What changed in this filing

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Item 1. Business

2022-02-25 compared with 2021-02-26 · 60 added, 65 removed, 104 unchanged (55% of the section changed)

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In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology.

Particular risks facing us include economic, business and other risks stemming from our internal operations, legal and regulatory risks, costs of raw materials, pricing pressures, information technology and cybersecurity risks, integration of acquisitions, and changes in the economy, as well as the impacts of the coronavirus disease (the “COVID-19 pandemic”) and governmental responses to stem further outbreaks of the COVID-19 pandemic, which is further discussed below and in other sections of this document.

Particular risks and uncertainties facing us include economic, business and other risks stemming from our internal operations, legal and regulatory risks, and uncertainties with respect to costs and availability of raw materials, availability of labor, pricing pressures, pension funding requirements, integration of acquisitions, and changes in the economy, as well as the impacts of the coronavirus disease (the “COVID-19 pandemic”), which is further discussed in other sections of this document.

These statements are only predictions.

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All the forward-looking statements are qualified in their entirety by reference to the risks and uncertainties discussed in this filing, including under the heading “Risk Factors,” and any subsequent filing with the U.S.

Securities and Exchange Commission (“SEC”), as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements.

Securities and Exchange Commission (“SEC”), as well as in any documents incorporated by reference that describe risks, uncertainties, and other factors that could cause results to differ materially from those projected in these forward-looking statements.

We caution you that these discussions of risks and uncertainties may not be exhaustive.

We operate in a continually changing business environment and frequently enter into new businesses and product lines.

We cannot predict all potentially relevant risks and uncertainties, and we cannot assess the impact, if any, of these factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

Accordingly, you should not rely on forward-looking statements as a prediction of actual results.

We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

We disclaim any responsibility, except to the extent we are legally required, to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

SPX Corporation (“SPX”, “our” or “we”) was founded in Muskegon, Michigan in 1912 as the Piston Ring Company and adopted our current name in 1988.

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Prior to the Spin-Off, our businesses serving the power generation markets had a major impact on the consolidated financial results of SPX.

In the recent years leading up to the Spin-Off, these businesses experienced significant declines in revenues and profitability associated with weak demand and increased competition within the global power generation markets.

Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided that our strategic focus would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses.

In the years leading up to the Spin-Off, these businesses experienced significant declines in revenues and profitability associated with weak demand and increased competition within the global power generation markets.

Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided coming out of the Spin-Off that our strategic focus would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses.

As a result, we have significantly reduced our exposure to the power generation markets as indicated by the dispositions of our dry cooling and Balcke Dürr businesses during 2016.

Additionally, during 2018, we initiated a plan to wind-down the SPX Heat Transfer (“Heat Transfer”) business, with the wind-down completed during the fourth quarter of 2020.

As a result of completing such wind-down activities, we are now reporting the Heat Transfer business as a discontinued operation for all periods presented.

Lastly, our South African subsidiary, DBT Technologies (PTY) LTD’s (“DBT”) contractual scope on the large power projects in South Africa is substantially complete, with its remaining responsibilities under the projects related

primarily to resolution of various claims between itself and one of the prime contractors on the projects.

As a result of completing such wind-down activities, we are reporting the Heat Transfer business as a discontinued operation for all periods presented.

Lastly, with its substantial completion of the remaining

scope on the large power projects in South Africa, our South African subsidiary, DBT Technologies (PTY) LTD’s (“DBT”), completed wind-down activities during the fourth quarter of 2021.

As a result of completing wind-down activities, we are now reporting the DBT business as a discontinued operation for all periods presented.

See MD&A and Notes 1 and 4 to our consolidated financial statements for further discussion of these actions.

On March 1, 2018 and June 7, 2018, we completed the acquisitions of Schonstedt Instrument Company (“Schonstedt”) and Cues, Inc.

(“Cues”), respectively.

Schonstedt is a manufacturer and distributor of magnetic locator products used for locating underground utilities and buried objects, while Cues is a manufacturer of pipeline inspection and rehabilitation equipment.

The post-acquisition operating results of Schonstedt and Cues are reflected within our Detection and Measurement reportable segment.

On February 1, 2019, we completed the acquisition of Sabik Marine (“Sabik”), primarily a manufacturer of obstruction lighting products.

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The post-acquisition operating results of ULC and Sensors & Software are reflected within our Detection and Measurement reportable segment.

On April 19, 2021 and August 2, 2021, we completed the acquisitions of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, "Sealite"), and Enterprise Control Systems Ltd ("ECS"), respectively.

Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products, while ECS is a manufacturer and designer of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers.

The post-acquisition operating results of Sealite and ECS are reflected within our Detection and Measurement reportable segment.

On October 1, 2021 we completed the sale of SPX Transformer Solutions, Inc.

(“Transformer Solutions”) pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc.

(the “Purchaser”) and Prolec GE Internacional, S.

We are reporting Transformer Solutions as a discontinued operation for all periods presented.

See Notes 1 and 4 to our consolidated financial statements for further details.

In connection with the disposition of Transformer Solutions and its classification as a discontinued operation, we have eliminated the Engineered Solutions reportable segment and have reflected the remaining operations of the former Engineered Solutions reportable segment within the HVAC reportable segment for all periods presented.

O n December 15, 2021, we completed the acquisition of Cincinnati Fan & Ventilator Co., Inc.

(“Cincinnati Fan”), a leader in engineered air movement solutions, including blowers and critical exhaust systems.

The post-acquisition operating results of Cincinnati Fan are reflected within our HVAC reportable segment.

Unless otherwise indicated, amounts provided in Part I pertain to continuing operations only (see Notes 1 and 4 to our consolidated financial statements for information on discontinued operations).

We are a diversified, global supplier of infrastructure equipment serving the HVAC, detection and measurement, power transmission and generation, and industrial markets.

With operations in over 15 countries and approximately 4,500 e mployees, we offer a wide array of highly engineered infrastructure products with strong brands.

HVAC solutions offered by our businesses include package cooling towers, residential and commercial boilers, comfort heating, and ventilation products.

We are a diversified, global supplier of infrastructure equipment serving the HVAC and detection and measurement markets.

With operations in 15 countries and approximat ely 3,100 emp loyees, we offer a wide array of highly engineered infrastructure products with strong brands.

HVAC solutions offered by our businesses include package and process cooling equipment, engineered air quality solutions, residential and commercial boilers, comfort heating, and ventilation products.

Our market leading brands, coupled with our commitment to continuous innovation and focus on our customers’ needs, enables our HVAC cooling and heating businesses to serve an expanding number of industrial, commercial and residential customers.

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We intend to expand our portfolio of specialized products through new, innovative hardware and software solutions in an attempt to (i) further capitalize on the detection and measurement markets we currently serve and (ii) expand the number of markets that we serve.

Within our engineered solutions platform, we are a leading manufacturer of medium and large power transformers, as well as process cooling equipment.

These solutions play a critical role in electricity transmission and generation.

Specifically, our power transformers play an integral role in the North American power grid, while our process cooling equipment assists our customers in meeting their power generation and industrial needs.

The businesses within the platform are committed to driving value through continued focus on operational and engineering efficiencies.

Reportable Segments and Other Operating Segment

Our DBT operating segment is reported within an “Other” category outside of our reportable segments.

Our other operating segments are aggregated into the following three reportable segments:

HVAC, Detection and Measurement, and Engineered Solutions.

Reportable Segments

Our operating segments are aggregated into the following two reportable segments:

HVAC and Detection and Measurement.

The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment.

In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Financial Accounting Standards Board Codification (“Codification”).

Operating income or loss for each of our operating segments is determined before considering impairment and special charges, long-term incentive compensation,

certain other operating expenses and other indirect corporate expenses.

Operating income for our reportable segments is determined before considering impairment and special charges, long-term incentive compensation, certain other operating income/expense and other indirect corporate expenses.

This is consistent with the way our Chief Operating Decision Maker evaluates the results of each segment.

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Approximately 97% of the segment’s backlog as of December 31, 2021 is expected to be recognized as revenue during 2022.

The segment engineers, designs, manufactures, installs and services cooling products for the HVAC and industrial markets, as well as heating and ventilation products for the residential and commercial markets.

The segment engineers, designs, manufactures, installs and services cooling products and engineered air quality solutions for the HVAC and industrial markets, as well as heating and ventilation products for the residential and commercial markets.

The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers.

The segment serves a customer base in North America, Europe, and Asia.

Core brands for our cooling products include Marley and Recold, while our heating and ventilation products are sold under the Berko, Qmark, Fahrenheat, Leading Edge, and Patterson-Kelley brands, and our Marley-Wylain subsidiary sells its products under the Weil-McLain and Williamson-Thermoflo brands.

Detection and Measurement Reportable Segment

The segment serves a cu stomer base in North America, Europe, and Asia.

Core brands for our cooling products include Marley, Recold, SGS and Cincinnati Fan, while our heating and ventilation products are sold under the Berko, Qmark, Fahrenheat, Leading Edge, and Patterson-Kelley brands, and o ur WM Technologies s ubsidiary sells its products under the Weil-McLain and Williamson-Thermoflo brands.

Detection and Measurement Reportable Segmen t

Our Detection and Measurement reportable segment had revenues of $ 467.4 , $387.3 and $384.9 in 2021, 2020 and 2019, respectively, and backlo g of $ 153.6 and $ 89.3 as of December 31, 2021 and 2020, respectively.

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The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia Pacific.

Core brands for our underground pipe and cable locators and inspection and rehabilitation equipment are Radiodetection, Pearpoint, Schonstedt, Dielectric, Warren G-V, Cues, ULC Robotics, and Sensors & Software.

Our bus fare collection systems, communication technologies, and obstruction lighting are sold under the Genfare, TCI, Flash Technology and Sabik Marine brand names, respectively.

Engineered Solutions Reportable Segment

Our Engineered Solutions reportable segment had revenues of $577.5, $548.9 and $537.0 in 2020, 2019 and 2018, respectively, and backlog of $353.4 and $373.4 as of December 31, 2020 and 2019, respectively.

Approximately 88% of the segment’s backlog as of December 31, 2020 is expected to be recognized as revenue during 2021.

The segment engineers, designs, manufactures, installs and services transformers for the power transmission and distribution market, as well as process cooling equipment for the industrial and power generation markets.

The primary distribution channels for the segment’s products are direct to customers and third-party representatives.

The segment has a strong presence in North America.

We sell transformers under the Waukesha brand name.

Typical customers for this product line are publicly and privately held utilities.

Our process cooling products are sold under the brand names of SPX Cooling and Marley.

Our DBT operati ng segment had revenues of $4.0, $(6.1) and $72.6 in 2020, 2019 and 2018, respectively, and backlog of $3.7 a nd $7.4 as of December 31, 2020 and 2019, respectively.

DBT engineers, designs, manufactures, installs, and services equipment for the industrial and power generation markets, with its efforts focused primarily on two large power projects in South Africa that are in the final stages of completion (see Note 15 to our consolidated financial statements for additional details).

Core brands for our underground pipe and cable locators and inspection and rehabilitation equipment are Radiodetection, Pearpoint, Schonstedt, Dielectric, Riser Bond, Warren G-V, Cues, ULC Robotics, and Sensors & Software.

Our bus fare collection systems, communication technologies, and obstruction lighting are sold under the Genfare, TCI, Flash Technology, Sabik Marine, Sealite, Avlite and ECS brand names, respectively.

We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material.

As previously indicated, we acquired ULC and Sensors & Software in 2020, Sabik, SGS, and Patterson-Kelley in 2019, and Schonstedt and Cues in 2018.

We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be material.

As previously indicated, we acquired Sealite, ECS, and Cincinnati Fan in 2021, ULC and Sensors & Software in 2020, and Sabik, SGS, and Patterson-Kelley in 2019.

We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be m aterial.

As previously indicated, the divestiture of Transformer Solutions was completed in 2021.

There were no divestitures of businesses in 2020 or 2019.

As previously indicated, we completed the wind-down of our Heat Transfer business in the fourth quarter of 2020 and, as such, the business is now being reported as a discontinued operation for all periods presented.

As previously indicated, we completed the wind-down of our DBT and Heat Transfer businesses in the fourth quarters of 2021 and 2020, res pectively.

International Operations

We are a multinational corporation with operations in over 15 c ountries.

We are a multinational co rporation with operations in over 15 countries.

Sales outside the United States were $228.0, $192.4 and $150.9 in 2021, 2020 and 2019, respectively.

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Patents/Trademarks

We own 197 domestic and 214 foreign patents (comprising 186 patent “families”), including 23 patents that were issued in 2020, covering a variety of our products and manufacturing methods.

We o wn 163 domestic and 265 foreign patents (comprising 154 patent “families”), including 34 patents that were issued in 2021, covering a variety of our products and manufacturing methods.

We also own a number of registered trademark s.

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We believe that we generally will be able to continue to obtain adequate supplies of key products, components or appropriate substitutes at reasonable costs.

We are subject to increases in the prices of many of our key raw materials, including petroleum-based products, steel and copper.

For information regarding COVID-19 impacts, please refer to "MD&A - COVID-19 Pandemic, Supply Chain Disruptions, and Other Economic Factors."

We are subject to increases in the prices of many of our key raw materials, including petroleum-based products and steel.

In recent years, we have generally been able to offset increases in raw material costs.

Occasionally, we are subject to long-term supplier contracts, which may increase our exposure to pricing fluctuations.

We use forward contracts to manage our exposure on forecasted purchases of commodity raw materials (“commodity contracts”).

See Note 14 to our consolidated financial statements for further information on commodity contracts.

Due to our diverse products and services, as well as the wide geographic dispersion of our production facilities, we use numerous sources for the raw materials needed in our operations.

We are not significantly dependent on any one or a limited number of suppliers, and we have been able to obtain suitable quantities of raw materials at competitive prices.

For information regarding COVID-19 impacts, please refer to "MD&A - COVID-19 Pandemic, Supply Chain Disruptions, and Other Economic Factors."

Our competitive position cannot be determined accurately in the aggregate or by reportable or operating segment since we and our competitors do not offer all the same product lines or serve all the same markets.

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We believe we compete effectively on the basis of each of these factors as they apply to the various products and services offered.

See “Reportable Segments and Other Operating Segment” above for a discussion of our competitors.

See “Reportable Segments” above for a discussion of our competitors.

Environmental Matters

See “ MD&A — Critical Accounting Estimates — Contingent Liabilities ,” “ Risk Factors ” and Note 15 to our consolidated financial statements for information regarding environmental matters.

See “ MD&A — Critical Accounting Estimates — Contingent Liabilities ,” “ Risk Factors - Risks Related to Contingent Liabilities ” and Note 15 to our consolidated financial statements for information regarding environmental matters.

Human Capital Resources

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We also leverage temporary workers to provide flexibility for our business and manufacturing needs.

Eight domestic collective bargaining agreements cover approximately 1,100 of our employees.

Six domestic collective bargaining agreements cover approximately 300 of our employees.

In addition, we have various collective labor arrangements covering certain of our non-U.S.

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As such, we strive to provide an environment where employees are developed and provided challenging career growth opportunities, and know their inputs and contributions are appreciated.

We offer a “Total Rewards” program that provides comprehensive compensation and benefits packages that are competitive with the market and choices designed to reward employees and assist them in managing their well-being.

Together, these opportunities present significant growth potential for employees, both financially and professionally.

We offer a “Total Rewards” program that

provides comprehensive compensation and benefits packages that are competitive with the market and choices designed to reward employees and assist them in managing their well-being.

In 2021, we also focused significant time on re-working many of our policies and programs to provide increased flexibility and work-life balance to our team members.

Together, these opportunities present significant growth potential for our employees from a financial, professional, and personal standpoint.

As part of our focus on building and sustaining a highly capable, engaged and motivated workforce that has the ability to deliver on the current and future requirements of the company, we continue to advance our talent management framework, known as RiSE, which helps us Reach, Identify, Strengthen, and Engage our workforce.

Recent areas of focus include:

the graduation of a new cohort from our executive leadership development program, the introduction of a new course supporting our frontline leaders’ development, and the expansion of our talent review and succession planning programs.

We also were able to successfully pivot many of our education and training programs to an online format in response to the COVID-19 pandemic.

We anticipate that we will incorporate the online approach into our training offerings going forward, as this format allows expanded participation and permits broader, time-flexible development.

During 2020, there was significant focus on enhancing our Diversity & Inclusion programs, aimed at ensuring we provide an inclusive environment where everyone feels valued and respected.

We targeted engagement, as well as education and training efforts, which focused on creating awareness and expanding understanding and changing behaviors.

We also formed a Diversity & Inclusion Council, which is comprised of several senior leaders from across the enterprise and is led by our CEO.

In addition, we developed networking and action groups, comprised of dozens of “Ambassadors” from across the company.

These groups have been asked to participate in the development and implementation of strategy and programming to ensure that the actions we take drive meaningful and impactful results for our employees.

We believe that through education and training we can unlock greater potential and opportunities and benefit from diverse backgrounds and points of view.

the enhancement of our Front-line Leadership Program, introduction of a new on-demand learning platform and the on-going expansion of our talent review and succession planning programs.

We also were able to successfully move even more of our education and training programs to an online format to allow for expanded participation and broader, time-flexible development.

During 2021, we continued our focus on enhancing our Diversity, Equity & Inclusion programs, aimed at ensuring we provide an inclusive environment where everyone feels valued and respected.

We launched our formal Diversity & Inclusion Statement and published an enterprise charter to align the organization on our commitments.

Our Executive Leadership Team and Diversity & Inclusion Council, both comprised of senior leaders from across the enterprise and led by our CEO, facilitated listening sessions with employees from across the globe to learn what was important to them and how we could create an even better work environment.

In response to the feedback received, multiple initiatives were undertaken to increase communications, build the capabilities of our leaders (we trained over 500 employees on how to Create an Inclusive Environment) and on furthering the dialogue across the enterprise.

A Day of Understanding was held in each business to communicate, engage and educate our global teams.

Our networking and action groups, comprised of dozens of “Ambassadors” from across the company, were active participants in the development and implementation of our strategies and programming to ensure that the actions we take drive meaningful and impactful results for our employees.

We believe that through these efforts we can unlock greater potential, provide new opportunities for our employees, and benefit from diverse backgrounds and points of view.

Valuing diversity and inclusion is, and will be, an on-going part of the culture we are continuously working to strengthen.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business