Exchange: NYSE | Sector: Consumer Cyclical | Industry: Auto Parts
Q1 2026
Published: Jul 30, 2025
Earnings Highlights
Revenue of $682.80M up 13.1% year-over-year
EPS of $0.95 increased by 93.9% from previous year
Gross margin of 24.2%
Net income of 51.20M
""These investments are allowing us to maintain a balanced portfolio of businesses with strong organic growth focus in data centers, supplemented with inorganic growth to expand product offerings and create scale in our other key Climate Solutions businesses."" - Neil Brinker
Modine Manufacturing Company (MOD) reported a robust Q1 2026 with total revenue reaching $682.8 million, marking a year-on-year growth of 13.14%. This growth was driven largely by the Climate Solutions segment, which experienced an 11% increase in sales and was bolstered by recent strategic acquisitions including AbsolutAire and L.B. White. Management expressed confidence by raising their full-year revenue guidance to a growth of 10% to 15%, supported by a strong backlog and significant demand in the data center market. With a clear focus on integrating new acquisitions and enhancing manufacturing capacities, Modine is strategically positioned for long-term growth despite ongoing challenges in the Performance Technologies segment, which faced an 8% revenue decline due to adverse market conditions. Investors should monitor the continued execution of the growth strategy and the impact of these acquisitions on profitability and cash flow.
Key Performance Indicators
Revenue
682.80M
QoQ: 10.70% | YoY:13.14%
Gross Profit
165.40M
24.22% margin
QoQ: 10.56% | YoY:22.25%
Operating Income
75.70M
QoQ: 27.66% | YoY:26.80%
Net Income
51.20M
QoQ: 24.88% | YoY:98.45%
EPS
0.95
QoQ: 25.00% | YoY:93.88%
Revenue Trend
Margin Analysis
Key Insights
**Total Revenue:** $682.8 million, a year-over-year increase of **13.14%** and a quarter-over-quarter increase of **10.70%**.
**Climate Solutions Revenue Growth:** Up by **11%**, with contributions from recent acquisitions.
**Gross Profit:** $165.4 million, gross profit margin at **24.2%**.
**Operating Income:** $75.7 million, with an operating income ratio of **11.1%**.
**Net Income:** $51.2 million, net income margin of **7.5%**.
Financial Highlights
### Revenue Performance
- Total Revenue: $682.8 million, a year-over-year increase of 13.14% and a quarter-over-quarter increase of 10.70%.
- Climate Solutions Revenue Growth: Up by 11%, with contributions from recent acquisitions.
### Profitability Metrics
- Gross Profit: $165.4 million, gross profit margin at 24.2%.
- Operating Income: $75.7 million, with an operating income ratio of 11.1%.
- Net Income: $51.2 million, net income margin of 7.5%.
- EPS: $0.95, representing a year-over-year increase of 93.88%.
### Balance Sheet Health
- Total Assets: $2.23 billion
- Total Liabilities: $1.21 billion
- Total Stockholders' Equity: $1.02 billion
- Net Debt: $403 million, representing a manageable leverage ratio of 1.3.
### Cash Flow Performance
- Operating Cash Flow: $27.7 million, indicating a solid capacity to generate cash from core operations.
- Free Cash Flow: $27.7 million, lower than prior year due to increased inventory levels in preparation for data center projects.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
682.80M
13.14%
10.70%
Gross Profit
165.40M
22.25%
10.56%
Operating Income
75.70M
26.80%
27.66%
Net Income
51.20M
98.45%
24.88%
EPS
0.95
93.88%
25.00%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Neil Brinker stated, "I'm pleased to report that Modine delivered a solid start to the year, giving us confidence to raise our revenue and earnings outlook for fiscal '26."
- Mick Lucareli highlighted the future outlook stating, "We expect to capture the full benefit of the recent acquisitions, and our data center sales accelerate significantly."
### Strategic Focus
- Continued integration of acquired companies (e.g., AbsolutAire, L.B. White) will enhance our capacity and capabilities in the HVAC market.
- A robust investment of $100 million in expanding manufacturing capacity to meet the growing demand in North America’s data center segment.
"These investments are allowing us to maintain a balanced portfolio of businesses with strong organic growth focus in data centers, supplemented with inorganic growth to expand product offerings and create scale in our other key Climate Solutions businesses."
— Neil Brinker
"I think we'll continue to generate free cash flow, but this year will be somewhat lower as a percentage of sales at around 3%."
— Michael B. Lucareli
Forward Guidance
For the remainder of FY 2026, Modine anticipates total sales growth in the range of **10% to 15%**, with the Climate Solutions segment expected to perform particularly well, forecasting revenue growth of **25% to 35%**. Management's projection for data center sales is over **45%** growth, significantly up from earlier estimates. However, challenges persist in the Performance Technologies segment, where revenues are expected to decline in the range of **2% to 12%** as market conditions remain soft due to external pressures such as tariffs and slower Genset sales.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MOD Focus
24.22%
N/A
N/A
N/A
CPS
11.60%
3.34%
-1.35%
43.71%
MPAA
17.20%
-3.80%
-6.77%
-1.67%
AXL
12.30%
3.03%
1.19%
16.85%
SRI
21.20%
-1.48%
-2.84%
-4.41%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Modine Manufacturing Company is well-positioned for growth amidst strategic operational enhancements and a robust backlog of orders. The company's commitments toward significant investment in capacity expansion alongside a growing demand for data management and climate solutions provide a favorable investment thesis. Monitoring the successful integration of recent acquisitions and their contribution to revenues will be crucial for assessing future performance.
Key Investment Factors
Growth Potential
Modine's strategic acquisitions and strong demand for data center solutions present significant growth opportunities, suggesting a roadmap towards reaching $2 billion in revenues by FY 2028.
Profitability Risk
Continued volatility in the Performance Technologies segment due to fluctuating demand in the vehicular markets and potential regulatory impacts could pose challenges.
Financial Position
A strong balance sheet with total equity of $1.02 billion and a net debt of $403 million suggests resilience to navigate market headwinds.
SWOT Analysis
Strengths
Diversified product portfolio in HVAC and cooling solutions
Recent strategic acquisitions enhancing market position
Strong growth in data center revenues reflective of industry trends
Weaknesses
Dependence on the performance of the Performance Technologies segment
Challenges in assimilating acquisitions effectively
Potential for inventory buildup affecting cash flow
Opportunities
Increased demand for cooling solutions in data centers
Expansion into emerging markets and technologies
Opportunity to leverage recent acquisitions for enhanced capabilities
Threats
Ongoing trade tensions impacting supply chains and costs
Softness in end markets for Performance Technologies
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