JP Morgan Industrial Conference
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  • 1. 3rd Annual Basics & Industrials Conference New York, New York June 4th, 2008
  • 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 2
  • 3. SPX Transformation PAGE 3
  • 4. SPX Growth Strategy Earnings Per Share* Strategic Initiatives Focus growth on three 17% 58% ~30% 17% 58% ~30% global end markets $6.20 to $6.40 Drive continuous $4.85 improvement culture Disciplined approach to $3.07 capital allocation $2.62 Achieve profitable and sustainable long-term growth 2005 2006 2007 2008E *2005 – 2007 adjusted for certain items, see appendix for reconciliations; 2008E as of April 30, 2008 Growth Strategy Established in 2005 Underpins 34% CAGR of EPS from 2005 to 2008E PAGE 4
  • 5. Focus on Three Global End Markets e Pr ur o ct ce ru ss st ra Eq nf ui lI pm a ob en Gl t Tools & Diagnostics Focused Growth Around Three Global End Markets PAGE 5
  • 6. 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
  • 7. Disciplined Capital Allocation Share Repurchases Strategic Acquisitions $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 $58 per share European Diagnostics Disciplined Approach to Capital Allocation PAGE 7
  • 8. Financial Results ($ 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 $3,658 11.1% 2005 2006 2007 2008E 2005 2006 2007 2008E Note: Data from continuing operations; 2008E as of 4/30/2008; See appendix for non-GAAP reconciliations *Excludes dilutive impact of APV The Transformation of SPX is Clearly Reflected in Our Improving Financial Performance PAGE 8
  • 9. Positioned for Future Growth PAGE 9
  • 10. SPX Well Positioned for Future Growth Revenue by Geography Revenue by End Market Global North Infrastructure America 53% 49% ROW 4% General Asia-Pacific Industrial Tools & 15% 13% Diagnostics Europe Sanitary Flow 20% 32% 14% > 50% of Revenue Generated Outside North America; > 50% of Revenue Supports Global Infrastructure Growth PAGE 10
  • 11. Key External Market Drivers Growing world population Gl ob a lI Advancement of developing countries nf Tools & Diagnostics ra st ru ct Increasing demand for power and u re energy nt Increasing demand for processed e m ip food and beverages qu E ss e Government regulations oc Pr Increasing environmental awareness Global Growth Providing Opportunities for SPX PAGE 11
  • 12. Backlog Development ($ 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 12
  • 13. 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 13
  • 14. 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 14
  • 15. Fuel Source Debate Fuel Source Positive Factors Negative Factors High emissions, CO2 Abundant, less expensive storage concerns Easy to transport Availability, inflating price, CO2 emissions Easy to transport, low Availability, inflating price, pollution rate CO2 emissions Zero CO2 emissions, low fuel High initial capital cost, cost long-term waste Zero CO2 emissions, free Low energy density, inputs reliability concerns South Africa Represents a Significant Opportunity for SPX PAGE 15
  • 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 16
  • 17. SPX Power and Energy Initiatives Power & Energy SPX Focus Revenue $1,965 Profitability improvement Geographic expansion $1,495 New product development Customer relationships Increase capacity & optimize global footprint 2006 2007 Strengthen engineering capabilities Focused on Maximizing Global Power & Energy Opportunities PAGE 17
  • 18. SPX New Product Development: Squib Valves for Nuclear Plants 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 Designed Squib Valves Supporting Nuclear Power Growth PAGE 18
  • 19. SPX Leading Technology: Crystal Growers for Solar Power Monocrystalline SPX Crystal Growers Demand Projection 12 10 8 GigaWatts 6 4 2 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: ? SPX Has Leading Technology with Global Reach; ~$90m in Orders Received Within the Past Year PAGE 19
  • 20. South African Power Market Electricity Demand vs. Installed Capacity Reserve margin below 10% Current installed capacity is Economic growth driving increased 38,000 MW electricity demand Peak demand expected to reach Government committed to double 55,000 MW by 2022 generating capacity to 80gw over the next decade Eskom targeting ~70% of South Africa’s new capacity Source: www.eskom.com South Africa Represents a Significant Opportunity for SPX PAGE 20
  • 21. Previous SPX Projects in South Africa Kendal Power Station (1993) Majuba Power Station (2000) Size: 4,116 MW Size: 2,100 MW SPX has Significant Demonstrated Experience in South Africa PAGE 21
  • 22. Eskom’s Coal-Fired Power Generation Expansion Approved Capacity Expansions Project Pipeline Medupi Coal Plants Province: Limpopo Project Delta: 2,200 MW Size: 4,800 MW Project Echo: 1,000 MW Source: Coal Project Charlie: 2,100 MW Project Golf: 4,200 MW Project Foxtrot: 4,200 MW Project Bravo Province: Mpumalanga Size: 4,740 MW Source: Coal Source: Eskom Presentation: Overview of Eskom Future Generation Options Eskom’s Expected Investment in Energy Infrastructure Represents a Significant Long-Term Opportunity for SPX PAGE 22
  • 23. SPX Presence in South Africa SPX Located in Nigel, South Africa SPX established in South Africa in 1970 Currently ~210k square feet of manufacturing capacity: X Planning additional capacity expansion of ~100k square feet Employing local labor for manufacturing 25.1% BEE minority shareholder SPX is Committed to Providing Critical Components to Help South Africa Expand its Power Capacity PAGE 23
  • 24. Process Equipment PAGE 24
  • 25. APV Impact on Process Equipment End Markets 2007 Revenue by End Market Including APV Excluding APV General Industrial Power & 22% Energy Sanitary 35% 41% Power & Energy 25% Sanitary 18% General Industrial 19% Compressed Compressed Chemical Air Air Chemical 17% 8% 5% 10% Note: Data from continuing operations. APV Acquisition Increases SPX’s Exposure to Global Sanitary Flow Market PAGE 25
  • 26. SPX Sanitary Flow Overview Sanitary Flow Revenue SPX Strengths Custom engineered solutions ~$875 Brand leadership Global presence $200 Cross channel leverage New product development 2007 2008E Note: Data from continuing operations; 2008E as of 4/30/2008. APV Acquisition Provides SPX Critical Mass Needed to Compete in Global Sanitary Flow Market PAGE 26
  • 27. SPX Sanitary Flow Products Positive Displacement Pumps Homogenizers Centrifugal Pumps Heat Exchangers Valves Mixers Process Regulating Butterfly Full Line of Product Offerings PAGE 27
  • 28. SPX Sanitary Flow Opportunities Processed Food Beverage Brewing Dairy Pharmaceutical Personal Care SPX has Technologies that Serve Customers Across Many Global Sanitary Applications PAGE 28
  • 29. Global Food and Beverage Market 2001 to 2010E Investment Attractive End Market for Food Processing Machinery and Characteristics Equipment by Region ’01 – ’06 ’07 – ’10E Regulated market Region CAGR CAGR 5.8% 7.1% Asia-Pac Stable Europe 3.3% 3.3% 0.1% 3.6% US Accelerating growth 4.0% 5.6% Latin America Developing market opportunities Source: Food Processing Machinery and Equipment Report, Global Industry Analysts, Inc. 2006 Investment in Food Processing Machinery Expected to be Higher in Developing Countries PAGE 29
  • 30. APV Integration Update APV Margin Development Operating Margin Opportunity 16.0% Gross margins on component sales >30% Transitioning from “cost center” to “profit center” ~5.0% organization 3.6% 2.2% Optimizing global footprint APV FY APV Q1 APV FY SPX Avg. Synergizing distribution 2007 2008* 2008E Process Equipment channels Margins *Excludes $7.5m inventory charge related to purchase accounting Expect APV to be Neutral to Slightly Accretive in 2008; Targeting Greater than 25 Cents EPS Accretion in 2009 PAGE 30
  • 31. Diagnostic Tools PAGE 31
  • 32. Primary Diagnostic Tools and Service Offerings Aftermarket Specialty Tools & Equipment Repair Labor Time OEM Studies & Warranty Electronic Reduction Diagnostic Initiatives Tools Tools Aftermarket Technology Based Technical Electronic Applications for Diagnostic Content Creation Information Tools Management & Vehicle Delivery Repair Manuals, OEM Essential Wiring Service Tool Diagrams Training Programs Development & Delivery Dealer Equipment and Services Managed Program Provider to Field Surveys, Support Customer Service Readiness DES Investigations & Training Programs Dealer Facility Design Only Global Provider with a Full Line of Products and Services for the Transportation Industry PAGE 32 32
  • 33. Regional Market Trends US remains challenging: No significant new model introductions expected until 2009 Soft aftermarket Europe providing growth: SPX growing globally with European OE’s 2007 acquisitions performing well Investing in Asia-Pacific: Future growth market US Market Remains Challenging in the Near Term; International Markets are Growing PAGE 33
  • 34. Diagnostic Tools Evolving Global Presence 2007 Revenue 2005 Revenue by Geography by Geography North America North America 78% 59% ROW ROW 1% Europe 1% Asia-Pacific 32% Asia-Pacific Europe 6% 8% 15% Note: Data from continuing operations Expect Globalization to Continue PAGE 34
  • 35. SPX Diagnostic Tools Strategic Initiatives Projected New Car Sales in China Restructure US cost base: Closed facility in Owatonna, MN $20 (2007-2008) ($ billions) $18 Announced intent to close facility $16 in Cleveland, OH (2008) $14 $12 Overtake US Sales Expand international operations: $10 $8 Increase global OE customer $6 base: BMW, Volkswagen, Renault $4 Overtake Japan Sales $2 European acquisitions: CarTool, JCID, Matra $0 1995 2000 2005 2010 2015 2020 2025 2030 Investment in China: Engineers, Sales, R&D Source: WEO 2007 Copyright OECD/IEA, 2007; Figure 9.6, page 300, as modified by SPX Corporation Positioning for Global Growth; Strategic Plan on Track PAGE 35
  • 36. Renault Case Study: As Renault Grows… 35% of Renault Sales Outside Europe Globalization of Renault Renault focused on growing in emerging markets: Brazil, India, Russia, Korea, Romania and Morocco Targeting 37% of sales outside Europe by 2009 by: Expanding product line Designing new vehicles for specific markets Renault Continues to Expand into New Markets PAGE 36
  • 37. …SPX Grows With Renault Roll out of diagnostic platform: SPX providing sales and service to 15,000 dealers globally SPX’s Ability to Provide Sales, Distribution and Service in Emerging Markets is Critical to Our Customers’ Global Success PAGE 37
  • 38. SPX Tools & Diagnostics New Products Next Generation DT-500 Global Diagnostic Tool Chinese Scan Tool Launched Q4 2007 Expected to Launch Summer of 2008 New Product Launches Expected to Drive Future Growth PAGE 38
  • 39. SPX Well Positioned for Continued 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 $2.62 2005 2006 2007 2008E *2005 – 2007 adjusted for certain items, see appendix for reconciliations; 2008E as of April 30, 2008 SPX Well Positioned for Future Growth in Global Infrastructure, Process Equipment and Tools & Diagnostics Markets PAGE 39
  • 40. Questions PAGE 40
  • 41. Appendix PAGE 41
  • 42. Q1 2008 Highlights ($ millions, except per share data) Comments Q1 2008 Earnings Per Share $1.14 +115% Revenue $1,393 +37% Organic Growth 7% Power & Energy Market Strength Segment Income Margin 11.6% +140 points Note: Data from continuing operations, see appendix for non-GAAP reconciliations Significant Earnings Growth in Q1 PAGE 42
  • 43. 2008 Q2 Targets Q2 2007 Q2 2008E Excluding APV ($ millions, except per share data) Revenue $1,208 +28% to 30% +9% to 11% Segment Income $ $149 $189 to $195 +27% to 31% +27% to 31% Segment Income % 12.4% 12.2% to 12.6% 13.8% to 14.0% +140 to 160 pts ~ Flat ~ Flat EPS $1.25 $1.50 - $1.57 +20% to 26% +20% to 26% Note: Data from continuing operations; 2008E as of 4/30/2008 20% to 26% Earnings Growth Expected in Q2 PAGE 43
  • 44. 2008 Financial Targets 2008E Target Range ($ 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 $150 Capacity, Lean Capital Spending & IT Investments As compared to 2007 adjusted EPS (1) Note: Data from continuing operations; see appendix for non-GAAP reconciliations; 2008E as of 4/30/2008 Targeting 27% to 32% Revenue Growth and 28% to 32% Earnings Growth PAGE 44
  • 45. Full Year Financial Model 2008E ($ 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 45
  • 46. Expected APV Impact 2008E APV Financial Modeling Targets Revenue: ~3-5% revenue growth ($885m to $900m) Operating margin: ~5% Interest expense: ~$40m Cash restructuring $30m to $50m Capital spending: ~$15m Depreciation expense: ~$15m Note: Quarterly results may vary Expect APV Acquisition to Dilute Consolidated Margin Performance; Neutral to Slightly Accretive Impact to EPS PAGE 46
  • 47. 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 47
  • 48. 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 48
  • 49. 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 49
  • 50. Non-GAAP Reconciliations PAGE 50
  • 51. 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 51
  • 52. 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 Adjusted EPS Presented Consistent with 2007 EPS Guidance PAGE 52
  • 53. 2006 Adjusted Earnings Per Share FY 2006 GAAP EPS from continuing operations $3.65 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 Adjusted EPS from continuing operations $3.07 PAGE 53
  • 54. 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 54