slide 28: Consolidated 2010 Full Year Financial Targets
Consolidated 2010 Full Year Financial Targets 2010 ($ millions, except per share data) Target Range Comments Revenue (1%) to +2% Organic: (3%) to (1%) FX: ~(2%) Acquisition: ~+4% Segment Income Margin 10.8% to 11.2% (130) to (90) points Adjusted EPS $3.30 to $3.50 (10%) to (15%) decline EPS Mid-Poin
Slide 29: 2010 Full Year Guidance
2010 Full Year Guidance Potential Positive Impacts Stronger organic revenue Lower tax rate Adjusted EPS: Foreign exchange fluctuations Raw material cost changes $3.30 to $3.50 Acquisitions / share repurchases Potential Negative Impacts Free Cash Flow: Softer organic revenue $180m to $220
Slide 30: Strategic Actions
Strategic Actions August 4, 2010 30
Slide 31: Recent Strategic Actions
Recent Strategic Actions Infrastructure: 50% expansion of North American power transformer manufacturing facility Acquired Torque Tension Systems: • Leading global supplier of hydraulic torque tension tools with annual revenue of ~$8m Infrastructure power & energy EGS Joint Venture acquired
Slide 32: Power Transformer Plant Expansion
Power Transformer Plant Expansion Planned 140k square foot (~50%) expansion of Waukesha, WI facility: • Increases capability to manufacture transformers up to 1,200 MVA at 345kV • Provides structural support to manufacture transformers up to 1,200 MVA and 765 kV Estimated total investment: ~$70m
Slide 33: Anhydro Acquisition Overview
Anhydro Acquisition Overview 2009 Revenue by End Market Anhydro’s core competencies are in Food & evaporation and drying technologies Beverage 72% Chemical & Pharma 14% Parts & Service Other 9% 5% 2009 Revenue by Region Asia 21% Europe 68% South America 11% Annual Revenue is ~$100m; Expands SPX’s
Slide 34: Launch Tech Strategic Alliance
Launch Tech Strategic Alliance 2009 Revenue by Region 2009 revenue: $68m China Europe 50% 20% China-based manufacturer of aftermarket automotive diagnostic equipment North America Products include scan tools, wheel 17% Rest of balancers, lifts, engine analyzers, wheel World aligners, tire chan
Slide 35: Executive Summary
Executive Summary SPX businesses recovery in various stages: • Early cycle markets at various stages of recovery • Mid-to-late cycle markets remain depressed Q2 EPS exceeded prior year and our guidance Raised full year EPS guidance by $0.25, an 8% increase: • 2010E adjusted EPS Mid-Point: $3.4
Slide 36: Questions
Questions GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL August 4, 2010 36
Slide 37: Appendix
Appendix GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL August 4, 2010 37
Slide 38: Full Year Mid-Point Target Financial Model
Full Year Mid-Point Target Financial Model ($ millions, except per share data) 2009 Adjusted 2010E Adjusted Earnings Earnings Revenue $4,851 $4,890 Segment income margin 12.1% 11.0% Corporate expense (84) (90) Pension / PRHC (38) (52) Stock-based compensation (28) (32) Special charges (73) (35) Oper
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS COMPANY CONFIDENTIAL August 4, 2010 39
Slide 40: Q2 2010 Organic Revenue Growth Reconciliation
Q2 2010 Organic Revenue Growth Reconciliation Quarter Ended July 3, 2010 Net Revenue Acquisitions/ Foreign Change Divestitures Currency Organic Flow -3.2% 3.8% -1.0% -6.0% Test 15.6% 0.0% -2.2% 17.8% Thermal 6.6% 5.9% -2.6% 3.3% Industrial -21.5% 0.6% -0.2% -21.9% Consolidated -0.3% 3.2% -1.5% -2.0%
Slide 41: Q2 Free Cash Flow Reconciliation
Q2 Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) Q2 2009 Q2 2010 Net cash from continuing operations $ 62 $ 48 Capital expenditures $ (30) $ (12) Free cash flow from continuing operations $ 32 $ 36 August 4, 2010 41
Slide 42: Full Year Free Cash Flow Reconciliation
Full Year Free Cash Flow Reconciliation SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2009 2010E Guidance Range Net cash from continuing operations $ 462 $ 280 to $ 310 Capital expenditures $ (93) $ (100) $ (90) Free cash flow from continuing operations $ 36
Slide 43: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2008 2009 2010E Revenues $5,856 $4,851 $4,890 Net Income $248 $33 $173 Income tax provision (benefit) 153 47 87 Interest expense 116 92 83 Income before interest and taxes $517 $172 $343 Depreciation and intangible amortization expense 105 106 115 EBITDA from
Slide 44: Debt Reconciliations
Debt Reconciliations ($ millions) 4/3/2010 7/3/2010 Short-term debt $ 102 $ 77 Current maturities of long-term debt 76 98 Long-term debt 1,135 1,107 Gross Debt $ 1,313 $ 1,282 Less: Puchase card program and extended A/P programs $ (29) $ (32) Adjusted Gross Debt $ 1,284 $ 1,250 Less: Cash in excess
Slide 45: Adjusted EPS
Adjusted EPS 2009 2010E Guidance Range GAAP EPS from continuing operations $ 0.93 $ 3.70 $ 3.90 Q4 2009 asset impairments $ 3.40 $ - $ - Tax benefits (0.43) (0.40) (0.40) - - - Adjusted EPS from continuing operations $ 3.90 $ 3.30 $ 3.50 Note: Data from continuing operations; 2010E as of 8/4/2010 Au
Slide 46: August 4, 2010
August 4, 2010 46