Modine Manufacturing Co (MOD) Q2 2025 Earnings Call Highlights: Strong Data Center Growth and ...

GuruFocus News
4 min read

In This Article:

  • Revenue Growth: Overall sales increased by 6%.

  • Data Center Sales: Grew 102%, contributing $80 million, driven by North American hyperscale and co-location customers.

  • Climate Solutions Segment Margin: Improved by 300 basis points to 21.5%.

  • Performance Technologies Margin: Improved by 230 basis points.

  • Gross Margin: Increased by 340 basis points to 25.2%.

  • Adjusted EBITDA: Increased by 23%, with a margin of 15.2%.

  • Adjusted Earnings Per Share (EPS): $0.97, a 9% increase from the prior year.

  • Free Cash Flow: Generated $44 million in the second quarter, with year-to-date free cash flow at $58 million.

  • Net Debt: $327 million, $45 million lower than the prior fiscal year.

  • Leverage Ratio: 0.9, consistent with the previous quarter.

  • Fiscal '25 Adjusted EBITDA Outlook: Expected to be in the range of $375 million to $395 million.

  • Fiscal '25 Adjusted EPS Outlook: Expected to remain in the range of $3.65 to $3.95.

  • Effective Tax Rate: Expected to be in the range of 26% to 28%.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Modine Manufacturing Co (NYSE:MOD) reported a 47% improvement in adjusted EBITDA margin, reaching over 21%, driven by strong performance in the Climate Solutions segment.

  • The data center business experienced significant growth, with sales increasing by 102%, supported by strong demand from North American hyperscale and co-location customers.

  • The company successfully launched a new one-megawatt coolant distribution unit (CDU), which has garnered interest from both co-location and hyperscale customers.

  • Modine Manufacturing Co (NYSE:MOD) is expanding its data center product capacity globally, including a new facility in Chennai, India, to support growth in Asia and the Middle East.

  • The company has secured a master sales agreement with a third hyperscale customer, indicating potential for further growth in the data center segment.

Negative Points

  • Performance Technologies segment faced a decline in top-line revenue due to market-related volume declines in automotive, commercial vehicle, and off-highway markets.

  • The company is experiencing temporary volume challenges in certain markets, particularly in agriculture, construction, and commercial vehicle sectors.

  • There is ongoing weakness in the global commercial vehicle, off-highway, and auto markets, impacting the Performance Technologies segment.

  • Modine Manufacturing Co (NYSE:MOD) anticipates a sequential dip in Q3 earnings due to normal seasonal trends and continued softness in vehicular markets.

  • The heat transfer product sales decreased by 13%, with lower sales to European heat pump and commercial and residential HVAC customers.

Recommended Stories