Modine Manufacturing Company (NYSE:MOD) Q3 2023 Earnings Call Transcript

Steve Ferazani: Okay. And just a quick question on that. So you’re saying $140 million at peak production with EV. The last number I had written down was $90 million. Have you picked up that one order wasn’t $50 million, was it? And then just in general, how you think that production ramp might work as component shortage disease.

Neil Brinker: Yes, so that’s incremental. If you combine all of the wins today, in addition to that other order that we won, we’re seeing those forecast increase as well. So it’s an aggregate of the trends that we see in that space. We’re — the team has done a really good job in terms of managing its inventory and managing our supply chain so that we can hit those targets. And so much so that they’ve launched this new product that we put a press release out for the Alcon-BTMS which actually has a different technology and we’re able to source the components where we need to source not only locally but we also do some of our own manufacturing for those components.

Steve Ferazani: Great. Thanks. You got it.

Neil Brinker: Thank you, Steve.

Operator: Our next question comes from Tim Moore with EF Hutton .

Unidentified Analyst: Congratulations on the impressive EPS growth in the quarter and the continued execution of the 80/20 strategy. My first question is related to the evolution to full systems offerings with aftermarket maintenance packages for data centers, heating into air quality and EVs. Do you have to ramp up hiring there and open any additional service locations your major customers?

Neil Brinker: Yes, absolutely. And thanks for the question, Tim. This is Neil. Certainly, that’s an area where we want to expand in North America. We have a very good service organization that supports our business in the U.K. as well as partnerships that we use in Continental Europe. That’s an area where we’re starting to put together plans on the service side to help support some of our largest customers, particularly in the Virginia, Northern Virginia area.

Unidentified Analyst: Great. That’s helpful. And then maybe just more on the Virginia topic for your facility for the data centers, the precooling chillers for North America. When do you think you might be ramped up to generate $100 million in sales run rate? Will that take another 3 or 6 months? Or are you getting close to that?

Neil Brinker: So yes, we produced our first chillers off the production line last quarter. We’re ramping up our capacity there. We’ve added some additional capacity at the same time. So we believe we have the ability to hit triple digits and we put that out in the most recent press release that I believe was 2 years was, what — $150 million .

Unidentified Analyst: Yes. $100 million ?

Neil Brinker: $100 million . For U.S. data center production, so that would include chillers plus the other products that we produce and that would be in fiscal ’24. Does that help, Tim?

Unidentified Analyst: That does. No, it seems like you’re on track for that. I just want to make sure that was going well. And just switching gears, you mentioned the Serbia, the third facility for heat up production. How is your initial read for calendar 2023 for the demand for heat pumps from Europe and those incentives there? Are those still holding up? And do you think 2023 could be maybe as good as a year as 2022 was?