Modine Manufacturing Shares Drop Over 7% for Second Straight Day
Shares of Modine Manufacturingare trading lower for a second straight session, adding to Tuesday's losses following NvidiaCEO Jensen Huang's comments at the Consumer Electronics Show. The chip giant's CEO said that Rubin chips could be cooled without water chillers, sending shares of other U.S. heating, ventilation and air conditioning-related companies - including Aaon, Johnson Controlsand Trane Technologies- into negative territory as well. DA Davidson believes Nvidia could be attempting to replace the data center cooling architecture with dry cooling or potentially evaporative cooling instead of mechanical chillers, noting Modine also makes dry coolers today.RUBIN PLATFORM:Nvidia launched the Nvidia Rubin platform, comprising six new chips designed to deliver one AI supercomputer. "Rubin arrives at exactly the right moment, as AI computing demand for both training and inference is going through the roof," said Jensen Huang, founder and CEO of Nvidia during CES. The chip giant's CEO also said it could be possible to cool racks with Nvidia's next-generation Rubin chips using water at a temperature that does not require a water chiller."With our annual cadence of delivering a new generation of AI supercomputers - and extreme codesign across six new chips - Rubin takes a giant leap toward the next frontier of AI." The Rubin platform introduces five innovations, including the latest generations of Nvidia NVLink interconnect technology, Transformer Engine, Confidential Computing and RAS Engine, as well as the Nvidia Vera CPU.Haung said the company's next generation chips are in "full production" and can deliver five times the AI computing of the company's previous chips. According to the executive, the chips are expected to arrive later this year and are already being tested by AI companies.INCREMENTAL NEGATIVE:Discussing the comments made at CES, Morgan Stanley says the firm takes the update as an incremental negative for the legacy Commercial HVAC providers - Trane Technologies, Johnson Controls, and Carrier Global, albeit more muted than the headlines suggest. Conversely, the firm finds the commentary incrementally positive for Liquid Cooling exposure – Vertivand Eaton. More broadly, efficiency Data Center gains screen negative for Power exposure, like Eaton, Emersonand Hubbell. These efficiency gains push the AI cycle towards adopters and away from enablers – a positive for the firm's U.S. Reshoring call where structural tech diffusion will narrow the cost delta between U.S. manufacturing and international peers.DRY COOLING:Post close, during a keynote at CES, Nvidia's Jensen Huang made comments regarding the cooling requirements for its new Vera-Rubin chip suggesting that a chiller would not be needed within the associated data center due to the chip's ability to withstand higher temperatures than Blackwell, DA Davidson notes. The firm believes that Nvidia could be attempting to replace the data center cooling architecture with dry cooling or potentially evaporative cooling instead of mechanical chillers, noting Modine also makes dry coolers today. Davidson further notes Modine is adding "considerable adiabatic capacity as we speak," including at a dedicated new plant in WI. The firm reiterates a Buy rating on Modine with a price target of $200 on the shares.BUY TRANE, JOHNSON CONTROLS:Melius Research upgraded Trane and Johnson Controls to Buy from Hold, with the catalyst in part being Tuesday's correction, after both traded down following comments from Nvidia at CES around future cooling architectures that will reduce, or potentially eliminate, the need for chillers. While the firm does not expect this "smart" evolution to be as negative for cooling suppliers as the stock reactions would suggest, the drivers of the current applied HVAC "supercycle" are far broader than just data center.Supply chain localization/reshoring, replacement of aging units, higher electricity prices while more efficient systems shorten payback periods, and local decarbonization mandates are all helping drive outsized growth across a wide array of verticals, Melius adds.PRICE ACTION:In afternoon trading, shares of Modine have dropped more than 7% to $120.40.
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MODINE MANUFACTURING CO.: OPPENHEIMER INCREASES TARGET PRICE FROM $220 TO $240
Company Announcement: Modine Manufacturing Co. has announced an increase in its target price.
New Target Price: The target price has been raised to $240 from the previous $220.
Modine Manufacturing Company Q3 2026 Earnings Call Insights
- Spin-Off Announcement: Modine plans to spin off its Performance Technologies segment, merging it with Gentherm, which will yield approximately $210 million in cash and grant shareholders a 40% stake in the new entity, valuing the Performance Technologies business at $1 billion, reflecting a 6.8x multiple on the trailing 12-month EBITDA.
- Climate Solutions Surge: The Climate Solutions segment reported a 51% revenue increase, driven by a 78% surge in data center sales, contributing an additional $130 million, indicating strong demand fulfillment capabilities and solid market confidence.
- Optimistic Outlook: Management expects to exceed $1 billion in data center sales for the current fiscal year and reach $2 billion by fiscal 2028, projecting a 50%-70% annual growth rate in data center revenue over the next two years, showcasing robust confidence in customer demand.
- Improved Financial Performance: Third-quarter sales rose by 31%, gross profit increased by 24%, and adjusted EBITDA improved by 37%, with expectations of adjusted EBITDA between $455 million and $475 million, despite a negative free cash flow of $17 million primarily due to inventory builds and higher CapEx.
Modine Reports 51% Revenue Growth in Climate Solutions Segment
- Significant Revenue Growth: Modine achieved a 51% revenue growth in its Climate Solutions segment, with third-quarter net sales reaching $805 million, a 31% increase from $616.8 million last year, indicating strong market demand and effective capacity expansion.
- Surge in Data Center Sales: Sales of data center products surged by 78%, driving a 21% organic sales growth, demonstrating the company's advantageous position in the rapidly growing data center market, with expectations for continued robust growth.
- Adjusted EBITDA Improvement: Adjusted EBITDA reached $119.6 million, a 37% year-over-year increase, reflecting the company's effective cost control alongside revenue growth, thereby enhancing profitability and solidifying its competitive edge in the market.
- Optimistic Outlook: Based on strong performance, Modine raised its fiscal 2026 revenue and adjusted EBITDA outlook, expecting data center business to grow over 70% year-over-year, laying a solid foundation for achieving its $2 billion revenue target for fiscal year 2028.
Modine Sells Performance Tech to Gentherm for ~$1B, Stock Surges
- Transaction Size: Modine announced the sale of its performance technologies business to Gentherm for approximately $1 billion, representing a valuation of about 6.8 times the adjusted EBITDA for 2025, indicating strong market recognition of its assets.
- Shareholder Benefits: Before the transaction closes, Modine is set to receive a cash distribution of $210 million, while shareholders will receive around 21 million shares of newly issued Gentherm common stock, allowing them to hold approximately 40% of the combined company, enhancing long-term shareholder value.
- Synergy Potential: The combined company is projected to have revenue of $2.6 billion and an adjusted EBITDA margin of 13%, with expected annual synergies of $25 million through cost optimization and operational efficiencies, significantly improving overall financial performance.
- Strategic Implications: Analysts view this transaction as a positive strategic move; while the sale of the entire engine business was unexpected, it does not negatively impact Modine's long-term prospects and may strengthen its focus on climate solutions.
Modine and Gentherm Merger Overview
- Cash Distribution Expectation: Modine is expected to receive a cash distribution of approximately $210 million from the spun-off unit before the transaction closes, which will enhance its financial flexibility for future business developments.
- Shareholder Structure Change: After the transaction, Modine shareholders will own about 40% of the new combined company, while Gentherm shareholders will hold the remaining 60%, allowing Modine to maintain a significant market presence post-merger.
- Strategic Focus Shift: Following the spin-off of the Performance Technologies division, Modine will concentrate solely on its Climate Solutions segment, particularly targeting the rapidly growing markets of data center cooling and commercial HVAC & refrigeration.
- Positive Market Reaction: Following the merger announcement, Modine's stock surged over 17% in early trading on Thursday, reflecting investor optimism about the merger's prospects, with retail sentiment shifting from 'bearish' to 'bullish', indicating strong confidence in future growth.
Modine Manufacturing Shares Rise 13% in Premarket Trading Following Merger Announcement with Gentherm
Market Performance: Shares of Modine Manufacturing have increased by 13% in pre-market trading.
Corporate Development: This rise follows the announcement of Modine's merger with Gentherm.
MODINE MANUFACTURING CO.: OPPENHEIMER INCREASES TARGET PRICE FROM $220 TO $240
Company Announcement: Modine Manufacturing Co. has announced an increase in its target price.
New Target Price: The target price has been raised to $240 from the previous $220.
Modine Manufacturing Company Q3 2026 Earnings Call Insights
- Spin-Off Announcement: Modine plans to spin off its Performance Technologies segment, merging it with Gentherm, which will yield approximately $210 million in cash and grant shareholders a 40% stake in the new entity, valuing the Performance Technologies business at $1 billion, reflecting a 6.8x multiple on the trailing 12-month EBITDA.
- Climate Solutions Surge: The Climate Solutions segment reported a 51% revenue increase, driven by a 78% surge in data center sales, contributing an additional $130 million, indicating strong demand fulfillment capabilities and solid market confidence.
- Optimistic Outlook: Management expects to exceed $1 billion in data center sales for the current fiscal year and reach $2 billion by fiscal 2028, projecting a 50%-70% annual growth rate in data center revenue over the next two years, showcasing robust confidence in customer demand.
- Improved Financial Performance: Third-quarter sales rose by 31%, gross profit increased by 24%, and adjusted EBITDA improved by 37%, with expectations of adjusted EBITDA between $455 million and $475 million, despite a negative free cash flow of $17 million primarily due to inventory builds and higher CapEx.
Modine Reports 51% Revenue Growth in Climate Solutions Segment
- Significant Revenue Growth: Modine achieved a 51% revenue growth in its Climate Solutions segment, with third-quarter net sales reaching $805 million, a 31% increase from $616.8 million last year, indicating strong market demand and effective capacity expansion.
- Surge in Data Center Sales: Sales of data center products surged by 78%, driving a 21% organic sales growth, demonstrating the company's advantageous position in the rapidly growing data center market, with expectations for continued robust growth.
- Adjusted EBITDA Improvement: Adjusted EBITDA reached $119.6 million, a 37% year-over-year increase, reflecting the company's effective cost control alongside revenue growth, thereby enhancing profitability and solidifying its competitive edge in the market.
- Optimistic Outlook: Based on strong performance, Modine raised its fiscal 2026 revenue and adjusted EBITDA outlook, expecting data center business to grow over 70% year-over-year, laying a solid foundation for achieving its $2 billion revenue target for fiscal year 2028.
Modine Sells Performance Tech to Gentherm for ~$1B, Stock Surges
- Transaction Size: Modine announced the sale of its performance technologies business to Gentherm for approximately $1 billion, representing a valuation of about 6.8 times the adjusted EBITDA for 2025, indicating strong market recognition of its assets.
- Shareholder Benefits: Before the transaction closes, Modine is set to receive a cash distribution of $210 million, while shareholders will receive around 21 million shares of newly issued Gentherm common stock, allowing them to hold approximately 40% of the combined company, enhancing long-term shareholder value.
- Synergy Potential: The combined company is projected to have revenue of $2.6 billion and an adjusted EBITDA margin of 13%, with expected annual synergies of $25 million through cost optimization and operational efficiencies, significantly improving overall financial performance.
- Strategic Implications: Analysts view this transaction as a positive strategic move; while the sale of the entire engine business was unexpected, it does not negatively impact Modine's long-term prospects and may strengthen its focus on climate solutions.
Modine and Gentherm Merger Overview
- Cash Distribution Expectation: Modine is expected to receive a cash distribution of approximately $210 million from the spun-off unit before the transaction closes, which will enhance its financial flexibility for future business developments.
- Shareholder Structure Change: After the transaction, Modine shareholders will own about 40% of the new combined company, while Gentherm shareholders will hold the remaining 60%, allowing Modine to maintain a significant market presence post-merger.
- Strategic Focus Shift: Following the spin-off of the Performance Technologies division, Modine will concentrate solely on its Climate Solutions segment, particularly targeting the rapidly growing markets of data center cooling and commercial HVAC & refrigeration.
- Positive Market Reaction: Following the merger announcement, Modine's stock surged over 17% in early trading on Thursday, reflecting investor optimism about the merger's prospects, with retail sentiment shifting from 'bearish' to 'bullish', indicating strong confidence in future growth.
Modine Manufacturing Shares Rise 13% in Premarket Trading Following Merger Announcement with Gentherm
Market Performance: Shares of Modine Manufacturing have increased by 13% in pre-market trading.
Corporate Development: This rise follows the announcement of Modine's merger with Gentherm.
