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Citigroup's Energy 2020 Conference
 

Citigroup's Energy 2020 Conference

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    Citigroup's Energy 2020 Conference Citigroup's Energy 2020 Conference Presentation Transcript

    • ENERGY 2020 June 11, 2008
    • Introductions Chris Kearney Chairman, President and Chief Executive Officer Patrick O’Leary EVP and Chief Financial Officer Jeremy Smeltser VP of Finance Ryan Taylor Manager of Investor Relations 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 April 30, 2008. SPX’s inclusion of estimates and guidance in the presentation is not an update, confirmation, affirmation, or disavowal of the estimates. 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. PAGE 3
    • SPX Overview 2008E Revenue by Segment Global, multi-industrial Thermal Flow Equipment & manufacturer of engineered Technology Services products 35% 28% 2008E revenue: $6.2b Operations in over 20 18% 19% countries Industrial Test & Over 17,000 global Products & Measurement employees Services Note: Data from continuing operations, 2008E as of 4/30/2008 $6b Global, Multi-Industrial Company; ~1/3 of SPX Revenue is From Sales into the Global Power and Energy Market PAGE 4
    • SPX Earnings Growth …Driving Earnings Growth* Three Global Growth Markets… 17% 58% ~30% 17% 58% ~30% $6.20 to $6.40 e Pr ur oc ct ru es st s ra Eq nf $4.85 u lI ip ba m en lo G t Tools & Diagnostics $3.07 $2.62 2005 2006 2007 2008E *2005 – 2007 adjusted for certain items, see appendix for reconciliations; 2008E as of April 30, 2008 SPX Well Positioned for Future Growth in Global Infrastructure, Process Equipment and Tools & Diagnostics Markets PAGE 5
    • SPX Operating Initiatives Emerging Lean Markets Organization Im pr h wt ov ro em G en t New Product Development Supply-Chain Resources Management IT Shared Infrastructure Services Learning and Development Operating Initiatives Supporting Growth and Improvement Within SPX PAGE 6
    • Disciplined Capital Allocation Share Repurchases Strategic Acquisitions ($ millions) $716 $675 5 acquisitions completed ~$1.2B total revenue $386 15m 9m 8m 2005 2006 2007 $1.8B of total share repurchases Average purchase Johnson Controls price of ~$58 per share European Diagnostics Disciplined Approach to Capital Allocation PAGE 7
    • Globalization of SPX Continues 2004 SPX Revenue 2007 Pro Forma SPX by Geography Revenue by Geography North America North America 70% 49% Europe 32% ROW ROW Europe 3% Asia-Pacific Asia-Pacific 4% 20% 15% 7% Note: Data from continuing operations, 2007 pro forma for APV acquisition Continued International Expansion; 50% of 2007 Revenue Outside North America PAGE 8
    • Key External Market Drivers Growing world population Gl ob a lI Advancement of developing countries nf Tools & Diagnostics ra st ru ct Increasing demand for power and u re energy nt Increasing demand for processed e m ip food and beverages qu E ss e Government regulations oc Pr Increasing environmental awareness Global Growth Providing Opportunities for SPX PAGE 9
    • SPX Global End Markets 2007 Pro Forma 2008E Market Trends Revenue by End Market • Power & Energy Global Infrastructure 53% • Sanitary HVAC, Telecom, Other • General Industrial Power & 20% Energy 33% Tools & • HVAC, Telecom, Other Diagnostics 20% • Tools & Diagnostics Sanitary 14% General Industrial 13% Double-Digit Mid/High-Single Digit Low-Single Digit Growth Growth Growth Note: Data from continuing operations, 2007 pro forma for APV acquisition; 2008E as of 4/30/2008 53% of SPX Revenue Serves the Global Infrastructure Market; Significant Exposure to Global Power and Energy Markets PAGE 10
    • Backlog Development ($ millions) Industrial Flow Thermal ~3 Months > 1 Year ~9 Months $1,401 Visibility Visibility Visibility $1,254 $1,217 $799 $763 $731 $640 $562 $348 Q1 Q4 Q1 Q1 Q4 Q1 Q1 Q4 Q1 2007 2007 2008 2007 2007 2008 2007 2007 2008 Note: Data from continuing operations Strong Global Demand for Power and Energy Infrastructure And Process Equipment Driving Backlog Increases PAGE 11
    • Global Energy Infrastructure Investment Cumulative Expected Investment in Energy Infrastructure, 2006 - 2030 Power 53% $11.6 trillion $5.4 Oil trillion 25% $4.3 trillion Coal Gas 3% 19% Source: WEO 2007 Copyright OECD/IEA, 2007; Table 1.9, page 95 , as modified by SPX Corporation $22 Trillion Estimated to be Spent on Energy Infrastructure From 2006 Through 2030 PAGE 12
    • Investment in Power and Energy Infrastructure by Region $2t $5t $2t $4t $3t $2t $2t $1t Source: WEO 2007 Copyright OECD/IEA, 2007; Figure 1.13, page 96, as modified by SPX Corporation Perfect Storm of Aging Infrastructure in Developed Countries and Rising Demand for Electricity Throughout the World PAGE 13
    • Fuel Source Debate Fuel Source Positive Factors Negative Factors High emissions, CO2 Abundant, less expensive Coal storage concerns Easy to transport Availability, inflating price, Oil CO2 emissions Easy to transport, low Availability, inflating price, Natural Gas pollution rate CO2 emissions Zero CO2 emissions, low fuel High initial capital cost, Nuclear cost long-term waste Alternative Sources Zero CO2 emissions, free Low energy density, inputs reliability concerns Positive and Negative Factors About Each Power Source PAGE 14
    • World Primary Energy Demand Global Primary Energy Demand 2005 – 2030 18 CAGR 16 Billion tonnes of oil equivalent 7.0% 14 0.7% 12 2.1% 10 8 1.3% 6 4 2 2.2% 0 1980 1990 2000 2010E 2020E 2030E Coal Oil Gas Nuclear Hydro/Other Source: WEO 2007 Copyright OECD/IEA, 2007; Figure 1.1, page 76, as modified by SPX Corporation Coal, Gas and Oil Expected to be the Primary Sources for Energy; Alternative Sources Gaining Momentum PAGE 15
    • SPX Power and Energy Contract Examples United Kingdom Norway Iceland Coal Solar Geothermal $70m $40m $100m Q3 2006 Q3 2007 Q2 2008 China Nuclear United States $13m Coal Q3 2007 $50m Q4 2007 China Coal 40 plants 2002 - present Qatar South Africa Petrochemical Coal $100m $235m Q1 2007 Q4 2007 SPX Power and Energy Technologies Providing Solutions Across a Diverse, Global Landscape of Customer Needs PAGE 16
    • SPX Power and Energy Opportunities Oil & Natural Gas Coal Nuclear Solar T&D Biofuels Petrochemicals Mining and Minerals Refinement SPX Technologies Serve Customers Across Many Global Power and Energy Applications PAGE 17
    • Cooling Solutions Mechanical Draft Air Cooled Condensers Evaporative Cooling (Dry Technology) (Wet Technology) Natural Draft Towers Air2Air (Wet or Dry Technology) (Hybrid Technology) SPX Offers Broad Cooling System Technology That Serves Customers Across Many Types of Power Generation Facilities PAGE 18
    • Thermal Equipment Feedwater Deaerators Heaters Electrostatic Precipitators Heat Exchangers SPX Provides Critical Components for Power Generation Facilities PAGE 19
    • Flow Technology Process Pumps & Systems Flue Gas Desulfurization Mixers Steam, Control, Gate, Squib Valves Dryers Filters: Liquid & Air SPX Engineered Flow Products Assist in Power Generation and Oil and Gas Exploration and Refinement PAGE 20
    • Typical Coal-Fired Power Plant Thermal Segment Flow Segment Industrial Segment TEXT PAGE 21
    • Nuclear Example SPX Squib Valve SPX contracted in 2007 to design and engineer squib valves for Westinghouse US Department of Energy funded 50% of the design fees Critical component for the AP1000 nuclear plant design Expect deployment in the US and Asia Permits the rapid exit of fluid from a pressurized fluid source SPX Squib Valves Supporting Nuclear Power Growth PAGE 22
    • Solar Example Monocrystalline SPX Key Demand Projection Market Attributes Global reach: Large installed base of crystal growers 12 Sales into over 20 countries for solar 10 8 GigaWatts Reputation for reliability and quality: 6 KX120PV a gold standard for solar 4 market 2 0 High productivity equipment with 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 sophisticated automatic operation Source: BCC Research Focused on new product development SPX Has Leading Crystal Growing Technology with Global Reach; ~$90m in Orders for Crystal Growers Received Within the Past Year PAGE 23
    • Geothermal Example $100m project in Iceland Iceland’s Svartsengi Power Plant SPX chosen to engineer, design, manufacture and install complete cold end solution 5 geothermal plants at the base of the Hengill volcano Total generating capacity of 225 MW SPX Helping Iceland Expand Its Energy Infrastructure PAGE 24
    • Transmission and Distribution PAGE 25
    • Power Transformers Power Transformer Revenue Power Transformer 10% to 15% ($ millions) $420 $290 $235 2005 2006 2007 2008E Note: 2008E as of April 30, 2008 SPX Custom Engineers Power Transformers for the Transmission and Distribution of Electricity in the US PAGE 26
    • US Transmission and Distribution Market Drivers > Investment in medium power transformers (10-60 mva) has driven Waukesha’s organic growth and backlog growth > Investment in large power transformers (>60 mva) is expected to increase in the near-term > Three primary drivers of this investment in transformers: Increased Electricity Demand (1): 2007 demand was 83% of net capacity resources Demand for electricity expected to increase 135,000 MW or 18% over the next decade Heightened Regulatory Standards: Energy Policy Act of 2005 Electric Reliability Organization Aging Infrastructure (1) US Department of Energy Increased Electricity Demand, Regulatory Standards and Aging Infrastructure Driving Investment in US T&D Market PAGE 27
    • Installation History of US Transformers Base Giga-Voltage Ampere (GVA) per Year Additions 200 180 Transformer GVA Installed 160 140 120 100 80 60 40 20 0 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 Year Source: Hartford Steam Boiler Significant Capital Spending for New US Transformers Occurred ~30 Years Ago PAGE 28
    • Aging US Transformers 100% 90% 80% Hazard Function 70% 60% 50% 40% 30% 20% 10% 0% 2 8 14 20 26 32 38 44 50 56 62 68 74 Age Transformer Age Source: Hartford Steam Boiler Risk of Transformer Failure and Need for Replacement Begins Significant Increase at 30 Years of Age PAGE 29
    • Expected Rate of Failure Failure Rate Forecast 4.5 4.0 3.5 Transformer GVA 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1983 1986 1989 1995 1998 2001 2013 1980 1992 2004 1968 1974 1977 2010 1964 1971 2007 Source: Hartford Steam Boiler Rate of Failure Expected to Increase Over the Next 5 Years PAGE 30
    • Regulatory Influences on T&D Investment Mandatory reliability standards FERC incentives: Capacity margins, transmission constraints State requirements and regulation Homeland security NERC’s Base Penalty Amount Table Risk Factor Low Medium High Severe Violation Low $1 - $3 $2 -$8 $3 - $15 $5 - $25 Medium $2 - $30 $4 - $100 $6 - $200 $10 - $335 High $4 - $125 $8 - $300 $12 - $625 $20 - $1,000 Source: NERC Customer Behavior Altered by Heightened Regulatory Standards; Driving Investment in Transmission and Distribution PAGE 31
    • Summary PAGE 32
    • SPX Power and Energy Initiatives Power & Energy SPX Focus Revenue Profitability improvement ~$1,950 Geographic expansion New product development ~$1,500 Customer relationships Increase capacity & optimize global footprint 2006 2007 Strengthen engineering capabilities Focused on Maximizing Global Power & Energy Opportunities PAGE 33
    • Financial Results ($ millions) Revenue Growth Segment Income Margins Organic 13.5% to ~5-7% 6% 10% 10% growth 14.0%* $6,175 13.0% $4,747 12.1% 12.4% to Including 12.9% APV $4,097 $3,658 11.1% 2005 2006 2007 2008E 2005 2006 2007 2008E Note: Data from continuing operations; 2008E as of 4/30/2008; See appendix for non-GAAP reconciliations *Excludes dilutive impact of APV The Transformation of SPX is Clearly Reflected in Our Improving Financial Performance PAGE 34
    • Questions PAGE 35
    • Q1 2008 Highlights ($ millions, except per share data) Comments Q1 2008 Earnings Per Share $1.14 +115% Revenue $1,393 +37% Organic Growth 7% Power & Energy Market Strength Segment Income Margin 11.6% +140 points Note: Data from continuing operations, see appendix for non-GAAP reconciliations Significant Earnings Growth in Q1 PAGE 36
    • 2008 Financial Targets 2008E Target Range ($ millions, except per share data) Comments +27% to 32% Organic: 5% to 7% Revenue 12.7% to 13.2% ~flat Segment Income Margin 13.8% to 14.3% +80 to 130 bps Excluding APV 28% to 32% (1) $6.20 to $6.40 Earnings Per Share $260 to $300 75% to 85% of NI Free Cash Flow $140 to $150 Capacity, Lean Capital Spending & IT Investments As compared to 2007 adjusted EPS (1) Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Targeting 27% to 32% Revenue Growth and 28% to 32% Earnings Growth PAGE 37
    • Full Year Financial Model 2008E ($ millions, except per share data) Guidance 2007 Mid-Point Revenue $4,822 $6,175 Segment Income Margin 12.9% 12.9% Corporate overhead (95) (102) Pension / PRHC (44) (39) Stock-based compensation (41) (46) Special charges (8) (15) Operating Income $435 $594 % of revenues 9.0% 9.6% Equity Earnings in J/V 40 46 Other Income/(Expense) (5) (5) Interest Expense (71) (110) Pre-Tax Income from Continuing Operations $399 $526 Tax Provision (126) (181) Income from Continuing Operations $273.1 $344 Tax Rate 32% 35% Weighted Average Dilutive Shares Outstanding 56 55 (1) EPS from continuing operations $ 4.85 $ 6.30 Guidance Range $6.20 to $6.40 EBITDA $ 663 $ 840 Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 2008E Mid-Point EPS Guidance is $6.30 Per Share PAGE 38
    • Flow Technology 2007 Pro Forma Revenue 2007 Pro Forma by Geography Revenue by End Market North America Sanitary 33% 41% Power & Europe Energy 38% 25% General Industrial Compressed 19% ROW Asia-Pacific Air Chemical 8% 21% 5% 10% Note: Data from continuing operations; pro forma for APV acquisition Providing Process Solutions to Global, Diverse Markets PAGE 39
    • Flow Technology: Full Year Analysis ($ millions) Full Year Revenue & Segment Margin Key 2008 Drivers: 88% to 92% APV Integration APV Revenue: Global energy infrastructure $885 to $900m development: $1,121 Power, oil & gas, and mining 16.3% to 16.8% APV Dilution: 15.8% Leverage on organic growth ~480 points 11.5% to 12.0% 11.3% 2007 2008E Excluding APV Including APV Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Targeting 5% to 7% Organic Growth in 2008 PAGE 40
    • Thermal Equipment and Services 2007 Revenue 2007 Revenue by Geography by End Market Power & North Energy America 61% 42% Europe 37% HVAC ROW Industrial 31% 2% 8% Asia-Pacific 19% Note: Data from continuing operations Global Provider of Thermal Equipment and Services; Power and Energy Infrastructure is Largest End Market PAGE 41
    • Thermal Equipment and Services: Full Year Analysis ($ millions) Key 2008 Drivers: Full Year Revenue & Global demand for power plant Segment Margin refurbishments and capacity additions +9 to 11% Qatar contract ($100m): $1,561 Dry cooling system for Linde petrochemical plant Majority of work expected to be 10.3% to completed in 2008 10.4% 10.8% Discipline on project bids: Competitive China market Contract execution 2007 2008E Lean manufacturing initiatives Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Expect 9% to 11% Total Revenue Growth; Expect Margins Between 10.3% and 10.8% PAGE 42
    • Test & Measurement 2007 Revenue 2007 Revenue by Geography by End Market North America 59% Vehicle Tools & Diagnostics Other 81% 7% Trans- portation 4% ROW Europe Utilities 1% 32% 8% Asia-Pacific 8% Note: Data from continuing operations Leading Global Provider of Essential Tools and Diagnostic Systems for New Vehicle Platforms PAGE 43
    • Test and Measurement: Full Year Analysis ($ millions) Full Year Revenue & Key 2008 Drivers: Segment Margin Integration of Johnson Controls European Diagnostics and Matra +9 to 11% North American market remains challenging $1,098 Focus on long-term strategy: Global expansion into Europe and Asia 10.8% to 10.9% 11.3% Restructure US business model Invest in R&D 2007 2008E Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Challenging N.A. OEM Markets Impacted Financial Performance; Focused on Long-Term Strategy for Global Expansion PAGE 44
    • Industrial Products and Services 2007 Revenue 2007 Revenue by Geography by End Market North America Power & Hydraulic 81% Energy Tools 44% 15% Aerospace 12% Broadcast 10% Other Asia-Pacific Industrial Europe 7% 19% 12% Note: Data from continuing operations 44% of Revenue Serves the Domestic Transmission and Distribution Market PAGE 45
    • Industrial Products and Services: Full Year Analysis ($ millions) Full Year Revenue & Key 2008 Drivers: Segment Margin U.S. investment in transmission and distribution of electricity +14% to 16% Strong backlog $966 Positive growth in other key end 20.2% to markets 20.7% 16.2% Pricing strength Lean process improvements and capacity expansion 2007 2008E Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Demand for T&D Equipment Driving Margin Expansion and Double-Digit Organic Growth PAGE 46
    • EGS Electrical Group Joint Venture ($ millions) EGS 2007 Revenue Equity Earnings by End Market Infrastructure $46 47% General Industrial $39 $39 26% Aerospace 2% Agriculture Sanitary 3% 9% Chemical Auto 2006 2007 2008E 6% 7% Note: Data from continuing operations; 2008E as of April 30, 2008 Nearly 50% of Sales From Infrastructure Equipment; Solid Earnings and Cash Contributor PAGE 47
    • Balance Sheet ($ millions) 12/31/07 3/31/08 Change Cash $354 $385 $31 Other Current Assets 2,342 2,512 169 Goodwill 1,944 2,005 61 Other Assets 1,597 1,636 39 Total Assets $6,237 $6,537 $300 Other Current Liabilities $1,838 $1,905 $67 Total Debt 1,569 1,624 55 Long-Term Liabilities 825 829 4 Shareholders' Equity 2,006 2,180 174 Total Liabilities and Shareholders' $6,237 $6,537 $300 Equity Debt / Capital Ratio 44% 43% (1) LTM EBITDA $663 $712 (1) Net Debt / EBITDA 1.83x 1.73x Gross Debt / EBITDA (1) 2.29x 2.20x Consolidated leverage ratios; Gross Debt to EBITDA as defined in the credit facility (1) PAGE 48
    • Capital Allocation Methodology Target Leverage Range: 1.5x to 2.0x Gross Debt to EBITDA (1) Gross Debt to EBITDA (1) Excess Capital Usage Debt reduction > 2.0x < 2.0x Strategic acquisitions Share repurchases Consolidated leverage ratios; Gross Debt to EBITDA as defined in the credit facility (1) 3/31/2008 Gross Debt to EBITDA at 2.2x; Expect to be In Target Leverage Range During 2008 PAGE 49
    • Debt Maturity Schedule $556 $500 $195 $75 $75 $75 $30 2008 2009 2010 2011 2012 2013 2014 Minimal Debt Repayment Requirements for the Next 3 Years PAGE 50
    • Re-Stated Quarterly Segment Data First Quarter Second Quarter Third Quarter Fourth Quarter Full Year 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 Flow Technology Revenue $194 $251 $215 $278 $212 $269 $244 $323 $866 $1,121 Segment Income $28 $38 $34 $45 $34 $45 $37 $50 $133 $177 Segment Margins 14.3% 15.0% 15.9% 16.0% 16.2% 16.8% 15.2% 15.4% 15.4% 15.8% Test and Measurement Revenue $242 $240 $270 $289 $260 $250 $296 $320 $1,067 $1,098 Segment Income $22 $24 $40 $33 $42 $23 $46 $41 $150 $120 Segment Margins 9.3% 9.9% 14.7% 11.3% 16.3% 9.2% 15.6% 12.7% 14.1% 10.9% Thermal Equipment and Services Revenue $275 $313 $300 $388 $322 $422 $431 $438 $1,328 $1,561 Segment Income $12 $16 $15 $38 $34 $57 $50 $52 $111 $163 Segment Margins 4.4% 5.2% 4.9% 9.8% 10.7% 13.4% 11.7% 12.0% 8.4% 10.4% Industrial Products and Services Revenue $196 $212 $207 $253 $206 $249 $227 $253 $837 $966 Segment Income $19 $26 $22 $34 $25 $44 $33 $52 $99 $156 Segment Margins 9.6% 12.3% 10.8% 13.5% 11.9% 17.7% 14.6% 20.5% 11.8% 16.2% Note: Data from continuing operations PAGE 51
    • Non-GAAP Reconciliations PAGE 52
    • Pro Forma APV Calculation Pro Forma Base Flow Purchase Flow Segment APV Accounting Segment Q1 2007 Revenue $251 $248 $499 Segment Income $38 $9 $47 Segment Margin 15.0% 3.5% 9.3% Q1 2008 Revenue $277 $227 $0 $504 Segment Income $45 $8 ($8) $46 Segment Margin 16.4% 3.6% na 9.1% Note: Data from continuing operations PAGE 53
    • Pro Forma Calculation Segm ent Segm ent Revenue Incom e Margin 2007 SP X $ 4,747 $ 616 13.0% APV $ 876 $19 2.2% P ro Fo rma SP X $ 5,623 $ 635 1 .3% 1 2008E SP X $ 5,1 - $ 5,350 65 13.8% to 14.3% APV $ 885 - $ 900 ~5% To tal SP X $ 6,050 - $ 6,250 12.7% to 13.2% 2008E SP X Flo w Techno lo gy 16.3% to 16.8% APV ~5% To tal SP X Flo w Technlo gy 1 .5% to 1 1 2.0% Note: Data from continuing operations PAGE 54
    • Organic Revenue Growth Reconciliation Net Revenue Acquisitions Organic Foreign Growth/(Decline) and Other Growth/(Decline) Currency 2005 6.2% 0.5% 0.0% 5.7% 2006 11.8% 1.4% 0.7% 9.7% 2007 15.7% 3.2% 2.7% 9.8% 2008E 27% - 32% 20% - 22% 2% - 3% 5% - 7% Note: Data from continuing operations; 2008E as of 4/30/2008 PAGE 55
    • Q1 2008 Organic Revenue Growth Reconciliation Quarter Ended March 31, 2008 Net Revenue Acquisitions/ Organic Foreign Growth Divestitures Growth Currency Flow 101.0% 91.1% 5.2% 4.7% Test 14.4% 13.0% 4.6% -3.2% Thermal 10.9% 0.0% 6.1% 4.8% Industrial 26.2% 0.0% 1.3% 24.8% Consolidated 37.2% 25.5% 4.6% 7.1% Note: Data from continuing operations PAGE 56
    • Q1 Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) Q1 2006 Q1 2007 Q1 2008 Net cash from continuing operations $ (114) $ (6) $ (28) Capital expenditures $ (10) $ (11) $ (21) Free cash flow from continuing operations $ (124) $ (17) $ (48) Taxes paid on LYONs tax recapture $ 84 Adjusted free cash flow from continuing operations $ (40) PAGE 57
    • 2008E Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) 2008 Guidance Range ($ millions) Net cash from continuing operations $ 400 $ 450 Capital expenditures $ (140) $ (150) Free cash flow from continuing operations $ 260 $ 300 Note: Data from continuing operations; 2008E as of 4/30/2008 PAGE 58
    • EBITDA Reconciliations ($ millions) 2006 2007 2008E Revenues $4,313 $4,822 $6,175 Net Income $171 $294 $344 Income tax provision (benefit) 56 90 181 Interest expense 50 77 110 Income before interest and taxes $277 $461 $635 Depreciation and intangible amortization expense 90 83 122 EBITDA from continuing operations $367 $544 $756 Adjustments: Non-cash compensation expense 38 41 46 Extraordinary non-cash charges 41 14 0 Extraordinary non-recurring cash charges 27 7 18 Excess of JV distributions over JV income (12) 2 13 Loss (Gain) on disposition or assets 56 4 0 Pro Forma effect of acquisitions and divestitures 53 5 Other 8 0 2 Adjusted LTM EBITDA from continuing operations $525 $663 $840 Note: EBITDA as defined in the credit facility; 2008E as of 4/30/2008 PAGE 59
    • Debt Reconciliations ($ millions) 12/31/2007 3/31/2008 Short-term debt $ 255 $ 313 Current maturities of long-term debt 79 79 Long-term debt 1,235 1,231 Gross Debt $ 1,569 $ 1,624 Less: Puchase card program and extended A/P programs $ (58) $ (53) Adjusted Gross Debt $ 1,511 $ 1,570 Less: Cash in excess of $50m $ (304) $ (335) Adjusted Net Debt $ 1,207 $ 1,236 Note: Debt as defined in the credit facility PAGE 60
    • 2007 Adjusted Earnings Per Share 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 Note: Data from continuing operations PAGE 61
    • 2006 Adjusted Earnings Per Share 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 C harges for Legacy Legal Matters 0.07 Loss from operations discontinued in 2007 (0.08) Adjusted EPS from continuing operations $3.07 Note: Data from continuing operations PAGE 62
    • 2005 Adjusted EPS Reconciliation Year ended, Dec 31, 2005 GAAP net income per share $15.33 Income from discontinued operations (15.61) SFAS 142 asset impairment 0.96 Loss on early extinguishment of debt 0.96 Normalized tax rate (40%) 0.41 Projected share count (64m) 0.26 Normalized interest expense ($37m) 0.12 Other (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. 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 PAGE 63
    • PAGE 64