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    MODINE MANUFACTURING (MOD)

    MOD Q4 2025 on track for $1B data center revenue, doubles NA capacity

    Reported on May 22, 2025 (After Market Close)
    Pre-Earnings Price$93.26Last close (May 21, 2025)
    Post-Earnings Price$93.63Open (May 22, 2025)
    Price Change
    $0.37(+0.40%)
    • Robust Data Center Demand and Extended Customer Visibility: Executives highlighted strong demand in the North American data center segment—with relationships now including five hyperscalers and customer project visibility extending 3 to 5 years—supporting a significant revenue growth opportunity and justifying capacity expansion in Mississippi.
    • Aggressive Capacity Expansion to Meet Demand: The company is addressing current capacity constraints by doubling North American chiller production capacity, indicating confidence in sustained order flow and a commitment to capture incremental revenue from the rapidly growing data center market.
    • Resilient Supply Chain and Tariff Mitigation Strategy: By significantly reducing dependency on Chinese supply sources through a robust local-for-local strategy, the company shields itself from tariff risks and supply chain disruptions, enhancing its competitive edge.
    • Execution Risk in Capacity Ramp-Up: The Q&A highlights that despite strong demand for data center products, capacity ramp-up—especially in North America—is still underway and may lead to a softer Q1 performance if production and shipping do not meet demand quickly enough.
    • Tariff and Supply Chain Uncertainty: Discussions on tariffs and supply chain challenges indicate potential cost pressures and disruptions from global trade dynamics, which could erode margins if not managed successfully.
    • Uncertainty Surrounding Strategic Divestitures: The delay or uncertainty in executing planned divestitures of nonstrategic business segments, such as the automotive portion, may continue to weigh on the Performance Technologies segment’s profitability.
    MetricYoY ChangeReason

    Total Net Sales

    Increased by 7% (from $603.5M to $647.2M)

    Strong overall sales growth driven by solid gains in key segments and geographies, particularly the Americas and Climate Solutions, which helped offset the decline in Performance Technologies revenue.

    Climate Solutions Revenue

    Increased by 34% (from $264.5M to $356.1M)

    Surge due to robust organic growth and strategic acquisitions boosting demand in data center cooling and HVAC&R, with notable increases in sales volumes and favorable pricing contributing significant incremental revenue.

    Performance Technologies Revenue

    Decreased by 22% (from $351.4M to $274.2M)

    The decline primarily reflects the impact of divestitures and market softness in key end-markets, reducing revenue from previously higher-performing automotive and industrial segments.

    Americas Revenue

    Increased by 15% (from $362.3M to $417.7M)

    Growth achieved through strong performance in the Climate Solutions segment, particularly in data centers and HVAC&R, boosted by acquisitions and an improved sales mix, driving a substantial uplift in regional revenue.

    Europe Revenue

    Decreased by 7% (from $194.9M to $181.7M)

    A decline driven by past divestitures, ongoing market challenges, and strategic cost-streamlining efforts such as the sale of the European headquarters contributed to a reduction in regional revenue.

    Operating Income

    Increased by 59% (from $46.8M to $74.5M)

    Significant improvement resulted from a higher gross profit driven by better pricing, improved sales mix, and operational efficiencies, which more than offset higher SG&A and restructuring expenses compared to the prior period.

    Net Earnings

    Increased by 92% (from $26.1M to $50.1M)

    A remarkable jump is attributable to the strong operating income growth and improved cost and tax management, resulting in nearly doubling net earnings despite increased SG&A and restructuring costs from the previous period.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Full Year Revenue Growth

    FY 2025

    Expected to trend towards the lower end of the guidance range

    no current guidance

    no current guidance

    Data Center Sales

    FY 2025

    Expected to grow 110% to 120%

    no current guidance

    no current guidance

    Adjusted EBITDA

    FY 2025

    Anticipated to see a sequential improvement in Q4 earnings that puts the full‐year slightly above the midpoint of the current adjusted EBITDA guidance range

    no current guidance

    no current guidance

    Adjusted EPS

    FY 2025

    Expected to remain in a range of $3.65 to $3.95

    no current guidance

    no current guidance

    Free Cash Flow

    FY 2025

    Expected to be in line or above the prior fiscal year

    no current guidance

    no current guidance

    Total Company Sales Growth

    FY 2026

    no prior guidance

    Expected to grow in the range of 2% to 10%

    no prior guidance

    Climate Solutions Sales Growth

    FY 2026

    no prior guidance

    Expected to grow 12% to 20%

    no prior guidance

    Data Center Revenue Growth

    FY 2026

    no prior guidance

    Anticipated to grow in excess of 30%

    no prior guidance

    Heating and School Business Growth

    FY 2026

    no prior guidance

    Expected to grow in low double digits

    no prior guidance

    Heat Transfer Products

    FY 2026

    no prior guidance

    Expected to be flat to slightly down (0% to -5%)

    no prior guidance

    Performance Technologies Sales Decline

    FY 2026

    no prior guidance

    Anticipated to decline by 2% to 12%

    no prior guidance

    Performance Technologies Margin Improvement

    FY 2026

    no prior guidance

    Expected to improve by 125 to 175 basis points

    no prior guidance

    Climate Solutions Margins

    FY 2026

    no prior guidance

    Expected to remain flat or slightly up

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Data Center Market Growth & Hyperscaler Relationships

    Recurring bullish sentiment: In Q1, Q2 and Q3 earnings calls, Modine consistently highlighted robust data center revenue growth driven by strong organic gains and the Scott Springfield acquisition ( , , ). The calls emphasized expanding hyperscaler relationships and increased sales—e.g. 138% growth in Q1 and 176% growth in Q3.

    Continued momentum: In Q4 2025, the Climate Solutions segment reported a 30% revenue increase with data center sales up 119%, while hyperscaler relationships expanded from one to five and capacity expansion in North America was emphasized ( , , ).

    Bullish and steady: The sentiment remains strongly positive with consistent high growth and expanding customer relationships. The focus has shifted towards balancing organic growth and execution of capacity increases.

    Capacity Expansion and Production Ramp-Up

    Steady investment: Q1 through Q3 earnings calls detailed multiple facility additions globally – including ramp-up via additional production lines in Mississippi, Virginia, and India. Executions in existing plants (e.g., Virginia’s shift expansion) and new global facilities were highlighted ( , , ).

    Focused execution: In Q4 2025, emphasis was on the North American expansion, with production capacity already maxed out at Virginia and significant ramp-up at Mississippi (more than doubling capacity), along with acknowledgment of a 12‐month cycle for full ramp-up ( , , ).

    Consistently bullish with cautious execution focus: The strategy is consistent with prior quarters, though Q4 adds a note of caution on timing and execution challenges while maintaining an overall positive outlook.

    Supply Chain Resilience and Tariff Mitigation

    Emerging themes: Only Q3 discussed these topics briefly by citing a global footprint that minimizes trade risks ( ). Q1 and Q2 did not provide relevant details.

    Enhanced focus: In Q4, Modine stressed the reduction in China-dependency and implementation of a “local-for-local” strategy with 38 facilities in 14 countries, effectively minimizing tariff exposure (less than 10% of annual spend) and mitigating related financial impacts ( , , ).

    Improved resilience: The Q4 discussion marks a clear strategic emphasis on supply chain diversification and tariff management, showing a proactive and positive evolution compared to earlier emphasis.

    Performance Technologies Segment Dynamics

    Mixed outlook: Q1 emphasized strong margin improvements (25% increase in adjusted EBITDA and 390 bp margin improvement) ( ) while Q2 noted revenue declines and active cost initiatives, and Q3 pointed to cyclic softness and lower sales volumes along with restructuring efforts ( , , ).

    Balanced yet challenging: In Q4, despite the segment’s strong Q4 EBITDA margins (15% adjusted EBITDA margin, 220 bp improvement) and cost initiatives, challenges persist in vehicular markets—including prolonged downturns and delayed EV program ramps ( , , ).

    Mixed sentiment: Ongoing restructuring and cost management keep margins on track, but continued market softness in core areas adds caution. The narrative has shifted to managing underlying challenges while extracting better profitability.

    Heat Transfer Sales Decline & Heat Pump Market Challenges

    Bearish signals: In Q1, heat transfer sales were down 21% (mainly due to soft European heat pump markets) with over three-quarters of the decline tied to heat pumps ( , ). Q2 reported a 13% decline with explicit market recovery challenges based on regulatory delays ( , ), and Q3 saw a 13% decline with some stabilization notes ( , ).

    Slight improvement: In Q4, heat transfer sales declined by 11% (a smaller percentage decline than prior periods) and notably, there was no specific mention of heat pump market challenges ( ).

    Moderate stabilization: While declines persist, the absence of new heat pump challenges in Q4 may indicate initial stabilization or reduced emphasis on that subsegment compared to earlier quarters.

    Strategic Divestitures & Non-Core Automotive Transition

    Consistent repositioning: Q1 described multiple divestitures (e.g. German automotive businesses) and a planned transition away from non-core auto components with $100M revenue rationalization per year ( , , ). Q2 reinforced this strategic shift with discussion on transitioning away from the ICE auto business ( ). Q3 further detailed divestiture-related actions such as the sale of their European headquarters and exiting commoditized segments ( , ).

    Ongoing transformation: In Q4, management reiterated the strategic exit from the automotive sector and the focus on executing a consolidated transaction. They emphasized that while the automotive business remains in full‐year guidance, a strategic exit is underway ( , ).

    Steady transition: The focus and sentiment remain consistent with previous periods, as the company continues to divest non-core assets while refining its portfolio for long-term growth.

    Competitive Pressures in the Data Center Cooling Market

    Limited mention: This topic was discussed in Q3 where management noted competitive bidding pressures and the need for bespoke solutions, but it was not a central theme in Q1 or Q2 ( , ).

    Not discussed: There was no mention of competitive pressures in Q4 2025, suggesting a deprioritization or resolution of earlier competitive concerns.

    De-emphasized: The lack of discussion in Q4 implies that competitive pressures are either being effectively managed or are no longer a focal point compared to earlier periods.

    Scott Springfield Acquisition Integration

    High contribution: In Q1, success was noted via strong customer synergies, robust order book reinforcement, and expectations of 40%-50% organic growth from the acquisition ( ). Q2 and Q3 highlighted its significant revenue contributions ($80M in Q2; $63M in Q3) and successful integration into the product portfolio ( , ).

    Robust and positive: In Q4, the acquisition was reported to have driven 119% growth in data center sales with a $197M contribution, reinforcing its key role in overall segment growth and capacity expansion in North America ( , ).

    Continued positive integration: The acquisition remains a strong growth engine, with consistently increasing contributions across periods.

    Geographic Expansion Initiatives (India)

    Emerging focus: Q1 did not mention India, while Q2 announced a new facility in Chennai to support Asia and the Middle East, and Q3 elaborated on strategic expansion in India as part of a broader Asia Pacific growth plan ( , , ).

    Ongoing expansion: In Q4, progress on India initiatives continues with plans to launch production in Q2 2026 aimed at supporting Southeast Asia and the Middle East, emphasizing a long-term commitment to the region ( ).

    Strengthening global reach: The focus on India has intensified over the quarters, evolving from an emerging initiative in Q2/Q3 to a core expansion strategy in Q4 with clearly defined timelines.

    GenSet Business Growth

    Consistently positive: Q1 indicated a forecast of around $120M in sales and 20%-30% growth, Q2 reported a 29% increase in sales, and Q3 noted a 16% growth rate – all underscoring strong momentum in this business ( , , ).

    Steady growth maintained: In Q4, sales to GenSet customers increased by 29%, reinforcing its role as a growth driver within Performance Technologies ( ).

    Sustained bullish outlook: The GenSet segment remains one of the consistent bright spots, with growth figures aligning closely across periods and a clear strategic emphasis on expanding this business.

    1. Data Center Outlook
      Q: How far do customer schedules extend?
      A: Management indicated visibility out to 5 years with high near-term confidence and moderate outlook beyond 2 years.

    2. Capacity Expansion
      Q: Is doubling capacity specific to North America?
      A: Yes, the plan focuses on North American facilities, doubling chiller capacity to meet strong local demand.

    3. Revenue Ramp
      Q: Is data center growth gradual or sudden?
      A: Growth is expected to be gradual—with a softer Q1 ramping up in later quarters as new capacity comes online.

    4. Segment Mix
      Q: What are segment growth rate expectations?
      A: Data center revenues are forecasted to grow by 30%, heating in low double digits, while coil sales remain flat or slightly down.

    5. Margin Outlook
      Q: What margin improvements are anticipated per segment?
      A: Performance Technologies targets an improvement of 125–175bps, while Climate Solutions is expected to sustain margins around 20%+.

    6. DC Demand & Hyperscalers
      Q: What drives North America demand and hyperscaler count?
      A: Strong North American demand is evident along with relationships with 5 hyperscalers, despite more cautious European spending.

    7. Geographical Split
      Q: What is the US versus Europe revenue mix?
      A: The data center revenue mix is approximately 75% North America and 25% Europe, reflecting a stronger US market.

    8. DC Revenue Target
      Q: Are we on track for $1B in data center revenue?
      A: The robust expansion in North America supports strong confidence in achieving and potentially exceeding the $1B target.

    9. Strategic Outlook
      Q: How long-term is the DC business optionality?
      A: Focus remains on execution with a healthy pipeline over the next 24 months, postponing further long-term strategic moves.

    10. Divestitures
      Q: Are divestitures built into fiscal guidance?
      A: Divestitures are not factored in this guidance; however, an automotive exit is still under active consideration.

    11. Supply Chain
      Q: Any critical imports still coming from China?
      A: Dependency on China has been greatly reduced through a local-for-local strategy amid past supply challenges.

    12. Modular DC System
      Q: Does the modular system expand overall TAM?
      A: It doesn’t increase total addressable market but accelerates deployment speed for customers.

    Research analysts covering MODINE MANUFACTURING.