SPXC - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 SPX Corporation Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to your speaker today, Paul Clegg, VP of Investor Relations. Thank you. Go ahead sir.

Paul Clegg

good and Justine, you, afternoon, everyone. Thank joining for us. Thanks are With and President Our the Scott today me call Gene and our Financial Lowe, Chief on Sproule, Officer. Chief Executive Officer; containing market close. year release A and fourth issued after was full press today XXXX our results quarter

link the in a the at section our a can Investor well find slide spx.com. as of website in Relations release You live earnings webcast our presentation as to call this of

in and I during release the website encourage replay results to will of you our with our presentation available February webcast be A press disclosures to slide discussion along our remarks. follow of and the XXth until on GAAP review the prepared

provisions. most presentation factors reminder, of our Please comments recent a note Harbor portions and in the SEC risk forward-looking and filings. our are As also subject Safe to

today Our financial focus largely comments adjusted on results. will

adjusted reconciliations measures detailed find in can appendix of to the GAAP You to presentation. today’s historical their respective figures

South Heat and including structure reporting valuation from combines segment adjusted and items, true-up how is results. which with other our of also Our into we cost assumptions, of adjusted excluded actuarial guidance, share one-time non-service Consistent excludes the our an earnings our true-up expense our category, associated with pension all Transfer African our established amortization results per and projects investment acquisition.

In addition, our adjusted related amortization and segment costs. results excluding acquisition

to investors first New be the in XX. quarter in Gene. over with the with March the in during Research meeting Sidoti the I’ll attending also And be & Texas. on turn and will We’ll we Company’s call Finally, York that, Conference Midwest Spring

Gene Lowe

and team proud good joining to our everyone. solid has year improvement and of us. the Thanks for XXXX was Thanks our afternoon performance. a financial for Paul. operational and drive done work very I’m SPX Good

you We’ll Q&A. on give before performances end Segment and provide update overall the also into market brief we’ll conditions. our results. today, guidance call On going

was EPS execution. of from a XXXX income $X.XX XXXX result XX% of operating Overall while Adjusted year-over-year was in performance million. strong adjusted an our solid increase $XX grew

cash to generate continue flow. strong We also free

well integration including businesses recent we’re and with pleased acquisitions Patterson-Kelley. purchase our pace of of Our the performed operationally the of

sheet value strategic we and initiatives. available for in strong growth balance have capital to creation further deploy Our remains substantial

expect the range of $X.XX. we EPS a $X.XX adjusted midpoint XXXX, where For to in $X.XX of

adjusted to XXXX. compared full Turning X% the income to increased year. for QX a prior strong results and year the quarter Operating for

points. operational acquisition For HVAC generated full basis the operating income proud milestone XX% in and up the the of I’m XXXX solid growth increased accomplishments effect was team. many adjusted of the initiatives detection All and with our our management segments year and another product year new margins profit Overall including and three XXX of segments.

like I value give to on would As initiatives. you brief always, update our creation a

large to applications office products our reaching very value continued our and efficiency our we large several boilers new employing of with or and successful we’ve new introduction drive inorganic organic high Over the for creation year, goals last developing buildings. such to of business growth employees. XXXX, the our such hospitals growth, organic been related value as line to as enhance In

gained required further manholes. time also to of assess inspection condition We the reduces as our amount products of solution which existing SPiDER significantly traction the in such

our employees have skill to and education of talent vision top sets ensure to of development business on the leaders I’m strategy. And attracted results. leveraged three on that in generation continued next our closed years. new In with our two addition, continue executing pleased last to we a system new very and integrations we acquisitions drive as to five in of the invest effectively our progress for the and total our we

additional and investments opportunity important and in development Our pleased closely performance. to technology our see more including our that market objectives, and say accelerate much to I’m team’s financial provide that we through strong adjacent product growth existing our successes are opportunity opportunities. drive reflected broadened in in value

that leader. and The strategy our across high highly a and footprint complementary Patterson-Kelley example acquisition This in of business an the broadens to portion extensive significantly boilers high growth key efficiency of which growth commercial area. attractive trusted channel developed our addressable transaction an Patterson-Kelley’s closed heating strength. they our investment is of market. have is opportunity extends a that November accelerates are in They in channel products, geographic great commercial technology where an our

very their are pleased of with team We product development expertise. talented and engineers

deployable numerous and strength products opportunities broader necessity synergies. in core we in invest as channel to HVAC, and ventilation continue extend to adjacencies. movement and cooling, as we’ll potential leverage core forward strategically our In our array of where closed areas have overlap heating, to Going air platforms a expertise well technical capital see operational we to

coverage opportunities also extend We that and technologies products inspection infrastructure communication as in underground our management aids with to see further of investments and navigation. location in such our enhance platform technology of focused and detection

financial turn I’ll now review Scott to over And the performance. to call our

Scott Sproule

EPS noted solutions results driven $X.XX our primarily were our GAAP the $X.XX excludes earnings QX of share $X.XX for per basis by the with our we items HVAC year. impact for and in for QX and basis, solid year. On an start adjusted was quarter for net which fourth for the full results segments. full Overall the a reported I’ll of by for Gene. the and the year. Thanks the On $X.XX quarter Paul. a engineered

to now results. adjusted our Turning

increased HVAC basis solutions due to engineered XX income For revenues million expanded impact segments. in revenues basis, $X by X% primarily from increased QX growth across growth and of margins and largest full our from year measurement acquisitions in a On our Segment points the acquisitions segment. and increased each reportable significant organic driven X.X% our segments. detection

X.X% and XX performance margin solutions Organic points segments. basis by the engineered of grew increased HVAC driven revenue segment our in

segment with by our details of results HVAC. walk you starting I’ll Now through the

of business. by than $X.X organic including increased primarily our customer. X.X% utility boiler quarter, fourth one-time the million sales shipment our due cooling decreased heating margins large demand income replacement to business sales XXXX, while due for called it in basis from points typical benefitted stronger quarter revenues For increased seasonal XX Segment We in strong mix. to

On growth. modest positive X% and cost a offset lower year. detection products demand cooling technology of Sabik Segment and income products prior exceptionally X.X% compared acquisition full including communication year. revenues for rose partially the for to prior heating price compared to by basis, X.X% seasonal measurement, organic due timing In improvements increased the orders segment increased our basis quarter the in year offset by by driven revenues to margin strong to and the business. Partially increased XX points operational

less line cooling with basis in QX reflecting mix. increased process segment revenues our guidance. business the our margin due project were On our basis, higher basis points for segment of transformers. XX.X% throughput and the to and full X.X% in year in margins solutions, decreased margin execution income primarily due a revenues decreased In by increased improved $X.X quarter income XX.X%, profitable engineered XXX more increased business. of points million mix XX.X% fewer higher in due to while Segment while a to sales shipments a increased segment acquisitions favorable transformer XXX

team basis income with implementing grew The increased throughput positioning revenue has year improvement XXXX. segment associated full of margin segment for and us transformer operational basis, great initiatives. XXX X.X% a done transformer productivity job well The largely was points. On a improvements, high driven

Now financial to at the of end our year. position the

remains sheet balance Our strong.

flow XXX% ended For XXX% representing of million due was higher conversion the and adjusted full income of net adjusted Cash conversion guidance our year the in flow than free of expected cash receipts we equivalence with cash to generated XXXX earlier and little of customer than million. a $XXX.X QX. $XX year

$XXX and to net of leverage end target of ended the acquisitions three of capital times. X.X our we million ratio times a year on for range of X.X the XXXX, During deployed X.X lower with

used of Africa. work For on activity the net cash substantially year, down pleased in our South Africa. our work. that our I’m South now $XX we’re the final and for million process projects in good the about completed We winding the of is scope we’ve made we in related feel construction site of progress full

the former we is which win arbitration Following now with party a counter against significant disputes. recent a remaining only have sub-contractor Mitsubishi

usage cash We significantly anticipate be dispute net expect spending we although modest South anticipate Africa resolution used legal wind as up in XXXX. cash the support in down do to activities efforts. elevated will to some We the decrease project ramp we of

and years credit our extended the Before In moving two review to guidance facility credit our recent I’ll maturity we briefly December, bank refinancing. XXXX. refinanced

proves near The reduced provides the revolver facility and to liquidity. our to cash overall flow increased is patterns. the more better generation our match size our size While agreement similar, and our capacity debt flexibility of financial new term shifted we term of

also financial benefitted covenant favorable from more levels. and We pricing

we an to versus $X.XX. adjusted of share for approximately earnings are about expect of $X.XX targeting XXXX of X% achieve billion to to This an $X.XX. compared increase midpoint in the revenue increase Moving basis, of at onto the an represents XXXX On guidance, full adjusted we results of adjusted a XXXX. X% year range per about $X.X and

margin We are XX.X%. targeting XX% of to margin and approximately operating XX% of income segment income

HVAC the our acquisitions. million plus reflecting the our Patterson-Kelley million $XXX year calls SGS impact to organic to and of Turning modest of guidance revenue for full growth segments, $XXX

to we of Detection expect compared or million range a X%. revenue We an within be of X% $XXX approximately $XXX to and to expect in approximately flat HVAC reflecting X% range target margins long-term million our to growth In Measurement increase XXXX.

growth transformers an The of flat significant XX are and process detection factors Adjusted XXXX the We to to the of our revenue margins cooling XX% in basis to margin XX%. end the engineered projects and $XXX to increase points in In driving of segment measurement. of line of anticipate range million income and X.X% of for top margins increase up range one of guidance levels with $XXX X%. is approximately anticipate contributing or be both or upper to expansion. million we most more a solutions, and similar expected lower at to timing than

cost our In initiatives headwind during Regarding which results of our we XXXX. points commodity and represents approximately cost fully pricing XXXX, the a to across basis recouped XX company. price

the into to we expect XXXX, impact Looking year-over-year results. price cost neutral be of to

generation XXX% and between XXXX. XXX% conversion is free be flow to Our anticipated in cash

receipts in As conversion we to close rate integrate XXXX. earlier due of customer to the acquisitions and impact XXX% with

you’ll be always, our find our XX%. including approximately today’s of which tax factors we expect presentation XX% driving As rate guidance the appendix XXXX other to details to to

included not quarterly we have earnings year. quarterly do with similar assist a Overall, your [indiscernible] we the last expecting While we’re performance provide to metrics in guidance, historical to modeling. appendix

providing for growth the anticipate earnings To QX, quarter. but we Coronavirus warmer modest winter some to headwinds in are the and to impact start continue

the our Now end call I’ll and turn closing for Gene of review back comments. markets his to

Gene Lowe

to markets be continue we well positioned Overall, end Thanks and beyond. in XXXX Scott. our for

diverse less Our that end many factors customers drivers markets with including government and spending regulatory are demand are macroeconomic to sensitive mandates. and

of by business which are and have XX% areas our more portfolio of The driven construction business provide a around our economic with which portion commercial stability. addition, locators sales replacements additional that are global In GDP and HVAC sensitivity of relationship our have revenue our historically shown trends. the

in markets guidance in Our growth last some compared these anticipates with moderation year.

of operational our developing a we overall One potential Obviously, in in pace products year have have only initiatives to continue and less to economically our businesses. targets. Coronavirus. new other we to new China, modest leave been to However, but and variable, full steady achieve monitor we well for continue us direct we any our disruption to businesses our exposure positioned sensitive plans the assessing to suite see supply of contingency chain is our risk the orders

and are well. delivering several continue to made on shareholders. integration positive changes we our our track XXXX, The value and is investments going our of to company During acquisition to strengthen

strong Our positive generating are we earnings to investments flows. and our in good growing results about cash continue ability our businesses yielding feel and

Our more and with very investments. facility are we refinancing credit position our have liquidity recent flexibility sheet to balance the strong, attractive even of make

measurement and to very candidates state growth and opportunities expand another value our our performance addressable Overall, see and pleased in business remains year pipeline robust we creation. highly the Our market multiple began and strategic of and segments. HVAC our strong I’m with as of growth our we of profile detection acquisition and

turn over to I’ll call back now Paul. And the

Paul Clegg

Gene. Thanks

Q&A. Justine, to go we’re ready to

Operator

UBS. [Operator Instructions] Karas question from and Damian comes our first from

Your line is open. now

Damian Karas

year a finishing in very strong XXXX. on Congratulations

X% of margin it start measurement to you Scott, timing the the flat guidance know range off project But wanted look sort guidance suggests So segment. to this XXXX. I mentioned on you growth. I and for kind asking slightly you margins detection of underlying about about maybe at when up talked the for

than [ph] incrementals you’d get probably think I that. better

could equation - there? aspects into else your you price cost just So maybe walk later through the other margins mix, the anything to any

Scott Sproule

to matter within sure. does not transportation nature businesses. and here. a the relate communications It’s Yes, price really project really technologies of It’s segment the the cost

projects more and years So Not into and ago same. of the nature estimate margins two decent come had really We it’s all timing projects projects. last we the are and what into and projects margins strong of will there some year businesses there the of most sit year. those the level the when very

in the putting of making around really margins assumptions We’re confidence an average projects some high at level and level.

most may in when the of execute they not because these backlog. So are finalize they [indiscernible]

forecast So putting we we’re try a prudent to together. that position take there when

Damian Karas

And sense. Okay, transformers. that engineered particular in question makes I guess solution

given of heightened color there’s have lead some of XXX moderate this other additional sort times right in on outlook now the any signals, you the and place the around slides you of a year. perhaps focus seeing recently that trade basis business improvement give What the change and is some in in firming for are that. you market just kind kind You color that haven’t just us the could of highlighted there any on maybe you been of

Gene Lowe

is Gene. this Damian,

very The nice of with very progress the been initiatives transformers. Lot well. CI pleased of there. nice are a They’ve at executing We’re executing level. facilities

we’ve we demand of keeps and team seen a steady demand the order. as winning very, that’s terms very market the a all very In just steady profile know

seen for price Now opportunity. we’ve some we have price been of pockets pushing and

market we’re to and going dynamics we for price. general, the there feel keep pushing good in about So

their very their trajectory So transformers overall, and feel execution into pleased we’re and with good is where about XXXX.

Damian Karas

Okay, great, get back thanks. queue. in I’ll the

Operator

Company. Sidoti our you. & from next Thank And from question Mondillo comes Joe

Your line is open. now

Joe Mondillo

to because related the ups follow-up mix of you sort of sort if just through could segment prior a issue. lot the different there are, of that question of walk and the sort just is So downs puts where that pieces on of and wondering D&M. regarding the margins takes to

be up where are expecting to maybe be visibility margin of that just higher some there other this trying you how to understand what versus make higher and is to that to point your volumes Just at the of lower parts of business, than margins?

Scott Sproule

are in in and have all we Scott, those platforms by the that But don’t seeing I level in project like that at. that and with the good some said, different normal the of But we’re those margins going Joe and it’s the a bit just of get back this XX% variability is can it margin. you that what it’s level [indiscernible] that’s a as always XX%, segment always both those provide really to projects like. wider measurement. from well stand the not business detection margin the within say, level leverages what and and we as when of of portion where like margins detail and look the projects same to performance around have going the as volume, where a organic good feel you’re volume, we project going is just margins margins projects to is its swing looks absolute work associated all at in what revenue execute volume looks We like

Joe Mondillo

comp, and then HVAC revenue know you Okay had so the to quite numbers The was able organic to you see a gross strong. tough were the up impressive stronger the than guys at I you was side that margin that I did. expected. on put segment it’s

and looks correct market XXXX if sort that if of what XXXX. curious, drove sort saw you’re on It organic relative looking the have that’s at growth I’m you number to of to Just single-digit like low of looking what’s talk sort of sort excluding two, correct, visibility there. take on we’re and wrong me, then And about what growth dynamic that of sort acquisitions have there. the slower and you related the you that that your backlog at

Scott Sproule

jump in and XXXX let I’ll the me take market. the let Gene Sure, on

throughput really really operational facility business. the our of lot it a of, the the had they range kind strong doing in up and of guidance our frankly and was and cooling quarter from that improvements around execution improve had big driver. just They’ve been they exceeding really end a their So top was we in to great XXXX work fourth perspective ended a revenue just,

even is, heating of overall see thing warmer for season so the and our other though anticipated was The did heating we that. early products, demand mitigated kind offset than an that

of big as have quarter. didn’t in the we So there headwind

by performance really business. HVAC overall just strong So our

into leave that on with Going XXXX, with does side of some heating dynamics. some a the market particularly comp the us tougher

Gene Lowe

on at different you you the feel moderating there. Joe, said flattening; we that about geographies. see some cooling and across what bit some the segment seeing do look of little [ph] We’ve initiatives NPI’s some of the our our We like HVAC differences we if and have growth we’re side. the good actions

some the ABI that been have of you us. a signals couple look there you Dodge, months [ph] Now been the could end year, of the for there’s at signals, if look of positive positive at if be some

Now it typically to months affect seven profile. demand indicators our of to six those takes

So of that positive and the nice is, the half you I indicators be back at we’re what year. some would for those say us traction look a there in could if seeing

at heating things I’d look side, say are the you If steady.

shoulders at in look XXXX, QX you we If have did and cold too QX.

the We that the But if product initiatives, solid XXXX, days. warmer and to you overall, degree a are the really little I off at look about bit the really, expansion, of heating start feel business line.

there. growth good we opportunities. you don’t the see the we pointed So but as two We see feel there, growth had dramatic modest put about if you probably together, out

Joe Mondillo

probably how us of an doing. a on improvement can could that, It’s into doing but as this just what like baked really the you you’re that you I initiatives. know is And effort of on stages, could wondering us like seem lastly, whole in a with higher sort it level, doesn’t comment the update on the you’re lot. update continuous well. you’re at if early sort maybe doesn’t I still was it overall and Okay you seem guidance that

Gene Lowe

Yes, sure.

would So across continuous of actually the activity our and first businesses. lot going is, improvement thing say there’s a on I

do our some focused seen impacts. Data’s excellence you CI into is pockets nice some having have or impact margins of brought If what key And have leader wide. cooling I don’t that’s focus successes heating driving that We’ve we’re driving past businesses, businesses could very really of on that transformers lot even What of year. Randy look a we a to this area specifically we and point the our over feel enterprise some business, our instead really nice been month. at portions about that. will under be We on on of this good this area year for good really CI our

And opportunity that our I have regards this, I do KPI’s see a at When with we our here. across happens overnight. look is enterprise This not something do to targets. nice

overnight. we’re actually and opportunity attractive change is moving really a for culture us don’t think But positive very journey. You it’s This direction there. a I in a

lot have you’re focus there. the to this you it where focus I end is resource going us have and day the our to you So it on there’s the up at year and a of ramp see going really on to think

Joe Mondillo

going upside? there is upside the overtime then is you It how follow-up is year, would say on based just the opportunity of say there things depending the potential continuous on say? there a to like and to that to along maybe guidance. regarding just on a evolve through progress you guidance that’s lot that Okay improvement is sounds fair Would

Scott Sproule

This I’ll is in. jump Scott,

the fruition I far specific of as think projects. that seeing as

alluded XXXX a anticipating then new there’s we’re any the of and later part we’re of maybe nature on to starting is as to be focused kind an things. location-by-location. significant forward. some Gene We’re things anticipating Obviously year and at the benefits, prioritizing this that, not impact from a going not underlying from kind areas going things approach with But that established, material setting foundations impact of from wide enterprise expecting see to, - we’re of but would of on up, getting and things setting the expect year nothing

Joe Mondillo

Okay, a great. Appreciated it. lot. Thanks

Operator

question And Buckingham. thank from comes with Barry Robert And next you. our

is now line Your open.

Robert Barry

XQ about it. I clarify it you that little just phasing, degree would weaker. segment income if to sounded referenced a was? But maybe some the virus be I you the the wanted to also clarify the like days, it Maybe what was were what you said it was message signaling heating of wanted maybe etc. some

Scott Sproule

Scott. identifying do year-over-year expect similar challenging as is, said will we some cadence here things QX, we that overall are but there We modest are growth. gating XXXX. that What were some EPS still have it in

Robert Barry

was I in XXXX it than guess Okay, little XX%. less

would So it maybe you’re referring that, again. be

Scott Sproule

that. sorry, I’m I catch didn’t

Robert Barry

XQ little in was Slide on less kind XXXX, That’s XX%. guess XX. than I a of the

Scott Sproule

Our lowest in XQ. XXXX was quarter

of outages is quarter one maintenance Third also are the transformer plants. that lower quarters typically given the

Robert Barry

Got It talking it. X% engineered the on curious XX% a so there. been I you’ve the guess if there, just guidance getting change any - recently or just wanted softer what’s margin and engineered than range, anything? to into what to maybe about up little about feels talk follow-up like

Scott Sproule

made so term good our has little progress and good in forward X% We feel conversion the the been I a continuing of to to but longer get we to margins target probably It XX we’re we saying feel taking are cooling really levels into is say that XXXX that in for plus good longer to going that’s is of XX% place. basis this and of anticipate, wouldn’t improvement XXXX initiatives the bit about We and points segment. hold The some mix of business continuing improvement for changed. of and well. Yes, profile about the really going fundamentally that process about feel anything transformers.

Robert Barry

I how what’s would don’t that that supply revenue clarify big in business, currently a in but deal some and maybe be? Got just guess lastly built think right, in that does going or I to you [indiscernible] much there’s contingency impact the parts it. China, on for chain said China of there.

Scott Sproule

our But kind fluid North X% it’s with, recognized think QX. total being everybody a of But bit as perspective situation. here earnings around America. to towards you, is perspective for end having an given some fully said, being just same is that level far we operational lessens from an single dealing is in chain very it’s country in as as it us is perspective weighted revenues, impact size then not that So, structurally which material still up as And as of we for and as it country really a as percent China China heavily back this issue of a fully no a very fully in we the when deal But right somewhere COGS. think for about everybody we’re others. you with. about to from now a market talking good about in when little supply about, shape from total our that is digits to is as chain in - low in a that perspective supply is is operational the many in chain, shortages from anybody it’s does and supply structurally become the and so QX it exposure

Robert Barry

much. All right, thanks very

Operator

And our from next from comes Liptak Seaport. question Walter

is line now open. Your

Walter Liptak

an were Most easy one of taken, I’ll so guidance. just the about my questions ask

and see You slowing China up like When guidance last of very late going early and the this early Coronavirus business out? out you taken the maybe did and one took kind especially up that with some things the year. guidance from of in [indiscernible]

Scott Sproule

clarify. guidance? year’s to in this year’s XXXX about the this growth Just talking You’re

Walter Liptak

Yes. exactly. XXXX guidance. The Right. Yes,

Scott Sproule

talked Well broader don’t that, mean geographic as markets our of of around that about I some our many company of many of GDP. think we one of I profile look the we’ve follow the businesses the things is as

across Brexit us Otherwise, has see non-res to minor sensitive books and relatively our really So in other and are business, those feel businesses. level we the most presence talked although effect and the US, demand our overall the we execution of have good the of markets healthy initiatives the guidance some than given of healthy strong there given backdrop. the good areas. what We about Gene order some rest construction across about market the backlogs, the

Walter Liptak

any enough Okay the weaker any deceleration the and the seeing to you XX, seasonal or of that low construction, bad. to commercial to But are and case. that well you right Slide political the could heating go year is things got end in look get that Obviously low end for you you to some this always on are events or that now? seeing high

Gene Lowe

little slower, have you heating year-to-date. the a started bit look We if degree at data on days,

So, it it But been of bit deceleration operating warmer a XXXX. there bit also, than together then construction believe, our taken the commercial year. in little little growth And we has we for a we’ve is of these as market. account put last was into plan

Scott Sproule

back the of when to of size nature year. the we and you that and measurement timing scope is to at biggest And the to going in XXXX I you table of execute what look and kind the, to project go experienced similar think detection one in when look at of business the variables, is what

Walter Liptak

guys. it. got Great. Thanks Okay,

Operator

Karas we have a you. And Damian Thank with from follow-up question UBS.

open. line Your is now

Damian Karas

a you term So I question have for on HVAC. longer

been a recently about of things the over some talking of obviously and efficiency next several regulatory the years. refrigerants changes related of have OEMs to lot are standards One

really wondering, Just your things and less does anything guides to alike. more product kind what line in were refrigerants all, or change related with or happens there you’re that your agnostic of to

Gene Lowe

Gene. Damian, on and this little general much bit I’ll and pretty in more specific the What HVAC. is I say get a would

that typically serve. niche portfolio, in markets leader the the across you If we’re our technology we look

able find meet HVAC that in be to positioned new or that specification that’s so regulations best and general more to we more look you our solutions engineering in typically the definitely the what the competitor a - is, are solution can that or requiring the if benefits or complex case that that in get typically means regulation So when us because more harder new and meet business. spec

[ph] are If you regulations cooling refrigerant heating other regulations relevant affect that Ashray in variety the we’re relevant of us end to but and is look us working we market. and the very on and specific defining hand important are on both sit, areas. very a the the The there of we’re of talking that our to committees have that board any number on to, you’re

very play our I general to it would seriously. it very in take we So but that, We in important say benefit. a works role

Cooling on heating and will higher have to very conditioning way, at we most that residential ensure more typically the form and we market, most air side. out than look is you in efficient leader of efficiency the really and reminder put the the in the commercial DOE specifications similarly meet ratings much efficient a side the both the cooling that the in the using being maintain side resources a cooled. If is air

its nature green, and so is specific position in we we’re a different a very there’s always by even regulations with to to question. rule those, efficient be nice think handle and to able the but So very that cut product to

impact one taking nice strategic The we something it when that think opportunity focus a there. too gets in we in said, to proactive don’t really refrigerant and like a us. affects much, that And very on raised businesses is I us our regulatory bar we do typically all but for approach of have general we almost the

Damian Karas

quick last That’s one, Scott. helpful one really and

below missed if On bit sorry seems came that. to a the expectations like this. in tax I quite tax But anything it front,

Scott Sproule

looking end, just so up highest had the XXXX, Yes, discrete US there lower which more jurisdiction. XXXX, but benefits increase bit, to to we some and in what the We probably at more so that just little in revenues the was some expecting. were - is are we’re with a has we’re there at obviously going do in the tax we

Damian Karas

Thanks great. luck. guys. Good Okay,

Operator

Thank Company. with Joe Mondillo follow you. have & Sidoti a from And we question

open. now Your line is

Joe Mondillo

cash regarding flow, debt is strong acquisitions earnings. you that is down using pay M&A you’ll good your pipeline, comment acquisitions it? guys of from Just on of Could hopefully? any on projecting the be you you cash how just a pipeline enough Do your flow the probably amount good good anticipate conversions are or

Gene Lowe

Gene. is this Joe,

well us. model have really you and look model. These all that businesses growth of how and where we of building enhanced lot in we attractive front business in and M&A have side, SPX. out I starts early think the there’s added moves building log platforms. do a is strategy innings very in runway think that business we in profile We good here. strategic with believe platforms as as and the very competitive us. really actually our is we’re and I our to of our in we’ve our very what businesses position really a On reminder we’re our are front the are margin have of a have everything a like would And our out if strengthened We our say good front

So, on allocation? capital

Scott Sproule

Joe, Scott. this is

there. get which some that put rather strategic put to much said, we acquisitions little Gene we any times like So, where opportunities and We’d our a work debt not we leverage good and have bit as through year from leverage range, a for are paid down. low perspective with be our at the [ph] capacity at would of already to OR we smart cash up we feel end X.X utilize looking the

Joe Mondillo

CapEx. just then, specifically little on and Okay a more

the Your up could CapEx to at good sort the point? all sort comment levels you any then bit due that quite you’re But of this this inventory or you in do at up levels you’ve I do is think partially you some in. year-over-year inventory about think opportunity on is it’s how of there, ramping acquisitions and and of on and acquired. year, know a there’s investing pretty that’s what

Scott Sproule

first CapEx address on side. So I’ll just the

little is So a it up bit.

acquisition, with operational and the companies at business are from other investments is of have facilities. some improvement improvement is, our issues it some a higher versus the in and the we we historical of perspective CapEx just associated with making more bit Some from so that little just the

structurally to if tied you our it’s we’re look overall, still at a but returns, heavy CapEx not So very company.

Our just structurally how our is depreciation model set CapEx that’s for below that be. we are to company overall and

build From perspective, there yes inventory an some inventory. in were

as of is here. business you up demand our associated in Some heating for it the with, build anticipating

naturally will inventory come down be it we’ll the no company, manage concerns nothing, demand So and real profile. able around the around with to

Joe Mondillo

Okay, lot. thanks a Appreciated.

Operator

questions. showing VP over I for further to would remarks. And I’m like of turn call you. to Investor further Thank the Paul no now back Relations Clegg,

Paul Clegg

look you again to thank joining and we forward the next Justine you you, call updating Thank and for quarter. all

Operator

conclude gentlemen, and this call. for Thank conference Ladies participating. you. Thank you today’s

disconnect. may You now

SPX (SPXC) 13 Feb 202019 Q4 Earnings call transcript