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Modine Reports Third Quarter Fiscal 2025 Results

Published

2 years ago

on

Revenue and gross margin growth driven by strong data center sales, including benefit from Scott Springfield acquisition

RACINE, Wis., Feb. 4, 2025 /PRNewswire/ — Modine (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported financial results for the quarter ended December 31, 2024.

Third Quarter Highlights:

Net sales of $616.8 million increased 10 percent from the prior yearNet earnings of $41.2 million decreased $3.9 million, or 9 percent, from the prior yearAdjusted EBITDA of $87.3 million increased $13.4 million, or 18 percent, from the prior yearEarnings per share of $0.76 decreased $0.07, or 8 percent, from the prior yearAdjusted earnings per share of $0.92 increased $0.18, or 24 percent, from the prior year

“Our third quarter results were largely in line with our expectations and a continuation of the trends outlined last quarter, with strong data center sales leading the year-over-year revenue improvement,” said Modine President and Chief Executive Officer, Neil D. Brinker. “The Scott Springfield acquisition continues to perform exceptionally well, accelerating our growth and providing revenue synergies with numerous cross selling opportunities. This, along with strong organic data center growth, more than offset lower volumes in other areas of the business. Overall, I am pleased with our performance as we continue to grow and deliver strong results, while successfully managing through down cycles in many of Performance Technologies’ end markets.”

Third Quarter Financial Results

Net sales increased 10 percent to $616.8 million, compared with $561.4 million in the prior year. Sales growth was primarily driven by higher sales of data center cooling and HVAC and refrigeration (“HVAC&R”) products, partially offset by lower sales of heat transfer products and lower sales to automotive, commercial vehicle and off-highway customers. 

Gross profit increased 18 percent to $149.6 million and gross margin improved by 160 basis points to 24.3 percent, which was primarily driven by favorable sales mix, including sales from the recently acquired Scott Springfield Manufacturing business and organic data center sales growth. 

Selling, general and administrative (“SG&A”) expenses increased $14.0 million to $82.0 million. The increase was primarily due to higher compensation-related expenses, including increased incentive compensation resulting from improved financial results, and SG&A expenses from the acquired Scott Springfield Manufacturing business, including $4.6 million of incremental amortization expense for acquired intangible assets.

Operating income was $59.3 million, compared to $61.7 million in the prior year, a decrease of 4 percent. The decrease was driven by higher SG&A and restructuring expenses as compared to the prior year and the absence of a $4.0 million gain on the sale of three automotive businesses in Germany in fiscal 2024. These decreases are partially offset by higher gross profit on the higher sales volume. The Company recorded $8.3 million of restructuring expenses during the third quarter of fiscal 2025, primarily for severance-related expenses within the Performance Technologies segment. Net earnings of $41.2 million decreased $3.9 million, or 9 percent, compared to $45.1 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 $87.3 million, an increase of $13.4 million, or 18 percent, compared to $73.9 million in the prior year. 

Earnings per share was $0.76, compared with $0.83 in the prior year. Adjusted earnings per share was $0.92, compared with adjusted earnings per share of $0.74 in the prior year.

Third Quarter Segment Review

Climate Solutions segment sales were $360.8 million, compared with $254.0 million one year ago, an increase of 42 percent, including $73.6 million of sales from the acquired Scott Springfield Manufacturing business. This increase was driven by higher sales of data center cooling and HVAC&R products, partially offset by lower sales of heat transfer products. The segment reported gross margin of 28.6 percent, which was 100 basis points higher than the prior year, primarily due to higher sales volume and favorable sales mix. The segment reported operating income of $62.4 million, a 54 percent increase from the prior year. Adjusted EBITDA was $75.7 million, an increase of $27.5 million, or 57 percent, from the prior year.

Performance Technologies segment sales were $262.2 million, compared with $310.9 million one year ago, a decrease of 16 percent. This decrease primarily resulted from market-related declines to automotive, off-highway and commercial vehicle customers and the impact of dispositions in the prior year. The segment reported gross margin of 17.8 percent, down 50 basis points primarily due to lower sales volume, partially offset by improved operating efficiencies. The segment reported operating income of $15.8 million, a $13.7 million decrease compared to the prior year, primarily due to lower gross profit and higher restructuring expenses. Adjusted EBITDA was $28.4 million, a decrease of $8.0 million, or 22 percent, from the prior year.

Balance Sheet & Liquidity

Net cash provided by operating activities for the nine months ended December 31, 2024 was $158.5 million, a decrease of $16.5 million compared to the prior year. Free cash flow for the nine months ended December 31, 2024 was $102.2 million, a decrease of $29.0 million from the prior year. Higher operating earnings in the current year was more than offset by a decrease in customer deposits associated with sales contracts with long inventory lead times and higher capital expenditures to support long- and short-term growth. In addition, cash payments for restructuring activities, acquisition and integration costs, and environmental charges during the nine months ended December 31, 2024 increased by $15.8 million from the prior year to $25.5 million. 

Total debt was $370.8 million as of December 31, 2024. Cash and cash equivalents at December 31, 2024 were $83.8 million. Net debt was $287.0 million as of December 31, 2024, a decrease of $84.5 million from the end of fiscal 2024. 

Outlook

“We are reaffirming our previously announced guidance for Fiscal 2025, which would result in our third consecutive year of record results,” added Brinker. “Our outlook for the data center business remains strong, driven by both organic growth and the Scott Springfield acquisition. The investments we’ve made to expand our technology offerings, accelerate new product development, and add manufacturing capacity are all contributing to above-market growth. In the Performance Technologies segment, we have taken aggressive cost actions as vehicular end-markets remain challenged. We continue to believe that this, along with our 80/20 focus, will allow us to drive higher margins and earnings.”

Conference Call and Webcast

Modine will conduct a conference call and live webcast, with a slide presentation, on Wednesday, February 5, 2025, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss its third quarter financial results. The webcast and accompanying slides will be available on the Investor Relations section of the Modine website at www.modine.com. Participants are encouraged to log on to the webcast and conference call about ten minutes prior to the start of the event. A replay of the audio and slides will be available on the Investor Relations section of the Modine website at www.modine.com on or after February 5, 2025. A call-in replay will be available through midnight on February 12, 2025, at 877-660-6853, (international replay 201-612-7415); Conference ID# 13750330. The Company will post a transcript of the call on its website on or after February 7, 2025.

About Modine

At Modine, we are Engineering a Cleaner, Healthier World™. Building on more than 100 years of excellence in thermal management, we provide trusted systems and solutions that improve air quality and conserve natural resources.  More than 11,000 employees are at work in every corner of the globe, delivering the solutions our customers need, where they need them. Our Climate Solutions and Performance Technologies segments support our purpose by improving air quality, reducing energy and water consumption, lowering harmful emissions and enabling cleaner running vehicles and environmentally friendly refrigerants. Modine is a global company headquartered in Racine, Wisconsin (U.S.), with operations in North America, South America, Europe and Asia. For more information about Modine, visit www.modine.com.

Forward-Looking Statements

This press release contains statements, including information about future financial performance and market conditions, accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” “projects,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine’s actual results, performance or achievements may differ materially from those expressed or implied in these statements because of certain risks and uncertainties, including, but not limited to those described under “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 and under Forward-Looking Statements in Item 7 of Part II of that same report and in the Company’s Quarterly Report on Form 10-Q for the quarters ended June 30, and September 30, 2024. Other risks and uncertainties include, but are not limited to, the following: the impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, energy costs, government incentive or funding programs, supply chain challenges or supplier constraints, logistical disruptions, tariffs, sanctions and other trade issues or cross-border trade restrictions; the impact of other economic, social and political conditions, changes and challenges in the markets where we operate and compete, including foreign currency exchange rate fluctuations, changes in interest rates, tightening of the credit markets, recession or recovery therefrom, restrictions associated with importing and exporting and foreign ownership, public health crises, and the general uncertainties, including the impact on demand for our products and the markets we serve from regulatory and/or policy changes that have been or may be implemented in the U.S. or abroad, including those related to tax and trade, climate change, public health threats, and military conflicts, including the conflicts in Ukraine and in the Middle East and tensions in the Red Sea; the overall health and pricing focus of our customers; changes or threats to the market growth prospects for our customers; our ability to successfully realize anticipated benefits, including improved profit margins and cash flow, from our strategic initiatives and our application of 80/20 principles across our businesses; our ability to be at the forefront of technological advances and the impacts of any changes in the adoption rate of technologies that we expect to drive sales growth; our ability to accelerate growth organically and through acquisitions and successfully integrate acquired businesses; our ability to effectively and efficiently manage our operations in response to sales volume changes, including maintaining adequate production capacity to meet demand in our growing businesses while also completing restructuring activities and realizing benefits thereof; our ability to fund our global liquidity requirements efficiently and comply with the financial covenants in our credit agreements; operational inefficiencies as a result of product or program launches, unexpected volume increases or decreases, product transfers and warranty claims; the impact on Modine of any significant increases in commodity prices, particularly aluminum, copper, steel and stainless steel (nickel) and other purchased components and related costs, and our ability to adjust product pricing in response to any such increases; our ability to recruit and maintain talent in managerial, leadership, operational and administrative functions and to mitigate increased labor costs; our ability to protect our proprietary information and intellectual property from theft or attack; the impact of any substantial disruption or material breach of our information technology (“IT”) systems; the impact of a material weakness identified in our internal controls related to IT system access in Europe on our financial reporting process; costs and other effects of environmental investigation, remediation or litigation and the increasing emphasis on environmental, social and corporate governance matters; our ability to realize the benefits of deferred tax assets; and other risks and uncertainties identified in our public filings with the U.S. Securities and Exchange Commission. Forward-looking statements are as of the date of this press release, and we do not assume any obligation to update any forward-looking statements.

Non-GAAP Financial Disclosures

Adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share, net debt, free cash flow, organic sales and organic sales growth (which are defined below) as used in this press release are not measures that are defined in generally accepted accounting principles (GAAP). These non-GAAP measures are used by management as performance measures to evaluate the Company’s overall financial performance and liquidity. These measures are not, and should not be viewed as, substitutes for the applicable GAAP measures, and may be different from similarly titled measures used by other companies.

Definition – Adjusted EBITDA and adjusted EBITDA margin

The Company defines adjusted EBITDA as net earnings excluding interest expense, the provision or benefit for income taxes, depreciation and amortization expenses, other income and expense, restructuring expenses, acquisition and integration costs, and certain other gains or charges. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of net sales. The Company believes that adjusted EBITDA and adjusted EBITDA margin provide relevant measures of profitability and earnings power. The Company views these financial metrics as being useful in assessing operating performance from period to period by excluding certain items that it believes are not representative of its core business. Adjusted EBITDA, when calculated for the business segments, is defined as operating income excluding depreciation and amortization expenses, restructuring expenses, and certain other gains or charges. 

Definition – Adjusted earnings per share

Diluted earnings per share plus restructuring expenses, acquisition and integration costs, and excluding changes in income tax valuation allowances and certain other gains or charges. Adjusted earnings per share is an overall performance measure, not including costs associated with restructuring and acquisitions and certain other gains or charges.

Definition – Net debt

The sum of debt due within one year and long-term debt, less cash and cash equivalents. Net debt is an indicator of the Company’s debt position after considering on-hand cash balances.

Definition – Free cash flow

Free cash flow represents net cash provided by operating activities less expenditures for property, plant and equipment. Free cash flow presents cash generated from operations during the period that is available for strategic capital decisions.

Definition – Organic sales and organic sales growth

Net sales and net sales growth can be impacted by acquisitions, dispositions, and foreign currency exchange rate fluctuations.  The Company defines organic sales as external net sales excluding the impact of acquisitions and the effects of foreign currency exchange rate fluctuations. Organic sales growth represents the percentage change of organic sales compared to prior year external net sales, excluding the impact of dispositions. The effect of exchange rate changes is calculated by using the same foreign currency exchange rates as those used to translate financial data for the prior period. The Company adjusts for acquisitions and dispositions by excluding net sales in the current and prior periods, respectively, for which there are no comparable sales in the reported periods. These sales growth measures provide a more consistent indication of our performance, without the effects of foreign currency exchange rate fluctuations or acquisitions and dispositions. 

Modine Manufacturing Company

Consolidated statements of operations (unaudited)

(In millions, except per share amounts)

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

Net sales

$

616.8

$

561.4

$

1,936.3

$

1,804.3

Cost of sales

467.2

434.1

1,458.5

1,414.0

Gross profit

149.6

127.3

477.8

390.3

Selling, general & administrative expenses

82.0

68.0

250.6

198.3

Restructuring expenses

8.3

1.6

18.2

2.1

Gain on sale of assets

—

(4.0)

—

(4.0)

Operating income

59.3

61.7

209.0

193.9

Interest expense

(6.2)

(5.8)

(21.1)

(17.8)

Other income (expense) – net

1.1

(0.5)

(0.7)

(1.0)

Earnings before income taxes

54.2

55.4

187.2

175.1

Provision for income taxes

(13.0)

(10.3)

(51.8)

(37.8)

Net earnings

41.2

45.1

135.4

137.3

Net earnings attributable to noncontrolling interest

(0.2)

(0.7)

(1.0)

(1.6)

Net earnings attributable to Modine

$

41.0

$

44.4

$

134.4

$

135.7

Net earnings per share attributable to Modine shareholders – diluted

$

0.76

$

0.83

$

2.49

$

2.55

Weighted-average shares outstanding – diluted

53.9

53.2

53.9

53.2

 

Condensed consolidated balance sheets (unaudited)

(In millions)

December 31, 2024

March 31, 2024

Assets

Cash and cash equivalents

$

83.8

$

60.1

Trade receivables

423.0

422.9

Inventories

336.7

357.9

Other current assets

62.1

53.1

Total current assets

905.6

894.0

Property, plant and equipment – net

354.8

365.7

Intangible assets – net

152.3

188.3

Goodwill

232.6

230.9

Deferred income taxes

61.9

75.1

Other noncurrent assets

122.6

97.5

Total assets

$

1,829.8

$

1,851.5

Liabilities and shareholders’ equity

Debt due within one year

$

40.8

$

31.7

Accounts payable

244.0

283.4

Other current liabilities

198.7

230.7

Total current liabilities

483.5

545.8

Long-term debt

330.0

399.9

Other noncurrent liabilities

153.1

150.3

Total liabilities

966.6

1,096.0

Total equity

863.2

755.5

Total liabilities & equity

$

1,829.8

$

1,851.5

 

Modine Manufacturing Company

Condensed consolidated statements of cash flows (unaudited)

(In millions)

Nine months ended December 31, 

2024

2023

Cash flows from operating activities:

Net earnings

$

135.4

$

137.3

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

58.5

41.1

Gain on sale of assets

—

(4.0)

Stock-based compensation expense

16.7

7.7

Deferred income taxes

8.5

4.7

Other – net

5.2

4.7

Changes in operating assets and liabilities:

  Trade accounts receivable

(11.6)

26.9

  Inventories

13.2

(18.5)

  Accounts payable

(19.3)

(67.8)

  Other assets and liabilities

(48.1)

42.9

Net cash provided by operating activities

158.5

175.0

Cash flows from investing activities:

Expenditures for property, plant and equipment

(56.3)

(43.8)

Payments for business acquisitions

(3.4)

(4.8)

Other – net

0.6

(5.9)

Net cash used for investing activities

(59.1)

(54.5)

Cash flows from financing activities:

Net decrease in debt

(60.6)

(20.7)

Purchases of treasury stock

(12.3)

(17.6)

Other – net

0.5

0.9

Net cash used for financing activities

(72.4)

(37.4)

Effect of exchange rate changes on cash

(3.2)

0.9

Net increase in cash, cash equivalents and restricted cash

23.8

84.0

Cash, cash equivalents and restricted cash – beginning of period

60.3

67.2

Cash, cash equivalents and restricted cash – end of period

$

84.1

$

151.2

 

Modine Manufacturing Company

Segment operating results (unaudited)

(In millions)

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

Net sales:

Climate Solutions

$

360.8

$

254.0

$

1,084.5

$

829.9

Performance Technologies

262.2

310.9

868.7

991.3

  Segment total

623.0

564.9

1,953.2

1,821.2

Corporate and eliminations

(6.2)

(3.5)

(16.9)

(16.9)

  Net sales

$

616.8

$

561.4

$

1,936.3

$

1,804.3

 

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

$’s

% of
sales

$’s

% of
sales

$’s

% of
sales

$’s

% of
sales

Gross profit:

Climate Solutions

$

103.1

28.6

%

$

70.1

27.6

%

$

310.2

28.6

%

$

222.8

26.8

%

Performance Technologies

46.7

17.8

%

57.0

18.3

%

170.3

19.6

%

166.5

16.8

%

  Segment total

149.8

24.0

%

127.1

22.5

%

480.5

24.6

%

389.3

21.4

%

Corporate and eliminations

(0.2)

—

0.2

—

(2.7)

—

1.0

—

  Gross profit

$

149.6

24.3

%

$

127.3

22.7

%

$

477.8

24.7

%

$

390.3

21.6

%

 

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

Operating income:

Climate Solutions

$

62.4

$

40.4

$

186.9

$

136.1

Performance Technologies

15.8

29.5

78.1

88.3

  Segment total

78.2

69.9

265.0

224.4

Corporate and eliminations

(18.9)

(8.2)

(56.0)

(30.5)

  Operating income

$

59.3

$

61.7

$

209.0

$

193.9

 

Modine Manufacturing Company

Adjusted financial results (unaudited)

(In millions, except per share amounts)

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

Net earnings

$

41.2

$

45.1

$

135.4

$

137.3

Interest expense

6.2

5.8

21.1

17.8

Provision for income taxes

13.0

10.3

51.8

37.8

Depreciation and amortization expense

19.4

13.4

58.5

41.1

Other (income) expense – net

(1.1)

0.5

0.7

1.0

Restructuring expenses (a)

8.3

1.6

18.2

2.1

Acquisition and integration costs (b)

0.1

—

2.0

—

Environmental charges (c)

0.2

1.2

0.3

2.4

Gain on sale of assets (d)

—

(4.0)

—

(4.0)

Adjusted EBITDA

$

87.3

$

73.9

$

288.0

$

235.5

Net earnings per share attributable to Modine shareholders
– diluted

$

0.76

$

0.83

$

2.49

$

2.55

Restructuring expenses (a)

0.12

0.02

0.29

0.03

Acquisition and integration costs (b)

0.04

—

0.15

—

Environmental charges (c)

—

0.02

—

0.03

Gain on sale of assets (d)

—

(0.13)

—

(0.13)

Adjusted earnings per share

$

0.92

$

0.74

$

2.93

$

2.48

____

(a)

Restructuring expenses primarily consist of employee severance expenses, the majority of which were recorded within the Performance Technologies segment, and equipment transfer costs. The tax benefit related to restructuring expenses during the third quarter of fiscal 2025 and fiscal 2024 was $1.7 million and $0.4 million, respectively. The tax benefit related to restructuring expenses during the first nine months of fiscal 2025 and fiscal 2024 was $2.5 million and $0.5 million, respectively.

(b)

On March 1, 2024, the Company acquired Scott Springfield Manufacturing, a leading provider of air handling units for the data center, telecommunications, healthcare, and aerospace markets. The adjustment in fiscal 2025 includes $1.6 million recorded at Corporate for the impact of an inventory purchase accounting adjustment. The Company wrote up acquired inventory to its estimated fair value and charged the write-up to cost of sales as the underlying inventory was sold. The fiscal 2025 costs also include fees for accounting and legal professional services and incremental costs directly associated with integration activities. In addition, for purposes of calculating adjusted EPS, the Company also adjusted for $8.0 million of incremental amortization expense recorded in the Climate Solutions segment during the first nine months of fiscal 2025 associated with an acquired order backlog intangible asset, which will be substantially amortized by the end of fiscal 2025. The tax benefit related to the acquisition related costs and adjustments for the third quarter and first nine months of fiscal 2025 was $0.6 million and $2.2 million, respectively.   

(c)

Environmental charges, including related legal costs, are recorded as SG&A expenses at Corporate and relate to previously owned facilities. The tax benefit related to environmental charges during the first nine months of fiscal 2025 and fiscal 2024 was $0.1 million and $0.6 million, respectively.

(d)

The Company’s sale of three automotive businesses based in Germany closed on October 31, 2023. As a result of the sale, the Company recorded a $4.0 million gain on sale at Corporate during the third quarter of fiscal 2024. The tax benefit associated with the sale totaled $3.1 million.

 

Modine Manufacturing Company

Segment adjusted financial results (unaudited)

(In millions)

Three months ended December 31, 2024

Three months ended December 31, 2023

Climate 

Performance 

Corporate and 

Climate 

Performance 

Corporate and 

Solutions

Technologies

eliminations

Total

Solutions

Technologies

eliminations

Total

Operating income

$

62.4

$

15.8

$

(18.9)

$

59.3

$

40.4

$

29.5

$

(8.2)

$

61.7

Depreciation and amortization
expense

12.2

7.1

0.1

19.4

6.4

6.7

0.3

13.4

Restructuring expenses (a)

1.1

5.5

1.7

8.3

1.4

0.2

—

1.6

Acquisition and integration costs (a)

—

—

0.1

0.1

—

—

—

—

Environmental charges (a)

—

—

0.2

0.2

—

—

1.2

1.2

Gain on sale of assets (a)

—

—

—

—

—

—

(4.0)

(4.0)

Adjusted EBITDA

$

75.7

$

28.4

$

(16.8)

$

87.3

$

48.2

$

36.4

$

(10.7)

$

73.9

Net sales

$

360.8

$

262.2

$

(6.2)

$

616.8

$

254.0

$

310.9

$

(3.5)

$

561.4

Adjusted EBITDA margin

21.0

%

10.8

%

14.2

%

19.0

%

11.7

%

13.2

%

Nine months ended December 31, 2024

Nine months ended December 31, 2023

Climate 

Performance 

Corporate and 

Climate 

Performance 

Corporate and 

Solutions

Technologies

eliminations

Total

Solutions

Technologies

eliminations

Total

Operating income

$

186.9

$

78.1

$

(56.0)

$

209.0

$

136.1

$

88.3

$

(30.5)

$

193.9

Depreciation and amortization
expense

36.7

21.3

0.5

58.5

18.7

21.6

0.8

41.1

Restructuring expenses (a)

2.8

13.7

1.7

18.2

1.7

0.4

—

2.1

Acquisition and integration costs (a)

—

—

2.0

2.0

—

—

—

—

Environmental charges (a)

—

—

0.3

0.3

—

—

2.4

2.4

Gain on sale of assets (a)

—

—

—

—

—

—

(4.0)

(4.0)

Adjusted EBITDA

$

226.4

$

113.1

$

(51.5)

$

288.0

$

156.5

$

110.3

$

(31.3)

$

235.5

Net sales

$

1,084.5

$

868.7

$

(16.9)

$

1,936.3

$

829.9

$

991.3

$

(16.9)

$

1,804.3

Adjusted EBITDA margin

20.9

%

13.0

%

14.9

%

18.9

%

11.1

%

13.1

%

____

(a)   See the Adjusted EBITDA reconciliations above for information on restructuring expenses and other adjustments.

 

Modine Manufacturing Company

Net debt (unaudited)

(In millions)

December 31, 2024

March 31, 2024

Debt due within one year

$

40.8

$

31.7

Long-term debt

330.0

399.9

Total debt

370.8

431.6

Less: cash and cash equivalents

83.8

60.1

Net debt

$

287.0

$

371.5

 

Free cash flow (unaudited)

(In millions)

Three months ended December 31, 

Nine months ended December 31, 

2024

2023

2024

2023

Net cash provided by operating activities

$

60.7

$

64.2

$

158.5

$

175.0

Expenditures for property, plant and equipment

(16.0)

(17.6)

(56.3)

(43.8)

Free cash flow

$

44.7

$

46.6

$

102.2

$

131.2

 

Organic sales and organic sales growth (unaudited)

(In millions)

Three months ended December 31, 2024

Three months ended December 31, 2023

Effect of

Sales

Organic

External

Exchange Rate

Effect of

Organic

External

Effect of

Excluding

 Sales

Sales

Changes

 Acquisitions

Sales

Sales

Dispositions

Dispositions

Growth

Net sales:

Climate Solutions

$

360.7

$

(1.1)

$

(73.6)

$

286.0

$

254.0

$

—

$

254.0

13

%

Performance Technologies

256.1

3.8

—

259.9

307.4

(8.0)

299.4

(13)

%

  Net Sales

$

616.8

$

2.7

$

(73.6)

$

545.9

$

561.4

$

(8.0)

$

553.4

(1)

%

Nine months ended December 31, 2024

Nine months ended December 31, 2023

Effect of

Sales

Organic

External

Exchange Rate

Effect of

Organic

External

Effect of

Excluding

Sales

Sales

Changes

 Acquisitions

Sales

Sales

Dispositions

Dispositions

Growth

Net sales:

Climate Solutions

$

1,084.3

$

(2.8)

$

(168.1)

$

913.4

$

829.9

$

—

$

829.9

10

%

Performance Technologies

852.0

9.8

—

861.8

974.4

(54.2)

920.2

(6)

%

  Net Sales

$

1,936.3

$

7.0

$

(168.1)

$

1,775.2

$

1,804.3

$

(54.2)

$

1,750.1

1

%

 

Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com

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Edvance and CWG Launch RealRelay Fintech, AI Agents for Finance with Trust Built First

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49 minutes ago

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October 19, 2026

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Edvance and CWG open RealRelay’s third vertical, bringing tested and rated AI agents to finance as MAS sets out how AI in the sector should be governed.

SINGAPORE, Oct. 19, 2026 /PRNewswire/ — On Oct. 17, Edvance International Holdings Limited (HKEX: 1410) (“Edvance”), through its wholly-owned Singapore subsidiary Paradise Matrix Pte. Ltd., and CWG Innovations Pte. Ltd. (“CWG”) today launched RealRelay Fintech, the third vertical on RealRelay.ai, the platform on which organisations build, test and run AI agents without writing code. The launch took place at a one-day youth AI event at Suntec Convention Centre, co-organised by the Digital Defence Alliance Singapore (DDAS) and CWG with the support of the National Youth Council (NYC).

The event was conceptualised, planned and developed by Mr Aaron Ang (linkedin.com/in/aaronangsg), Chief Commercial Officer of CWG, who leads the RealRelay project. Mr Ang built the day around one challenge. Participants were handed a simulated fraud case and asked to use agentic AI to find out what had happened. Within hours they had worked through tens of thousands of transaction records, traced the money, flagged the entries that did not add up and shown how they got there. The same job, done by hand, would take an audit team weeks. The event was graced by Mr Ong Kah Kuang, Assistant Chief Executive of the National Youth Council.

That is what RealRelay Fintech sets out to do. Work that is slow, manual and easy to get wrong, such as reconciling accounts, checking documents and finding the one record in a million that should not be there, becomes something an agent on the platform does accurately, in hours, with every step on record. Fraud detection is the clearest example, and it is where the fintech vertical begins. In finance, though, a fast answer counts for nothing unless the institution can trust it.

Trust comes first

Finance is the sector where trust in AI matters most, and Singapore has moved first. On 7 October the Monetary Authority of Singapore (MAS) issued its Guidelines on AI Risk Management. They cover every financial institution and every form of AI, agents included. Boards are expected to oversee AI risk, keep an inventory of each AI use, manage third-party AI and control the whole life cycle, from testing to monitoring. The guidelines take effect in October 2027. In August, MAS also committed S$220 million under FSTI 4.0 to get AI into the sector faster, including an AI Pathfinder track for solutions listed on PathFin.ai.

Every agent on RealRelay passes through the Trust and Control Layer. The platform’s own security agent tests it before it goes live and tests it again each time it changes. Permissions, logging, retention and access are controlled centrally, and every agent carries a risk rating that covers the data it can touch, the actions it can take and how it behaved under test. That rating, the agent inventory and the full log are the same things MAS now asks financial institutions to keep. The Trust and Control Layer draws on Edvance’s more than 20 years in cybersecurity.

Asked what the launch represents, Mr Ang said:

“Singapore has been clear about how it wants AI to enter finance. Innovate, but with trust and control in place from the start. We believe that is the next phase of fintech, and we built RealRelay Fintech on exactly that principle. The Trust and Control Layer is the foundation of the platform. Every agent is tested before it goes live, and the institution keeps full control over what it can see and do. When people can see that, they stop hesitating. That is how banks, funds and founders will actually put AI to work, and that is what we are here to make possible.”

What RealRelay Fintech does

At launch the vertical covers four areas of work.

Research and analysis. Agents that read filings, news and market data, run scenarios and produce forecasts with the reasoning shown.

Decision documents. Credit memos, investment committee packs, portfolio risk briefs and client review notes, drafted from a firm’s own data and templates.

Fraud, compliance and document checks. Agents that reconcile transactions, flag anomalies, check onboarding documents against policy and keep a record of every check.

Learning. A guided track for students and new joiners, using the same tools professionals use, at a price a student can afford.

Institutional deployments, including Singapore-hosted and on-premises options, are available on request.

Three verticals, one platform

RealRelay has two layers sitting on a Trust and Control Layer. The Token Exchange launched on 30 September 2026 and puts more than 300 mainstream AI models behind one subscription, routing each task to a suitable model at a lower cost than buying them separately. The Agentic Layer sits on top. Users describe what they need in plain language, assemble an agent from ready-made modules, test it and deploy it in one click, with no code. Three verticals run on these layers: education, cybersecurity and now fintech.

Education came first, and it is where the platform found its first users. At the APEX Bootcamp in September, students and young working adults with no technical background built working agents in two days. Interest from educational institutions has followed, and CWG is finalising details with these institutions to provide RealRelay and the full AI ecosystem around it to their students. Fintech now follows the same path, on the same layers and under the same controls.

What comes next

RealRelay Fintech will run a series of masterclasses in parallel with the Singapore FinTech Festival from 18 to 20 November 2026, and CWG is preparing its listing on PathFin.ai. Over 2027, the Trust and Control Layer will be mapped to the MAS guidelines so that an institution can take an agent’s test record straight into its own risk assessment. Agents built to individual institutions’ own policies and templates will follow.

For Edvance, fintech opens a subscription market where the buyers are large, regulated, and now required to show trust and control over the AI they use. Edvance is responsible for commercialising the platform and holds the intellectual property in its cybersecurity agents. The platform is owned and operated from Singapore, and the two companies are preparing to take it global, with partner talks under way and expansion plans already in place.

About Edvance International Holdings Limited

Edvance International Holdings Limited (HKEX: 1410) is a Hong Kong-headquartered value-added distributor of cybersecurity products and provider of cybersecurity services, with more than 20 years of experience in the market. Paradise Matrix Pte. Ltd. is Edvance’s wholly-owned subsidiary in Singapore. For more information, visit https://www.paradisematrix.sg.

About CWG Innovations Pte. Ltd.

CWG Innovations Pte. Ltd. is a Singapore company focused on AI solutions development and enterprise AI deployment. CWG is the operator of RealRelay.ai. For more information, visit https://www.cwgsg.ai.

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SOURCE CWG Innovations; Edvance International Holdings Limited; RealRelay

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140th Canton Fair Amplifies Visibility for Hundreds of Product Debuts, Connecting Innovation with Global Demand

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2 hours ago

on

October 19, 2026

By

GUANGZHOU, China, Oct. 19, 2026 /PRNewswire/ — The 140th Canton Fair opened on October 15 and will be held in three phases. Over 700 New Collection events will take place, representing a 15% increase from the previous session. To share these innovations with a broader audience, the fair has introduced a range of initiatives designed to enhance product visibility and facilitate business connections.

Canton Fair New Collection Gallery Debuts

A dedicated Canton Fair New Collection Gallery has been introduced for the first time at the 140th Canton Fair. Located near the high-traffic platform connecting Area A and B, the gallery is divided into three sections: a product display area, a digital interactivity area and a business matching area.

Together, these sections create an integrated platform that combines product showcase and commercial matchmaking. The setup enables buyers and exhibitors to connect more efficiently, supporting on-site trade discussions and demand matching throughout the event.

Exhibition Meets Livestreaming

To help global buyers stay updated on emerging opportunities in real time, the Canton Fair is combining its physical exhibition with livestreaming programs. A series of featured broadcasts will highlight exhibition tours, product demonstrations and new product launches across a wide range of industries.

By extending product showcases beyond the exhibition floor, these livestreams provide international buyers with convenient access to the latest innovations and market trends regardless of their location.

Theme Release Events

The fair also hosts daily New Collection Theme Release events at the central platform between Area A and B. During Phase 1, featured themes include smart living appliances, service robots, low-altitude smart inspection, smart electronics, precision tools and green energy storage. These sessions provide exhibitors with additional opportunities to present newly launched products and engage directly with buyers from around the world.

As the Canton Fair continues to evolve alongside global trade, its expanded launch platforms, digital engagement initiatives and business matching services reflect a growing commitment to helping innovative products gain market exposure and accelerate commercial opportunities. By creating more touchpoints between exhibitors and buyers, the fair is bolstering a 70-year history as a gateway for international business collaboration in China and a leading product innovation showcase.

For more convenient attendance, please click here for pre-registration:
https://buyer.cantonfair.org.cn/register/buyer/email?source_type=16

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SOURCE Canton Fair

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FF EAI Robotics Ecosystem Inc. (FFR) Highlights Faraday Future Founder and Global CEO YT Jia’s Weekly Investor Update: Three New Product Offerings Launched; More Details on FFR’s Acquisition of FFAI’s Robotics Business and Independent Public Listing

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2 hours ago

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October 19, 2026

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On October 26, FFR will hold its listing ceremony and first Investor Day at the Nasdaq Tower in New York, where management will share more about FFR’s strategy and business plans, with more details to follow soon.Two new EAI Devices launched including FF Nova—America’s first entry-level EAI humanoid robot under $2,500, and the second is Nova Mini, a humanoid robot for foundational Physical AI education, priced at $299, with the accompanying curriculum at $499.FF EAI launched two new education and developer training initiatives, the Physical AI Spark Program Curriculum and the Nova Reinforcement Learning Developer Program, while also opening enrollment for its developer community to help expand participation in its embodied AI ecosystem.

LOS ANGELES, Oct. 18, 2026 /PRNewswire/ — FF EAI Robotics Ecosystem Inc. (NASDAQ: FFR) (“FFR” or the “Company”), a U.S.-based Embodied AI (EAI) robotics company, today highlighted a weekly business update from YT Jia, Founder and Global CEO of Faraday Future Intelligent Electric Inc. (NASDAQ: FFAI) (“Faraday Future” or “FF”). For purposes of attribution, references to “we,” “our,” and “FF” in the following transcript refer to FFAI and its robotics business, except where FFR named.

“Welcome to Weekly Report 77. This week, let’s start with some big news from FFR. On October 26, we will hold FFR’s listing ceremony and first Investor Day at the Nasdaq Tower in New York. Our management team will share more about our strategy and business plans. We’ll also have the chance to talk with investors face to face. To our stockholders and partners, we hope you can join us and help open this new chapter for FFR. Formal invitations to the event will go out tomorrow! Now, let me share what we’ve been working on this week.

This week, FFR and FFAI jointly launched three new offerings.

1. Two new EAI Devices. The first is FF Nova—America’s first entry-level EAI humanoid robot under $2,500. Your Physical AI lab in a backpack. The Nova device costs $2,490, and the Developer Skills Package is $390. The second is Nova Mini, our humanoid robot for foundational Physical AI education. The robot is priced at $299, and the accompanying curriculum is $499. With these additions, the “One-Brain Multi-Form Multi-Capability” FF EAI Robot World 2.0 we are building now includes more than 20 EAI Devices across 11 models, seven series, and three robot forms.

2. A new FF EAI Education Skills product—the “Physical AI Spark Program Curriculum.”

3. The Nova Reinforcement Learning Developer Program. We also opened enrollment in our developer community. 

Our EAI Brain and Developer Platform Cores also made two breakthroughs this week.

Regarding the EAI brain, The All-New Futurist now fully supports SONIC. That opens up more room for development and applications on more advanced robotics platforms. This is how our approach of combining in-house development with open collaboration is starting to deliver more value. 

On the Developer Platform side, we’ve made the NVIDIA SONIC data, models, and deployment solutions based on FF Master fully open source through GitHub and Hugging Face. What does that mean for developers? You now have a complete path from open-source research and testing algorithms to deploying robots and building solutions. And that path is open to universities, research institutions, and industry partners around the world, too. 

Over the past few days, we’ve received some questions from stockholders about FFR’s acquisition of FFAI’s robotics business and its independent public listing. Let me take a moment to clarify a few points and explain what this means. Giving the robotics business its own operations, financing, and public listing is much more than moving assets within FFAI. It fundamentally reshapes FFR and unlocks its value.  We see this as the starting point for a major breakthrough in business value and a faster release of value in the capital markets. Let me explain this in four areas.

One is a sharper strategic focus. We will concentrate our resources on delivering our “Four-Core Full-Stack AI” robotics strategy. Every dollar we invest, every decision we make, and every financing round will serve that goal. This focus will help us refine what we do, deepen our expertise, expand our scale, and strengthen our business.

Another is a clearer basis for valuation. With its own public listing as a pure-play robotics business, FFR can be valued directly against its industry peers. Its valuation will no longer be held back by other factors affecting FFAI.  Combined with continued deliveries at positive contribution margins, this gives FFR significant room to unlock value.

We will also have more transparent business results and cleaner financial statements. You will be able to see how each financing round translates into business performance. That transparency can help attract strategic investors and long-term capital. After closing, FFR will have almost no debt. Its balance sheet, income statement, and cash flow statement will be cleaner, making the company’s value easier to see.

The fourth area is lower funding needs and financing costs. FFR has seven unique advantages, including our “Four-Core Full-Stack AI” EAI technology and asset-light operating model. Building on these strengths, we aim to achieve positive operating cash flow no later than the third quarter of 2028. Until then, we expect to need no more than $150 million in total financing. 

For FFAI, once the transaction closes, we will remain FFR’s controlling and majority stockholder and continue to share in its potential future growth in value. As a Physical AI investment company following a Berkshire-style model, FFAI will share further business updates soon. We want to reward our stockholders for your continued support.

Over the years, we’ve received encouragement, faced ridicule, and taken harsh criticism, yet we’ve seldom felt the need to explain ourselves. Our passion for building a business is still there. It comes from working alongside people who share our vision, and driving change in the industry together. Failure itself doesn’t stop us. What stops us is losing the belief that we can try again. “Try again.” A message to myself, and to every entrepreneur who keeps going. Thank you for being part of this journey. See you next week.”

About FF EAI Robotics Ecosystem Inc. 

FF EAI Robotics Ecosystem Inc. (NASDAQ: FFR) (renamed from AIxCrypto Holdings, Inc. and AIXC, effective September 30, 2026) is a U.S.-based Embodied AI (EAI) robotics company that is in the process of acquiring the FF EAI Robotics business. Upon completion of the acquisition, the Company will focus on the research and development, manufacturing, commercialization, and deployment of intelligent robotic technologies, products, and industry solutions.  

The Company is committed to building a “Four-Core Full-Stack” AI ecosystem covering the full lifecycle of robotics, consisting of EAI Brain & Developer Platform, EAI Devices, Industry Productivity Solutions, and EAI Data Factory. Guided by the technology and product philosophy of “One Brain, Multi-forms, Multi-capabilities,” the Company aims to empower humanoid, biomimetic, and other robotic form factors through a unified EAI Brain, while continuously expanding their multi-task and multi-scenario capabilities. The ecosystem is designed to support the full robotics lifecycle, including R&D, deployment, data collection and training, operations, and commercial applications.  

The FF EAI Robotics business has already achieved commercial deliveries of humanoid and biomimetic robotic products. Through its multi-form-factor robotic products, EAI technology platform, closed-loop data capabilities, and industry solutions, the business continues to advance the scaled adoption of robotics across real-world applications. The Company also operates RoboShare, a robot-sharing and services platform designed to connect robotic assets, service capabilities, customer demand, and ecosystem partners, further strengthening its robotics commercialization and service ecosystem. 

For more information, visit www.ff.com. 

About Faraday Future 

Founded in 2014, Faraday Future (FF) is a U.S.-based Physical AI ecosystem company dedicated to reshaping the future of robotics and mobility solutions through AI innovation and technologies. FF focuses on two major product strategies within the Embodied AI (EAI) robotics business: EAI humanoid and bionic robots, and EAI automotive-focused robots. By building a “Four-Core Full-Stack AI” ecosystem of EAI Brain and Developer Platform, EAI Devices, Industry Productivity Solutions and EAI Data Factory, FF aims to create an evolutionary flywheel: scaled device delivery, data collection and training, continuous evolution of the EAI Brain, stronger product capability, and even larger-scale delivery and deployment. Through this flywheel, FF seeks to maximize its commercial value and lead to the advancement of Physical AI. For more information, please visit Faraday Future’s official website: https://www.ff.com/ 

FFR Forward-Looking Statements 

This communication, including any presentation, press release, investor materials or other document of which it forms a part (this “Communication”), contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, and other securities laws, regarding FF EAI Robotics Ecosystem Inc. (“FFR,” the “Company,” “us,” “our,” or “we”) and our industry. All statements, whether written or oral, other than statements of historical fact, including any financial projections and any statements regarding future events, our strategy, our transition to robotics operations, our plans for RoboShare, our digital asset disposition plans, the proposed acquisition of the FF EAI Robotics business, the projections referenced in this communication, our name and ticker change, any related financing, and the anticipated benefits and timing of the foregoing, our objectives, expectations, or anticipated actions or results, are forward-looking statements. You can often identify forward-looking statements by words such as “may,” “might,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” “likely,” or “continue,” or the negative of these terms or other similar expressions; the absence of these words does not mean a statement is not forward-looking. These statements reflect our current expectations and projections about future events as of the date of this Communication and are necessarily based on estimates and assumptions that, while considered reasonable by management, are inherently uncertain. FFR can give no assurance that such forward-looking statements or financial projections will prove to be correct. 

Actual results may differ materially from those expressed or implied by these forward-looking statements as a result of numerous risks and uncertainties, both general and specific, including, but not limited to: 

The proposed acquisition transaction and PIPE. The definitive agreements may be terminated in accordance with their terms, and the proposed transactions may not be completed on the terms described or at all; the conditions to closing, including the completion of FFAI’s internal restructuring of the robotics business, the execution of key employee agreements and other customary conditions, and the parties’ ability to satisfy them; the risk that the stockholder approval required under Nasdaq listing rules for the conversion of the preferred stock issued as consideration is not obtained or is delayed, and the effect of the conversion restrictions and the information statement process on the timing of conversion; the timing of the transaction and the costs of pursuing it; the issuance of a substantial number of shares as consideration and the resulting dilution to existing stockholders; the fact that the counterparty is our controlling stockholder, that it will hold a substantial majority of our outstanding shares following closing, that certain members of management serve both companies, and the conflicts of interest inherent in the transaction; the risk that the agreed valuations do not reflect the market value of our shares or of the acquired business; our dependence on the counterparty for transition, supply and support following any closing; the scope and enforceability of the non-competition and governance arrangements; the consequences of the transaction under Nasdaq listing rules, including the possibility that Nasdaq determines that the transaction requires us to satisfy initial listing requirements in connection with a business combination, change of control or change in the nature of our business; the risk that the PIPE financing, on which the transaction is not conditioned, is not completed on the anticipated terms or at all; the risk of litigation relating to the transaction; our ability to integrate and operate the acquired business; and the risk that the acquired business performs differently than anticipated. 

Projections. The projections referenced in this communication were prepared by FFAI management for the FF EAI Robotics business on a standalone basis and do not reflect our existing business, transaction-related expenses or the combined company. We have not independently verified them or adopted them as guidance. They were not prepared with a view toward public disclosure or toward compliance with the published guidelines of the Securities and Exchange Commission or the American Institute of Certified Public Accountants regarding prospective financial information, and no independent registered public accounting firm has examined, compiled or performed any procedures with respect to them, and none expresses an opinion or any other form of assurance with respect to them. The projections reflect estimates and assumptions that are inherently uncertain and subject to change, including through due diligence and the review of our special committee and its financial advisor. Actual results are likely to differ, and may differ materially. 

Liquidity, capital and going concern. Our limited cash and liquidity position and our history of operating losses and negative operating cash flow; substantial doubt regarding our ability to continue as a going concern, as described in our periodic reports; our need to obtain additional financing on acceptable terms or at all, and the substantial dilution to existing stockholders that additional financing may cause, including any financing completed in connection with the proposed transaction, which may not be completed or may be on less favorable terms than anticipated; our ability to fund operations pending and following the disposition of our digital asset positions; and our ability to satisfy the continued listing requirements of The Nasdaq Stock Market, including stockholders’ equity, minimum bid price and other applicable standards. 

Our strategic transition and the disposition of digital assets. Risks associated with a fundamental shift in our business strategy and the redeployment of resources from a digital asset treasury strategy to robotics operations; our ability to execute the disposition of our digital asset positions in an orderly manner and on acceptable terms; the risk that amounts realized on disposition are materially less than carrying value as a result of price volatility, market depth, execution timing, custody or transfer constraints, or other limitations; tax, accounting and regulatory consequences of the dispositions; the continued volatility and regulatory uncertainty associated with digital assets and cryptocurrencies during the wind-down period; the concentration of a substantial portion of our assets in a single equity investment, including an investment in a related party, and the illiquidity, valuation uncertainty, holding-period and transfer restrictions associated with that investment; and risks arising from our relationships and agreements with related parties and significant stockholders.  

Our robotics operations business. Our limited operating history in robotics operations and commercialization and the absence of a meaningful revenue history; the early stage of RoboShare and the risk that customer demand, repeat demand, pricing, utilization or unit economics do not develop as anticipated; our dependence on a small number of customers, on a single initial geographic market, and on individual events or engagements, and the risk that the loss of, or a change in the terms of, any such relationship has a disproportionate effect; our dependence on third-party robot owners, operators, suppliers, original equipment manufacturers and local partners, and on their willingness to make robots available on our platform; risks relating to the availability, cost, quality, maintenance, transport, insurance and technological obsolescence of robots and related equipment, and to supply chains, tariffs and trade measures affecting them; and our ability to expand into additional markets and to attract and retain participants on both sides of our marketplace. 

Operations, safety and liability. Risks of property damage, personal injury or death arising from the operation of humanoid robots, quadrupeds and other autonomous or semi-autonomous machines in proximity to performers, employees, guests and the public, including at live events and in uncontrolled environments; product liability, premises liability, negligence and related claims and the adequacy, scope, availability and cost of our insurance coverage and of contractual indemnities from customers, owners and suppliers; the allocation of responsibility among us, robot owners, venues, event producers and customers; permitting, licensing, occupational safety and event-specific regulatory requirements; and the reputational consequences of any safety incident. 

Technology, data and intellectual property. Systems, network, telecommunications or service disruptions, failures, defects or cyber-attacks; the performance, reliability and autonomy limitations of robotic systems and of the software, models and networks that support them; our collection, use, storage, transmission and protection of personal information, including images and any biometric or biometric-adjacent data captured in the course of robot deployments, and evolving privacy, biometric and artificial intelligence laws and regulations across the jurisdictions in which we operate or intend to operate; our ability to obtain, maintain, protect and enforce our intellectual property rights and to defend against third-party claims of infringement or misappropriation; and our reliance on third-party technology, platforms and licenses. 

Legal, regulatory and general. The regulated industries and jurisdictions in which we operate; current or future laws or regulations and new interpretations of existing laws or regulations, including those applicable to digital assets, robotics, autonomous systems, consumer protection, advertising and endorsements; the risk that our marketplace arrangements, or the manner in which they are described, are characterized differently than we intend by regulators or courts; the failure of counterparties to perform their contractual obligations; litigation, regulatory inquiries, investigations and enforcement actions, and their costs and outcomes; business, economic, market and capital-market conditions; competition in our industry; changes in market demand for, and the pricing of, our products and services; our ability to define, design and release new products and services in a timely manner that meet customer needs; our ability to attract, retain and motivate qualified personnel, including key management; our ability to manage our growth and our transition; and our ability to maintain effective internal control over financial reporting and disclosure controls and procedures. 

This list of factors is not exhaustive. Additional risks and uncertainties are described more fully in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025, our Quarterly Reports on Form 10-Q, and our subsequent filings, which are available on the SEC’s website at www.sec.gov. Investors are urged to review the liquidity, capital resources and going concern disclosures contained in those reports.  

The forward-looking statements in this Communication speak only as of the date hereof. Except as required by law, neither FFR nor any other person undertakes any obligation to update or revise any forward-looking statement or financial projection set out herein, whether as a result of new information, future events or otherwise. This Communication is provided for informational purposes only, does not constitute an offer to sell or the solicitation of an offer to buy any security, and does not constitute investment, tax or legal advice or any investment recommendation, and does not take into account the investment objectives or financial situation of any person. FFR reserves the right to amend or replace the information contained herein, in whole or in part, at any time, and undertakes no obligation to notify any recipient thereof. Readers are cautioned not to place undue reliance on these forward-looking statements. This caution is made under, and these forward-looking statements are intended to be covered by, the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

FFAI FORWARD LOOKING STATEMENTS

Important factors that may affect actual results or outcomes include, among others: the Company’s ability to continue as a going concern and improve its liquidity and financial position; the Company’s ability to pay its outstanding obligations, which it currently lacks; the availability of sufficient share capital to meet its current obligations and execute on its strategy; the willingness of convertible debt investors to fund the Company; demand for the Company’s robotics products; competition in the robotics industry, which includes companies with far superior experience, funding and name recognition; the ability of the Company to build an EAI education ecosystem that serves both the B2C consumer market and the B2B institutional education market; the acceptance by teachers and students of the Company’s robotics products in the education market; the ability of the Company to expand into additional markets for its robotics products; the Company’s reliance on a single OEM for most of its robotics products; the Company’s reliance on Chinese OEMs for all of its robotics products; the possibility of the federal government banning imports of Chinese robotics products; the Company’s ability to get the planned robotics products to comply with all applicable U.S. rules and regulations; the ability of the robotics OEM to timely supply robotics to the Company; tariff uncertainty for imported products, particularly from China; the ability of the Company to close its transaction with FF EAI Robotics Ecosystem Inc. (FFR) for the sale of its robotics business; demand from automobile dealers for robotics products; the Company’s ability to homologate FX vehicles for sale; the Company’s ability to secure the necessary funding to execute on the FX strategy, which is substantial; the Company’s ability to secure an occupancy certificate covering all of its Hanford facility; the Company’s ability to remediate its material weaknesses in internal control over financial reporting and the risks related to the restatement of previously issued consolidated financial statements; the Company’s limited operating history and the significant barriers to growth it faces; the Company’s history of substantial losses and expectation of continued losses; the success of the Company’s payroll expense reduction plan; the Company’s ability to execute on its plans to develop and market its vehicles and the timing of these development programs; the Company’s ability to execute on its plans to enter the robotaxi and cybercab industries; the Company’s estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company’s vehicles; the Company’s ability to cover future warranty claims; the success of other competing manufacturers; the performance and security of the Company’s vehicles; current and potential litigation involving the Company; the Company’s ability to receive funds from, satisfy the conditions precedent of and close on the various financings described elsewhere by the Company; the result of future financing efforts, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company’s indebtedness; the Company’s ability to use its “at-the-market” program; insurance coverage; general economic and market conditions impacting demand for the Company’s products; potential negative impacts of a reverse stock split; potential cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; circumstances outside of the Company’s control, such as natural disasters, climate change, health epidemics and pandemics, terrorist attacks, and civil unrest; risks related to the Company’s operations in China; the success of the Company’s remedial measures taken in response to the Special Committee findings; the Company’s dependence on its suppliers and contract manufacturer; the Company’s ability to develop and protect its technologies; the Company’s ability to protect against cybersecurity risks; and the ability of the Company to attract and retain employees, any adverse developments in existing legal proceedings or the initiation of new legal proceedings; the volatility of the Company’s stock price; the ability of the Company to maintain its stock price above $1.00; and the ability of the Company to maintain compliance with Nasdaq regulations for continued listing. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 13, 2026; the quarter ended March 31, 2026, filed with the SEC on May 14, 2026; and Form 10-K filed with the SEC on March 31, 2026, and other documents filed by the Company from time to time with the SEC.

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SOURCE FF EAI Robotics Ecosystem Inc.

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