SPXC Q4 2025: Data Center Revenue Surges 50% as Capacity Expansion Unlocks $700M Growth Path
SPX Technologies closed 2025 with a decisive pivot toward high-growth data center and engineered air markets, leveraging both organic investment and targeted M&A to expand capacity and product breadth. Data center revenue leapt 50% and now comprises a growing share of the HVAC segment, while new facilities and acquisitions position SPXC to capture multi-year secular demand. 2026 guidance signals another robust EBITDA expansion, underpinned by backlog strength and operational leverage, but investors should watch integration and ramp risks as capital deployment accelerates.
Summary
- Data Center Acceleration: Data center solutions now drive a double-digit share of revenue with rapid growth expected to continue.
- Capacity Investments Scale: $700 million in new HVAC capacity targets both data center and custom air handling growth.
- M&A Integration Focus: Recent acquisitions deepen engineered air and electric heat exposure, but integration is a key execution watchpoint.
Performance Analysis
SPXC delivered a strong fourth quarter, with both revenue and adjusted EBITDA increasing by double digits, fueled by a blend of organic growth and the benefit of recent acquisitions such as KTS, Sigma, and Omega. The HVAC segment, which constitutes the majority of company revenue, posted 16.4% YoY growth, with both cooling and heating lines contributing. Data center revenue stood out, reaching approximately $200 million and increasing from 7% to 9% of total revenue, with management projecting this to rise to 12% in 2026—a roughly 50% YoY increase.
Detection and Measurement (D&M), the company’s smaller but high-margin segment, grew revenue by 26.3% YoY, primarily from the KTS acquisition, while organic growth was modest. Backlogs in both segments hit record levels, with HVAC backlog up 22% and D&M up 43% organically, reflecting strong multi-year demand visibility. Cash conversion remained robust, with 90% free cash flow conversion despite $60 million in expansion capex, and the balance sheet remains underlevered at 1x pro-forma net debt to EBITDA, providing ample flexibility for further capital deployment.
- Data Center Demand Drives Mix Shift: Data center bookings and revenue are accelerating, now a core engine of HVAC growth and margin leverage.
- Backlog Expansion Supports Outlook: Record backlogs in both segments anchor growth visibility into 2026 and beyond.
- Acquisition Synergies Emerging: M&A contributed to top-line and margin gains, but integration and channel execution will be critical to realizing full benefits.
While margin expansion was evident in both segments, the company signaled temporary margin headwinds in HVAC for 2026 due to plant ramp costs, offset by long-term operating leverage as new capacity comes online.
Executive Commentary
"We grew full year adjusted EBITDA and adjusted EPS by 21% with strong performance by both segments. In addition, we continue to advance our value creation initiatives... To capture the growing demand, we are investing in expanding capacity across several of our existing HVAC facilities, including Ingenia's Maribel and cooling products Olathe locations, and have recently added two new facilities to further accelerate our expansion efforts."
Gene Lowe, President and Chief Executive Officer
"Our fourth quarter results were strong. Year over year, adjusted EPS grew by 25%... For the quarter, total company revenues increased 19.4% year-over-year, driven by the acquisitions of KTS and Sigma and Omega, as well as organic growth."
Mark Carano, Chief Financial Officer
Strategic Positioning
1. Data Center Solutions as a Growth Anchor
Data center cooling and custom air handling have become SPXC’s primary growth vector, with data center revenue expected to rise from 9% to 12% of total company revenue in 2026. The Olympus MAX product, described by management as their most successful launch, has secured multi-year bookings and is positioned as a differentiated solution with integrated controls and modularity—key for hyperscaler clients. Management expects data center revenue to grow by approximately 50% in 2026, with demand visibility extending into 2027 and beyond.
2. Capacity Expansion and Capital Allocation
SPXC is deploying $100 million in 2026 capex, following $60 million in 2025, to expand HVAC production capacity across multiple facilities. The Madison, Alabama site and Tennessee’s TAMCO facility are central to this effort, targeting $700 million in incremental revenue capacity at full production, split between data center and custom air handling. Ramp timing is staged, with TAMCO production starting in Q1 2026 and Madison reaching full production in 2027-2028.
3. M&A as a Platform Builder
Recent acquisitions—Thermalec, Air Enterprises, and RON Industries—extend SPXC’s reach in electric heat and engineered air movement, adding both product breadth and geographic coverage, especially in Canada. Management highlighted operational and channel synergies, such as leveraging RON’s coil manufacturing across HVAC lines and cross-selling Thermalec’s duct heating in the U.S. and Canada. These acquisitions are expected to contribute nearly $110 million in 2026 revenue, with margins above segment average.
4. Detection and Measurement: Steady, Margin-Focused Execution
D&M delivered strong margin expansion, benefiting from project mix and ongoing cost optimization initiatives, including sourcing, R&D, and footprint rationalization. While a $20 million project pull-forward creates a 5% headwind for 2026, underlying run-rate business is growing at GDP-plus rates and backlog is at record levels, providing stability and optionality for future growth.
5. End-Market Diversification and Visibility
SPXC’s HVAC growth is not solely reliant on data centers; healthcare, power, heavy industrial, and institutional markets also contribute to backlog and revenue diversity. Commercial real estate and select industrial verticals remain softer, but overall demand signals are positive, with management noting a strong start to 2026 bookings.
Key Considerations
SPXC’s 2025 performance and 2026 guidance reflect a company at an inflection point, leveraging secular trends in data infrastructure and engineered air while maintaining financial discipline and optionality for additional growth moves.
Key Considerations:
- Data Center Momentum: The rapid expansion of data center revenue and bookings underpins multi-year visibility and margin leverage, but increases exposure to cyclical tech capex trends.
- Capacity Ramp Execution: Timely startup and scaling of new facilities are critical to realizing projected growth and avoiding cost overruns or margin dilution.
- M&A Integration Risk: Recent deals add scale and channel breadth, but require successful integration to deliver promised synergies and incremental growth.
- Backlog Quality and Project Mix: Record backlogs support near-term guidance, but project timing and mix shifts (such as the $20M D&M pull-forward) can create quarterly volatility.
- Capital Allocation Flexibility: Low leverage and strong cash flow provide ample room for continued investment, but disciplined deployment remains essential as capex and M&A accelerate.
Risks
Execution risk is elevated as SPXC ramps multiple new facilities and integrates acquisitions, with potential for delays, cost overruns, or margin compression if operational targets are missed. Data center demand concentration introduces exposure to hyperscaler capex cycles, while project timing in D&M can create lumpy results. Tariff and metal price volatility remain manageable given the company’s configure-to-order model, but warrant monitoring. Management’s bullish tone is grounded in backlog, but investors should watch for signs of order deceleration or integration challenges.
Forward Outlook
For Q1 2026, SPXC expects:
- Revenue and segment income in both segments, as well as adjusted EPS, to be roughly flat YoY, reflecting normal seasonality and the impact of project timing.
For full-year 2026, management guided to:
- Revenue of $2.535B to $2.605B, with adjusted EBITDA growth of approximately 20% at the midpoint.
- Adjusted EPS of $7.60 to $8.00, up about 15% at the midpoint.
- HVAC segment revenue of $1.8B to $1.84B, and D&M revenue of $735M to $765M.
Management highlighted:
- Strong backlog and capacity investments will drive nearly half of HVAC's revenue growth in 2026.
- Acquisitions are expected to be accretive to both revenue and margin, with further M&A opportunities in the pipeline.
Takeaways
SPXC is executing a multi-pronged growth strategy, with data center and engineered air solutions at the core, supported by aggressive capacity investments and disciplined M&A. Backlogs and bookings provide growth visibility, but the company must deliver on its operational and integration agenda to fully realize its potential.
- Data Center Growth Engine: The company’s pivot toward data center solutions is driving outsized growth and margin leverage, making execution in this vertical a primary investor focus.
- Capacity and Integration Watch: Timely ramp-up of new facilities and seamless M&A integration are critical to sustaining growth and delivering on guidance.
- 2026 Watchpoints: Investors should monitor data center order trends, facility ramp progress, and the pace of M&A-driven synergy realization to gauge the durability of SPXC’s growth trajectory.
Conclusion
SPXC enters 2026 with strong tailwinds from data center demand, record backlogs, and new capacity coming online, but must navigate integration and execution risks as it scales. Management’s disciplined capital allocation and robust balance sheet provide flexibility, but investors should track operational milestones and end-market signals to assess the sustainability of current momentum.
Industry Read-Through
SPXC’s results reinforce the secular growth thesis in data center infrastructure, with cooling and air handling emerging as critical bottlenecks as AI and cloud workloads proliferate. Peer HVAC and industrial technology firms should expect heightened competition for capacity and talent, as well as increased M&A activity targeting engineered air and electric heat segments. The configure-to-order model and focus on operational flexibility are likely to become best practices across the sector as project timing and supply chain volatility persist. Detection and measurement businesses with project-driven backlogs should prepare for continued timing volatility, but robust demand in institutional and infrastructure markets offers multi-year growth visibility.