Core Insights - Modine Manufacturing Company (MOD) and Gentherm Incorporated (THRM) are both involved in thermal management technologies for the automotive sector, with Modine also serving other markets such as HVAC and construction equipment [1][2] - The analysis aims to compare the fundamentals of both companies to determine which is better positioned to meet investor expectations amid tariff-related uncertainties [2] Modine Manufacturing Company (MOD) - Modine has consistently exceeded earnings expectations for the last four quarters, reporting net sales of $682.8 million in Q1 fiscal 2026, a 3% increase from $661.5 million the previous year, driven by strong performance in the Climate Solutions segment [3][9] - The company anticipates a significant volume ramp-up in the second half of the year, projecting full-year fiscal 2026 net sales growth of 10-15% year over year and adjusted EBITDA growth of 12-20% [3][21] - Modine has implemented the 80/20 principle, leading to transformative operational and financial improvements during fiscal 2025 [4] - Recent acquisitions, including AbsolutAire, L.B. White, and Climate by Design International, are aimed at addressing thermal management challenges and expanding into high-growth adjacent markets [5] - Modine announced a $100 million investment over 12-18 months to enhance U.S. manufacturing of data center cooling products, expecting data center revenues to approach $2 billion by fiscal 2028 [6] - The company boasts a high return on equity (ROE) of 24%, significantly above the industry average of 7.2%, indicating strong profitability relative to shareholder equity [7] Gentherm Incorporated (THRM) - Gentherm reported stable revenues of $375 million in Q2 2025, with a 3.8% year-over-year growth in Automotive Climate and Comfort Solutions, outperforming S&P Global's light vehicle production report by 10 basis points [8][11] - The company secured $620 million in new automotive business awards in Q2, raising its 2025 revenue outlook to between $1.43 billion and $1.5 billion [11] - Gentherm is focusing on narrowing the gap in Asia, with 70% of year-to-date awards going to domestic OEMs in China, compared to 50% in the previous two years [10] - The company is diversifying into the medical sector, enhancing its European distribution through a partnership with DUOMED [12] - However, tariffs have posed a challenge, resulting in a narrowed EBITDA margin guidance range of 11.7-12.5% [13] - Gentherm's ROE stands at 9.9%, which, while respectable, is lower than Modine's [13][22] Price Performance and Valuation - Year-to-date, Modine shares have increased by approximately 31.5%, while Gentherm's stock has decreased by 11% [14] - Modine is trading at a forward sales multiple of 2.62X, close to its five-year mean of 2.72X, whereas Gentherm's forward sales multiple is at 0.73X, significantly below its median of 2.85X [16] Earnings Estimates - The Zacks Consensus Estimate for Modine's fiscal 2026 EPS indicates a year-over-year growth of 14.3%, with estimates trending upward [18] - Conversely, the Zacks Consensus Estimate for Gentherm's 2025 EPS suggests a year-over-year decline of 4.3%, although estimates have also been trending upward [19] Conclusion - Modine is positioned for solid top-line growth with projected double-digit revenue and EBITDA gains for fiscal 2026, supported by strategic acquisitions and investments [21] - Gentherm shows resilience with steady revenues and strong automotive business wins, but its lower ROE and margin pressures from tariffs present challenges [22] - Overall, Modine's stronger financial performance and clearer growth strategy make it a more attractive investment option compared to Gentherm [23]

Financial Performance - Modine achieved a third consecutive record year, driven by strong Q4 performance[7] - Net sales for FY25 reached $25835 billion, up from $24078 billion in FY24[5, 27] - Adjusted EBITDA for FY25 was $3921 million, compared to $3143 million in FY24[5, 28] - Adjusted EPS grew by 45% due to higher earnings in Q4 FY25[19] - Free cash flow for FY25 was $129 million[20] Climate Solutions Segment - Climate Solutions saw a 30% increase in revenues and a 45% increase in adjusted EBITDA in FY25[10] - Data center revenue increased by 119% to $644 million, including $197 million from the Scott Springfield acquisition[10] - Climate Solutions net sales in Q4 FY25 were $3563 million, an 80% increase in Data Centers sales[15] - Adjusted EBITDA margin for Climate Solutions in Q4 FY25 improved by 290 bps to 214%[15] Performance Technologies Segment - Performance Technologies net sales for FY25 were $11635 billion, down from $13213 billion in FY24[12] - Adjusted EBITDA for Performance Technologies in FY25 was $1572 million, compared to $1524 million in FY24[12] - Performance Technologies Q4 FY25 sales decreased by 12%[16] - Adjusted EBITDA margin for Performance Technologies in Q4 FY25 increased by 220 bps to 150% due to improved operating efficiency[16] Fiscal Year 2026 Outlook - The company anticipates revenue growth of 2% to 10%, projecting net sales between $264 billion and $284 billion[23, 24] - Adjusted EBITDA is forecasted to grow by 7% to 15%, reaching $420 million to $450 million[23, 24] - Climate Solutions sales are expected to increase by 12% to 20% in FY26[23]