SPX Technologies, Inc. Q3 FY2025 earnings call

• Q3 performance was strong with adjusted EPS up 32%, profit and margin growth in both segments. Full-year guidance raised with adjusted EBITDA midpoint exceeding $500 million, ~20% Y/Y growth.
• Raised additional capital via equity offering and increased revolving credit facility capacity to over $1 billion in liquidity.
• Progress on organic initiatives: Expansion plans for engineered air movement businesses (TAMCO lease in Tennessee, Ingénia expansion in Southeast); launch of Olympus Max cooling solution for data centers, on track for $50M orders in 2025 for 2026 revenue.
• Robust M&A pipeline with attractive opportunities.

HVAC Segment

• Revenue grew 15.5% year-over-year, with 6.7% inorganic growth and nominal FX impact. Organic revenue increased 9%, with growth in cooling and heating. Segment income grew $14 million (18%) and margin increased 50 basis points. Backlog at quarter-end was $579 million, up 7% sequentially.

Detection & Measurement Segment

• Revenue increased 38.4% year-over-year, with 26.5% organic growth. KTS acquisition contributed 11.6% and FX was a tailwind. Organic revenue driven by higher CommTech project volumes. Segment income grew $18 million (53%) and margin increased 240 basis points. Backlog was $366 million, flat sequentially.

• Raised full-year adjusted EPS guidance to $6.65-$6.80.
• HVAC segment maintains revenue and margin guidance.
• Detection & Measurement segment increases full-year margin guidance to 23.25%-23.75%, midpoint 23.5% (140 basis points Y/Y growth).
• Q4 revenue for D&M expected to be modestly lower sequentially due to project delivery timing.

• Market conditions and timing of project deliveries could impact performance.
• Uncertainties in large project planning and potential pushouts.
• Seasonal fluctuations and market dynamics in residential HVAC segment.

Q: Another very solid quarter. Given you're almost in November and you have supportive backlog in both segments, maybe speak to your team's visibility into 2026 and which platforms or across which end markets you're most confident in sustained growth? And to balance that, where there may be some watch items as you look to the new year?

A: Eugene Lowe discussed market conditions, strength in data centers, health care, institutional, and industrial markets, initiatives like Olympus Max, capacity expansions, and steady run rate in D&M.

Q: I wanted to ask you first about the capacity expansion plans. Gene, you talked a little bit earlier about the TAMCO production going to be coming online later this year in Tennessee and you're looking for a spot in the Southeast for Ingénia. Could you just maybe give us a sense for initial production capacity, how to think about that, how much you're planning to bring online? And then just in terms of the equity raise that you guys just did, like how much kind of investment outlay for these expansion plans are you expecting?

A: Eugene Lowe discussed TAMCO's 150,000 sq ft facility in Tennessee, ramping up over time, and Ingénia's larger expansion in Southeast, with more details to come in Q4.