UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number 1-6948

SPX TECHNOLOGIES, INC.

(Exact Name of registrant as specified in its charter)

Delaware	88-3567996
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6325 Ardrey Kell Road, Suite 400, Charlotte, North Carolina 28277

(Address of principal executive offices) (Zip Code)

(980) 474-3700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Common Stock, par value $0.01	SPXC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No. 

Common shares outstanding April 28, 2023, 45,501,829

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q INDEX

PART 1 – FINANCIAL INFORMATION
Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income	3
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Stockholders' Equity	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	37
Item 4 – Controls and Procedures	37
PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings	38
Item 1A – Risk Factors	38
Item 6 – Exhibits	38
SIGNATURES	39

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited; in millions, except per share amounts)

	Three months ended
	April 1, 2023		April 2, 2022
Revenues	$	399.8	$	307.1
Costs and expenses:
Cost of products sold	249.9		203.1
Selling, general and administrative	93.8		84.2
Intangible amortization	6.3		9.3
Other operating income	—		(0.9)
Operating income	49.8		11.4
Other income, net	2.5		6.5
Interest expense	(2.4)		(2.4)
Interest income	0.5		0.1
Income from continuing operations before income taxes	50.4		15.6
Income tax provision	(11.3)		(2.6)
Income from continuing operations	39.1		13.0
Income (loss) from discontinued operations, net of tax	—		—
Gain (loss) on disposition of discontinued operations, net of tax	3.7		(1.6)
Income (loss) from discontinued operations, net of tax	3.7		(1.6)
Net income	$	42.8	$	11.4
Basic income per share of common stock:
Income from continuing operations	$	0.86	$	0.29
Income (loss) from discontinued operations	0.08		(0.04)
Net income per share	$	0.94	$	0.25
Weighted-average number of common shares outstanding — basic	45.382		45.554
Diluted income per share of common stock:
Income from continuing operations	$	0.84	$	0.28
Income (loss) from discontinued operations	0.08		(0.03)
Net income per share	$	0.92	$	0.25
Weighted-average number of common shares outstanding — diluted	46.402		46.445
Comprehensive income	$	44.6	$	14.4

The accompanying notes are an integral part of these statements.

3

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)

	April 1, 2023		December 31, 2022
ASSETS
Current assets:
Cash and equivalents	$	204.8	$	147.8
Accounts receivable, net	274.9		263.5
Contract assets	32.2		23.9
Inventories, net	265.7		244.0
Other current assets	42.2		41.9
Total current assets	819.8		721.1
Property, plant and equipment:
Land	13.9		13.9
Buildings and leasehold improvements	63.5		63.7
Machinery and equipment	237.2		233.4
	314.6		311.0
Accumulated depreciation	(204.3)		(201.1)
Property, plant and equipment, net	110.3		109.9
Goodwill	458.0		455.3
Intangibles, net	396.2		401.6
Other assets	194.8		197.4
Deferred income taxes	2.6		2.7
Assets of DBT and Heat Transfer (includes cash and equivalents of $7.9 and $9.3 at April 1, 2023 and December 31, 2022, respectively) (Note 3)	39.7		42.9
TOTAL ASSETS	$	2,021.4	$	1,930.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	120.0	$	124.5
Contract liabilities	65.8		52.8
Accrued expenses	121.3		148.0
Income taxes payable	14.4		4.7
Short-term debt	68.9		1.8
Current maturities of long-term debt	3.5		2.0
Total current liabilities	393.9		333.8
Long-term debt	241.5		243.0
Deferred and other income taxes	30.6		34.8
Other long-term liabilities	206.2		208.3
Liabilities of DBT and Heat Transfer (Note 3)	23.1		31.8
Total long-term liabilities	501.4		517.9
Commitments and contingent liabilities (Note 15)
Stockholders' Equity:
Common stock (53,442,050 and 45,476,237 issued and outstanding at April 1, 2023, respectively, and 53,350,918 and 45,291,989 issued and outstanding at December 31, 2022, respectively)	0.5		0.5
Paid-in capital	1,335.3		1,338.3
Retained deficit	(8.8)		(51.6)
Accumulated other comprehensive income	259.3		257.5
Common stock in treasury (7,965,813 and 8,058,929 shares at April 1, 2023 and December 31, 2022, respectively)	(460.2)		(465.5)
Total stockholders' equity	1,126.1		1,079.2
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,021.4	$	1,930.9

The accompanying notes are an integral part of these statements.

4

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited; in millions)

	Three months ended April 1, 2023
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		Total Stockholders’ Equity
Balance at December 31, 2022	$	0.5	$	1,338.3	$	(51.6)	$	257.5	$	(465.5)	$	1,079.2
Net income	—		—		42.8		—		—		42.8
Other comprehensive income, net	—		—		—		1.8		—		1.8
Incentive plan activity	—		5.2		—		—		—		5.2
Long-term incentive compensation expense	—		3.1		—		—		—		3.1
Restricted stock unit vesting	—		(11.3)		—		—		5.3		(6.0)
Balance at April 1, 2023	$	0.5	$	1,335.3	$	(8.8)	$	259.3	$	(460.2)	$	1,126.1

	Three months ended April 2, 2022
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		Total Stockholders’ Equity
Balance at December 31, 2021	$	0.5	$	1,334.2	$	(51.8)	$	263.9	$	(443.9)	$	1,102.9
Net income	—		—		11.4		—		—		11.4
Other comprehensive income, net	—		—		—		3.0		—		3.0
Incentive plan activity	—		2.5		—		—		—		2.5
Long-term incentive compensation expense	—		3.1		—		—		—		3.1
Restricted stock unit vesting	—		(18.6)		—		—		11.5		(7.1)
Balance at April 2, 2022	$	0.5	$	1,321.2	$	(40.4)	$	266.9	$	(432.4)	$	1,115.8

The accompanying notes are an integral part of these statements.

5

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

	Three months ended
	April 1, 2023		April 2, 2022
Cash flows from (used in) operating activities:
Net income	$	42.8	$	11.4
Less: Gain (loss) from discontinued operations, net of tax	3.7		(1.6)
Income from continuing operations	39.1		13.0
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Gain on change in fair value of equity security	(3.6)		(4.4)
Deferred and other income taxes	(3.5)		4.3
Depreciation and amortization	10.7		14.0
Pension and other employee benefits	3.5		1.6
Long-term incentive compensation	3.1		3.1
Other, net	(1.5)		0.6
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable and other assets	(15.1)		10.4
Inventories	(21.2)		(25.6)
Accounts payable, accrued expenses and other	(10.7)		(65.5)
Cash spending on restructuring actions	—		(0.1)
Net cash from (used in) continuing operations	0.8		(48.6)
Net cash used in discontinued operations	(5.2)		(8.6)
Net cash used in operating activities	(4.4)		(57.2)
Cash flows from (used in) investing activities:
Proceeds related to company-owned life insurance policies, net	0.1		—
Business acquisition, net of cash acquired	—		(41.8)
Capital expenditures	(4.0)		(2.1)
Net cash used in continuing operations	(3.9)		(43.9)
Net cash used in discontinued operations	—		(13.9)
Net cash used in investing activities	(3.9)		(57.8)
Cash flows from (used in) financing activities:
Borrowings under senior credit facilities	20.0		—
Repayments under senior credit facilities	—		(3.1)
Borrowings under trade receivables arrangement	47.0		—
Repayments under trade receivables arrangement	—		—
Net repayments under other financing arrangements	—		(0.2)
Payment of contingent consideration	—		(1.3)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.1)		(6.4)
Net cash from (used in) continuing operations	62.9		(11.0)
Net cash used in discontinued operations	—		(0.4)
Net cash from (used in) financing activities	62.9		(11.4)
Change in cash and equivalents due to changes in foreign currency exchange rates	1.0		(0.1)
Net change in cash and equivalents	55.6		(126.5)
Consolidated cash and equivalents, beginning of period	157.1		396.0
Consolidated cash and equivalents, end of period	$	212.7	$	269.5

	Three months ended
	April 1, 2023		April 2, 2022
Components of cash and equivalents:
Cash and equivalents	$	204.8	$	262.8
Cash and equivalents included in assets of DBT and Heat Transfer	7.9		6.7
Total cash and equivalents	$	212.7	$	269.5

The accompanying notes are an integral part of these statements.

6

SPX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; in millions, except per share data)

(1)    BASIS OF PRESENTATION

Unless otherwise indicated, “we,” “us” and “our” mean SPX Technologies, Inc. and its consolidated subsidiaries (“SPX”).

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally required by accounting principles generally accepted in the United States (“GAAP”) can be condensed or omitted. The financial statements represent our accounts after the elimination of intercompany transactions and, in our opinion, include the adjustments (consisting only of normal and recurring items) necessary for their presentation. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 3 for information on discontinued operations).

We account for investments in unconsolidated companies where we exercise significant influence but do not have control using the equity method. In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. All of our VIE’s are immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Merger and Consummation of Holding Company Reorganization

As of August 15, 2022, SPX Technologies, Inc. (the “Company”) is the successor registrant pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended, to SPX Corporation (“Legacy SPX”) as a result of the completion on August 15, 2022 of a holding company reorganization (the “Holding Company Reorganization”) effected as a merger of Legacy SPX with and into SPX Merger, LLC, a subsidiary of the Company. Each share of Legacy SPX’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the consummation of the Holding Company Reorganization was automatically converted into an equivalent corresponding share of the Company’s common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX common stock being converted. Accordingly, upon consummation of the Holding Company Reorganization, Legacy SPX stockholders became stockholders of the Company. The terms “SPX,” “we” and “our” include Legacy SPX for periods prior to the consummation of the Holding Company Reorganization as the context requires.

Divestiture of Asbestos Liabilities and Certain Assets

On November 1, 2022, we divested three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets, to Canvas Holdco LLC (“Canvas”), an entity formed by a joint venture of Global Risk Capital LLC and an affiliate of Premia Holdings Ltd. In connection with the divestiture (the “Asbestos Portfolio Sale”), the divested subsidiaries have agreed to indemnify us and our affiliates for their asbestos-related liabilities, which encompassed all of our consolidated asbestos-related liabilities and contingent liabilities immediately prior to the divestiture. These indemnification obligations are not subject to any cap or time limitation. As a result of this transaction, the Company divested all obligations with respect to pending and future asbestos claims relating to these matters. The board of managers of the divested subsidiaries each received a solvency opinion from an independent advisory firm that the divested subsidiaries were solvent after giving effect to the Asbestos Portfolio Sale.

The agreement for the Asbestos Portfolio Sale contains customary representations and warranties with respect to the divested subsidiaries, the Company, and Canvas. Pursuant to the agreement, the Company and Canvas will each indemnify the other for breaches of representation and warranties or breaches of covenants, subject to certain limitations as set forth in the agreement. Refer to Note 15 for additional details.

7

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-improvised explosive device RF jammers. We purchased ECS for cash consideration of $39.4, net of cash acquired of $5.1. Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $15.4, with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones. The estimated fair value of such contingent consideration as of the date of acquisition was $8.2. During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated liability of $6.7. During the first quarter of 2022, we further reduced the estimated liability by $0.9, with such amount recorded within “Other operating income.” The estimated fair value of such contingent consideration was $0.0 at April 1, 2023 and December 31, 2022. The post-acquisition operating results of ECS are reflected within our Detection and Measurement reportable segment.

Acquisition of ITL

On March 31, 2022, we completed the acquisition of International Tower Lighting, LLC (“ITL”), a leader in the design and manufacture of highly-engineered Aids to Navigation systems, including obstruction lighting for telecommunications towers, wind turbines and numerous other terrestrial obstructions. We purchased ITL for cash proceeds of $40.4, net of (i) cash acquired of $1.1 and (ii) an adjustment to the purchase price received during the third quarter of 2022 related to acquired working capital of $1.4. The post-acquisition operating results of ITL are reflected within our Detection and Measurement reportable segment.

Other

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022 (“our 2022 Annual Report on Form 10-K”). Interim results are not necessarily indicative of full year results.

We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 2023 are April 1, July 1, and September 30, compared to the respective April 2, July 2, and October 1, 2022 dates. We had one less day in the first quarter of 2023 and will have one more day in the fourth quarter of 2023 than in the respective 2022 periods. It is not practicable to estimate the impact of the one less day on our consolidated operating results for the three months ended April 1, 2023, when compared to the consolidated operating results for the 2022 respective period.

8

Correction of Prior-Year Classification and Disclosure

During the fourth quarter of 2022, we concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Accounting Standards Codification (“Codification”), the disclosure of operating income for each of our reportable segments (“Segment Income”) was not consistent with the measure used by our Chief Operating Decision Maker (“CODM”) when evaluating the results of, or allocating resources to, our reportable segments. We previously disclosed that Segment Income was determined before considering impairments and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses. Our CODM also excludes the impact of intangible asset amortization, inventory step-up charges, and certain other acquisition-related costs from Segment Income. Accordingly, Segment Income, as presented in Note 6, now excludes all of the items noted above. This change had no impact to the amounts previously presented in our condensed consolidated statement of operations for the three months ended April 2, 2022. Although the impact of this change to previously disclosed Segment Income is not material, we revised the prior-year presentation to be consistent with the current-year disclosure. The impact of this change on the Segment Income previously presented for the three months ended April 2, 2022 is summarized below:

	April 2, 2022
	As Previously Presented		Effect of Change		Current Presentation
Income:
HVAC reportable segment	$	15.2	$	5.4	$	20.6
Detection and Measurement reportable segment	15.0		4.0		19.0
Total income for segments	30.2		9.4		39.6
Corporate expense	16.6		—		16.6
Acquisition-related costs (1)	—		0.1		0.1
Long-term incentive compensation expense	3.1		—		3.1
Amortization of intangible assets	—		9.3		9.3
Other operating income	(0.9)		—		(0.9)
Consolidated operating income	$	11.4	$	—	$	11.4

______________________________

(1)Represents additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with an acquisition of $0.1 during the three months ended April 2, 2022.

(2)    NEW ACCOUNTING PRONOUNCEMENTS

The following is a summary of new accounting pronouncements that apply or may apply to our business.

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023. In an effort to address the various challenges created by such discontinuance, the Financial Accounting Standards Board (“FASB”) issued three amendments to existing guidance, Accounting Standards Update (“ASU”) No. 2020-04, No. 2021-01, and No. 2022-06, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2024. In conjunction with entering into an amended and restated credit agreement on August 12, 2022, we adopted this guidance with no material impact on our condensed consolidated financial statements.

9

(3)    ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on March 31, 2022, we completed the acquisition of ITL. The pro forma effects of this acquisition are not material to our condensed consolidated results of operations.

Sale of Transformer Solutions Business

On October 1, 2021, we completed the sale of SPX Transformer Solutions, Inc. During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the buyer of $13.9 and an increase to the gain on sale of $0.2.

Wind-Down of DBT Business

We completed the wind-down of our DBT Technologies (PTY) LTD (“DBT”) business in the fourth quarter of 2021. As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented.

The assets and liabilities of DBT have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of April 1, 2023 and December 31, 2022. The major line items constituting DBT’s assets and liabilities as of April 1, 2023 and December 31, 2022 are shown below:

	April 1, 2023		December 31, 2022
ASSETS
Cash and equivalents	$	7.9	$	9.3
Accounts receivable, net	7.2		7.6
Other current assets	6.1		6.5
Property, plant and equipment:
Buildings and leasehold improvements	0.2		0.2
Machinery and equipment	0.7		0.7
	0.9		0.9
Accumulated depreciation	(0.8)		(0.8)
Property, plant and equipment, net	0.1		0.1
Other assets	18.1		19.1
Total assets of DBT	$	39.4	$	42.6
LIABILITIES
Accounts payable	$	1.3	$	1.4
Contract liabilities	3.3		3.6
Accrued expenses	14.0		22.0
Other long-term liabilities	4.3		4.6
Total liabilities of DBT	$	22.9	$	31.6

10

Wind-Down of the Heat Transfer Business

We completed the wind-down of our SPX Heat Transfer (“Heat Transfer”) business in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented.

The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of April 1, 2023 and December 31, 2022. The major line items constituting Heat Transfer’s assets and liabilities as of April 1, 2023 and December 31, 2022 are shown below:

	April 1, 2023		December 31, 2022
ASSETS
Other current assets	$	0.2	$	0.2
Other assets	0.1		0.1
Total assets of Heat Transfer	$	0.3	$	0.3
LIABILITIES
Accounts payable	$	0.1	$	0.1
Accrued expenses	0.1		0.1
Total liabilities of Heat Transfer	$	0.2	$	0.2

Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g. income taxes) may occur. As a result, it is possible that the resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods.

For the three months ended April 1, 2023 and April 2, 2022, results of operations from our businesses reported as discontinued operations were as follows:

	Three months ended
	April 1, 2023		April 2, 2022
DBT
Income (loss) from discontinued operations (1)	$	3.0	$	(1.6)
Income tax benefit	0.7		0.4
Income (loss) from discontinued operations, net	3.7		(1.2)
All other
Loss from discontinued operations (2)	—		(0.5)
Income tax benefit	—		0.1
Loss from discontinued operations, net	—		(0.4)
Total
Income (loss) from discontinued operations	3.0		(2.1)
Income tax benefit	0.7		0.5
Income (loss) from discontinued operations, net	$	3.7	$	(1.6)

___________________________

(1) Income for the three months ended April 1, 2023 resulted primarily from income recorded in connection with a dispute resolution matter (see Note 15 for additional details), partially offset by legal costs incurred in connection with various dispute resolution matters related to two large power projects. The loss for the three months ended April 2, 2022 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(2) Loss for the three months ended April 2, 2022 resulted primarily from revisions to liabilities retained in connection with prior dispositions.

11

(4)    REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three months ended April 1, 2023 and April 2, 2022:

	Three months ended April 1, 2023
Reportable Segments	HVAC		Detection and Measurement		Total
Major product lines
Package and process cooling equipment and services, and engineered air movement solutions	$	158.3	$	—	$	158.3
Boilers, comfort heating, and ventilation	93.3		—		93.3
Underground locators, inspection and rehabilitation  equipment, and robotic systems	—		65.9		65.9
Communication technologies, aids to navigation, and transportation systems	—		82.3		82.3
	$	251.6	$	148.2	$	399.8
Timing of Revenue Recognition
Revenues recognized at a point in time	$	228.3	$	128.2	$	356.5
Revenues recognized over time	23.3		20.0		43.3
	$	251.6	$	148.2	$	399.8

	Three months ended April 2, 2022
Reportable Segments	HVAC		Detection and Measurement		Total
Major product lines
Package and process cooling equipment and services, and engineered air movement solutions	$	116.8	$	—	$	116.8
Boilers, comfort heating, and ventilation	76.3		—		76.3
Underground locators, inspection and rehabilitation  equipment, and robotic systems	—		67.2		67.2
Communication technologies, aids to navigation, and transportation systems	—		46.8		46.8
	$	193.1	$	114.0	$	307.1
Timing of Revenue Recognition
Revenues recognized at a point in time	$	173.1	$	103.2	$	276.3
Revenues recognized over time	20.0		10.8		30.8
	$	193.1	$	114.0	$	307.1

12

Contract Balances

Our customers are invoiced for products and services at the time of delivery or based on contractual milestones, resulting in outstanding receivables with payment terms from these customers (“Contract Accounts Receivable”). In some cases, the timing of revenue recognition, particularly for revenue recognized over time, differs from when such amounts are invoiced to customers, resulting in a contract asset (revenue recognition precedes the invoicing of the related revenue amount) or a contract liability (payment from the customer precedes recognition of the related revenue amount). Contract assets and liabilities are generally classified as current. On a contract-by-contract basis, the contract assets and contract liabilities are reported net within our condensed consolidated balance sheets. Our contract balances consisted of the following as of April 1, 2023 and December 31, 2022:

Contract Balances	April 1, 2023		December 31, 2022		Change
Contract Accounts Receivable(1)	$	271.6	$	259.9	$	11.7
Contract Assets	32.2		23.9		8.3
Contract Liabilities - current	(65.8)		(52.8)		(13.0)
Contract Liabilities - non-current(2)	(4.3)		(4.7)		0.4
Net contract balance	$	233.7	$	226.3	$	7.4

___________________________

(1) Included in “Accounts receivable, net” within the accompanying condensed consolidated balance sheets.

(2) Included in “Other long-term liabilities” within the accompanying condensed consolidated balance sheets.

The $7.4 increase in our net contract asset balance from December 31, 2022 to April 1, 2023 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

During the three months ended April 1, 2023, we recognized revenues of $25.8 related to our contract liabilities at December 31, 2022.

Performance Obligations

As of April 1, 2023, the aggregate amount allocated to remaining performance obligations was $227.0. We expect to recognize revenue on approximately 80% and 91% of remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

(5)    LEASES

There have been no material changes to our operating and finance leases during the three months ended April 1, 2023.

(6)    INFORMATION ON REPORTABLE SEGMENTS

We are a global supplier of highly specialized, engineered solutions with operations in 15 countries and sales in over 100 countries around the world.

We have aggregated our operating segments into the following two reportable segments: HVAC and Detection and Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification. Segment Income is determined before considering, if applicable, impairment and special charges, long-term incentive compensation, certain other operating income/expense, other indirect corporate expenses, intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs. This is consistent with the way our CODM evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a customer base in North America, Europe, and Asia.

13

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, Africa, and Asia.

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters.

Financial data for our reportable segments for the three months ended April 1, 2023 and April 2, 2022 are presented below:

	Three months ended
	April 1, 2023		April 2, 2022
Revenues:
HVAC reportable segment	$	251.6	$	193.1
Detection and Measurement reportable segment	148.2		114.0
Consolidated revenues	$	399.8	$	307.1
Income:
HVAC reportable segment	$	47.7	$	20.6
Detection and Measurement reportable segment	26.7		19.0
Total income for segments	74.4		39.6
Corporate expense	14.6		16.6
Acquisition-related and other costs (1)	0.6		0.1
Long-term incentive compensation expense	3.1		3.1
Amortization of intangible assets	6.3		9.3
Other operating income	—		(0.9)
Consolidated operating income	$	49.8	$	11.4

______________________________

(1)Includes certain acquisition-related costs incurred during the three months ended April 1, 2023 and April 2, 2022 of $0.6 and $0.1, respectively, including additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with an acquisition of $0.1 during the three months ended April 2, 2022.

(7)    SPECIAL CHARGES, NET

There were no special charges for the three months ended April 1, 2023 and April 2, 2022. No significant future charges are expected to be incurred under actions approved as of April 1, 2023.

The following is an analysis of our restructuring liabilities for the three months ended April 1, 2023 and April 2, 2022:

	Three months ended
	April 1, 2023		April 2, 2022
Balance at beginning of year	$	—	$	0.3
Special charges	—		—
Utilization — cash	—		(0.1)
Currency translation adjustment and other	—		—
Balance at end of period	$	—	$	0.2

14

(8)    INVENTORIES, NET

Inventories are accounted for under the first-in, first-out method and are comprised of the following at April 1, 2023 and December 31, 2022:

	April 1, 2023		December 31, 2022
Finished goods	$	76.7	$	73.0
Work in process	29.4		25.7
Raw materials and purchased parts	159.6		145.3
Total inventories	$	265.7	$	244.0

    

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values.

(9)    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the three months ended April 1, 2023 were as follows:

	December 31, 2022		Goodwill Resulting from Business Combinations (1)		Foreign Currency Translation		April 1, 2023
HVAC reportable segment
Gross goodwill	$	529.5	$	—	$	2.3	$	531.8
Accumulated impairments	(328.2)		—		(1.6)		(329.8)
Goodwill	201.3		—		0.7		202.0
Detection and Measurement reportable segment
Gross goodwill	425.2		0.8		1.8		427.8
Accumulated impairments	(171.2)		—		(0.6)		(171.8)
Goodwill	254.0		0.8		1.2		256.0
Total
Gross goodwill	954.7		0.8		4.1		959.6
Accumulated impairments	(499.4)		—		(2.2)		(501.6)
Goodwill	$	455.3	$	0.8	$	1.9	$	458.0

___________________________

(1)Reflects an increase in ITL’s goodwill of $0.8 resulting from revisions to the valuation of certain assets and liabilities.

Other Intangibles, Net

Identifiable intangible assets at April 1, 2023 and December 31, 2022 comprised the following:

	April 1, 2023						December 31, 2022
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives:
Customer relationships	$	199.4	$	(45.9)	$	153.5	$	198.9	$	(41.7)	$	157.2
Technology	81.7		(20.1)		61.6		81.5		(18.4)		63.1
Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	36.6		(24.5)		12.1		36.7		(24.1)		12.6
	322.2		(95.0)		227.2		321.6		(88.7)		232.9
Trademarks with indefinite lives	169.0		—		169.0		168.7		—		168.7
Total	$	491.2	$	(95.0)	$	396.2	$	490.3	$	(88.7)	$	401.6

15

At April 1, 2023, the net carrying value of intangible assets with determinable lives consisted of $92.7 in the HVAC reportable segment and $134.5 in the Detection and Measurement reportable segment. At April 1, 2023, trademarks with indefinite lives consisted of $105.2 in the HVAC reportable segment and $63.8 in the Detection and Measurement reportable segment.

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 goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. A significant amount of judgment is involved in determining if an indication of impairment has occurred between annual testing dates. Such indication may include: a significant decline in expected future cash flows; a significant adverse change in legal factors or the business climate; unanticipated competition; and a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit.

During the fourth quarter of 2022, we performed a quantitative analysis on the goodwill of our Cincinnati Fan reporting unit. The Cincinnati Fan analysis indicated that the fair value of its net assets exceeded the related carrying value by less than 10%. A change in assumptions used in Cincinnati Fan’s quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit’s estimated fair value being less than the carrying value. If Cincinnati Fan is unable to achieve its current financial forecast, we may be required to record an impairment charge in a future period related to its goodwill. As of April 1, 2023, Cincinnati Fan’s goodwill totaled $54.8.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis, if there are indications of potential impairment. The fair value of our trademarks is based on applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions (fair value based on unobservable inputs - Level 3, as defined in Note 17). The primary basis for these projected revenues is the annual operating plan for each of the related businesses, which is prepared in the fourth quarter of each year.

(10)     WARRANTY

The following is an analysis of our product warranty accrual for the periods presented:

	Three months ended
	April 1, 2023		April 2, 2022
Balance at beginning of year	$	34.7	$	34.8
Acquisitions	0.6		—
Provisions	3.5		2.6
Usage	(3.1)		(3.0)
Balance at end of period	35.7		34.4
Less: Current portion of warranty	12.5		11.2
Non-current portion of warranty	$	23.2	$	23.2

(11)    EMPLOYEE BENEFIT PLANS

On February 17, 2022, we transferred our existing liability under the SPX Postretirement Benefit Plans (the “Plans”) for a group of participants with retiree life insurance benefits to an insurance carrier for consideration payable to the insurance carrier of approximately $10.0. Of this consideration, $9.0 was paid during the quarter ended April 2, 2022, with the remainder paid in the second quarter of 2022. This transaction resulted in a settlement charge of $0.7 recorded to “Other income, net” during the first quarter of 2022. In addition, and in connection with this transfer, we remeasured the assets and liabilities of the Plans as of the transfer date, which resulted in a benefit of $0.4 recorded to “Other income, net” for the three months ended April 2, 2022.

16

Net periodic benefit (income) expense for our pension and postretirement plans include the following components:

Domestic Pension Plans

	Three months ended
	April 1, 2023		April 2, 2022
Service cost	$	—	$	—
Interest cost	3.3		2.3
Expected return on plan assets	(2.2)		(2.1)
Net periodic pension benefit expense	$	1.1	$	0.2

Foreign Pension Plans

	Three months ended
	April 1, 2023		April 2, 2022
Service cost	$	—	$	—
Interest cost	1.4		1.0
Expected return on plan assets	(1.6)		(1.5)
Net periodic pension benefit income	$	(0.2)	$	(