What Management Said
Read the full Q2 2025 transcript ↗You can find the release and our earnings slide presentation, as well as a link to a live webcast of this call, in the Investor Relations section of our website at spx.com. Our adjusted earnings per share exclude amortization expense, acquisition-related costs, non-service pension items, mark-to-market changes, and other items. On the call today we'll provide you with an update on our consolidated and segment results for the second quarter of 2025, as well as an update. SPX Technologies continued to execute well, driving significant profit growth in both segments and making meaningful progress on several key initiatives.
Once again, we are raising our full year guidance range to reflect our strong results and outlook for the remainder of the year. We now anticipate growth in adjusted EBITDA of 18% at the midpoint of our updated range. Looking ahead, we remain well positioned to continue executing on our organic and inorganic value creation initiatives supported by a robust M&A pipeline. Turning to high level results for the second quarter, we grew revenue by 10%, largely driven by the benefit of recent acquisitions and project sales in our Detection and Measurement segment.
Adjusted EBITDA increased by approximately 16% year-over-year with 120 basis points of margin expansion. Over the past quarter, we've continued to gain traction on our growth and new product initiatives. We are making meaningful progress on expansion plans for our engineered air movement businesses where we see significant demand in excess of our current production capacity. We expect this product to strengthen our position and significantly increase our addressable market in data center cooling solutions.
- Strong Q2 with adjusted EPS up 16% to $1.65 and significant profit growth in both segments; consolidated segment income up 15.5% to $136 million with 110 basis points of margin expansion.
- Adjusted EBITDA grew about 16% with 120 basis points of margin expansion; full-year adjusted EBITDA growth guidance raised to about 18% at the midpoint.
- HVAC segment margin expanded 190 basis points to 25.4%, aided by favorable project execution in the cooling business (about half the improvement) plus higher volume and accretive mix.
- Detection & Measurement revenue grew 21% (5.5% organic) with strong project momentum; segment backlog of $365 million and book-to-bill around 1.1, with project business expected to grow high teens organically in the second half.
- Recalibrated tariff exposure down to about $0.05 for the total company (from a prior $0.10 midpoint headwind), reflecting effective supply chain and pricing management.
- HVAC organic revenue rose only 0.7% (about 7% excluding a large prior-year cooling service project), reflecting a tough comparison.
- D&M segment margin declined 60 basis points, reflecting a slightly more favorable sales mix in the prior year.
- First-half free cash flow trailed the prior year (Q2 adjusted free cash flow about $37 million) due to a larger working capital build, including inventory bought ahead to mitigate tariffs.
- The high end of the HVAC revenue guidance range was lowered (first reduction since Q4 2021), driven by surcharges no longer in effect as tariff impacts proved less material.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS (full year 2025) | FY2025 | $6.35-$6.65 (about 16.5% growth at midpoint) |
| Adjusted EBITDA growth (implied) | FY2025 | approximately 18% at the midpoint |
| HVAC revenue and margin | FY2025 | revenue midpoint ~$1.52 billion; margin midpoint ~24.5% (up 80 bps for the year) |
| Detection & Measurement revenue and margin | FY2025 | increased to reflect additional project deliveries in 2025 |
| Tariff impact | FY2025 | approximately $0.05 for the total company |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Adjusted EPS | +16% to $1.65 | Profit growth in both segments and acquisition contribution. |
| Total revenue | +10% | KTS and Sigma & Omega acquisitions plus higher project sales in D&M. |
| Adjusted EBITDA | approximately +16% | 120 basis points of margin expansion. |
| HVAC revenue | +5.7% (0.7% organic; ~7% excluding prior-year project) | Acquisitions and growth in cooling and heating, against a large prior-year cooling service project comparison. |
| HVAC segment income | +14.5% (+$12 million) | Higher volumes, accretive mix, and favorable cooling project execution; margin up 190 basis points. |
| D&M revenue | +21% (5.5% organic) | KTS acquisition (14.9%), higher transportation and CommTech project deliveries, and modest FX. |
| D&M segment income | +18% (+$6 million) | Primarily the KTS acquisition; margin declined 60 basis points on a more favorable prior-year mix. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Data center | Becoming more material | About $150 million-$200 million (around 9%) of 2025 revenue, growing to low double digits in 2026; Olympus Vmax expanding addressable market with both dry and adiabatic modes launched | — |
| Capacity expansion | Expansion plans progressing | TAMCO and Ingenia U.S. production site locations to be announced before year end, with incremental capacity online in first half of 2026; Mirabel targeting $140 million run rate by Q4 and about $300 million combined run rate by end of 2027 | — |
| Tariffs | About $0.10 midpoint headwind for the year | Recalibrated to about $0.05 total company; pricing actions and surcharges taken in Q2, with some China surcharges stepping down | — |
| M&A pipeline | Robust with several attractive opportunities | Very robust now and over the next 12 months; most activity in engineered air movement, with opportunities in CommTech and transportation; average deal size about $130 million over 16 deals at 10x-12x multiples | — |
Q&A Summary
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