Financial Data and Key Metrics Changes - For Q2, the company reported record net sales of $257.6 million, up 20% year over year and marking the sixth consecutive quarter of growth [25][24] - Adjusted gross margin was 53.2%, down 30 basis points sequentially but up 280 basis points year over year [25] - Adjusted operating income was $48.6 million, resulting in an adjusted operating margin of 18.8%, up 460 basis points year over year [26] - Adjusted diluted earnings per share increased to $0.41, up from $0.11 a year ago [28] - The adjusted debt leverage ratio improved to 1.6, down from 8.8 a year ago [27] Business Line Data and Key Metrics Changes - Infrastructure net sales reached $73.4 million, up 1% sequentially and up 39% year over year, driven by record revenues in the data center business [9] - Data center net sales were $52.2 million, up 1% sequentially and up 92% year over year [10] - High-end consumer net sales were $41.2 million, up 16% sequentially and up 11% year over year [17] - Industrial net sales were $143 million, up slightly sequentially and up 14% year over year [19] - IoT systems hardware business recorded net sales of $64.8 million, up 2% sequentially and up 24% year over year [21] Market Data and Key Metrics Changes - The company noted strong demand in the data center market, with expectations for continued growth driven by increased CapEx spending from cloud service providers [39] - In China, CSPs showed cautious booking activity due to GPU availability but have recently seen improved bookings [40] - The company is experiencing strong momentum in the 5G market, particularly with IoT transitions from 4G to 5G [22] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, having reduced debt significantly and improved its net leverage ratio [6] - There is an emphasis on portfolio optimization and increased investment in core assets such as data center, LoRa, and Persei [6][8] - The company aims to transform into a higher growth and more profitable entity, with a strong focus on R&D to support long-term growth [5][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the data center market's growth cycle, driven by higher data rates and increased demand for fiber edge products [11] - The company anticipates continued strong opportunities in the data center market, despite some caution from CSPs in China [40] - Management highlighted the importance of low power and low latency solutions in meeting the evolving demands of data centers [12] Other Important Information - The company recorded a non-cash goodwill impairment charge of $41.9 million from its Connected Services business [28] - The company expects net sales for Q3 to be approximately $266 million, reflecting a 12% year-over-year increase [30] Q&A Session Summary Question: What is the timing for LPO opportunities? - Management indicated that LPO deployments are expected to start in Q4, with some customers at different stages of testing and qualification [36][37] Question: What is the outlook for data center spending? - Management expressed strong confidence in continued data center spending, with CSPs forecasting increased CapEx for 2026 and beyond [38][39] Question: What is the outlook for CopperEdge adoption? - Management reported strong traction with CopperEdge, with several key customers engaged in testing and qualification [46] Question: What is the expected performance of LoRa? - Management expects LoRa revenue to be between $30 million to $40 million quarterly, driven by new applications and enhanced capabilities [56] Question: What are the expectations for ACC revenue? - Management expects ACC revenue to ramp up in Q4, with 100 gig per lane cables leading the initial demand [95] Question: What are the expectations for the Tri Edge business? - Management plans to continue developing the Tri Edge product line, focusing on low power consumption and signal integrity [86][88]

Financial Data and Key Metrics Changes - The second quarter recorded a 17% increase in gross contact revenue, a 15% increase in net service billing, over 8% organic net service billing growth, and almost 51% growth in adjusted EBITDA [5][6] - Gross revenue and net revenue reached $122 million and $108 million respectively, with adjusted EBITDA of $20.2 million and a margin of $18.7 million, marking record-setting figures [6][7] - Adjusted EBITDA margin increased by 250 basis points year-over-year and is projected to be around 17% for the year [10][11] Business Line Data and Key Metrics Changes - Organic growth in net revenue was positive across all verticals, strongest in transportation at 21%, followed by natural resources and imaging at 19%, power utilities and energy at 5%, and building infrastructure at 4% [14][15] - The backlog at the end of Q2 was nearly $87 million, a 25% increase compared to last year and a 5% increase from Q1 [15] Market Data and Key Metrics Changes - The company is experiencing strong demand in transportation, renewables, and energy transmission, with record bookings well balanced across markets [5][6] - The influence of the data center market is growing, leading to increased demand for power generation, transmission, and consumption [22][23] Company Strategy and Development Direction - The company is focusing on capturing a larger share of the data center market by moving data centers into the power market sector and expanding service offerings through acquisitions [23][26] - A commitment of $25 million for innovation investment through the Bowman Innovation Growth Fund aims to enhance digital and data service offerings and create efficiencies [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the remainder of 2025 and early 2026, expecting a similar growth pattern to the previous year with momentum building through the second and third quarters [28] - The recent "One Big Beautiful" bill is expected to accelerate investment decisions and project pipelines, particularly in renewable energy [84][85] Other Important Information - The company maintains a healthy balance sheet with low leverage of 1.6 times trailing four quarters adjusted EBITDA and $108 million in net debt [15][16] - Cash flow from operations year-to-date is $16.3 million, reflecting a nearly 50% adjusted EBITDA conversion rate [16] Q&A Session All Questions and Answers Question: Can you talk about the Transportation segment and growth areas? - The company is seeing strong synergies from recent acquisitions and increased public spending, leading to wins in construction management and engineering services [30][31] Question: Can you provide more color on the Power and Utilities segment? - Energy transmission is significant for the company, with recent wins in power transmission and applications from the acquisition of Surdex [32] Question: Can you discuss operational capacity and areas of investment? - The company is focused on managing labor increases and investing in innovation to leverage workforce efficiency [34] Question: Can you elaborate on the updated outlook for the year? - The updated view implies improving margins in the second half, despite some inflationary pressure on labor [38][40] Question: How has the acquisition pace affected the organic business? - The slower acquisition pace has allowed the company to focus on organic growth and efficiencies, with plans to continue pursuing larger deals [57][58] Question: What is the impact of the One Big Beautiful bill on project pipelines? - The bill is expected to accelerate investment decisions and project activity, particularly in renewable energy [84][85] Question: What is driving growth in natural resources? - Growth is driven by the acquisition of Certex and increased work in high altitude orthoimetry and geospatial services [87]

Financial Data and Key Metrics Changes - In 2024, the company delivered GAAP earnings per share of $3.44 and ongoing earnings per share of $3.50, marking the twentieth consecutive year of meeting or exceeding initial earnings guidance [19][20] - The company reaffirmed its 2025 earnings guidance range of $3.75 to $3.85 per share, with long-term earnings per share growth expectations of 6% to 8% and dividend growth of 4% to 6% [20] Business Line Data and Key Metrics Changes - The company invested over $7.5 billion in 2024 to modernize electric and natural gas systems, alongside updating its five-year capital plan [20] - The resource plans include proposals for 15,000 to 29,000 megawatts of new efficient, clean generation, with a focus on wind, solar, and battery storage [36][37] Market Data and Key Metrics Changes - The U.S. electricity demand growth rate through 2030 has tripled, with expectations to sell 30% more electricity in 2030 than in 2024 [14] - The company has received requests for nearly 9,000 megawatts of new daily demand from data center companies, equivalent to powering over 8 million homes each year [14] Company Strategy and Development Direction - The company is strategically positioned to capitalize on the growing demand for electricity driven by new technologies and the transition to cleaner energy sources [4][13] - A $45 billion investment plan over the next five years aims to modernize, strengthen, and expand the grid to support economic growth and the clean energy transition [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the unprecedented growth opportunities in the energy sector, emphasizing the importance of evolving and pushing to new heights [27][30] - The company is focused on enhancing customer experience, affordability, reliability, and advancing clean energy policy goals [19][21] Other Important Information - The company has been recognized as one of Ethisphere's world's most ethical companies for six consecutive years and has received accolades for its commitment to diversity and inclusion [29] - In 2024, the corporate economic development team closed on 24 projects resulting in over $5 billion in capital investment and the creation of more than 3,000 jobs [23] Q&A Session Summary Question: Can you provide an update on your recent resource plan? - The company plans to add between 15,000 and 29,000 megawatts of new generation resources, including 720 megawatts of firm dispatchable generation in the Upper Midwest [35][36] Question: What impact will data centers have on future load growth? - The company is experiencing significant interest from data centers, with nearly 9,000 megawatts of backlog and expects to serve about 25% of that demand [39][40] Question: What impact do recently announced tariffs have on your capital investment plans? - The company has been agile in managing its supply chain and expects tariffs to represent about 1% to 2% of its total capital bill over the next five years, which is considered manageable [42][45]

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]