Summary of Modine Manufacturing Company (MOD) FY Conference Call Company Overview - **Company**: Modine Manufacturing Company (MOD) - **Event**: Oppenheimer's twentieth Annual Industrial Growth Conference - **Date**: May 08, 2025 Key Industry Insights Data Center Market - **Growth Projections**: Initial growth outlook for fiscal year 2025 was 60% to 70%, revised to 110% to 120% due to increased demand from hyperscalers [4][6] - **Hyperscaler Relationships**: Expanded from one significant relationship to four, enhancing sales opportunities [5][6] - **Acquisition Impact**: The acquisition of Scott Springfield added evaporative cooling technology, allowing access to a previously blocked market segment [6][7] - **North American Chiller Market**: Significant growth noted in North America, particularly in chiller markets, with expansions in Virginia and Mississippi [7][8] - **Core Technology**: Focus on free cooling technology and evaporative cooling, addressing both water and electricity efficiency [10][11] Customer Diversification - **Current Customer Base**: Approximately 50% hyperscale and 50% colocation, with potential shifts based on customer CapEx or leasing models [23][27][28] - **AI Orders**: Secured a $180 million order for AI chillers from a Neo Cloud provider, indicating diversification into new customer pools [24][25] Competitive Dynamics - **Market Share Growth**: Modine has been gaining market share despite increased competition in liquid cooling and chiller capacity [29][31] - **Sustainable Growth**: Projected 30% organic growth in data center for fiscal year 2026, with a CAGR of 45% to 55% expected [12][31] Financial and Operational Highlights Capacity Expansion - **Investment in Capacity**: Capacity has more than doubled from $500 million to over $1 billion based on market visibility and probability analysis [18][19] - **Pipeline Potential**: The sales pipeline is five to six times the current revenue, indicating strong future growth potential [21] M&A Strategy - **Acquisition Focus**: Active in M&A to fill technology gaps and enhance data center capabilities, with a strong buy-side funnel [38][40] - **Absolute Air Acquisition**: A strategic acquisition to extend product lines and leverage existing partnerships [34][36] Capital Allocation - **Prioritization**: M&A is the top priority, followed by internal CapEx for growth, with buybacks being a lower priority [80][82] - **Divestiture Plans**: Plans to divest $250 million to $300 million in automotive revenue, focusing on non-core assets [55][58] Market Trends and Challenges HVAC and Heat Transfer Products - **Market Transformation**: Strategic simplification of the coils business has improved margins, with a focus on cash generation for reinvestment [43][44] - **Impact of ESSER Funding**: The cessation of ESSER funding may affect the IAQ business, but backlog remains strong [46][48] Tariff Management - **Tariff Strategy**: Different approaches for climate solutions and performance technology segments, with a focus on passing through costs to customers [69][71] Future Outlook - **Diversification Opportunities**: Excitement about entering new markets such as healthcare and life sciences, leveraging expertise in thermal management [89][90] - **Long-term Growth Potential**: Focus on generating cash from current operations to reinvest in more attractive markets [92]

Core Viewpoint - Modine will host a conference call and webcast to discuss its fourth quarter and fiscal year 2025 financial results on May 21, 2025, following the release of results on May 20, 2025 [1][2]. Group 1 - The conference call will be led by Modine's President and CEO, Neil D. Brinker, and Executive Vice President and CFO, Michael B. (Mick) Lucareli, who will review the financial results [2]. - The live webcast can be accessed through Modine's investor section on their website, with a replay available after the event [3]. - An audio-only replay will be available until midnight on May 28, 2025, with a specific Conference ID for access [3]. Group 2 - Modine has over 100 years of experience in thermal management technology, focusing on engineering solutions for cleaner and healthier environments [4]. - The company employs more than 11,000 people globally and operates in North America, South America, Europe, and Asia [4]. - Modine's segments aim to improve air quality, reduce energy and water consumption, lower harmful emissions, and utilize environmentally friendly refrigerants [4].

Core Insights - Investors in the Automotive - Original Equipment sector may consider Phinia (PHIN) and Modine (MOD) as potential investment opportunities [1] Valuation Metrics - Phinia has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while Modine has a Zacks Rank of 4 (Sell) [3] - The forward P/E ratio for PHIN is 9.75, significantly lower than MOD's forward P/E of 17.77, suggesting that PHIN may be undervalued [5] - PHIN's PEG ratio is 0.44, compared to MOD's PEG ratio of 0.52, indicating better expected earnings growth relative to its valuation [5] - PHIN has a P/B ratio of 1.06, while MOD's P/B ratio is 4.98, further supporting the notion that PHIN is undervalued [6] - Overall, PHIN has a Value grade of A, while MOD has a Value grade of C, highlighting PHIN as the superior value option [6]

After years of focusing on industrial markets, Modine Manufacturing Co. (NYSE: MOD ) has made a strategic transformation and provides itself today as a pivotal player in the AI revolution. My thesis revolves around the strategic transformation of Modine's company towards theI am a dedicated investor and financial analyst with a deep passion for uncovering undervalued opportunities in the stock market. With years of experience in equity research and fundamental analysis, I specialize in identifying companies ...

Company Performance - Modine's stock closed at $80.57, reflecting a -0.69% change from the previous day, underperforming the S&P 500's gain of 0.06% [1] - Over the past month, Modine's shares have increased by 2.37%, while the Auto-Tires-Trucks sector and the S&P 500 have decreased by 3.23% and 4.29%, respectively [1] Upcoming Earnings - Modine's projected earnings per share (EPS) for the upcoming quarter is $0.96, indicating a 24.68% increase year-over-year [2] - The consensus estimate for quarterly revenue is $629.47 million, which represents a 4.3% increase from the same period last year [2] Analyst Projections - Recent shifts in analyst projections for Modine should be monitored, as positive estimate revisions are seen as favorable for the company's business outlook [3] Valuation Metrics - Modine's Forward P/E ratio is currently 17.63, which is higher than the industry average of 10.43 [6] - The company has a PEG ratio of 0.52, compared to the Automotive - Original Equipment industry's average PEG ratio of 0.81 [6] Industry Context - The Automotive - Original Equipment industry, part of the Auto-Tires-Trucks sector, holds a Zacks Industry Rank of 181, placing it in the bottom 28% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Performance - Modine's stock closed at $77.41, reflecting a gain of +0.99% from the previous trading session, outperforming the S&P 500's gain of 0.79% [1] - Over the last month, Modine's shares have decreased by 10.27%, underperforming the Auto-Tires-Trucks sector's loss of 1.73% and the S&P 500's loss of 3.56% [1] Upcoming Earnings - Analysts expect Modine to report earnings of $0.96 per share, indicating a year-over-year growth of 24.68% [2] - The consensus estimate for revenue is $629.47 million, representing a 4.3% increase compared to the same quarter of the previous year [2] Analyst Estimates - Recent modifications to analyst estimates for Modine reflect evolving short-term business trends, with positive revisions indicating analysts' confidence in the company's performance [3] - The Zacks Consensus EPS estimate has seen a 2.71% decrease over the last 30 days, and Modine currently holds a Zacks Rank of 3 (Hold) [5] Valuation Metrics - Modine has a Forward P/E ratio of 16.66, which is a premium compared to the industry average Forward P/E of 9.39 [6] - The PEG ratio for Modine is 0.49, while the industry average PEG ratio is 0.68 [6] Industry Context - The Automotive - Original Equipment industry, part of the Auto-Tires-Trucks sector, has a Zacks Industry Rank of 181, placing it in the bottom 28% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Glow Lifetech Corp is expanding its production capacity by acquiring a new automated bottling line, which will triple its production capacity to meet the growing demand for its MOD™ product portfolio in Canada [1][2][3] - The company has achieved significant retail growth, with its products now available in over 850 cannabis retail stores across Ontario, marking a 30% increase from Q4 2024 [4] - Glow's MOD™ THC 1000 has become the 2 ranked SKU in Ontario's oils category, reinforcing the brand's market leadership and consumer appeal [5][6] Production and Efficiency - The new automated bottling system enhances production output while reducing labor costs, aligning with the company's high-margin, scalable business model [2] - This investment in automation is expected to improve efficiency and profitability as the company scales production to meet rising demand [3] Market Presence and Growth Potential - Glow's retail footprint has expanded aggressively, with significant room for further growth as it deepens relationships with retailers and explores new provinces [4][8] - The company is positioned for continued growth, with a solid foundation in production infrastructure and increasing market share [6][8]

Core Viewpoint - The average brokerage recommendation (ABR) for Modine (MOD) is 1.20, indicating a consensus leaning towards a Strong Buy, with four out of five recommendations classified as Strong Buy and one as Buy [2]. Group 1: Brokerage Recommendations - The ABR of 1.20 suggests a strong positive outlook for Modine, with 80% of recommendations being Strong Buy and 20% being Buy [2]. - Despite the favorable ABR, reliance solely on brokerage recommendations may not be prudent, as studies indicate limited success in guiding investors towards stocks with the highest price increase potential [4][9]. - Brokerage analysts often exhibit a positive bias due to their firms' vested interests, leading to a higher number of favorable ratings compared to negative ones [5][9]. Group 2: Zacks Rank Comparison - Zacks Rank categorizes stocks into five groups, with a strong correlation between earnings estimate revisions and near-term stock price movements, making it a potentially more reliable indicator than ABR [7][10]. - The Zacks Rank for Modine is currently 3 (Hold), indicating a cautious stance despite the positive ABR [13]. - The Zacks Consensus Estimate for Modine's earnings has remained unchanged at $3.88, suggesting stability in analysts' views regarding the company's earnings prospects [12].

Core Viewpoint - Modine has announced the acquisition of AbsolutAire, which will enhance its offerings in heating, ventilation, and air quality solutions, aligning with its strategy to expand its technology portfolio and capture growth opportunities in various markets [1][2]. Company Overview - Modine is a global leader in thermal management technology, with over 100 years of experience and a workforce of more than 11,000 employees worldwide [3]. - The company operates in multiple regions, including North America, South America, Europe, and Asia, focusing on improving air quality and conserving natural resources through its Climate Solutions and Performance Technologies segments [3]. Acquisition Details - The acquisition of AbsolutAire, expected to close on April 1, 2025, is valued at approximately $25 million in revenue for 2024 [2]. - AbsolutAire specializes in direct-fired heating, ventilation, and make-up air systems, which will complement Modine's existing HVAC offerings and allow for a more comprehensive suite of high-performance air quality solutions [2]. - The integration of AbsolutAire into Modine's Heating & Schools IAQ product group will provide access to a broader customer base across commercial, industrial, food service, and warehousing sectors, which are expected to experience significant growth due to stricter HVAC and air quality management requirements [2].

Core Viewpoint - Modine Manufacturing is taking strategic steps to enhance its growth potential, including a $100 million stock buyback and expansion of its coolant distribution units (CDUs) to meet rising demand from data centers [1][3][19]. Group 1: Growth Initiatives - The company is experiencing significant growth in its climate solutions segment, particularly in the data center business, which saw a 176% increase in revenues in Q3 of fiscal 2025 [3]. - Modine secured $180 million in orders for its Airedale by Modine brand data center cooling systems from a leading AI infrastructure developer, with deliveries expected throughout 2025 and the first half of 2026 [4]. - The establishment of a new manufacturing facility in India is aimed at supporting data center cooling and power generation needs in the region [5]. - The HVAC & Refrigeration products segment achieved a 15% growth in Q3, driven by sales from the Scott Springfield acquisition [5]. Group 2: Financial Performance - Modine's adjusted EBITDA margin improved by 200 basis points in Q3, benefiting from a favorable sales mix in its Climate Solutions segment [6]. - For fiscal 2025, the company anticipates net sales between $2.55 billion and $2.67 billion, indicating a year-over-year growth of 6% to 11% [14]. - Adjusted EBITDA is expected to range from $375 million to $395 million, reflecting a growth of 19% to 26% year-over-year [14]. - The company forecasts a 110-120% growth in its data center segment for fiscal 2025 [15]. Group 3: Challenges - Modine is facing challenges in its Performance Technologies segment due to weaknesses in the automotive and commercial vehicle markets, impacting sales in liquid and air-cooled applications [7]. - Advanced solutions sales declined by 7% in Q3, attributed to supply chain issues affecting major North American bus customers [8]. Group 4: Stock Performance and Valuation - Modine shares have decreased by 25.2% over the past six months, underperforming both the Zacks Auto, Tires and Trucks sector and the broader S&P 500 index [9][10]. - The stock is currently trading at a forward 12-month price/earnings ratio of 17.26x, lower than its median of 28.43x and the sector's 20.13x, indicating it may be undervalued [12]. - The Zacks Consensus Estimate for Modine's fiscal 2025 EPS is currently $3.88, reflecting a slight increase over the past month [16].