SPX Corporation
2008 Industrial ConferenceNovember 11, 2008
Chris KearneyChairman, President and CEO
PAGE 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, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.
Particular risks facing SPX include economic, business and other risks stemming from our international operations, legal and regulatory risks, cost of raw materials, pricing pressures, pension funding requirements, integration of acquisitions and changes in the economy. More information regarding such risks can be found in SPX’s SEC filings.
The estimates of future performance and guidance are as presented on October 29, 2008. SPX’s inclusion of estimates and guidance numbers in this presentation is not an update, confirmation, affirmation or disavowal of the estimates and guidance given on October 29, 2008.
Although SPX believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company’s current complement of businesses, which is subject to change.
Statements in this presentation are only as of the time made, and SPX does not intend to update any statements made in this presentation except as required by regulatory authorities.
This presentation includes non-GAAP financial measures. A copy of this presentation, including a reconciliation of the non-GAAP financial measures with the most comparable measures calculated and presented in accordance with GAAP, is available on our website at www.spx.com.
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SPX Overview
SPX Well Positioned for Future Growth in GlobalInfrastructure, Process Equipment and Tools & Diagnostics Markets
Global Infra
structu
re Process Equipment
Tools & Diagnostics
Global, multi-industrial manufacturer of engineered products
2008E revenue: $6b
Operations in over 35 countries
Over 17,000 global employees
Note: 2008E as of 10/29/2008
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Industrial Products &
Services
Test & Measurement
Flow Technology
Thermal Equipment &
Services
SPX Overview
$6b Global, Multi-Industrial Manufacturing Company
33% 29%
19%19%
2008E Revenueby Segment
Note: Data from continuing operations, 2008E as of 10/29/2008
2005 2006 2007 2008E
Earnings Growth*
$2.62
$4.85
$3.07
$6.40 to $6.50
17%17% 58%58% ~33%~33%
*2005 – 2008 adjusted for certain items, see appendix for reconciliations; 2008E as of 10/29/2008
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2008 Financial Targets and Updated Guidance
Targeting 7% to 8% Organic Growth and More Than 30% Earnings Growth in 2008
2008 Target Range
Revenue
Segment Income Margin
Excluding APV
Adjusted Earnings Per Share
Free Cash Flow
Capital Spending
Note: Data from continuing operations; Targets as of 10/29/2008; see appendix for non-GAAP reconciliations
Comments+28% to 29% Organic: 7% to 8%
13.2% to 13.4% +10 to 30 bps
14.6% to 14.8% +150 to 170 bps
$6.40 to $6.50 32% to 34%
$300 to $320 85% to 90% of NI
$140 to $150 Capacity, Lean & IT Investments
($ millions, except per share data)
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Global End Markets
General Industrial
13%
Global Infrastructure
53%
Sanitary14%
Tools & Diagnostics
20%
Targeting Q4 Organic Growth Between 8% and 10%;Tools & Diagnostics Declining
Pro Forma Revenueby End Market
Note: 2007 data from continuing operations, pro forma for APV acquisition; 2008E as of 10/29/08
Power & Energy
33%
HVAC, Telecom,
Other20%
Q4 2008E OrganicGrowth Expectations
Power & Energy
Sanitary
General Industrial
HVAC, Telecom, Other
Tools & Diagnostics
Mid-Single DigitGrowth
Double Digit DeclineFlatDouble Digit
GrowthROW4%
North America49%
Asia-Pacific15%
Europe32%
Pro Forma Revenueby Geography
(Food, Beverage, Dairy, Pharmaand Personal Care Markets)
PAGE 7
Backlog Development
Backlog Decline Primarily Driven by Foreign Exchange Rate Changes;Total Backlog Down ~$120m or 3% During Q3
($ millions)
$1,401 $799 $696
$2,003 $782 $721
$2,077 $796 $648
$2,002 $763 $648
$0 $1,000 $2,000 $3,000
Q1 '08
Q2 '08
Q3 '08*
Q3 '08
Thermal Flow Industrial
Q3 ending backlog at $3.6b, down $120m or 3% from Q2:
– Foreign currency fluctuations reduced the backlog value by $108m
– Industrial backlog down 10%:• 28% organic growth in Q3• Distribution transformer orders
slowing
~60% of annual revenue from short-cycle businesses
No major contract cancellations
Last 3 Quarters Ending Backlog
*Q3 2008 backlog excluding the impact of foreign currency fluctuations
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Financial Position
12/31/07 9/27/08
Cash $354 $466
Other Current Assets 2,362 2,540
Total Assets 6,237 6,523
Total Debt $1,569 $1,531
Other Current Liabilities 1,837 1,842
Shareholders' Equity 2,006 2,361
$466m of Cash on Hand at September 27th;Gross Leverage Ratio Within Target Range of 1.5x to 2.0x EBITDA
($ millions)Key Balance Sheet
Accounts at,
2.3x
1.9x
1.8x1.4x
Q4 2007 Q3 2008
Net Leverage Gross Leverage
Debt to Capital
Debt to EBITDA (1)
44.0%
39.0%
Q4 2007 Q3 2008
(1) Consolidated leverage ratios; Net and Gross Debt to EBITDA as defined in the credit facility
PAGE 9
Disciplined Capital Allocation
$675
$386
$716
2005 2006 2007
Disciplined Approach to Capital Allocation
15m
8m9m
Share Repurchases Strategic Acquisitions
$1.8B of total share repurchases
Repurchased more than 40% of outstanding share count
($ millions)
Johnson Controls European Diagnostics
6 acquisitions completed
~$1.2B total revenue
PAGE 10
Projected Liquidity
Over $850m of Projected Liquidity After Completing Planned Share Repurchases
Cash on hand at 9/27/2008 $466
Expected cash proceeds from the sale of LDS 102
2008E free cash flow remaining 242Available, committed credit lines 400
Total Projected Availability $1,210
Remaining dividend payments ($15)
2008 minimum remaining debt payments (19)
Working capital management needs (200)
Projected Liquidity $976
Repurchase 3m shares (based on 11/10 closing stock price of $37.92) ($114)
Projected Liquidity after Share Repurchases $862
Note: Our ability to access these sources under our various facilities may be limited by the terms of our credit facility and by certain tax regulations that pertain to cash in overseas locations
($ millions)
Expected Sources
RequiredUses
PlannedUse
Amount
PAGE 11
Changing Economic Environment
~40% to 45% of SPX’s Revenue is Translated From Foreign Currencies;Too Early to Predict How Economic Changes Will Impact SPX Customers in 2009
Banking failures and consolidations have impacted credit availability for many companies
Global credit crisis has created an uncertain economic environment…
…as a result, capital budgets for 2009 are uncertain
Foreign exchange rates have changed dramatically, impacting SPX’s 2008 outlook and backlog:
– % decline from June through November 10th:
• Euro: (18%)
• British Pound: (21%)-40%
-30%
-20%
-10%
0%
10%
Jun-08
Jun-08
Jun-08
Jul-08
Jul-08
Jul-08
Aug-08
Aug-08
Sep-08
Sep-08
Sep-08
Oct-08
Oct-08
EUR GBP ZAR
% Value Declinevs. U.S. Dollar
PAGE 12
Flow Technology
PAGE 13
Flow Technology Overview
About 1/3 of SPX’s Annual Revenue is Generated from Sales of Flow Technology
2008E Revenue: $2b
Strong brands with market leading positions
Global sales infrastructure and distribution
Engineered products and turnkey solutions
Operational expertise
Key Flow Technology Characteristics
Chemical10%
Compressed Air5%
Sanitary41% Power &
Energy25%
General Industrial
19%
2007 Flow TechnologyRevenue by End Market
Includes Food, Beverage, Dairy, Pharmaceutical and Personal Care Markets
Note: Data from continuing operations, 2007 pro forma for APV acquisition; 2008E as of 10/29/2008
PAGE 14
APV Overview
APV is a Global Manufacturer of Process Equipment and Engineered Solutions
2007 Revenue by End Market
Sanitary (Dairy, Food,
Beverage)73%
General Industrial
16%
Power and Energy11% EMEA
56%
Asia-Pacific24%
Americas20%
2007 Revenue by Geography
PAGE 15
Key Sanitary Market Drivers
Food
Beverage
Dairy
Brewing
Pharmaceutical
Personal Care
SPX Has Technologies that Serve the Food, Beverage, Dairy, Pharmaceutical and Personal Care Manufacturers
Increases in hygienic standards and regulatory controls
Economic expansion in developing regions
Process and business optimization
Energy efficiency and waste reduction
Production of value added or higher quality produce
Demand for new plants
PAGE 16
Food Processing Market Characteristics
$38.6
$40.7
$43.0
$45.4
2008E 2009E 2010E 2011E
Food Processing Machinery and Equipment Global Forecast
($ billions)
Source: Food Processing Machinery & Equipment
Global Food Processing Market Projected to Grow Significantly From 2008E to 2011E
Regulated market
Stable
Consistent growth
Developing market opportunities
Attractive End MarketCharacteristics
6% CAGR
PAGE 17
Expected Growth by Region
Investment in Food Processing Machinery Expected to be Higher in Developing Countries
2001 to 2010E Investmentfor Food Processing Machinery and
Equipment by Region
Source: Food Processing Machinery and Equipment Report, Global Industry Analysts
’01 – ’06CAGR
5.8%
3.3%
0.1%
4.0%
Region
Asia-Pac
Europe
US
Latin America
’07 – ’10ECAGR7.1%
3.3%
3.6%
5.6%
EMEA30%
Asia-Pacific35%
North America18% Latin America
10%ROW7%
2007 Global FPME Spend by Region
PAGE 18
Typical Sanitary Customers
Power
SPX Serves a Global Customer Base IncludingMany of the Leading Food and Beverage Manufacturers
PAGE 19
Primary Product Uses
Positive Displacement Pumps: Pump viscous products such as tomato paste, peanut butter
Centrifugal Pumps: Pump thin fluids for beverage or clean in place systems
Heat Exchangers: Temperature control for mechanically separated meats, margarines, icings, fondants
Valves: Process flow diversion & shut off
Mixers: Dispersion & solid suspension
Diverse Product Portfolio of Customer Engineered Solutions
PAGE 20
Sanitary Offerings
SPX Offers Customers Engineered Components, Skidded Systems and Turnkey Systems
2007 Revenue by Type
Note: Data from continuing operations, pro forma for APV acquisition
Engineered Components
70%
Process Systems
30%
~70% engineered components for niche end markets:
– Built to order
~30% turnkey and skidded process systems:
– Engineered, designed and installed
PAGE 21
Flow Technology Global Presence Before APV
Global Expansion of Manufacturing, Sales and Distribution Presence Underway Prior to APV Acquisition…
Strong Presence
Growing Presence
PAGE 22
Strong Presence
Growing Presence
Key APV Additions
Flow Technology Global Presence Including APV
…Addition of APV’s Global Platform is Expected to Accelerate SPX Flow Technology’s Global Expansion
APV has increased SPX’s presence in developing growth markets:
– China
– Eastern Europe
– South America
– Middle East
– Russia
– South Africa
PAGE 23
APV Integration
Streamline combined global presence
Increase leverage with suppliers on combined spend
Share best manufacturing practices globally:– Including implementation of “Lean”
Increased localization of manufacturing
Leverage respective distribution markets globally
– Product “pull-through” combined distribution channels
Expect Integration to be Completed During 2010Projected Annualized Savings of $40m to $60m
PAGE 24
Summary
Industrial Products
19%
Thermal Equipment
32%Test &
Measurement28%
Flow Technology
21%
Flow Technology Revenue has Growth ~160% Since 2005
2005 SPXRevenue by Segment
Note: Data from continuing operations, 2008E as of 10/29/2008
2008E SPXRevenue by Segment
Industrial Products
19%
Thermal Equipment
29%
Test & Measurement
19%
Flow Technology
33%
Flow Revenue: $775m
Flow Revenue: ~$2b
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Current SPX Situation
Targeting growth in Q4 2008:– Targeting 8% to 10% organic growth
– Targeting 14% to 20% earnings growth
Solid financial position and liquidity:– Expect to repurchase 3m shares of SPX stock
– Significant flexibility in uncertain economic environment
Reducing cost through APV integration
Evaluating and preparing for 2009
Carefully Monitoring Risks In Uncertain Economic Environment
PAGE 26
Questions
PAGE 27
Appendix
PAGE 28
Balance Sheet
($ millions) 12/31/07 9/27/08 Change
Cash $354 $466 $112
Other Current Assets 2,362 2,540 178
Goodwill 1,930 1,921 (9)
Other Assets 1,591 1,595 4
Total Assets $6,237 $6,523 $286
Other Current Liabilities $1,838 $1,842 $4
Total Debt 1,568 1,531 (37)
Long-Term Liabilities 825 790 (35)
Shareholders' Equity 2,006 2,361 355Total Liabilities and Shareholders' Equity
$6,237 $6,523 $286
Debt / Capital Ratio 44% 39%LTM EBITDA (1) $663 $772Net Debt / EBITDA (1) 1.83x 1.35xGross Debt / EBITDA (1) 2.29x 1.89x
(1) As defined in the SPX credit facility
PAGE 29
Full Year Financial Model($ millions, except per share data)
(1) Adjusted EPS, includes businesses discontinued in 2008, see appendix for reconciliationNote: Data from continuing operations
2008E Mid-Point EPS Guidance is $6.45 Per Share
(1)
2007
2008E Guidance Mid-Point
Revenue $4,677 $6,000Segment Income Margin 13.1% 13.3%
Corporate overhead (95) (107) Pension / PRHC (44) (37) Stock-based compensation (41) (43) Special charges (5) (16) Operating Income $428 $598 % of revenues 9.1% 10.0%
Equity Earnings in J/V 40 46 Other Income/(Expense) (5) (7) Interest Expense (71) (107) Pre-Tax Income from Continuing Operations $392 $530Tax Provision (126) (178) Income from Continuing Operations $266 $352
Tax Rate 32% 34%Weighted Average Dilutive Shares Outstanding 56 55
EPS from continuing operations 4.73$ 6.45$ EPS from businesses discontinued in 2008 0.12$ Adjusted EPS 4.85$
Adjusted EPS Guidance Range $6.40 to $6.50
EBITDA 663$ 800$
PAGE 30
2008 Full Year Segment Targets
IndustrialIndustrial
FlowFlow
ThermalThermal
Test & Measurement
Test & Measurement
July 30th
FY Targets
Revenue Growth
Operating Margins
Revenue Growth
Operating Margins
Revenue Growth
Operating Margins
Revenue Growth
Operating Margins
October 29th
FY Targets
+88% to 89%
12.0% to 12.2%
+91% to 93%
11.8% to 12.3%
+10% to 11%
11.7% to 11.9%
+11% to 13%
10.6% to 11.1%
Primary Drivers for Change
+3% to 4%
10.5% to 10.7%
+9% to 11%
10.5% to 11.0%
+19% to 20%
20.6% to 20.8%
+18% to 20%
20.2% to 20.7%
FX fluctuations
Discontinued product line
FX fluctuations
Strong Q3 margin execution
FX fluctuations,
Softness in U.S. market
Discontinued product line
Strong Q3 operating execution
Targets Have Been Adjusted to Reflect Foreign Currency Fluctuations, Discontinued Operations and Q3 Performance
Note: Data from continuing operations, 2008E as of 10/29/2008
PAGE 31
Re-Stated Quarterly Segment Data
Note: Data from continuing operations
Fourth Quarter Full Year2007 2008 2007 2008 2007 2008 2007 2007
Flow Technology Revenue $237 $492 $266 $535 $256 $493 $311 $1,070 Segment Income $37 $47 $44 $70 $44 $56 $51 $175 Segment Margins 15.4% 9.5% 16.5% 13.1% 17.2% 11.3% 16.4% 16.4%
Test and Measurement Revenue $236 $270 $284 $320 $245 $260 $315 $1,080 Segment Income $24 $24 $32 $37 $22 $30 $41 $118 Segment Margins 10.0% 8.9% 11.2% 11.4% 9.0% 11.7% 13.0% 11.0%
Thermal Equipment and Services Revenue $313 $347 $388 $409 $422 $437 $438 $1,561 Segment Income $16 $36 $38 $46 $57 $52 $52 $163 Segment Margins 5.2% 10.5% 9.8% 11.1% 13.4% 12.0% 12.0% 10.4%
Industrial Products and Services Revenue $212 $267 $253 $276 $249 $320 $253 $966 Segment Income $26 $54 $34 $57 $44 $70 $52 $156 Segment Margins 12.3% 20.3% 13.5% 20.5% 17.7% 22.0% 20.5% 16.2%
First Quarter Second Quarter Third Quarter
PAGE 32
Non-GAAP Reconciliations
PAGE 33
Q3 2008 Organic Revenue Growth Reconciliation
Net Revenue Acquisitions/ Organic Growth Divestitures Growth
Flow 92.4% 83.1% 1.0% 8.3%
Test 6.1% 7.4% 1.8% -3.1%
Thermal 3.5% 0.0% 5.3% -1.8%
Industrial 28.6% 0.0% 0.4% 28.2%
Consolidated 28.8% 19.7% 2.6% 6.5%
Foreign Currency
Quarter Ended September 27, 2008
Note: Data from continuing operations
PAGE 34
2008E Organic Revenue Growth Reconciliation
Net Revenue Acquisitions/ Organic Growth Divestitures Growth
Consolidated +28% to 29% +19% to 20% +1% to 2% +7% to 8%
Foreign Currency
2008E
Note: Data from continuing operations, 2008E as of 10/29/2008
PAGE 35
EBITDA Reconciliations
Note: EBITDA as defined in the credit facility
($ millions) 2006 2007
LTM Sept. 2008
Revenues $4,313 $4,822 $5,742
Net Income $171 $294 $381Income tax provision (benefit) 56 90 127Interest expense 50 77 110Income before interest and taxes $277 $461 $618
Depreciation and intangible amortization expense 90 83 102EBITDA from continuing operations $367 $544 $720
Adjustments:Non-cash compensation expense 38 41 43Extraordinary non-cash charges 41 14 (9)Extraordinary non-recurring cash charges 27 7 11Excess of JV distributions over JV income (12) 2 3Loss (Gain) on disposition of assets 56 4 (14)Pro Forma effect of acquisitions and divestitures 53 20Other 8 0
Adjusted LTM EBITDA from continuing operations $525 $663 $772
PAGE 36
Debt Reconciliations
($ millions) 12/31/2007 9/27/2008
Short-term debt 254$ 260$ Current maturities of long-term debt 79 76 Long-term debt 1,235 1,194
Gross Debt 1,568$ 1,531$
Less: Puchase card program and extended A/P programs (58)$ (59)$
Adjusted Gross Debt 1,510$ 1,472$
Less: Cash in excess of $50m (304)$ (416)$
Adjusted Net Debt 1,206$ 1,055$
Note: Debt as defined in the credit facility
PAGE 37
Pro Forma APV Calculation: 2008E
Excluding APV APV
Including APV
SPX Consolidated 2008ERevenue $5,150 $850 $6,000Segment Income $762 $38 $800Segment Margin 14.8% 4.5% 13.3%
Note: Data from continuing operations, 2008E as of 10/29/2008
PAGE 38
2008E Free Cash Flow Reconciliation to GAAP Financial Measures
($ millions)
Net cash from continuing operations 440$ 470$ Capital expenditures (140)$ (150)$
Free cash flow from continuing operations 300$ 320$
2008E Guidance Range
Free Cash Flow Reconciliation(unaudited)
SPX Corporation and Subsidiaries
Note: Data from continuing operations, 2008E as of 10/29/2008
PAGE 39
2008E Adjusted Earnings Per Share
GAAP EPS from continuing operations $6.76 $6.86
Q3 Tax Benefits (0.47) (0.47)
Q3 Legal Settlement (Other Expense) 0.11 0.11
Adjusted EPS from continuing operations $6.40 $6.50
2008E EPS Range
Adjusted EPS Presented Consistent with 2008 EPS Guidance
Note: Data from continuing operations, 2008E as of 10/29/2008
PAGE 40
2007 Adjusted Earnings Per Share
Note: Data from continuing operations
FY 2007
GAAP EPS from continuing operations $5.33
Q3 Tax Benefits (0.34)
Q4 Tax Benefits (0.25)Q4 Asset Impairment 0.05
Q4 Legacy Legal Matters (Corporate Expense) 0.06
Adjusted EPS from continuing operations $4.85
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2006 Adjusted Earnings Per Share
Note: Data from continuing operations
FY 2006
GAAP EPS from continuing operations $3.74
Q2 Tax Accrual Reversal (0.57)
Q2 VSI Legal Settlement 0.20
Q4 Miscellaneous Tax Benefits (0.28)
Q4 Charges for Legacy Legal Matters 0.07
Loss from operations discontinued in 2007 (0.08)
Adjusted EPS from continuing operations $3.07
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2005 Adjusted EPS Reconciliation
Note: The model above has been presented on the same basis as the annual earnings per share model presented in SPX’s March 3, 2005 investor presentation
GAAP net income per share $15.33
Income from discontinued operations (15.61)SFAS 142 asset impairment 0.96Loss on early extinguishment of debt 0.96Normalized tax rate (40%) 0.41Projected share count (64m) 0.26Normalized interest expense ($37m) 0.12Other (1) 0.19
Adjusted earnings per share $2.62
(1) Includes income from businesses discontinued in the second half of 2005, other expense relating to FX losses on the repatriation of cash, a one-time legal settlement at our EGS joint venture and a one-time gain on the sale of property.
Year ended, Dec 31, 2005
PAGE 43
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