RACINE, Wis., May 28, 2020 /PRNewswire/ -- Modine
Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported
financial results for the quarter and fiscal year ended
March 31, 2020.
Fourth Quarter Highlights:
- Net sales of $472.9 million
decreased 15 percent from the prior year
- Operating income declined to $5.6
million and adjusted operating income to $24.8 million
- Loss per share of $0.13 and
adjusted earnings per share of $0.24
- Automotive business sale temporarily delayed, but the Company
will resume the process as soon as possible
Full Year Highlights:
- Net sales of $1,975.5 million
decreased 11 percent from the prior year
- Operating income of $37.9 million
and adjusted operating income of $97.3
million
- Loss per share of $0.04 and
adjusted earnings per share of $1.05
- Successfully completed the separation of the Automotive
business, creating a stand-alone business segment to facilitate the
exit strategy
Liquidity Update and Risk Mitigation Initiatives
In response to the significant reduction in customer demand
resulting from the COVID-19 crisis, the Company has taken the
following actions to further reduce operating expenses, conserve
cash and maximize liquidity:
- Reduced employee and executive salaries by 10 to 20
percent
- Reduced board of directors annual cash compensation by 20
percent
- Implemented a combination of furloughs and shortened work weeks
for salaried employees
- Reduced production schedules to align manufacturing operations
with customer demand, resulting in the temporary layoff of
manufacturing employees
- Reduced planned fiscal 2021 capital expenditures by 25
percent
- Amended credit agreement to provide liquidity through covenant
flexibility for next two fiscal years
"We finished a challenging year on a strong note despite the
impact of the COVID-19 pandemic on our manufacturing operations in
March," said Modine President and
Chief Executive Officer, Thomas A.
Burke. "Modine faced unprecedented conditions in many
of our end markets this year, but rose to the challenge by quickly
implementing cost saving measures in response to lower end-market
demand. In addition, we successfully amended our credit
agreement to increase our flexibility and temporarily paused
activities related to the sale of our auto business, which we will
resume once economic conditions allow. The pandemic has
presented new challenges for us, and we are continuing to take the
actions necessary to prioritize the health of our employees and to
serve our customers and communities during these difficult
times."
Financial Results
Net sales decreased 15 percent in the fourth quarter to
$472.9 million, compared with
$556.7 million in the prior
year. The decrease was primarily driven by market-related
volume declines in the automotive, off-highway and commercial
vehicle markets in the Vehicular Thermal Solutions ("VTS") segment
and lower data center, commercial HVAC and refrigeration sales in
the Commercial and Industrial Solutions ("CIS") segment. This
decline includes the impact of COVID-19 related plant closures
around the world during the quarter.
Gross profit decreased 18 percent in the fourth quarter to
$74.9 million, primarily driven by
volume declines in the VTS and CIS segments. This was
partially offset by higher gross profit in the Building HVAC
("BHVAC") segment, which increased 15 percent on slightly lower
sales volume. Overall gross margin decreased 60 basis points during
the quarter to 15.8 percent, primarily due to lower margins in the
VTS and CIS segments as a result of lower sales volume.
Selling, general and administrative ("SG&A") expenses were
$55.2 million in the fourth quarter,
which was $9.0 million or 14 percent
lower than the prior year. This decrease was primarily due to
lower compensation-related expenses, including decreased incentive
compensation, and the benefits from cost savings initiatives across
the organization.
Operating income was $5.6 million
in the fourth quarter, compared to $18.5
million in the prior year. This decrease was driven
primarily by lower gross profit and asset impairment charges
recorded in the fourth quarter of fiscal 2020, partially offset by
lower SG&A and restructuring expenses as compared to the prior
year. During the fourth quarter of fiscal 2020, the Company
recorded $8.6 million of impairment
charges primarily related to manufacturing facilities in
Austria and Germany and $5.5
million of restructuring expenses primarily related to
employee severance expenses. In addition, the Company
recorded $5.0 million of costs to
separate and prepare the automotive business for a potential
sale. In the prior year, strategy and restructuring expenses
and certain other items totaled $16.1
million. Excluding these items, adjusted operating
income of $24.8 million was down 28
percent compared with $34.6 million
in the prior year.
The loss per share was $0.13 in
the fourth quarter, compared with earnings per share of
$0.12 in the prior year. This
decrease was primarily due to lower operating income compared to
the prior year, including the impact of the impairment charges, and
a higher effective tax rate. Adjusted earnings per share were
$0.24 in the fourth quarter, compared
with $0.40 in the prior year.
This decrease was primarily due to lower adjusted operating income
compared to the prior year.
Fourth Quarter Segment Review
- VTS segment sales were $279.5
million, compared with $340.0
million one year ago, a decrease of 18 percent. This
decrease was driven by lower sales to all vehicular end markets and
included the planned wind down of certain commercial vehicle
programs. The segment reported gross margin of 12.8 percent,
down 100 basis points from the prior year. This decrease was
primarily due to lower sales volume. The segment's operating
loss of $1.4 million decreased
$11.1 million compared to operating
income of $9.7 million in the prior
year. This decrease was due to lower gross profit on the
lower sales volume and the impact of $8.0
million in impairment charges, partially offset by lower
SG&A and restructuring expenses as compared to the prior
year.
- CIS segment sales were $150.9
million, compared with $178.5
million one year ago, a decrease of 15 percent. This
decrease was driven by lower sales across all major end markets,
including commercial HVAC, refrigeration and data centers. The
segment reported gross margin of 15.3 percent, down 140 basis
points compared with the prior year, primarily due to lower sales
volumes and unfavorable sales mix. Operating income of
$7.1 million was down $7.1 million, primarily due to lower gross profit
and higher restructuring and impairment charges, partially offset
by lower SG&A expenses as compared to the prior year.
- BHVAC segment sales were $51.2
million, compared with $52.5
million one year ago, a decrease of 2 percent. This
decrease was driven primarily by lower sales of air conditioning
and ventilation products in the U.K. The segment reported
gross margin of 33.3 percent, which was 510 basis points higher
than the prior year. This improvement was primarily due to
favorable pricing and materials. The segment reported
operating income of $8.8 million, an
increase of $2.9 million, primarily
due to higher gross profit and lower SG&A expenses.
Full-Year Fiscal 2020 Overview
In fiscal 2020, net sales decreased 11 percent to $1,975.5 million. The decrease was primarily
driven by market -related declines in the Company's VTS and CIS
segments, including lower data center sales in the CIS segment and
the impact of COVID-19 related plant closures in the fourth
quarter. This was partially offset by higher sales in the
BHVAC segment, which increased 4 percent from the prior year.
Gross margin decreased 90 basis points to 15.6 percent, primarily
due to the lower sales volume in the Company's VTS and CIS
segments.
Operating income was $37.9 million
compared to $109.7 million in the
prior year. During fiscal 2020 and 2019, automotive separation and
strategy costs, restructuring expenses, impairment charges and
certain other items totaled $59.4
million and $22.2 million,
respectively. Excluding these items, adjusted operating
income was $97.3 million in
fiscal 2020 and $131.9 million in
fiscal 2019. The loss per share in fiscal 2020 was
$0.04 compared with earnings per
share of $1.65 in fiscal 2019, and
adjusted earnings per share in fiscal 2020 were $1.05, compared with $1.57 in fiscal 2019.
During the year, the Company successfully completed the physical
separation of the Automotive business, and plans to report a
separate Automotive segment beginning in the first quarter of
fiscal 2021.
Balance Sheet & Liquidity
Total debt was $482.4 million as
of March 31, 2020. Cash and cash
equivalents at the end of the fourth quarter were $70.9 million, along with $117.5 million of capacity under the Company's
revolving credit facility results in total available liquidity of
$188.4 million at March 31, 2020. Net debt was $411.5 million as of March
31, 2020, an increase of $3.5
million from the end of fiscal 2019.
Net cash provided by operating activities for the year ended
March 31, 2020 was $57.9 million, compared with $103.3 million one year ago. Free cash flow for
fiscal 2020 was a use of $13.4
million. Fiscal 2020 free cash flow was negatively
impacted by cash payments related to the potential sale of the
automotive business and restructuring activities, which totaled
$64.7 million.
As previously disclosed, during the first quarter of fiscal
2021, the Company amended its credit agreement to provide
additional covenant flexibility through fiscal 2022, including a
higher leverage ratio covenant limit during this period. The
combined benefits of higher cash balances, available borrowing
capacity, and revised covenants puts the Company in a strong
position to manage through the global economic uncertainties.
Outlook
The Company is not providing a financial outlook at this
time. There is currently significant uncertainty regarding
the short-term and longer-term business impacts of the COVID-19
pandemic. Customer orders and production schedules are
currently very unpredictable, so it is difficult to forecast
revenue and earnings for fiscal 2021.
"We are making the difficult decisions necessary to run our
business as we deal with the uncertainty created by the
COVID-19 pandemic, including aligning our production schedules with
customer demand, while implementing the protocols necessary to keep
our employees and communities safe," commented Burke. "We are
taking all the actions necessary to protect the company and
preserve liquidity at the expected lower revenue levels. This
includes reducing workforce where possible, implementing salary
cuts and delaying all possible capital spending. At this
time, it is very difficult to know the length and severity of the
current economic downturn, but we believe that we will weather this
storm and that our actions today will allow us to be in a strong
position when end markets recover."
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Friday, May 29,
2020 at 8:00 a.m. Central Time
(9:00 a.m. Eastern Time) to discuss
its fourth quarter and full year fiscal 2020 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
May 29, 2020. A call-in replay will
be available through midnight on June 1,
2020, at 800-585-8367, (international replay 416-621-4642);
Conference ID# 5186921. The Company will post a transcript of the
call on its website, on June 1,
2020.
About Modine
Modine, with fiscal 2020 revenues of $2.0
billion, specializes in thermal management systems and
components, bringing highly engineered heating and cooling
components, original equipment products, and systems to diversified
global markets through its three complementary segments: VTS; CIS;
and BHVAC. Modine is a global company headquartered in Racine, Wisconsin (USA), 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," 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,
2019 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,
2019, September 30, 2019, and
December 31, 2019. Other risks
and uncertainties include, but are not limited to, the following:
the impact of the COVID-19 pandemic on the national and global
economy, our business, suppliers, customers, and employees; the
overall health and price-down focus of Modine's customers; our
ability to successfully execute our strategic and operational
plans, including our ability to successfully exit the automotive
business within the VTS segment; our ability to effectively and
efficiently reduce our cost structure in response to sales volume
declines and complete restructuring activities and realize benefits
thereon; our ability to comply with the financial covenants in our
credit agreements and to fund our global liquidity requirements
efficiently, particularly in light of the significant volatility
and negative impacts to the financial markets resulting from
COVID-19; operational inefficiencies as a result of program
launches, unexpected volume increases, product transfers, and
delays or inefficiencies resulting from restrictions imposed in
response to the COVID-19 pandemic; economic, social and political
conditions, changes and challenges in the markets where Modine
operates and competes, including foreign currency exchange rate
fluctuations, tariffs (and potential trade war impacts resulting
from tariffs or retaliatory actions), inflation, changes in
interest rates or tightening of the credit markets, recession,
restrictions associated with importing and exporting and foreign
ownership, public health crises, and the general uncertainties
about the impact of regulatory and/or policy changes, including
those related to tax and trade, the COVID-19 pandemic and other
matters, that have been or may be implemented in the U.S. or
abroad, and continuing uncertainty regarding the impacts of
"Brexit"; the impact on Modine of any significant increases in
commodity prices, particularly aluminum, copper, steel and
stainless steel (nickel) and other purchased component inventory,
and our ability to adjust product pricing in response to any such
increases; the nature of and Modine's significant exposure to the
vehicular industry and the dependence of this industry on the
health of the economy; the concentration of sales within our CIS
segment attributed to one customer; Modine's ability to recruit and
maintain talent in managerial, leadership, and administrative
functions; Modine's ability to protect its proprietary information
and intellectual property from theft or attack; the impact of any
substantial disruption or material breach of our information
technology systems; costs and other effects of environmental
investigation, remediation or litigation; and other risks and
uncertainties identified by the Company in public filings with the
U.S. Securities and Exchange Commission. Forward-looking
statements are as of the date of this release, and the Company does
not assume any obligation to update any forward-looking
statements.
Non-GAAP Financial Disclosures
Adjusted operating income, adjusted earnings per share, net
debt, and free cash flow (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. We believe
these measures provide a more consistent view of performance than
the closest GAAP equivalent for management and investors.
Management compensates for this by using these measures in
combination with the GAAP measures. However, 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 operating income and earnings per
share
Operating income or diluted earnings per share plus impairment
charges, restructuring expenses, and acquisition and integration
costs, and excluding certain other gains or charges. These
are measures of overall performance not including non-cash
impairment charges, 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. This 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. This measure presents cash generated from
operations during the period that is available for strategic
capital decisions.
Modine
Manufacturing Company
|
|
|
|
|
|
|
|
Consolidated
statements of operations (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
472.9
|
|
$
556.7
|
|
$
1,975.5
|
|
$
2,212.7
|
Cost of
sales
|
398.0
|
|
465.1
|
|
1,668.0
|
|
1,847.2
|
Gross
profit
|
74.9
|
|
91.6
|
|
307.5
|
|
365.5
|
Selling, general
& administrative expenses
|
55.2
|
|
64.2
|
|
249.6
|
|
244.1
|
Restructuring
expenses
|
5.5
|
|
8.9
|
|
12.2
|
|
9.6
|
Impairment
charges
|
8.6
|
|
-
|
|
8.6
|
|
0.4
|
(Gain) loss on sale
of assets
|
-
|
|
-
|
|
(0.8)
|
|
1.7
|
Operating
income
|
5.6
|
|
18.5
|
|
37.9
|
|
109.7
|
Interest
expense
|
(5.4)
|
|
(5.9)
|
|
(22.7)
|
|
(24.8)
|
Other expense -
net
|
(2.5)
|
|
(2.0)
|
|
(4.8)
|
|
(4.1)
|
(Loss) earnings
before income taxes
|
(2.3)
|
|
10.6
|
|
10.4
|
|
80.8
|
(Provision) benefit
for income taxes
|
(4.1)
|
|
(4.2)
|
|
(12.4)
|
|
5.1
|
Net (loss)
earnings
|
(6.4)
|
|
6.4
|
|
(2.0)
|
|
85.9
|
Net earnings
attributable to noncontrolling interest
|
(0.3)
|
|
(0.1)
|
|
(0.2)
|
|
(1.1)
|
Net (loss)
earnings attributable to Modine
|
$
(6.7)
|
|
$
6.3
|
|
$
(2.2)
|
|
$
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings
per share attributable to Modine shareholders - diluted:
|
$
(0.13)
|
|
$
0.12
|
|
$
(0.04)
|
|
$
1.65
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding - diluted:
|
50.9
|
|
51.4
|
|
50.8
|
|
51.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
(In
millions)
|
|
March 31,
2020
|
|
March 31,
2019
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
70.9
|
|
$
41.7
|
Trade
receivables
|
292.5
|
|
338.6
|
Inventories
|
207.4
|
|
200.7
|
Other current
assets
|
62.5
|
|
65.8
|
Total current
assets
|
633.3
|
|
646.8
|
Property, plant and
equipment - net
|
448.0
|
|
484.7
|
Intangible assets -
net
|
106.3
|
|
116.2
|
Goodwill
|
166.1
|
|
168.5
|
Deferred income
taxes
|
104.8
|
|
97.1
|
Other noncurrent
assets
|
77.6
|
|
24.7
|
Total
assets
|
$
1,536.1
|
|
$
1,538.0
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
Debt due within one
year
|
$
30.4
|
|
$
67.5
|
Accounts
payable
|
227.4
|
|
280.9
|
Other current
liabilities
|
114.2
|
|
121.6
|
Total current
liabilities
|
372.0
|
|
470.0
|
Long-term
debt
|
452.0
|
|
382.2
|
Other noncurrent
liabilities
|
218.5
|
|
144.7
|
Total
liabilities
|
1,042.5
|
|
996.9
|
Total
equity
|
493.6
|
|
541.1
|
Total liabilities
& equity
|
$
1,536.1
|
|
$
1,538.0
|
|
|
|
|
|
|
|
|
Modine
Manufacturing Company
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
(In
millions)
|
|
|
|
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
Net (loss)
earnings
|
$
(2.0)
|
|
$
85.9
|
Adjustments to
reconcile net (loss) earnings to net cash provided by
|
|
|
|
operating
activities:
|
|
|
|
Depreciation and
amortization
|
77.1
|
|
76.9
|
Impairment
charges
|
8.6
|
|
0.4
|
(Gain) loss on sale
of assets
|
(0.8)
|
|
1.7
|
Stock-based
compensation expense
|
6.6
|
|
7.9
|
Deferred income
taxes
|
1.0
|
|
(4.4)
|
Other -
net
|
5.6
|
|
5.3
|
Changes in operating
assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
36.6
|
|
(15.3)
|
Inventories
|
(12.0)
|
|
(22.0)
|
Accounts
payable
|
(37.7)
|
|
16.6
|
Accrued compensation
and employee benefits
|
(15.2)
|
|
(10.1)
|
Other
assets
|
14.7
|
|
(11.8)
|
Other
liabilities
|
(24.6)
|
|
(27.8)
|
Net cash provided
by operating activities
|
57.9
|
|
103.3
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Expenditures for
property, plant and equipment
|
(71.3)
|
|
(73.9)
|
Proceeds from
disposition of assets
|
6.2
|
|
0.3
|
Other -
net
|
4.6
|
|
0.8
|
Net cash used for
investing activities
|
(60.5)
|
|
(72.8)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net increase
(decrease) in debt
|
42.9
|
|
(20.7)
|
Other -
net
|
(9.6)
|
|
(5.2)
|
Net cash provided
by (used for) financing activities
|
33.3
|
|
(25.9)
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(1.6)
|
|
(2.7)
|
|
|
|
|
Net increase in
cash, cash equivalents and restricted cash
|
29.1
|
|
1.9
|
|
|
|
|
Cash, cash
equivalents and restricted cash - beginning of period
|
42.2
|
|
40.3
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of period
|
$
71.3
|
|
$
42.2
|
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales:
|
|
|
|
|
|
|
|
Vehicular Thermal
Solutions
|
$
279.5
|
|
$
340.0
|
|
$
1,177.2
|
|
$
1,351.7
|
Commercial and
Industrial Solutions
|
150.9
|
|
178.5
|
|
623.9
|
|
707.6
|
Building HVAC
Systems
|
51.2
|
|
52.5
|
|
221.1
|
|
212.4
|
Segment
total
|
481.6
|
|
571.0
|
|
2,022.2
|
|
2,271.7
|
Corporate and
eliminations
|
(8.7)
|
|
(14.3)
|
|
(46.7)
|
|
(59.0)
|
Net
sales
|
$
472.9
|
|
$
556.7
|
|
$
1,975.5
|
|
$
2,212.7
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Vehicular Thermal
Solutions
|
$
35.7
|
12.8%
|
|
$ 46.9
|
13.8%
|
|
$
144.9
|
12.3%
|
|
$ 186.9
|
13.8%
|
Commercial and
Industrial Solutions
|
23.0
|
15.3%
|
|
29.8
|
16.7%
|
|
92.9
|
14.9%
|
|
114.9
|
16.2%
|
Building HVAC
Systems
|
17.0
|
33.3%
|
|
14.8
|
28.2%
|
|
71.5
|
32.3%
|
|
63.4
|
29.9%
|
Segment
total
|
75.7
|
15.7%
|
|
91.5
|
16.0%
|
|
309.3
|
15.3%
|
|
365.2
|
16.1%
|
Corporate and
eliminations
|
(0.8)
|
-
|
|
0.1
|
-
|
|
(1.8)
|
-
|
|
0.3
|
-
|
Gross
profit
|
$
74.9
|
15.8%
|
|
$ 91.6
|
16.4%
|
|
$
307.5
|
15.6%
|
|
$ 365.5
|
16.5%
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
income:
|
|
|
|
|
|
|
|
Vehicular Thermal
Solutions
|
$(1.4)
|
|
$
9.7
|
|
$
27.6
|
|
$
64.8
|
Commercial and
Industrial Solutions
|
7.1
|
|
14.2
|
|
32.9
|
|
53.4
|
Building HVAC
Systems
|
8.8
|
|
5.9
|
|
36.4
|
|
26.9
|
Segment
total
|
14.5
|
|
29.8
|
|
96.9
|
|
145.1
|
Corporate and
eliminations
|
(8.9)
|
|
(11.3)
|
|
(59.0)
|
|
(35.4)
|
Operating income
(a)
|
$
5.6
|
|
$ 18.5
|
|
$
37.9
|
|
$ 109.7
|
|
|
|
|
|
(a)
|
See the adjusted
operating income reconciliation on the next page for information on
restructuring expenses and other adjustments.
|
|
|
Modine
Manufacturing Company
|
Adjusted financial
results (unaudited)
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
income
|
$
5.6
|
|
$ 18.5
|
|
$
37.9
|
|
$
109.7
|
Automotive separation
and strategy costs(a)
|
5.0
|
|
5.9
|
|
39.2
|
|
7.1
|
Restructuring
expenses (b)
|
5.5
|
|
8.9
|
|
12.2
|
|
9.6
|
Impairment charges
(c)
|
8.6
|
|
-
|
|
8.6
|
|
0.4
|
(Gain) loss on sale
of assets(d)
|
-
|
|
-
|
|
(0.8)
|
|
1.7
|
Environmental charges
(e)
|
0.1
|
|
1.3
|
|
0.2
|
|
3.2
|
Acquisition
integration costs (f)
|
-
|
|
-
|
|
-
|
|
0.2
|
Adjusted operating
income
|
$
24.8
|
|
$ 34.6
|
|
$
97.3
|
|
$
131.9
|
|
|
|
|
|
|
|
|
Net (loss) earnings
per share attributable to Modine shareholders - diluted
|
$(0.13)
|
|
$ 0.12
|
|
$(0.04)
|
|
$
1.65
|
Automotive separation
and strategy costs(a)
|
0.07
|
|
0.09
|
|
0.58
|
|
0.10
|
Restructuring
expenses (b)
|
0.08
|
|
0.17
|
|
0.19
|
|
0.18
|
Impairment charges
(c)
|
0.13
|
|
-
|
|
0.13
|
|
0.01
|
(Gain) loss on sale
of assets(d)
|
-
|
|
-
|
|
(0.01)
|
|
0.03
|
Environmental charges
(e)
|
-
|
|
0.02
|
|
-
|
|
0.05
|
Tax valuation
allowances (g)
|
0.08
|
|
-
|
|
0.14
|
|
(0.02)
|
Tax from legal entity
restructuring (h)
|
0.01
|
|
-
|
|
0.06
|
|
-
|
U.S. tax
reform(i)
|
-
|
|
-
|
|
-
|
|
(0.43)
|
Adjusted earnings
per share
|
$
0.24
|
|
$ 0.40
|
|
$
1.05
|
|
$
1.57
|
|
|
(a)
|
During fiscal 2020
and 2019, the Company recorded $39.2 million and $7.1 million,
respectively, of costs at Corporate directly associated with its
review of strategic alternatives for the Vehicular Thermal
Solutions ("VTS") segment's automotive business, including costs to
separate and prepare the business for a potential sale. With
the exception of $3.1 million of costs in fiscal 2020 associated
with program and equipment transfers recorded as costs of sales,
these costs were recorded as SG&A expenses and primarily
related to accounting, legal, and IT professional services.
The tax benefit related to these costs during the fourth quarter of
fiscal 2020 and 2019 was $1.3 million and $1.5 million,
respectively. The tax benefit related to these costs during
fiscal 2020 and 2019 was $9.6 million and $1.8 million,
respectively.
|
|
|
(b)
|
Restructuring
expenses primarily relate to employee severance expenses, largely
resulting from targeted headcount reductions, and equipment
transfer and plant consolidation costs. The tax benefit related to
these costs during the fourth quarter of fiscal 2020 and fiscal
2019 was $1.3 million and $0.2 million, respectively. The tax
benefit related to these costs during fiscal 2020 and fiscal 2019
was $2.3 million and $0.2 million, respectively.
|
|
|
(c)
|
During the fourth
quarter of fiscal 2020, the Company recorded asset impairment
charges totaling $8.0 million within the VTS segment, primarily
related to manufacturing facilities in Austria and Germany.
The Company anticipates the future cash flows at these facilities
will be negatively impacted by planned wind downs of certain
commercial vehicle and automotive programs. Also in the
fourth quarter of fiscal 2020, the Company recorded a $0.6 million
impairment charge to reduce the carrying value of a
previously-closed CIS manufacturing facility in Austria to its
current estimated fair value. The tax benefit related to
these impairment charges was $1.8 million. During fiscal
2019, the Company recorded a $0.4 million impairment charge related
to the CIS facility in Austria.
|
|
|
(d)
|
During fiscal 2020,
the VTS segment sold a previously-closed manufacturing facility in
Germany and, as a result, recorded a gain of $0.8 million.
During fiscal 2019, the Building HVAC Systems segment sold its
operations in South Africa and, as a result, recorded a loss of
$1.7 million. Annual sales for this disposed business were less
than $2.0 million. There were no tax impacts associated with these
transactions.
|
|
|
(e)
|
Environmental
charges, including related legal costs, are recorded as SG&A
expenses and relate to previously-owned U.S. manufacturing
facilities in the VTS segment.
|
|
|
(f)
|
These costs related
to the Company's acquisition and integration of the Luvata Heat
Transfer Solutions business.
|
|
|
(g)
|
During fiscal 2020,
the Company adjusted its valuation allowances on deferred tax
assets in the U.S and in Brazil. As a result, the Company
recorded net income tax charges totaling $3.0 million and $4.1
million in the third and fourth quarters of fiscal 2020,
respectively. During fiscal 2019, the Company adjusted its
valuation allowances on deferred tax assets related to two separate
subsidiaries in China. As a result, the Company recorded a
$2.0 million income tax benefit in the first quarter of fiscal 2019
and an income tax charge of $1.0 million in the second quarter of
fiscal 2019.
|
|
|
(h)
|
During fiscal 2020,
the Company recorded a net income tax charge totaling $2.9 million
as a result of legal
entity restructuring
completed in preparation of a potential sale of the automotive
business.
|
|
|
(i)
|
During fiscal 2019,
the Company recorded income tax benefits totaling $22.2 million,
primarily related to transition tax obligations associated with tax
reform legislation in the U.S. that was enacted in December 2017
and the recognition of tax assets for foreign tax
credits.
|
|
|
|
|
|
|
|
|
|
Modine
Manufacturing Company
|
Net debt
(unaudited)
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
March 31,
2019
|
|
|
|
|
Debt due within one
year
|
$
30.4
|
|
$
67.5
|
|
|
|
|
Long-term
debt
|
452.0
|
|
382.2
|
|
|
|
|
Total debt
|
482.4
|
|
449.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: cash and cash
equivalents
|
70.9
|
|
41.7
|
|
|
|
|
Net
debt
|
$
411.5
|
|
$
408.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
$
12.0
|
|
$
35.9
|
|
$
57.9
|
|
$
103.3
|
Expenditures for
property, plant and equipment
|
(13.1)
|
|
(15.2)
|
|
(71.3)
|
|
(73.9)
|
Free cash
flow
|
$
(1.1)
|
|
$
20.7
|
|
$
(13.4)
|
|
$
29.4
|
|
|
|
|
|
|
|
|
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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SOURCE Modine Manufacturing Company