Good day, ladies and gentlemen, and welcome to the Q3 2016 SPX Corporation’s Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like now to turn the call over to your host Paul Clegg, VP of Finance and Investor Relations. Mr. Clegg, you may begin.

Thank you, Sherry. And good afternoon, everyone. Thanks for joining us. With me on the call today are Gene Lowe, our President and Chief Executive Officer; and Scott Sproule, our Chief Financial Officer. A press release containing our third quarter 2016 results was issued today after market close. You can find the release in our earnings slide presentation as well as a link to a live webcast of this call in the Investor Relations section of our website, at spx.com. I encourage you to review section of our website, at spx.com. I encourage you to review our disclosure and discussion of GAAP results in the press release and then fall along with the slide presentation during our prepared remarks. A replay of the webcast will be available on our website until November 10th. As a reminder, portions of our presentation and comments are forward-looking and subject to Safe Harbor provisions. Please also note the risk factors in our 10-K and other SEC filings. On our call today, we will discuss core operating results, which exclude the results of the South African projects, and we will separately provide an update on those projects. Other adjustments to our GAAP results this quarter include an adjustment to the gain from the sale of our Dry Cooling business, a pension adjustment and a charge associated with the write off of differed financing fees. You can find reconciliations of adjusted figures to their respective GAAP financial measures in the appendix to today’s presentation and in our press release. Finally, we plan to be on the road this month meeting with investors. And on December 1st, we will participate in the Credit Suisse Annual Industrials Conference in Palm Beach, Florida. And, with that, I will turn the call over to Gene.

Thanks, Paul. Good afternoon, everyone. Thank you for joining us. On the call today we'll give you a brief update on our overall results, segment performances, end market condition and guidance before going into Q&A. I'll start with some highlights from the quarter. Overall, I'm pleased with our performance in the face of headwinds and certain end markets. The operational initiatives we have been implementing across our company have helped drive improvements in the margin profile of our businesses and for the quarter our adjusted EPS is roughly in line with our internal forecast. And our Detection & Measurement segment specifically, two of our product lines have recently received their largest customer awards in years, helping to position the segment for future growth. Our Transformers business is continuing its strong performance and we're starting to see the benefits of restructuring actions in our Power Generation businesses. All of these factors leave us feeling good about our path forward. So, while we're making several changes to the components of our guidance today, we continue to be confident in our ability to achieve our full-year mid-point adjusted EPS guidance of a $10 as well as our leverage and our full-year targets for 2016. Turning to results. For the quarter, adjusted operating income was $10 million and 2.8% of sales, down from the prior year period primarily due to lower revenues and more origins in our HVAC segment. As a reminder, our year-over-year revenue comparisons in Q3 are affected by the sale of our Dry Cooling business which occurred in late Q1 as well as a large project in HVAC cooling completed in the prior year. During the quarter, most of our strategic platforms performed well. Our Transformer business experienced solid revenue and margin growth and is on track to exceed our full-year…

Thanks, Gene. I'll start with our net results for the quarter. Our GAAP earnings per share was $0.06 on an adjusted basis earnings per share for the third quarter was $0.14. In addition to adjusting for the results of the South African projects, we continue to adjust for noncash pension cost that do not pay into the service time of our active employees. During the quarter, we also completed the true up of working capital transferred with the sale of our dry cooling business resulting in a final adjustment to gain on the sales on that transaction. Lastly, we reported a loss classified as the -- of debt on our income statement. This noncash charge reflects writing off a portion of previously differed financing cost. During the quarter we decided to reduce evaluable capacity associated with bank guarantee facilities that predominantly support our power generation businesses with the strategic actions we've been taking in those businesses, it was excess capacity that we are paining to maintain and this action reduces the facility to more properly reflect our ongoing needs. The result will be a reduction I cost of approximately $1 million on an annual basis. Moving on to core segment results of the quarter, which exclude the results of our South African project. We continue to execute well on the variables within our control and believe our year-to-date results reflect those accomplishments. As Gene had mentioned, we have experienced market headwinds during Q3 associated with HVAC heating orders. That effect was partially offset by continuing strong operating performance within HVAC. And our transformer business continues contributed another solid quarter of revenue in margin growth. In the Detection & Measurement segment, our run rate products experienced steady overall demand. However, revenue from projects which can vary from period to period were…

Thanks, Scott. Well, the third quarter reflected a strong operating performance in several businesses being offset by some market challenges, I'm confident that we have the right plan and the right team in place to continue executing on our blueprint to drive value for our shareholders. Before we move to the Q&A portion of the call, I want to say I'm very proud of the strong effort put forth by our employees since the spin-off of SPX flow more than one year ago today. There is still plenty of hard work in front of us, we've accomplished a lot in a short amount of time and we remain determined to create a more profitable growth company by continuing to build on our strategic platforms while executing on our plan to eliminate the losses from the underperforming portions of our power generation business. We are well underway on our plans to achieve these goals and I look forward to updating you on our progress going forward. I'll now turn the call back over to Paul.

Thanks, Gene. Sherry, I think we're ready to go to Q&A.

Thank you. [Operator Instructions] Our first question comes from Damien Horth of UBS.

Hey guys, good afternoon.

Hey, Damien.

Hey, Damien.

So, I appreciate the color on the boiler business and kind of what's going on there within HVAC. But I was wondering if you could just try to help us understand a little bit better, the typical seasonality that you see there in boilers. Now, is it normal that you kind of start seeing that business ramp September? I was just kind of trying to recognise last when it was a little bit warmer but just trying to understand if apart from that you would typically start seeing a seasonal ramp September?

Yes. I think, let me take a crack of that, Damien. I think as Scott mentioned, both the boiler business which is a portion of our heating business, is about 80% residential and that's really the portion that we're talking about here. Most of that goes into replacement and upgrades of existing boilers. And this is it's really an aftermarket business. And there is a fairly nice steady demand as you look at that year-over-year. Having said that weather does either increase the market or decrease the market on any given year. And it does effect the overall market demand that we see for that product line. The way that the demand typically works is you have a end market pull through in typically in Q4 and Q1 and that is when people are typically turning on their boilers and operating their boilers and the call for heat is initiating the process. And what we typically see in the offseason months of Q2 and Q3, most of our demand comes from our partners that are building up stocking orders in anticipation for the winter season. So, what will affect the demand profile for boilers overall in the residential side of the house is, one, how cold it is but also when the cold hits. The earlier the cold, the more the pull through demand will happen earlier in the season. So, we have talked about how last season was a low order volume that was not seen in Q1 and Q2 in terms of the demand profile for boilers. But we as we talked about, we did see a real decline in the market demand profile in Q3. Scott, do you have anything else on this topic?

The only thing I would add is if you look at just overall HVAC segment and you try to isolate what kind of impact heating could have on variability there. If you're looking that kind of an average view, you could see about plus or minus 2% to the organic revenue growth as a variability be whether it’s a very cold winter or very warm winter. So, we had already anticipated some impact of that because we obviously experienced a cold beginning tail end of the 2015, '16, winter. And what we've seen is some further delays and I think we're going to be towards the lower end of a season here.

Okay, that's really helpful. Now, I guess one more question on power. If you strip away the divesting impact, sort of the flat organic year-over-year result. Seems like a pretty good result relative to what you guys have been seeing there. You mentioned the Transformers is sort of continuing to see sort of steady demand there. So, I was just wondering if maybe you're starting to see in and some of the bleeding on the power generation side. If you can maybe just kind of provide a little additional colour on sort of the split between power gen transformers and what you saw there in the quarter. Thanks.

Yes. I don’t know if I'd go as far to say that we're seeing in end to the issues we're seeing in power generation on a full-year basis. We are seeing, we've been putting a fair amount of actions towards there. Structurally change in the business and as a result of the sale are drive business in the beginning of the year. We've done some restructuring directed at US operations, structurally get those businesses to least break even. We still are struggling in with the European businesses but we're seeing some benefits there and what we're alluding to is we're going to see some sequential improvement there from Q3 to Q$. And if you just look at Q3, we had less than 1% margins for the overall segment, but still had good margins in Transformers. You can get, if you back into those experiencing losses in those power gen business. So, I'm not saying that we've turned the corner around those but we've already going to see some benefit sequentially as we go to Q4. And it also, remember, Q4 usually are one of the larger quarters of the year. So, we're going to give a little bit of volume benefit there in Q4 as well.

Okay, thanks guys.

Thank you. Our next question comes from Ronny Weiss of Credit Suisse.

Hi, good afternoon, everyone.

Hi, Ron.

Hey runny. And Dissection & Measurement. Can you give some additional colour in to each of the business there kind of perform over the quarter. Is that flash business still see in a little bit of weakness and is all the live large project deferrals kind of related to Genfare or is it you got is all the live large project deferrals kind of related to Genfare or is it you got it business lines as well?

I'll take a crack at that Ronny. So, if I break down the Detection & Measurement. As we've talked about at the macro, that's about 2/3rds three quarters run rate businesses across our different product lines and we've seen very nice demand there, very steady demand there across the four product lines we have there. And then on the project businesses, I'd say there's two product lines that have more project oriented businesses and then knows I'd say one will be performing a little ahead, one we've been seeing some pushouts in particularly in the large capital decisions there. If I had to kind of run through those, our largest businesses, radio detection, that is really a run rate business and that's been steady for us. We're pleased with the demand profile we've seen there. The flash business which we brought up is really a largely a run rate business as well. That's been performing very well this year, I'd say ahead of our expectations as when we started the year. And if you look at Genfare, I would say on the demand side, the run rate portion of that business which is a good chunk of that business, has been healthy. And on the project side, we've had a pretty substantial backlog over the past two years, we were pleased that some of these were starting to convert. So, I think that we are seeing some kind of version of the backlog on that side. On the communication technologies business, this is a business that's very global and probably has the highest project orientation nature to it. We have a really robust front log there globally but this is where we have seen projects pushing our some of these capital projects pushing to the right, particularly I would say in some of the countries that are influenced by oil but in that when I look at kind of the demand profile across our Detection & Measurement businesses, I'd summarize by saying feeling good about the performance on the run rate. And then on the project, we're seeing a good front log. We're very pleased about these two awards that we got this quarter, which were the largest we've had in years. Those are two different businesses and two different product lines and we think that boards well for our past four --. Scott, do you have any other colour on the market?

Ronny, when you look at our updated guidance particularly for D&M, what you're seeing there is as we said we saw a little bit few more delays and so that means that we are expecting some of these projects to book in Q3 that we're going to be hold the revenue in Q4. We're seeing some of those fall out of the year. The positive is that we're actually seeing more traction in closing out, so moving from front log to closing out to contract phase, started here and late Q3 and into Q4. And we're not seeing a loss of prices or cancellation of projects, they feel like the -- is robust. It's our real project, projects are bit of a shift. So, it'll shift out at Q4 but it's not something that's shifting out of our expectations for award we'll be winning.

Very helpful. And then on the capital allocation side, you guys have talked about doing smaller deals. Deals in few areas in the past. The reason there has been no kind of activity there yet, the focus being mostly on the divestments right now, it is the valuation of some of the targets that you're going after is leverage still too high. Any kind of colour around there?

Yes. Ronny, I would say that we are actively in the market. I would say we've been involved with processes, we're being very disciplined on valuation. I would say one or two opportunities where the valuation that we're not comfortable with. But we actually think that there is a pretty reasonable front log for us. And again this would be opportunities that are both on, really right on top of our growth platforms or HVAC and our Detection & Measurement. As we've kind of laid out. And the $20 million to a $100 million revenue range is I would say the bulk of the opportunities that we see. So, I'd say that there is a lot of activity going on behind the scenes but we're going to be very disciplined and very careful. We think there is an opportunity to enhance the growth of our platforms but we want to do it in a smart way.

Got it. Congrats on the one year anniversary.

Thank you.

Thank you. Our next question comes from Brett Linzey at Vertical Research.

Thank you. Our next question comes from Brett Linzey at Vertical Research.

Hi, good afternoon all.

Hi, Brett.

I just want to come back to the full-year guide for HVAC. You're seeing flat for the year. And implicitly this is the Q4 that looks like it's something a little bit better than mid-single digits. And I understand and appreciate the colour on the heating side. What are the expectations on the cooling side? Do you have project deliverables invisibility there, there's -- like kind of help me get comfortable with the kind of mid-single digits plus growth profile?

Yes. And Brett, maybe I'll take a crack at it and Scott can also augment here. I think if you look at our cooling side, we're actually very pleased with what we're seeing. And as we've talked about dodge is really the best leading indicator there. And what the dodge index is saying, there several more years of growth, probably with the institutional taking on a little bit more of a lead role than commercial. But we're seeing a very healthy front log and we're very pleased with the conversion of that front log. This year, our cooling business is right now we're tracking organic at 5% to 6% for the full-year. And I think it's important to highlight that we had a really a one time job last year. That was POP go. If you take that into account, it's actually going to be much higher than that. What we've seen is very nice growth in the America, we've seen lower growth in Europe and higher growth in our Asia region. So, net net we think we're in the 5% to 6% range.

Okay, great. Now, that better helps. And then I know you can't say too much, but just around the European sale process in Power Gen. is it, is there a buyer than solidify and it's just more timing and working through the final negotiations. Just trying to understand the context of the clear password.

Yes. So, I mean, I've -- Brett, it's kind of hard for us to speak as we're right in the middle of the process and we don’t want to that limit what we can say. I think what we can say is we are targeting to have an answer here by the end of the year. This has been going on as we've highlighted over the past six months. So, it's been a process but with where we are today, there's rely a limit to what we can say about the active discussions.

Okay, great. And then just one last one on D&M. you talked about the two big awards you had. Could you maybe help us size those and then just say anything around timing, when we might see those convert?

I would say from a size wise individually 10 million. And for that segment over the large rewards. We don’t think kind of thinking anything in that segment or kind of over 5 million is probably a pretty large award. And as far as execution, there'll be, some of them have milestones they'll execute throughout 2017.

Okay, great. I appreciate you guys, thanks.

Thanks Brett. Speaker: Thank you. Our next question comes from Robert Barry of Susquehanna International Group.

Good afternoon, guys. This is Filippo on the call for Rob.

Hi, Filippo.

Hi, Filippo.

Hi. So, first question on the Detection & Measurement. What, so just to clarify, your guidance assumes kind of steady contribution from the run rate and not further delays on the project or what is your assumption for 4Q in Detection & Measurement.

Yes, that's correct. Steady run rate business in more and here for the fourth quarter really largely asking of the backlog.

Okay. And so you have visibility based on your current outlook on that.

That's correct.

Okay, cool. And if I look at your guidance, I mean, 4Q kind of implies a little stronger than you're a usual seasonality. Again what is the driver then? And also, on the EPS side, you also implies. Is this kind of almost more than 50% of earnings, your 4Q. Is there something below the line that makes the difference even larger at the EPS line? Is the tax rate or something else?

Yes, a couple of things one, just structurally how we are as a company in the type business we have, niche business or is always our largest quarter. And if you just look back at last year, when wed $0.52 of earnings on elevated restructuring, you'll see its similar level of earnings that we're expecting this quarter. Obviously visibilities are different but it's not an abnormal level. And as far as some of the things you're looking at, it's one of the reasons why I called out power because we're getting a greater level of contribution from the power segment in Q4. Certainly as you look at it sequentially from Q3 for the various matters I went through. And then as I updated, we are reducing our tax rate to 30% to 35%, we have been guiding over 35% plus, so that's benefitting us in the quarter, end of quarter.

Okay, great. And let me, finally if you can comment on Genfare and I know there's been a lot of talks about the highway deal and the potential benefit from here. When do you think those will come through and the project will come through and will have some contribution from those?

Yes. Filippo, this is Gene. I'll take a crack at that. I think we've had a pretty healthy pipeline there for a while since the transportation bill has come in. I would say that there's two things we've seen. There's a fairly big portion of that business, which is run rate and we've seen very healthy activity levels on the run rate business. But we've also seen some of the larger projects start to move towards the contracting phase. As a matter of fact, one of the projects that we referenced and our opening comment is a project in Genfare and that's currently under execution and we anticipate we'll be right in the end of the quarter and then 2017 timeframe. So, I would say that we believe we've already seeing some of the positive benefits of that and we think that's a very good market driver. As a reminder, that is a multiple year deal. And we think that's going to provide some tailwinds for the Genfare business.

Okay, great. Thanks, guys.

Thank you.

Thank you. I'm showing no further questions at this time. I would now like to turn the call back over to your host Mr. Paul Clegg.

Okay, thanks Sherry. And thank you everyone for joining the call. We look forward to updating you on our fourth quarter results in February. Have a good evening.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may all disconnect and have a wonderful day.