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Financial Performance - Net sales for the third quarter of fiscal 2026 reached $805.0 million, an increase of $188.2 million or 31% compared to the same quarter last year, primarily driven by higher sales in the Climate Solutions segment [113][117]. - The company recorded a gross profit of $186.1 million in the third quarter, with a gross margin of 23.1%, down 120 basis points from the prior year due to temporary operating inefficiencies [116][120]. - Operating income for the third quarter was $89.3 million, an increase of $30.0 million from the previous year, primarily due to higher gross profit [113][124]. - Year-to-date net sales for fiscal 2026 were $2,226.7 million, up $290.4 million or 15% from the same period last year, mainly due to increased sales in the Climate Solutions segment [115][128]. - Operating income for the first nine months of fiscal 2026 was $238.5 million, an increase of $29.5 million compared to the same period last year [134]. - Gross profit for Climate Solutions increased by $49.8 million year-to-date, but gross margin declined by 280 basis points to 25.8 percent [147]. - Gross profit decreased by $14.2 million, resulting in a gross margin decline of 100 basis points to 18.6% [160]. Costs and Expenses - Cost of sales for the third quarter increased by $151.7 million or 32%, leading to a gross margin decline due to higher sales volume and temporary inefficiencies [119][129]. - A non-cash pension termination charge of $116.1 million was recorded in the third quarter, impacting net earnings significantly [114][125]. - SG&A expenses increased by $7.3 million in the third quarter, driven by higher compensation-related expenses in the Climate Solutions segment [122]. - SG&A expenses increased by $7.8 million year-to-date in fiscal 2026, but as a percentage of sales, they decreased by 130 basis points [131]. - Year-to-date SG&A expenses decreased by $18.2 million, or 23%, with SG&A expenses as a percentage of sales decreasing by 180 basis points [161]. - Restructuring expenses in the first nine months of fiscal 2026 increased by $2.8 million compared to the same period last year [149]. - Interest expense increased by $1.9 million year-to-date, primarily due to higher average outstanding borrowings [135]. Strategic Transactions - The company announced a Reverse Morris Trust transaction with Gentherm, which will result in shareholders receiving approximately 40% ownership of the combined company and cash proceeds of $210.0 million [106][107]. - The company expects to incur transaction-related fees of approximately $30.0 million to $40.0 million in connection with the Gentherm transaction [107]. - Cash payments totaling $182.4 million were made for acquisitions, including L.B. White and Climate by Design, to accelerate strategic growth [168]. - Borrowings on credit facilities totaled $258.3 million to support strategic growth initiatives, including acquisitions and Data Center expansion [169]. Segment Performance - Climate Solutions segment net sales increased by $311.9 million, or 29 percent, year-to-date, driven by higher sales volume and favorable foreign currency exchange rates [145]. - Performance Technologies segment net sales decreased by $30.9 million, or 4 percent, year-to-date, primarily due to lower sales volume in North America [157]. - Climate Solutions cost of sales increased by $262.1 million, or 34 percent, year-to-date, primarily due to higher sales volume and temporary operating inefficiencies [146]. - SG&A expenses in the Climate Solutions segment increased by $21.6 million, or 18 percent, year-to-date, yet decreased by 90 basis points as a percentage of sales [148]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $53.8 million, a decrease of $104.7 million compared to the prior year, primarily due to increased working capital [166]. - Capital expenditures increased by $44.9 million to $101.2 million, driven by investments in the Climate Solutions segment [167]. - As of December 31, 2025, the company had $98.7 million in cash and cash equivalents and $216.8 million in available borrowing capacity [165].

Modine Manufacturing Company (NYSE:MOD) Q3 2026 Earnings call February 05, 2026 11:00 AM ET Company ParticipantsBrian Drab - Co-Group Head of IndustrialsDavid Tarantino - Assistant VPKathy Powers - Vice President, Treasurer, Corporate Communications and Investor RelationMick Lucareli - EVP and CFONeil Brinker - CEONoah Kaye - Managing DirectorConference Call ParticipantsBrian Sponheimer - AnalystChris Moore - Senior AnalystJeff Van Sinderen - Senior AnalystMatt Summerville - Senior AnalystNeal Burk - Equity ...

Financial Data and Key Metrics Changes - Modine reported a 31% increase in total sales for Q3, driven primarily by growth in the Climate Solutions segment [17] - Adjusted EBITDA improved by 37%, with a margin increase of 70 basis points to 14.9% [18] - Adjusted earnings per share rose by 29% to $1.19, excluding a $116 million non-cash settlement loss related to the termination of the U.S. pension plan [18] Business Line Data and Key Metrics Changes - Performance Technologies revenue increased by 1% year-over-year, with adjusted EBITDA margin rising by 400 basis points to 14.8% [15] - Climate Solutions segment saw a 51% increase in revenues, with data center sales growing by 78% [8][16] - HVAC technology sales increased by 48%, driven by acquisitions and stronger heating product sales [16] Market Data and Key Metrics Changes - The Performance Technologies segment faced challenges with end markets, but commercial execution and cost recoveries led to a slight revenue increase [6] - Data center sales are projected to exceed $1 billion this fiscal year, with expectations of 50%-70% annual growth over the next two years [12][13] Company Strategy and Development Direction - The company is focusing on high-margin, high-growth businesses, including a strategic divestiture of the automotive business and a spin-off of the Performance Technologies segment [4][5] - Modine aims to become a pure-play, diversified climate solutions company, emphasizing investments in data centers and HVAC technologies [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the Climate Solutions segment, particularly in data centers, and anticipates further margin improvements [19][22] - The company raised its fiscal 2026 revenue outlook to a growth range of 20%-25%, with Climate Solutions expected to grow 40%-45% [22][23] Other Important Information - Free cash flow was negative $17 million in Q3, primarily due to inventory builds and higher capital expenditures [20] - The company expects to generate positive free cash flow in Q4 and anticipates capital expenditures to be in the range of $150 million-$180 million for the full fiscal year [21] Q&A Session Summary Question: Can you discuss the margin outlook for Climate Solutions and Performance Technologies in Q4? - Management expects Climate Solutions to achieve a margin improvement to 20%-21%, while Performance Technologies may see a temporary dip in margins due to material costs and inventory cleanup [26][29] Question: What defines the high and low end of the 50%-70% CAGR for data center growth? - The growth range is influenced by capacity expansion and demand, with confidence in achieving the higher end as capacity comes online [30][31] Question: Can you provide insights on record order intake in data centers? - The majority of growth is driven by existing customer relationships, particularly with hyperscalers, indicating strong future potential [38][39] Question: How will working capital investments impact free cash flow? - Management anticipates a return to normalized free cash flow levels as inventory and capital expenditures trend back to typical ratios [40][41] Question: What are the top priorities for data center customers regarding cooling needs? - Customers are focused on securing capacity and innovating to reduce energy and water usage, which are critical issues in the industry [71]

Modine Manufacturing Company (NYSE:MOD) Q3 2026 Earnings call February 05, 2026 11:00 AM ET Speaker11Good morning, ladies and gentlemen, and welcome to Modine's third quarter fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference ...

Third Quarter Fiscal 2026 February 5, 2026 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 ▪ Significant progress evolving our business portfolio by investing in high-growth, high-margin businesses and executing strategic divestitures ▪ Recently announced our plan to spin-off the Performance Technologies segment and combine with Gentherm; with Modi ...

Core Insights - Modine (MOD) reported $805 million in revenue for the quarter ended December 2025, marking a year-over-year increase of 30.5% and exceeding the Zacks Consensus Estimate by 5.9% [1] - The earnings per share (EPS) for the same period was $1.19, up from $0.92 a year ago, representing a surprise of 19.96% over the consensus estimate of $0.99 [1] Financial Performance - Net Sales in Performance Technologies reached $266 million, surpassing the two-analyst average estimate of $252.69 million, with a year-over-year change of +1.5% [4] - Net Sales in Climate Solutions amounted to $544.6 million, exceeding the two-analyst average estimate of $522.14 million, reflecting a significant year-over-year change of +50.9% [4] - Adjusted EBITDA for Climate Solutions was reported at $97.4 million, higher than the average estimate of $88.77 million from two analysts [4] - Adjusted EBITDA for Corporate and eliminations was -$17.1 million, compared to the average estimate of -$15.26 million [4] - Adjusted EBITDA for Performance Technologies was $39.3 million, exceeding the two-analyst average estimate of $35.22 million [4] Stock Performance - Modine's shares have returned +53.5% over the past month, significantly outperforming the Zacks S&P 500 composite's +0.9% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]

分组1 - Modine reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $0.99 per share, and showing an increase from $0.92 per share a year ago, resulting in an earnings surprise of +19.96% [1] - The company achieved revenues of $805 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 5.90%, and up from $616.8 million year-over-year [2] - Modine has consistently outperformed consensus EPS and revenue estimates over the last four quarters, indicating strong financial performance [2] 分组2 - Modine shares have increased approximately 49.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.1% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $1.50 for the coming quarter and $4.63 for the current fiscal year [7] - The Zacks Industry Rank indicates that the Automotive - Original Equipment sector is currently in the bottom 40% of over 250 Zacks industries, which may impact Modine's stock performance [8]

Financial Performance - Net sales increased by 31% to $805.0 million, compared to $616.8 million in the prior year, driven by strong demand in the Climate Solutions segment [3]. - Adjusted EBITDA increased by 37% to $119.6 million, up from $87.3 million in the prior year [7]. - Adjusted earnings per share rose by 29% to $1.19, compared to $0.92 in the prior year [8]. - In Q3 2025, net sales increased to $805.0 million, up 30.5% from $616.8 million in Q3 2024, while net sales for the nine months ended December 31, 2025, reached $2,226.7 million, a 15% increase from $1,936.3 million in the same period last year [25]. - Adjusted EBITDA for the nine months ended December 31, 2025, was $324.8 million, up from $288.0 million in the same period last year, reflecting improved operational performance [29]. - Adjusted EBITDA for Q3 fiscal 2026 was $119.6 million, with an adjusted EBITDA margin of 14.9% [32]. Segment Performance - Climate Solutions segment sales reached $544.6 million, a 51% increase from $360.8 million one year ago, with data center sales up 78% [13]. - Organic sales growth for Climate Solutions was 36% in Q3 fiscal 2026, while Performance Technologies remained flat [36]. - The company plans to raise its multi-year outlook for Data Center sales to 50% to 70% annual growth over the next two years [12]. Losses and Charges - The company reported a net loss of $46.8 million, including a $116.1 million non-cash pension termination charge [5]. - The company incurred a pension termination charge of $116.1 million in Q3 2025, impacting overall earnings significantly [29]. - A non-cash pension termination charge of $116.1 million was recognized in Q3 fiscal 2026, with a tax benefit of $13.1 million associated with this charge [30]. - The provisions of the One Big Beautiful Bill Act negatively impacted the Company's income tax expense by $0.6 million in Q3 fiscal 2026 [30]. Expenses and Debt - Selling, general and administrative expenses increased by $7.3 million to $89.3 million, primarily due to higher spending to support growth and acquisitions [6]. - Total debt as of December 31, 2025, was $615.8 million, with net debt increasing by $237.9 million to $517.1 million [11]. - Total debt as of December 31, 2025, was $615.8 million, with net debt of $517.1 million after accounting for cash and cash equivalents [34]. - For fiscal 2026, the company estimates adjusted EBITDA guidance, excluding significant cash and non-cash expenses, with interest expense projected at approximately $30 to $34 million and income tax provision at approximately $72 to $76 million [24]. Cash Flow and Investments - Cash and cash equivalents increased to $98.7 million as of December 31, 2025, from $71.6 million at the end of March 2025 [26]. - Net cash provided by operating activities for the nine months ended December 31, 2025, was $53.8 million, down from $158.5 million in the same period last year [27]. - The company invested $182.4 million in business acquisitions during the nine months ended December 31, 2025, compared to $3.4 million in the same period last year, indicating a strategic focus on growth through acquisitions [27]. - Free cash flow for the three months ended December 31, 2025, was $(17.1) million, compared to $44.7 million in the same period of 2024 [35]. Asset Growth - Total assets rose to $2,482.9 million as of December 31, 2025, compared to $1,917.6 million as of March 31, 2025, indicating strong growth in the company's asset base [26].

Core Insights - Modine reported a strong financial performance for the third quarter of fiscal 2026, with a 31% increase in net sales to $805.0 million, driven by a 51% growth in the Climate Solutions segment, particularly from data center products [3][12][13] - The company raised its full-year outlook for revenue and adjusted EBITDA, expecting data center revenue to increase by over 70% year-over-year and projecting annual growth of 50% to 70% for the next two years [11][12] Financial Performance - Net sales increased by $188.2 million, or 31%, compared to the prior year, with the Climate Solutions segment contributing significantly due to strong demand from data center customers [3][12] - Gross profit rose by $36.5 million to $186.1 million, although gross margin decreased by 120 basis points to 23.1% due to higher temporary costs related to capacity expansion [4][12] - Operating income increased by $30.0 million to $89.3 million, primarily driven by higher revenues in the Climate Solutions segment [6][12] - Adjusted EBITDA reached $119.6 million, a 37% increase from the prior year, reflecting strong operational performance [6][12] Segment Analysis - The Climate Solutions segment reported sales of $544.6 million, a 51% increase from $360.8 million a year ago, with data center sales up 78% [13] - Performance Technologies segment sales increased by 1% to $266.0 million, driven by higher automotive sales, although offset by lower sales in other areas [13] Outlook - The company is optimistic about continued growth in the Climate Solutions segment, raising its revenue outlook for fiscal 2026 to a growth range of 20% to 25% [11][14] - Modine anticipates adjusted EBITDA for fiscal 2026 to be between $455 million and $475 million, indicating a growth of 16% to 21% [12][14]