Modine Manufacturing Q1 Earnings Call Highlights

Modine reported strong first-quarter growth , with sales up 28% and adjusted EPS up 44%, while maintaining its fiscal 2027 outlook for 20%–35% revenue growth and $650 million–$680 million in adjusted EBITDA. Data Center revenue surged 90% year over year, but component shortages reduced production and pressured margins to 14.8%. Management expects margins to recover to 19%–20% in the second quarter as supply and capacity improve. Commercial HVAC delivered 22% revenue growth but faced integration and product-mix pressure, while Performance Technologies remained weak. The planned Performance Technologies spin-off and merger with Gentherm remains on track for completion by year-end, subject to approvals.

Modine Manufacturing NYSE: MOD reported first-quarter fiscal 2027 sales growth of 28% and adjusted earnings per share growth of 44%, while reiterating its full-year revenue and adjusted EBITDA outlook. The company said supply-chain shortages in its Data Center segment constrained production and pressured margins during the quarter, but management expects conditions and profitability to improve sequentially. The quarter marked Modine’s first reporting period under a new three-segment structure consisting of Data Centers, Commercial HVAC and Performance Technologies. President and Chief Executive Officer Neil Brinker said the company continues to see exceptional underlying demand for data-center cooling products, logging its third consecutive quarter of record order intake and another significant increase in backlog.

Data Center segment revenue increased 90% from the prior-year period, including 112% growth in the Americas and 18% growth in EMEA. Revenue declined sequentially from the preceding quarter, as management had expected, but supply shortages of certain key components lasted longer than initially anticipated and further limited production volumes. Brinker said the shortages prompted Modine to resequence capacity rollouts, shift available components toward its highest-producing lines and temporarily carry labor and overhead costs while some expansion sites operated below planned utilization. The company is negotiating supply commitments for fiscal 2027 and beyond, while existing suppliers expand capacity.

Data Center adjusted EBITDA rose 27%, but the adjusted EBITDA margin declined to 14.8%. Chief Financial Officer Mick Lucareli said the margin was affected by a 150-basis-point year-over-year warranty variance related to a large prior-year settlement, as well as a 450- to 550-basis-point impact from excess labor and unfavorable overhead absorption tied to lower production volumes. Modine expects Data Center margins to recover to a range between 19% and 20% in the second quarter, supported by an expected roughly $100 million sequential increase in revenue. Lucareli said the company expects further margin improvement in the second half as capacity comes online and throughput rises. For the full fiscal year, Modine expects Data Center earnings growth in excess of 85%. The company said it has secured supply for the remainder of the fiscal year, assuming suppliers meet agreed commitments. Brinker added that Modine is pursuing longer-term supply arrangements with critical vendors and is considering vertical integration in one instance as part of its supply-risk mitigation efforts.

Commercial HVAC revenue increased 22% during the first quarter. HVAC Technologies revenue rose $24 million, or 45%, with acquisi...