What changed in this filing

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Item 1. Business

2024-02-23 compared with 2023-02-24 · 62 added, 48 removed, 124 unchanged (47% 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 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.

Particular risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include the following:

cyclical changes and specific industry events in the Company’s markets;

changes in anticipated capital investment and maintenance expenditures by customers;

availability, limitations or cost increases of raw materials and/or commodities that cannot be recovered in product pricing;

the impact of competition on profit margins and the Company’s ability to maintain or increase market share;

inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks;

the uncertainty of claims resolution with respect to environmental and other contingent liabilities;

the impact of climate change and any legal or regulatory actions taken in response thereto;

cyber-security risks;

risks with respect to the protection of intellectual property, including with respect to the Company’s digitalization initiatives;

the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts;

defects or errors in current or planned products;

the impact of pandemics and governmental and other actions taken in response;

domestic economic, political, legal, accounting and business developments adversely affecting the Company’s business, including regulatory changes;

changes in worldwide economic conditions, including as a result of geopolitical conflicts;

uncertainties with respect to the Company’s ability to identify acceptable acquisition targets;

uncertainties surrounding timing and successful completion of acquisition or disposition transactions, including with respect to integrating acquisitions and achieving cost savings or other benefits from acquisitions;

the impact of retained liabilities of disposed businesses;

potential labor disputes;

and extreme weather conditions and natural and other disasters.

These and other risks and uncertainties are further discussed in other sections of this document.

These statements are only predictions.

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(“SPX”, “our”, “the Company”, or “we”) is the successor registrant pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended, to SPX Corporation (“Legacy SPX”) as a result of the completion on August 15, 2022 of a holding company reorganization (the “Holding Company Reorganization”) effected as a merger of Legacy SPX with and into SPX Merger, LLC, a subsidiary of the Company.

Each share of Legacy SPX’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the consummation of the Holding Company Reorganization was automatically converted into an equivalent corresponding share of the Company's common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX common stock being converted.

common stock being converted.

Accordingly, upon consummation of the Holding Company Reorganization, Legacy SPX stockholders became stockholders of the Company.

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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.

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 at that time 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.

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 at that time 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.

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

On September 2, 2020 and November 11, 2020, we completed the acquisitions of ULC Robotics (“ULC”) and Sensors & Software, Inc.

(“Sensors & Software”), respectively.

ULC is a leading developer of robotic systems, mechanical learning applications, and inspection technology for the energy, utility, and industrial markets, while Sensors & Software is a manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations.

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.

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 of 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-improvised explosive device RF jammers.

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These indemnification obligations are not subject to any cap or time limitation.

The board of managers of the divested subsidiaries each received a solvency opinion from an independent advisory firm that the divested subsidiaries were solvent after giving effect to the divestiture.

On April 3, 2023, we completed the acquisition of T.A.

Morrison & Co.

(“TAMCO”), a market leader in motorized and non-motorized dampers that control airflow in large-scale specialty applications in commercial, industrial, and institutional markets.

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

On June 2, 2023, we completed the acquisition of ASPEQ Heating Group (“ASPEQ”), a leading provider of electrical heating solutions to customers in industrial and commercial markets.

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

On February 7, 2024, we completed the acquisition of Ingénia Technologies Inc.

(“Ingénia”) which specializes in the design and manufacture of custom air handling units that demand high levels of precision and reliability in healthcare, pharmaceutical, education, food processing and industrial end markets.

The post-acquisition results of Ingénia will be reflected within our HVAC reportable segment.

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

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With operations in 15 countries and approximat ely 4,100 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.

HVAC solutions offered by our businesses include package and process cooling equipment, engineered air movement solutions, residential and commercial boilers, electrical 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.

Growth for our HVAC businesses will be driven by innovation, increased scalability, and our ability to meet the needs of broader markets.

Our detection and measurement product lines encompass underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, fare collection systems, communication technologies, and obstruction lighting.

Our detection and measurement product lines encompass underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation.

Our detection and measurement solutions enable utilities, telecommunication providers and regulators, and municipalities and transit authorities to build, monitor and maintain vital infrastructure.

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This is consistent with the way our Chief Operating Decision Maker (“CODM”) evaluates the results of each segment.

During 2022, management concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Codification, the disclosure of operating income for each of our reportable segments (“Segment Income”) was not consistent with the measure used by our CODM when evaluating the results of, or allocating resources to, our reportable segments.

We previously disclosed that Segment Income is determined before considering impairments and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses.

Our CODM also excludes the impact of intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs from Segment Income.

Accordingly, Segment Income, as presented in Note 7 to the consolidated financial statements, now excludes all of the items noted above.

This change had no impact to the amounts previously presented in our consolidated statements of operations for the years ended December 31, 2021 and 2020.

Although the impact of this change to previously disclosed Segment Income is not material, we revised the prior years’ presentation to be consistent with the current year disclosure.

Refer to Notes 1 and 7 to our consolidated financial statements for additional details.

HVAC Reportable Segment

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Approximately 98 % of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024.

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 segment engineers, designs, manufactures, installs and services cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as heating and ventilation products for the residential, industrial, 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 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, Patterson-Kelley, Weil-McLain, and Williamson-Thermoflo brands.

Core brands for our cooling products include Marley, Recold, SGS, Cincinnati Fan, TAMCO, and Ingénia , while our heating products are sold under the Berko, Qmark, Fahrenheat, Leading Edge, Patterson-Kelley, Weil-McLain, Williamson-Thermoflo, INDEECO, Heatrex, AccuTherm, Brasch, Spectrum, BannerDay PipeHeating, and Solar Products brands.

Detection and Measurement Reportable Segmen t

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Approximately 76 % of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024.

The segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, fare collection systems, communication technologies, and obstruction lighting.

The segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation.

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

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

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 fare collection systems are sold under the Genfare brand, our communication technologies products are sold under the TCI and ECS brands, and our obstruction lighting products are sold under the Flash Technology, ITL, Sabik Marine, Sealite, and Avlite brands.

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

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

Our transportation systems are sold under the Genfare brand, our communication technologies products are sold under the TCI and ECS brands, and our aids to navigation products are sold under the Flash Technology, ITL, Sabik Marine, Sealite, and Avlite brands.

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 ITL in 2022, Sealite, ECS, and Cincinnati Fan in 2021, and ULC and Sensors & Software in 2020.

As previously indicated, we acquired Ingénia in 2024, TAMCO and ASPEQ in 2023, ITL in 2022, and Sealite, ECS, and Cincinnati Fan in 2021.

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 three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets, was completed in the fourth quarter of 2022 and the divestiture of Transformer Solutions was completed in 2021.

There were no divestitures in 2020.

As previously indicated, the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets, was completed in 2022 and the divestiture of Transformer Solutions was completed in 2021.

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.

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Patents/Trademarks

We o wn 141 domestic and 366 foreign patents (comprising 132 patent “families”) (foreign patents include patents in individual countries in the European Union (“EU”), as well as EU-level patents), including 18 patents that were issued in 2022, covering a variety of our products and manufacturing methods.

We also own a number of registered trademark s.

We own 160 domestic and 360 foreign patents (comprising 140 patent “families”) (foreign patents include patents in individual countries in the European Union (“EU”), as well as EU-level patents), including 13 patents that were issued in 2023, covering a variety of our products and manufacturing methods.

We also own a number of registe red trademark s.

Although in the aggregate our patents and trademarks are of considerable importance in the operation of our business, we do not consider any single patent or trademark to be of such importance that its absence would adversely affect our ability to conduct business as presently constituted.

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In instances where we depend on third-party suppliers for outsourced products or components, we are subject to the risk of customer dissatisfaction with the quality or performance of the products we sell due to supplier failure.

In addition, business difficulties experienced by a third-party supplier can lead to the interruption of our ability to obtain the outsourced product or component and ultimately to our inability to supply products to our customers.

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

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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 Labor Shortages, and Cost Increases.”

For information regarding supply chain disruptions and labor shortages refer to “MD&A - Supply Chain Disruptions, Labor Shortages, and Cost Increases.”

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.

In addition, specific reliable

comparative figures are not available for many of our competitors.

In addition, specific reliable comparative figures are not available for many of our competitors.

In most product groups, competition comes from numerous concerns, both large and small.

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While we generally have experienced satisfactory labor relations, we are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.

We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.

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

We have 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.

We believe that our future success is impacted by our continued ability to attract and retain highly skilled employees.

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

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

We have focused many of our policies and programs to provide increased flexibility and work-life balance to our team members.

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.

In 2023, we continued deployment of our Frontline Leader Program and have now trained more than 240 leaders in the fundamentals of effective leadership, communication, and team development.

We also launched the third cohort of our Executive Leadership Development Program expanding the bench strength of our most senior leaders.

We are looking forward to adding the final piece to our leadership development program in 2023 with the launch of our Mid-level Program, “Amplified Leadership.”

At the beginning of 2022, we launched our updated Global Employee Survey.

We also continue expanding the strength of our most senior leaders through our Executive Leadership Development Program that has been conducted for three cohorts.

Additionally, in 2023 we implemented the final piece to our leadership development program with the launch of our Mid-level Program, “Amplified Leadership,” graduating 44 leaders.

Further, we expanded the use of our online learning platform and offered several facilitated courses on focused topics, including training over 100 leaders on having “Better Conversations Every Day” with their teams.

At the beginning of 2023, we launched our updated Global Employee Survey with over 90% employee participation.

This annual survey captures employee feedback on topics related to Engagement and Diversity & Inclusion.

The results of the survey informed discussions about what is most important to our employees and helped us develop action plans to focus on those priorities.

During 2022, we continued our focus on enhancing our Diversity & Inclusion programs, aimed at ensuring that we provide an inclusive environment where all employees feel valued and respected.

We launched a new program engaging our entire workforce in a conversation about Unconscious Bias and how we might mitigate biases that typically show up in the workplace.

In addition, we were able to leverage our online learning platform for our leaders, providing continuing education on the value of Diversity & Inclusion and the importance of their roles as leaders, ensuring that all employees have opportunities to contribute their perspectives.

We launched our Diversity & Inclusion calendar highlighting days of celebration or remembrance that further educate our employees on topics that are current and relevant and engaged our global workforce in activities related to World Humanitarian Day.

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.

During 2023, we continued our focus on enhancing our programs aimed at ensuring that we provide an inclusive environment where all employees feel valued and respected.

We continued our annual leader training, engaging just under 600 people-leaders on techniques to have effective conversations on diversity and inclusion.

We believe 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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We file reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and certain amendments to these reports.

Copies of these reports are available free of charge on our website as soon as reasonably

practicable after we file the reports with the SEC.

Copies of these reports are available free of charge on our website as soon as reasonably practicable after we file the reports with the SEC.

The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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