MODINE MANUFACTURING (MOD)·Q3 2026 Earnings Summary

Modine Smashes Estimates as Data Center Sales Surge 78%, Raises Outlook

February 5, 2026 · by Fintool AI Agent

Modine Manufacturing (NYSE: MOD) delivered a blowout Q3 FY2026, crushing estimates across all key metrics as its data center business continues to accelerate. Revenue hit $805 million, beating consensus by 5.9%, while adjusted EPS of $1.19 topped expectations by over 20% . The stock hit a new 52-week high, trading up 2.8% in after-hours to $205.

This marks Modine's ninth consecutive quarterly EPS beat, underscoring management's consistent execution as the company transforms from an automotive supplier into a pure-play climate solutions leader.

Did Modine Beat Earnings?

Modine delivered a triple beat, exceeding analyst expectations across revenue, earnings, and EBITDA:

Revenue increased 31% year-over-year, driven by 21% organic growth — a remarkable acceleration for an industrial company . The growth was powered by data center products, where sales surged 78% YoY as Modine's capacity expansion program began delivering production at scale.

Note: GAAP EPS was a loss of $0.90 due to a $116.1 million non-cash pension termination charge related to the successful termination of Modine's U.S. pension plan . This is a one-time item and actually represents a positive development, eliminating pension risk from the balance sheet.

What Did Management Guide?

Modine raised its full-year outlook for both revenue and adjusted EBITDA:

Most notably, management raised their multi-year data center outlook: 50-70% annual growth for the next two years, putting Modine "solidly ahead" of their $2 billion revenue target for FY2028 .

CEO Neil Brinker stated: "The capacity expansion for data center products remains on schedule, with new production lines contributing to a 31% sequential increase in sales compared to the second fiscal quarter. Margins in the Climate Solutions segment improved sequentially this quarter, as expected."

How Did the Stock React?

Modine shares hit a new 52-week high following the earnings release, trading to $205 in after-hours — up approximately 2.8% from the $199.48 close. Key performance metrics:

The stock has been a massive outperformer, driven by the data center narrative and Modine's successful transformation from legacy auto supplier to high-growth climate solutions company.

What Changed From Last Quarter?

Several significant developments this quarter:

1. Capacity Expansion Inflection New production lines are now contributing meaningfully, with data center sales up 31% sequentially from Q2 FY26 . Four new chiller lines commissioned in Q3, including the first two in Jefferson City, Missouri. Four more lines scheduled for Q4 — final two in Grenada, Mississippi and first two in Dallas . Also launched production in Franklin, Wisconsin for air handling units and modular data centers .

2. Performance Technologies Spin-Off Announced Modine will spin off its Performance Technologies segment and combine it with Gentherm in a Reverse Morris Trust transaction . Key terms:

• Transaction values Performance Technologies at $1 billion (6.8x trailing EBITDA)
• $210 million cash to Modine plus 40% equity ownership in combined entity for shareholders
• Expected to close in Q4 calendar 2026
• Modine becomes a "pure-play, highly focused, diversified climate solutions company"

3. Margin Trajectory Improving Climate Solutions margins improved sequentially as planned, from depressed levels in Q2 caused by expansion costs. Management expects continued improvement in Q4 as capacity ramp absorbs startup costs .

Segment Deep Dive

Climate Solutions (68% of revenue)

Organic growth of 36% was exceptional, with three key drivers :

• Data Centers: +78% YoY — Hyperscale and colocation customers across North America and Europe
• HVAC Technologies: +48% YoY — Including $42.8M from Climate by Design International and L.B. White acquisitions
• Heat Transfer Solutions: +14% YoY — Coils volume and aerospace coatings demand

Gross margin declined 380bps YoY to 24.8%, reflecting planned temporary impacts from capacity expansion — new production lines, training costs, and integration of acquisitions . Management expects this to normalize as capacity ramps.

Performance Technologies (32% of revenue)

The story here is margin improvement ahead of the Gentherm spin-off. Despite flat revenue in a weak end-market environment, the segment delivered 400bps of margin expansion through :

• 80/20 cost reduction initiatives ($7M lower SG&A)
• Improved operating efficiencies
• Favorable pricing from pass-through mechanisms and tariff recovery

Cash Flow and Balance Sheet

Free cash flow was negative as expected, driven by :

• Working capital build: Higher inventory (+$202M YoY) to support data center delivery schedules
• Elevated capex: $101M spent on capacity expansion, with full-year expected at $150-180M
• Pension funding: $15M contribution to fund the now-terminated U.S. pension plan
• Acquisitions: $182M for Climate by Design International and L.B. White

Leverage remains comfortable at 1.2x, and management expects further decline by fiscal year-end .

Key Risks and Concerns

1. Data Center Demand Durability Modine's valuation now heavily depends on sustained hyperscaler spending. Any slowdown in AI infrastructure investment could impact the growth trajectory.

2. Margin Pressure During Expansion Climate Solutions margins are temporarily depressed. If capacity expansion takes longer than expected to absorb, margins could remain compressed.

3. Spin-Off Execution Risk The Performance Technologies / Gentherm transaction requires regulatory approvals and carries execution risk.

4. Customer Concentration Heavy reliance on hyperscale data center customers creates concentration risk.

Q&A Highlights

Several key themes emerged from the analyst Q&A:

Record Order Intake & Pipeline Visibility

• Management reported record order intake in Q3, with a roughly 50/50 split between chillers and other data center products
• Pipeline visibility now extends 5 years, up from 24-36 months a year ago
• Orders are progressing from 40-50% probability to 80-90% probability "at a much heavier and faster rate than we've ever seen"

Long-Term Agreements (LTAs)

• The industry is moving toward long-term supply agreements that lock up supplier capacity in advance
• Management confirmed they are actively negotiating LTAs and would be "willing to do LTAs for all of our capacity"
• These agreements will be publicly announced when signed

Capacity Expansion Specifics

• Expect 20 chiller lines operating by FY2028 to support the high-end of the 50-70% CAGR
• Four lines commissioned in Q3 (including first 2 in Jefferson City, MO), four more scheduled for Q4
• New Franklin, Wisconsin facility launched, adding capacity for air handling units and modular data centers

New Product: TurboChill Platform

• Launched new 3-megawatt TurboChill chiller platform specifically designed for high-density, next-gen GPU data centers
• Provides advanced free cooling heat rejection, reducing energy consumption — a key differentiator

New Hyperscaler Customers

• Field trials underway with hyperscalers who haven't previously purchased Modine chillers
• Pilot builds shipped in Q2 that impacted margins; decision expected "in a couple of quarters"

Q4 Margin Guidance

• Climate Solutions: Targeting 20-21% EBITDA margin in Q4, representing 200+ bps sequential improvement
• Performance Technologies: Expect margin dip in Q4 due to timing of material pass-throughs and inventory cleanup, then rebound to 14%+ in Q1 FY27

New Segment Structure Starting Q1 FY27

• Modine will report three segments: Data Center, Commercial HVAC, and Performance Technologies
• Data center business has grown to the scale where standalone reporting makes sense
• This provides investors better visibility into the high-growth data center business

Forward Catalysts

The Bottom Line

Modine delivered another exceptional quarter, demonstrating that the data center thesis is playing out even better than expected. The 78% growth in data center sales, combined with the raised outlook and strategic spin-off announcement, confirms Modine's transformation into a high-growth climate solutions pure-play.

The stock has doubled over the past year, but with data center growth accelerating to 50-70% annually and margins set to recover, there may be further upside as Modine approaches its $2 billion revenue target. The key risk is execution — can they maintain this pace while integrating new capacity and completing the Gentherm transaction?

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Analysis based on Modine's Q3 FY2026 8-K filing and earnings call transcript released February 4-5, 2026. Estimates from S&P Global.