Elaborate on the increase in data center capacity to $1.1 billion, its contribution to top-line growth, and the timeline for reaching this capacity.

The capacity increase stems from improved throughput of OlympusMAX (due to lean projects and flow optimization) and the core cooling business (Everest product). This has allowed raising FY26 data center revenue guidance to $430 million. The Madison facility will add production in H1 2027, with full capacity expected by H2 2028, potentially earlier. “It's really the combination of those 2 broad categories that have allowed us to really raise the $750 million to $1.1 billion, and we have very good conviction about that. But then also, that has been a contributing factor for why we have been able to get our $300 million up to $430 million this year.”

How should we think about Neptronic's growth rates, the sustainability of its healthy margins, and its effect on HVAC's total addressable market (TAM)?

Neptronic's business is expected to grow at a high single-digit rate, above SPX's medium-term targets, with sustainable margins in the low 40s (segment income) to mid-40s (EBITDA). It strengthens SPX's controls capabilities, expands the addressable market, and allows leveraging SPX's channels for accelerated growth. “I think this business is going to grow above our medium-term growth targets that we put out there. I would probably put it at kind of high single-digit growth rate. ...it does have a nice high sustainable margin profile that is higher than the segment average kind of in -- on a segment income basis, I would say it's kind of in the low 40s EBITDA basis, kind of mid-40s.”

What are the contribution margins for data center revenue, and how much of Neptronic's current revenue is exposed to data centers?

Data center incrementals are expected to be consistent with the balance of the HVAC business, in the high 20s to low 30s. Neptronic has a data center presence similar to SPX's HVAC data center percentage, possibly a 'tad higher'. “We would expect those incrementals to be similar or consistent with the balance of the HVAC business. So we typically identify those as sort of high 20s to low 30s incrementals. ...On the Neptronics, they do have some nice data center presence. I would say they're very similar to our HVAC data center percentage, if you look at this year, and I'd say actually maybe a tad higher there, but similar, they've had some good success, and we actually see some very nice opportunities for growth there going forward.”

SPXC

SPX Technologies (SPXC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Materials· Jul 30, 2026

Source: earnings call transcript

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

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

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

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

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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-year	18.9% 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%

SPXC operating KPIs by quarter

SPXC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Backlog HVAC	$755M Segment backlog at quarter end was $755 million, up 38% organically year-over-year, primarily driven by data center demand. Source: earnings call transcript	$919M Segment backlog at quarter end was $919 million, up 59% organically year-over-year, primarily driven by strong data center demand. Source: earnings call transcript	+21.7%
Backlog Detection & Measurement	$333M Segment backlog at quarter end was $333 million, down modestly year-over-year. Source: earnings call transcript	$312M Segment backlog at quarter end was $312 million, down year-over-year, primarily driven by higher project volumes in the quarter. Source: earnings call transcript	-6.3%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Neptronic Strategic 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

HVAC Data Center Capacity Expansion Initiatives underway

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 Capabilities underway

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

HVAC Segment Margin Pressure Q2 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 Decline Q2 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 Centers Ongoing

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

D&M Segment Revenue and Margin Cadence

Next quarter

Current Q2 FY26 D&M segment margin +610 bps YoY; Q4 revenue expected larger than Q3, margins similar.

Target Verification 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.

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Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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).

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.

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 impacts, 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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.