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    SPXC
    Earnings call· Jun 2026(Q2 FY26)

    SPX Technologies Q2 FY26 earnings call SPXC

    Jul 30, 2026 Source

    Executive summary

    SPX Technologies Q2 FY26 — Strong Data Center Demand Drives Raised Full-Year Outlook

    SPX Technologies delivered a strong second quarter, driven by robust organic growth across both segments and strategic acquisitions. The company significantly increased its data center capacity expectations and raised its full-year guidance, reflecting strong demand and operational efficiencies. The recent Neptronic acquisition further enhances the HVAC portfolio, positioning SPX for continued growth and margin expansion, with management actively pursuing additional M&A opportunities.

    Highlights

    5

    • Adjusted EBITDA grew 20% year-over-year in Q2 FY26.

    • Adjusted EPS increased 22% to $2.02 in Q2 FY26.

    • Total data center capacity expectation raised to $1.1 billion from $750 million.

    • Full-year 2026 adjusted EPS guidance midpoint increased by $0.45 to $8.40.

    • Neptronic acquisition strategically strengthens HVAC segment and is expected to be accretive by $0.05-$0.06 to FY26 EPS.

    Concerns

    2

    • HVAC segment margin declined 260 basis points in Q2 FY26, primarily due to capacity expansion-related start-up costs and net tariff impacts.

    • Detection & Measurement segment backlog was down year-over-year at quarter end, driven by higher project volumes executed in the quarter.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $8.40 (midpoint)
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Growth
    27%
    high materiality
    High
    Full-year 2026 Data Center Revenue
    $430 million
    high materiality
    High
    D&M Segment Revenue Cadence
    Q4 larger than Q3
    medium materiality
    Medium
    D&M Segment Margin Cadence
    Very similar across Q3 and Q4
    medium materiality
    Medium
    HVAC Segment Margin Cadence
    Higher in Q4 than in Q3
    medium materiality
    Medium
    Full-year 2026 Capital Expenditures
    $135 million to $165 million
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    HVAC
    Revenue growth driven by strong organic growth in both cooling and heating, and recent acquisitions. Segment margin decline primarily due to capacity expansion-related start-up costs and net tariff impacts, consistent with expectations.
    Inorganic growth: 8.5%FX tailwind: NegligibleSegment margin: Declined 260 basis pointsBacklog: $919 million at quarter endOrganic backlog growth YoY: 59%Data center demand: Strong
    		Increased 27.6% year-over-year18.9% organic growth—Segment income grew 15%
    Detection & Measurement
    Increases largely driven by high-margin project volumes, including a project executed earlier than forecasted, and benefits from segment synergy initiatives. Backlog decreased due to higher project volumes in the quarter.
    Segment margin: Increased 610 basis pointsBacklog: $312 million at quarter endBacklog change YoY: Down
    		Increased 13% year-over-year——Segment income grew 43%

    Operational metrics

    21
    Adjusted EBITDA Growth
    20%year-over-year
    Q2 FY26

    Driven by strong organic growth in both segments and recent acquisitions.

    Adjusted EPS
    $2.02up 22% year-over-year
    Q2 FY26

    Strong performance in the quarter.

    Total Company Revenue Growth
    23%year-over-year
    Q2 FY26

    Primarily driven by strong organic growth in both segments and the benefit of recent acquisitions.

    Consolidated Segment Income Growth
    $31.3 millionup 23%
    Q2 FY26

    Total consolidated segment income reached $167.1 million.

    Consolidated Segment Margin
    24.6%remained flat year-over-year
    Q2 FY26

    Despite segment-level fluctuations, consolidated margin remained stable.

    Cash on Hand
    $168 million
    Q2 FY26 end

    Financial position at the end of the quarter.

    Total Debt
    $615 million
    Q2 FY26 end

    Financial position at the end of the quarter.

    Leverage Ratio (Bank Credit Agreement)
    0.7x
    Q2 FY26 end

    Calculated under bank credit agreement.

    Leverage Ratio (Pro Forma with Neptronic)
    1.4x
    Q2 FY26 end

    Including the effect of the Neptronic acquisition.

    Neptronic Acquisition Multiple
    12.5x
    Acquisition

    Multiple paid for the business based on EBITDA.

    Neptronic Revenue Contribution
    Low $30 million
    FY 2026

    Expected contribution for the approximately 5 months owned in 2026.

    Neptronic Segment Income Margin
    Low 40shigher than segment average
    Ongoing

    Sustainable margin profile for the acquired business.

    Neptronic EBITDA Margin
    Mid-40shigher than segment average
    Ongoing

    Sustainable margin profile for the acquired business.

    Neptronic EPS Accretion
    $0.05-$0.06
    FY 2026

    Expected accretion to 2026 adjusted EPS, built into guidance raise.

    HVAC Segment Margin Decline Drivers
    260 basis pointsyear-over-year decline
    Q2 FY26

    These were known items contemplated in the full-year forecast.

    D&M Segment Margin Increase Drivers
    610 basis pointsyear-over-year increase
    Q2 FY26

    High-margin project movement leverages the fixed cost base nicely.

    D&M Structural Margin Improvement
    ~25%
    Ongoing

    Based on work done to drive synergies across the D&M platform.

    Neptronic Growth Rate
    High single-digitabove medium-term targets
    Ongoing

    Expected growth rate for the acquired business.

    HVAC Data Center Incremental Margins
    High 20s to low 30ssimilar to balance of HVAC business
    Ongoing

    Expected incremental margins for data center revenue.

    Data Center Revenue Growth
    115%year-over-year
    FY 2026

    Growth from $200 million last year to $430 million guided for FY26.

    Regular Way CapEx
    1.5% to 2%
    Ongoing

    Expected range for CapEx not related to major expansion projects.

    Industry KPIs

    3
    MetricValueDetails
    Tariff cost impact260 basis pointsbps
    Incremental margin operating leverageHigh 20s to low 30s%
    Order backlog order intake by segment—

    Deals & partnerships

    1
    NeptronicStrategic acquisition to complement existing HVAC product offering and expand capabilities into new adjacencies.

    Neptronic brings intelligent controls, electric duct heaters, humidification solutions, and actuated valves. It deepens controls intelligence, expands addressable market (commercial, healthcare, institutional, data centers), and offers opportunities to leverage SPX's global channels and OEM relationships.

    Capital programs

    2
    HVAC Data Center Capacity Expansion Initiativesunderway
    Start: Ongoing

    Benefit: $1.1 billion total data center capacity (up from $750 million previously)

    Capacity expansions across HVAC facilities are progressing well and remain on track with previously outlined timeline and capital requirements. This includes the Madison, Alabama facility and TAMCO's new Tennessee facility.

    Madison, Alabama Facility Production Capabilitiesunderway
    Start: July 2026 (assembly)

    Benefit: Increased OlympusMAX production

    Assembly activities for the OlympusMAX launched in July 2026, with production capabilities to be added in the first half of 2027.

    Risks & headwinds

    3
    HVAC Segment Margin PressureQ2 FY26

    260 basis points decline year-over-year in Q2 FY26

    Mitigation: Expected to moderate in the back half of 2026 as start-up costs and tariffs stabilize.

    D&M Segment Backlog DeclineQ2 FY26

    Down year-over-year at quarter end

    Mitigation: Driven by higher project volumes executed in the quarter, not a lack of demand; active front log for project-oriented businesses.

    Customer Concentration in Data CentersOngoing

    Smaller number of hyperscaler customers

    Mitigation: Maintaining strong relationships, ensuring delivery and quality to meet commitments, and having appropriate protections in long-term agreements for demand alignment.

    What to watch in Q3 FY26

    5

    D&M Segment Revenue and Margin Cadence

    Next quarter
    CurrentQ2 FY26 D&M segment margin +610 bps YoY; Q4 revenue expected larger than Q3, margins similar.
    TargetVerification of Q3 D&M revenue and margin performance relative to Q4 expectations.

    Why it matters

    To assess the sustainability of D&M's strong performance and the impact of project timing on quarterly results.

    I think that as I think about the back half of the year, Q4 is probably going to be larger than our Q3 numbers. I would expect the margins across both quarters to be very similar.

    Q&A highlights

    5

    How much of D&M's strong Q2 performance was due to project timing versus sustainable demand, and what is the expected cadence for the segment in the back half of the year?

    About half of the 610 bps margin increase was from favorable project mix, and the other half from project timing, specifically a $15 million high-margin project pulled from Q3 to Q2. Q4 revenue is expected to be larger than Q3, with similar margins across both quarters.

    “If I think about the 600 -- plus 610 basis point increase, really about half of that was driven by favorable project mix in the quarter relative to the project mix that we had last year. ...the balance of it and the majority of that balance really was project timing. We referenced a project that shifted forward into Q2. That actually moved from Q3 into Q2. And it was about $15 million in size at a high margin.”

    asked by Andrew Obin · answered by Mark Carano

    2 min read5 chapters

    Detailed Narrative

    01

    Data Center Capacity Expansion & Throughput

    SPX Technologies has significantly increased its total data center capacity expectation to $1.1 billion once in full production, up from a prior $750 million. This improvement is attributed to enhanced throughput from lean projects and flow optimization for the OlympusMAX product in Olathe and Springfield, as well as increased efficiency in the core cooling business (Everest product). The Madison, Alabama facility launched OlympusMAX assembly in July and will add production capabilities in the first half of 2027, with full production capacity for new facilities expected by the second half of 2028, potentially earlier.

    02

    Neptronic Acquisition Strategic Rationale

    The acquisition of Neptronic strategically extends SPX's HVAC segment, bringing complementary products like intelligent controls, electric duct heaters, and humidification solutions. This move deepens SPX's controls and systems intelligence, expands its addressable market across commercial, healthcare, institutional, and mission-critical applications (including data centers), and offers opportunities to leverage SPX's global channels and OEM relationships for accelerated growth. Neptronic's business is expected to grow at a high single-digit rate with sustainable margins in the low to mid-40s (EBITDA basis).

    03

    Detection & Measurement Segment Performance

    The D&M segment saw a 13% year-over-year revenue growth and a 43% increase in segment income, with margins expanding by 610 basis points. Approximately half of the margin increase was due to a favorable project mix, while the remainder was largely driven by project timing, including a $15 million high-margin project pulled forward📎 from Q3 to Q2. Management expects Q4 revenue to be larger than Q3, with similar margins across both quarters, and anticipates a return to normal growth paths in 2027 and beyond after a relatively flat 2026.

    04

    HVAC Segment Margin Dynamics

    HVAC segment margins declined by 260 basis points year-over-year in Q2. This was primarily due to three anticipated factors: net tariff impact🌐s, capacity expansion-related start-up costs, and a tough prior-year comparable. Additionally, modest inflationary headwinds contributed approximately 50 basis points to the decline. Management expects these headwinds to moderate in the second half of the year, leading to higher margins in Q4 compared to Q3, also benefiting from Neptronic's contribution.

    05

    Capital Allocation and M&A Pipeline

    SPX ended Q2 with a low leverage ratio of 0.7x (1.4x pro forma with Neptronic), well below its target range of 1.5x to 2.5x, indicating significant capacity for further M&A. The company sees attractive opportunities in Detection & Measurement, particularly in location, inspection, CommTech, and transportation. In HVAC, engineered air movement presents numerous prospects. Management expects to continue growing through strategic acquisitions, having already deployed substantial capital in the first half of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.