SPX Technologies, Inc. (SPXC) | The Buildout — AI Infrastructure
The Verdict
SPX Technologies builds engineered cooling and air-handling equipment — large cooling towers, custom air handling units, and dampers — that data centers need to reject heat from AI-scale compute. Its Detection & Measurement segment adds underground locators, inspection equipment, robotic systems, transportation systems, and communication technologies outside the AI path. The HVAC data center business is the AI-relevant piece.
| Market Cap | — |
| Revenue (TTM) | $2.5B |
| Revenue Growth | +20.6% |
| EBITDA Margin (TTM) | 22.5% |
| Net Debt | $438M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data center revenue is expected to rise from roughly $200M in 2025 to roughly $350M in 2026.
- HVAC backlog reached $755M, up 38% organically year over year, primarily on data center demand.
- Management raised 2026 data center growth from ~50% to 50%–70% in one quarter.
- Olathe, Kansas began OlympusMAX production ahead of schedule; TAMCO Tennessee began production in Q1 2026.
- Leverage of about 0.9x sits below management's 1.5x–2.5x long-term target, leaving M&A capacity.
What We’re Watching
- HVAC segment margin fell 40bps in Q1 on $8M–$9M of capacity start-up costs weighted to H1 2026.
- Section 232 tariff headwind of $0.05–$0.10 EPS is concentrated in Q2; management expects no material 2027 impact.
- D&M margin raise was tied to one software scope expansion and D&M backlog was down modestly year over year.
- A D&M leadership transition was announced June 19, 2026; impact is unclear.
The thesis is strengthening on demand and capacity. The core HVAC data center story has faster-than-expected production, record backlog, and a raised 2026 outlook. The open question is whether H2 2026 margin recovery confirms that underlying HVAC operating leverage is intact once start-up costs and the Q2 tariff hit roll off.
Earnings Beat
Q2 2026 revenue was $679.0M, up from $552.4M a year earlier. Gross margin was 40.2%, compared with 37.0% in Q2 2025. EBITDA was $152.1M, or 22.4% of revenue.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $679M | $567M | $552M | +22.9% |
| Gross margin | 40.2% | 36.6% | 37.0% | +320bps |
| EBITDA | $152M | $128M | $127M | +20.0% |
| EPS | $1.55 | $1.31 | $1.11 | +39.6% |
The demand strength is very strong. We would say accelerating.— Gene Lowe, CEO, 2026-04-30
Management tone: On the Q1 2026 call, management was confident and operationally specific; it reserved its strongest language for data center demand and described demand as accelerating.
Management Guidance
For full-year 2026, management raised revenue guidance to $2.575B–$2.645B, adjusted EBITDA to $600M–$625M, and adjusted EPS to $7.75–$8.15. Data center growth was raised to 50%–70%, implying roughly $350M of data center revenue. D&M segment margin guidance was raised to 25.50%–26.00%, while HVAC segment margin guidance was lowered to 24.25%–24.75% reflecting start-up costs and tariff impact. Management embedded a $0.05–$0.10 EPS Section 232 tariff headwind, mostly in Q2, and expects no material 2027 tariff impact.
Trajectory
Revenue trajectory is stable: after a 11.1% QoQ dip to $566.8M in Q1 2026, revenue rebounded 19.8% in Q2 to $679.0M. Gross margin expanded about 390bps, while EBITDA margin was roughly stable to down slightly as start-up costs offset volume. The underlying driver is HVAC data center demand; Q1 HVAC backlog reached $755M, up 38% organically, but segment margin fell 40bps on $8M–$9M of start-up costs.
The Model
The model's FY+1 projection is revenue of $2,650M and EBITDA of $625M (23.6% margin). FY+2 projects revenue of $2,985M and EBITDA of $725M (24.3% margin). Near-term revenue anchors on the raised HVAC guide and expected 2026 data center revenue of roughly $350M. FY+2 assumes the Olathe, TAMCO, and Madison capacity ramps convert and D&M sustains a favorable software mix.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.3B | $2.6B | $3.0B |
| YoY Growth | — | +17.0% | +12.6% |
| EBITDA | $505M | $625M | $725M |
| EBITDA Margin | 22.3% | 23.6% | 24.3% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.0% above analyst consensus.
For full-year 2026, management raised revenue guidance to $2.575B–$2.645B, adjusted EBITDA to $600M–$625M, and adjusted EPS to $7.75–$8.15. Data center growth was raised to 50%–70%, implying roughly $350M of data center revenue. D&M segment margin guidance was raised to 25.50%–26.00%, while HVAC segment margin guidance was lowered to 24.25%–24.75% reflecting start-up costs and tariff impact. Management embedded a $0.05–$0.10 EPS Section 232 tariff headwind, mostly in Q2, and expects no material 2027 tariff impact.
What Could Go Right — and Wrong
- Data center revenue approaches the roughly $750M implied total capacity as Olathe, TAMCO, and Madison ramp.
- Semiconductor bidding converts to awards, adding a second growth vector.
- D&M software scope expansion proves repeatable and lifts segment margin structurally.
- Section 232 tariffs stay confined to 2026 and IEEPA refunds materialize.
- Proprietary M&A extends engineered air movement and electric heat with leverage below target.
- Hyperscaler data center build-outs pause or shift, stalling the fastest-growing revenue stream.
- Capacity delays at Madison, Alabama, or cost overruns prolong HVAC margin drag.
- D&M software expansion proves one-time and backlog softness persists; leadership transition disrupts execution.
- Tariff or raw-material escalation exceeds SPX's pass-through ability and the $0.05–$0.10 estimate.
Looking Ahead
The next twelve months revolve around capacity conversion. Madison, Alabama assembly is set for H2 2026, initial production for H1 2027, and full capacity for mid-2028. Olathe, Kansas reaches full capacity mid-2027, and TAMCO Tennessee reaches full capacity in 2027. Q2 2026 results, released July 30, 2026, are the first confirmation checkpoint.
- H2 2026Madison assembly begins — Tests Alabama assembly supporting data center capacity.
- H2 2026Data center volume ramps — Tests 2026 data center revenue near $350M.
- H1 2027Madison initial production — First production units from Alabama facility.
- Mid-2027Olathe full capacity — OlympusMAX facility reaches full production.
- 2027TAMCO full capacity — Aluminum damper output reaches full rate.
- Mid-2028Madison full capacity — Alabama facility reaches full production rate.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.0B | $2.3B | $2.5B | +14.2% |
| Gross Margin | 40.3% | 36.7% | 37.6% | 362bps |
| EBITDA | $400M | $505M | $2.2B | +26.3% |
| EBITDA Margin | 20.2% | 22.3% | 22.5% | +213bps |
| Net Income | $200M | $246M | $286M | +22.4% |
| Free Cash Flow | $248M | $242M | $1.2B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)37.6%
- EBITDA Margin (TTM)22.5%
- Net Margin (TTM)11.5%
- ROIC12.1%
- FCF Conversion54.6%
- SBC / Revenue0.6%
The Company
SPX Technologies is a diversified, global supplier of highly engineered infrastructure products across two segments: HVAC and Detection & Measurement. HVAC makes package and process cooling products, engineered air movement and handling, and hydronic and electrical heating and ventilation; D&M makes underground locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation. With operations in 16 countries and about 4,700 employees, SPX's HVAC cooling and air-handling products are the part of the business that serves data centers.
SPX's HVAC segment has facilities in 11 U.S. states and 3 foreign countries; D&M has facilities in 8 U.S. states and 5 foreign countries. Management emphasizes proprietary engineering — designing its own fans, gearboxes, motors, and heat exchange — and has substantially mitigated prior tariffs through pricing and other actions. Recent portfolio moves include the Crawford United, Thermolec, KTS, and Sigma & Omega acquisitions, and the sale of Crawford's non-core Industrial and Transportation products business for about $60M in Q1 2026.
Business Segments
Competitive Landscape
Management says it believes SPX is the global leader in cooling towers for data centers. The company emphasizes proprietary fans, gearboxes, motors, and heat exchange. A computed criticality assessment sees only minor delays for the AI buildout if SPX cooling towers were unavailable, with customers switching to alternative suppliers like BAC or EVAPCO.
- Baltimore AircoilNamed as a primary cooling tower manufacturer in a customer filing, alongside SPX.
- EVAPCONamed as an alternative cooling tower supplier in the computed criticality assessment; not discussed in filings.
- VertivNamed in inferred competitor relationships; not discussed.
- Named in inferred competitor relationships; not discussed.
- TraneNamed in inferred competitor relationships; not discussed.
Supply Chain
SPX sits between specialty metal and component suppliers and data center operators, hyperscalers, and MEP contractors. Management has substantially mitigated prior tariffs through pricing and other actions.
More on SPXC: Earnings recap