SPX Technologies: A Masterclass in Margin Expansion and Strategic Growth in Q2 2025

SPX Technologies (NYSE: SPXC) has delivered a Q2 2025 performance that transcends mere growth—it's a case study in disciplined execution, strategic acumen, and market leadership. With revenue surging 10.2% year-over-year to $552.4 million, and adjusted EPS climbing 16.2% to $1.65, the company has not only met expectations but redefined them. For investors, this is a rare combination of short-term execution and long-term vision. Let's dissect why SPXC is a compelling long-term buy.

Organic and Inorganic Growth: A Dual-Engine Strategy

SPX's Q2 results highlight a balanced approach to growth. The HVAC segment, a cornerstone of its business, generated $376.7 million in revenue, up 5.7% year-over-year. While organic growth contributed a modest 0.7%, the lion's share—4.9%—came from inorganic initiatives, notably the acquisition of Sigma & Omega. This isn't just a one-off win; it reflects a disciplined M&A strategy that prioritizes complementary technologies and market access.

The Detection & Measurement segment, meanwhile, posted a staggering 21.3% YoY revenue increase to $175.7 million. Here, the acquisition of KTS amplified organic momentum in communication technologies and transportation systems. SPX's ability to integrate acquisitions swiftly and drive incremental value is a competitive moat in capital-intensive sectors like HVAC and industrial detection.

Margin Expansion: The Unsung Hero of Earnings Power

While top-line growth is impressive, SPX's margin expansion is what elevates its performance from good to exceptional. The HVAC segment's operating margin jumped 190 basis points to 25.4%, driven by cost discipline and pricing power. In a sector often plagued by commoditization, SPX's ability to convert revenue into profits is a testament to its operational rigor.

The Detection & Measurement segment, despite a 60-basis-point margin contraction, still posted a robust 22.8% operating margin. This dip was attributed to a less favorable project mix compared to 2024, underscoring the segment's inherent volatility. Yet, the fact that SPX can maintain margins above 20% even in challenging conditions speaks volumes about its pricing strength and technological differentiation.

Raised Guidance: A Vote of Confidence in the Long Game

SPX's Q2 results were so strong that the company revised its full-year 2025 guidance upward across all metrics. Revenue is now expected to reach $2.225 billion–$2.275 billion (up 13% at the midpoint), with adjusted EBITDA projected at $485 million–$510 million (18% growth). Adjusted EPS guidance of $6.35–$6.65 implies a 16% year-over-year increase, a figure that should resonate with value investors seeking durable earnings growth.

This upward revision isn't just a reflection of past performance—it's a signal that SPX is accelerating its growth trajectory. The company's leadership cited “operational momentum” and “strong customer demand” as key drivers, with specific mentions of its Engineered Air Movement expansion and the OlympusV Max cooling solution. This latter product, tailored for data centers, taps into a $60 billion global market projected to grow at 12% annually through 2030.

Strategic Initiatives: Building a 2026+ Growth Flywheel

SPX isn't resting on its laurels. The company is investing in production capacity for its Engineered Air Movement businesses, a move that will enhance scalability and reduce lead times. Simultaneously, the OlympusV Max's adoption by data center clients positions SPX to capitalize on the AI-driven infrastructure boom.

Financially, SPX's liquidity is a tailwind. With $136.9 million in cash as of June 28, 2025, and $37.1 million in adjusted free cash flow for the quarter, the company has the flexibility to reinvest in growth or reward shareholders. At current valuations—SPXC trades at a forward P/E of 14.5x and a P/EBITDA of 11.2x—these metrics suggest the market hasn't fully priced in SPX's upside.

Investment Thesis: Why SPXC is a Long-Term Buy

1. Margin Resilience: SPX's ability to expand operating margins, even in volatile markets, ensures that revenue growth translates into superior earnings.
2. Strategic Depth: From inorganic growth to product innovation (e.g., OlympusV Max), SPX is building a durable competitive edge.
3. Guidance Credibility: The upward revision in 2025 targets validates management's execution track record, a critical factor for long-term trust.
4. Valuation Attractiveness: With EBITDA growth projected at 18%, SPXC offers a compelling risk-reward profile at current price levels.

Conclusion: A Company in Sync with Its Industry

SPX Technologies isn't just surviving in a fragmented industrial landscape—it's leading the charge. By marrying organic innovation with strategic acquisitions, and by leveraging margin expansion as a growth catalyst, SPXC has positioned itself as a compounder for the next decade. For investors seeking a long-term hold, SPXC offers the trifecta of consistent earnings, disciplined capital allocation, and a clear line of sight into 2026 and beyond. The question isn't whether SPX can deliver—it's whether the market will catch up to its potential.

Final Call to Action: With a raised 2025 guidance, a strong balance sheet, and a pipeline of growth drivers, SPXC is a compelling addition to a long-term portfolio. Buy with confidence.