--- title: "Modine's data-center sales rose 95% and the margin bill came due" description: "Data Centers sales rose 95% to $439.7 million on a fourth straight record order book, yet gross margin fell 470 basis points, net income fell 32%, and first-half free cash flow was negative $145.6 million. Analysts cut targets to $160–215 against a $98.56 stock before the November 18 investor day." publisher: "The Inference" section: "Data Center" published: 2026-11-07T17:00:19.267Z modified: 2026-11-07T17:00:19.267Z canonical: https://theinference.org/article/modine-s-data-center-sales-rose-95-and-the-margin-bill-came-due language: en keywords: "Earnings, Modine, Data Centers, Cooling, Guidance, Analyst Calls" --- # Modine's data-center sales rose 95% and the margin bill came due > Data Centers sales rose 95% to $439.7 million on a fourth straight record order book, yet gross margin fell 470 basis points, net income fell 32%, and first-half free cash flow was negative $145.6 million. Analysts cut targets to $160–215 against a $98.56 stock before the November 18 investor day. [Modine](https://theinference.org/markets/companies/modine) Manufacturing, the Wisconsin thermal-management group whose coils and air handlers cool AI data-center halls, [reported fiscal second-quarter results on November 3, 2026](https://www.securities.io/modine-raises-core-revenue-outlook-as-data-center-sales-rise-95/): data-center sales rose 95% to $439.7 million, on more than $1 billion of orders [1][2]. That was the segment's fourth straight quarterly order record, including a $400 million hyperscale air-handler contract running through the end of 2027 [1][2]. The cost of doubling sat in the same release. Segment gross margin contracted 470 basis points to 19.7% on higher material, component and tariff costs, and company [net income fell 32% to $30.3 million](https://www.ad-hoc-news.de/boerse/news/unternehmensnachrichten/modine-s-order-boom-meets-its-margin-test-as-new-leadership-takes-the-reins/70472874) [1][2]. ## The margin is where the boom gets tested Segment EBITDA margin slipped to 15.4% from 18.1% a year earlier [2]. Commercial HVAC told a milder version of the same story: sales up 23% to $285.5 million, gross margin down 140 basis points [1]. The quarter still includes Performance Technologies, the auto-parts business spun off on October 1, which moves to discontinued operations next quarter [1]. *Chart: **Data Centers out-earned the business Modine just spun off** Bars chart of Modine fiscal Q2 2027 quarterly sales by business: Data Centers $439.7 million, Performance Technologies $287.7 million, Commercial HVAC $285.5 million, out of net sales of $994.4 million* *Fiscal Q2 2027 (ended September 30, 2026) quarterly sales by business, in millions of US dollars. Net sales totaled $994.4 million and still include Performance Technologies, spun off October 1, 2026, and reported as discontinued operations from next quarter. Source: Securities.io, November 7, 2026. [1]* ## Hyperscalers place the orders, shareholders fund the inventory First-half free cash flow was a use of $145.6 million, against $30.3 million a year earlier, as capex rose to $88.5 million and inventories climbed to $697.5 million from $506.1 million in March; net debt reached $573.7 million [1]. Management re-based its fiscal 2027 outlook to the continuing business, guiding to $3.1–3.2 billion of revenue and $470–500 million of adjusted EBITDA, growth of 50–55% [1][2]. July's $650–680 million EBITDA range included Performance Technologies, so the absolute ranges do not compare [1]. *Chart: **Gross margin has fallen for five of the last six quarters** Line chart of Modine quarterly gross margin, falling from 24.6% in Q2 2024 to 20.7% in Q3 2026* *Company gross margin by fiscal quarter, percent of revenue, from Modine's SEC filings (labels are calendar quarters; the fiscal quarter ended 2026-09-30 is shown as Q3 2026). Source: Modine quarterly figures from its SEC filings, retrieved November 7, 2026. [4]* ## Bulls hold the guide, skeptics hold the targets Since our October 25 preview, when the tape stood at $133 against Wall Street at $305 ([The Inference](https://theinference.org/article/modine-reports-november-3-with-wall-street-at-305-and-the-tape-at-133)), the stock has reset further: it traded at $98.56 on November 5 [3]. Analysts paid for the margin, not the orders [2]. Oppenheimer cut its price target to $215 from $260 on Thursday and UBS cut to $160 from $355 today, November 7, both keeping buy ratings [2]. New segment president Michael Mahan has set the falsifiable test: a 20% data-center EBITDA margin by the fourth quarter [2]. Longer-term targets land at the investor day on November 18; that is the date the margin promise gets priced or doubted [2]. Texas's planned pause on new data-center permits remains the demand-side wildcard behind it [2]. ## Takeaway Modine doubled data-center sales but paid for the growth in margin and cash: gross margin fell 470 basis points, first-half free cash flow was negative $145.6 million, and analysts cut targets to $160-215 before the November 18 investor day. ## Sources 1. [Securities.io, Modine Raises Core Revenue Outlook as Data Center Sales Rise 95%, 7 November 2026](https://www.securities.io/modine-raises-core-revenue-outlook-as-data-center-sales-rise-95/) 2. [Ad-hoc-news, Modine's Order Boom Meets Its Margin Test as New Leadership Takes the Reins, 7 November 2026](https://www.ad-hoc-news.de/boerse/news/unternehmensnachrichten/modine-s-order-boom-meets-its-margin-test-as-new-leadership-takes-the-reins/70472874) 3. [Yahoo Finance / Simply Wall St, Modine (MOD) Stock Looks Below Fair Value Following Its 7x Five Year Run, 5 November 2026](https://finance.yahoo.com/markets/stocks/articles/modine-mod-stock-looks-below-081933368.html) 4. [Modine, quarterly figures from its SEC filings, retrieved 7 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000067347) --- Modine's data-center sales rose 95% and the margin bill came due — The Inference. Canonical: https://theinference.org/article/modine-s-data-center-sales-rose-95-and-the-margin-bill-came-due