Modine Manufacturing Company
10/29/2025 | Press release | Distributed by Public on 10/29/2025 10:18
Amendment to Current Report (Form 8-K/A)
NEWS RELEASE
FOR IMMEDIATE RELEASE
Modine Reports Second Quarter Fiscal 2026 Results
Strong revenue performance driven by strong organic growth in Climate Solutions segment and strategic acquisitions; raising full-year revenue guidance
Racine, WI - October 28, 2025 - Modine (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported financial results for the quarter ended September 30, 2025.
Second Quarter Highlights:
| ● | Net sales of $738.9 million increased 12 percent, from the prior year |
| ● | Net earnings of $44.8 million decreased $1.6 million, or 3 percent, from the prior year |
| ● | Adjusted EBITDA of $103.8 million increased 4 percent, from the prior year |
| ● | Earnings per share of $0.83 decreased $0.03, or 3 percent, from the prior year |
| ● | Adjusted earnings per share of $1.06 increased $0.09, or 9 percent, from the prior year |
Fiscal 2026 Outlook:
| ● | Net sales growth between 15 percent to 20 percent, up from our prior outlook of 10 to 15 percent |
| ● | Adjusted EBITDA range of $440 million to $470 million, resulting in growth between 12 percent and 20 percent |
"This quarter's strong organic growth reflects the continued momentum of the Climate Solutions segment, which is aligned with our strategy to expand manufacturing capacity in response to accelerating demand for data center solutions," said Modine President and Chief Executive Officer, Neil D. Brinker. "As we prepare to bring this additional capacity online, we are encountering temporary operating inefficiencies. However, these expansions are critical to meeting customer needs and fueling long-term growth. We remain on track to begin production in the second half of the fiscal year, positioning us to capitalize on recent investments and further drive revenue and margin improvement."
Second Quarter Financial Results
Net sales increased 12 percent to $738.9 million, compared with $658.0 million in the prior year. Sales growth was driven by higher sales in the Climate Solutions segment, driven by strong demand from data center customers and sales from acquired businesses, partially offset by lower sales in the Performance Technologies segment, primarily related to on-going market weakness.
Gross profit decreased $0.7 million to $164.9 million and gross margin decreased by 290 basis points to 22.3 percent. The decrease in gross margin was primarily driven by lower gross margin in the Climate Solutions segment, which resulted from increased costs related to the capacity expansion for data center products. In addition, the prior year included a benefit from commercial pricing settlements from heat pump customers.
Selling, general and administrative ("SG&A") expenses decreased $1.6 million to $84.2 million. The decrease was primarily due to headcount reductions in Performance Technologies, partially offset by higher spending to support growth and acquisitions in Climate Solutions.
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Operating income decreased $1.8 million to $73.5 million, compared to $75.3 million in the prior year. This decrease was primarily driven by a $4.1 million impairment charge on real estate held for sale in Europe. The Company also recorded $3.1 million of restructuring expenses during the quarter, primarily severance expenses related to headcount reductions and other costs related to equipment transfers. Net earnings of $44.8 million decreased $1.6 million, or 3 percent, compared to $46.4 million in the prior year. Adjusted EBITDA, which excludes restructuring expenses, impairment charges, certain other charges, interest expense, the provision for income taxes, and depreciation and amortization expense, was $103.8 million, an increase of $4.0 million, or 4 percent, compared to $99.8 million in the prior year.
Earnings per share was $0.83, compared with $0.86 in the prior year, a decrease of $0.03 or 3 percent. Adjusted earnings per share was $1.06, compared with adjusted earnings per share of $0.97 in the prior year, an increase of $0.09 or 9 percent.
Second Quarter Segment Review
| ● | Climate Solutions segment sales were $454.4 million, compared with $366.4 million one year ago, an increase of 24 percent. Data center sales increased 42 percent from the prior year, and HVAC Technologies sales increased 25 percent, including $28.1 million of incremental sales from acquired businesses. The segment reported gross margin of 24.6 percent, which was 440 basis points lower than the prior year. This decline included the negative impact of temporary costs related to the rapid expansion of manufacturing capacity for data center products, the absence of commercial pricing settlements that benefited the prior year, and unfavorable sales mix in HVAC Technologies. The segment reported operating income of $62.2 million, a 4 percent decrease from the prior year, and adjusted EBITDA of $76.0 million, a decrease of 4 percent from the prior year. |
| ● | Performance Technologies segment sales were $286.3 million, compared with $297.5 million one year ago, a decrease of 4 percent. This decrease primarily resulted from lower sales of On-Highway Applications products to commercial vehicle customers. The segment reported gross margin of 18.9 percent, which was 130 basis points lower than the prior year, primarily due to the lower sales volume, higher material costs, and the absence of sales tax credits recognized in Brazil in the prior year. This was partially offset by the positive impact of improved operating efficiencies and cost reductions. The segment reported operating income of $29.7 million, a 4 percent decrease from the prior year, and adjusted EBITDA of $42.2 million, a 3 percent increase from the prior year. |
Balance Sheet & Liquidity
Net cash provided by operating activities for the six months ended September 30, 2025 was $29.1 million, a decrease of $68.7 million compared to the prior year. Free cash flow for the six months ended September 30, 2025 was negative $30.3 million, a decrease of $87.8 million from the prior year. This decrease was due to an increase in working capital, primarily related to higher inventory balances in Climate Solutions, and higher capital expenditures to support growth in Data Centers. Cash payments for restructuring activities, acquisition and integration costs, and certain other costs totaled $15.8 million during the six months ended September 30, 2025.
Total debt was $582.1 million as of September 30, 2025. Cash and cash equivalents totaled $83.8 million as of September 30, 2025. Net debt was $498.3 million as of September 30, 2025, an increase of $219.1 million from the end of fiscal 2025. This increase resulted from borrowings to fund acquisitions and capital expenditures.
Outlook
"Organic growth in Climate Solutions continues to gain momentum and is projected to accelerate in the second half of the fiscal year," said Brinker. "We now anticipate Data Centers revenue to grow by more than 60 percent year-over-year, reflecting strong demand and strategic execution. Based on current market conditions, we are raising our revenue outlook and reaffirming our guidance for adjusted EBITDA. Our expanded capacity positions us to meet growing demand for data center products, and keeps us on track to achieve our target of more than $2 billion in Data Centers revenue by fiscal 2028."
Based on current exchange rates and market conditions, Modine provides its revised outlook for Fiscal 2026:
|
Fiscal 2026 |
Current Outlook |
|
Net Sales |
+15% to 20% |
|
Adjusted EBITDA |
$440 to $470 million |
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Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a slide presentation, on Wednesday, October 29, 2025, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss its second quarter fiscal year 2026 financial results. The webcast and accompanying slides will be available on the Investor Relations section of the Modine website at www.modine.com. Participants are encouraged to log on to the webcast and conference call about ten minutes prior to the start of the event. A replay of the audio and slides will be available on the Investor Relations section of the Modine website at www.modine.com on or after October 29, 2025. A call-in replay will be available through midnight on November 5, 2025, at 877-660-6853, (international replay 201-612-7415); Conference ID# 13755492. The Company will post a transcript of the call on its website on or after October 31, 2025.
About Modine
For more than 100 years, Modine has solved the toughest thermal management challenges for mission-critical applications. Our purpose of Engineering a Cleaner, Healthier World™ means we are always evolving our portfolio of technologies to provide the latest heating, cooling, and ventilation solutions. Through the hard work of more than 11,000 employees worldwide, our Climate Solutions and Performance Technologies segments advance our purpose with systems that improve air quality, reduce energy and water consumption, lower harmful emissions, enable cleaner running vehicles, and use environmentally friendly refrigerants. Modine is a global company headquartered in Racine, Wisconsin (U.S.), with operations in North America, South America, Europe, and Asia. For more information about Modine, visit www.modine.com.
Modine Manufacturing Company published this content on October 29, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 29, 2025 at 16:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]