SPXC - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 and Full Year SPX Corporation Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. [Operator Instructions] I would now like to introduce your host of this conference call, Mr. Paul Clegg, VP, Investor Relations and Communications.

sir. begin, may You

Paul Clegg

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

call well our available in with and disclosure to of as the on the Investor I March can release our Xnd. our in webcast earnings the of remarks. presentation spx.com. results live find along of during release this link a presentation of the prepared review website our until section press as the to and discussion slide Relations at our a A You slide website follow you be and will to replay GAAP webcast encourage

comments safe pandemic. the As in our presentation portions and SEC filings, COVID-XX to and our disclosures note also forward-looking Please including related to a the of risk most provisions. recent ongoing are subject our reminder, factors harbor

Our comments largely today financial on results. adjusted will focus

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

as today’s been as available restated have is of operations operations, appendix and category, previously Other reported quarters results with the our discontinued Our the fully structure Transfer were which Please Heat down. the are segment for XXXX operations, The in adjusted reporting includes note the which now from reported being showing results. to segments they African wound table South the an African our of excluded operations Other as presentation. is that our South XXXX

costs expense, impairment with also acquisitions. earnings onetime items, pension and gain, intangible and tax per investment adjusted non-service excludes favorable discrete certain Our associated asset items charges share amortization

months. we the conducting with be virtual investors Finally, coming will meetings over

and the over updates we key with in we strategy creation to on Day overview and -- I’ll Gene. late conducting our a initiatives. will intend call We turn provide to also where spring an value also anticipate And virtual Investor that,

Gene Lowe

afternoon, Paul. hope healthy. have everyone. I us. remained all Good you joining your Thanks, of Thanks families safe and and for that

On and year. the year. the for provide our performances quarter and you on key brief and this with a the provide update We’ll results segment call our overall today, also guidance fourth variables view of XXXX driving we’ll full

circumstances, touch highlights from year. I’ll the quarter of Now, performance a a XXXX. of successes. adapting had employees our of the resilience and balance they our faced to want year-over-year a very difficult of challenging bringing and despite done thank stronger earnings unusual with in XXXX the job growth, operational some the full an positive momentum outstanding of the to numerous and and team. the We businesses sheet fourth and hurdles perseverance demonstrate our Finishing who’ve highly on year solid I about

are adjusted EPS double-digit we XXXX, For targeting growth.

solid HVAC Measurement. attractive Overall, modestly sales expectations. with drive about the We investments also including front continue increased than the income I’m our opportunities and as and very drivers in years and revenue acquisitions our cash the In come. year project traction on line to internal us, focused QX, softer success, offset earnings Detection & in and digital strategic for in highly excited remain in in numerous our of and growth to flow non-residential growth more gain value continuous initiatives and to key acquisitions. improvement, our segment of sales ability on was delayed

grew net we full income revenue, the segment For income. year, adjusted and

the our items increase particular caused operating matters, adjusted experience product decline estimated and of XXXX. item XXXX. a liability full in One Our which an did $X.XX an increase was legacy QX reserves unusual year EPS is We our in $X.XX from in of for income several for QX.

in the operating later Jamie will operational performance businesses move these and Excluding both of reflecting and of performance, in items strong were margin the and operational financial we positioning with the discuss our businesses. full detail charge, Overall, pleased our the more I’m forward. as our year income up, call.

touch As always, our I’d value like creation to on framework.

Our new safety products, adapting programs several in effectively people on our business been worldwide continuous facing including continued improvement manage has introduction of year. and a to rapidly executing in environment supporting challenging our to numerous system ability our experiencing past priority and important In we progress our over while team XXXX, top through have been make instrumental investments a the initiatives, the the on pandemic, and culture. several

pleased for addition, closed and And Robotics integrations. in of am our of years. X I In last with acquisitions, a two the we Software ULC Sensors the pace total three &

successes are in financial team’s reflected performance. our Our strong

we XXXX SPX journey. creation forward growth and As look very continue is positioned to beyond, to value and well our

enhance initiatives our key extending digital successes employee development and the of diversity inclusion on to across and organization, include Our expanding our of experience initiatives. customers’ processes and continuous solutions the our building use our improvement

sheet markets. strong further attractive anticipate also to employing growth the compound We platforms opportunities in and balance invest closely by to our adjacent end

the training initiatives doing diversity our have and our parts in us with simply modules, digital and to new inclusion multiple further emphasis more capabilities ordering. investments focusing will initiatives, that our rapid product and believe With as as on enhanced and listening, solutions be extend identification things well We additional on are impactful. learning we easier respect quotes configuration, for to on-demand OEM

awareness, a I across leveraging several We inclusion culture to which training the initiatives inclusive SPX. are other ambassador diversity the we behaviors council, education and and program of and lead; ensure create

opportunities our turn mentoring We now, of by as guidance. organization our results also RiSE leadership the and framework called management for programs development well Jamie at extending to financial to expanding engagement. community to as further levels the And all talent review call forward and look I’ll

Jamie Harris

full QX to $X.XX with XXXX the $X.XX share the we basis, per $X.XX To Gene. basis, a comments, we year. $X.XX in with for in are adjusted quarter very XXXX. the results. of On Thanks was for EPS of On year. Gene’s compared with full echo reported an pleased for prior $X.XX on $X.XX basis, GAAP fourth Also earnings our compared year an grew we adjusted EPS and

liabilities, As include segment impacts below unusual on income several adjusted that and approximately balance non-operating the included in $X.XX. reflect to our expenses charge our net asbestos additional changes expenses. legacy EPS charge items net million negatively by items assumptions basis adjustments sheet to long-term in a Gene about our $X.X operating earnings line to had $X.X million mentioned, a These an we include

favorable benefits with material other policies statute insurance of associated outcomes, from our income former And associated company audit resolutions, and tax We including do in changes had with also not cash on executives. items. expirations proceeds use discrete We tax ongoing result challenges we a items. past they to unusual year-over-year of consistency or remain of pandemic, overall these these achieve practice, To items in our the growth. adjusted and cash of with impact generation maintain were the the results. as EPS Despite able anticipate

Turning results. adjusted to a our of review

decline from organic impact For the margin basis, declined X.X%, acquisitions revenue segments. of by and & mentioned X.X% and Measurement Detection HVAC our by to million Operating increase QX, increased year modest in earlier. approximately the a in revenue. offset full income the a revenues negatively volumes. as increased lower acquisitions X% I were revenue X.X% driven affected more HVAC than due On Organic charge $X.X

XX decline income operating operating of charge, As declined basis-point full with the $X approximately result in million margin. a a

points, million in charge, summary slide revenue the of approximately result of and income mix year $X HVAC international and HVAC Software. and up declined year-over-year our of Solutions of segment Full the and segment X.X% full This acquisitions Cooling of largely in was ULC and basis changes Sensors approximately Excluding XX & less operating & a points to with XX segments. you due a the margin performance X.X%, our favorable Measurement a view income basis margin and as margin. grew improvement. revenue The segment business. year segments of segment our Engineered QX Detection gives our decreased

We strength income XX of growth and business, million businesses. Full margin location segment business operational and grew strong and Cooling and transformer resilience of HVAC improvement total inspection within points the our our our led of Genfare year QS also growth our year-over-year the by performance $X businesses. had with basis the in acquisition

our continue and of Engineered in Solutions our strength in segment several a end to general recovery markets. see We

walk through the will details segment I HVAC. of Next, you with our performances, starting

including quarter November XXXX. organic due X.X% revenues volumes a cooling to and decline which the acquired having a For both, decreased a was offset partially X% benefit X.X%, by in of Patterson-Kelley, in lower quarter, heating, from full

strong business prior The portion residential by As declined our did comparisons XXX due we from in year. QX a business despite cooling in solid pulled our the weather-driven QX. trends margins Non-residential volumes. earlier was HVAC sales Segment and softened, Cooling leading lower $X into consistent results have forward sales in reminder, basis observed XXXX. of the with income indicators macro decreased million points to with approximately some

heating lower Our prior similar were margin to segment operational volumes, slightly to income XX strong the a year basis to points businesses, full income prior due and On margin basis, despite year. compared up performance. and segment year reported about the

end As we signs enter in markets. early see XXXX, we of are increased activity beginning non-residential to

temperatures we very heating our As seeing for which the cold know, bodes business. across well are U.S., you generally

shipments a from heating from This we and Software sales we quarter, XXXX, in growth, tailwind increase, for XXX resulting contributed The growth full a our X.X% includes single-digit and and ULC Sensors year-end basis-point XX.X%, As the Detection low revenue in continue location platforms. and & year navigation in our & segment these and flat view lighting revenues Robotics anticipating increase strong cooling trends of inspection of In Measurement, increased organic are experienced a age a we monitor margin. acquisitions including higher and for our currency. to XX.X% the HVAC sales. modest and

currency due built segment due our significant approximately hedges cost mix to issue exchange increased reminder, technologies top $X while a a associated Segment million, fewer shipments into for our decreased primarily XXX a business. points As natural basis SPX from line to favorable with income margin translation foreign communication structure. project less is the

restrictions impacted move shipments to we did QX. anticipated, that by moving projects begin in As forward see of slower were pandemic

below levels However, overall saw the remained in we volumes strong XXXX.

organic heading progressed, to in that of we by continue technologies positive primarily communication the in a due volume offset these Segment declined due positioned recovery On partially our well declines increased As we of lower revenues year to high-margin and momentum. margin the impact saw nice businesses XXXX, full equipment. that also modestly into location income to and QX of and a year products. are basis, shorter-cycle acquisitions, sales believe

part in For due acquisitions of a to SPX impact we less income. XXXX, revenue as mid-teens of in in our the We growth recent with in location acquisitions P&L and flat mix inspection increase low some favorable and a anticipate including margins in their to investments and segment XXXX, significant completed approximately the growth first anticipate in year associated platform.

a segment transformers. we decreased acquisitions, to and XXX Sensors segment and income project-related favorable performance and full mix strong with process Software operational discipline operational to strong increased ULC cooling. an better rebound in initiatives, transformers pricing a offset Engineered In revenue quarter due a higher transformers fully year performance see basis, margin margin we by both, sales Segment On and in Solutions, increased sales process points less X.X%, anticipate in cooling. for basis revenue we segment strategic and pricing revenue reflecting pricing in in X.X%, increase grew As margin. the continue integrate and Robotics & modestly

with single the margin digits higher For We actions. partially our pricing XXXX, offset cooling pricing and with and higher lower approximately volumes. volumes process revenue we low by commodity flat anticipate offsetting anticipate business, costs in in transformer growth

position the end to the of now financial year. at Turning our

Our balance sheet strong. remains

of into cash cash free approximately for million net the ended which and acquisitions of flow ratio Adjusted translates During million, XXXX, flow ratio $XXX for full capital we $XXX year a conversion XX%. leverage free year the two X.XX. with deployed of was a

last We than the has average the years, in greater Over our three anticipate again been conversion XXXX. ratios strong XXX%. of generation cash

range, acquisitions, net which end is will deployment leverage X.X. materially we X.X that lower capital to our below anticipate our the target ratio of any decline Excluding for would potential

quarter. is net continue South disputes externally. with we with including last associated a work. sheet process, and as our as with have dispute associated Africa, For in spend and counterparties. cash $XX it strength good Despite Mitsubishi South focus balance the think dispute the legal substantially internally lower impact we impact in higher with the of We of made used resolution are we usage initiatives, full strategic both pursue the bonding us and million we we discussed cash about very finished Overall, our are remaining on we’ll in feel pleased anticipate our XXXX discussed year, with that scope to in resolving modestly the growth approximately -- of progress advantage we our Africa, with we the we XXXX of to

Moving to our guidance.

year increase of basis, the billion On estimating XXXX in are adjusted are earnings midpoint of full the an of segment approximately approximately This margin at adjusted to increase the in per we share modest range adjusted $X.X For the revenue EPS represents XX.X% $X an compared and to we of we from estimating XXXX, in a reported income XXXX. $X.XX. $X.XX. XX%

a higher whole. segment in anticipate We of Detection in Measurement & each in margins we currently for and overview, Engineered growth As flat discussed segment margins our revenue and in relatively segments. HVAC Solutions and as modestly our SPX expect

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

do XXXX. our earnings anticipate turn to call will provide markets guidance, now comments. and not Gene end closing of a to we back his review the cadence While currently we quarterly two for of I a similar

Gene Lowe

markets by have are portions for areas. heating our Thanks, trends previously noted are in our we although continue progress non-resi end by through as encouraged to closely headwinds XXXX, residentially regions. signs year-on-year we products trends to we the certain we and of remains we as Jamie. Overall, monitor although we and in HVAC, demand influenced of Detection & geographically. cooling business. rebounded boiler in has Recently, the In term. begun our for Demand somewhat the most In activity see uneven weather short early always, stable significantly Measurement, locator markets, these across increased appears more focused seeing

seen of D&M In XXXX, be solid steady. signs sensitive demand in municipalities remained our demand Inspection flattening we to shown project-based have interest. showed customer trends solid frontlog we equipment, that healthy. While continue and lockdowns, pandemic-related which can current from has see businesses, but to remain

were access While abated, have the communication XXXX. and that movement travel forward in and fully XXXX improvement delayed this impact in on we have not restrictions of an in orders seen anticipate business technologies

and trends to customers are behavior from continue monitor seeing transformer In solid we encouraging Solutions, We closely. these backlog. Engineered

and experienced our turn call the sheet am to to excited team, about we balance to investments. drive I’ll continue value While the Paul. of are capable the a year, growth strong grid in focused opportunities very potential and people transformers back further organic growth in accelerate with strength efforts return In in summary, inorganic business, on our and and digital resilient is earnings to platforms for a earnings in solid continuous a longer double-digit through and address our improvement, well-positioned pleased With The investment I’m for that with performance renewable to driving challenging focused a growth infrastructure transmission highly And reliability year. a of opportunity initiatives cycle initiatives associated our sustainability. increased our now, investments and energy levers, our over pandemic. very employees a during us ahead helped and on remain worldwide This we shareholders. anticipate I

Paul Clegg

Operator, to we Thanks, questions. to ready are go Gene.

Operator

you. will Linzey Thank Instructions] Our from of [Operator come line Vertical Research. from first the Brett question

Brett Linzey

‘XX? I wanted supply constraints the cadence to the Should some two of can two those recovery steel. those terms whole a provide the weaker year half? How items for in start color with expect also Any the price you of with costs, half items. obviously, on industry, in are first informing second particularly affecting profit chain we

Jamie Harris

Jamie. off. is This I’ll kick Hey. this

in of commodities chain. we supply products tightening general, are chain supply certain So, a seeing in

at of material we commodity in From Company. spots through we’re a some that time We our standpoint, or in cover point in commodity think price to pricing able the certain are most this seeing increases price. increases

on shortages taking or supply if potential We’re chain constraints, actions will. you

safety stocks. some doing We’re

We’re supply choices making sure have we to alternative good use.

we’re of so, many cases, highly not right all. customer, But monitoring. able to being through lot and very we’re material that in don’t now, specialized that our a businesses very is closely we technical, it see the we’re something that pass again, And price product, are but to a issue, fortunate,

Brett Linzey

then, flat signs non-res with easy Okay, on in great. cooling And recovery piece, comps. of you comments the are for year the the side, wanted square early guiding relatively against an just to but the

we considering conservatism, So, else there? just something should be

Gene Lowe

what this end downward in non-resi, for projections markets, Brett, impact seen where if you latest versus Dodge Yes, at projections, have is -- index if diversified. as Gene. our a if very a where is a The look XXXX. year, the last we’re reminder, at of had look little we I bit think, the the map out Dodge you and you was,

We’re in education. data centers, hospitals, commercial, health care,

If the little maybe back at a would according X%, And of improved. a has probably in the demand, the situation have market coming I you with think, current the index more the look Dodge bit at it, to plus us X% half year.

change a think been do bit I dynamics. it’s a So, of that seen in market little the we’ve positive

point. So, that is a I fair think,

Brett Linzey

the HVAC the Just quarter and what’s in some channel mean, first Have heating dynamic the given your to in kind seen of the through weather in I you of side, markets, the served the almost the in quarter. up early follow particularly heating? conditions two-thirds on the load pulse of here side, we’re or the and colder way

Gene Lowe

Yes.

impacts is heating if look think, have very I we So, U.S., cold days. monitor you across seen something we degree outside, lot a the of closely

at days normal lower term. up nicely. actually our the versus look having positive our longer the is It’s it’s degree that, year. heating you But, If than data, said last over averages

QX. a well shoulder, in nice as into flows And a think preseason positive bit the say, that QX through, you how year, than think favorable of half up the about having go the let’s you up But would off-season. you that sets second we last but as then, versus seeing and that are lower comparison we before. So, a little set obviously,

be So, we this has us year. net-net, more weather a date positive the been and will for think to favorable

Operator

question line And Oppenheimer. from the Blair comes our from next of Bryan

Bryan Blair

of carryover your to team sales I the is D&M of M&A FX terms range? what terms to organic thinking was low sales, mid-teens could if you out In guide, the to contribution get break wondering in and

Jamie Harris

Yes.

as ULC our sort will a a organic to of there. be there the large acquisition acquisitions have last respectively, large -- occurred that we low be -- both be some little a fourth will as contribution of in -- a November, and D&M in growth of quarter, teens result A of mid-double-digits the our are FX, little which Sensors of September, that & more part see on bit We will FX. of part Software year. more whole, from in bit a do we from

ULC it’s and of think, two But increase of two. of house, between large side X.X less primarily FX. it will than the of gain from X was the the -- I part larger the of acquisition majority because points, -- a the maybe the the be

our and saw that of we happen seeing second the terms We businesses, nice -- are it organic, saw are in the inspection. more a to half in we cycle we seeing it XXXX. particular, In enter accelerate in We happen XXXX. into little of rebound location begin and shorter as bit in QX, a

incremental in and it it XXXX. XXXX profile was revenue there’s and at was a look happens. in That that’s from business, high when communication project where rather we the shipment and significantly margin project-oriented carries technology our As a where a large down contribution business, that business, it carries obviously dollars

very seeing We’re that in in nice rebound XXXX. a

top with the at that record and XXXX. segment a line SPX business. not will line XXXX remember, of the probably probably income be that We levels back as was the level, And for both historic you to

And we’re also are Genfare think, a back seeing having business, So, our very are a well. is business, rate That the business but characteristic we the of recover, lot not nice run in rebound. seeing carries as we’re transportation big business carries of sales. doing that also there, then, which we but

out good seeing frontlog we’re there. so, And

projects also execute. to have -- those We

agencies. both with of of governmental businesses, terms In it involve does those working

environment. with we still still at difficult there. things -- in although all moving signs be they And so, times, positive being But, along, especially in people are positively can a still remote see it

Bryan Blair

color. expecting they’re And Sensors the accretion terms helpful Very offer cetera? deals you’re ULC maybe product how & you can Thank businesses? trends, and development et R&D influencing Curious from anything more important, what And across in Software, and you. in XXXX? of your integration,

Gene Lowe

at and there. of take required part I Well, that a I’ll feel the technologies some and there good hand were the then to it that Jamie why the first don’t the about of crack really accretion. on We businesses

a As able that only is lines value remediate core a robotics, very, in solution that that unique This been proposition. infrastructure a no and into steady really goes It’s they a do. gas business is have a good, We has good really very see reminder, business. a you’ll one that their CISBOT. way can underground business. like to It’s

we’re will And they And typically a But, before, smaller R&D business, solved solution through customers. Robotics number. we technologies customer, talked where Could be of portfolio, we’re amount. focusing what has that customer. end about so, an what we an be have industrial we’re variety a have that a the going now in a quarter a there different process this doing and is really And end business been of is we’ve could ULC good on that like solving a about be never is revenue. right is, of a It could an which number be utility. for

what we’re four to I technologies. top down the really see. think, we we like And

actually say, AI. with very about has would backwards robotics, things obviously strong what it you we’ve a solutions very when the but solution. of time. these in in technology bit do get that’s production-ready some an net-net, strong the there’s I they of we’re a that bidding Company. more about forwards. to one you does into brought risk positive these that take also and AI in is, Now, they’re feeling of in you already I would And company say the have a commercially They’re And commercialization of some bring in to little some really learn But, have of always and And everything environment.

is And early our our still are that it’s So, but they technology the know, in still & things as And think rate. a actually and Measurement on which business, all run I ago to we lot $XXX they’re million underground you there. one like infrastructure, more is there’s working location years approaching And Detection about of and our inspection work of capabilities a to $XX do, is was sharing. area. greatly enhancing talk million two there lot now

already is So, with technology working radio, with the and the other ULC is each cues, help seeing we’re sales side which working out, or opportunities commercial side. where can or we the on on

So, very encouraged there.

Sensors The Software, like other we & business. one, that

many a reminder, product basically business very As a that’s resold We our for we’ve known their as name that well. years.

very under product a penetrating very our and important small we glad line, of product. the growing relatively a is portion very areas and actually a it’s So, see one. for umbrella, radar Ground market, that’s That’s that growth. we’re long-established some

company that where channel leader that’s doesn’t the that and technology was Asia, we’re neighborhood we global we million, because $X increase the selling the to they’re detection -- we just maybe company a it, think, at but incremental a $XX of look smaller and the in I Europe have you see lot actually but were radio a small, significantly think opportunities of I Americas million, a If in being in have. million smaller $X

of one so, things we’re is the expanding really And at looking that.

on that integration very for... the To I’ve the and been side, Jamie, the means pleased. question, net-net, from technology what So, specific side

Jamie Harris

Yes.

a said, we we probably put out generally as fully press ULC, The it that R&D think, on sort And release a date. we two very I From speaking, result see going to -- exciting. piggyback being or we when what is and generally XXXX. Gene very once I of year speaking, segment integration, is would that to So well margin, we’re integrated. expecting indicated see the incremental about business from ULC think

a of a have rate of UK business, really that’s then lot You I’ll call what run a R&D business opportunity. and business, got nice offers a there a U.S. nice business more

things I a normal from think, depreciation business, our than businesses. carry of of relative it one just perspective, the a about this it to D&M P&L with does larger other amount

margin, look And from carries income when EBITDA margins. very you the so, to it the high margin EBITDA segment

segment but a about the than extension SPX good necessarily becomes if a integrate smaller. as that Gene so, I part much into business you And large, this more and do immediately all would in as side, think -- we’re business. doing acquisition. increase see margin the about In our will. & a said, think a & for XXXX rather Sensors business Software But them we more Sensors transacting We radio standalone product because integral of together. family, already the Software But, that, of

integration not terms of P&L, but meaningful quicker the for So, as us. total in a much process

Paul Clegg

And this Paul. Brian, is

in of Software the in a $XX about were a basis, throw million. portion the million. In Just $XX of here only I’ll somewhere modeling ULC out -- them is combined one we had combined one help point XXXX, from they together year. & neighborhood Sensors and The on from to the group. for Obviously, annualized revenue

Bryan Blair

prospects You pandemic. the can. What executed for about I And during early getting to more your the deals How then, one last strategic through? obviously couple come one, you if are funnel XXXX? in some M&A are a thinking

the plenty towards low targeted You’re of of net end so leverage, capacity.

wondering Just speak to if confidence acceleration further year? you can this there in

Gene Lowe

But, We were point. we’re excited increasing. we said think, ULC Yes. that, Robotics I those did seeing Sensors about & it’s having two What in in talked Software. discussions am really activity about. the is, Bryan, actually just I I would ‘XX. and say obviously a acquisitions good

getting -- opportunities pop more So, starting those beforehand. of discussions the is with they seeing, I during point. didn’t they two I in I would to businesses I’d would at What we both that already up months. we to COVID seem are three in actually say, particularly a come that are From rate say, say, but to we’re we’re run the consistent. full time. rapidly We actually were say what normal valuations wouldn’t we’re past seeing -- up,

across we’ve on As disciplined know, very been our valuations acquisitions. you

post times has times value blended and average XX.X X.X synergy. pre-money been Our pre-synergy or

of we with we’re think So, seeing front probably that’s in what consistent still us.

us. we very would in I’m very optimistic see I a good relevant, more very And on good And probably about million. amount well us. to a what of opportunities strategically very we’ve of $XX But as opportunity to seen, a & set anywhere us on have as the the little Measurement, more is, opportunities technologies, would Detection side. might I’d say the say larger in front say of opportunities we So, What good businesses. I good I’d say, north characterize then, side. smaller HVAC And of I’d probably larger be then,

-- but, like our we our of to We think out in both dramatic opportunities Detection where And as you shift businesses. a early go so, today, there. runway of building in front a our in of there’s seen, lot and we HVAC And We’ve innings the sit we’re we think platforms. know, us. the

Operator

[Operator of line the from from UBS. Instructions] Damian Our next question Karas comes

Damian Karas

touch wanted I to guidance on year. margin for the back your

in with growth potential what D&M. D&M maybe you think, margins are flattish price maybe kind more kind out your bit And there? that parse you apart if just M&A little I or expect of that out -- Engineered neutral. are? kind and in to you’re But operating not curious particular, could kind you’re margins a on I getting underlying just you expectations impact if guys Just that with less that, what’s the could be comment, clarify your more prior Solutions, there. of you of said expecting going of leverage you that mean, from know But calling for I called on cost

Jamie Harris

Yes. This I’ll one. is take that Jamie.

us. contribution technologies largest couple project-oriented the businesses, specifically of And of which factors impact a we’re carries And will. it for the that has amount the D&M communication a margin, high if rather a to -- large that on high So, rebound business you a considerably of project, margin really of back very is XXXX. side, the margin, revenue, from seeing was ‘XX. nice It from down

on we P&L. seeing are -- the other there. nice are going being said, So, we we have rebound also That a in things

in gaps business location inspection -- We putting like some the call investments here filling there. we’re and geography. are P&L I Things Street in making feet some, what our on and to

marketing in marketplace. doing product new innovation get the product We’re and to it launch, out

as improving not those see it year as and hurting down so, today things, road. while years the margins, and next it really believe we not they’re And hope, we much will

As I the from roughly about mentioned on in few it at of the in XX if total mean, look the guidance you acquisitions, XX totals ago year. a moments total incremental last about Paul that from

So, that’s up XX. about incrementally to XX

margin, come segment little than one does bit business a in, one, acquisition, that overall that primarily ULC lower of what margin. hear so, in hear the our in And

the from our very to D&M. the that resulting for leverage on you to communication in guidance. begins off we’ve business experienced us of. we’re sort it the So, still type We a Again, dilute, technology platform will, of bullish it’s if great flattish rebound think the

these We different the in to today margins part go And the and in. a have And expect we’re we actions can go many taking up think we of today do directions that. we’re will we outer years. big making investments be

well a margin first the Solutions saw XXX basis where quarter to of -- pricing you Company know. you some CI points to if XXXX and seen In in that different strategic had side, and had the improvement all really through business of of Solutions XXXX, first began places that you back think show the about QX, you a go to QX And had of relative P&L. the XXXX Engineered was as improvements, What it that X the at though, flattish. taken X, in profile, the really Company more from Engineered one saw we up quarter some X. operational in fourth the hold the in of saw the I we X, to On

a XXXX, P&L different got cycle year prior we to began from in QX. when to much QX profile we So,

high so, Solutions, tough up actually slightly. And with on year segment. still performed we -- the that in economy. we obviously being very we’re from great especially in see the resilience, see flattish next I The Engineered think, But XXXX in range, transformers

optimistic that slightly down that averages a guidance. and to overall, Our mix of process of we’re cooling out because still about flattish probably very high service some that. very But kind

Damian Karas

hearing going what of world we’re that sooner hearing situation things all these engineered that, start makes business? EV still, you these outage lot about think about when the transformers. way the later, So Obviously, was current your this about kind if an thinking sticking it. some wondering about is think for replacement trajectory that I systems Got charging seeing intentions in station business? impacting to down in And or Texas Okay. there. of automotive cycle I mean that basically it’s of That forward. story? the with really kind and Gene, business right a issues transformers some acceleration that sense. what’s platform be means to and there’s got of about and the When going guess, on long are think What’s Also, about the the build-out. rather you than you about down think on

Gene Lowe

Yes.

Damian, are is, points the think, really I look bring at if And I I good. that where relevant. business feel I really you up actually think

been, and job you just team the with the where operations start kind pricing. continuous done strategic If a of driving of improvement, business it’s really great driving the has

I a think, it’s healthier just much business.

You It position. a strong market. the know place a it in business. the long And is leadership cycle very in has very, lead it’s

you somewhere back of the the in pocket with start quarters neighborhood a in your typically three already. year orders So, of

business. opened some it they’ve think And market has point growth half, are to team sometimes very real. the in booking years. also you strong and the up nicer past the which QX, But, And capacity really CI, been I through I after up over two had bring is you’re some there, able the even really a in grow. the think, built the in that really So, second has year They’ve a occasions. strong sometimes foundation

real. there do couple would replacement very, trends very real. in the there usage But, think timing. you if I not overall because you be think of of to out be question of really getting that I General I positive internal obviously EV, an of like Electric are things upgrade of are like going mega been some very centers, vehicles combustion is be data growth there Motors be there And business if -- of been drive could shift, lot the some has the if bulk renewables, is past do like you’re generation. that such could and the general will a that look absolutely there’s drive U.S., demand. but T&D more our are drivers And time. the years, over drives has in it’s infrastructure. more think engines, large a infrastructure. that will see right? over that those particularly whenever right, energy generation, aged more And a there

set discussion and table very impact or know and If bills, term? us would could of be forward. what infrastructure have short look there’ll positive looking those that think a are if like. I about infrastructure bill I a What lot the medium the in still when that an there there’s

amount more good where would, there’s for in a see investments incremental or generation, that typically more provide renewables and I bills, in You if investments those T&D is. to transformers demand would say, of growth or opportunities in drive

business. the to really about put in performance and But, that transformers foundations a So, everything real did is feel good -- very of do of we of think more timing question job. Mason a strengthen like good will a and really great yes, have and strong a is really was challenging happen. that. a transformers I really, think Brian team, year there team and really year. I business the when we is team last underneath business The happen, highlighting will the it’s the actually that

Operator

the closing showing any to currently not to questions speakers I’m turn back I’d any in remarks. over for queue. the call like further

Paul Clegg

Well, us this and very joining Day quarter again. Stay call. much thank our updating to We all at next then safe. Investor look Okay. for you spring in late for forward you

Operator

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

now You disconnect. may

SPX (SPXC) 24 Feb 212020 Q4 Earnings call transcript