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SPX Technologies, Inc. (SPXC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $482.6 million (+3.7% YoY), adjusted EPS of $1.38 (+10.4% YoY), and adjusted EBITDA of $102.6 million (+11.5% YoY). Adjusted EPS was a significant beat versus S&P Global consensus ($1.17*) and revenue was slightly above consensus ($481.2 million*) .
  • FY 2025 guidance was raised: revenue to $2.20–$2.26 billion (prior $2.13–$2.19B), adjusted EBITDA to $470–$495 million (prior $460–$490M), and adjusted EPS to $6.10–$6.40 (prior $6.00–$6.25), incorporating Sigma & Omega and net tariff impacts .
  • Segment performance: HVAC revenue rose to $323.0 million (+6.8% YoY) with margin expansion (+30 bps to 22.9%); Detection & Measurement revenue declined to $159.6 million (−2.0% YoY) but margin expanded sharply (+360 bps to 22.9%) on mix and KTS acquisition .
  • Backlog and positioning: D&M backlog surged to $346 million (+56% sequential; ~22% from KTS), HVAC backlog was $451 million (+~3% sequential), supporting raised guidance despite tariff headwinds .
  • Liquidity and leverage: cash $182.2 million, debt $960.3 million; leverage ratio ~1.9x including Sigma & Omega; net operating cash flow was $(10.4) million reflecting acquisition-related items, with adjusted free cash flow of ~$36 million .

Note: Consensus values marked with * are from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and profit growth: Adjusted EBITDA margin improved to 21.3% (+150 bps YoY), with consolidated segment income up 10.7% YoY to $110.5 million; HVAC margin +30 bps and D&M margin +360 bps .
  • Strategic M&A execution: Sigma & Omega closed in April and is highly complementary to HVAC; management raised FY guidance reflecting accretion from Sigma & Omega, partially offset by tariffs. “We see numerous opportunities to leverage our combined channels to drive additional growth” .
  • Backlog momentum: D&M backlog rose 56% sequentially (34% organic) and HVAC backlog increased ~3% sequentially, improving visibility into 2025 execution .

What Went Wrong

  • Organic revenue growth was modest (+0.4% consolidated), and D&M saw a −6.9% organic decline on timing of shipments and lower project volumes in aids to navigation .
  • Operating cash flow turned negative (−$10.4 million) in Q1 due to working capital movements and retention-related contributions tied to acquisitions; capex was $5.5 million .
  • Tariff headwinds: net EPS impact of ~$0.08–$0.12 for 2025 (gross ~$20 million, offset by ~$14 million of price/surcharges), with limited near-term ability to surcharge backlog projects in D&M .

Financial Results

Core Financials vs Prior Periods and Estimates

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$465.2 $483.7 $533.7 $482.6
GAAP EPS ($)$1.05 $1.08 $1.19 $1.10
Adjusted EPS ($)$1.25 $1.39 $1.51 $1.38
Adjusted EBITDA ($USD Millions)$92.0 $104.0 $116.1 $102.6
Adjusted EBITDA Margin (%)19.8% 21.5% 21.8% 21.3%

Actual vs S&P Global Consensus

MetricConsensusActualSurprise
Adjusted/Primary EPS ($)1.17*1.38 +0.21 (≈+18%)*
Revenue ($USD Millions)481.2*482.6 +1.4 (≈+0.3%)*

Values marked with * retrieved from S&P Global.

Segment Performance

Segment MetricQ1 2024Q4 2024Q1 2025
HVAC Revenue ($USD Millions)$302.4 $370.5 $323.0
HVAC Segment Income ($USD Millions)$68.4 $91.8 $73.9
HVAC Segment Margin (%)22.6% 24.8% 22.9%
D&M Revenue ($USD Millions)$162.8 $163.2 $159.6
D&M Segment Income ($USD Millions)$31.4 $37.6 $36.6
D&M Segment Margin (%)19.3% 23.0% 22.9%

KPIs and Balance Sheet

KPIQ1 2025
HVAC Backlog ($USD Millions)$451
D&M Backlog ($USD Millions)$346 (up 56% seq; ~22% KTS)
Cash and Equivalents ($USD Millions)$182.2
Total Debt ($USD Millions)$960.3
Leverage Ratio (post Sigma & Omega)~1.9x
Net Operating Cash Flow ($USD Millions)$(10.4)
Capital Expenditures ($USD Millions)$(5.5)
Consolidated Segment Income ($USD Millions)$110.5
Adjusted Operating Income ($USD Millions)$94.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated RevenueFY 2025$2.13–$2.19B $2.20–$2.26B Raised
Adjusted EBITDA ($) / Margin (%)FY 2025$460–$490M / 21.6%–22.4% $470–$495M / 21.4%–21.9% Raised $; Margin midpoint slightly lower
Adjusted EPS ($)FY 2025$6.00–$6.25 $6.10–$6.40 Raised
HVAC RevenueFY 2025$1,440–$1,480M $1,500–$1,540M Raised
HVAC Segment Margin (%)FY 202523.5%–24.5% 23.5%–24.0% Maintained lower bound; tightened top end
D&M RevenueFY 2025$690–$710M $700–$720M Raised
D&M Segment Margin (%)FY 202522.0%–23.0% 21.5%–22.75% Slightly lowered
Guidance contextFY 2025—Includes Sigma & Omega; net tariff impact mitigated by price increases/surcharges Context update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Tariffs & PricingIn-country/for-country sourcing, pricing power, prepared to act quickly ; D&M margins raised in 2024 despite mix Net EPS impact ~$0.08–$0.12; gross ~$20M offset by ~$14M price/surcharges; cadence ~40% in Q2, 30%/30% in Q3/Q4 New headwind quantified; mitigation underway
Data Centers~7% of company revenue in 2024; healthy demand; expanding abiatic/dry cooling and Everest capacity “Incrementally more positive” outlook; product launches driving interest (Everest, adiabatic/dry) Strengthening
M&A (KTS, Sigma & Omega)KTS ~$90M annual, modest 2025 accretion; synergy with CommTech; defense tailwinds Sigma & Omega ~$65M annual; plan to expand U.S. sales; slight EPS accretion offset by interest costs Platform scaling; HVAC adjacency
Run-Rate vs Projects (D&M)Run-rate flattish with regional variation; projects healthy, longer-dated into 2026+ Run-rate steady; strong frontlog; backlog +56% seq; some high-margin project timing Solid execution; timing variability
Heating Season DynamicsWarm Q4 hurt HVAC margins; distributors prudently managing inventory Q1 heating volumes normalized vs unusually warm prior-year; organic HVAC growth 4.4% Normalizing volumes

Management Commentary

  • “Our Q1 performance included solid growth in our key profit measures and favorable margin performance in both segments… we are raising our full-year 2025 guidance… partially offset by the net impact of current tariff rates and our mitigation efforts, including price increases.” — Gene Lowe, President & CEO .
  • “We ended Q1 with cash of $182 million and total debt of $960 million… leverage ratio… ~1.9x including Sigma & Omega; we anticipate leverage declining below the low end of our target range by year-end.” — Mark Carano, CFO .
  • “We continue to leverage our business system to manage a dynamic tariff environment… closely managing price and sourcing… continued traction on continuous improvement and value engineering initiatives.” — Gene Lowe .
  • “Sigma & Omega… highly complementary… we plan to substantially increase sales to U.S. customers, supported by expansion of production at our existing U.S. facilities with minimal additional capital investment.” — Gene Lowe .

Q&A Highlights

  • Tariffs quantified: net ~$6M cost at midpoint (gross low-$20Ms; offset ~$14M via price/surcharges). Pricing pass-through lag in D&M backlog; tariff impact cadence ~40% Q2, ~30% Q3, ~30% Q4 .
  • Sigma & Omega: ~$65M annual revenue; owned ~8.5 months in 2025 implying ~$40–$45M contribution; segment income slightly below HVAC average .
  • D&M backlog: $346M (+56% seq), ~22% from KTS; strong organic growth in frontlog; high-margin project benefited Q1; some lower-margin projects shift to later quarters .
  • Data centers: stronger outlook with new product traction (Everest cooling towers, adiabatic/dry cooling); bookings targeted in 2025, revenue in 2026 .
  • Cyclicality: Radiodetection seen as “canary in the coal mine”; current activity solid; replacement-heavy HVAC mitigates downturn risk .

Estimates Context

  • Q1 2025 results beat S&P Global consensus on EPS and slightly on revenue: Adjusted/Primary EPS $1.38 vs $1.17*, revenue $482.6M vs $481.2M*. The beat reflects margin expansion across segments and favorable mix in CommTech projects, with acquisitions (KTS, extra month of Ingénia) contributing to top line .
  • 2025 consensus models may need to incorporate: raised FY revenue/EPS/EBITDA guidance; tariff headwind cadence; Sigma & Omega accretion (tempered by higher interest costs); and stronger D&M backlog visibility .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Positive inflection: Raised FY 2025 guidance (revenue, EBITDA, EPS) and strong backlog support a constructive multi-quarter setup, despite tariff headwinds .
  • Quality of beat: EPS beat vs consensus stemmed from margin expansion and project mix (CommTech) alongside inorganic contributions; sustainability depends on price realization and project timing .
  • HVAC durability: Replacement-heavy mix plus capacity/product initiatives (Everest, adiabatic/dry) position HVAC for balanced growth across data centers, institutional, and health care .
  • D&M trajectory: Short-cycle demand flattish, but backlog strength and KTS synergies point to multi-year project growth; expect quarterly volatility from project timing .
  • Tariff management: Net EPS headwind ($0.08–$0.12) is being mitigated via surcharges and pricing; near-term D&M pass-through lag should abate over time .
  • Balance sheet flexibility: Leverage ~1.9x post Sigma & Omega with path to <1.5x by year-end supports continued M&A and internal investments .
  • Trading lens: Near-term catalysts include tariff mitigation progress, D&M backlog conversion, and incremental data center bookings; watch Q2 EPS (guided “modestly higher” YoY) amid higher interest/corporate expense .

Additional Notes on Non-GAAP

Adjusted EPS, adjusted operating income, and adjusted EBITDA exclude acquisition-related costs, amortization of intangibles, non-service pension items, and mark-to-market changes; reconciliations are provided in the press release and 8-K exhibits . Guidance excludes future M&A, FX changes post quarter, and incremental tariff/trade impacts beyond those announced .