Double digit top-line growth and meaningful
margin improvement; Company confirms earnings outlook for fiscal
2023
RACINE,
Wis., Feb. 1, 2023 /PRNewswire/ -- Modine
Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported
financial results for the quarter ended December 31, 2022.
Third Quarter Highlights:
- Net sales of $560.0 million,
increased 12 percent from the prior year
- Operating income of $39.5
million, decreased $39.9
million from the prior year, due to a significant impairment
reversal recorded in the prior year
- Adjusted EBITDA of $53.3 million,
increased $14.0 million or 36
percent, from the prior year
- Earnings per share of $0.46,
compared to $1.41 in the prior year,
and adjusted earnings per share of $0.48, compared to $0.31 in the prior year
- 80/20 focus continues to drive significant margin improvement
and increased sales
"The improvement in our revenue and earnings are the result of
strategic actions we've proactively taken over the past year to
transform Modine into a higher margin, higher return business
focused on faster growing markets," said Modine President and Chief Executive Officer,
Neil D. Brinker. "As we embed 80/20
into our business practices, we are focusing our resources on our
best opportunities, in our most attractive markets. This is helping
us improve our service to our best customers, while further
focusing our technical and manufacturing resources in areas that
will drive long-term profitable growth. Over the past year, we have
sharpened our commercial acumen and taken commercial actions to
offset inflation, while simultaneously simplifying our product
lines. These activities are allowing us to increase our market
share, improve our operations, and make solid progress towards our
financial goals."
Financial Results
Net sales increased 12 percent in the third quarter to
$560.0 million, compared with
$502.2 million in the prior year. On
a constant currency basis, sales increased 18 percent. The increase
was driven by sales volume improvements and favorable commercial
pricing in both the Climate Solutions and Performance Technologies
segments.
Gross profit increased 31 percent in the third quarter to
$97.6 million and gross margin
improved by 250 basis points to 17.4 percent. These increases were
driven by the higher sales volume and favorable commercial pricing,
partially offset by inflationary cost pressures, particularly
within the Performance Technologies segment.
Selling, general and administrative ("SG&A") expenses were
$58.0 million in the third quarter,
which was 15 percent higher than the prior year. This increase was
primarily driven by higher compensation-related expenses, including
higher incentive compensation, and, to a lesser extent, increases
in other general and administrative expenses that have been
impacted by inflationary market conditions.
Operating income in the third quarter was $39.5 million, compared to $79.4 million in the prior year. The decrease was
primarily driven by a significant impairment reversal recorded last
year. In connection with the termination of an agreement to sell
the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment
charges during the third quarter of fiscal 2022. During the third
quarter of fiscal 2023, the Company recorded $0.3 million of environmental charges and
$0.1 million of restructuring
expenses. Excluding these items, as well as depreciation and
amortization expense, adjusted EBITDA of $53.3 million increased $14.0 million, or 36 percent, compared with
$39.3 million in the prior year.
Earnings per share was $0.46 in
the third quarter, compared with $1.41 in the third quarter last year. This
decrease was primarily due to the absence of the significant
impairment reversal recorded last year related to the liquid-cooled
automotive business, as described above. Adjusted earnings per
share was $0.48 in the third quarter,
compared with adjusted earnings per share of $0.31 in the third quarter of the prior year.
This improvement was primarily driven by higher gross profit on
higher sales volume.
Third Quarter Segment Review
- Climate Solutions segment sales were $248.6 million, compared with $227.3 million one year ago, an increase of 9
percent. On a constant currency basis, sales increased 15 percent
from the prior year. This increase was driven by higher sales of
data center cooling, heat transfer and HVAC and refrigeration
products. The segment reported gross margin of 22.0 percent, which
was 360 basis points higher than the prior year, primarily due to
higher sales volume and improved operating efficiencies. The
segment reported operating income of $30.2
million, an 80 percent increase from the prior year.
Adjusted EBITDA was $35.4 million, an
increase of $11.5 million, or 48
percent, from the prior year.
- Performance Technologies segment sales were $317.8 million, compared with $282.0 million one year ago, an increase of 13
percent. On a constant currency basis, sales increased 19 percent.
This increase primarily resulted from higher sales across all
product groups as well as favorable commercial pricing. The segment
reported gross margin of 13.5 percent, up 180 basis points from the
prior year. This margin improvement was primarily driven by higher
sales volume and favorable commercial pricing. This was partially
offset by ongoing inflationary pressures, including higher labor
and overhead costs, as compared to the prior year. The segment
reported operating income of $17.4
million, a $48.7 million
decrease compared to the prior year, primarily due to the absence
of the significant impairment reversal related to the liquid-cooled
automotive business in the prior year. Adjusted EBITDA was
$25.6 million, an increase of
$8.3 million, or 48 percent, from the
prior year.
Balance Sheet & Liquidity
Net cash provided by operating activities for the nine months
ended December 31, 2022 was
$67.9 million, an increase of
$60.5 million compared to the prior
year. Free cash flow for the nine months ended December 31, 2022 was $32.7 million, an increase of $56.0 million from the prior year, primarily
resulting from higher operating earnings and favorable net changes
in working capital. While inventories increased $32.4 million from March
31, 2022 to December 31, 2022,
the increase has been less significant than the increase in the
same period during the previous year. Cash payments for
restructuring activities, strategic reorganization costs,
environmental costs and certain other items during the nine months
ended December 31, 2022 totaled
$13.0 million.
Total debt was $389.8 million as
of December 31, 2022. Cash and cash
equivalents at December 31, 2022 were
$82.2 million. Net debt was
$307.6 million as of December 31, 2022, a decrease of $25.0 million from the end of fiscal
2022.
Outlook
Based on current exchange rates and market outlook, Modine is
confirming its outlook for fiscal 2023:
Fiscal 2023
|
Current Outlook
|
Net Sales
|
+ 6% to
12%
|
Adjusted EBITDA
|
$190 to $200
million
|
"Overall, we are pleased with our financial performance through
the first nine months of the year," added Brinker. "Our deliberate
actions to refocus the business and capitalize on our best market
opportunities are beginning to yield a simplified and more
profitable Modine. We remain confident in our strategic
transformation despite the current economic environment, and expect
that we will be at the high end of our guidance range."
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Thursday, February 2,
2023 at 10:00 a.m. Central
Time (11:00 a.m. Eastern Time)
to discuss its third 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
February 2, 2023. A call-in replay
will be available through midnight on February 9, 2023 at 877-660-6853, (international
replay 201-612-7415); Conference ID# 13734605. The Company will
post a transcript of the call on its website on or after
February 7, 2023.
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 (U.S.), 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 quarters ended June 30,
2022 and September 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, 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, 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, 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
$20 to $21
million, a provision for income taxes of approximately
$27 to $31
million, and depreciation and amortization expense of
approximately $55 to $57 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 nine 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
December 31,
|
|
Nine months ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales
|
$
560.0
|
|
$
502.2
|
|
$
1,679.8
|
|
$
1,475.7
|
Cost of
sales
|
462.4
|
|
427.6
|
|
1,402.6
|
|
1,261.6
|
Gross
profit
|
97.6
|
|
74.6
|
|
277.2
|
|
214.1
|
Selling, general &
administrative expenses
|
58.0
|
|
50.3
|
|
173.1
|
|
161.6
|
Restructuring
expenses
|
0.1
|
|
2.1
|
|
2.2
|
|
3.0
|
Impairment charges
(reversals) – net
|
-
|
|
(57.2)
|
|
-
|
|
(55.7)
|
Loss on sale of
assets
|
-
|
|
-
|
|
-
|
|
6.6
|
Operating
income
|
39.5
|
|
79.4
|
|
101.9
|
|
98.6
|
Interest
expense
|
(5.9)
|
|
(3.8)
|
|
(14.7)
|
|
(11.8)
|
Other expense –
net
|
(0.4)
|
|
(1.1)
|
|
(4.1)
|
|
(1.6)
|
Earnings before
income taxes
|
33.2
|
|
74.5
|
|
83.1
|
|
85.2
|
Provision for income
taxes
|
(8.5)
|
|
(0.1)
|
|
(19.8)
|
|
(7.4)
|
Net
earnings
|
24.7
|
|
74.4
|
|
63.3
|
|
77.8
|
Net earnings
attributable to noncontrolling interest
|
(0.2)
|
|
(0.3)
|
|
(0.1)
|
|
(1.0)
|
Net earnings
attributable to Modine
|
$
24.5
|
|
$
74.1
|
|
$
63.2
|
|
$
76.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders – diluted
|
$
0.46
|
|
$
1.41
|
|
$
1.20
|
|
$
1.46
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding – diluted
|
52.9
|
|
52.4
|
|
52.7
|
|
52.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
82.2
|
|
$
45.2
|
|
|
|
|
Trade
receivables
|
347.4
|
|
367.5
|
|
|
|
|
Inventories
|
313.6
|
|
281.2
|
|
|
|
|
Other current
assets
|
64.6
|
|
63.7
|
|
|
|
|
Total current
assets
|
807.8
|
|
757.6
|
|
|
|
|
Property, plant and
equipment – net
|
301.0
|
|
315.4
|
|
|
|
|
Intangible assets –
net
|
82.8
|
|
90.3
|
|
|
|
|
Goodwill
|
164.8
|
|
168.1
|
|
|
|
|
Deferred income
taxes
|
25.6
|
|
27.2
|
|
|
|
|
Other noncurrent
assets
|
65.0
|
|
68.4
|
|
|
|
|
Total
assets
|
$
1,447.0
|
|
$
1,427.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Debt due within one
year
|
$
30.9
|
|
$
29.4
|
|
|
|
|
Accounts
payable
|
302.2
|
|
325.8
|
|
|
|
|
Other current
liabilities
|
132.8
|
|
139.3
|
|
|
|
|
Total current
liabilities
|
465.9
|
|
494.5
|
|
|
|
|
Long-term
debt
|
358.9
|
|
348.4
|
|
|
|
|
Other noncurrent
liabilities
|
120.7
|
|
126.0
|
|
|
|
|
Total
liabilities
|
945.5
|
|
968.9
|
|
|
|
|
Total equity
|
501.5
|
|
458.1
|
|
|
|
|
Total liabilities
& equity
|
$
1,447.0
|
|
$
1,427.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
Nine months ended
December 31,
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net earnings
|
$
63.3
|
|
$
77.8
|
Adjustments to
reconcile net earnings to net cash provided by
|
|
|
|
operating
activities:
|
|
|
|
Depreciation and
amortization
|
40.7
|
|
40.4
|
Impairment charges
(reversals) – net
|
-
|
|
(55.7)
|
Loss on sale of
assets
|
-
|
|
6.6
|
Stock-based
compensation expense
|
5.0
|
|
4.7
|
Deferred income
taxes
|
(0.9)
|
|
(4.7)
|
Other –
net
|
4.0
|
|
2.0
|
Changes in operating
assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
5.4
|
|
5.8
|
Inventories
|
(40.0)
|
|
(66.6)
|
Accounts
payable
|
(9.3)
|
|
24.9
|
Other assets and
liabilities
|
(0.3)
|
|
(27.8)
|
Net cash provided by
operating activities
|
67.9
|
|
7.4
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Expenditures for
property, plant and equipment
|
(35.2)
|
|
(30.7)
|
Proceeds from (payments
for) disposition of assets
|
0.1
|
|
(7.6)
|
Other – net
|
(0.1)
|
|
(3.4)
|
Net cash used for
investing activities
|
(35.2)
|
|
(41.7)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net increase in
debt
|
12.0
|
|
51.7
|
Other –
net
|
(4.6)
|
|
(1.5)
|
Net cash provided by
financing activities
|
7.4
|
|
50.2
|
|
|
|
|
Effect of exchange rate
changes on cash
|
(3.1)
|
|
(0.7)
|
|
|
|
|
Net increase in
cash, cash equivalents and restricted cash
|
37.0
|
|
15.2
|
|
|
|
|
Cash, cash equivalents
and restricted cash - beginning of period
|
45.4
|
|
46.1
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of period
|
$
82.4
|
|
$
61.3
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
Climate
Solutions
|
|
|
|
$
248.6
|
|
$
227.3
|
|
$
748.9
|
|
$
651.0
|
Performance
Technologies
|
|
|
|
317.8
|
|
282.0
|
|
952.1
|
|
849.9
|
Segment
total
|
|
|
|
566.4
|
|
509.3
|
|
1,701.0
|
|
1,500.9
|
Corporate and
eliminations
|
|
|
|
(6.4)
|
|
(7.1)
|
|
(21.2)
|
|
(25.2)
|
Net
sales
|
|
|
|
$
560.0
|
|
$
502.2
|
|
$
1,679.8
|
|
$
1,475.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Climate
Solutions
|
$
54.8
|
22.0 %
|
|
$
41.9
|
18.4 %
|
|
$
162.5
|
21.7 %
|
|
$
110.4
|
17.0 %
|
Performance
Technologies
|
43.0
|
13.5 %
|
|
32.9
|
11.7 %
|
|
115.2
|
12.1 %
|
|
102.6
|
12.1 %
|
Segment
total
|
97.8
|
17.3 %
|
|
74.8
|
14.7 %
|
|
277.7
|
16.3 %
|
|
213.0
|
14.2 %
|
Corporate and
eliminations
|
(0.2)
|
-
|
|
(0.2)
|
-
|
|
(0.5)
|
-
|
|
1.1
|
-
|
Gross
profit
|
$
97.6
|
17.4 %
|
|
$
74.6
|
14.9 %
|
|
$
277.2
|
16.5 %
|
|
$
214.1
|
14.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
Climate
Solutions
|
|
|
|
|
$
30.2
|
|
$
16.8
|
|
$
89.9
|
|
$
41.4
|
Performance
Technologies
|
|
|
|
|
17.4
|
|
66.1
|
|
41.1
|
|
83.9
|
Segment
total
|
|
|
|
|
47.6
|
|
82.9
|
|
131.0
|
|
125.3
|
Corporate and
eliminations
|
|
|
|
|
(8.1)
|
|
(3.5)
|
|
(29.1)
|
|
(26.7)
|
Operating
income
|
|
|
|
|
$
39.5
|
|
$
79.4
|
|
$
101.9
|
|
$
98.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Adjusted financial
results (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net earnings
|
$
24.7
|
|
$
74.4
|
|
$
63.3
|
|
$
77.8
|
Interest
expense
|
5.9
|
|
3.8
|
|
14.7
|
|
11.8
|
Provision for income
taxes
|
8.5
|
|
0.1
|
|
19.8
|
|
7.4
|
Depreciation and
amortization expense
|
13.4
|
|
13.8
|
|
40.7
|
|
40.4
|
Other expense –
net
|
0.4
|
|
1.1
|
|
4.1
|
|
1.6
|
Restructuring expenses
(a)
|
0.1
|
|
2.1
|
|
2.2
|
|
3.0
|
Impairment charges
(reversals) – net (b)
|
-
|
|
(57.2)
|
|
-
|
|
(55.7)
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
6.6
|
Environmental charges
(d)
|
0.3
|
|
-
|
|
1.8
|
|
3.6
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
1.2
|
|
-
|
|
5.6
|
Adjusted
EBITDA
|
$
53.3
|
|
$
39.3
|
|
$
146.6
|
|
$
102.1
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders - diluted
|
$
0.46
|
|
$
1.41
|
|
$
1.20
|
|
$
1.46
|
Restructuring expenses
(a)
|
-
|
|
0.04
|
|
0.04
|
|
0.05
|
Impairment charges
(reversals) – net (b)
|
-
|
|
(1.01)
|
|
-
|
|
(0.94)
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
0.13
|
Environmental charges
(d)
|
0.01
|
|
-
|
|
0.03
|
|
0.07
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
0.03
|
|
-
|
|
0.11
|
Debt amendment costs
(f)
|
0.01
|
|
-
|
|
0.01
|
|
-
|
Tax valuation
allowances (g)
|
-
|
|
(0.16)
|
|
-
|
|
(0.22)
|
Adjusted earnings
per share
|
$
0.48
|
|
$
0.31
|
|
$
1.28
|
|
$
0.66
|
|
|
(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 both the first
nine months of fiscal 2023 and fiscal 2022 was $0.3
million.
|
(b)
|
The net impairment
reversals during fiscal 2022 primarily relate to the Company's
liquid-cooled automotive business. During the third quarter of
fiscal 2022, the Company and the prospective buyer terminated an
agreement for the sale of the business and the Company remeasured
its previously impaired long-lived assets to the lower of (i)
carrying value, had held for sale classification never been met, or
(ii) fair value. As a result, the Company recorded a $57.2 million
impairment reversal during the third quarter of fiscal 2022. On a
year-to-date basis, this impairment reversal was partially offset
by net impairment charges related to assets held for sale. The tax
charges related to the net impairment reversals during the third
quarter and first nine months of fiscal 2022 were $4.3 million and
$6.1 million, respectively.
|
(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 nine months of fiscal 2022, the Company recorded SG&A
expenses totaling $3.1 million related to recruiting new senior
management and the Company's implementation of 80/20. In addition,
the Company recorded $2.5 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 the first nine months of 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 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 $8.2 million and $11.4 million during the three
and nine months ended December 31, 2021,
respectively.
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted
financial results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2022
|
|
Three months ended
December 31, 2021
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating
income
|
$ 30.2
|
|
$
17.4
|
|
$
(8.1)
|
|
$
39.5
|
|
$ 16.8
|
|
$
66.1
|
|
$
(3.5)
|
|
$
79.4
|
Depreciation and
amortization expense
|
5.2
|
|
8.1
|
|
0.1
|
|
13.4
|
|
5.6
|
|
7.8
|
|
0.4
|
|
13.8
|
Restructuring expenses
(a)
|
-
|
|
0.1
|
|
-
|
|
0.1
|
|
1.5
|
|
0.6
|
|
-
|
|
2.1
|
Impairment charges
(reversals) - net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(57.2)
|
|
-
|
|
(57.2)
|
Environmental charges
(a)
|
-
|
|
-
|
|
0.3
|
|
0.3
|
|
-
|
|
-
|
|
-
|
|
-
|
Strategic
reorganization and automotive
exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.2
|
|
1.2
|
Adjusted
EBITDA
|
$ 35.4
|
|
$
25.6
|
|
$
(7.7)
|
|
$
53.3
|
|
$ 23.9
|
|
$
17.3
|
|
$
(1.9)
|
|
$
39.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
248.6
|
|
$
317.8
|
|
$
(6.4)
|
|
$ 560.0
|
|
$
227.3
|
|
$
282.0
|
|
$
(7.1)
|
|
$
502.2
|
Adjusted EBITDA
margin
|
14.2 %
|
|
8.1 %
|
|
|
|
9.5 %
|
|
10.5 %
|
|
6.1 %
|
|
|
|
7.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
December 31, 2022
|
|
Nine months ended
December 31, 2021
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating
income
|
$ 89.9
|
|
$
41.1
|
|
$
(29.1)
|
|
$ 101.9
|
|
$ 41.4
|
|
$
83.9
|
|
$
(26.7)
|
|
$
98.6
|
Depreciation and
amortization expense
|
16.0
|
|
23.9
|
|
0.8
|
|
40.7
|
|
17.4
|
|
21.9
|
|
1.1
|
|
40.4
|
Restructuring expenses
(a)
|
0.3
|
|
1.9
|
|
-
|
|
2.2
|
|
1.7
|
|
1.3
|
|
-
|
|
3.0
|
Impairment charges
(reversals) – net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.3
|
|
(56.0)
|
|
-
|
|
(55.7)
|
Loss on sale of assets
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
Environmental charges
(a)
|
-
|
|
-
|
|
1.8
|
|
1.8
|
|
-
|
|
-
|
|
3.6
|
|
3.6
|
Strategic
reorganization and automotive
exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5.6
|
|
5.6
|
Adjusted
EBITDA
|
$
106.2
|
|
$
66.9
|
|
$
(26.5)
|
|
$ 146.6
|
|
$ 60.8
|
|
$
51.1
|
|
$
(9.8)
|
|
$
102.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
748.9
|
|
$
952.1
|
|
$
(21.2)
|
|
$
1,679.8
|
|
$
651.0
|
|
$
849.9
|
|
$
(25.2)
|
|
$
1,475.7
|
Adjusted EBITDA
margin
|
14.2 %
|
|
7.0 %
|
|
|
|
8.7 %
|
|
9.3 %
|
|
6.0 %
|
|
|
|
6.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
See the Adjusted EBITDA reconciliation on
the previous page for information on restructuring expenses and
other adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
|
|
Debt due within one
year
|
$
30.9
|
|
$
29.4
|
|
|
|
|
Long-term
debt
|
358.9
|
|
348.4
|
|
|
|
|
Total debt
|
389.8
|
|
377.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: cash and cash
equivalents
|
82.2
|
|
45.2
|
|
|
|
|
Net debt
|
$
307.6
|
|
$
332.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
11.8
|
|
$
26.4
|
|
$
67.9
|
|
$
7.4
|
Expenditures for
property, plant and equipment
|
(12.2)
|
|
(10.3)
|
|
(35.2)
|
|
(30.7)
|
Free cash
flow
|
$
(0.4)
|
|
$
16.1
|
|
$
32.7
|
|
$
(23.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales - constant
currency (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
2022
|
|
2021
|
|
Net Sales
|
|
Effect of Exchange
Rate
Changes
|
|
Net Sales -
Constant Currency
|
|
Net Sales
|
Climate
Solutions
|
$
248.6
|
|
$
13.7
|
|
$
262.3
|
|
$
227.3
|
Performance
Technologies
|
317.8
|
|
16.5
|
|
334.3
|
|
282.0
|
Segment
total
|
566.4
|
|
30.2
|
|
596.6
|
|
509.3
|
Corporate and
eliminations
|
(6.4)
|
|
-
|
|
(6.4)
|
|
(7.1)
|
Net
sales
|
$
560.0
|
|
$
30.2
|
|
$
590.2
|
|
$
502.2
|
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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SOURCE Modine Manufacturing Company