Modine's executive leadership team unveiled
strategies to accelerate revenue growth and drive significant
margin improvement
RACINE,
Wis., June 22, 2022 /PRNewswire/ -- Modine
Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today hosted an
Investor and Analyst Day at The New York Stock Exchange in
New York, NY. Members of the
executive management team presented the Company's strategy to
transform the Company and drive increased shareholder value. Guided
by the Company's commitment to 80/20, management detailed
multi-phased plans to improve margins and cash flows while also
accelerating revenue growth.
The highlights of the event included:
- The Company presented average annual revenue growth targets of
6 to 8 percent in the next two years, and 8 to 10 percent in the
following three years, including a renewed focus on
acquisitions.
- The Company presented adjusted EBITDA margin targets of 10 to
12 percent within the next two years, reaching 13 to 15 percent
over the next five years.
- The Company's two new reporting segments – Performance
Technologies and Climate Solutions – will manage the business
around six verticals to drive a more focused and efficient
organization.
- Modine's refreshed leadership team brings extensive global
industrials experience with proven track records of execution and
profitable growth to lead their respective businesses.
- Modine already possesses the capabilities, products and
solutions to profitably grow market share in key markets. The
reallocation of capital and resources will allow the Company to
prioritize previously under-resourced areas of the business and
unlock significant value.
- The 80/20 approach is the governing philosophy for the entire
organization. It is a systemic way of examining the business,
focusing resources and emphasizing the highest return
opportunities.
- Modine expects its multi-phased transformation will result in a
more capital efficient and higher margin business focused on
faster-growing markets supported by global megatrends.
"Today we presented our strategy that builds upon a legacy of
more than 100 years of innovation to transform Modine for a more
sustainable future," said Modine
President and Chief Executive Officer, Neil D. Brinker. "Our initiatives to refocus the
organization are already well underway and are yielding improved
results. With our new segment structure and refreshed management
team, we have greatly simplified the business and created a
high-performance organization. Our solidified foundation will allow
us to increase our share in targeted markets by focusing on proven
technologies and products where we have the right to win, shifting
capital to businesses that were previously underfunded, while also
improving businesses that are performing below our target margins.
All of these efforts will lead to an acceleration of profitable
growth for a more sustainable future as we shift our legacy focus
on products to systems solutions, promote geographic expansion and
evaluate opportunistic M&A to complement our technologies. I am
incredibly excited about our future and the team we have in place
for the next chapter in Modine's rich history."
Fiscal 2024 Financial Targets
- Revenue CAGR of 6 percent to 8 percent
- Adjusted EBITDA margin of 10 percent to 12 percent
- Capital expenditures of ~3 percent of revenue
- Free cash flow 3 percent to 5 percent of revenue
- Net leverage ratio target of 1.5x-2.5x
Fiscal 2027 Financial Targets
- Revenue CAGR of 8 percent to 10 percent
- Adjusted EBITDA margin of 13 percent to 15 percent
- Capital expenditures of ~3 percent of revenue
- Free cash flow 6 percent to 8 percent of revenue
- Net leverage ratio target of 1.5x-2.5x
"I have never been more excited about Modine's future as we
evaluate the opportunities available to us over the next several
years," added Modine Executive Vice President and Chief Financial
Officer, Mick Lucareli. "The actions
we are taking today will allow Modine to deliver stronger revenue
growth, better margins, higher returns on capital and to drive
significant value for all Modine stakeholders."
A webcast replay of the event will be available on the Investor
Relations section of the Company's website at 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,
2022, and under Forward-Looking Statements in Item 7 of Part
II of that same report. 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.
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 Non-GAAP Financial Measures
Adjusted EBITDA, adjusted EBITDA margin and free cash flow are
not measures defined in generally accepted accounting principles
(GAAP). These non-GAAP measures are used by management to
evaluate the Company's overall financial performance. These
measures are not, and should not be viewed as, a substitute for the
applicable GAAP measures, and may be different from
similarly-titled measures used by other companies. 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, 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 by excluding certain items that it believes are not
representative of its core business. The Company defines free cash
flow as 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.
The Company's future projections for non-GAAP financial measures
are based on management's expectations of future financial results.
For example, adjusted EBITDA includes expectations for interest
expense, the provision for income taxes, depreciation and
amortization expense. 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 are not available due
to the low visibility and unpredictability of these items.
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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SOURCE Modine Manufacturing Company