SPXC - NYSE
SPX Technologies, Inc.
SPXC·NYSE
$234.08
+1.7%IndustrialsIndustrial - Machinery
SPX Technologies, Inc. supplies infrastructure equipment serving the heating, ventilation, and cooling (HVAC); and detection and measurement markets in the United States, China, the United Kingdom, and internationally. The company operates in two segments, HVAC and Detection and Measurement. The HVAC segment engineers, designs, manufactures, installs, and services package and process cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets. It offers its products under the Marley, Recold, SGS, Cincinnati Fan, Berko, Qmark, Fahrenheat, Leading Edge, Patterson-Kelley, Weil-McLain, and Williamson-Thermoflo brands. The Detection and Measurement segment offers underground pipe and cable locators, inspection and rehabilitation equipment, and robotic systems under the Radiodetection, Pearpoint, Schonstedt, Dielectric, Riser Bond, Warren G-V, Cues, ULC Robotics, and Sensors & Software brands; and bus fare collection systems, communication technologies, and obstruction lighting products under the Genfare, TCI, Flash Technology, Sabik Marine, Sealite, Avlite, and ECS brands. The company markets its products through independent manufacturing representatives, third-party distributors, and retailers, as well as direct to customers. The company was formerly known as SPX Corporation and changed its name to SPX Technologies, Inc. in August 2022. SPX Technologies, Inc. was founded in 1912 and is headquartered in Charlotte, North Carolina.
At a Glance
Live SnapshotMarket Cap$11.72B
EPS5.1300
P/E Ratio45.63
Earnings Date07/30/2026
Earnings Call Transcript
SPXC • 2026 • Q1
Operator
Good day, ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2026 SPX Technologies earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question, you will need to press star one one on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Mark Carano. Sir, please begin.
Mark Carano
Thank you, operator, and good afternoon, everyone. Thanks for joining us. With me on the call today is Gene Lowe, our President and Chief Executive Officer. I'm also excited to be joined by our new Head of Investor Relations, Johann Rawlinson. He has joined us from The Hertz Corporation, where he served as Head of Investor Relations for the last five years. A press release containing our first quarter results was issued today after market close. You can find the release and our earnings slide presentation, as well as a link to a live webcast of this call in the investor relations section of our website at spx.com. I encourage you to review our disclosure and discussion of GAAP results in the press release and to follow along with the slide presentation during our prepared remarks. A replay of the webcast will be available on our website.
Mark Carano
Thanks, Gene. Our first quarter results were strong. Year-over-year, adjusted EPS grew by 22% to $1.69. For the quarter, total company revenue increased 17.4% year-over-year, primarily driven by the benefit of acquisitions and strong organic growth in HVAC. Consolidated segment income grew by $25 million, or 22% to $135 million, while consolidated segment margin increased 100 basis points. In our HVAC segment, revenue grew by 22% year-over-year, with 11.5% inorganic growth and a modest FX tailwind. On an organic basis, revenue increased 9.6% with solid growth in both cooling and heating. Segment income grew by $15 million, or 20%, primarily driven by higher volume, while segment margin decreased 40 basis points, largely due to startup costs associated with the capacity expansions.
Mark Carano
Segment backlog at quarter end was $755 million, up 38% organically year-over-year, primarily driven by data center demand. In our Detection and Measurement segment, revenue grew by 8.3% year-over-year. The one month of inorganic revenue from KTS contributed 3.9%, FX was a modest tailwind. On an organic basis, revenue increased 3%, primarily driven by higher volumes in our transportation platform. Segment income grew by $10 million, or 28%, Segment margin increased 410 basis points. Increases in segment income and margin were primarily driven by higher volume and a favorable mix, greater than typical high-margin software volume. Segment backlog at quarter end was $333 million, down modestly year-over-year. Turning now to our financial position at the end of the quarter.
Mark Carano
We ended Q1 with $158 million of cash on hand and total debt of $674 million. Our leverage ratio, as calculated under our bank credit agreement, was approximately 0.9x quarter end, below our long-term target range of 1.5x-2.5x, giving us significant capacity to pursue accretive growth opportunities. Q1 adjusted free cash flow was approximately $16 million. During the quarter, we received approximately $60 million in cash proceeds following the completion of the sale of Crawford United's Industrial and Transportation Products businesses. As a reminder, these businesses were reported in discontinued operations and not part of our original 2026 guidance.
Mark Carano
Net of these proceeds, the implied EBITDA multiple for the acquisitions of Air Enterprises and Rahn Industries, formerly the Air Handling segment of Crawford United, is approximately in line with our average acquisition multiple. Moving on to our full year 2026 guidance. We are increasing our adjusted EPS guidance by $0.15 to a midpoint of $7.95 to reflect our strong Q1 results, particularly in D&M, and additional data center-related volume anticipated to be delivered in the second half of this year. Our updated guidance reflects a $0.05-$0.10 impact from the recently announced changes to the Section 232 tariffs. This headwind is expected to predominantly affect HVAC in the second quarter. Excluding this tariff headwind in Q2, we expect first half adjusted EPS gating to be similar to the prior year.
Johann Rawlinson
Thanks, Gene. Operator, we will now go to questions.
Operator
Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Andrew Obin from Bank of America. Mr. Obin, your line is open.
Andrew Obin
No. Thanks for the cover on CommTech. Thanks a lot.
Operator
Thank you. Our next question or comment comes from the line of Joe O'Dea from Wells Fargo. Mr. O'Dea, your line is open.
Joe O'Dea
I appreciate the color there. On the, on the tariff and sort of cost inflation front, just in terms of your response to that and how much of that is a pricing response, how much of that is a cost mitigation response, and then in particular, where you're manufacturing outside of the U.S., you know, what you see as a, as a timeline to bring more of that into the U.S. to help on the mitigation side?
Mark Carano
A couple comments there, Joe. You know, with respect to, you know, sort of sizing that and, you know, we talked about, you know, $10 million of kind of gross cost, but that we can offset, we believe, 50% of that, primarily through price, but we've got other levers to pull with respect to that. That kind of gets you to a net impact. Probably 75%-80% of that is gonna fall within the 2nd quarter of this year. You know, why is that? It really relates to a couple of our businesses in Canada, the Ingenia business and the Sigma and Omega business that have backlog today that's already priced. As we go through the back half of the year, you know, we think the impact will be, you know, de minimis.
Mark Carano
In 2027, I think as we highlighted in our prepared remarks, we don't expect to see any impact from tariffs. We've got the levers in place to offset that. You know, with respect to your kind of second part of your question, you know, we're largely in country for country really. We manufacture, you know, in the region, you know, that we're selling in. You know, when you think about those Canadian businesses, for example, the TAMCO expansion that we've highlighted in Tennessee and then the Madison facility, a part of that is gonna be for the Ingenia product, the custom air handling. You know, we were doing that, A, because there's a lot of demand, obviously, you know, in the U.S. market for those products.
Mark Carano
Also it allows us to move that manufacturing into the U.S. and kinda create that in-country for country model.
Joe O'Dea
That's helpful. I appreciate it.
Operator
Thank you. Our next question or comment comes from the line of Brad Hewitt from Wolfe Research. Mr. Hewitt, your line is now open.
Brad Hewitt
Hey, good afternoon. Thanks for taking my questions.
Mark Carano
Hey, how are you?
Brad Hewitt
You mentioned there were some startup costs and related inefficiencies with the HVAC capacity expansions. Curious if you'd be able to quantify how much of that HVAC margin miss versus your expectations was due to the capacity ramp. Have you seen anything so far that kind of changes your thinking about the near term timing of the ramp or the margin impact?
Mark Carano
Yeah, Brad, I'll start. I think, you know, if you're referring to Q1, a couple comments to make. You know, we had, I think in our last call highlighted the startup costs. I think if you did the math around what we said, it would kind of get you to $8 million-$9 million of startup costs, predominantly landing in the first half of the year, right? 2/3 of it, you know, will impact kind of Q1 and Q2. You'd see that impact and I can come back to what those costs were if that's helpful. What I would say is, you know, first of all, I mean, those startup costs were expected.
Mark Carano
I think as we thought about the margin performance in Q1, it was on track with where we expected it to be from our perspective. You know, if you peel out those startup costs and just look at the operating leverage and, you know, the accretion from the acquisitions, you'd see there's sort of roughly 40 basis points of margin lift, you know, absent the startup costs.
Brad Hewitt
Okay, great. Maybe switching over to the D&M side of things. Curious if we could kinda unpack some of the moving pieces there with the revenue outlook unchanged, but margins bumped up by 75 basis points for the year. Sounds like there may have been some pull forward on transportation, just any color on how that project timing shifted and kind of the resulting impact on the segment guide for the year would be helpful. Thank you.
Mark Carano
Yeah, sure. Hey, just back on your last question, just to be clear, I was talking about year-over-year when I made that last kind of comment around the bridge. When you think about where Q1 actual was and for 2026 versus Q1 2025. You know, with respect to the D&M, so it wasn't a project pull forward. What this was expanded scope on an existing project we have, you know, or that we're currently executing. It is in the transportation segment. It's one of our larger multi-year projects. Many of these projects, as you know, have a software scope to them. This one did, and the customer decided to expand the scope of that portion of the project.
Mark Carano
It wasn't something that was in our forecast or in our backlog. It sort of effectively by expanding the scope in a way it sort of dropped in, for lack of a better word. Those projects, I think as you know, the software components, they have high margins. We don't, we don't typically disclose what those are just for competitive reasons. When you think about the software revenue that we have, it has a very high variable margin associated with it. When you expand that scope, it really leverages through. That's really what, when you think about the full year guide and raising it by 75 basis points, it's really driven in large part by the benefit from this expanded scope and project.
Brad Hewitt
Great. Thanks, Mark.
Mark Carano
Got it.
Operator
Thank you. Our next question or comment comes from the line of Jamie Cook from Truist Securities. Mrs. Cook, your line is now open.
Jamie Cook
Hi, good morning. Sorry, good afternoon. I'm sorry. I've been on 11 calls like Andrew today.
Mark Carano
It is a busy day.
Jamie Cook
Yeah, it has been a busy day. Just understanding, like, some of the margins impact, you know, in the quarter that you spoke to for the year related to just tariffs and capacity additions, I guess, Mark, what's your comfort level in the ability to put up normalized incremental margins as we, you know, exit 2026? Just concerned capacity could continue to weigh on margins. So I guess it's my first question. The second question, was there anything unusual as you think about, you know, the cadence of orders or sales throughout the quarter and as we, you know, we're into, I guess, April, just given some of the, you know, macro uncertainty that's out there? Thanks.
Mark Carano
Yeah, I'll start on margins. Listen, I'm very confident in our ability to kinda deliver, you know, our traditional kinda incremental margins that we see in the HVAC business, particularly, you know, through the back half of the year and as we get into next year. You know, when you sort of look at, you know, where we ended the year in 2025, and you look at our guide, right? And if you strip out the impact of these expansion costs that I was chatting about just on an earlier call, and, you know, a very modest impact from tariffs that we're gonna see in Q2, you pull that out, you're gonna see if you isolated the revenue, you'd see operating leverage of, let's call it 60-70 basis points.
Operator
Thank you. Our next question or comment comes from the line of Bryan Blair from Oppenheimer. Blair, your line is open.
Mark Carano
Good morning.
Bryan Blair
I was curious, how did Radiodetection perform in Q1? How's your team thinking about Q2 and full year revenue performance? To what extent is the outlook influenced by the new technology and product rollout that you said?
Mark Carano
Yeah, I think, Bryan, I mean, Gene touched on it, right? The order rates are, you know, healthy, particularly in the U.S. That market has performed well. I would say when I think about that business overall, it's kind of this year, you know, we're forecasting and I feel confident about kind of mid-single digit growth. We're seeing that in the first quarter, kind of low to mid-single digit growth, you know, in that business.
Operator
Thank you. Our next question or comment comes from the line of Joe Giordano from TD Cowen. Mr. Giordano, your line is now open.
Joe Giordano
Yeah, I agree. Anything noteworthy that you're seeing in terms of inflation? We're seeing some of the readings tick higher here. Just curious how you're planning around that.
Mark Carano
Yeah, I think, you know, Joe, you know, you're probably referring to some of these costs, input costs like steel, aluminum and things of that nature. You know, those costs have moved up a little bit over time. I guess the bias is probably upwards. I think from our perspective, you know, the reality is that as a total cost of goods sold, you know, they represent kinda, you know, let's call it, you know, mid-single digits of exposure. But the reality is, just given the nature of our business, a lot of what we do is engineered to order or configured to order. Our ability to, you know, pass those incremental costs on price real-time effectively, that really puts us in a good spot and has allowed us to mitigate, you know, any of these inflationary pressures so far. I feel good about where we sit today.
Mark Carano
It's not something I'm clearly watching, but I'm not overly concerned about.
Joe Giordano
Thank you.
Operator
Thank you. Our next question or comment comes from the line of Amit Mehrotra from UBS. Your line is now open.
Amit Mehrotra
Thanks. Good afternoon. Mark, maybe just give us a sense of how you're thinking about the second quarter, just so we can calibrate our expectations. I mean, there's some tariffs, there's new capacity, there's good growth in data centers. Any color on organic growth and margin by segment in the second quarter would just be helpful to calibrate our expectations.
Mark Carano
Yeah, it's a good question. I mean, I think, you know, just broadly, I would say, you know, those markets, you know, that we participate in, I mean, all of them kind of remain healthy, right? We're not seeing, you know, any challenges or, you know, I wouldn't say we're at the tipping point of anything that would change with respect to that. You know, and, you know, when I think about the second quarter, we kinda spoke to that a little bit in the prepared remarks. We kinda suggested the first half gating, you know, would be similar to the prior year.
Mark Carano
You know, when you, when you look at that, you know, absent, you know, absent the tariff impact, you really need to pull that out, to really kinda get a sense for what those numbers are. You know, I think broadly defined, we're, we feel good about as we look into the second quarter. I think the other thing I would add to that, listen, when you think about HVAC revenue, I would expect that to be up sequentially. With respect to D&M, I think obviously that business can be impacted by the timing of project revenue. That clearly, as we often talk about, we're pretty good about getting that in the year.
Mark Carano
Where it ultimately lands quarter to quarter can create some variability for us. We feel good about where we sit from that perspective.
Amit Mehrotra
Just when you say sequentially up, are you talking about year-on-year growth is up from the 9.6 or just absolute revenue up sequentially in HVAC?
Mark Carano
Well, year-on-year, but.
Amit Mehrotra
Yeah
Mark Carano
but also, yeah, absolute.
Amit Mehrotra
Okay. Year-over-year growth. Got you. Yep, of course.
Mark Carano
Yeah.
Amit Mehrotra
Okay. Just maybe a less tactical question, forgive me for that question, but maybe a more important question for the long term. You're obviously adding a lot of capacity. You raised the data center growth from 50% to 70%. You know, one, can you just update us now on where you think data centers are gonna be a percentage of your revenue? Probably low teens, I would imagine. When you ramp up this capacity, Tennessee, Mirabel, Madison, et cetera, you know, how much more revenue you think you can unlock? Because the question is, it feels like you're more capacity-constrained than customers seem like they'll take anything you can give them.
Amit Mehrotra
I'm just curious about, you know, when this capacity comes online, how much more revenue you think you can unlock for that market.
Mark Carano
Yeah. You know, Amit, we talked a little bit about this at in our last call. Maybe a couple comments. First of all, when I think about the incremental data center growth that we're gonna see this year and that we've added into our guidance, you know, our Olathe facility, which is really, you know, the primary driver of that for 2026, that's just come online earlier than anticipated. We're seeing really nice performance on that, and it is allowing us to meet more of the demand that's out there.
Mark Carano
You know, as we look out, you know, over the next, you know, the next couple of years in support of all this capacity expansion, you know, I would say as we sit today, you know, our view hasn't really changed from that perspective. We highlighted that, you know, these capacity expansions would give us the ability to serve, you know, circa $550 million of revenue in the data center market. You know, these sites though, whether it's Olathe or the new facility in Huntsville, right? They're constructed in a way that gives us flexibility to, you know, ultimately, you know, drive the product line that's most available to us at that time. You know, I'd say our view hasn't changed on that.
Amit Mehrotra
Okay. That's very helpful. Thank you very much. Appreciate it.
Operator
Thank you. Our next question or comment comes from the line of Jeff Van Sinderen from B. Riley Securities. Your line is now open.
Operator
Thank you. Our next question or comment comes from the line of Walter Liptak from Seaport Research. Mr. Liptak, your line is now open.
Johann Rawlinson
Great. Thank you all for joining today's call. We look forward to updating you again next quarter. Operator, with that, we can end the call. Thank you.
Transcript from April 30, 2026
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