Key Highlights

  • Modine (NYSE:MOD) reported fiscal second quarter 2027 net sales of USD 994.4 million, up 35% from USD 738.9 million, with Data Centers Revenue up 95% to USD 439.7 million.
  • Net Earnings fell 32% to USD 30.3 million, including USD 29.5 million of income tax expense tied to Legal entity restructuring for the Performance Technologies spin-off.
  • Adjusted EBITDA rose 31% to USD 136.2 million, and adjusted Earnings Per Share were USD 1.35, up 27%, against GAAP earnings per share of USD 0.56.
  • The company now expects fiscal 2027 net sales of USD 3.1 billion to USD 3.2 billion and adjusted EBITDA of USD 470 million to USD 500 million for its continuing business.

Data Center Cooling Drives a 35% Sales Jump

Modine (NYSE:MOD) reported results on November 3, 2026, for the quarter ended September 30. Net sales rose to USD 994.4 million from USD 738.9 million. Data Centers segment sales nearly doubled to USD 439.7 million, driven by hyperscale customers in North America, and Commercial HVAC rose 23% to USD 285.5 million. Performance Technologies grew less than 1% to USD 287.7 million. Gross Profit rose 25% to USD 205.4 million, and Operating Income rose 33% to USD 97.8 million. The company also cited record orders and Backlog in Data Centers and said it had signed long-term agreements with strategic suppliers to secure critical components.

Why GAAP Earnings Fell Despite Growth

Net earnings of USD 30.3 million fell from about USD 44.8 million a year earlier (our arithmetic: USD 30.3 million plus the reported USD 14.5 million decline) because of USD 29.5 million of income tax expense related to legal entity restructuring to facilitate the spin-off of Performance Technologies, which was completed on October 1. GAAP earnings per share were USD 0.56 versus USD 0.83, while adjusted earnings per share rose to USD 1.35 from USD 1.06. Gross Margin fell 160 basis points to 20.7%, with lower margins in all three segments from higher material, component and Tariff costs. Data Centers gross margin slipped 470 basis points to 19.7%. Spin-off costs of USD 14.1 million and restructuring expenses of USD 3.0 million also affected operating results.

Cash Use, Debt and the Post-Spin Outlook

Free Cash Flow for the six months ended September 30 was a use of USD 145.6 million as Capital spending on Data Center capacity and inventory rose. Total debt was USD 724.3 million, cash was USD 150.6 million, and net debt of USD 573.7 million was up USD 210.9 million from the end of fiscal 2026. Starting in the third fiscal quarter, Performance Technologies will be reported as discontinued operations. The new outlook excludes it, expects revenue growth of 50% to 55% for the continuing business, and points to an Analyst and Investor Day on November 18. A call was scheduled for November 4, 2026, at 11:00 a.m. ET.

Where Things Stand

Sales rose 35% because data center cooling Demand from hyperscale customers more than doubled that segment's revenue, while net earnings fell 32% because of a one-time tax charge linked to the spin-off, not because of weaker operations. Adjusted EBITDA still rose 31%. The caveat for Modine (NYSE:MOD) is margin: tariffs and material costs reduced gross margin in every segment, and cash is being consumed by expansion. Investors will look to the November 18 investor day for longer-term targets and to later quarters for margin recovery.