SPXC Q2 Earnings Call Highlights Data Center Growth, M&A Focus

SPXC Expands Data Center Capacity

SPXC executives placed significant focus on expanding data center cooling capacity. President and CEO Eugene Lowe said that the company now expects approximately $1.1 billion of annual data center capacity at full production, up from the prior expectation of $750 million.

Lowe said that improvements in OlympusMAX production, facility throughput and lean initiatives helped raise expectations. The company increased its 2026 data center revenue outlook to $430 million, supported by stronger demand and improved manufacturing efficiency.

Management also highlighted customer visibility in the market. Lowe said that hyperscaler relationships and direct customer engagement provide visibility into future demand, while data center cooling remains a major growth opportunity for the HVAC business.

SPX Raises 2026 Outlook

SPX increased its full-year guidance following the strong quarter. Management raised the midpoint of adjusted EBITDA guidance to reflect higher data center volume, stronger Detection & Measurement performance and the contribution from Neptronic.

The updated outlook calls for revenues of $2.705-$2.765 billion, adjusted EBITDA of $630-$660 million and adjusted EPS of $8.2-$8.6.

CFO Mark Carano said the guidance increase reflects improved execution and demand trends. He noted that HVAC margins should benefit from higher volumes, Neptronic contributions and easing impacts from capacity start-up costs and tariffs.

SPXC Adds HVAC Capabilities

SPXC discussed the strategic importance of its Neptronic acquisition. Lowe said the deal strengthens the HVAC portfolio by adding controls, electric duct heating, humidification solutions and actuated valves.

Management said Neptronic expands SPXC’s capabilities toward more integrated HVAC solutions. The company expects the acquisition to support growth through existing channels, OEM relationships and data center customer connections.

Carano said Neptronic is expected to grow above SPXC’s medium-term targets, with high single-digit growth potential and a margin profile above the HVAC segment average.

SPX Delivers Segment Momentum

SPX reported revenue growth of 22.9% year over year in the quarter, with adjusted EBITDA increasing 19.8%. Consolidated segment income rose 23% to $167.1 million, while adjusted EPS increased 22.4% to $2.02.

The HVAC segment benefited from higher cooling equipment volumes tied to data center demand and increased throughput from expanded capacity. Revenues grew 27.6% year over year, while segment income increased 14.6%.

Detection & Measurement also posted stronger profitability. Segment income increased 43.3%, supported by project volumes, favorable mix and cost optimization initiatives.

SPXC Addresses Analyst Questions

SPXC faced questions from analysts about the durability of Detection & Measurement margins. Carano told a BofA Securities analyst that roughly half of the margin improvement came from favorable project mix, while project timing and synergy initiatives contributed to the remainder.

A Truist Securities analyst asked about the pace of data center capacity expansion. Lowe explained that productivity improvements and facility optimization enabled the company to increase expected capacity without changing the overall ramp timeline.

A B. Riley Securities analyst questioned long-term customer agreements. Lowe said that SPXC has agreements with several customers that provide demand alignment while maintaining flexibility through formal purchase orders.

SPX Maintains Growth Focus

SPX ended the quarter with $168 million of cash and total debt of $615 million. Management said that its leverage position leaves room for continued acquisitions while maintaining its strategic investment priorities.

Lowe emphasized continued investment in capacity expansion, acquisition integration and opportunities across HVAC and Detection & Measurement. The company said that its pipeline of potential acquisitions remains active.

Management’s focus remains on scaling data center solutions, integrating recent acquisitions and improving operating performance across its businesses.

SPXC’s Zacks Rank and Style Signals

SPXC currently carries a Zacks Rank #2 (Buy). The Zacks Rank is driven by earnings estimate revisions and is designed to help identify stocks with stronger near-term performance potential. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of D, a Growth Score of B, a Momentum Score of D and a VGM Score of C. The Zacks Style Score evaluates value, growth and momentum characteristics, with higher grades representing stronger attributes within each category.

The combination of a Zacks Rank #2 and individual Style Scores provides investors with additional context, though the Zacks Rank can change as analysts update earnings estimates following new results.

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