Try our mobile app
 |
| • |
Net sales of $494.6 million increased 42 percent from the prior year
|
| • |
Operating income of $8.7 million increased $11.9 million
|
| • |
Adjusted EBITDA of $33.3 million increased $12.8 million or 62 percent
|
| • |
Earnings per share of $0.04 and adjusted earnings per share of $0.20
|
| • |
BHVAC segment sales were $59.9 million, compared with $47.6 million one year ago, an increase of 26 percent. This increase was driven primarily by higher sales of
heating products in the U.S. and air conditioning, data center, and ventilation products in the U.K. The segment reported gross margin of 27.1 percent, which was 340 basis points lower than the prior year, primarily due to higher material
and labor costs, including the impact of cost saving initiatives taken in the first quarter of fiscal 2021 in response to the COVID-19 pandemic. The segment reported operating income of $6.8 million, a $0.3 million decrease from the prior
year, primarily due to higher SG&A expenses. Adjusted EBITDA for the BHVAC segment was $7.7 million, a decrease of $0.2 million from the prior year.
|
| • |
CIS segment sales were $159.2 million, compared with $122.5 million one year ago, an increase of 30 percent. This increase was driven by higher sales to commercial HVAC
and refrigeration customers. The segment reported gross margin of 13.0 percent, up 40 basis points compared with the prior year, primarily due to higher sales volumes, partially offset by the negative impact of higher material and overhead
costs. The segment reported operating income of $6.4 million, a $6.4 million increase from the prior year, primarily due to higher gross profit on higher sales. Adjusted EBITDA for the CIS segment was $12.6 million, an increase of $4.0
million from the prior year.
|
| • |
HDE segment sales were $201.8 million, compared with $123.5 million one year ago, an increase of 63 percent. This increase was driven by higher sales to all end markets
around the world, largely as the result of improved end market demand. The segment reported gross margin of 11.2 percent, up 200 basis points from the prior year. This increase was primarily driven by higher sales volume partially offset by
higher material and tariff costs. The segment reported operating income of $8.9 million, an $11.4 million increase compared to an operating loss of $2.5 million in the prior year. This increase was primarily due to higher gross profit on
higher sales volume and lower restructuring expenses, partially offset by higher SG&A expenses. Adjusted EBITDA for the HDE segment was $15.4 million, an increase of $9.9 million from the prior year.
|
| • |
Automotive segment sales were $86.2 million, compared with $62.1 million one year ago, an increase of 39 percent. This increase was driven by higher end market demand,
primarily in Europe. The segment reported gross margin of 15.3 percent, up 760 basis points compared with the prior year, primarily due to higher sales volume and lower depreciation expense, partially offset by higher material and tariff
costs. The segment’s operating income of $4.2 million was up $8.0 million, primarily due to higher gross profit partially offset by higher SG&A expenses as compared to an operating loss of $3.8 million in the prior year. Adjusted EBITDA
for the Automotive segment was $2.3 million, an increase of $0.9 million from the prior year.
|
| • |
Full fiscal year-over-year sales up 12 to 18 percent;
|
| • |
Adjusted EBITDA of $170 million to $185 million.
|
|
Modine Manufacturing Company
|
|
Consolidated statements of operations (unaudited)
|
|
(In millions, except per share amounts)
|
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net sales
|
$
|
494.6
|
$
|
347.8
|
||||
|
Cost of sales
|
421.4
|
301.7
|
||||||
|
Gross profit
|
73.2
|
46.1
|
||||||
|
Selling, general & administrative expenses
|
59.4
|
44.7
|
||||||
|
Restructuring expenses
|
0.3
|
4.6
|
||||||
|
Impairment charges (reversals) – net
|
(1.8
|
)
|
-
|
|||||
|
Loss on sale of assets
|
6.6
|
-
|
||||||
|
Operating income (loss)
|
8.7
|
(3.2
|
)
|
|||||
|
Interest expense
|
(4.2
|
)
|
(5.4
|
)
|
||||
|
Other income – net
|
0.2
|
-
|
||||||
|
Earnings (loss) before income taxes
|
4.7
|
(8.6
|
)
|
|||||
|
(Provision) benefit for income taxes
|
(1.9
|
)
|
0.2
|
|||||
|
Net earnings (loss)
|
2.8
|
(8.4
|
)
|
|||||
|
Net earnings attributable to noncontrolling interest
|
(0.5
|
)
|
(0.2
|
)
|
||||
|
Net earnings (loss) attributable to Modine
|
$
|
2.3
|
$
|
(8.6
|
)
|
|||
|
Net earnings (loss) per share attributable to Modine shareholders - diluted
|
$
|
0.04
|
$
|
(0.17
|
)
|
|||
|
Weighted-average shares outstanding - diluted
|
52.5
|
50.9
|
||||||
|
Condensed consolidated balance sheets (unaudited)
|
|
(In millions)
|
|
June 30, 2021
|
March 31, 2021
|
|||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
49.0
|
$
|
37.8
|
||||
|
Trade receivables
|
293.7
|
267.9
|
||||||
|
Inventories
|
229.1
|
195.6
|
||||||
|
Assets held for sale
|
76.1
|
107.6
|
||||||
|
Other current assets
|
43.1
|
35.9
|
||||||
|
Total current assets
|
691.0
|
644.8
|
||||||
|
Property, plant and equipment - net
|
271.6
|
269.9
|
||||||
|
Intangible assets - net
|
99.0
|
100.6
|
||||||
|
Goodwill
|
171.4
|
170.7
|
||||||
|
Deferred income taxes
|
28.1
|
24.5
|
||||||
|
Other noncurrent assets
|
65.8
|
66.2
|
||||||
|
Total assets
|
$
|
1,326.9
|
$
|
1,276.7
|
||||
|
Liabilities and shareholders' equity
|
||||||||
|
Debt due within one year
|
$
|
22.5
|
$
|
23.3
|
||||
|
Accounts payable
|
260.0
|
233.9
|
||||||
|
Liabilities held for sale
|
62.5
|
103.3
|
||||||
|
Other current liabilities
|
123.0
|
108.7
|
||||||
|
Total current liabilities
|
468.0
|
469.2
|
||||||
|
Long-term debt
|
348.6
|
311.2
|
||||||
|
Other noncurrent liabilities
|
143.1
|
140.2
|
||||||
|
Total liabilities
|
959.7
|
920.6
|
||||||
|
Total equity
|
367.2
|
356.1
|
||||||
|
Total liabilities & equity
|
$
|
1,326.9
|
$
|
1,276.7
|
||||
|
Modine Manufacturing Company
|
|
Condensed consolidated statements of cash flows (unaudited)
|
|
(In millions)
|
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net earnings (loss)
|
$
|
2.8
|
$
|
(8.4
|
)
|
|||
|
Adjustments to reconcile net earnings (loss) to net cash (used for) provided by
|
||||||||
|
operating activities:
|
||||||||
|
Depreciation and amortization
|
13.5
|
18.6
|
||||||
|
Impairment charges (reversals) – net
|
(1.8
|
)
|
-
|
|||||
|
Loss on sale of assets
|
6.6
|
-
|
||||||
|
Stock-based compensation expense
|
1.2
|
0.7
|
||||||
|
Deferred income taxes
|
(3.1
|
)
|
(5.9
|
)
|
||||
|
Other - net
|
0.9
|
1.3
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Trade accounts receivable
|
(4.9
|
)
|
21.7
|
|||||
|
Inventories
|
(26.7
|
)
|
(1.5
|
)
|
||||
|
Accounts payable
|
9.2
|
(34.1
|
)
|
|||||
|
Other assets and liabilities
|
(7.8
|
)
|
19.9
|
|||||
|
Net cash (used for) provided by operating activities
|
(10.1
|
)
|
12.3
|
|||||
|
Cash flows from investing activities:
|
||||||||
|
Expenditures for property, plant and equipment
|
(11.4
|
)
|
(9.1
|
)
|
||||
|
Proceeds from (payments for) disposition of assets
|
(5.7
|
)
|
0.6
|
|||||
|
Other - net
|
1.6
|
-
|
||||||
|
Net cash used for investing activities
|
(15.5
|
)
|
(8.5
|
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Net increase in debt
|
40.7
|
3.4
|
||||||
|
Other - net
|
(1.3
|
)
|
(1.6
|
)
|
||||
|
Net cash provided by financing activities
|
39.4
|
1.8
|
||||||
|
Effect of exchange rate changes on cash
|
0.4
|
0.6
|
||||||
|
Net increase in cash, cash equivalents, restricted cash and cash held for sale
|
14.2
|
6.2
|
||||||
|
Cash, cash equivalents, restricted cash and cash held for sale - beginning of period
|
46.1
|
71.3
|
||||||
|
Cash, cash equivalents, restricted cash and cash held for sale - end of period
|
$
|
60.3
|
$
|
77.5
|
||||
|
Modine Manufacturing Company
|
|
Segment operating results (unaudited)
|
|
(In millions)
|
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net sales:
|
||||||||
|
Building HVAC Systems
|
$
|
59.9
|
$
|
47.6
|
||||
|
Commercial and Industrial Solutions
|
159.2
|
122.5
|
||||||
|
Heavy Duty Equipment
|
201.8
|
123.5
|
||||||
|
Automotive
|
86.2
|
62.1
|
||||||
|
Segment total
|
507.1
|
355.7
|
||||||
|
Corporate and eliminations
|
(12.5
|
)
|
(7.9
|
)
|
||||
|
Net sales
|
$
|
494.6
|
$
|
347.8
|
||||
|
Three months ended June 30,
|
||||||||||||||||
|
2021
|
2020
|
|||||||||||||||
|
Gross profit:
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||
|
Building HVAC Systems
|
$
|
16.2
|
27.1
|
%
|
$
|
14.5
|
30.5
|
%
|
||||||||
|
Commercial and Industrial Solutions
|
20.8
|
13.0
|
%
|
15.5
|
12.6
|
%
|
||||||||||
|
Heavy Duty Equipment
|
22.6
|
11.2
|
%
|
11.3
|
9.2
|
%
|
||||||||||
|
Automotive
|
13.2
|
15.3
|
%
|
4.8
|
7.7
|
% |
||||||||||
|
Segment total
|
72.8
|
14.3
|
%
|
46.1
|
13.0
|
%
|
||||||||||
|
Corporate and eliminations
|
0.4
|
-
|
-
|
-
|
||||||||||||
|
Gross profit
|
$
|
73.2
|
14.8
|
%
|
$
|
46.1
|
13.3
|
%
|
||||||||
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Operating income:
|
||||||||
|
Building HVAC Systems
|
$
|
6.8
|
$
|
7.1
|
||||
|
Commercial and Industrial Solutions
|
6.4
|
-
|
||||||
|
Heavy Duty Equipment
|
8.9
|
(2.5
|
)
|
|||||
|
Automotive
|
4.2
|
(3.8
|
)
|
|||||
|
Segment total
|
26.3
|
0.8
|
||||||
|
Corporate and eliminations
|
(17.6
|
)
|
(4.0
|
)
|
||||
|
Operating income (loss)
|
$
|
8.7
|
$
|
(3.2
|
)
|
|||
|
Modine Manufacturing Company
|
|
Adjusted financial results (unaudited)
|
|
(In millions, except per share amounts)
|
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net earnings (loss)
|
$
|
2.8
|
$
|
(8.4
|
)
|
|||
|
Interest expense
|
4.2
|
5.4
|
||||||
|
Provision (benefit) for income taxes
|
1.9
|
(0.2
|
)
|
|||||
|
Depreciation and amortization expense
|
13.5
|
18.6
|
||||||
|
Other income – net
|
(0.2
|
)
|
-
|
|||||
|
Restructuring expenses (a)
|
0.3
|
4.6
|
||||||
|
Impairment charges (reversals) – net (b)
|
(1.8
|
)
|
-
|
|||||
|
Loss on sale of assets (c)
|
6.6
|
-
|
||||||
|
Automotive separation and exit strategy costs (d)
|
1.9
|
0.5
|
||||||
|
Strategic reorganization costs (e)
|
0.6
|
-
|
||||||
|
Environmental charges (f)
|
3.5
|
-
|
||||||
|
Adjusted EBITDA
|
$
|
33.3
|
$
|
20.5
|
||||
|
Net earnings (loss) per share attributable to Modine shareholders - diluted
|
$
|
0.04
|
$
|
(0.17
|
)
|
|||
|
Restructuring expenses (a)
|
-
|
0.07
|
||||||
|
Loss on sale of assets (c)
|
0.13
|
-
|
||||||
|
Automotive separation and exit strategy costs (d)
|
0.04
|
0.01
|
||||||
|
Strategic reorganization costs (e)
|
0.01
|
-
|
||||||
|
Environmental charges (f)
|
0.07
|
-
|
||||||
|
Tax valuation allowance (g)
|
(0.09
|
)
|
-
|
|||||
|
Adjusted earnings per share
|
$
|
0.20
|
$
|
(0.09
|
)
|
|||
| (a) |
Restructuring expenses primarily consist of employee severance expenses related to targeted headcount reductions and plant consolidation activities. The tax benefit
related to restructuring expenses during the first quarter of fiscal 2022 and fiscal 2021 was $0 and $0.8 million, respectively.
|
| (b) |
The net impairment reversal in the first quarter of fiscal 2022 primarily relates to the Company's liquid-cooled automotive business within the Automotive segment. The
Company and the buyer modified the transaction perimeter and are currently in the process of amending the sale agreement. Certain manufacturing operations will no longer convey as part of the pending sale. Accordingly, the Company evaluated
the long-lived assets of these businesses and reversed $7.4 million of previously-recorded impairment charges to adjust the asset groups to estimated fair value. This impairment reversal was partially offset by $5.6 million of impairment
charges recorded during the first quarter of fiscal 2022 related to other assets held for sale. The tax charge related to the net impairment reversal was $1.8 million.
|
| (c) |
The Company's sale of its air-cooled automotive business closed on April 30, 2021. As a result of the sale, the Company recorded a $6.6 million loss on sale at
Corporate during the first quarter of fiscal 2022. There was no tax impact associated with this transaction.
|
| (d) |
Automotive separation and exit strategy costs consist of costs directly associated with the Company's review of strategic alternatives for the liquid-cooled and
air-cooled automotive businesses, including costs to separate and prepare the underlying businesses for sale. With the exception of $0.1 million and $0.2 million of costs in the first quarter of fiscal 2022 and fiscal 2021, respectively,
associated with program and equipment transfers recorded as costs of sales, these costs were recorded as SG&A expenses at Corporate and primarily related to accounting, legal, and IT professional services. The tax benefit related to
these costs during the first quarter of fiscal 2022 and fiscal 2021 was $0 and $0.1 million, respectively.
|
| (e) |
Strategic reorganization costs, recorded as SG&A expenses at Corporate, primarily relate to professional services for the recruiting of new senior management
positions and the Company's implementation of its 80/20 strategy. The Company is in the process of recruiting general managers as part of its redesigned organizational structure, which better aligns its businesses with key end markets.
|
| (f) |
Environmental charges, including related legal costs, are recorded as SG&A expenses at Corporate and relate to a previously-owned U.S. manufacturing facility.
|
| (g) |
As of June 30, 2021, the Company reversed a valuation allowance on its deferred tax assets in Italy and, as a result, recorded an income tax benefit of $4.8 million.
|
|
Modine Manufacturing Company
|
|
Segment adjusted financial results (unaudited)
|
|
(In millions)
|
|
Three months ended June 30, 2021
|
Three months ended June 30, 2020
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Building HVAC Systems
|
Commercial
and Industrial
Solutions
|
Heavy Duty Equipment
|
Automotive
|
Corporate and eliminations
|
Total
|
Building HVAC Systems
|
Commercial
and Industrial
Solutions
|
Heavy Duty Equipment
|
Automotive
|
Corporate and eliminations
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
Operating income (loss)
|
$
|
6.8
|
$
|
6.4
|
$
|
8.9
|
$
|
4.2
|
$
|
(17.6
|
)
|
$
|
8.7
|
$
|
7.1
|
$
|
-
|
$
|
(2.5
|
)
|
$
|
(3.8
|
)
|
$
|
(4.0
|
)
|
$
|
(3.2
|
)
|
|||||||||||||||||||
|
Depreciation and amortization expense
|
0.9
|
5.9
|
6.3
|
0.1
|
0.3
|
13.5
|
0.8
|
6.2
|
6.1
|
5.0
|
0.5
|
18.6
|
||||||||||||||||||||||||||||||||||||
|
Restructuring expenses (a)
|
-
|
-
|
0.2
|
0.1
|
-
|
0.3
|
-
|
2.4
|
1.9
|
0.2
|
0.1
|
4.6
|
||||||||||||||||||||||||||||||||||||
|
Impairment charges (reversals) – net (a)
|
-
|
0.3
|
-
|
(2.1
|
)
|
-
|
(1.8
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||
|
Loss on sale of assets (a)
|
-
|
-
|
-
|
-
|
6.6
|
6.6
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
|
Automotive separation and exit strategy costs (a)
|
-
|
-
|
-
|
-
|
1.9
|
1.9
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
||||||||||||||||||||||||||||||||||||
|
Strategic reorganization costs (a)
|
-
|
-
|
-
|
-
|
0.6
|
0.6
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
|
Environmental charges (a)
|
-
|
-
|
-
|
-
|
3.5
|
3.5
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA
|
$
|
7.7
|
$
|
12.6
|
$
|
15.4
|
$
|
2.3
|
$
|
(4.7
|
)
|
$
|
33.3
|
$
|
7.9
|
$
|
8.6
|
$
|
5.5
|
$
|
1.4
|
$
|
(2.9
|
)
|
$
|
20.5
|
||||||||||||||||||||||
|
(a)
|
See the Adjusted EBITDA reconciliation on the previous page for information on restructuring expenses and other adjustments.
|
|
Net debt (unaudited)
|
||||||||
|
(In millions)
|
||||||||
|
June 30, 2021
|
March 31, 2021
|
|||||||
|
Debt due within one year
|
$
|
22.5
|
$
|
23.3
|
||||
|
Long-term debt
|
348.6
|
311.2
|
||||||
|
Total debt
|
371.1
|
334.5
|
||||||
|
Less: cash and cash equivalents
|
49.0
|
37.8
|
||||||
|
Net debt
|
$
|
322.1
|
$
|
296.7
|
||||
|
Free cash flow (unaudited)
|
||||||||
|
(In millions)
|
||||||||
|
Three months ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net cash (used for) provided by operating activities
|
$
|
(10.1
|
)
|
$
|
12.3
|
|||
|
Expenditures for property, plant and equipment
|
(11.4
|
)
|
(9.1
|
)
|
||||
|
Free cash flow
|
$
|
(21.5
|
)
|
$
|
3.2
|
|||
