Key Takeaways Modine's Q2 revenues rose 12% and EPS grew 9%, both topping consensus estimates.Climate Solutions revenues surged 24%, boosted by recent acquisitions and capacity gains.FY26 sales outlook lifted to 15-20% growth, though cash flow will tighten amid expansion.Shares of Modine Manufacturing Company (MOD) slid more than 4% since the release of its second-quarter fiscal 2026 results on Oct. 28, after the closing bells. The stock fell despite a year-over-year rise in fiscal second-quarter revenues a ...

Financial Performance - Net sales for the second quarter of fiscal 2026 increased by $80.9 million, or 12 percent, to $738.9 million compared to the same quarter last year, driven primarily by higher sales in the Climate Solutions segment [113]. - Year-to-date net sales for fiscal 2026 reached $1,421.7 million, an increase of $102.2 million, or 8 percent, compared to the same period last year [124]. - Climate Solutions net sales increased by $88.0 million, or 24%, from Q2 FY2025 to Q2 FY2026, driven by higher sales volume and a favorable foreign currency impact of $5.1 million [134]. - Year-to-date net sales for Climate Solutions rose by $128.1 million, or 18%, compared to the same period last year, primarily due to higher sales volume and a favorable foreign currency impact of $11.2 million [140]. - Performance Technologies net sales decreased by $11.2 million, or 4%, from Q2 FY2025 to Q2 FY2026, primarily due to lower sales volume in North America [147]. - Year-to-date net sales for Performance Technologies decreased by $34.7 million, or 6%, compared to the same period last year, primarily due to lower sales volume and market weakness [154]. Cost and Profitability - Cost of sales increased by $81.6 million, or 17 percent, leading to a gross profit decrease of $0.7 million and a gross margin decline of 290 basis points to 22.3 percent [113][116]. - Year-to-date cost of sales increased by $100.1 million, or 10 percent, resulting in a gross margin decline of 170 basis points to 23.2 percent [125][126]. - Climate Solutions cost of sales increased by $82.3 million, or 32%, from Q2 FY2025 to Q2 FY2026, attributed to higher sales volume and temporary operating inefficiencies [136]. - Year-to-date cost of sales for Climate Solutions increased by $110.3 million, or 21%, primarily due to higher sales volume and an unfavorable foreign currency impact of $8.8 million [141]. - Operating income for Climate Solutions in Q2 FY2026 was $62.2 million, a decrease of $2.5 million from Q2 FY2025, primarily due to higher SG&A expenses [139]. - Year-to-date operating income for Climate Solutions was $129.1 million, an increase of $4.6 million from the same period last year, driven by higher gross profit [144]. - Operating income for Performance Technologies in Q2 FY2026 was $29.7 million, a decrease of $1.1 million from Q2 FY2025, primarily due to lower gross profit and an impairment charge [153]. Expenses and Impairments - SG&A expenses decreased by $1.6 million, or 2 percent, as a percentage of sales decreased by 160 basis points, primarily due to lower compensation-related expenses in the Performance Technologies segment [117]. - The company recorded a $4.1 million impairment charge in the Performance Technologies segment during the second quarter, impacting operating income, which decreased by $1.8 million to $73.5 million [121][120]. Acquisitions and Investments - The company completed three acquisitions in the Climate Solutions segment, including AbsolutAire for $11.3 million, L.B. White for $110.5 million, and Climate by Design for $64.4 million, expanding its product portfolio and customer base [109][110][111]. - Cash payments totaling $182.1 million were made for acquisitions of L.B. White, Climate by Design, and AbsolutAire in the first half of fiscal 2026 [163]. - Borrowings on credit facilities, net of repayments, totaled $224.6 million, primarily used to fund acquisitions of L.B. White and Climate by Design [164]. - The company announced a plan to invest $100.0 million over the next twelve months to expand manufacturing capacity for data center products [162]. - Capital expenditures increased by $19.1 million to $59.4 million during the first six months of fiscal 2026, with a new plan to invest an additional $100.0 million to expand manufacturing capacity in the U.S. [162]. Cash Flow and Financial Position - The company reported cash and cash equivalents of $83.8 million as of September 30, 2025, with an available borrowing capacity of $128.8 million under its revolving credit facility [160]. - Net cash provided by operating activities for the six months ended September 30, 2025, was $29.1 million, a decrease of $68.7 million compared to the prior year, primarily due to unfavorable net changes in working capital [161]. - As of September 30, 2025, the company was in compliance with its debt covenants and expects to remain compliant throughout fiscal 2026 [168]. - The leverage ratio covenant requires consolidated indebtedness to be no more than 3.5 times Adjusted EBITDA [167]. Market Risks - The company faces various market risks, including potential adverse developments in the global economy, inflation, and supply chain challenges [172].

Financial Data and Key Metrics Changes - The company reported a 12% increase in total sales for the second quarter, driven primarily by growth in the Climate Solutions segment [19] - Adjusted earnings per share (EPS) was $1.06, reflecting a 9% increase compared to the prior year [20] - The gross margin declined by 290 basis points to 22.3%, primarily due to increased costs associated with data center capacity expansion [19][22] Business Line Data and Key Metrics Changes - Climate Solutions segment revenue increased by 24%, with data center sales growing by 42% [14][24] - Performance Technologies segment revenue declined by 4%, but adjusted EBITDA improved by 3%, with adjusted EBITDA margins increasing by 90 basis points to 14.7% [10][18] - HVAC technologies within Climate Solutions saw a 25% increase in sales, driven by acquisitions, but faced lower margins due to a negative mix impact [14][15] Market Data and Key Metrics Changes - The company anticipates data center sales to grow in excess of 60% for the fiscal year, with expectations of over 90% year-over-year growth in the second half [24] - The Performance Technologies segment is expected to see revenue flat to down 7%, improving from a prior range of down 2% to 12% [24] Company Strategy and Development Direction - The company is focused on expanding its U.S. manufacturing capacity for data center products and has secured additional facilities in Texas and the UK [3][5][8] - The strategy includes integrating recent acquisitions to enhance product offerings and improve margins through the application of 80/20 principles [3][11] - The company aims to transition from low-volume, high-mix manufacturing to high-volume production to meet the demands of large data centers, particularly those specializing in AI applications [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet customer demands and execute on strategic plans despite current challenges in hiring and training a workforce [7][9] - The company expects significant revenue growth in Q4 as new production lines come online, with a path to achieve over $2 billion in revenues by fiscal 2028 [8][24] - Management acknowledged temporary margin erosion due to increased costs from capacity expansion but anticipates a return to normalized margins by Q4 [15][21] Other Important Information - Free cash flow was negative $31 million in the second quarter, primarily due to higher inventory builds and capital expenditures [22] - The company raised its revenue outlook for fiscal 2026, expecting total sales growth in the range of 15% to 20% [24][25] Q&A Session Summary Question: Can you parse out year-over-year margin contraction on the climate side of the business? - The margin contraction was primarily driven by data center expansion costs, accounting for about 225 to 250 basis points, with additional impacts from HVAC technologies and mix issues [31][32] Question: What gives confidence that margins should normalize going into Q4? - Confidence stems from learning and efficiency improvements from previous product launches, which will enhance margins as production ramps up [50][51] Question: How does the company view the total addressable market for data centers? - The company estimates that reaching $2 billion in sales could represent 15% to 20% of the available HVAC market, indicating significant growth potential [60] Question: What is the expected contribution of liquid cooling to the business? - Liquid cooling is seen as a complementary product to air cooling, with ongoing developments expected to enhance its market presence [95]

Modine Manufacturing Company (NYSE:MOD) Q2 2026 Earnings Call October 29, 2025 11:00 AM ET Company ParticipantsDavid Tarantino - Assistant Vice PresidentKathy Powers - VP, Treasurer, and Head of Corporate Communications and Investor RelationsNeil Brinker - President and CEOMick Lucareli - EVP and CFOConference Call ParticipantsChris Moore - Senior AnalystJeff Van Sinderen - Senior AnalystMatt Summerville - Managing Director and Senior Research AnalystNoah Kaye - Senior Research AnalystBrian Drab - Partner a ...

Financial Data and Key Metrics Changes - The company reported a 12% increase in total sales for Q2, driven primarily by the Climate Solutions segment [19] - Adjusted earnings per share (EPS) was $1.06, reflecting a 9% increase compared to the prior year [20] - Free cash flow was negative $31 million, primarily due to higher inventory builds and capital expenditures in Climate Solutions [21][22] Business Line Data and Key Metrics Changes - Climate Solutions segment revenue increased by 24%, with data center sales growing by 42% [13][24] - Performance Technologies segment revenue declined by 4%, but adjusted EBITDA improved by 3% [10][18] - HVAC technologies within Climate Solutions saw a 25% increase, driven by acquisitions, while indoor air quality sales were lower [13] Market Data and Key Metrics Changes - The company anticipates a significant increase in data center sales, projecting over 60% growth for the fiscal year [8][24] - The Performance Technologies segment is expected to see revenue flat to down 7%, improving from a previous range of down 2% to 12% [24] Company Strategy and Development Direction - The company is focusing on expanding its U.S. manufacturing capacity for data center products and has secured additional facilities in Texas and India [5][7] - The strategy includes integrating recent acquisitions to enhance product offerings and improve margins through the application of 80/20 principles [3][11] - The company aims to achieve over $2 billion in revenues from data centers by fiscal 2028, with a strong emphasis on meeting the growing demand for AI applications [8][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming current challenges related to workforce hiring and training, which have temporarily impacted margins [6][10] - The company expects a significant jump in revenue between Q3 and Q4, driven by new capacity coming online [6][20] - Management highlighted the importance of learning from recent product launches to improve efficiency and margins moving forward [43][44] Other Important Information - The company is undergoing a strategic transformation, including potential divestitures in the Performance Technologies segment [11][61] - The balance sheet remains strong with a leverage ratio of 1.2, and the company expects this to decline further by fiscal year-end [23] Q&A Session Summary Question: Can you parse out year-over-year margin contraction on the climate side of the business? - The margin contraction was primarily due to data center expansion costs, accounting for about 225 to 250 basis points, and a negative mix impact from HVAC technologies [30][31] Question: What gives confidence that margins should normalize going into Q4? - Confidence stems from learning and improving efficiency from new product launches and the expectation of higher volume absorption in existing facilities [43][44] Question: How is customer concentration evolving in the data center area? - The company is building strong relationships with hyperscalers and expanding its customer base, which is expected to drive further demand [76] Question: How does the liquid cooling business evolve? - Liquid cooling is seen as a complementary product to air cooling, with ongoing development to differentiate offerings in the market [82]

Second Quarter Fiscal 2026 October 29, 2025 NEIL BRINKER President and Chief Executive Officer MICK LUCARELI Executive Vice President and Chief Financial Officer KATHY POWERS Vice President, Treasurer, and Investor Relations 2 Forward-Looking Statements This presentation contains statements, including information about future financial performance and market conditions, accompanied by phrases such as "believes," "estimates," "expects," "plans," "anticipates," "intends," "projects," and other similar "forwar ...

Core Insights - Modine reported revenue of $738.9 million for the quarter ended September 2025, reflecting a 12.3% increase year-over-year and a surprise of +7.02% over the Zacks Consensus Estimate of $690.47 million [1] - Earnings per share (EPS) for the quarter was $1.06, compared to $0.97 in the same quarter last year, resulting in an EPS surprise of +9.28% against the consensus estimate of $0.97 [1] Revenue Performance - Net Sales in Climate Solutions reached $454.4 million, exceeding the estimated $424.63 million, marking a 24% increase compared to the previous year [4] - Net Sales in Performance Technologies were $286.3 million, slightly below the estimated $269.59 million, representing a decrease of 3.8% year-over-year [4] - Corporate and eliminations reported net sales of $-1.8 million, better than the estimated $-5.2 million, showing a significant improvement of 69.5% compared to the year-ago quarter [4] EBITDA Analysis - Adjusted EBITDA for Climate Solutions was $76 million, slightly below the average estimate of $79.81 million from two analysts [4] - Adjusted EBITDA for Corporate and eliminations was $-14.4 million, better than the estimated $-17.82 million [4] - Adjusted EBITDA for Performance Technologies was $42.2 million, exceeding the average estimate of $37.04 million from two analysts [4] Stock Performance - Modine's shares have returned +15.5% over the past month, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Modine (MOD) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $0.97 per share, and showing an increase from $0.97 per share a year ago, resulting in an earnings surprise of +9.28% [1] - The company achieved revenues of $738.9 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 7.02% and increasing from $658 million year-over-year [2] - Modine's stock has increased approximately 40.6% since the beginning of the year, outperforming the S&P 500's gain of 16.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $708.52 million, while for the current fiscal year, the estimate is $4.65 on revenues of $2.88 billion [7] - The estimate revisions trend for Modine was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - Modine operates within the Zacks Automotive - Original Equipment industry, which is currently ranked in the top 29% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - The performance of Modine's stock may be influenced by the overall industry outlook, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Exhibit 99.1 NEWS RELEASE FOR IMMEDIATE RELEASE Modine Reports Second Quarter Fiscal 2026 Results Strong revenue performance driven by strong organic growth in Climate Solutions segment and strategic acquisitions; raising full-year revenue guidance Racine, WI – October 28, 2025 – Modine (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported financial results for the quarter ended September 30, 2025. Fiscal 2026 Outlook: "This quarter's strong organic growth r ...

Core Insights - Modine reported strong revenue growth driven by the Climate Solutions segment and strategic acquisitions, raising its full-year revenue guidance [1][2][7] - The company anticipates a significant increase in Data Centers revenue, projecting over 60% year-over-year growth [7][9] Financial Performance - Net sales for the quarter increased by 12% to $738.9 million, compared to $658.0 million in the prior year [3][9] - Net earnings decreased by 3% to $44.8 million, down from $46.4 million in the previous year [4][9] - Adjusted EBITDA rose by 4% to $103.8 million, compared to $99.8 million in the prior year [4][9] - Earnings per share decreased by 3% to $0.83, while adjusted earnings per share increased by 9% to $1.06 [4][9] Segment Performance - The Climate Solutions segment reported sales of $454.4 million, a 24% increase from $366.4 million a year ago, with data center sales up 42% [10] - The Performance Technologies segment saw a 4% decline in sales to $286.3 million, primarily due to lower sales in On-Highway Applications [10] Cost and Margin Analysis - Gross profit decreased slightly to $164.9 million, with a gross margin of 22.3%, down 290 basis points from the prior year [4][10] - The Climate Solutions segment's gross margin fell to 24.6%, impacted by costs related to capacity expansion and the absence of prior year pricing settlements [10] Balance Sheet and Liquidity - As of September 30, 2025, total debt was $582.1 million, with cash and cash equivalents at $83.8 million, resulting in net debt of $498.3 million [7][32] - Net cash provided by operating activities for the first half of fiscal 2026 was $29.1 million, a decrease of $68.7 million from the prior year [6][33] Outlook - Modine raised its fiscal 2026 revenue outlook to a growth range of 15% to 20%, up from the previous 10% to 15% [7][9] - Adjusted EBITDA is projected to be between $440 million and $470 million for fiscal 2026 [7][9]