Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Day (January 2011)
87 slides from Spx Technologies's investor day presentation, Jan 19, 2011
Slide 1: 2011 Annual Investor Meeting
GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS 2011 Annual Investor Meeting GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 19, 2011
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: Agenda
Agenda SPX Overview 2011 Guidance Segment Analysis Free Cash Flow & Capital Structure Closing Remarks January 2011 3
Slide 4: Evolution
‐ Evolution 2004 to today Global, Multi‐Industry Supplier off Engineered E i d Solutions S l ti ~$5b of annual revenue 1997‐2004 Diversified Industrial Manufacturer 1912‐1996 U.S. Automotive Supplier Founded in 1912: “The Piston Ring Company” Transformed SPX into a Global, Multi‐Industry Supplier of
Slide 5: Primary Technology Offerings
Primary Technology Offerings Infrastructure Power & Energy Cooling Systems Heat Exchangers Power Transformers Process Equipment Food & Beverage Engineered Components Skidded Systems Full‐Line Systems Diagnostic Tools Vehicle Service OEM Professional Aftermarket Professional Aftermarket Do‐it‐Yoursel
Slide 6: Key End Markets
Key End Markets 2010E Revenue Macro‐Economic Drivers by End Market G i world Growing ld population l ti with ith emerging middle class Food & Beverage Infrastructure 16% Advancement of emerging countries 53% HVAC & Other 17% Vehicle Service Replacement of aged infrastructure Power & 16% Energy
Slide 7: Revenue by Region
Revenue by Region 2010E: 26% sales into emerging markets: 2004 2010E 2004 2010E China 11% 70% 48% 20% 24% Africa 6% South America 2% Middle East 2% India 1% Other countries 4% 2004 2010E 7% 18% 2004 2010E <1% 2% 2004 2010E 2% 8% Note: Data from continuing operations; 2010E as of 1/19/201
Slide 8: Key Power & Energy Investments
Key Power & Energy Investments 2011E ~$2b of revenue >50% international 2011: Large power (>100MVA) transformer expansion 2007 to 2009: SPX Heat Transfer Inc. acquisition Joint venture with Thermax APV acquisition 2001‐2004: Marley Cooling acquisition q Balcke Duerr acquisition 2000: Hamon assets ac
Slide 9: Infrastructure: Power & Energy
Infrastructure: Power & Energy R 2010E Revenue b End by E d Market M k t 2011E revenue: ~$2b Power Power T&D Generation 15% 71% K revenue drivers: Key di Oil & Gas Electricity demand 14% 2010E Revenue by Product New power generation in emerging markets Cooling Systems 34% H Heatt Exchangers Re
Slide 10: Power Generation Infrastructure Investment Needs
Power Generation Infrastructure Investment Needs ($ billions) China $2,222 Western Europe $1 774 $1,774 North America $1,624 Other Asia Pacific $1,278 India $967 Eastern Europe $665 Latin America $403 P Power Infrastructure I f t t Investment I t t 2010‐2035 2010 2035 Power Infrastructure Investment
Slide 11: Age of Installed Thermal & Nuclear Capacity by Region
Age of Installed Thermal & Nuclear Capacity by Region, 2008 coal gas oil nuclear OECD Non‐OECD 50+ years 40 to 50 years y 30 to 40 years 20 to 30 years 10 to 20 years 0 to 10 years 0 150 300 450 600 0 150 300 450 600 GW GW Source: S WEO 2010 Copyright C i ht OECD/IEA, OECD/IEA 2010; 2010 Figure
Slide 12: Key Food & Beverage Acquisitions
Key Food & Beverage Acquisitions 2011E ~$800m of revenue >50% international 2010 expanded systems capabilities: Gerstenberg Schroeder acquisition Anhydro acquisition 2005 to 2007 systems & globalization: APV acquisition Johnson pump acquisition 2001 p process components: p Waukesha Cherry‐Burrell &
Slide 13: Process Equipment: Food & Beverage
Process Equipment: Food & Beverage 2010E Revenue by Market 2011E revenue: ~$0.8b Food & Beverage Dairyy 50% Keyy revenue drivers: Products 50% Globalization, emerging markets Sustainability, environmental considerations Product safetyy 2010E Revenue by Product Product innovation: taste & nut
Slide 14: Global Food & Beverage Market
Global Food & Beverage Market Food & Beverage Market: Global Retail Industry Revenues 2010E – 2014E CAGR 2009 decline $16,000 $16 000 due to global +6% $14,000 recession $12,000 +4% $10 000 $10,000 +6% $8,000 +3% $6,000 $4 000 $4,000 +7% $2,000 $0 Asia Pacific Europe Middle East & Africa North Ameri
Slide 15: Key Diagnostic Tools & Equipment Investments
Key Diagnostic Tools & Equipment Investments 2011E ~$800m of revenue >40% international 2008‐2010 Asia ‐Pacific: Launch Tech alliance Autoboss acquisition 2007 Europe : Johnson Controls Diagnostics g acquisition q Matra acquisition 2004‐2005 Europe and U.S. Aftermarket: C t l acquisition Cartool i i
Slide 16: Diagnostic Tools: Vehicle Service
Diagnostic Tools: Vehicle Service 2010E Revenue by End Market 2011E revenue: ~$0.8b OEMS & Aftermarket Key revenue drivers: Dealers 41% 59% New vehicle platforms Increasing electronic complexity of vehicles 2010E Revenue by Product Environmental considerations Tools & Equipment Evolving glob
Slide 17: 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 48 49 48 50 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 1987 1988 1989 1990 1991
Slide 18: 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 f Merrill
Slide 19: Initiatives
Initiatives GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 19
Slide 20: Global Business Systems and Services
Global Business Systems and Services Migrating to regional shared service Consolidating Chinese manufacturing centers: into a shared campus: North America: America Charlotte, Charlotte NC Shanghai EMEA: Manchester, UK Asia Pacific: Shanghai Rendering of SPX Chinese Manufacturing Campus E
Slide 21: Global Business Systems and Services
Global Business Systems and Services Emerging Market Expansion Innovation & New Product Placeholder Placeholder Development text text LEAN Supply‐Chain Operational Management Improvements Placeholder Placeholder text Excellence text IT Infrastructure Placeholder Placeholder Organizational and Improv
Slide 22: Innovation
Innovation 2009/2010 2011 2012 Organize Deploy • Sponsorship • Strategy • Build Capabilities • Socialization • Architecture • Project Ownership • Integration • Governance • Resource • Project Mgmt. • Implementation S Structure M bili ti Mobilization • Project P j t Support S t • Performance • Buy-in
Slide 23: Innovation
Innovation > 160 ideas generated Detailed business planning: 9 Market assessment Process Equipment 9Competitive analysis Diagnostic Tools 9Technology and IP review Power & E Energy 9Financial analysis y 9Implementation planning 9Budgeting & approval 10 projects selected for investment in 2011 Over 1
Slide 24: SPX Electric Vehicle Charging Installation Program
SPX Electric Vehicle Charging Installation Program Selected by GM and Daimler as the home charging g g installation p partner for Chevrolet Volts and Smart cars Over 350 installations completed to date SPX Installer Network includes over 350 independent electrical companies and over 2,000 tech
Slide 25: SPX Wireless Antenna System
SPX Wireless Antenna System SPX’s vasTerraTM wireless antenna system: 10 times i the h coverage area 25% lower operating costs Attractive technology for wireless operators to deploy in rural regions Installed trial site in India during Q4 2010 that is currently being used in a live network
Slide 26: Capital Allocation
Capital Allocation 2005 to 2010E Acquisition criteria: Capital Allocation 9 Strategic to three core end markets: Share Globalization Debt Repurchases Reduction Expand customer base 42% 28% Expand into adjacent markets Increase technology offerings 9 EPS accretion Dividends Acquisitions 8%
Slide 27: 2011 Guidance
2011 Guidance GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 27
Slide 28: Cyclical Analysis by End Market
Cyclical Analysis by End Market % of 2010E Revenue Power 35% Generation 30% Diagnostics Tools & 25% HVAC & Other Equipment for Infrastructure Other Vehicle Service Markets 20% Food & Beverage Components 15% 10% Oil & Gas Food & Beverage Systems Power 5% T&D 0% Late Cycle Mid Cycle Early Cycle Cyclic
Slide 29: Cyclical Analysis by Segment
Cyclical Analysis by Segment % of 2010E Revenue 45% 40% 35% 30% 25% Flow Technology Thermal Equipment 20% & Services % 15% 10% Test & Industrial Products Measurement 5% & Services 0% Late Cycle Mid Cycle Early Cycle y Cyclical Timeline Note: Data from continuing operations; 2010E as of 11/3/2010 ~2/
Slide 30: 2011E Segment Revenue and Margin Targets
2011E Segment Revenue and Margin Targets % Revenue Growth 20% 15% Flow 10% Thermal Industrial 5% T&M 0% Margin Change ‐150 ‐100 ‐50 0 50 100 (in bps) ‐5% ‐10% Revenue Margins Flow +10% to +15% 13.0% to 13.5% Th Thermal l +1% to t +6% 10 3% tto 10 10.3% 10.8% 8% T&M +2% to +7% 8.7% to 9.2% Industrial
Slide 31: Backlog
Backlog Aging of Q4 2010 Ending Backlog 2011 Quarter End Backlog 70% ($ billions) 2012 and $3.1 Beyond $2.9 $ $3.0 $2.9 30% $2.7 Q4 2010E Ending Backlog by Geography South Africa Americas 26% 34% Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010E EEurope 22% Middle East Asia 4% Pacific 14% Note: Data from con
Slide 32: 2011 Consolidated Financial Targets
2011 Consolidated Financial Targets Revenue $5.2b to $5.4b total growth: +5% to 10%* organic i growth: th +2% 2% to t 7% * Segment Income Margin 10.8% to 11.3% stable* Earnings Per Share $4.20 to $4.50 +20% to +30%* EPS mid‐point: $4.35 Free Cash Flow $220m to $260m 100% to 120% of net income Capita
Slide 33: 2011 Analysis
2011 Analysis January 2011 33
Slide 34: EPS Bridge
EPS Bridge $4.20 to $0.10 ($0.06) $4.50 $0.13 $0.17 $0.49 $3.45 to $3.60 2010E Segment Pension Special Equity Other Items 2011E EPS Adjusted EPS Income Expense Charges Earnings (net) Note: Data from continuing operations; 2010E adjusted EPS as of 11/3/2010, see appendix for non‐GAAP reconciliations
Slide 35: EPS Mid-Point Model
EPS Mid‐Point Model ($ millions millions, except per share data) 2010E 2011E Revenue $4,913 $5,280 Segment income margin 11.2% 11.1% Corporate expense (90) (100) Pension / PRHC (53) (40) Stock‐based compensation (31) (35) Special charges (35) (25) Operating Income $342 $389 % of revenues 7.0% 7.4% E
Slide 36: Business Matrix: % of 2010E revenue
Business Matrix: % of 2010E revenue Reporting Segment Flow Thermal Equipment Test & Industrial Products Technology & Services Measurement & Services End Market 34% 33% 19% 14% Power & Energy 36% 6% 23% 7% Infrastructure HVAC & Other HVAC & Other I f t t Infrastructure 17% 4% 8% 3% 2% 17% Food & Beve
Slide 37: Flow Technology Overview
Flow Technology Overview pumps 2010E Revenue byy End Market valves Dairy, Food & Beverage 45% homogenizers General Industrial mixers 22% Power Generation heat exchangers Compressed Oil & Gas 6% Air Infrastructure 11% 8% 8% filters Note: Data from continuing operations; 2010E as of 1/19/2011 / / Dair
Slide 38: Flow Technology Revenue by Region
Flow Technology Revenue by Region 2004 2010E 2004 2010E 45% 33% 37% 31% 2004 2010E 14% 26% 2004 2010E 2% 4% 2004 2010E 2% 6% Note: Data from continuing operations; 2010E as of 1/19/2011 / / Balanced Global Presence; 31% of Sales Into Emerging Markets January 2011 38
Slide 39: Flow Technology End Market Expectations
Flow Technology End Market Expectations Emerging markets expansion Food & Beverage Customer focus on sustainabilityy and p productivityy Acquisition synergies and new product development Execution E ti off nuclear l squib ib valve l contract t t Power & Energy Emerging markets focus on new
Slide 40: Flow Technology Nuclear Squib Valve
Flow Technology Nuclear Squib Valve SPX’s Squib Valve is a key part of the automatic depressurization system in Westinghouse’s Westinghouse s nuclear AP1000 design design. The Squib Valve is designed to open by the actuation of an explosive charge and allows low pressure safety injection water to en
Slide 41: Flow Technology Food & Beverage Systems
Flow Technology Food & Beverage Systems 2011E Systems y Revenue Dairy (liquid) 52% Dairy Milk Reception Line (powder) 18% Brewery & Other 6% Beverages Fats & Oils 12% 12% Butter Blend System Note: Data from continuing operations The Acquisitions of Gerstenberg Schroeder and Anhydro have Significantl
Slide 42: Flow Technology Backlog
Flow Technology Backlog Aging of Q4 2010 Ending Backlog Quarterly Backlog 2011 84% ($ millions) 2012 and $772 $783 Beyond 16% $620 $636 $579 Q4 2010E Ending Backlog by Geography EMEA 44% Americas 28% Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010E Asia Pacific Note: N t Data D t from f continuing ti i oper
Slide 43: Flow Technology Financial Analysis
Flow Technology Financial Analysis ($ millions) Revenue Segment Margins Expect E t high‐single hi h i l digit di it organic i growth: th +10% to +15% Emerging markets Food & beverage $ , ~$1,665 13.0% to Targeting ~50 points of margin expansion: 13.5% Leverage from organic revenue Restru
Slide 44: Flow Technology Historical Financial Results
Flow Technology Historical Financial Results ($ millions) Long‐term targets: Average annual revenue growth: 4% to 6% Revenue Segment income margins: 14% to 16% Segment Margins APV Acquisition Gerstenberg & Anhydro 12/31/2007 Acquisitions, 2010 $1,999 +10% to +15% 16.4% $1,634 $1,665 15.6% 14.4%
Slide 45: Thermal Equipment & Services Overview
Thermal Equipment & Services Overview 2010E Revenue byy Product 2010E Revenue byy End Market Pollution Services Control 11% Chemical & Cooling Other Power 5% Systems 6% Generation Personal 49% 71% Comfort Heating HVAC 17% 23% Heat Exchangers 18% N t Data Note: D t ffrom continuing ti i operations; t
Slide 46: Thermal Equipment & Services Revenue by Region
Thermal Equipment & Services Revenue by Region 2004 2010E 2004 2010E 58% 44% 28% 22% 2004 2010E 12% 16% 2010E 2010E 0% 2% 2004 2010E 2% 16% Note: Data from continuing operations; 2010E as of 1/19/2011 / / Balanced Global Presence; 33% of Sales Into Emerging Markets January 2011 46
Slide 47: Thermal Equipment & Services Technology Offerings
Thermal Equipment & Services Technology Offerings Technology Power Applications Coal Natural Gas Oil Dry Cooling l Biomass Solar Petrochemical Coal, Nuclear Coal Natural Gas, Oil Evaporative Biomass, Solar Cooling Geothermal, Industrial Commercial HVAC SPX Offers a Full Line of Cooling Solutions; Di
Slide 48: Thermal Equipment & Services Technology Offerings
Thermal Equipment & Services Technology Offerings Technology Power Applications Stationary Heat Coal, Nuclear Exchangers g Solar,, Geothermal Rotating Heat Coal Exchangers Oil Pollution Control Coal Systems Biomass A Leading Supplier of Thermal Heat Transfer and Pollution Control Systems; Diverse Te
Slide 49: Thermal Equipment & Services Backlog
Thermal Equipment & Services Backlog Aging of Q4 2010 Ending Backlog Quarterly Backlog 2011 59% ($ millions) 2012 and Beyond $1,973 $ , 41% $1,785 $1,597 $1,666 $1,625 Q4 2010E Ending Backlog by Geography Africa 47% Americas Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010E 23% Europe Asia & Middle Pacific E
Slide 50: South Africa, Medupi and Kusile Projects
South Africa, Medupi and Kusile Projects Estimated Medupi: Revenue Recognition g air preheaters feedwater heaters ($ millions) $300 to pollution control systems $250 to $350 $275 $200 $100 to $150 $87 Kusile: dry cooling systems 2009 2010E 2011E 2012E 2013E air preheaters feedwater h
Slide 51: Thermal Equipment & Services Projects >$15m in Backlog
Thermal Equipment & Services Projects >$15m in Backlog Coal Power: Dry Cooling System Retrofit Nuclear: Natural Gas: Geothermal Power: Heat Exchanger Dry Cooling System Cold end solution 3 Coal Power: Heat Exchangers Combined Cycle: & pollution control Dry Cooling 3 Coal Power: 2 Coal Power: E Evapo
Slide 52: Thermal Equipment & Services Regional Commentary
Thermal Equipment & Services Regional Commentary North America & Expect revenue growth due to increase in orders during 2H 2010 Europe New orders expected p to be focused on retrofit opportunities pp Lack of policy direction continues to drive uncertainty Execution of Medupi & Kusile power p
Slide 53: Thermal Equipment & Services Financial Analysis
Thermal Equipment & Services Financial Analysis ($ millions) Revenue Segment Margins Expect E t modest d t organic i growth th 1% to ~$1,625 +6% Expect margins to decline: Concentration of higher margin projects in 2010 (dry cooling & retrofit) ~11.9% 10.3% to 10.8% 2010E 2011 Note: Data from
Slide 54: Thermal Equipment & Services Historical Financial Results
Thermal Equipment & Services Historical Financial Results ($ millions) Long‐term targets: Average annual revenue growth: 5%+ Revenue Segment income margins: 11% to 13% Segment g Margins g 1% to $1,690 +6% $1,601 ~$1,625 $1,561 $1,328 $1,178 12.1% ~11.9% 10.3% to 10.7% 10.8% 10.0% 10.4% 8.4% 2005
Slide 55: Test & Measurement Overview
Test & Measurement Overview Diagnostic Tools, 2010E Revenue by End Market Service Information, Tools Service Tools, Shop Equipment Vehicle Service 84% Transportation 8% Telecom 8% Cable and Fare Box Pipe Locators Systems Note: Data from continuing operations; 2010E as of 1/19/2011 / / 84% of 2010E R
Slide 56: Test & Measurement Revenue by Region
Test & Measurement Revenue by Region 2004 2010E 2004 2010E 72% 61% 22% 30% 2004 2010E 6% 9% Note: Data from continuing operations; 2010E as of 1/19/2011 / / Globalization Has Been a Key Strategic Focus January 2011 56
Slide 57: Service Solutions Overview
Service Solutions Overview 2010E Revenue by Customer Electric Vehicle Solutions Diagnostic Products & System Solutions American OEMs & Dealers 35% TTechnical h i l IInformation f ti SServices i Aftermarket Service 41% Special Service Tools Professional Shop Tools & Equipment European Asian
Slide 58: Increasing Complexity of Vehicles
Increasing Complexity of Vehicles Business model has evolved into electronic diagnostics & information services Revenue by Product 10% Information 22% 13% S i Services Electronic 43% Diagnostics 77% Tools & 35% Equipment 1995 2010E Note: 2010E as off 11/3/2010 / / Vehicles Have Become Increasi
Slide 59: Estimated Increase in Global Light Duty Fleet
Estimated Increase in Global Light Duty Fleet An increase in the number of vehicles in China and India is expected to lead to development of # of Vehicles the vehicle service industryy in those countries I U In 300Use (in millions) +10x over 2007 250 200 2007 150 2015 +8x 2030 100 over 2007 50 0 E
Slide 60: Electric Vehicle Demand Expectations
Electric Vehicle Demand Expectations Hybrid Electric Vehicles, Plug‐in Hybrid Electric Vehicles and Battery Electric Vehicles are Expected to Reach 6‐8% of Market Share by 2015 January 2011 60
Slide 61: Air Conditioning Service Market
Air Conditioning Service Market New vehicle pplatforms in Europe p required q to use a refrigerant with an improved environmental outcome starting in 2011 North American manufacturers can receive a credit towards CAFE standards by using this new refrigerant SPX Robinair is a global industry le
Slide 62: Test & Measurement Financial Analysis
Test & Measurement Financial Analysis ($ millions) Revenue Segment Margins Targeting T i single i l digit di i organic i growth: h +2% to +7% OEM programs for new vehicles ~$915 New product introductions: o Air conditioning testing unit o Electric vehicle charging installations 8.7% to 9.2% ~8
Slide 63: Test & Measurement Historical Financial Results
Test & Measurement Historical Financial Results ($ millions) Long‐term targets: Average annual revenue growth: 3% to 5% Revenue Segment income margins: 11% to 13% Segment g Margins g $1,080 $1,100 $1,050 +2% to $969 +7% 7% ~$915 14.2% $810 12.1% 11 0% 11.0% 9.9% 8.7% to 9.2% ~8.3% 6.3% 2005 2006
Slide 64: Industrial Products & Services Overview
Industrial Products & Services Overview 2010E Revenue b by EEnd dMMarket k Power T&D 37% Power Transformers Hydraulic Technologies Other Markets 14% Power Gen. 9% Communications 16% Infrastructure 11% Aerospace 13% Antenna Systems Communications Intelligence Note: N t Data D t from f continuing ti i
Slide 65: Industrial Products & Services Revenue by Region
Industrial Products & Services Revenue by Region 2004 2010E 2004 2010E 85% 78% 9% 9% 2004 2010E 5% 13% Note: Data from continuing operations; 2010E as of 1/19/2011 / / 78% of 2010E Revenue from North America January 2011 65
Slide 66: Industrial Products & Services Backlog
Industrial Products & Services Backlog Aging of Q4 2010 Ending Backlog Quarterly Backlog 2011 81% ($ millions) $393 2012 and $358 $369 $359 $360 Beyond 19% Q4 2010E Ending Backlog by Geography Americas 84% Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010E EMEA 6% Asia Pacific Note: N t Data D t from f contin
Slide 67: Industrial Products & Services Financial Analysis
Industrial Products & Services Financial Analysis ($ millions) Revenue Segment Margins Targeting T ti single i l digit di it organic i growth: th +3% to Communications technology +8% Hydraulic tools ~$705 $705 Flat transformer revenue ~10.0% 8.8% to 9.3% Expect p margins g to decline ~100
Slide 68: Transformer Facility Expansion
Transformer Facility Expansion Broke ground in Q4 2010 Received local grants Secured first order to be manufactured in the expanded facility On schedule to begin shipping units in 2012 Targeting Annual Production of 50 Units With 250 MVA Average Ratings at Full Capacity January 2011 68
Slide 69: U.S. Power Transformer Market
U.S. Power Transformer Market Base Giga‐Voltage Ampere (GVA) per Year Additions 200 180 160 Electricity demand: TTransformer GVA Installed 140 120 Load growth on the grid 100 80 New housing starts 60 40 20 0 Aging infrastructure: 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 19
Slide 70: Industrial Products & Services Historical Financial Results
Industrial Products & Services Historical Financial Results ($ millions) Long‐term targets: Average annual revenue growth: 4% to 6% Revenue Segment income margins: 18% to 20% Segment g Margins g $1,049 $832 $806 +3% to 23.2% $733 +8% $707 $613 19.1% 17.4% 11.9% 8.8% 9.6% ~10.0% to 9.3% 2005 2006
Slide 71: Q1 Guidance
Q1 Guidance GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 71
Slide 72: Q1 Consolidated Financial Analysis
Q1 Consolidated Financial Analysis ($ millions, except per share data) Q1 2010 Q1 2011E Revenue $1,086 total growth: +6% to 8% Segment Income $106 $103 to $108 Segment Income Margin 9.8% 8.8% to 9.3% Earnings Per Share $0.37 $0.40 to $0.48 Note: Data from continuing operations Targeting 6% to 8% Rev
Slide 73: Free Cash Flow & Capital Structure
Free Cash Flow & Capital Structure GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 73
Slide 74: Pension Funding
Pension Funding ($ millions) Funding Status of U.S. Pension Plans 100% Strong Q4 2010 Free Cash Flow 80% Made a $100 voluntary contribution to U.S. pension plan in December 2010 Significantly reduced future expected funding obligations Key 2011 assumptions: 2010E 2017E Discount rate 5.25%
Slide 75: Free Cash Flow
Free Cash Flow ($ millions) 113% 110% $300 Q4 Pension Funding($100) 2010E Adjusted Free Cash Flow is $180 to $220: $200 $220 to Net of Q4 2010 p pension fundingg $180 to $260 $220 2011E Free Cash Flow is $220 to $260 $100 and includes: Elevated capital spending at $150m $0 ~$20m of pension
Slide 76: Debt Repayment Schedule
Debt Repayment Schedule ($ millions) $600 $500 Credit facility expires in 2012 Evaluating a uat g refinancing e a c g optoptions o s $21 $28 2011 2012 2013 2014 2015 2016 2017 6.25% Senior Notes2 7.50% Senior Notes 7.625% Senior Notes 6.875% Senior Notes >95% of Debt is Fixed Rate; No Significan
Slide 77: Projected Liquidity
Projected Liquidity ($ millions) Estimated cash on hand at 12/31/2010 $455 Available credit lines $555 Estimated liquidity at 12/31/2010 $1,010 2011E free cash flow $240 Planned debt payments ($50) Expected dividend payments ($51) Projected liquidity at 12/31/2011 $1,149 Note: Our ability to access
Slide 78: Capital Allocation
Capital Allocation Debt to EBITDA* Gross Leverage Net Leverage Gross leverage target range: 1.5x to 2.0x 2.3x 2.1x 2.1x 1.8x 2011 capital allocation focus: 1.6x 1.3x 1.4x 1.1x Strategic acquisitions and/or share repurchases 2007 2008 2009 2010E *EBITDA is as defined in SPX’s credit facility; s
Slide 79: 2011 Guidance Upsides & Downsides
2011 Guidance Upsides & Downsides 2011 Guidance potential negative impacts potential positive impacts earnings per share: – dispositions $4.20 to $4.50 ⁺ acquisitions – Flow market slowdowns ⁺ transformer pricing – large project timing delays ⁺ wireless commercialization – delayed vehicle launches f
Slide 80: Executive Summary
Executive Summary GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 80
Slide 81: Executive Summary
Executive Summary Earnings Per Share* Expect to return to organic revenue and earnings growth in 2011 p peak earnings g was in 2008 Investing in: $6.53 Innovation Large power transformer capacity $4.85 China manufacturing campus $4.35 $3.90 $3.52 Recovery in power‐related $3.07 businesse
Slide 82: Questions
GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS QUESTIONS January 19, 2011
Slide 83: Appendix
Appendix GLOBAL INFRASTRUCTURE X PROCESS EQUIPMENT X DIAGNOSTIC TOOLS January 2011 83
Slide 84: 2006 to 2010E Adjusted EPS
2006 to 2010E Adjusted EPS 2010E 2006 2007 2008 2009 MidPoint Mid Point GAAP EPS from continuing operations $ 3.74 $ 5.33 $ 4.68 $ 0.93 $ 3.45 refinancing charges $ 0.33 asset impairments $ 0.05 $ 2.21 $ 3.40 $ ‐ tax benefits (0.85) (0.59) (0.47) (0.43) (0.40) legal matters 0.27 0.06 0.11 other (0.
Slide 85: 2010E Adjusted EPS Guidance
2010E Adjusted EPS Guidance 2010E Adjusted EPS Guidance Range GAAP EPS from conti nui ng opera ti ons $ 3.52 to $ 3.67 Q2 ta x benefi ts (0.40) (0.40) Q3 refi na nci ng cha rges 0.33 0.33 Adjus ted EPS from conti nui ng opera ti ons $ 3.45 to $ 3.60 N Note: 2010E as off 11/3/2010 January 2011 85
Slide 86: Full Year Free Cash Flow Reconciliation
Full Year Free Cash Flow Reconciliation ($ millions) 2010E Guidance Range 2011E Guidance Range Net cash from continuing operations $ 246 to $ 286 $ 370 to $ 410 Capital expenditures $ (90) $ (90) $ (150) $ (150) Free cash flow from continuing operations $ 156 to $ 196 $ 220 to $ 260 Add back: Paymen
Slide 87: Bank EBITDA Reconciliations
Bank EBITDA Reconciliations ($ millions) 2010E 2011E Revenues $4,913 $5,280 Net Income $177 $222 Income tax provision (benefit) 90 105 Interest expense 82 89 Income before interest and taxes $349 $417 Depreciation D i i and d iintangible ibl amortization i i expense 117 130 EBITDA from continuing op