# SPX Technologies (SPXC) Investment Thesis: Industrial Machinery Growth, Risks, and Future Scenarios

> This investment thesis evaluates SPX Technologies, Inc. (NYSE: SPXC), an industrial machinery and automation company, across its business model, management, future growth opportunities, key risks, and potential scenarios. The analysis offers a focused view of what could drive SPXC’s performance and how investors should weigh its operational strengths against execution and market uncertainties.

**Companies**: SPX Technologies, Inc. Common Stock
**Sectors**: Industrials
**Published**: 2026-09-05
**Last Updated**: 2026-09-05
**Source**: https://thesisloop.ai/thesis/spx-technologies-spxc-investment-thesis-industrial-machinery-growth-risks-and-0c866885-2104-4d9f-9964-e368cd154288

## Score Overview

| Company | Management | Business Model | Future Growth | Risk |
|---------|-----------|---------------|--------------|------|
| SPX Technologies, Inc. Common Stock | 82/100 | 71/100 | 57/100 | 76/100 |

## SPX Technologies, Inc. Common Stock (NYSE:SPXC)

**Sector**: Industrials | **Industry**: Industrial Machinery & Automation

### Management Credibility

- **[CATALYST] Industrial Machinery And Automation M&A and Portfolio Action** (POSITIVE, EXCEEDED): The divestiture was completed approximately seven weeks after the February 6, 2026 acquisition, substantially earlier than the twelve-month deadline. (2 exceeded across 2 tracked commitments)
  > In connection with the acquisitions of Thermolec and Crawford, which have definite-lived intangible assets as noted above, we updated our estimated annual amortization expense related to intangible assets to approximately $103.0 for the full year 2026, $89.0 for 2027, and $87.0 for each of the three
- **[CATALYST] Industrial Machinery And Automation Product or Capex Inflection** (NEUTRAL, IN_PROGRESS): Capacity-expansion spending continued beyond the first quarter, demonstrating active execution, but the filing does not confirm completion of the expansion program. (1 in progress across 1 tracked commitment)
  > Cash flows used in investing activities for the three months ended March 28, 2026 were comprised primarily of net cash utilized in the acquisitions of Thermolec and Crawford of $439.6 and capital expenditures of $18.5 (inclusive of $10.8 related to capacity expansions for our engineered air movement
- **[METRIC] Industrial Machinery And Automation Balance Sheet Resilience** (NEUTRAL): Management intends to continue using external financing markets for liquidity, acquisitions, general corporate purposes, and refinancing. (+2 more commitments)
  > Financing instruments may be used from time to time including, but not limited to, public and private debt and equity offerings, operating leases, finance leases and securitizations. We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources o
- **[METRIC] Industrial Machinery And Automation Margin Profile** (POSITIVE, MET): The company reported only $0.2 million of special charges in Q1 2026 and explicitly stated that no significant future charges are expected under actions approved as of March 28, 2026. (1 met across 1 tracked commitment)
  > In connection with the acquisitions of Thermolec and Crawford, which have definite-lived intangible assets as noted above, we updated our estimated annual amortization expense related to intangible assets to approximately $105.0 for the full year 2026, $92.0 for 2027, and $87.0 for the three years t
- **[METRIC] Industrial Machinery And Automation Return on Capital** (NEUTRAL): Management intends to maintain annual impairment testing of goodwill and indefinite-lived trademarks and perform additional testing if indicators emerge, including deterioration in forecasts or business conditions.
  > We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodw
- **[METRIC] Industrial Machinery And Automation Revenue Growth** (NEUTRAL): Management expects to recognize revenue from approximately 45% of remaining performance obligations over the next 12 months and approximately 61% over the next 24 months. — target: Recognize approximately 45% of $221.4 million of remaining performance obligations within 12 months and approximately 61% within 24 months.
  > As of June 28, 2025, the aggregate amount allocated to remaining performance obligations was $221.4. We expect to recognize revenue on approximately 45% and 61% of these remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.
- **[PRINCIPLE] Industrial Machinery And Automation Capital Allocation** (NEUTRAL): Management expects no significant future restructuring charges under actions approved through September 27, 2025. — target: No significant future charges (+4 more commitments)
  > No significant future charges are expected to be incurred under actions approved as of September 27, 2025.
- **[PRINCIPLE] Industrial Machinery And Automation Revenue Quality** (NEUTRAL): Management expects to recognize revenue from the remaining performance-obligation balance over the next two years and thereafter. — target: Approximately 56% of $175.2 million of remaining performance obligations over the next 12 months and approximately 75% over the next 24 months, with the remainder thereafter. (+2 more commitments)
  > As of June 27, 2026, the aggregate amount allocated to remaining performance obligations was $175.2. We expect to recognize revenue on approximately 56% and 75% of remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.
- **[TREND] Industrial Machinery And Automation Demand Cycle** (NEUTRAL): Management expects ongoing geopolitical conflicts to have no material impact on operating results based on current information, while monitoring raw-material availability and potential demand effects.
  > However, at this time, we do not expect the potential impact to be material to our operating results. These conflicts have created additional demand for certain products within our communication technologies business. The longer-term impact of these global events on our business is currently unknown
- **[TREND] Industrial Machinery And Automation Policy and Regulation** (NEUTRAL): Management expects announced 2025 U.S. tariffs not to have a direct material impact on fiscal-year 2025 operating results, while continuing to assess their effects and potential mitigating actions. — target: No direct material impact expected on fiscal-year 2025 results (+1 more commitment)
  > While we do not expect these new tariffs to have a direct material impact on our results of operations in fiscal year 2025, we are unable to determine the full extent or duration at this time, as well as the impact of such tariffs, if implemented on announced terms, on general economic conditions in
- **[TREND] Industrial Machinery And Automation Supply Chain Reconfiguration** (NEUTRAL): Management expects to continue actions addressing tariff-related costs, cash flows, and sourcing challenges. (+3 more commitments)
  > However, at this time, we do not expect the potential adverse impact to be material to our operating results. ... We are monitoring the availability of certain raw materials that are supplied by businesses in the countries impacted by these conflicts.

### Business Model

- SPX Technologies designs, manufactures, installs, and services specialized HVAC equipment and detection-and-measurement systems, with Q2 2026 revenue of $679.0 million generated across more than 100 countries. (NEUTRAL)
  > We are a diversified, global supplier of highly specialized, engineered solutions with operations in 16 countries and sales in over 100 countries around the world. Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling equipment and engineered
- **[CATALYST] Industrial Machinery And Automation Product or Capex Inflection** (POSITIVE, Change: EXPANDING): The scale and capacity moat strengthened through a major HVAC manufacturing expansion. Capital spending rose sharply, with most of the increase tied to new capacity for engineered air movement, handling, and cooling products. This supports later data-center-related demand, although the filing warns that expansion execution and utilization remain risks. (2 expanding)
  > Capital expenditures of continuing operations for the six months ended June 27, 2026 were comprised primarily of ... capital expenditures of $39.6 (inclusive of $27.4 related to capacity expansions for our engineered air movement and handling and cooling equipment businesses within the HVAC reportab
- **[METRIC] Industrial Machinery And Automation Balance Sheet Resilience** (NEUTRAL, Change: SHIFTED): Financial flexibility weakened during Q1 2026 because acquisitions increased debt and reduced cash. Total debt rose from $501.6 million at year-end 2025 to $674.0 million at March 28, 2026, while cash declined from $364.0 million to $156.5 million. However, the company retained $1.347 billion of revolving borrowing capacity and remained covenant-compliant. The later Q2 2026 baseline shows debt reduced to $614.7 million and cash increased to $166.4 million, indicating partial improvement after the Q1 acquisition funding spike. (1 shifted)
  > At June 27, 2026, we had $1,457.3 of available borrowing capacity under our revolving credit facility ... At June 27, 2026, we were in compliance with all covenants of the senior credit agreement.
- **[METRIC] Industrial Machinery And Automation Margin Profile** (POSITIVE, Change: EXPANDING): HVAC profitability improved. Segment income grew faster than revenue, and the segment margin expanded because of higher volumes, operating leverage, and favorable project execution and mix. (5 expanding across 1 engine)
  > Detection and Measurement Reportable Segment Revenues $198.4 $175.7 12.9 ... Segment Income 57.3 40.0 43.3 ... % of revenues 28.9% 22.8%. The increase in revenues ... was due primarily to organic revenue growth ... driven by higher project volumes within our aids to navigation and communication tech
- **[METRIC] Industrial Machinery And Automation Revenue Growth** (POSITIVE, Change: EXPANDING): Detection and Measurement expanded faster than HVAC and increased its share of company revenue. Growth was driven by higher communications-technology project volumes and the KTS acquisition, although aids-to-navigation volumes declined during the nine-month period. (5 expanding)
  > United States $538.0 $438.9 $985.6 $841.9
- **[PRINCIPLE] Industrial Machinery And Automation Competitive Moat** (POSITIVE, Change: EXPANDING): The distribution model remained broad and unchanged: HVAC sells directly and through representatives, distributors, and retailers; Detection and Measurement sells directly and through third-party distributors. The filing provides no evidence of a material channel change. (1 stable, 1 expanding)
  > The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers.
- **[PRINCIPLE] Industrial Machinery And Automation Revenue Quality** (POSITIVE, Change: EXPANDING): HVAC backlog expanded substantially, indicating stronger future contracted demand. Management attributed growth to higher volumes in both heating and cooling products and increased production capacity. (5 expanding across 1 engine)
  > HVAC Reportable Segment Revenues $480.6 $376.7 27.6 ... Segment Income 109.8 95.8 14.6 ... % of revenues 22.8% 25.4%. The increase in revenues ... was due primarily to (i) higher volumes of cooling equipment primarily associated with increased data center demand and higher throughput resulting from 
- **[TREND] Industrial Machinery And Automation Market Structure** (POSITIVE, Change: EXPANDING): The United States remained the dominant geography and expanded slightly as a share of revenue. U.S. revenue grew faster than consolidated nine-month revenue, while Canada was the fastest-growing separately reported geography. (1 expanding, 1 contracting)
  > United States revenue was $1,312.4 million versus $1,199.3 million.

### Future Growth

- **[CATALYST] Industrial Machinery And Automation M&A and Portfolio Action** (POSITIVE, Trend: ACCELERATING): Thermolec and Crawford contributed $20.5 million of Q1 FY26 revenue ($7.4 million from Thermolec and $13.1 million from Crawford). The previously extracted Q2 FY26 contribution was $32.0 million. The higher Q2 contribution reflects a full-quarter effect and ramping acquisition contribution, making this an accelerating inorganic growth source. (1 accelerating, 4 new trend across 5 signals, 1 leading indicator)
  > We recognized revenues and net income for Crawford of $23.6 and $1.0 ... for the three ... months ended June 27, 2026 ... We recognized revenues and net income for Thermolec of $8.4 and $0.9 ... for the three ... months ended June 27, 2026.
- **[CATALYST] Industrial Machinery And Automation Product or Capex Inflection** (NEGATIVE, Trend: DECELERATING): The current filing provides no quantified HVAC capacity-expansion spending or explicit production-capacity target. The only available comparable data point is capital expenditures of $4.7 million in HVAC during Q1 FY25, down from $8.7 million a year earlier. This does not support a continuing acceleration in capacity investment; it suggests reduced quarterly spending, though capital expenditures can be uneven. (1 decelerating, 4 new trend across 5 signals, 1 leading indicator)
  > Capital expenditures of continuing operations for the six months ended June 27, 2026 were comprised primarily of net cash utilized in the Crawford and Thermolec acquisitions of $439.6 and capital expenditures of $39.6 (inclusive of $27.4 related to capacity expansions for our engineered air movement
- **[METRIC] Industrial Machinery And Automation Margin Profile** (NEGATIVE, Trend: DECELERATING): HVAC profitability improved materially: segment margin rose from 20.5% in Q2 FY2023 to 23.5% in Q2 FY2024, and from 19.8% to 23.1% for the first half. The latest-quarter margin was slightly above the first-half margin, indicating steady-to-improving operating leverage rather than deterioration. (2 accelerating, 2 reversing, 1 decelerating across 5 signals)
  > The decrease in margin for the three and six months ended June 27, 2026, compared to the respective periods in 2025, was primarily due to (i) start-up costs and related inefficiencies associated with our capacity expansion initiatives, (ii) net tariff headwinds and inflationary cost increases, and (
- **[METRIC] Industrial Machinery And Automation Revenue Growth** (POSITIVE, Trend: ACCELERATING): Detection and Measurement grew organically by 9.6% in Q1 FY2024, with revenue up 9.9% to $162.8 million and segment income up 17.6% to $31.4 million. The later supplied Q2 FY2026 signal shows stronger revenue growth of 12.9% and income growth of 43.3%. The latest observation therefore points to accelerating growth, especially in profitability, although the comparison spans nonconsecutive periods. (5 accelerating across 5 signals)
  > For the three and six months ended June 27, 2026, the increase in revenues, compared to the respective periods in 2025, was due primarily to (i) higher volumes of cooling equipment primarily associated with increased data center demand and higher throughput resulting from increased capacity, and (ii
- **[PRINCIPLE] Industrial Machinery And Automation Revenue Quality** (NEUTRAL, Trend: STEADY): Contracted future revenue remains substantial. Company-wide remaining performance obligations were $175.2 million at June 27, 2026, with approximately 56% expected to convert to revenue within 12 months and 75% within 24 months. Separately, HVAC backlog was $918.8 million, but only the latest comparable year-over-year backlog point is disclosed, limiting a multi-quarter acceleration assessment. (1 steady across 1 signal)
  > As of June 27, 2026, the aggregate amount allocated to remaining performance obligations was $175.2. We expect to recognize revenue on approximately 56% and 75% of remaining performance obligations over the next 12 and 24 months, respectively.
- **[PRINCIPLE] Industrial Machinery And Automation Unit Economics** (POSITIVE, Trend: ACCELERATING): Detection and Measurement revenue growth improved from 10.7% in the first half to 12.9% in Q2, while segment-income growth accelerated sharply from 35.8% to 43.3%. Margin expanded from 22.8% in the comparable 2025 periods to 28.9% in Q2 2026, indicating strong operating leverage and favorable mix. (1 accelerating across 1 signal)
  > The increase in margin... was primarily due to (i) a more favorable product mix within our communication technologies and aids to navigation businesses, (ii) operating leverage... and (iii) benefits related to our cost optimization initiatives. In addition, the six month period... included increased
- **[TREND] Industrial Machinery And Automation Demand Cycle** (NEGATIVE, Trend: REVERSING): HVAC backlog was $461.9 million, up 70.9% from $270.3 million a year earlier. This is a strong positive demand and revenue-visibility signal, but it cannot be reconciled directly with the previously supplied $918.8 million Q2 FY2026 figure because the periods differ materially. Within the available filing, the backlog trajectory is accelerating sharply year over year. (1 accelerating, 3 reversing, 1 decelerating across 5 signals)
  > The segment had backlog of $918.8 and $539.5 as of June 27, 2026 and June 28, 2025, respectively.
- **[TREND] Industrial Machinery And Automation Digital and Automation Shift** (NEUTRAL): Detection and Measurement is growing organically, led by communications technology and navigation projects. Latest-quarter revenue increased 12.9% year over year to $198.4 million, while segment income rose 43.3% and margin expanded to 28.9%. The business also benefited from higher-margin transportation software-as-a-service revenue in the first half. — Detection and Measurement revenue: 12.9% YoY; segment income up 43.3% YoY
  > For the three and six months ended June 27, 2026, the increase in revenues, compared to the respective periods in 2025, was due primarily to organic revenue growth. The organic revenue growth was primarily driven by higher project volumes within our aids to navigation and communication technologies 
- **[TREND] Industrial Machinery And Automation Supply Chain Reconfiguration** (NEUTRAL): Tariffs and inflation remain a material risk to growth and profitability. SPX says tariffs and inflationary cost increases reduced HVAC margins, while future tariff changes could materially affect results. The company is responding with pricing and sourcing actions, but it cannot yet quantify the full impact.
  > While we are unable to determine the full extent or duration of the tariff impact on our business and broader end-markets at this time, the future impact could be material. We believe that our diverse set of businesses, along with our strong balance sheet and available liquidity, position us well to

### Risk Assessment

- **[CATALYST] Industrial Machinery And Automation M&A and Portfolio Action** (NEGATIVE, Risk: HIGH): Acquisition risk was already material in September 2025. SPX spent $445.3 million on acquisitions during the first nine months, acquired KTS for $340.0 million and Sigma & Omega for $143.6 million, and recognized $23.0 million of acquisition and integration costs. KTS generated a $15.5 million net loss and Sigma & Omega a $0.7 million net loss for the first nine months, including substantial amortization and retention-compensation costs. Goodwill increased to $1,036.0 million and net intangibles to $888.3 million. Compared with the June 2026 baseline, goodwill and intangibles increased further and additional acquisitions increased the risk. The trajectory is intensifying. (3 intensifying, 1 stable, 1 emerging, 2 high-severity)
  > On July 22, 2026, we completed the acquisition of Neptronic for net cash consideration of approximately $430.0. The acquisition was funded through available borrowings of approximately $340.0 on our revolving credit facility under our senior credit facilities, and cash on hand.
- **[CATALYST] Industrial Machinery And Automation Product or Capex Inflection** (NEGATIVE, Risk: HIGH): The September 2025 filing reported higher HVAC volumes, increased production capacity, and improved segment margin from 23.3% to 24.3% for the first nine months. This indicates that the expansion was producing operating leverage at that time. However, the June 2026 baseline reported capacity-expansion inefficiencies and a margin decline to 22.7%. The risk therefore worsened after the older filing, despite appearing controlled in Q3 FY25. (3 intensifying, 1 stable, 1 high-severity)
  > The decrease in margin for the three and six months ended June 27, 2026, compared to the respective periods in 2025, was primarily due to (i) start-up costs and related inefficiencies associated with our capacity expansion initiatives...
- **[METRIC] Industrial Machinery And Automation Balance Sheet Resilience** (NEGATIVE, Risk: HIGH): In September 2025, this risk was low: the $100 million facility had no borrowings and $86.1 million of available capacity. The June 2026 baseline reported $73 million outstanding and only $8 million available capacity. This represents a clear deterioration from the older filing and makes the risk high. (4 intensifying, 1 stable, 1 high-severity)
  > Under this arrangement, we can borrow, on a continuous basis, up to $100.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses. At June 27, 2026, we had $8.0 of available borrowing capacity under this facility after giving ef
- **[METRIC] Industrial Machinery And Automation Free Cash Flow** (NEGATIVE, Risk: HIGH): Working-capital pressure was already visible in the September 2025 filing: accounts receivable increased to $386.0 million from $313.6 million, contract assets rose to $70.3 million from $11.3 million, and inventory increased to $331.3 million from $271.0 million. Operating cash flow from continuing operations declined to $139.8 million from $146.4 million despite higher earnings. Compared with the June 2026 baseline, receivables and inventory were higher still and cash absorption was materially greater. The risk intensified. (4 intensifying, 1 high-severity)
  > Changes in operating assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable and other assets (70.4) ... Inventories (66.5) ... Net cash from continuing operations 120.2
- **[METRIC] Industrial Machinery And Automation Margin Profile** (NEGATIVE, Risk: HIGH): The older filing showed consolidated gross margin broadly stable year over year at 40.8% for the first nine months versus 40.1% previously, although third-quarter gross margin slipped to 40.4% from 40.9% because of less favorable Detection and Measurement project mix. HVAC segment margin improved to 24.3% from 23.3%. Compared with the June 2026 baseline, where HVAC and consolidated margins had deteriorated materially from input-cost pressure, this risk intensified after the September 2025 period. (4 intensifying, 1 high-severity)
  > The decrease in gross profit as a percentage of revenues was primarily driven by lower margins within our HVAC reportable segment driven by (i) start-up costs and related inefficiencies associated with our capacity expansion initiatives, (ii) net tariff headwinds and inflationary cost increases, and
- **[PRINCIPLE] Industrial Machinery And Automation Competitive Moat** (NEUTRAL, Risk: MODERATE): Goodwill and indefinite-lived trademarks are sensitive to competition, lower cash flows, revenue shortfalls, and changes in discount rates. Because some trademark values are close to their carrying values, a modest deterioration could cause a material non-cash impairment and hurt the stock price. [COMPETITIVE]
  > The implied value of our ASPEQ and ULC business unit's trademarks approximated their carrying value. If ASPEQ or ULC is unable to achieve their current revenue forecasts, or there is a change in assumptions used in the fair value analyses (e.g., projected revenues, royalty rates, and discount rates,
- **[PRINCIPLE] Industrial Machinery And Automation Regulatory Position** (NEUTRAL, Risk: MODERATE): The company has sizeable environmental and other legal liabilities whose final cost is uncertain. New findings, stricter environmental rules, or unfavorable claim outcomes could create unexpected charges and cash outflows. [REGULATORY]
  > Our recorded liabilities related to these matters, primarily associated with environmental remediation matters, totaled $44.9 and $43.7 at June 27, 2026 and December 31, 2025, respectively. ... We had liabilities for site investigation and/or remediation at 16 sites...
- **[PRINCIPLE] Industrial Machinery And Automation Revenue Quality** (NEUTRAL, Risk: MODERATE): The September 2025 filing confirms continuing project-execution exposure. Detection and Measurement gross margin declined in the third quarter because of a less favorable project mix, and management stated that project volumes and execution timing can vary materially. Remaining performance obligations were $341.1 million, with 62% expected within 12 months and 75% within 24 months. The June 2026 baseline reported a smaller remaining-performance-obligation balance of $175.2 million and continued project exposure. The risk remains high, but the older filing does not establish a clear deterioration in execution losses; severity is best viewed as broadly stable at a high level. (1 stable, 1 insufficient_data)
  > Project volumes, primarily within our communications technologies, aids to navigation, cooling equipment, and transportation systems businesses, can vary from period to period based on the timing of project execution.
- **[TREND] Industrial Machinery And Automation Demand Cycle** (NEGATIVE, Risk: HIGH): The filing provides concrete evidence of project and demand variability: Detection and Measurement revenue rose 18.6% year over year for the first nine months, but aids-to-navigation volumes declined and management warned that project volumes can vary by period. Backlog increased to $366.1 million from $193.5 million for Detection and Measurement, while HVAC backlog rose to $578.5 million from $437.7 million. Thus, the risk was not worsening in the September 2025 period; strong backlog and revenue growth partly reduced near-term risk. The later June 2026 baseline showed Detection and Measurement backlog falling to $312.4 million, making the overall risk more severe thereafter. (3 intensifying, 1 stable, 1 high-severity)
  > Project volumes, primarily within our communication technologies, aids to navigation, and transportation systems businesses, can vary from period to period based on the timing of project execution. ... Backlog — The segment had backlog of $312.4 and $365.4 as of June 27, 2026 and June 28, 2025, resp
- **[TREND] Industrial Machinery And Automation Policy and Regulation** (NEGATIVE, Risk: HIGH): In the September 2025 quarter, tariff exposure was an identified risk, but management did not expect a material direct earnings impact for fiscal 2025. Compared with the June 2026 baseline, the risk later became more severe because Section 232 tariffs expanded exposure to the full customs value of goods containing aluminum, steel, or copper. The trajectory from this older filing to the baseline is therefore intensifying. (4 intensifying, 1 high-severity)
  > While the Company has substantially been able to mitigate the impact of tariffs, including tariffs under IEEPA, through pricing and other actions, it may be unable to do so under recently announced or future U.S. tariffs, including the tariffs imposed by executive proclamation on April 2, 2026 under
- **[TREND] Industrial Machinery And Automation Supply Chain Reconfiguration** (NEGATIVE, Risk: HIGH): The risk was active in FY25 and became more severe in the later baseline. FY25 raw materials and purchased parts increased to $212.3 million from $170.2 million, while management warned that tariffs, shortages, supplier failures, and subcontractor interruptions could prevent timely delivery. The later baseline reports $257.6 million of raw materials and purchased parts, approximately 68.9% of inventory, along with specific tariff and shipping-route concerns. (2 intensifying, 1 stable, 2 high-severity)
  > the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; ... inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks

### Scenario Analysis

- Tariffs on steel, aluminum, copper, and imported components directly raise SPX's HVAC and industrial-product costs, with the effect already visible in lower HVAC and consolidated gross margins. The company has recovered a meaningful portion through pricing, but broader Section 232 tariffs may be harder to pass through, particularly on fixed-price contracts. Second-order demand is favorable: data-center construction, expanded industrial capacity, and domestic infrastructure investment are driving HVAC volumes and backlog, while SPX's $27.4 million capacity investment and North American acquisitions improve its ability to serve that demand. Third-order, SPX is positioned as a supplier to reshoring rather than merely an importer exposed to it, but the benefit will be strongest if localization reduces tariff exposure without allowing labor, depreciation, integration, inventory, and financing costs to absorb the incremental profit. (POSITIVE)
  > availability, limitations or cost increases of raw materials and/or commodities, including as a result of geopolitical conflicts or new or increased tariffs, as well as the potential impact of retaliatory tariffs and other penalties, that cannot be recovered in product pricing.
- The first-order effect is rising data-center construction and computing density, which increases demand for SPX's cooling, engineered air-movement, and air-handling products. That demand has translated into sharply higher HVAC revenue and backlog, while SPX is responding with capacity expansion and the Crawford and Neptronic acquisitions. The second-order consequence is a larger forward revenue opportunity but also lower near-term margins, higher inventory, execution costs, and greater capital requirements as new facilities ramp. In the third order, SPX could become a durable infrastructure supplier benefiting from a multiyear AI-capex cycle, but investor returns will depend on converting backlog into cash flow and restoring margins rather than merely expanding reported sales. (POSITIVE)
  > The decrease in margin for the three and six months ended June 27, 2026, compared to the respective periods in 2025, was primarily due to (i) start-up costs and related inefficiencies associated with our capacity expansion initiatives, (ii) net tariff headwinds and inflationary cost increases.
- The primary first-order effects are lower interest expense, improved customer financing conditions, and a lower equity discount rate. Those effects can support SPX's HVAC backlog, data-center and infrastructure projects, residential heating demand, and the valuation of its goodwill and intangible assets. In the second order, cheaper credit could accelerate project execution, improve absorption of expanded HVAC capacity, and make further acquisitions more attractive; higher rates would instead create margin pressure, slower contract conversion, and greater integration or impairment risk. In the third order, SPX could benefit from a rotation toward small-cap industrial companies, although valuation support would be vulnerable if technology-substitution concerns or rising credit costs overshadow the rate benefit. (POSITIVE)
  > The decrease in margin ... was primarily due to (i) start-up costs and related inefficiencies associated with our capacity expansion initiatives, (ii) net tariff headwinds and inflationary cost increases, and (iii) the respective 2025 periods benefiting from a more accretive mix and favorable projec

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