• |
Net sales of $618.1 million increased 8 percent from the prior year
|
• |
Operating income of $48.5 million increased $27.9 million, or 135 percent, from the prior year, due in part to a significant restructuring charge recorded in the prior year
|
• |
Adjusted EBITDA of $65.5 million increased $8.8 million, or 16 percent, from the prior year
|
• |
Earnings per share of $1.69 compared to $0.16 in the prior year, and adjusted earnings per share of $0.67 increased $0.10, or 18 percent, from the prior year
|
• |
Net sales of $2.3 billion increased 12 percent from the prior year
|
• |
Operating income of $150.4 million increased $31.2 million, or 26 percent, from the prior year
|
• |
Adjusted EBITDA of $212.1 million increased $53.3 million, or 34 percent, from the prior year
|
• |
Earnings per share of $2.90 compared to $1.62 in the prior year, and adjusted earnings per share of $1.95 increased $0.72, or 59 percent, from the prior year
|
• |
Net sales up 4% to 10%
|
• |
Adjusted EBITDA of $240 million to $260 million, up 13% to 23%
|
• |
Climate Solutions segment sales were $263.0 million, compared with $259.5 million one year ago, an increase of 1 percent. On a constant currency basis, sales increased 5 percent from the prior year. This increase was driven by higher sales of data center cooling products, partially offset by lower sales of heat transfer and HVAC and refrigeration
products. The segment reported gross margin of 23.2 percent, which was 170 basis points higher than the prior year, primarily due to higher sales volume and favorable commercial pricing. The segment reported operating income of $34.2
million, a 7 percent increase from the prior year. Adjusted EBITDA was $41.8 million, an increase of $3.2 million, or 8 percent, from the prior year.
|
• |
Performance Technologies segment sales were $364.1 million, compared with $322.5 million one year ago, an increase of 13 percent. On a constant currency basis, sales increased 16 percent. This
increase primarily resulted from higher sales across all product groups as well as favorable commercial pricing. The segment reported gross margin of 14.0 percent, up 170 basis points from the prior year. The margin improvement was
primarily driven by higher sales volume and favorable commercial pricing. This was partially offset by inflationary cost increases and negative material pass through adjustments. The segment reported operating income of $24.5 million, a
$31.0 million improvement compared to the prior year, primarily due to higher gross profit and lower restructuring expenses, as compared to the prior year. Adjusted EBITDA was $33.3 million, an increase of $11.2 million, or 51 percent, from
the prior year.
|
Fiscal 2024
|
Current Outlook
|
Net Sales
|
+4% to 10%
|
Adjusted EBITDA
|
$240 to $260 million
|
Modine Manufacturing Company
|
|||||
Consolidated statements of operations (unaudited)
|
|||||
(In millions, except per share amounts)
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net sales
|
$
|
618.1
|
$
|
574.4
|
$
|
2,297.9
|
$
|
2,050.1
|
||||||||
Cost of sales
|
505.9
|
479.2
|
1,908.5
|
1,740.8
|
||||||||||||
Gross profit
|
112.2
|
95.2
|
389.4
|
309.3
|
||||||||||||
Selling, general & administrative expenses
|
60.9
|
53.5
|
234.0
|
215.1
|
||||||||||||
Restructuring expenses
|
2.8
|
21.1
|
5.0
|
24.1
|
||||||||||||
Impairment charges (reversals) – net
|
-
|
-
|
-
|
(55.7
|
)
|
|||||||||||
Loss on sale of assets
|
-
|
-
|
-
|
6.6
|
||||||||||||
Operating income
|
48.5
|
20.6
|
150.4
|
119.2
|
||||||||||||
Interest expense
|
(6.0
|
)
|
(3.8
|
)
|
(20.7
|
)
|
(15.6
|
)
|
||||||||
Other expense – net
|
(0.3
|
)
|
(0.5
|
)
|
(4.4
|
)
|
(2.1
|
)
|
||||||||
Earnings before income taxes
|
42.2
|
16.3
|
125.3
|
101.5
|
||||||||||||
Benefit (provision) for income taxes
|
48.1
|
(7.8
|
)
|
28.3
|
(15.2
|
)
|
||||||||||
Net earnings
|
90.3
|
8.5
|
153.6
|
86.3
|
||||||||||||
Net earnings attributable to noncontrolling interest
|
(0.4
|
)
|
(0.1
|
)
|
(0.5
|
)
|
(1.1
|
)
|
||||||||
Net earnings attributable to Modine
|
$
|
89.9
|
$
|
8.4
|
$
|
153.1
|
$
|
85.2
|
||||||||
Net earnings per share attributable to Modine shareholders – diluted
|
$
|
1.69
|
$
|
0.16
|
$
|
2.90
|
$
|
1.62
|
||||||||
Weighted-average shares outstanding – diluted
|
53.1
|
52.4
|
52.8
|
52.5
|
Condensed consolidated balance sheets (unaudited)
|
(In millions)
|
March 31, 2023
|
March 31, 2022
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
67.1
|
$
|
45.2
|
||||
Trade receivables
|
398.0
|
367.5
|
||||||
Inventories
|
324.9
|
281.2
|
||||||
Other current assets
|
56.4
|
63.7
|
||||||
Total current assets
|
846.4
|
757.6
|
||||||
Property, plant and equipment – net
|
314.5
|
315.4
|
||||||
Intangible assets – net
|
81.1
|
90.3
|
||||||
Goodwill
|
165.6
|
168.1
|
||||||
Deferred income taxes
|
83.7
|
27.2
|
||||||
Other noncurrent assets
|
74.6
|
68.4
|
||||||
Total assets
|
$
|
1,565.9
|
$
|
1,427.0
|
||||
Liabilities and shareholders' equity
|
||||||||
Debt due within one year
|
$
|
23.4
|
$
|
29.4
|
||||
Accounts payable
|
332.8
|
325.8
|
||||||
Other current liabilities
|
150.9
|
139.3
|
||||||
Total current liabilities
|
507.1
|
494.5
|
||||||
Long-term debt
|
329.3
|
348.4
|
||||||
Other noncurrent liabilities
|
129.9
|
126.0
|
||||||
Total liabilities
|
966.3
|
968.9
|
||||||
Total equity
|
599.6
|
458.1
|
||||||
Total liabilities & equity
|
$
|
1,565.9
|
$
|
1,427.0
|
Modine Manufacturing Company
|
Condensed consolidated statements of cash flows (unaudited)
|
(In millions)
|
Twelve months ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
153.6
|
$
|
86.3
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
54.5
|
54.8
|
||||||
Impairment charges (reversals) – net
|
-
|
(55.7
|
)
|
|||||
Loss on sale of assets
|
-
|
6.6
|
||||||
Stock-based compensation expense
|
6.6
|
5.7
|
||||||
Deferred income taxes
|
(59.6
|
)
|
(3.8
|
)
|
||||
Other – net
|
4.8
|
3.1
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
(40.7
|
)
|
(55.6
|
)
|
||||
Inventories
|
(49.4
|
)
|
(70.7
|
)
|
||||
Accounts payable
|
10.2
|
55.1
|
||||||
Accrued compensation and employee benefits
|
6.4
|
9.8
|
||||||
Other assets
|
19.6
|
(2.4
|
)
|
|||||
Other liabilities
|
1.5
|
(21.7
|
)
|
|||||
Net cash provided by operating activities
|
107.5
|
11.5
|
||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(50.7
|
)
|
(40.3
|
)
|
||||
Proceeds from (payments for) disposition of assets
|
0.3
|
(7.6
|
)
|
|||||
Other – net
|
-
|
(3.1
|
)
|
|||||
Net cash used for investing activities
|
(50.4
|
)
|
(51.0
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Net (decrease) increase in debt
|
(26.1
|
)
|
40.8
|
|||||
Purchase of treasury stock under share repurchase program
|
(7.3
|
)
|
-
|
|||||
Other – net
|
0.1
|
(1.6
|
)
|
|||||
Net cash (used for) provided by financing activities
|
(33.3
|
)
|
39.2
|
|||||
Effect of exchange rate changes on cash
|
(2.0
|
)
|
(0.4
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
21.8
|
(0.7
|
)
|
|||||
Cash, cash equivalents and restricted cash - beginning of period
|
45.4
|
46.1
|
||||||
Cash, cash equivalents and restricted cash - end of period
|
$
|
67.2
|
$
|
45.4
|
Modine Manufacturing Company
|
Segment operating results (unaudited)
|
(In millions)
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net sales:
|
||||||||||||||||
Climate Solutions
|
$
|
263.0
|
$
|
259.5
|
$
|
1,011.9
|
$
|
910.5
|
||||||||
Performance Technologies
|
364.1
|
322.5
|
1,316.2
|
1,172.4
|
||||||||||||
Segment total
|
627.1
|
582.0
|
2,328.1
|
2,082.9
|
||||||||||||
Corporate and eliminations
|
(9.0
|
)
|
(7.6
|
)
|
(30.2
|
)
|
(32.8
|
)
|
||||||||
Net sales
|
$
|
618.1
|
$
|
574.4
|
$
|
2,297.9
|
$
|
2,050.1
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||||||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||||||||||||||||||
Gross profit:
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Climate Solutions
|
$
|
61.1
|
23.2
|
%
|
$
|
55.9
|
21.5
|
%
|
$
|
223.6
|
22.1
|
%
|
$
|
166.3
|
18.3
|
%
|
||||||||||||||||
Performance Technologies
|
50.9
|
14.0
|
%
|
39.6
|
12.3
|
%
|
166.1
|
12.6
|
%
|
142.2
|
12.1
|
%
|
||||||||||||||||||||
Segment total
|
112.0
|
17.9
|
%
|
95.5
|
16.4
|
%
|
389.7
|
16.7
|
%
|
308.5
|
14.8
|
%
|
||||||||||||||||||||
Corporate and eliminations
|
0.2
|
-
|
(0.3
|
)
|
-
|
(0.3
|
)
|
-
|
0.8
|
-
|
||||||||||||||||||||||
Gross profit
|
$
|
112.2
|
18.2
|
%
|
$
|
95.2
|
16.6
|
%
|
$
|
389.4
|
16.9
|
%
|
$
|
309.3
|
15.1
|
%
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Operating income:
|
||||||||||||||||
Climate Solutions
|
$
|
34.2
|
$
|
32.0
|
$
|
124.1
|
$
|
73.4
|
||||||||
Performance Technologies
|
24.5
|
(6.5
|
)
|
65.6
|
77.4
|
|||||||||||
Segment total
|
58.7
|
25.5
|
189.7
|
150.8
|
||||||||||||
Corporate and eliminations
|
(10.2
|
)
|
(4.9
|
)
|
(39.3
|
)
|
(31.6
|
)
|
||||||||
Operating income
|
$
|
48.5
|
$
|
20.6
|
$
|
150.4
|
$
|
119.2
|
Modine Manufacturing Company
|
Adjusted financial results (unaudited)
|
(In millions, except per share amounts)
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net earnings
|
$
|
90.3
|
$
|
8.5
|
$
|
153.6
|
$
|
86.3
|
||||||||
Interest expense
|
6.0
|
3.8
|
20.7
|
15.6
|
||||||||||||
(Benefit) provision for income taxes
|
(48.1
|
)
|
7.8
|
(28.3
|
)
|
15.2
|
||||||||||
Depreciation and amortization expense
|
13.8
|
14.4
|
54.5
|
54.8
|
||||||||||||
Other expense – net
|
0.3
|
0.5
|
4.4
|
2.1
|
||||||||||||
Restructuring expenses (a)
|
2.8
|
21.1
|
5.0
|
24.1
|
||||||||||||
Impairment charges (reversals) – net (b)
|
-
|
-
|
-
|
(55.7
|
)
|
|||||||||||
Loss on sale of assets (c)
|
-
|
-
|
-
|
6.6
|
||||||||||||
Environmental charges (d)
|
0.4
|
0.2
|
2.2
|
3.8
|
||||||||||||
Strategic reorganization and automotive exit costs (e)
|
-
|
0.4
|
-
|
6.0
|
||||||||||||
Adjusted EBITDA
|
$
|
65.5
|
$
|
56.7
|
$
|
212.1
|
$
|
158.8
|
||||||||
|
||||||||||||||||
Net earnings per share attributable to Modine shareholders - diluted
|
$
|
1.69
|
$
|
0.16
|
$
|
2.90
|
$
|
1.62
|
||||||||
Restructuring expenses (a)
|
0.05
|
0.40
|
0.08
|
0.45
|
||||||||||||
Impairment charges (reversals) – net (b)
|
-
|
-
|
-
|
(0.94
|
)
|
|||||||||||
Loss on sale of assets (c)
|
-
|
-
|
-
|
0.13
|
||||||||||||
Environmental charges (d)
|
0.01
|
-
|
0.04
|
0.07
|
||||||||||||
Strategic reorganization and automotive exit costs (e)
|
-
|
0.01
|
-
|
0.12
|
||||||||||||
Debt amendment costs (f)
|
-
|
-
|
0.01
|
-
|
||||||||||||
Tax valuation allowances (g)
|
(1.08
|
)
|
-
|
(1.08
|
)
|
(0.22
|
)
|
|||||||||
Adjusted earnings per share
|
$
|
0.67
|
$
|
0.57
|
$
|
1.95
|
$
|
1.23
|
(a) |
Restructuring expenses include employee severance-related expenses and equipment transfer costs. The fiscal 2023 restructuring expenses primarily relate to targeted headcount reductions within the
Climate Solutions and Performance Technologies segments. The fiscal 2022 restructuring expenses primarily relate to headcount reductions in Europe within the Performance Technologies segment. The tax benefit related to restructuring
expenses during the fourth quarter of fiscal 2023 and fiscal 2022 was $0.3 million and $0, respectively. The tax benefit related to restructuring expenses during fiscal 2023 and fiscal 2022 was $0.6 million and $0.3 million, respectively.
|
(b) |
The net impairment reversal during fiscal 2022 primarily relates to the Company's liquid-cooled automotive business. In connection with the termination of the agreement to sell this business in
the third quarter of fiscal 2022, the Company reversed a significant amount of previously-recorded impairment charges within the Performance Technologies segment. The tax charge related to the net impairment reversal during fiscal 2022 was
$6.1 million.
|
(c)
|
The Company's sale of its air-cooled automotive business in Austria 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)
|
Environmental charges, including related legal costs, are recorded as SG&A expenses at Corporate and relate to a previously-owned U.S. manufacturing
facility.
|
(e)
|
The fiscal 2022 amounts include costs recorded at Corporate associated with the Company’s strategic reorganization and automotive exit strategy. During fiscal
2022, the Company recorded SG&A expenses totaling $3.4 million related to recruiting new senior management and the Company’s implementation of 80/20. In addition, the Company recorded $2.6 million of costs associated with its review
of strategic alternatives for its automotive businesses, including costs to prepare the businesses for sale. These costs were primarily recorded as SG&A expenses and consisted of accounting, legal, and IT professional services.
There were no tax benefits related to the strategic reorganization or automotive exit strategy costs during fiscal 2022.
|
(f)
|
In October 2022, the Company amended and extended its primary debt agreement in the U.S. that provides for a five-year revolving credit facility and term
loans. In connection with the credit agreement modification, the Company recorded $0.7 million of costs as interest expense during the third quarter of fiscal 2023. There was no tax benefit associated with these costs.
|
(g)
|
During the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on certain deferred tax assets in the U.S. As a result, the Company
recorded an income tax benefit of $57.3 million. During fiscal 2022, the Company reversed valuation allowances on deferred tax assets in Italy, China, and the Netherlands. These reversals were partially offset by a valuation allowance
established on other deferred tax assets in China. As a result, the Company recorded net income tax benefits totaling $11.4 million during fiscal 2022.
|
Modine Manufacturing Company
|
|||||||||||||||
Segment adjusted financial results (unaudited)
|
|||||||||||||||
(In millions)
|
|
Three months ended March 31, 2023
|
Three months ended March 31, 2022
|
||||||||||||||||||||||||||||||
|
Climate Solutions
|
Performance Technologies
|
Corporate and
eliminations
|
Total
|
Climate Solutions
|
Performance Technologies
|
Corporate and
eliminations
|
Total
|
||||||||||||||||||||||||
Operating income (loss)
|
$
|
34.2
|
$
|
24.5
|
$
|
(10.2
|
)
|
$
|
48.5
|
$
|
32.0
|
$
|
(6.5
|
)
|
$
|
(4.9
|
)
|
$
|
20.6
|
|||||||||||||
Depreciation and amortization expense
|
5.7
|
7.9
|
0.2
|
13.8
|
6.1
|
8.0
|
0.3
|
14.4
|
||||||||||||||||||||||||
Restructuring expenses (a)
|
1.9
|
0.9
|
-
|
2.8
|
0.5
|
20.6
|
-
|
21.1
|
||||||||||||||||||||||||
Environmental charges (a)
|
-
|
-
|
0.4
|
0.4
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Strategic reorganization and
automotive exit costs (a)
|
-
|
-
|
-
|
-
|
-
|
-
|
0.4
|
0.4
|
||||||||||||||||||||||||
Adjusted EBITDA
|
$
|
41.8
|
$
|
33.3
|
$
|
(9.6
|
)
|
$
|
65.5
|
$
|
38.6
|
$
|
22.1
|
$
|
(4.0
|
)
|
$
|
56.7
|
||||||||||||||
|
||||||||||||||||||||||||||||||||
Net sales
|
$
|
263.0
|
$
|
364.1
|
$
|
(9.0
|
)
|
$
|
618.1
|
$
|
259.5
|
$
|
322.5
|
$
|
(7.6
|
)
|
$
|
574.4
|
||||||||||||||
Adjusted EBITDA margin
|
15.9
|
%
|
9.1
|
%
|
10.6
|
%
|
14.9
|
%
|
6.9
|
%
|
9.9
|
%
|
|
Twelve months ended March 31, 2023
|
Twelve months ended March 31, 2022
|
||||||||||||||||||||||||||||||
|
Climate Solutions
|
Performance Technologies
|
Corporate and
eliminations
|
Total
|
Climate Solutions
|
Performance Technologies
|
Corporate and
eliminations
|
Total
|
||||||||||||||||||||||||
Operating income
|
$
|
124.1
|
$
|
65.6
|
$
|
(39.3
|
)
|
$
|
150.4
|
$
|
73.4
|
$
|
77.4
|
$
|
(31.6
|
)
|
$
|
119.2
|
||||||||||||||
Depreciation and amortization expense
|
21.7
|
31.8
|
1.0
|
54.5
|
23.6
|
29.9
|
1.3
|
54.8
|
||||||||||||||||||||||||
Restructuring expenses (a)
|
2.2
|
2.8
|
-
|
5.0
|
2.2
|
21.9
|
-
|
24.1
|
||||||||||||||||||||||||
Impairment charges (reversals) – net (a)
|
-
|
-
|
-
|
-
|
0.3
|
(56.0
|
)
|
-
|
(55.7
|
)
|
||||||||||||||||||||||
Loss on sale of assets (a)
|
-
|
-
|
-
|
-
|
-
|
-
|
6.6
|
6.6
|
||||||||||||||||||||||||
Environmental charges (a)
|
-
|
-
|
2.2
|
2.2
|
-
|
-
|
3.8
|
3.8
|
||||||||||||||||||||||||
Strategic reorganization and automotive
exit costs (a)
|
-
|
-
|
-
|
-
|
-
|
-
|
6.0
|
6.0
|
||||||||||||||||||||||||
Adjusted EBITDA
|
$
|
148.0
|
$
|
100.2
|
$
|
(36.1
|
)
|
$
|
212.1
|
$
|
99.5
|
$
|
73.2
|
$
|
(13.9
|
)
|
$
|
158.8
|
||||||||||||||
|
||||||||||||||||||||||||||||||||
Net sales
|
$
|
1,011.9
|
$
|
1,316.2
|
$
|
(30.2
|
)
|
$
|
2,297.9
|
$
|
910.5
|
$
|
1,172.4
|
$
|
(32.8
|
)
|
$
|
2,050.1
|
||||||||||||||
Adjusted EBITDA margin
|
14.6
|
%
|
7.6
|
%
|
9.2
|
%
|
10.9
|
%
|
6.2
|
%
|
7.7
|
%
|
(a)
|
See the Adjusted EBITDA reconciliation on the previous page for information on restructuring expenses and other adjustments.
|
Net debt (unaudited)
|
||||||||
(In millions)
|
||||||||
March 31, 2023
|
March 31, 2022
|
|||||||
Debt due within one year
|
$
|
23.4
|
$
|
29.4
|
||||
Long-term debt
|
329.3
|
348.4
|
||||||
Total debt
|
352.7
|
377.8
|
||||||
Less: cash and cash equivalents
|
67.1
|
45.2
|
||||||
Net debt
|
$
|
285.6
|
$
|
332.6
|
Modine Manufacturing Company
|
|||||||
Free cash flow (unaudited)
|
|||||||
(In millions)
|
|||||||
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
Twelve months ended March 31,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net cash provided by operating activities
|
$
|
39.6
|
$
|
4.1
|
$
|
107.5
|
$
|
11.5
|
||||||||
Expenditures for property, plant and equipment
|
(15.5
|
)
|
(9.6
|
)
|
(50.7
|
)
|
(40.3
|
)
|
||||||||
Free cash flow
|
$
|
24.1
|
$
|
(5.5
|
)
|
$
|
56.8
|
$
|
(28.8
|
)
|
Net sales - constant currency (unaudited)
|
|||||||
(In millions)
|
|||||||
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|||||||||||||||
|
2023
|
2022
|
||||||||||||||
|
Net Sales
|
Effect of Exchange Rate
Changes
|
Net Sales -
Constant Currency |
Net Sales
|
||||||||||||
Climate Solutions
|
$
|
263.0
|
$
|
8.3
|
$
|
271.3
|
$
|
259.5
|
||||||||
Performance Technologies
|
364.1
|
9.8
|
373.9
|
322.5
|
||||||||||||
Segment total
|
627.1
|
18.1
|
645.2
|
582.0
|
||||||||||||
Corporate and eliminations
|
(9.0
|
)
|
-
|
(9.0
|
)
|
(7.6
|
)
|
|||||||||
Net sales
|
$
|
618.1
|
$
|
18.1
|
$
|
636.2
|
$
|
574.4
|