Key Highlights

  • Net sales rose 35% to USD 994.4 million, with Data Centers Revenue up 95% and Commercial HVAC revenue up 23%.
  • Adjusted EBITDA rose 31% to USD 136.2 million, and adjusted EPS rose 27% to USD 1.35.
  • Net Earnings fell 32% to USD 30.3 million after USD 29.5 million of tax expense tied to the spin-off.
  • Fiscal 2027 outlook is sales of USD 3.1 to 3.2 billion and adjusted EBITDA of USD 470 to 500 million.

Data Centers Drive Growth

Modine (NYSE:MOD), a thermal management company, reported fiscal second-quarter 2027 net sales of USD 994.4 million for the quarter ended September 30, 2026, up USD 255.5 million, or 35%, from USD 738.9 million. Growth came from the Data Centers and Commercial HVAC segments, with revenue growth of 95% and 23% respectively. Gross Profit rose 25% to USD 205.4 million, but gross Margin fell 160 basis points to 20.7% on lower margins in each of the three segments.

Operating income rose 33% to USD 97.8 million. Adjusted EBITDA rose USD 32.4 million, or 31%, to USD 136.2 million. President and Chief Executive Officer Neil Brinker pointed to record orders and Backlog in Data Centers and expanding opportunities to serve Data Center cooling within Commercial HVAC.

Analyst estimates were EPS of USD 1.45 against reported EPS of USD 1.35, and revenue of USD 978.3 million against reported revenue of USD 994.4 million.

Spin-Off and Earnings

Modine completed the spin-off of its Performance Technologies Business on October 1, 2026. Net earnings were USD 30.3 million, down USD 14.5 million, or 32%, and included USD 29.5 million of income tax expense related to Legal entity restructuring to facilitate the spin-off. Earnings Per Share were USD 0.56, down USD 0.27, while adjusted earnings per share rose USD 0.29, or 27%, to USD 1.35.

Brinker said the company bolstered its Supply chain over the period through long-term agreements with multiple strategic suppliers to secure critical components for the existing backlog and future needs.

Balance Sheet and Outlook

Net cash used for Operating Activities in the six months ended September 30, 2026 was USD 57.1 million, and free Cash Flow was a use of USD 145.6 million, a decrease of USD 115.3 million from the prior year. Total Debt was USD 724.3 million as of September 30, 2026, cash was USD 150.6 million and net debt was USD 573.7 million, an increase of USD 210.9 million from the end of fiscal 2026.

The company updated its fiscal 2027 outlook for the continuing business, excluding Performance Technologies from both periods. It expects revenues to increase 50% to 55% and adjusted EBITDA of USD 470 million to USD 500 million, growth above 50%. Current outlook is net sales of USD 3.1 billion to USD 3.2 billion. Brinker said he looks forward to sharing longer-term revenue and earnings targets at the Analyst and Investor Day on November 18.

Items to Follow

Data Centers backlog conversion, gross margin and Working Capital needs are the items to follow, along with the longer-term targets due at the Investor Day.