SPXC - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to the SPX Technologies Q3 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Paul Clegg, Vice President, Investor Relations and Communications. 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. A our after today market results containing release issued third

to follow can along our well a this review website I as of call at and You slide to the press Investor of release our webcast results during you a as GAAP the spx.com. the our link release be earnings find available Relations replay the the presentation live our on in in with to prepared our disclosure of and discussion will section encourage A presentation slide website. and remarks. webcast of

and risk safe note As Please also in subject factors provisions. a SEC portions are to our reminder, harbor filings. the of most presentation our recent and forward-looking comments

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

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

earnings adjusted changes, costs, nonservice items. other exclude per acquisition-related mark-to-market and expense amortization pension items, share Our

will at we Industrial to on Baird meeting Finally, December on on events over Gene. in the Research X. Small X December Conference with Wolfe XX, Conference the November the Global turn And call quarter, the fourth and with during the Conference I'll various Sidoti's be including investors Cap that,

Eugene Lowe

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

discuss update outlook you an quarter provide today, on consolidated of and the On the we'll remainder the for results our with third and our call of XXXX the year. segment for

key profit growth and revenue increases measures. reflect our results in QX solid Our substantial

to including segments our continuation both sustainability execute on initiatives, value Our margin key performance was across and improvement. and creation we strong continue

of full XX% well year are EPS guidance, EBITDA an year-on-year a which achieve increase of and increase in XX%. adjusted adjusted our reflects in approximately to We positioned

high-level our to results. Turning

XXX basis we in EBITDA expansion. approximately points strength with quarter, HVAC by of X.X%, grew increased third XX% the Adjusted cooling. year-on-year margin For revenue driven by

I'd like update on to our efforts you value always, creation quarter. As during the

recently of key our XX% sustainability solutions help we of customers' power we usage. the intensity year achieved published to annual several across climate reflecting our front, introduced carbon in conscious and new another emissions ahead report that On well reduction usage, sustainability schedule, and initiatives. reduce In a our particular, progress water

investments benefits to continue capital as also investments in see gains We that progress efficiency. equipment throughput. to continued of margin to continuous from improving and in including improve our production capacity initiatives, incremental improvement to see add by processes We've result a significant

turn financial Mark call I'll to review the now to our over And results.

Mark Carano

Thanks, Gene.

Our third quarter strong. results adjusted XX% Year-on-year, grew $X.XX. were EPS to

or total million, million Organically, the quarter, company to increased $XX.X while increase segment revenue acquisitions X.X%, income FX increased Consolidated basis while grew grew drove revenue by was X.X% margin segment a year-on-year. an tailwind. modest For X%, $XXX.X XXX of XX.X% points.

platform was in revenues prior revenues of similar segment, in quarter, organic X.X%, FX cooling year-on-year. HVAC contributed driven demand, was grew XX.X% the year. nominal. our For to strength continued growth Ingenia and increased the an X%, cooling heating of while the acquisition by The our impact while On basis,

was on Segment Segment backlog $XX.X income QX. modestly and segment due quarter from segment and $XXX XXX margin by in XX.X% sales increased up basis operating The to points. acquisition. Ingenia or income million, the while grew margin increases leverage were organic million at higher end cooling

quarter sales lower of was large and segment, in Decrease Measurement tailwind. the Detection largely into pass-through the project X.X% associated XXXX. during revenue was the by FX X% contract driven & revenues delivered the with For year-on-year. XXXX quarter in decreased a first

QX, to from million, down efforts timing Segment certain quarter at sequentially driven the by project our income by structure. end $X.X margin from million backlog XXX grew transportation efficiency project approximately of the increased and benefit X.X% revenue awards. project, was sales. Year-on-year deliveries pass-through Segment X%, $XXX points, the mix. and margin income grew driven also to continued segment basis AtoN and reflecting our enhance more segment of project Excluding favorable

our the position to at financial million. the debt now total million of quarter. Turning $XXX cash QX of In of end $XXX and with

capital Our of or leverage was We approximately target calculated flow credit by $XX free X.X for X.Xx, our bank now lower the deployment. ratio to our to leverage declining under agreement anticipate cash no range below is our assuming was X.Xx. ratio year-end, additional million. quarter Adjusted X.Xx

facility order the credit and the During size better double opportunities. for in quarter, growth our agreement to our billion match size credit of to we revolving $X our amended increased

Moving guidance. our on to

We our EPS. are maintaining adjusted for and adjusted guidance EBITDA full year

of range $X.XXX of HVAC billion the billion, growth reflecting to the to midpoint. guidance $X.XXX narrowing are We our at XX.X% revenue year-on-year

We are narrowing XXX for or of XX.X% increase HVAC basis margin the slightly midpoint while also our range guidance maintaining year-on-year. points

margin our previously. with of D&M, a a basis increase of the to In our range XX.X%. year-on-year performance XXX on raising outlook, basis a XX%, to increase guidance we approximately This and represents XXX based compared XX.XX% points year-on-year are midpoint approximately to increasing of year-to-date points

midpoint total, the a unchanged company result consolidated income remains as adjustments. of for In these segment

As you'll modeling in to our the presentation. considerations always, appendix find

end to closing over a I'll his for the Gene review and comments. our now markets turn call back of

Eugene Lowe

our short-cycle demand and markets, demand temperatures we regional to healthy. cooling platform, Detection driver in to continue orders year-end are Measurement care continue platform, Mark. project business variations, our demand is & see support health typical. key several Current data winter heating with flattish remain across segment, we our conditions of institutional. In while including our our a as for experience In our continue strong outlook. centers, HVAC key HVAC products Thanks, market to Within end global

year in Looking with anticipate solid ending well us for positioned a the ahead, backlog XXXX. position, we giving growth

in opportunities and growing results, achieve businesses EPS. attractive implies through We're In growth segments. continue year to updated XX% adjusted both adjusted margin significant see positioned including in EBITDA acquisition organically summary, and I'm multiple XX% our QX full pipeline. in guidance, expansion our pleased SPX's well with our We both which growth to

significant ahead, future. to turn opportunity about Paul. right to call The remain for Looking driving to I the I'll back I value highly And team, continue and that, excited a come. see capable, our with strategy years experienced

Paul Clegg

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

Operator

[Operator Blair. with Instructions] Ross Our Sparenblek from question William first will come

Ross Sparenblek

XXXX? and quarter of for double How to order it guys with [indiscernible] growth all to during mean to HVAC streamline a growth the the about you digits sustainability we the Strong fair continuing rates done index base the have process. still think is for cooling business? underwrite work the climb, the and sales mid-teens XXXX case into I the should overall

Unknown Executive

into be early. too don't I about get all, XXXX careful. We a to discussion of first on, we're So want

I some that capacity. with think organic we've side, with growth the respect a expanded on respect well. benefited from strong we've as here done had Obviously, cooling throughput that also acquisitions our we of year we've improvements done so significant the far some to

into data Yes, good we're we care look next we I'd and centers benefited and the markets as this year, those year. institutional. about looking largely, strength And of say have health at feel us that

good And the so from we where say pretty that's cooling still about side, stand. we I'd feel

Ross Sparenblek

your flow numbers? already . come? when understand I'm just Dodge XXXX. we to books hasn't to understood this to hit recovering bleed if expect Or more the of timing to is from in it already, I to is Maybe the starting should index order trying Yes, through

Unknown Executive

About proxy all for I'm of is which a to of Dodge business. linked his mean perfect really index is sure not I XX% HVAC the exactly. Ross, our the Dodge replacement, not

care, of these some So thinking then of build. new you you really reshoring in be we're And data the quarter well the about health some And those changed. next dynamic to need trends really to They as there through think just see the the continuing thematic like strong year. Paul markets. replacement markets and continue I both about the mentioned, as like institutional, the centers, haven't mean, seeing. fourth be that we

Ross Sparenblek

the was boiler a kind just growth and maybe see new surprising the for at share there guys given And there, you we little commercial intra-quarter flat comp the we have seasonally seen of from side. quarter enough. read read-throughs as just seen look on the launches some least we've to Fair resi? product of into it low the gains fourth at Is anything should side, and

Eugene Lowe

Yes.

this to season had I slower -- was think we heat initially I anticipated. it start mean, a Ross, than year the

in that our have that extended. in lead our business business of the with conjunction boiler and times really no longer the So They're fact kind normalized.

they last still longer recall, lead you were year, normal at If times. than

the at more So we're little levels than seeing in distributors the least their have a manage inventory they perhaps past. prudently

by yet. we driven really, So season kick end dynamics, and seen the in just day, of the largely the the weather at eating it's but haven't

quickly. it when know, XX% you business. As does, This replacement is an concerned

the to to you year, dynamics our our delayed ramp will that once think account guide, take up the to have balance a about you the of really season. With will, business of you shift. Yes. kind So into when heating if guide, respect adjusted see the we weather start to start

Paul Clegg

Yes. Well And you side. the resi stronger commercial the versus on yes, I think do we mention commercial. are

think is a are I flatness. market where is all replacement more much seeing which we the resi,

Operator

Bryan come Blair Oppenheimer. Our with from will next question

Bryan Blair

with to dig Detection run like & I'd rate in on your starting Measurement, business.

perspective is project think what team seeing perhaps should Is should demand, the demand this terms we there? And citing you've And may to reading the inflection. slides, the consistent setup of [indiscernible] that underlying regional global activity said actually into on rate? horizon? catalysts into be turn healthy but mixed The terms and read Just XXXX? spending simply variation, of going looking sustainability perhaps I in currently? in in commentary your for your business, of we anything demand forward in very too been being . in into on team's run on much, terms of script, and the you then How flattish, about term project flattish near there infrastructure

Eugene Lowe

Bryan, Yes, start let me it.

flattish very mean, growth. variation. anything regional I that run rate in very, that think word. There's I too wouldn't general, has think read with I into been much the I modest

level, XX% in and we're As America at North about split we Europe, equally a Asia. approximately know, and XX% company

come activity, 'XX. our And XXXX. go those The 'XX. could when that of be other to There's we're guidance. But I'd project on. careful start that There's Continental to I say in of Southeast would North would start say actually keep I fairly healthy. big the to appear the [indiscernible] projects regions. large XXXX some about there's I as about, will holding the be got say test thing of [indiscernible] we've there to on not China large looking that our Asia pretty me to giving and into Europe. the is soft overall, steady. And to would want I We say U.S. cautiously say, we're U.K., optimistic be a and some we talked lot very these would would in eyes could is some that small. are revenue go also bidding to relative fruition. America, that areas in X that is

got really to So really of we're rates projects have success sure those manage handle the on we've that good the to going did timing revenues that and a of projects. make PME but there,

kind if we head is normal But yes, to 'XX look of say, growth. if I say HVAC our would at you mid-single-digit business

I as 'XX. we look drivers seeing probably D&M, overall, HVAC we're think say, bit underneath more a ahead whereas would to is growth what there's little growth I lower

Bryan Blair

flexing your a Understood. quarters? your for what guess, in leverage your how credit the scale having intrigues the capacity? targeted team's out with of powder. Appreciate quick to of with speak to coming $X amount XXXX deals the pipeline, you're me that enter is your I of kind And however below dry there also, And color. of there expanded tremendous update to you deal frame, moving to would pipeline, is utilize may, potential executing actually -- M&A Or Are going facility a billion, a your on composition simply the range, maybe operations? confidence current over it that

Eugene Lowe

Yes.

spot you're think I -- think I on.

going we're [indiscernible] our EBITDA half much was well you is business our EBITDA what has When is I got in it below think generate as think revolver thing to cash. X obviously expanded so I do right? of today. almost place, our we know, that somewhat,

the getting with just is size our the it revolver of appropriate part so And strategy.

feel good we about So that. very

on feel we with side And misses that, as the strong activity good actually D&M HVAC say would well on the very really pipeline. on said side. side. as I the the level and having is But our M&A

platforms. XX And about building feel of level the good the activity. what our ability a actually there's next we're terms to I over So optimistic seeing months in keep out of

[indiscernible] think I really opportunities there. good

some flip very seeing see it, as opportunities over would on HVAC, inspection see to [indiscernible] very we're some as cooling in you I the side, well platform. transportation side, and good we those on interesting on opportunities Where location say, side, if content movement the the we engineered then and air intriguing some

it going ratio, And our revolver have powder with the do feel relatively multiple on. right, grow. So new dry like there's our a we lot debt-to-EBITDA and you're does low to

Bryan Blair

That's encouraging.

Operator

next Damian UBS. Our from come question with Karas will

Damian Karas

few a impact I a would been heard couple XX-point on had X% that and here. Maybe a follow-up otherwise, correctly? hear weeks. to of had just I want It's up questions I D&M D&M sure, quarter long Did single you organically. [indiscernible]. first, have project correctly the just a that been on make

Paul Clegg

know Yes. you what Damian. I talked about,

by year. you So delivered the in the the we're the giving the Paul, no, way. We're you actually that math this giving just without prior pass-through -- is projects

first tended delivered that the year. That's large of last You project the skew may with remember results quarter that had this lower and a in year our pass-through typical to technologies associated into margin and business, than year. it, through we communication all

year-over-year as we gave math. the comparisons, so that we just do And

Damian Karas

Okay. I were seems ask last just see. strong, you, considering let pretty year. X% off Well, me versus margin the sales

you like, you've could give just the So that on? mix kind initiatives impacts working much been been some that us stronger related How that of margin? a have versus were would there to operating sense

Unknown Executive

I Yes. a mean both. it's really mix of Damian,

segment been bringing that's related X margin, IT, around have sorts segment. as and efficiencies businesses together pulled these whether or We across initiatives to all or for the of under very operational roof sourcing, together to opportunities it and drive X all look intentional we

quarter that quarter mentioned, anticipated. from this have perspective. relative within higher they them. margin they of in what initially had a And you case, I projects, mix in landed we a margin we you These of we and to, as across a mix profiles margin QX, know, And in had given the projects think, as slightly have then the favorable a as profile the execute variety did

Eugene Lowe

team's taken year, the very actions nice been work on the done you they've have last at driving synergy if a I different think that look margins, areas productivity, pricing, some on versus this year beneficial. on

Detection Measurement progress a talking and little margins to So it's we've about they're -- the nice making. Really for been really see while.

Paul Clegg

for that add, D&M we might those midpoint guidance you raised for probably the I our reflecting as of obviously Yes, Damian, activities. many year saw well,

So from midpoint now XX.X%, up is which I think the X.X%. is

Damian Karas

pretty the just Anything seemed range staying updated for on Yes. D&M, And to read just Yes. that? just wide see. No, the for that's X left. I into great year, to then guide the -- quarter pretty --

Paul Clegg

the had of ones No. year. of it's as look think And us a quarter Damian timing which to really, I it's just the fall this projects. during chunky of to you've at that's of the timing we -- just have caused revisit fair number the timing kind into been projects of a which year. that's those, And

healthy midpoint the average, a we where revenue implies the you'll about So really going fourth are on something think margin. and the see pretty that on mid-XXXs I feel good into we in quarter,

Operator

Seaport with Liptak Walt from come Research. will . question next Our

Walter Liptak

HVAC, you So data and up And been usually this some wonder cadence chain or could year doing the your you the orders, center I -- start for boiler I of like But when wanted to normal there. care order . from do boilers, clearly you have of boilers? weather the when like to distributors the warmer cadence a about the has fine. don't that is with lot just last starting what and do whatever then Like is ask it sounds supply year. -- seeing take issues inventory? health talk about the if an

Paul Clegg

Yes.

in Mark So of you to see as that, of this not referred see September. we to did were expecting earlier. We start much some year, typically that

the lead holding come or inventory at distributors you're as able and be more a off have weather, did And You position some just-in-time in with lead warm them to on a their bit down little times. puts times management. save there's less this to see --

At as for we for roll Look, you we've guide in in in that in quarter. and this accounted the here our should right, fourth start October, you're that to winter it's point, still kick through. months see warm the

know we've set what far So on I about we we where based guidance fourth the quarter. about good feel think so

historical to -- of it that last to you -- the versus look lowest over of decade here. levels it's at the we've If X levels, the last were at close forecasting one seen we're

of With particularly which last weak. was the year, exception

So impact sort being very expecting of had in that addition we're post still double in to a year-over-year a particularly whammy bit Last in growth COVID warm heating. little in year quarter of of taking environment. was the you place fourth a kind of sort of destocking it weak,

Walter Liptak

center, orders look then Okay. data the care? of for Great. they And cadence health the

Eugene Lowe

good, Overall, And to and would our nice long the we're there. customary say there. opportunities there the health starting we're growth very there. as Walt of centers some awards, strong, is really handling, Data nice I 'XX in nice which Asia regions. really, Europe in really In even Ingenia, I EAM on lead some U.S., into in what projects biggest all book be times remain seeing Strobic, getting feeling care, well. X say, a would portion seeing some would

sit yes, strong. good. right 'XX. things the North like So, very so that replacement I that, governments, we activity in think progression look healthy institutional I'd then to a more seems be America to today still universities, say of amount and now good remains Schools, as And as we is ahead

Walter Liptak

to D&M. Great. then over Okay. And switching

trend and You could wonder I second I project was there, about seeing might of visibility funnel remember too. out you kind any if AtoN what order guys the you're or can't But AtoN, in have? that if a good called in quarter, talk just you

Eugene Lowe

year, actually We're progression very, line We're pleased in year. good pleased. top this growth with very and AtoN growth. has had very a both margin very the

I'd say rate. of of that that majority run there's is think that. a the I good chunk

eye your That's business serves there, believe, Canada, global the keeping very Asia, we Northern globally. presence. Europe, the North clear We're very Europe, run global on always you a leader rate. America, Southeast So very good

So yes, we've say And there's nothing follow-up had I'd a really signals that good there. year any there.

Operator

Ferazani next Sidoti. will Our from come question with Steve

Steve Ferazani

check wanted in check in the progress the expanding in ability just market was I current to that to to your is of capacity plan business Ingenia, where know of that on wanted grow with if to you I additions. just serves? beyond, were terms -- on it process

Eugene Lowe

to -- ways -- it some expansion a of and to very very nice that's year. a make our QX it's we're in had I very situation of at you Yes. then but there's the still the very we look demand, cooling automated, got out there. in how high than it's see product Steve, small. smaller good much you of have It's lot where a nice we're in it's And robotics one -- each getting much out It's substantially going to products, -- business, next lot positive. there. to but we've get quarter. level more can a would say, And very and into we do of have you're And expansion sure. be It's a is nice really growth seeing a

see 'XX you business. in some 'XX So from will to growth year-over-year of refract that

Steve Ferazani

you do that you have completed? on are run be you side? expansion with that you need Marley -- to where now Do -- to And . Great. is room have plenty all

Eugene Lowe

driven margin gone been more Yes. very that Actually, well. very, it's has only throughput, exceptionally and positive. Not that's

we're times or lead at productivity our And very competitors we've our there we actually, put below competitive to place. X back with brought have the primary believe initiatives We in levels.

-- topline more on the 'XX. investments, really good -- about -- feel runway line a it dividends really on we really margin that we so have it's line, about pay we into those it's those going feel the you So and see good and

Steve Ferazani

Excellent.

industrial sense where demand coming have that? reshoring we And You again. any mentioned Do you of additional are reshoring? with are you from seeing still

Eugene Lowe

in thing, the think once that a cooling it's be on here, those a I Let's ongoing products towers whatever bring or say a there interesting need -- there. semiconductor an you car put to maintained there, place. not something some put you is right? on onetime are And you projects plant here you it, on reshores, products plant necessarily and basis thing put

And the service, it's expanded you happened, TAM so your has et there. aftermarket what a parts, subsequent have and cetera, be not will OEM onetime project,

there's So on. what would say projects working are -- that I the still is we

associated segment overall seen But as slowed there. with couple vehicles. small some revenue, delays the the have of revenue. seen We a that We've our have a electric context grand percentage some in those we're down, relatively of

it activity, some areas. that it's I you -- of good way would the side. a still of there's on other see even been amount But say, So of in growth the don't because

Steve Ferazani

up Excellent. to the very strong Last one the -- for quarter. down Is debt me. still some deals Obviously, come intention flow in another until pay near cash to term?

Unknown Executive

before be mean, I near to our a continue outstanding term that debt would intention, interim transaction. that I have Yes, we reduce the think, the the to we in Steve, in period have

Operator

[Operator Instructions] Our next a Damian follow-up question Karas will UBS. with from be

Damian Karas

Carolinas ask hurricane didn't the you and of kind facilities the obviously, hear I Southeast headquartered I some the you, I U.S. wanted in here. in word have guys mentioned. are to And know,

ask whether any of uplift in in Just the activity And to from of that, some hurricanes kind to considering second impacts recently. the see had the had storm? you restoration post potential that rebuild just particularly wanted your any we've D&M, from solutions, quarter you whether X and

Unknown Executive

impacted have Damian, hurricane directly, our we were we in [indiscernible] none was not facilities Florida, really of but not by not the was impacted. were. in did it we obviously our One the Yes, where it business, of -- line

issues to to not any So fortunately, respect we that. have with did deal with

have replacement With activity caused on question, seen that where any days, we think, front. regard early But really second wouldn't we've activity. with it's I to the that say damage meaningful that your respect by hurricane to would was I

the whether [indiscernible] as some they through rebuild. are the positioned, our solutions you're side business that's right, So or the of of work well AtoN clearly on

Eugene Lowe

fan the see the that. area, stacks, say I'd we And areas, things more events, other [indiscernible] sometimes industrial weather towers, like a cooling these you'll have

we have we're how working support. to -- we identify can So --

we this anything time, materially but support we're point can. in at where haven't to We working significant seen

Damian Karas

I And know to sudden gen. power of it. Got a become world. solid some I in your areas a had all you investor nuclear business topical quite pretty which ask position about wanted in that And nuclear, of has has the

in We you you project last could cooling fact, might that a quarter. some been I think and about think just work have involved you maybe So nice -- talked and nuclear plant doing there. data a all But the are activity some tech opportunity hearing companies center for just get of built out. trying SPX? about nuclear we're capacity to thinking there of that from these What is in the potential

Eugene Lowe

know, Damian, think say our our days, would the is what business, portion, I a it's a for portion of OEM benefit is really the process you do in business thus facilities for but power we nuclear parts. towers our -- -- It's work power and I humongous service which cooling as not these are net far [indiscernible]. of provide the and cooling majority

we we projects. some -- right, larger You're do have

the seeing has is burdening that long, to centers -- the demand. you demand, data little in in you grid going so be really in growth growth are a actually I you've very for real think growth net-net, had and grid had

capacity. And so you have to find more

cooling your capacity of say take plant. the would some you're because a talking tower, lot working power plant you our I what out but couple more fastest going get your New a years on if source, natural place. any activity [indiscernible] a to in you more plant, longer, put much to upgrade on new see is for time while into you're plants or nukes you probably Even gas of a a takes get

projects. I lot are a and think some service on So do seeing of we activity

person cooling that's to the There's anything activity something which but not I out of other some the thing there would is of when reactors, I for you're what say call a the they're further probably good actual nuclear to The a would a amount for modular couple material get are small see tower. say to they there, first years. a that's looking going [indiscernible]. little point at typically

to positioned will see actually approved it advantage opportunity. to But an fully think I we if very interesting we're It opportunity. commissioned. that gets think take do does, interesting if it's well of it and that be

a on So would segment, to generate to utilities and yes, more growing activity, expect there's I say pressure that of that [indiscernible]. with have I that the the would level continue

Damian Karas

Thanks guys. thoughts. a luck, of your Best Appreciate lot.

Operator

concludes This closing back any Clegg question-and-answer session. remarks. to over Paul our the to I'd conference like turn for

Paul Clegg

Thank to the many updating look and you you quarter throughout you at of seeing next again quarter. for and and forward us, one-on-ones all joining conferences we

Operator

The conference for now concluded. is Thank you presentation. attending today's

now may disconnect. You

SPX (SPXC) 30 Oct 242024 Q3 Earnings call transcript