SPX Technologies, Inc. Q3 FY2024 earnings call

• Sustainability: Published annual sustainability report, achieved 30% reduction in carbon intensity ahead of schedule, introduced new climate-conscious solutions to reduce customers' power usage, emissions, and water usage.
• Continuous Improvement: Made capital investments in equipment and processes to increase production capacity, resulting in incremental margin gains from efficiency improvements.
• Financial Results: Adjusted EPS grew 31% to $1.39 for the quarter; total company revenue increased 7.8% year-on-year; organic revenue up 3%, acquisitions drove 4.4% growth, and FX was a modest tailwind.

For the third quarter, HVAC segment revenues grew 15.9% year-on-year. Organically, revenues increased 9% due to cooling demand, while heating was flat. Acquisition of Ingenia and cooling platform contributed 6.8% to growth. Segment income grew by $21.7 million (37.2%) with 370 basis points of margin expansion. Detection & Measurement segment revenues decreased 7% year-on-year. Excluding a large pass-through project from 2023, revenue grew ~3%. Segment income grew $0.5 million with 190 basis points of margin increase.

• Maintaining full-year adjusted EBITDA and adjusted EPS guidance.
• Narrowing HVAC revenue guidance to $1.365 billion to $1.385 billion, reflecting 22.5% midpoint year-on-year growth.
• Slightly narrowing HVAC margin guidance while maintaining midpoint 23.5% (260 basis points year-on-year increase).
• Increasing Detection & Measurement margin guidance to 21.25% to 22%, with midpoint raised to ~21.6% (240 basis points year-on-year increase).

• Weather impact on HVAC heating, as slower start to heat season affected growth.
• Regional variations in Detection & Measurement demand, with softness in China and Continental Europe.
• Timing of projects affecting Detection & Measurement guidance due to chunky project timing throughout the year.

Q: Strong HVAC order growth during the quarter, sustainability of 2024 growth rates into 2025?

A: Paul Clegg states they feel good about strength in markets like data centers, health care, and institutional, and see those continuing through fourth quarter and next year.

Q: Detection & Measurement demand sustainability, M&A pipeline?

A: Gene Lowe discusses regional variations in D&M demand and strong M&A pipeline with activity on both HVAC and D&M sides.

Q: HVAC order cadence, boilers?

A: Paul Clegg and Gene Lowe talk about weather impact on boiler growth and order timing in different markets.

Q: Detection & Measurement margin, guidance range?

A: Paul Clegg and Gene Lowe discuss margin progress from operational efficiencies and project timing affecting guidance range.

Q: Capacity additions, nuclear opportunity?

A: Gene Lowe talks about positive capacity expansion in Ingenia and potential nuclear project opportunities and activity.