Industrial conglomerate SPX Technologies (NYSE:SPXC) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 3.7% year on year to $482.6 million. The company’s full-year revenue guidance of $2.23 billion at the midpoint came in 3.5% above analysts’ estimates. Its non-GAAP profit of $1.38 per share was 17.6% above analysts’ consensus estimates.
Revenue: $482.6 million vs analyst estimates of $480.3 million (3.7% year-on-year growth, in line)
Adjusted EPS: $1.38 vs analyst estimates of $1.17 (17.6% beat)
Adjusted EBITDA: $102.6 million vs analyst estimates of $95.53 million (21.3% margin, 7.4% beat)
The company lifted its revenue guidance for the full year to $2.23 billion at the midpoint from $2.16 billion, a 3.2% increase
Adjusted EPS guidance for the full year is $6.25 at the midpoint, beating analyst estimates by 1.9%
EBITDA guidance for the full year is $482.5 million at the midpoint, above analyst estimates of $472.2 million
Operating Margin: 13.8%, in line with the same quarter last year
Free Cash Flow was -$16.4 million, down from $450,000 in the same quarter last year
Market Capitalization: $6.28 billion
Company Overview
SPX Technologies (NYSE:SPXC) is an industrial conglomerate catering to the energy, manufacturing, automotive, and aerospace sectors.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, SPX Technologies’s sales grew at a tepid 5.3% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about SPX Technologies.
SPX Technologies Quarterly Revenue
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. SPX Technologies’s annualized revenue growth of 13.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated.
SPX Technologies Year-On-Year Revenue Growth
This quarter, SPX Technologies grew its revenue by 3.7% year on year, and its $482.6 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 10% over the next 12 months, a deceleration versus the last two years. Still, this projection is noteworthy and implies the market is baking in success for its products and services.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
SPX Technologies has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, SPX Technologies’s operating margin rose by 7.6 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, SPX Technologies generated an operating profit margin of 13.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
SPX Technologies’s EPS grew at a spectacular 14.9% compounded annual growth rate over the last five years, higher than its 5.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
SPX Technologies Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into SPX Technologies’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, SPX Technologies’s operating margin was flat this quarter but expanded by 7.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For SPX Technologies, its two-year annual EPS growth of 25.5% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q1, SPX Technologies reported EPS at $1.38, up from $1.25 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects SPX Technologies’s full-year EPS of $5.70 to grow 11.2%.
Key Takeaways from SPX Technologies’s Q1 Results
We were impressed by SPX Technologies’s optimistic full-year revenue, EPS, and EBITDA guidance, which beat past analysts’ expectations. We were also glad its EPS and EBITDA outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 1.1% to $138 immediately after reporting.
SPX Technologies had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
