Summary of SPX Technologies Conference Call Company Overview - **Company**: SPX Technologies - **Headquarters**: Charlotte, North Carolina - **Revenue**: Approximately $2.2 billion - **Segments**: HVAC (Heating, Ventilation, and Air Conditioning) and Detection and Measurement - **Geographic Revenue Distribution**: 83% from The Americas, 11% from Europe, and a smaller portion from Asia Pacific [3][11][20] Core Business Insights - **HVAC Segment**: - Revenue: Approximately $1 billion with a segment margin of 24% [6][20] - Major focus on cooling, which constitutes nearly two-thirds of the HVAC business [19] - Replacement revenue accounts for about 60% of HVAC sales, providing stability [20][41] - **Detection and Measurement Segment**: - Revenue: Approximately $710 million with a segment margin of 22% [7][23] - Largest platform is location inspection, making up about 42% of this segment [21] Financial Performance - **EBITDA**: Approaching $500 million, with a midpoint of $483 million for the current year [10][11] - **Growth Strategy**: Targeting 15% EBITDA growth annually, with a clear path to double EBITDA over the medium term [13][18] - **Acquisitions**: Completed around 16 acquisitions in the past five years, significantly expanding the company's total addressable market (TAM) [18][28][67] Market Position and Competitive Advantage - **Market Leadership**: SPX is typically the market leader in approximately 90% of the revenue-generating markets it serves [9][14] - **Innovation**: The company has a strong history of innovation, having created many of the industries it operates in, such as cooling towers [8][14] - **Resilience**: The business model is characterized by low beta, with stable replacement revenue providing a buffer against economic fluctuations [41][43] Recent Developments and Future Outlook - **Data Center Opportunities**: SPX has seen increased activity in data centers, with HVAC products being a significant growth driver [55][56] - **New Product Launches**: Introduction of dry adiabatic cooling solutions and expansion into the Building Envelope market, with expectations of substantial bookings and revenue growth [57][58] - **Manufacturing Expansion**: Plans to establish U.S. manufacturing capabilities for recently acquired Canadian businesses to meet growing demand [61][63] M&A Strategy - **Current Activity**: Two acquisitions completed in the current year, with a healthy pipeline of potential deals [65][67] - **Proprietary Deals**: Approximately half of M&A activities are proprietary, focusing on strategic planning and strengthening core businesses [66] Key Risks and Considerations - **Economic Sensitivity**: While the company has shown resilience, it remains vigilant regarding macroeconomic conditions and potential impacts on order rates [40][48] - **Tariff and Trade Policies**: Ongoing concerns about tariffs may influence manufacturing strategies and operational decisions [60][63] Conclusion SPX Technologies is positioned for continued growth through strategic acquisitions, a strong focus on innovation, and a resilient business model that buffers against economic fluctuations. The company is actively expanding its product offerings and manufacturing capabilities to capitalize on emerging market opportunities.

Core Viewpoint - SPX Technologies (SPXC) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to significant price movements when estimates are revised [4]. Company Performance and Outlook - The upgrade for SPX Technologies reflects an improvement in the company's underlying business, which is expected to drive the stock price higher as investors recognize this trend [5][10]. - For the fiscal year ending December 2025, SPX Technologies is projected to earn $6.37 per share, representing a 14.2% increase from the previous year, with a 4% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating, indicating superior earnings estimate revisions [9][10]. - The Zacks Rank 2 for SPX Technologies places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - SPX Technologies reported revenue of $482.6 million for Q1 2025, a year-over-year increase of 3.7% and an EPS of $1.38, up from $1.25 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $478.43 million by 0.87%, while the EPS surprised by 18.97% against the consensus estimate of $1.16 [1] Revenue Breakdown - Detection & Measurement segment generated $159.60 million, surpassing the two-analyst average estimate of $157.67 million, but reflecting a year-over-year decline of 2% [4] - HVAC segment reported revenues of $323 million, exceeding the average estimate of $320.45 million, with a year-over-year increase of 6.8% [4] Segment Income - Detection & Measurement segment income was $36.60 million, compared to the average estimate of $30.75 million [4] - HVAC segment income reached $73.90 million, slightly above the average estimate of $72.90 million [4] Stock Performance - SPX Technologies' shares returned -1.1% over the past month, compared to the Zacks S&P 500 composite's -0.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

SPX Technologies (SPXC) came out with quarterly earnings of $1.38 per share, beating the Zacks Consensus Estimate of $1.16 per share. This compares to earnings of $1.25 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 18.97%. A quarter ago, it was expected that this infrastructure equipment supplier would post earnings of $1.50 per share when it actually produced earnings of $1.51, delivering a surprise of 0.67%.Over the last f ...

Financial Data and Key Metrics Changes - The company reported a 3.7% year-on-year increase in revenue for Q1 2025, driven by strong performance in the HVAC segment and recent acquisitions [8][13] - Adjusted EBITDA grew by 12% year-on-year, with a margin expansion of 150 basis points [6][8] - Adjusted EPS increased by 10% to $1.38 for the quarter [13][17] - The full year adjusted EPS guidance was raised to a range of $6.1 to $6.4, reflecting a year-on-year growth of 12% at the midpoint [17][18] Segment Performance Changes - In the HVAC segment, revenues grew by 6.8% year-on-year, with organic growth of 4.4% driven by the heating platform [13][14] - The Infection and Measurement segment saw a 2% decline in revenues year-on-year, with an organic decline of 6.9%, partially offset by a 5.2% increase from the acquisition of KTS [15][16] - Segment backlog for HVAC was $451 million, up approximately 3% from Q4, while the Infection and Measurement segment backlog was $346 million, up 56% sequentially from Q4 [14][16] Market Data and Key Metrics Changes - The company noted a healthy backlog for highly engineered solutions in the HVAC segment, with strong demand in healthcare and institutional markets [21][22] - The Detection and Measurement segment is experiencing steady run rate demand, with regional variations noted, particularly stronger in the U.S. compared to Europe and Asia [21][48] Company Strategy and Industry Competition - The acquisition of Sigma and Omega is expected to enhance the HVAC segment's value proposition and expand the addressable market, particularly in multi-story buildings [10][11][22] - The company aims to leverage its existing U.S. facilities to increase sales to U.S. customers with minimal additional capital investment [12][22] - The company believes it is less cyclical than most industrial tech companies due to diverse end market drivers and a high level of replacement revenue [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and highlighted a strong start to 2025 [22] - The company is optimistic about data center opportunities and new product initiatives in the HVAC segment [21][22] - Management acknowledged potential impacts from tariffs but indicated that they are well-positioned to manage these challenges [18][20] Other Important Information - The company ended Q1 with cash of $182 million and total debt of $960 million, resulting in a leverage ratio of approximately 1.6 times [16] - Adjusted free cash flow for Q1 was approximately $36 million [17] Q&A Session Summary Question: What is the gross and net tariff impact for the year? - Management indicated a tariff impact of approximately $0.08 to $0.12 on adjusted EPS, translating to a net cost of about $6 million at the midpoint [28][29] Question: How does the Sigma and Omega acquisition fit into growth rates and EBITDA margins? - Management expressed confidence in the acquisition, noting it complements existing products and has strong growth potential, with EBITDA margins slightly lower than the HVAC segment average [29][31] Question: How has order growth progressed through Q1 into Q2 amid tariff uncertainty? - Management reported steady demand across segments, with no significant changes attributed to tariff-related uncertainty [41][42] Question: What is the visibility for multi-year growth with Ingenia? - Management projected Ingenia's revenue capacity to reach $140 million by the end of the year, with high demand for its unique product offerings [52][54] Question: What is driving the growth in the Detection and Measurement segment? - Management noted strong demand driven by various applications, including military and government spending, contributing to the segment's growth [73][76]

Financial Data and Key Metrics Changes - The company reported a 3.7% increase in revenue year-on-year for Q1 2025, driven by strong performance in the HVAC segment and recent acquisitions [8][13] - Adjusted EBITDA grew by 12% year-on-year, with a margin expansion of 150 basis points [6][8] - Adjusted EPS increased by 10% to $1.38 for the quarter [13][17] Segment Performance Changes - In the HVAC segment, revenues grew by 6.8% year-on-year, with organic growth of 4.4% driven by the heating platform [13][14] - The Infection and Measurement segment saw a 2% decline in revenues year-on-year, with organic revenue down 6.9%, partially offset by a 5.2% increase from the acquisition of KTS [15][16] - Segment backlog for HVAC was $451 million, up approximately 3% from Q4, while the Infection and Measurement segment backlog was $346 million, up 56% sequentially [14][16] Market Data and Key Metrics Changes - The company noted a healthy backlog for highly engineered solutions in the HVAC segment, with positive sentiment regarding data center opportunities in 2025 and 2026 [21][22] - Demand in the Detection and Measurement segment remains steady, with regional variations noted, particularly stronger in the U.S. compared to Europe and Asia [42][44] Company Strategy and Industry Competition - The acquisition of Sigma and Omega is expected to enhance the value provided to HVAC customers and position the company for future growth [10][22] - The company aims to leverage its business system to manage tariff impacts and maintain strong margin performance [8][9] - The company believes it is less cyclical than most industrial tech companies due to diverse end market drivers and a high level of replacement revenue [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the updated full-year guidance, anticipating adjusted EBITDA growth of 15% at the midpoint [7][22] - The company is well-positioned to navigate macroeconomic uncertainties and adapt to rapid changes in the environment [22] - Management highlighted strong demand in the HVAC segment, particularly in data centers, and noted that replacement sales are critical and resilient [20][38] Other Important Information - The company ended Q1 with cash of $182 million and total debt of $960 million, resulting in a leverage ratio of approximately 1.6 times [16] - Adjusted free cash flow for Q1 was approximately $36 million [17] Q&A Session Summary Question: What are the assumptions regarding gross and net tariff impact for the year? - Management indicated a tariff impact of approximately $0.08 to $0.12 on adjusted EPS, with a gross cost of around $20 million offset by price increases of about $14 million [28][29] Question: How does the Sigma and Omega acquisition fit into growth rates and EBITDA margins? - Management expressed strong confidence in the acquisition, noting it complements existing products and has synergy opportunities for growth, with expected revenues of $65 million for Sigma and Omega [30][31] Question: What is the outlook for order rates and demand amid tariff-related uncertainty? - Management reported no significant changes in demand, with a balanced performance across HVAC segments and strong activity in data centers [37][38] Question: Can you provide insights on Ingenia's revenue projections and multi-year growth visibility? - Management projected Ingenia's revenue capacity to reach $140 million by the end of the year, with high demand for its unique value proposition [48][50] Question: How does the acquisition of Sigma and Omega affect total addressable market (TAM)? - Management noted that while the TAM for Sigma and Omega is smaller than cooling towers, it still meaningfully expands the company's market opportunities [52][53]

Q1 2025 Performance Highlights - SPX Technologies achieved revenue growth of 3.7% in Q1 2025[13] - Adjusted EBITDA grew by 11.5%, with a 150 bps margin expansion[19] - Adjusted EPS for Q1 2025 reached $1.38[28] Segment Performance - HVAC revenue increased by 6.8% year-over-year, driven by organic growth and the Ingénia acquisition[38] - Detection & Measurement revenue decreased by 2.0%, but segment income increased due to favorable sales mix and project execution[44] Financial Position and Guidance - SPX Technologies is raising its 2025 guidance, projecting adjusted EBITDA in the range of $470 million to $495 million, implying a 15% growth at the midpoint[9,52] - Full-year revenue guidance is now $2.20 billion to $2.26 billion[52] - The company anticipates leverage below the low end of its 1.5x-2.5x target range by year-end[50] Strategic Initiatives - The acquisition of Sigma & Omega expands the value of HVAC solutions, particularly in the multi-story market, where hot water and cooling systems are typically 2X the value of cooling towers and boilers combined[9,24]

Financial Performance - Revenue for Q1 2025 was $482.6 million, an increase of 3.7% compared to Q1 2024, with organic growth contributing 0.4%[4] - GAAP income from continuing operations rose to $51.7 million, reflecting a 5.1% increase year-over-year[4] - Adjusted EBITDA for Q1 2025 was $102.6 million, up 11.5% from $92.0 million in Q1 2024, with an adjusted EBITDA margin of 21.3%[4][3] - The company anticipates adjusted EBITDA for 2025 to be in the range of $470 to $495 million, reflecting a year-on-year increase of approximately 15% at the midpoint[4] - Operating income rose to $66.6 million, reflecting a 3.1% increase compared to $64.6 million in the prior year[29] - Net income for the period was $51.2 million, compared to $49.0 million, representing a 4.5% year-over-year growth[31] - Basic income per share from continuing operations increased to $1.11, up from $1.07, while diluted income per share rose to $1.09 from $1.05[25] - The adjusted operating income for the same period was $94.9 million, representing 19.7% of revenues, compared to $84.4 million and 18.1% of revenues for the three months ended March 30, 2024[37] - SPX Technologies' diluted earnings per share from continuing operations increased to $1.38 for the three months ended March 29, 2025, compared to $1.25 for the same period in 2024[38] Revenue Segments - The HVAC segment reported revenue of $323.0 million, a 6.8% increase, driven by 4.4% organic growth and 2.9% inorganic growth from acquisitions[6] - The Detection & Measurement segment experienced a revenue decline to $159.6 million, down 2.0%, primarily due to a 6.9% organic decrease[8] - The HVAC reportable segment generated revenues of $323.0 million, a 6.8% increase from $302.4 million[29] - The Detection & Measurement segment reported revenues of $159.6 million, a decrease of 2.0% from $162.8 million[29] - For the three months ended March 29, 2025, SPX Technologies reported a consolidated net revenue growth of 3.7%, with a 6.8% increase in Detection & Measurement and a 2.0% decline in HVAC Measurement[35] Guidance and Projections - The company raised its full-year 2025 revenue guidance to a range of $2.20 to $2.26 billion, representing an approximate 12% year-on-year increase at the midpoint[4] - Adjusted EPS for 2025 is projected to be between $6.10 and $6.40, indicating a year-on-year increase of approximately 12% at the midpoint[4] Debt and Cash Position - Total debt increased to $960.3 million from $614.7 million in Q4 2024, while total cash rose to $182.2 million[12] - Total liabilities increased to $1,694.1 million, up from $1,330.1 million, primarily due to increased long-term debt[27] - Cash and equivalents at the end of the period were $177.8 million, compared to $156.9 million at the end of December 2024[27] - SPX Technologies' ending cash and equivalents increased to $182.2 million from $161.4 million at the beginning of the period, with net borrowings under other financing arrangements totaling $0.5 million[33] - Total debt increased to $960.3 million as of March 29, 2025, from $614.7 million at the end of 2024, primarily due to borrowings under senior credit facilities[33] Acquisitions and Integration - The company completed the acquisition of Sigma & Omega, enhancing its HVAC product offerings with complementary vertical stack heat pumps[2] - The company incurred acquisition and integration-related costs of $8.6 million for the three months ended March 29, 2025, compared to $5.0 million for the same period in 2024[37] - Goodwill increased significantly to $950.0 million, up from $834.5 million, indicating recent acquisitions[27] Other Financial Metrics - Total current assets increased to $906.8 million, a rise of 15.6% from $784.3 million at the end of December 2024[27] - Cash used in discontinued operations was $0.5 million for the three months ended March 29, 2025[33] - The company experienced a foreign currency exchange rate impact that resulted in a cash increase of $2.6 million during the period[33]

Core Insights - SPX Technologies, Inc. reported strong first-quarter results for 2025, with revenue of $482.6 million, representing a 3.7% increase compared to Q1 2024 [2][3] - The company raised its full-year 2025 guidance for Adjusted EBITDA to a range of $470 to $495 million, indicating a ~15% year-on-year increase at the midpoint [1][3] - The acquisition of Sigma & Omega is expected to enhance SPX's HVAC segment, providing opportunities for growth through combined channels [1] Financial Performance - Revenue for Q1 2025 was $482.6 million, up from $465.2 million in Q1 2024 [2] - Operating income increased to $66.6 million, a rise of 3.1% from $64.6 million in the previous year [2][3] - GAAP EPS rose to $1.10, reflecting a 4.8% increase year-on-year [2][3] - Adjusted EBITDA for Q1 2025 was $102.6 million, up 11.5% from $92.0 million in Q1 2024 [2][3] Segment Performance - The HVAC segment reported revenue of $323.0 million, a 6.8% increase from $302.4 million in Q1 2024, with an organic growth of 4.4% [5][28] - Detection & Measurement segment revenue decreased by 2.0% to $159.6 million, with an organic decline of 6.9% [7][28] - Segment income for HVAC was $73.9 million, with a margin of 22.9%, while Detection & Measurement segment income was $36.6 million, with a margin of 22.9% [5][28] Guidance and Outlook - SPX anticipates full-year 2025 revenue in the range of $2.20 to $2.26 billion, reflecting a ~12% year-on-year increase at the midpoint [3][11] - Adjusted EPS guidance for 2025 is set between $6.10 and $6.40, indicating a ~12% increase year-on-year [3][11] - The company expects continued healthy demand in core markets and solid execution across its businesses [1][3] Liquidity and Financial Position - Total debt increased to $960.3 million as of Q1 2025, up from $614.7 million at the end of Q4 2024 [10][34] - Total cash on hand was $182.2 million, compared to $161.4 million at the end of the previous quarter [10][34] - Net cash used in continuing operations was $(10.4) million for Q1 2025, down from $10.7 million in Q1 2024 [30]

Core Viewpoint - SPX Technologies, Inc. has completed the acquisition of Sigma Heating and Cooling and Omega Heat Pump for approximately $144 million (CAD 200 million), aligning with its typical acquisition multiple of 8x-12x Adjusted EBITDA [1][3]. Company Overview - Sigma & Omega, founded in 1997, is a Toronto-based manufacturer specializing in hydronic heating and cooling equipment, with expected annual revenues of approximately $65 million in 2025 and a workforce of around 220 employees [2][3]. Strategic Integration - Sigma & Omega will be integrated into SPX's hydronics business, enhancing its HVAC segment alongside Weil-McLain and Patterson-Kelley. The majority of Sigma & Omega's sales are from Canadian customers, but SPX aims to expand its U.S. customer base through increased domestic production [3][4]. Synergies and Growth Potential - The acquisition is expected to create significant synergies with SPX's existing HVAC businesses, leveraging Sigma & Omega's differentiated product offerings, such as vertical stack water-sourced heat pumps and fan coils, to enhance customer value and production efficiency [4][5]. Future Guidance - SPX Technologies plans to update its full-year 2025 guidance to reflect the impact of Sigma & Omega on May 1, 2025, coinciding with the Q1 2025 results announcement [3].