SPX Technologies, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Innovation: Introduced new sustainability-focused products in HVAC (biofuel boilers, heat pump boiler combo, adiabatic cooling for data centers) and Detection & Measurement (precision locator, acoustic utility intersection detection).
• Acquisitions: Completed acquisition of Kranze Technology Solutions (KTS) in January, expanding communication technologies platform within Detection and Measurement segment.
• Financial Results: Fourth quarter revenue grew 13.7%, adjusted EBITDA up 28.1%, adjusted EPS near upper end of guidance range, adjusted free cash flow 108% of adjusted net income.

Segment Performance

• HVAC Segment: Fourth quarter revenue grew 13.7%, with organic revenue up 12.8% and a 25.4% increase in segment income ($18.6 million) and 140 basis points of margin expansion. Full year 2025 guidance: revenue in the range of $1.44 billion to $1.48 billion, segment margin 23.5% to 24.5%.
• Detection and Measurement Segment: Fourth quarter organic revenue grew 4.2%, segment income increased $8 million (27%), and margin expanded 410 basis points. Full year 2025 guidance: revenue in the range of $690 million to $710 million (including KTS acquisition), segment margin 22% to 23%.

Guidance

• Full year 2025: Revenue $2.13 billion to $2.19 billion, segment income margin 23% to 24%, adjusted EBITDA $460 million to $490 million, adjusted EPS $6 to $6.25.
• Q1 2025: Modest revenue growth driven by KTS acquisition and full quarter of Ingénia, flat organic revenue with HVAC growth offset by Detection and Measurement decline, margins similar to prior year, higher interest costs from KTS acquisition.

Risks

• Tariffs: Reflected recently enacted tariffs in 2025 guidance; SPX has mitigation measures in place.
• Market Dynamics: Uncertainty from new administration policies and potential impacts on defense and government projects.

Q: Bryan Blair asks about data center revenue in 2024 and 2025 guidance A: Mark Carano responds that data center revenue in 2024 was ~7% of total company or ~10% of HVAC, expecting similar or better share in 2025 Q: Damian Karas asks about data center project funnel and D&M project lead times A: Gene Lowe and Mark Carano respond that data center demand is healthy, D&M project activity is healthy with longer lead times for certain projects Q: Ross Sparenblek asks about HVAC product dynamics A: Gene Lowe responds on cooling business health, new product opportunities, and TAMCO demand Q: Steve Ferazani asks about backlog and government project risks A: Gene Lowe responds on no impact from new administration on Genfare business, and KTS business is critical to military needs Q: Brad Hewitt asks about revenue timing and KTS synergy A: Mark Carano and Gene Lowe respond on Ingenia ramp-up, KTS synergy and ROIC focus, and KTS business importance to military