SPXC Q3 Deep Dive: Broad-Based Growth, New Product Momentum, and Capacity Expansion Drive Guidance Increase

Infrastructure equipment supplier SPX Technologies (NYSE:SPXC) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 22.6% year on year to $592.8 million. The company expects the full year’s revenue to be around $2.25 billion, close to analysts’ estimates. Its non-GAAP profit of $1.84 per share was 13.8% above analysts’ consensus estimates.

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StockStory’s Take

SPX Technologies delivered a strong Q3, surpassing Wall Street’s revenue and profit expectations, with management crediting robust growth in both its HVAC and Detection & Measurement segments. CEO Eugene Lowe highlighted the impact of new product introductions, such as Olympus Max for data centers, and ongoing expansion in engineered air movement capacity. The company also cited recent acquisitions as significant contributors, particularly in the Detection & Measurement segment, pointing to higher project volumes and successful integration efforts. Management noted, “We grew third quarter adjusted EPS by 32% and drove significant profit and margin growth in both segments,” emphasizing strategic execution as a core driver of the quarter’s success.

Looking ahead, management’s updated full-year guidance is underpinned by continued demand strength in key markets, expansion of production capacity, and the ramp-up of new product initiatives. The company expects its Olympus Max cooling solution to contribute meaningful bookings next year, while recently acquired businesses are projected to sustain margin improvements. CEO Eugene Lowe stated, “We are well positioned to achieve our increased full year guidance, which implies 20% growth in adjusted EBITDA and adjusted EPS at the midpoint.” Management also acknowledged a modest headwind in 2026 from project timing but anticipates steady growth based on strong backlogs and multi-year projects.

Key Insights from Management’s Remarks

Management attributed Q3’s outperformance to strong organic growth, successful acquisitions, and operational initiatives that expanded margins and operating leverage across both business segments.

• Detection & Measurement momentum: The Detection & Measurement segment saw strong organic growth, driven by higher project volumes, with management highlighting the successful integration of the KTS and Sigma & Omega acquisitions. KTS, in particular, outperformed margin expectations due to new product launches and expanded government standards involvement.
• HVAC backlog and capacity: The HVAC segment experienced solid demand across end markets, supported by increased production capacity and a sequential 7% increase in backlog. Management cited expansion of engineered air movement businesses, including the commissioning of a new TAMCO facility in Tennessee, as key for meeting excess demand.
• Olympus Max traction: The launch of Olympus Max, a large-scale dry and adiabatic cooling solution for data centers, was noted as a significant milestone. Management reported strong customer engagement and is tracking toward its $50 million booking target for 2025, anticipating revenue realization in 2026 and beyond.
• Capital structure enhancement: The company raised $575 million in equity and expanded its revolving credit facility by $500 million, strengthening liquidity by over $1 billion to support organic growth and M&A without diluting 2025 earnings.
• M&A pipeline and integration: Management emphasized a robust M&A pipeline, particularly in HVAC and Detection & Measurement, with recent deals performing ahead of plan. The company intends to maintain disciplined acquisition multiples and focus on targets that strengthen competitive positioning and product offerings.

Drivers of Future Performance

SPX Technologies’ outlook is shaped by continued demand for data center and infrastructure solutions, capacity expansion initiatives, and disciplined capital deployment to accelerate both organic and inorganic growth.

• Data center and infrastructure demand: Management expects sustained growth in data center cooling and healthcare infrastructure, driven by trends in higher heat loads and a shift toward water-cooled chiller solutions, which favor the company’s new Olympus Max product line. The company is positioning itself to capture a greater share of these expanding markets.
• Production capacity investments: Expansion of U.S.-based manufacturing for TAMCO and Ingénia products is set to address excess demand and support future revenue growth. Management plans to announce further details on the scale and timing of these investments by the next quarter, with the goal of significantly increasing output by 2027.
• Strategic capital deployment: The company’s strengthened balance sheet enables further M&A activity and organic investments. Management highlighted the importance of maintaining acquisition discipline and targeting deals that offer synergy and technology advantages, while acknowledging timing risks from project delivery shifts and market cyclicality.

Catalysts in Upcoming Quarters

Our analysts will be watching (1) the pace of Olympus Max adoption and its impact on future data center bookings, (2) progress in scaling production capacity at new and existing facilities for engineered air movement and air handling units, and (3) execution on the company’s robust M&A pipeline, especially as liquidity is deployed into new deals. Additionally, we will monitor backlog trends and margin performance as new projects and products ramp through 2026.

SPX Technologies currently trades at $200.06, in line with $198.73 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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