SPX Technologies, Inc. (NYSE:SPXC) Q4 2022 Earnings Call Transcript

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Damian Karas: Understood. And then one last one, Gene, you had mentioned some of the digital initiatives. Pro tool sounds like that’s more or less just a complementary service, it’s helping you gain €“ outgrow the market in boilers, but you also talked about Genfare Link and a few others and some 50 new accounts with Genfare Link. Is that €“ should we be thinking of that as an incremental revenue opportunity? Are you capturing additional sales on these accounts? Is this like a software subscription? How should we think about that?

Gene Lowe: Yes. And I think you are right. I think broadly speaking, if you think about our digital initiatives, on the HVAC side, it’s much more of tools and solutions and capabilities to really help either us or our reps, our partners in the field win. And I think we talked about the heating business, the hydronics. They had a great year. And I think the digital tools that we provided to the contractors is a key factor of why we gained so much market share this year. So, we feel really good of that. And really when you look on the detection and measurement it’s different. Most of our detection and measurement products come with software. So, it’s really part of the solution that you are providing to the customer. And in general, what you see is this software on a relative basis is small relative to the revenue of the overall segment.

You are talking in the neighborhood of, let’s say, $20 million, $25 million. Having said that, it’s extremely, strategically important because this the software we provide provides data, analytics, oftentimes €“ a lot of times, it’s asset management and it engenders customer loyalty such that once they buy our equipment, they buy all of their equipment with us. And so for example, on the €“ specifically on the Genfare example, once a municipality goes on our platform, they are on our platform for the next 20 years, let’s say, typically. And so every piece of equipment that attaches into that fair collection area will be the Genfare solution because it plugs into their software. But to your very specific question, yes, we are building revenue streams.

Now, I would still say those revenue streams were smaller, relatively speaking, to the equipment. So, like let’s say, on the Genfare side, the amount of software we are selling, it’s SaaS software typically is growing every year. And it’s doing very well, and we keep winning more accounts, but it is still relatively a smaller portion of the overall revenue of the business. You are probably talking high-single digits in terms of revenue and in terms of margin. Actually, it’s getting more material. You are probably talking because it’s such high margin, you are probably talking higher than that. But yes, that might give you some flavor, Damian, for how we think about it.

Damian Karas: Yes. That’s really helpful. Thanks a lot guys. Best of luck.

Operator: Thank you. I would like to now turn it back to Paul Clegg for closing remarks.

Paul Clegg: Thank you all for joining us on the call today and we look forward to updating you again next quarter. Thank you for your support.

Operator: And thank you for participation in today’s conference. This does conclude the program and you may now disconnect.

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