Modine (MMF) Q2 2027 Earnings Report

The call was strongly positive overall, supported by record data center orders, 95% data center revenue growth, a major hyperscaler award, strong Commercial HVAC performance, raised fiscal 2027 revenue and EBITDA guidance, and improving supply chain reliability. The main challenges were lower-than-expected margins, material inflation, tariffs, supplier costs, temporary spin-off expenses, negative second-quarter free cash flow, and execution risks during the capacity ramp. Management nevertheless maintained an optimistic outlook and expects sequential margin improvement, positive full-year free cash flow, and adjusted EBITDA growth in excess of 50%.

For fiscal year 2027, excluding Performance Technologies revenue and earnings for the full year, Modine expects total company sales in the range of $3.1 billion-$3.2 billion, representing a 50%-55% increase from the prior year, with data center sales growing 80%-90% and Commercial HVAC sales growing 10%-15%; adjusted EBITDA is expected to be in the range of $470 million-$500 million, representing a growth rate in excess of 50%, and the company expects to generate positive cash flow for the full year. Data center earnings growth is expected to be in excess of 80% this year, with 100-200 basis points sequential improvement in Q3 and a target of getting to 20% or above in Q4; Commercial HVAC is expected to deliver double-digit earnings growth and incremental improvements in the adjusted EBITDA margin during the second half of the fiscal year, with a 50-100 basis points year-over-year improvement in Q3 and another big lift in Q4. The company is fully committed to reaching 20 operational chiller lines by the end of the fiscal year and expects FY 2027 CapEx of $150 million-$200 million.