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 include intangible amortization expense, acquisition, and integration-related costs, non-service pension items, among other items. On the call today, we'll provide you with an update on our consolidated and segment results for the first quarter of 2026, as well as an update on our full-year outlook. We had a strong start to the year with year-over-year growth and adjusted EBITDA of 23% and adjusted EPS of 22%.

We continued to execute well, driving significant profit growth in both segments and making meaningful progress on several key initiatives. Looking ahead, we remain well-positioned to continue executing on our organic and inorganic value creation initiatives supported by our robust M&A pipeline. We grew revenue by 17.4%, driven by the benefit of recent acquisitions and organic growth in both segments. Adjusted EBITDA increased 23% year-over-year, with 90 basis points of margin expansion.

The capacity expansions across our HVAC facilities to meet the strong demand for our data center cooling and custom air handling solutions are progressing well. They remain on track with the timeline and capital requirements outlined last quarter. In Q1, we began producing highly engineered aluminum dampers in TAMCO's new Tennessee facility and expect production to steadily increase throughout the year. For the quarter, total company revenue increased 17.4% year-over-year, primarily driven by the benefit of acquisitions and strong organic growth in HVAC.

What went well
  • Strong start to 2026 with adjusted EBITDA up 23% year-over-year and adjusted EPS up 22% to $1.69, with 90 basis points of consolidated margin expansion.
  • Total revenue grew 17.4%, driven by recent acquisitions and organic growth, with HVAC revenue up 22% (9.6% organic) on solid cooling and heating demand.
  • HVAC segment backlog reached $755 million, up 38% organically year-over-year, primarily driven by data center demand; the company raised its full-year data center growth outlook from roughly 50% to 70%.
  • Detection & Measurement segment income grew 28% with margin up 410 basis points, aided by greater-than-typical high-margin software volume from an expanded-scope transportation project.
  • Strong balance sheet with leverage of approximately 0.9x, below the 1.5x-2.5x target range, providing significant capacity for accretive M&A; full-year adjusted EPS guidance raised by $0.15 to a $7.95 midpoint.
What went wrong
  • HVAC segment margin decreased 40 basis points, largely due to startup costs associated with the capacity expansions (estimated $8 million-$9 million of startup costs, predominantly in the first half).
  • Recently announced changes to Section 232 tariffs created a $0.05-$0.10 headwind, expected to predominantly affect HVAC in the second quarter, with roughly $10 million of gross cost (about 50% offsettable, mainly through price).
  • Detection & Measurement segment backlog was down modestly year-over-year at $333 million.
  • Softness persisted in battery and semiconductor end markets (strong a couple of years ago), with commercial real estate and hotels remaining at relatively low levels.

Guidance Changes

MetricPeriodCurrent guidance
Adjusted EPS (full year 2026)FY2026Midpoint $7.95 (raised $0.15)
Adjusted EBITDA growth (implied)FY2026approximately 21% at the midpoint
Data center revenue growthFY2026approximately 70%
Section 232 tariff impactFY2026$0.05-$0.10 headwind, predominantly Q2 HVAC

Performance Breakdown

MetricYoYNote
Adjusted EPS +22% to $1.69 Profit growth in both segments, higher volume, and acquisition contribution.
Total revenue +17.4% Benefit of recent acquisitions and strong organic growth in HVAC.
Adjusted EBITDA +23% Margin expansion of 90 basis points alongside revenue growth.
HVAC revenue +22% (9.6% organic, 11.5% inorganic) Recent acquisitions, organic growth in cooling and heating, and modest FX tailwind.
Detection & Measurement revenue +8.3% (3% organic) One month of KTS inorganic revenue (3.9%), higher transportation platform volumes, and modest FX.
HVAC segment income +20% (+$15 million) Higher volume, partially offset by capacity-expansion startup costs.
D&M segment income +28% (+$10 million) Higher volume and favorable mix including greater-than-typical high-margin software.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Data center demand and capacityData center growth outlook of about 50%; Olathe facility rampingRaised to about 70% growth as demand accelerates; Olathe online earlier than expected, TAMCO Tennessee shipping, Madison build-out underway; capacity to serve circa $550 million incremental data center revenue—
TariffsModest exposure managed largely through price and sourcingNew Section 232 changes create a $0.05-$0.10 headwind concentrated in Q2 HVAC; no expected impact on 2027—
M&A pipelineRobust pipeline in engineered air movement and electric heatStill robust with leverage at 0.9x; seeing more Detection & Measurement opportunities in transportation, CommTech, and AtoN; discipline maintained at roughly 10.5x-11x pre-synergy—
Acquisition integrationKTS and Sigma & Omega added in prior yearAir Enterprises, Rahn, and Thermolec off to a strong start; Crawford United non-core businesses sold for approximately $60 million in proceeds—

Q&A Summary

Outside of data centers, what HVAC end markets stand out for strength?
Gene Lowe said data center is strongest (now expected to grow about 70% this year), with the rest of HVAC at mid-single digits or a hair above. Healthcare and pharma remain very strong, power is strong (partly data-center linked, on both new power and aftermarket), and heavy industrial has a lot of activity. Aftermarket has been very strong. Softer areas, little changed quarter-to-quarter, include commercial real estate and hotels at low levels, flattish institutional/government, and battery/semiconductor, though some new semiconductor bidding opportunities are emerging.
How much of the HVAC margin miss was due to the capacity ramp, and has thinking changed on timing?
Mark Carano said roughly $8 million-$9 million of startup costs were expected, predominantly in the first half with about two-thirds in Q1 and Q2. Q1 margin performance was on track with expectations; excluding the startup costs, there was roughly 40 basis points of margin lift year-over-year. No change to thinking on the ramp timing.
What drove the D&M margin guidance increase of 75 basis points with revenue unchanged?
Mark Carano clarified it was not a project pull-forward but an expanded scope on an existing large multi-year transportation project. The customer expanded the software portion, which carries very high variable margins, and that expanded scope largely drove the full-year margin raise.
Where will data center revenue settle as capacity ramps and how much more revenue can be unlocked?
Mark Carano said Olathe came online earlier than anticipated, driving incremental 2026 data center growth; the capacity expansions enable circa $550 million of incremental data center revenue off a roughly $200 million base. Olathe expected at full capacity by mid-2027, TAMCO Tennessee in 2027, and Madison ramping with full production by mid-2028. Gene Lowe noted the company expects roughly $350 million in data center revenue this year with about $400 million more capacity available, plus potential additional levers.
What is your discipline on M&A in a market with rich valuations?
Gene Lowe said strategy comes first; about half of M&A targets are proprietary deals with no banker. The average pre-synergy multiple over 18 acquisitions is roughly 10.5x-11x, or about 9x after synergies. The company will not play in segments at high-teens to 20x-30x EBITDA (some D&M and data center deals), staying disciplined while still deploying capital.

More on SPX Technologies, Inc.

Reported 2026-04-30 · figures from the SPX Technologies, Inc. Q1 2026 earnings call.

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