Modine Fiscal Q2 Sales Jump 34.6% to $994.4 Million as Data Centers Revenue Rises 95.4%; Adjusted EPS $1.35

Modine Manufacturing's Data Centers segment grew sales 95.4% in the fiscal second quarter, lifting total revenue 34.6% to $994.4 million and adjusted earnings per share 27.4% to $1.35, the thermal management company said Tuesday.

Data Centers sales reached $439.7 million, up from $225.0 million a year earlier, driven mainly by higher sales to hyperscale customers in North America, according to the earnings release Modine filed with an 8-K for the quarter ended Sept. 30.

"Demand for our products remains very robust, highlighted by record orders and backlog in our Data Centers segment and expanding opportunities to serve the data center cooling market within Commercial HVAC," CEO Neil Brinker said in the release.

GAAP earnings hit by spin-off taxes

GAAP results moved the other way. Net earnings fell 32.4% to $30.3 million, and diluted EPS declined 32.5% to $0.56 from $0.83. Modine attributed the drop to $29.5 million of income tax expense tied to legal entity restructuring steps taken to facilitate the spin-off of its Performance Technologies business. It also booked $14.1 million of spin-off costs and $3.0 million of restructuring expenses in the quarter.

Adjusted EBITDA rose 31.2% to $136.2 million. Gross margin narrowed by 160 basis points to 20.7%, with lower margins in all three segments. In Data Centers, the margin fell 470 basis points to 19.7%, which the company tied mainly to higher material, component and tariff costs.

Segment snapshot

Commercial HVAC sales rose 22.6% to $285.5 million on higher sales of coils, coatings, and heating and ventilation products, and segment operating income grew 30%. Performance Technologies sales were $287.7 million, compared with $286.3 million a year earlier.

Modine completed the spin-off of Performance Technologies on Oct. 1, and its earnings presentation describes the transaction as a spin-off and merger with Gentherm. Starting in the fiscal third quarter, that business will be reported as discontinued operations.

A bigger outlook for the core business

On that continuing-operations basis, Modine now expects fiscal 2027 net sales of $3.1 billion to $3.2 billion and adjusted EBITDA of $470 million to $500 million. Brinker said revenue should rise 50% to 55% and adjusted EBITDA should grow more than 50%, excluding Performance Technologies from both years.

The company said it has signed long-term agreements with multiple strategic suppliers to secure critical components for its backlog. Modine plans to share longer-term revenue and earnings targets at an analyst and investor day on Nov. 18.

Cash and debt

Free cash flow for the first six months was a use of $145.6 million, reflecting higher capital spending to expand Data Centers capacity and more inventory to meet demand. Net debt rose by $210.9 million from the end of fiscal 2026 to $573.7 million.

By the numbers

• Net sales: $994.4 million, up 34.6%
• Adjusted EPS: $1.35, up 27.4%
• GAAP EPS: $0.56, down 32.5%
• Data Centers sales: $439.7 million, up 95.4%
• Adjusted EBITDA: $136.2 million, up 31.2%
• Fiscal 2027 continuing sales outlook: $3.1 billion to $3.2 billion

Sources

1. Modine Manufacturing Company Form 8-K with fiscal second-quarter 2027 earnings release, filed Nov. 3, 2026 (accession 0001104659-26-122032)

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