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Introduction & Market Context
SPX Technologies (NYSE:SPXC) reported solid first-quarter 2025 results on May 1, highlighting strong margin expansion despite modest revenue growth. The company’s stock closed at $134.15, up 1.88% on the day, and has experienced some volatility recently, trading well below its 52-week high of $183.83.
The Q1 2025 presentation revealed continued momentum following a robust 2024, when the company delivered 36% growth in adjusted EBITDA and 29% growth in adjusted EPS. The latest results show SPX Technologies maintaining its growth trajectory while navigating market uncertainties.
Executive Summary
SPX Technologies delivered strong bottom-line performance in Q1 2025, with 12% adjusted EBITDA growth and 10% adjusted EPS growth, driven primarily by margin expansion rather than top-line growth. The company also announced the strategic acquisition of Sigma & Omega, which expands its HVAC solutions portfolio in the multi-story market.
As shown in the following executive summary slide, management highlighted four key takeaways from the quarter:
Based on the strong start to the year, SPX Technologies raised its full-year 2025 guidance, with adjusted EBITDA now expected to grow approximately 15% at the midpoint of the new range. Management expressed confidence in the company’s positioning to manage macroeconomic uncertainties while continuing to execute its growth strategy.
Quarterly Performance Highlights
SPX Technologies reported Q1 2025 revenue of $483 million, representing a 3.7% increase from $465 million in Q1 2024. This growth was primarily driven by the HVAC segment and the benefit of acquisitions, which contributed 3.7 percentage points to overall growth. Organic growth was modest at 0.4%, as strong HVAC performance was largely offset by weakness in the Detection & Measurement segment.
The following chart illustrates the company’s revenue and adjusted EBITDA performance for Q1 2025:
Adjusted EBITDA reached $103 million in Q1 2025, up 11.5% from $92 million in the prior year, with margins expanding by 150 basis points to 21.3%. This margin improvement was consistent across both business segments, reflecting operational efficiencies and favorable product mix.
Adjusted earnings per share increased to $1.38 in Q1 2025, up from $1.25 in Q1 2024, representing 10% growth. The reconciliation from GAAP to adjusted EPS is detailed in the following slide:
Looking at segment performance, the HVAC business delivered strong results with 6.8% revenue growth to $323 million, including 4.4% organic growth. The segment benefited from solid demand in both cooling and heating markets, as well as the contribution from the Ingenia acquisition.
The Detection & Measurement segment experienced a 2.0% revenue decline to $160 million, with a 6.9% organic decrease partially offset by a 5.2% contribution from the KTS acquisition. Despite the revenue decline, segment income increased by $5.2 million year-over-year, with margins expanding by 360 basis points to 22.9%, driven by favorable sales mix.
Strategic Initiatives
A central element of SPX Technologies’ strategy is its Value Creation Framework, which focuses on building a strong foundation of engineered niches with leading market positions while implementing a business system centered on excellence and growth.
The acquisition of Sigma & Omega represents a significant strategic move to expand the company’s HVAC solutions portfolio. This acquisition complements SPX’s existing Marley cooling towers and Patterson-Kelley boilers by adding heat pumps and fan coils, allowing the company to offer more comprehensive solutions for multi-story buildings.
As illustrated in the following slide, the acquisition substantially increases SPX’s addressable market in the HVAC space:
Management noted that the typical value of hot water and cooling systems is twice the value of cooling towers and boilers combined, positioning the company to capture a larger share of the overall HVAC system value in commercial buildings.
Forward-Looking Statements
Based on the strong Q1 performance and the contribution from the Sigma & Omega acquisition, SPX Technologies raised its full-year 2025 guidance across all key metrics:
The updated guidance implies 12% year-over-year growth in adjusted EPS at the midpoint, with adjusted EBITDA expected to grow approximately 15%. Revenue is now projected to reach $2.20-$2.26 billion, up from the previous range of $2.13-$2.19 billion.
Management provided the following commentary on market conditions across its business segments:
In the HVAC segment, the company reported solid backlog and demand in core verticals for cooling products, while both residential and non-residential demand remained steady for heating products. The Detection & Measurement segment showed mixed global demand with regional variations in run-rate businesses, while project-oriented businesses are building significant activity for 2026 and beyond.
Financial Position
The acquisition of Sigma & Omega had a significant impact on SPX Technologies’ financial position in Q1 2025. Total (EPA:TTEF) debt increased to $960 million from $615 million in Q4 2024, while net debt rose to $778 million from $453 million.
As a result, the company’s bank net leverage ratio increased to 1.9x in Q1 2025 from 1.0x in Q4 2024. While this represents a substantial increase, management indicated that the leverage remains within their target range and that they are comfortable with the current capital structure.
Conclusion
SPX Technologies delivered a solid start to 2025, with strong margin expansion and bottom-line growth despite modest revenue increases. The strategic acquisition of Sigma & Omega positions the company for accelerated growth in the HVAC segment, while the raised guidance reflects management’s confidence in the outlook for the remainder of the year.
While organic growth was limited in Q1, particularly in the Detection & Measurement segment, the company’s ability to expand margins across both business segments demonstrates effective operational execution. As SPX Technologies continues to integrate recent acquisitions and navigate market uncertainties, investors will be watching for sustained organic growth and further margin improvements to justify the company’s premium valuation.
Full presentation:
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