Key Highlights

  • Modine (NYSE:MOD) posted fiscal second-quarter 2027 net sales of USD 994.4 million, up 35% from USD 738.9 million, with Data Centers Revenue rising 95% to USD 439.7 million.
  • Net Earnings declined 32% to USD 30.3 million, reflecting USD 29.5 million of income tax expense linked to Legal entity restructuring for the Performance Technologies spin-off.
  • Adjusted EBITDA increased 31% to USD 136.2 million, and adjusted EPS of USD 1.35 rose 27%, compared with GAAP EPS of USD 0.56.
  • For its continuing business, the company now projects 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.

Data Center Cooling Demand Pushes Sales Up 35%

Modine (NYSE:MOD) published results on November 3, 2026, for the quarter ended September 30. Net sales increased to USD 994.4 million from USD 738.9 million. The Data Centers segment almost doubled to USD 439.7 million on hyperscale demand in North America, while Commercial HVAC climbed 23% to USD 285.5 million. Performance Technologies edged up less than 1% to USD 287.7 million. Gross Profit advanced 25% to USD 205.4 million, and Operating Income grew 33% to USD 97.8 million. The company highlighted record orders and Backlog in Data Centers and said it signed long-term agreements with key suppliers to lock in critical components.

The Spin-Off Tax Charge Behind the Earnings Decline

Net earnings of USD 30.3 million were down from about USD 44.8 million a year earlier (our arithmetic, adding the USD 30.3 million to the reported USD 14.5 million decline), because USD 29.5 million of income tax expense tied to legal entity restructuring for the Performance Technologies spin-off, completed October 1, weighed on results. GAAP EPS was USD 0.56 compared with USD 0.83, while adjusted EPS climbed to USD 1.35 from USD 1.06. Gross Margin fell 160 basis points to 20.7%, with all three segments hurt by 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 charges of USD 3.0 million also affected operating results.

Cash Burn, Net Debt and the Post-Spin Guidance Basis

Free Cash Flow for the six months through September 30 was negative USD 145.6 million as Capital spending on Data Center capacity and inventory rose. Total debt reached USD 724.3 million and cash was USD 150.6 million, leaving net debt of USD 573.7 million, up USD 210.9 million since the end of fiscal 2026. From the third fiscal quarter, Performance Technologies will be reported as discontinued operations, and the new outlook excludes it while projecting 50% to 55% revenue growth for the continuing business. An Analyst and Investor Day is set for November 18. A call was scheduled for November 4, 2026, at 11:00 a.m. ET.

Where Things Stand

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