Modine Manufacturing Co (NYSE:MOD) stock fell 8.30% (As on May 21, 11:17:59 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fourth quarter results and provided an outlook for fiscal 2026 sales growth. Gross profit increased 23 percent to $166.0 million and gross margin improved by 330 basis points to 25.7 percent. The gross margin improvement was primarily driven by favorable sales volume and mix in the Climate Solutions segment, as well as the benefits from restructuring actions and cost-saving initiatives in the Performance Technologies segment. Operating income was $74.5 million, compared to $46.8 million in the prior year, an increase of 59 percent. The increase was driven by higher gross profit on higher sales volume, partially offset by higher SG&A expenses as compared to the prior year. The Company recorded $10.0 million of restructuring expenses during the fourth quarter of fiscal 2025, primarily for severance expenses. Net earnings of $50.1 million increased $24.0 million, or 92 percent, compared to $26.1 million in the prior year. Adjusted EBITDA, which excludes restructuring expenses, certain other charges, interest expense, the provision for income taxes, and depreciation and amortization expense, was $104.1 million, an increase of $25.3 million, or 32 percent, compared to $78.8 million in the prior year.

MOD in the first quarter of FY25 has reported the adjusted earnings per share of $1.12, beating the analysts’ estimates for the adjusted earnings per share of 96 cents. The company had reported the adjusted revenue growth of 7 percent to $647.2 million in the first quarter of FY25, beating the analysts’ estimates for revenue of $634.49 million. This is driven by 28% growth in the Climate Solutions segment. This was partially offset by an 11% decline in Performance Technologies sales due to weakness in automotive and other vehicular end markets.

Additionally, the Company reported another year of strong cash flow. Net cash provided by operating activities for the year ended March 31, 2025, was $213.3 million, a decrease of $1.3 million compared to the prior year. Free cash flow for the year ended March 31, 2025, was $129.3 million, an increase of $2.4 million from the prior year. Cash payments for restructuring activities, acquisition and integration costs, and environmental charges during the year ended March 31, 2025, increased by $17.6 million from the prior year to $31.8 million.

For fiscal 2026, Modine expects net sales growth of 2% to 10%. The company also forecasts adjusted EBITDA of $420 million to $450 million, representing growth of 7% to 15% compared to fiscal 2025.