SPX Corporation ((SPXC)) has held its Q1 earnings call. Read on for the main highlights of the call.
SPX Corporation’s recent earnings call conveyed a generally positive sentiment, highlighting a robust start to the fiscal year. The company reported significant growth in both adjusted EBITDA and EPS, driven by the strong performance of the HVAC segment and strategic acquisitions. Despite facing challenges such as tariff-related impacts and a decline in Detection & Measurement revenue, SPX remains optimistic, raising its full-year guidance.
Strong Start to Fiscal Year 2025
SPX Technologies kicked off fiscal year 2025 with impressive financial results, reporting a 12% increase in adjusted EBITDA and a 10% rise in adjusted EPS for the first quarter. These figures underscore the company’s strong margin performance and successful execution of key initiatives.
HVAC Segment Growth
The HVAC segment demonstrated solid growth, with revenue increasing by 6.8% year-on-year and organic growth of 4.4%. This segment’s performance was further bolstered by the strategic acquisitions of Sigma and Omega, which are expected to drive future growth opportunities.
Acquisition of Sigma and Omega
The acquisition of Sigma and Omega has significantly enhanced the HVAC segment’s value proposition. This strategic move expands SPX’s addressable market, particularly targeting multistory buildings across North America, and is expected to contribute positively to the company’s growth trajectory.
Increased Full Year Guidance
Reflecting the strong first-quarter results and the positive impact of recent acquisitions, SPX has raised its full-year adjusted EPS guidance range to $6.10 to $6.40. This adjustment indicates confidence in achieving a 12% growth at the midpoint of the guidance.
Strong Order Backlog
The Detection & Measurement segment reported a substantial 56% increase in backlog sequentially from Q4, signaling healthy demand for future project deliveries despite current revenue challenges.
Tariff Environment Impact
The ongoing tariff environment poses a challenge, with an expected negative impact on adjusted EPS by approximately $0.08 to $0.12. SPX is actively working to mitigate these effects through price increases and surcharges.
Detection & Measurement Revenue Decline
The Detection & Measurement segment experienced a 2% year-on-year revenue decline, with organic revenue down by 6.9%. This decline is attributed to the timing of project deliveries, presenting a challenge for maintaining margin improvements.
Modest Growth in Detection & Measurement Segment
Despite the revenue decline, the Detection & Measurement segment showed strong income growth. However, the negative impact of tariffs and backlog constraints suggests challenges in sustaining margin improvements throughout the year.
Forward-Looking Guidance
SPX Technologies provided an optimistic forward-looking guidance, reflecting its strong financial performance and strategic acquisitions. The company anticipates a 15% growth in adjusted EBITDA at the midpoint of its guidance range for the full year. Despite the challenges posed by tariffs, SPX remains confident in its ability to navigate economic uncertainties, leveraging its strong market position and diverse demand drivers.
In conclusion, SPX Corporation’s earnings call painted a picture of a company on a growth trajectory, buoyed by strategic acquisitions and strong segment performances. While challenges such as tariffs and revenue declines in certain segments persist, the company’s raised guidance and strategic initiatives suggest a positive outlook for the remainder of the fiscal year.