SPXC - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Q1 2024 SPX Technologies Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paul Clegg, Vice President of Investor Relations. Please go ahead.

Paul Clegg

Thank you, Operator, and good afternoon, everyone. us. joining for Thanks the Executive are our Officer; Officer. on President Chief Lowe, and Chief and call me Gene today our Financial With Mark Carano, press was quarter close. The our after today market results containing release issued first

safe GAAP you can and A slide of on of the note as as in of along during follow our X.As our spx.com. presentation results this website and filings. with You the in harbor presentation factors until earnings in discussion risk the live to comments encourage website webcast our to a well find at in most a available provisions. the release our to prepared be also Please press Investor and disclosure slide recent remarks. and portions a SEC of call forward-looking presentation replay link also will reminder, our of review webcast May the are our our release Relations the subject I section to

today Our will of only. will results. continuing operations the Comparisons adjusted be to financial results comments focus on largely

reconciliations historical find detailed presentation. respective appendix to of in can adjusted today's their figures GAAP You measures from the

turn Growth over with June in per including expense at UBS at in Conference call effect on awards quarter, pension and Growth Stock Gene. and costs, primarily exclude New mark-to-market Industrial changes, Annual investors various X, Annual on to that, exercised X.And during favorable will second items, were with that Chicago events William the virtual, at Oppenheimer will amortization May X Our acquisition-related Blair meeting Conference of the we I'll June earnings Reshoring the the which be Infrastructure Conference and adjusted on be the York the share QX, compensation during in nonservice tax stock-based quarter.Finally, the

Eugene Lowe

afternoon, you Paul. Thanks, everyone, for and thank us. joining Good

had drove guidance company In update the results of for start with for We're also our QX, with well execute consolidated and growth the we'll a our call on you margin. increasing substantial XXXX. all increases We year. measures, an the to On of quarter our strong first in today, year-on-year profit year. in our significant the provide continued to full key and segment

to across experience We key markets. robust continue demand

acquisitions and are efficiency. levels our Today, our well, are Our at full performing high facilities are XXXX operating production we guidance. of year raising

XX% new of in XX% adjusted our and adjusted results. Our EPS.Turning in reflects year-on-year midpoint EBITDA high-level to growth

growth at the XX.X%, XX% For journey. by basis our and points the with shared our new Investor framework a for we month by we year-on-year first quarter, grew of XXX value revenue EBITDA Day, expansion. We creation Last adjusted of margin continuation build as through niche intend to on and strong value products, and business engineered strong solutions. system We'll strategic our well and to positions, our drive also foundation through as continue of moats leverage to further tech-enabled initiatives M&A. sustainable investments

across HVAC Integration framework than project solution are with QX, growth drive the price EBITDA some more in also new of acquisitions initiatives on various In efficiencies the of material annually our on the has points. for of during driving This XX% gone average markets plus we our application-specific of a recent by value solutions successful segment, fluid cooler margins targets to broadening well flexible our our quarter. of helping progress businesses, continuous range expand engineering improvement includes XX%.I'll fronts. Our helped value. addressable update of reduced initiatives that advancing our costs. several In create to the continue and our key at more

we competitive duct supply We and position. lead also to products.Our improve tools, Measurement, heating for benefiting advance further reduce continue are the our creating times channels opportunities SPX's are numerous from digital & initiatives. helping which to for including sales broadening management our market-leading chain cross-selling, are In acquisitions Detection our

During Internet QX, sharing. of or development Things, cross-segment and and gained resource further we traction software IoT on

to through I'll significantly system, turn results. review over value to financial we the Looking call see room now investments ahead, our automation Mark in continue more continued to driving R&D.And business our and through including

Mark Carano

strong Thanks, Gene. to adjusted quarter for Technologies. QX XX% SPX was our $X.XX. grew a EPS very Year-on-year,

increased to while a the income points. was Organically, margin total XX.X% acquisitions Detection Consolidated increased largely segment segment slight or XXX and For while quarter, company revenue FX grew X.X%, $XX.X Measurement, revenue million grew a $XX.X year-on-year. increase by million, tailwind. & XX.X% drove basis driven by XX%

was majority Detection tailwind. with and and XX.X% X.X% in quarter of by FX of sales and in QX supported On the in segment, project project, revenue driven CommTech cooling in partially our of offset which sales increased revenue was XXXX. Measurement, & largely higher that higher products.Segment sales Acquisitions delivery was associated income from shipped increased XX.X%, and revenues points. in in and organically platform end in markets. included organic impact was our heating. by driven period.For The up mix by heating followed HVAC X.X% included organic TAMCO was Ingenia backlog by year increase sales large The following cooling grew basis, or hydronic to in a remainder segment equipment our prior margin substantial of increase the The at elevated nominal. sales. our grew an in of XXX million This the and the CommTech increases ASPEQ primarily million, were by revenues contributed our by XX% prior weather declined electric FX acquisitions, revenues margin income the modest lower a unseasonably growth basis in $XXX in year-on-year quarter of For recent segment and driven volumes quarter Segment the the both growth to $XX.X pandemic. heating a organic due XX.X% year-on-year. The platform. decline year end and period while heat warm year-on-year, favorable backlog cooling

in basis prior points, operating due other to XXX CommTech XX% single to debt end increased from to and benefited We due Segment organically backlog large with earlier-than-anticipated now of $X.X revenue. the end quarter. was year financial QX $XXX higher delivery down $XXX project, this cash high of primarily also of at effect of quarter QX.Year-on-year, expected million, backlog the our million deliveries from income leverage the with We digits.Turning margin projects at the grew million the million. total ended period previously of project. was position of up segment and $XXX Absent

calculated Xx. Our as agreement our credit bank leverage ratio, under was

we our declining strong QX to assuming on year-end, X.Xx anticipate Based results ratio We of continue X.X to target no to guidance. range on the and end by capital our deployment.Moving to our leverage to of our outlook, lower adjusted growth additional to $X.XX demand year-on-year robust The midpoint approximately reflects prior guidance a a of $X.XX $X.XX range EPS of are range XX%. new $X.XX. with increasing of for to a compared

Detection anticipate increase We and guidance We guidance. maintaining guidance a for revenue are of midpoint of to at & now Measurement. the $XX billion for HVAC range in or HVAC $X.XX billion million an prior of our raising $X.X

full million. adjusted range HVAC also total prior of income or We range.At $XXX to a basis $XXX in an a from this we segment level, XXX anticipate in a At increase anticipate EBITDA points range weighting company XX.XX% XX%. in increased of million margin the to midpoint, respect in the capacity. of a quarter of we and revenue growth and With than more up cooling XX% Ingenia due to of year-on-year of a QX acquisition HVAC, sequential expect in reflects the production step a

We revenue the margin expect due highest demand. quarter be winter QX to and heating to

large as the delivered CommTech project we revenue highest the remainder mentioned. expect QX of quarter D&M, For we've to be the I

you also of for find higher-margin will and our the anticipate end heavier review always, presentation. closing appendix modeling call I'll projects Gene to over of markets half.As now back his in considerations We a the second to turn our a comments. the weighting in

Eugene Lowe

market strong products HVAC, continue supportive XXXX conditions end of our Current a across Mark. plants centers, of industrial set outlook. cooling updated market semiconductor demand applications, Thanks, broad data see for facilities. are to including we and Within our

to heat regional continue flattish project variation, to healthy. Measurement, also our & performance I'm see we summary, and remain momentum, QX Detection while our our in attractive positioned in EBITDA. short-cycle demand full-year robust solid opportunities a businesses growth adjusted to to significant and orders implies strong start for updated pleased In with We XX% decarbonization. electric with well guidance, through associated continue a the acquisition multiple with which and see operational organically demand year. We very continue With our to experience achieve global both growing In we're pipeline. businesses demand our

Looking future. excited about remain ahead, I very our

significant highly that, Paul. experienced capable, call a see for I value to turn team, come.And strategy with years continue the to back to the driving opportunity With I'll right and

Paul Clegg

will we Thanks, to now Gene. questions. go Operator,

Operator

Blair with [Operator from the Instructions] line Our comes question Oppenheimer. of Bryan first

Bryan Blair

level versus could deal days. start things there Another much prior the million the to up guide. lift guidance, set the HVAC the period or couple left kick stronger excellent from we revenue obviously, in pretty a year. $XX Ingenia that early of off, on To stronger is of inorganic aspect organic in growth, months the versus great How contribution quarter,

Paul Clegg

one. Paul. that is take this Bryan, I'll

drop-through So And was driver organic about really about of revenue increase yes, The here. comes associated your -- basis, the attractive higher $XX all revenue the and gross biggest by points. at the line is basis of margins. million the XXX midpoint is guidance raised the which of revenue, really, the on margin with

do that expect our We acquisitions biggest to have previously them the bit organic. margin a really, we are integrating higher So single than factor and did. say little we well, is did

Bryan Blair

the the So the HVAC, in so organic would growth closer robust. that. level That's outlook that in that prior quite range weighted ask How that versus baked cooling moves about just cooling think notably you it's terms something to contribution? in on X% we and XX% would level. I but know should the to side set better been I in of assume of to heating

Paul Clegg

correct. that here. Of increase looking the Yes, that's you're at year-over-year

of Let revenue something here little we neighborhood this into give $XXX because coming previously talked a the of more million in bit me year. acquisition you about

is is get expect number being spot on to the that's XX% on for around primarily lift much the cooling to but do yes, be on stronger side. And your going we growth heating So is HVAC organic. side, the pretty then still

or you're at if looking at digits on looking something digits, heating. digits single like cooling, So mid-single digits on lower you're double on more double like low

Bryan Blair

year outlook did moves for is anything, you into assumed how through terms QX as terms contribution for QX? run And project the of rate in infrastructure early then year full D&M, what if trend of what, And forward. versus are in And spending business? contemplating and orders

Paul Clegg

with Yes. the I'll start looking one that Bryan. for, numbers off you're

in So overall, in a was for that overall stronger our orders were and HVAC little the pretty company, bit D&M. good less but

here quarter take delivered year got both large that well. last fact in that you then you them back in the projects and If into first of some account the to you the as comp last against got year, half have

less was So the little about is in D&M HVAC. X.X book-to-bill was where a it X than in

look we project left -- As typical had left guidance which we a delivery revenue, margins know, this hole it of million throughout year roughly a in called because us slightly than by a has lower I a to year. the fill large all And maybe bit includes hole large that of pass-through little about for has a you associated in a this kind the it year us last with as year. being down it prior with $XX flat, CommTech, project it. organic, our That the year, and of it's for with

And projects that coming into with other with up so back that year. -- the bringing are mostly we're

Mark Carano

CommTech about think respect project of the seeing growth. So growth question year-on-year we you dollars. Bryan, is on are the infrastructure, about your line ex With the X% benefit some I infrastructure to when top think

really our think of we're the where we've this prior it in on transportation business. seeing calls, now highlighted primarily side is right I

from. I are out think the other will that function relative that's that a those delivery that fact projects there may benefit ready projects more for of to probably be

we're line the that's activity those So to benefit bills. from spending really where a various seeing and the business first federal

Operator

Karas question next comes from UBS. Our Damian with

Damian Karas

really the on strong start to Congrats the year.

like guidance from margins, increase for the from basis year original is So raise it coming the HVAC the XXX majority EPS your guide. your of seems points

Could year. heating confidence supporting and lower continue? the acquisitions maybe what's the That's had And in this just you driving just in? all a you Maybe mentioned driving early margin better your can about bit talk that's about that could this XXX basis you there raise a know playing I points little anticipated. is impressive than it? you accelerated that what's quite Is path talk that's are So not that? mix

Eugene Lowe

I'll strength. I This We're end-market what is overall, off. Gene. think feel really Damian, of lot we the demand, HVAC start The seeing a good actually we're -- about seeing.

industrial. of some play strength. then healthcare/pharma out larger tech, a our very products markets, lot end In our different I'd know, you and As many in ones but particular, really of call have

to HVAC high in If very area Those are and the is very and nice aftermarket strong industrial. EVs is growth some also a our some Semiconductor doing our our well markets we nice have is high that and one wins, market number across do business, well and our projects. very you are very strength there. Industrial just we're we That that also strong, end tends seeing seeing supplemented competitive lines, requirements. is last portion data reassuring and we're specifications seeing of on. a notable Health and care tech, And progress substantial look are and we're centers of we're momentum some and there. pharma, with area, very there. positions largest there. are have this nice strong an at We product some and seeing had

you just and at think we in. bit the on we about a good the you margins Mark, deeper? feel it, side, look Do to play end little if talk, about markets our really I market So positioning want

Mark Carano

Yes.

prior we to think, our right, continue talked quarters, side. cooling about platform and heating as across the efficiencies on I Damian, we've in see

as continue plants. required businesses well that's invest to those to reduce utilization production labor in We those improve both in as

continue in was capital dropping this plants. new a really that of the or those find plants, deploying on those of nature. layout we we creating through opportunities earnest primarily. lot in efficiencies whether that then to front through were process plant also, talked new through. that things about And drive And in really year it's that's more So we've CI the function That a to those a It's plants. efficiency year last started that's that footprint, of

Damian Karas

there? a was in just on particular cooling end bit years. seeing all color growth kind cooling lot hood on Thinking recent you I walk business and could of so And playing. acquisitions business, where maybe similar of really towers, market HVAC little Are if of because you seeing. you're out. just you stand a any the within helpful what HVAC us the across about Or kind level I a dampers, you've with across the much that under the very Gene, very, areas the cooling. of are got you're verticals comments now any fans areas units a there's have of wondering take there appreciate of just there the different

Eugene Lowe

Yes.

nice tower. I very cooling. a -- the in challenge across newest D&M engineer side. cooling, a our our benefiting our seeing of We markets nice And Cincinnati is acquisition, momentum very very very and there. We're as Fan, we produce businesses So we're see with In We growth then nice I there, very which discussed. think on leader growth position the really ourselves very view has there strong diverse that TAMCO lot is believe global the customer just organically. seeing Ingenia have but we play invented there. demand. being end in We movement, strong the attractive cooling is We of data to new, able centers would be biggest there a a the growth, TAMCO. lot base position the the

with pleased very very, really in strong have they product They than -- we're have a market. that. very I believe available We the do what's better demand.

So growth then again, also very us nice opportunities for growth there. ahead and

down props growth. across would And lot be synergies is you're path. would Day a always in with think that's said And particularly mid-single REV growth there. TAM to the growth -- seeing these electric our a also I'd of biggest then going what say it's That's side, we're very and engineers, given talked cooling can on we're I in be days environment. there. up heat, we we've actually there starting heating more there. the say the modest in high hard of relationships any winter which And our some would value the to some across I anticipating Investor to I On that But going us primary see we markets. of weather, real unlock the say see But not growth really or categories. about X hydronics, the synergies early is move product is think and channel mid-single-digit growth and -- areas things the are that we're of like But one ] -- our [ we our there we're for the we

really the has nice we're the good segment really HVAC where feel we going our feel past like strong of we some momentum we and about couple and team, over years, had position So there. and the

Operator

comes from question next with Our Blair. William Sparenblek Ross

Ross Sparenblek

to here. start year nice the A

at mean, second But full the deceleration just all to think understand I Detection given the growth year we backlog to and of expectation? third & the locators Looking at guidance, indicate or going the Measurement, seems that revised Is it that I quarter. kind further tough into least not the comps. are see

Paul Clegg

be think, you against period. bit comparison a seeing ago So Ross, no, of may is a there's there I what in the year L&I issue little

at -- If got of last did saw the the across different saying, flattish quarter lowest half still fairly of you year. levels a of call in look year, is little kind back where what it first highest the last in first I quarter the healthy demand. that the am of you during its quarter L&I the of quarters had sorry, year last quarter year, We things out

year, expecting pretty look year at to that be we this As we're full the overall. flat

from standpoint its on and was year revenue in profit last it what with what seeing. in terms contribution In a fact, pretty line much both based we're of

this is backlog, with year. order a that to through first of for the that associated Hopefully, at in as large result of backlog that delivered it. project look you down that. quarter delivery that around had than lower final typical margins a if we bit being & the again, helps large And for CommTech -- year last really -- straighten Measurement the with the So little the Detection

Ross Sparenblek

Sticking larger think us to, a sense for on It full Can projects you the of relates the and give half, some mix second the like guidance again, it how project hitting. have you maybe year? as about sounds should price cycle. we

Paul Clegg

Yes.

majority get at D&M Measurement in or see we the of various of majority you volume. year, & the really parts what look vast it. of all it's the We'll is the the Detection typically if -- specifically, For but driver this vast typically, kind of business, some price, rather

So the offset by again, with it's a largely areas, speaking. in that decline associated large project from project, other volume improvement

If at price on the it there. volume you side, yes, there volume look HVAC price or

organic You're I looking be XX% that's growth, would mostly to price going there. and at something say like volume modest

Ross Sparenblek

could. maybe run And down, Can any the cash you us more if remind we accretive the are business requirements what as minimum about then one M&A? debt to think I pay just absent

Mark Carano

needs M&A, absent we're on vary. be X.Xx Ross, of typically the an be to quarter, X% of than I a support in business. mean, that normal where year, would said really, capital just where the year to and are X we're to which of spending have will revenue. percent closer I we call a, average you'd to as we're basis, We're the last And a -- spent. you business scale we the then on should this think working depending revenue more mean, between it, in cycle capital this I and have going Yes. in year, I a what But

Operator

Steve from Sidoti. comes with question next Ferazani Our

Steve Ferazani

quarter. Great

going again? the was be location weakness the you it to your you platform, business inspection. was you've So just that? to us you know, U.S. want the generate sort while catch that about catalyst think expecting and I GDP be want previously, of I doing mean, ask from a growth about I underperforming always Can okay. really I up Gene, better generally on what And were being Europe, GDP indicated would dependent the most growth? do in of too but that Is to don't the to talked I much be one platform. downer,

Eugene Lowe

Yes.

I is, you way framed pretty think it the Steve's accurate.

that predominantly and actually expect the a little in to said run at in we're I regions, choppy bit would look relatively would do meaningful seeing when And it inspection, that's our terms economies actually that, I and the actually regional categories we going in This rate say, And some why in this some bit as the said of We're areas. But to U.S. to say own were than come well and talked the Asia, a flattish product, if of locator initiatives break what this very most be back location year. our we very you new This be about it, think is stronger in businesses. product And has we slower. GPS flattish a is typically is If nicely doing of down having in you really that's doing with GPS XX% there, I'm a by market. is our product. excited, little a Radio it's there. growth the U.S. higher core integrated product Europe I premium

HD Robotics Qs strategic which is also We have ULC, out really coming with and some ] getting we have also the solution, wins. [

look And really nice heading we I good or the can't end a GDP if are and the doing can margin about actually where control. So at on the team going countries job products. feel new 'XX. I it, into is the of businesses really What you those control really mark

Steve Ferazani

cash Do reversal way typical capital build the is the in year first on the you where in will this QX real play front, you QX Mark, year had on? think plays flow half. the typical working out, the

Mark Carano

will towards will under think this you're by net we've of I it move incremental I years to but that where we flow we as year. be free that cash Steve, spend cash build conversion CapEx going driven expect prior have that's continue as see we've that target income, to said, to a XXX%, Yes, signaled. the look similar

Steve Ferazani

right? convert debt early whether depending the it is, any actions, robust are, 'XX chances XQ So or any dependent pipeline would until probably on pipelines late the how into reduction on save

Mark Carano

Yes.

nature. absent or think other acquisitions obviously, that anything any of -- I any

will You're half weighted down be the back correct. pay mean side. on it I

Steve Ferazani

given stuff know, of is down robust? about timing think debt pipeline? you knowing is still the paying sort If you pretty worth and do have short How reduction the term, it in that's -- is your enough debt impossible pipeline to

Mark Carano

I been the relative capital today evergreen revolver mean, you instrument. borrow of thus get the to approach to about that respect far. sense because Steve, think down I cash, when particularly to go it more that's debt, return you obviously cost an that's our can and And think on ahead pay to with the makes

We have the ability need to liquidity today of capacity or redraw on that. But that, do I and think do from got we we've if that to an to that M&A perspective, plenty supporting obviously, to. capacity

Steve Ferazani

several And update the Gene, it you've is how HVAC How pipeline acquisitions. about any Obviously, on there? larger looking now? you're thinking out made

Eugene Lowe

say looking it's very I'd solid.

you technology, opportunity of probably CommTech X.X the our that, I likely number midsize, have opportunities. a electric continue pipeline. in small as side, Also, healthy say seeing good alluded We're on it's heat I'd some actually some build more kind great the will attractive of good amount grow at to or a there. under than I'd to normal know, Mark actually to that Measurement Detection to, we and opportunities. & course. very, say, activity. that be There's There's a lower just As a of say

it's active. So look yes, at I'd say it's if healthy, overall, it you

fire. the in rolls yes, our We forward. machine have irons I the think And

half back our and working, strategy is think the we of it year. I the into rolling to So expect keep

Operator

Seaport next comes Liptak line [Operator of from Walter with Our the Research. question Instructions]

Walter Liptak

pulled pull And the that ask I forward? why forward. CommTech quarter. wanted to order Good about did get

Paul Clegg

we into work as was Yes. pulled wasn't forward actually gating of mean there that you projects This Actually, other never them some is weren't -- these know, the pull if was the was project already I Well, easy. forecasted. the clear quarters sorry, that project. the wasn't QX That of from between -- QX. forward CommTech timing

function it how contract it So executed to relative were we deliver ready when and of we QX. that to a was just

Walter Liptak

one pulled So it was orders forward. It many forward. got not pulled was that order that

Paul Clegg

more Yes, it X. than was

Walter Liptak

-- was in D&M repeat CommTech what the in you backlog could sorry? I And the segment, mean

Paul Clegg

the end million I sure. for backlog Yes, it Walt, million at And quarter. $XXX that the of D&M quarter. at got you, the HVAC, $XXX segment of the in the was was end

Walter Liptak

projects considering pretty D&M. backlog, that maybe the that pulled within should those for we the getting and year talk those of Or some orders that order if order and of are funnel year. other the is robust I of saw large I even you Are timing -- mean, wonder foreseeable last the CommTech about there we it's for off Yes, those -- still the products forward. are funnel some rolled nice funnel CommTech activity last D&M? could in done future? and in a the

Eugene Lowe

which would you I about Yes. project, a where large say, -- Walt, it if did replacing is feel good this we we from that stand, pass-through We have look we're at funnel. the that year.

infrastructure funnel transportation. in I across would then that call I If the that's predominantly area This So CommTech our in look that's say one is activity where very actually 'XX what for supported would businesses, our there. a we're actually has We and seeing of the by opportunities that in was is about feel called comfortable government been Transportation. lot out bidding activity at we very 'XX. core. seeing growth healthy. of see and We a of lot spend, the some a and we're there, actually 'XX. lot of

many I'd said There's newer CommTech. activity. a very using prepared wins. of -- of We're very actually like key are and our lot We've that feel our activity good the some there. is that as reminder, of from that gotten customers about say technology a the very countries, remarks, same global So getting we in big, business technology. our We lot true seeing feedback a we're there. is our very nature. as project positive There we in for

like positioned. good So Also project well looking we're the feel on ahead 'XX, of to we house, we feel the for side very 'XX.

Paul Clegg

at think actually I backlog, when backlog referred many high up of adding project the last kind you that, is single Walt, the exclude look CommTech and digits. quarters, we've you the to over that to

Walter Liptak

orders it's great forward. pulled see And to

pushed out. that there quarter, of this orders think were I a lot

yes, so congratulations next And quarter. on the

Operator

now This to you. closing question-and-answer to it Paul session. turn would concludes back remarks. I Clegg for the Thank like

Paul Clegg

to talk for upcoming you shows, We we at you everybody, will the joining to you, Thank the forward look of next and conferences call. you. and seeing Thank road many quarter.

Operator

Thank you the conclude does today's conference. This in for your participation program.

disconnect. now may You

SPX (SPXC) 2 May 242024 Q1 Earnings call transcript