SPX (SPXC) Q2 EPS Up 16 Revenue Up 10

SPX (SPXC 7.66%), a diversified industrial company focused on HVAC and detection and measurement products, reported results for Q2 2025 on July 31, 2025. The company posted adjusted earnings per share of $1.65, topping analyst estimates of $1.45 (non-GAAP). Revenue (GAAP) was $552.4 million, also surpassing GAAP expectations of $546.69 million. Both earnings and revenue showed double-digit percentage growth versus the prior-year period. The quarter was marked by strong segment income in HVAC, and a step-up in annual guidance. While results outperformed, leadership called out areas for continued focus, including softer organic growth in HVAC, some margin pressure in detection and measurement, and tighter adjusted free cash flow.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About the Business and Strategic Framework

SPX operates two primary businesses: heating, ventilation, and air conditioning (HVAC), and detection and measurement solutions. Its HVAC segment delivers products such as cooling towers and air movement equipment for buildings, including hospitals and data centers. In the detection and measurement area, it develops technologies for infrastructure monitoring, communication, and security. Recent years have seen SPX reduce exposure to its legacy power business, aiming for more scalable, stable growth in HVAC and detection and measurement. Success in these markets depends on innovation, strong supply chain management, and integrating new business units from ongoing acquisitions.

Management has placed emphasis on product innovation and expanding in high-growth markets. The company regularly points to its pipeline of HVAC solutions designed for data centers and green buildings, as well as technological advancements in detection and measurement, like digital interoperability tools and tactical networking systems. Scale and competency in these focused areas, along with disciplined acquisition and divestiture activity, are considered key elements for driving future performance.

Highlights and Segment Trends for the Quarter

Revenue climbed 10.2% while adjusted earnings grew 16.2%. Both non-GAAP EPS and GAAP revenue outpaced analyst expectations. The increase was driven by a mix of organic growth and completed acquisitions. HVAC segment revenue increased 5.7%. Detection and measurement revenue jumped 21.3%, with about 14.9% of this driven by the acquisition of KTS.

Profitability, as signaled by segment income (non-GAAP), advanced strongly in both businesses. HVAC delivered a segment income margin of 25.4% (non-GAAP), up nearly two percentage points from last year, reflecting higher volumes and positive results from Sigma & Omega, a maker of heat pumps and fan coils for multistory structures. Detection and measurement also posted higher segment income (non-GAAP), though its margin slipped to 22.8%, down slightly from the prior year period, due in part to decreased project mix favorability. Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, improved to 22.9% of revenue (non-GAAP), up 120 basis points compared to Q2 2024

The company continues to add to its portfolio, integrating Sigma & Omega into HVAC and KTS into its detection and measurement offerings. Sigma & Omega broadens SPX's reach in North American buildings by adding energy-efficient heating and cooling products. KTS expands digital and communication technologies for critical infrastructure and defense customers. These new businesses contributed to both revenue and profit growth, but management noted that they also raised total debt (GAAP) to $1,019.3 million as of June 28, 2025, up 65.9% from December 31, 2024.

SPX's tariff exposure affected raw material costs, with management citing a net annual impact of roughly $6 million for FY2025. While the company seeks to offset these costs through price increases and surcharges, leadership explained the ability to recover costs from projects in backlog is somewhat limited in the short term, particularly in the Detection & Measurement segment, where there is less flexibility to capture price on projects already in backlog. In the statement, SPX described confidence in passing through more of these costs over the remainder of the year as newly priced projects come online.

Looking Ahead: Guidance and Key Issues to Watch

Following the quarter's results, SPX lifted its full-year 2025 outlook. The company’s full-year 2025 guidance is for revenue in the range of $2.225 to $2.275 billion, adjusted EBITDA (non-GAAP) of $485 to $510 million, and adjusted EPS (non-GAAP) of $6.35 to $6.65. The targets reflect raised expectations for both core business growth and accretive contributions from acquisitions. Segment guidance now anticipates HVAC revenue of $1.50–$1.53 billion with segment income margins as high as 24.75% for the full year, and Detection & Measurement revenue of $725–745 million with segment income margin guidance up to 23.0% for the full year. Management tied these upward revisions to continued strong demand, healthy backlogs, and operational momentum.

SPX will continue to advance investments in manufacturing capacity and new product development, particularly for its HVAC offerings for data centers and high-performance buildings. Investors should watch for organic growth trends in HVAC, as recent growth relied heavily on inorganic contributions from acquisitions. In detection and measurement, margin trends and successful integration of KTS remain in focus. Other closely watched areas are adjusted free cash flow, which declined to $37.1 million from $57.9 million in Q2 2024 despite stronger earnings. No new dividend has been announced.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.