Modine increases data center revenue by 95 percent
Modine increased revenue by 35 percent to $994.4 million in the second quarter of fiscal 2027. Data center revenue rose 95 percent, prompting the company to raise its full-year outlook for continuing operations.
- Quarterly revenue rose 35 percent to $994.4 million.
- Data center revenue increased 95 percent.
- Adjusted EBITDA improved 31 percent to $136.2 million.
- Modine separated the Performance Technologies business on October 1.
- The company expects fiscal 2027 revenue of between $3.1 billion and $3.2 billion.
Strong quarter lifts adjusted earnings
Modine, which develops thermal management technologies and solutions, reported net sales of $994.4 million for the quarter ended September 30, 2026. That was $255.5 million, or 35 percent, above the year-earlier figure. Growth was driven primarily by higher sales in the data center and commercial HVAC businesses.
Net income was $30.3 million, down $14.5 million, or 32 percent, year over year. The result included $29.5 million in tax expense related to the legal-entity restructuring being carried out in preparation for the separation of Performance Technologies. Earnings per share fell to $0.56 from $0.83.
Adjusted EBITDA was $136.2 million, up $32.4 million, or 31 percent, from the same period a year earlier. Adjusted earnings per share rose 27 percent to $1.35 from $1.06 a year earlier.
Data centers drive growth
Data center revenue rose to $439.7 million from $225 million. The 95 percent increase was mainly driven by higher volumes delivered to hyperscale customers in North America. The segment's operating income was $61.2 million, while adjusted EBITDA reached $67.6 million. Those figures represented increases of 70 percent and 66 percent, respectively.
The segment's gross margin fell to 19.7 percent, primarily because of higher material, component and tariff costs. The company said the data center segment achieved record order intake and backlog. To meet growing demand, Modine entered into long-term agreements with several strategic suppliers to secure critical components.
Commercial HVAC revenue increased 23 percent to $285.5 million. Higher sales of heat exchanger coils, coatings, and heating and ventilation products contributed to the growth. Operating income was $34.3 million, while adjusted EBITDA was $43 million.
Performance Technologies generated revenue of $287.7 million, representing growth of less than 1 percent. Modine completed the separation of the business on October 1.
Higher full-year outlook after separation
Modine will report the former Performance Technologies results as discontinued operations beginning in the third quarter of fiscal 2027. The company expects full-year revenue from continuing operations of between $3.1 billion and $3.2 billion, and adjusted EBITDA of between $470 million and $500 million. Excluding Performance Technologies from both periods, annual revenue growth is expected to range from 50 percent to 55 percent. Adjusted EBITDA growth could exceed 50 percent.
Neil D. Brinker, Modine's president and chief executive officer, said the data center and commercial HVAC businesses had a strong quarter. The company's chief executive said demand for its products remained very strong, as demonstrated by record orders and backlog in the data center business.
Over six months, the company used $57.1 million in net cash for operating activities, while free cash flow usage was $145.6 million. As of September 30, Modine had $724.3 million in debt and $150.6 million in cash. Modine will hold a conference call and webcast on November 4 to discuss its quarterly results, and plans to outline its longer-term revenue and earnings targets at its analyst and investor day on November 18.
PR Newswire: Modine Reports Second Quarter Fiscal 2027 Results
