Slide 1: SPX Technologies Q4 2022 Earnings Presentation
SPX Technologies Q4 2022 Earnings Presentation February 23, 2023
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: Executive Summary
Executive Summary Very strong close to 2022 Solid performances in HVAC and D&M Significant progress on multiple key initiatives in 2022 Digital, Continuous Improvement, ESG, and legacy liability reduction Strong balance sheet and inorganic pipeline 2023 guidance ~10% Adjusted EPS* growth
Slide 5: Q4 2022 Results Summary
Q4 2022 Results Summary ($ millions) Q4 2022 Full Year Strong organic revenue growth (18%+) / Margin* HVAC and Detection & Measurement Acquisitions performed well Cincinnati Fan and ITL Robust profit and margin growth 48% growth in Adj. Operating Income* 290 bps margin* expansion Stron
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Digital initiatives • Channel expansion • Continuous Improvement • Adjacent markets • Sustainability Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Results/account
Slide 7: Momentum on ESG Initiatives
Momentum on ESG Initiatives ESG Commitments Committed to GHG intensity reduction of 30% by 2030* Enhanced D&I disclosures (more demographic details at various levels of company) # 190 of 500 Favorable ESG Story; Momentum on Journey Plan *Reduction of scope 1 and scope 2 greenhouse gas emissions as a
Slide 8: Momentum in Digital
Momentum in Digital Driving Customer Value Through Focus on Technology February 23, 2023 8
Slide 9: Q4 Financial Review
Q4 Financial Review Mark Carano
Slide 10: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q4 2021 Q4 2022 FY 2021 FY 2022 GAAP EPS from continuing operations $0.10 ($0.55) $1.27 $0.43 Amortization $0.09 $0.09 $0.36 $0.46 Acquisition-related ($0.09) $0.02 $0.00 $0.06 Asbestos-related $0.74 $1.65 $0.78 $2.03 Non-service pension & other* $0.04 ($0.04) ($0.08) $0.
Slide 11: Q4 2022 Results
Q4 2022 Results ($ millions) Q4 Revenue: Q4 2022 Full Year 22.7% year-over-year increase: Revenue 18.4% organic increase with broad strength in HVAC Consolidated Segment Income/Margin* and Detection & Measurement 6.3% acquisition impact (Cincinnati Fan and ITL) -2.0% currency impact Q4 Conso
Slide 12: HVAC Q4 2022 Results
HVAC Q4 2022 Results ($ millions) Q4 Revenue: Q4 2022 Full Year 29.5% year-over-year Increase: Revenue 21.1% organic increase driven by growth in both Segment Income/Margin Heating and Cooling 9.4% acquisition impact (Cincinnati Fan) -1.0% currency impact Q4 Segment Income and Margin: $19.
Slide 13: Detection & Measurement Q4 2022 Results
Detection & Measurement Q4 2022 Results ($ millions) Q4 Revenue: Q4 2022 Full Year 12.2% year-over-year increase: Revenue 14.4% organic increase with broad strength across Segment Income/Margin segment 1.5% acquisition impact (ITL) -3.7% currency impact Q4 Segment Income and Margin: $4.2m
Slide 14: Financial Position and Liquidity Review
Financial Position and Liquidity Review Mark Carano
Slide 15: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) Q3 2022 Q4 2022 ($millions) Q3 2022 Q4 2022 Short-term debt $2 $2 Current maturities of long-term debt 0 2 Long-term debt 245 243 Total Debt $247 $247 1.3x 1.1x Less: Cash on hand ** (187) (157) 0.3x 0.4x Net Debt $60 $90 Include
Slide 16: 2023 Guidance
2023 Guidance Revenue Segment Income Margin $935-$955m 15.25%-16.0% HVAC 2022 Actual $914m 2022 Actual 14.8% Detection & $565-$585m 20.5%-21.5% Measurement 2022 Actual $547m 2022 Actual 20.9% $1.50-1.54b 17.0%-18.0% Total SPX 2022 Actual $1.46b 2022 Actual 17.1% Adj. Operating Income* of
Slide 17: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 18: Market Commentary
Market Commentary Market Comments Cooling: ‒ Overall solid demand in Americas ‒ Labor constraints moderating Heating: ‒ Stable orders / No material cancellations ‒ Production constraint challenges easing Run-rate: ‒ Broad strength in Location & Inspection (regional variances) ‒ Infrastructure
Slide 19: Summary
Summary Very strong close to 2022 Progressing on key initiatives 2023 guidance ~ 10% Adjusted EPS* growth Well-positioned for continued growth Progressing Towards “SPX 2025” Targets *Adjusted results are non-GAAP financial measures. Reconciliations from US GAAP financial measures are availab
Slide 20: Appendix
SPX4 TECHNOLOGIES Appendix
Slide 21: Modeling Considerations – Full Year 2023
Modeling Considerations – Full Year 2023 Metric Considerations Corporate expense $44-46.5m Long-term incentive comp $13-14m Restructuring costs $1m Interest cost ~$7m Other income/(expense), and Non-service pension benefit/(expense) $6.5-8m Tax rate 23.5-24.5% Capex ~$25m Cash cost of pension + OPEB
Slide 22: End Market Exposure
End Market Exposure ~$1.46 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 28% 17% 13% 42% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 3% Gov't Regulated, Institutional, 12% 21% Office / Ret
Slide 23: 2023 Adjusted EPS Guidance - Key Drivers
2023 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $3.55 • Accelerated project-related sales • Moderating supply chain challenges and input costs $3.43 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $3.30 • Unfa
Slide 24: Segment Income Phasing and Reconciliations
Segment Income Phasing and Reconciliations 36% 34% 25% 23% 22% 23% 21% 16% Q1 Q2 Q3 Q4 2021 2022 February 23, 2023 24
Slide 25: GAAP Reconciliation Results by Quarter
GAAP Reconciliation Results by Quarter ($ millions) 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 Corporate expense (14.4) (13.6) (11.9) (20.6) (60.5) (16.6) (16.4) (17.2) (18.4) (68.6) Acquisition related and other cos
Slide 26: Adjusted SPX 2021 Results by Quarter
Adjusted SPX 2021 Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2021 HVAC segment income $ 23.0 $ 26.6 $ 23.6 $ 34.5 $ 107.7 Detection & Measurement segment income 24.0 18.1 18.0 32.8 92.9 Consolidated segment income $ 47.0 $ 44.7 $ 41.6 $ 67.3 $ 200.6 Operating income from continuing operations $ 25.
Slide 27: Adjusted SPX 2022 Results by Quarter
Adjusted SPX 2022 Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2022 HVAC segment income $ 20.6 $ 28.3 $ 33.1 $ 53.5 $ 135.5 Detection & Measurement segment income 19.0 27.8 30.3 37.0 114.1 Consolidated segment income $ 39.6 $ 56.1 $ 63.4 $ 90.5 $ 249.6 Operating income (loss) from continuing operatio
Slide 28: HVAC Segment Results – 2021-2022
HVAC Segment Results – 2021-2022 ($ millions) Q1 Q2 Q3 Q4 2021 Revenue $175.6 $185.4 $179.3 $211.8 $752.1 Segment income $23.0 $26.6 $23.6 $34.5 $107.7 13% 14% 13% 16% 14% Q1 Q2 Q3 Q4 2022 Revenue $193.1 $218.7 $227.8 $274.2 $913.8 Segment income $20.6 $28.3 $33.1 $53.5 $135.5 11% 13% 15% 20% 15% Fe
Slide 29: Detection & Measurement Segment Results – 2021-2022
Detection & Measurement Segment Results – 2021-2022 ($ millions) Q1 Q2 Q3 Q4 2021 Revenue $111.6 $111.2 $106.4 $138.2 $467.4 Segment income $24.0 $18.1 $18.0 $32.8 $92.9 22% 16% 17% 24% 20% Q1 Q2 Q3 Q4 2022 Revenue $114.0 $135.3 $142.7 $155.1 $547.1 Segment income $19.0 $27.8 $30.3 $37.0 $114.1 17%
Slide 30: Q4 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q4 2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 90.5 $ — $ 90.5 Corporate expense (1) (18.4) 2.9 (15.5) Acquisition related costs (2) (0.8) 0.8 — Long-term incentive compensation expense (3.2) — (3.2) Amortization of intangible assets (3) (5.4
Slide 31: Q4 2021 U.S. GAAP to Adjusted EPS Reconciliation
Q4 2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted ($ millions) Segment income $ 67.3 $ — $ 67.3 Corporate expense (1) (20.6) 5.2 (15.4) Acquisition related costs (2) (0.3) 0.3 — Long-term incentive compensation expense (3.4) — (3.4) Amortization of intangible assets (3) (5.6
Slide 32: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation ($ millions) Three months ended Twelve months ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Operating income (loss) $ (24.9) $ 13.9 $ 51.0 $ 73.7 Include - TSA Income (1) 0.5 0.9 2.9 0.9 Exclude: Acquisition relate
Slide 33: Q4 2022 Non-GAAP Reconciliation - Organic Revenue
Q4 2022 Non-GAAP Reconciliation - Organic Revenue Three months ended December 31, 2022 Detection & HVAC Measurement Consolidated Net Revenue Growth 29.5 % 12.2 % 22.7 % Exclude: Foreign Currency (1.0)% (3.7)% (2.0)% Exclude: Acquisitions 9.4 % 1.5 % 6.3 % Organic Revenue Growth 21.1 % 14.4 % 18.4 %
Slide 34: Q4 2022 Debt Reconciliation
Q4 2022 Debt Reconciliation ($ millions) Q4 2022 Short-term debt $ 1.8 Current maturities of long-term debt 2.0 Long-term debt 243.0 Gross debt 246.8 Plus: adjustment associated with credit agreement⁽ⁱ⁾ (1.1) Adjusted gross debt 245.7 Less: cash and equivalents (156.6) Adjusted net debt $ 89.1 ⁽ⁱ⁾In
Slide 35: Q4 2022 Adjusted EBITDA Reconciliation
Q4 2022 Adjusted EBITDA* Reconciliation ($ millions) FY 2022 Net Income $ 0.2 Income tax provision 7.3 Interest expense 9.3 Income before interest and taxes 16.8 Depreciation and amortization 46.4 EBITDA 63.2 Adjustments: Losses on disposition of assets outside the ordinary course of business 19.6 I
Slide 36: Q4 2022 Adjusted Free Cash Flow Reconciliation
Q4 2022 Adjusted Free Cash Flow Reconciliation ($ millions) FY 2022 Operating cash flow used in continuing operations $ (115.2) Capital expenditures (15.9) Free cash flow used in continuing operations (131.1) Adjustments* 228.1 Adjusted free cash flow from continuing operations $ 97.0 * Adjustments