Modine Participates in BAUMA China 2008 Show Click here for more information about Modine's booth at the 2008 BAUMA China Show.
Take a Virtual Tour of Modine's Climatic Vehicular Wind Tunnel Click here to take a virtual tour of Modine's Wind Tunnel in Bonlanden, Germany.
What is Modine? Wherever thermal management is needed, Modine is there. Click a video link below to learn more about us. Real (2.7 MB), WMP (3.5 MB), Quick (4.3 MB)
Modine India Click here for more information about Modine India.
RightWay - Modine's Business Ethics Program Click here for the Modine Helpline.
RACINE, Wis.--(BUSINESS WIRE)--Nov. 13, 2008--Modine Manufacturing
Company (NYSE: MOD), a diversified leader in thermal management
technology and solutions, announced today the opening of its
manufacturing operations in Chennai, India. The Chennai facility
supports Modine's global expansion objectives and will serve India's
rapidly growing engine, commercial vehicle, and off highway markets.
The 80,000 square-foot state-of-the-art manufacturing site,
located in the southeastern section of India, will provide
Modine-developed thermal management solutions to that nation's
domestic engine, commercial vehicle, and off-highway markets as demand
grows. With an initial 75 employees, Modine's Chennai facility will
serve as a base from which the company can expand its extensive engine
and powertrain cooling product lines to new markets. This supplements
the 2007 opening of Modine's India engineering and design center,
which supports product development activities to meet increasing
customer technology requirements.
"We are pleased to be in our facility and continue the
preparations for production launch activities scheduled for December
2009," said Jerry Kapoor, Managing Director, Modine India. "The smooth
startup reflects Modine's commitment to the region, the excellent
cooperation of our local and global employees and our determination to
be a major player in this important market. With our manufacturing
operations starting shortly, we have begun work on several product
launches for key customers. These programs should position us well to
serve major Indian engine and commercial vehicle makers and play a
significant role in India's growing industrial economy."
Modine announced its three-year, $14 million investment to build
the greenfield Indian facility in December 2006 as part of its
strategic plan to meet global product demand and increase its presence
in the expanding Asian market. The Chennai operations offer customers
a one-stop solution to their thermal management needs. As the fifth
largest commercial vehicle market in the world with a five-year growth
of 27 percent and 15 of the world's major auto makers present, India
represents a wealth of opportunities for Modine.
"The opening of our Chennai facility marks a giant step in
Modine's evolution as a global supplier that can provide
technologically differentiated products and systems wherever our
customers are located," said Tom Marry, Regional Vice President -
Asia. "The Indian market offers a very interesting group of local
companies who are actively implementing plans to become more
international, as well as global companies who are expanding into the
rapidly growing marketplace. In both cases, Modine is very well
positioned with market specific products, manufacturing capability,
and our in country management team to support these opportunities. We
look forward to leveraging Modine India's experience and
capabilities."
About Modine - www.modine.com
Modine, with fiscal 2008 revenues from continuing operations of
$1.9 billion, specializes in thermal management systems and
components, bringing highly engineered heating and cooling technology
and solutions to diversified global markets. Modine products are used
in light, medium and heavy-duty vehicles, HVAC (heating, ventilation
and air conditioning) equipment, industrial equipment, refrigeration
systems and fuel cells. Based in Racine, Wisconsin, the company
employs approximately 7,900 people worldwide at 33 facilities in 15
countries. For information about Modine, visit www.modine.com.
CONTACT: Modine Manufacturing Company
Susan Fisher - 262-636-8434 s.h.fisher@na.modine.com
RACINE, Wis.--(BUSINESS WIRE)--Nov. 7, 2008--Modine Manufacturing
Company (NYSE: MOD), a diversified global leader in thermal management
technology and solutions, announced today that it will participate in
the Baird 2008 Industrial Conference in Chicago on Tuesday, November
11 at 2:30 P.M. CT. Modine's President and Chief Executive Officer
Thomas A. Burke and Executive Vice President, Corporate Strategy and
Chief Financial Officer Bradley C. Richardson will present at the
conference.
The audio cast and accompanying slides may be accessed live
through the Investor Relations section of Modine's website at
www.modine.com or directly at:
http://www.wsw.com/webcast/baird3/modi/
A replay will be available following the event for approximately
60 days.
About Modine
Modine, with fiscal 2008 restated revenues of $1.9 billion,
specializes in thermal management systems and components, bringing
highly engineered heating and cooling technology and solutions to
diversified global markets. Modine products are used in light, medium
and heavy-duty vehicles, heating, ventilation and air conditioning
equipment, off-highway and industrial equipment, refrigeration
systems, and fuel cells. The company employs approximately 7,900
people at 33 facilities worldwide in 15 countries. For more
information about Modine, visit www.modine.com.
CONTACT: Modine Manufacturing Company
Investor Contact:
Susan Fisher, 262-636-8434
s.h.fisher@na.modine.com
RACINE, Wis.--(BUSINESS WIRE)--Oct. 30, 2008--Modine Manufacturing
Company (NYSE: MOD), a diversified global leader in thermal management
technology and solutions, today reported its financial results for the
second quarter of fiscal 2009 as compared to the second quarter of
fiscal 2008, as follows:
($ in millions except per share data) 2009 2008(a) Change
----------------------------------------------------------------------
Net Sales $433.3 $428.7 $4.6
----------------------------------------------------------------------
Gross Profit $54.9 $61.9 $(7.0)
----------------------------------------------------------------------
% of Sales 12.7% 14.4%
----------------------------------------------------------------------
Pre-Tax (Loss) Earnings from Continuing
Operations(b) $(16.7) $5.6 $(22.3)
----------------------------------------------------------------------
Effective Income Tax Rate 15.7% (81.8%)
----------------------------------------------------------------------
(Loss) Earnings from Continuing Operations $(14.1) $10.2 $(24.3)
----------------------------------------------------------------------
Diluted (Loss) Earnings Per Share from
Continuing Operations $(0.44) $0.32 $(0.76)
----------------------------------------------------------------------
Net (loss) earnings $(13.2) $10.4 $(23.6)
----------------------------------------------------------------------
Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA)(b) $5.5 $27.8 $(22.3)
----------------------------------------------------------------------
Net Debt (c) $193.1 $193.0 $0.1
----------------------------------------------------------------------
----------------------------------------------------------------------
(a) Second quarter fiscal 2008 amounts have been restated to reflect
the removal of a one-month lag in the reporting of results for the
company's international operations
(b) Refer to the table below reconciling the significant differences
in earnings (loss) from continuing operations before income taxes and
EBITDA between the second quarter of fiscal 2008 and the second
quarter of fiscal 2009 for a discussion of significant changes in
these measures year over year
(c) As of September 30, 2008, and March 31, 2008, respectively
----------------------------------------------------------------------
Commenting on the recent results, Modine President and Chief
Executive Officer Thomas A. Burke said, "Although we anticipated
fiscal 2009 to be a challenging year as we continue to implement our
four-point recovery plan, our second quarter performance was clearly a
disappointment. During this period of heavy restructuring, our
business, like a number of others in our sector, has been buffeted by
the impact of economic, financial and credit market turmoil, sluggish
North American commercial vehicle production volumes and, more
recently, a marked decline in European automotive production volumes.
These economic and end-market conditions, combined with continued
operating inefficiencies in our Original Equipment - North America
segment and a shift in sales mix toward lower margin products in our
Original Equipment - Europe segment, contributed to a 170 basis point
decline in the company's gross margin in comparison to the prior year.
We are continuing to execute on our four-point recovery plan and are
taking a number of proactive steps to address our business performance
and underlying cost structure. We remain encouraged by new program
opportunities in our core thermal management business. Meanwhile, as a
prudent measure, until economic and end-market conditions improve, the
company is reducing its fiscal 2009 guidance and closely evaluating
its debt covenant compliance."
Second Quarter Overview
Excluding the impact of foreign currency exchange rate
changes, sales growth in South America (+14 percent) and
Commercial Products (+11 percent) was offset by declining
sales in the Original Equipment - Asia segment (-15 percent)
and the Original Equipment - Europe segment (-8 percent);
Disappointing results continued in the Original Equipment -
North America segment due to ongoing plant closures and
program launch-related operating inefficiencies and the
slower-than-anticipated recovery in the North American truck
market;
Gross margin in the Original Equipment - Europe segment was
adversely impacted by lower volumes as well as a shift in
sales mix toward lower margin products;
The Original Equipment - Asia segment results reflected a
significant volume decline due to strike-related activities at
a key customer;
Restructuring and repositioning charges totaled $5.2 million,
including the impact of the recently announced reduction in
managerial workforce in the company's Racine, Wisconsin,
headquarters;
Impairment charges totaling $3.0 million were recorded related
to programs which were discontinued or unable to support their
asset bases;
Foreign exchange losses of $3.2 million were recorded on
inter-company loans based on the substantial strengthening of
the U.S. dollar to the Brazilian real and South Korean won
during the quarter; and
Tax valuation allowance charges of $4.6 million were recorded
against net deferred tax assets in the U.S. and South Korea.
Accelerating Actions to Address Business Performance
"To address our business performance, we are proceeding with a
number of decisive measures to position the company to attain a more
competitive cost base and more effectively capitalize on growth
opportunities in our respective niche thermal management markets,"
said Bradley C. Richardson, Executive Vice President - Corporate
Strategy and Chief Financial Officer. "These include the following
previously-announced actions:
The closure of three manufacturing facilities in North America
and another in Europe, which are proceeding on track and
expected to result in annualized savings/benefits in an
adjusted range of $16 million to $20 million when fully
implemented by the end of fiscal 2010;
The intended divestiture of our South Korean-based vehicular
HVAC business, which has been unable to attain the revenue
diversification, profitability or return on average capital
employed targets we envisioned when we acquired the business
in 2004;
Realignment of our North American region organization
structure resulting in early retirements and a reduction in
our Racine workforce, which impacted approximately 15 percent
of our managerial headcount and is anticipated to result in an
estimated $3 million in annualized savings;
The elimination of post-retirement medical benefits for
Medicare eligible participants resulting in an estimated $3
million in annualized savings;
The licensing of specific Modine-developed fuel cell
technology to Bloom Energy for a one-time payment of $12
million, enabling Modine to focus more broadly on fuel cell
technology development to meet growing demand for alternative
energy solutions;
The ramp-up of production at our newly opened manufacturing
plants in China, Hungary and Mexico and the start of
production in our new India facility in January 2009; and
Investment in a new state-of-the-art facility in Austria,
which is expected to open in mid-calendar year 2009 and
replace a facility where demand has outgrown capacity, to
support continued growth in refrigerant components and
systems."
"The combination of this period of heavy restructuring and the
associated risks, along with the overall decline in the credit markets
and ensuing economic uncertainty, make it even more difficult to
predict future conditions within our served markets," Richardson
continued. "Amid what is tantamount to a near perfect storm of
negative influences on our business, we believe our four-point plan
remains central to positioning Modine to return to profitability and
achieve our long-term return on average capital employed objective.
Our four-point plan focuses on the following elements:
Manufacturing realignment;
Portfolio rationalization;
Selling, general & administrative (SG&A) expense reduction;
and
Capital allocation discipline.
As we execute on our recovery plan, we continue to focus on higher
margin programs with increased emphasis on emissions and fuel
efficiency, as well as our own strategic emphasis on thermal
management, technological differentiation, and diversification of
products, markets, customers and geographies. As evidenced by our
recently announced actions, we are moving decisively with a sense of
urgency to address underlying performance issues in the business and
position the company to attain its long term performance targets."
The following table reconciles the significant differences in
earnings (loss) from continuing operations before income taxes and
EBITDA between the second quarter of fiscal 2008 and the second
quarter of fiscal 2009:
($ in millions) Pre-Tax Earnings (Loss)
from Continuing
Operations EBITDA
-----------------------------------========================-==========
Second Quarter Fiscal 2008 Results $5.6 $27.8
----------------------------------------------------------------------
----------------------------------------------------------------------
Net underlying decrease(d) (2.2) (2.2)
----------------------------------------------------------------------
Incremental repositioning charges (4.6) (4.6)
----------------------------------------------------------------------
Impairment charges (3.0) (3.0)
----------------------------------------------------------------------
Foreign exchange losses on inter-
company loans (2.9) (2.9)
----------------------------------------------------------------------
Absence of gain on pension freeze
& airplane sale in fiscal 2008 (9.6) (9.6)
-----------------------------------========================-==========
----------------------------------------------------------------------
Second Quarter Fiscal 2009 Results $(16.7) $5.5
----------------------------------------------------------------------
(d) Net underlying decrease consisted of the impact of volume
changes, product mix, operating inefficiencies, and other net negative
factors
Sales: Second quarter sales from continuing operations increased 1
percent to $433.3 million from $428.7 million reported in the second
quarter of fiscal 2008. Excluding the impact of foreign currency
exchange rate changes, underlying sales decreased by $8.5 million, or
2 percent, with the largest sales decreases in the Original Equipment
- Europe and Asia segments.
Gross Profit: Second quarter gross profit was $54.9 million, or
12.7 percent of sales, compared to gross profit of $61.9 million, or
14.4 percent of sales, in the same period last year. The second
quarter gross margin reflects the impact of lower fixed cost
absorption with the declining sales volumes in the Original Equipment
- Europe and Asia segments, the impact of changing product mix toward
lower margin programs in the Original Equipment - Europe segment and
operating inefficiencies in the Original Equipment - North America
segment. The company is addressing its operating inefficiencies
through restructuring its North American manufacturing footprint to
move toward scaled facilities with a greater focus on operational
excellence to support its global customers. Further, the company
continues its focus on achieving price realization with certain
customers for select product lines.
SG&A Expenses: The following table reconciles the significant
differences in SG&A expenses between the second quarter of fiscal 2008
and the second quarter of fiscal 2009:
($ in millions)
---------------
Second Quarter Fiscal 2008 SG&A Expenses $54.8
Net underlying decrease(e) (2.2)
Impact of foreign exchange rate changes 1.0
Absence of gain on pension freeze & airplane
sale in fiscal 2008 8.0
--------------
Second Quarter Fiscal 2009 SG&A Expenses $61.6
==============
(e) The net underlying decrease of $2.2 million is primarily
related to improvements made through the implementation of the
company's four-point recovery plan.
(Loss) Earnings from Continuing Operations before Income Taxes:
The second quarter of fiscal 2009 resulted in a loss from continuing
operations before income taxes of $16.7 million, compared to earnings
from continuing operations before income taxes of $5.6 million in the
same period last year. The reduction in gross profit, the absence of
the pension freeze and airplane sale, the incremental restructuring
and repositioning charges of $4.6 million and the impairment charges
of $3.0 million were the primary factors contributing to this
year-over-year decline.
(Loss) Earnings from Continuing Operations: The second quarter of
fiscal 2009 resulted in a loss from continuing operations of $14.1
million, or ($0.44) per fully diluted share, compared to earnings from
continuing operations of $10.2 million, or $0.32 per fully diluted
share, in the same period last year. Consistent with the third and
fourth quarters of fiscal 2008 and first quarter of fiscal 2009, the
company continues to be unable to realize deferred tax assets in the
U.S. and South Korea, which resulted in a valuation allowance charge
of $4.6 million established against these deferred tax assets during
the second quarter of fiscal 2009.
Cash and Liquidity
Operating cash flows were $40.3 million for the six months ended
September 30, 2008, compared with $22.7 million for the six months
ended September 30, 2007, primarily related to the company's efforts
to reduce its working capital. The company's net debt has remained
consistent at $193.1 million at September 30, 2008 compared to $193.0
million at March 31, 2008. The debt to capital (debt plus
shareholders' equity) ratio at September 30, 2008 of 37.3 percent
increased from 32.4 percent at March 31, 2008 based on an increasing
debt balance over this period, which has been offset by a
corresponding increase in cash over this same time frame. The company
continues to focus on maintaining its net debt at or below the March
31, 2008 balance.
The company's unsecured debt agreements require it to satisfy
quarter-end financial ratios of consolidated total debt to
consolidated adjusted EBITDA (leverage ratio), and consolidated EBIT
to consolidated interest expense (interest coverage ratio), as such
terms are used in the debt agreements. The leverage ratio at the end
of the second quarter of fiscal 2009 is 2.3 to 1.0, which remains in
compliance with the required ratio of not greater than 3.0 to 1.0. The
interest coverage ratio at the end of the second quarter of fiscal
2009 is 2.4 to 1.0, which remains in compliance with the required
ratio of not less than 1.75 to 1.0. The interest coverage ratio
becomes more restrictive in the fourth quarter of fiscal 2009,
requiring a ratio of not less than 2.25 to 1.0, and again more
restrictive in the second quarter of fiscal 2010, requiring a ratio of
not less than 2.50 to 1.0.
The company closely evaluates its expected ability to remain in
compliance with the interest coverage ratio based on the more
restrictive nature of this covenant, as well as the sensitivity of
this covenant to changes in financial results. The recent trends
impacting the company's performance, including the
slower-than-anticipated recovery in the North American truck market,
the operating inefficiencies in the Original Equipment - North America
segment, and the overall decline in the credit markets and ensuing
economic uncertainty which has contributed to declining revenues,
especially within the Original Equipment - Europe segment, have put
additional pressure on the company's ability to remain in compliance
with the interest coverage ratio. These downward trends are expected
to continue to adversely affect the company's financial results in the
third and fourth quarters of fiscal 2009. Depending on severity,
duration and timing of the impact of these trends, the company may
need to work with its lenders to seek to obtain a waiver of or amend
the interest coverage ratio covenant in the near future. In
contemplation of this possibility, the company is developing a
contingency plan that it would implement in the event that it is not
able to obtain a waiver or amendment of the interest coverage ratio
covenant with its lenders. The company believes that it will be able
to maintain compliance with the interest coverage ratio covenant by
either working with its lenders or through implementation of the
contingency plan.
Guidance Summary
Based on current operating conditions and continued economic
uncertainty with respect to the credit market impact on the company's
end markets, as well as recent strengthening of the U.S. dollar in
comparison to foreign exchange rates, and other factors, including the
expectations discussed below, the company is reducing its fiscal 2009
guidance as follows:
Fiscal 2009 Guidance
(including repositioning
Fiscal 2008(f) charges)(g)
(Restated Results) Low High
------------------ ------------- ----------------
Net sales $1.86 billion $1.7 billion $1.8 billion
Gross margin 14.3% 13% 14%
Pre-tax loss ($26) million ($25) million ($5) million
EBITDA $68 million $75 million $95 million
Capital spending
(net of $79 million $70 million $80 million
divestitures)
(f) Fiscal 2008 amounts have been restated to reflect the removal
of a one-month lag in the reporting of results for the company's
international operations
(g) Excludes the effects of implementing the possible contingency
plan discussed above
As the company looks to the remainder of fiscal 2009, it has the
following expectations:
Continued softness in the North American heavy-duty truck
market with Class 8 build rates now projected at 200,000 units
for both fiscal 2009 and calendar 2008;
Significant softening in the European and North American
commercial vehicle and automotive markets due to the impact of
economic uncertainty caused by the credit market turmoil;
Seasonal patterns in the business with lower volumes around
winter holidays due to normal customer-driven plant shutdowns,
affecting the company's third quarter earnings;
Restructuring activities are expected to have an estimated $17
million negative impact on the fiscal 2009 pre-tax loss,
comprised of an estimated $10 million negative impact on gross
margins, including $7 million in repositioning costs and $3
million in plant inefficiencies and incremental scrap related
to the plant closures in North America and Europe, an
estimated $3 million of restructuring expense related to
severance charges, and an estimated $4 million negative impact
on SG&A expenses;
The U.S. dollar will remain strong in comparison to other
foreign currencies, most notably the euro, South Korean won
and Brazilian real;
A significantly higher effective tax rate, based on the
expectation that the company will be unable to realize
deferred tax assets in the U.S. and South Korea; and
The majority of the $12 million licensing payment from Bloom
Energy will be recognized as income in the third and fourth
quarters of fiscal 2009.
The above guidance assumes the South Korean business will continue
to be reported as a continuing operation. Depending on the success of
the intended plan to divest of this business, the South Korean
business may become classified as held for sale and as a discontinued
operation at some point during fiscal 2009. If this were to occur, the
financial results of the South Korean business would be excluded from
continuing operations. This would impact the above guidance by
reducing sales by approximately $200 million, increasing gross margin
by approximately 60 basis points, and reducing EBITDA by approximately
$5 million to $7 million. Pre-tax guidance would not be impacted as
this business is projected to be break-even. Given the continued
underperformance of the South Korean business and the unprecedented
market conditions being experienced in the company's industry segments
and others, Modine's ability to recover its investment in the South
Korean business on a "held for sale" basis may be challenging and
could result in a material impairment charge or loss on sale in a
future period. The above guidance excludes any potential charge which
may need to be recognized related to this intended divestiture.
Change in Accounting for International Operations
The company's second quarter results reflect a change in the
company's accounting principles, in accordance with Statement of
Financial Accounting Standards (SFAS) No. 154, "Accounting Changes and
Error Corrections - A Replacement of Accounting Principles Board
Opinion No. 20 and SFAS No. 3," with respect to the accounting for the
company's international operations. Beginning April 1, 2008, the
company changed the fiscal year end for its international operations
from February 28 to March 31. The one-month reporting lag was
eliminated because it was no longer required to achieve a timely
consolidation due to improvements in the company's information
technology systems and processes. Fiscal 2008 results have been
restated to reflect this adjustment, which had the effect of
increasing reported second quarter fiscal 2008 net earnings by $0.3
million, or $0.01 per fully diluted share. In addition, the company is
providing, in the accompanying financial table, restated financial
highlights for the third and fourth quarters of fiscal 2008 as an aid
to investors' comparative analysis of the company's financial
performance.
Conference Call and Webcast
Modine will conduct a conference call and live webcast, with a
slide presentation, on Thursday, October 30, 2008 at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time) to discuss the fiscal 2009
second quarter. The webcast and accompanying slides will be available
on the investor section of the Modine website at www.modine.com. The
dial-in phone number for the audio portion of the call is
800-798-2884; passcode: 54279805. The international call-in number is
617-614-6207; passcode: 54279805. Participants are encouraged to log
on to the webcast and conference call about 10 minutes prior to the
start of the event. A replay of the audio and the slides will be
available on the investor relations section of the Modine website at
www.modine.com, after October 30, 2008. A call-in replay will be
available through November 6, 2008, at 888-286-8010; passcode:
75653515 or, for international callers, at 617-801-6888; passcode:
75653515. A transcript of the call will be posted to the company's
website after November 3, 2008.
About Modine
Modine, with fiscal 2008 restated revenues of $1.9 billion,
specializes in thermal management systems and components, bringing
highly engineered heating and cooling technology and solutions to
diversified global markets. Modine products are used in light, medium
and heavy-duty vehicles, heating, ventilation and air conditioning
equipment, off-highway and industrial equipment, refrigeration
systems, and fuel cells. The company employs approximately 7,900
people at 33 facilities worldwide in 15 countries. For more
information about Modine, visit www.modine.com.
Forward-Looking Statements
Statements made in this press release regarding future matters are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on Modine's current expectations. The company'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, the company's
ability to either successfully obtain a waiver of or amend its debt
agreements or implement the contingency plan to remain in compliance
with the interest coverage ratio financial covenant; the impact which
the current economic uncertainty and credit market turmoil could have
on the company, its customers and suppliers; the company's ability to
limit capital spending and/or consummate planned divestitures; the
company's ability to maintain adequate liquidity to carry out
restructuring programs while investing for future growth; the
company's ability to fully recover the book value of its South Korean
business if divested; the company's ability to successfully implement
its restructuring plans and drive cost reductions as a result; the
company's ability to continue to service its customers during the
implementation of any restructuring plan; the avoidance of
inefficiencies in the transition of products from plants to be closed
to plants continuing in operation; factors impacting the Original
Equipment - North America segment's operating results; the ability of
the company, its customers and suppliers to achieve projected sales
and production levels; unanticipated product or manufacturing
difficulties; fluctuations in currency values, in particular, changes
in the relative values of the U.S. dollar, won, euro and real; the
ability of the company to obtain profitable business at its new
facilities in China, Hungary, Mexico, India and Austria and to produce
quality products at these facilities from business obtained;
international economic changes and challenges; and other factors
affecting the company's business prospects discussed in filings made
by the company, from time to time, with the Securities and Exchange
Commission including the factors discussed in Item 1A, Risk Factors,
and in the "Forward-Looking Statements" section in Item 7 of the
company's most recent Annual Report on Form 10-K as the same may be
updated from time to time. We undertake no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future events or otherwise, except as may be required by
law. Modine's financial results, as reported herein, are preliminary
and subject to possible adjustments.
Non-GAAP Financial Disclosures
Financial information excluding the impact of foreign currency
exchange rate changes in this press release are not measures that are
defined in generally accepted accounting principles (GAAP). These
items are measures that management believes are important to adjust
for in order to have a meaningful comparison to prior and future
periods and to provide a basis for future projections and for
estimating our earnings growth prospects. Non-GAAP measures are used
by management as a performance measure to judge profitability of our
business absent the impact of foreign currency exchange rate changes.
Management analyzes the company's business performance and trends
excluding these amounts. These measures, as well as EBITDA, Return on
Average Capital Employed (ROACE) and Net Debt (which are defined
below), 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 GAAP measures. The presentations of the
non-GAAP measures in this press release are made alongside the most
directly comparable GAAP measures.
Definition - Return on average capital employed (ROACE)
Pre-tax (loss) earnings adding back impairment of goodwill and
long-lived assets and interest expense, the sum of which is tax
effected at normalized 30 percent tax rate; divided by the average
total debt plus shareholders' equity; this is a financial measure of
the profit generated on the total capital invested in the company
before any interest expenses payable to lenders, net of a 30 percent
tax rate.
Definition - Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA)
The sum of, net (loss) earnings and adding back provision for
income taxes, interest expense, discontinued operations, depreciation
and amortization; this is a financial measure of the profit generated
excluding the above mentioned items.
Definition - Net Debt
The sum of short- and long-term debt, less cash on hand; this is
an indicator of the company's debt position after considering on hand
cash balances.
-- Financial tables follow --
Modine Manufacturing Company
Consolidated statements of earnings (unaudited)
(In thousands, except per-share amounts)
----------------------------------------------------------------------
Three months ended Six months ended
September 30, September 30,
2008 2007 (i) 2008 2007 (i)
----------------------- -------------------
Net sales $433,263 $428,657 $932,982 $872,893
Cost of sales 378,324 366,718 799,743 740,754
----------------------- -------------------
Gross profit 54,939 61,939 133,239 132,139
Selling, general and
administrative expenses 61,601 54,763 124,423 110,969
Restructuring expense
(income) 2,871 (79) 2,819 (319)
Impairment of long-lived
assets 3,031 - 3,165 -
-------------------------------------------
(Loss) income from
operations (12,564) 7,255 2,832 21,489
Interest expense 3,110 2,930 6,236 5,705
Other expense (income) -
net 1,010 (1,300) (1,162) (4,549)
----------------------- -------------------
(Loss) earnings from
continuing operations
before income taxes (16,684) 5,625 (2,242) 20,333
(Benefit from) provision
for income taxes (2,620) (4,601) 5,059 (640)
----------------------- -------------------
(Loss) earnings from
continuing operations (14,064) 10,226 (7,301) 20,973
Earnings from discontinued
operations (net of income
taxes) 817 132 992 386
Gain on sale of
discontinued operations
(net of income taxes) 21 - 870 -
----------------------- -------------------
Net (loss) earnings $(13,226) $10,358 $(5,439) $21,359
======================= ===================
(Loss) earnings per share
of common stock - basic:
Continuing operations $(0.44) $0.32 $(0.23) $0.66
Earnings from discontinued
operations 0.03 - 0.03 0.01
Gain on sale of
discontinued operations - - 0.03 -
----------------------- -------------------
Net (loss) earnings - basic $(0.41) $0.32 $(0.17) $0.67
======================= ===================
(Loss) earnings per share
of common stock - diluted:
Continuing operations $(0.44) $0.32 $(0.23) $0.65
Earnings from discontinued
operations 0.03 - 0.03 0.01
Gain on sale of
discontinued operations - - 0.03 -
----------------------- -------------------
Net (loss) earnings -
diluted $(0.41) $0.32 $(0.17) $0.66
======================= ===================
Weighted average shares
outstanding:
Basic 32,065 32,099 32,052 32,105
Diluted 32,065 32,294 32,052 32,231
Dividends paid per share $0.100 $0.175 $0.200 $0.350
Comprehensive (loss) earnings, which represents net earnings adjusted
by the post-tax change in foreign-currency translation, the effective
portion of cash flow hedges and change in SFAS No. 158 benefit plan
adjustment recorded in shareholders' equity, for the three month
period ended September 30, 2008 and 2007, were $(59,864) and $46,308,
respectively, and for the six month period ended September 30, 2008
and 2007, were $(48,755) and $63,914, respectively.
----------------------------------------------------------------------
Condensed consolidated
balance sheets (unaudited)
(In thousands)
----------------------------------------------------
September 30, March 31,
2008 2008 (i)
----------------------------------------------------
Assets
-------------------------
Cash and cash equivalents $62,690 $38,595
Short term investments 2,140 2,909
Trade receivables - net 238,267 294,935
Inventories 130,039 125,499
Assets held for sale - 6,871
Other current assets 61,362 64,482
------------- -----------
Total current assets 494,498 533,291
------------- -----------
Property, plant and
equipment - net 499,600 540,536
Assets held for sale - 5,522
Other noncurrent assets 81,308 88,934
------------- -----------
Total assets $1,075,406 $1,168,283
============= ===========
Liabilities and
shareholders' equity
---------------------------
Debt due within one year $1,123 $4,600
Accounts payable 172,138 193,228
Liabilities of business
held for sale - 3,093
Other current liabilities 126,790 137,993
------------- -----------
Total current liabilities 300,051 338,914
------------- -----------
Long-term debt 254,620 227,013
Deferred income taxes 21,616 23,634
Liabilities of business
held for sale - 166
Other noncurrent
liabilities 68,775 95,438
------------- -----------
Total liabilities 645,062 685,165
------------- -----------
Shareholders' equity 430,344 483,118
------------- -----------
Total liabilities &
shareholders' equity $1,075,406 $1,168,283
============= ===========
(i) The prior year amounts have been adjusted to account for the
removal of the one-month reporting lag for foreign operations.
Modine Manufacturing Company
Condensed consolidated statements of cash flows (unaudited)
(In thousands)
----------------------------------------------------------------------
Six months ended September 30, 2008 2007 (i)
----------------------------------------------------------------------
Cash flows from operating activities:
Net (loss)
earnings $(5,439) $21,359
Adjustments to reconcile net (loss)
earnings with net cash provided
by operating activities:
Depreciation and
amortization 38,705 38,663
Other - net (2,220) (18,522)
Net changes in operating assets and
liabilities 9,210 (18,817)
--------------------------
Net cash provided by operating
activities 40,256 22,683
--------------------------
Cash flows from investing activities:
Expenditures for plant, property and
equipment (46,207) (36,394)
Proceeds from dispositions of assets 10,638 8,435
Settlement of derivative contracts 599 194
Other - net 3,145 241
--------------------------
Net cash used for investing activities (31,825) (27,524)
--------------------------
Cash flows from financing activities:
Net increase in debt 25,288 24,288
Cash proceeds from exercise of stock
options 18 664
Repurchase of common stock, treasury
and retirement (514) (5,962)
Cash dividends paid (6,451) (11,337)
Other - net 2,959 7,172
--------------------------
Net cash provided by financing
activities 21,300 14,825
--------------------------
Effect of exchange rate changes on cash (5,636) 2,143
--------------------------
Net increase in cash and cash
equivalents 24,095 12,127
Cash and cash equivalents at beginning
of the period 38,595 26,207
--------------------------
Cash and cash equivalents at end of the
period $62,690 $38,334
==========================
----------------------------------------------------------------------
Condensed segment operating results (unaudited)
(In thousands)
----------------------------------------------------------------------
Three months ended Six months ended
September 30, September 30,
------------------- ---------------------
2008 2007 (i) 2008 2007 (i)
Sales:
Original Equipment - Asia $45,146 $60,365 $110,785 $130,258
Original Equipment - Europe 169,858 169,373 386,986 346,174
Original Equipment - North
America 125,931 119,744 259,126 247,894
South America 44,772 34,318 86,118 63,712
Commercial Products 53,186 48,894 102,070 94,427
Fuel Cell 1,669 868 2,813 1,307
------------------- ---------------------
Segment sales 440,562 433,562 947,898 883,772
------------------- ---------------------
Corporate and
administrative 885 839 1,734 2,140
Eliminations (8,184) (5,744) (16,650) (13,019)
------------------- ---------------------
Total net sales $433,263 $428,657 $932,982 $872,893
=================== =====================
Operating income (loss):
Original Equipment - Asia $(4,064) $(1,162) $(4,818) $(783)
Original Equipment - Europe 9,630 18,166 36,486 39,793
Original Equipment - North
America (8,738) (4,197) (12,935) (3,154)
South America 6,418 3,711 10,608 6,305
Commercial Products 4,835 3,654 8,708 5,819
Fuel Cell (357) (201) (1,294) (852)
------------------- ---------------------
Segment income from
operations 7,724 19,971 36,755 47,128
------------------- ---------------------
Corporate and
administrative (20,262) (12,731) (33,932) (25,694)
Eliminations (26) 15 9 55
------------------- ---------------------
(Loss) income from
operations $(12,564) $7,255 $2,832 $21,489
=================== =====================
(i) The prior year amounts have been adjusted to account for the
removal of the one-month reporting lag for foreign operations.
Modine Manufacturing Company
Earnings before interest, taxes, depreciation and amortization
(EBITDA) from continuing operations (unaudited)
(In thousands)
----------------------------------------------------------------------
Three months ended Six months ended
September 30, September 30,
2008 2007 (i) 2008 2007 (i)
------------------ --------------------
Net (loss) earnings $(13,226) $10,358 $(5,439) $21,359
(Benefit from) provision for
income taxes (2,620) (4,601) 5,059 (640)
Interest expense 3,110 2,930 6,236 5,705
Earnings from discontinued
operations (a) (817) (132) (992) (386)
Gain on sale of discontinued
operations (a) (21) - (870) -
Depreciation and amortization
(b) 19,118 19,278 38,705 38,465
------------------ --------------------
EBITDA from continuing
operations $5,544 $27,833 $42,699 $64,503
------------------ --------------------
(a) The calculation of EBITDA excludes the results of discontinued
operations for the periods presented.
(b) Depreciation and amortization of $198 for the six months ended
September 30, 2007 related to discontinued operations and was
excluded from the depreciation and amortization presented.
(i) The prior year amounts have been adjusted to account for the
removal of the one-month reporting lag for foreign operations.
Modine Manufacturing Company
Results of operations after change in accounting principle (unaudited)
(ii)
(In thousands, except per-share amounts)
----------------------------------------------------------------------
Twelve
months
Three months ended ended
June 30, September 30, December 31, March 31, March 31,
2007 2007 2007 2008 2008
----------------------------------------------------------
Net sales
As
previously
reported $444,073 $431,494 $495,301 $478,505 $1,849,373
Impact of
change in
accounting
principle 163 (2,837) (14,722) 30,194 12,798
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $444,236 $428,657 $480,579 $508,699 $1,862,171
Gross
profit
As
previously
reported $70,970 $62,716 $77,011 $58,898 $269,595
Impact of
change in
accounting
principle (770) (777) (7,373) 5,897 (3,023)
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $70,200 $61,939 $69,638 $64,795 $266,572
Earnings
(loss)
from
continuing
operations
before
income
taxes
As
previously
reported $17,588 $4,427 $(15,675) $(27,465) $(21,125)
Impact of
change in
accounting
principle (2,880) 1,198 (8,201) 5,369 (4,514)
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $14,708 $5,625 $(23,876) $(22,096) $(25,639)
Earnings
(loss)
from
continuing
operations
As
previously
reported $12,396 $9,930 $(47,499) $(40,338) $(65,511)
Impact of
change in
accounting
principle (1,649) 296 (7,460) 5,776 (3,037)
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $10,747 $10,226 $(54,959) $(34,562) $(68,548)
Net
earnings
(loss)
As
previously
reported $12,650 $10,062 $(47,350) $(40,958) $(65,596)
Impact of
change in
accounting
principle (1,649) 296 (7,460) 5,776 (3,037)
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $11,001 $10,358 $(54,810) $(35,182) $(68,633)
Earnings
(loss) per
share from
continuing
operations
- diluted
As
previously
reported $0.39 $0.31 $(1.49) $(1.26) $(2.05)
Impact of
change in
accounting
principle (0.05) 0.01 (0.23) 0.18 (0.09)
--------- ------------- ------------ --------- -----------
After
change in
accounting
principle $0.34 $0.32 $(1.72) $(1.08) $(2.14)
(ii) The fiscal 2008 information was revised to reflect the removal of
the one-month reporting lag for foreign operations.
CONTACT: Modine Manufacturing Company
Susan Fisher, 262-636-8434
s.h.fisher@na.modine.com
RACINE, Wis.--(BUSINESS WIRE)--Oct. 29, 2008--Modine Manufacturing
Company (NYSE: MOD), a diversified global leader in thermal management
technology and solutions, announced today that it will participate in
the Gabelli & Company Symposium in Las Vegas on Tuesday, November 4 at
1:15 PM PT. Modine's Executive Vice President - Corporate Strategy and
Chief Financial Officer Bradley C. Richardson will present at the
conference.
A live webcast of this presentation may be accessed through:
http://www.wsw.com/webcast/gabelli24/modi/.
A replay will be available following the event at this location.
About Modine
Modine, with fiscal 2008 restated revenues of $1.9 billion,
specializes in thermal management systems and components, bringing
highly engineered heating and cooling technology and solutions to
diversified global markets. Modine products are used in light, medium
and heavy-duty vehicles, heating, ventilation and air conditioning
equipment, off-highway and industrial equipment, refrigeration
systems, and fuel cells. The company employs approximately 7,900
people at 33 facilities worldwide in 15 countries. For more
information about Modine, visit www.modine.com.
CONTACT: Modine Manufacturing Company
Investor Contact:
Susan Fisher, 262-636-8434
s.h.fisher@na.modine.com
Global Focus on Core Engine, Powertrain Cooling, Refrigerant Component, Building HVAC and Alternative Energy Solutions
RACINE, Wis.--(BUSINESS WIRE)--
Modine Manufacturing Company (NYSE: MOD), a diversified global
leader in thermal management technology and solutions, today announced
strategic plans to scale back its focus on the global vehicular HVAC
market through the intended divestiture of its Korean-based vehicular
HVAC business. The Company's Korea subsidiary includes standalone
vehicular HVAC research and development, testing, application
engineering and manufacturing capability for automotive, commercial
vehicle, off highway, bus and train HVAC systems, along with similar
technical support and manufacturing for original equipment (OEM)
automotive, commercial vehicle and off highway engine and powertrain
cooling components. The Korean HVAC business was included in Modine's
acquisition of WiniaMando Inc's Automotive Climate Control division in
2004 for approximately $80 million as part of its strategic expansion
into the Asian OEM cooling and vehicular HVAC markets.
Modine currently has a significant global market position in the
engine and powertrain cooling product lines and will continue to focus
R&D, testing, application engineering, and manufacturing capabilities
and resources in these areas. Modine will finalize its plans for
continuing these activities in the Korean market in the upcoming
months in order to support this important business in the region as
the company moves forward.
"The Korea acquisition heightened Modine's technical presence in
Asia and brought regional research and development capabilities that
served as a foundation for subsequent expansion of our relationships
with key OEM customers," said Modine President and Chief Executive
Officer Thomas A. Burke. "At the same time, given its continued focus
on vehicular HVAC for a highly concentrated customer base, our
Korean-based manufacturing operations, while achieving top line growth
over the past four years, have had difficulty attaining the global
revenue diversification, profitability and return on capital employed
targets envisioned at the time of the acquisition and, ultimately,
expected by our shareholders."
"The decision to scale back our vehicular HVAC module business
reflects Modine's increased product portfolio and capital allocation
discipline, which are key elements of our four point action plan to
address business performance," said Bradley C. Richardson, Modine's
Executive Vice President - Corporate Strategy and Chief Financial
Officer. "We believe this decision represents the best path forward
for Modine, for the employees of Modine Korea and, ultimately, for our
respective customers. Scaling back the vehicular HVAC business will
enable Modine to focus our human and financial capital on our global
engine and powertrain cooling, refrigerant component, and building
HVAC (Commercial Products) segments, in which we continue to
experience profitable growth based on differentiated technologies, as
well as the development of solutions for the alternative energy
market. Meanwhile, the course of action we are announcing today allows
the employees in Korea that are dedicated to the vehicular HVAC
business to focus solely on this core business and continue to
leverage their growth and technical capabilities regionally.''
"In moving to divest our Korean vehicular HVAC business," Burke
continued, "it is important to underscore that we will retain our
North American and European focus on refrigerant component and system
research and development, design, manufacturing, and sales of PF(TM)
condensers and other high performance refrigerant-based heat
exchangers, including R744 gas coolers. Towards this end, we are in
the process of expanding our European condenser manufacturing
footprint with the recently announced Kottingbrunn, Austria, plant
investment. Modine invented the PF(TM) technology and will continue to
grow this business on a global scale in the OEM automotive, commercial
vehicle, off highway, and building HVAC markets. We have significant
ongoing research activities demonstrating improved efficiency,
performance and packaging options for this world-class product
offering. We will continue to maintain and grow our refrigerant
systems expertise in this critical area through our newly formed
Refrigerant Components team within our global Powertrain Cooling
Products Group in order to maximize efficiencies and focus."
Other vehicular HVAC businesses, including the Company's 50
percent share in Anhui Jianghaui Mando Climate Control Co., Ltd.,
located in Hefei, China, its North American vehicular HVAC module
assembly business and its assembly operations in its Shanghai, China
facility, will be the subject of further evaluation over the next 12
to 18 months.
At a conference call to review second quarter financial results
scheduled for October 30, 2008, Modine management will discuss the
impact of the intended divestiture and other factors on the company's
2009 sales and earnings guidance.
Modine has retained Ernst & Young Advisory Inc. in Seoul, Korea to
act as its transaction advisor in connection with the intended
disposition of the Korean Vehicular HVAC business.
About Modine
With fiscal 2008 restated revenues of $1.9 billion, Modine
specializes in thermal management systems and components, bringing
highly engineered heating and cooling technology and solutions to
diversified global markets. Modine products are used in light, medium
and heavy-duty vehicles, heating, ventilation and air conditioning
equipment, off-highway and industrial equipment, refrigeration
systems, and fuel cells. The company employs approximately 7,900
people at 33 facilities worldwide in 15 countries. For more
information about Modine, visit www.modine.com.
Forward-Looking Statements
Statements made in this press release regarding future matters are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on Modine's current expectations. The company'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, the company's
ability to successfully implement its restructuring plans and achieve
growth and cost savings as a result, the company's ability to
successfully consummate the sale of this business, and other factors
affecting the company's business prospects discussed in filings made
by the company, from time to time, with the Securities and Exchange
Commission including the factors discussed in Item 1A, Risk Factors,
and in the "Forward-Looking Statements" section in Item 7 of the
company's most recent Annual Report on Form 10-K and in the company's
most recent quarterly report on Form 10-Q. We undertake no obligation
to publicly update any forward-looking statement, whether as a result
of new information, future events or otherwise, except as may be
required by law. Modine's financial results, as reported herein, are
preliminary and subject to possible adjustments.