Dive Brief:
- Modine had a robust start to its 2025 fiscal year, amid strong growth in data centers and contributions from its acquisitions of Scott Springfield and Napps Technology, the company reported Wednesday.
- Sales for the HVAC manufacturer’s climate solutions segment rose 25% year over year to $357.3 million in its first fiscal quarter of 2025, including $41.1 million from the businesses it acquired, Modine said in an earnings release. Organic sales for the segment climbed 10% year over year, with the company attributing the growth to higher sales of data center cooling products, partially offset by lower sales of heat transfer products.
- Data center sales rose 138% year over year, according to Modine’s earnings presentation. To support future growth in North America and Europe, the company is adding more capacity for its data center products, with much of that available capacity slated to come online later this year, Modine CEO Neil Brinker said on an earnings call Wednesday.
Dive Insight:
Modine organically grew net sales 4% year over year to $661.5 million in the quarter. In its earnings presentation, the company attributed higher sales to organic growth and acquisitions, which were partially offset by about $24 million in divestitures and Modine’s planned 80/20 initiatives, which the company describes as “a systematic way of examining the business, focusing resources and emphasizing the highest return opportunities.”
In its climate solutions segment, data center sales increased $94 million, “driven by strong demand from hyperscale customers along with sales from the acquired Scott Springfield business,” Modine Executive Vice President and CFO Mick Lucareli said on the call.
“As data centers prepare for the growth of high-performance computing, there is an increased need for hybrid solutions that incorporate a mix of air and liquid cooling products,” Brinker said. “By combining both air and liquid techniques in a hybrid approach, data centers can achieve optimal cooling efficiency, while minimizing energy consumption.”
Earlier this year, Brinker announced that Modine is internally developing a cooling distribution unit to facilitate direct-to-chip cooling and broaden its product portfolio. “We are completing the test base for this product and moving towards production and launch,” Brinker said on the call Wednesday. Management expects the first shipments to be delivered to a strategic colocation customer in Europe during the company’s fourth fiscal quarter, followed by shipments to key colocation customers in North America, Brinker added.
HVAC and refrigeration sales in the climate solutions segment rose by 7% or $5 million, including revenue from the company’s acquired businesses, Lucareli said on the call. This increase was driven by growth in heating market demand, according to Modine’s earnings presentation. Heat transfer product sales, however, dropped 21%, or $29 million, on the heels of lower demand in the European heat pump market and reduced demand in “certain other commercial and residential markets,” Lucareli said.
Net sales for the company’s performance technologies segment dipped 10% year over year to $309 million in the first fiscal quarter of 2025. Excluding the impact of $24.3 million in divestitures in the quarter, Modine’s first fiscal quarter organic sales declined 1% year over year, the company said in its earnings release. Modine attributed the decline to reduced sales to off-highway and automotive customers, partially offset by higher sales to commercial vehicle customers.
Modine said it is raising its full-year sales outlook due to “stronger-than-expected data center sales.” The company issued guidance of 6% to 11% in total net sales.
The company expects climate solutions data center and HVAC&R sales to increase by 80% to 90% and 15% to 20%, respectively, in fiscal year 2025. This anticipated growth is offset by expectations that heat transfer products sales will be flat or decline by as much as 5% during the year, according to its earnings presentation.
Within its performance solutions segment, management expects advanced solution sales to rise by 15% to 25% in fiscal 2025 and sales for liquid-cooled products to drop by 10% to 15%, while sales for air-cooled applications are expected to be in the range of staying flat or decreasing by as much as 10%, per its earning presentation.
