Premium Returns & Upside, But Value's Already in the Ductwork; Initiate at HOLD

Research evidence excerpt

Premium Returns & Upside, But Value's Already in the Ductwork; Initiate at HOLD

MAIR Seems ~Fairly Valued

at Current Levels, Reflecting Peer-Leadingand manufacturing. EBITDA Margin

600% MAIR

AAONIndustry-Leading Margins, Despite Mix. Madison delivers peer-leading gross & EBITDA margins 500% FIX

400%(2025 ~38.5% & 26.7%), with expectations for further expansion. Margin performance is driven by Sales TT

CARRan 80/20 management system coupled with a "Return on Air" strategy that stresses short paybacks 300% JCI LII SPXC EV/2027 200% WSO

EMEand prices accordingly. Margin execution comes despite an increase in data center mix, which 100%

carries margins a few pts below the corp avg. 0%

10% 15% 20% 25% 30%

.Data Centers: Actually, MAIR Can Build 'Em Fast Enough. Madison is differentiated in its ability 2027 EBITDA Margin % (Cons; MAIR JEFe) Source: FactSet, Jefferies

to deliver customized products to DC customers with shorter lead times vs peers. The company

operates a broad manufacturing footprint with purpose-built lines, enabling a faster move from

design to production.

Focus on Deleverage Sets Stage for More Inorganic Growth. NT mgmt remains focused on debt

reduction, targeting a net leverage range of 1.5–2.5x, as our ests suggest the company exits 2026

near 2.5x. Still, we view M&A as a significant LT opportunity, as mgmt has expressed a desire for

accretive bolt-ons. While timing will depend on debt paydown, we expect M&A to reasonably add

~LSD growth over time.

Stephen Volkmann, CFA * | Equity AnalystStrong Start with 1Q Sales and Margin Above the Street. Madison reported its first earnings as a

(212) 284-2031 | svolkmann@jefferies.com

public company on May 12, with sales and adj EBITDA margin above St estimates. 2026 revenue