Executive Summary / Key Takeaways

• SPX Technologies is executing a robust growth strategy centered on specialized, engineered solutions in HVAC and Detection & Measurement, significantly expanding its market reach through strategic acquisitions and organic innovation.
• The company's core technological differentiators, particularly in data center cooling with the new Olympus Max product and advanced digital interoperability from KTS, are creating strong competitive moats and driving substantial new revenue opportunities.
• Strong financial performance in Q3 2025, with adjusted EPS growing 32% and adjusted EBITDA up 31% year-over-year, has led to an upward revision of full-year 2025 guidance, projecting adjusted EBITDA to exceed $500 million.
• Recent capital market activities, including a $551.1 million equity offering and an expanded $1.5 billion revolving credit facility, have bolstered liquidity by over $1 billion without diluting 2025 EPS, providing ample firepower for future growth initiatives.
• While geopolitical conflicts and tariffs present ongoing risks, SPX's diversified end markets, high replacement sales, and proven business system position it for continued double-digit growth and value creation, with a robust M&A pipeline complementing organic efforts.

The Foundation of Growth: Engineered Solutions in Critical Infrastructure

SPX Technologies, Inc., founded in 1912 and headquartered in Charlotte, North Carolina, has evolved into a global supplier of highly specialized, engineered solutions across 16 countries with sales in over 100. The company's strategic journey has been marked by a clear focus on high-value industrial and infrastructure markets, evidenced by the wind-down of non-core businesses like SPX Heat Transfer and DBT Technologies, and a rebranding to SPX Technologies in August 2022. This strategic refinement has paved the way for concentrated investment in its core HVAC and Detection and Measurement segments, where it provides essential equipment and services.

The company's overarching strategy is built on a foundation of engineered products, leadership positions, and technology-heavy solutions, with a strong emphasis on customer-centric innovation and digital capabilities. This approach has yielded significant results, with adjusted earnings per share growing an average of 28% per year over the past four years. SPX's business model is inherently resilient, characterized by a high level of replacement sales and diverse demand drivers, making it less susceptible to economic downturns compared to many industrial technology peers. Its solutions are often government-mandated or critical for operational continuity, further insulating its revenue streams.

Technological Edge: Powering Performance and Expanding Markets

SPX Technologies distinguishes itself through core differentiated technologies that provide tangible benefits over alternatives, particularly in its key growth areas. In the HVAC segment, the company's long-standing expertise in cooling systems, epitomized by its Marley brand, forms a significant competitive advantage. This heritage is now being leveraged in the rapidly expanding data center market.

A prime example of SPX's technological differentiation is the recently launched Olympus Max product. This dry and adiabatic cooling solution is specifically designed for the large-scale needs of data center customers. The Olympus Max offers a modular design, allowing the same product to be upgraded for increased tonnage, a feature not commonly prevalent among competitors. Its mechanical equipment, including unique fan, motor, and gear reducer designs, are battle-tested over 50 years in cooling towers, ensuring superior uptime—a critical factor for data centers. Furthermore, SPX is pursuing Cooling Power Institute (CPI) validation for Olympus Max, aiming to be one of only two products with this certification, which guarantees product performance. This technology significantly expands SPX's addressable market in data center cooling, targeting $50 million in bookings in 2025 for 2026 revenue. The macro trend towards higher heat loads in data centers favors water-cooled chiller solutions (dry, adiabatic, or cooling tower) over air-cooled chillers, a dynamic that plays directly into SPX's strengths and expands its opportunity.

In the Detection and Measurement segment, the acquisition of Kranze Technology Solutions (KTS) in January 2025 brought advanced digital interoperability and tactical networking solutions. KTS's technology integrates and distributes real-time information across multiple communications domains and platforms, enhancing situational awareness and tactical execution, particularly for the defense industry. This capability is highly complementary to SPX's existing tactical data links and radio frequency (RF) countermeasure offerings. The synergy allows for the launch of a joint product with KTS and the legacy TCI business in Q4 2025, strengthening SPX's technology position in communication solutions. KTS's solutions are also proving effective in tracking drones, a growing application driven by global unrest.

These technological advancements are not merely incremental improvements; they represent strategic expansions into larger, higher-growth markets and reinforce SPX's competitive moat. The focus on modularity, uptime, and performance validation in HVAC, coupled with digital integration and real-time information advantages in Detection and Measurement, directly contributes to higher average selling prices, lower customer operational costs, and improved margins, solidifying SPX's market positioning and long-term growth strategy.

Strategic Expansion and Operational Excellence

SPX Technologies' growth narrative is deeply intertwined with its strategic acquisition program. The company has a proven track record of acquiring businesses that complement its existing operations and expand its addressable markets. The acquisition of Ingénia Technologies Inc. in February 2024, specializing in custom air handling units, has been a significant addition to the HVAC segment. To meet the "significant demand in excess of current production capacity," SPX is aggressively expanding Ingénia's production, targeting a $140 million run rate from its Mirabel facility by the end of 2025 and a combined $300 million-ish run rate capacity by the end of 2027 with a new U.S. facility in the Southeast. Similarly, a new 150,000 square foot facility in Tennessee for TAMCO actuated dampers is expected to begin production in late Q4 2025, addressing high demand.

The acquisition of Sigma Heating and Cooling and Omega Heat Pump (Sigma Omega) in April 2025 further bolstered the HVAC segment. Sigma Omega's highly engineered hydronic heating and cooling equipment, including vertical stack heat pumps, is a natural fit with SPX's Weil-McLain and Patterson-Kelley brands. The strategic intent is to leverage SPX's strong U.S. distribution channels to expand Sigma Omega's presence beyond its current Canadian stronghold, particularly in multi-story buildings like hospitals and hotels. This creates a full solution offering for engineers and contractors, enhancing SPX's value proposition.

In the Detection and Measurement segment, the KTS acquisition has not only expanded the communication technologies platform but is also performing ahead of the deal model, securing new government proclamations as a basis of design. The strategy involves leveraging KTS's U.S. success globally through SPX's CommTech business, which has a presence in over 100 countries. This integration is expected to unlock significant synergistic opportunities.

Operational excellence, driven by the SPX Business System, is a cornerstone of the company's ability to translate strategic initiatives into financial performance. This includes continuous improvement and value engineering initiatives, such as standardizing control components in electric heat products to streamline manufacturing, reduce lead times, and lower costs. This focus on efficiency and integration is critical for absorbing new acquisitions and scaling organic growth initiatives effectively.

Financial Performance and Outlook: A Trajectory of Strength

SPX Technologies has demonstrated a compelling financial trajectory, consistently delivering strong results that underscore its strategic effectiveness. For the three months ended September 27, 2025, the company reported revenues of $592.80 million, a significant increase from $483.70 million in the prior-year period. This 22.6% growth was fueled by both organic expansion across HVAC and Detection & Measurement, and inorganic contributions from the Sigma Omega and KTS acquisitions. Over the nine-month period, revenues reached $1,627.80 million, up from $1,450.20 million in 2024, reflecting a 12.2% increase driven by recent acquisitions and organic growth.

Profitability has followed a similar upward trend. Operating income for the three months ended September 27, 2025, was $97.10 million, up from $78.90 million in the prior year. For the nine-month period, operating income stood at $250.30 million, compared to $218.10 million in 2024.

Gross profit for the nine months ended September 27, 2025, increased to $664.30 million from $581.30 million, with the gross profit margin expanding to 40.8% from 40.1%. This margin expansion was primarily due to revenue growth, associated operating leverage, and a more accretive mix within the HVAC segment. The company's adjusted EBITDA for Q3 2025 increased by approximately 31% year-over-year, with 150 basis points of margin expansion.

Segment-wise, HVAC revenues grew 15.5% in Q3 2025 to $387.40 million, with 9% organic growth driven by strong demand and increased production capacity for heating and cooling products. Segment income for HVAC rose 18% to $94.40 million, expanding margins to 24.40%. Detection & Measurement revenues surged 38.4% in Q3 2025 to $205.40 million, with robust 26.5% organic growth from higher project volumes in communication technologies, complemented by the KTS acquisition. D&M segment income grew 53% to $51.70 million, with margins increasing to 25.20%.

Liquidity and capital resources have been significantly strengthened to support future growth. In August 2025, SPX completed an underwritten public offering, generating net proceeds of $551.10 million. This was followed by an amendment to its senior credit agreement in September 2025, increasing its multicurrency revolving credit facility to $1.5 billion and extending its maturity to 2030. These actions provided over $1 billion of additional liquidity, with available borrowing capacity of $1,489 million under revolving credit facilities as of September 27, 2025. Importantly, these capital raises did not dilute 2025 EPS, reflecting efficient capital management. The company ended Q3 with $229.40 million in cash and equivalents and total debt of $501.60 million, resulting in a healthy leverage ratio of approximately 0.5x under its bank credit agreement.

Management has consistently raised its full-year 2025 guidance, reflecting strong performance and a positive outlook. The latest guidance anticipates adjusted EPS in the range of $6.65 to $6.80, representing approximately 21% year-over-year growth at the midpoint. Adjusted EBITDA is now expected to exceed $500 million at the midpoint, implying approximately 20% growth year-over-year. HVAC segment revenue and margin guidance remain confident, while Detection & Measurement full-year margin guidance has been increased to a range of 23.25% to 23.75%, with a midpoint of 23.5%. This implies a 140 basis point year-over-year growth for D&M margins. While Q4 D&M revenue is expected to be modestly lower sequentially due to project timing, the overall outlook remains strong.

Competitive Landscape and Strategic Positioning

SPX Technologies operates in highly competitive markets within both its HVAC and Detection and Measurement segments. However, its strategy of focusing on specialized, engineered solutions provides a distinct competitive edge against both larger, more diversified industrial conglomerates and smaller, niche players.

In the HVAC segment, SPX competes with global leaders like Johnson Controls International (JCI) and Carrier Global (CARR). While JCI and CARR benefit from broader portfolios and extensive global distribution networks, SPX differentiates itself through its emphasis on customized, project-specific designs and operational execution in niche industrial applications. For instance, SPX's cooling products under brands like Marley are known for their industrial-grade quality and uptime, which is particularly critical in data centers and power generation markets. The Olympus Max product, with its modular design and CPI validation, directly addresses the specific, high-performance needs of hyperscalers, offering a unique value proposition that can lead to stronger customer loyalty and recurring service revenue. SPX's ability to offer significantly higher efficiency in industrial settings helps it counter the broader market presence of competitors by targeting segments where specialized performance is paramount.

In the Detection and Measurement segment, SPX faces competition from diversified industrial players like Honeywell International (HON) and Emerson Electric (EMR), which focus on automation and control systems. SPX's offerings, such as underground pipe and cable locators (Radiodetection) and robotic systems (ULC Robotics), provide specialized tools for infrastructure inspection and maintenance. The KTS acquisition further strengthens SPX's position in tactical networking solutions, where its digital interoperability platform solves a critical pain point for frontline operations by consolidating disparate communication systems. While HON and EMR excel in integrated digital platforms and broader automation, SPX's strategy leans towards robust, field-tested equipment and practical solutions for utilities and defense. This focus allows SPX to lead in niche operational execution and product durability in harsh environments, potentially offering lower operating costs for hardware-based products.

SPX's competitive advantages are further bolstered by its unique distribution channels, often relying on direct sales to customers and specialized third-party representatives, which fosters strong customer relationships and faster market access. This model can lead to more robust growth and capital efficiency in its targeted segments. However, SPX's vulnerabilities include potential supply chain dependencies and a narrower market focus compared to its larger, more diversified rivals. While its niche focus allows for deep expertise and strong product performance in specific applications, it may require continuous investment in R&D to keep pace with the broader technological integration offered by competitors like HON.

Risks and Challenges

Despite a strong growth trajectory, SPX Technologies faces several risks. The integration of recent acquisitions like KTS and Sigma Omega, while promising, carries inherent risks related to the realization of anticipated synergies and the final valuation of acquired assets. Goodwill impairment charges could be necessary if these businesses fail to meet financial forecasts or if key assumptions in fair value analyses change.

Macroeconomic conditions, including potential downturns in global and North American markets, could negatively impact revenues, margins, and cash flows by affecting customer orders, credit access, and supplier performance. Geopolitical conflicts, while not significantly impacting operating results in Q3 2025, pose ongoing risks related to raw material availability and broader economic instability. The dynamic tariff environment, particularly with the U.S. government's announced tariffs, could increase costs, although SPX's in-country, for-country sourcing model and pricing power are expected to mitigate the direct material impact in 2025.

The company also manages contingent liabilities, including litigation, environmental matters, and self-insured risks, which are subject to estimation uncertainties and could result in future charges to earnings. While SPX maintains accruals and insurance, these may not always be sufficient.

Conclusion

SPX Technologies stands as a compelling investment narrative, characterized by a clear strategic vision, robust operational execution, and a commitment to technological leadership in critical infrastructure markets. The company's disciplined approach to M&A, exemplified by the successful integration of Ingénia, KTS, and Sigma Omega, has demonstrably expanded its market reach and enhanced its product portfolio. Its core technological differentiators, such as the Olympus Max data center cooling solution and KTS's digital interoperability platforms, are not just innovative but are strategically positioned to capture significant growth in high-demand sectors.

The strong financial performance in 2025, marked by double-digit growth in adjusted EBITDA and EPS, and the proactive strengthening of its balance sheet, underscore SPX's capacity for sustained value creation. While the company operates in competitive and dynamic environments, its focus on specialized, engineered solutions, coupled with a resilient business model, provides a strong foundation. Investors looking for exposure to a company with a proven track record of growth, a clear technological roadmap, and ample liquidity to pursue future opportunities should find SPX Technologies' story highly attractive. The company's ability to consistently exceed expectations and adapt to evolving market demands positions it favorably for continued success.