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    SPXC
    Earnings call· Dec 2025(Q4 FY25)

    SPX Technologies Q4 FY25 earnings call SPXC

    Feb 24, 2026 Source

    Executive summary

    SPX Technologies Q4 FY25 — Strong Growth and Strategic Capacity Expansion

    SPX Technologies closed FY25 with robust performance, driven by strong organic growth and strategic acquisitions in its HVAC segment. The company is actively expanding capacity to meet surging demand, particularly in data center cooling, and has introduced optimistic FY226 guidance implying significant adjusted EBITDA and EPS growth. Management remains focused on both organic and inorganic initiatives to drive shareholder value.

    Highlights

    5

    • Full year adjusted EBITDA grew 21% with strong performance by both segments.

    • Full year adjusted EPS grew 21% to $6.76, at the upper end of guidance.

    • Q4 revenue grew 19.4% year-over-year, driven by acquisitions and organic growth.

    • Q4 adjusted EBITDA increased approximately 22% year-over-year with 50 basis points of margin expansion.

    • HVAC segment backlog increased 22% organically year-over-year to $585 million.

    Concerns

    4

    • Detection & Measurement project timing shift

    • HVAC new plant start-up costs

    • Tariff impact

    • Supply chain bottlenecks

    Guidance & targets

    10
    CategoryTargetConfidence
    Full year 2026 Revenue
    $2.535 billion to $2.605 billion
    high materiality
    High
    Full year 2026 Segment Income Margin
    24.6% to 25.1%
    high materiality
    High
    Full year 2026 Adjusted EBITDA
    $590 million to $620 million
    high materiality
    High
    Full year 2026 Adjusted EPS
    $7.60 to $8
    high materiality
    High
    HVAC segment 2026 Revenue
    $1.8 billion to $1.84 billion
    medium materiality
    High
    HVAC segment 2026 Margin
    24.5% to 25%
    medium materiality
    High
    Detection & Measurement segment 2026 Revenue
    $735 million to $765 million
    medium materiality
    High
    Detection & Measurement segment 2026 Margin
    24.75% to 25.25%
    medium materiality
    High
    HVAC capacity expansion investment
    $100 million
    medium materiality
    High
    Q1 2026 Revenue, Segment Income, Adjusted EPS
    similar to prior year as percentage of full year 2026 guidance midpoint
    low materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    HVAC
    Revenue growth driven by inorganic growth and solid organic growth in both cooling and heating. Segment income and margin increases were largely driven by higher volume and associated operating leverage.
    Organic revenue growth: 10.3%Inorganic revenue growth: 5.5%Segment income growth: 18%Segment income: $17 millionBacklog: $585 millionOrganic backlog growth: 22% YoY
    		—16.4%—40 bps increase
    Detection & Measurement
    Revenue increase primarily driven by the KTS acquisition and higher project volumes. Segment income and margin increases were primarily driven by higher volume, including the benefit of KTS.
    KTS acquisition contribution to growth: 23.2%Organic revenue growth: 1.7%Segment income growth: 27%Segment income: $10 millionBacklog: $350 millionOrganic backlog growth: 43% YoY
    		—26.3%—20 bps increase

    Operational metrics

    19
    Adjusted EPS
    $1.8825% YoY growth
    Q4 FY25

    Year-over-year growth.

    Adjusted EPS
    $6.7621% YoY growth
    FY25

    Towards the upper end of guidance range of $6.65 to $6.80.

    Total company revenue growth
    19.4%YoY
    Q4 FY25

    Driven by acquisitions and organic growth in both segments.

    Adjusted EBITDA growth
    22%YoY
    Q4 FY25

    Accompanied by 50 basis points of margin expansion.

    Cash on hand
    $366 million
    FY25 end

    At year-end.

    Total debt
    $502 million
    FY25 end

    At year-end.

    Leverage ratio (bank credit agreement)
    0.3x
    FY25 end

    As calculated under bank credit agreement.

    Leverage ratio (pro forma)
    1x
    FY25 end

    Including the effect of recently announced acquisitions.

    Data center revenue as percentage of total revenue
    9%up from 7% prior
    FY25

    In the neighborhood of $200 million.

    Data center revenue as percentage of total revenue
    12%
    FY26

    Expected.

    Data center sales growth
    50%
    FY26

    Expected.

    HVAC segment revenue growth from capacity expansion
    nearly half
    FY26

    Expected to be enabled by expansion-related investments.

    D&M project pull-forward impact
    $20 million5% growth headwind
    FY26

    Project originally slated for 2026 was executed in 2025, making 2025 $20 million higher and 2026 $20 million lower for D&M.

    HVAC margin impact from start-up costs
    50 bps
    FY26

    Related to bringing new plants online.

    D&M margin improvement drivers
    2/3
    FY26

    The balance (1/3) is from cost optimization initiatives.

    D&M margin improvement drivers
    1/3
    FY26

    The balance (2/3) is from mix.

    Acquisition revenue contribution (Thermolec, Air Enterprises, Rahn)
    $110 million
    FY26

    Combined revenue for 11 months in 2026. Thermolec: $35M, Air Enterprises and Rahn: low $80s M.

    Acquisition segment income margins
    slightly highervs segment average
    FY26

    For Thermolec, Air Enterprises, and Rahn Industries.

    Non-data center, non-air handling HVAC growth
    low single digits
    FY26

    Expected growth for the rest of the HVAC segment.

    Industry KPIs

    5
    MetricValueDetails
    Capacity expansion$100 millionUSD
    Tariff cost impactnot material
    Data center prime power demand9%%
    Incremental margin operating leverage2/3
    Order backlog order intake by segment$585 millionUSD

    Orderbook & backlog

    2
    HVAC segment backlog$585 millionQ4 FY25 end

    up 22% organically YoY

    Detection & Measurement segment backlog$350 millionQ4 FY25 end

    up 43% organically YoY

    Product announcements

    1
    ProductTypeDetails
    OlympusMAXlaunch

    Deals & partnerships

    2
    ThermlecStrengthens position in electric heat market, adding complementary custom duct heating solutions and broader geographic reach.

    Located in Montreal, it is a leader for duct heating in Canada. Provides channel synergies for U.S. products into Canada and vice versa.

    Air Enterprises and Rahn Industries (formerly Air Handling segment of Crawford United)Advances strategy in engineered air movement market by expanding portfolio of custom air handling solutions and enhancing coil offering.

    Air Enterprises is a premium provider of custom air handling units with a blue-chip customer base. Rahn Industries is a coil manufacturer. Strengthens ability to serve healthcare, institutional, and commercial markets.

    Capital programs

    2
    Madison, Alabama facilityunderway
    Period spend: $100 million
    Start: Q4 FY25 (purchase)

    Benefit: flexible manufacturing capabilities for custom air handling and data center solutions; adds to $700 million incremental capacity across all HVAC expansions

    Completed purchase in Q4 2025. Assembly capabilities expected toward latter half of 2026, initial production capabilities in H1 2027. Part of $100 million capital investment in 2026 for HVAC expansions.

    TAMCO highly engineered aluminum dampeners facility (Tennessee)underway

    Benefit: produce TAMCO highly engineered aluminum dampeners for data center market

    Production expected to begin by the end of Q1 2026 and steadily ramp throughout the year. Part of $100 million capital investment in 2026 for HVAC expansions.

    Risks & headwinds

    4
    Detection & Measurement project timing shiftFY26

    $20 million revenue shifted from 2026 to 2025, creating a 5% growth headwind for D&M in 2026.

    Mitigation: Management acknowledges the impact on top-line comparison but notes strong underlying run-rate business growth and record backlog.

    HVAC new plant start-up costsFY26

    Approximately 50 basis points temporary margin impact in 2026.

    Mitigation: Expected to be temporary; operating leverage will outstrip initial costs as facilities ramp up to full capacity.

    Tariff impactOngoing

    Not a material impact in 2025.

    Mitigation: Largely offset through price, sourcing, or continuous improvement initiatives. Company is primarily U.S.-based and North American business is covered under USMCA.

    Supply chain bottlenecksFY26

    No material concerns.

    Mitigation: Ongoing line-item bill of materials review to ensure scalability for growing products; no red flags identified.

    What to watch in Q1 FY26

    5

    HVAC segment margin trajectory

    next quarter
    Current40 bps increase in Q4 FY25
    TargetImpact of ~50 bps temporary margin headwind from start-up costs

    Why it matters

    To assess the initial impact of new plant start-up costs on HVAC profitability and the pace of recovery.

    I think we suggested maybe in the last call, but we've sort of indicated that there'll be start-up costs related to the -- bringing these plants online really in 2026. These are going to be temporary in nature. But I would kind of gauge them as around 50 basis points of a temporary impact.

    Q&A highlights

    6

    What was data center revenue growth in 2025, what percentage of total revenue is it, and what is the sales growth expectation for 2026?

    Data center revenue was over $200 million in 2025, representing about 9% of total revenue, up from 7%. It is expected to grow approximately 50% in 2026, reaching around 12% of total revenue.

    “So in the neighborhood of $200 million, maybe a little bit more than $200 million. That's up quite a bit. We'd given the number of 7% prior. And we would anticipate that to be, as we'd said, low double digits, say, 12%. So we'd expect nice growth here, probably in the 50% neighborhood for our data centers going into '26.”

    asked by Bryan Blair · answered by Eugene Lowe

    3 min read6 chapters

    Detailed Narrative

    01

    Data Center Demand & OlympusMAX Success

    Demand for custom air handling and data center cooling products remains strong, with data center revenue expected to grow approximately 50% in FY26, reaching about 12% of total revenue from 9% in FY25. The OlympusMAX product, designed for data center cooling, has been highly successful, securing material bookings from three customers and exceeding the $50 million booking target for FY25. Management is bullish on its advantages in tonnage, flexibility (dry to adiabatic upgrade), integrated controls, and robust mechanical equipment, positioning it well for future demand.

    02

    HVAC Capacity Expansion Initiatives

    SPX is investing significantly in expanding its HVAC capacity to meet growing demand. This includes a new 459,000 sq ft facility in Madison, Alabama, purchased in Q4 FY25, which will produce custom air handling and data center solutions, with assembly capabilities by H2 FY26 and initial production by H1 FY27. Another facility in Tennessee for TAMCO dampeners is expected to begin production by the end of Q1 FY26. Total expansion-related investments are projected to be $100 million in FY26, following $60 million in FY25, aiming to add roughly $700 million of incremental capacity by FY28.

    03

    Strategic HVAC Acquisitions

    In Q1 FY26, SPX completed two strategic acquisitions in its HVAC segment: Thermolec, and Air Enterprises and Rahn Industries (from Crawford United). Thermolec strengthens the electric heat strategy, adding custom duct heating and expanding geographic reach in Canada, with potential for U.S. growth. Air Enterprises and Rahn Industries enhance the engineered air movement market position by expanding custom air handling solutions and coil offerings, serving healthcare, institutional, and commercial markets. These acquisitions are expected to contribute approximately $110 million in revenue for 11 months in FY26.

    04

    Detection & Measurement Performance and Outlook

    The Detection & Measurement segment reported strong Q4 FY25 revenue growth of 26.3% (23.2% from KTS acquisition, 1.7% organic) and segment income growth of 27%. Segment backlog reached a record $350 million, up 43% organically YoY. However, FY26 revenue guidance for D&M is impacted by a $20 million project pull-forward📎 from FY26 to FY25, creating a 5% growth headwind. Despite this, the run-rate business is seeing mid-single-digit growth, and management expects margin expansion driven by mix and cost optimization initiatives.

    05

    M&A Pipeline and Capital Allocation

    SPX maintains a robust M&A pipeline, particularly in engineered air movement and electric heat, as well as Detection & Measurement platforms. With a pro forma leverage ratio of approximately 1x net debt to EBITDA, the company has significant capacity for further strategic acquisitions. Management expressed confidence in the probability of more investment opportunities in FY26, building on the successful Q1 FY26 transactions.

    06

    Non-Data Center HVAC Market Dynamics

    Outside of data centers, the HVAC segment is experiencing mixed market conditions. Strong demand is observed in healthcare, power, heavy industrial aftermarket, institutional, and higher education sectors. Conversely, softer demand is noted in battery, automotive, semiconductor, chemical, and commercial real estate markets. Despite these variations, the overall non-data center, non-air handling parts of the HVAC business are expected to achieve low single-digit growth in FY26.

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