SPX Technologies, Inc.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base these estimates and judgments on historical experience, the current economic environment and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties, are listed below. This section should be read in conjunction with Notes 1 and 2 to our consolidated financial statements, which include a detailed discussion of our accounting policies and the application of estimates.

Acquisition Accounting

We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material. The acquired assets and liabilities are recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations, which impact the amount of future amortization expense and possible impairment charges.

Goodwill, intangible assets, long-lived assets (primarily property, plant and equipment), and inventories, generally represent the largest assets of our acquisitions. The primary identifiable intangible assets that we acquire typically consist of customer relationships and contracts, indefinite-lived and definite-lived trademarks, technology, and backlog. The fair market value assessment for intangible assets requires judgment and estimates that can be affected by various factors over time, which may cause final amounts to be materially adjusted from original estimates in subsequent periods. The fair value of the customer relationships and contracts and backlog identifiable intangible assets has been estimated using the multi-period excess earnings method. Significant model inputs and judgments used in the multi-period excess earnings method include economic life, estimated future revenue growth rates, expenses based on historical results and forecasts, and a discount rate based on a weighted average cost of capital. The weighted average cost of capital was determined based on a market participant capital structure, cost of capital, inherent business risk profile and long-term growth expectations. The definite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives is based upon the nature, competitive position, life cycle position, and historical and expected future cash flows of each acquired asset, as well as our commitment to support these assets through continued investment and legal infringement protection.

Additionally, the fair value of the trademark and technology identifiable intangible assets has been estimated using the relief-from-royalty-method, which values the intangible assets by estimating royalties saved through ownership of an asset. Significant model inputs and judgments used in the relief-from-royalty-method include estimated future revenue growth rates, economic life, an estimated royalty rate, and a discount rate based on a weighted average cost of capital. The weighted average cost of capital was determined based on a market participant capital structure, cost of capital, inherent business risk profile and long-term growth expectations. The definite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives (or the indefinite life) is based upon the nature, competitive position, life cycle position, and historical and expected future cash flows of each acquired asset, as well as our commitment to support these assets through continued investment and legal infringement protection. Inventories acquired in an acquisition are recorded at fair value, which approximates a market participant’s estimated selling price adjusted for (i) costs to complete, (ii) costs to sell, and (iii) a reasonable profit allowance to the seller for costs incurred. We record the excess of consideration transferred over the fair value of the identifiable net assets acquired as goodwill.

We believe the accounting estimates and assumptions are reasonable based on historical experience and information obtained from management of the acquired entity at or near the acquisition. When appropriate, our estimates of the acquired fair values include assistance from an independent third-party. There is inherent uncertainty in the accounting estimates as assumptions are forward-looking and could be affected by future economic and market conditions, among other factors.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to impairment testing. We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently as we continually assess whether a triggering event has occurred that indicates the carrying value may exceed the implied fair value. Monitoring the results of each of our reporting units as a means of identifying trends and/or matters that may impact their financial results, and be an indicator of a potential impairment, requires judgment. The trends and/or matters that we specifically monitor for each of our reporting units include:

•Significant variances in financial performance (e.g., revenues, earnings and cash flows) in relation to expectations and historical performance;

•Significant changes in end markets or other economic factors;

•Significant changes or planned changes in our use of a reporting unit’s assets; and

•Significant changes in customer relationships and competitive conditions.

The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units. We have the option to assess impairment through a qualitative assessment, which includes factors such as general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which a reporting unit operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. When a potential impairment is indicated, we perform quantitative testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets. Under our quantitative testing, fair value is generally based on discounted projected cash flows, but we also consider factors such as comparable industry price multiples. The revenue growth rates included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each reporting unit based on current cost structure and, when applicable, anticipated net cost increases/reductions.

The calculation of fair value for our reporting units incorporates many assumptions which have inherent uncertainties including future growth rates, profit margin, tax rates and discount factors. Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.

As mentioned above, we estimate the fair value of indefinite-lived intangible assets (certain of our trademarks) using a relief-from-royalty method. The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted to present value using a discount rate commensurate with the relative risk of achieving the cash flows attributable to the asset. Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates.

During the fourth quarter of 2025, we performed our analyses on the goodwill of our reporting units. The fair value of the assets related to the KTS and Sigma & Omega acquisitions approximate their carrying value. If KTS and Sigma & Omega are unable to achieve their current financial forecasts or there is a change in assumptions used in KTS's and Sigma & Omega's analyses (e.g. projected revenues and profit growth rates, discount rates, industry price multiples, etc.), we may be required to record an impairment charge in a future period related to their goodwill. As of December 31, 2025, KTS's and Sigma & Omega's goodwill totaled $104.4 and $77.4, respectively. A 10% decline in KTS's and Sigma & Omega's fair value would result in an impairment of approximately $28.4 and $7.1, respectively.

During the fourth quarter of 2025, in connection with the annual impairment analyses of indefinite-lived intangible assets, we determined that the implied value of ASPEQ's trademarks approximated their carry value. If ASPEQ is unable to achieve its current revenue forecast, or there is a change in assumptions used in ASPEQ’s analysis (e.g., projected revenues, royalty rates, and discount rates, etc.), we may be required to record an impairment charge in a future period related to its trademarks. As of December 31, 2025, ASPEQ’s trademarks totaled $51.5. A 10% reduction in ASPEQ's revenues projections or a 1% increase in the discount rate used in the impairment analysis would result in an impairment of $5.1 or $6.5, respectively.

Additionally, during the fourth quarter of 2025, a decision was made to exit a minor product line within our ULC business. As a result, we recorded an impairment of $0.7 related to the indefinite-lived trademark associate with ULC. The remaining fair value of the ULC trademark is $4.7.

See Note 10 to our consolidated financial statements for additional details.

Definite-lived Intangible Assets

Determining whether an impairment loss occurred for finite-lived intangible assets requires a comparison of the carrying amount to the undiscounted cash flows expected to be generated by the assets. These analyses require management to make judgments and estimates about future revenues, expenses, and market conditions. The calculation of fair value for our reporting units incorporates many assumptions that have inherent uncertainties including future growth rates, profit margin, and tax rates. Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.

Contingent Liabilities

Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., contracts, intellectual property and competitive claims), environmental matters, product liability matters, and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. We continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on an analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Such analysis includes making judgments concerning matters such as the costs associated with environmental matters, the outcome of negotiations, and the impact of evidentiary requirements, including historical claims and payment experience. As many contingencies are resolved over long periods of time, liabilities may change in the future due to new developments (including new discovery of facts, changes in legislation, and outcomes of similar cases through the judicial system), changes in assumptions, or changes in our settlement strategy. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations in future periods.

Our recorded liabilities related to these matters, primarily associated with environmental matters, totaled $43.7 and $39.9 at December 31, 2025 and 2024, respectively.

Our environmental accruals relate predominantly to legacy sites that the Company no longer operates as part of its ongoing business. These environmental accruals cover anticipated costs, including investigation, remediation, and maintenance of clean-up sites. Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, changes in our allocation of shared remediation costs, or alteration to the expected remediation plans. Our estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. A 10% increase in our environmental reserves would result in a charge of approximately $3.2.

See Note 15 to our consolidated financial statements for additional discussion.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification 606, which requires revenue to be recognized over-time or at a point in time.

Most of our businesses recognize revenue at a point in time as satisfaction of the related performance obligations occur at the time of shipment or delivery, while certain of our businesses recognize revenue and costs for certain complex long-term, subscription, or service contracts over-time.

The revenue for complex long-term contracts is often recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such a contract at completion (cost-to-cost input method) because it best depicts the transfer of control to the customer that occurs as we incur costs. The revenue for subscription or service contracts are typically recorded based on the period of subscription delivered or service progress made. In 2025, 2024, and 2023 we recognized revenues of $238.9, $213.4 and $173.2, respectively, under such methods.

Our estimation process for determining revenues and costs for our complex long-term contracts is based upon (i) our historical experience, (ii) the professional judgment and knowledge of our engineers, project managers, operations, and financial professionals, (iii) historical award experience and objective evidence related to unapproved change orders and claims, and (iv) an assessment of the key underlying factors (see below).

We believe the underlying factors used to estimate our complex long-term contracts costs to complete and percentage-of-completion are sufficiently reliable to provide a reasonable estimate of revenue and profit; however, due to the length of time over which revenues are generated and costs are incurred, along with the judgment required in developing the underlying factors, the variability of revenue and cost can be significant. Factors that may affect revenue and costs relating to complex long-term contracts include, but are not limited to, the following:

•Cost Recovery for Product Design Changes and Claims — On occasion, design specifications may change during the course of the contract. Any additional costs arising from these changes may be supported by change orders, or we may submit a claim to the customer. Our rights to, and amount we anticipate we will, collect requires judgment.

•Material Availability and Costs — Our estimates of material costs generally are based on existing supplier relationships, adequate availability of materials, prevailing market prices for materials, and, in some cases, long-term supplier contracts. Changes in our supplier relationships, delays in obtaining materials, or changes in material prices can have a significant impact on our cost and profitability estimates.

•Use of Subcontractors — Our arrangements with subcontractors are generally based on fixed prices; however, our estimates of the cost and profitability can be impacted by subcontractor delays, customer claims arising from subcontractor performance issues, or a subcontractor’s inability to fulfill its obligations.

•Labor Costs and Anticipated Productivity Levels — Where applicable, we include the impact of labor improvements in our estimation of costs, such as in cases where we expect a favorable learning curve over the duration of the contract. In these cases, if the improvements do not materialize, costs and profitability could be adversely impacted. Additionally, to the extent we are more or less productive than originally anticipated, estimated costs and profitability may also be impacted.

•Effect of Foreign Currency Fluctuations — Fluctuations between currencies in which our long-term contracts are denominated and the currencies under which contract costs are incurred can have an impact on profitability. When the impact on profitability is potentially significant, we may enter into FX forward contracts or prepay certain vendors for raw materials to manage the potential exposure. See Note 14 to our consolidated financial statements for additional details on our FX forward contracts.

Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. Anticipated losses on long-term contracts are recognized when such losses become evident.

In contracts where a portion of the price may vary, we estimate the variable consideration at the amount to which we expect to be entitled, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. We analyze the risk of a significant revenue reversal and, if necessary, constrain the amount of variable consideration recognized in order to mitigate this risk.

See Notes 1 and 5 to our consolidated financial statements for further information on our revenue recognition policies.

Employee Benefit Plans

Defined benefit plans cover a portion of our salaried and hourly paid employees, including certain employees in foreign countries. Additionally, domestic postretirement plans provide health and life insurance benefits for certain retirees and their dependents. We recognize changes in the fair value of plan assets and actuarial gains and losses into earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense. The remaining components of pension/postretirement expense, primarily interest costs and expected return on plan assets, are recorded on a quarterly basis.

The costs and obligations associated with these plans are determined based on actuarial valuations. The critical assumptions used in determining these related expenses and obligations are discount rates and healthcare cost projections. These critical assumptions are calculated based on company data and appropriate market indicators, and are evaluated at least annually by us in consultation with outside actuaries. Other assumptions involving demographic factors, such as retirement patterns and mortality, are evaluated periodically and are updated to reflect our experience and expectations for the future. While management believes that the assumptions used are appropriate, actual results may differ.

The discount rate enables us to state expected future cash flows at a present value on the measurement date. This rate is the yield on high-quality fixed income investments at the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension expense. Including the effects of recognizing actuarial gains and losses into earnings as described above, a 50 basis point decrease in the discount rate for our domestic plans would have increased our 2025 pension expense by approximately $6.9, and a 50 basis point increase in the discount rate would have decreased our 2025 pension expense by appro ximately $6.5.

The trend in healthcare costs is difficult to estimate, and it can significantly impact our postretirement liabilities and costs. The healthcare cost trend rate for 2025, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 6.25%. This rate is assumed to decrease to 5.0% by 2031 and then remain at that level.

See Note 11 to our consolidated financial statements for further information on our pension and postretirement benefit plans.

Income Taxes

We record our income taxes based on the Income Taxes Topic of the Codification, which includes an estimate of the amount of income taxes payable or refundable for the current year and deferred income tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal or foreign statutory tax audits or estimates and judgments used.

Realization of deferred tax assets involves estimates regarding (i) the timing and amount of the reversal of taxable temporary differences, (ii) expected future taxable income, and (iii) the impact of tax planning strategies. We believe that it is more likely than not that we will not realize the benefit of certain deferred tax assets and, accordingly, have established a valuation allowance against them. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of and potential changes to ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that the remaining deferred tax assets will be realized through future taxable earnings or alternative tax strategies. However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax strategies are no longer viable.

The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions and ongoing audits by federal, state and foreign tax authorities, which may result in proposed adjustments. We perform reviews of our income tax positions on a quarterly basis and accrue for potential uncertain tax positions. Accruals for these uncertain tax positions are classified as “Income taxes payable” and “Deferred and other income taxes” in our consolidated balance sheets based on an expectation as to the timing of when the matter will be resolved. As events change or resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters. An increase of 1.0% in our 2025 nominal tax rate would have resulted in an additional income tax provision for continuing operations for the year ended December 31, 2025 of $3.1.

Our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to closure of income tax examinations, statute expirations, new regulatory or judicial pronouncements, changes in tax laws, changes in projected levels of taxable income, future tax planning strategies, or other relevant events. See Note 12 to our consolidated financial statements for additional details regarding our uncertain tax positions.

New Accounting Pronouncements

See Note 3 to our consolidated financial statements for a discussion of recent accounting pronouncements.