SPX Technologies, Inc. Q2 FY2025 earnings call

• Q2 performance was strong with adjusted EPS growing 16%.
• Raised full-year guidance range, anticipating adjusted EBITDA growth of 18% at the midpoint.
• Progress on growth initiatives: expansion plans for Engineered Air Movement businesses with site locations expected to be announced by year-end 2025 and production capacity online in H1 2026.
• New product launch: OlympusV Max cooling solution for data centers, receiving positive feedback and expected to increase addressable market.
• Robust M&A pipeline supporting organic and inorganic value creation.

For the HVAC segment, revenues grew 5.7% year-over-year with 4.9% in organic growth. On an organic basis, revenues increased 0.7% with a modest increase, reflecting a large cooling service project in the prior year. Excluding this project, the organic increase was approximately 7% with solid growth from both cooling and heating. Segment income grew by $12 million or 14.5%, while segment margin increased 190 basis points. For the Detection & Measurement segment, revenues increased 21% year-over-year. On an organic basis, revenue increased 5.5%, the KTS acquisition accounted for an increase of 14.9% and FX was a modest tailwind. Year-over-year, segment income grew $6 million or 18%, primarily driven by the KTS acquisition, while segment margin declined 60 basis points, reflecting a slightly more favorable sales mix in the prior year.

• Updated adjusted EPS range to $6.35 to $6.65, reflecting 16.5% growth at midpoint.
• Narrowed HVAC revenue guidance range with midpoint ~$1.52 billion and increased margin guidance by 75 basis points at midpoint.
• Increased D&M revenue and margin guidance due to additional project deliveries in 2025.
• Q3 adjusted EPS expected to be approximately flat sequentially, with second half as a percentage of full year similar to prior year.

• Tariff impacts, with recalibration of exposure affecting margins, particularly in D&M.
• Supply chain and economic uncertainty, monitoring end market demands through reports like Dodge report.

Q: What kind of growth is seen in the data center space and expectations for 2025 and 2026?

A: Data center has grown to ~$150M-$200M in 2025, ~9% of company revenue, with growth expected to be low double digits in 2026. OlympusV Max is on track for bookings this year with revenue in 2026.

Q: What drove the strength in HVAC margin in Q2 and expectations for the back half?

A: Margins in Q2 were 25.4%, up 190 basis points YOY. ~50% due to favorable project execution, remaining 50% from higher volume and accretive mix. Back half margins expected to be lower than Q2 but still showing growth.

Q: How has M&A integration been for KTS and Sigma & Omega?

A: KTS integration is going well with synergies in technology and global expansion. Sigma & Omega is part of hydronics business, leveraging channel and heat pump technology for growth.