Adjusted operating margin declined 200 basis points year-over-year but was 100 basis points better than forecast, with SG&A expense reductions helping offset volume-related pressures.
Consolidated operating margins were 6.2% on a reported basis and 8.3% on an adjusted basis, reflecting strong decremental margins in the mid-teens.
Europe/Middle East sales declined roughly 11%, South America sales decreased about 5%, North America sales decreased approximately 32%, and Asia Pacific/Africa sales decreased 6%, all excluding currency impacts.
Free cash flow for the first half of 2025 was $63 million, approximately $390 million better than the same period in 2024.
Net sales totaled over $2.6 billion, down approximately 19% year-over-year or 11% excluding the Grain & Protein business divested last year.
Production hours were down approximately 16% compared to Q2 2024, with a 50%+ reduction in North America due to dealer inventory reduction efforts.
Replacement part sales were approximately $503 million in Q2, up 3% year-over-year on a reported basis and down 1% excluding currency effects.
Adjusted earnings per share increased 2% to $1.06.
Adjusted EBITDA margin was 14.9%, down 40 basis points year-over-year, reflecting temporary impacts from lower Performance Technologies volume and increased investments in Climate Solutions.
Climate Solutions segment saw a 10% improvement in adjusted EBITDA with a 20% adjusted EBITDA margin.
Data center sales grew 15% year-over-year, driven by North America growth.
Free cash flow was $200,000, lower than prior year due to higher inventory levels in Climate Solutions and $5 million cash payments related to restructuring and acquisition costs.
Gross margin declined 40 basis points to 24.2%, primarily due to lower sales and higher materials costs in Performance Technologies.
HVAC Technologies sales increased 34%, including $10 million revenue contribution from recent acquisitions AbsolutAire and L.B. White.
Leverage ratio remains strong at 1.0, with extended credit facility maturity and upside providing liquidity and flexibility.
Modine reported a 3% increase in total company sales for Q1 fiscal 2026, driven primarily by an 11% revenue increase in the Climate Solutions segment.
Net debt increased by $123 million to $403 million, related to acquisitions completed during the quarter.
Performance Technologies segment revenues declined 8%, with adjusted EBITDA down 14% and margin decreasing 100 basis points to 13.1%, impacted by lower sales volume and higher material costs.
Adjusted operating income margin was 14.5% and adjusted EBITDA margin was 17.8%, with adjusted EPS increasing 11% year-over-year.
Agtech backlog increased 71%, despite delays in controlled environment agriculture projects, with adjusted EBITDA margin improving 20 basis points.
Gibraltar Industries delivered 14% adjusted sales growth in Q2 2025, driven by acquisitions in metal roofing and structures, participation gains in building accessories, and growth in infrastructure.
Infrastructure net sales grew 1.6%, with operating and EBITDA margins improving by approximately 300 basis points each.
Operating cash flow was $44 million and free cash flow was $25 million, with capital expenditures at 5.9% of sales in the quarter.
Residential segment sales increased 8.9%, led by metal roofing acquisitions, while organic revenue was slightly down less than 1%.