• Revenue Growth: Increased by 13.7% year-on-year for the fourth quarter.
• Adjusted EBITDA: Grew by 28.1% year-on-year with a 250 basis points margin expansion.
• Adjusted EPS: Increased by 21% to $1.51 for the fourth quarter; full year adjusted EPS grew 29% to $5.58.
• HVAC Segment Revenue: Grew 18.6% year-on-year, with organic growth of 12.8% and a 6% contribution from the Ingenia acquisition.
• Detection & Measurement Segment Revenue: Organic growth of 4.2% year-on-year.
• Segment Income: Increased by $26.6 million or 25.9% to $129.4 million, with a 230 basis points margin increase.
• Cash and Debt: Ended Q4 with $161 million in cash and $615 million in total debt.
• Leverage Ratio: 1x, increasing to 1.7x post-KTS acquisition.
• Adjusted Free Cash Flow: Approximately $284 million, reflecting 108% conversion of adjusted net income.
• 2025 Revenue Guidance: $2.13 billion to $2.19 billion.
• 2025 Adjusted EBITDA Guidance: $460 million to $490 million, reflecting 13% growth at the midpoint.
• 2025 Adjusted EPS Guidance: $6 to $6.25, reflecting approximately 10% growth at the midpoint.

• Warning! GuruFocus has detected 3 Warning Signs with AMC.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SPX Technologies Inc (NYSE:SPXC) reported a 36% increase in full-year adjusted EBITDA, showcasing strong financial performance.
• The company delivered adjusted EPS near the upper end of its guidance range, indicating effective financial management.
• SPX Technologies Inc (NYSE:SPXC) achieved a 13.7% revenue growth in the fourth quarter, with significant contributions from both segments.
• The acquisition of Kranze Technology Solutions (KTS) enhances the company's Detection & Measurement segment, positioning it for further growth.
• The company introduced several innovative products in 2024, enhancing customer efficiency and sustainability, particularly in the HVAC segment.

Negative Points

• The HVAC segment faced challenges with heating product sales due to warmer weather conditions in the fourth quarter.
• There is potential uncertainty regarding the impact of tariffs and geopolitical factors on future operations.
• The Detection & Measurement segment anticipates flat organic revenue growth in 2025, with some project deliveries delayed to 2026 and beyond.
• Higher interest costs are expected due to the acquisition of KTS, which may impact financial performance in the short term.
• The company faces capacity constraints in meeting demand for certain products, particularly in the Engineered Air Movement business.

Q & A Highlights

Q: Can you provide more color on the key watch items for 2025 and what could drive upside to the high end of your guidance? A: Mark Carano, CFO, explained that SPX Technologies remains bullish on HVAC end markets like data centers, institutional, and healthcare. Key factors include weather dynamics affecting heating, non-residential momentum, and data center projects. For Detection & Measurement (D&M), the economic environment will influence the short-cycle business, while the project pipeline remains robust, with opportunities extending into 2026 and beyond.

Q: What is the expected financial contribution of KTS in 2025, and how does it expand the TAM for CommTech and D&M? A: Mark Carano noted that KTS is expected to contribute about $80 million in revenue for 2025, with margins slightly higher than the current D&M segment. The acquisition enhances SPX's position in communication solutions and broadens access to growth markets. Eugene Lowe, CEO, highlighted that KTS's technology complements SPX's existing offerings, creating new product development opportunities.

Q: How did data center revenue perform in 2024, and what is the outlook for 2025? A: Paul Clegg, VP of Investor Relations, stated that data center revenue was about 7% of total sales in 2024, and they expect similar or better performance in 2025. Eugene Lowe added that demand remains healthy, driven by cloud migration and new product launches that expand SPX's addressable market in data centers.

Q: Can you elaborate on the nature of longer-dated projects in the D&M segment and the outlook for 2025? A: Eugene Lowe explained that the D&M segment's project activity is healthy, with larger, multiyear projects in transportation and military lighting. The run rate business is steady, with regional variations. Mark Carano added that while the run rate business is expected to be flat, the project pipeline is robust, with many opportunities extending into 2026 and beyond.

Q: What are the demand dynamics between Everest cooling and the Engineered Air Movement (EAM) business within HVAC? A: Eugene Lowe stated that cooling demand is healthy, with strong positions in cooling towers and new product launches expanding opportunities. The EAM business, including TAMCO, is experiencing strong demand, with production expansion underway to meet capacity. Both segments are well-positioned for growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.