Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Gentherm, with a focus on how actual results compare to estimates, which could significantly influence the stock price [1][2]. Earnings Expectations - Gentherm is expected to report quarterly earnings of $0.57 per share, reflecting a year-over-year increase of +96.6% [3]. - Revenue is projected to be $374.72 million, representing a 6.2% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 4.46% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Gentherm matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a strong predictor for positive readings [9][10]. - Gentherm currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [12]. Historical Performance - In the last reported quarter, Gentherm exceeded the expected earnings of $0.64 per share, achieving $0.73, which was a surprise of +14.06% [13]. - Over the past four quarters, Gentherm has beaten consensus EPS estimates twice [14]. Market Context - The automotive industry player Dana is expected to post earnings of $0.32 per share, indicating a year-over-year change of +28%, with revenues expected to decline by 20.4% to $1.86 billion [18][19]. - Dana's consensus EPS estimate has been revised up by 9.4% in the last 30 days, but it also has an Earnings ESP of 0.00% [19][20].

Financial Data and Key Metrics Changes - Modine reported a 31% increase in third-quarter sales, 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% due to cost reductions and improved efficiencies [15][16] - 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 volumes down, but commercial execution and cost recoveries led to a slight revenue increase [6][15] - Data center products experienced a 31% sequential revenue growth in Q3, with expectations for significant incremental volumes in Q4 [16] Company Strategy and Development Direction - The company is focusing on high-margin, high-growth businesses, with plans to spin off the Performance Technologies segment and combine it with Gentherm [4][5] - Modine aims to become a pure-play, diversified climate solutions company, concentrating on investments for growth and capacity expansion [6] - The company is targeting over $1 billion in data center sales for the current year and expects to reach $2 billion by fiscal 2028 [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future growth of the Climate Solutions segment, particularly in data centers, and anticipates further margin improvements [19][22] - The company is optimistic about the fourth quarter outlook, expecting to deliver record sales and earnings [23] - Management noted that the end markets for Performance Technologies are expected to remain depressed in the near term [22] Other Important Information - Free cash flow was negative $17 million in Q3, primarily due to inventory builds and higher CapEx in climate solutions [20] - The company anticipates generating positive free cash flow in Q4 and expects CapEx for the full fiscal year to be in the range of $150 million to $180 million [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 see a sequential margin improvement to the range of 20%-21%, while Performance Technologies may experience a temporary dip in EBITDA margin 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 revenue? - Management indicated that capacity expansion and demand will influence the growth range, with confidence in achieving the higher end as capacity comes online [30][31] Question: Can you provide insights on the record order intake in data centers? - The majority of the growth is driven by existing customer relationships, particularly with hyperscalers, indicating strong demand and potential for future orders [38][39] Question: How is the working capital investment trending, and when will free cash flow normalize? - Management expects working capital to trend back to normal ratios as inventory levels stabilize and CapEx decreases [40][41] Question: What are the top concerns for data center customers regarding their cooling needs? - Customers are focused on securing capacity and ensuring that suppliers are investing in production to meet rising demand, alongside innovations in energy and water efficiency [71]

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]

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 a 3% decrease in heavy-duty equipment sales offset by a 6% increase in on-highway product sales [15] - Climate Solutions segment saw a 51% increase in revenues, with data center sales growing by 78% [8][16] - Adjusted EBITDA margin for Climate Solutions improved to 17.9%, reflecting strong top-line growth [17] Market Data and Key Metrics Changes - The data center market is projected to deliver over $1 billion in sales this fiscal year, with expectations of reaching $2 billion by fiscal 2028 [12] - Record order intake in the data center segment indicates strong demand, primarily from existing customers [38] Company Strategy and Development Direction - The company is focusing on high-margin, high-growth businesses, with plans to spin off the Performance Technologies segment and merge it with Gentherm [3][4] - Modine aims to become a pure-play, diversified climate solutions company, concentrating on investments in growth and capacity expansion [5] - The company is committed to innovation in data center cooling solutions, addressing energy consumption and water usage challenges [71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the Climate Solutions segment, particularly in data centers, with expectations for continued revenue growth [12][19] - The company anticipates a sequential ramp in revenue for Q4, driven by typical seasonal patterns and increased data center volumes [15][22] - Management raised the fiscal 2026 revenue outlook to a growth range of 20%-25%, with Climate Solutions expected to grow 40%-45% [21][22] Other Important Information - Free cash flow was negative $17 million in Q3, primarily due to inventory builds and higher capital expenditures [19] - 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 [20] 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 of 200+ basis points in Q4, while Performance Technologies may see a temporary dip in EBITDA margin [26] Question: What defines the high and low end of the 50%-70% CAGR for data center revenue? - 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 details on the record order intake in data centers? - The majority of growth is driven by existing customer relationships, particularly with hyperscalers, indicating strong demand and potential for future orders [38] Question: How is the company managing working capital and free cash flow? - Management indicated that working capital ratios are expected to normalize, with a return to positive free cash flow anticipated next year [40] Question: What is the company's strategy regarding long-term agreements (LTAs)? - The company is open to structuring LTAs to secure capacity and reduce risk, aligning with strategic customers [84]

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 ...

Company Overview - Gentherm (NASDAQ: THRM) is a global market leader in innovative thermal management and pneumatic comfort technologies [4] - The company offers automotive products such as Climate Control Seats (CCS), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, and Valve Systems, as well as medical products including patient temperature management systems [4] - Gentherm employs over 14,000 people across 13 countries [4] Financial Performance - Gentherm recorded annual sales of approximately $1.5 billion in 2024 [4] - The company secured $2.4 billion in new business awards in the automotive sector [4] Upcoming Events - Gentherm will report its financial results for the fourth quarter and year-end 2025 on February 19, 2026 [1] - A conference call to discuss these results will take place at 8 am (ET) on the same day [1]

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]

Core Insights - Gentherm has submitted a 510(k) Class II premarket notification to the FDA for its ThermAffyx™ Patient Safety System, which is designed to enhance patient safety during robotic surgeries by maintaining temperature and preventing movement [1][4] Group 1: Product Innovation - The ThermAffyx™ System is the first of its kind to combine air-free patient warming with securement technology, addressing critical patient safety concerns such as hypothermia and unintended movement during surgeries [2][3] - The development of this system was initiated after identifying a significant clinical gap in the market, showcasing Gentherm's commitment to innovation in medical technology [3] Group 2: Market Impact - The introduction of the ThermAffyx™ System is expected to set a new standard of care in operating rooms, potentially improving patient outcomes significantly [3][4] - Gentherm's approach leverages technology from its automotive division, indicating a strategic expansion into the medical device market [3] Group 3: Company Overview - Gentherm is a global leader in thermal management and pneumatic comfort technologies, with a diverse product portfolio that includes both automotive and medical applications [5] - In 2024, Gentherm reported annual sales of approximately $1.5 billion and secured $2.4 billion in new business awards within the automotive sector, highlighting its strong market position [5]

Core Viewpoint - Modine Manufacturing is spinning off its Performance Technologies segment and merging it with Gentherm in a transaction valued at approximately $1 billion, aimed at transforming Modine into a high-growth, pure-play Climate Solutions company [1][3][5]. Transaction Details - The deal values Performance Technologies at about $1 billion, equating to 6.8 times trailing twelve-month Adjusted EBITDA as of September 30, 2025 [1][6]. - Modine is expected to receive $210 million in cash and shareholders will receive approximately $790 million in Gentherm stock, resulting in Modine shareholders owning 40% of the combined Gentherm/PT company [1][6]. - The transaction is structured as a Reverse Morris Trust, intended to be tax-free for Modine and its shareholders [2][6]. Financial and Growth Outlook - The Climate Solutions segment generated approximately $1.6 billion in revenue with a 19.6% adjusted EBITDA margin, and management anticipates revenue growth of 35-40% to nearly $2 billion [4][10]. - Data centers are identified as a core growth driver, with a projected 50-70% annual growth over the next two years [4][13]. - Modine plans to invest $125-150 million in capital expenditures to support revenue capacity of $2-3 billion [4][14]. Strategic Outcome - The transaction will create two focused companies: a larger thermal management platform (Gentherm + PT) and a streamlined Climate Solutions Modine focused on data centers and commercial HVAC&R [5][9]. - Modine's management has been shifting towards higher-growth, higher-margin businesses, completing six divestitures and six acquisitions over the past five years [8][9]. Reporting Structure Changes - Post-transaction, Modine will operate through two primary business segments: data centers and commercial HVAC&R, with a new reporting structure expected to begin in the first quarter of fiscal 2027 [12][17]. Market Position and Future Outlook - Modine expects to replace approximately $1 billion of PT revenue with revenue from the data center market within the next 12 to 24 months [14]. - The company anticipates continued demand for thermal cooling solutions in data centers for the next 5 to 10 years, driven by evolving chip technology [15].

Company Overview - Modine's shares increased by 20.3% to $176.72 in the last trading session, with a higher-than-average trading volume, compared to a 10% gain over the past four weeks [1] - The company announced a definitive agreement to spin off its Performance Technologies business and merge it with Gentherm through a Reverse Morris Trust transaction, which is structured to be tax-free for U.S. federal income tax purposes [2] Financial Performance - Modine is expected to report quarterly earnings of $0.99 per share, reflecting a year-over-year increase of 7.6%, with revenues projected at $763.38 million, up 23.8% from the same quarter last year [3] - The consensus EPS estimate for the quarter has been revised 2.6% higher over the last 30 days, indicating a positive trend in earnings estimate revisions, which typically correlates with stock price appreciation [4] Industry Context - Modine operates within the Zacks Automotive - Original Equipment industry, which includes other companies like Custom Truck One Source, Inc. [5] - Custom Truck One Source's consensus EPS estimate has remained unchanged at $0.07, representing a year-over-year change of 75%, and it currently holds a Zacks Rank of 4 (Sell) [6]