SPX(US:SPXC)2025-05-01 20:45Financial 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]