Snapshot
SPX Technologies, Inc. reported $552M of revenue in Q2 2025, up 10.2% year over year, with diluted EPS of $1.10 and an operating margin of 15.7%.
- Revenue
- $552M
- YoY growth
- +10.2%
- Diluted EPS
- $1.10
- Operating margin
- 15.7%
What management said
- •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.
- •Our adjusted earnings per share exclude amortization expense, acquisition-related costs, non-service pension items, mark-to-market changes, and other items.
- •On the call today we'll provide you with an update on our consolidated and segment results for the second quarter of 2025, as well as an update.
- •SPX Technologies continued to execute well, driving significant profit growth in both segments and making meaningful progress on several key initiatives.
- •Once again, we are raising our full year guidance range to reflect our strong results and outlook for the remainder of the year.
- •We now anticipate growth in adjusted EBITDA of 18% at the midpoint of our updated range.
- •Looking ahead, we remain well positioned to continue executing on our organic and inorganic value creation initiatives supported by a robust M&A pipeline.
- •Turning to high level results for the second quarter, we grew revenue by 10%, largely driven by the benefit of recent acquisitions and project sales in our Detection and Measurement segment.
- •Adjusted EBITDA increased by approximately 16% year-over-year with 120 basis points of margin expansion.
- •Over the past quarter, we've continued to gain traction on our growth and new product initiatives.
- •We are making meaningful progress on expansion plans for our engineered air movement businesses where we see significant demand in excess of our current production capacity.
- •We expect this product to strengthen our position and significantly increase our addressable market in data center cooling solutions.
What went well
- •Strong Q2 with adjusted EPS up 16% to $1.65 and significant profit growth in both segments; consolidated segment income up 15.5% to $136 million with 110 basis points of margin expansion.
- •Adjusted EBITDA grew about 16% with 120 basis points of margin expansion; full-year adjusted EBITDA growth guidance raised to about 18% at the midpoint.
- •HVAC segment margin expanded 190 basis points to 25.4%, aided by favorable project execution in the cooling business (about half the improvement) plus higher volume and accretive mix.
- •Detection & Measurement revenue grew 21% (5.5% organic) with strong project momentum; segment backlog of $365 million and book-to-bill around 1.1, with project business expected to grow high teens organically in the second half.
- •Recalibrated tariff exposure down to about $0.05 for the total company (from a prior $0.10 midpoint headwind), reflecting effective supply chain and pricing management.
What went wrong
- •HVAC organic revenue rose only 0.7% (about 7% excluding a large prior-year cooling service project), reflecting a tough comparison.
- •D&M segment margin declined 60 basis points, reflecting a slightly more favorable sales mix in the prior year.
- •First-half free cash flow trailed the prior year (Q2 adjusted free cash flow about $37 million) due to a larger working capital build, including inventory bought ahead to mitigate tariffs.
- •The high end of the HVAC revenue guidance range was lowered (first reduction since Q4 2021), driven by surcharges no longer in effect as tariff impacts proved less material.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Adjusted EPS (full year 2025) | FY2025 | $6.10-$6.40 | $6.35-$6.65 (about 16.5% growth at midpoint) | |
| Adjusted EBITDA growth (implied) | FY2025 | prior range | approximately 18% at the midpoint | |
| HVAC revenue and margin | FY2025 | margin midpoint ~23.75% | revenue midpoint ~$1.52 billion; margin midpoint ~24.5% (up 80 bps for the year) | |
| Detection & Measurement revenue and margin | FY2025 | prior range | increased to reflect additional project deliveries in 2025 | |
| Tariff impact | FY2025 | approximately $0.10 headwind | approximately $0.05 for the total company |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Adjusted EPS | +16% to $1.65 | Profit growth in both segments and acquisition contribution. |
| Total revenue | +10% | KTS and Sigma & Omega acquisitions plus higher project sales in D&M. |
| Adjusted EBITDA | approximately +16% | 120 basis points of margin expansion. |
| HVAC revenue | +5.7% (0.7% organic; ~7% excluding prior-year project) | Acquisitions and growth in cooling and heating, against a large prior-year cooling service project comparison. |
| HVAC segment income | +14.5% (+$12 million) | Higher volumes, accretive mix, and favorable cooling project execution; margin up 190 basis points. |
| D&M revenue | +21% (5.5% organic) | KTS acquisition (14.9%), higher transportation and CommTech project deliveries, and modest FX. |
| D&M segment income | +18% (+$6 million) | Primarily the KTS acquisition; margin declined 60 basis points on a more favorable prior-year mix. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Data center | Becoming more material | About $150 million-$200 million (around 9%) of 2025 revenue, growing to low double digits in 2026; Olympus Vmax expanding addressable market with both dry and adiabatic modes launched | |
| Capacity expansion | Expansion plans progressing | TAMCO and Ingenia U.S. production site locations to be announced before year end, with incremental capacity online in first half of 2026; Mirabel targeting $140 million run rate by Q4 and about $300 million combined run rate by end of 2027 | |
| Tariffs | About $0.10 midpoint headwind for the year | Recalibrated to about $0.05 total company; pricing actions and surcharges taken in Q2, with some China surcharges stepping down | |
| M&A pipeline | Robust with several attractive opportunities | Very robust now and over the next 12 months; most activity in engineered air movement, with opportunities in CommTech and transportation; average deal size about $130 million over 16 deals at 10x-12x multiples |
Q&A summary
What growth is your team seeing in data center, and can you size dry and adiabatic orders supporting 2026?
Gene Lowe said data center has grown to roughly $150 million-$200 million in 2025 (around 9% of company revenue, high single digits), and will grow further in 2026. SPX is well positioned in cooling towers and actuated dampers and has expanded its addressable market with Olympus Vmax. The target is tens of millions of dollars in bookings this year for 2026 revenue, and management believes it is on track, with data center expected to reach low double digits of company revenue in 2026.
Is the D&M sales guidance raise from 2026 activity pulled forward or new project activity?
Mark Carano said the increase reflected projects in the very early part of 2026 that moved into 2025, a timing dynamic. SPX continues to see a lot of project activity on both the Genfare and CommTech sides despite the shift.
What drove the strong HVAC margin in Q2 and why the implied step down in the back half?
Mark Carano said Q2 HVAC margin of 25.4% was up about 190 basis points YoY, with roughly 50% from favorable project execution and the other 50% split between higher volume and a more accretive mix. For the full year, HVAC margin guidance moved up 80 basis points to a 24.5% midpoint; backing out the favorable Q2 project, first-half margin was just under 24% with an implied second half of about 24.7%, showing a sequential lift.
Did you see any caution or order delays post Liberation Day, and what is the tariff exposure?
Gene Lowe said SPX could not point to anything material, partly due to its precision engineered products, though it watches the Dodge report for downstream capital program demand; end markets look on track for 2026. Mark Carano said the company is largely in-country for country with no real sourcing issues, and recalibrated the full-year tariff exposure to about $0.05 (from a prior $0.10 midpoint).
Does SPX's larger size require larger M&A targets to move the needle?
Gene Lowe said no; average deal size has been about $130 million over 16 deals, and while the company has done some larger $300-$400 million deals and is comfortable doing so for strong strategic fits, its core bread-and-butter strategy is unchanged, with a robust pipeline of opportunities.