Good morning! Welcome to our conference call to discuss this morning's joint announcement regarding the future of Modine's Performance Technologies segment. I'm joined on this call by Neil Brinker, our President and Chief Executive Officer, and Mick Lucareli, our Executive Vice President and Chief Financial Officer. The slides that we'll be using for today's presentation are available on the Investor Relations section of our website, modine.com. On slide two of that deck is our notice regarding forward-looking statements. This call will contain forward-looking statements as outlined in our press release, as well as in our company's filings with the Securities and Exchange Commission. With that, I'm pleased to turn the call over to Neil.
Thank you, Kathy, and good morning, everyone. We appreciate you all joining us for this call on short notice. If you were unable to join the Gentherm-hosted investor call earlier this morning, I encourage you to listen to the replay. On this call, I will provide a brief overview of the transaction and then focus on the significant benefits for Modine. Please turn to slide three. Our team has been on a strategic and transformational journey, which was launched at our first Investor Day back in 2022. Our goals have been consistent and transparent throughout the process, and we've established a track record of exceeding our targets. We have a long history of leveraging critical thermal applications to build a top-performing, diversified industrial company while accelerating growth and improving our margin profile.
We've seen great success over the last five years as we've made 80/20 a core part of our DNA and realigned our product portfolio to better capitalize on favorable secular megatrends. Today's announcement is both historic and extremely exciting, accelerating our strategic transformation. Please turn to slide four. Since beginning our 80/20 journey, we've been executing a focused plan to evolve our portfolio. With 6 divestitures and 6 acquisitions over the past 5 years, we've made tremendous progress shifting our business mix towards high growth, high margin businesses, driving improved profitability and creating substantial shareholder value. As we previously discussed, we've been looking to exit non-strategic portions of our Performance Technologies segment, including our automotive business. While that work was ongoing, the opportunity to combine the PT business with Gentherm presented itself.
After a thorough evaluation, we determined this is the best path forward for our shareholders and all of our stakeholders. This is the right transaction at the right time to maximize future shareholder value in both business segments. The tax-free spinoff and combination of our Performance Technologies business with Gentherm presents a unique and compelling opportunity to accelerate the evolution of our portfolio in a way that we believe will immediately benefit our shareholders and allows the remaining Modine to become a high-growth, pure-play Climate Solutions company. It is also clear that Gentherm is the right natural owner of the PT business as it looks to scale through a broader portfolio of thermal management solutions and increase its presence in the power generation, commercial, and heavy-duty end markets.
Our shareholders will be able to participate in the upside potential of the powerful combination of Performance Technologies business with Gentherm as a combined company positioned to drive profitable growth. Please turn to slide five. This transaction creates two strong, focused companies, each equipped to serve its end markets more effectively, accelerate growth, and drive long-term value for shareholders, customers, and employees. Combining our Performance Technologies business with Gentherm will establish a scaled leader in thermal management solutions with expanded technologies and capabilities in precision flow management. The combined company will be well-positioned to serve a broad range of customers with expanded, highly competitive product portfolio. For Modine, this is the start of an exciting chapter in our long history as a pure-play Climate Solutions company. This strategic step is designed to unlock significant additional value and accelerate growth in attractive end markets.
The transaction enables us to sharpen our focus on the climate solution segment. With a streamlined business model, we will be better positioned to allocate capital and resources to high growth, high return initiatives and drive long-term shareholder value. This includes completing our capacity expansion for data center cooling products and exploring further inorganic growth opportunities. As an 80/20 company, the new Modine will be more agile, allowing us to be more responsive to a dynamic and accelerating industry demands and ensuring that we remain a premier partner to our customers. This is a pivotal moment for Modine and our stakeholders. We are creating a new leader in the vehicular thermal management while transforming Modine into a more focused, high-growth company dedicated to innovating Climate Solutions. Moving to slide six, I'd like to quickly touch on the transaction structure and highlights.
The transaction is structured as a Reverse Morris Trust, in which Performance Technologies will be spun off and simultaneously combined with Gentherm. The relative sizes of the two businesses, along with the substantial overlap in shareholders, presents a unique and compelling value, as it allows the transaction to be tax-free for Modine and our shareholders. The transaction values our Performance Technologies business at approximately $1 billion or 6.8 times our trailing twelve-month Adjusted EBITDA as of September 30, 2025. A fair valuation that reflects both the cost structure improvements we have achieved and the additional margin upside as industry volumes recover. At closing, Modine will receive $210 million in cash, subject to certain adjustments, and our shareholders will get approximately $790 million of Gentherm stock.
The structure provides Modine shareholders with 40% ownership of the combined company and 100% ownership of Modine. We expect the transaction to close in the fourth quarter of calendar year 2026, subject to receipt of Gentherm shareholder approval and other customary closing conditions, including required regulatory approvals and certain tax opinions. Please turn to Slide seven. Let's now take a closer look at the new Modine following the transaction. The strategic rationale is compelling. It accelerates our transformation into a market-leading Climate Solutions company focused on high growth, high margin opportunities. With our long-standing leadership in thermal technologies, we will expand product development and innovation to support next generation requirements, especially in the rapidly growing data center cooling market. Over the 12 months ending September 30, 2025, our Climate Solutions segment generated $1.6 billion in revenue.
We expect revenue growth of 35%-40% to nearly $2 billion this fiscal year, driven by strong organic growth in the data center market and recent acquisitions within HVAC technologies. On a pro forma basis, we fully expect a significant profit margin improvement based on previous Climate Solutions results. The segment delivered strong profitability, with trailing twelve months Adjusted EBITDA margin of 19.6%. This represents $307 million of Adjusted EBITDA. Meaningful growth in revenue and EBITDA is expected for the Climate Solutions segment in fiscal 2026, a solid financial foundation for future growth. I want to highlight that these numbers reference Climate S olutions previously reported segment results. We do not anticipate any significant change in our corporate costs, especially given our plans to replace the PT revenue with future growth.
We will report recast financial statements after the close of the transaction. Revenue will remain well-diversified across end markets, with data centers representing 45% of last year's segment revenue, positioning us squarely in one of the fastest-growing sectors of the global economy. We will continue to maintain leading positions in HVAC and Refrigeration markets, including coils, coolers, heating, indoor air quality, and coatings. In addition to these benefits, we have a streamlined business model and sharper management focus that will enhance our ability to pursue both organic and inorganic growth. In short, this transaction results in a simplified and more powerful operating structure. The new Modine will operate through two primary business segments: data centers and commercial HVAC & R. We plan to begin reporting our current Climate Solutions business under this structure in the first quarter of fiscal 2027.
Clearly, this transaction creates a financially stronger, more focused, and significantly more agile Modine, well-positioned to lead and win in our most attractive Climate Solutions markets. Please turn to Slide eight. I'd now like to take a closer look at our data center business and explain why we're so excited about this market, and why we believe we can continue to generate top-quartile organic growth and compound shareholder value. Over the last 2 years, our data center business has grown an impressive 93% CAGR. We believe that the market demand for thermal cooling will continue for the next 5-10 years, and we are continuing to invest to support the future growth. Based on our current targets, we anticipate 50%-70% annual growth over the next 2 years, putting us well on track to exceed our previous $2 billion revenue goal for fiscal 2028.
Within the next 12-24 months, we expect to replace the $1 billion of Performance Technologies revenue with revenue from the data center market alone. We recognize that recent commentary has raised questions about the future of data center cooling, given advancements in chip technologies. I want to address this directly. Our suite of technologies is positioned to benefit from this evolution. The fundamental need to remove the heat from data center is not decreasing. It's intensifying. It is important to note that the heat can be removed in multiple ways, both at the chip level and then at the data hall. That is exactly why we have built a comprehensive suite of cooling solutions that address the diverse needs of our customers. This includes adiabatic solutions from our Scott Springfield product line and advanced free cooling technologies from our Airedale portfolio.
Our success is rooted in a century of thermal management expertise, enabling us to design solutions that meet both today's requirements and tomorrow's demands. We've also cultivated a diverse customer list with broad exposure to both traditional data centers and those dedicated to high-performance computing. Our customer list spans leading hyperscalers as well as colocation data center customers, providing us with exposure to a varied chip design, manufacturers, and rack architectures. Our customers are at the leading edge of chip technology development, and we're working closely with them to design the data centers of the future, whether they're modular solutions, higher capacity chillers and air handling units, or more efficient free cooling solutions. As data center cooling, architecture, and customers need to evolve, the new Modine will be leaner, more focused, and more readily capable of meeting those demands.
We are committed to being a technology leader because that is what we do best. Please turn to Slide nine. This slide gives you a sense of our excitement about this transaction and the potential for the new Modine. The Climate Solutions business's track record speaks for itself. From fiscal 2022 through the trailing twelve-month period, our Climate Solutions segment has compounded revenue growth at 15% and grown Adjusted EBITDA at 34%.... We expect the simplified operating structure of the new Modine to enhance our ability to grow in our targeted markets and improve our organic growth CAGR. Please turn to Slide ten. The value proposition of the new Modine is clearly supported by strong underlying fundamentals. We've demonstrated over the past few years, our ability to deliver growth rates that are among the highest in the industry.
We've done this through our positioning as a technology leader for mission-critical applications, and our unique ability to meet the rapidly changing industry demand for complex and other bespoke cooling solutions. All of this has produced an attractive financial profile and a clear ability to accelerate both organic and inorganic investment opportunities to advance our industry-leading position. We believe this strong performance, coupled with a simplified operating structure, focused on high growth verticals, provides the opportunity to earn a market valuation that is more in line with our comparable industrial peers. Please turn to slide 11. In conclusion, we are incredibly excited about this strategic step for Modine and for our shareholders. This is a meaningful acceleration of our transformation and greatly enhances the ability of both the PT business and the new Modine to grow and drive shareholder value through more focused operating structures.
We believe that combining our Performance Technologies business with Gentherm through the RMT structure, creates the strongest path for growth and success, providing our shareholders with a more focused, high-growth new Modine, while allowing them to benefit from the substantial anticipated future market recovery in PT end markets through the retained 40% ownership in the combined company. For the new Modine, we will build on the progress we've made in accelerating growth and improving margins. With sharper focus on product development, organic growth, and targeted acquisitions, we will continue to evolve our portfolio and compound shareholder value. With that, we will now take your questions.
Thank you. If you would like to ask a question at this time, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for our first question. The first question comes from Matt Summerville with D.A. Davidson. Please proceed.
Thanks. Excuse me. Morning. Couple questions. First, can you address how we should be thinking about any stranded costs associated with executing this transaction? You mentioned probably holding corporate expense flat, but I'm wondering if there's another bucket of stranded costs we need to be thinking about. And if also, Neil, you could put a little bit of a finer point on the why now for PT, given that cyclical upturn is still in front of us, and then I have a follow-up or two. Thank you.
Yeah. Hey, Matt, good morning. So I'll take the first one, Neil can do the second one. The good news is, we're not anticipating any significant stranded costs. So as you mentioned, we think our corporate costs are gonna remain relatively flat. And in addition, as Neil went through it, if you think about while we will be transitioning away from the PT business and merging that with Gentherm, the rate of growth in the Climate Solutions business is so great that those corporate resources and costs are gonna be fully absorbed in the new Modine going forward. And it's both CS and PT really look kind of pro forma, the way we've been representing them in on our financial statements over the last couple of years, which is good.
There will be some one-time deal costs, but, nothing then in addition, with regards to what you might consider, material stranded costs. Neil?
Yeah. Thanks, Matt. As you know, this is a just a natural step in the transformation as we move towards becoming a pure- play Climate Solutions company. So, you know, streamlining the business model, allowing us to apply our resources towards these large initiatives in the data center market, commercial HVAC and refrigeration, while at the same time, I think is key, is that it Performance Technologies will expand Gentherm's portfolio, and it's very complementary. So altogether, the transaction established two stronger, more focused companies. And with the 40-40% ownership of the combined company, there's still opportunity for the shareholders to participate in substantial anticipated market recovery.
As a follow-up, I'm, I'm curious, as you just thinking about how 80/20 sort of works, if you are repositioning your resource base and putting even more energy and emphasis and R&D dollars into the data center business, could this theoretically unlock an even greater iteration of growth in that business versus what you're even talking about today? And, and is your, your conviction on the 50-70, is that based on incoming orders? Is that based on backlog funnel, or is it more a function of this capacity iteration? And then just to clarify, what's the base we should extrapolate that 50%-70% growth CAGR off of? Thank you, guys.
Yeah, Matt, it's a combination of—I mean, you, you hit on all the variables there, and it's a combination of all those variables. So when we think about that, and we, we project these numbers that we've projected, the confidence behind it is our order books that we're seeing. The backlog that we have visibility of, our, our comfort as we continue to ramp these facilities and we can continue to execute. And, you know, that is what gives us comfort in terms of why we, we would suggest what we can do with the data center.
Streamlined, focused, the CapEx deployment, the project plan, the backlog, it's all there to give us the ability to move and be very excited about this market and being very focused on the execution that we need to deliver on over the next 12-24 months.
Yeah, Matt, real quick, it's Mick. With regards to the growth rate, we're taking that off of where we think we'll be, we've guided you this year. So I would say, think of it as the starting point. It's a billion-dollar starting point, and then we see $50 million-$70 million in each of the next two fiscal years.
Perfect. I'll get back in queue. Thanks, guys.
The next question comes from David Tarantino with KeyBanc Capital. Please proceed.
Hey, good morning. Congratulations, everyone.
Thank you.
Maybe just thinking about 80/20 as it relates to climate. Obviously, it, the focus was more on PT previously, but could you talk about the areas of opportunity you see in climate to drive more meaningful 80/20 improvement once you have that more streamlined focus?
Yeah, that's a, that's a fair question. So when I think about 80/20, I think about utilizing 80/20, the processes, the techniques, the tools, and then just how it's organically in our DNA to bring stability to the organization, make sure that you're, you're leaning into your most profitable opportunities. And the ultimate end game of 80/20 is growth. Growth. Reduce the complexity, reduce the noise, get focused on what's most important, and put your resources behind the best potential. So when we think about 80/20, it's not just a mechanism for profit improvement, it's a mechanism for high growth. So when we think about the, the Climate Solutions business, that's what, exactly what we're doing with the CapEx deployment, the resource deployment, how we align the organization on data centers, because we've done a lot in terms of profitability there, and it's about execution and growth.
When I think about the other parts of the climate solution business, same thing. The reason why we're acquiring in the HVAC side is because we continue to see that we roll up these acquisitions, it's about growth, it's about channel expansion, it's about cross-selling. So when we think about 80/20, the ultimate end game is growth, growth with a profitable profile. So it's a, it's a combination of many things, but at the end of the day, it's about driving high growth.
Okay, great. That's helpful. And then maybe to follow up on Matt's question in data center, like, how does the greater long-term target, thinking about kind of the greater than $2 billion, and the more streamlined portfolio change the way we should think about the investment curve within data center specifically?
Yeah, this is Mick. From a CapEx perspective, we'll probably be this year. You know, this year was a big lift for us, so we'll probably be in that $125 million-$150 million type number, and I'd expect that to be a similar number next year to support that growth that Neil and I covered, you know. That'll put us. We'll be, we'll be, have plenty of capacity to be in that $2 billion-$3 billion revenue range based on that capital investment.
Okay, great. Thanks, guys.
The next question comes from Neal Burk with UBS. Please proceed.
Hey, thanks for the question. So it sounds like you're very confident in the $2 billion target or over $2 billion target in data center sales by fiscal 2028. Like, I know that part of that plan was based on converting some performance technology production lines to data center. Like, does this change kind of how you get to that over $2 billion target?
No, it does not. You're correct, we are confident in that, and it was one facility that we were converting that's not in the perimeter.
Okay, understood. And with, I mean, with HVAC being a bigger piece of the mix now going forward, I know there's a lot of moving parts with, like, M&A, but can you just kind of give us an update on what kind of, like, long-term growth profile we should think about the HVAC business? Is this kind of a mid-single-digit organic grower? And anything on kind of incremental margins through the cycle?
Yeah. As we think about the remaining business, the climate business, based on the guidance, you know, we provided, we should have an HVAC business, the commercial ventilation and heating business that's north of $350 million, and that should grow organically high single digits, and our goal would be through more M&A to grow that at a, you know, low double-digit rate. We also have a nice about $200 million between coatings and refrigeration and process cooling, and that should have a really nice, similar high single digit type organic growth rate. And then the balance of the business is really around our coils business. As Neil's talked before, we really peel that onion back, and within there, applying 80/20.
Parts of coils will grow and expand, and others, we're just gonna optimize the profit and the cash flow on the out of that side. So. And then obviously, growing up that the other built-in type run rate this year off the data center side. Hope that helps, Neil.
That's very helpful. Thank you.
The next question comes from Noah Kaye with Oppenheimer. Please proceed.
Hey, congratulations on the news, and thanks for taking the questions. I just wanna double-click on the consideration around the data center capacity ramp and where the PT exit fits in there. You mentioned it shouldn't impact from a facilities perspective. How about from a staffing perspective? And then maybe, you know, and it doesn't look like you're updating, obviously, 2026 numbers today. We appreciate that, but, you know, any implications for how the capacity ramp is going right now?
Yeah. Thank you, Noah. So, Noah, we've had, as we operated in two independent segments between PT and Climate Solutions, we've had the organization split and established over time, and we made some iterations and some changes to it, you know, several quarters back. But we're stable, and we have exactly what we need, so we don't anticipate any issues there at all. So that, that won't be a concern. We've got what we need in order to execute it. It's a matter of just getting the execution done. The second part of your question?
Just, just how the capacity ramp, you know, is proceeding. Is basically on track, and this doesn't affect the trajectory.
Yes. Yeah, we're on track. It doesn't affect the trajectory. We have a strong order intake. We have very strong order intake. We've got a growing backlog. It gives us this confidence to come out and say what we're saying today. The fact that we're executing at the level that we are, and we're learning from the previous quarters in terms of our launch, and we're learning fast, I'm impressed with what the team's been capable of doing. That's why we feel comfortable about this today, Noah.
Yeah. And, Neil, I wanna ask you a follow-up on margins. You know, in the past, the company shared a target of, you know, 20%-23% EBITDA margins in Climate Solutions. You know, obviously, with a higher growth trajectory now for data center and a sort of a more focused business, how should we think about where Climate Solutions margins pre-corporate costs can go over the next few years?
Yeah, I think, you know, those numbers make a lot of sense in a stable environment. As we continue to insert change here and grow, we're gonna see some inefficiencies until we get a lot of this production capacity in place. So you think about that for the next couple quarters, I think those baseline numbers are pretty good numbers, but, you know, we're in, there's a lot of change, right? And with change, that means there's costs. So as we continue to do what we suggested last quarter, we're gonna incrementally improve and get back to those baseline numbers. We're on... That's where we're headed. We're on path.
Excellent. Thank you.
The next question comes from Jeff Van Sinderen with B. Riley. Please proceed.
Hi, good morning, everyone. Thanks for taking my question. Kind of a multipart one here. You touched on it a bit in your prepared comments, but maybe you can expand, how do you expect the NVIDIA Rubin architecture to evolve the data center cooling market, the overall demand for cooling for data centers, and the types of cooling used, and then also, your overall business?
Yeah, I'm excited about it. I mean, as we see the temperatures rise, you see the heat loads intensifying at magnitudes that we would only dream about years ago. And we're here, and it plays perfectly into our chiller strategy in terms of our new product development and our innovation. So as this market continues to have higher heat loads, we really, really value our free cooling capacity and capability, which we believe, from voice of customer, that's one of the best in the industry. So that is something that differentiates us with free cooling, because your total cost of ownership goes down as the heat loads intensify inside of the data center.
I feel like the market's moving towards our chiller technology, and we've got a great set of liquid product offerings that I hope to become the industry standard.
Okay, great. And then just a little bit, sort of a longer-term question. I know it, it's a ways here, even before this transaction closes, but when we think about just the, Climate Solutions business on a go-forward as sort of a standalone, what do you think the EBITDA margin potential is for that business? What are you kind of thinking about might be attainable there?
Yeah. It's Mick. I'll just— I'll build on where Neil was going. I'd say it's a little early for us to set the new. I think that was Noah's question. We've been public about wanting to be operating in the low 20s, 20%-23%. I wanna reiterate what Neil said. With the expansions, we still see that margin improving. We talked last quarter about it improving sequentially to Q3 and to Q4, and having CS be back in that 20%+ range in Q4 here. We're gonna. And then we've also been public that we wanna move towards a top- quartile HVAC type company, and that would mean, in our mind, we move from the low 20s to the mid-20s, even upper 20s, in terms of EBITDA margins.
So, we'll hold on that, so we're ready to come out with our next set of, you know, one or two-year targets. But if you're asking us for a long-term vision, it was first operate in that low twenties range, and then we really think we'd love to be operating in, the upper twenties, is, is where we know. And part of this message today, we're so excited about, is focusing in the climate area, fully opens the door for us to operate in that, that environment.
Well, the high 20s, I would think, would create some multiple expansion on your stock.
Yeah.
Appreciate you guys answering that. Congratulations on the deal. We'll take the rest offline.
The next question comes from Brian Drab with William Blair. Please proceed.
Hi, congrats. Thanks for taking my questions. Most of the things have been asked, I think now, but just to put a finer point on the data center revenue outlook, I just want to make sure that we're all doing the math correctly and in line with how you're thinking about it. If $1 billion is the base, and the high end is 70% growth for two years, that gets you to $2.9 billion. I'm just wondering, is it, is that kind of almost $3 billion level in play?
Yeah, when you do that, we're doing the same math. That's absolutely that you're thinking about the right way.
What is the mix of the revenue, just roughly? Like, is it gonna be more than 50%, like, more than half, chillers? Or, you know, can you break that out at all to give us a sense?
Yeah, I'm glad you asked. So today, this year, to be clear, we expect less than half of our revenue will come from chillers. I think next year it'll be about, we'll be closer to 50/50. So I think it's still gonna be a nice, well-balanced portfolio.
Okay. And then maybe just the last one for now. Is there anything to talk about regarding regulatory challenges in getting the deal done?
Yeah, I'll do that. I'll, I'll take that as well, too. No, nothing that we're concerned about or be non-customary. With an RMT, there's shareholder approval on the Gentherm side, there's IRS ruling, and then with any transaction, you've got some legal or local approvals. But as we covered today, and I thought the Gentherm team did a great job, really nice overlap in synergies, but today, we're not in the, we are not on the same product base at all. So, as far as, like, regulatory approvals, we see a really clear path to that. I also wanted to mention there was a question, just, Neil and I wanted to make sure we helped clarify. There was a question about, you know, what stays and goes with regards to the data center. I want to make sure we have made sure everyone understood.
Everything going with PT is exactly as we've presented over the last couple of years. It's Modine's legacy on- highway, off- highway business, including the cooling modules for power generation genset units, and CS stays with Modine as reported, including all the data center revenue that we've been discussing and reporting. So I just wanted to make sure, if there was any follow-ups or questions on that, we addressed it.
Okay. I'm all set for now. Thanks very much.
Thank you.
The next question is a follow-up from Matt Summerville with D.A. Davidson. Please proceed.
Thanks, Mick, you actually answered one of my questions, so thank you for that clarification. There did seem to be a little bit of maybe confusion on that from the other call. In any event, I'm wondering if, again, thinking through an 80/20 lens, if this prompts you guys to rethink or recast the M&A net, so to speak, meaning, do you look to acquisitively broaden your solution set in the data centers or broaden your, your other sort of HVAC capability? Do you start to think about M&A? Does that evolve as part of this, as part of this process? And then I have one other quick follow-up.
Yes, for sure, it does evolve in terms of thinking more along the lines of deploying cash in areas in the HVAC technology side, because there's a lot of opportunity there, as well as moving in towards precision cooling in different markets that we don't necessarily play in today. It's the same technologies, it's the same thermodynamics, it's the same physics, it's the same principles. We have the expertise, then we can move into precision, whether that's in life sciences and medical or test and measurement. So we're exploring those opportunities. With regards to data center, we feel we have what we need to win today, and we have evidence in that in just this call. And when we think about what we need to do in data centers, it's about execution. Now, that doesn't mean if there's a technology that we believe is essential for the go-forward plan-...
If we decide and determine the fastest way to get it is to acquire it versus building it out internally or developing it internally, we reserve the right to do that. But for the most part, data center, with all the technologies, all the acquisitions we've made over the last few years, the tremendous order funnel and backlog, it's about execution there. If we have a gap or we see some evolution in the industry where we can accelerate it or get there faster or leapfrog a technology through acquisition, we'd absolutely explore that. But for the most part, it's about continuing to balance our portfolio and make sure that we have a good mix with products in the HVAC technology side and venturing into a new segment.
Understood. Then, you know, kind of building on, Neil, you sort of proactively addressed, I think, some of the dialogue coming out of CES, but to put a finer point on that and maybe a little more specificity, in a 45 degrees Celsius environment, does your content per megawatt change, good, bad, and different?
Yeah, we have the-- It's roughly $600,000 per megawatt. It's the same in terms of the slight uptick. The chillers with free cooling will be slightly more expensive, but what they do is critically important to ensure they're solving the problems inside of that space. So as you see these heat loads increase, certainly, you can do it with more free cooling technologies, but you will-- We understand from the market is you need the insurance of the chiller. So even if you can free cool 90%+ of the time, there are those spike events where you have these high heat loads, and they happen. You wanna make sure that you have the insurance of the chiller.
That's why we feel real confident in our new product design and that, that chiller that we launched, you know, years ago, that now it's gonna have significant place in the marketplace as the water temperature rise.
Perfect. That's all for me. Thanks, Neil.
Got it.
The next question comes from Chris Moore with CJS Securities. Please proceed.
Hey, good morning, guys. Yeah, most have been asked already from me, but maybe you talked about it a little bit, but perhaps just you were targeting Q4 for the close. Can you just kinda walk through again the key milestones between now and then, you know, kinda how financials will be presented in the interim and just, you know, kinda the key steps between now and then?
Yeah, sure, Chris. So, tactically, one of the first things we need to do is complete a carve-out audit, and then there will be filings with the SEC and the IRS, and a shareholder vote on the Gentherm side that, in all, this is a pretty typical timeline for an RMT transaction, given the tax-free nature of it. And, from the Modine side, PT, Performance Technologies, will continue to be reported through our continuing operations until the close. So our Q4, as we talk about next year and until we get to a close, we'll guide and share with all of you our, our results, and at the same time, we'll continue to separate the climate and the PT and corporate, such that anybody who wants to do their own pro forma will have all the pieces there to do that work.
Last, I would say is with the carve out audits, and we'll prepare for closing a recast. So when we close, we'll be able to provide you with the recast financials to help you with the modeling.
Terrific. I appreciate that. Thanks, guys.
Yep.
Thank you. I am showing no further questions at this time. I would like to turn the conference back to Kathy Powers. Thank you.
Thanks, and thanks to everybody who joined us this morning to hear about this exciting news. A replay of the call will be available through our website in about two hours. We hope everyone has a great day.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.