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 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]

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]