Modine's Q3 2025: Conflicting Insights on Heat Transfer Sales, Capacity Expansion, and Data Center Growth

These are the key contradictions discussed in Modine Manufacturing Company's latest 2025 Q3 earnings call, specifically including: Heat Transfer Product Sales, Capacity Planning Support for Revenue Levels, Data Center Business Growth Rate, and Data Center Cooling Strategies:



Strong Performance in Data Center Segment:
- Modine Manufacturing's data center revenue increased by 176% in Q3, driven by both organic growth and the acquisition of Scott Springfield.
- Growth was fueled by strong demand and expanded manufacturing capacity to support global data center infrastructure.

Challenges in Performance Technologies:
- The Performance Technologies segment saw a 13% decline in sales, with adjusted EBITDA down 22%, primarily due to extended seasonal shutdowns and weakness in vehicular markets.
- This was exacerbated by the current market downturn and the impact of prior-year divestitures.

Significant Margin Improvement:
- The overall company achieved a 160 basis point improvement in gross margin, reaching 24.3%, primarily driven by higher data center and IAQ sales.
- This improvement was a result of the company's transformation strategy and efficient cost management.

Optimistic Outlook for Data Center Growth:
- Modine is raising its forecast for data center sales growth, expecting an increase of 110% to 120% in fiscal 2025.
- This optimism is based on the demand for AI technologies and improved processing efficiency in large language modeling.