Slide 1: Q3 2016 Earnings Presentation
Q3 2016 Earnings Presentation November 3, 2016
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 November 3, 2016
Slide 4: Quarter Highlights
Quarter Highlights Performance and Accomplishments Solid HVAC operating performance amid revenue headwinds (i.e., large cooling project in prior year, lower Heating orders) Detection & Measurement backlog solidifying with large projects; revenue timing will influence Q4 operating performance T
Slide 5: Core Q3 2016 Results
Core Q3 2016 Results Year-over-Year Analysis ($ millions) Revenue comparison challenged by sale Q3 Year-to-Date of Dry Cooling (Q1’2016) and a large Revenue HVAC Cooling project in Q3’2015 Adjusted Operating Income* Margin $411 $1,206 $1,122 Strong transformer performance and $360 operational im
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 in 2016 Channel development Expand vertically and geographically Geographic expansion
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 Awarded two of largest jobs in Transformer business tracking ahead expansion several years of schedule to achieve long-
Slide 8: Transformation of Power Generation
Transformation of Power Generation Power Generation Sale Process • In May 2016, SPX announced the hiring of BNP Paribas to pursue the sale of the European-based portion of our Power Gen business. Simultaneously announced plan to restructure the US portion of power generation (heat exchanger) busines
Slide 9: Market Commentary
Market Commentary Segment/Business Commentary Cooling: Steady demand in commercial markets HVAC Segment Heating: Effect of unseasonably warm 2015 winter Detection & Steady run-rate demand in primary markets Measurement Segment Large projects converting to backlog despite extended sales cycle
Slide 10: Q3 Financial Review
Q3 Financial Review Scott Sproule November 3, 2016
Slide 11: Earnings Per Share
Earnings Per Share Q3 2016 Adjusted EPS GAAP EPS from Continuing Operations $0.06 In addition to usual adjustments: South African Projects $0.08 Adjustment to the gain on sale of the Dry Cooling business Adjustment to Gain on Sale of Dry Cooling ($0.04) Loss on early extinguishment of Loss on ea
Slide 12: Core Q3 2016 Results
Core Q3 2016 Results Year-over-Year Analysis ($ millions) Q3 Revenue: Q3 Year-to-Date Revenue (12.4%) year-over-year decline: Segment Income Margin (6.4%) organic decrease* from HVAC $411 and Power Generation partially offset by $360 $1,206 growth in Transformers $1,122 (4.9%) decline from sal
Slide 13: HVAC Q3 2016 Results
HVAC Q3 2016 Results Year-over-Year Analysis ($ millions) Q3 Revenue: Revenue Revenue Segment Income Margin Segment Income Margin (18.1%) year-over-year decline: (16.8)% organic decline* $143 – Lower Heating orders $369 $350 – High value project in prior-year period $117 (1.3%) currency impact
Slide 14: Detection & Measurement Q3 2016 Results
Detection & Measurement Q3 2016 Results Year-over-Year Analysis ($ millions) Q3 Revenue: Revenue Revenue Segment Income Margin Segment Income Margin (6.4%) year-over-year decline: (3.5%) organic decline* largely due to elongated sales cycle in certain $56 $52 $166 $168 project oriented end marke
Slide 15: Base Power Q3 2016 Results
Base Power Q3 2016 Results Year-over-Year Analysis ($ millions) Q3 Revenue: Revenue Revenue Segment Income Margin Segment Income Margin (10.1%) year-over-year decline: (9.5%) decline from sale of Dry Cooling Flat organic revenues* with growth in Transformers, offset by Power Generation $212 $6
Slide 16: Financial Position & Guidance
Financial Position & Guidance Scott Sproule November 3, 2016
Slide 17: Financial Position
Financial Position Capital Structure Update ($ millions) Q2 2016 Q3 2016 Leverage Ratios 2.9x Short-term debt $22 $15 2.7x 2.6x 1.5-2.5x 2.3x Current maturities of long-term debt 18 18 Long-term debt 334 331 Gross Debt $374 $364 Less: Cash on hand (102) (83) Q2'16 Q3'16 LT Target Net Debt $272 $281
Slide 18: 2016 Core Guidance Update (Changes in Bold)
2016 Core Guidance Update (Changes in Bold) Revenue Segment Income Margin Flattish organic revenue* with variability HVAC Approaching 16% based on winter heating demand Organic growth* rate at lower end of Detection & long-term target of 2-6%; variability 20-21% Measurement driven by project
Slide 19: Executive Summary
Executive Summary Gene Lowe November 3, 2016
Slide 20: Executive Summary
Executive Summary Accomplishments Post-Spin “Year 1”: Substantial progress achieved on key value creation goals including successful new product solutions and operational initiatives Commitment to Earnings Growth: Remain committed to eliminating losses in power generation business to drive full
Slide 21: Questions
Questions November 3, 2016
Slide 22: Appendix
Appendix November 3, 2016
Slide 23: Q3 2016 Power Segment Results
Q3 2016 Power Segment Results ($ millions) Q3 2016 Q3 2015 Revenue Segment Income Revenue Segment Income Power Segment 216.0 (2.2) 175.5 (96.5) Exclude: South African Projects 25.4 (3.5) (36.4) (98.2) Base Power $190.6 $1.3 $211.9 $1.7 South African Projects: Q3 2015 includes a $95 million charge
Slide 24: 2016 Modeling Considerations
2016 Modeling Considerations Metric Commentary/Assumptions Corporate costs ~$40M Long-term incentive comp $13-15M Restructuring costs ~$5M Interest cost $13-14M Tax rate 30-35%, jurisdictionally sensitive Capex $18-20M Cash cost of pension + OPEB ~$16M ongoing cash cost D&A ~$30M, mostly in COGS Sha
Slide 25: Core Revenue & Segment Income Reconciliation
Core Revenue & Segment Income Reconciliation ($ millions) Q3 2016 Q3 2015 GAAP SA Projects Core GAAP SA Projects Core Revenue HVAC 116.9 116.9 142.7 142.7 D&M 52.3 52.3 55.9 55.9 Power 216.0 25.4 190.6 175.5 (36.4) 211.9 Total SPX $385.2 $25.4 $359.8 $374.1 ($36.4) $410.5 Segment Income HVAC 15.6 15
Slide 26: Core Segment Income Phasing
Core Segment Income Phasing ($ millions) Q1 2014 Q2 2014 Q3 2014 Q4 2014 GAAP 25.6 30.5 38.0 35.5 Less: South (0.4) 6.3 0.3 27.7 39% 37% African Projects Core $25.2 $36.8 $38.3 $63.2 % of full-year 15% 23% 23% 39% 24% 23% 25% 23% 15% 14% Q1 2015 Q2 2015 Q3 2015 Q4 2015 GAAP 10.4 24.8 (64.7) 45.2 Les
Slide 27: Core Revenue and Segment Income Phasing
Core Revenue and Segment Income Phasing ($ millions) 2015 Q1 Q2 Q3 Q4 Revenue HVAC 107.7 118.3 142.7 160.4 D&M 51.9 58.2 55.9 66.3 Base Power 202.7 256.4 211.9 259.5 Core SPX $362.3 $432.9 $410.5 $486.2 Segment Income HVAC 12.9 13.0 23.5 30.8 D&M 8.9 10.2 8.3 18.6 Base Power (3.0) 9.9 1.7 1.4 Core S
Slide 28: Q3 2016 GAAP to Adjusted Earnings Per Share Reconciliation
Q3 2016 GAAP to Adjusted Earnings Per Share Reconciliation ($ millions, except per share values) GAAP Adjustments Adjusted Segment income $ 21.2 $ 3.5 $ 24.7 Corporate expense (9.2) — (9.2) Pension and postretirement income (expense) (0.9) 1.1 0.2 Long-term incentive compensation expense (4.2) — (4.
Slide 29: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation ($ millions) Three months ended Nine months ended O ctober 1, 2016 September 26, 2015 O ctober 1, 2016 September 26, 2015 Operating income (loss) $ 7.1 $ (113.6) $ 37.1 $ (166.9) Adjustments: South African projects 3.5 98.2 9.8 114.9 Non-service pension and p
Slide 30: Q3 2016 Organic Revenue Reconciliation
Q3 2016 Organic Revenue Reconciliation Detection & HVAC Measurement Power Consolidated Net Revenue Growth (Decline) (18.1) % (6.4) % 23.1 % 3.0 % Adjustment for South African projects - % - % 33.2 % 15.4 % Core Revenue Decline (18.1) % (6.4) % (10.1) % (12.4) % Exclude: Foreign Currency (1.3) % (2.9
Slide 31: Q3 2016 Year-to-Date Organic Revenue Reconciliation
Q3 2016 Year-to-Date Organic Revenue Reconciliation Detection & HVAC Measurement Power Consolidated Net Revenue Growth (Decline) (5.0) % 1.1 % (0.9) % (1.0) % Adjustment for South African projects - % - % 9.1 % 6.0 % Core Revenue Growth (Decline) (5.0) % 1.1 % (10.0) % (7.0) % Exclude: Foreign Curre
Slide 32: Debt Reconciliation
Debt Reconciliation ($ millions) O ctober 1, 2016 Short-term debt $ 14.9 Current maturities of long-term debt 17.9 (1) Long-term debt 332.9 Adjusted Gross Debt 365.7 Less: Purchase card program and extended payables (3.7) Adjusted Gross Debt 362.0 Less: Cash in excess of $50.0 (33.4) Adjusted Net De
Slide 33: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ millions) Q 4 2015 1H 2016 Q 3 2016 LTM $ (9.5) $ 17.0 $ 1.9 Net income (loss) attributable to SPX Corporation common shareholders Income tax provision (benefit) (3.2) 6.1 - Interest expense 3.5 7.3 3.8 Income (loss) before interest and taxes (9.2) 30.4 5.7 Depr
Slide 34: Free Cash Flow
Free Cash Flow ($ millions) O ctober 1, 2016 Net cash used in continuing operations $ (6.0) Capital expenditures - continuing operations (4.1) Free cash flow used in continuing operations $ (10.1) November 3, 2016 34