Strong fourth quarter drives record full year
2023 sales and earnings
Fiscal 2024 outlook calls for another record
year with continued margin expansion across both
segments
RACINE,
Wis., May 24, 2023 /PRNewswire/ -- Modine (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,
2023.
Fourth Quarter Highlights:
- Net sales of $618.1 million
increased 8 percent from the prior year
- Operating income of $48.5 million
increased $27.9 million, or 135
percent, from the prior year, due in part to a significant
restructuring charge recorded in the prior year
- Adjusted EBITDA of $65.5 million
increased $8.8 million, or 16
percent, from the prior year
- Earnings per share of $1.69
compared to $0.16 in the prior year,
and adjusted earnings per share of $0.67 increased $0.10, or 18 percent, from the prior year
Full Year Highlights:
- Net sales of $2.3 billion
increased 12 percent from the prior year
- Operating income of $150.4
million increased $31.2
million, or 26 percent, from the prior year
- Adjusted EBITDA of $212.1 million
increased $53.3 million, or 34
percent, from the prior year
- Earnings per share of $2.90
compared to $1.62 in the prior year,
and adjusted earnings per share of $1.95 increased $0.72, or 59 percent, from the prior year
Fiscal 2024 Outlook:
- Net sales up 4% to 10%
- Adjusted EBITDA of $240 million
to $260 million, up 13% to 23%
"Strong execution against our multiyear transformation strategy
drove outstanding revenue and margin growth this quarter despite
the increased level of volatility and uncertainty in the current
market," said Modine President and
Chief Executive Officer, Neil D.
Brinker. "Business segment performance exceeded our
expectations and is a direct result of both the hard work of our
teams to transform our business and focus on higher-value
applications for our technologies. We are growing in targeted areas
where we possess the expertise to provide superior solutions to our
customers. These strategies, including our focus on commercial
excellence, are leading to more favorable business mix and higher
margins as we improve all aspects of our business processes. We
expect these initiatives to continue to drive improvements as we
move into fiscal 2024."
Financial Results
Net sales increased 8 percent in the fourth quarter to
$618.1 million, compared with
$574.4 million in the prior year. On
a constant currency basis, net sales increased 11 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 18 percent in the fourth quarter to
$112.2 million and gross margin
improved by 160 basis points to 18.2 percent. These increases were
driven by higher sales volume and favorable commercial pricing,
partially offset by inflationary cost increases and negative
material pass through adjustments in the Performance Technologies
segment.
Selling, general and administrative ("SG&A") expenses were
$60.9 million in the fourth quarter,
which was 14 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 fourth quarter was $48.5 million, compared to $20.6 million in the prior year. The increase was
driven by higher gross profit and lower restructuring expenses as
compared to the prior year. During the fourth quarter of fiscal
2023, the Company recorded $2.8
million of restructuring expenses and $0.4 million of environmental charges. During the
fourth quarter of fiscal 2022, the Company recorded $21.1 million of restructuring expenses,
primarily related to targeted headcount reductions, and
environmental and other charges totaling $0.6 million. Excluding restructuring expenses,
certain other charges, and depreciation and amortization expense,
adjusted EBITDA of $65.5 million
increased $8.8 million, or 16
percent, compared with $56.7 million
in the prior year.
Earnings per share was $1.69 in
the fourth quarter, compared with $0.16 in the fourth quarter last year. This
increase was primarily due to higher operating income as compared
to the prior year and the reversal of a significant portion of a
valuation allowance on deferred tax assets in the U.S.
Adjusted earnings per share was $0.67 in the fourth quarter, compared with
adjusted earnings per share of $0.57
in the fourth quarter of the prior year. This improvement was
primarily driven by higher gross profit on higher sales
volume.
Fourth Quarter Segment Review
- Climate Solutions segment sales were $263.0 million, compared with $259.5 million one year ago, an increase of 1
percent. On a constant currency basis, sales increased 5 percent
from the prior year. This increase was driven by higher sales of
data center cooling products, partially offset by lower sales of
heat transfer and HVAC and refrigeration products. The segment
reported gross margin of 23.2 percent, which was 170 basis points
higher than the prior year, primarily due to higher sales volume
and favorable commercial pricing. The segment reported operating
income of $34.2 million, a 7 percent
increase from the prior year. Adjusted EBITDA was $41.8 million, an increase of $3.2 million, or 8 percent, from the prior
year.
- Performance Technologies segment sales were $364.1 million, compared with $322.5 million one year ago, an increase of 13
percent. On a constant currency basis, sales increased 16 percent.
This increase primarily resulted from higher sales across all
product groups as well as favorable commercial pricing. The segment
reported gross margin of 14.0 percent, up 170 basis points from the
prior year. The margin improvement was primarily driven by higher
sales volume and favorable commercial pricing. This was partially
offset by inflationary cost increases and negative material pass
through adjustments. The segment reported operating income of
$24.5 million, a $31.0 million improvement compared to the prior
year, primarily due to higher gross profit and lower restructuring
expenses, as compared to the prior year. Adjusted EBITDA was
$33.3 million, an increase of
$11.2 million, or 51 percent, from
the prior year.
Full-Year Fiscal 2023 Overview
In fiscal 2023, net sales increased 12 percent to $2,297.9 million. The increase was driven by
higher sales in both segments, with particularly strong gains in
sales of data center products, heat transfer products and air- and
liquid-cooled products to the off-highway, automotive and
commercial vehicle markets. Gross margin increased 180 basis points
to 16.9 percent, primarily due to higher sales volume and favorable
commercial pricing compared to the prior year.
The Company reported operating income of $150.4 million compared to $119.2 million in the prior year. This
$31.2 million improvement was driven
primarily by higher gross profit on higher sales volume. During
fiscal 2023, restructuring expenses and environmental charges
totaled $7.2 million. During fiscal
2022, the Company recorded a $55.7
million net impairment reversal primarily related to its
liquid-cooled automotive business, and recorded restructuring
expenses, a loss on sale of the Austrian air-cooled automotive
business, and certain other charges totaling $40.5 million. Excluding these items and
depreciation and amortization expense, adjusted EBITDA was
$212.1 million in fiscal 2023 and
$158.8 million in fiscal 2022.
Earnings per share in fiscal 2023 was $2.90 compared with $1.62 in fiscal 2022, and adjusted earnings per
share in fiscal 2023 was $1.95,
compared with $1.23 in fiscal
2022.
Balance Sheet & Liquidity
Net cash provided by operating activities for the year ended
March 31, 2023 was $107.5 million, an increase of $96.0 million compared to the prior year. Free
cash flow for the year ended March 31,
2023 was $56.8 million, an
improvement of $85.6 million from the
prior year, primarily resulting from higher operating earnings and
favorable net changes in working capital. Cash payments for
restructuring activities, strategic reorganization costs,
environmental costs and certain other items during the year ended
March 31, 2023 totaled $18.5 million.
Total debt was $352.7 million as
of March 31, 2023. Cash and cash
equivalents at March 31, 2023 were
$67.1 million. Net debt was
$285.6 million as of March 31, 2023, a decrease of $47.0 million from the end of fiscal 2022.
Outlook
"Fiscal 2023 was an important year for Modine as we made
tremendous progress executing against our strategic plan and
delivered strong financial results, which we expect to replicate in
fiscal 2024," added Brinker. "In Climate Solutions, our full year
adjusted EBITDA margin is within the 13-15 percent range targeted
for fiscal 2024, a full year ahead of schedule. We expect this
improvement to continue with further gains toward our longer term
margin targets next year. Also, despite the planned later
application of 80/20 initiatives in Performance Technologies, the
segment drove significant margin improvements this year that we
expect to accelerate next year. I am proud of what this team has
accomplished, and am confident that our strategies will result in
further improvements as we work to meet our commitments and reach
our goals."
Based on current exchange rates and market outlook, Modine
provides its outlook for fiscal 2024:
Fiscal 2024
|
Current Outlook
|
Net Sales
|
+4% to 10%
|
Adjusted EBITDA
|
$240 to $260
million
|
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Thursday, May 25,
2023 at 10:00 a.m. Central
Time (11:00 a.m. Eastern Time)
to discuss its fourth quarter and fiscal year 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 May 25,
2023. A call-in replay will be available through midnight on
June 1, 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 May 31, 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, September 30, 2022, and
December 31, 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, COVID-19, the military conflict in Ukraine and other matters, that have been or
may be implemented in the U.S. or abroad; the impact of COVID-19 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 2024 guidance includes adjusted EBITDA, as
defined above, which is a non-GAAP financial measure. The full-year
fiscal 2024 guidance for adjusted EBITDA is based upon the
Company's estimates for interest expense of approximately
$23 to $25
million, a provision for income taxes of approximately
$38 to $45
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 2024 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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
618.1
|
|
$
574.4
|
|
$
2,297.9
|
|
$
2,050.1
|
Cost of
sales
|
505.9
|
|
479.2
|
|
1,908.5
|
|
1,740.8
|
Gross
profit
|
112.2
|
|
95.2
|
|
389.4
|
|
309.3
|
Selling, general &
administrative expenses
|
60.9
|
|
53.5
|
|
234.0
|
|
215.1
|
Restructuring
expenses
|
2.8
|
|
21.1
|
|
5.0
|
|
24.1
|
Impairment charges
(reversals) – net
|
-
|
|
-
|
|
-
|
|
(55.7)
|
Loss on sale of
assets
|
-
|
|
-
|
|
-
|
|
6.6
|
Operating
income
|
48.5
|
|
20.6
|
|
150.4
|
|
119.2
|
Interest
expense
|
(6.0)
|
|
(3.8)
|
|
(20.7)
|
|
(15.6)
|
Other expense –
net
|
(0.3)
|
|
(0.5)
|
|
(4.4)
|
|
(2.1)
|
Earnings before
income taxes
|
42.2
|
|
16.3
|
|
125.3
|
|
101.5
|
Benefit (provision) for
income taxes
|
48.1
|
|
(7.8)
|
|
28.3
|
|
(15.2)
|
Net
earnings
|
90.3
|
|
8.5
|
|
153.6
|
|
86.3
|
Net earnings
attributable to noncontrolling interest
|
(0.4)
|
|
(0.1)
|
|
(0.5)
|
|
(1.1)
|
Net earnings
attributable to Modine
|
$
89.9
|
|
$
8.4
|
|
$
153.1
|
|
$
85.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders – diluted
|
$
1.69
|
|
$
0.16
|
|
$
2.90
|
|
$
1.62
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding – diluted
|
53.1
|
|
52.4
|
|
52.8
|
|
52.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
consolidated balance sheets (unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
March 31,
2023
|
|
March 31,
2022
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
67.1
|
|
$
45.2
|
|
|
|
|
Trade
receivables
|
398.0
|
|
367.5
|
|
|
|
|
Inventories
|
324.9
|
|
281.2
|
|
|
|
|
Other current
assets
|
56.4
|
|
63.7
|
|
|
|
|
Total current
assets
|
846.4
|
|
757.6
|
|
|
|
|
Property, plant and
equipment – net
|
314.5
|
|
315.4
|
|
|
|
|
Intangible assets –
net
|
81.1
|
|
90.3
|
|
|
|
|
Goodwill
|
165.6
|
|
168.1
|
|
|
|
|
Deferred income
taxes
|
83.7
|
|
27.2
|
|
|
|
|
Other noncurrent
assets
|
74.6
|
|
68.4
|
|
|
|
|
Total
assets
|
$
1,565.9
|
|
$
1,427.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Debt due within one
year
|
$
23.4
|
|
$
29.4
|
|
|
|
|
Accounts
payable
|
332.8
|
|
325.8
|
|
|
|
|
Other current
liabilities
|
150.9
|
|
139.3
|
|
|
|
|
Total current
liabilities
|
507.1
|
|
494.5
|
|
|
|
|
Long-term
debt
|
329.3
|
|
348.4
|
|
|
|
|
Other noncurrent
liabilities
|
129.9
|
|
126.0
|
|
|
|
|
Total
liabilities
|
966.3
|
|
968.9
|
|
|
|
|
Total equity
|
599.6
|
|
458.1
|
|
|
|
|
Total liabilities
& equity
|
$
1,565.9
|
|
$
1,427.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
Condensed
consolidated statements of cash flows (unaudited)
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net earnings
|
$
153.6
|
|
$
86.3
|
Adjustments to
reconcile net earnings to net cash provided by
|
|
|
|
operating
activities:
|
|
|
|
Depreciation and
amortization
|
54.5
|
|
54.8
|
Impairment charges
(reversals) – net
|
-
|
|
(55.7)
|
Loss on sale of
assets
|
-
|
|
6.6
|
Stock-based
compensation expense
|
6.6
|
|
5.7
|
Deferred income
taxes
|
(59.6)
|
|
(3.8)
|
Other –
net
|
4.8
|
|
3.1
|
Changes in operating
assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
(40.7)
|
|
(55.6)
|
Inventories
|
(49.4)
|
|
(70.7)
|
Accounts
payable
|
10.2
|
|
55.1
|
Accrued compensation
and employee benefits
|
6.4
|
|
9.8
|
Other assets
|
19.6
|
|
(2.4)
|
Other
liabilities
|
1.5
|
|
(21.7)
|
Net cash provided by
operating activities
|
107.5
|
|
11.5
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Expenditures for
property, plant and equipment
|
(50.7)
|
|
(40.3)
|
Proceeds from (payments
for) disposition of assets
|
0.3
|
|
(7.6)
|
Other – net
|
-
|
|
(3.1)
|
Net cash used for
investing activities
|
(50.4)
|
|
(51.0)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net (decrease) increase
in debt
|
(26.1)
|
|
40.8
|
Purchase of treasury
stock under share repurchase program
|
(7.3)
|
|
-
|
Other –
net
|
0.1
|
|
(1.6)
|
Net cash (used for)
provided by financing activities
|
(33.3)
|
|
39.2
|
|
|
|
|
Effect of exchange rate
changes on cash
|
(2.0)
|
|
(0.4)
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash
|
21.8
|
|
(0.7)
|
|
|
|
|
Cash, cash equivalents
and restricted cash - beginning of period
|
45.4
|
|
46.1
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of period
|
$
67.2
|
|
$
45.4
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Segment operating
results (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales:
|
|
|
|
|
|
|
|
Climate
Solutions
|
$
263.0
|
|
$
259.5
|
|
$
1,011.9
|
|
$
910.5
|
Performance
Technologies
|
364.1
|
|
322.5
|
|
1,316.2
|
|
1,172.4
|
Segment
total
|
627.1
|
|
582.0
|
|
2,328.1
|
|
2,082.9
|
Corporate and
eliminations
|
(9.0)
|
|
(7.6)
|
|
(30.2)
|
|
(32.8)
|
Net
sales
|
$
618.1
|
|
$
574.4
|
|
$
2,297.9
|
|
$
2,050.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Gross
profit:
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
|
$'s
|
% of
sales
|
Climate
Solutions
|
$
61.1
|
23.2 %
|
|
$
55.9
|
21.5 %
|
|
$
223.6
|
22.1 %
|
|
$
166.3
|
18.3 %
|
Performance
Technologies
|
50.9
|
14.0 %
|
|
39.6
|
12.3 %
|
|
166.1
|
12.6 %
|
|
142.2
|
12.1 %
|
Segment
total
|
112.0
|
17.9 %
|
|
95.5
|
16.4 %
|
|
389.7
|
16.7 %
|
|
308.5
|
14.8 %
|
Corporate and
eliminations
|
0.2
|
-
|
|
(0.3)
|
-
|
|
(0.3)
|
-
|
|
0.8
|
-
|
Gross
profit
|
$
112.2
|
18.2 %
|
|
$
95.2
|
16.6 %
|
|
$
389.4
|
16.9 %
|
|
$
309.3
|
15.1 %
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income:
|
|
|
|
|
|
|
|
Climate
Solutions
|
$
34.2
|
|
$
32.0
|
|
$
124.1
|
|
$
73.4
|
Performance
Technologies
|
24.5
|
|
(6.5)
|
|
65.6
|
|
77.4
|
Segment
total
|
58.7
|
|
25.5
|
|
189.7
|
|
150.8
|
Corporate and
eliminations
|
(10.2)
|
|
(4.9)
|
|
(39.3)
|
|
(31.6)
|
Operating
income
|
$
48.5
|
|
$
20.6
|
|
$
150.4
|
|
$
119.2
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Adjusted financial
results (unaudited)
|
|
|
|
|
|
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net earnings
|
$
90.3
|
|
$
8.5
|
|
$
153.6
|
|
$
86.3
|
Interest
expense
|
6.0
|
|
3.8
|
|
20.7
|
|
15.6
|
(Benefit) provision for
income taxes
|
(48.1)
|
|
7.8
|
|
(28.3)
|
|
15.2
|
Depreciation and
amortization expense
|
13.8
|
|
14.4
|
|
54.5
|
|
54.8
|
Other expense –
net
|
0.3
|
|
0.5
|
|
4.4
|
|
2.1
|
Restructuring expenses
(a)
|
2.8
|
|
21.1
|
|
5.0
|
|
24.1
|
Impairment charges
(reversals) – net (b)
|
-
|
|
-
|
|
-
|
|
(55.7)
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
6.6
|
Environmental charges
(d)
|
0.4
|
|
0.2
|
|
2.2
|
|
3.8
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
0.4
|
|
-
|
|
6.0
|
Adjusted
EBITDA
|
$
65.5
|
|
$
56.7
|
|
$
212.1
|
|
$
158.8
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Modine shareholders - diluted
|
$
1.69
|
|
$
0.16
|
|
$
2.90
|
|
$
1.62
|
Restructuring expenses
(a)
|
0.05
|
|
0.40
|
|
0.08
|
|
0.45
|
Impairment charges
(reversals) – net (b)
|
-
|
|
-
|
|
-
|
|
(0.94)
|
Loss on sale of assets
(c)
|
-
|
|
-
|
|
-
|
|
0.13
|
Environmental charges
(d)
|
0.01
|
|
-
|
|
0.04
|
|
0.07
|
Strategic
reorganization and automotive exit costs (e)
|
-
|
|
0.01
|
|
-
|
|
0.12
|
Debt amendment costs
(f)
|
-
|
|
-
|
|
0.01
|
|
-
|
Tax valuation
allowances (g)
|
(1.08)
|
|
-
|
|
(1.08)
|
|
(0.22)
|
Adjusted earnings
per share
|
$
0.67
|
|
$
0.57
|
|
$
1.95
|
|
$
1.23
|
|
|
(a)
|
Restructuring expenses
include employee severance-related expenses and equipment transfer
costs. The fiscal 2023 restructuring expenses primarily
relate to targeted headcount reductions within the Climate
Solutions and Performance Technologies segments. The fiscal
2022 restructuring expenses primarily relate to headcount
reductions in Europe within the Performance Technologies segment.
The tax benefit related to restructuring expenses during the
fourth quarter of fiscal 2023 and fiscal 2022 was $0.3 million and
$0, respectively. The tax benefit related to restructuring
expenses during fiscal 2023 and fiscal 2022 was $0.6 million and
$0.3 million, respectively.
|
(b)
|
The net impairment
reversal during fiscal 2022 primarily relates to the Company's
liquid-cooled automotive business. In connection with the
termination of the agreement to sell this business in the
third quarter of fiscal 2022, the Company reversed a significant
amount of previously-recorded impairment charges within the
Performance Technologies segment. The tax charge related to
the net impairment reversal during fiscal 2022 was $6.1
million.
|
(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
fiscal 2022, the Company recorded SG&A expenses totaling
$3.4 million related to recruiting new senior management and the
Company's implementation of 80/20. In addition, the Company
recorded $2.6 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 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 the fourth
quarter of fiscal 2023, the Company reversed the valuation
allowance on certain deferred tax assets in the U.S. As a
result, the Company recorded an income tax benefit of $57.3
million. 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.
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted
financial results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2023
|
|
Three months ended
March 31, 2022
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating income
(loss)
|
$
34.2
|
|
$
24.5
|
|
$
(10.2)
|
|
$ 48.5
|
|
$
32.0
|
|
$
(6.5)
|
|
$
(4.9)
|
|
$ 20.6
|
Depreciation and
amortization expense
|
5.7
|
|
7.9
|
|
0.2
|
|
13.8
|
|
6.1
|
|
8.0
|
|
0.3
|
|
14.4
|
Restructuring expenses
(a)
|
1.9
|
|
0.9
|
|
-
|
|
2.8
|
|
0.5
|
|
20.6
|
|
-
|
|
21.1
|
Environmental charges
(a)
|
-
|
|
-
|
|
0.4
|
|
0.4
|
|
-
|
|
-
|
|
0.2
|
|
0.2
|
Strategic
reorganization and automotive exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.4
|
|
0.4
|
Adjusted
EBITDA
|
$
41.8
|
|
$
33.3
|
|
$
(9.6)
|
|
$ 65.5
|
|
$
38.6
|
|
$
22.1
|
|
$
(4.0)
|
|
$ 56.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
263.0
|
|
$
364.1
|
|
$
(9.0)
|
|
$ 618.1
|
|
$
259.5
|
|
$
322.5
|
|
$
(7.6)
|
|
$ 574.4
|
Adjusted EBITDA
margin
|
15.9 %
|
|
9.1 %
|
|
|
|
10.6 %
|
|
14.9 %
|
|
6.9 %
|
|
|
|
9.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended
March 31, 2023
|
|
Twelve months ended
March 31, 2022
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
|
Climate
Solutions
|
|
Performance
Technologies
|
|
Corporate and
eliminations
|
|
Total
|
Operating
income
|
$
124.1
|
|
$
65.6
|
|
$
(39.3)
|
|
$ 150.4
|
|
$
73.4
|
|
$
77.4
|
|
$
(31.6)
|
|
$ 119.2
|
Depreciation and
amortization expense
|
21.7
|
|
31.8
|
|
1.0
|
|
54.5
|
|
23.6
|
|
29.9
|
|
1.3
|
|
54.8
|
Restructuring expenses
(a)
|
2.2
|
|
2.8
|
|
-
|
|
5.0
|
|
2.2
|
|
21.9
|
|
-
|
|
24.1
|
Impairment charges
(reversals) – net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
0.3
|
|
(56.0)
|
|
-
|
|
(55.7)
|
Loss on sale of assets
(a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.6
|
|
6.6
|
Environmental charges
(a)
|
-
|
|
-
|
|
2.2
|
|
2.2
|
|
-
|
|
-
|
|
3.8
|
|
3.8
|
Strategic
reorganization and automotive exit costs (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6.0
|
|
6.0
|
Adjusted
EBITDA
|
$
148.0
|
|
$
100.2
|
|
$
(36.1)
|
|
$ 212.1
|
|
$
99.5
|
|
$
73.2
|
|
$
(13.9)
|
|
$ 158.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$ 1,011.9
|
|
$ 1,316.2
|
|
$
(30.2)
|
|
$
2,297.9
|
|
$
910.5
|
|
$ 1,172.4
|
|
$
(32.8)
|
|
$
2,050.1
|
Adjusted EBITDA
margin
|
14.6 %
|
|
7.6 %
|
|
|
|
9.2 %
|
|
10.9 %
|
|
6.2 %
|
|
|
|
7.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
2023
|
|
March 31,
2022
|
Debt due within one
year
|
$
23.4
|
|
$
29.4
|
Long-term
debt
|
329.3
|
|
348.4
|
Total debt
|
352.7
|
|
377.8
|
|
|
|
|
Less: cash and cash
equivalents
|
67.1
|
|
45.2
|
Net debt
|
$
285.6
|
|
$
332.6
|
|
|
|
|
|
|
|
|
Modine Manufacturing
Company
|
|
|
|
|
|
|
|
Free cash flow
(unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Twelve months ended
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
39.6
|
|
$
4.1
|
|
$
107.5
|
|
$
11.5
|
Expenditures for
property, plant and equipment
|
(15.5)
|
|
(9.6)
|
|
(50.7)
|
|
(40.3)
|
Free cash
flow
|
$
24.1
|
|
$
(5.5)
|
|
$
56.8
|
|
$
(28.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales - constant
currency (unaudited)
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2023
|
|
2022
|
|
Net Sales
|
|
Effect of Exchange
Rate
Changes
|
|
Net Sales -
Constant Currency
|
|
Net Sales
|
Climate
Solutions
|
$
263.0
|
|
$
8.3
|
|
$
271.3
|
|
$
259.5
|
Performance
Technologies
|
364.1
|
|
9.8
|
|
373.9
|
|
322.5
|
Segment
total
|
627.1
|
|
18.1
|
|
645.2
|
|
582.0
|
Corporate and
eliminations
|
(9.0)
|
|
-
|
|
(9.0)
|
|
(7.6)
|
Net
sales
|
$
618.1
|
|
$
18.1
|
|
$
636.2
|
|
$
574.4
|
Kathleen Powers
(262) 636-1687
kathleen.t.powers@modine.com
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SOURCE Modine Manufacturing Company