Madison Air (MAIR) Q1 FY26 earnings call: guidance and Q&A

Seeking additional color on data center orders, the split between liquid and traditional air conditioning, and the hyperscale customer mix.

Jill Wyant confirmed data centers were a primary growth driver but emphasized broad-based growth across 15 end markets. She noted a balanced trend between liquid and air cooling, with liquid cooling taking a larger share. The company is diversifying across hyperscalers and colocators.

“Data centers remain strong. I would say -- the second part of your question, air versus liquid, I would say very balanced. Liquid is a larger share of the pie, if you will, than it was last year.”

asked by Deane Dray · answered by Jill Wyant

Questioned the implied $600 million quarterly sales for Commercial given Q1 results and strong orders, asking about order-to-revenue conversion and potential conservatism.

JJ Foley clarified that while Q1 Commercial sales were $610 million, they expect a sequential step-up in Q2, driven by seasonality in businesses like Big Ass Fans and ramping data center business. He acknowledged seasonality but expressed confidence in the full-year high single-digit growth guide for Commercial.

“I would expect some step-up as we get into the second quarter, not only when you think about businesses like Big Ass Fans, which do pick up as you kind of get into that heating season. But we do expect to ramp the data center business throughout the year.”

asked by Julian Mitchell · answered by JJ Foley

Inquired about customer inventories, especially on the Residential side, and whether backlog included pulled-forward orders due to pricing.

Jill Wyant stated that volume drove 9 points of the 13% net sales growth, with price contributing 4 points. Commercial growth was volume-driven, while Residential volume was flat with positive pricing. She noted no significant change in residential channel-based backlogs and reiterated the vast whitespace penetration opportunity for AprilAire.

“I would say no big change from a residential perspective in terms of channel-based backlogs. That business was up mid-single digits. So I think a great hallmark of our continued resilience, particularly good demand for the healthier solutions on the AprilAire business.”

asked by Scott Davis · answered by Jill Wyant

Asked for more details on business unit performance, specifically data center and Big Ass Fans, and clarification on the $100 million gross tariff impact.

Jill Wyant confirmed strong broad-based growth across most of the 15 end markets, including institutional, government, and clean energy, beyond just data centers. JJ Foley clarified the $100 million gross tariff impact is a $50 million increase from 2025, incorporated into guidance, and excludes potential refunds.

“I would say on tariffs, we definitely, on a net basis, expect more inflation. So that's including raw materials and tariffs, and we expect to be able to manage that for the full year. It's incorporated in the guidance we shared earlier. That being said, it's approximately a $50 million increase in 2026.”

asked by Nigel Coe · answered by JJ Foley

Inquired about the sequential increase in backlog and whether the duration of the backlog, particularly in data centers, is pushing out into 2027.

Jill Wyant stated that about two-thirds of the company is backlog-driven, typically 1-3 quarters in duration. For data centers, the backlog duration is extending to 4-5 quarters, driven by customer demand for longer-term visibility and supply chain readiness, rather than extended lead times.

“That backlog principally in the thermal management technology platform, the data center business may be 4 to 5 quarters in duration, so a little bit longer than what we continuously see.”

asked by Joseph Ritchie · answered by Jill Wyant

Asked about positive mix in Commercial despite strong data center growth (which might be mix-negative) and the full-year expectation for pricing after a strong Q1.

JJ Foley explained that positive mix in Commercial was driven by smaller businesses with high incremental margins contributing to growth. For full-year pricing, he expects "a few points of price" for the total year, noting Q1's 4 points were strong and largely carried over from prior efforts to offset inflation and tariffs.

“To your point, 4 points of price in the quarter was pretty strong. Much of that was carrying as a function of the work that we had done last year, primarily linked to the conversation that we had around offsetting inflation and tariff pressures.”

asked by Jeffrey Sprague · answered by JJ Foley

Asked to verify AprilAire's mid-teens growth and if such growth is sustainable, given its outperformance relative to residential HVAC.

Jill Wyant confirmed AprilAire grew "very nicely" with demand for healthier solutions in the low double-digit growth territory. She attributed this to early innings of whitespace penetration (92% of US homes lack solutions), 40 million annual in-home touch points, and significant contractor conversion opportunity (only 15-20% penetrated of 70,000+ HVAC contractors).

“AprilAire, as you -- yes, grew very nicely in the quarter, real kudos to that team. We saw demand for healthier solutions that was in the low double-digit growth territory.”

asked by Timothy Wojs · answered by Jill Wyant

Inquired about the medium-term evolution of the services opportunity, its potential, and how the company plans to prosecute it.

Jill Wyant stated that aftermarket is expected to grow faster than equipment volumes (strong double-digit CAGR) and will continue to grow as a percentage of sales. The company is investing growth capital in four prioritized businesses, focusing on people, digital tools, and distribution infrastructure, and has seen strong growth in Q1.

“We expect our aftermarket opportunity to continue to grow at a faster rate than equipment volumes, which it did -- it's been growing at a strong double-digit CAGR.”

asked by Stephen Volkmann · answered by Jill Wyant

Asked if deleveraging is the primary use of cash near-term or if there's flexibility for incremental M&A, and what constitutes the "right opportunity" for acquisition.

JJ Foley reiterated that investing in organic growth is the first priority, followed by deleveraging to less than 2.5x net debt to EBITDA within 12 months. Jill Wyant added that M&A is a lever for growth, with a focus on high-return deals that strengthen capabilities, and they are willing to flex leverage modestly for the right opportunity with a clear path to delever post-acquisition.

“Our capital allocation priorities have not shifted. From an M&A perspective, again, I'd say, Natalia, you should think of us as an organic growth company with M&A as a lever.”

asked by Natalia Bak · answered by JJ Foley

Asked for more color on the Commercial air handling business being down in Q1 and its outlook for returning to growth.

Jill Wyant explained that the Q1 sales decline in air handling stemmed from customer hesitancy on new projects in mid-2025. However, orders momentum picked up nicely in Q4 2025 and continued into Q1 2026, suggesting a return to growth. She emphasized the benefits of a diversified portfolio.

“This is the dynamic we saw on the air handling technology platform sales in the first quarter really dates back to what JJ and I talked about sort of late last year, which was in the aftermath of Liberation Day 2025... customers were just a little bit hesitant to press the go button on new projects.”

asked by Ryan Merkel · answered by Jill Wyant