Modine Manufacturing Company

Good morning, ladies and gentlemen, and welcome to Modine's first quarter fiscal 2026 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.

Hello and good morning. Welcome to our conference call to discuss Modine's first quarter fiscal 2026 results. I'm joined by Neil Brinker, our President and Chief Executive Officer, and Mick Muccarelli, 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'll turn the call over to Neil.

Thank you, Kathy, and good morning, everyone. I'm pleased to report that Modine delivered a solid start to the year, giving us confidence to raise our revenue and earnings outlook for fiscal 26. We've completed three strategic acquisitions so far this fiscal year and announced major new investments in our manufacturing capacity for our rapidly growing North America data center business. Investments that will position us to meet continued strong market demand this year and well into the future. These investments are allowing us to maintain a balanced portfolio of businesses with strong organic growth focus in data centers, supplemented with inorganic growth to expand product offerings, and create scale in our other key climate solutions businesses. Mick will take us through the financial results and updated outlook, but first, I'd like to provide additional context around the quarter's key events. Our climate solutions segment continues to deliver, posting an 11% increase in revenue and a 10% improvement in adjusted EBITDA. This performance reflects initial contributions from two of our most recent acquisitions, Absolute Air and LB White. Both of these acquisitions offer complimentary solutions to our heating business, which falls within our HVAC technologies group. These additions broaden our product portfolio and unlock new markets and distribution channels. Modine has been in the heating business for nearly 100 years and has a large install base for our signature line of gas-fired unit heaters. We also have a leading market share with replacements typically driving over half of our annual revenues. These recent acquisitions allow us to accelerate growth and build scale as we continue to use 80-20 to drive both revenue and cost energies. Earlier this month, we closed a third acquisition, Climate by Design International, or CDI, a leader in desiccant dehumidification and critical process air handlers. These technologies integrate well with our previous acquisitions, namely Jetson Modular Chillers and Scott Springfield's Custom Commercial Air Handlers. As we integrate this business, we will use 80-20 to improve their mix and raise margins while exploring opportunities to utilize excess U.S.-based manufacturing capacity to support growth in the broader commercial IAQ businesses. All of these acquisitions are squarely in line with our business development strategy to expand our portfolio with next-gen technologies and complementary solutions in heating, indoor air quality, and data center cooling. They also build the foundation for scale in these key markets within HVAC technologies. I'd like to again welcome all the new associates from Absolute Air, LB White, and now CDI. Our teams are already integrating well and aligning around new opportunities to drive revenue and operational synergies. In our data center business, we continue to prioritize organic growth through capacity investments and product innovation. We recently announced 100 million investment to expand manufacturing capacity across four US sites. including a new facility in Dallas, Texas area, further expansion in Grenada, Mississippi, and repurposing two existing performance technology sites. The announcement advances our local-for-local supply chain strategy to be close to our data center customers and expand capacity in our largest and best markets. This investment will also enhance engineering, product development, and testing capabilities, create new jobs, and support the redeployment and retraining of existing Modine employees. This expansion is a necessary response to the extraordinary demand we're seeing, especially in North America. With our current funnel of opportunities, we believe that we can approach $2 billion of data center revenues in fiscal 28. This is a lofty goal, but one that we believe is achievable. In addition to this capacity expansion, we are also innovating. An example is our new modular data center development project, where we are collaborating with a large customer on a custom design built to suit their specific needs. This innovative solution offers rapid deployment and scalability, reducing the build time for a data center from over a year to mere months. An initial site can also be expanded by adding more modules to the center. As demand accelerates, our data center customers are pushing for higher efficiency and advanced cooling strategies. We're not only responding, but collaborating deeply with our engineering teams to create next generation solutions. We are and will continue to be a major part of these conversations, often supporting the additional mechanical cooling requirements needed to address changes being made at the rack level. For example, if a customer is looking for an alternative solution to distributing coolant to the rack, we will work closely with our engineering teams to collaborate an innovative alternative to meet their cooling requirements. To be clear, these innovations aren't threats. their outcomes of long-tenured strategic partnerships where our largest customers are seeking our expertise to meet their evolving demands. And they are unlocking new opportunities as we advance the technology required to manage heat loads in modern data centers. There's tremendous energy in this segment, and it's not slowing down. We will continue to aggressively pursue the opportunities in front of us to ensure continued execution and growth. Please turn to page five. As expected, the performance technology segment continues to navigate tough market conditions, with revenues in the quarter down 8% and corresponding declines in adjusted EBITDA. The downturn in vehicular markets is likely to persist for several more quarters. In response, we've taken decisive action to control costs, including reallocating talent to support our high-growth climate solutions business. As an example, we plan to transition two of our existing performance technology sites to expand capacity for data center production. One of those under consideration is Franklin, Wisconsin, which was previously planned to support our EV systems business. We are also evaluating plans for our Jefferson City, Missouri manufacturing facility, which would involve consolidating those product lines into other PT plants in North America. For other select portions of the segment, we continue to explore strategic options to realign and optimize our portfolio. Our PT team is doing excellent work to remain lean and focused on our key customers. When volumes return, we're well positioned to capitalize with strong incremental margins and improve profitability. Despite the market headwinds we're executing on our transformational strategy, this team has been through a great deal of change and has worked hard to improve margins and cut costs in light of these challenging market conditions. But our 80-20 strategy remains clear, to shift resources to high-growth, high-margin businesses. In summary, we had an extremely busy start to the fiscal year. We are investing in our growth both organically and inorganically. These are very purposeful investments designed to build scale across our portfolio and capture near-term growth opportunities. I want to thank the Modine team for their hard work and dedication. With that, I'll turn the call over to Mick.