Company raises earnings outlook for fiscal
2023; execution of strategic initiatives accelerate transformation
by driving stronger revenue and earnings growth
RACINE,
Wis., Nov. 2, 2022 /PRNewswire/ -- Modine
Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported
financial results for the quarter ended September 30, 2022.
Second Quarter Highlights:
- Net sales of $578.8 million
increased 21 percent from the prior year
- Operating income of $36.8 million
increased $26.3 million from the
prior year
- Adjusted EBITDA of $51.1 million
increased $21.6 million, or 73
percent, from the prior year
- Earnings per share of $0.46
compared to $0.01 in the prior year
and adjusted earnings per share of $0.48 compared to $0.15 in the prior year
- Company raises fiscal 2023 outlook for adjusted EBITDA to
$190 to $200
million
"Our results this quarter clearly demonstrate that our strategic
initiatives are beginning to unlock the value in Modine," said
Modine President and Chief Executive
Officer, Neil D. Brinker. "Our
renewed focus on select products and solutions, combined with our
strong leadership team are providing the tools needed to win in our
most important markets. Our ongoing focus on commercial
excellence, driven by 80/20 principles, is driving us to more
efficiently allocate capital and improve our margins in this
inflationary environment. We will continue to reduce
complexity while focusing on our best opportunities, allowing us to
gain share in those markets where we are best positioned to win as
we make progress towards our margin targets."
Financial Results
Net sales increased 21 percent in the second quarter to
$578.8 million, compared with
$478.9 million in the prior year. On
a constant currency basis, sales increased 28 percent. The increase
was driven by market-related volume improvements and favorable
pricing adjustments in both the Climate Solutions and Performance
Technologies segments.
Gross profit increased 45 percent in the second quarter to
$96.2 million and gross margin
improved by 280 basis points to 16.6 percent. These increases were
driven by the higher sales volume and commercial pricing in both
the Climate Solutions and Performance Technologies segments,
partially offset by inflationary cost pressures, particularly
within the Performance Technologies segment.
Selling, general and administrative ("SG&A") expenses were
$58.8 million in the second quarter,
which was 13 percent higher than the prior year. This increase was
primarily driven by higher compensation-related expenses, including
higher incentive compensation and commissions, partially offset by
lower strategic reorganization costs.
Operating income in the second quarter was $36.8 million, compared to $10.5 million in the prior year, an improvement
of $26.3 million. This
improvement was driven primarily by higher gross profit and lower
impairment charges, partially offset by higher SG&A expenses.
During the second quarter of fiscal 2023, the Company
recorded $0.6 million of
restructuring expenses, primarily related to equipment transfer
costs and closure costs related to a previously-leased facility,
and $0.3 million of environmental
charges. Excluding these items, as well as depreciation and
amortization expense, adjusted EBITDA of $51.1 million increased $21.6 million, or 73 percent, compared with
$29.5 million in the prior
year.
Earnings per share was $0.46 in
the second quarter, compared with $0.01 in the second quarter last year. This
improvement was primarily due to higher operating earnings.
Adjusted earnings per share was $0.48 in the second quarter, compared with
adjusted earnings per share of $0.15
in the second quarter of the prior year.
Second Quarter Segment Review
- Climate Solutions segment sales were $255.9 million, compared with $217.2 million one year ago, an increase of 18
percent. On a constant currency basis, sales increased 25 percent
from the prior year. This increase was driven by higher sales
of heat transfer, data center cooling, and HVAC and refrigeration
products. The segment reported gross margin of 22.4 percent,
which was 590 basis points higher than the prior year, primarily
due to higher sales volume and favorable commercial pricing. The
segment reported operating income of $32.7
million, a 135 percent increase from the prior year.
Adjusted EBITDA was $38.4 million, an
increase of $18.5 million, or 93
percent, from the prior year.
- Performance Technologies segment sales were $330.0 million, compared with $270.8 million one year ago, an increase of 22
percent. On a constant currency basis, sales increased 29
percent. This increase primarily resulted from higher sales
across all product groups as well as favorable commercial pricing,
including adjustments in response to raw material price increases.
The segment reported gross margin of 11.9 percent, up 100
basis points from the prior year. This margin improvement was
primarily driven by higher volumes and pricing, partially offset by
ongoing inflationary pressures, including higher labor and overhead
costs, and, to a lesser extent, higher material prices as compared
to the prior year. The segment reported operating income of
$16.3 million, a $14.2 million increase compared to the prior
year. Adjusted EBITDA was $24.3
million, an increase of $11.4
million, or 88 percent, from the prior year.
Balance Sheet & Liquidity
Net cash provided by operating activities for the six months
ended September 30, 2022 was
$56.1 million, an increase of
$75.1 million compared to the prior
year. Free cash flow for the six months ended September 30, 2022 was $33.1 million, an increase of $72.5 million from the prior year, primarily
resulting from higher operating earnings and favorable net changes
in working capital. While inventories have increased
$12.5 million from March 31, 2022 to September 30, 2022, the increase has been less
significant than the increase during the same period last year.
Cash payments for restructuring activities, strategic
reorganization costs, environmental costs and certain other items
during the six months ended September 30,
2022 totaled $10.0
million.
Total debt was $370.6 million as
of September 30, 2022. Cash and cash
equivalents at September 30, 2022
were $70.1 million. Net debt was
$300.5 million as of September 30, 2022, a decrease of $32.1 million from the end of fiscal
2022.
Outlook
Based on current exchange rates and market outlook, Modine is
updating its outlook for fiscal 2023:
Fiscal
2023
|
Updated
Outlook
|
Prior
Outlook
|
Net
Sales
|
+ 6% to 12%
|
+ 6% to 12%
|
Adjusted
EBITDA
|
$190 to $200
million
|
$180 to $195
million
|
"Our financial results during the first half of the year have
continued to exceed initial expectations as higher volumes and
internal actions have resulted in strong earnings and margin
improvement," said Brinker. "As a result, we are increasing our
adjusted EBITDA guidance for the year as we expect our 80/20
initiatives to continue to support profitability improvements.
Despite the challenging market conditions and inflationary
environment, we have executed our plans to invest in talent and
capacity expansion in the areas that can have the greatest
impact. Our commercial teams have achieved pricing
improvements across the organization and those actions are ongoing.
I am very proud of our performance this year as we navigate a
challenging landscape and continue to work towards our goals."
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Thursday, November 3,
2022 at 10:00 a.m. Central
Time (11:00 a.m. Eastern Time)
to discuss its second quarter fiscal 2023 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
November 3, 2022. A call-in replay
will be available through midnight on November 8, 2022 at 800-770-2030, (international
replay 647-362-9199); Conference ID# 17663. The Company will post a
transcript of the call on its website on or after November 8, 2022.
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 (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," "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,
2022 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 quarter ended June 30,
2022. 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, including rising
energy costs, along with supply chain challenges or supplier
constraints, 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, increases 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, the military conflict in
Ukraine and other matters, that
have been or may be implemented in the U.S. or abroad; the impact
of the COVID-19 pandemic on the national and global economy, our
business, suppliers, customers, and employees; the overall health
and pricing focus of our customers; our ability to successfully
execute our strategic and operational plans, including applying
80/20 principles to our business; our ability to effectively and
efficiently modify our cost structure in response to sales volume
increases or decreases and complete restructuring activities and
realize benefits thereon; 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
program launches, unexpected volume increases or decreases, and
product transfers; 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; the nature of and Modine's
significant exposure to the vehicular industry and the dependence
of this industry on the health of the economy; 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
systems; costs and other effects of environmental investigation,
remediation or litigation; 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, and constant currency (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, impairment charges or reversals, costs
associated with the review of strategic alternatives for the
Company's automotive businesses, strategic reorganization 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 GAAP operating income excluding
depreciation and amortization expenses, restructuring expenses,
impairment charges or reversals, and certain other gains or
charges.
Definition – Adjusted earnings per share
Diluted earnings per share plus restructuring expenses,
impairment charges or reversals, costs associated with the review
of strategic alternatives for the Company's automotive businesses,
strategic reorganization 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
non-cash impairment charges, costs associated with restructuring
activities 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 – Constant currency
Constant currency translates financial data from foreign
operations for a period into U.S. dollars using the same foreign
currency exchange rates as those used to translate financial data
for the prior period. This measure provides a more consistent
indication of our performance, without the effects of foreign
currency exchange rate fluctuations.
Forward-looking non-GAAP financial measure
The Company's fiscal 2023 guidance includes adjusted EBITDA, as
defined above, which is a non-GAAP financial measure. The full-year
fiscal 2023 guidance for adjusted EBITDA is based upon the
Company's estimates for interest expense of approximately
$19 to $20
million, a provision for income taxes of approximately
$26 to $30
million, and depreciation and amortization expense of
approximately $55 to $59 million. Adjusted EBITDA also excludes
certain cash and non-cash expenses or gains. These expenses and
gains may be significant and include items such as restructuring
expenses (including severance costs and plant consolidation and
relocation expenses), impairment charges and certain other items.
These expenses and gains for the first six months of fiscal
2023 are presented on page 9. Estimates of these expenses and
gains for the remainder of fiscal 2023 are not available due to the
low visibility and unpredictability of these items.
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Consolidated
statements of operations (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales
|
$
578.8
|
|
$
478.9
|
|
$
1,119.8
|
|
$
973.5
|
Cost of
sales
|
482.6
|
|
412.6
|
|
940.2
|
|
834.0
|
Gross
profit
|
96.2
|
|
66.3
|
|
179.6
|
|
139.5
|
Selling, general &
administrative expenses
|
58.8
|
|
51.9
|
|
115.1
|
|
111.3
|
Restructuring
expenses
|
0.6
|
|
0.6
|
|
2.1
|
|
0.9
|
Impairment charges –
net
|
-
|
|
3.3
|
|
-
|
|
1.5
|
Loss on sale of
assets
|
-
|
|
-
|
|
-
|
|
6.6
|
Operating
income
|
36.8
|
|
10.5
|
|
62.4
|
|
19.2
|
Interest
expense
|
(4.7)
|
|
(3.8)
|
|
(8.8)
|
|
(8.0)
|
Other expense –
net
|
(1.4)
|
|
(0.7)
|
|
(3.7)
|
|
(0.5)
|
Earnings before
income taxes
|
30.7
|
|
6.0
|
|
49.9
|
|
10.7
|
Provision for income
taxes
|
(6.4)
|
|
(5.4)
|
|
(11.3)
|
|
(7.3)
|
Net
earnings
|
24.3
|
|
0.6
|
|
38.6
|
|
3.4
|
Net loss (earnings)
attributable to noncontrolling interest
|
0.1
|
|
(0.2)
|
|
0.1
|
|
(0.7)
|
Net earnings
attributable to Modine
|
$
24.4
|
|
$
0.4
|
|
$
38.7
|
|
$
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders – diluted
|
$
0.46
|
|
$
0.01
|
|
$
0.74
|
|
$
0.05
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding – diluted
|
52.7
|
|
52.6
|
|
52.5
|
|
52.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
March 31,
2022
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
70.1
|
|
$
45.2
|
|
|
|
|
Trade
receivables
|
340.5
|
|
367.5
|
|
|
|
|
Inventories
|
293.7
|
|
281.2
|
|
|
|
|
Other current
assets
|
62.9
|
|
63.7
|
|
|
|
|
Total current
assets
|
767.2
|
|
757.6
|
|
|
|
|
Property, plant and
equipment – net
|
291.2
|
|
315.4
|
|
|
|
|
Intangible assets –
net
|
82.4
|
|
90.3
|
|
|
|
|
Goodwill
|
160.9
|
|
168.1
|
|
|
|
|
Deferred income
taxes
|
23.8
|
|
27.2
|
|
|
|
|
Other noncurrent
assets
|
66.7
|
|
68.4
|
|
|
|
|
Total
assets
|
$
1,392.2
|
|
$
1,427.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Debt due within one
year
|
$
36.2
|
|
$
29.4
|
|
|
|
|
Accounts
payable
|
309.1
|
|
325.8
|
|
|
|
|
Other current
liabilities
|
141.2
|
|
139.3
|
|
|
|
|
Total current
liabilities
|
486.5
|
|
494.5
|
|
|
|
|
Long-term
debt
|
334.4
|
|
348.4
|
|
|
|
|
Other noncurrent
liabilities
|
120.6
|
|
126.0
|
|
|
|
|
Total
liabilities
|
941.5
|
|
968.9
|
|
|
|
|
Total equity
|
450.7
|
|
458.1
|
|
|
|
|
Total liabilities
& equity
|
$
1,392.2
|
|
$
1,427.0
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
September 30,
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net earnings
|
$
38.6
|
|
$
3.4
|
|
|
|
|
Adjustments to
reconcile net earnings to net cash provided by (used
for)
|
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
27.3
|
|
26.6
|
|
|
|
|
Impairment charges –
net
|
-
|
|
1.5
|
|
|
|
|
Loss on sale of
assets
|
-
|
|
6.6
|
|
|
|
|
Stock-based
compensation expense
|
3.5
|
|
3.6
|
|
|
|
|
Deferred income
taxes
|
(0.5)
|
|
(1.7)
|
|
|
|
|
Other –
net
|
1.8
|
|
1.2
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Trade accounts
receivable
|
0.2
|
|
12.5
|
|
|
|
|
Inventories
|
(30.5)
|
|
(54.8)
|
|
|
|
|
Accounts
payable
|
7.2
|
|
4.1
|
|
|
|
|
Other assets and
liabilities
|
8.5
|
|
(22.0)
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
56.1
|
|
(19.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(23.0)
|
|
(20.4)
|
|
|
|
|
Proceeds from (payments
for) disposition of assets
|
0.1
|
|
(5.2)
|
|
|
|
|
Other – net
|
-
|
|
(3.4)
|
|
|
|
|
Net cash used for
investing activities
|
(22.9)
|
|
(29.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net increase in
debt
|
0.4
|
|
64.8
|
|
|
|
|
Other –
net
|
(2.9)
|
|
(1.1)
|
|
|
|
|
Net cash (used for)
provided by financing activities
|
(2.5)
|
|
63.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
(5.8)
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in
cash, cash equivalents and restricted cash
|
24.9
|
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash - beginning of period
|
45.4
|
|
46.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of period
|
$
70.3
|
|
$
61.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales:
|
|
|
|
|
|
|
|
Climate
Solutions
|
$
255.9
|
|
$
217.2
|
|
$
500.3
|
|
$
423.7
|
Performance
Technologies
|
330.0
|
|
270.8
|
|
634.3
|
|
567.9
|
Segment
total
|
585.9
|
|
488.0
|
|
1,134.6
|
|
991.6
|
Corporate and
eliminations
|
(7.1)
|
|
(9.1)
|
|
(14.8)
|
|
(18.1)
|
Net
sales
|
$
578.8
|
|
$
478.9
|
|
$
1,119.8
|
|
$
973.5
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Climate
Solutions
|
$
57.3
|
22.4 %
|
|
$
35.9
|
16.5 %
|
|
$
107.7
|
21.5 %
|
|
$
68.5
|
16.2 %
|
Performance
Technologies
|
39.2
|
11.9 %
|
|
29.5
|
10.9 %
|
|
72.2
|
11.4 %
|
|
69.7
|
12.3 %
|
Segment
total
|
96.5
|
16.5 %
|
|
65.4
|
13.4 %
|
|
179.9
|
15.9 %
|
|
138.2
|
13.9 %
|
Corporate and
eliminations
|
(0.3)
|
-
|
|
0.9
|
-
|
|
(0.3)
|
-
|
|
1.3
|
-
|
Gross
profit
|
$
96.2
|
16.6 %
|
|
$
66.3
|
13.8 %
|
|
$
179.6
|
16.0 %
|
|
$
139.5
|
14.3 %
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Operating
income:
|
|
|
|
|
|
|
|
Climate
Solutions
|
$
32.7
|
|
$
13.9
|
|
$
59.7
|
|
$
24.6
|
Performance
Technologies
|
16.3
|
|
2.1
|
|
23.7
|
|
17.8
|
Segment
total
|
49.0
|
|
16.0
|
|
83.4
|
|
42.4
|
Corporate and
eliminations
|
(12.2)
|
|
(5.5)
|
|
(21.0)
|
|
(23.2)
|
Operating
income
|
$
36.8
|
|
$
10.5
|
|
$
62.4
|
|
$
19.2
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Adjusted financial
results (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net earnings
|
$
24.3
|
|
$
0.6
|
|
$
38.6
|
|
$
3.4
|
Interest
expense
|
4.7
|
|
3.8
|
|
8.8
|
|
8.0
|
Provision for income
taxes
|
6.4
|
|
5.4
|
|
11.3
|
|
7.3
|
Depreciation and
amortization expense
|
13.4
|
|
13.1
|
|
27.3
|
|
26.6
|
Other expense –
net
|
1.4
|
|
0.7
|
|
3.7
|
|
0.5
|
Restructuring expenses
(a)
|
0.6
|
|
0.6
|
|
2.1
|
|
0.9
|
Impairment charges –
net (b)
|
-
|
|
3.3
|
|
-
|
|
1.5
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
6.6
|
Environmental charges
(d)
|
0.3
|
|
0.1
|
|
1.4
|
|
3.6
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
1.9
|
|
-
|
|
4.4
|
Adjusted
EBITDA
|
$
51.1
|
|
$
29.5
|
|
$
93.2
|
|
$
62.8
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders - diluted
|
$
0.46
|
|
$
0.01
|
|
$
0.74
|
|
$
0.05
|
Restructuring expenses
(a)
|
0.01
|
|
0.01
|
|
0.03
|
|
0.02
|
Impairment charges –
net (b)
|
-
|
|
0.06
|
|
-
|
|
0.06
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
0.13
|
Environmental charges
(d)
|
0.01
|
|
-
|
|
0.03
|
|
0.07
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
0.04
|
|
-
|
|
0.08
|
Tax valuation allowance
(f)
|
-
|
|
0.03
|
|
-
|
|
(0.06)
|
Adjusted earnings
per share
|
$
0.48
|
|
$
0.15
|
|
$
0.80
|
|
$
0.35
|
|
(a)
|
Restructuring expenses
primarily consist of employee severance expenses related to
targeted headcount reductions and equipment transfer costs.
The tax benefit related to restructuring expenses during the
first six months of fiscal 2023 and fiscal 2022 was $0.2 million
and $0.1 million, respectively.
|
(b)
|
The net impairment
charges in fiscal 2022 primarily relate to the Company's
liquid-cooled automotive business. The Company recorded $3.3
million and $8.9 million of impairment charges during the second
quarter and first six months of fiscal 2022, respectively, related
to assets held for sale. The year-to-date impairment charges
were partially offset by a $7.4 million reversal of
previously-recorded impairment charges during the first quarter of
fiscal 2022. The tax charge related to the net impairment
reversal during the first quarter of fiscal 2022 was $1.8 million.
There was no tax benefit associated with the impairment
charges recorded during the second quarter of fiscal
2022.
|
(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
the first six months of fiscal 2022, the Company recorded SG&A
expenses totaling $2.2 million related to recruiting new senior
management and the Company's implementation of 80/20.
In addition, the Company recorded $2.2 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 primarily consisted of accounting, legal, and IT professional
services. There were no tax benefits related to the strategic
reorganization or automotive exit strategy costs during the first
six months of fiscal 2022.
|
(f)
|
During the first
quarter of fiscal 2022, 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. During the second quarter of
fiscal 2022, the Company established a valuation allowance on
deferred tax assets in China and, as a result, recorded an income
tax charge of $1.6 million.
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted
financial results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2022
|
|
Three months ended
September 30, 2021
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating
income
|
$ 32.7
|
|
$
16.3
|
|
$
(12.2)
|
|
$
36.8
|
|
$ 13.9
|
|
$
2.1
|
|
$
(5.5)
|
|
$
10.5
|
Depreciation and
amortization expense
|
5.4
|
|
7.7
|
|
0.3
|
|
13.4
|
|
5.8
|
|
7.1
|
|
0.2
|
|
13.1
|
Restructuring expenses
(a)
|
0.3
|
|
0.3
|
|
-
|
|
0.6
|
|
0.2
|
|
0.4
|
|
-
|
|
0.6
|
Impairment charges
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3.3
|
|
-
|
|
3.3
|
Environmental charges
(a)
|
-
|
|
-
|
|
0.3
|
|
0.3
|
|
-
|
|
-
|
|
0.1
|
|
0.1
|
Strategic
reorganization and automotive exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.9
|
|
1.9
|
Adjusted
EBITDA
|
$ 38.4
|
|
$
24.3
|
|
$
(11.6)
|
|
$
51.1
|
|
$ 19.9
|
|
$
12.9
|
|
$
(3.3)
|
|
$
29.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
255.9
|
|
$
330.0
|
|
$
(7.1)
|
|
$
578.8
|
|
$
217.2
|
|
$
270.8
|
|
$
(9.1)
|
|
$
478.9
|
Adjusted EBITDA
margin
|
15.0 %
|
|
7.4 %
|
|
|
|
8.8 %
|
|
9.2 %
|
|
4.8 %
|
|
|
|
6.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
September 30, 2022
|
|
Six months ended
September 30, 2021
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating
income
|
$ 59.7
|
|
$
23.7
|
|
$
(21.0)
|
|
$
62.4
|
|
$ 24.6
|
|
$
17.8
|
|
$
(23.2)
|
|
$
19.2
|
Depreciation and
amortization expense
|
10.8
|
|
15.9
|
|
0.6
|
|
27.3
|
|
11.8
|
|
14.1
|
|
0.7
|
|
26.6
|
Restructuring expenses
(a)
|
0.3
|
|
1.8
|
|
-
|
|
2.1
|
|
0.2
|
|
0.7
|
|
-
|
|
0.9
|
Impairment charges –
net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.3
|
|
1.2
|
|
-
|
|
1.5
|
Loss on sale of assets
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
Environmental charges
(a)
|
-
|
|
-
|
|
1.4
|
|
1.4
|
|
-
|
|
-
|
|
3.6
|
|
3.6
|
Strategic
reorganization and automotive exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4.4
|
|
4.4
|
Adjusted
EBITDA
|
$ 70.8
|
|
$
41.4
|
|
$
(19.0)
|
|
$
93.2
|
|
$ 36.9
|
|
$
33.8
|
|
$
(7.9)
|
|
$
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
500.3
|
|
$
634.3
|
|
$
(14.8)
|
|
$
1,119.8
|
|
$
423.7
|
|
$
567.9
|
|
$
(18.1)
|
|
$
973.5
|
Adjusted EBITDA
margin
|
14.2 %
|
|
6.5 %
|
|
|
|
8.3 %
|
|
8.7 %
|
|
6.0 %
|
|
|
|
6.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
See the Adjusted EBITDA reconciliation on
the previous page for information on restructuring expenses and
other adjustments.
|
|
|
|
|
Net debt
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
March 31,
2022
|
|
|
|
|
Debt due within one
year
|
$
36.2
|
|
$
29.4
|
|
|
|
|
Long-term
debt
|
334.4
|
|
348.4
|
|
|
|
|
Total debt
|
370.6
|
|
377.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: cash and cash
equivalents
|
70.1
|
|
45.2
|
|
|
|
|
Net debt
|
$
300.5
|
|
$
332.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
(used for) operating activities
|
$
41.6
|
|
$
(8.9)
|
|
$
56.1
|
|
$
(19.0)
|
Expenditures for
property, plant and equipment
|
(12.6)
|
|
(9.0)
|
|
(23.0)
|
|
(20.4)
|
Free cash
flow
|
$
29.0
|
|
$
(17.9)
|
|
$
33.1
|
|
$
(39.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales - constant
currency (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
2022
|
|
2021
|
|
Net Sales
|
|
Effect of Exchange
Rate
Changes
|
|
Net Sales -
Constant Currency
|
|
Net Sales
|
Climate
Solutions
|
$
255.9
|
|
$
16.5
|
|
$
272.4
|
|
$
217.2
|
Performance
Technologies
|
330.0
|
|
19.9
|
|
349.9
|
|
270.8
|
Segment
total
|
585.9
|
|
36.4
|
|
622.3
|
|
488.0
|
Corporate and
eliminations
|
(7.1)
|
|
(0.1)
|
|
(7.2)
|
|
(9.1)
|
Net
sales
|
$
578.8
|
|
$
36.3
|
|
$
615.1
|
|
$
478.9
|
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/modine-reports-second-quarter-fiscal-2023-results-301666801.html
SOURCE Modine Manufacturing Company