AQUISITIONS AND DISCONTINUED OPERATIONS | ACQUISITIONS AND DISCONTINUED OPERATIONS Acquisitions As indicated in Note 1, on April 3, 2023, we completed the acquisition of TAMCO. The pro forma effect of this acquisition is not material to our condensed consolidated results of operations. Acquisition of Ingénia As indicated in Note 1, on February 7, 2024, we completed the acquisition of Ingénia, for $294.1, net of cash acquired of $1.5. We financed the acquisition with available borrowings on our revolving credit facilities under our senior credit facilities. The assets acquired and liabilities assumed have been recorded at preliminary estimates of fair value as determined by management, based on information currently available and on current assumptions as to future operations and are subject to change upon completion of the acquisition method of accounting. Final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP. The excess of the purchase price over the total of the estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Ingénia, we engaged a third-party independent valuation specialist. The following is a summary of the recorded preliminary fair values of the assets acquired and liabilities assumed for Ingénia as of February 7, 2024: Assets acquired: Current assets, including cash and equivalents of $1.5 $ 33.5 Property, plant and equipment 73.6 Goodwill 141.6 Intangible assets 97.9 Total assets acquired 346.6 Current liabilities assumed 13.1 Non-current liabilities assumed (1) 37.9 Net assets acquired $ 295.6 ___________________________ (1) Includes net deferred income tax liabilities and other liabilities of $37.8 and $0.1, respectively. The identifiable intangible assets acquired consis t of technology, customer relationships, trademarks, and customer backlog of $46.7, $23.5, $13.9, and $13.8, respectively, with suc h amounts based on a preliminary assessment of the related fair values. We expect to amortize the technology, customer relationships, trademarks, and customer backlog assets ove r 12.0, 7.0, 8.0, and 1.0 years, respectively. We acquired gro ss receivables of $18.2, which had the same fair value at the acquisition date based on our estimates of cash flows expected to be recovered. The qualitative factors that comprise the recorded goodwill include expected market growth for Ingénia's existing operations, increased volumes achieved by selling Ingénia’s products through existing SPX sales channels, procurement and operational savings and efficiencies, and various other factors. We expect none of the goodwill described above to be deductible for tax purposes. We recognized revenues and net income for Ingénia of $21.6 and $1.7, and $34.1 and $2.3, r espectively, for the three and six months ended June 2 9, 2024 with net income impacted by charges during the three and six months ended June 29, 2024 of (i) $5.3 and $8.6, respectively, associated with amortization of the various intangible assets mentioned above and (ii) $0.9 and $1.8, respectively, associate d with the excess fair value (over historical cost) of inventory acquired which was subsequently sold. Addition ally, during the three and six months ended June 29, 2024, we incurred acquisition-related costs for Ingénia of $0.6 and $2.9, respectively, which have been recorded to “Selling, general and administrative” within our condensed consolidated statements of operations and “Corporate expense” within consolidated operating income, as further described in Note 6. Acquisition of ASPEQ As indicated in Note 1, on June 2, 2023, we completed the acquisition of ASPEQ for $421.5, net of (i) an adjustment to the purchase price of $0.3 received during the fourth quarter of 2023 related to acquired working capital and (ii) cash acquired of $0.9. We financed the acquisition with available cash and borrowings under our senior credit facilities. The excess of the purchase price over the total of the fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed fo r ASPEQ, we engaged a third-party independent valuation specialist. The following is a summary of the recorded final fair values of the assets acquired and liabilities assumed for ASPEQ as of June 2, 2023: Assets acquired: Current assets, including cash and equivalents of $0.9 $ 38.0 Property, plant and equipment 10.6 Goodwill 195.0 Intangible assets 246.1 Other assets 1.2 Total assets acquired 490.9 Current liabilities assumed 11.1 Non-current liabilities assumed (1) 57.4 Net assets acquired $ 422.4 ________________________________ (1) Includes net deferred income tax liabilities and other liabilities of $56.4 and $1.0, respectively. The identifiable intangible assets acquired consist of customer relationships, trademarks, technology, and customer backlog of $142.3, $51.5, $47.8, and $4.5, respectively, with such amounts based on a final assessment of the related fair values. We expect to amortize the ASPEQ customer relationships, technology, and customer backlog assets over 12.0, 16.0, and 1.0 years, respectively, with the trademarks acquired being indefinite-lived. We acquired gross receivables of $18.0, which had a fair value at the acquisition date of $17.8, respectively, based on our estimates of cash flows expected to be recovered. The qualitative factors that comprise the recorded goodwill include expected market growth for ASPEQ’s existing operations, increased volumes achieved by selling ASPEQ’s products through existing SPX sales channels, procurement and operational savings and efficiencies, and various other factors. The following unaudited pro forma information presents our condensed consolidated results of operations for the three and six months ended June 29, 2024 and July 1, 2023, respectively, as if the acquisitions of Ingénia and ASPEQ had taken place on January 1, 2023 and January 1, 2022, respectively. The unaudited pro forma financial information is not intended to represent or be indicative of our condensed consolidated results of operations that would have been reported had the acquisitions been completed as of the dates presented, and should not be taken as representative of our future consolidated results of operations. The pro forma results include estimates and assumptions that management believes are reasonable; however, these results do not include any anticipated cost savings or expenses of the planned integration of Ingénia and ASPEQ. These pro forma consolidated results of operations have been prepared for comparative purposes only and include additional interest expense on the borrowings required to finance the acquisitions, additional depreciation and amortization expense associated with fair value adjustments to the acquired property, plant and equipment and intangible assets, adjustments to reflect charges associated with acquisition and integration-related costs and charges associated with the excess fair value (over historical cost) of inventory acquired and subsequently sold as if they were incurred during the first quarter of 2023 for Ingénia and first quarter of 2022 for ASPEQ, and the related income tax effects. Three months ended Six months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Revenues $ 501.3 $ 457.9 $ 974.5 $ 903.6 Income from continuing operations 49.0 36.1 99.3 65.8 Net income 48.0 33.8 98.1 67.2 Income from continuing operations per share of common stock: Basic $ 1.06 $ 0.79 $ 2.16 $ 1.45 Diluted $ 1.04 $ 0.77 $ 2.12 $ 1.42 Net income per share of common stock: Basic $ 1.04 $ 0.74 $ 2.13 $ 1.48 Diluted $ 1.02 $ 0.72 $ 2.09 $ 1.45 Wind-Down of DBT Business We completed the wind-down of our DBT Technologies (PTY) LTD (“DBT”) business after ceasing all operations, including those related to two large power projects in South Africa (Kusile and Medupi), in the fourth quarter of 2021. As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented. As previously disclosed, DBT had asserted claims against the remaining prime contractor on the large projects, Mitsubishi Heavy Industries Power — ZAF (f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD) (“MHI”), which had also asserted claims against DBT. As previously disclosed in our 2023 Annual Report on Form 10-K, on September 5, 2023, DBT and SPX entered into an agreement with MHI to resolve all claims between the parties with respect to the two large power projects in South Africa (the “Settlement Agreement”). The Settlement Agreement provides for full and final settlement and mutual release of all claims between the parties with respect to the projects, including any claim against SPX Technologies, Inc. as guarantor of DBT's performance on the projects. It also provides that the underlying subcontracts are terminated and all obligations of both parties under the subcontracts have been satisfied in full. Prior to the Settlement Agreement, on February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT against MHI related to costs incurred in connection with delays on two units of the Kusile project. In connection with the ruling, DBT received South African Rand 126.6 (or $8.6 at the time of payment). This ruling was subject to final and binding arbitration in this matter. In March 2023, an arbitration tribunal upheld the decision of the dispute adjudication panel. As a result, South African Rand 126.6 (or $7.0) was recorded as income during the first quarter of 2023, with such amount recorded within “Gain (loss) on disposition of discontinued operations, net of tax.” Further, in June 2023, the arbitration tribunal ruled DBT was entitled to recover $1.3 of legal costs incurred related to the arbitration. Additionally, in May 2023, a separate arbitration tribunal ruled DBT was entitled to recover $5.5 of legal costs incurred related to another prior arbitration. Such amounts were recorded within “Gain (loss) on disposition of discontinued operations, net of tax” during the quarter ended July 1, 2023. The assets and liabilities of DBT have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the condensed consolidated balance sheets as of June 29, 2024 and December 31, 2023 . The major line items constituting DBT ’ s assets and liabilities as of June 29, 2024 and December 31, 2023 are shown below: June 29, 2024 December 31, 2023 ASSETS Cash and equivalents $ 4.9 $ 5.5 Accounts receivable, net — 0.4 Other current assets (1) 5.1 4.7 Property, plant and equipment: Buildings and leasehold improvements — 0.2 Machinery and equipment — 0.5 — 0.7 Accumulated depreciation — (0.6) Property, plant and equipment, net — 0.1 Total assets of DBT $ 10.0 $ 10.7 LIABILITIES Accounts payable (2) $ 27.1 $ 26.9 Contract liabilities (1) 2.1 2.1 Accrued expenses (1) 5.9 6.3 Other long-term liabilities (1) 4.7 4.2 Total liabilities of DBT $ 39.8 $ 39.5 ___________________________ (1) Recorded amounts relate primarily to disputed amounts due to or from a subcontractor engaged by DBT during the Kusile project, that is currently in liquidation. The timing of the ultimate resolution of these matters is uncertain as they are likely to occur as part of the liquidation process. (2) Includes DBT's remaining obligation under the Settlement Agreement to make a payment to MHI of South African Rand 480.9 (or $26.4 and $26.2 at June 29, 2024 and December 31, 2023, respectively), due in September 2024. In connection with this remaining obligation, we entered into a foreign currency forward contract which we are accounting for as a fair value hedge. Refer to Note 14 for additional details. Wind-Down of the Heat Transfer Business We completed the wind-down of our SPX Heat Transfer (“Heat Transfer”) business in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented. The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of June 29, 2024 and December 31, 2023. The major line items constituting Heat Transfer’s assets and liabilities as of June 29, 2024 and December 31, 2023 are shown below: June 29, 2024 December 31, 2023 ASSETS Other current assets $ 0.3 $ 0.3 Other assets — 0.1 Total assets of Heat Transfer $ 0.3 $ 0.4 LIABILITIES Accounts payable $ 0.2 $ 0.2 Total liabilities of Heat Transfer $ 0.2 $ 0.2 Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g. income taxes) may occur. As a result, it is possible that the resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods. For the three and six months ended June 29, 2024 and July 1, 2023, results of operations from our businesses reported as discontinued operations were as follows: Three months ended Six months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 DBT Income (loss) from discontinued operations (1) $ (0.4) $ (2.4) $ (0.6) $ 0.6 Income tax (provision) benefit (0.2) 0.2 — 0.9 Income (loss) from discontinued operations, net (0.6) (2.2) (0.6) 1.5 All other Loss from discontinued operations (2) (0.2) (0.1) (0.4) (0.1) Income tax provision (0.2) — (0.2) — Loss from discontinued operations, net (0.4) (0.1) (0.6) (0.1) Total Income (loss) from discontinued operations (0.6) (2.5) (1.0) 0.5 Income tax (provision) benefit (0.4) 0.2 (0.2) 0.9 Income (loss) from discontinued operations, net $ (1.0) $ (2.3) $ (1.2) $ 1.4 ________________________________ (1) Income for the six months ended July 1, 2023 resulted primarily from income recorded in connection with the dispute resolutions mentioned above, partially offset by legal costs incurred in connection with various dispute resolution matters that existed prior to the Settlement Agreement. Loss for the three months ended July 1, 2023 resulted primarily from net legal costs incurred in connection with various dispute resolution matters that existed prior to the Settlement Agreement. (2) Loss for the three and six months ended June 29, 2024 and July 1, 2023 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions. |