MODINE MANUFACTURING CO — Call Transcript 2026

Greetings, and welcome to Modine's fourth quarter fiscal 2026 results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kathleen Powers. Thank you. You may begin. Hello, good morning. Welcome to our conference call to discuss Modine's fourth quarter fiscal 2026 results. I'm joined by Neil Brinker, our President and Chief Executive Officer, and Mick Lucareli, our Executive Vice President and Chief Financial Officer. The slides that we will be using with today's presentation are available on the investor relations section of our website, modine.com. On slide three of that deck is our notice regarding forward-looking statements. This call will contain forward-looking statements as outlined in our earnings release, as well as in our company's filings with the Securities and Exchange Commission. With that, I will turn the call over to Neil. Thank you, Kathy, and good morning, everyone. I'm pleased to report another strong quarter, capping off our fourth consecutive year of record-breaking revenue and adjusted EBITDA. This is a testament to the hard work and dedication of the entire team. Even more importantly, we've built strong business momentum and significantly advanced our strategic transformation, accelerating the evolution of our portfolio to become more focused on higher margin and higher growth businesses. Earlier in the year, we announced three strategic acquisitions: AbsolutAire, L.B. White, and Climate by Design, which collectively added $119 million in incremental revenue this year. These acquisitions added key products to our portfolio and opened new end markets and channel partners for our HVAC businesses. In the second quarter, we announced an incremental $100 million investment to expand capacity for our data center products in the U.S. We are more than six months into this work, and I'm happy to report that we are firmly on schedule with this crucial initiative. When completed, our investment to expand our operations footprint in the U.S. will provide critical capacity close to our North American customers, allowing us to further advance our market positions in this hyper-growth market. In January, we announced that we will further accelerate our transformation by spinning off our Performance Technologies segment and combining it with Gentherm. This transaction will allow us to focus on our high-growth businesses while providing an ideal home for our Performance Technologies team. Finally, to close out this remarkable year, I'm proud to announce a landmark long-term capacity locking agreement with a key strategic data center customer. Under the terms of this LTA, we will guarantee capacity to supply more than $4 billion of data center cooling products during calendar years 2027 through 2029. This agreement highlights the confidence our customers have in Modine and validates our need for our current investment in capacity expansion. This has been a year of tremendous accomplishments. I'm so proud of our team's execution and commitment. While we celebrate these successes, we are even more energized by the significant opportunities that lie ahead. Please turn to slide five. Climate Solutions delivered another outstanding, record-breaking year. The segment reported a 43% increase in revenues for the full fiscal year, including acquisitions. Organic sales grew 32% in fiscal 2026. Sales growth in this segment was also driven by data centers, which increased 73% to $1.1 billion. We ended the year with a strong fourth-quarter performance in data centers with over $400 million in revenue. To put this in perspective, our chiller production in North America increased fivefold as compared to the prior year. This was despite production delays where we lost 20 shifts due to severe weather in the south. The team worked extremely hard to overcome the impact of this missed production and make sure we delivered on our customers' commitments, which included significant overtime hours. In addition, we ended the year with our second consecutive quarter of record order intake. I recently toured several of our data center facilities, and I'm pleased to report that the expansion plans are progressing well. We've already shipped our first chillers from Jefferson City, Missouri, and we shipped air handling units and CDUs from our Franklin, Wisconsin, plant in the fourth quarter. Overall, I'm very pleased and proud of this team's work. Their efforts have been instrumental to our revenue growth this quarter and will continue to allow us to grow to meet future demand. As we continue to execute on our capacity expansion, we are proactively managing our supply chain to ensure our growth trajectory. We are currently addressing challenges with a few key suppliers, which is affecting our production schedules and efficiency. We began to see a shortage of certain components late in the quarter, and we are implementing corrective actions. We have a dedicated team actively working on solutions, including qualifying new vendors to ensure a stable supply of components. We're confident in our ability to manage through these short-term challenges, and while this will temporarily impact our Q1 production plans, we do not anticipate any impact on our full-year outlook. From a market demand standpoint, we're in a great competitive position. The outlook remains incredibly strong. We see no signs of slowdown. The hyperscalers are continuing their significant investments with a heavy concentration in North America. We are deepening our partnership with strategic customers, co-developing innovative products to meet their current and future cooling needs. One of the products I'm most excited about is our groundbreaking 3 MW chiller, which delivers a 50% increase in cooling capacity with only a 9% increase in footprint. As chip densities increase, data centers will require more cooling capacity within the same footprint. Our 3 MW chiller's modular design will be the solution for handling higher heat loads within the same space. We believe this will be a game changer. Innovating alongside our customers for what are dynamic cooling requirements over multi-year periods is giving us greater visibility into future demand, allowing us to invest in our key growth initiatives and products with greater conviction. Turning to the rest of our Climate Solutions segment. Our HTS business delivered a great quarter, with revenues up 19%. This was largely driven by higher coil sales to data center and heat pump customers. In HVAC technologies, revenues increased 51% from the prior year, driven by recent acquisitions. Our HVAC business on the East Coast and in the South also lost significant production time due to severe weather. Looking forward, we have a great deal to be excited about across this segment. The commercial HVAC portion of the Scott Springfield business is poised for a strong recovery from a down year. This business was negatively impacted by tariffs this past year but is expected to rebound in fiscal 2027. We're also seeing continued momentum in our coils business, not only with data center customers, but also in commercial HVAC markets. Similarly, our heating businesses are also expected to have a good year, led by agricultural heating and markets served by L.B. White. In summary, I'm very pleased with the performance of the Climate Solutions segment, and I'm confident in our strategy as we head into the fiscal year 2027. Please turn to page six. The Performance Technologies segment is making excellent progress on preparing for the planned spin-off and merger with Gentherm. There are numerous work streams preparing for the separation, including standing up IT systems to ensure that we can deliver a standalone operating business to Gentherm at close. We have completed several major milestones and have others ahead of us, including Gentherm's S-4 submission to the SEC and its subsequent shareholder approval, as well as a receipt of our IRS determination letter on the tax treatment of the Reverse Morris Trust transaction. Overall, this process remains on track, and we are still expecting to close this transaction before the end of the calendar year, presuming that all these necessary approvals are received. The team is excited about the road ahead. We have worked diligently to improve our business with higher adjusted EBITDA margins on flat to down revenues. Margins were lower this quarter as anticipated, primarily due to higher material costs, including the impact of tariffs. We expect this to improve in fiscal 2027 as we pass through and recover these costs. While our vehicular markets have been challenging, we are seeing bright spots and opportunities for growth. The stationary power market continues to be strong. We expect this to return to growth in fiscal 2027. We are also encouraged by the emerging growth in our automotive and construction equipment businesses. Regarding the latest 232 aluminum tariffs, we are proactively working to mitigate their impact on our business. We have a proven track record of managing these situations and are in the process of working through this current round. We have factored a range of expected costs in our guidance, which Mick will discuss in more detail. Before I hand it over to Mick, I'd like to remind you of our upcoming changes to our segment reporting structures. The Performance Technologies segment, under the leadership of Jeremy Patten, will continue to be reported as a segment until the expected spin-off and merger with Gentherm closes later this year. Our Climate Solutions segment has been split into two segments beginning in fiscal 2027. Data centers led by Art Laszlo and commercial HVAC, currently led by Eric McGinnis. Eric has announced that he will be retiring in June; his successor will be named at a later date. I'd like to sincerely thank Eric for his leadership and invaluable contributions to Modine over the past five years. We wish Eric a long, happy, and well-deserved retirement. With that, I'll turn the call over to Mick. Thanks, Neil, and good morning, everyone. Please turn to slide seven to begin reviewing the Q4 segment results. Climate Solutions delivered a strong quarter with sales up 87% over the prior year. The main driver was data centers, which grew $246 million, or 158%. HVAC technology sales increased $33 million, or 51%, driven by our recent acquisitions, partially offset by slightly lower sales of heating and indoor air quality products. Heat Transfer Solutions sales grew 19% or $26 million, primarily driven by coils with higher sales to commercial HVAC and data center customers. I'm pleased to report that Climate Solutions' fourth quarter adjusted EBITDA grew 63%, driven by strong data center earnings growth from the prior year. As anticipated, the Climate Solutions adjusted EBITDA margin was down versus the prior year but improved sequentially from the prior quarter. All three product groups generated strong year-over-year earnings growth, including a near doubling in our Data Centers business. One headwind during the quarter was severe weather and storms across the U.S. As Neil stated, we lost 20 production shifts in Data Centers and another 35 shifts in other parts of the business due to weather-related shutdowns. The team largely made up this work, but with additional costs for overtime that negatively impacted gross margin. As we discussed last quarter, HVAC Technologies is currently experiencing a negative mix impact along with higher costs while we are integrating several acquisitions. These factors are temporary, and we expect that the margins will continue to improve. We also saw a nice sequential margin improvement in Heat Transfer Solutions contributing to the rapid earnings growth. With regards to the Data Centers group, I'm happy to say that we saw another sequential margin gain in Q4. While the margin improved, there were some negative margin impacts during the loss production days tied to the weather and a shortage of some critical parts. As Neil discussed, we expect the team will address the shortage of a few critical components during our first quarter, and I'll provide some additional information in our guidance section. Despite some planned and unplanned challenges in growing revenue by more than 85%, our Climate Solutions segment delivered over 60% earnings growth. As Neil noted, starting in fiscal 2027, this segment will be split into two: Data Centers and commercial HVAC. I'll discuss our outlook in more detail at the end. We anticipate another year of earnings growth driven by strong top-line growth and further margin improvement. Please turn to slide eight. Performance Technologies revenue remained relatively flat from the prior year, with lower sales offset by FX, which positively impacted sales by $12 million. Heavy-duty equipment sales were down 5%, primarily driven by lower genset revenue. On-highway sales were up 4%, with higher sales to automotive and commercial vehicle customers. As expected, the EBITDA margin was down versus the prior year, primarily due to lower sales volume, along with higher material and tariff costs. Given the difficult market conditions and higher material costs, adjusted EBITDA declined 15% from the prior year. As we've done in the past, we'll recover tariffs through surcharges and mitigate increasing metals prices with pricing mechanisms in our customer contracts. As a reminder, there is typically a three to six-month lag before these price adjustments take effect. SG&A expenses were $5 million lower versus the prior year, as the segment continues to benefit from cost savings initiatives implemented earlier in the year. The team has been quite diligent in managing all controllable costs this year, with the full fiscal year EBITDA margin improving 30 basis points to 13.8%. This was a nice improvement given the lower revenue and various cost headwinds. We expect margins to further improve during fiscal 2027 as we adjust commodity-related pricing, recover tariffs, and maintain our 80/20 focus and discipline. Let's review the total company results. Please turn to slide nine. Fourth quarter sales increased 47%, driven by revenue growth in Climate Solutions. Gross profit increased 29%, driven primarily by higher data center sales volume, along with contributions from the acquisitions and Climate Solutions. The lower gross margin was due to the combination of factors that I covered with Climate Solutions and Performance Technologies. SG&A expenses increased at a much lower rate than overall revenue growth. We increased SG&A spending in Climate Solutions and partially offset that with Performance Technologies cost-savings initiatives. As a result, SG&A as a percentage of sales fell by 190 basis points to 10.7%. I'd also like to note that the reported SG&A included $12.5 million of disposition costs related to the pending spin-off of Performance Technologies. These have been added back to arrive at adjusted EBITDA and are referenced in the reconciliation schedule. From an earnings standpoint, I'm pleased to report a 40% improvement in adjusted EBITDA. While I reviewed the temporary items that have impacted this year's margin, the adjusted EBITDA margin continues to improve with a 40 basis points increase from the third quarter while growing revenue at an exponential rate. Adjusted earnings per share increased 53% to $1.71. To summarize our consolidated results, Q4 represented another strong quarter of revenue and earnings growth. We're pleased to have delivered another record year. The team is managing well through a strategic transformation and exponential Data Center growth. This year represents the fourth year of earnings growth of 20% or more, resulting in a compound annual growth rate in excess of 40%. As we look ahead, we expect to continue to capitalize on this momentum and drive further margin improvement as the Data Center production volumes ramp. Moving to the cash flow metrics. Please turn to slide 10. Free cash flow was a positive $153 million in the fourth quarter. As Neil announced, we reached a long-term capacity agreement with a key strategic data center customer and received an upfront cash payment of $165 million. This payment is intended to support our capacity expansion and to meet future volume commitments under this agreement. From an accounting standpoint, the customer payment represents a down payment to secure future volumes. It did not impact the income statement and was recorded as a contract liability, and this liability will be reduced over the life of the contract based on future volumes. Net debt of $363 million was $84 million higher than the prior fiscal year-end. This included the funding for the three acquisitions completed earlier this year and the investments in CapEx and working capital required to grow our data center business. Our balance sheet remains quite strong with a leverage ratio of 0.8x, and based on our earnings and cash flow outlook, we expect it will decline further in fiscal 2027. CapEx for fiscal 2026 totaled $143 million. As I explained last quarter, some of the data center capital investments will carry over into the next fiscal year as we continue with our capacity expansion to meet our future customer demands. Let's turn to slide 11 for our fiscal 2027 outlook. Similar to last year, there's a great deal of uncertainty across the markets in the global economy, especially around input costs, tariffs, and the overall supply chain. With regard to trade and tariff risks, our team is continually assessing the impact on our business, including the recent announced 232 tariffs on metals. We believe that we'll be able to recover the majority of these impacts with pricing and surcharges. While the net risk is quite manageable, we can be impacted by the timing of the material price adjustments. Our guidance ranges to start the year reflect the current level of uncertainty in the markets and input costs. Also, our outlook includes a full year of Performance Technologies. Once we know when the pending transaction will close, we'll provide an update on our full-year outlook for the remaining business. For fiscal 2027, we expect total company sales to grow in the range of 20%-35%. For the data center segment, we expect sales to grow 60%-80%. This is ahead of our previous multi-year estimate of 50%-70%. We don't anticipate that the part shortages we started to experience in Q4 will impact our full-year production, but will temporarily impact our capacity ramp. Consistent with the previous year, we expect that each of the quarters will show very rapid year-over-year sales growth in excess of 50%. From a sequential standpoint, we anticipate that Q2, Q3, and Q4 will all show sequential increases. For commercial HVAC, we expect sales to grow 5%-10% this year. This is driven by accelerated growth in our heating and IAQ businesses. In addition, we expect that the recent growth trends in the coils business will continue with mid-single-digit growth in fiscal 2027. For Performance Technologies, we anticipate sales to be flat to up 5%, driven primarily by material pass-through agreements and growth in stationary power programs. We are expecting most other markets to be flat with the opportunity for improvement in the back half of the fiscal year. With regard to our full-year earnings, we expect fiscal 2027 adjusted EBITDA to be in the range of $650 million-$680 million, representing a growth rate in excess of 40%. This implies at least 100-200 basis points of margin improvement. We expect that this will be driven by a margin increase in all three business segments. From a free cash flow perspective, we expect we'll generate a higher level of free cash flow, and as a percentage of sales, we believe it'll be between 4% and 6%. Please see the appendix in this presentation for all our key assumptions, including interest expense, taxes, depreciation, and amortization expense. As we currently look at the next several quarters, we expect that margins and earnings will increase sequentially throughout the year, driven by the data center trends I described in our material cost recovery plans. From a year-over-year perspective, we anticipate that each quarter will result in double-digit earnings growth with favorable margin comparisons to begin in Q2 and continuing through year-end. As Neil and I previously noted, we are now operating under three business segments, and to assist everyone with modeling and analysis, we'll provide a recast fiscal 2026 segment results and will begin reporting this way with our first quarter results. To wrap up, we're excited about our fiscal 2027 outlook and fully expect to deliver another year of record sales and adjusted EBITDA. Very few companies are planning to grow earnings in excess of 40% this year and drive meaningful margin improvements. I'm proud to say that this team has executed on these types of results over the last several years. They've worked hard to execute on our strategy using 80/20 as a guide. The recent announcements related to the LTA and pending spin-off of Performance Technologies are truly historic. We remain confident that these actions are setting the stage for long-term sustainable growth for Modine shareholders. With that, Neil Brinker and I will take your questions. Thank you. At this time, we will be conducting a question and answer session. If you like to ask questions, please press star one on your telephone keypad. The confirmation tone will indicate your line on the questions queue. You may press star two if you like to remove your question from the queue. For participants using speaker equipment, you may necessarily have to pick up the handset. Before you press the star keys. One moment, please, while we poll for a question. First question comes from Matt Summerville with D.A. Davidson. Your line is now live. Thanks. Morning. Mick, I was wondering, just a question on margins. As we think about looking at Modine in the context of a climate-only sort of co-entity, what would your profitability expectation be for the PT business that's been factored into your guide? Again, we think about how to best build, and for others to best build, a climate-only model remains a sort of looking ahead. Hey, Matt. I think it's going to be good news, is relatively clean, and your ability to estimate it until we do the recast and then eventually the disc ops after the deal closes. We're looking at this year, I mentioned already, from a top line, flat to 5%, relatively consistent top line with last year. From a margin, we see it early this year being between probably like a 14%-15%, that'd be up maybe 25-100 basis points. That will give you a good idea of the impact on PT or how to back that out. There are some complexities around corporate costs that will stay or go with. Net net, there wasn't a large material difference in remaining SG&A. For the most part, I think you'll have the pieces to try to estimate Modine without PT. Thank you. That's helpful. Then maybe if you guys could talk a little bit, you're guiding fiscal 2027 data center business to up 60%-80%. You have this massive long-term agreement for capacity that you disclosed yesterday. How does all of this influence the multi-year CAGR of 50%-70% that you previously discussed for the data center business? Secondarily, do you see more LTAs, and is the one you just signed accretive to profitability? If so, maybe talk about that. Thank you, guys. Yeah. I'll go first. We don't see a reason to change our longer-term outlook. Later this year, we'll probably go out another year of more formal guidance. In short, Matt, raising this year up to 60%-80%, I don't think that changes our outlook for the next year being 50%-70% million. Some people have asked, would that mean implying a decline? No. We still don't see the funnel shrinking or squeezing the back end of the funnel. I'd say for now, we'd still hold with fiscal year 2028, 50%-70% up. Before Neil can jump in, the LTA would definitely be accretive to where we are today. Said another way, it's absolutely within the target margins of where we want the data center business to be. Yeah, I agree, Mick. We're in those conversations with customers. We'll always entertain a conversation with a customer relative to an LTA or a derivative of an LTA, some form of it. Honestly, we're seeing the market move. Nothing of this significance for sure. Yeah, there could be potential opportunities for smaller versions of that, yes. Thanks, guys. Talk to you back in the queue. Our next question is from Noah Kaye with Oppenheimer. Your line is now live. Hey. Just to follow up, congratulations, by the way, on inking that LTA. Two related questions on it. First, does this result in you expanding capacity beyond the scope of the expansion that you outlined in July? In other words, is this incremental as an increase in your revenue capacity? How much if so? Second, I think I understood you, Mick; I just want to be crystal clear. The LTA you're saying is not really incremental to the targets you've already given us? Is it more that you are after this fiscal year, going back to the 50%-70% CAGR on top of where you'll exit fiscal 2027? Hey, Noah, this is Neil. I'll take the first part of that question. The LTA that was announced is in the numbers for the capacity expansion that we've talked about over the last few quarters. We believe with the annual CapEx that we traditionally spend each year, particularly in the data center business, that annual cycle of CapEx spend will be sufficient for us to continue to grow capacity beyond this LTA. To your question on growth rates, Noah, I'll try again. I'm glad, make sure there's no confusion. This year, we see revenue growth higher, 60%-80%. As we roll forward then to the next fiscal year, I would still hold to a 50%-70% growth rate on top of the year we'll finish this year. All right. That's extremely helpful. Thank you. You called out the weather impacts across the business in the quarter. Just so we kind of have that as a data point heading into next year, can you maybe dimension what the cost impact was? Whether it was sort of a lost profitability or lost EBITDA numbers. Is that something that you can have and can share with us? Yeah. From a Climate Solutions side, Noah, I think the weather costs about 50-100 basis points on the climate business from a gross margin standpoint. Okay. Thank you very much. Sure. Our next question is from Neil Burke with UBS. Your line is now live. Hey, thanks for the question. Mick, I think you just mentioned data center growth of 60%-80% for this year, but also for fiscal 2028, if I heard that right. Can you just kind of remind us of the number of production lines that you had running exiting the year and how many you're expecting to get to by year-end? I'll go quick, Neil then can talk about capacity. We see 60%-80% growth this year on the data center side. That's, call it, a $1.8 billion-$2 billion range this year. For the following fiscal year, I would still use a 50%-70% range for our fiscal 2028. We'll dial that in and we'll know more. That's why I said later this calendar year, either through an IR meeting or an IR day, we'll likely give a more firm fiscal 2028 or even a 2029 outlook for all of you. In the interim, I would assume next year is still going to be a 50%-70% growth rate. I'll look at the capacity we have. This is specific to chillers and data centers. We have half of the capacity running at various rates of efficiency today. We'll be doubling that by the end of the fiscal year. That's helpful. Just to follow up, just to make sure I understand, for the current year. I know you said calendar 2027 is when you start recognizing revenue for that $4 billion long-term agreement. Do you have enough visibility to say, is there just basically one quarter assumed in the guide for this year of revenue recognition? One quarter alone off of that $4 billion should be pretty substantial. We actually have a little bit of that built into our current guide, and part of it is we know where the LTA is, and we have windows where they give us firm commits. I don't think we're quite there yet to know what that exact number will be in Q4. Also, I would just add, as we've tried to do in previous years, I would say we've got the most firm commitments and delivery schedules for the next six months, Neil. When we get to our Q4 and where we've tended to update our Q4 or raise guidance if we're fortunate enough, it would probably be that we get halfway through the year. Q4 is kind of our best placeholder for this time, and we're just balancing the known and unknown at this point with regards to that LTA. Okay. Thank you. Our next question comes from Chris Moore with CJS Securities. Your line is now live. Hey, good morning, guys. In terms of, obviously, data center growth, 60%-80% this year, continued rapid 50%-70%, and strong beyond that. That recognizes the market is a dynamic. The mix of products to get there might change. Maybe just strictly from a fiscal 2027 perspective, is the mix pretty locked in? If so, roughly what % of that is chillers? You're right, and that's why we have the modularity with our factories, so that we can adjust and pivot to whichever design we move forward with. The last number we gave was around half of that, which was on chillers. About 40%. 40% this year. This year. That will be going probably about 50%. 40%-50% Yep Chris, to be specific. There is a little bit of a mix shift there. The balance of that, the other side, would be air handling units, CDUs, other products, and fan walls. That's what we have factored into the mix so far. Got you. Very helpful. Just on the heat transfer side, the growth this quarter you've talked about is driven by both data center and heat pump customers. Moving forward, just from a data center perspective, how much of that growth is on the data center side? Is that going to be a constant moving forward over the next five years, that piece of the heat transfer growth? Within the coil side of heat transfer solutions, clearly, the largest rate of growth is coming out of the data center side. I would say the balance of it tends to be more based on replacement cycles or GDP cycles. Neil, anything you want to add? It's pretty new in terms of the growth on the data center side that we're seeing. It's over the last quarter or so. We're still building out the funnel. We're engaging with customers to understand what the short-term and long-term commitments are. Definitely there's interest there on the data center side as we see our customers wanting to lock up some supply. Got it. I appreciate it, guys. I'll jump back in line. Our next question comes from David Tarantino with KeyBanc Capital Markets. Your line is now live. Hey, good morning, everyone. Maybe following up on the LTA, understanding that there's often NDAs covering this, but could you give any color on kind of the profile of the customer? Is it a new or an existing customer, and what technologies does the agreement cover? Then maybe within that, how should we be thinking about how the $4 billion shows through in terms of timeline as the capacity continues to ramp here? Yeah. Thanks, David. With an existing customer, yes, it's someone who we've had a relationship. We've got great relationships with our data center customers, and this is just further evidence, and this LTA is specific for our chillers. Okay, great. Oh, go ahead. No, go ahead, David. Just any thoughts on how the $4 billion shows through as capacity is still ramping here? Yeah. We mentioned a minute ago it's a calendar, so we'll see some ramp beginning in Q4. We'll know more here probably in another quarter or so. It is over three years, and don't know the exact ramp, but we don't see any more than $2 billion a year right now. It's still early days, but hopefully that kind of helps you if you look at $4 billion over three years and no more than $2 billion in any one year. Definitely going to ramp up. Okay, great. Maybe looking at data center as a whole, could you give some more color on the pipeline here? Maybe X the LTA. I think you mentioned another quarter of record order intake, but do you have any color on continued opportunities as we think about the long-term growth profile, and then maybe talk about your confidence in delivering for those other customers as you ramp capacity for the LTA as well? Yeah, certainly, we'll balance this to make sure that we meet our commitments with all of our data center customers. There's no doubt about that. Before we commit to this or agree to any kind of long-term agreement around capacity, we want to make sure that we keep all of our customers in mind and are able to deliver on those commitments. That's considered, to your point. What was the second part of your question, David? It's just the pipeline as a whole. If you kind of exclude the LTA from this quarter, kind of give some color on how it continues to evolve as you put up these record order numbers, how much more is out there? Yeah, it continues to evolve, you're right. It's growing at significant rates. I think if you look at the trends in the last couple of years, it continues to follow that trend line. As we move things through our probability funnel, we get to points where we can publicly announce LTAs, which gives, hopefully, everybody further confidence that we can execute on these things. As the funnel is large, it continues to grow. Our hit rate continues to increase because of our technology. Because of that, we feel very confident with the guidance that we gave relative to data centers. Okay, great. Thank you, guys. Our next question comes from Brian Drab with William Blair. Your line is now live. Hi. Thanks for taking my questions. I'm curious if you would say anything about what the probability was that you had assigned to the orders or the opportunity associated with the LTA when you gave us the 50%-70% forecast for 2027 and 2028. On my side, we factored in that when Neil always talks about the funnel and when we set those longer-term goals, we're really building it customer by customer and program by program. We were aware of this opportunity, so there's some of that that gets factored in, but we didn't know at the time what the magnitude or the scale or the number would flow over, Brian. I'm trying to get a sense for whether it's really incremental. We don't know if you had $4 billion in sales over that period with an 80% probability on it, or was this something like a win where it was 30% and it's more of a surprise, but you can't help any further with that? Maybe the way I would say it, and maybe it will help, is when we give a multi-year look like that, and we talk about the funnel, we'll clear that short of an LTA, we don't have multi-year POs. What this one did is it gave us a really high confidence in a big portion of our two-three year outlook. If you run that 60-80% and 50-70%, right? It implies we had talked about being north of $2 billion, and that implies we're at $3 billion+ type. This is a big component of it in that funnel that gives us more visibility and certainty of that outlook. I would just say when we get outside of the fiscal year we're in, it's really difficult to have certainty on what those order rates could potentially be. You see the projects for sure. You have them in that 25%-50% range, but anything outside of the calendar year can be really difficult to predict. If you're looking at things in 2027 and 2028 and 2029, those are going to be the lower end of the probability funnel. The LTA simply accelerates it through the probability funnel to a high degree of confidence. It's significant, Brian. Yeah. It feels really significant. I'm just going to press with one more on it just because if it's $4 billion over three years and you're doing—you said not over $2 billion in a year, I think, a second ago, but on average, it's like $1.4 billion. If you're hitting a run rate in fiscal 2028 of $3 billion+ in data centers, and a little more than half of that is chillers, you're doing like $1.5 billion+ in chillers, but this one LTA is $1.4 billion on average over three years. I'm just trying to see if that thinking makes sense. What it feels like, observing from the outside here, is that there's a big step up, like a step function increase in data center revenue coming in either fiscal 2028 or 2029. You have a lot more customers than just this one. I know there wasn't a question there. That's true. Yeah. Well, no, it's true. That's the way you're thinking about it in terms of them absorbing a huge amount of capacity. We can always add further capacity based on demand with our annual CapEx budget that we have in place. We've looked at that, we've done the analysis, and we're comfortable with growing with our customers and having further conversations on if we want to invest in more chiller lines and how to go about it. It's a fair point. Okay, just the last one. Can you give any further color on the first quarter? You said supply chain is impacting volume. I don't know if you said if volume would be down year-over-year or up year-over-year. Directionally, can you give us some sense for how to model first quarter also first quarter margins for Climate Solutions? Yeah. Brian, just to narrow that down, were you talking about data centers in particular, or the total company, or...? I guess just Climate Solutions EBITDA margin, first of all. Because I think you said favorable comparisons or something along those lines for the second, third, and fourth quarters. I'm just wondering what you're trying to tell us about the first quarter for Climate Solutions EBITDA margin, and then also how much sales volume is going to be impacted for, I guess, data center or Climate Solutions, however you want to talk about it for the first quarter. Yeah. From a margin standpoint, I'd actually maybe just talk about revenue. I think total company revenue in the first quarter should be right in line with our annual revenue range, probably closer to the midpoint from a total top line. From a margin standpoint versus the prior year, we expect that the commercial HVAC and data center businesses' margins will be down year-over-year in Q1, similar to the trend we've had the last few quarters starting Q2 last year, where we've been improving the margin, but on a year-over-year basis, it's been down from a year-over-year comparability. As I mentioned at the beginning of the call, we expect that to flip in Q2 for actually all three segments. We would expect beginning in Q2 and then continuing in three and four that, in addition to that top-line growth, we'll have favorable year-over-year margins for the balance of the year. So Q1 is really working through the data center and the supply chain shortage, and we'll then be able to continue to ramp our volumes on the data center side. HVAC, we'll be on a holiday, we'll have anniversaries on those three acquisitions, and that'll have the positive impact there beginning in Q2. Okay. Thank you very much. Yeah, sure. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please while we poll for questions. Our next question comes from Jeff Van Sinderen with B. Riley Securities. Your line is now live. Good morning, everyone. I'm just wondering, is there a way to break out how much of your data center business is AI-related versus cloud? I guess what are your latest thoughts on how the longer-term mix of that will evolve between AI and cloud? Just maybe, how long do you believe the rapid growth of AI data centers can continue? Just trying to get, I guess, a sense of how you think about longevity there versus the ongoing cloud demand. We have projects at different levels of scale in our funnels that go beyond. We look at and talk to customers, and we have our technology roadmaps that obviously go beyond that as well. We feel pretty confident over the next several years into 2030 with our projections and our guidance based on the supply chain and the data center capacity that's being added globally. It's difficult for us to know where the product is being used in certain applications. Our product is universal, so it can go into the cloud, it can go into compute, and it can go into AI. The product can serve multiple end-use applications. It's really hard to know exactly what some of these data centers are actually used for based on the product type that they buy from us. When it is specific for a CDU, then we know that it's for liquid cooling, and there's a high degree of certainty that that's part of the AI infrastructure ramp-up. That continues to grow at the rate that's pretty public. I don't see a reason to think it's going to be any less than that over the next couple of years. Okay, fair enough. Just, I guess, thinking about it, obviously, this LTA is going to be a pretty substantial part of your business. I guess as we think about challenges ahead that you're navigating relevant to further ramping production, maybe you can just touch a little bit more to the degree that you want to on those, and maybe speak to initiatives to get beyond those obstacles to getting production higher. Yeah, that's good. It's a good question. I just have to commend the team at Modine for this. All the businesses pitching in to support the data center business, the entire organization pitching in to support the data center because we have such great technology and product that the demand is so high, it's all hands on deck. We've doubled the data center business four years in a row. To double that business every single year, it's been extremely hard. This is the first time we've actually started to bump up against some headwinds on the supply chain side. We're getting to that level of scale. We're talking with our suppliers, we're working with our suppliers, and we're engaging in a way we haven't engaged in the past to ensure continuity of supply. We're looking at our suppliers strategically, and then we are also helping our suppliers with the daily cadence and the daily management to ensure that we can keep the capacity at the rate that we want to keep it. It's a balancing act. It's a mix of tactics and strategy. It's one of our top priorities as a company. We've invested there significantly with the human capital to support that. We've hired some very talented people to support that, and it's the front of the radar for us as we continue to double our capacity, or I should say double the business over the last several years. Okay, great. Thanks for taking my questions. I'll take the rest offline. We have a follow-up question from Matt Summerville with D.A. Davidson. Thanks. Just a couple quick ones. As we think about the context of this LTA and the chiller lines that you've publicly disclosed you're standing up, the 14 lines in the U.S., the two lines in the U.K. When all of those lines are ramped, how much of your chiller capacity will be spoken for potentially by this LTA? How should we think about Modine's sort of playbook to, at some point down the road, serve the two hyperscalers that you currently have onboarded as customers, but those that you're not able to supply chillers to at this moment? I have another quick one. Yeah. The ones that we are having conversations with that are beyond the LTA today. We can make adjustments and we can make pivots, but we're looking for certainty to deploy any additional CapEx. We would engage in similar conversations and discussions of how we could potentially lock up capacity for a specific customer. We know how to do it. We know the process, we know the playbook. We can do more of it. It's just once we get to that point in the negotiations long term, what years would that impact? I don't have an answer for that right now because we're in discussions. The existing capacity that we have today, a high degree of it, is going to be for the LTA. I can't give you a specific number because these are all ramping at different rates, and with the LTA and how we put this together, it's not equal amounts each year. It's different based on project timings and completion of construction. It's a high degree, and we have the ability to adjust if we need to make adjustments to add additional customers. Got it. Just finally, maybe to kind of get off of the DC topic for a minute, can you just talk about your M&A funnel actionability, and how we should be thinking about M&A in the context of fiscal 2028, or excuse me, fiscal 2027 for Modine? Thanks. Yeah, we're still maintaining an active funnel, Matt, and that's important. It took us a while to build those relationships, and we want to keep doing our homework on those. I'd say for the bulk of this calendar year, it's still going to be heads down. We talk a lot about the data center business and how many people at Modine, as Neil talked about, are supporting a business growing at that rate. Some of the same people, or those that aren't doing that, are also actively working daily to stand up the Performance Technologies group so we can complete that spin-off. I'd say for the bulk of this calendar year, that's a lot, plus the three acquisitions we're integrating in HVAC. Anything could happen, but I really think for our sake, or where Neil and I are focused the next six months or so, is going to be just heavily focused on the spin-off and the data center growth. Great stuff. Thank you, guys. We have reached the end of the question-and-answer session. I'd now like to turn the call over to Kathleen Powers for closing comments. Thank you. Thanks to everyone for joining our call this morning. A replay will be available through our website in about two hours. We hope everyone has a great day. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Speaker 11: Greetings, and welcome to Modine's fourth quarter fiscal 2026 results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kathleen Powers. Thank you. You may begin. Greetings, and welcome to Modine's fourth quarter fiscal 2026 results conference call. greetings and welcome to modine's fourth quarter fiscal 2026 results conference call At this time, all participants are on a listen-only mode. at this time all participants are on a listen-only mode A question and answer session will follow the formal presentation. a question and answer session will follow the formal presentation If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. if anyone should require operator assistance during the conference please press star zero on your telephone keypad As a reminder, this conference is being recorded. as a reminder this conference is being recorded I would now like to turn the conference over to your host, Kathleen Powers. i would now like to turn the conference over to your host kathleen powers Thank you. thank you You may begin. you may begin

Speaker 5: Hello, good morning. Welcome to our conference call to discuss Modine's fourth quarter fiscal 2026 results. I'm joined by Neil Brinker, our President and Chief Executive Officer, and Mick Lucareli, our Executive Vice President and Chief Financial Officer. The slides that we will be using with today's presentation are available on the investor relations section of our website, modine.com. On slide three of that deck is our notice regarding forward-looking statements. This call will contain forward-looking statements as outlined in our earnings release, as well as in our company's filings with the Securities and Exchange Commission. With that, I will turn the call over to Neil. Hello, good morning. hello good morning Welcome to our conference call to discuss Modine's fourth quarter fiscal 2026 results. welcome to our conference call to discuss modine's fourth quarter fiscal 2026 results I'm joined by Neil Brinker, our President and Chief Executive Officer, and Mick Lucareli , our Executive Vice President and Chief Financial Officer. i'm joined by neil brinker our president and chief executive officer and mick lucareli our executive vice president and chief financial officer The slides that we will be using with today's presentation are available on the investor relations section of our website, modine.com. the slides that we will be using with today's presentation are available on the investor relations section of our website modine.com On slide three of that deck is our notice regarding forward-looking statements. on slide three of that deck is our notice regarding forward-looking statements This call will contain forward-looking statements as outlined in our earnings release, as well as in our company's filings with the Securities and Exchange Commission. this call will contain forward-looking statements as outlined in our earnings release as well as in our company's filings with the securities and exchange commission With that, I will turn the call over to Neil. with that i will turn the call over to neil

Speaker 8: Thank you, Kathy, and good morning, everyone. I'm pleased to report another strong quarter, capping off our fourth consecutive year of record-breaking revenue and adjusted EBITDA. This is a testament to the hard work and dedication of the entire team. Even more importantly, we've built strong business momentum and significantly advanced our strategic transformation, accelerating the evolution of our portfolio to become more focused on higher margin and higher growth businesses. Earlier in the year, we announced three strategic acquisitions: AbsolutAire, L.B. White, and Climate by Design, which collectively added $119 million in incremental revenue this year. These acquisitions added key products to our portfolio and opened new end markets and channel partners for our HVAC businesses. In the second quarter, we announced an incremental $100 million investment to expand capacity for our data center products in the U.S. Thank you, Kathy, and good morning, everyone. thank you kathy and good morning everyone I'm pleased to report another strong quarter, capping off our fourth consecutive year of record-breaking revenue and adjusted EBITDA. i'm pleased to report another strong quarter capping off our fourth consecutive year of record-breaking revenue and adjusted ebitda This is a testament to the hard work and dedication of the entire team. this is a testament to the hard work and dedication of the entire team Even more importantly, we've built strong business momentum and significantly advanced our strategic transformation, accelerating the evolution of our portfolio to become more focused on higher margin and higher growth businesses. even more importantly we've built strong business momentum and significantly advanced our strategic transformation accelerating the evolution of our portfolio to become more focused on higher margin and higher growth businesses Earlier in the year, we announced three strategic acquisitions: AbsolutAire, L.B. earlier in the year we announced three strategic acquisitions absolutaire l.b White, and Climate by Design, which collectively added $119 million in incremental revenue this year. white and climate by design which collectively added $119 million in incremental revenue this year These acquisitions added key products to our portfolio and opened new end markets and channel partners for our HVAC businesses. these acquisitions added key products to our portfolio and opened new end markets and channel partners for our hvac businesses In the second quarter, we announced an incremental $100 million investment to expand capacity for our data center products in the U.S. in the second quarter we announced an incremental $100 million investment to expand capacity for our data center products in the u.s We are more than six months into this work, and I'm happy to report that we are firmly on schedule with this crucial initiative. When completed, our investment to expand our operations footprint in the U.S. will provide critical capacity close to our North American customers, allowing us to further advance our market positions in this hyper-growth market. In January, we announced that we will further accelerate our transformation by spinning off our Performance Technologies segment and combining it with Gentherm. This transaction will allow us to focus on our high-growth businesses while providing an ideal home for our Performance Technologies team. Finally, to close out this remarkable year, I'm proud to announce a landmark long-term capacity locking agreement with a key strategic data center customer. We are more than six months into this work, and I'm happy to report that we are firmly on schedule with this crucial initiative. we are more than six months into this work and i'm happy to report that we are firmly on schedule with this crucial initiative When completed, our investment to expand our operations footprint in the U.S. will provide critical capacity close to our North American customers, allowing us to further advance our market positions in this hyper-growth market. when completed our investment to expand our operations footprint in the u.s will provide critical capacity close to our north american customers allowing us to further advance our market positions in this hyper-growth market In January, we announced that we will further accelerate our transformation by spinning off our Performance Technologies segment and combining it with Gentherm. in january we announced that we will further accelerate our transformation by spinning off our performance technologies segment and combining it with gentherm This transaction will allow us to focus on our high-growth businesses while providing an ideal home for our Performance Technologies team. this transaction will allow us to focus on our high-growth businesses while providing an ideal home for our performance technologies team Finally, to close out this remarkable year, I'm proud to announce a landmark long-term capacity locking agreement with a key strategic data center customer. finally to close out this remarkable year i'm proud to announce a landmark long-term capacity locking agreement with a key strategic data center customer Under the terms of this LTA, we will guarantee capacity to supply more than $4 billion of data center cooling products during calendar years 2027 through 2029. This agreement highlights the confidence our customers have in Modine and validates our need for our current investment in capacity expansion. This has been a year of tremendous accomplishments. I'm so proud of our team's execution and commitment. While we celebrate these successes, we are even more energized by the significant opportunities that lie ahead. Please turn to slide five. Climate Solutions delivered another outstanding, record-breaking year. The segment reported a 43% increase in revenues for the full fiscal year, including acquisitions. Organic sales grew 32% in fiscal 2026. Sales growth in this segment was also driven by data centers, which increased 73% to $1.1 billion. Under the terms of this LTA, we will guarantee capacity to supply more than $4 billion of data center cooling products during calendar years 2027 through 2029. under the terms of this lta we will guarantee capacity to supply more than $4 billion of data center cooling products during calendar years 2027 through 2029 This agreement highlights the confidence our customers have in Modine and validates our need for our current investment in capacity expansion. this agreement highlights the confidence our customers have in modine and validates our need for our current investment in capacity expansion This has been a year of tremendous accomplishments. this has been a year of tremendous accomplishments I'm so proud of our team's execution and commitment. i'm so proud of our team's execution and commitment While we celebrate these successes, we are even more energized by the significant opportunities that lie ahead. while we celebrate these successes we are even more energized by the significant opportunities that lie ahead Please turn to slide five. please turn to slide five Climate Solutions delivered another outstanding, record-breaking year. climate solutions delivered another outstanding record-breaking year The segment reported a 43% increase in revenues for the full fiscal year, including acquisitions. the segment reported a 43% increase in revenues for the full fiscal year including acquisitions Organic sales grew 32% in fiscal 2026. organic sales grew 32% in fiscal 2026 Sales growth in this segment was also driven by data centers, which increased 73% to $1.1 billion. sales growth in this segment was also driven by data centers which increased 73% to $1.1 billion We ended the year with a strong fourth-quarter performance in data centers with over $400 million in revenue. To put this in perspective, our chiller production in North America increased fivefold as compared to the prior year. This was despite production delays where we lost 20 shifts due to severe weather in the south. The team worked extremely hard to overcome the impact of this missed production and make sure we delivered on our customers' commitments, which included significant overtime hours. In addition, we ended the year with our second consecutive quarter of record order intake. I recently toured several of our data center facilities, and I'm pleased to report that the expansion plans are progressing well. We've already shipped our first chillers from Jefferson City, Missouri, and we shipped air handling units and CDUs from our Franklin, Wisconsin, plant in the fourth quarter. We ended the year with a strong fourth -quarter performance in data centers with over $400 million in revenue. we ended the year with a strong fourth -quarter performance in data centers with over $400 million in revenue To put this in perspective, our chiller production in North America increased fivefold as compared to the prior year. to put this in perspective our chiller production in north america increased fivefold as compared to the prior year This was despite production delays where we lost 20 shifts due to severe weather in the south. this was despite production delays where we lost 20 shifts due to severe weather in the south The team worked extremely hard to overcome the impact of this missed production and make sure we delivered on our customers' commitments, which included significant overtime hours. the team worked extremely hard to overcome the impact of this missed production and make sure we delivered on our customers' commitments which included significant overtime hours In addition, we ended the year with our second consecutive quarter of record order intake. in addition we ended the year with our second consecutive quarter of record order intake I recently toured several of our data center facilities, and I'm pleased to report that the expansion plans are progressing well. i recently toured several of our data center facilities and i'm pleased to report that the expansion plans are progressing well We've already shipped our first chillers from Jefferson City, Missouri, and we shipped air handling units and CDUs from our Franklin, Wisconsin, plant in the fourth quarter. we've already shipped our first chillers from jefferson city missouri and we shipped air handling units and cdus from our franklin wisconsin plant in the fourth quarter Overall, I'm very pleased and proud of this team's work. Their efforts have been instrumental to our revenue growth this quarter and will continue to allow us to grow to meet future demand. As we continue to execute on our capacity expansion, we are proactively managing our supply chain to ensure our growth trajectory. We are currently addressing challenges with a few key suppliers, which is affecting our production schedules and efficiency. We began to see a shortage of certain components late in the quarter, and we are implementing corrective actions. We have a dedicated team actively working on solutions, including qualifying new vendors to ensure a stable supply of components. We're confident in our ability to manage through these short-term challenges, and while this will temporarily impact our Q1 production plans, we do not anticipate any impact on our full-year outlook. Overall, I'm very pleased and proud of this team's work. overall i'm very pleased and proud of this team's work Their efforts have been instrumental to our revenue growth this quarter and will continue to allow us to grow to meet future demand. their efforts have been instrumental to our revenue growth this quarter and will continue to allow us to grow to meet future demand As we continue to execute on our capacity expansion, we are proactively managing our supply chain to ensure our growth trajectory. as we continue to execute on our capacity expansion we are proactively managing our supply chain to ensure our growth trajectory We are currently addressing challenges with a few key suppliers, which is affecting our production schedules and efficiency. we are currently addressing challenges with a few key suppliers which is affecting our production schedules and efficiency We began to see a shortage of certain components late in the quarter, and we are implementing corrective actions. we began to see a shortage of certain components late in the quarter and we are implementing corrective actions We have a dedicated team actively working on solutions, including qualifying new vendors to ensure a stable supply of components. we have a dedicated team actively working on solutions including qualifying new vendors to ensure a stable supply of components We're confident in our ability to manage through these short-term challenges, and while this will temporarily impact our Q1 production plans, we do not anticipate any impact on our full-year outlook. we're confident in our ability to manage through these short-term challenges and while this will temporarily impact our q1 production plans we do not anticipate any impact on our full-year outlook From a market demand standpoint, we're in a great competitive position. The outlook remains incredibly strong. We see no signs of slowdown. The hyperscalers are continuing their significant investments with a heavy concentration in North America. We are deepening our partnership with strategic customers, co-developing innovative products to meet their current and future cooling needs. One of the products I'm most excited about is our groundbreaking 3 MW chiller, which delivers a 50% increase in cooling capacity with only a 9% increase in footprint. As chip densities increase, data centers will require more cooling capacity within the same footprint. Our 3 MW chiller's modular design will be the solution for handling higher heat loads within the same space. We believe this will be a game changer. From a market demand standpoint, we're in a great competitive position. from a market demand standpoint we're in a great competitive position The outlook remains incredibly strong. the outlook remains incredibly strong We see no signs of slowdown. we see no signs of slowdown The hyperscalers are continuing their significant investments with a heavy concentration in North America. the hyperscalers are continuing their significant investments with a heavy concentration in north america We are deepening our partnership with strategic customers, co-developing innovative products to meet their current and future cooling needs. we are deepening our partnership with strategic customers co-developing innovative products to meet their current and future cooling needs One of the products I'm most excited about is our groundbreaking 3 MW chiller, which delivers a 50% increase in cooling capacity with only a 9% increase in footprint. As chip densities increase, data centers will require more cooling capacity within the same footprint. one of the products i'm most excited about is our groundbreaking 3 mw chiller which delivers a 50% increase in cooling capacity with only a 9% increase in footprint. as chip densities increase data centers will require more cooling capacity within the same footprint Our 3 MW chiller's modular design will be the solution for handling higher heat loads within the same space. our 3 mw chiller's modular design will be the solution for handling higher heat loads within the same space We believe this will be a game changer. we believe this will be a game changer Innovating alongside our customers for what are dynamic cooling requirements over multi-year periods is giving us greater visibility into future demand, allowing us to invest in our key growth initiatives and products with greater conviction. Turning to the rest of our Climate Solutions segment. Our HTS business delivered a great quarter, with revenues up 19%. This was largely driven by higher coil sales to data center and heat pump customers. In HVAC technologies, revenues increased 51% from the prior year, driven by recent acquisitions. Our HVAC business on the East Coast and in the South also lost significant production time due to severe weather. Looking forward, we have a great deal to be excited about across this segment. The commercial HVAC portion of the Scott Springfield business is poised for a strong recovery from a down year. Innovating alongside our customers for what are dynamic cooling requirements over multi-year periods is giving us greater visibility into future demand, allowing us to invest in our key growth initiatives and products with greater conviction. innovating alongside our customers for what are dynamic cooling requirements over multi-year periods is giving us greater visibility into future demand allowing us to invest in our key growth initiatives and products with greater conviction Turning to the rest of our Climate Solutions segment. turning to the rest of our climate solutions segment Our HTS business delivered a great quarter, with revenues up 19%. our hts business delivered a great quarter with revenues up 19% This was largely driven by higher coil sales to data center and heat pump customers. this was largely driven by higher coil sales to data center and heat pump customers In HVAC technologies, revenues increased 51% from the prior year, driven by recent acquisitions. in hvac technologies revenues increased 51% from the prior year driven by recent acquisitions Our HVAC business on the East Coast and in the South also lost significant production time due to severe weather. our hvac business on the east coast and in the south also lost significant production time due to severe weather Looking forward, we have a great deal to be excited about across this segment. looking forward we have a great deal to be excited about across this segment The commercial HVAC portion of the Scott Springfield business is poised for a strong recovery from a down year. the commercial hvac portion of the scott springfield business is poised for a strong recovery from a down year This business was negatively impacted by tariffs this past year but is expected to rebound in fiscal 2027. We're also seeing continued momentum in our coils business, not only with data center customers, but also in commercial HVAC markets. Similarly, our heating businesses are also expected to have a good year, led by agricultural heating and markets served by L.B. White. In summary, I'm very pleased with the performance of the Climate Solutions segment, and I'm confident in our strategy as we head into the fiscal year 2027. Please turn to page six. The Performance Technologies segment is making excellent progress on preparing for the planned spin-off and merger with Gentherm. There are numerous work streams preparing for the separation, including standing up IT systems to ensure that we can deliver a standalone operating business to Gentherm at close. This business was negatively impacted by tariffs this past year but is expected to rebound in fiscal 2027. this business was negatively impacted by tariffs this past year but is expected to rebound in fiscal 2027 We're also seeing continued momentum in our coils business, not only with data center customers, but also in commercial HVAC markets. we're also seeing continued momentum in our coils business not only with data center customers but also in commercial hvac markets Similarly, our heating businesses are also expected to have a good year, led by agricultural heating and markets served by L.B. similarly our heating businesses are also expected to have a good year led by agricultural heating and markets served by l.b White. white In summary, I'm very pleased with the performance of the Climate Solutions segment, and I'm confident in our strategy as we head into the fiscal year 2027. in summary i'm very pleased with the performance of the climate solutions segment and i'm confident in our strategy as we head into the fiscal year 2027 Please turn to page six. please turn to page six The Performance Technologies segment is making excellent progress on preparing for the planned spin-off and merger with Gentherm. the performance technologies segment is making excellent progress on preparing for the planned spin-off and merger with gentherm There are numerous work streams preparing for the separation, including standing up IT systems to ensure that we can deliver a standalone operating business to Gentherm at close. there are numerous work streams preparing for the separation including standing up it systems to ensure that we can deliver a standalone operating business to gentherm at close We have completed several major milestones and have others ahead of us, including Gentherm's S-4 submission to the SEC and its subsequent shareholder approval, as well as a receipt of our IRS determination letter on the tax treatment of the Reverse Morris Trust transaction. Overall, this process remains on track, and we are still expecting to close this transaction before the end of the calendar year, presuming that all these necessary approvals are received. The team is excited about the road ahead. We have worked diligently to improve our business with higher adjusted EBITDA margins on flat to down revenues. Margins were lower this quarter as anticipated, primarily due to higher material costs, including the impact of tariffs. We expect this to improve in fiscal 2027 as we pass through and recover these costs. While our vehicular markets have been challenging, we are seeing bright spots and opportunities for growth. We have completed several major milestones and have others ahead of us, including Gentherm's S-4 submission to the SEC and its subsequent shareholder approval, as well as a receipt of our IRS determination letter on the tax treatment of the Reverse Morris Trust transaction. we have completed several major milestones and have others ahead of us including gentherm's s-4 submission to the sec and its subsequent shareholder approval as well as a receipt of our irs determination letter on the tax treatment of the reverse morris trust transaction Overall, this process remains on track, and we are still expecting to close this transaction before the end of the calendar year, presuming that all these necessary approvals are received. overall this process remains on track and we are still expecting to close this transaction before the end of the calendar year presuming that all these necessary approvals are received The team is excited about the road ahead. the team is excited about the road ahead We have worked diligently to improve our business with higher adjusted EBITDA margins on flat to down revenues. we have worked diligently to improve our business with higher adjusted ebitda margins on flat to down revenues Margins were lower this quarter as anticipated, primarily due to higher material costs, including the impact of tariffs. margins were lower this quarter as anticipated primarily due to higher material costs including the impact of tariffs We expect this to improve in fiscal 2027 as we pass through and recover these costs. we expect this to improve in fiscal 2027 as we pass through and recover these costs While our vehicular markets have been challenging, we are seeing bright spots and opportunities for growth. while our vehicular markets have been challenging we are seeing bright spots and opportunities for growth The stationary power market continues to be strong. We expect this to return to growth in fiscal 2027. We are also encouraged by the emerging growth in our automotive and construction equipment businesses. Regarding the latest 232 aluminum tariffs, we are proactively working to mitigate their impact on our business. We have a proven track record of managing these situations and are in the process of working through this current round. We have factored a range of expected costs in our guidance, which Mick will discuss in more detail. Before I hand it over to Mick, I'd like to remind you of our upcoming changes to our segment reporting structures. The Performance Technologies segment, under the leadership of Jeremy Patten, will continue to be reported as a segment until the expected spin-off and merger with Gentherm closes later this year. The stationary power market continues to be strong. the stationary power market continues to be strong We expect this to return to growth in fiscal 2027. we expect this to return to growth in fiscal 2027 We are also encouraged by the emerging growth in our automotive and construction equipment businesses. we are also encouraged by the emerging growth in our automotive and construction equipment businesses Regarding the latest 232 aluminum tariffs, we are proactively working to mitigate their impact on our business. regarding the latest 232 aluminum tariffs we are proactively working to mitigate their impact on our business We have a proven track record of managing these situations and are in the process of working through this current round. we have a proven track record of managing these situations and are in the process of working through this current round We have factored a range of expected costs in our guidance, which Mick will discuss in more detail. we have factored a range of expected costs in our guidance which mick will discuss in more detail Before I hand it over to Mick, I'd like to remind you of our upcoming changes to our segment reporting structures. before i hand it over to mick i'd like to remind you of our upcoming changes to our segment reporting structures The Performance Technologies segment, under the leadership of Jeremy Patten, will continue to be reported as a segment until the expected spin-off and merger with Gentherm closes later this year. the performance technologies segment under the leadership of jeremy patten will continue to be reported as a segment until the expected spin-off and merger with gentherm closes later this year Our Climate Solutions segment has been split into two segments beginning in fiscal 2027. Data centers led by Art Laszlo and commercial HVAC, currently led by Eric McGinnis. Eric has announced that he will be retiring in June; his successor will be named at a later date. I'd like to sincerely thank Eric for his leadership and invaluable contributions to Modine over the past five years. We wish Eric a long, happy, and well-deserved retirement. With that, I'll turn the call over to Mick. Our Climate Solutions segment has been split into two segments beginning in fiscal 2027. our climate solutions segment has been split into two segments beginning in fiscal 2027 Data centers led by Art Laszlo and commercial HVAC, currently led by Eric McGinnis. data centers led by art laszlo and commercial hvac currently led by eric mcginnis Eric has announced that he will be retiring in June; his successor will be named at a later date. eric has announced that he will be retiring in june his successor will be named at a later date I'd like to sincerely thank Eric for his leadership and invaluable contributions to Modine over the past five years. i'd like to sincerely thank eric for his leadership and invaluable contributions to modine over the past five years We wish Eric a long, happy, and well-deserved retirement. we wish eric a long happy and well-deserved retirement With that, I'll turn the call over to Mick. with that i'll turn the call over to mick

Speaker 7: Thanks, Neil, and good morning, everyone. Please turn to slide seven to begin reviewing the Q4 segment results. Climate Solutions delivered a strong quarter with sales up 87% over the prior year. The main driver was data centers, which grew $246 million, or 158%. HVAC technology sales increased $33 million, or 51%, driven by our recent acquisitions, partially offset by slightly lower sales of heating and indoor air quality products. Heat Transfer Solutions sales grew 19% or $26 million, primarily driven by coils with higher sales to commercial HVAC and data center customers. I'm pleased to report that Climate Solutions' fourth quarter adjusted EBITDA grew 63%, driven by strong data center earnings growth from the prior year. As anticipated, the Climate Solutions adjusted EBITDA margin was down versus the prior year but improved sequentially from the prior quarter. Thanks, Neil, and good morning, everyone. thanks neil and good morning everyone Please turn to slide seven to begin reviewing the Q4 segment results. please turn to slide seven to begin reviewing the q4 segment results Climate Solutions delivered a strong quarter with sales up 87% over the prior year. climate solutions delivered a strong quarter with sales up 87% over the prior year The main driver was data centers, which grew $246 million, or 158%. the main driver was data centers which grew $246 million or 158% HVAC technology sales increased $33 million, or 51%, driven by our recent acquisitions, partially offset by slightly lower sales of heating and indoor air quality products. hvac technology sales increased $33 million or 51% driven by our recent acquisitions partially offset by slightly lower sales of heating and indoor air quality products Heat Transfer Solutions sales grew 19% or $26 million, primarily driven by coils with higher sales to commercial HVAC and data center customers. heat transfer solutions sales grew 19% or $26 million primarily driven by coils with higher sales to commercial hvac and data center customers I'm pleased to report that Climate Solutions' fourth quarter adjusted EBITDA grew 63%, driven by strong data center earnings growth from the prior year. i'm pleased to report that climate solutions' fourth quarter adjusted ebitda grew 63% driven by strong data center earnings growth from the prior year As anticipated, the Climate Solutions adjusted EBITDA margin was down versus the prior year but improved sequentially from the prior quarter. as anticipated the climate solutions adjusted ebitda margin was down versus the prior year but improved sequentially from the prior quarter All three product groups generated strong year-over-year earnings growth, including a near doubling in our Data Centers business. One headwind during the quarter was severe weather and storms across the U.S. As Neil stated, we lost 20 production shifts in Data Centers and another 35 shifts in other parts of the business due to weather-related shutdowns. The team largely made up this work, but with additional costs for overtime that negatively impacted gross margin. As we discussed last quarter, HVAC Technologies is currently experiencing a negative mix impact along with higher costs while we are integrating several acquisitions. These factors are temporary, and we expect that the margins will continue to improve. We also saw a nice sequential margin improvement in Heat Transfer Solutions contributing to the rapid earnings growth. All three product groups generated strong year-over-year earnings growth, including a near doubling in our Data Centers business. all three product groups generated strong year-over-year earnings growth including a near doubling in our data centers business One headwind during the quarter was severe weather and storms across the U.S. one headwind during the quarter was severe weather and storms across the u.s As Neil stated, we lost 20 production shifts in Data Centers and another 35 shifts in other parts of the business due to weather-related shutdowns. as neil stated we lost 20 production shifts in data centers and another 35 shifts in other parts of the business due to weather-related shutdowns The team largely made up this work, but with additional costs for overtime that negatively impacted gross margin. the team largely made up this work but with additional costs for overtime that negatively impacted gross margin As we discussed last quarter, HVAC Technologies is currently experiencing a negative mix impact along with higher costs while we are integrating several acquisitions. as we discussed last quarter hvac technologies is currently experiencing a negative mix impact along with higher costs while we are integrating several acquisitions These factors are temporary, and we expect that the margins will continue to improve. these factors are temporary and we expect that the margins will continue to improve We also saw a nice sequential margin improvement in Heat Transfer Solutions contributing to the rapid earnings growth. we also saw a nice sequential margin improvement in heat transfer solutions contributing to the rapid earnings growth With regards to the Data Centers group, I'm happy to say that we saw another sequential margin gain in Q4. While the margin improved, there were some negative margin impacts during the loss production days tied to the weather and a shortage of some critical parts. As Neil discussed, we expect the team will address the shortage of a few critical components during our first quarter, and I'll provide some additional information in our guidance section. Despite some planned and unplanned challenges in growing revenue by more than 85%, our Climate Solutions segment delivered over 60% earnings growth. As Neil noted, starting in fiscal 2027, this segment will be split into two: Data Centers and commercial HVAC. I'll discuss our outlook in more detail at the end. We anticipate another year of earnings growth driven by strong top-line growth and further margin improvement. Please turn to slide eight. With regards to the Data Centers group, I'm happy to say that we saw another sequential margin gain in Q4. with regards to the data centers group i'm happy to say that we saw another sequential margin gain in q4 While the margin improved, there were some negative margin impacts during the loss production days tied to the weather and a shortage of some critical parts. while the margin improved there were some negative margin impacts during the loss production days tied to the weather and a shortage of some critical parts As Neil discussed, we expect the team will address the shortage of a few critical components during our first quarter, and I'll provide some additional information in our guidance section. as neil discussed we expect the team will address the shortage of a few critical components during our first quarter and i'll provide some additional information in our guidance section Despite some planned and unplanned challenges in growing revenue by more than 85%, our Climate Solutions segment delivered over 60% earnings growth. despite some planned and unplanned challenges in growing revenue by more than 85% our climate solutions segment delivered over 60% earnings growth As Neil noted, starting in fiscal 2027, this segment will be split into two: Data Centers and commercial HVAC. as neil noted starting in fiscal 2027 this segment will be split into two data centers and commercial hvac I'll discuss our outlook in more detail at the end. i'll discuss our outlook in more detail at the end We anticipate another year of earnings growth driven by strong top-line growth and further margin improvement. we anticipate another year of earnings growth driven by strong top-line growth and further margin improvement Please turn to slide eight. please turn to slide eight Performance Technologies revenue remained relatively flat from the prior year, with lower sales offset by FX, which positively impacted sales by $12 million. Heavy-duty equipment sales were down 5%, primarily driven by lower genset revenue. On-highway sales were up 4%, with higher sales to automotive and commercial vehicle customers. As expected, the EBITDA margin was down versus the prior year, primarily due to lower sales volume, along with higher material and tariff costs. Given the difficult market conditions and higher material costs, adjusted EBITDA declined 15% from the prior year. As we've done in the past, we'll recover tariffs through surcharges and mitigate increasing metals prices with pricing mechanisms in our customer contracts. As a reminder, there is typically a three to six-month lag before these price adjustments take effect. Performance Technologies revenue remained relatively flat from the prior year, with lower sales offset by FX, which positively impacted sales by $12 million. performance technologies revenue remained relatively flat from the prior year with lower sales offset by fx which positively impacted sales by $12 million Heavy-duty equipment sales were down 5%, primarily driven by lower genset revenue. heavy-duty equipment sales were down 5% primarily driven by lower genset revenue On-highway sales were up 4%, with higher sales to automotive and commercial vehicle customers. on-highway sales were up 4% with higher sales to automotive and commercial vehicle customers As expected, the EBITDA margin was down versus the prior year, primarily due to lower sales volume, along with higher material and tariff costs. as expected the ebitda margin was down versus the prior year primarily due to lower sales volume along with higher material and tariff costs Given the difficult market conditions and higher material costs, adjusted EBITDA declined 15% from the prior year. given the difficult market conditions and higher material costs adjusted ebitda declined 15% from the prior year As we've done in the past, we'll recover tariffs through surcharges and mitigate increasing metals prices with pricing mechanisms in our customer contracts. as we've done in the past we'll recover tariffs through surcharges and mitigate increasing metals prices with pricing mechanisms in our customer contracts As a reminder, there is typically a three to six-month lag before these price adjustments take effect. as a reminder there is typically a three to six-month lag before these price adjustments take effect SG&A expenses were $5 million lower versus the prior year, as the segment continues to benefit from cost savings initiatives implemented earlier in the year. The team has been quite diligent in managing all controllable costs this year, with the full fiscal year EBITDA margin improving 30 basis points to 13.8%. This was a nice improvement given the lower revenue and various cost headwinds. We expect margins to further improve during fiscal 2027 as we adjust commodity-related pricing, recover tariffs, and maintain our 80/20 focus and discipline. Let's review the total company results. Please turn to slide nine. Fourth quarter sales increased 47%, driven by revenue growth in Climate Solutions. Gross profit increased 29%, driven primarily by higher data center sales volume, along with contributions from the acquisitions and Climate Solutions. SG&A expenses were $5 million lower versus the prior year, as the segment continues to benefit from cost savings initiatives implemented earlier in the year. sg&a expenses were $5 million lower versus the prior year as the segment continues to benefit from cost savings initiatives implemented earlier in the year The team has been quite diligent in managing all controllable costs this year, with the full fiscal year EBITDA margin improving 30 basis points to 13.8%. the team has been quite diligent in managing all controllable costs this year with the full fiscal year ebitda margin improving 30 basis points to 13.8% This was a nice improvement given the lower revenue and various cost headwinds. this was a nice improvement given the lower revenue and various cost headwinds We expect margins to further improve during fiscal 2027 as we adjust commodity-related pricing, recover tariffs, and maintain our 80/20 focus and discipline. we expect margins to further improve during fiscal 2027 as we adjust commodity-related pricing recover tariffs and maintain our 80/20 focus and discipline Let's review the total company results. let's review the total company results Please turn to slide nine. please turn to slide nine Fourth quarter sales increased 47%, driven by revenue growth in Climate Solutions. fourth quarter sales increased 47% driven by revenue growth in climate solutions Gross profit increased 29%, driven primarily by higher data center sales volume, along with contributions from the acquisitions and Climate Solutions. gross profit increased 29% driven primarily by higher data center sales volume along with contributions from the acquisitions and climate solutions The lower gross margin was due to the combination of factors that I covered with Climate Solutions and Performance Technologies. SG&A expenses increased at a much lower rate than overall revenue growth. We increased SG&A spending in Climate Solutions and partially offset that with Performance Technologies cost-savings initiatives. As a result, SG&A as a percentage of sales fell by 190 basis points to 10.7%. I'd also like to note that the reported SG&A included $12.5 million of disposition costs related to the pending spin-off of Performance Technologies. These have been added back to arrive at adjusted EBITDA and are referenced in the reconciliation schedule. From an earnings standpoint, I'm pleased to report a 40% improvement in adjusted EBITDA. The lower gross margin was due to the combination of factors that I covered with Climate Solutions and Performance Technologies. the lower gross margin was due to the combination of factors that i covered with climate solutions and performance technologies SG&A expenses increased at a much lower rate than overall revenue growth. sg&a expenses increased at a much lower rate than overall revenue growth We increased SG&A spending in Climate Solutions and partially offset that with Performance Technologies cost -savings initiatives. we increased sg&a spending in climate solutions and partially offset that with performance technologies cost -savings initiatives As a result, SG&A as a percentage of sales fell by 190 basis points to 10.7%. as a result sg&a as a percentage of sales fell by 190 basis points to 10.7% I'd also like to note that the reported SG&A included $12.5 million of disposition costs related to the pending spin-off of Performance Technologies. i'd also like to note that the reported sg&a included $12.5 million of disposition costs related to the pending spin-off of performance technologies These have been added back to arrive at adjusted EBITDA and are referenced in the reconciliation schedule. these have been added back to arrive at adjusted ebitda and are referenced in the reconciliation schedule From an earnings standpoint, I'm pleased to report a 40% improvement in adjusted EBITDA. from an earnings standpoint i'm pleased to report a 40% improvement in adjusted ebitda While I reviewed the temporary items that have impacted this year's margin, the adjusted EBITDA margin continues to improve with a 40 basis points increase from the third quarter while growing revenue at an exponential rate. Adjusted earnings per share increased 53% to $1.71. To summarize our consolidated results, Q4 represented another strong quarter of revenue and earnings growth. We're pleased to have delivered another record year. The team is managing well through a strategic transformation and exponential Data Center growth. This year represents the fourth year of earnings growth of 20% or more, resulting in a compound annual growth rate in excess of 40%. As we look ahead, we expect to continue to capitalize on this momentum and drive further margin improvement as the Data Center production volumes ramp. Moving to the cash flow metrics. Please turn to slide 10. While I reviewed the temporary items that have impacted this year's margin, the adjusted EBITDA margin continues to improve with a 40 basis points increase from the third quarter while growing revenue at an exponential rate. while i reviewed the temporary items that have impacted this year's margin the adjusted ebitda margin continues to improve with a 40 basis points increase from the third quarter while growing revenue at an exponential rate Adjusted earnings per share increased 53% to $1.71. adjusted earnings per share increased 53% to $1.71 To summarize our consolidated results, Q4 represented another strong quarter of revenue and earnings growth. to summarize our consolidated results q4 represented another strong quarter of revenue and earnings growth We're pleased to have delivered another record year. we're pleased to have delivered another record year The team is managing well through a strategic transformation and exponential Data Center growth. the team is managing well through a strategic transformation and exponential data center growth This year represents the fourth year of earnings growth of 20% or more, resulting in a compound annual growth rate in excess of 40%. this year represents the fourth year of earnings growth of 20% or more resulting in a compound annual growth rate in excess of 40% As we look ahead, we expect to continue to capitalize on this momentum and drive further margin improvement as the Data Center production volumes ramp. as we look ahead we expect to continue to capitalize on this momentum and drive further margin improvement as the data center production volumes ramp Moving to the cash flow metrics. moving to the cash flow metrics Please turn to slide 10. please turn to slide 10 Free cash flow was a positive $153 million in the fourth quarter. As Neil announced, we reached a long-term capacity agreement with a key strategic data center customer and received an upfront cash payment of $165 million. This payment is intended to support our capacity expansion and to meet future volume commitments under this agreement. From an accounting standpoint, the customer payment represents a down payment to secure future volumes. It did not impact the income statement and was recorded as a contract liability, and this liability will be reduced over the life of the contract based on future volumes. Net debt of $363 million was $84 million higher than the prior fiscal year-end. This included the funding for the three acquisitions completed earlier this year and the investments in CapEx and working capital required to grow our data center business. Free cash flow was a positive $153 million in the fourth quarter. free cash flow was a positive $153 million in the fourth quarter As Neil announced, we reached a long-term capacity agreement with a key strategic data center customer and received an upfront cash payment of $165 million. This payment is intended to support our capacity expansion and to meet future volume commitments under this agreement. as neil announced we reached a long-term capacity agreement with a key strategic data center customer and received an upfront cash payment of $165 million. this payment is intended to support our capacity expansion and to meet future volume commitments under this agreement From an accounting standpoint, the customer payment represents a down payment to secure future volumes. from an accounting standpoint the customer payment represents a down payment to secure future volumes It did not impact the income statement and was recorded as a contract liability, and this liability will be reduced over the life of the contract based on future volumes. it did not impact the income statement and was recorded as a contract liability and this liability will be reduced over the life of the contract based on future volumes Net debt of $363 million was $84 million higher than the prior fiscal year-end. net debt of $363 million was $84 million higher than the prior fiscal year-end This included the funding for the three acquisitions completed earlier this year and the investments in CapEx and working capital required to grow our data center business. this included the funding for the three acquisitions completed earlier this year and the investments in capex and working capital required to grow our data center business Our balance sheet remains quite strong with a leverage ratio of 0.8x, and based on our earnings and cash flow outlook, we expect it will decline further in fiscal 2027. CapEx for fiscal 2026 totaled $143 million. As I explained last quarter, some of the data center capital investments will carry over into the next fiscal year as we continue with our capacity expansion to meet our future customer demands. Let's turn to slide 11 for our fiscal 2027 outlook. Similar to last year, there's a great deal of uncertainty across the markets in the global economy, especially around input costs, tariffs, and the overall supply chain. With regard to trade and tariff risks, our team is continually assessing the impact on our business, including the recent announced 232 tariffs on metals. We believe that we'll be able to recover the majority of these impacts with pricing and surcharges. Our balance sheet remains quite strong with a leverage ratio of 0.8x, and based on our earnings and cash flow outlook, we expect it will decline further in fiscal 2027. our balance sheet remains quite strong with a leverage ratio of 0.8x and based on our earnings and cash flow outlook we expect it will decline further in fiscal 2027 CapEx for fiscal 2026 totaled $143 million. capex for fiscal 2026 totaled $143 million As I explained last quarter, some of the data center capital investments will carry over into the next fiscal year as we continue with our capacity expansion to meet our future customer demands. as i explained last quarter some of the data center capital investments will carry over into the next fiscal year as we continue with our capacity expansion to meet our future customer demands Let's turn to slide 11 for our fiscal 2027 outlook. let's turn to slide 11 for our fiscal 2027 outlook Similar to last year, there's a great deal of uncertainty across the markets in the global economy, especially around input costs, tariffs, and the overall supply chain. similar to last year there's a great deal of uncertainty across the markets in the global economy especially around input costs tariffs and the overall supply chain With regard to trade and tariff risks, our team is continually assessing the impact on our business, including the recent announced 232 tariffs on metals. with regard to trade and tariff risks our team is continually assessing the impact on our business including the recent announced 232 tariffs on metals We believe that we'll be able to recover the majority of these impacts with pricing and surcharges. we believe that we'll be able to recover the majority of these impacts with pricing and surcharges While the net risk is quite manageable, we can be impacted by the timing of the material price adjustments. Our guidance ranges to start the year reflect the current level of uncertainty in the markets and input costs. Also, our outlook includes a full year of Performance Technologies. Once we know when the pending transaction will close, we'll provide an update on our full-year outlook for the remaining business. For fiscal 2027, we expect total company sales to grow in the range of 20%-35%. For the data center segment, we expect sales to grow 60%-80%. This is ahead of our previous multi-year estimate of 50%-70%. We don't anticipate that the part shortages we started to experience in Q4 will impact our full-year production, but will temporarily impact our capacity ramp. While the net risk is quite manageable, we can be impacted by the timing of the material price adjustments. while the net risk is quite manageable we can be impacted by the timing of the material price adjustments Our guidance ranges to start the year reflect the current level of uncertainty in the markets and input costs. our guidance ranges to start the year reflect the current level of uncertainty in the markets and input costs Also, our outlook includes a full year of Performance Technologies. also our outlook includes a full year of performance technologies Once we know when the pending transaction will close, we'll provide an update on our full-year outlook for the remaining business. once we know when the pending transaction will close we'll provide an update on our full-year outlook for the remaining business For fiscal 2027, we expect total company sales to grow in the range of 20%-35%. for fiscal 2027 we expect total company sales to grow in the range of 20%-35% For the data center segment, we expect sales to grow 60%-80%. for the data center segment we expect sales to grow 60%-80% This is ahead of our previous multi-year estimate of 50%-70%. this is ahead of our previous multi-year estimate of 50%-70% We don't anticipate that the part shortages we started to experience in Q4 will impact our full-year production, but will temporarily impact our capacity ramp. we don't anticipate that the part shortages we started to experience in q4 will impact our full-year production but will temporarily impact our capacity ramp Consistent with the previous year, we expect that each of the quarters will show very rapid year-over-year sales growth in excess of 50%. From a sequential standpoint, we anticipate that Q2, Q3, and Q4 will all show sequential increases. For commercial HVAC, we expect sales to grow 5%-10% this year. This is driven by accelerated growth in our heating and IAQ businesses. In addition, we expect that the recent growth trends in the coils business will continue with mid-single-digit growth in fiscal 2027. For Performance Technologies, we anticipate sales to be flat to up 5%, driven primarily by material pass-through agreements and growth in stationary power programs. We are expecting most other markets to be flat with the opportunity for improvement in the back half of the fiscal year. Consistent with the previous year, we expect that each of the quarters will show very rapid year-over-year sales growth in excess of 50%. consistent with the previous year we expect that each of the quarters will show very rapid year-over-year sales growth in excess of 50% From a sequential standpoint, we anticipate that Q2, Q3, and Q4 will all show sequential increases. from a sequential standpoint we anticipate that q2 q3 and q4 will all show sequential increases For commercial HVAC, we expect sales to grow 5%-10% this year. for commercial hvac we expect sales to grow 5%-10% this year This is driven by accelerated growth in our heating and IAQ businesses. this is driven by accelerated growth in our heating and iaq businesses In addition, we expect that the recent growth trends in the coils business will continue with mid-single -digit growth in fiscal 2027. in addition we expect that the recent growth trends in the coils business will continue with mid-single -digit growth in fiscal 2027 For Performance Technologies, we anticipate sales to be flat to up 5%, driven primarily by material pass-through agreements and growth in stationary power programs. for performance technologies we anticipate sales to be flat to up 5% driven primarily by material pass-through agreements and growth in stationary power programs We are expecting most other markets to be flat with the opportunity for improvement in the back half of the fiscal year. we are expecting most other markets to be flat with the opportunity for improvement in the back half of the fiscal year With regard to our full-year earnings, we expect fiscal 2027 adjusted EBITDA to be in the range of $650 million-$680 million, representing a growth rate in excess of 40%. This implies at least 100-200 basis points of margin improvement. We expect that this will be driven by a margin increase in all three business segments. From a free cash flow perspective, we expect we'll generate a higher level of free cash flow, and as a percentage of sales, we believe it'll be between 4% and 6%. Please see the appendix in this presentation for all our key assumptions, including interest expense, taxes, depreciation, and amortization expense. As we currently look at the next several quarters, we expect that margins and earnings will increase sequentially throughout the year, driven by the data center trends I described in our material cost recovery plans. With regard to our full-year earnings, we expect fiscal 2027 adjusted EBITDA to be in the range of $650 million-$680 million, representing a growth rate in excess of 40%. with regard to our full-year earnings we expect fiscal 2027 adjusted ebitda to be in the range of $650 million-$680 million representing a growth rate in excess of 40% This implies at least 100-200 basis points of margin improvement. this implies at least 100-200 basis points of margin improvement We expect that this will be driven by a margin increase in all three business segments. we expect that this will be driven by a margin increase in all three business segments From a free cash flow perspective, we expect we'll generate a higher level of free cash flow, and as a percentage of sales, we believe it'll be between 4% and 6%. from a free cash flow perspective we expect we'll generate a higher level of free cash flow and as a percentage of sales we believe it'll be between 4% and 6% Please see the appendix in this presentation for all our key assumptions, including interest expense, taxes, depreciation, and amortization expense. please see the appendix in this presentation for all our key assumptions including interest expense taxes depreciation and amortization expense As we currently look at the next several quarters, we expect that margins and earnings will increase sequentially throughout the year, driven by the data center trends I described in our material cost recovery plans. as we currently look at the next several quarters we expect that margins and earnings will increase sequentially throughout the year driven by the data center trends i described in our material cost recovery plans From a year-over-year perspective, we anticipate that each quarter will result in double-digit earnings growth with favorable margin comparisons to begin in Q2 and continuing through year-end. As Neil and I previously noted, we are now operating under three business segments, and to assist everyone with modeling and analysis, we'll provide a recast fiscal 2026 segment results and will begin reporting this way with our first quarter results. To wrap up, we're excited about our fiscal 2027 outlook and fully expect to deliver another year of record sales and adjusted EBITDA. Very few companies are planning to grow earnings in excess of 40% this year and drive meaningful margin improvements. I'm proud to say that this team has executed on these types of results over the last several years. They've worked hard to execute on our strategy using 80/20 as a guide. From a year-over-year perspective, we anticipate that each quarter will result in double-digit earnings growth with favorable margin comparisons to begin in Q2 and continuing through year-end. from a year-over-year perspective we anticipate that each quarter will result in double-digit earnings growth with favorable margin comparisons to begin in q2 and continuing through year-end As Neil and I previously noted, we are now operating under three business segments, and to assist everyone with modeling and analysis, we'll provide a recast fiscal 2026 segment results and will begin reporting this way with our first quarter results. as neil and i previously noted we are now operating under three business segments and to assist everyone with modeling and analysis we'll provide a recast fiscal 2026 segment results and will begin reporting this way with our first quarter results To wrap up, we're excited about our fiscal 2027 outlook and fully expect to deliver another year of record sales and adjusted EBITDA. to wrap up we're excited about our fiscal 2027 outlook and fully expect to deliver another year of record sales and adjusted ebitda Very few companies are planning to grow earnings in excess of 40% this year and drive meaningful margin improvements. very few companies are planning to grow earnings in excess of 40% this year and drive meaningful margin improvements I'm proud to say that this team has executed on these types of results over the last several years. They've worked hard to execute on our strategy using 80/20 as a guide. i'm proud to say that this team has executed on these types of results over the last several years. they've worked hard to execute on our strategy using 80/20 as a guide The recent announcements related to the LTA and pending spin-off of Performance Technologies are truly historic. We remain confident that these actions are setting the stage for long-term sustainable growth for Modine shareholders. With that, Neil Brinker and I will take your questions. The recent announcements related to the LTA and pending spin-off of Performance Technologies are truly historic. the recent announcements related to the lta and pending spin-off of performance technologies are truly historic We remain confident that these actions are setting the stage for long-term sustainable growth for Modine shareholders. we remain confident that these actions are setting the stage for long-term sustainable growth for modine shareholders With that, Neil Brinker and I will take your questions. with that neil brinker and i will take your questions

Speaker 11: Thank you. At this time, we will be conducting a question and answer session. If you like to ask questions, please press star one on your telephone keypad. The confirmation tone will indicate your line on the questions queue. You may press star two if you like to remove your question from the queue. For participants using speaker equipment, you may necessarily have to pick up the handset. Before you press the star keys. One moment, please, while we poll for a question. First question comes from Matt Summerville with D.A. Davidson. Your line is now live. Thank you. At this time, we will be conducting a question and answer session. If you like to ask questions, please press star one on your telephone keypad. The confirmation tone will indicate your line on the questions queue. You may press star two if you like to remove your question from the queue. For participants using speaker equipment, you may necessarily have to pick up the handset. Before you press the star keys. One moment, please, while we poll for a question. thank you. at this time, we will be conducting a question and answer session. if you like to ask questions, please press star one on your telephone keypad. the confirmation tone will indicate your line on the questions queue. you may press star two if you like to remove your question from the queue. for participants using speaker equipment, you may necessarily have to pick up the handset. before you press the star keys. one moment, please, while we poll for a question First question comes from Matt Summerville with D.A. first question comes from matt summerville with d.a Davidson. davidson Your line is now live. your line is now live

Speaker 6: Thanks. Morning. Mick, I was wondering, just a question on margins. As we think about looking at Modine in the context of a climate-only sort of co-entity, what would your profitability expectation be for the PT business that's been factored into your guide? Again, we think about how to best build, and for others to best build, a climate-only model remains a sort of looking ahead. Thanks. thanks Morning. morning Mick, I was wondering, just a question on margins. mick i was wondering just a question on margins As we think about looking at Modine in the context of a climate-only sort of co-entity, what would your profitability expectation be for the PT business that's been factored into your guide? as we think about looking at modine in the context of a climate-only sort of co-entity what would your profitability expectation be for the pt business that's been factored into your guide Again, we think about how to best build, and for others to best build, a climate-only model remains a sort of looking ahead. again we think about how to best build and for others to best build a climate-only model remains a sort of looking ahead

Speaker 7: Hey, Matt. I think it's going to be good news, is relatively clean, and your ability to estimate it until we do the recast and then eventually the disc ops after the deal closes. We're looking at this year, I mentioned already, from a top line, flat to 5%, relatively consistent top line with last year. From a margin, we see it early this year being between probably like a 14%-15%, that'd be up maybe 25-100 basis points. That will give you a good idea of the impact on PT or how to back that out. There are some complexities around corporate costs that will stay or go with. Net net, there wasn't a large material difference in remaining SG&A. For the most part, I think you'll have the pieces to try to estimate Modine without PT. Hey, Matt. hey matt I think it's going to be good news, is relatively clean, and your ability to estimate it until we do the recast and then eventually the disc ops after the deal closes. i think it's going to be good news is relatively clean and your ability to estimate it until we do the recast and then eventually the disc ops after the deal closes We're looking at this year, I mentioned already, from a top line, flat to 5%, relatively consistent top line with last year. we're looking at this year i mentioned already from a top line flat to 5% relatively consistent top line with last year From a margin, we see it early this year being between probably like a 14%-15%, that'd be up maybe 25-100 basis points. from a margin we see it early this year being between probably like a 14%-15% that'd be up maybe 25-100 basis points That will give you a good idea of the impact on PT or how to back that out. that will give you a good idea of the impact on pt or how to back that out There are some complexities around corporate costs that will stay or go with. there are some complexities around corporate costs that will stay or go with Net net, there wasn't a large material difference in remaining SG&A. net net there wasn't a large material difference in remaining sg&a For the most part, I think you'll have the pieces to try to estimate Modine without PT. for the most part i think you'll have the pieces to try to estimate modine without pt

Speaker 6: Thank you. That's helpful. Then maybe if you guys could talk a little bit, you're guiding fiscal 2027 data center business to up 60%-80%. You have this massive long-term agreement for capacity that you disclosed yesterday. How does all of this influence the multi-year CAGR of 50%-70% that you previously discussed for the data center business? Secondarily, do you see more LTAs, and is the one you just signed accretive to profitability? If so, maybe talk about that. Thank you, guys. Thank you. thank you That's helpful. that's helpful Then maybe if you guys could talk a little bit, you're guiding fiscal 2027 data center business to up 60%-80%. then maybe if you guys could talk a little bit you're guiding fiscal 2027 data center business to up 60%-80% You have this massive long-term agreement for capacity that you disclosed yesterday. you have this massive long-term agreement for capacity that you disclosed yesterday How does all of this influence the multi-year CAGR of 50%-70% that you previously discussed for the data center business? how does all of this influence the multi-year cagr of 50%-70% that you previously discussed for the data center business Secondarily, do you see more LTAs, and is the one you just signed accretive to profitability? secondarily do you see more ltas and is the one you just signed accretive to profitability If so, maybe talk about that. if so maybe talk about that Thank you, guys. thank you guys

Speaker 7: Yeah. I'll go first. We don't see a reason to change our longer-term outlook. Later this year, we'll probably go out another year of more formal guidance. In short, Matt, raising this year up to 60%-80%, I don't think that changes our outlook for the next year being 50%-70% million. Some people have asked, would that mean implying a decline? No. We still don't see the funnel shrinking or squeezing the back end of the funnel. I'd say for now, we'd still hold with fiscal year 2028, 50%-70% up. Before Neil can jump in, the LTA would definitely be accretive to where we are today. Said another way, it's absolutely within the target margins of where we want the data center business to be. Yeah. yeah I'll go first. i'll go first We don't see a reason to change our longer-term outlook. we don't see a reason to change our longer-term outlook Later this year, we'll probably go out another year of more formal guidance. later this year we'll probably go out another year of more formal guidance In short, Matt, raising this year up to 60%-80% , I don't think that changes our outlook for the next year being 50% -70% million. in short matt raising this year up to 60%-80% i don't think that changes our outlook for the next year being 50% -70% million Some people have asked, would that mean implying a decline? some people have asked would that mean implying a decline No. no We still don't see the funnel shrinking or squeezing the back end of the funnel. we still don't see the funnel shrinking or squeezing the back end of the funnel I'd say for now, we'd still hold with fiscal year 2028, 50%-70% up. i'd say for now we'd still hold with fiscal year 2028 50%-70% up Before Neil can jump in, the LTA would definitely be accretive to where we are today. before neil can jump in the lta would definitely be accretive to where we are today Said another way, it's absolutely within the target margins of where we want the data center business to be. said another way it's absolutely within the target margins of where we want the data center business to be

Speaker 8: Yeah, I agree, Mick. We're in those conversations with customers. We'll always entertain a conversation with a customer relative to an LTA or a derivative of an LTA, some form of it. Honestly, we're seeing the market move. Nothing of this significance for sure. Yeah, there could be potential opportunities for smaller versions of that, yes. Yeah, I agree, Mick. yeah i agree mick We're in those conversations with customers. we're in those conversations with customers We'll always entertain a conversation with a customer relative to an LTA or a derivative of an LTA, some form of it. we'll always entertain a conversation with a customer relative to an lta or a derivative of an lta some form of it Honestly, we're seeing the market move. honestly we're seeing the market move Nothing of this significance for sure. nothing of this significance for sure Yeah, there could be potential opportunities for smaller versions of that, yes. yeah there could be potential opportunities for smaller versions of that yes

Speaker 6: Thanks, guys. Talk to you back in the queue. Thanks, guys. thanks guys Talk to you back in the queue. talk to you back in the queue

Speaker 11: Our next question is from Noah Kaye with Oppenheimer. Your line is now live. Our next question is from Noah Kaye with Oppenheimer. our next question is from noah kaye with oppenheimer Your line is now live. your line is now live

Speaker 10: Hey. Just to follow up, congratulations, by the way, on inking that LTA. Two related questions on it. First, does this result in you expanding capacity beyond the scope of the expansion that you outlined in July? In other words, is this incremental as an increase in your revenue capacity? How much if so? Second, I think I understood you, Mick; I just want to be crystal clear. The LTA you're saying is not really incremental to the targets you've already given us? Is it more that you are after this fiscal year, going back to the 50%-70% CAGR on top of where you'll exit fiscal 2027? Hey. hey Just to follow up, congratulations, by the way, on inking that LTA. just to follow up congratulations by the way on inking that lta Two related questions on it. two related questions on it First, does this result in you expanding capacity beyond the scope of the expansion that you outlined in July? first does this result in you expanding capacity beyond the scope of the expansion that you outlined in july In other words, is this incremental as an increase in your revenue capacity? in other words is this incremental as an increase in your revenue capacity How much if so? how much if so Second, I think I understood you, Mick; I just want to be crystal clear. second i think i understood you mick i just want to be crystal clear The LTA you're saying is not really incremental to the targets you've already given us? the lta you're saying is not really incremental to the targets you've already given us Is it more that you are after this fiscal year, going back to the 50% - 70% CAGR on top of where you'll exit fiscal 2027? is it more that you are after this fiscal year going back to the 50% - 70% cagr on top of where you'll exit fiscal 2027

Speaker 8: Hey, Noah, this is Neil. I'll take the first part of that question. The LTA that was announced is in the numbers for the capacity expansion that we've talked about over the last few quarters. We believe with the annual CapEx that we traditionally spend each year, particularly in the data center business, that annual cycle of CapEx spend will be sufficient for us to continue to grow capacity beyond this LTA. Hey, Noah, this is Neil. hey noah this is neil I'll take the first part of that question. i'll take the first part of that question The LTA that was announced is in the numbers for the capacity expansion that we've talked about over the last few quarters. the lta that was announced is in the numbers for the capacity expansion that we've talked about over the last few quarters We believe with the annual CapEx that we traditionally spend each year, particularly in the data center business, that annual cycle of CapEx spend will be sufficient for us to continue to grow capacity beyond this LTA. we believe with the annual capex that we traditionally spend each year particularly in the data center business that annual cycle of capex spend will be sufficient for us to continue to grow capacity beyond this lta

Speaker 7: To your question on growth rates, Noah, I'll try again. I'm glad, make sure there's no confusion. This year, we see revenue growth higher, 60%-80%. As we roll forward then to the next fiscal year, I would still hold to a 50%-70% growth rate on top of the year we'll finish this year. To your question on growth rates, Noah, I'll try again. to your question on growth rates noah i'll try again I'm glad, make sure there's no confusion. i'm glad make sure there's no confusion This year, we see revenue growth higher, 60%-80%. this year we see revenue growth higher 60%-80% As we roll forward then to the next fiscal year, I would still hold to a 50%-70% growth rate on top of the year we'll finish this year. as we roll forward then to the next fiscal year i would still hold to a 50%-70% growth rate on top of the year we'll finish this year

Speaker 10: All right. That's extremely helpful. Thank you. You called out the weather impacts across the business in the quarter. Just so we kind of have that as a data point heading into next year, can you maybe dimension what the cost impact was? Whether it was sort of a lost profitability or lost EBITDA numbers. Is that something that you can have and can share with us? All right. all right That's extremely helpful. that's extremely helpful Thank you. thank you You called out the weather impacts across the business in the quarter. you called out the weather impacts across the business in the quarter Just so we kind of have that as a data point heading into next year, can you maybe dimension what the cost impact was? just so we kind of have that as a data point heading into next year can you maybe dimension what the cost impact was Whether it was sort of a lost profitability or lost EBITDA numbers. whether it was sort of a lost profitability or lost ebitda numbers Is that something that you can have and can share with us? is that something that you can have and can share with us

Speaker 7: Yeah. From a Climate Solutions side, Noah, I think the weather costs about 50-100 basis points on the climate business from a gross margin standpoint. Yeah. yeah From a Climate Solutions side, Noah, I think the weather costs about 50 - 100 basis points on the climate business from a gross margin standpoint. from a climate solutions side noah i think the weather costs about 50 - 100 basis points on the climate business from a gross margin standpoint

Speaker 10: Okay. Thank you very much. Okay. okay Thank you very much. thank you very much

Speaker 7: Sure. Sure. sure

Speaker 11: Our next question is from Neil Burke with UBS. Your line is now live. Our next question is from Neil Burke with UBS. our next question is from neil burke with ubs Your line is now live. your line is now live

Speaker 9: Hey, thanks for the question. Mick, I think you just mentioned data center growth of 60%-80% for this year, but also for fiscal 2028, if I heard that right. Can you just kind of remind us of the number of production lines that you had running exiting the year and how many you're expecting to get to by year-end? Hey, thanks for the question. hey thanks for the question Mick, I think you just mentioned data center growth of 60%-80% for this year, but also for fiscal 2028, if I heard that right. mick i think you just mentioned data center growth of 60%-80% for this year but also for fiscal 2028 if i heard that right Can you just kind of remind us of the number of production lines that you had running exiting the year and how many you're expecting to get to by year-end? can you just kind of remind us of the number of production lines that you had running exiting the year and how many you're expecting to get to by year-end

Speaker 7: I'll go quick, Neil then can talk about capacity. We see 60%-80% growth this year on the data center side. That's, call it, a $1.8 billion-$2 billion range this year. For the following fiscal year, I would still use a 50%-70% range for our fiscal 2028. We'll dial that in and we'll know more. That's why I said later this calendar year, either through an IR meeting or an IR day, we'll likely give a more firm fiscal 2028 or even a 2029 outlook for all of you. In the interim, I would assume next year is still going to be a 50%-70% growth rate. I'll go quick, Neil then can talk about capacity. i'll go quick neil then can talk about capacity We see 60%-80% growth this year on the data center side. we see 60%-80% growth this year on the data center side That's, call it, a $1.8 billion-$2 billion range this year. that's call it, a $1.8 billion-$2 billion range this year For the following fiscal year, I would still use a 50%-70% range for our fiscal 2028. for the following fiscal year i would still use a 50%-70% range for our fiscal 2028 We'll dial that in and we'll know more. we'll dial that in and we'll know more That's why I said later this calendar year, either through an IR meeting or an IR day, we'll likely give a more firm fiscal 2028 or even a 2029 outlook for all of you. that's why i said later this calendar year either through an ir meeting or an ir day we'll likely give a more firm fiscal 2028 or even a 2029 outlook for all of you In the interim, I would assume next year is still going to be a 50%-70% growth rate. in the interim i would assume next year is still going to be a 50%-70% growth rate

Speaker 8: I'll look at the capacity we have. This is specific to chillers and data centers. We have half of the capacity running at various rates of efficiency today. We'll be doubling that by the end of the fiscal year. I'll look at the capacity we have. i'll look at the capacity we have This is specific to chillers and data centers. this is specific to chillers and data centers We have half of the capacity running at various rates of efficiency today. we have half of the capacity running at various rates of efficiency today We'll be doubling that by the end of the fiscal year. we'll be doubling that by the end of the fiscal year

Speaker 9: That's helpful. Just to follow up, just to make sure I understand, for the current year. I know you said calendar 2027 is when you start recognizing revenue for that $4 billion long-term agreement. Do you have enough visibility to say, is there just basically one quarter assumed in the guide for this year of revenue recognition? One quarter alone off of that $4 billion should be pretty substantial. That's helpful. that's helpful Just to follow up , just to make sure I understand, for the current year. just to follow up just to make sure i understand for the current year I know you said calendar 2027 is when you start recognizing revenue for that $4 billion long-term agreement. i know you said calendar 2027 is when you start recognizing revenue for that $4 billion long-term agreement Do you have enough visibility to say, is there just basically one quarter assumed in the guide for this year of revenue recognition? do you have enough visibility to say is there just basically one quarter assumed in the guide for this year of revenue recognition One quarter alone off of that $4 billion should be pretty substantial. one quarter alone off of that $4 billion should be pretty substantial

Speaker 7: We actually have a little bit of that built into our current guide, and part of it is we know where the LTA is, and we have windows where they give us firm commits. I don't think we're quite there yet to know what that exact number will be in Q4. Also, I would just add, as we've tried to do in previous years, I would say we've got the most firm commitments and delivery schedules for the next six months, Neil. When we get to our Q4 and where we've tended to update our Q4 or raise guidance if we're fortunate enough, it would probably be that we get halfway through the year. Q4 is kind of our best placeholder for this time, and we're just balancing the known and unknown at this point with regards to that LTA. We actually have a little bit of that built into our current guide, and part of it is we know where the LTA is, and we have windows where they give us firm commits. we actually have a little bit of that built into our current guide and part of it is we know where the lta is and we have windows where they give us firm commits I don't think we're quite there yet to know what that exact number will be in Q4. i don't think we're quite there yet to know what that exact number will be in q4 Also, I would just add, as we've tried to do in previous years, I would say we've got the most firm commitments and delivery schedules for the next six months, Neil. also i would just add as we've tried to do in previous years i would say we've got the most firm commitments and delivery schedules for the next six months neil When we get to our Q4 and where we've tended to update our Q4 or raise guidance if we're fortunate enough, it would probably be that we get halfway through the year. when we get to our q4 and where we've tended to update our q4 or raise guidance if we're fortunate enough, it would probably be that we get halfway through the year Q4 is kind of our best placeholder for this time, and we're just balancing the known and unknown at this point with regards to that LTA. q4 is kind of our best placeholder for this time and we're just balancing the known and unknown at this point with regards to that lta

Speaker 9: Okay. Thank you. Okay. okay Thank you. thank you

Speaker 11: Our next question comes from Chris Moore with CJS Securities. Your line is now live. Our next question comes from Chris Moore with CJS Securities. our next question comes from chris moore with cjs securities Your line is now live. your line is now live

Speaker 2: Hey, good morning, guys. In terms of, obviously, data center growth, 60%-80% this year, continued rapid 50%-70%, and strong beyond that. That recognizes the market is a dynamic. The mix of products to get there might change. Maybe just strictly from a fiscal 2027 perspective, is the mix pretty locked in? If so, roughly what % of that is chillers? Hey, good morning, guys. hey good morning guys In terms of, obviously, data center growth, 60%-80% this year, continued rapid 50%-70%, and strong beyond that. in terms of obviously data center growth 60%-80% this year continued rapid 50%-70% and strong beyond that That recognizes the market is a dynamic. that recognizes the market is a dynamic The mix of products to get there might change. the mix of products to get there might change Maybe just strictly from a fiscal 2027 perspective, is the mix pretty locked in? maybe just strictly from a fiscal 2027 perspective is the mix pretty locked in If so, roughly what % of that is chillers? if so roughly what % of that is chillers

Speaker 8: You're right, and that's why we have the modularity with our factories, so that we can adjust and pivot to whichever design we move forward with. The last number we gave was around half of that, which was on chillers. You're right, and that's why we have the modularity with our factories, so that we can adjust and pivot to whichever design we move forward with. you're right and that's why we have the modularity with our factories so that we can adjust and pivot to whichever design we move forward with The last number we gave was around half of that, which was on chillers. the last number we gave was around half of that, which was on chillers

Speaker 7: About 40%. About 40%. about 40%

Speaker 8: 40% this year. 40% this year. 40% this year

Speaker 7: This year. That will be going probably about 50%. This year. this year That will be going probably about 50%. that will be going probably about 50%

Speaker 8: 40%-50% 40%- 50% 40%- 50%

Speaker 7: Yep Yep yep

Speaker 8: Chris, to be specific. There is a little bit of a mix shift there. The balance of that, the other side, would be air handling units, CDUs, other products, and fan walls. That's what we have factored into the mix so far. Chris, to be specific. chris to be specific There is a little bit of a mix shift there. there is a little bit of a mix shift there The balance of that, the other side, would be air handling units, CDUs, other products, and fan walls. the balance of that the other side would be air handling units, cdus other products, and fan walls That's what we have factored into the mix so far. that's what we have factored into the mix so far

Speaker 2: Got you. Very helpful. Just on the heat transfer side, the growth this quarter you've talked about is driven by both data center and heat pump customers. Moving forward, just from a data center perspective, how much of that growth is on the data center side? Is that going to be a constant moving forward over the next five years, that piece of the heat transfer growth? Got you. got you Very helpful. very helpful Just on the heat transfer side, the growth this quarter you've talked about is driven by both data center and heat pump customers. just on the heat transfer side the growth this quarter you've talked about is driven by both data center and heat pump customers Moving forward, just from a data center perspective, how much of that growth is on the data center side? moving forward just from a data center perspective how much of that growth is on the data center side Is that going to be a constant moving forward over the next five years, that piece of the heat transfer growth? is that going to be a constant moving forward over the next five years that piece of the heat transfer growth

Speaker 7: Within the coil side of heat transfer solutions, clearly, the largest rate of growth is coming out of the data center side. I would say the balance of it tends to be more based on replacement cycles or GDP cycles. Neil, anything you want to add? Within the coil side of heat transfer solutions, clearly, the largest rate of growth is coming out of the data center side. within the coil side of heat transfer solutions clearly the largest rate of growth is coming out of the data center side I would say the balance of it tends to be more based on replacement cycles or GDP cycles. i would say the balance of it tends to be more based on replacement cycles or gdp cycles Neil, anything you want to add? neil anything you want to add

Speaker 8: It's pretty new in terms of the growth on the data center side that we're seeing. It's over the last quarter or so. We're still building out the funnel. We're engaging with customers to understand what the short-term and long-term commitments are. Definitely there's interest there on the data center side as we see our customers wanting to lock up some supply. It's pretty new in terms of the growth on the data center side that we're seeing. it's pretty new in terms of the growth on the data center side that we're seeing It's over the last quarter or so. it's over the last quarter or so We're still building out the funnel. we're still building out the funnel We're engaging with customers to understand what the short-term and long-term commitments are. we're engaging with customers to understand what the short-term and long-term commitments are Definitely there's interest there on the data center side as we see our customers wanting to lock up some supply. definitely there's interest there on the data center side as we see our customers wanting to lock up some supply

Speaker 2: Got it. I appreciate it, guys. I'll jump back in line. Got it. got it I appreciate it, guys. i appreciate it guys I'll jump back in line. i'll jump back in line

Speaker 11: Our next question comes from David Tarantino with KeyBanc Capital Markets. Your line is now live. Our next question comes from David Tarantino with KeyBanc Capital Markets. our next question comes from david tarantino with keybanc capital markets Your line is now live. your line is now live

Speaker 3: Hey, good morning, everyone. Maybe following up on the LTA, understanding that there's often NDAs covering this, but could you give any color on kind of the profile of the customer? Is it a new or an existing customer, and what technologies does the agreement cover? Then maybe within that, how should we be thinking about how the $4 billion shows through in terms of timeline as the capacity continues to ramp here? Hey, good morning, everyone. hey good morning everyone Maybe following up on the LTA, understanding that there's often NDAs covering this, but could you give any color on kind of the profile of the customer? maybe following up on the lta understanding that there's often ndas covering this but could you give any color on kind of the profile of the customer Is it a new or an existing customer, and what technologies does the agreement cover? is it a new or an existing customer and what technologies does the agreement cover Then maybe within that, how should we be thinking about how the $4 billion shows through in terms of timeline as the capacity continues to ramp here? then maybe within that how should we be thinking about how the $4 billion shows through in terms of timeline as the capacity continues to ramp here

Speaker 8: Yeah. Thanks, David. With an existing customer, yes, it's someone who we've had a relationship. We've got great relationships with our data center customers, and this is just further evidence, and this LTA is specific for our chillers. Yeah. yeah Thanks, David. thanks david With an existing customer, yes, it's someone who we've had a relationship. with an existing customer yes it's someone who we've had a relationship We've got great relationships with our data center customers, and this is just further evidence, and this LTA is specific for our chillers. we've got great relationships with our data center customers and this is just further evidence and this lta is specific for our chillers

Speaker 3: Okay, great. Oh, go ahead. Okay, great. okay great Oh, go ahead. oh go ahead

Speaker 7: No, go ahead, David. No, go ahead, David. no go ahead david

Speaker 3: Just any thoughts on how the $4 billion shows through as capacity is still ramping here? Just any thoughts on how the $4 billion shows through as capacity is still ramping here? just any thoughts on how the $4 billion shows through as capacity is still ramping here

Speaker 7: Yeah. We mentioned a minute ago it's a calendar, so we'll see some ramp beginning in Q4. We'll know more here probably in another quarter or so. It is over three years, and don't know the exact ramp, but we don't see any more than $2 billion a year right now. It's still early days, but hopefully that kind of helps you if you look at $4 billion over three years and no more than $2 billion in any one year. Definitely going to ramp up. Yeah. yeah We mentioned a minute ago it's a calendar, so we'll see some ramp beginning in Q4. we mentioned a minute ago it's a calendar so we'll see some ramp beginning in q4 We'll know more here probably in another quarter or so. we'll know more here probably in another quarter or so It is over three years, and don't know the exact ramp, but we don't see any more than $2 billion a year right now. it is over three years and don't know the exact ramp but we don't see any more than $2 billion a year right now It's still early days, but hopefully that kind of helps you if you look at $4 billion over three years and no more than $2 billion in any one year. it's still early days but hopefully that kind of helps you if you look at $4 billion over three years and no more than $2 billion in any one year Definitely going to ramp up. definitely going to ramp up

Speaker 3: Okay, great. Maybe looking at data center as a whole, could you give some more color on the pipeline here? Maybe X the LTA. I think you mentioned another quarter of record order intake, but do you have any color on continued opportunities as we think about the long-term growth profile, and then maybe talk about your confidence in delivering for those other customers as you ramp capacity for the LTA as well? Okay, great. okay great Maybe looking at data center as a whole, could you give some more color on the pipeline here? maybe looking at data center as a whole could you give some more color on the pipeline here Maybe X the LTA. maybe x the lta I think you mentioned another quarter of record order intake, but do you have any color on continued opportunities as we think about the long-term growth profile, and then maybe talk about your confidence in delivering for those other customers as you ramp capacity for the LTA as well? i think you mentioned another quarter of record order intake but do you have any color on continued opportunities as we think about the long-term growth profile and then maybe talk about your confidence in delivering for those other customers as you ramp capacity for the lta as well

Speaker 8: Yeah, certainly, we'll balance this to make sure that we meet our commitments with all of our data center customers. There's no doubt about that. Before we commit to this or agree to any kind of long-term agreement around capacity, we want to make sure that we keep all of our customers in mind and are able to deliver on those commitments. That's considered, to your point. What was the second part of your question, David? Yeah, certainly, we'll balance this to make sure that we meet our commitments with all of our data center customers. yeah certainly we'll balance this to make sure that we meet our commitments with all of our data center customers There's no doubt about that. there's no doubt about that Before we commit to this or agree to any kind of long-term agreement around capacity, we want to make sure that we keep all of our customers in mind and are able to deliver on those commitments. before we commit to this or agree to any kind of long-term agreement around capacity we want to make sure that we keep all of our customers in mind and are able to deliver on those commitments That's considered, to your point. that's considered to your point What was the second part of your question, David? what was the second part of your question david

Speaker 3: It's just the pipeline as a whole. If you kind of exclude the LTA from this quarter, kind of give some color on how it continues to evolve as you put up these record order numbers, how much more is out there? It's just the pipeline as a whole. it's just the pipeline as a whole If you kind of exclude the LTA from this quarter, kind of give some color on how it continues to evolve as you put up these record order numbers, how much more is out there? if you kind of exclude the lta from this quarter kind of give some color on how it continues to evolve as you put up these record order numbers how much more is out there

Speaker 8: Yeah, it continues to evolve, you're right. It's growing at significant rates. I think if you look at the trends in the last couple of years, it continues to follow that trend line. As we move things through our probability funnel, we get to points where we can publicly announce LTAs, which gives, hopefully, everybody further confidence that we can execute on these things. As the funnel is large, it continues to grow. Our hit rate continues to increase because of our technology. Because of that, we feel very confident with the guidance that we gave relative to data centers. Yeah, it continues to evolve, you're right. yeah it continues to evolve you're right It's growing at significant rates. it's growing at significant rates I think if you look at the trends in the last couple of years, it continues to follow that trend line. i think if you look at the trends in the last couple of years it continues to follow that trend line As we move things through our probability funnel, we get to points where we can publicly announce LTAs, which gives, hopefully, everybody further confidence that we can execute on these things. as we move things through our probability funnel we get to points where we can publicly announce ltas which gives hopefully everybody further confidence that we can execute on these things As the funnel is large, it continues to grow. as the funnel is large it continues to grow Our hit rate continues to increase because of our technology. our hit rate continues to increase because of our technology Because of that, we feel very confident with the guidance that we gave relative to data centers. because of that we feel very confident with the guidance that we gave relative to data centers

Speaker 3: Okay, great. Thank you, guys. Okay, great. okay great Thank you, guys. thank you guys

Speaker 11: Our next question comes from Brian Drab with William Blair. Your line is now live. Our next question comes from Brian Drab with William Blair. our next question comes from brian drab with william blair Your line is now live. your line is now live

Speaker 1: Hi. Thanks for taking my questions. I'm curious if you would say anything about what the probability was that you had assigned to the orders or the opportunity associated with the LTA when you gave us the 50%-70% forecast for 2027 and 2028. Hi. hi Thanks for taking my questions. thanks for taking my questions I'm curious if you would say anything about what the probability was that you had assigned to the orders or the opportunity associated with the LTA when you gave us the 50%-70% forecast for 2027 and 2028. i'm curious if you would say anything about what the probability was that you had assigned to the orders or the opportunity associated with the lta when you gave us the 50%-70% forecast for 2027 and 2028

Speaker 7: On my side, we factored in that when Neil always talks about the funnel and when we set those longer-term goals, we're really building it customer by customer and program by program. We were aware of this opportunity, so there's some of that that gets factored in, but we didn't know at the time what the magnitude or the scale or the number would flow over, Brian. On my side, we factored in that when Neil always talks about the funnel and when we set those longer-term goals, we're really building it customer by customer and program by program. on my side we factored in that when neil always talks about the funnel and when we set those longer-term goals we're really building it customer by customer and program by program We were aware of this opportunity, so there's some of that that gets factored in, but we didn't know at the time what the magnitude or the scale or the number would flow over, Brian. we were aware of this opportunity so there's some of that that gets factored in but we didn't know at the time what the magnitude or the scale or the number would flow over brian

Speaker 1: I'm trying to get a sense for whether it's really incremental. We don't know if you had $4 billion in sales over that period with an 80% probability on it, or was this something like a win where it was 30% and it's more of a surprise, but you can't help any further with that? I'm trying to get a sense for whether it's really incremental. i'm trying to get a sense for whether it's really incremental We don't know if you had $4 billion in sales over that period with an 80% probability on it, or was this something like a win where it was 30% and it's more of a surprise, but you can't help any further with that? we don't know if you had $4 billion in sales over that period with an 80% probability on it or was this something like a win where it was 30% and it's more of a surprise but you can't help any further with that

Speaker 7: Maybe the way I would say it, and maybe it will help, is when we give a multi-year look like that, and we talk about the funnel, we'll clear that short of an LTA, we don't have multi-year POs. Maybe the way I would say it, and maybe it will help, is when we give a multi-year look like that, and we talk about the funnel, we'll clear that short of an LTA, we don't have multi-year POs. maybe the way i would say it and maybe it will help is when we give a multi-year look like that and we talk about the funnel we'll clear that short of an lta we don't have multi-year pos What this one did is it gave us a really high confidence in a big portion of our two-three year outlook. If you run that 60-80% and 50-70%, right? It implies we had talked about being north of $2 billion, and that implies we're at $3 billion+ type. This is a big component of it in that funnel that gives us more visibility and certainty of that outlook. What this one did is it gave us a really high confidence in a big portion of our two- three year outlook. what this one did is it gave us a really high confidence in a big portion of our two- three year outlook If you run that 60-80% and 50-70%, right? if you run that 60-80% and 50-70% right It implies we had talked about being north of $2 billion, and that implies we're at $3 billion + type . it implies we had talked about being north of $2 billion and that implies we're at $3 billion + type This is a big component of it in that funnel that gives us more visibility and certainty of that outlook. this is a big component of it in that funnel that gives us more visibility and certainty of that outlook

Speaker 8: I would just say when we get outside of the fiscal year we're in, it's really difficult to have certainty on what those order rates could potentially be. You see the projects for sure. You have them in that 25%-50% range, but anything outside of the calendar year can be really difficult to predict. If you're looking at things in 2027 and 2028 and 2029, those are going to be the lower end of the probability funnel. The LTA simply accelerates it through the probability funnel to a high degree of confidence. It's significant, Brian. I would just say when we get outside of the fiscal year we're in, it's really difficult to have certainty on what those order rates could potentially be. i would just say when we get outside of the fiscal year we're in it's really difficult to have certainty on what those order rates could potentially be You see the projects for sure. you see the projects for sure You have them in that 25%-50% range, but anything outside of the calendar year can be really difficult to predict. you have them in that 25%-50% range but anything outside of the calendar year can be really difficult to predict If you're looking at things in 2027 and 2028 and 2029, those are going to be the lower end of the probability funnel. if you're looking at things in 2027 and 2028 and 2029 those are going to be the lower end of the probability funnel The LTA simply accelerates it through the probability funnel to a high degree of confidence. the lta simply accelerates it through the probability funnel to a high degree of confidence It's significant, Brian. it's significant brian

Speaker 1: Yeah. It feels really significant. I'm just going to press with one more on it just because if it's $4 billion over three years and you're doing—you said not over $2 billion in a year, I think, a second ago, but on average, it's like $1.4 billion. If you're hitting a run rate in fiscal 2028 of $3 billion+ in data centers, and a little more than half of that is chillers, you're doing like $1.5 billion+ in chillers, but this one LTA is $1.4 billion on average over three years. I'm just trying to see if that thinking makes sense. What it feels like, observing from the outside here, is that there's a big step up, like a step function increase in data center revenue coming in either fiscal 2028 or 2029. Yeah. yeah It feels really significant. it feels really significant I'm just going to press with one more on it just because if it's $4 billion over three years and you're doing—you said not over $2 billion in a year, I think, a second ago, but on average, it's like $1.4 billion. i'm just going to press with one more on it just because if it's $4 billion over three years and you're doing—you said not over $2 billion in a year i think a second ago but on average it's like $1.4 billion If you're hitting a run rate in fiscal 2028 of $3 billion + in data centers, and a little more than half of that is chillers, you're doing like $1.5 billion + in chillers, but this one LTA is $1.4 billion on average over three years. if you're hitting a run rate in fiscal 2028 of $3 billion + in data centers and a little more than half of that is chillers you're doing like $1.5 billion + in chillers but this one lta is $1.4 billion on average over three years I'm just trying to see if that thinking makes sense. i'm just trying to see if that thinking makes sense What it feels like, observing from the outside here, is that there's a big step up, like a step function increase in data center revenue coming in either fiscal 2028 or 2029. what it feels like observing from the outside here is that there's a big step up like a step function increase in data center revenue coming in either fiscal 2028 or 2029 You have a lot more customers than just this one. I know there wasn't a question there. You have a lot more customers than just this one. you have a lot more customers than just this one I know there wasn't a question there. i know there wasn't a question there

Speaker 8: That's true. That's true. that's true

Speaker 1: Yeah. Yeah. yeah

Speaker 8: Well, no, it's true. That's the way you're thinking about it in terms of them absorbing a huge amount of capacity. We can always add further capacity based on demand with our annual CapEx budget that we have in place. We've looked at that, we've done the analysis, and we're comfortable with growing with our customers and having further conversations on if we want to invest in more chiller lines and how to go about it. It's a fair point. Well, no, it's true. well no it's true That's the way you're thinking about it in terms of them absorbing a huge amount of capacity. that's the way you're thinking about it in terms of them absorbing a huge amount of capacity We can always add further capacity based on demand with our annual CapEx budget that we have in place. we can always add further capacity based on demand with our annual capex budget that we have in place We've looked at that, we've done the analysis, and we're comfortable with growing with our customers and having further conversations on if we want to invest in more chiller lines and how to go about it. we've looked at that we've done the analysis and we're comfortable with growing with our customers and having further conversations on if we want to invest in more chiller lines and how to go about it It's a fair point. it's a fair point

Speaker 1: Okay, just the last one. Can you give any further color on the first quarter? You said supply chain is impacting volume. I don't know if you said if volume would be down year-over-year or up year-over-year. Directionally, can you give us some sense for how to model first quarter also first quarter margins for Climate Solutions? Okay, just the last one. okay just the last one Can you give any further color on the first quarter? can you give any further color on the first quarter You said supply chain is impacting volume. you said supply chain is impacting volume I don't know if you said if volume would be down year-over-year or up year-over-year. i don't know if you said if volume would be down year-over-year or up year-over-year Directionally, can you give us some sense for how to model first quarter also first quarter margins for Climate Solutions? directionally can you give us some sense for how to model first quarter also first quarter margins for climate solutions

Speaker 7: Yeah. Brian, just to narrow that down, were you talking about data centers in particular, or the total company, or...? Yeah. yeah Brian, just to narrow that down, were you talking about data centers in particular, or the total company, or...? brian just to narrow that down were you talking about data centers in particular or the total company or

Speaker 1: I guess just Climate Solutions EBITDA margin, first of all. Because I think you said favorable comparisons or something along those lines for the second, third, and fourth quarters. I'm just wondering what you're trying to tell us about the first quarter for Climate Solutions EBITDA margin, and then also how much sales volume is going to be impacted for, I guess, data center or Climate Solutions, however you want to talk about it for the first quarter. I guess just Climate Solutions EBITDA margin, first of all. i guess just climate solutions ebitda margin first of all Because I think you said favorable comparisons or something along those lines for the second, third, and fourth quarters. because i think you said favorable comparisons or something along those lines for the second third and fourth quarters I'm just wondering what you're trying to tell us about the first quarter for Climate Solutions EBITDA margin, and then also how much sales volume is going to be impacted for, I guess, data center or Climate Solutions, however you want to talk about it for the first quarter. i'm just wondering what you're trying to tell us about the first quarter for climate solutions ebitda margin and then also how much sales volume is going to be impacted for i guess data center or climate solutions however you want to talk about it for the first quarter

Speaker 7: Yeah. From a margin standpoint, I'd actually maybe just talk about revenue. I think total company revenue in the first quarter should be right in line with our annual revenue range, probably closer to the midpoint from a total top line. From a margin standpoint versus the prior year, we expect that the commercial HVAC and data center businesses' margins will be down year-over-year in Q1, similar to the trend we've had the last few quarters starting Q2 last year, where we've been improving the margin, but on a year-over-year basis, it's been down from a year-over-year comparability. As I mentioned at the beginning of the call, we expect that to flip in Q2 for actually all three segments. Yeah. yeah From a margin standpoint, I'd actually maybe just talk about revenue. from a margin standpoint i'd actually maybe just talk about revenue I think total company revenue in the first quarter should be right in line with our annual revenue range, probably closer to the midpoint from a total top line. i think total company revenue in the first quarter should be right in line with our annual revenue range probably closer to the midpoint from a total top line From a margin standpoint versus the prior year, we expect that the commercial HVAC and data center businesses ' margins will be down year-over-year in Q1, similar to the trend we've had the last few quarters starting Q2 last year, where we've been improving the margin, but on a year-over-year basis, it's been down from a year-over-year comparability. from a margin standpoint versus the prior year we expect that the commercial hvac and data center businesses ' margins will be down year-over-year in q1 similar to the trend we've had the last few quarters starting q2 last year where we've been improving the margin but on a year-over-year basis it's been down from a year-over-year comparability As I mentioned at the beginning of the call, we expect that to flip in Q2 for actually all three segments. as i mentioned at the beginning of the call we expect that to flip in q2 for actually all three segments We would expect beginning in Q2 and then continuing in three and four that, in addition to that top-line growth, we'll have favorable year-over-year margins for the balance of the year. So Q1 is really working through the data center and the supply chain shortage, and we'll then be able to continue to ramp our volumes on the data center side. HVAC, we'll be on a holiday, we'll have anniversaries on those three acquisitions, and that'll have the positive impact there beginning in Q2. We would expect beginning in Q2 and then continuing in three and four that, in addition to that top-line growth, we'll have favorable year-over-year margins for the balance of the year. we would expect beginning in q2 and then continuing in three and four that in addition to that top-line growth we'll have favorable year-over-year margins for the balance of the year So Q1 is really working through the data center and the supply chain shortage, and we'll then be able to continue to ramp our volumes on the data center side. so q1 is really working through the data center and the supply chain shortage and we'll then be able to continue to ramp our volumes on the data center side HVAC, we'll be on a holiday, we'll have anniversaries on those three acquisitions, and that'll have the positive impact there beginning in Q2. hvac we'll be on a holiday we'll have anniversaries on those three acquisitions and that'll have the positive impact there beginning in q2

Speaker 1: Okay. Thank you very much. Okay. okay Thank you very much. thank you very much

Speaker 8: Yeah, sure. Yeah, sure. yeah sure

Speaker 11: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please while we poll for questions. Our next question comes from Jeff Van Sinderen with B. Riley Securities. Your line is now live. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. as a reminder if you'd like to ask a question please press star one on your telephone keypad One moment please while we poll for questions. one moment please while we poll for questions Our next question comes from Jeff Van Sinderen with B. our next question comes from jeff van sinderen with b Riley Securities. riley securities Your line is now live. your line is now live

Speaker 4: Good morning, everyone. I'm just wondering, is there a way to break out how much of your data center business is AI-related versus cloud? I guess what are your latest thoughts on how the longer-term mix of that will evolve between AI and cloud? Just maybe, how long do you believe the rapid growth of AI data centers can continue? Just trying to get, I guess, a sense of how you think about longevity there versus the ongoing cloud demand. Good morning, everyone. good morning everyone I'm just wondering, is there a way to break out how much of your data center business is AI -related versus cloud? i'm just wondering is there a way to break out how much of your data center business is ai -related versus cloud I guess what are your latest thoughts on how the longer-term mix of that will evolve between AI and cloud? i guess what are your latest thoughts on how the longer-term mix of that will evolve between ai and cloud Just maybe, how long do you believe the rapid growth of AI data centers can continue? just maybe how long do you believe the rapid growth of ai data centers can continue Just trying to get, I guess, a sense of how you think about longevity there versus the ongoing cloud demand. just trying to get i guess a sense of how you think about longevity there versus the ongoing cloud demand

Speaker 8: We have projects at different levels of scale in our funnels that go beyond. We look at and talk to customers, and we have our technology roadmaps that obviously go beyond that as well. We feel pretty confident over the next several years into 2030 with our projections and our guidance based on the supply chain and the data center capacity that's being added globally. It's difficult for us to know where the product is being used in certain applications. Our product is universal, so it can go into the cloud, it can go into compute, and it can go into AI. The product can serve multiple end-use applications. It's really hard to know exactly what some of these data centers are actually used for based on the product type that they buy from us. We have projects at different levels of scale in our funnels that go beyond. we have projects at different levels of scale in our funnels that go beyond We look at and talk to customers, and we have our technology roadmaps that obviously go beyond that as well. we look at and talk to customers and we have our technology roadmaps that obviously go beyond that as well We feel pretty confident over the next several years into 2030 with our projections and our guidance based on the supply chain and the data center capacity that's being added globally. we feel pretty confident over the next several years into 2030 with our projections and our guidance based on the supply chain and the data center capacity that's being added globally It's difficult for us to know where the product is being used in certain applications. it's difficult for us to know where the product is being used in certain applications Our product is universal, so it can go into the cloud, it can go into compute, and it can go into AI. our product is universal so it can go into the cloud it can go into compute, and it can go into ai The product can serve multiple end-use applications. the product can serve multiple end-use applications It's really hard to know exactly what some of these data centers are actually used for based on the product type that they buy from us. it's really hard to know exactly what some of these data centers are actually used for based on the product type that they buy from us When it is specific for a CDU, then we know that it's for liquid cooling, and there's a high degree of certainty that that's part of the AI infrastructure ramp-up. That continues to grow at the rate that's pretty public. I don't see a reason to think it's going to be any less than that over the next couple of years. When it is specific for a CDU, then we know that it's for liquid cooling, and there's a high degree of certainty that that's part of the AI infrastructure ramp-up. when it is specific for a cdu then we know that it's for liquid cooling and there's a high degree of certainty that that's part of the ai infrastructure ramp-up That continues to grow at the rate that's pretty public. that continues to grow at the rate that's pretty public I don't see a reason to think it's going to be any less than that over the next couple of years. i don't see a reason to think it's going to be any less than that over the next couple of years

Speaker 4: Okay, fair enough. Just, I guess, thinking about it, obviously, this LTA is going to be a pretty substantial part of your business. I guess as we think about challenges ahead that you're navigating relevant to further ramping production, maybe you can just touch a little bit more to the degree that you want to on those, and maybe speak to initiatives to get beyond those obstacles to getting production higher. Okay, fair enough. okay fair enough Just, I guess, thinking about it, obviously, this LTA is going to be a pretty substantial part of your business. just i guess thinking about it obviously this lta is going to be a pretty substantial part of your business I guess as we think about challenges ahead that you're navigating relevant to further ramping production, maybe you can just touch a little bit more to the degree that you want to on those, and maybe speak to initiatives to get beyond those obstacles to getting production higher. i guess as we think about challenges ahead that you're navigating relevant to further ramping production maybe you can just touch a little bit more to the degree that you want to on those and maybe speak to initiatives to get beyond those obstacles to getting production higher

Speaker 8: Yeah, that's good. It's a good question. I just have to commend the team at Modine for this. All the businesses pitching in to support the data center business, the entire organization pitching in to support the data center because we have such great technology and product that the demand is so high, it's all hands on deck. We've doubled the data center business four years in a row. To double that business every single year, it's been extremely hard. This is the first time we've actually started to bump up against some headwinds on the supply chain side. We're getting to that level of scale. We're talking with our suppliers, we're working with our suppliers, and we're engaging in a way we haven't engaged in the past to ensure continuity of supply. Yeah, that's good. yeah that's good It's a good question. it's a good question I just have to commend the team at Modine for this. i just have to commend the team at modine for this All the businesses pitching in to support the data center business, the entire organization pitching in to support the data center because we have such great technology and product that the demand is so high, it's all hands on deck. all the businesses pitching in to support the data center business the entire organization pitching in to support the data center because we have such great technology and product that the demand is so high it's all hands on deck We've doubled the data center business four years in a row. we've doubled the data center business four years in a row To double that business every single year, it's been extremely hard. to double that business every single year it's been extremely hard This is the first time we've actually started to bump up against some headwinds on the supply chain side. this is the first time we've actually started to bump up against some headwinds on the supply chain side We're getting to that level of scale. we're getting to that level of scale We're talking with our suppliers, we're working with our suppliers, and we're engaging in a way we haven't engaged in the past to ensure continuity of supply. we're talking with our suppliers we're working with our suppliers and we're engaging in a way we haven't engaged in the past to ensure continuity of supply We're looking at our suppliers strategically, and then we are also helping our suppliers with the daily cadence and the daily management to ensure that we can keep the capacity at the rate that we want to keep it. It's a balancing act. It's a mix of tactics and strategy. It's one of our top priorities as a company. We've invested there significantly with the human capital to support that. We've hired some very talented people to support that, and it's the front of the radar for us as we continue to double our capacity, or I should say double the business over the last several years. We're looking at our suppliers strategically, and then we are also helping our suppliers with the daily cadence and the daily management to ensure that we can keep the capacity at the rate that we want to keep it. we're looking at our suppliers strategically and then we are also helping our suppliers with the daily cadence and the daily management to ensure that we can keep the capacity at the rate that we want to keep it It's a balancing act. it's a balancing act It's a mix of tactics and strategy. it's a mix of tactics and strategy It's one of our top priorities as a company. it's one of our top priorities as a company We've invested there significantly with the human capital to support that. we've invested there significantly with the human capital to support that We've hired some very talented people to support that, and it's the front of the radar for us as we continue to double our capacity, or I should say double the business over the last several years. we've hired some very talented people to support that and it's the front of the radar for us as we continue to double our capacity or i should say double the business over the last several years

Speaker 4: Okay, great. Thanks for taking my questions. I'll take the rest offline. Okay, great. okay great Thanks for taking my questions. thanks for taking my questions I'll take the rest offline. i'll take the rest offline

Speaker 11: We have a follow-up question from Matt Summerville with D.A. Davidson. We have a follow-up question from Matt Summerville with D.A. we have a follow-up question from matt summerville with d.a Davidson. davidson

Speaker 6: Thanks. Just a couple quick ones. As we think about the context of this LTA and the chiller lines that you've publicly disclosed you're standing up, the 14 lines in the U.S., the two lines in the U.K. When all of those lines are ramped, how much of your chiller capacity will be spoken for potentially by this LTA? How should we think about Modine's sort of playbook to, at some point down the road, serve the two hyperscalers that you currently have onboarded as customers, but those that you're not able to supply chillers to at this moment? I have another quick one. Thanks. thanks Just a couple quick ones. just a couple quick ones As we think about the context of this LTA and the chiller lines that you've publicly disclosed you're standing up, the 14 lines in the U.S., the two lines in the U.K. as we think about the context of this lta and the chiller lines that you've publicly disclosed you're standing up the 14 lines in the u.s the two lines in the u.k When all of those lines are ramped, how much of your chiller capacity will be spoken for potentially by this LTA? when all of those lines are ramped how much of your chiller capacity will be spoken for potentially by this lta How should we think about Modine's sort of playbook to, at some point down the road, serve the two hyperscalers that you currently have onboarded as customers, but those that you're not able to supply chillers to at this moment? how should we think about modine's sort of playbook to at some point down the road serve the two hyperscalers that you currently have onboarded as customers but those that you're not able to supply chillers to at this moment I have another quick one. i have another quick one

Speaker 8: Yeah. The ones that we are having conversations with that are beyond the LTA today. We can make adjustments and we can make pivots, but we're looking for certainty to deploy any additional CapEx. We would engage in similar conversations and discussions of how we could potentially lock up capacity for a specific customer. We know how to do it. We know the process, we know the playbook. We can do more of it. It's just once we get to that point in the negotiations long term, what years would that impact? I don't have an answer for that right now because we're in discussions. Yeah. yeah The ones that we are having conversations with that are beyond the LTA today. the ones that we are having conversations with that are beyond the lta today We can make adjustments and we can make pivots, but we're looking for certainty to deploy any additional CapEx. we can make adjustments and we can make pivots but we're looking for certainty to deploy any additional capex We would engage in similar conversations and discussions of how we could potentially lock up capacity for a specific customer. we would engage in similar conversations and discussions of how we could potentially lock up capacity for a specific customer We know how to do it. we know how to do it We know the process, we know the playbook. we know the process we know the playbook We can do more of it. we can do more of it It's just once we get to that point in the negotiations long term, what years would that impact? it's just once we get to that point in the negotiations long term what years would that impact I don't have an answer for that right now because we're in discussions. i don't have an answer for that right now because we're in discussions The existing capacity that we have today, a high degree of it, is going to be for the LTA. I can't give you a specific number because these are all ramping at different rates, and with the LTA and how we put this together, it's not equal amounts each year. The existing capacity that we have today, a high degree of it, is going to be for the LTA. the existing capacity that we have today a high degree of it is going to be for the lta I can't give you a specific number because these are all ramping at different rates, and with the LTA and how we put this together, it's not equal amounts each year. i can't give you a specific number because these are all ramping at different rates and with the lta and how we put this together it's not equal amounts each year It's different based on project timings and completion of construction. It's a high degree, and we have the ability to adjust if we need to make adjustments to add additional customers. It's different based on project timings and completion of construction. it's different based on project timings and completion of construction It's a high degree, and we have the ability to adjust if we need to make adjustments to add additional customers. it's a high degree and we have the ability to adjust if we need to make adjustments to add additional customers

Speaker 6: Got it. Just finally, maybe to kind of get off of the DC topic for a minute, can you just talk about your M&A funnel actionability, and how we should be thinking about M&A in the context of fiscal 2028, or excuse me, fiscal 2027 for Modine? Thanks. Got it. got it Just finally, maybe to kind of get off of the DC topic for a minute, can you just talk about your M&A funnel actionability, and how we should be thinking about M&A in the context of fiscal 2028, or excuse me, fiscal 2027 for Modine? just finally maybe to kind of get off of the dc topic for a minute can you just talk about your m&a funnel actionability and how we should be thinking about m&a in the context of fiscal 2028 or excuse me fiscal 2027 for modine Thanks. thanks

Speaker 7: Yeah, we're still maintaining an active funnel, Matt, and that's important. It took us a while to build those relationships, and we want to keep doing our homework on those. I'd say for the bulk of this calendar year, it's still going to be heads down. We talk a lot about the data center business and how many people at Modine, as Neil talked about, are supporting a business growing at that rate. Some of the same people, or those that aren't doing that, are also actively working daily to stand up the Performance Technologies group so we can complete that spin-off. I'd say for the bulk of this calendar year, that's a lot, plus the three acquisitions we're integrating in HVAC. Yeah, we're still maintaining an active funnel, Matt, and that's important. yeah we're still maintaining an active funnel matt and that's important It took us a while to build those relationships, and we want to keep doing our homework on those. it took us a while to build those relationships and we want to keep doing our homework on those I'd say for the bulk of this calendar year, it's still going to be heads down. i'd say for the bulk of this calendar year it's still going to be heads down We talk a lot about the data center business and how many people at Modine, as Neil talked about, are supporting a business growing at that rate. we talk a lot about the data center business and how many people at modine as neil talked about are supporting a business growing at that rate Some of the same people, or those that aren't doing that, are also actively working daily to stand up the Performance Technologies group so we can complete that spin-off. some of the same people or those that aren't doing that are also actively working daily to stand up the performance technologies group so we can complete that spin-off I'd say for the bulk of this calendar year, that's a lot, plus the three acquisitions we're integrating in HVAC. i'd say for the bulk of this calendar year that's a lot plus the three acquisitions we're integrating in hvac Anything could happen, but I really think for our sake, or where Neil and I are focused the next six months or so, is going to be just heavily focused on the spin-off and the data center growth. Anything could happen, but I really think for our sake, or where Neil and I are focused the next six months or so, is going to be just heavily focused on the spin-off and the data center growth. anything could happen but i really think for our sake or where neil and i are focused the next six months or so is going to be just heavily focused on the spin-off and the data center growth

Speaker 6: Great stuff. Thank you, guys. Great stuff. great stuff Thank you, guys. thank you guys

Speaker 11: We have reached the end of the question-and-answer session. I'd now like to turn the call over to Kathleen Powers for closing comments. We have reached the end of the question -and-answer session. we have reached the end of the question -and-answer session I'd now like to turn the call over to Kathleen Powers for closing comments. i'd now like to turn the call over to kathleen powers for closing comments

Speaker 5: Thank you. Thanks to everyone for joining our call this morning. A replay will be available through our website in about two hours. We hope everyone has a great day. Thank you. thank you Thanks to everyone for joining our call this morning. thanks to everyone for joining our call this morning A replay will be available through our website in about two hours. a replay will be available through our website in about two hours We hope everyone has a great day. we hope everyone has a great day

Speaker 11: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. This concludes today's conference. this concludes today's conference You may disconnect your lines at this time, and we thank you for your participation. you may disconnect your lines at this time and we thank you for your participation