SPX Technologies keeps raising its data center ceiling — but the tape is taking profits anyway
Fourth straight capacity/revenue raise (2026 data center revenue now $430M; full-production capacity $1.1B), plus a Thermolec controls bolt-on — while shares sit 16% off June's peak.
SPXC · Earnings Call · 2026-07-30
SPX Technologies delivered a strong Q2 2026 on paper — revenue up 23%, adjusted EBITDA up 20%, adjusted EPS up to $2.02 — yet the story the market seems to be wrestling with is the cash cost of rocket-ship growth and a broader rotation out of AI-infrastructure names. The company has now raised its data center expectations four straight quarters, and this one was the most aggressive yet.
The data center ceiling keeps moving higher
The trajectory of the company's data center franchise is remarkable for its compounding pace. Two years ago SPXC did roughly $150M of data center revenue; last year about $200M. For 2026 the plan was $300M, then $350M, and now:
We raised that to $350 million last quarter, and we subsequently raised it again to $430 million for the full year as of now.
That's about 115% year-over-year growth in a single year, and the capacity story is even bigger. When the company laid out its plant expansions — Olathe, Springfield, TAMCO in Nashville, and the new Madison, Alabama facility — the revenue potential at full production grew from around $700M (and before that, an incremental $550M off the prior base) to $750M, and now to $1.1B. As Gene Lowe put it in the prepared remarks, “we now expect total data center capacity to reach $1.1 billion once at full production up from our previous expectation of approximately $750 million” — Eugene Joseph Lowe · 2026-07-30.
The driver is a mix of operational learnings and stepping on the gas: "Olathe and Springfield have actually performed better than we initially expected," and the new Madison line is already assembling product. Management attributes the upside to “getting more throughput than we had anticipated” — Eugene Joseph Lowe · 2026-07-30 through lean projects, flow optimization, and augmented staffing. Visibility into 2027 remains strong, with hyperscalers giving multiyear line of sight and, increasingly, long term agreement structures that align demand without locking up capacity against other customers. The longer-term ambition was set a year ago at the OlympusMAX launch: “I would expect it to kind of grow from there. And if we're successful, it could grow very rapidly into '27 and '28” — Eugene Lowe, President and Chief Executive Officer · 2025-10-30.
This is not a company-unique story in isolation — virtually every reporter this week is waving the AI data centers flag, from Korean component makers to European grid operators — but SPXC is one of the more direct, repeated "we keep raising the number" beats in this reporting window, and the scale of the raise — a 47% jump in full-production capacity in a single quarter — is company-unique.
Thermolec: a step up the controls stack
The other fresh item was the Thermolec acquisition, announced just before the quarter. Thermolec brings electric duct heaters, humidification, and a more advanced configured-controls capability that management describes as moving SPX "further up the solution stack from equipment-focused offerings towards integrated, control-enabled solutions." Gene Lowe framed it as roughly half core-business adjacency and half genuinely new capability: “the newest piece would be the controls. And while we do a lot of controls... they have a more advanced set of controls particularly in the configured controls” — Eugene Joseph Lowe · 2026-07-30.
The margin profile is well above the segment average — segment income in the low-40s, EBITDA in the mid-40s — and management paid roughly 12.5x, a click above the historical 10.5–11x base. Thermolec adds a complementary product platform and a channel into third-party OEM fan walls, precisely the kind of Thermolec bolt-on that extends the HVAC controls TAM rather than merely scaling existing volume.
The drawdown is a funds-flow story, not a demand story
The tension sits on the balance sheet and the tape. CapEx jumped 236% year-over-year in the latest quarter as the capacity expansion lands, and free cash flow margin printed a thin 1.5% as the company invests ahead of full production. Net debt now stands around $518M, with pro-forma Thermolec leverage at ~1.4x — still inside the 1.5–2.5x target but climbing from the ~0.7x reported at quarter end. The D&M beat, meanwhile, was honestly characterized as largely a timing artifact: “a project that shifted forward into Q2. That actually moved from Q3 into Q2. And it was about $15 million in size at a high margin” — Mark A. Carano · 2026-07-30 — with the normalized structural margin improvement closer to 25%, just above the old 22–24% target zone.
And the market has been voting with its feet: SPXC is down roughly 16% from its June 22 peak of $246.41, and the 90-day tape shows a steady grind lower even into strong results. The broader 30-day price tape confirms this is a rotation, with high performance compute-adjacent and data-center-AI names all clustered in the decliners. So the fundamentals keep compounding — “the demand strength is very strong. We would say accelerating” — Eugene Lowe, President and Chief Executive Officer · 2026-04-30 was the message a quarter ago — but the market is repricing an expansion phase that consumes cash before it returns it.
The setup is genuinely interesting: a company with four consecutive capacity raises and a clear demand signal, but a stock sitting 16% in drawdown as the market weighs cash burn and a D&M beat that's partly a quarter-shift. If the next two quarters show margin leverage on the back-half CapEx ramp, the capacity story will look cheap in hindsight; if the cash costs run hot, the tape's caution will have been vindicated. For now, demand is not the question — the funding of expansion is.