Modine Manufacturing Company Announces Reorganization of Climate Solutions Segment

Details of the Segment Reorganization

Effective April 1, 2026, Modine Manufacturing Company has reorganized its Climate Solutions segment, which has now been divided into two separate operating segments: Data Centers and Commercial HVAC. The company believes that this reorganization will allow for more focused management and better alignment with its 80/20 strategy, which emphasizes capitalizing on growth opportunities while optimizing profit margins and cash flow.

This strategic shift is designed to enhance operational efficiency and enable the company to respond more effectively to market demands within the data center and commercial HVAC sectors. By managing these segments independently, Modine aims to leverage specific growth opportunities that may arise in each area.

Impact on Financial Reporting

Beginning with the first quarter of fiscal 2027, Modine will report financial results based on its newly structured segments: Data Centers, Commercial HVAC, and Performance Technologies. This change is intended to provide a clearer view of the company's operational performance and financial health in relation to its distinct business areas.

The company has indicated that this reorganization will not affect the financial results of the Performance Technologies segment or the overall consolidated financial position. This suggests that the transition is primarily aimed at improving transparency and operational focus rather than altering the financial fundamentals of the business.

Background on the Performance Technologies Spin-off

In January 2026, Modine announced a definitive agreement with Gentherm Incorporated to spin off and combine its Performance Technologies segment with Gentherm in a Reverse Morris Trust transaction. This transaction is expected to close by the end of calendar 2026, pending approval from Gentherm's shareholders and other customary closing conditions.

As part of this process, Modine has stated that it will classify the Performance Technologies segment as a discontinued operation starting in the period when the transaction is completed. This classification is significant as it indicates a strategic shift in how the company will manage its business segments moving forward.

Unaudited Historical Segment Financial Results

Modine's recent disclosure includes unaudited historical segment operating and adjusted financial results that align with the new reporting structure. These results are intended to provide investors with insights into the company's performance under the revised segment organization.

Exhibit 99.1 of the announcement contains the unaudited financial information for the quarters ended June 30, 2025; September 30, 2025; December 31, 2025; and for the quarter and fiscal year ended March 31, 2026. This information is crucial for investors as it offers a comparative look at how the new segments have performed historically.

Understanding Non-GAAP Financial Measures

In its disclosure, Modine has provided definitions for adjusted EBITDA and adjusted EBITDA margin, which are not measures defined by generally accepted accounting principles (GAAP). These non-GAAP measures are used by management to evaluate the company's overall financial performance and liquidity.

Adjusted EBITDA is defined as net earnings excluding interest expense, income taxes, depreciation and amortization, and other specific charges. The adjusted EBITDA margin represents adjusted EBITDA as a percentage of net sales. Modine believes these measures provide relevant insights into profitability and earnings power, although they should not be viewed as substitutes for GAAP measures.

Strategic Rationale Behind the Reorganization

The reorganization of the Climate Solutions segment is part of Modine's broader strategy to enhance operational focus and drive growth in key markets. By separating the Data Centers and Commercial HVAC operations, the company aims to tailor its strategies and resources to meet the specific needs of each segment.

This strategic alignment is expected to facilitate better decision-making and resource allocation, allowing Modine to capitalize on emerging opportunities within the rapidly growing data center market while maintaining strong performance in the commercial HVAC sector.

Investor Considerations Following the Update

Investors may want to closely monitor Modine's upcoming financial reports, which will reflect the new segment structure starting in fiscal 2027. This will provide a clearer understanding of how the reorganization is impacting the company's financial performance and operational efficiency.

Additionally, the anticipated spin-off of the Performance Technologies segment may also influence investor sentiment and market perception of Modine's overall business strategy. As the company navigates these changes, stakeholders should remain informed about developments that could affect their investment decisions.

Compliance and Regulatory Context

Modine's recent disclosure is part of its ongoing compliance with regulatory requirements, ensuring transparency and accountability to its investors. The company has indicated that the information provided in the filing is not deemed "filed" for purposes of certain sections of the Securities Exchange Act and should not be incorporated by reference in other filings.

This clarification is important for investors as it delineates the nature of the information shared and its intended use. Understanding these regulatory nuances can help investors make more informed decisions regarding their investments in Modine.