RACINE, Wis., Nov. 2, 2021 /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, 2021.
Second Quarter Highlights:
- Net sales of $478.9 million
increased 4 percent from the prior year
- Operating income of $10.5 million
decreased $18.0 million
- Adjusted EBITDA of $29.5 million
decreased $25.9 million
- Earnings per share of $0.01 and
adjusted earnings per share of $0.15
- Announced several leadership changes and new strategy for
Automotive business
"Our top-line growth in the fiscal second quarter reflects
double digit gains in our BHVAC, CIS and HDE segments, which
together were up $65 million, or 18
percent," said Modine President and
Chief Executive Officer, Neil D.
Brinker. "This growth was partially offset by a
$45 million decrease in sales in our
automotive segment, of which approximately $18 million related to the sale of the air-cooled
automotive business earlier this fiscal year along with the
negative impacts the semiconductor shortage and other supply chain
issues. Our operating margins continue to be negatively pressured
by rising raw material prices and supply chain
disruptions. These significant cost increases, along with the
absence of over $10 million of
COVID-related savings in the second quarter of fiscal 2021, make
year-over-year comparisons exceedingly difficult. In response, we
are raising prices wherever possible to mitigate these headwinds
and to improve operating margins. Our new leadership team is now
firmly in place to take these commercial actions and to launch a
restructuring program in our Automotive segment. These efforts, and
further benefits from deploying 80/20 principles through our
business, will quickly enable our transformation and lead to a
stronger Modine."
Financial Results
Net sales increased 4 percent in the second quarter to
$478.9 million, compared with
$461.4 million in the prior year. The
increase was driven by market-related volume improvements in the
BHVAC, CIS and HDE segments, but was partially offset by a
$44.5 million decline in the
automotive segment, which was impacted by the sale of the
air-cooled business in the first quarter of fiscal 2022 and the
semiconductor shortage.
Gross profit decreased 18 percent in the second quarter to
$66.3 million and gross margin
decreased by 370 basis points to 13.8 percent, primarily driven by
higher material prices, including underlying metal prices and
related premiums, fabrication, freight, tariff and packaging costs,
compared to the prior year. The prior year also benefited from the
impact of cost-saving actions taken in response to the COVID-19
pandemic. These factors were partially offset by lower depreciation
expense in the Automotive segment.
Selling, general and administrative ("SG&A") expenses were
$51.9 million in the second quarter,
which was $1.1 million higher than
the prior year. This increase was primarily driven by higher
compensation-related expenses in the current year, as expenses in
the second quarter of fiscal 2021 were impacted by COVID-related
cost-saving actions including furloughs, shortened work weeks and
temporary salary reductions. This increase was partially offset by
lower expenses at Corporate related to severance costs for
executive management positions, as the prior year included expenses
related to the CEO departure.
Operating income in the second quarter was $10.5 million, compared to operating income of
$28.5 million in the prior year. This
decrease was driven primarily by lower gross profit in the second
quarter of fiscal 2022, as compared to the prior year. During the
second quarter of fiscal 2022, the Company recorded a total of
$5.9 million of impairment charges,
restructuring expenses, strategic reorganization costs, automotive
exit strategy costs and environmental expenses. Excluding these
items, as well as depreciation and amortization expense, adjusted
EBITDA of $29.5 million decreased
$25.9 million, or 47 percent,
compared with $55.4 million in the
prior year.
Earnings per share was $0.01 in
the second quarter, compared with earnings per share of
$0.17 in the second quarter last
year. Adjusted earnings per share was $0.15 in the second quarter, compared with
adjusted earnings per share of $0.43
in the second quarter last year. These decreases were primarily due
to lower operating earnings compared to the prior year.
Second Quarter Segment Review
- BHVAC segment sales were $77.5
million, compared with $68.5
million one year ago, an increase of 13 percent. This
increase was driven primarily by higher sales to commercial HVAC
and data center customers. The higher commercial HVAC sales were
driven by higher sales of heating and ventilation products. The
segment reported gross margin of 27.8 percent, which was 630 basis
points lower than the prior year, primarily due to higher material
prices and labor costs, including the impact of cost-saving
initiatives taken in the prior year in response to the COVID-19
pandemic. The segment reported operating income of $10.0 million, a $3.5
million decrease from the prior year, due to lower gross
profit and higher SG&A expenses. Adjusted EBITDA for the BHVAC
segment was $11.5 million, a decrease
of $3.4 million from the prior
year.
- CIS segment sales were $153.5
million, compared with $128.2
million one year ago, an increase of 20 percent. This
increase was driven by higher sales to commercial HVAC and
refrigeration customers and favorable pricing adjustments in
response to raw material price increases. The segment reported
gross margin of 11.9 percent, down 190 basis points compared with
the prior year, primarily due to the negative impact of higher
material prices. The segment reported operating income of
$5.8 million, a $0.6 million increase from the prior year,
primarily due to lower restructuring expenses. Adjusted EBITDA for
the CIS segment was $11.1 million, a
decrease of $1.4 million from the
prior year.
- HDE segment sales were $195.8
million, compared with $165.6
million one year ago, an increase of 18 percent. This
increase was driven by higher sales to off-highway and commercial
vehicle customers. The segment reported gross margin of 9.4
percent, down 480 basis points from the prior year. This decrease
was primarily driven by higher material prices. The segment
reported operating income of $5.8
million, a $7.5 million
decrease compared to operating income of $13.3 million in the prior year. This decrease
was primarily due to lower gross profit and higher SG&A
expenses. Adjusted EBITDA for the HDE segment was $12.1 million, a decrease of $7.7 million from the prior year.
- Automotive segment sales were $65.4
million, compared with $109.9
million one year ago, a decrease of 40 percent. This
decrease was driven in part by the sale of the air-cooled
automotive business earlier this fiscal year and by the impact of
the ongoing semiconductor shortage on automotive production
volumes. The segment reported gross margin of 11.0 percent, down
420 basis points compared with the prior year, primarily due to
lower sales volume, as lower depreciation expenses in the current
year were largely offset by higher material prices. The segment
reported an operating loss of $5.6
million, a decline of $13.6
million compared with the operating income in the prior
year, primarily due to lower gross profit and $3.3 million of impairment charges related to
assets held for sale during the quarter. Adjusted EBITDA for the
Automotive segment was a loss of $1.9
million, a decline of $15.1
million from the prior year.
Balance Sheet & Liquidity
Net cash used for operating activities for the six months ended
September 30, 2021 was $19.0 million, a decrease of $106.3 million compared with net cash provided by
operating activities in the same period in the prior year. Free
cash flow for the six months ended September
30, 2021 was a use of $39.4
million, down $112.1 million
from the prior year, primarily resulting from unfavorable net
changes in working capital and higher capital expenditures as
compared to the prior year. Higher inventory balances
resulted from increased raw material prices and strategic safety
stock builds in connection with supply chain challenges. In
addition, free cash flow was unusually strong in the first six
months of fiscal 2021 due to the deferral of certain cash payments
in an effort to conserve cash in response to the COVID-19 pandemic,
including incentive compensation and the purchase of certain
program-related equipment and tooling. Cash payments for
restructuring activities, automotive strategy and separation costs,
and strategic reorganization costs during the first six months of
fiscal 2022 totaled $7.7
million.
Total debt was $388.9 million as
of September 30, 2021. Cash and cash
equivalents at the end of the second quarter were $56.0 million. Net debt was $332.9 million as of September 30, 2021, an increase of $36.2 million from the end of fiscal
2021.
Outlook
"Material costs have increased further over the past several
months and it will take us longer to fully offset these increases
with commercial actions and contractual metals pass through pricing
adjustments," said Brinker. "In addition, we have reduced our
revenue outlook for the Automotive business given the ongoing
impact of the semiconductor shortage and other supply chain
disruptions on production volumes. Although our BHVAC, CIS and HDE
segments continue to have strong order intake, we are lowering our
full-year guidance due to the weaker outlook for our Automotive
segment and due to ongoing material cost inflation and supply chain
issues."
Based on current exchange rates and market outlook, Modine
provides the following guidance ranges for fiscal 2022:
- Full fiscal year-over-year sales up 10 to 16 percent;
- Adjusted EBITDA of $145 million
to $160 million.
Brinker concluded, "We are working to mitigate the impact of
supply chain and inflationary pressures in order to improve
operating margins and cash flows, while also continuing to build
momentum around the longer-term repositioning and transformation of
our business. There are numerous disruptive technologies across our
markets that require new and creative ways to manage heat transfer
where we can build upon areas where we are already positioned to
provide a complete systems solution. We have the right leadership
team in place to drive this transformation and become a stronger
Modine, and are developing the strategies to promote long-term
growth and drive shareholder value."
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Wednesday, November
3, 2021 at 8:00 a.m. Central
Time (9:00 a.m. Eastern Time)
to discuss its second quarter fiscal 2022 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, 2021. A call-in replay
will be available through midnight on November 9, 2021 at 800-770-2030, (international
replay 647-362-9199); Conference ID# 79220. The Company will
post a transcript of the call on its website on or after
November 9, 2021.
About Modine
Modine, with fiscal 2021 revenues of $1.8
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 four complementary segments: BHVAC, CIS,
HDE, and Automotive. 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,
2021 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,
2021. 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 80/20 strategy; 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 comply with the financial covenants in our credit agreements and
to fund our global liquidity requirements efficiently; operational
inefficiencies as a result of program launches, unexpected volume
increases or decreases, 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, supplier constraints, including
the global semiconductor chip shortage, supply-chain related
logistic and transportation challenges, 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 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; Modine's ability to recruit and maintain talent in
managerial, leadership, operational 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 EBITDA, 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. The Company
believes 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 EBITDA
Net earnings excluding interest expense, the provision or
benefit for income taxes, depreciation and amortization expenses,
other income and expense, restructuring expenses, impairment
charges, costs associated with the review of strategic alternatives
for the Automotive segment's business operations, strategic
reorganization costs, and certain other gains or charges. The
Company believes that adjusted EBITDA provides a relevant measure
of profitability and earnings power. The Company views this
financial metric as being useful to assess 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, and certain other gains
or charges.
Definition – Adjusted earnings per share
Diluted earnings per share plus restructuring expenses,
impairment charges, costs associated with the review of strategic
alternatives for the Automotive segment's business operations,
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. 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.
Forward-looking non-GAAP financial measure
The Company's fiscal 2022 guidance includes adjusted EBITDA, as
defined above, which is a non-GAAP financial measure. The
full-year fiscal 2022 guidance for adjusted EBITDA is based upon
the Company's estimates for interest expense of approximately
$15 to $16
million, a provision for income taxes of approximately
$16 to $20
million, and depreciation and amortization expense of
approximately $50 to $55 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), costs associated with the review of strategic
alternatives for the automotive business, strategic reorganization
activities, impairment charges and certain other items. These
expenses and gains for the first six months of fiscal 2022 are
presented on page 9. Estimates of these expenses and gains
for the remainder of fiscal 2022 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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
$
478.9
|
|
$
461.4
|
|
$
973.5
|
|
$
809.2
|
Cost of
sales
|
412.6
|
|
380.6
|
|
834.0
|
|
682.3
|
Gross
profit
|
66.3
|
|
80.8
|
|
139.5
|
|
126.9
|
Selling, general
& administrative expenses
|
51.9
|
|
50.8
|
|
111.3
|
|
95.5
|
Restructuring
expenses
|
0.6
|
|
1.5
|
|
0.9
|
|
6.1
|
Impairment charges –
net
|
3.3
|
|
-
|
|
1.5
|
|
-
|
Loss on sale of
assets
|
-
|
|
-
|
|
6.6
|
|
-
|
Operating
income
|
10.5
|
|
28.5
|
|
19.2
|
|
25.3
|
Interest
expense
|
(3.8)
|
|
(5.2)
|
|
(8.0)
|
|
(10.6)
|
Other expense –
net
|
(0.7)
|
|
(0.5)
|
|
(0.5)
|
|
(0.5)
|
Earnings before
income taxes
|
6.0
|
|
22.8
|
|
10.7
|
|
14.2
|
Provision for income
taxes
|
(5.4)
|
|
(13.9)
|
|
(7.3)
|
|
(13.7)
|
Net
earnings
|
0.6
|
|
8.9
|
|
3.4
|
|
0.5
|
Net earnings
attributable to noncontrolling interest
|
(0.2)
|
|
(0.3)
|
|
(0.7)
|
|
(0.5)
|
Net earnings
attributable to Modine
|
$
0.4
|
|
$
8.6
|
|
$
2.7
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share attributable to Modine shareholders – diluted
|
$
0.01
|
|
$
0.17
|
|
$
0.05
|
|
$
-
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – diluted
|
52.6
|
|
51.3
|
|
52.5
|
|
51.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
September 30,
2021
|
|
March 31,
2021
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
56.0
|
|
$
37.8
|
|
|
|
|
Trade
receivables
|
276.8
|
|
267.9
|
|
|
|
|
Inventories
|
248.9
|
|
195.6
|
|
|
|
|
Assets held for
sale
|
70.5
|
|
107.6
|
|
|
|
|
Other current
assets
|
44.5
|
|
35.9
|
|
|
|
|
Total current
assets
|
696.7
|
|
644.8
|
|
|
|
|
Property, plant and
equipment – net
|
265.9
|
|
269.9
|
|
|
|
|
Intangible assets –
net
|
96.0
|
|
100.6
|
|
|
|
|
Goodwill
|
170.1
|
|
170.7
|
|
|
|
|
Deferred income
taxes
|
26.0
|
|
24.5
|
|
|
|
|
Other noncurrent
assets
|
67.3
|
|
66.2
|
|
|
|
|
Total
assets
|
$
1,322.0
|
|
$
1,276.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Debt due within one
year
|
$
22.0
|
|
$
23.3
|
|
|
|
|
Accounts
payable
|
252.5
|
|
233.9
|
|
|
|
|
Liabilities held for
sale
|
65.5
|
|
103.3
|
|
|
|
|
Other current
liabilities
|
114.0
|
|
108.7
|
|
|
|
|
Total current
liabilities
|
454.0
|
|
469.2
|
|
|
|
|
Long-term
debt
|
366.9
|
|
311.2
|
|
|
|
|
Other noncurrent
liabilities
|
137.1
|
|
140.2
|
|
|
|
|
Total
liabilities
|
958.0
|
|
920.6
|
|
|
|
|
Total
equity
|
364.0
|
|
356.1
|
|
|
|
|
Total liabilities
& equity
|
$
1,322.0
|
|
$
1,276.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine
Manufacturing Company
|
|
|
|
|
|
|
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
September 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net
earnings
|
$
3.4
|
|
$
0.5
|
|
|
|
|
Adjustments to
reconcile net earnings to net cash (used for) provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
26.6
|
|
37.9
|
|
|
|
|
Impairment charges –
net
|
1.5
|
|
-
|
|
|
|
|
Loss on sale of
assets
|
6.6
|
|
-
|
|
|
|
|
Stock-based
compensation expense
|
3.6
|
|
2.1
|
|
|
|
|
Deferred income
taxes
|
(1.7)
|
|
1.0
|
|
|
|
|
Other –
net
|
1.2
|
|
2.5
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Trade accounts
receivable
|
12.5
|
|
4.4
|
|
|
|
|
Inventories
|
(54.8)
|
|
11.0
|
|
|
|
|
Accounts
payable
|
4.1
|
|
(5.7)
|
|
|
|
|
Other assets and
liabilities
|
(22.0)
|
|
33.6
|
|
|
|
|
Net cash (used
for) provided by operating activities
|
(19.0)
|
|
87.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(20.4)
|
|
(14.6)
|
|
|
|
|
Proceeds from
(payments for) disposition of assets
|
(5.2)
|
|
0.6
|
|
|
|
|
Other –
net
|
(3.4)
|
|
0.7
|
|
|
|
|
Net cash used for
investing activities
|
(29.0)
|
|
(13.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net increase
(decrease) in debt
|
64.8
|
|
(82.3)
|
|
|
|
|
Other –
net
|
(1.1)
|
|
(1.6)
|
|
|
|
|
Net cash provided
by (used for) financing activities
|
63.7
|
|
(83.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(0.3)
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents, restricted cash and cash held
for sale
|
15.4
|
|
(8.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, restricted cash and cash held for sale - beginning of
period
|
46.1
|
|
71.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, restricted cash and cash held for sale - end of
period
|
$
61.5
|
|
$
62.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine
Manufacturing Company
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales:
|
|
|
|
|
|
|
|
Building HVAC
Systems
|
$
77.5
|
|
$
68.5
|
|
$
144.1
|
|
$
122.6
|
Commercial and
Industrial Solutions
|
153.5
|
|
128.2
|
|
307.6
|
|
244.7
|
Heavy Duty
Equipment
|
195.8
|
|
165.6
|
|
397.6
|
|
289.1
|
Automotive
|
65.4
|
|
109.9
|
|
151.6
|
|
172.0
|
Segment
total
|
492.2
|
|
472.2
|
|
1,000.9
|
|
828.4
|
Corporate and
eliminations
|
(13.3)
|
|
(10.8)
|
|
(27.4)
|
|
(19.2)
|
Net
sales
|
$
478.9
|
|
$
461.4
|
|
$
973.5
|
|
$
809.2
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Building HVAC
Systems
|
$
21.6
|
27.8%
|
|
$
23.3
|
34.1%
|
|
$
37.8
|
26.2%
|
|
$
39.1
|
31.9%
|
Commercial and
Industrial Solutions
|
18.3
|
11.9%
|
|
17.7
|
13.8%
|
|
39.1
|
12.7%
|
|
31.9
|
13.0%
|
Heavy Duty
Equipment
|
18.3
|
9.4%
|
|
23.6
|
14.2%
|
|
40.9
|
10.3%
|
|
34.9
|
12.1%
|
Automotive
|
7.2
|
11.0%
|
|
16.6
|
15.2%
|
|
20.4
|
13.4%
|
|
21.4
|
12.5%
|
Segment
total
|
65.4
|
13.3%
|
|
81.2
|
17.2%
|
|
138.2
|
13.8%
|
|
127.3
|
15.4%
|
Corporate and
eliminations
|
0.9
|
-
|
|
(0.4)
|
-
|
|
1.3
|
-
|
|
(0.4)
|
-
|
Gross
profit
|
$
66.3
|
13.8%
|
|
$
80.8
|
17.5%
|
|
$
139.5
|
14.3%
|
|
$
126.9
|
15.7%
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
Building HVAC
Systems
|
$
10.0
|
|
$
13.5
|
|
$
15.7
|
|
$
20.7
|
|
|
|
|
Commercial and
Industrial Solutions
|
5.8
|
|
5.2
|
|
13.3
|
|
5.1
|
|
|
|
|
Heavy Duty
Equipment
|
5.8
|
|
13.3
|
|
14.7
|
|
10.8
|
|
|
|
|
Automotive
|
(5.6)
|
|
8.0
|
|
(1.4)
|
|
4.2
|
|
|
|
|
Segment
total
|
16.0
|
|
40.0
|
|
42.3
|
|
40.8
|
|
|
|
|
Corporate and
eliminations
|
(5.5)
|
|
(11.5)
|
|
(23.1)
|
|
(15.5)
|
|
|
|
|
Operating
income
|
$
10.5
|
|
$
28.5
|
|
$
19.2
|
|
$
25.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine
Manufacturing Company
|
|
|
|
|
|
|
|
Adjusted financial
results (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
earnings
|
$
0.6
|
|
$
8.9
|
|
$
3.4
|
|
$
0.5
|
Interest
expense
|
3.8
|
|
5.2
|
|
8.0
|
|
10.6
|
Provision for income
taxes
|
5.4
|
|
13.9
|
|
7.3
|
|
13.7
|
Depreciation and
amortization expense
|
13.1
|
|
19.3
|
|
26.6
|
|
37.9
|
Other expense –
net
|
0.7
|
|
0.5
|
|
0.5
|
|
0.5
|
Restructuring
expenses (a)
|
0.6
|
|
1.5
|
|
0.9
|
|
6.1
|
Impairment charges –
net (b)
|
3.3
|
|
-
|
|
1.5
|
|
-
|
Loss on sale of
assets (c)
|
-
|
|
-
|
|
6.6
|
|
-
|
Automotive separation
and exit strategy costs(d)
|
0.3
|
|
0.6
|
|
2.2
|
|
1.1
|
Strategic
reorganization costs (e)
|
1.6
|
|
5.5
|
|
2.2
|
|
5.5
|
Environmental charges
(f)
|
0.1
|
|
-
|
|
3.6
|
|
-
|
Adjusted
EBITDA
|
$
29.5
|
|
$
55.4
|
|
$
62.8
|
|
$
75.9
|
|
|
|
|
|
|
|
|
Net earnings per
share attributable to Modine shareholders - diluted
|
$
0.01
|
|
$
0.17
|
|
$
0.05
|
|
$
-
|
Restructuring
expenses (a)
|
0.01
|
|
0.03
|
|
0.02
|
|
0.10
|
Impairment charges –
net (b)
|
0.06
|
|
-
|
|
0.06
|
|
-
|
Loss on sale of
assets (c)
|
-
|
|
-
|
|
0.13
|
|
-
|
Automotive separation
and exit strategy costs(d)
|
0.01
|
|
0.01
|
|
0.04
|
|
0.02
|
Strategic
reorganization costs (e)
|
0.03
|
|
0.09
|
|
0.04
|
|
0.09
|
Environmental charges
(f)
|
-
|
|
-
|
|
0.07
|
|
-
|
Tax valuation
allowances (g)
|
0.03
|
|
0.13
|
|
(0.06)
|
|
0.13
|
Adjusted earnings
per share
|
$
0.15
|
|
$
0.43
|
|
$
0.35
|
|
$
0.34
|
|
|
|
|
|
|
|
|
(a)
Restructuring expenses primarily consist of employee severance
expenses related to targeted headcount reductions and plant
consolidation activities and equipment transfer costs.
The tax benefit related to restructuring
expenses during both the second quarter of fiscal 2022 and fiscal
2021 was $0.1 million. The tax benefit related to
restructuring expenses
during the first six months of fiscal 2022
and fiscal 2021 was $0.1 million and $0.9 million,
respectively.
|
(b)
The net impairment charges in fiscal 2022 primarily relate to
the Company's liquid-cooled automotive business within the
Automotive segment. The Company recorded $3.3 million
and $8.9 million of impairment charges
during the first three and six months of fiscal 2022 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, which adjusted long-lived assets that were no longer
expected to convey as
part of the sale transaction to their
estimated fair value. 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 closed on
April 30, 2021. As a result of the sale, the Company recorded
a $6.6 million loss on sale at Corporate during
the first quarter of fiscal 2022.
There was no tax impact associated with this
transaction.
|
(d)
Automotive separation and exit strategy costs consist of costs
directly associated with the Company's review of strategic
alternatives for the liquid-cooled and air-cooled automotive
businesses, including costs to separate
and prepare the underlying businesses for sale. With the
exception of $0.2 million and $0.4 million of costs in the first
six months of fiscal
2022 and fiscal 2021, respectively,
associated with program and equipment transfers recorded as costs
of sales, these costs were recorded as SG&A expenses at
Corporate and
primarily related to accounting, legal,
and IT professional services. The tax benefit related to
these costs during the first six months of fiscal 2022 and fiscal
2021 was $0 and $0.2
million, respectively.
|
(e)
Strategic reorganization costs, recorded as SG&A expenses at
Corporate, primarily consist of severance-related expenses and
professional service fees for recruiting key senior
management positions and the Company's
implementation of its 80/20 strategy. The fiscal 2022 costs
include recruiting fees for new segment vice presidents and
business
unit general managers and
severance-related expenses for the outgoing executives as part of
the transition. The fiscal 2021 costs include severance and
benefit-related expenses
associated with Thomas A. Burke's
separation agreement and costs directly associated with the search
for his successor. There was no tax benefit related to the
fiscal 2022 costs.
The tax benefit related to these costs in
fiscal 2021 was $0.8 million.
|
(f) Environmental charges,
including related legal costs, are recorded as SG&A expenses at
Corporate and relate to a previously-owned U.S. manufacturing
facility.
|
(g)
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. During the second quarter
of fiscal 2021, the Company increased its valuation allowance on
deferred tax assets in the U.S. As a result, the Company
recorded an income
tax charge of $6.6 million.
|
Modine
Manufacturing Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted
financial results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2021
|
|
Three months ended
September 30, 2020
|
|
Building HVAC
Systems
|
|
Commercial and
Industrial Solutions
|
|
Heavy Duty
Equipment
|
|
Automotive
|
|
Corporate and
eliminations
|
|
Total
|
|
Building HVAC
Systems
|
|
Commercial and
Industrial Solutions
|
|
Heavy Duty
Equipment
|
|
Automotive
|
|
Corporate and
eliminations
|
|
Total
|
Operating income
(loss)
|
$
10.0
|
|
$
5.8
|
|
$
5.8
|
|
$
(5.6)
|
|
$
(5.5)
|
|
$
10.5
|
|
$
13.5
|
|
$
5.2
|
|
$
13.3
|
|
$
8.0
|
|
$
(11.5)
|
|
$
28.5
|
Depreciation and
amortization expense
|
1.5
|
|
5.1
|
|
6.0
|
|
0.3
|
|
0.2
|
|
13.1
|
|
1.4
|
|
5.8
|
|
6.5
|
|
5.2
|
|
0.4
|
|
19.3
|
Restructuring
expenses (a)
|
-
|
|
0.2
|
|
0.3
|
|
0.1
|
|
-
|
|
0.6
|
|
-
|
|
1.5
|
|
-
|
|
-
|
|
-
|
|
1.5
|
Impairment charges
(a)
|
-
|
|
-
|
|
-
|
|
3.3
|
|
-
|
|
3.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Automotive separation
and exit strategy costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.3
|
|
0.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.6
|
|
0.6
|
Strategic
reorganization costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
1.6
|
|
1.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5.5
|
|
5.5
|
Environmental charges
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.1
|
|
0.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Adjusted
EBITDA
|
$
11.5
|
|
$
11.1
|
|
$
12.1
|
|
$
(1.9)
|
|
$
(3.3)
|
|
$
29.5
|
|
$
14.9
|
|
$
12.5
|
|
$
19.8
|
|
$
13.2
|
|
$
(5.0)
|
|
$
55.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
September 30, 2021
|
|
Six months ended
September 30, 2020
|
|
Building HVAC
Systems
|
|
Commercial and
Industrial Solutions
|
|
Heavy Duty
Equipment
|
|
Automotive
|
|
Corporate and
eliminations
|
|
Total
|
|
Building HVAC
Systems
|
|
Commercial and
Industrial Solutions
|
|
Heavy Duty
Equipment
|
|
Automotive
|
|
Corporate and
eliminations
|
|
Total
|
Operating income
(loss)
|
$
15.7
|
|
$
13.3
|
|
$
14.7
|
|
$
(1.4)
|
|
$
(23.1)
|
|
$
19.2
|
|
$
20.7
|
|
$
5.1
|
|
$
10.8
|
|
$
4.2
|
|
$
(15.5)
|
|
$
25.3
|
Depreciation and
amortization expense
|
2.9
|
|
10.4
|
|
12.3
|
|
0.4
|
|
0.6
|
|
26.6
|
|
2.8
|
|
11.4
|
|
12.6
|
|
10.2
|
|
0.9
|
|
37.9
|
Restructuring
expenses (a)
|
-
|
|
0.2
|
|
0.5
|
|
0.2
|
|
-
|
|
0.9
|
|
-
|
|
3.9
|
|
1.9
|
|
0.2
|
|
0.1
|
|
6.1
|
Impairment charges –
net (a)
|
-
|
|
0.3
|
|
-
|
|
1.2
|
|
-
|
|
1.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Loss on sale of
assets (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Automotive separation
and exit strategy costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
2.2
|
|
2.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.1
|
|
1.1
|
Strategic
reorganization costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
2.2
|
|
2.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5.5
|
|
5.5
|
Environmental charges
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
3.6
|
|
3.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Adjusted
EBITDA
|
$
18.6
|
|
$
24.2
|
|
$
27.5
|
|
$
0.4
|
|
$
(7.9)
|
|
$
62.8
|
|
$
23.5
|
|
$
20.4
|
|
$
25.3
|
|
$
14.6
|
|
$
(7.9)
|
|
$
75.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
2021
|
|
March 31,
2021
|
|
|
|
|
|
Debt due within one
year
|
$
22.0
|
|
$
23.3
|
|
|
|
|
|
Long-term
debt
|
366.9
|
|
311.2
|
|
|
|
|
|
Total debt
|
388.9
|
|
334.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: cash and cash
equivalents
|
56.0
|
|
37.8
|
|
|
|
|
|
Net
debt
|
$
332.9
|
|
$
296.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net cash (used for)
provided by operating activities
|
$
(8.9)
|
|
$
75.0
|
|
$
(19.0)
|
|
$
87.3
|
|
Expenditures for
property, plant and equipment
|
(9.0)
|
|
(5.5)
|
|
(20.4)
|
|
(14.6)
|
|
Free cash
flow
|
$
(17.9)
|
|
$
69.5
|
|
$
(39.4)
|
|
$
72.7
|
|
|
|
|
|
|
|
|
|
|
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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multimedia:https://www.prnewswire.com/news-releases/modine-reports-second-quarter-fiscal-2022-results-301414626.html
SOURCE Modine Manufacturing Company