Slide 1: Q1 2016 Earnings Presentation
Q1 2016 Earnings Presentation May 5, 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 and are thus prospective. These forward-looking statements are subject to risks,
Slide 3: Introductory Comments
Introductory Comments Gene Lowe May 5, 2016
Slide 4: Quarter Highlights
Quarter Highlights Performance and Accomplishments Core Segment Income up +30% over the prior year Strong margin expansion in HVAC and Detection & Measurement segments and Transformers business Completion of Dry Cooling sale (approximately $48 million sale price) Engaged BNP Paribas to pursu
Slide 5: Core Q1 2016 Results
Core Q1 2016 Results Year-over-Year Analysis ($ millions) Solid organic growth in HVAC segment and Revenue margin expansion for both Heating and Adjusted Operating Income Margin* Cooling $362 $369 Strong revenue and segment income performance in Detection & Measurement 3.0% segment -0.4% Solid
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: Market Commentary
Market Commentary Segment/Business Commentary Cooling: Solid on strength of commercial market HVAC Heating: Muted by warm winter; operational efficiencies driving segment income growth Detection & Demand for run-rate products remains steady Measurement Robust frontlog activity; timing of cer
Slide 8: Q1 Financial Review
Q1 Financial Review Scott Sproule May 5, 2016
Slide 9: Earnings Per Share
Earnings Per Share Q1 2016 Adjusted EPS GAAP EPS from Continuing Operations $0.34 Gain on Sale of Dry Cooling business ($0.41) Adjusted results exclude: Gain on sale of Dry Cooling business South African Projects $0.08 Non-service pension adjustment Non-Cash Intangible Impairment $0.06 (legacy p
Slide 10: Core Q1 2016 Results
Core Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue +1.8% year-over-year improvement: Segment Income Margin +2.8% organic growth, with increases in all three segments $362 $369 (1.0%) currency impact Q1 Segment Income and Margin: 6.7% $6.0m increase in Segment Incom
Slide 11: HVAC Q1 2016 Results
HVAC Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue +3.6% year-over-year improvement: Segment Income Margin +4.3% organic growth primarily driven by higher sales of cooling products $108 $112 (0.7%) currency impact Q1 Segment Income and Margin: 14.2% 12.0% $3.0m inc
Slide 12: Detection & Measurement Q1 2016 Results
Detection & Measurement Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue +6.7% year-over-year growth: Segment Income Margin +7.9% organic growth with contributions from multiple product lines within the $55 $52 segment (1.2%) currency impact 19.9% Q1 Segment Income and
Slide 13: Base Power Q1 2016 Results
Base Power Q1 2016 Results Year-over-Year Analysis ($ millions) Q1 Revenue: Revenue Performance approximately flat: Segment Income Margin +0.6% organic increase, with transformers sales growth largely offset by a challenging $203 $202 environment in power generation (1.0%) currency impact -1.0
Slide 14: Financial Position & Guidance
Financial Position & Guidance Scott Sproule May 5, 2016
Slide 15: Financial Position
Financial Position Capital Structure Update ($ millions) Q1 2016 Leverage Ratios Short-term debt $38 2.8x 2.8x Current maturities of long-term debt 14 Long-term debt 338 2.5x 2.5x 1.5-2.5x Gross Debt $390 Less: Cash on hand (98) Q4'15 Q1'16 LT Target Net Debt $292 Bank Net Leverage* Gross Leverage**
Slide 16: Reaffirming 2016 Core Guidance
Reaffirming 2016 Core Guidance Revenue Segment Income Margin Towards the lower-end of LT annual Flat (favorable margin project in HVAC growth targets of 2-4% 3Q’15 affects comparisons) At least 100 bps increase driven by Detection & In-line with LT annual growth targets of commercial efforts
Slide 17: Executive Summary
Executive Summary Gene Lowe May 5, 2016
Slide 18: Executive Summary
Executive Summary Q1 2016 Recap: Solid margin improvement in growth platforms – HVAC, Detection & Measurement and Transformers business Value Creation Accomplishments: Closed sale of Dry Cooling; Pursuing sale of European-based Power Generation business Market Conditions: Well positioned in mi
Slide 19: Questions
Questions May 5, 2016
Slide 20: 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 35-40%, jurisdictionally sensitive Capex $18-20M Cash cost of pension + OPEB ~$16M ongoing cash cost D&A $30-32M, mostly in COGS S
Slide 21: Core Revenue & Segment Income Reconciliation
Core Revenue & Segment Income Reconciliation ($ millions) Q1 2016 Q1 2015 GAAP SA Projects Core GAAP SA Projects Core Revenue HVAC 111.6 111.6 107.7 107.7 D&M 55.4 55.4 51.9 51.9 Power 222.3 (20.5) 201.8 216.7 (14.0) 202.7 Total SPX $389.3 ($20.5) $368.8 $376.3 ($14.0) $362.3 Segment Income HVAC 15.
Slide 22: Core Segment Income Phasing
Core Segment Income Phasing ($ 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% African Projects 37% Core $25.2 $36.8 $38.3 $63.2 % of total 15% 23% 23% 39% 24% 23% 25% 23% 15% Q1 2015 Q2 2015 Q3 2015 Q4 2015 14% GAAP 10.4 24.8 (64.7) 45.2 Less: S
Slide 23: Core Revenue and Segment Income Phasing
Core Revenue and Segment Income Phasing ($ millions) 2015 Q1 Q2 Q3 Q4 Revenue HVAC 107.7 118.4 142.7 160.4 D&M 51.9 58.2 55.9 66.3 Base Power 202.7 256.3 211.9 259.5 Core SPX $362.3 $432.9 $410.5 $486.2 Segment Income HVAC 12.9 13.0 23.5 30.8 D&M 8.9 10.2 8.3 18.6 Base Power (3.0) 9.9 1.7 1.4 Core S
Slide 24: Q1 2016 GAAP to Adjusted Earnings Per Share Reconciliation
Q1 2016 GAAP to Adjusted Earnings Per Share Reconciliation GAAP Adjustments Adjusted Commentary ($ millions) Segment income $ 21.4 $ 3.4 $ 24.8 Excludes South African projects Corporate expenses (10.9) (10.9) Pension and postretirement expense (1.0) 1.1 0.1 Includes only ongoing service costs/credit
Slide 25: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation ($ millions) Three months ended April 2, 2016 March 28, 2015 Operating income (loss) $ 20.3 $ (44.6) Adjustments: South African projects 3.4 8.4 Non-service pension and postretirement items 1.1 (0.3) Certain corporate expenses (1) - 34.9 Gain on sale of Dry C
Slide 26: Q1 2016 Organic Revenue Reconciliation
Q1 2016 Organic Revenue Reconciliation Detection & HVAC Measurement Power Consolidated Net Revenue Growth 3.6 % 6.7 % 2.6 % 3.5 % Exclude: South African projects % - % (3.0) % (1.7) % Core Revenue Growth (Decline) 3.6 % 6.7 % (0.4) % 1.8 % Foreign Currency (0.7) % (1.2) % (1.0) % (1.0) % Organic Rev
Slide 27: Debt Reconciliation
Debt Reconciliation ($ millions) April 2, 2016 Short-term debt $ 38.4 Current maturities of long-term debt 13.5 Long-term debt 339.5 Gross Debt 391.4 Less: Purchase card program and extended payables (4.1) Adjusted Gross Debt 387.3 Less: Cash in excess of $50.0 (47.9) Adjusted Net Debt $ 339.4 Note:
Slide 28: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation ($ millions) Q 2 2015* 2H 2015 Q 1 2016 LTM $ (114.5) $ 13.0 Net income (loss) attributable to SPX Corporation common shareholders Income tax provision 2.3 3.5 Interest expense 9.8 3.5 Income (loss) before interest and taxes (102.4) 20.0 Depreciation and amortizati
Slide 29: Free Cash Flow
Free Cash Flow ($ millions) Q 1 2016 Net cash used in continuing operations $ (60.9) Capital expenditures - continuing operations (2.0) Free cash flow used in continuing operations $ (62.9) May 5, 2016 29