PART I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) Q1 FY2026 unaudited financials report 3.2% net sales growth to $682.8M and 8.2% net earnings increase to $51.2M, with assets growing to $2,228.5M [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 FY2026 net sales increased 3.2% to $682.8M, operating income rose to $75.7M, and net earnings grew 8.2% to $51.2M Consolidated Statements of Operations Highlights (Q1 FY2026 vs Q1 FY2025) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $682.8 M | $661.5 M | +3.2% | | Gross profit | $165.4 M | $162.6 M | +1.7% | | Operating income | $75.7 M | $74.4 M | +1.7% | | Net earnings attributable to Modine | $51.2 M | $47.3 M | +8.2% | | Diluted EPS | $0.95 | $0.88 | +8.0% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to **$2,228.5M** by June 30, 2025, driven by acquisitions and increased inventories, while total liabilities rose to **$1,209.8M** Key Balance Sheet Items (June 30, 2025 vs March 31, 2025) | Account | June 30, 2025 (M) | March 31, 2025 (M) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $124.5 | $71.6 | | Inventories | $434.8 | $340.9 | | Goodwill | $268.2 | $233.9 | | Total assets | $2,228.5 | $1,917.6 | | **Liabilities & Equity** | | | | Long-term debt | $482.1 | $296.7 | | Total liabilities | $1,209.8 | $999.4 | | Total Modine shareholders' equity | $1,011.5 | $910.2 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 FY2026 operating cash flow decreased to **$27.7M**, investing activities used **$144.0M** for acquisitions, and financing provided **$166.9M** from debt Cash Flow Summary (Q1 FY2026 vs Q1 FY2025) | Cash Flow Activity | Three months ended June 30, 2025 (M) | Three months ended June 30, 2024 (M) | | :--- | :--- | :--- | | Net cash provided by operating activities | $27.7 | $40.5 | | Net cash used for investing activities | $(144.0) | $(26.5) | | Net cash provided by financing activities | $166.9 | $0.0 | | Net increase in cash | $52.8 | $12.9 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail **$121.8M** in acquisitions, strong Data Centers revenue growth, U.S. pension plan termination, and amended credit facilities post-quarter - Acquired AbsolutAire for **$11.3 million** on April 1, 2025, and L.B. White for **$110.5 million** on May 31, 2025. A third acquisition, Climate by Design, was completed on July 1, 2025, for **$64.1 million**[25](index=25&type=chunk)[28](index=28&type=chunk)[37](index=37&type=chunk) - Data Centers product group revenue grew to **$186.9 million** from **$162.6 million** year-over-year, driving growth in the Climate Solutions segment[42](index=42&type=chunk) - Approved the termination of its primary U.S. pension plan, expecting to make additional cash contributions of **$17.0** to **$22.0 million** and record non-cash settlement charges of **$115.0** to **$125.0 million** in the second half of fiscal 2026[49](index=49&type=chunk) - In July 2025, the company executed an amended credit agreement, providing a **$400.0 million** revolving credit facility and a **$200.0 million** term loan facility, both maturing in July 2030[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 net sales up 3% driven by Climate Solutions and acquisitions, offset by Performance Technologies decline, with gross margin slightly down and strong liquidity [Consolidated Results of Operations](index=35&type=section&id=Consolidated%20Results%20of%20Operations) Q1 net sales rose 3% to **$682.8M**, driven by Climate Solutions, while gross margin declined 40 basis points to **24.2%** due to higher material costs - Q1 net sales increased by **$21.3 million** (**3%**) YoY, primarily due to a **$40.1 million** sales increase in Climate Solutions, driven by data center customers and **$10.0 million** from new acquisitions[103](index=103&type=chunk) - Gross margin declined by **40 basis points** to **24.2%**, as higher material costs and unfavorable sales mix in the Performance Technologies segment offset gains elsewhere[104](index=104&type=chunk)[105](index=105&type=chunk) - SG&A expenses increased by **$2.1 million**, reflecting higher compensation in the growing Climate Solutions segment and **$1.4 million** in acquisition-related costs[106](index=106&type=chunk) - The effective tax rate decreased to **21.3%** from **28.2%** in the prior year, primarily due to changes in the geographic mix of earnings[58](index=58&type=chunk)[110](index=110&type=chunk) [Segment Results of Operations](index=39&type=section&id=Segment%20Results%20of%20Operations) Climate Solutions net sales grew 11% to **$397.4M** driven by data centers and acquisitions, while Performance Technologies net sales declined 8% to **$285.5M** due to market weakness Climate Solutions Segment Performance (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $397.4 M | $357.3 M | +11.2% | | Gross Profit | $112.9 M | $100.8 M | +12.0% | | Operating Income | $66.9 M | $59.8 M | +11.9% | | Operating Margin | 16.8% | 16.7% | +10 bps | Performance Technologies Segment Performance (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $285.5 M | $309.0 M | -7.6% | | Gross Profit | $51.9 M | $63.5 M | -18.3% | | Operating Income | $26.5 M | $31.5 M | -15.9% | | Operating Margin | 9.3% | 10.2% | -90 bps | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operating cash flow of **$27.7M** and credit facilities, with **$119.0M** spent on acquisitions and **$100.0M** planned for data center capacity expansion - Net cash from operating activities decreased to **$27.7 million** from **$40.5 million** YoY, mainly due to higher inventory levels to support growing data center customer demand[125](index=125&type=chunk) - The company plans to invest **$100.0 million** over the next twelve months to expand manufacturing capacity in the U.S. for data center products[126](index=126&type=chunk) - Paid **$119.0 million** for the acquisitions of L.B. White and AbsolutAire during the quarter, and an additional **$64.1 million** for Climate by Design International on July 1, 2025[127](index=127&type=chunk) - Net borrowings on credit facilities increased by **$172.0 million** in Q1 to fund acquisitions. The company was in compliance with all debt covenants as of June 30, 2025[128](index=128&type=chunk)[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes in market risks have occurred since the fiscal 2025 Form 10-K filing, with prior disclosures incorporated by reference - There have been no material changes in the company's market risks since the fiscal 2025 Form 10-K was filed[144](index=144&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during Q1 FY2026 - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[145](index=145&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[146](index=146&type=chunk) PART II [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No shares were repurchased under the program in Q1 FY2026, but **53,840** shares were acquired for tax withholding, with **$81.6M** remaining authorized - No shares were purchased under the publicly announced share repurchase program during the quarter[148](index=148&type=chunk) - The company acquired **53,840 shares** from employees/directors to satisfy tax withholding obligations related to vested stock awards[148](index=148&type=chunk) - As of June 30, 2025, **$81.6 million** remains available for repurchase under the company's share repurchase authorization, which has no expiration date[148](index=148&type=chunk) [Other Information](index=52&type=section&id=Item%205.%20Other%20Information.) Director Suresh V. Garimella adopted a Rule 10b5-1 plan on May 23, 2025, to sell **72,344** shares between August 2025 and September 2027 - Director Suresh V. Garimella adopted a Rule 10b5-1 stock sale plan on May 23, 2025, for the sale of **72,344 shares** between August 2025 and September 2027[149](index=149&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with Form 10-Q, including merger agreements, amended credit facilities, and officer certifications

Financial Data and Key Metrics Changes - Modine reported a 3% increase in first-quarter sales, driven primarily by growth in the Climate Solutions segment [24] - Adjusted EBITDA margin was 14.9%, down 40 basis points from the prior year, attributed to lower Performance Technologies volume and new investments in Climate Solutions [25] - Adjusted earnings per share was $1.06, a 2% increase compared to the previous year [27] Business Line Data and Key Metrics Changes - Climate Solutions segment revenue increased by 11%, with adjusted EBITDA improving by 10% and an adjusted EBITDA margin of 20% [17] - Data center sales grew by $24 million or 15% from the prior year, driven by higher sales in North America [17] - Performance Technologies revenues decreased by 8%, with adjusted EBITDA declining by 14% and adjusted EBITDA margin decreasing to 13.1% [12][22] Market Data and Key Metrics Changes - North America data center business is experiencing extraordinary demand, with expectations to approach $2 billion in revenues by fiscal 2028 [9] - The company anticipates a significant acceleration in data center sales in the second half of the fiscal year, with expected growth of over 80% [31] Company Strategy and Development Direction - The company has completed three strategic acquisitions this fiscal year to enhance its manufacturing capacity and product offerings [4] - Modine is focusing on organic growth in the data center business while also pursuing inorganic growth through acquisitions [4][7] - The company aims to maintain a balanced portfolio with strong organic growth in data centers and complementary solutions in HVAC technologies [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising revenue and earnings outlook for fiscal 2026 due to strong market demand and recent acquisitions [4] - The Performance Technologies segment is navigating tough market conditions, with expectations of continued challenges in vehicular markets [12] - Management highlighted the importance of strategic partnerships and innovation in meeting evolving customer demands in the data center segment [11] Other Important Information - The company plans to invest an additional $100 million in capital expenditures over the next 12 to 18 months to support growth [33] - Modine's net debt increased by $123 million compared to the prior fiscal year end, primarily due to recent acquisitions [28] Q&A Session Summary Question: Can you talk about the magnitude of unabsorbed cost in the Climate business related to the DC build-out? - Management indicated that core capacity will convert at good margins, while incremental capital investments may convert at a lower rate due to added resources for engineering support [39] Question: How should we think about the fiscal 2027 data center revenue target? - Management suggested a straight-line approach for estimating fiscal 2027 revenue, trending towards a billion this fiscal year [41] Question: Will margins improve in the second half of the year? - Management expects total company margins to improve, driven mainly by Performance Technologies, with significant growth anticipated in the second half [45] Question: Can you provide clarity on capacity expansion and expected returns? - Management confirmed high returns on investment for capacity expansion, estimating over 40% return on invested capital [57] Question: What is the visibility on demand and capacity for the data center business? - Management stated they have visibility extending beyond a year, with commitments from customers driving the need for additional capacity [70] Question: Can you provide updates on divestiture processes? - Management mentioned ongoing efforts to sell the European headquarters and plans to exit the light-duty business, with expected closure later this year [76][77] Question: Are you expanding data center service capabilities alongside production? - Management confirmed that they are building out service capabilities to support the growth in equipment sales [101] Question: What is the outlook for future acquisitions? - Management indicated a pause on acquisitions for a couple of quarters to digest recent acquisitions and focus on data center expansion [98]

Financial Data and Key Metrics Changes - Modine reported a 3% increase in total sales for Q1, driven primarily by growth in the Climate Solutions segment [25] - Adjusted earnings per share was $1.06, a 2% increase compared to the prior year [27] - Adjusted EBITDA margin decreased by 40 basis points to 14.9% due to lower performance in the Performance Technologies segment [26] Business Line Data and Key Metrics Changes - Climate Solutions segment saw an 11% increase in revenue and a 10% improvement in adjusted EBITDA, with an adjusted EBITDA margin of 20% [18] - Data center sales grew by $24 million or 15% from the prior year, primarily due to higher sales in North America [18] - Performance Technologies revenues declined by 8%, with adjusted EBITDA down 14% and adjusted EBITDA margin decreasing to 13.1% [21][23] Market Data and Key Metrics Changes - North America data center business is experiencing extraordinary demand, with expectations to approach $2 billion in revenues by fiscal 2028 [11] - The company anticipates a significant acceleration in data center sales in the second half of the fiscal year, projecting a growth of over 80% [31] Company Strategy and Development Direction - The company is focusing on organic growth through capacity investments and product innovation, with a recent $100 million investment to expand manufacturing capacity [9] - Recent acquisitions are aimed at expanding the product portfolio and creating scale in key climate solutions businesses [5][8] - The company is maintaining a balanced portfolio with a strong focus on high-growth areas like data centers while managing costs in underperforming segments [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising revenue and earnings outlook for fiscal 2026, driven by strong market demand and recent acquisitions [5][30] - The Performance Technologies segment is expected to continue facing market headwinds, but management is optimistic about future profitability as volumes return [14][24] - The company is committed to reinvesting in growth and expects to see margin improvements in the second half of the fiscal year [26][32] Other Important Information - The company generated $200,000 of free cash flow in the quarter, lower than the prior year due to higher inventory levels [28] - Net debt increased by $123 million compared to the prior fiscal year end, primarily due to recent acquisitions [29] - The company plans to invest an additional $100 million in capital expenditures over the next 12 to 18 months [33] Q&A Session Summary Question: Can you talk about the magnitude of unabsorbed cost in the Climate business related to the DC build-out? - Management indicated that core capacity will convert at good margins, but incremental capital investments may convert at a lower rate due to added resources for engineering support [40] Question: How should we think about the fiscal 2027 data center revenue target? - Management suggested a straight-line approach for estimating fiscal 2027 revenue, trending towards a billion this fiscal year [42] Question: Will margins improve in the second half of the year? - Management expects total company margins to improve, primarily driven by Performance Technologies, with significant volume increases anticipated in the second half [45] Question: Can you provide clarity on capacity expansion and expected revenue? - Management stated that to achieve the $2 billion goal for fiscal 2028, approximately $2.5 billion in capacity is needed, with the recent $100 million investment expected to significantly contribute to this capacity [54] Question: What is the expected interest expense for fiscal 2026? - Management estimated interest expense to be in the range of $28 million to $30 million for fiscal 2026 [85]

Financial Performance - Net sales increased to $682.8 million, up from $661.5 million, a 3.2% increase[15] - Adjusted EBITDA grew to $101.4 million from $100.9 million, with a margin of 14.9%[15] - Adjusted EPS increased by 2% to $1.06[17] - Free cash flow was slightly positive at $0.2 million[18] Segment Performance - Climate Solutions - Climate Solutions revenue increased by 11%[6] - Climate Solutions adjusted EBITDA increased by 10%[6] - Climate Solutions net sales were $397.4 million, a 15% increase from $357.3 million[11] - Data Centers sales grew significantly, driving overall growth in Climate Solutions[11] Segment Performance - Performance Technologies - Performance Technologies revenues decreased by 8%[9] - Performance Technologies adjusted EBITDA decreased by 14%[9] - Performance Technologies net sales were $285.5 million, down from $309.0 million[13] Fiscal Year 2026 Outlook - The company raised its revenue outlook to +10% to +15%, projecting $2.84 billion to $2.97 billion in net sales[19] - Adjusted EBITDA is expected to be between $440 million and $470 million, a +12% to +20% increase[19] - Climate Solutions revenue is projected to grow by +25% to +35%[19] - Performance Technologies revenue is expected to decline by (2%) to (12%)[19]

Core Insights - Modine reported revenue of $682.8 million for the quarter ended June 2025, reflecting a 3.2% increase year-over-year and a surprise of +4.87% over the Zacks Consensus Estimate of $651.12 million [1] - Earnings per share (EPS) for the quarter was $1.06, up from $1.04 in the same quarter last year, with an EPS surprise of +13.98% compared to the consensus estimate of $0.93 [1] Financial Performance Metrics - Net Sales for Climate Solutions reached $397.4 million, exceeding the average estimate of $384.4 million from three analysts [4] - Net Sales for Corporate and eliminations was reported at $-0.1 million, better than the average estimate of $-4.98 million [4] - Net Sales for Performance Technologies was $285.5 million, surpassing the average estimate of $273.68 million [4] - Adjusted EBITDA for Climate Solutions was $79.4 million, above the average estimate of $75.01 million [4] - Adjusted EBITDA for Corporate and eliminations was reported at $-15.5 million, compared to the average estimate of $-16.96 million [4] - Adjusted EBITDA for Performance Technologies was $37.5 million, slightly below the average estimate of $38.91 million [4] Stock Performance - Modine's shares have returned +14.2% over the past month, outperforming the Zacks S&P 500 composite's +3.4% 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 Viewpoint - Modine (MOD) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and showing a year-over-year increase from $1.04 per share [1] Group 1: Earnings Performance - The earnings surprise for the recent quarter was +13.98%, and the company had a previous quarter surprise of +17.89% with actual earnings of $1.12 per share against an expectation of $0.95 [1][2] - Over the last four quarters, Modine has consistently surpassed consensus EPS estimates [2] Group 2: Revenue Performance - Modine's revenues for the quarter ended June 2025 were $682.8 million, surpassing the Zacks Consensus Estimate by 4.87% and showing an increase from $661.5 million year-over-year [2] - The company has also topped consensus revenue estimates in each of the last four quarters [2] Group 3: Stock Performance and Outlook - Modine shares have declined approximately 3.4% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] - The future performance of Modine's stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement [3][4] Group 4: Earnings Estimates and Industry Outlook - The current consensus EPS estimate for the upcoming quarter is $1.10 on revenues of $680.23 million, and for the current fiscal year, it is $4.52 on revenues of $2.76 billion [7] - The Automotive - Original Equipment industry, to which Modine belongs, is currently ranked in the top 30% of over 250 Zacks industries, indicating a favorable outlook [8]

[Modine Q1 Fiscal 2026 Earnings Release](index=1&type=section&id=Modine%20Reports%20First%20Quarter%20Fiscal%202026%20Results) [Financial Highlights and Outlook](index=1&type=section&id=First%20Quarter%20Highlights%20%26%20Fiscal%202026%20Outlook) Modine's Q1 net sales rose 3% to $682.8 million, driven by Climate Solutions, leading to raised FY2026 guidance for 10-15% net sales growth and $440-$470 million Adjusted EBITDA Q1 Fiscal 2026 Key Performance Indicators | Metric | Q1 FY2026 | Change vs. Q1 FY2025 | | :--- | :--- | :--- | | Net Sales | $682.8 million | +3% | | Net Earnings | $51.7 million | +8% | | Adjusted EBITDA | $101.4 million | +0.5% | | Diluted EPS | $0.95 | +8% | | Adjusted EPS | $1.06 | +2% | Revised Fiscal 2026 Full-Year Outlook | Metric | Current Outlook | | :--- | :--- | | Net Sales Growth | 10% to 15% | | Adjusted EBITDA | $440 million to $470 million | - The company is raising its fiscal year outlook due to the impact of **recent acquisitions** in Climate Solutions and **increased demand from data center customers**[1](index=1&type=chunk)[11](index=11&type=chunk) - A planned North American manufacturing capacity expansion for data center products is expected to positively impact H2 FY2026 and provides a path to approach **$2 billion** in data center revenues by fiscal 2028[11](index=11&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=First%20Quarter%20Financial%20Results) Q1 FY2026 net sales grew 3% to $682.8 million, with gross profit up 2% to $165.4 million, while gross margin contracted 40 bps to 24.2% due to Performance Technologies Consolidated Income Statement Highlights (Q1 FY2026 vs Q1 FY2025) | Metric (in millions) | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $682.8 | $661.5 | +3% | | Gross Profit | $165.4 | $162.6 | +2% | | Gross Margin | 24.2% | 24.6% | -40 bps | | SG&A Expenses | $84.9 | $82.8 | +2.5% | | Operating Income | $75.7 | $74.4 | +2% | | Net Earnings | $51.7 | $47.8 | +8% | - Sales growth was driven by the **Climate Solutions segment**, which was partially offset by lower sales in the **Performance Technologies segment** due to vehicular market weakness and product line exits[3](index=3&type=chunk) - The increase in SG&A was primarily due to higher spending to support growth and acquisitions in **Climate Solutions**[4](index=4&type=chunk) - The company recorded **$4.8 million** in restructuring expenses, mainly for severance related to headcount reductions in the **Performance Technologies segment**[5](index=5&type=chunk) [Segment Performance](index=3&type=section&id=First%20Quarter%20Segment%20Review) Segment performance diverged, with Climate Solutions sales up 11% to $397.4 million, while Performance Technologies sales decreased 8% to $285.5 million due to market weakness [Climate Solutions](index=3&type=section&id=Climate%20Solutions) Climate Solutions sales grew 11% to $397.4 million, driven by data center and HVAC products, with gross margin improving to 28.4% and operating income rising 12% to $66.9 million Climate Solutions Performance (Q1 FY2026 vs Q1 FY2025) | Metric (in millions) | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Sales | $397.4 | $357.3 | +11% | | Gross Margin | 28.4% | 28.2% | +20 bps | | Operating Income | $66.9 | $59.8 | +12% | | Adjusted EBITDA | $79.4 | $71.9 | +10% | - Organic sales growth for the segment was **7%**[32](index=32&type=chunk) - Sales increase was driven by data center and HVAC technologies products, with **$10 million** in incremental sales from acquired businesses[13](index=13&type=chunk) [Performance Technologies](index=3&type=section&id=Performance%20Technologies) Performance Technologies sales declined 8% to $285.5 million due to market weakness and product exits, leading to a 240 bps gross margin contraction to 18.2% and a 16% drop in operating income Performance Technologies Performance (Q1 FY2026 vs Q1 FY2025) | Metric (in millions) | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Sales | $285.5 | $309.0 | -8% | | Gross Margin | 18.2% | 20.6% | -240 bps | | Operating Income | $26.5 | $31.5 | -16% | | Adjusted EBITDA | $37.5 | $43.7 | -14% | - The sales decrease was primarily due to market-related declines in heavy-duty equipment and on-highway applications, as well as strategic product line exits[13](index=13&type=chunk) - Gross margin decline was driven by lower sales volume and higher material costs, which were partially offset by improved operating efficiencies[13](index=13&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20%26%20Liquidity) Net debt increased to $402.6 million as of June 30, 2025, driven by acquisitions, while net cash from operating activities and free cash flow decreased due to increased working capital Debt and Liquidity Summary | Metric (in millions) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Debt | $527.1 | $350.8 | | Cash and Cash Equivalents | $124.5 | $71.6 | | Net Debt | $402.6 | $279.2 | Cash Flow Summary (Three months ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $27.7 | $40.5 | | Free Cash Flow | $0.2 | $13.7 | - The increase in net debt resulted from borrowings to fund acquisitions[10](index=10&type=chunk) - The decrease in free cash flow was primarily due to an increase in working capital, related to higher inventory balances in Climate Solutions[9](index=9&type=chunk) [Non-GAAP Financial Disclosures](index=5&type=section&id=Non-GAAP%20Financial%20Disclosures) The report utilizes non-GAAP measures such as Adjusted EBITDA, Adjusted EPS, Net Debt, Free Cash Flow, and Organic Sales Growth to evaluate financial performance and liquidity, with detailed definitions and reconciliations provided - Key non-GAAP measures used by management for performance evaluation include: - **Adjusted EBITDA:** Net earnings excluding interest, taxes, D&A, restructuring, acquisition costs, and other charges - **Adjusted EPS:** Diluted EPS excluding restructuring, acquisition costs, and certain other charges - **Net Debt:** Total debt less cash and cash equivalents - **Free Cash Flow:** Net cash from operating activities less capital expenditures - **Organic Sales:** Net sales excluding the impact of acquisitions and foreign currency fluctuations[16](index=16&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) This section presents detailed, unaudited financial statements for Q1 FY2026, including Consolidated Statements of Operations, Balance Sheets, Cash Flows, and reconciliations of GAAP to non-GAAP measures [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20statements%20of%20operations%20(unaudited)) The Consolidated Statements of Operations show a 3% increase in net sales to $682.8 million and an 8% increase in net earnings to $51.2 million for Q1 FY2026 Consolidated statements of operations (unaudited) (In millions, except per share amounts) | | Three months ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | | Net sales | $682.8 | $661.5 | | Cost of sales | $517.4 | $498.9 | | **Gross profit** | **$165.4** | **$162.6** | | Selling, general & administrative expenses | $84.9 | $82.8 | | Restructuring expenses | $4.8 | $5.4 | | **Operating income** | **$75.7** | **$74.4** | | Interest expense | ($5.8) | ($7.5) | | Other expense – net | ($4.2) | ($0.3) | | **Earnings before income taxes** | **$65.7** | **$66.6** | | Provision for income taxes | ($14.0) | ($18.8) | | **Net earnings** | **$51.7** | **$47.8** | | Net earnings attributable to Modine | $51.2 | $47.3 | | **Net earnings per share – diluted** | **$0.95** | **$0.88** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20consolidated%20balance%20sheets%20(unaudited)) The balance sheet as of June 30, 2025, shows total assets of $2,228.5 million, an increase driven by inventories, intangible assets, and goodwill, largely financed by increased long-term debt Condensed consolidated balance sheets (unaudited) (In millions) | | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Total current assets** | **$1,155.4** | **$961.2** | | Property, plant and equipment – net | $425.9 | $390.5 | | Intangible assets – net | $198.8 | $146.7 | | Goodwill | $268.2 | $233.9 | | **Total assets** | **$2,228.5** | **$1,917.6** | | **Total current liabilities** | **$561.9** | **$541.0** | | Long-term debt | $482.1 | $296.7 | | **Total liabilities** | **$1,209.8** | **$999.4** | | **Total equity** | **$1,018.7** | **$918.2** | | **Total liabilities & equity** | **$2,228.5** | **$1,917.6** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20consolidated%20statements%20of%20cash%20flows%20(unaudited)) For Q1 FY2026, net cash from operating activities was $27.7 million, with $144.0 million used in investing activities and $166.9 million generated from financing, resulting in a $52.8 million net cash increase Condensed consolidated statements of cash flows (unaudited) (In millions) | Three months ended June 30, | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $27.7 | $40.5 | | Net cash used for investing activities | ($144.0) | ($26.5) | | Net cash provided by financing activities | $166.9 | $0.0 | | Net increase in cash | $52.8 | $12.9 | [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=Adjusted%20financial%20results%20(unaudited)) This section provides detailed reconciliations for non-GAAP measures, showing how Q1 FY2026 Net Earnings of $51.7 million reconcile to Adjusted EBITDA of $101.4 million, and diluted EPS of $0.95 to Adjusted EPS of $1.06 Reconciliation of Net Earnings to Adjusted EBITDA (in millions) | Three months ended June 30, | 2025 | 2024 | | :--- | :--- | :--- | | Net earnings | $51.7 | $47.8 | | Interest expense | $5.8 | $7.5 | | Provision for income taxes | $14.0 | $18.8 | | Depreciation and amortization | $19.0 | $19.1 | | Other expense – net | $4.2 | $0.3 | | Restructuring expenses | $4.8 | $5.4 | | Acquisition and integration costs | $1.9 | $1.9 | | **Adjusted EBITDA** | **$101.4** | **$100.9** | Reconciliation of Diluted EPS to Adjusted EPS | Three months ended June 30, | 2025 | 2024 | | :--- | :--- | :--- | | Net earnings per share – diluted | $0.95 | $0.88 | | Restructuring expenses | $0.08 | $0.09 | | Acquisition and integration costs | $0.03 | $0.07 | | **Adjusted earnings per share** | **$1.06** | **$1.04** |

Core Insights - Modine has raised its revenue and earnings outlook for fiscal 2026, driven by improved data center sales and recent acquisitions [13][2][1] Financial Performance - Net sales for the quarter ended June 30, 2025, increased by 3% to $682.8 million, compared to $661.5 million in the prior year [3][11] - Net earnings rose by 8% to $51.7 million, up from $47.8 million in the previous year [5][11] - Adjusted EBITDA increased slightly to $101.4 million, compared to $100.9 million in the prior year [5][11] - Earnings per share increased by 8% to $0.95, compared to $0.88 in the prior year [6][11] Segment Performance - The Climate Solutions segment reported sales of $397.4 million, an 11% increase from $357.3 million a year ago, driven by higher sales of data center and HVAC technologies products [12][11] - The Performance Technologies segment saw a decline in sales to $285.5 million, down 8% from $309.0 million, primarily due to market-related declines [12][11] Cost and Expenses - Gross profit increased by 2% to $165.4 million, while gross margin decreased by 40 basis points to 24.2% [4][11] - Selling, general, and administrative expenses rose by $2.1 million to $84.9 million, mainly due to increased spending for growth and acquisitions [4][11] Balance Sheet and Liquidity - As of June 30, 2025, total debt was $527.1 million, with cash and cash equivalents totaling $124.5 million, resulting in net debt of $402.6 million [9][11] - Net cash provided by operating activities decreased to $27.7 million, down $12.8 million from the prior year [8][11] Outlook - Modine anticipates net sales growth of 10% to 15% and adjusted EBITDA in the range of $440 million to $470 million for fiscal 2026 [13][11]

Core Insights - Modine Manufacturing Company (MOD) is expected to report first-quarter fiscal 2026 results on July 30, with earnings per share (EPS) estimated at 93 cents and revenues at $651.12 million, reflecting a 10.58% decline in EPS year-over-year [1][9] - The consensus estimate for quarterly revenues indicates a year-over-year decline of 1.57% [2] Financial Performance - In the fourth quarter of fiscal 2025, MOD reported adjusted EPS of $1.12, exceeding the Zacks Consensus Estimate of 95 cents, and net sales of $647 million, surpassing the estimate of $625 million [2] - The company has consistently beaten earnings estimates in the past four quarters, with an average surprise of 14.90% [2] Revenue Projections - For fiscal 2026, MOD anticipates net revenues to increase by 2-10% year-over-year, with the Climate Solutions segment projected to grow by 12-20%, driven by strong demand in data centers and commercial indoor air quality products [3] - The company expects revenue growth of over 30% year-over-year specifically for data centers [3] EBITDA Expectations - Adjusted EBITDA for fiscal 2026 is expected to range between $420 million and $450 million, compared to $392.1 million in fiscal 2025, indicating a positive outlook for the company's performance [4] Segment Performance - Performance Technologies sales are projected to decline by 2% to 12% year-over-year due to ongoing market weaknesses and trade conflicts, which may offset overall top-line growth in the first quarter [5] - SG&A expenses as a percentage of sales increased to 12.8% in fiscal 2025 from 11.3% in fiscal 2024, and are expected to remain elevated, potentially impacting margin performance in the upcoming quarter [6] Earnings Prediction - The current Earnings ESP for MOD is -4.30%, indicating that the model does not predict an earnings beat for the upcoming quarter [7][8]

Core Insights - Modine announced a multimillion-dollar investment to expand U.S. manufacturing capacity for Airedale by Modine™ data center cooling products in response to unprecedented demand from U.S. hyperscale and colocation data center customers [1][2] - The investment aims to enhance manufacturing and testing capabilities, create new jobs, and support the redeployment and retraining of existing employees [2][3] - Modine's total data centers revenue is projected to approach $2 billion by Fiscal 2028, driven by significant growth in the U.S. digital infrastructure market [2][4] Investment Details - The company plans to invest $100 million over the next 12-18 months to expand manufacturing at four sites, including a new facility in Dallas, TX, and expansions in Grenada, MS [2][3] - Existing Performance Technologies' sites in Franklin, WI, and Jefferson City, MO, are also being considered for repurposing to support this growth [2] Product and Market Strategy - Modine is focusing on delivering integrated, modular, and scalable cooling solutions to meet the needs of hyperscale and colocation data center customers [3][4] - The company is developing a modular data center platform tailored for key global customers to address the increasing demand for rapid deployment and scalable infrastructure [3] Company Background - Modine has over 100 years of experience in thermal management technology, with a commitment to engineering solutions that improve air quality and reduce energy consumption [5] - The company operates globally, with a workforce of more than 11,000 employees across North America, South America, Europe, and Asia [5]