SPXC - Earnings call transcript Q4 2024

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Operator

Good day and thank you for standing by. Welcome to the Fourth Quarter 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

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

the the our earnings find spx.com. of website Investor as Relations as slide of webcast and a at to section link live release this can presentation well You a call in our

the press encourage our of in I of to GAAP with be along website. disclosure review prepared will on available replay during and discussion and release the you our A the presentation follow webcast our to results slide remarks.

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

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

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

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

production This will to at and our the X, outside analysts. various April On to events are we handling be Montreal. open investors planning quarter. air unit a custom of we tour meeting Ingénia tour host of is over Finally, facility with investors

attending, If me you in on website. Relations have an or please contact me address e-mail Investor interest through the our e-mail

the turn over Gene. to I'll that, call with And

Eugene Lowe

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

year an We'll XXXX. we'll with the and provide update today, year quarter results call you full guidance also fourth XXXX. our the full on for On segment provide and for consolidated

EPS guidance Adjusted was adjusted by adjusted grew We end free cash year. of XX% income. our the year range. to close strong upper a net and adjusted delivered the had EBITDA flow XXX% near We full

across quarter, fourth to well. margin our several made strong progress on drove performance segments the and great company key execute both initiatives. During We continued

our our Solutions, addition Communication position significant KTS, which another made segment us and scales Technology positions further Kranze to significantly or the Technologies for addition platform Detection of Measurement we in & Recently, growth. with our

SPX, positioned strong solid midpoint continued we're double-digit Looking ahead, another well providing for conditions adjusted continue growth. support our growth and reflects that EBITDA EPS we of and remain year guidance market adjusted operational performance. XXXX Today, to

Turning our results. high-level to

quarter, by in segments, basis XXX of including revenue XX.X% in fourth expansion. increased with we performance the year-on-year particularly margin cooling. For strong grew growth Adjusted both with a HVAC XX.X% EBITDA points

extend big customers significantly efficiency platform, As like our we sustainability-focused always, update reduce a HVAC and to that year innovation a segment, continue products. Within I'd to our allow solutions introduced boiler and initiatives. customers' you SPX, footprint, including we our our number at enhance biofuel In heating boilers carbon range a our heat pump their of XXXX safety. combination. on that we products our to new value-creation and introduced is for of

In products enables platform, to range antibiotic and data This for version introduced customers year, applications. our various a for larger-scale center cooling with we optimize expanding ideal our that an we're line cooling cooling. water of power cooling usage between

locator precision a to enables Measurement, that exacting utility Detection & for credible customers survey-grade requirements In we introduced meet mapping our infrastructure.

an as We such lines. gas detect utilities, and introduced different between also underground technology acoustics problematic that uses intersections innovative water to

ECS. highly operations. tactical and offerings coordination enhance our Their domains solutions solutions advanced from execution awareness, and links our information or RF real-time existing tactical KTS, In the which tactical TCI our to are communications complementary Detection digital networking the within Technologies we Communication KTS' radiofrequency and of and integrate completed platform solutions Measurement platforms. of interoperability distribute & and January, acquisition countermeasure significantly multiple data situational during expands KTS' scale to segment. across

to position growth significant Together, in growth attractive and expands our KTS markets, platforms. customer our strengthens our access base. CommTech further enhances global our broadens for opportunities see communication we solutions,

also existing development ultimately product through channels opportunities their can that address attractive to be highly our leveraged new applications. creates of sales potential We believe a technology differentiated wider range

creation, to an several average including years. deployment, capital earnings last our grown per value per X share successful. over has the We've Over highly of been year past years, approach XX% the

value Looking very positioned acquisitions. to continue well ahead, we remain organically our further and driving shareholders both for through

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

Mark Carano

Gene. Thanks,

strong. the year Our $X.XX. XX% adjusted were grew fourth results adjusted to towards of Full to guidance to $X.XX $X.XX. range our EPS of upper EPS quarter grew XX% end Year-on-year, $X.XX or

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

in a revenues was platform On HVAC X%. contributed quarter growth of year-on-year. extent, to organic cooling growth revenues heating. in an by increased segment, a basis, FX driven the grew modest For XX.X% in and Ingénia lesser The acquisition our XX.X% of our continued headwind. cooling, primarily in

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

continuous QX. Segment leverage $XXX XX% million, year-on-year, Segment stronger points. income income and & sequentially operating largely project improvement further revenue and up from a margin increased as and AtoN XX%. Inspection XXX of by Detection revenue in by revenues For increases at or segment was Year-on-year The driven headwind. execution $X the initiatives. sales was organic margin from quarter as grew increase FX backlog & Location segment, modest X.X% end well basis million in were favorable on while Measurement quarter higher The products. driven in benefits was our our grew segment

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

We closed within target acquisition, January, of leverage cash $XXX ratio, approximately leverage declining ratio of X.X our X.Xx our well KTS million, by was year credit agreement, of capital ratio under year-end, calculated our reflecting of below to which Our conversion assuming in as leverage income was further effect target range flow range the XXX%. our no X.Xx. was adjusted adjusted Including the bank net our deployment. Full Xx. anticipate or free

Moving the guidance. KTS. year XXXX anticipate million guidance, revenue of and Today, this full year-on-year of of a adjusted of introduced a segment midpoint, on adjusted XX% to $XXX we in the XX% in including XX%. to our growth $XXX At to EBITDA million. We in range of anticipate margin We billion $X.XX billion income $X.XX approximately margin range reflects EBITDA range XX%. to a

$X.XX range midpoint. the approximately XX% growth to reflects guidance Our adjusted EPS at of $X

our & acquisition, revenue HVAC to million, including segment $X.XX Measurement in and margin our a we anticipate a the anticipate XX.X% of a XX% in of range a XX.X%. in Detection margin and range we in In segment range to to of XX%. to billion segment, $X.XX In revenue segment, of KTS billion $XXX $XXX range million

For QX, we acquisition February quarter anticipate by modest of acquired a Ingénia, KTS driven XXXX. we revenue which in the and of growth full

similar the We timing offset related expect year-over-year. HVAC, to revenue in in both to be flat & deliveries organic segments project decline margins with growth the Detection We anticipate year. during year-on-year by of in Measurement a

consistent We our tax also KTS and year expect rate XXXX with a full interest higher with associated acquiring guidance. costs

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

markets, to for wanted I tariffs. over back a call end the of briefly our turn Gene review on to touch I Before

tariffs recently the reflected in we've China, for guidance For our enacted XXXX.

and For is Mexico, nominal. revenue sourcing exposure

pricing and a For largely follow is have potential positioned across XX% businesses. of Canada, our We than multiple have the revenue component a navigate an business sales chain of up States. and United revenue. to our our SPX we model. from operations system, in-country, comes Supply of well we Canadian sourcing changes, our for-country tariff from the into U.S. our make measures mid-single-digit core total More power mitigation available. percentage is management

quickly. current prepared the nimble dynamic, situation are act remain While and we is to

to And with back I'll call turn that, over the Gene.

Eugene Lowe

Current support key Detection delivery HVAC targeted market for data with healthy rate run HVAC the and heating seeing XXXX more In overall products for several markets, more steady our beyond. demand outlook for conditions we're for seeing Within typical cooling Mark. care towards our platform, Measurement continue XXXX our heating see and with across order our health and end experiencing solid we're we our institutional. demand centers, businesses, In growth. solid nonresidential demand with we're variation. our & projects. to flattish platform, including rates In consistent projects times season demand segment, Thanks, regional

and summary, In strong with year I'm close very full to the performance. pleased XXXX our

for in attractive our double-digit year execution, acquisition positioned platform of demand us growth and growth. solid EPS further CommTech strong adjusted operational scales background With positions of EBITDA for another and XXXX. well we a future are adjusted KTS in and Our

growth. our an active of pipeline also opportunities have acquisition attractive enhance to We

excited I ahead, Looking future. remain our very about

for highly SPX come. right see the experienced and team, a to I opportunities to With growing continue value driving capable strategy and for significant years

the turn Paul. I'll to that, with call And back

Paul Clegg

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

Operator

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

Bryan Blair

the into good are thinking I'm to What your more items how full the levers mind? team quarter, is the thinking It'd on helpful watch color be momentum little you solid Another X revenue what earnings we upside then the think how drive end of end? mind, that guidance. to framework about in the and of about XX perhaps the could high through cadence lower year? if a offer keep year. 'XX. about And key should in And

Mark Carano

start here. off I'll Yes. Bryan, thanks.

when say, remain think at data As our institutional, year we I care. broadly, health on HVAC -- would centers, about end I bullish we the those business, markets, right, look and

there. last markets the remain see of year opportunity good Some we we've mentioned and solid, continue throughout to

to the always As got out obviously dynamics HVAC, you that of guidance the weather think on our business. heating the see the -- lower about -- or what within we those That's that side the of upper drive could end you've control. you

key that times, center always accelerate some Dodge On -- momentum, year? large down? slow and then opportunity And data key the indicators We're could PMI. like projects when think out. nonresi represent plays of if us that market, for does at about the Does which Those the throughout things. I are the it's right, incremental cooling it fairly it side, represents watching

the we're we've respect seeing very what the feel the in business. about D&M, we CommTech business, businesses. good or seeing cycle and of obviously economic our about to That's short to robust. side our to that pipeline that respect optimistic the environment in operating certain of the that opportunities In actually to L&I We what to I to of And say, run business, we're front log project side sensitive other going With the Genfare, markets, U.S. of or would across the the be tied feel more rate tends with most in. talked remains that. remain we're some about

where a you always element quarters, year. those as to the there's the timing know, and within think I within But fall and sometimes, they

very it's and more, We're kind and our also of this while we're last log, We into rolling are XXXX. in 'XX are a in that good 'XX. few front seeing We're attractive, we seeing seeing mentioned this call. quite I seeing think actually opportunities

So broad market. improved obviously about because that's do I kind of disruption say, The policy seeing. I of that the the overall just economy, has in kind that's think what we're short-term there this we're is cautiously sentiment impacting optimistic you general have would out comments. the

some States. happening things the the America about of across administration United particularly with for respect think new just You means that to in and are that North businesses what the and

Bryan Blair

exposures. will makes mentioned sense. 'XX? terms contemplating rates shake XXXX? did mean there. will spending been for shake of center guess, you in where out, out And There's color. centers are for I revenue set, obviously where guidance in consternation all trend, what SPX lately data unrelated appreciate you to growth level where That the I I data

Paul Clegg

with and about company we was So HVAC. -- we what the in be of HVAC the institutional, the at one of side on into of look of it's total XXXX. it drivers care would growth, around it our along around Bryan, actually XX% about thought X% came And as this or health

a we that would expect represent So or better similar to share.

Bryan Blair

financial then TAM that brought expansion most now the walked differentiated what's terms speak Understood. contribution, you in should And asset technology. It D&M? where the X for fits that of time? And we one to fold, play through may. think the to over What you intriguingly, CommTech in may KTS, climb if portfolio. that willing last are about into I having and the one, year

Mark Carano

higher announced $XX off. segment revenue Bryan, than about have deal, basis we Sure. slightly that kick own the income business. going we that of of it on When current I'll year. annual D&M segment would million margins an and it the in indicated Obviously, only for we're months the XX margins to that

million or the probably do about that. of the of revenue kind $XX so throughout math can year. you It's So around contribution

Paul Clegg

of looking -- being half basis, in on goes X/X closer they're in to that we're the you in. first contribution. at really second first On it second that contribution; half, half, programs to Bryan, if installations kind a of timing look the at And half the X/X involved the the

And other that half worked a burden see as get have into the I'd guys front think decline you that And flow. year. interest half the you I the burden in then you more comment make, out, which of to second the heavier starts is cash and generate interest

-- as on a in year, them, debt. modest you when bought this Modest for the some and when subsequent that the be will year of that we -- pick pay it said we contribution would that up down

Mark Carano

the right? about marines to deployment is over U.S. forward, that within areas. you coming I Bryan, the military. the think there's We've about or further in out, high that's think other Navy government, broadening the of visibility of program going you into into then, that that the got kind And of the opportunity key a program capability years. other for visibility of the branch asked whether expand considerable This that market it When and opportunity branches

Eugene Lowe

Yes.

comments few a just think there. I

we've are very platforms those helicopter before, have And KTS significant a stated very many -- these aircraft of and that. that a embedded is and they number in of of visibility variety installs a on As platforms. good position strong different multiyear

has attractive very of had see and very U.K., see synergy global of we in And we growth the our strong there. in business strong alluded a one growth there. MOD opportunities ], is presence, Mark some to in Is TCI the some nice [ as But we see that to, Canada, opportunities have very presence in a X Air attractive also the Force areas

synergy technology some our very, here, very on technology this there's good they technology. to be links overlaps have opportunities. very think well to going opportunities also here very We together work see technology, we nice some And with data where and different some good

Operator

Karas question comes of Damian next of Our UBS. from line the

Damian Karas

data cooling A data ended maybe sales year that a centers. you think said I but of And said the little follow-up total year expect you'd around level I into misheard centers me your a question on you, you you I higher. or for X% HVAC if business. think Paul, similar correct this the

of maybe high of that. if confirm X%, data like just you single expecting right, digits, one, that math's So my something just Could kind suggests that? you're growth center like

there And and little some centers Microsoft changes the visibility in data funnel last any you've just just second your part of if on seen of like I'm my question bit is, talked? for some companies given having a of or the project we your maybe overcapacity, commentary since out curious these

Eugene Lowe

about But talk no, answer or centers as is the that. like actually people I'll And growing the the you I to second overall the fast. feel cloud good. very moving is about other would is And know, portion think one the of obviously, if applications majority say really really that Damian. AI actually of to still pretty data first. We small a centers, demand, data you

to going very I open front demand for But our see But opportunities [indiscernible]. center the the healthy line current I and you here, is we steady. think also, us say is interesting products going product for have forward. new we And very as us, demand would dry. up attractive. abiotic And actually see and a of that's And the opportunity data we reminder, particular expand on and some mark would that us say launched we in then addressable the in our

Paul Clegg

have numbers anything that only account there math I'd do benefit is thing that acquisitions data Sure. your remember have in the couple of don't we take in centers. that us that Damian, the XXXX a into Yes. with to

into And other this Ingénia is and is part obviously, so of rolls that that, the year, KTS.

so those overall math. number your to are affects there going bit raise the that And little revenue a

conclusion agree there. sure I not your So I'm with

Damian Karas

with question is just is stuff And that is second & Okay. Appreciate is project and you it. lot saying My follow on of on you're Measurement. Detection Gene, a of beyond. I XXXX but said kind healthy, you can up off-line that. activity

that's lead in see than little bit times you think longer I a typically business. that

nature guidance just about just the are how sales projects? flat elaborate So these on projects maybe you year could And thinking the D&M, short-cycle thinking they're and longer-dated? for the of part in kind of you the underlying why that, this versus run rate about business of

Eugene Lowe

of to to and into numbers. start over Yes. it more I'll kind Why it then Mark don't I put throw

If you there. some on by maybe vary does it's with our businesses, growth look run would D&M, region. rate modest steady at It I say,

U.S. Europe, well which modest pretty is steady. the is of run say performing continent more & segment, rate steady. is our steady. think Measurement the But is pretty I the performing of bulk and U.K. overall, Detection The I'd the business,

of Damian, have project activities. the projects, know, you On as different that couple there's a business units

So we've are on very the the I side, seen orders, transportation a large lot of good. orders, say, would very brand, which larger Genfare

of some in that see backlog. our You

we've verbally more That's see You'll of been this. where awarded.

I same -- range in order, year. where hit of an in have projects the the be a could it more and A have work Oftentimes, it million. X even not quarter historically these these out million, them. for X. are or opportunities number it could and $X get a gets broader in be the projects, a that you you're doing is of multiyear business are be good are say, years. over A million, could And $X are, lot $X in multiyear think out of some QX, these same seen could that the QX than past projects I of we would chunk the larger transportation that these

it. we're so actually about excited very And

lot really in -- team the a a that business. done nice job of We have had has

AtoN business other our is that we in has see for that A 'XX. rolling into think very 'XX-'XX. have well some side. more good us. Two positions nice Air some projects portable. And for so We military Force lighting actually ones, project in on business, us the been of lot I

which our have business, lead CommTech very see about. which So there. to in do similar longer you times always is longer do the portion lead some times, we've talked We

about say seeing. is project activity I'd what good We healthy. yes, feel So the we're

Mark Carano

Yes.

that were, I mean, that, run about being Gene's to the the comments flattish. think, business, of talked rate think I what I to mean, I just about add when side we've

as we're in we I our flattish optimistic rate U.S. today globe, of we're year. think we today the a in contemplates run the But particularly guide parts experienced seeing of what served sit like about business, still last much kind

With the And respect bid or activity. will to projects get year, fair are on but be year a in log, of the some that high side, a all and project when bid just we're beyond execute will later X about either within seeing we'll those number that multiyear really those I execution. a projects think executed 'XX the of level will or be of front of in that seeing

Operator

comes William from of of Sparenblek line the Our Blair. Ross next question

Ross Sparenblek

the sense help a the just through of business? of demand us you dynamics cooling and the between within EMA get Taken some can commentary maybe Everest just some product HVAC, levels of and

Paul Clegg

EAM business?

Ross Sparenblek

Yes, and Moving. Engineered

Paul Clegg

Air Movement business. Engineered The

Eugene Lowe

Yes.

center. cooling hit healthy. for biggest I'd our think I is product probably say cooling, say data at X on you I would categories

a position centers. America, As centers, where in we oriented Asian a nice big of very a business the but not is have strong a actually, do well We lot cooling in Asia, data -- reminder, North chunk we're only went in towers. around really in we data

We in also do Europe. well

of not portion other opportunity one and excitement the the well. there And is areas, that were a there's servicing. product say, servicing which lot we But abiotic, about area, X business have of cooling speaking, the cooling really tower. is been the dry of because Let's expansion the frankly doing really

and last getting there. material into 'XX the longer show So focused we amount Show, be at of a a 'XX. this to be on bookings did in of targeting excitement Ash We the would lead month. I there's tend launch And Ray think chunk to large lot HVAC that times. revenue get of a These

feel we side, cooling we're the very what on say about seeing I'd there. good So

side, TAMCO And then demand on very strong. is the

-- to and very situation we demand. being have because challenge I think where we think And are I better It's And are a both there. our expanding there. sell product. our in capacity we we to production product in meet Canada is a Ingénia, the more our the where are the at is U.S. able focus full in similar to getting

So we're I'd we're say on seeing. sides, feeling good about both what

Ross Sparenblek

just Got updates the you of for of trying new the almost it. That top Maybe reserving kind of capacity kind and these on maybe get absorbing the sense sensitivity Everest to makes sense. a you're for Yes. site? HVAC are in any Springfield that some where line I'm understand new products. just Well, that

Eugene Lowe

ramped to will we we from of That's It's semiconductor. We're It's of of -- data numbers room see very rapidly. more grow and in but facility. and addition. centers, all? X plants. think our NC talking in a for that there been done tens We variety a most those of you're we I variety also battery in of shared applications, We've facility. still It's dollars. really a have gone larger-scale well. the and applications, tens nice there. millions that it's steel, them have seen larger seeing up products tens been also through publicly very nice But focus our not We've MD Everest really used a only

our is business. a So in if find cooling there amount I can think that material we scale further we -- the demand,

Ross Sparenblek

Okay.

in think kind the to still HVAC there's you hit us mean, end I midpoint absorption how what some high of the range and of overhead the of towards organic go, then? to low margin guide. So the about I kind the gets mean that, M&A if additional around that of something last ] capacity XX% there [ hit Ingénia you of is that guys the Or kind that gave think, Is medium-term was that range? March? diluted in would that targets I low end? else

Paul Clegg

the be through would much of line, where see absorption. the much as you're be you're really about the would that if No, top really seeing you on as lower drop Ross. range, end -- not That don't talking

could that from of Some about winter. heating weaker a you're the side, come if talking

could that see in of the come deterioration macro. if just Some you to start

Ross Sparenblek

more if net [ heating kind can. January-loaded, like maybe been so flowing winter, cold little it's abnormally there and Is I One quarter? Or there? ] I still this on for something growth of the through in a surprised a I'm on the else Okay. side the it's is pretty first boilers.

Paul Clegg

Yes.

So actually, we And fourth Hydronics, in turn quite -- have January, it in was for would it quarter, warm. really stronger the bookings cold seen and as in did you the expect. first quarter

Operator

comes Our Steve Ferazani line of of the Sidoti. next question from

Steve Ferazani

When high months a look looks segment like full you guided the came year XQ, was very while of D&M at for the end. low -- it the few HVAC range, actually back, your for your at numbers, end results above the the

of to transpired that the quarter results? went see of what generated those trying sort Just as kind on

Mark Carano

Yes.

execution leverage Stephen, that really, there. I revenue strong to business, very was, think side our with fourth -- saw incremental from business, you respect with given to we And the operating particularly quarter the saw L&I business. you of we in D&M what have the respect saw, the the a did

some very CommTech that were some quarter. saw within the also You project favorable execution, the executed projects of

all outsized across the we've on that those year X elements in margin it this really, the think, over drive other blend of been year a of as synergies I quarter. really or to performance And then as X journey And CI was that using the kind of drove D&M platform segment. you and a know, last

the saw to you dynamic D&M of margins the right, that drive And finished the continue throughout obviously as to year. we up year, where levels some we

the guiding really the that, related the respect saw heating and relative and right, and quarter. of that fourth With was we which function to to end in where to the HVAC dynamic were related revenue to the margins on was there a drop-through lower dynamic being we the

Paul Clegg

at turned fairly the We Yes. bar to out had it It been warm. remained because lot we of quarter see a uptake. low -- a be for warm. didn't It heating set had

north, was up and nobody T-shirts all guys buying the on were You boilers. in

So key caused that a in us HVAC. bit on to was lower driver little a come that

Steve Ferazani

season But was ask this you not boiler the usually that the for play not into X done obviously we you in the the does don't so the coldest got years next many to You does Or how year? in how least are it guys January, start of season I'm the know until this, order I first one -- it, Because out? is but as goes? October, February. ordering years. you'll if wait have that at

Eugene Lowe

Steve, I head. the cold not cold. rate. only If think if is what you see and what of it nail it is the January hit And February, when the you number It's the cold degree gets people but replace October, it you early kind boiler. get see do days gets does heating a on September, November, in of will lower pickup

exactly You might get parts right. you're But orders, you might get work. some service

days, degree when we So gets specifically at but also are when look -- heating it the always cold. X the numbers

accurate. models what historical but it for some and also year, TAM drives have about I described We think our data the way is progression you that

Steve Ferazani

Okay. That's helpful.

XXXX at spend. with by build D&M much so year, backlog strong the is government a that On could expectation and very D&M supported the be

administration, new these of put the projects at risk? Given any that does

Mark Carano

any of no Washington I The business robust and change. seeing seeing remain about Yes. would been really the the we're in of opportunities would that there, any you coming be, question. that business. change noise X think see of we the on there's Steve, or that timing around where out regarding as sit When sort side. administration great impact from you're our not one, tell areas I the you will Genfare today, transportation

a tie to spending, closely. With watching we regard to the would are business defense the you compact the where side obviously that very of see

sit to be out. a we we today seeing change the rate the not or as look opportunity are anything believe We that would would us there as there in order that lead

business these Clearly, these of of some It's are the it's of what military. is businesses to right, of to equipment they're when is kind right? where military, frankly, I the And the traditional really they're particularly the argue, -- And going. the to U.S. kind are that you of with modern out CommTech, of elements KTS military kind technology of skewed essential, look the the at that other of really the of see not would you U.S. U.S. sort really tied there. large strategy kind

defense think positioned But where be there it about from good closely I we clearly. watching a we'll So feel perspective. we're

Steve Ferazani

That's a like it M&A to strategy. like to flip versus what wanted really X, strategy fair. X, be at looks get any is looks It you're evolving for KTS mean X second. I terms Gene, would wanted shifted were fits now I But very at M&A just back ago a like what and looks of your projects. maybe very, you targets? technology. you on to priorities that with all? hard sense, It displace at looking unique to years perfectly a I looking Have past your in it

Eugene Lowe

I so. don't think

our what build true tech-heavy, can where the -- our on and staying we're of XX think I we to focused years. It's things types are of same how always the in all past positions, and values that at that leadership been types it's businesses growing products, it's of engineered we terms good of platforms? we've in over

grow. you ago, strategy Movement, you opportunities as and in a TAMCO then into dramatically very that towers, that example What Air you the as that. years of terms we and how It's not Engineered now couple that TAM does right? would in would will to our of is larger build can about that A new Ingénia, cooling and evolve our By a Cincinnati business, business. the build, same perfect different of is out. I which types close Fan adjacency getting platforms, be in think were say We of where we see were

commodity important. We're management businesses a guy. not very is where a guy. run We're engineered We not cheap product

the the We and on I some in the Measurement side, then years. different strong on digital. & see on also is, side attractive the ever and customers And This lot on focus look Detection on seen areas busiest us the side. in couple very M&A of We XX they've platforms HVAC say, a there is very have a more a very across say, opportunity. I would today, strong our innovation, would focus you if opportunities

as really very We're changing of in how March we So terms in of It's is I -- strategy but laid anything our we our out and believe about kind think know, not -- similar. we're sound. not strategy. you Steve,

against we're We seeing. about we're what feel So executing that. good

Operator

Research. line Hewitt from next of of the Our Wolfe Brad comes question

Bradley Hewitt

it basis the the in looks [ whereas a for $XXX Was get revenue kind annualized sequentially and sequentially should there million of the Ingénia component rate step-up an of full year basis? was a So then And aware exit on outlook for we ] about on be QX, of a to think flattish relatively like run to timing rate. kind there? year growth revenue how was to expectation about this modest a

Mark Carano

we a kick to Brad, -- very very, off. business. strong respect I'll Ingénia, that Sure. have in that With backlog that

set about So good opportunity the feel there. we

that of of we we're behind there know, you the was intended as had we currently. facility that last Most doing slower think were and getting over originally months. respect I expansion now. bit think a us with this when of up we a little chatting to than running kind And is had couple that I challenge about

that did revenue the quarter. functional, impact fully but up within it's So

Paul Clegg

in that came we're light track. But little back a from installation, the with We on that. on based guide equipment

Bradley Hewitt

can X the synergy on And math? walk KTS what assuming from impact expect perspective business, helpful. maybe DOGE? then you and then the do you're That's any maybe a through from business to see on Okay. ROIC a you year And

Mark Carano

question. Gene very of I last I'll But dynamic we're the -- I is carefully. kind will technology start a -- to watching with about one the what many say, little we expectation has think well, this core the is will that and of it talked I made think technologies the bit and of branches military. just DOGE as But within it's embedded the across branches. U.S. of a be If just one other critical the the really point in this the

that sort military So and where when a things going nature, think you about they and -- component to critical this of to that's U.S. technologies is whether just is in the, it. the drones, the need of communications, support

But generally out Washington what's future now I and if unpredictable. it I was So impacted. coming be clearly, think speaking, would surprised of is the right

we're close it. on a So keeping eye

we of our respect in of to that X, cost year parts of it that With do our ROIC your got to a excess of return to to within in transaction of listen, with -- question, capital the to any trying elements X I'm has remember other one years. X key generate respect

had have not -- should that have transaction moved wouldn't we the it with profile. So forward of return that sort

So rest assured, you can it's something very we're focused on.

Eugene Lowe

few V-XX, existing multiyear are growth infrastructure. within the CH-XX, and platforms other areas other has comments. programs, a won platforms, synergy AA-XZ, like the actually a the installing existing of within the of and their MQ technology there's multiyear side, of lot the while XA their that a business in just their KTS qualitative number On more

The real frontline is solves thing like a pain we for operations. this point about this

where of You're communications you XX really have want proprietary different to systems. don't communication a lot taking different

everything have really You And the want has. actually that's where one you that to and special sauce can see KTS manage everything.

very positioned well technology. So we their think with they're

of As our bring on think we Mark a strong synergy actually we very CommTech lot from alluded to, the business. side, relationships

of strong U.K., really very the our Force, mobile Air in have as in other with expand AtoN and Is the in that the lighting. which some this We Force as big X Canada, think is we a help well Air relationships

side. We relationship a on very That's the there. have commercial strong

the the not opportunities some happens the technical solution something the on tactical more does to excited how of see that links side It can and about together value our the to joint Then data as That's to very their but we KTS are side, deliver customers. bring of take legacy only and time teams real the not development, some side we customers, do TCI but there well. overnight.

growth technical on about opportunities yes, the and opportunities, we and commercial specifically side. the good here the feel the So synergy

Operator

remarks. questions would Paul time. closing I'm back turn at now like showing no further Clegg for I this to to it

Paul Clegg

Thank all attending Once an if please me. on quarter once look you interest the for have again, Ingénia the e-mail you -- on in joining us. tour, to We updating you facility ahead. our forward quarter

Operator

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

disconnect now may You

SPX (SPXC) 25 Feb 252024 Q4 Earnings call transcript