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# Modine's Data Centers Sales Soar 95% To $439.7 Million, But a $29.5 Million Tax Charge Cuts Profit
- URL: https://www.bullished.co/modines-data-centers-sales-soar-95-to-439-7-million-but-a-29-5-million-tax-charge-cuts-7746c309/
- Published: 2026-11-03T21:37:37.000Z
- Updated: 2026-11-03T21:37:37.000Z
- Description: Net earnings fell 32% to $30.3 million on spin-off tax costs, while Modine raised its revenue outlook for the businesses it kept.
- Author: Matteo Parrino
- Tags: Earnings, MOD, Industry: Industrials

[Modine](https://www.bullished.co/tag/mod/), which makes thermal management products including data center cooling equipment, said its Data Centers segment sales [soared 95% to $439.7 million](https://www.sec.gov/Archives/edgar/data/0000067347/000110465926122032/mod-ex99d1.htm?ref=bullished.co) in the quarter ended September 30, in results released Tuesday. A $29.5 million tax charge tied to the Performance Technologies spin-off still pushed net earnings down 32% to $30.3 million.

## Sales up 35%, earnings down 32%

Total net sales rose 35% to $994.4 million from $738.9 million a year earlier. Earnings per share fell to $0.56 from $0.83, which the company blamed on higher income taxes from legal entity restructuring done to prepare the spin-off.

Stripping out spin-off costs, restructuring and that tax item, adjusted earnings per share rose 27% to $1.35, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, with other adjustments) rose 31% to $136.2 million. Operating income climbed 33% to $97.8 million. The company also booked $14.1 million of spin-off costs in the quarter.

Gross margin slipped 160 basis points to 20.7%, with lower margins in all three segments.

## Hyperscale demand, thinner margins

The Data Centers segment, up from $225.0 million a year ago, got its lift mainly from higher sales to hyperscale customers in North America. Its gross margin fell 470 basis points (4.7 percentage points) to 19.7% on higher material, component and tariff costs. Segment operating income rose 70% to $61.2 million.

Commercial HVAC sales rose 23% to $285.5 million, led by coils, coatings, and heating and ventilation products. Performance Technologies sales were $287.7 million, up less than 1%.

CEO Neil D. Brinker said demand "remains very robust," citing record orders and backlog in Data Centers. A company presentation put quarterly order intake above $1 billion and noted a $400 million program award from a hyperscale customer.

## Cash burn and a higher outlook

Free cash flow was a use of $145.6 million for the six months ended September 30, a $115.3 million swing from a year earlier, as Modine spent on data center capacity and built inventory. Net debt reached $573.7 million, up $210.9 million from the end of fiscal 2026; total debt was $724.3 million.

Modine completed the spin-off of Performance Technologies on October 1, merging it with Gentherm in a Reverse Morris Trust, a tax-efficient way to separate a business. It received $199 million from Gentherm at closing and used it to repay debt. From the third quarter, that unit will be reported as discontinued operations.

For fiscal 2027, excluding Performance Technologies, Modine expects net sales of $3.1 billion to $3.2 billion, up 50% to 55%, and adjusted EBITDA of $470 million to $500 million.

## Name change and investor day

Shareholders are being asked to approve a new corporate name, Modexus Solutions, at a special meeting on November 13\. Modine holds its earnings call Wednesday at 11:00 a.m. Eastern.

Modine plans to lay out longer-term revenue and earnings targets at its Analyst and Investor Day on November 18.

Learn

- [Item 2.02: results of operations →](https://www.bullished.co/learn/8-k-items-explained/#item-202-results-of-operations)  
From 8-K Items Explained: What Every Item Code From 1.01 To 9.01 Tells You, With Examples

### Sources

- [8-K Filing — MODINE MANUFACTURING CO (MOD)](https://www.sec.gov/Archives/edgar/data/0000067347/000110465926122032/mod-20261103x8k.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit mod-ex99d1.htm — MODINE MANUFACTURING CO 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0000067347/000110465926122032/mod-ex99d1.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit mod-ex99d2.htm — MODINE MANUFACTURING CO 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0000067347/000110465926122032/mod-ex99d2.htm?ref=bullished.co) — SEC EDGAR

### More on Modine Manufacturing

- [Modine Triples CEO Brinker's Takeover Severance Multiple, Extends Protection To CFO And General Counsel](https://www.bullished.co/modine-triples-ceo-brinkers-takeover-severance-multiple-extends-protection-to-cfo-and-801036ca/)
- [Modine Completes $946 Million Spin-Off Of Performance Technologies, Pockets $156 Million To Repay Debt](https://www.bullished.co/modine-completes-946-million-spin-off-of-performance-technologies-pockets-156-million-to-23d0badf/)

[All Modine Manufacturing (MOD) coverage →](https://www.bullished.co/tag/mod/)