Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Q1 2020 Earnings Presentation
33 slides from Spx Technologies's earnings presentation, Apr 30, 2020
Slide 1: Q1 2020 Earnings Presentation
Q1 2020 Earnings Presentation April 30, 2020 SPX Corporation 2020 Investor Event - New York
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, products introductions, and financial projections, are forward-looking statements within the meaning of Section 27A of the Securities Act
Slide 3: Introductory Comments
Introductory Comments Gene Lowe
Slide 4: Q1 Performance Highlights
Q1 Performance Highlights Strong first quarter despite modest COVID-19 impact Solid growth in adjusted revenue and adjusted operating profit Expansion of 160 basis points in adjusted operating margin Withdrawing 2020 guidance due to economic uncertainty COVID-19 impact accelerated during M
Slide 5: Adjusted Q1 2020 Year-Over-Year Summary
Adjusted Q1 2020 Year-Over-Year Summary Revenue increase in Detection & ($ millions) Adjusted Revenue Measurement and Engineered Solutions Adjusted Operating Income Margin segments, partially offset by a decline in HVAC $352 $365 3.9% adjusted revenue growth 10.7% Engineered Solutions was prim
Slide 6: COVID-19 – Status Update and Actions
COVID-19 – Status Update and Actions Facilities remain operational ‒ Meet definition of “essential” to critical infrastructure Safety of our employees is our top priority ‒ Visitor restrictions; travel bans; remote work where feasible ‒ Social distancing by modifying tasks, staggering shift/brea
Slide 7: Value Creation Framework
Value Creation Framework SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Culture & Values • Focus in HVAC and D&M • Employee development • Significant capital to deploy • Results/accountability • Large
Slide 8: Q1 Financial Review
Q1 Financial Review Scott Sproule
Slide 9: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q1 2020 Q1 2019 GAAP EPS from continuing operations $0.50 $0.01 South Africa and Heat Transfer* $0.08 $0.47 Acquisition-related $0.01 $0.06 Non-service pension & other** ($0.01) ($0.06) Amortization $0.04 $0.03 Adjusted EPS from continuing operations $0.62 $0.51 Adjusted
Slide 10: Adjusted Q1 2020 Year-Over-Year Results
Adjusted Q1 2020 Year-Over-Year Results Q1 Adjusted Revenue: Adjusted Revenue ($ millions) 3.9% year-over-year increase: Adjusted Segment Income Margin 3.7% acquisition impact 0.6% organic increase*, primarily due to higher Engineered $352 $365 Solutions volumes (0.4%) unfavorable currency i
Slide 11: HVAC Q1 2020 Year-Over-Year Results
HVAC Q1 2020 Year-Over-Year Results Revenue Q1 Revenue: Adjusted Segment Income Margin* ($ millions) (7.7%) year-over-year decrease: 8.5% impact from acquisitions (15.7%) organic decrease* driven by lower seasonal $128 $119 demand for heating products, and a decline in cooling volumes in China
Slide 12: Detection & Measurement Q1 2020 Year-Over-Year Results
Detection & Measurement Q1 2020 Year-Over-Year Results ($ millions) Q1 Revenue: Revenue Adjusted Segment Income Margin* 8.0% year-over-year increase: 2.5% increase from acquisition $92 6.4% organic increase* primarily due to timing of project revenues $85 (0.9%) unfavorable currency impact 2
Slide 13: Engineered Solutions Q1 2020 Year-Over-Year Results
Engineered Solutions Q1 2020 Year-Over-Year Results Revenue Q1 Revenue: Segment Income Margin ($ millions) 12.2% year-over-year increase: $155 Improved volumes in Transformers and Process $138 Cooling 11.6% Q1 Segment Income and Margin: $9.9m increase in segment income 5.8% 580 basis points
Slide 14: Financial Position and Liquidity Review
Financial Position and Liquidity Review Scott Sproule
Slide 15: Financial Position - Capital Structure Update
Financial Position - Capital Structure Update Leverage Ratios* ($millions) 2.3x 1.5-2.5x Q4 2019 Q1 2020 1.9x Short-term debt $142.6 $260.3 Current maturities of long-term debt 1.0 2.6 1.6x 1.6x Long-term debt 249.9 248.6 Total Debt $393.5 $511.5 Less: Cash on hand (54.7) (163.1) Net Debt $338.8 $34
Slide 16: Financial Position - Liquidity Update
Financial Position - Liquidity Update Refinanced Credit Facility in Q4’19: ($ in millions) $450 million revolver, with ~$200 million remaining Term Loan Repayment Schedule capacity at Q1’20 $219 ‒ Drew down $100 million pre-emptively during Q1 $250 million term loan - 2024 final maturity and mod
Slide 17: Outlook Discussion
Outlook Discussion Withdrawing 2020 guidance on uncertain market dynamics Diverse end markets and businesses Controlling discretionary costs while maintaining capacity to return quickly to growth and value creation initiatives Prepared for alternative scenarios April 30, 2020 17
Slide 18: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 19: End Market Exposures (2019)
End Market Exposures* (2019) Total 2019 Revenue of $1.5 Billion 52% Wastewater / Water, 6% 29% Utility, Light Mfg. / Other, 5% 33% Healthcare, 3% Hospitality, 3% Data Center / Lab, 3% 11% Institutional, 9% Gov't Regulated, 8% Office / Retail, 7% 13% End Markets Resi Non-resi Gov't, Regulated and Uti
Slide 20: Near-Term Demand Sensitivity
Near-Term Demand Sensitivity % of 2019 Segment EBITDA Considerations Inspection; CARES Act; Less Sensitive Transformers; ~33% Gov’t Spending; Transportation; Backlog SMS/CommInt Regulatory drivers; Aids-to-Navigation; Project timing (access); Process Cooling; ~42% SME Liquidity; Residential Heating*
Slide 21: Executive Summary
Executive Summary Strong Q1 performance; limited near-term visibility Well positioned to manage through COVID-19 impact Near-term actions helping to moderate virus impact while maintaining capacity to return quickly to growth Navigating a Challenging 2020; Anticipate Resuming Growth Journey as
Slide 22: Questions
SPX4 Questions
Slide 23: Appendix
SPX4 Appendix
Slide 24: Appendix: Modeling Considerations
Appendix: Modeling Considerations Metric Considerations Incremental/ Decremental Margins Corporate Expense Reduced incentive comp Long-term incentive comp ~$14-15m HVAC Low-30s% Restructuring costs Cost reduction actions Detection & Measurement ~50% Interest cost Drew $100m on revolver in Q1’20 Engi
Slide 25: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations ($ millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 GAAP 20.8 41.4 42.9 68.9 37% Exclude: "All other" (22.6) (10.0) (5.7) (7.4) 34% Exclude: One time acquisition (1.3) (0.9) - (0.2) related costs Exclude: Intangible amortization (1.6) (2.4) (2.0) (2.9) 23
Slide 26: Q1 2020 U.S. GAAP to Adjusted EPS Reconciliation
Q1 2020 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 47.2 $ 6.6 $ 53.8 (2) Corporate expense (11.1) 0.1 (11.0) Long-term incentive compensation expense (3.5) - (3.5) Special charges, net (3) (0.3) 0.2 (0.1) (4) Other operating in
Slide 27: Q1 2019 U.S. GAAP to Adjusted EPS Reconciliation
Q1 2019 U.S. GAAP to Adjusted Earnings Per Share Reconciliation ($ millions) GAAP Adjustments Adjusted Segment income (1) $ 20.8 $ 25.5 $ 46.3 (2) Corporate expense (12.4) 1.6 (10.8) Long-term incentive compensation expense (3.5) - (3.5) Special charges, net (0.1) - (0.1) Other operating expense (3)
Slide 28: Q1 2020 and 2019 GAAP to Adjusted Operating Income Reconciliation
Q1 2020 and 2019 U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended March 28, 2020 March 30, 2019 Operating income $ 32.7 $ 3.0 Exclude: Aggregate operating losses of the South Africa and Heat Transfer businesses (1) (4.1) (22.6) (2) One-time acquisition related co
Slide 29: Q1 2020 U.S. GAAP Revenue to Organic Revenue Reconciliation
Q1 2020 U.S. GAAP Revenue to Organic Revenue Reconciliation ($ millions) Three months ended March 28, 2020 Detection & HVAC Measurement Engineered Solutions Adjusted SPX Net Revenue Growth (Decline) (7.7) % 8.0 % 12.2 % 3.9 % Exclude: Foreign Currency (0.5) % (0.9) % — % (0.4) % Exclude: Acquisition
Slide 30: Q1 2020 and 2019 GAAP to Adjusted Revenue and Segment Income
Q1 2020 and 2019 U.S. GAAP to Adjusted Revenue and Adjusted Segment Income Reconciliations Three months ended ($ millions) CONSOLIDATED SPX: March 28, 2020 March 30, 2019 Consolidated revenue $ 369.3 $ 343.6 Exclude: "All Other" operating segments (1) 4.0 (7.9) Adjusted consolidated revenue $ 365.3
Slide 31: Q1 2020 Debt Reconciliation
Q1 2020 Debt Reconciliation ($ millions) Q1 2020 Short-term debt $ 260.3 Current maturities of long-term debt 2.6 Long-term debt (1) 250.3 Gross debt 513.2 Less: Purchase card program and extended payables (2.3) Adjusted gross debt 510.9 Less: Cash and equivalents (163.1) Adjusted net debt $ 347.8 1
Slide 32: Q1 2020 Consolidated Adjusted EBITDA Reconciliation
Q1 2020 Consolidated Adjusted EBITDA Reconciliation Last 12 Months ($ millions) Net income attributable to SPX Corporation common shareholders $ 88.8 Income tax provision 14.9 Interest expense 20.4 Income before interest and taxes 124.1 Depreciation and amortization 35.6 EBITDA 159.6 Adjustments: No
Slide 33: Q1 2020 Adjusted Free Cash Flow Reconciliation
Q1 2020 Adjusted Free Cash Flow from Continuing Operations to U.S. GAAP Reconciliation ($ millions) Q1 2020 Operating cash flow from continuing operations $ 2.7 Capital expenditures - continuing operations (3.6) Free cash flow used in continuing operations (0.9) Adjustments* 4.0 Adjusted free cash f