Modine Unveils Path to $3 Billion Data Center Revenue as Stock Hits All-Time High
January 29, 2026 · by Fintool Agent
Modine Manufacturing+18.67% shares surged 16% to an all-time intraday high of $182.47 Wednesday after management outlined explosive growth projections for the "new Modine"—a pure-play climate solutions company poised to nearly triple its data center revenue to approximately $3 billion by fiscal 2028.
During a follow-up investor call held just hours after announcing the $1 billion spinoff and merger of its Performance Technologies segment with Gentherm-0.74%, CEO Neil Brinker and CFO Mick Lucareli painted a picture of a leaner, faster-growing company singularly focused on the AI-driven data center cooling boom.
"Within the next 12-24 months, we expect to replace the $1 billion of Performance Technologies revenue with revenue from the data center market alone," Brinker said.
The math is straightforward: with 50-70% annual growth projected over the next two fiscal years off a roughly $1 billion base, Modine's data center business alone could reach $2.9 billion—nearly $3 billion—by FY 2028.
The "New Modine": A Pure-Play Climate Solutions Company
Following the transaction close expected in Q4 2026, Modine will operate as a pure-play climate solutions company through two primary business segments: Data Centers and Commercial HVAC & R.
The Climate Solutions segment delivered strong results in the trailing twelve months ended September 2025:
| Metric | TTM Sept 2025 |
|---|---|
| Net Sales | $1.57B |
| Adjusted EBITDA | $307M |
| EBITDA Margin | 19.6% |
| Data Center Revenue Mix | 45% |
Management expects fiscal 2026 Climate Solutions revenue to grow 35-40% to nearly $2 billion, driven by strong organic growth in data centers and recent HVAC acquisitions.
Ask Fintool AI Agent50-70% Growth: The Data Center Rocket Ship
The headline number that sent shares soaring: Modine is projecting 50-70% annual data center revenue growth for each of the next two fiscal years.
"Over the last two years, our data center business has grown at an impressive 93% CAGR," Brinker noted. "We believe that market demand for thermal cooling will continue for the next 5-10 years, and we are continuing to invest to support the future growth."
Data Center Revenue Trajectory:
| Fiscal Year | Revenue | Growth |
|---|---|---|
| FY 2025 (Base) | $660M | — |
| FY 2026 (Current Year) | $1.0B | 50% |
| FY 2027 (Projected) | $1.5-1.7B | 50-70% |
| FY 2028 (Target) | $2.5-2.9B | 50-70% |
Analyst Brian Drab from William Blair confirmed the math during the Q&A: "If $1 billion is the base, and the high end is 70% growth for two years, that gets you to $2.9 billion. Is that almost $3 billion level in play?" CFO Lucareli responded: "When you do that, we're doing the same math. That's absolutely the right way to think about it."
What Gives Management Confidence?
Brinker attributed the aggressive growth targets to concrete visibility:
- Strong order books - "The confidence behind it is our order books that we're seeing"
- Growing backlog - "The backlog that we have visibility of"
- Execution track record - "Our comfort as we continue to ramp these facilities"
- Capacity investments - $125-150 million annual CapEx to build 2.5 billion in revenue capacity
"Streamlined, focused, the CapEx deployment, the project plan, the backlog—it's all there to give us the ability to move and be very excited about this market," Brinker said.
Ask Fintool AI AgentAddressing the Chip Cooling Debate
Recent commentary from tech conferences—including CES discussions about next-generation chip architectures—has raised questions about the future of data center cooling as chip efficiency improves. Brinker addressed this head-on:
"The fundamental need to remove heat from data centers is not decreasing. It's intensifying," he said. "It is important to note that heat can be removed in multiple ways, both at the chip level and then at the data hall. That is exactly why we have built a comprehensive suite of cooling solutions."
When asked specifically about NVIDIA's Rubin architecture and 45°C water temperature requirements, Brinker was bullish:
"I'm excited about it. As we see the temperatures rise, you see the heat loads intensifying at magnitudes that we would only dream about years ago. And we're here, and it plays perfectly into our chiller strategy."
The company's content per megawatt remains approximately $600,000, with higher-end chillers featuring free cooling commanding a slight premium but delivering critical efficiency benefits as power costs rise.
Margin Expansion: From Low 20s to Upper 20s
While the focus is on top-line growth, management also outlined a path to significant margin expansion:
| Timeframe | EBITDA Margin Target |
|---|---|
| Near-term (during ramp) | 19-20%+ |
| Stable operations | 20-23% |
| Long-term vision | Mid-to-upper 20s |
"With the expansions, we still see that margin improving," Brinker said. "We've been public about wanting to operate in the low 20s, 20-23%. We also want to move towards a top quartile HVAC-type company, and that would mean... we move from the low 20s to the mid-20s, even upper 20s, in terms of EBITDA margins."
Notably, margins may temporarily dip as the company absorbs costs from rapid capacity expansion. "With change, that means there's costs," Brinker acknowledged, noting margins should recover to baseline levels and then expand as production stabilizes.
No Stranded Costs Expected
A key concern in any spinoff is whether the remaining company gets saddled with stranded corporate costs. Lucareli addressed this directly:
"The good news is, we're not anticipating any significant stranded costs. Our corporate costs are going to remain relatively flat," he said. "The rate of growth in the Climate Solutions business is so great that those corporate resources and costs are going to be fully absorbed in the new Modine going forward."
HVAC: The Diversification Play
While data centers grab headlines, management emphasized the importance of the Commercial HVAC & Refrigeration business for long-term portfolio balance:
| Business Unit | FY 2026 Revenue | Growth Profile |
|---|---|---|
| Commercial HVAC | >$350M | High single digits organic + M&A |
| Coatings & Refrigeration | $200M | High single digits organic |
| Coils | $200M | Optimize for profit/cash |
"For the long term, it's important to maintain a diversified business portfolio," Brinker noted. "We'll be actively building out our funnel over the next two quarters to support our HVAC technologies business and maybe even some vertical integration of the supply chain."
The company completed three HVAC acquisitions in fiscal 2026: AbsolutAire ($11.3M), L.B. White ($110.5M), and Climate by Design ($64.4M)—adding approximately $145 million in annual revenue and expanding capabilities in heating, ventilation, and dehumidification.
Ask Fintool AI AgentWhat This Means for Investors
The transaction creates an interesting dual-ownership structure for current Modine shareholders:
- 100% ownership of "New Modine" — a pure-play climate solutions company with 50-70% growth in its largest business
- 40% ownership of combined Gentherm — exposure to automotive thermal management recovery
The stock's 16% surge suggests investors are enthusiastically endorsing the pure-play data center narrative. Modine now trades at a $9 billion market cap—a significant re-rating from the $64.79 low hit just months ago.
Analysts currently have an average price target of $183, which MOD briefly exceeded during Wednesday's intraday high before settling around $171.*
Key Catalysts to Watch:
- Q3 FY 2026 Earnings — Progress on capacity ramp and data center order momentum
- Transaction Close (Q4 2026) — Regulatory approvals and carve-out audit completion
- FY 2027 Guidance — Confirmation of 50-70% growth trajectory
- Margin Recovery — Movement back toward 20%+ EBITDA margins as capacity utilization improves
The Bottom Line
Modine's investor call painted a compelling picture: a 100-year-old thermal management company repositioning as a high-growth data center cooling pure-play at exactly the right moment. With AI infrastructure spend accelerating, hyperscalers racing to build capacity, and heat loads intensifying with each chip generation, Modine is betting big that the need to cool data centers will only grow.
The 50-70% growth projections are aggressive—but they're backed by visible backlogs, customer relationships with leading hyperscalers and colocations, and a century of thermal management expertise. If execution matches ambition, the "new Modine" could be one of the most direct ways to play the AI infrastructure buildout.
The market seems to agree. At $170+ per share and a fresh all-time high, investors are paying up for the transformation.
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*Values retrieved from S&P Global