SPX Technologies

The AI data-center cooling demand is showing up as accelerating ORGANIC growth (16.9% consolidated, 18.9% in HVAC, versus ~7.4% organic in Q1), the higher-margin Detection & Measurement segment expanded margin 610bps, and management raised all three FY2026 ranges — while the stock is up only 9% over twelve months, so the multiple has already compressed against a ~24% adjusted-EPS growth guide.

• Organic growth more than doubled sequentially in rate terms: 16.9% consolidated organic in Q2 versus roughly 7.4% in Q1. This is the key change in the quarter — the growth is no longer mostly bought.
• Detection & Measurement is quietly the best business here: +12.9% revenue with essentially all of it organic, and segment margin up 610bps to 28.9%. It is the steadier, higher-margin third of the company and it is expanding, not just holding.
• Guidance was raised across the board — revenue to $2.705-$2.765B, adjusted EBITDA to $630-$660M (~27% growth), adjusted EPS to $8.20-$8.60 (~24% growth). Adjusted EBITDA growing faster than revenue is margin expansion embedded in the guide.
• The M&A machine keeps compounding and is proven: ~$440M deployed in H1 2026 (Crawford United, Thermolec) plus $430M for Neptronic in July, all bolt-ons into existing channels, funded by the revolver rather than equity at this multiple.
• Interest expense FELL to $8.8M from $15.6M year-over-year despite carrying more debt — the September 2030 term-loan structure means the leverage being added to fund Neptronic is cheap by recent standards.
• Balance-sheet capacity remains. Even pro-forma for Neptronic at roughly $879M of net debt against a $645M guided adjusted-EBITDA midpoint (~1.4x), leverage sits at or below the company's stated 1.5-2.5x target band, so the acquisition program is not out of runway.
• Valuation has de-rated into the growth: +9.05% share price over twelve months against ~21% revenue and ~24% adjusted-EPS growth means the entry multiple is meaningfully lower than it was a year ago.

The growth engine's own margin is going the wrong way — HVAC segment margin fell 260bps to 22.8% and consolidated gross margin fell ~120bps to 40.2% — while the balance sheet doubles its net debt to ~$879M to buy a fourth bolt-on in eighteen months, leaving $1.23B of goodwill and a company whose adjusted-EPS bridge depends on acquisitions closing and integrating on schedule.

• HVAC — the AI data-center story and two-thirds of revenue — saw segment margin drop 260bps YoY to 22.8%, and consolidated gross margin fell to 40.2% from 41.4%. The demand is real; the incremental margin on it currently is not accretive, whether from capacity start-up costs or acquisition mix.
• The growth is substantially purchased. HVAC's 27.6% growth included 8.5 points of inorganic, and $439.6M of H1 acquisition cash plus $430M for Neptronic means roughly $870M deployed in seven months. A serial acquirer's reported growth rate is only as durable as the deal pipeline and the multiples paid.
• Leverage roughly doubles post-Neptronic: net debt from $448.3M to ~$879M, with $340M drawn on a revolver. That removes most of the dry powder that made the underlevered balance sheet a bull point, and it happens before Neptronic contributes a full year of EBITDA.
• Goodwill of $1,234.3M (up from $1,043.4M in six months) plus $26.3M of quarterly intangible amortization is the tell: GAAP EPS of $1.56 versus adjusted EPS of $2.02 is a ~23% adjustment gap, and the bulk of it is acquisition accounting that recurs indefinitely.
• Forward visibility disclosure is thin. Remaining performance obligations of $175.2M is well under one quarter's revenue and only ~56% converts within twelve months — this is not a business with a disclosed multi-year backlog underwriting the data-center narrative.
• Capex is stepping up 3x (H1 $39.6M vs $13.2M) for data-center capacity that is being built ahead of contracted volume, and it is the same capacity build management cites for HVAC's margin compression. If AI cooling orders normalize, the fixed cost stays.
• Dilution is running ~7% YoY (50.675M vs 47.396M weighted diluted shares), so a slice of the adjusted-EPS growth is being handed back through the share count used to fund the roll-up.
• The market is not paying up: the stock sits below its 50-day average and roughly at its 200-day, +9% over a year in which earnings grew ~24%. Either the de-rating is the opportunity or it is the market pricing the margin and leverage trend the bulls are discounting.