Racine-based manufacturer Modine raised its guidance for the year on Thursday due to increasing double-digit demand for the company’s data center products.
During the company’s third quarter fiscal 2026 earnings call, Modine reported net sales of $805 million, increasing $188.2 million, or 31%, from the prior fiscal year’s third quarter.
The bulk of this growth was from Modine’s data center business, which is expected to achieve annual growth of between 50% and 70% over the next two years.
The company is still on track to achieve $2 billion in data center sales by fiscal 2028.
Neil Brinker Photo: Business Wire
“Modine delivered another quarter of outstanding performance, with 21% organic sales growth driven by a 78% increase in data center sales,” said Neil Brinker, president and CEO of Modine. “The capacity expansion for data center products remains on schedule, with new production lines contributing to a 31% sequential increase in sales compared to the second fiscal quarter. Margins in the climate solutions segment improved sequentially this quarter, as expected, and we remain confident that we are on pace for a strong fourth quarter as more production lines are commissioned to keep pace with the strong demand.”
For 2026, Modine now projects company-wide sales growth of between 20% and 25%.
The company is still ramping up production of its data center products, with four new chiller lines beginning production in the third quarter. Those lines are located at Modine’s plants in Mississippi and Texas.
While Modine is continuously asked whether the company is concerned with having too much production capacity, Brinker said the simple answer is “no.”
“Our current projections fully support the capacity we’re putting in place based on known demand with existing customers,” he said.
If there is a change in the kind of data center products needed by Modine’s customers, the company will be able to pivot and make new products on the same production lines being used today.
Brinker said he is also regularly being asked how next-generation AI chips, like NVIDIA’s Rubin chip platform, will impact the business. These new chips could reduce the need for cooling systems in data centers.
“None of this was a surprise to us,” Brinker said. “We’re constantly working with our customers to ensure we are designing the data center solutions they need today and in the future.”
Pending spin-off
Over the past several years, Modine has worked to evolve its portfolio of businesses by investing in high-margin, high-growth companies.
Last summer, the company launched a process to divest its remaining automotive business, allowing Modine to “accelerate its transformation,” said Brinker.
That process involves the recently announced spin-off of Modine’s performance technologies segment. That segment will then be combined with Michigan-based thermal management company Gentherm.
Modine will receive $210 million in cash and will control 40% of the combined business once the deal is completed.
“We are at a turning point for Modine,” said Brinker. “We are making unprecedented investments in the future of our company, while simultaneously accelerating the transformation of our portfolio,” said Brinker.
Following the spin-off, Modine will focus on its high-growth data center and commercial HVAC and refrigeration markets.
“This marks a major milestone in our strategic transformation, including a significant acceleration of our strategy to evolve our portfolio to drive long-term value for our shareholders, customers and employees,” said Brinker.
