Strong earnings growth driven by higher
revenues in key end markets and early benefits from the
implementation of 80/20 actions
RACINE,
Wis., May 25, 2022 /PRNewswire/ -- Modine
Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported
financial results for the quarter and fiscal year ended
March 31, 2022.
Fourth Quarter Highlights:
- Net sales of $574.4 million
increased 12 percent from the prior year
- Operating income of $20.6 million
increased $34.9 million from the
prior year operating loss
- Adjusted EBITDA of $56.7 million
increased $14.5 million, or 34
percent, from the prior year
- Earnings per share of $0.16
compared to a loss per share of $0.29
in the prior year
- Adjusted earnings per share of $0.57 compared to $0.51 in the prior year
- Investor and Analyst Day planned for June 22, 2022 at the NYSE
Full Year Highlights:
- Net sales of $2.1 billion
increased 13 percent from the prior year
- Operating income of $119.2
million increased $216.9
million from the prior year, primarily due to impairment
charges related to the Automotive segment recorded in the prior
year and the reversal of a portion of those charges in the current
year
- Adjusted EBITDA of $158.8 million
decreased $6.0 million from the prior
year
- Earnings per share of $1.62
compared to a loss per share of $4.11
in the prior year
- Adjusted earnings per share of $1.23 compared to $1.14 in the prior year
"We generated strong growth in our Building HVAC ("BHVAC") and
Commercial and Industrial Solutions ("CIS") segments this quarter,
and are starting to see the early benefits of the 80/20 actions
taken in fiscal 2022 to simplify our business and improve
profitability," said Modine
President and Chief Executive Officer, Neil D. Brinker. "We continue to work diligently
to offset inflationary pressures, particularly the impact of higher
material costs. We have focused on improving our commercial
processes, including instituting multiple pricing adjustments
throughout the year. This was particulary evident in our CIS
segment, which benefited from early execution of 80/20 actions by
our leadership team. Finally, we continue to focus on taking
actions to improve margins, including moving forward with the
restructuring plans announced last quarter to reprioritize
resources and capital. Overall, we are pleased with a strong finish
to our fiscal year and the realization of early benefits from our
deliberate, strategic actions."
Financial Results
Net sales increased 12 percent in the fourth quarter to
$574.4 million, compared with
$514.9 million in the prior year. The
increase was driven by market-related volume improvements and
favorable pricing adjustments in response to raw material price
increases in the CIS, BHVAC and Heavy Duty Equipment ("HDE")
segments, but was partially offset by a $23.1 million sales decrease in the Automotive
segment, which was impacted by the sale of the air-cooled business
in the first quarter of fiscal 2022 and the ongoing semiconductor
shortages.
Gross profit increased 14 percent in the fourth quarter to
$95.2 million and gross margin
improved by 30 basis points to 16.6 percent. These increases were
primarily driven by the higher sales volume, partially offset by
the ongoing impact of higher material prices, including underlying
metal prices and related premiums, fabrication, freight and
packaging costs, compared to the prior year.
Selling, general and administrative ("SG&A") expenses were
$53.5 million in the fourth quarter,
which was 10 percent lower than the prior year. This decrease was
primarily driven by lower incentive compensation expenses and lower
automotive exit strategy costs, as compared to the prior year.
Operating income in the fourth quarter was $20.6 million, compared to an operating loss of
$14.3 million in the prior year.
This improvement was driven primarily by the absence of
$32.4 million of impairment charges
recorded in the prior year, higher gross profit, and lower SG&A
expenses. These favorable drivers were partially offset by higher
restructuring expenses compared to the prior year. During the
fourth quarter of fiscal 2022, the Company recorded $21.1 million of restructuring charges, primarily
related to targeted headcount reductions. Excluding
restructuring charges and certain other charges totaling
$0.6 million, as well as depreciation
and amortization expense, adjusted EBITDA of $56.7 million increased $14.5 million, or 34 percent, compared with
$42.2 million in the prior
year.
Earnings per share was $0.16 in
the fourth quarter, compared with a loss per share of $0.29 in the fourth quarter last year. This
improvement was primarily due to higher operating earnings,
including the absence of significant impairment charges recorded in
the prior year. Adjusted earnings per share was $0.57 in the fourth quarter, compared with
adjusted earnings per share of $0.51
in the fourth quarter last year.
Fourth Quarter Segment Review
- BHVAC segment sales were $101.9
million, compared with $66.9
million one year ago, an increase of 52 percent. This
increase was driven by higher sales to data center and commercial
HVAC customers. The higher commercial HVAC sales were driven by
higher sales of heating and school ventilation products. The
segment reported gross margin of 27.9 percent, which was 310 basis
points lower than the prior year, primarily due to higher
inflationary costs, including freight charges, and unfavorable
sales mix. The segment reported operating income of $15.6 million, a 63 percent increase from the
prior year. Adjusted EBITDA for the BHVAC segment was
$17.4 million, an increase of
$6.4 million, or 58 percent, from the
prior year.
- CIS segment sales were $171.3
million, compared with $142.8
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 18.5 percent, up 490 basis points compared with the
prior year, primarily due to the positive impact of increased sales
volume, favorable sales mix, pricing, and operational efficiencies.
The segment reported operating income of $18.6 million, a $12.8
million improvement from the prior year, primarily due to
higher gross profit on increased sales. Adjusted EBITDA for the CIS
segment was $24.1 million, an
increase of $11.9 million, or 98
percent, from the prior year.
- HDE segment sales were $226.1
million, compared with $207.4
million one year ago, an increase of 9 percent. This
increase was driven by higher sales to off-highway, bus and
specialty vehicle customers, and includes a significant impact from
material pass through price increases. The segment reported gross
margin of 10.7 percent, down 250 basis points from the prior year.
This decrease was primarily driven by higher material prices in
excess of contractual pricing adjustments along with higher
freight, packaging and surcharges. The segment reported operating
income of $9.6 million, a
$3.6 million decrease compared to the
prior year. This decrease was primarily due to lower gross profit.
Adjusted EBITDA for the HDE segment was $15.6 million, a decrease of $5.2 million from the prior year.
- Automotive segment sales were $89.3
million, compared with $112.4
million one year ago, a decrease of 21 percent. This
decrease was primarily driven by the sale of the air-cooled
automotive business earlier this fiscal year and, to a lesser
extent, the impact of the ongoing semiconductor shortage on
automotive production volumes. The segment reported gross margin of
12.8 percent, down 160 basis points compared with the prior year,
primarily due to lower sales volume. The segment reported an
operating loss of $18.2 million, an
improvement of $12.0 million from the
prior year. The operating loss in the current year was negatively
impacted by $20.1 million of
restructuring expenses, primarily related to targeted headcount
reductions in Europe. The operating loss in the prior year
was negatively impacted by $32.4
million of impairment charges, which were primarily related
to the air-cooled automotive business that was sold earlier in
fiscal 2022. Adjusted EBITDA for the Automotive segment was
$3.6 million, compared with adjusted
EBITDA of $5.9 million in the prior
year.
Full-Year Fiscal 2022 Overview
In fiscal 2022, net sales increased 13 percent to $2,050.1 million. The increase was primarily
driven by higher sales in the HDE, CIS, and BHVAC segments,
partially offset by lower sales in the Automotive segment, which
decreased 21 percent from the prior year. Automotive sales were
lower due to the sale of the air-cooled automotive business early
in the fiscal year and the impact of the ongoing semiconductor
shortage on automotive production volumes. Gross margin decreased
110 basis points to 15.1 percent, primarily due to the significant
increase in material prices, including underlying metal prices and
related premiums, fabrication, freight and packaging costs,
compared to the prior year.
The Company reported operating income of $119.2 million compared to a $97.7 million operating loss in the prior year.
This $216.9 million improvement was
driven primarily by $166.8 million of
impairment charges recorded in the prior year and the partial
reversal of those charges in the current year. During fiscal
2022, the Company recorded net impairment reversals totaling
$55.7 million and recorded
restructuring expenses, a loss on sale of the air-cooled automotive
business, and certain other charges totaling $40.5 million. During fiscal 2021, impairment
charges, restructuring expenses, and certain other charges totaled
$193.9 million. Excluding these items
and depreciation and amortization expense, adjusted EBITDA was
$158.8 million in fiscal 2022
and $164.8 million in fiscal
2021. Earnings per share in fiscal 2022 was $1.62 compared with a loss per share of
$4.11 in fiscal 2021, and adjusted
earnings per share in fiscal 2022 was $1.23, compared with $1.14 in fiscal 2021.
Balance Sheet & Liquidity
Net cash provided by operating activities for the year ended
March 31, 2022 was $11.5 million, a decrease of $138.3 million compared to the prior year. Free
cash flow for the year ended March 31,
2022 was a use of $28.8
million, down $145.9 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 prior year due to the deferral of
certain cash payments in an effort to conserve cash in response to
the COVID-19 pandemic, including the purchase of certain
program-related equipment and tooling. Cash payments for
restructuring activities, automotive exit strategy costs, strategic
reorganization costs, environmental costs and certain other items
during fiscal 2022 totaled $19.7
million.
Total debt was $377.8 million as
of March 31, 2022. Cash and cash
equivalents at March 31, 2022 were
$45.2 million. Net debt was
$332.6 million as of March 31, 2022, an increase of $35.9 million from the end of fiscal
2021.
Outlook
"Although we currently expect our key markets to remain strong,
we continue to monitor and assess the uncertainty created by
inflationary risks, the lockdowns in China and the war in the Ukraine," said Brinker. "We are aggressively
addressing these risks along with the ongoing volatility created by
the supply chain challenges around the globe, and are working to
strengthen our customer and supplier relationships. Similarly, we
remain diligent in addressing inflationary pressures with further
commercial actions as well as executing on our previously announced
cost reduction initiatives. Our key focus remains on growth in our
target verticals, while simultaneously taking actions to reduce
complexity and improve margins where we see opportunities for
efficiencies. This is an inflection point for Modine as we
anticipate that the actions taken this year will unlock the
inherent value in the underlying business and provide benefits in
fiscal 2023 and beyond. We look forward to providing an overview of
our strategies and expectations during our Investor and Analyst Day
next month."
Based on current exchange rates and market outlook, Modine
provides its outlook for fiscal 2023:
- Full fiscal year-over-year sales up 6 to 12 percent;
- Adjusted EBITDA of $180 million
to $195 million.
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Thursday, May 26,
2022 at 8:00 a.m. Central Time
(9:00 a.m. Eastern Time) to discuss
its fourth 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 May 26, 2022. A call-in replay will be available
through midnight on May 31, 2022 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 May 31, 2022.
About Modine
Modine, with fiscal 2022 revenues of $2.1
billion, specializes in thermal management systems and
components, bringing highly engineered heating and cooling
components, original equipment products, and systems to diversified
global markets. 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 quarters ended June 30,
2021, September 30, 2021 and
December 31, 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 pricing focus of Modine's 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 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, and product transfers; economic, social and
political conditions, changes and challenges in the markets where
Modine operates and competes, including foreign currency exchange
rate fluctuations, inflation, tariffs and sanctions (and potential
trade war impacts resulting from tariffs, sanctions or retaliatory
actions), supply chain disruptions and supplier constraints,
including semiconductor shortages and 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, the military conflict in Ukraine and other matters, that have been or
may be implemented in the U.S. or abroad; 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 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 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 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
$16 to $17
million, a provision for income taxes of approximately
$24 to $28
million, and depreciation and amortization expense of
approximately $58 to $62 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.
Estimates of these expenses and gains for 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
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales
|
$
574.4
|
|
$
514.9
|
|
$
2,050.1
|
|
$
1,808.4
|
Cost of
sales
|
479.2
|
|
431.1
|
|
1,740.8
|
|
1,515.0
|
Gross
profit
|
95.2
|
|
83.8
|
|
309.3
|
|
293.4
|
Selling, general &
administrative expenses
|
53.5
|
|
59.3
|
|
215.1
|
|
210.9
|
Restructuring
expenses
|
21.1
|
|
6.4
|
|
24.1
|
|
13.4
|
Impairment charges
(reversals) – net
|
-
|
|
32.4
|
|
(55.7)
|
|
166.8
|
Loss on sale of
assets
|
-
|
|
-
|
|
6.6
|
|
-
|
Operating income
(loss)
|
20.6
|
|
(14.3)
|
|
119.2
|
|
(97.7)
|
Interest
expense
|
(3.8)
|
|
(4.2)
|
|
(15.6)
|
|
(19.4)
|
Other expense –
net
|
(0.5)
|
|
(1.2)
|
|
(2.1)
|
|
(2.2)
|
Earnings (loss)
before income taxes
|
16.3
|
|
(19.7)
|
|
101.5
|
|
(119.3)
|
(Provision) benefit for
income taxes
|
(7.8)
|
|
5.1
|
|
(15.2)
|
|
(90.2)
|
Net earnings
(loss)
|
8.5
|
|
(14.6)
|
|
86.3
|
|
(209.5)
|
Net earnings
attributable to noncontrolling interest
|
(0.1)
|
|
(0.4)
|
|
(1.1)
|
|
(1.2)
|
Net earnings (loss)
attributable to Modine
|
$
8.4
|
|
$
(15.0)
|
|
$
85.2
|
|
$
(210.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share attributable to Modine shareholders – diluted
|
$
0.16
|
|
$
(0.29)
|
|
$
1.62
|
|
$
(4.11)
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding – diluted
|
52.4
|
|
51.6
|
|
52.5
|
|
51.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
March 31,
2022
|
|
March 31,
2021
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
45.2
|
|
$
37.8
|
|
|
|
|
Trade
receivables
|
367.5
|
|
267.9
|
|
|
|
|
Inventories
|
281.2
|
|
195.6
|
|
|
|
|
Assets held for
sale
|
-
|
|
107.6
|
|
|
|
|
Other current
assets
|
63.7
|
|
35.9
|
|
|
|
|
Total current
assets
|
757.6
|
|
644.8
|
|
|
|
|
Property, plant and
equipment – net
|
315.4
|
|
269.9
|
|
|
|
|
Intangible assets –
net
|
90.3
|
|
100.6
|
|
|
|
|
Goodwill
|
168.1
|
|
170.7
|
|
|
|
|
Deferred income
taxes
|
27.2
|
|
24.5
|
|
|
|
|
Other noncurrent
assets
|
68.4
|
|
66.2
|
|
|
|
|
Total
assets
|
$
1,427.0
|
|
$
1,276.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Debt due within one
year
|
$
29.4
|
|
$
23.3
|
|
|
|
|
Accounts
payable
|
325.8
|
|
233.9
|
|
|
|
|
Liabilities held for
sale
|
-
|
|
103.3
|
|
|
|
|
Other current
liabilities
|
139.3
|
|
108.7
|
|
|
|
|
Total current
liabilities
|
494.5
|
|
469.2
|
|
|
|
|
Long-term
debt
|
348.4
|
|
311.2
|
|
|
|
|
Other noncurrent
liabilities
|
126.0
|
|
140.2
|
|
|
|
|
Total
liabilities
|
968.9
|
|
920.6
|
|
|
|
|
Total equity
|
458.1
|
|
356.1
|
|
|
|
|
Total liabilities
& equity
|
$
1,427.0
|
|
$
1,276.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended
March 31,
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
86.3
|
|
$ (209.5)
|
|
|
|
|
Adjustments to
reconcile net earnings (loss) to net cash provided by
|
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
54.8
|
|
68.6
|
|
|
|
|
Impairment charges
(reversals) – net
|
(55.7)
|
|
166.8
|
|
|
|
|
Loss on sale of
assets
|
6.6
|
|
-
|
|
|
|
|
Stock-based
compensation expense
|
5.7
|
|
6.3
|
|
|
|
|
Deferred income
taxes
|
(3.8)
|
|
67.9
|
|
|
|
|
Other –
net
|
3.1
|
|
6.3
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Trade accounts
receivable
|
(55.6)
|
|
(17.1)
|
|
|
|
|
Inventories
|
(70.7)
|
|
(5.0)
|
|
|
|
|
Accounts
payable
|
55.1
|
|
44.0
|
|
|
|
|
Accrued compensation
and employee benefits
|
9.8
|
|
15.7
|
|
|
|
|
Other assets
|
(2.4)
|
|
27.5
|
|
|
|
|
Other
liabilities
|
(21.7)
|
|
(21.7)
|
|
|
|
|
Net cash provided by
operating activities
|
11.5
|
|
149.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(40.3)
|
|
(32.7)
|
|
|
|
|
Proceeds from (payments
for) disposition of assets
|
(7.6)
|
|
0.7
|
|
|
|
|
Other – net
|
(3.1)
|
|
0.7
|
|
|
|
|
Net cash used for
investing activities
|
(51.0)
|
|
(31.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net increase (decrease)
in debt
|
40.8
|
|
(147.3)
|
|
|
|
|
Other –
net
|
(1.6)
|
|
2.2
|
|
|
|
|
Net cash provided by
(used for) financing activities
|
39.2
|
|
(145.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
(0.4)
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash, cash equivalents, restricted cash and cash held for
sale
|
(0.7)
|
|
(25.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
$
45.4
|
|
$
46.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales:
|
|
|
|
|
|
|
|
Building HVAC
Systems
|
$
101.9
|
|
$
66.9
|
|
$ 336.6
|
|
$
263.2
|
Commercial and
Industrial Solutions
|
171.3
|
|
142.8
|
|
627.5
|
|
512.4
|
Heavy Duty
Equipment
|
226.1
|
|
207.4
|
|
824.5
|
|
682.1
|
Automotive
|
89.3
|
|
112.4
|
|
313.3
|
|
398.3
|
Segment
total
|
588.6
|
|
529.5
|
|
2,101.9
|
|
1,856.0
|
Corporate and
eliminations
|
(14.2)
|
|
(14.6)
|
|
(51.8)
|
|
(47.6)
|
Net
sales
|
$
574.4
|
|
$
514.9
|
|
$
2,050.1
|
|
$ 1,808.4
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Building HVAC
Systems
|
$28.4
|
27.9%
|
|
$20.8
|
31.0%
|
|
$
93.6
|
27.8%
|
|
$
85.3
|
32.4%
|
Commercial and
Industrial Solutions
|
31.7
|
18.5%
|
|
19.4
|
13.6%
|
|
88.5
|
14.1%
|
|
64.2
|
12.5%
|
Heavy Duty
Equipment
|
24.1
|
10.7%
|
|
27.5
|
13.2%
|
|
87.2
|
10.6%
|
|
88.4
|
13.0%
|
Automotive
|
11.4
|
12.8%
|
|
16.2
|
14.4%
|
|
39.3
|
12.5%
|
|
56.0
|
14.1%
|
Segment
total
|
95.6
|
16.2%
|
|
83.9
|
15.8%
|
|
308.6
|
14.7%
|
|
293.9
|
15.8%
|
Corporate and
eliminations
|
(0.4)
|
-
|
|
(0.1)
|
-
|
|
0.7
|
-
|
|
(0.5)
|
-
|
Gross
profit
|
$95.2
|
16.6%
|
|
$83.8
|
16.3%
|
|
$309.3
|
15.1%
|
|
$293.4
|
16.2%
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Operating
income:
|
|
|
|
|
|
|
|
Building HVAC
Systems
|
$
15.6
|
|
$
9.6
|
|
$
45.7
|
|
$
45.2
|
Commercial and
Industrial Solutions
|
18.6
|
|
5.8
|
|
35.3
|
|
10.2
|
Heavy Duty
Equipment
|
9.6
|
|
13.2
|
|
34.6
|
|
36.8
|
Automotive
|
(18.2)
|
|
(30.2)
|
|
35.4
|
|
(150.9)
|
Segment
total
|
25.6
|
|
(1.6)
|
|
151.0
|
|
(58.7)
|
Corporate and
eliminations
|
(5.0)
|
|
(12.7)
|
|
(31.8)
|
|
(39.0)
|
Operating income
(loss)
|
$
20.6
|
|
$ (14.3)
|
|
$
119.2
|
|
$ (97.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Adjusted financial
results (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net earnings
(loss)
|
$
8.5
|
|
$(14.6)
|
|
$
86.3
|
|
$(209.5)
|
Interest
expense
|
3.8
|
|
4.2
|
|
15.6
|
|
19.4
|
Provision (benefit) for
income taxes
|
7.8
|
|
(5.1)
|
|
15.2
|
|
90.2
|
Depreciation and
amortization expense
|
14.4
|
|
14.4
|
|
54.8
|
|
68.6
|
Other expense –
net
|
0.5
|
|
1.2
|
|
2.1
|
|
2.2
|
Restructuring expenses
(a)
|
21.1
|
|
6.4
|
|
24.1
|
|
13.4
|
Impairment charges
(reversals) – net (b)
|
-
|
|
32.4
|
|
(55.7)
|
|
166.8
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
6.6
|
|
-
|
Automotive separation
and exit strategy costs (d)
|
0.1
|
|
2.5
|
|
2.6
|
|
6.6
|
Strategic
reorganization costs (e)
|
0.3
|
|
0.8
|
|
3.4
|
|
6.7
|
Environmental charges
(f)
|
0.2
|
|
-
|
|
3.8
|
|
0.4
|
Adjusted
EBITDA
|
$56.7
|
|
$ 42.2
|
|
$158.8
|
|
$ 164.8
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share attributable to Modine shareholders - diluted
|
$0.16
|
|
$(0.29)
|
|
$
1.62
|
|
$
(4.11)
|
Restructuring expenses
(a)
|
0.40
|
|
0.12
|
|
0.45
|
|
0.24
|
Impairment charges
(reversals) – net (b)
|
-
|
|
0.62
|
|
(0.94)
|
|
2.51
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
0.13
|
|
-
|
Automotive separation
and exit strategy costs (d)
|
-
|
|
0.05
|
|
0.05
|
|
0.11
|
Strategic
reorganization costs (e)
|
0.01
|
|
0.01
|
|
0.07
|
|
0.11
|
Environmental charges
(f)
|
-
|
|
-
|
|
0.07
|
|
0.01
|
Tax valuation
allowances (g)
|
-
|
|
-
|
|
(0.22)
|
|
2.27
|
Adjusted earnings
per share
|
$0.57
|
|
$ 0.51
|
|
$
1.23
|
|
$
1.14
|
|
|
(a)
|
Restructuring expenses
primarily consist of employee severance expenses related to
targeted headcount reductions and plant consolidation activities
and equipment transfer costs. The restructuring expenses
recorded in the fourth quarter of fiscal 2022 primarily relate to
targeted headcount reductions in Europe within the Automotive
segment. The tax benefit related to restructuring expenses
during the fourth quarter of fiscal 2022 and fiscal 2021 was $0 and
$0.4 million, respectively. The tax benefit related to
restructuring expenses during fiscal 2022 and fiscal 2021 was $0.3
million and $1.4 million, respectively.
|
|
|
(b)
|
The net impairment
reversals during fiscal 2022 primarily relate to the Company's
liquid-cooled automotive business within the Automotive segment.
During the third quarter of fiscal 2022, the Company agreed
with Dana Incorporated to terminate an agreement for the sale of
the liquid-cooled automotive business. The Company remeasured
the previously impaired long-lived assets of the liquid-cooled
automotive business 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. This impairment reversal was partially offset by
other net impairment charges related to assets held for sale.
The tax charges related to the net impairment reversals
during fiscal 2022 totaled $6.1 million. The fiscal 2021
impairment charges also primarily related to the liquid-cooled
automotive business in connection with it being classified as held
for sale in fiscal 2021. The tax benefit related to the
fiscal 2021 impairment charges was $37.7 million.
|
|
|
(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 $0.6 million of costs
in 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 fiscal 2022 and
fiscal 2021 was $0 and $0.9 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 $0.9
million.
|
|
|
(f)
|
Environmental charges,
including related legal costs, are recorded as SG&A expenses
and relate to a previously-owned U.S. manufacturing
facility.
|
|
|
(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 $11.4 million during
fiscal 2022. During fiscal 2021, the Company increased its
valuation allowance on deferred tax assets in the U.S. and in
foreign jurisdictions. As a result, the Company recorded
income tax charges totaling $116.5 million during fiscal
2021.
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted
financial results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2022
|
|
Three months ended
March 31, 2021
|
|
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)
|
$
15.6
|
|
$
18.6
|
|
$ 9.6
|
|
$
(18.2)
|
|
$
(5.0)
|
|
$
20.6
|
|
$ 9.6
|
|
$
5.8
|
|
$ 13.2
|
|
$
(30.2)
|
|
$ (12.7)
|
|
$ (14.3)
|
Depreciation and
amortization expense
|
1.5
|
|
5.3
|
|
5.5
|
|
1.7
|
|
0.4
|
|
14.4
|
|
1.4
|
|
5.6
|
|
6.5
|
|
0.5
|
|
0.4
|
|
14.4
|
Restructuring expenses
(a)
|
0.3
|
|
0.2
|
|
0.5
|
|
20.1
|
|
-
|
|
21.1
|
|
-
|
|
0.8
|
|
1.1
|
|
3.2
|
|
1.3
|
|
6.4
|
Impairment charges
(reversals) – net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
32.4
|
|
-
|
|
32.4
|
Automotive separation
and exit strategy costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.1
|
|
0.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2.5
|
|
2.5
|
Strategic
reorganization costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.3
|
|
0.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.8
|
|
0.8
|
Environmental charges
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.2
|
|
0.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Adjusted
EBITDA
|
$
17.4
|
|
$
24.1
|
|
$ 15.6
|
|
$
3.6
|
|
$
(4.0)
|
|
$
56.7
|
|
$
11.0
|
|
$
12.2
|
|
$ 20.8
|
|
$
5.9
|
|
$
(7.7)
|
|
$ 42.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended
March 31, 2022
|
|
Twelve months ended
March 31, 2021
|
|
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)
|
$
45.7
|
|
$
35.3
|
|
$ 34.6
|
|
$
35.4
|
|
$ (31.8)
|
|
$ 119.2
|
|
$
45.2
|
|
$
10.2
|
|
$ 36.8
|
|
$ (150.9)
|
|
$ (39.0)
|
|
$ (97.7)
|
Depreciation and
amortization expense
|
5.9
|
|
20.5
|
|
23.4
|
|
3.4
|
|
1.6
|
|
54.8
|
|
5.5
|
|
22.6
|
|
25.5
|
|
13.2
|
|
1.8
|
|
68.6
|
Restructuring expenses
(a)
|
0.3
|
|
2.3
|
|
1.2
|
|
20.3
|
|
-
|
|
24.1
|
|
-
|
|
5.2
|
|
3.0
|
|
3.8
|
|
1.4
|
|
13.4
|
Impairment charges
(reversals) – net (a)
|
-
|
|
0.3
|
|
-
|
|
(56.0)
|
|
-
|
|
(55.7)
|
|
-
|
|
-
|
|
-
|
|
166.8
|
|
-
|
|
166.8
|
Loss on sale of assets
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Automotive separation
and exit strategy costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
2.6
|
|
2.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
Strategic
reorganization costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
3.4
|
|
3.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.7
|
|
6.7
|
Environmental charges
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
3.8
|
|
3.8
|
|
-
|
|
-
|
|
0.4
|
|
-
|
|
-
|
|
0.4
|
Adjusted
EBITDA
|
$
51.9
|
|
$
58.4
|
|
$ 59.2
|
|
$
3.1
|
|
$ (13.8)
|
|
$ 158.8
|
|
$
50.7
|
|
$
38.0
|
|
$ 65.7
|
|
$
32.9
|
|
$ (22.5)
|
|
$ 164.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
See the Adjusted EBITDA reconciliation on
the previous page for information on restructuring expenses and
other adjustments.
|
|
|
|
|
|
|
|
Net debt
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2022
|
|
March 31,
2021
|
|
|
|
|
Debt due within one
year
|
$
29.4
|
|
$
23.3
|
|
|
|
|
Long-term
debt
|
348.4
|
|
311.2
|
|
|
|
|
Total debt
|
377.8
|
|
334.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: cash and cash
equivalents
|
45.2
|
|
37.8
|
|
|
|
|
Net debt
|
$
332.6
|
|
$
296.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
4.1
|
|
$
3.3
|
|
$
11.5
|
|
$ 149.8
|
Expenditures for
property, plant and equipment
|
(9.6)
|
|
(9.0)
|
|
(40.3)
|
|
(32.7)
|
Free cash
flow
|
$
(5.5)
|
|
$
(5.7)
|
|
$
(28.8)
|
|
$ 117.1
|
SOURCE: Modine Manufacturing Company
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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SOURCE Modine Manufacturing Company