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MODINE MANUFACTURING CO (MOD)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered record results and broad-based strength: revenue $647.2M, adjusted EPS $1.12, adjusted EBITDA $104.1M; gross margin expanded 330 bps to 25.7%. Both revenue and EPS beat consensus for the quarter, extending Modine’s margin improvement streak to 13 consecutive quarters . EPS and revenue estimates marked with * are from S&P Global; see Estimates Context.
  • Climate Solutions was the growth engine: Q4 segment sales +28% y/y; data center sales up $69M (+80% y/y), with stronger North America demand and incremental contribution from Scott Springfield Manufacturing. Management highlighted multi-year visibility (up to 3–5 years) and accelerated capacity additions in Virginia and Mississippi to keep up with demand .
  • FY2026 outlook at Q4: net sales +2% to +10% and adjusted EBITDA $420–$450M, with wider ranges to reflect tariff uncertainty; Modine later raised FY2026 guidance to net sales +10% to +15% and adjusted EBITDA $440–$470M on July 30 (post-quarter) .
  • Stock reaction catalysts: accelerating North American data center capacity (Grenada chiller lines, Rockbridge scale-up), launch of modular data center solution, and $180M AI infrastructure orders from a new customer; PT margin actions and tariff mitigation clarity further support narrative momentum .

What Went Well and What Went Wrong

  • What Went Well
    • Data center momentum and capacity expansion: “We are increasing production capacity both at our Rockbridge Virginia facility and in Grenada, Mississippi” to address strong hyperscaler and colocation demand .
    • Margin execution: “This now represents the 13th consecutive quarter of year-over-year margin improvement and we achieved our highest adjusted EBITDA margin since beginning Modine’s strategic transformation” .
    • Visibility and customer diversification: “We have visibility of upwards of 5 years… high confidence in a year outlook, moderate to high confidence in 2 years out” and relationships with five hyperscalers .
  • What Went Wrong
    • Vehicular end-markets pressured PT: segment sales down 11% y/y, FX headwind ~$7.6M; delays in EV program launches led to lowered near-term Advanced Solutions expectations .
    • Europe data center tentativeness: softer EU demand and project delays; pricing discipline maintained given premium brand positioning .
    • Tariff uncertainty: management broadened guidance ranges due to unknown tariff impacts on supply chains and end-market demand, though purchasing exposure subject to new tariffs is <10% .

Financial Results

  • Consolidated results
MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$603.5 $616.8 $647.2
Diluted EPS ($USD)$0.48 $0.76 $0.92
Adjusted EPS ($USD)$0.77 $0.92 $1.12
Gross Margin %22.4% 24.3% 25.7%
Adjusted EBITDA ($USD Millions)$78.8 $87.3 $104.1
Operating Income ($USD Millions)$46.8 $59.3 $74.5
Free Cash Flow ($USD Millions)$(4.3) $44.7 $27.1
  • Q4 2025 vs consensus (S&P Global)
MetricConsensusActualSurprise
Revenue ($USD Millions)$631.5*$647.2 +$15.7M / +2.5%
Primary EPS ($USD)$0.955*$1.12 +$0.165 / +17.3%

Values marked with * retrieved from S&P Global.

  • Segment revenue and profitability
Segment MetricQ4 2024Q3 2025Q4 2025
Climate Solutions Revenue ($M)$278.2 $360.8 $356.3
Performance Technologies Revenue ($M)$330.0 $262.2 $294.8
Climate Solutions Adjusted EBITDA ($M)$51.6 $75.7 $76.3
Climate Solutions Adj. EBITDA Margin (%)18.5% 21.0% 21.4%
Performance Technologies Adjusted EBITDA ($M)$42.1 $28.4 $44.1
Performance Technologies Adj. EBITDA Margin (%)12.8% 10.8% 15.0%
  • KPIs
KPIValue
Data center Q4 y/y sales growth+80%
FY2025 Data center revenue$644M
FY2025 Data center geography mix~75% North America / 25% Europe
Net Debt (3/31/2025)$279.2M
Leverage ratio (FY2025 end)0.7x
Q4 share repurchases$18M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales GrowthFY2026+2% to +10% +10% to +15% Raised
Adjusted EBITDA ($M)FY2026$420 to $450 $440 to $470 Raised
Tariff assumptionsFY2026Wider ranges to reflect tariff/FX uncertainty Reaffirmed, with stronger demand/added capacity Clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Data center demand/capacityLaunch of 1MW CDU; expanding UK/Calgary; India facility; raising DC outlook; gaining share in NA; adding chillers for hyperscalers NA demand very strong; modular DC solution; doubling chiller capacity in NA; five hyperscaler relationships; multi-year visibility Accelerating
Tariffs/supply chainLocal-for-local footprint; <10% annual spend subject to proposed tariffs; pass-through surcharges; mitigation plan <10% purchases subject to new tariffs; wider guidance ranges; case-by-case pricing; broader uncertainty acknowledged Managed, uncertainty persists
PT restructuring/marginsPlanned product exits (~$300M); severance for ~$15M annual savings; sequential Q4 ramp expected; margin targets reiterated Reorganizing into 2 product groups; >$15M savings; margin improvement even on lower sales; Q1 FY26 severance planned Ongoing cost takeout, margins up
Regional trendsEU heat pump softness; NA DC strength; India capacity planning EU DC tentativeness/slight delays; NA ramp constrained by capacity; 75/25 NA/EU mix FYDC NA strength; EU mixed
Liquid cooling/CDUCDU launch, initial shipments expected Q4 FY2025; inquiries from hyperscalers/colo CDU revenue targeted mid FY2026; integration with chillers/CRACs for efficiency Building pipeline
M&A/divestituresSSM integration; board add; automotive exits in Germany completed; further PT exits targeted Confidence in executing at least one acquisition in 1H FY2026; aiming to exit remaining automotive in one transaction Increasing actionability

Management Commentary

  • “Our team delivered a third consecutive year of record revenue and adjusted EBITDA in fiscal 2025… record results were led by our data center business… Performance Technologies reported a significant margin improvement on lower sales” — Neil D. Brinker, CEO .
  • “Data center sales grew $69 million or 80% from the prior year… adjusted EBITDA margin [Climate] improved to 21.4%” — Michael Lucareli, CFO .
  • “We have visibility of upwards of 5 years… high confidence in a year outlook… opportunity to do business with five hyperscalers” — Neil D. Brinker .
  • “Given the volatility and uncertainty in the market, we are providing wider-than-usual ranges for our outlook” — Michael Lucareli .
  • “There is a great deal of market uncertainty due to the unknown impact of tariffs… we are taking actions to mitigate supply chain and other potential risks” — Neil D. Brinker .

Q&A Highlights

  • Data center visibility and capacity: Multi-year pipeline visibility (3–5 years); NA demand far outpacing capacity; doubling chiller capacity in NA; Q1 FY26 expected as softest quarter before ramping across the year .
  • Tariff exposure: <10% of purchases subject to new tariffs; local-for-local supply chain mitigates risk; case-by-case pass-through/pricing actions; primary uncertainty is ultimate product demand, notably in PT .
  • Europe softness: Some project delays and pricing discipline in EU; focus remains on executing ramp in NA .
  • M&A/divestitures: Confidence in completing at least one acquisition in next quarter or two; strategic exit of remaining automotive targeted as single transaction .
  • Modular DC solution: Improves customer speed-to-deploy via plug-and-play; similar TAM but faster start-up; supports AI infrastructure buildout .

Estimates Context

  • Quarterly beats vs consensus (S&P Global):
MetricQ2 2025Q3 2025Q4 2025
Revenue Consensus ($M)646.8*613.9*631.5*
Revenue Actual ($M)658.0 616.8 647.2
Primary EPS Consensus ($)0.922*0.79*0.955*
Adjusted/Diluted EPS Actual ($)0.97 adj / 0.86 dil 0.92 adj / 0.76 dil 1.12 adj / 0.92 dil

Values marked with * retrieved from S&P Global.

  • FY2025 context:
MetricFY 2025
Revenue Consensus ($M)2,576.6*
Revenue Actual ($M)2,583.5
Primary EPS Consensus ($)3.882*
Adjusted/Diluted EPS Actual ($)4.05 adj / 3.42 dil

Values marked with * retrieved from S&P Global.

Implication: Both Q4 revenue and EPS materially beat consensus; estimate revisions likely trend higher for FY2026 on data center strength and subsequent guidance raise .

Key Takeaways for Investors

  • Data center remains the core growth and margin driver; NA demand is constrained by capacity, which Modine is rapidly expanding (Grenada and Rockbridge) — expect second-half FY2026 ramp and sustained multi-year growth visibility .
  • PT margins improving despite volume pressure, with >$15M annual cost savings and portfolio reshaping; near-term volumes remain challenged, but structural margin trajectory is positive .
  • Tariff uncertainty is acknowledged and embedded in guidance; exposure appears manageable (<10% of purchases), supported by local-for-local supply chains and pricing mechanisms .
  • Post-quarter, Modine raised FY2026 revenue and EBITDA guidance, reflecting acquisitions and capacity additions — a bullish signal on execution and demand durability .
  • Modular data center solution and $180M AI infrastructure orders broaden product scope and customer base, strengthening competitive positioning and potential wallet share in hyperscaler builds .
  • Watch Q1 FY2026 for the expected softer quarter in data centers before capacity-driven ramp; model a back-half weighted year for Climate Solutions .
  • Estimate risk skewed to upside on Climate Solutions; PT estimates should reflect cautious volumes but continued margin actions; monitor EU DC dynamics and tariff developments for potential volatility .