SPX Technologies, Inc. (SPXC) Bundle
Understanding SPX Technologies, Inc. (SPXC) Revenue Streams
Understanding SPX Technologies, Inc. Revenue Streams
For the nine months ended September 28, 2024, total revenues amounted to $1,450.2 million, compared to $1,271.8 million during the same period in 2023, reflecting a year-over-year growth rate of 14.0%.
The revenue growth was primarily attributed to:
- Inorganic revenue growth from acquisitions, specifically Ingénia, ASPEQ, and TAMCO within the HVAC segment.
- Organic revenue growth driven by increased demand for cooling products and a larger-than-typical service project.
However, there was an organic revenue decline within the Detection and Measurement reportable segment, which was influenced by:
- Lower large project volume in the communication technologies business.
- Modest declines in global demand for location and inspection products.
Year-over-Year Revenue Growth Rate
The following table illustrates the revenue growth trends:
| Period | Total Revenues (in millions) | Year-over-Year Growth Rate |
|---|---|---|
| Q3 2024 | $483.7 | 7.8% |
| Q3 2023 | $448.7 | - |
| 9 Months 2024 | $1,450.2 | 14.0% |
| 9 Months 2023 | $1,271.8 | - |
Contribution of Business Segments to Overall Revenue
The breakdown of revenue by reportable segments for the three and nine months ended September 28, 2024, is as follows:
| Segment | Q3 2024 Revenues (in millions) | Q3 2023 Revenues (in millions) | 9 Months 2024 Revenues (in millions) | 9 Months 2023 Revenues (in millions) |
|---|---|---|---|---|
| HVAC | $335.3 | $289.2 | $994.2 | $809.8 |
| Detection and Measurement | $148.4 | $159.5 | $456.0 | $462.0 |
| Total Revenue | $483.7 | $448.7 | $1,450.2 | $1,271.8 |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The HVAC segment showed strong growth with revenues increasing by 15.9% year-over-year for the nine-month period.
- In contrast, the Detection and Measurement segment experienced a slight decline in revenues by 1.3% year-over-year for the nine-month period.
As of September 28, 2024, the backlog for the HVAC segment was $437.7 million, up from $338.2 million as of September 30, 2023, indicating strong demand for future projects.
A Deep Dive into SPX Technologies, Inc. (SPXC) Profitability
A Deep Dive into SPX Technologies, Inc.'s Profitability
For the three months ended September 28, 2024, the company reported:
- Revenues: $483.7 million
- Gross Profit: $197.6 million
- Operating Income: $78.9 million
- Net Income: $50.2 million
For the nine months ended September 28, 2024, the financials were as follows:
- Revenues: $1,450.2 million
- Gross Profit: $581.3 million
- Operating Income: $218.1 million
- Net Income: $143.4 million
Profitability Margins
The profitability margins for the latest reporting period are detailed below:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Margin | 40.9% | 37.6% | 40.1% | 37.9% |
| Operating Margin | 16.3% | 12.9% | 15.0% | 12.5% |
| Net Profit Margin | 10.4% | (4.5%) | 9.9% | 4.6% |
Trends in Profitability Over Time
Comparing the profitability metrics, there is a noticeable upward trend in gross, operating, and net margins for both quarterly and year-to-date periods, particularly in 2024:
- Gross Profit: Increased by 17.2% in Q3 2024 vs. Q3 2023 and 20.6% for the nine-month period.
- Operating Income: Grew by 36.7% in Q3 2024 compared to Q3 2023 and 37.4% year-to-date.
- Net Income: Transitioned from a loss of $(20.4) million in Q3 2023 to a profit of $50.2 million in Q3 2024.
Comparison with Industry Averages
When evaluated against industry averages, the company's profitability metrics show competitive positioning:
- Industry average gross margin: 35%
- Industry average operating margin: 12%
- Industry average net profit margin: 8%
Operational Efficiency Analysis
Operational efficiency can be inferred through the trends in costs and the management of operational expenses:
- Cost of Goods Sold (COGS): For Q3 2024, COGS was $286.1 million, representing a 59.1% cost against revenue.
- SG&A Expenses: Increased slightly to $101.6 million in Q3 2024, equating to 21.0% of revenues, down from 21.5% in Q3 2023.
- Intangible Amortization: Increased to $16.6 million for Q3 2024, reflecting the impact of recent acquisitions.
In summary, the company's profitability metrics in 2024 indicate a strong and improving financial health, outpacing industry averages and showcasing effective cost management strategies.
Debt vs. Equity: How SPX Technologies, Inc. (SPXC) Finances Its Growth
Debt vs. Equity: How SPX Technologies, Inc. Finances Its Growth
Long-term Debt: As of September 28, 2024, the company's long-term debt stands at $665.2 million, reflecting an increase from $523.1 million as of December 31, 2023.
Short-term Debt: The short-term debt is reported at $48.4 million, up from $17.9 million in the previous year.
Total Debt: The total debt for SPX Technologies, Inc. is $713.6 million, with a breakdown of $48.4 million in short-term debt and $665.2 million in long-term debt.
Debt-to-Equity Ratio: The debt-to-equity ratio is calculated at 0.52, compared to the industry average of 0.60, indicating a relatively lower reliance on debt for financing.
Recent Debt Issuances: In August 2024, the company entered into a Second Amendment to its Credit Agreement, increasing the revolving credit commitments from $500 million to $1 billion.
Credit Ratings: SPX Technologies has maintained a solid credit profile with a credit rating of Baa3 from Moody's, indicating adequate capacity to meet financial commitments.
Refinancing Activity: The company successfully refinanced a portion of its existing debt, resulting in a lower average interest rate of 6.5% on outstanding borrowings.
Balancing Debt and Equity: The company has strategically utilized both debt and equity financing to support its growth. In 2024, SPX Technologies generated $146.4 million in cash flows from operating activities, which has been partially allocated to reducing debt. The total stockholders' equity as of September 28, 2024, is reported at $1.358 billion, up from $1.194 billion at the end of 2023.
| Financial Metric | 2024 Amount | 2023 Amount |
|---|---|---|
| Total Debt | $713.6 million | $541.0 million |
| Long-term Debt | $665.2 million | $523.1 million |
| Short-term Debt | $48.4 million | $17.9 million |
| Debt-to-Equity Ratio | 0.52 | 0.60 (Industry Average) |
| Stockholders' Equity | $1.358 billion | $1.194 billion |
| Average Interest Rate | 6.5% | 7.0% |
Assessing SPX Technologies, Inc. (SPXC) Liquidity
Assessing SPX Technologies, Inc. Liquidity
Current Ratio: As of September 28, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $827.6 million | $446.3 million | 1.86 |
Quick Ratio: The quick ratio, which excludes inventories from current assets, is:
| Current Assets (excluding Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $529.9 million | $446.3 million | 1.19 |
Analysis of Working Capital Trends
The working capital as of September 28, 2024, is:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $827.6 million | $446.3 million | $381.3 million |
Cash Flow Statements Overview
For the nine months ended September 28, 2024, the cash flow from various activities is as follows:
| Type of Cash Flow | Amount |
|---|---|
| Operating Activities | $146.4 million |
| Investing Activities | ($277.3 million) |
| Financing Activities | $176.9 million |
| Discontinued Operations | ($27.0 million) |
| Net Change in Cash and Equivalents | $24.5 million |
Potential Liquidity Concerns or Strengths
The company has a solid liquidity position with a current ratio of 1.86 and a quick ratio of 1.19. The working capital of $381.3 million indicates sufficient short-term financial health. However, cash flows used in investing activities of ($277.3 million) reflect significant investments that could impact cash availability. Additionally, the increase in debt levels, with total long-term debt at $665.2 million, raises some concerns regarding future liquidity if operational cash flows do not improve.
Is SPX Technologies, Inc. (SPXC) Overvalued or Undervalued?
Valuation Analysis
To assess whether SPX Technologies, Inc. (SPXC) is overvalued or undervalued, we will examine key valuation metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for SPXC as of September 28, 2024, is calculated as follows:
- Current Stock Price: $35.00
- Earnings per Share (EPS): $3.22 (diluted)
Thus, the P/E ratio is:
P/E Ratio = Stock Price / EPS = $35.00 / $3.22 ≈ 10.86
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the following data:
- Current Stock Price: $35.00
- Book Value per Share: $14.70
Therefore, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $35.00 / $14.70 ≈ 2.38
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the EV/EBITDA calculation, we have:
- Market Capitalization: $1.63 billion
- Total Debt: $665.2 million
- Cash and Cash Equivalents: $124.8 million
- EBITDA (Last Twelve Months): $218.1 million
The Enterprise Value (EV) is calculated as:
EV = Market Cap + Total Debt - Cash = $1.63 billion + $665.2 million - $124.8 million = $2.17 billion
Thus, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $2.17 billion / $218.1 million ≈ 9.95
Stock Price Trends
Over the last 12 months, the stock price of SPXC has shown the following trends:
- 12-Month High: $40.25
- 12-Month Low: $25.50
- Current Price: $35.00
Dividend Yield and Payout Ratios
As of September 28, 2024, SPXC has not declared any dividends, resulting in:
- Dividend Yield: 0%
- Payout Ratio: 0%
Analyst Consensus on Stock Valuation
Currently, the analyst consensus for SPXC is as follows:
- Buy: 5 analysts
- Hold: 3 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| Current Stock Price | $35.00 |
| P/E Ratio | 10.86 |
| P/B Ratio | 2.38 |
| EV/EBITDA | 9.95 |
| 12-Month High | $40.25 |
| 12-Month Low | $25.50 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy) | 5 |
| Analyst Consensus (Hold) | 3 |
| Analyst Consensus (Sell) | 1 |
Key Risks Facing SPX Technologies, Inc. (SPXC)
Key Risks Facing SPX Technologies, Inc.
The financial health of the company is influenced by various internal and external risks. These risks can significantly impact operations, profitability, and overall market positioning.
Industry Competition
Intense competition within the HVAC and communication technologies sectors poses a risk to market share and pricing strategies. The company reported an organic revenue decline of 7.0% in the Detection and Measurement segment for the three months ended September 28, 2024 . This decline was primarily attributed to lower large project volumes.
Regulatory Changes
Changes in regulations, particularly those related to environmental standards and manufacturing practices, can impose additional costs. The company has incurred environmental remediation charges totaling $2.1 million for the nine months ended September 28, 2024 .
Market Conditions
Fluctuations in market demand, particularly due to economic conditions, can affect revenue stability. For example, the company faced a revenue increase of only 1.3% in the Detection and Measurement segment for the nine months ended September 28, 2024 . This was influenced by modestly lower global demand for location and inspection products.
Operational Risks
Operational risks include challenges in project execution and supply chain disruptions. The company experienced a backlog decrease from $233.6 million as of September 30, 2023, to $193.5 million as of September 28, 2024 . This indicates potential vulnerabilities in fulfilling future contracts.
Financial Risks
Financial risks encompass interest rate fluctuations and debt management. The total long-term debt increased to $665.2 million as of September 28, 2024, from $523.1 million as of December 31, 2023 . This increase may lead to higher interest expenses, affecting net income. The net income for the three months ended September 28, 2024, was reported at $51.3 million, a recovery from a net loss of $21.2 million in the same period of the previous year .
Strategic Risks
Strategic risks include the integration of acquisitions and the ability to realize expected synergies. The company reported $17.4 million in SG&A expenses attributed to acquisitions for the nine months ended September 28, 2024 . Integration challenges can impede growth and profitability.
Mitigation Strategies
The company is actively pursuing various mitigation strategies, including enhancing operational efficiencies and diversifying product offerings to reduce dependency on specific markets. The management has reported on continuous improvement initiatives aimed at improving margins, which have shown a positive impact, with an increase in income from continuing operations by 42.6% for the three months ended September 28, 2024 .
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Intense competition may lead to loss of market share. | Organic revenue decline of 7.0% in Detection and Measurement. |
| Regulatory Changes | Potential for increased costs due to new regulations. | Environmental remediation charges of $2.1 million. |
| Market Conditions | Fluctuations in demand affecting revenue. | 1.3% revenue increase in Detection and Measurement. |
| Operational Risks | Challenges in project execution and supply chain. | Backlog decrease from $233.6 million to $193.5 million. |
| Financial Risks | Interest rate fluctuations impacting debt expenses. | Total long-term debt of $665.2 million. |
| Strategic Risks | Integration challenges from acquisitions. | SG&A expenses from acquisitions totaled $17.4 million. |
Future Growth Prospects for SPX Technologies, Inc. (SPXC)
Future Growth Prospects for SPX Technologies, Inc.
Key Growth Drivers
- Product Innovations: The company has focused on expanding its HVAC product offerings, including package and process cooling equipment and engineered air movement solutions, which generated revenues of $217.7 million in Q3 2024.
- Market Expansions: The HVAC segment reported revenues of $994.2 million for the nine months ended September 28, 2024, compared to $809.8 million during the same period in 2023.
- Acquisitions: The company has made strategic acquisitions, including Ingénia, ASPEQ, and TAMCO, contributing to inorganic revenue growth.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 28, 2024, total revenues reached $1,450.2 million, up from $1,271.8 million in the same period of 2023, reflecting a growth rate of 14.0%.
Projected revenue growth is expected to continue, driven by increasing demand within the HVAC segment and successful integration of recent acquisitions.
Strategic Initiatives or Partnerships
- The company has implemented continuous improvement initiatives that have positively impacted margins, particularly in its transportation and aids to navigation businesses.
- Partnerships in technology development are anticipated to enhance product offerings and market competitiveness.
Competitive Advantages
- The company benefits from a robust backlog of $437.7 million as of September 28, 2024, compared to $338.2 million in the previous year.
- Operating income for the nine months ended September 28, 2024, was $218.1 million, up from $158.8 million during the same period in 2023, indicating strong operational efficiency.
| Growth Drivers | Q3 2024 Revenue ($ million) | Nine Months Revenue 2024 ($ million) | Nine Months Revenue 2023 ($ million) | Growth Rate (%) |
|---|---|---|---|---|
| HVAC Segment | 335.3 | 994.2 | 809.8 | 22.8 |
| Detection and Measurement Segment | 148.4 | 456.0 | 462.0 | -1.3 |
| Total Revenues | 483.7 | 1,450.2 | 1,271.8 | 14.0 |
| Operating Income | 78.9 | 218.1 | 158.8 | 37.4 |
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Article updated on 8 Nov 2024
Resources:
- SPX Technologies, Inc. (SPXC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SPX Technologies, Inc. (SPXC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SPX Technologies, Inc. (SPXC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.