Modine (MOD) Down 0.3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Modine (MOD). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Modine due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

Key Highlights

• Revenue: $805.0 million, up 31% year over year and surpassing the Zacks Consensus Estimate by 5.90%.
• Adjusted EPS: $1.19, up 29% year over year, beating the Zacks Consensus Estimate of 99 cents per share.
• Adjusted EBITDA: $119.6 million, up 37% year over year; margin of 14.9% expanded 70 bps.
• Segment revenue: Climate Solutions (CS) $544.6 million, up 51% year over year (organic +36%; includes acquisitions); Performance Technologies (PT) $266 million, up 1% year over year.
• Segment profitability: CS adjusted EBITDA $97.4 million with a 17.9% margin; PT adjusted EBITDA $39.3 million with a 14.8% margin
• Gross profit: $186.1 million, up 24% year over year; gross margin of 23.1%
• Free cash flow: negative $17.1 million; net debt $517 million as of Dec 31, 2025.

Revenue growth was led by Climate Solutions, with strong data center demand from hyperscale and colocation customers across North America and Europe. Within CS, organic growth of 36% included a 78% increase in Data Center sales; acquisitions contributed $43 million, and FX was a modest tailwind

Segment Performance

Climate Solutions: Sales rose 51% year over year to $544.6 million on robust data center demand and contributions from recent HVAC acquisitions. Adjusted EBITDA of $97.4 million translated to a 17.9% margin (vs. 21.0% a year ago), reflecting the near-term inefficiencies from the capacity buildout; however, margins improved sequentially. Record order intake, roughly split between chillers and the broader DC portfolio, enhanced multi-year visibility. Four new chiller lines were commissioned in third quarter (including Jefferson City, MO), with four additional lines scheduled for fourth quarter; initial production for AHUs and modular DCs launched in Franklin, WI. Lines are designed for flexibility (convertible to modular DCs or large AHUs)

Performance Technologies: Sales increased 1% year over year to $266.0 million, with adjusted EBITDA of $39.3 million and a 14.8% margin (up 400 bps year over year), driven by cost containment, operational efficiencies, and pricing/tariff recoveries.

Multi-Year Data Center Trajectory and Capacity

Management expects Data Center revenue to grow 50%-70% annually over the next two fiscal years-comfortably ahead of the prior $2 billion fiscal 2028 target. Visibility now extends to ~5 years, with record third quarter order intake and engagement on long-term supply agreements to secure capacity with hyperscalers. The current capital plan targets roughly 20 chiller lines by entry into fiscal 2028 and is expected to have capacity in place by the end of fiscal 2027, supporting outcomes up to approximately $3 billion of DC revenue potential

Guidance

Management raised fiscal 2026 guidance: total company net sales growth to +20%-+25% and adjusted EBITDA to $455-$475 million. By segment, Climate Solutions sales growth is now +40%-+45% (from +35%-+40%), with Data Centers expected to grow in excess of 70% year over year. PT sales are expected to be flat to down 7% for the year, with end markets remaining depressed through fourth quarter of fiscal 2026.

Into fourth quarter, the company expects sequential improvement in adjusted EBITDA margin and to exit the year at the highest quarterly margin rate, with further margin improvement next fiscal year. Within CS, fourth quarter adjusted EBITDA margin is guided to 20%-21% (200+ bps sequential improvement). Data Centers grew 31% sequentially in third quarter and are set for "significant incremental volumes" in fourth quarter; implied fourth quarter DC revenue is $400+ million (annualized ~$1.6 billion run-rate). Fiscal 2026 capex is expected at $150-$180 million, with ~$40 million of DC capex likely to carry over into next year.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates review.

VGM Scores

Currently, Modine has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Modine has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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