Company Overview
Modine Manufacturing is emerging as a prime beneficiary of the AI data center infrastructure boom, and the company’s recent actions demonstrate this isn’t just talk – it’s aggressive execution. On November 17th – just two weeks ago – Modine officially opened a new 155,000-square-foot manufacturing facility in Franklin, Wisconsin, dedicated to expanding production of Airedale by Modine data center cooling solutions. This facility is the first tangible result of a $100 million multi-site investment announced in July 2025 that includes a new facility in Grand Prairie, Texas, and expansions in Grenada, Mississippi and Jefferson City, Missouri. The Franklin site alone will create more than 300 jobs by March 2026, ramping to approximately 430 employees within three years.
The timing couldn’t be more strategic. At its most recent earnings call in late October, CEO Neil Brinker announced that management now projects data center business revenue could reach $2 billion by fiscal 2028 – effectively doubling from approximately $1 billion in fiscal 2026. This extraordinary growth trajectory is driven by what the company describes as “unprecedented demand” from U.S. hyperscale and colocation data center operators, particularly as AI workloads create massive cooling requirements. Modine’s Climate Solutions segment, which houses the data center business, reported 42% revenue growth in Q3 fiscal 2025 (ended December 31, 2024) to $360.8 million, with the segment achieving 28.6% gross margins – 100 basis points higher than the prior year. The company reaffirmed its fiscal 2025 guidance calling for the third consecutive year of record results.
Key Technical and Fundamental Drivers
Recent Facility Opening → 155K Sq. Ft. Expansion
Modine opened its new Franklin, Wisconsin manufacturing facility on November 17th (two weeks ago) as part of a $100M investment to scale U.S. data center cooling capacity, creating 300+ jobs by March 2026 and ramping to 430 employees within three years.
Revenue Doubling Target → $2B by Fiscal 2028
Management projects data center business revenue could reach $2 billion by fiscal 2028, effectively doubling from approximately $1 billion in fiscal 2026, driven by unprecedented AI-driven demand from hyperscale and colocation operators.
Strong Q3 Results → 42% Climate Solutions Growth
Q3 fiscal 2025 showed Climate Solutions segment revenue surged 42% to $360.8M including $73.6M from the Scott Springfield acquisition, with gross margins expanding 100 basis points to 28.6% driven by data center cooling demand.
UBS Initiation → Buy Rating November 20th
UBS initiated coverage with a Buy rating on November 20th (less than two weeks ago), citing Modine’s strategic expansion in the data center market and positioning at the intersection of AI infrastructure growth and thermal management expertise.
Multiple Analyst Upgrades → $185-$200 Targets
Following strong Q2 results, DA Davidson raised its price target to $200 (from $185), Oppenheimer to $185 (from $180), and Roth MKM maintained Buy, all citing data center visibility extending “3-5 years out” according to management.
Market Takeaway
Modine Manufacturing represents a compelling way to invest in the AI infrastructure buildout without paying nosebleed valuations for pure-play semiconductor or hyperscaler stocks. The November 17th facility opening in Wisconsin wasn’t just a ribbon-cutting ceremony – it’s physical proof that Modine is aggressively scaling capacity to meet what management describes as a multi-year data center cooling supercycle. With Wisconsin emerging as a data center hub due to abundant water supply, reliable electricity, and naturally cool climate (all critical for energy-intensive AI facilities), Modine’s geographic positioning is strategic.
What makes this particularly interesting is the visibility management cited on its recent earnings calls – describing data center pipeline visibility extending “3-5 years out” with confirmed projects from hyperscale customers like Amazon and Google. This isn’t speculative demand; these are contracted projects driving the $100 million capacity expansion. The company’s acquisition of Scott Springfield Manufacturing earlier in 2024 has proven exceptionally successful, contributing $73.6 million in Q3 revenue alone while providing revenue synergies through cross-selling opportunities. The integration is accelerating Modine’s ability to serve both the liquid cooling and air cooling segments of the market as data centers increasingly deploy hybrid solutions for high-density AI compute.
Trading at approximately 14x forward EV/EBITDA – a discount to some thermal management peers – Modine offers attractive valuation considering the growth trajectory. The stock has performed well (up significantly year-to-date), but analyst targets ranging from $185-$200 suggest continued upside from current levels around $150. The key risk is execution on the capacity ramp and potential cyclical weakness in the Performance Technologies segment (automotive/industrial), but management’s margin discipline and the structural nature of data center cooling demand provide downside protection. For investors seeking leveraged exposure to AI infrastructure through a 100+ year-old manufacturing company that’s successfully pivoting into the hottest growth market in industrials, Modine offers a unique risk-reward profile heading into 2026.