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 Data and Key Metrics Changes - Organic sales grew by 6% in Q3 2025, with segment margins expanding by 20 basis points to 17.6% [4][22] - Adjusted EPS increased by 11% year-over-year, reaching $1.05, exceeding guidance [23] - Year-to-date adjusted free cash flow nearly doubled to $1.8 billion, with over 100% free cash flow conversion expected for the year [4][29] Business Line Data and Key Metrics Changes - Orders grew by 2%, with strength in The Americas offset by softness in China [5][24] - In The Americas, orders increased by 5%, while EMEA saw a 2% rise, and APAC experienced a decline [24][25] - Adjusted segment EBITDA margins improved across regions, with EMEA up 100 basis points to 14.1% and APAC up 70 basis points to 19.4% [26] Market Data and Key Metrics Changes - The backlog grew by 11% to a record $14.6 billion, with both system and service backlogs increasing [5][27] - Sales in The Americas rose by 7% organically, driven by HVAC and controls [25] - APAC sales grew by 6% organically, with strong double-digit growth in the service business [26] Company Strategy and Development Direction - The company is focusing on customer centricity, operational efficiency, and innovation to drive growth [7][8] - A new business system is being developed, emphasizing simplification, acceleration, and scaling through lean principles and digitization [12][14] - The company is evaluating its portfolio for potential acquisitions or exits to ensure sustainable growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of core vertical markets despite challenges in China [63] - The company anticipates low single-digit organic sales growth in Q4, with a reaffirmation of mid-single-digit growth for the full year [27][28] - There is a focus on improving operational efficiency and cash flow conversion, with expectations of maintaining over 100% free cash flow conversion [29][50] Other Important Information - The sale of the residential and light commercial HVAC business to Bosch is expected to close in Q4, with most proceeds returned to shareholders [30] - The company is committed to returning 100% of free cash flow to shareholders through dividends and share repurchases [29] Q&A Session Summary Question: Initial observations and KPIs focus - Management highlighted the need to sharpen customer focus and drive growth through innovation and operational improvements [34][35] Question: Accelerating growth in Fire and Security - Management sees potential in both HVAC and Fire and Security, with plans to apply new business systems to improve performance [45][46] Question: Free cash flow opportunities - Management noted strong cash flow performance driven by improved collection management and operational efficiencies [49][50] Question: Orders and growth outlook - Management expressed confidence in healthy pipelines despite lower-than-expected order growth, particularly in China [62][63] Question: 2026 outlook and Investor Day - Management is working on the 2026 plan and aims to provide a clearer long-term outlook as the year progresses [72][74]

Financial Data and Key Metrics Changes - Revenue for the second quarter grew by 3% compared to the previous year, with a segment margin reaching a record 23.6%, an increase of 170 basis points [6][11] - Adjusted earnings per share (EPS) for the second quarter was $7.82, with operating cash flow reported at $87 million [6][11] - The full-year adjusted EPS outlook has been raised to a range of $23.25 to $24.25, reflecting strong execution in a challenging environment [8][20] Business Line Data and Key Metrics Changes - Home Comfort Solutions (HCS) segment saw a 3% revenue increase driven by favorable product mix and pricing, despite a decline in sales volume due to inventory destocking and market conditions [12][13] - Building Climate Solutions (BCS) segment achieved a 5% revenue increase, supported by emergency replacement products, although overall market demand remained weak [15][16] Market Data and Key Metrics Changes - The company noted softness in new construction demand and industry-wide refrigerant canister shortages impacting sales [6][7] - The transition to low GWP refrigerants is ongoing, with approximately 90% of refrigerant-based product sales now utilizing the new R454B refrigerant [12][21] Company Strategy and Development Direction - The company is focused on executing its transformation strategy introduced in 2022, with an emphasis on digital customer experience, ductless technology, and expanding its product portfolio through strategic partnerships [25][26] - Joint ventures with Samsung and Ariston are expected to enhance product offerings and customer experience, with significant contributions anticipated starting in 2026 and 2027 respectively [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate ongoing challenges, citing improved factory productivity and a strong operational execution [23][24] - The outlook for the second half of the year is cautiously optimistic, with expectations of stabilization in demand and continued margin expansion [20][21] Other Important Information - The company has authorized an additional $1 billion in share repurchases and increased its quarterly dividend by approximately 15% [16][17] - Inventory levels are expected to normalize in the second half of the year, following temporary investments to support the transition to new products [16][92] Q&A Session Summary Question: Can you discuss the price and cost dynamics, particularly regarding A2L manufacturing costs and tariffs? - Management indicated that both cost and price are in line with expectations, with productivity improvements driving margin expansion [30][34] Question: What are the volume assumptions for the second half? - Volume guidance for HCS is expected to decline by about 8%, while BCS is projected to decline by about 4% [35][36] Question: Can you confirm the margin outlook for the full year? - The company is projecting about a 50 basis point expansion in margins for the full year, with both segments expected to show margin improvement [40][41] Question: What are the expectations regarding the Ariston partnership and market share? - Early feedback from dealers on the water heater business has been positive, with meaningful growth expected starting in 2027 [54][57] Question: How is the company managing inventory and what is the outlook for the second half? - The company plans to reduce inventory levels to normal by the end of the year, with a focus on balancing supply and demand [92][93]

Company Overview - AAON's order backlog is $1 billion[17] - AAON's gross margin is 31%[17] - AAON's EBITDA margin is 211%[17] - AAON's CapEx and R&D as a percentage of sales is 216%[17] - AAON's EPS is $190[17] - AAON's ROIC is 167%[17] BASX Overview - BASX's backlog at 1Q25 is $623 million, up 123% year over year[128] - BASX has had a three-year CAGR of ~40% in a market growing ~10%[26] - BASX air-side cooling sales (~$166M in 2024) expected to grow >20% for the next three years[162] Financial Targets - The company is affirming its 3-year targets of 32%-35% gross margin and 125%-plus organic sales CAGR[71]