Item 1. Business
ITEM 1 . BUSINESS .
At Modine Manufacturing Company, we are Engineering a Cleaner, Healthier World ™ . For more than 100 years, we have been a trusted leader in designing, engineering, testing, and manufacturing mission-critical thermal solutions. Our technologies heat, cool, and ventilate, with systems that drive performance, efficiency, and reliability for our customers. Our technologies support our mission to improve indoor air quality, lower harmful emissions, enable cleaner running vehicles, and use environmentally friendly refrigerants. We help customers across industries solve complex thermal management challenges and meet increasingly stringent indoor and outdoor air, energy, and water standards.
We sell customer-centric thermal management solutions in a wide array of commercial, industrial, and building heating, ventilating, air conditioning, and refrigeration (“HVAC&R”) markets. In addition, we are a leading provider of engineered heat transfer systems and high-quality heat transfer components for use in on- and off-highway original equipment manufacturer (“OEM”) vehicular applications. Our primary customers across the globe include:
-
Developers and operators of data centers;
- Healthcare facility operators and K-12 school systems;
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Heating, ventilation and cooling OEMs;
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Construction architects and contractors;
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Wholesalers of heating equipment;
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Agricultural, industrial and construction equipment OEMs;
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Commercial and industrial equipment OEMs; and
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Truck, bus, automobile and specialty vehicle OEMs.
We partner with our customers to provide solutions including systems, services, and components to solve complex heat transfer challenges and are committed to helping them reach their sustainability goals. We focus on product design, from raw materials to end-of-life recyclability, to optimize the total cost of ownership and reduce negative environmental impacts across the product life cycle. We anticipate and prepare for change in order to be at the forefront of technological advances and to provide innovative solutions to help our customers meet their sustainability targets and comply with an increasingly stringent regulatory environment.
History
Modine was incorporated under the laws of the State of Wisconsin on June 23, 1916 by its founder, Arthur B. Modine. A.B. Modine’s “Turbotube” radiators became standard equipment on the famous Ford Motor Company Model T. In response to frigid Wisconsin winter temperatures and inadequate heating options in the market, A.B. Modine combined a radiator, a fan and steam pipes to construct the first unit heater, marking the start of our heating business. When he died at the age of 95, A.B. Modine had personally been granted more than 120 U.S. patents for his heat transfer innovations. The standard of innovation exemplified by A.B. Modine remains the cornerstone of Modine today.
Our heritage provides a depth and breadth of expertise in thermal management, which, when combined with our global manufacturing presence, standardized processes, and state-of-the-art technical resources, enables us to rapidly bring highly-valued, customized solutions to our customers.
Terms and Year References
When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, unless the context otherwise requires, we are referring to Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to a particular year mean the fiscal year ended March 31 of that year, unless indicated otherwise.
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Business Strategy and Results
Our purpose of Engineering a Cleaner, Healthier World™ guides our strategic direction. Our mission is to use our thermal management expertise to help our customers improve indoor air quality, reduce energy and water consumption, lower harmful emissions, enable cleaner running vehicles, and use more environmentally friendly refrigerants. We are committed to evolving our product portfolio in pursuit of highly engineered, mission-critical thermal solutions. We are strategically investing in end markets where we see the highest growth prospects. These markets continue to shift to low-carbon energy solutions, driving demand for cleaner, more efficient thermal management.
We first announced our vision for a “new” Modine in late fiscal 2021. Over the last four fiscal years, we have simplified and re-segmented our organization and have aligned resources around specific strategies and market-based verticals. Our leadership and teams have embraced 80/20 principles, which focus on the rule that 80 percent of outputs result from 20 percent of inputs. Our teams have created a high-performance culture that focuses resources on products and markets with the highest sustainable growth opportunities and best return profiles, while simplifying and improving our processes. Through our application of 80/20 principles, we have achieved transformative change and significant improvements in our businesses and our financial results — and we are not done yet.
During fiscal 2025, our consolidated net sales were $2.6 billion, a 7 percent increase from $2.4 billion in fiscal 2024, primarily driven by higher sales in our Climate Solutions segment, partially offset by lower sales in our Performance Technologies segment . The higher Climate Solutions segment sales included significant sales growth to data center customers, both incremental sales from the Scott Springfield Mfg. Inc (“Scott Springfield Manufacturing”) business, a leading manufacturer of air handling units serving the data center cooling and indoor air quality markets in the U.S. and Canada that we acquired in March 2024, and organic growth . The lower Performance Technologies segment sales included a $54 million impact from the disposition of three automotive businesses in Germany during the third quarter of fiscal 2024. Our operating income of $283 million in fiscal 2025 increased $42 million from the prior year, primarily due to higher gross profit.
As we head into fiscal 2026, we are committed to our strategic pillars to drive value creation, as follows:
● Capitalizing on our deep expertise in thermal management , including world-class capabilities and proprietary technologies, to deliver differentiated solutions to our customers and sustain market leadership.
● Leveraging our portfolio of highly engineered, mission-critical thermal solutions to accelerate growth.
● Focusing on opportunities fueled by multiple secular mega-trends , directly tied to our mission. For example, we are rapidly expanding our Data Center Cooling business in response to trends in high-performance computing, with significant data center growth fueled by artificial intelligence, resulting in a commensurate need for data center cooling solutions.
● Elevating our 80/20 discipline , influencing our daily decision making and strategic resource and capital allocation. We will continue to foster an entrepreneurial spirit in our businesses and customer-centric innovation to build and sustain long-term customer relationships.
● Evolving our portfolio to compound shareholder value , focusing on high-growth, high margin businesses for sustainable growth and returns.
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Customers and Product Groups
We partner with our customers across multiple industries to provide sustainable solutions for a wide range of applications. Our top five customers, in terms of sales, are in the data center, commercial vehicle, and off-highway markets and our ten largest customers accounted for 43 percent of our net sales in fiscal 2025.
The following is a summary of our primary product groups, categorized as a percentage of our net sales:
Fiscal 2025
Fiscal 2024
Data center cooling
25
%
12
%
Heat transfer
16
%
20
%
HVAC&R
15
%
14
%
Air-cooled
23
%
28
%
Liquid-cooled
16
%
21
%
Advanced solutions
5
%
5
%
Competitive Position
We compete with many manufacturers of heat transfer and HVAC&R solutions, some of which are divisions of larger companies. The markets for our products continue to be very dynamic. For example, our data center customers are expanding globally and are requiring new technologies, driving us to invest in geographic and capacity expansion and to expand our product portfolio to meet their needs. The expansion of electric vehicle demand has also created opportunities to work with our existing OEM customers, as well as emergent customers focused on zero-emission products. Additionally, our global power generation customers, driven by new data center construction and demand for backup power for critical infrastructure, such as hospitals, mining and airports, are looking for new technologies and global manufacturing capacity to meet their growth demands. Our HVAC&R OEM customers are faced with significant international competition and maintain global manufacturing footprints to compete in local markets. In addition, consolidation within the supply base and vertical integration may introduce new or restructured competitors to our markets. We are investing in geographic and capacity expansion to meet these customer needs, particularly as we experience competition from suppliers positioned in different geographies that enjoy economic advantages such as lower labor costs and tax rates. Many of our customers also continue to ask us, as well as their other primary suppliers, to provide research and development (“R&D”), design, and validation support for new potential projects. This combined work effort often results in stronger customer relationships and more partnership opportunities for us.
Business Segments
Our chief operating decision maker (“CODM”), our President and Chief Executive Officer, reviews the separate financial results for each of our operating segments. The CODM utilizes the financial results to evaluate the performance of each business segment and in making decisions on the allocation of resources. See Note 22 of the Notes to Consolidated Financial Statements for segment financial information.
Climate Solutions Segment
The Climate Solutions segment provides energy-efficient, climate-controlled solutions and components. The Climate Solutions segment provides cooling solutions for data centers that help save water and energy through intelligent controls. The Climate Solutions segment also provides heat exchangers for HVAC&R applications and anti-corrosive coatings. In addition, the segment also provides HVAC&R systems and solutions for commercial, education, industrial, and residential applications.
The Climate Solutions segment has strategically aligned its teams around three primary market-based verticals: i) Data Center Cooling; ii) Heat Transfer Products and iii) HVAC&R.
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Data Center Cooling
The Data Center Cooling business provides sustainable cooling solutions for data center markets in North America, Europe, the Middle East and Africa (“EMEA”), and Asia, including complete system design, controls, maintenance and monitoring. We provide data center cooling solutions that feature low global warming potential refrigerants, free cooling technology, and lower water consumption, enabling our customers and end-users to meet their environmental and sustainability goals. Data center products consist of IT cooling solutions, including precision air conditioning units for data center applications; computer room air conditioning (“CRAC”) and computer room air handler (“CRAH”) units; hybrid fan coils; fan walls; chillers; condensers; condensing units; and liquid cooling solutions for high-density computing, including coolant distribution units (“CDU”) and immersion solutions. In addition, the Data Center Cooling business sells replacement parts, maintenance service and control solutions for existing equipment and new building management controls and systems. This business serves data center management customers, including large colocation, cloud service providers and hyperscale customers, as well as customers in the commercial and industrial sectors such as telecommunications, healthcare and commercial real estate.
In fiscal 2025, the data center cooling markets that we serve experienced a year of exceptionally strong growth. We expect strong growth in these markets in fiscal 2026, supported by an increasing reliance on digital technologies, specifically colocation and cloud usage. Market demand for data usage and storage continues to rise, driven by the increased use of IoT (Internet of Things) technology, which connects various devices through the internet, artificial intelligence and machine learning, smart phones, and digital transformation trends. In addition, artificial intelligence, machine learning, and other trends are driving increased high performance computing, which increases heat loads and the need for high-density cooling solutions such as hybrid and liquid cooling. Digital transformation trends driving market demand include an increased focus on the digital customer experience, as more transactions and customer interactions are taking place virtually through websites and mobile applications, and the increasing use of 5G technology and its application across global enterprise opportunities, particularly in the healthcare, manufacturing, and energy sectors.
Heat Transfer Products
The Heat Transfer Products business provides heat exchanger coils, primarily of round tube plate fin construction, to the HVAC&R markets in North America, Europe, and Asia. In addition, our Heat Transfer Products business provides coatings products and application services to the HVAC&R markets in North America and Europe. Our coatings products are designed to extend the life of equipment and components by protecting against corrosion and foreign matter. Customers for these products and services include manufacturers of commercial, industrial and residential HVAC&R equipment and systems, and distributors, contractors, and end users in a variety of applications, including commercial and residential HVAC, mobile air conditioning, refrigeration, data center management, and precision and industrial cooling.
In fiscal 2025, the HVAC&R markets to which we sell heat exchanger coils experienced declines. The most significant decline was in the European heat pump market, resulting from the delay in the adoption of heat pump technology. Looking ahead, we expect the commercial and residential markets that we serve will be relatively flat during fiscal 2026. Trends influencing our primary markets include refrigerant substitution and energy efficiency requirements, both of which are expected to benefit the commercial HVAC&R markets. Demand for more efficient HVAC&R systems in buildings and processes is driven by more stringent energy efficiency regulations. In addition, demand continues to be strong for corrosion resistant coatings, specifically for HVAC applications in coastal areas and other harsh environments.
HVAC&R
The HVAC&R business provides a wide array of solutions to heating; indoor air quality; commercial and industrial refrigeration; and industrial power generation, conversion, and transmission; and industrial process markets in North America, EMEA, and China.
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Heating products, primarily sold to the North American residential and commercial heating markets, include unit heaters (gas-fired, hydronic, electric and oil-fired); roof-mounted direct- and indirect-fired makeup air units; duct furnaces (indoor and outdoor); infrared units (high- and low-intensity); and perimeter heating products (cabinet unit heaters and convectors). The primary customers for these heating products are HVAC wholesalers, installers, and end users in a variety of residential, commercial and industrial applications, including residential garages, warehousing, manufacturing, and greenhouses. In fiscal 2025, the North American residential and commercial heating markets were relatively flat. While the heating market benefited from an extended winter season this year, the improvement was tempered by distributors reducing their elevated inventory stock levels. We expect the North American heating markets will experience modest growth in fiscal 2026. Longer term, we anticipate that increasing demands for energy efficiency as well as decarbonization and lower emission initiatives and regulations will impact the North American heating markets.
Indoor air quality products, primarily sold to the North American school and commercial HVAC markets, include single packaged unit ventilators, modular chillers, air handler units, condensing units, and ceiling cassettes. Customers for these indoor air quality products include mechanical contractors, HVAC wholesalers, installers, and end users in a variety of commercial and industrial applications. In fiscal 2025, the North American school and commercial HVAC markets experienced growth, with the strongest growth in the school and healthcare markets. We expect modest market growth in fiscal 2026 to be driven by continued demand in schools and commercial buildings. We expect the commercial HVAC market will continue to expand as businesses are increasingly prioritizing indoor air quality and energy-efficient HVAC solutions to ensure healthier environments for employees and customers and to lower operating costs.
Refrigeration products, primarily sold to the commercial and industrial refrigeration markets in EMEA, China, and North America, include evaporator unit coolers, remote condensers, fluid coolers, gas coolers, and dry and brine coolers. Customers for these coolers and refrigeration products primarily include wholesalers, distributors and resellers, commercial and industrial OEMs, as well as contractors and end users in a variety of commercial and industrial applications, including supermarkets, refrigerated warehouses, logistic centers, cold rooms, precision and industrial cooling, hospitality, hotels, and restaurants. In fiscal 2025, the commercial and industrial refrigeration markets experienced modest growth. We expect moderate growth in the global refrigeration markets in fiscal 2026, driven by improving standards of living in emerging countries, as well as more stringent energy efficiency regulations in Europe and North America, partially offset by anticipated investment delays in connection with general market and economic uncertainties. Regulations focused on eliminating fluorinated gases, which are man-made gases that contribute to the global greenhouse effect, have shifted investments from synthetic to natural gas, including carbon dioxide cooling solutions, and are driving growth in mature markets in Europe and North America.
In addition, the HVAC&R business sells motor and generator cooling coils, transformer oil coolers, radiators, dryers and industrial heat exchangers to the industrial power generation, conversion, and transmission and industrial process markets in EMEA, China, and North America. Customers for these products primarily include industrial OEMs as well as contractors and end users in industrial applications and for capital projects within the pulp and paper industry. In fiscal 2025, the pulp and paper sector experienced modest growth and demand for industrial power and process products also improved. We expect these markets will be stable in fiscal 2026, with an increase in demand for transformer oil cooler products, driven by higher electricity demands, and modest demand growth in the pulp and paper sector.
Performance Technologies Segment
The Performance Technologies segment provides products and solutions that enhance the performance of customer applications and develops solutions that provide mission critical energy for a variety of end market applications. The segment also provides solutions that increase fuel economy, reduce harmful emissions and maximize range in zero emission applications. The Performance Technologies segment designs and manufactures products and solutions using air-cooled and liquid-cooled technology for vehicular, stationary power, and industrial applications. In addition, the Performance Technologies segment provides advanced thermal solutions to zero-emission and hybrid commercial vehicle and off-highway customers.
The Performance Technologies segment has strategically aligned its teams around three primary market-based verticals: i) Air-Cooled Applications; ii) Liquid-Cooled Applications, and iii) Advanced Solutions.
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Air-Cooled Applications
The Air-Cooled Applications business provides air-cooled heat exchangers and modules for vehicular, mission critical stationary power, and industrial applications. This business primarily serves the commercial vehicle, off-highway and power generation markets in North America, Brazil, China, India, Europe and South Korea. It primarily sells powertrain cooling products, such as radiators, condensers, engine cooling modules, charge air coolers, fan shrouds, and surge tanks; and cooling module generator sets (“Gensets”). Its customers include commercial, medium- and heavy-duty truck and engine manufacturers; construction, agricultural, and mining equipment, and mission critical power generation manufacturers; and industrial manufacturers of material handling equipment, Gensets and compressors.
During fiscal 2025, the commercial vehicle markets in India and Brazil experienced moderate growth, yet the commercial vehicle market in North America experienced weakness. The agriculture markets in North America and Europe experienced significant declines and were negatively impacted by lower crop prices, higher interest rates and the continued military conflict in Ukraine. As these market conditions challenged the profitability of farming, farmers purchased less new equipment and agriculture OEMs reduced production and inventory levels throughout the year. The global construction and mining markets also experienced weakness, with the exception of the construction market in the U.S., which benefited from government programs incentivizing construction investments, such as the Inflation Reduction Act. The power generation markets in North America, Europe, and India saw strong growth during fiscal 2025, driven by new data center construction and demand for backup power Gensets for critical infrastructure, such as hospitals, mining and airports.
Looking ahead, we expect the commercial vehicle markets will largely continue trending similarly in fiscal 2026, with moderate growth in India and Brazil and market softness in North America. We expect the global agriculture markets to experience further declines in fiscal 2026, particularly in North America and Europe. While we are optimistic that crop prices may begin to rebound and interest rates may continue to trend favorably, which would aid the recovery of the agriculture markets, we do not anticipate significant recovery until fiscal 2027. In fiscal 2026, we expect modest growth in the global construction markets. We believe large-scale infrastructure development projects, including those for data centers and artificial intelligence, will benefit the construction markets. We expect these large-scale development projects will increase the need for construction equipment including loaders, excavators, cranes and bulldozers.
Liquid-Cooled Applications
The Liquid-Cooled Applications business provides heat exchangers for engine, stationary power, and industrial applications. This business primarily serves the commercial vehicle, automotive, and off-highway markets in North America, Europe, China, and India. Its products and solutions include aluminum and stainless steel engine oil coolers, exhaust gas recirculation (“EGR”) coolers, liquid charge air coolers, transmission and retarder oil coolers, chillers, and condensers. Its customers include commercial, medium- and heavy-duty truck engine manufacturers and automobile and light truck OEMs; and Tier-1 construction, agricultural equipment, and automotive module manufacturers.
During fiscal 2025, the global commercial vehicle markets served by our Liquid-Cooled Applications business experienced declines, with the largest declines in Europe and North America. While we expect market softness will continue, we are optimistic that the medium- and heavy-duty truck markets will begin to stabilize in fiscal 2026 based upon recent OEM order trends. In North America, we are monitoring the U.S. Environmental Protection Agency’s upcoming Greenhouse Gas Phase 3 regulations for commercial vehicles, which includes stricter emission regulations for heavy-duty trucks starting with the 2027 model year. If these regulations are significantly rolled back or eased, it would likely dampen the anticipated surge of heavy-duty truck orders prior to the new regulations going into effect. Regarding the automotive markets, the European and North American automotive markets experienced moderate declines during fiscal 2025, while the automotive market in China saw moderate growth compared with the prior year. We expect the global automotive markets will remain relatively weak during fiscal 2026 and are monitoring the current uncertainty in the marketplace related to the potential impacts on vehicle sales from trade conflicts and future emission requirements for internal combustion engines. The off-highway markets that we serve experienced declines in fiscal 2025 and we expect further weakness in these markets during fiscal 2026, particularly within the agriculture markets.
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Advanced Solutions
Our Advanced Solutions business provides products and solutions for zero-emission and hybrid vehicles. These products and solutions, which are primarily sold to the commercial vehicle, bus and specialty vehicle, off-highway and automotive markets in North America and Europe, include complete battery thermal management systems, electronics cooling packages, battery chillers, battery cooling plates, coolers and casings for electronics cooling, and coolers for electric axles (“e-axles”). Customers for these products include commercial vehicle, bus and specialty vehicle, off-highway, and automotive OEMs, e-axle producers, and power electronics providers.
The primary markets served by the Advanced Solutions business experienced strong growth during the first half of fiscal 2025, but subsequently slowed during the second half of the year. Uncertainty in the marketplace regarding federal government funding related to electric vehicles has resulted in market softness, which we expect will continue into fiscal 2026. Longer-term, we expect increased demand for electric vehicles and other lower-emission vehicle platforms, including fuel cell and hybrid platforms, will benefit the markets served by our Advanced Solutions business.
Geographic Areas
We maintain administrative organizations in all key geographic regions to facilitate customer support, development and testing, and other administrative functions. We operate in four continents and within the following countries:
North America
South America
Europe
Asia
Canada
Brazil
Germany
China
Mexico
Hungary
India
United States
Italy
South Korea
Netherlands
United Arab Emirates
Serbia
Spain
Sweden
United Kingdom
Our non-U.S. subsidiaries and affiliates manufacture and sell a number of data center cooling, heat transfer, HVAC&R and vehicular products, similar to those we produce in the U.S.
Exports
Export sales from the U.S. to foreign countries, as a percentage of consolidated net sales, were 7 percent in fiscal 2025, 2024, and 2023.
We believe our international presence positions us to benefit from the anticipated long-term growth of the global data center cooling, HVAC&R and vehicular markets. We are committed to increasing our involvement and investment in these international markets in the years ahead.
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Customer Dependence
Our ten largest customers, some of which are conglomerates or otherwise affiliated with one another, accounted for 43 percent of our consolidated net sales in fiscal 2025. In fiscal 2025, 2024 and 2023, our largest customer accounted for less than 10 percent of our net sales.
Our top customers operate primarily in the data center cooling, commercial air conditioning and refrigeration, commercial vehicle, off-highway, and automotive and light vehicle markets. Our top customers across both of our segments, listed alphabetically, include: Ascent; Carrier; Caterpillar; Deere; Stellantis (including Chrysler, Fiat, PSA-Peugeot-Citroen, and VM Motori); Trane; Volkswagen (including Audi, MAN, Porsche, Scania, and International); and Volvo (including Mack Trucks and Renault Trucks). In addition, our Climate Solutions segment includes significant sales to two global technology customers with which we are party to confidentiality agreements. Generally, we supply products to our customers on the basis of individual purchase orders received from them. When it is in the mutual interest of Modine and our customers, we utilize long-term sales agreements to minimize investment risks and provide the customer with a proven source of competitively-priced products. These contracts are typically three to five years in duration.
Backlog of Orders
Our operating segments maintain their own inventories and production schedules. We believe that our segment teams can manage their operations and production capacity effectively and efficiently based upon expected sales volume in fiscal 2026 and beyond.
Raw Materials
We purchase aluminum, copper, steel and stainless steel (nickel) from several domestic and foreign suppliers. In general, we do not rely on any one supplier for these materials, which are, for the most part, available from numerous sources in quantities required by us. While our suppliers may become constrained due to global demand, we typically do not experience raw material shortages and believe that our suppliers’ production of these metals will be adequate throughout the next fiscal year. We typically adjust metals pricing with our raw material suppliers on a monthly basis and our major fabricated component suppliers on a quarterly basis. When possible, we have included provisions within our long-term customer contracts which provide for adjustments to customer prices, on a prospective basis, based upon increases and decreases in the cost of key raw materials. When applicable, however, these contract provisions are limited to the underlying cost of the material based upon a relevant pricing source, such as the London Metal Exchange, American Metal Market, or Platts index, and typically do not include related metals premiums or fabrication costs. In addition, there can often be a three-month to one-year lag until the time that the price adjustments take effect.
Patents and Other Intellectual Property
We protect our intellectual property through patents, trademarks, trade secrets and copyrights. As a part of our ongoing R&D activities, we routinely seek patents on new products and processes. Our Patent Review Committee manages our intellectual property strategy and portfolio. We own or license numerous patents worldwide related to our products and operations. Also, because we have many product lines, we believe that our business as a whole is not materially dependent upon any particular patent or license, or any particular group of patents or licenses. We consider each of our patents, trademarks, and licenses to be of value and aggressively defend our rights throughout the world against infringement.
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Research and Development and Investments in Technology
We are committed to building better products that will, in turn, help create a better world. We are investing in products and technology to meet the challenging thermal management and air quality needs of our customers within the markets we serve. Our products are often aimed at solving difficult and complex heat transfer challenges requiring advanced thermal management solutions, while meeting the demand for increased energy efficiency and compliance with increasingly stringent regulations. Our heritage includes a depth and breadth of expertise in thermal management that, combined with our global manufacturing presence, standardized processes, and state-of-the-art technical resources, enables us to rapidly bring customized solutions to our customers.
We strive to be at the forefront of technological advances through both strategic inorganic investments in new technologies and meaningful internal R&D projects. R&D expenditures, including certain application engineering costs for specific customer solutions, totaled $35 million, $42 million, and $44 million in fiscal 2025, 2024, and 2023, respectively. Our R&D teams work closely with our customers on projects and system designs to ensure efficient and cost-effective development of technologies. We are strategically expanding our technology and product portfolio in the Data Center Cooling business within our Climate Solutions segment. We recognize the need for investment in this area as artificial intelligence, machine learning, and other trends are driving increased high performance computing, which increases heat loads and is driving the need for high-density cooling solutions. In fiscal 2025, we launched our CDU to provide critical cooling capacity for heat removal in high-density data center environments. As a result of our data center cooling technology investments, we offer our customers multiple efficient, customizable products and solutions to elevate their performance while meeting their sustainability targets around power and water usage. Regarding HVAC&R markets, we are focused on developing sustainable solutions that optimize thermal efficiency and manufacturing to support decarbonization efforts and the use of next generation refrigerants, which help minimize climate change potential. Regarding the vehicular markets, our development projects include solutions to optimize the efficiency and reliability of commercial and off-highway vehicles. In addition, we are developing solutions, including precision battery cooling, to optimize the performance of zero emission and hybrid vehicles. We also collaborate with industry, university, and government-sponsored research organizations that conduct research and provide data on practical applications in the markets we serve. In addition, we engage in external research projects that complement our strategic internal research initiatives to further leverage our significant thermal technology expertise and capabilities.
Quality Improvement
Globally, we drive quality improvement by maintaining the Global Modine Management System and executing the Modine Quality Strategy.
Our actions and decisions are driven by our purpose: Engineering a Cleaner, Healthier World™ . We are committed to evolving our product portfolio in pursuit of highly engineered, mission-critical thermal solutions. We strive to deliver customer-centric solutions with superior quality and dedicated service throughout the product lifecycle.
Through our integrated and process-oriented Global Modine Management System, the majority of our manufacturing facilities and administrative offices are registered to ISO 9001:2015 or IATF 16949:2016 standards, helping to ensure that our customers receive high quality products and services. We regularly monitor our process performance to meet or exceed rising customer expectations for products, services and quality.
Our Global Modine Management System supports our mission and values by applying well-defined improvement principles and leadership behaviors, all based on our 80/20 mindset to facilitate rapid improvements. We drive sustainable and systematic continual improvement throughout our company by utilizing the principles, processes and behaviors of the Global Modine Management System.
To ensure future quality, we continue to execute the Modine Quality Strategy, which focuses on people, process, performance, quality engineering and the Global Modine Management System.
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Environmental Matters
We are committed to Engineering a Cleaner, Healthier World™ and work every day to use our thermal management expertise to help our customers improve air quality, reduce energy and water consumption, lower harmful emissions, enable cleaner running vehicles and use more environmentally friendly refrigerants. In addition, we are committed to conducting business at our global locations in an environmentally conscious manner, and are embracing our responsibility to reduce the carbon footprint of our operations, products, and value chain and promoting renewal energy programs. During fiscal 2025, we became a signatory to the United Nations (“UN”) Global Compact, the world’s largest voluntary corporate sustainability initiative, as part of our commitment to align our operations and sustainability targets. The environmental principles within the UN Global Compact promote a greater sense of environmental responsibility and the development of environmentally friendly technologies.
In our global business operations, we are working to improve energy efficiency, minimize water waste, and increase the amount of waste recycled or diverted from landfills. We have empowered each of our global facilities to invest in facility upgrades and enhancements that support our sustainability goals. We are partnering with local utilities and government entities to implement renewal energy and conservation projects. We are utilizing resource tracking technologies and waste management programs, installing solar panel systems and more efficient LED lighting systems, replacing inefficient boilers and air compressors and installing improved building HVAC management systems. The majority of our facilities maintain Environmental Management System (“EMS”) certification to the international ISO14001 standard through independent third-party audits.
In regard to providing innovative, climate-resilient solutions that enable our customers to meet their sustainability goals, we are continuously driving energy efficiency across our product portfolio. Our Climate Solutions segment continues to develop high-efficiency solutions and products, particularly in the areas of data center cooling, heating, and indoor air quality. For example, our Data Center Cooling business is focused on providing solutions that optimize performance and reduce energy and water consumption. To do this, the Data Center Cooling business has invested in cooling technologies and has leveraged our deep thermal management expertise to expand its product portfolio. The business offers customers tailored air, liquid, and hybrid (air and liquid) cooling solutions to meet their needs and sustainability goals. We are also shifting our product portfolios toward lower-emission propellants and refrigerants, which greatly reduce the environmental impact of and enhance energy efficiency for our customers’ heating and cooling systems. Our Performance Technologies segment is focused on product and technology innovations to improve efficiency and lower carbon emissions. Our oil, charge-air, and EGR coolers, radiators, air conditioning condensers, and battery thermal management systems for trucks, buses, cars, specialty vehicles, and off-highway equipment allow both electric vehicle and internal combustion systems to run at optimal temperatures, which promotes better fuel efficiency, lower emissions, and improved vehicle lifespans, while still providing the vehicle performance that our customers expect.
Obligations for environmental-related remedial activities may arise at our facilities due to past practices, or as a result of a property purchase or sale. These obligations most often relate to sites where past operations followed practices that were considered acceptable under then-existing regulations, but now require investigative and/or remedial work to ensure appropriate environmental protection or where we are a successor to the obligations of prior owners and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance. We have recorded liabilities for environmental monitoring and remediation work at sites in the U.S. and abroad totaling $16 million at March 31, 2025.
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Seasonal Nature of Business
Our overall operating performance is generally not subject to a significant degree of seasonality. The Climate Solutions segment experiences some seasonality, as demand for HVAC&R products is affected by heating and cooling seasons, weather patterns, project construction, and other factors. Sales volume for our Climate Solutions heating products is generally stronger in our second and third fiscal quarters, corresponding with demand for these products. We generally expect sales volume for our Climate Solutions refrigeration, power generation and conversion, and heat transfer products to be higher during our first and second fiscal quarters due to the construction seasons in the northern hemisphere. Sales to Performance Technologies vehicular OEM customers are dependent upon market demand for new vehicles. However, our second fiscal quarter production schedules are typically impacted by customer summer shutdowns and our third fiscal quarter is affected by customer holiday shutdowns.
Working Capital
We manufacture products for the majority of customers on an as-ordered basis, which makes large inventories of finished products unnecessary, with the exception of certain products in our Climate Solutions segment. Within our Climate Solutions segment, we maintain varying levels of finished goods inventory, primarily related to our heating and data center cooling businesses, due to seasonal demand and project construction schedules, respectively. In Brazil, within our Performance Technologies segment, we maintain aftermarket product inventory in order to timely meet customer needs in the Brazilian commercial vehicle and automotive aftermarkets. We have not experienced a significant number of returned products within any of our businesses.
Human Capital Resource Management
As of March 31, 2025, we employed approximately 11,300 persons worldwide.
We recognize that our continued success is a direct result of the quality of our people. As such, we strive to be an employer of choice in every community in which we operate. We do this by fostering a fair, respectful, and safe work environment for our people in alignment with our core values.
We have identified priorities that we believe are essential to attract, develop and retain highly-qualified talent. These include, among others, i) providing career development programs; ii) promoting health and safety; iii) fostering people-centric values; and iv) providing competitive compensation and benefits.
Workforce development
Our operations require expertise across a wide range of disciplines, from engineering and manufacturing to accounting and finance to information technology. Our human resources team, in connection with our Company leaders across the globe, work to hire talented individuals who align with our values.
All of our new employees go through a comprehensive onboarding program with their managers to ensure proper training is provided to succeed in their respective roles. We also encourage our employees to further develop their skills through both internal and external training programs.
We are committed to growing our employees’ capabilities. Through our Performance and Development Process (“PDP”), we provide all salaried employees with a consistent, structured development and performance review experience. The PDP provides employees with a development pathway that focuses on both annual performance goals and longer-term career development. In addition, we perform strategic talent reviews and succession planning on a regular cadence.
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Health and safety
The health and safety of our employees is paramount to us. We are committed to conducting our business operations in a safe and healthy manner. We employ a behavior-based safety program which proactively seeks to correct at-risk behaviors while positively reinforcing safe behaviors. We educate and train employees on safe practices and promote personal accountability and responsibility for safety at all levels of our organization.
We have consistently out-performed the private-industry Recordable Incident Rate (“RIR” as defined by the Occupational Safety and Health Administration) average for the manufacturing sector, which was 2.8 in 2023, the most recent year for which data is available. During fiscal 2025, we recorded an RIR of 1.0, well below the manufacturing sector average.
People centric
As a global employer, we are committed to providing working environments where our employees feel supported and valued. We treat all people equally and with dignity and respect. We appreciate our employees and their contributions, from the fresh perspectives of our interns to the seasoned experience of our longstanding professionals. We create relationships where our employees feel valued and appreciated for who they are and what they can contribute. We reward merit and accountability. One way we formally recognize accomplishments of our employees is through our Modine Values People Awards. In addition, we focus on qualitative indicators across our global operations, such as the movement and promotion of employees between our global business units.
Competitive compensation and benefits
We offer our employees competitive compensation and comprehensive benefit packages. We regularly benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain talent throughout our organization.
Available Information
Through our website, www.modine.com (Investors link), we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8- K, proxy statements, other Securities Exchange Act reports and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Our reports are also available free of charge on the SEC’s website, www.sec.gov. Also available free of charge on our website are the following corporate governance documents, among others:
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Code of Conduct, which is applicable to all Modine directors and employees, including our executive officers;
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Guidelines on Corporate Governance;
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Audit Committee Charter;
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Human Capital and Compensation Committee Charter;
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Corporate Governance and Nominating Committee Charter; and
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Technology Committee Charter.
All of the reports and corporate governance documents referenced above and other materials relating to corporate governance may also be obtained without charge by contacting Corporate Secretary, Modine Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403- 2552. We do not intend to incorporate our internet website and the information contained therein or incorporated therein into this Annual Report on Form 10-K.
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