SPX Technologies Q2 Earnings Call Highlights

SPX Technologies (NYSE:SPXC) reported second-quarter 2026 results marked by double-digit revenue, adjusted EBITDA and adjusted earnings-per-share growth, as demand for its data center cooling products and stronger Detection & Measurement project activity supported performance.

Adjusted EBITDA increased 20% from a year earlier, while adjusted EPS rose 22% to $2.02, Chief Executive Officer Gene Lowe said on the company’s earnings call. Revenue increased 23%, including 17% organic growth. Consolidated segment income rose $31.3 million, or 23%, to $167.1 million, while consolidated segment margin held at 24.6%.

The company raised the midpoint of its full-year adjusted EPS guidance by $0.45 to $8.40. Lowe said the updated outlook reflects additional data center volume, a stronger outlook for Detection & Measurement, and modest accretion from the recently announced Neptronic acquisition. The revised guidance implies 27% adjusted EBITDA growth at the midpoint.

Data Center Capacity Outlook Expands

SPX increased its expected data center production capacity to approximately $1.1 billion when fully operational, up from a prior estimate of about $750 million. Lowe attributed the increase to higher-than-anticipated throughput at the company’s Olathe, Kansas, and Springfield facilities, as well as production and workflow improvements.

The company has raised its 2026 data center revenue outlook several times, from an initial expectation of $300 million to $350 million last quarter and now to $430 million. Lowe said demand remains strong among existing hyperscale customers, while the company has also recorded wins with colocation and “neo cloud” customers.

Assembly activity for the OlympusMAX cooling product began in July at the company’s new Madison, Alabama, facility. SPX expects to add production capabilities there during the first half of 2027. Production of engineered aluminum dampers at Tamco’s Tennessee facility is also ramping as planned.

Chief Financial Officer Mark Carano said Tamco is expected to reach full production capacity sometime in 2027, while the Madison facility is expected to reach full capacity in the second half of 2028. He added that the timetable could move earlier if progress continues favorably.

SPX said it has long-term agreements with several data center customers, though Lowe noted that such agreements are not recorded as backlog until formal purchase orders are received. The company said it evaluates supply availability for each major order and seeks to ensure it can meet delivery commitments.

HVAC Growth and Neptronic Acquisition

In the HVAC segment, second-quarter revenue rose 27.6% year over year, including 18.9% organic growth. The segment recorded double-digit organic growth in both cooling and heating. Segment income increased $14 million, or 15%, primarily due to higher volume.

HVAC segment margin declined 260 basis points from a year earlier. Carano said the decline reflected capacity-expansion startup costs, the net effect of tariffs and a difficult prior-year comparison, along with modest inflationary pressure. Segment backlog ended the quarter at $919 million, up 59% organically from a year earlier, driven primarily by data center demand.

The company said the raised full-year HVAC margin outlook was attributable to the Neptronic acquisition. Carano said the remaining HVAC outlook was unchanged, and that tariffs and startup costs that weighed on the first half should moderate in the second half.

Neptronic adds intelligent controls, electric duct heaters, humidification products and actuated valves to SPX’s HVAC portfolio. Lowe said roughly half of Neptronic’s business is closely related to SPX’s existing electric heating and humidification operations, while its controls business offers capabilities for third-party fan walls and other HVAC equipment.

Carano said Neptronic is expected to generate approximately $75 million of full-year revenue, although SPX will own the business for about five months during 2026. He described the acquisition’s contribution to 2026 guidance as roughly $0.05 to $0.06 per share. Neptronic’s segment income margin is in the low-40% range, according to Carano, and management expects the business to grow at a high-single-digit rate over time.

Detection & Measurement Results

Detection & Measurement revenue increased 13% year over year, while segment income rose 43% and segment margin expanded 610 basis points. The improvement was driven by high-margin project volume, including a project worth about $15 million that moved from the third quarter into the second quarter, as well as synergy initiatives across the segment.

Lowe said approximately half of the margin expansion was attributable to favorable project mix relative to the prior year, with much of the remainder tied to the timing shift and synergy efforts. Detection & Measurement backlog ended the quarter at $312 million, down from a year earlier because of higher project volume during the period.

Management expects fourth-quarter Detection & Measurement revenue to exceed third-quarter levels, with similar margins in both periods. Carano said the company’s 2026 guidance calls for segment margins of roughly 26% to 26.5%, though project mix can affect results from period to period.

Balance Sheet and Leadership Updates

SPX ended the quarter with $168 million in cash, $615 million in total debt and adjusted free cash flow of about $72 million. Its leverage ratio was approximately 0.7 times under its bank credit agreement, or 1.4 times including the Neptronic acquisition.

Lowe also announced that John Swann, who leads the Detection & Measurement segment, plans to retire at the end of 2026. Eric Kaled, who has led the company’s transportation and contact platform since 2019, will succeed Swann. SPX also appointed JBT Marel Chief Executive Officer Brian Deck as an independent director.

About SPX Technologies (NYSE:SPXC)

SPX Technologies (NYSE:SPXC) is a diversified global supplier of highly engineered products and solutions serving industrial, municipal, energy and utility markets. The company designs, manufactures and supports a broad range of equipment that helps customers monitor, control and manage critical processes in water distribution, power generation, HVAC, refrigeration and industrial applications.

The company’s Detection & Measurement Technologies segment offers leak detection systems, pipe and asset assessment tools, fluid flow measurement devices, gas detection equipment and related services.