Slide 1: Electrical Products Group Presentation
Electrical Products Group Presentation Chris Kearney, Chairman, President and CEO May 19, 2014
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, u
Slide 3: Current Update and Market Trends
Current Update and Market Trends
Slide 4: Recent Highlights
Recent Highlights 1) Improved operating performance over last four quarters: Transitioned to new operational alignment 4 consecutive quarters of year-over-year margin expansion, totaling 110 points from Q2 2013 through Q1 2014 8% increase in segment income, despite 2.5% revenue decline 2) Increased
Slide 5: Flow End Market Trends
Flow End Market Trends Food & Beverage Power & Energy Industrial Flow Components Oil & Gas Continued growth in heat Positive, steady aftermarket and Demand for pipeline valves exchanger orders driven by component order trends steady at a high level marine market Aftermarket order activity also Minin
Slide 6: End Market Trends for Power Transformers and Thermal Equipment
End Market Trends for Power Transformers and Thermal Equipment Power Transformers (U.S.) No significant changes in market trends Replacement demand for power transformers remains strong Market pricing remains competitive, with market lead times for medium power units stable Thermal Equipment Challen
Slide 7: Backlog
Backlog Sequential Backlog Analysis ($ millions) Total Backlog* $2,098 $2,122 $2,227 $2,199 $2,243 $328 $285 $313 Ending Q1 total backlog* up 7% Industrial $296 $303 year-over-year; up 2% sequentially $527 $538 Thermal * $465 $501 $507 Flow Short cycle trends generally positive $1,392 $1,392 $1,387
Slide 8: Quarterly Segment Income Profile
Quarterly Segment Income Profile % of Full Year Segment Income Per Quarter 2012 2013 2014E 35% 35% ~34% 26% 26% ~26% 22% 23% ~23% 16% ~18% 16% Q1 Q2 Q3 Q4 Note: 2014E as of April 30, 2014 Segment Income Seasonally Stronger in Second Half of the Year May 19, 2014 8
Slide 9: 2014 Financial Guidance
2014 Financial Guidance 2014 Guidance on a Continuing Operations Basis Revenue Segment Margin Growth Improvement Adjusted Earnings Per Share Flow segment +3% to +6% +100 points $5.00 to $5.50 Thermal segment (2%) to +2% +40 points Adjusted Free Cash Flow Industrial segment +6 to +10% +80 points $225
Slide 10: Long-Term Growth Strategy
SI-><. Long-Term Growth Strategy
Slide 11: Strategic Transformation
Strategic Transformation 2004 Revenue Mix 2014E Revenue Mix Laboratory Auto Equipment Other 7% Flow 8% 7% Compaction Flow 56% Equipment 14% Industrial 9% 16% $5.7b $4.9b Security 10% Infrastructure Vehicle Service 24% 15% Niche Industrial 6% Thermal 28% Exited businesses Note: 2014E as of April 30,
Slide 12: Segment Income Development
Segment Income Development Segment Income Earnings Impact $800 ($ millions) Since 2008, growth and investment in $600 Flow segment, combined with capital allocation actions have largely offset… $400 ~25% (1) ~63% (1) … the earnings declines at our Thermal $200 Peak of and Industrial segments related
Slide 13: Attractiveness of Flow End Markets
Attractiveness of Flow End Markets Definition of Flow Markets pumps valves Market sectors that require highly engineered system solutions and components which enable our customers to: process, transport, meter, filter or dehydrate… …fluids, gases and powders across a variety of applications heat exc
Slide 14: SPX Flow Technology Segment Overview
SPX Flow Technology Segment Overview 2013 Revenue by End Market 2013 Revenue by Geography Food & Beverage 36% 32% 29% Power & Energy 34% $2.6b 26% 4% 9% Industrial Flow Processes 31% SPX Flow Technology Consists of Three End Market Platforms; Well Positioned in Highly Attractive Food & Energy Market
Slide 15: Flow Power & Energy Markets
Flow Power & Energy Markets Flow’s 2013 Power & Energy Revenue Power & Energy Overview Upstream Oil & Gas Midstream Large, global markets in which customers demand 41% 20% highly engineered technology solutions $892m Power Downstream Competitors include Flowserve, Sulzer, KSB, Related 15% Cameron, G
Slide 16: Key Flow Power & Energy Offerings
Key Flow Power & Energy Offerings multi-stage pumps valves closures dosing pumps filtration and strainers dehydration & dryers mixers heat exchangers Complementary Products With Very Good Potential for Revenue Synergies Through Cross-Selling Opportunities, Channel Combinations and Key Customer Accou
Slide 17: SPX Flow Oil & Gas Offerings
SPX Flow Oil & Gas Offerings P Pumps V Valves & Closures D Dehydration F Filtration M Mixers H Heat Exchangers May 19, 2014 17
Slide 18: Typical Oil & Gas Pump Lifecycle
Typical Oil & Gas Pump Lifecycle 25 Year Pump Timeline Original Equipment Customer Value Add Purchase Upgrade / Re-rate Insurance Consumable Stock Consumable Shelf Stock Consumable Spares Spares Spares Spares Spares Spares Spares 0 5 10 15 20 25 years years years years years Site Site Overhaul o Sit
Slide 19: Flow Power & Energy Growth Initiatives
Flow Power & Energy Growth Initiatives Organic Growth Initatives Transition mix from “engineered to order” to “configured to order” Leverage combined technology offerings Increase penetration in profitable market segments (i.e. aftermarket, pipeline, subsea, nuclear power) Expand global service cent
Slide 20: SPX Product Portfolio for Oil & Gas Pipelines
SPX Product Portfolio for Oil & Gas Pipelines Key Pipeline Products valves booster pumps surge relief control skid Gate valves Surge relief valves Closures Booster pumps Transfer pumps filters pigging system chemical injection system Injection pumps Plate heat exchangers Filters Power transformers F
Slide 21: Flow Food & Beverage Market
Flow Food & Beverage Market Flow’s 2013 Food & Beverage Revenue Market Overview Non-Dairy Food & Beverage Regulated, global industry in which customers Dairy 46% demand highly engineered, turn-key solutions $941m 48% Personal Care Competitors include GEA, Tetra Pak, Alfa Laval, 6% Sudmo (Pentair) an
Slide 22: Key Food & Beverage Offerings
Key Food & Beverage Offerings Full Line Systems Components Liquid Processing Separation & Dispersion Mixing Clarification Drying & Evaporation Pumps Valves Heat Exchangers Extraction & Distillation Our Technology Offerings Include Full-Line Process Systems and Process Components May 19, 2014 22
Slide 23: Dairy Project in Shanghai
Dairy Project in Shanghai Project Details End Market: Liquid Dairy in China Customer: Bright Dairy & Food Co., Inc. SPX Scope: Design and install all technologies required to produce stirred and set yoghurt, pastuerized and UHT milk Expect to produce 1,200 tons of yoghurt per day which would make th
Slide 24: China Infant Milk Formula Market
China Infant Milk Formula Market China Infant Formula Market Trends ($ millions) Upcoming baby boom expected to drive a Sales of Infant Milk Formula $28,547 14% CAGR in sales of infant milk formula $25,363 from 2013-2018 $22,340 $19,531 Total market expected to more than $16,945 double to ~$28 billi
Slide 25: Food & Beverage Systems
Food & Beverage Systems Food & Beverage System Revenue Cost Breakdown of a Typical System ($ millions) SPX Process Food & Beverage System Revenue Equipment ~25% $528 $510 3rd Party $466 Content ~50% $293 SPX $232 Engineering ~25% 2009 2010 2011 2012 2013 Growing Installed Base Increases Aftermarket
Slide 26: First 10 Years of Aftermarket Opportunity for a Typical Food & Beverage System
First 10 Years of Aftermarket Opportunity for a Typical Food & Beverage System Customer Value Add Original System Consumable Upgrade / Re-rate Purchase Consumable Periodic Automation Consumable Spares Spares HMG Block Hardware Critical Membranes Upgrade Spares PHE Pack 5-7 years 0 5 10 years Years S
Slide 27: Food & Beverage Growth Initiatives
Food & Beverage Growth Initiatives Organic Growth Initatives Selective pursuit of new system opportunities: Prioritize aftermarket annuity streams Project risk assessment Focus on core technologies and high growth market segments (i.e. dairy processing, infant formula) Increase focus on aftermarket:
Slide 28: Flow Industrial Markets
Flow Industrial Markets Flow’s 2013 Industrial Revenue Industrial Flow Markets Overview General Industrial, 32% Compressed Air, Large, global markets in which customers demand 22% highly engineered technology solutions $806m Water, 6% $860m Mining, 8% Chemical, 19% Fragmented, regional competitor ba
Slide 29: Flow Industrial Growth Initiatives
Flow Industrial Growth Initiatives Organic Growth Initatives mixers air treatment Expand geographic presence through localization and new channels Focus on growing aftermarket sales Leverage combined product offerings pumps heat exchangers Chemical market penetration across multiple lines Innovation
Slide 30: Natural Gas Industry
Natural Gas Industry Fuel Station Tower Dryer Next generation Fuel Station Singel Tower Dryer Improves performance and energy efficiency Equipped with high performance particulate and oil removal filtration Optimized footprint offers ease of transport, installation and service Launched April 2014 In
Slide 31: Executive Summary
SI-><. Executive Summary
Slide 32: Executive Summary
Executive Summary Key Investor Messages 1) Significant progress over the last four quarters improving operating performance and executing strategic and capital allocation actions 2) Remain committed to leaner cost structure and continued operating improvement: Focused on achieving 2014 and long-term
Slide 33: Questions?
SI-><. Questions?
Slide 34: Appendix
SI-><. Appendix
Slide 35: Free Cash Flow
Free Cash Flow Reconciliation to GAAP Cash Flow Statement 2014E ($ millions) Net cash from continuing operations $50 to $100 Tax payments on asset sale gains $260 $260 Capital expenditures ($85) ($85) Adjusted free cash flow from continuing operations $225 to $275 May 19, 2014 35