Modine Manufacturing Company

Good morning, ladies and gentlemen, and welcome to Modine's first quarter fiscal 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer, and Investor Relations. Please go ahead.

Hello and good morning. Welcome to our conference call to discuss Modine's first quarter fiscal 2025 results. I'm joined by Neil Brinker, our President and Chief Executive Officer, and Mick Luccarelli, 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, Mojean.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'll turn the call over to Neal.

Thank you, Kathy, and good morning, everyone. I'm pleased to report a strong start to our new fiscal year. It's clear that the investments we've made in our business are contributing to our top line growth this quarter, including the strategic acquisitions made last year in our climate solutions segment. In addition, our performance technologies business reported a great quarter, delivering a gross margin over 20%, a 550 basis point increase from the prior year. Both segments are executing on their strategic objectives. Our financial results are ahead of our targets we outlined at our 2022 Investor Day, and we are demonstrating that we can rapidly grow our margins and earnings. This is a result of the successful deployment of 80-20 across our diversified portfolio, creating a favorable shift in our business mix as we prioritize and invest in our best performing businesses. Nick will go over our first quarter financial results and provide an update to our full year outlook But first, I'd like to provide some high-level updates on each segment. Please turn to slide five. Our climate solutions segment had an outstanding quarter, benefiting from the Scott Springfield and NAPS acquisitions last year. In particular, our data center business was up 138%, driven primarily by growth in North America. Organic data center sales nearly doubled compared to the prior year. As I mentioned last quarter, we are adding additional capacity for our data center products to support future growth in North American Europe, with much of that available capacity coming online later this year. As data centers prepare for the growth of high-performance computing, there is an increased need for hybrid solutions that incorporate a mix of air and liquid cooling products. By combining both air and liquid techniques in a hybrid approach, data centers can achieve optimal cooling efficiency while minimizing energy consumption. As I previously mentioned, we are internally developing a cooling distribution unit, or CDU, that will facilitate direct-to-chip cooling while integrating seamlessly with our other products. We are completing the test base for this product and moving towards production and launch. We expect the first shipments to be delivered to a strategic co-location customer in Europe during our fourth fiscal quarter and expect this to be followed by shipments to key North America co-location customers. Our CDU will be on display at our Investor Day in September, as well as at industry trade shows this fall. Please turn to slide six. The performance technology segment also had an outstanding quarter, with a 25% increase in adjusted EBITDA and an EBITDA margin of 14%. Mick will cover the specifics, but we are lowering our sales outlook in the performance technology segment due to lower expected volumes in the agricultural and construction equipment markets, as well as certain portions of the automotive market. However, we have been able to offset some of these declines with higher-than-expected sales of Genset modules as the market continues to be strong. This strategic shift and evolving product mix is one of the contributing factors to the significant margin improvement in the performance technology segment. Earlier this month, our EV systems business announced an important product launch with the introduction of the Advanced Cabin Climate System. Along with the other products marketed under the eVantage brand, this system is specifically designed for commercial, off-highway, and specialty electric vehicles and fully integrates with our other thermal management products. The team booked eight program wins this quarter, equating to a projected annual run rate of over $24 million at peak revenue. One of these awards was with a major bus customer in Europe, which will be the first program launched out of our expanded Italian footprint next year. We are projecting this business to grow by 30% or more per year over the next few years. This is a great example of how 80-20 has changed our culture, allowing us to identify and foster new opportunities to leverage our deep expertise in thermal management to develop highly engineered, mission-critical solutions. Performance technologies revenue were also influenced by the planned strategic divestitures completed last year, and we are continuing to reduce our costs as we shift resources away from some of our legacy businesses. We will continue to evaluate the best way to achieve these goals and look for opportunities to accelerate where possible. Now that we've improved the profitability of the business, we have more and better options than we've had before and can take the time to do what's best to evolve our portfolio. I'm very pleased with our progress and our performance this quarter. I'm looking forward to our Investor Day event, which is in September, at our headquarters, where we will provide some additional insights on our transformation and updated financial targets. With that, I'll turn the call over to Mick.