Analysis SPXC
SPX's cooling boom is getting more expensive
SPX raised its annual sales forecast but reduced its adjusted profit target. Demand for cooling equipment is strong, while the cost of expanding production is rising.
SPX Technologies expects to sell more equipment this year than it forecast in July. It now expects less adjusted profit from those sales.
The company is benefiting from demand for cooling equipment, including products used in data centers. But expanding production is bringing higher labor and supply-chain costs, while other input costs remain elevated.
The change in the 2026 forecast is clearest when the revenue and profit targets are read together:
| 2026 forecast | July | October |
|---|---|---|
| Revenue | $2.705–$2.765 billion | $2.745–$2.805 billion |
| Adjusted EBITDA | $630–$660 million | $625–$645 million |
| Adjusted EPS | $8.20–$8.60 | $8.20–$8.50 |
The adjusted figures remove certain costs and gains, such as acquisition expenses and changes in the value of investments. EBITDA also leaves out interest, taxes and accounting charges for assets used over time. The lower forecast does not mean quarterly profit has fallen: income from continuing operations rose to $82.3 million from $63.1 million in the third quarter of 2026.
Cooling growth comes at a cost
The heating, ventilation and air-conditioning division, known as HVAC, increased sales to $525 million. Growth from existing businesses was 22.3%, with acquired operations adding a further 13 percentage points and currency a small additional contribution.
Yet the division kept less profit from each dollar of sales. Its segment profit margin fell to 23% from 24.4%. This company measure leaves out certain central and other costs. SPX cited labor and supply-chain inefficiencies as it increased volumes and capacity, along with higher input costs.
The pressure is not uniform. The smaller Detection and Measurement division sold less but improved its margin. Across the group, revenue rose 20.5% to $714.5 million and adjusted EBITDA increased to $165.7 million from $136.1 million.
Chief Executive Officer Gene Lowe said expansion projects remain on track to support approximately $1.1 billion of annual data-center revenue capacity at full production. That describes potential capacity, rather than sales already recorded or guaranteed orders.
Expansion also uses cash
Cash generated by continuing operations fell to $60.1 million in the quarter from $106.8 million. Capital spending rose to $40 million from $10.4 million. Over the first nine months, operating cash flow was still higher than a year earlier, although investment spending had increased as well.
Acquisitions are another use of funds. SPX completed its purchase of FIS Water on September 15 for $405 million after acquired cash, financed with its revolving credit facility. The business supplies water-management and control products used in cooling applications.
Following that and other acquisitions, total debt stood at $1.335 billion at September 26, compared with $501.6 million at the end of 2025. Cash fell to $120.8 million from $366 million over the same period.
The demand opportunity remains visible. The revised forecast shows that turning it into additional sales is currently easier than turning it into the profit SPX had expected in July.