☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
WISCONSIN
|
39-0482000
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
1500 DeKoven Avenue, Racine, Wisconsin
|
53403
|
|
(Address of principal executive offices)
|
(Zip Code)
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Large Accelerated Filer ☐
|
Accelerated Filer ☑
|
|
Non-accelerated Filer ☐
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(Do not check if a smaller reporting company) |
Smaller reporting company ☐
|
PART I. FINANCIAL INFORMATION
|
|||
Item 1.
|
Financial Statements. |
1
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations. |
21
|
|
Item 3.
|
30
|
||
Item 4.
|
Controls and Procedures. |
30
|
|
PART II. OTHER INFORMATION
|
|||
Item 6.
|
Exhibits. |
31
|
|
32
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net sales
|
$
|
349.8
|
$
|
328.7
|
$
|
1,014.7
|
$
|
1,008.8
|
||||||||
Cost of sales
|
291.1
|
270.1
|
846.3
|
847.5
|
||||||||||||
Gross profit
|
58.7
|
58.6
|
168.4
|
161.3
|
||||||||||||
Selling, general and administrative expenses
|
51.1
|
43.3
|
144.4
|
162.9
|
||||||||||||
Restructuring expenses
|
1.6
|
1.6
|
6.0
|
5.2
|
||||||||||||
Gain on sale of facility
|
-
|
-
|
(1.2
|
)
|
-
|
|||||||||||
Operating income (loss)
|
6.0
|
13.7
|
19.2
|
(6.8
|
)
|
|||||||||||
Interest expense
|
(4.5
|
)
|
(2.7
|
)
|
(10.5
|
)
|
(8.2
|
)
|
||||||||
Other expense – net
|
(0.3
|
)
|
(0.4
|
)
|
(0.6
|
)
|
(0.5
|
)
|
||||||||
Earnings (loss) before income taxes
|
1.2
|
10.6
|
8.1
|
(15.5
|
)
|
|||||||||||
Benefit (provision) for income taxes
|
0.7
|
(2.4
|
)
|
(1.3
|
)
|
6.7
|
||||||||||
Net earnings (loss)
|
1.9
|
8.2
|
6.8
|
(8.8
|
)
|
|||||||||||
Net earnings attributable to noncontrolling interest
|
(0.2
|
)
|
-
|
(0.6
|
)
|
(0.4
|
)
|
|||||||||
Net earnings (loss) attributable to Modine
|
$
|
1.7
|
$
|
8.2
|
$
|
6.2
|
$
|
(9.2
|
)
|
|||||||
Net earnings (loss) per share attributable to Modine shareholders:
|
||||||||||||||||
Basic
|
$
|
0.04
|
$
|
0.17
|
$
|
0.13
|
$
|
(0.19
|
)
|
|||||||
Diluted
|
$
|
0.04
|
$
|
0.17
|
$
|
0.13
|
$
|
(0.19
|
)
|
|||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Basic
|
47.9
|
47.4
|
47.3
|
47.4
|
||||||||||||
Diluted
|
48.5
|
47.8
|
47.7
|
47.4
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net earnings (loss)
|
$
|
1.9
|
$
|
8.2
|
$
|
6.8
|
$
|
(8.8
|
)
|
|||||||
Other comprehensive income (loss):
|
||||||||||||||||
Foreign currency translation
|
(14.8
|
)
|
(6.2
|
)
|
(17.7
|
)
|
(6.1
|
)
|
||||||||
Defined benefit plans, net of income taxes of $0.4, $1.7, $1.3 and $14.3 million
|
0.9
|
2.9
|
2.6
|
23.3
|
||||||||||||
Total other comprehensive income (loss)
|
(13.9
|
)
|
(3.3
|
)
|
(15.1
|
)
|
17.2
|
|||||||||
Comprehensive income (loss)
|
(12.0
|
)
|
4.9
|
(8.3
|
)
|
8.4
|
||||||||||
Comprehensive (income) loss attributable to noncontrolling interest
|
0.4
|
-
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||
Comprehensive income (loss) attributable to Modine
|
$
|
(11.6
|
)
|
$
|
4.9
|
$
|
(8.4
|
)
|
$
|
8.3
|
December 31, 2016
|
March 31, 2016
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
50.0
|
$
|
68.9
|
||||
Trade accounts receivable – net
|
234.8
|
189.1
|
||||||
Inventories
|
156.9
|
111.0
|
||||||
Other current assets
|
52.4
|
43.5
|
||||||
Total current assets
|
494.1
|
412.5
|
||||||
Property, plant and equipment – net
|
446.2
|
338.6
|
||||||
Intangible assets – net
|
111.2
|
8.2
|
||||||
Goodwill
|
173.2
|
15.8
|
||||||
Deferred income taxes
|
145.3
|
123.1
|
||||||
Other noncurrent assets
|
22.9
|
22.7
|
||||||
Total assets
|
$
|
1,392.9
|
$
|
920.9
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Short-term debt
|
$
|
70.6
|
$
|
28.6
|
||||
Long-term debt – current portion
|
30.0
|
8.5
|
||||||
Accounts payable
|
178.5
|
142.4
|
||||||
Accrued compensation and employee benefits
|
65.8
|
58.6
|
||||||
Other current liabilities
|
48.4
|
35.5
|
||||||
Total current liabilities
|
393.3
|
273.6
|
||||||
Long-term debt
|
413.2
|
125.5
|
||||||
Deferred income taxes
|
31.7
|
4.2
|
||||||
Pensions
|
122.3
|
118.6
|
||||||
Other noncurrent liabilities
|
28.0
|
16.3
|
||||||
Total liabilities
|
988.5
|
538.2
|
||||||
Commitments and contingencies (see Note 15)
|
||||||||
Shareholders' equity:
|
||||||||
Preferred stock, $0.025 par value, authorized 16.0 million shares, issued - none
|
-
|
-
|
||||||
Common stock, $0.625 par value, authorized 80.0 million shares, issued 51.8 million and 49.0 million shares
|
32.4
|
30.6
|
||||||
Additional paid-in capital
|
215.0
|
185.6
|
||||||
Retained earnings
|
364.4
|
358.2
|
||||||
Accumulated other comprehensive loss
|
(188.8
|
)
|
(174.2
|
)
|
||||
Treasury stock, at cost, 1.7 million and 1.6 million shares
|
(25.2
|
)
|
(24.0
|
)
|
||||
Total Modine shareholders' equity
|
397.8
|
376.2
|
||||||
Noncontrolling interest
|
6.6
|
6.5
|
||||||
Total equity
|
404.4
|
382.7
|
||||||
Total liabilities and equity
|
$
|
1,392.9
|
$
|
920.9
|
Nine months ended December 31,
|
||||||||
|
2016
|
2015
|
||||||
Cash flows from operating activities:
|
||||||||
Net earnings (loss)
|
$
|
6.8
|
$
|
(8.8
|
)
|
|||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
39.9
|
37.4
|
||||||
Insurance proceeds from Airedale fire
|
-
|
5.1
|
||||||
Gain on sale of facility
|
(1.2
|
)
|
-
|
|||||
Pension and postretirement expense
|
2.6
|
42.4
|
||||||
Deferred income taxes
|
(9.1
|
)
|
(14.4
|
)
|
||||
Other – net
|
5.0
|
4.4
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
33.2
|
42.3
|
||||||
Inventories
|
-
|
(9.2
|
)
|
|||||
Accounts payable
|
(21.1
|
)
|
(19.9
|
)
|
||||
Other assets and liabilities
|
(21.1
|
)
|
(13.9
|
)
|
||||
Net cash provided by operating activities
|
35.0
|
65.4
|
||||||
Cash flows from investing activities:
|
||||||||
Acquistion of Luvata HTS - net of cash acquired
|
(363.9
|
)
|
-
|
|||||
Expenditures for property, plant and equipment
|
(46.0
|
)
|
(42.3
|
)
|
||||
Insurance proceeds from Airedale fire
|
3.0
|
25.3
|
||||||
Costs to replace building and equipment damaged in Airedale fire
|
(1.0
|
)
|
(37.9
|
)
|
||||
Proceeds from dispositions of assets
|
4.3
|
0.2
|
||||||
Other – net
|
(1.6
|
)
|
0.2
|
|||||
Net cash used for investing activities
|
(405.2
|
)
|
(54.5
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings of debt
|
475.4
|
29.0
|
||||||
Repayments of debt
|
(113.2
|
)
|
(24.8
|
)
|
||||
Financing fees paid
|
(8.5
|
)
|
-
|
|||||
Purchases of treasury stock under share repurchase program
|
-
|
(2.1
|
)
|
|||||
Dividend paid to noncontrolling interest
|
-
|
(0.9
|
)
|
|||||
Other – net
|
(0.3
|
)
|
(0.5
|
)
|
||||
Net cash provided by financing activities
|
353.4
|
0.7
|
||||||
Effect of exchange rate changes on cash
|
(2.1
|
)
|
(0.6
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
(18.9
|
)
|
11.0
|
|||||
Cash and cash equivalents – beginning of period
|
68.9
|
70.5
|
||||||
Cash and cash equivalents – end of period
|
$
|
50.0
|
$
|
81.5
|
Cash and cash equivalents
|
$
|
27.4
|
||
Trade accounts receivable
|
86.3
|
|||
Inventories
|
48.8
|
|||
Property, plant and equipment
|
116.5
|
|||
Intangible assets
|
105.9
|
|||
Goodwill
|
159.8
|
|||
Other assets
|
31.0
|
|||
Accounts payable
|
(66.2
|
)
|
||
Deferred income taxes
|
(30.0
|
)
|
||
Pensions
|
(14.3
|
)
|
||
Other liabilities
|
(49.6
|
)
|
||
Purchase price
|
$
|
415.6
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net sales
|
$
|
447.6
|
$
|
454.5
|
$
|
1,398.1
|
$
|
1,418.1
|
||||||||
Net earnings (loss) attributable to Modine
|
$
|
10.4
|
$
|
13.1
|
$
|
28.8
|
$
|
(3.8
|
)
|
|||||||
Net earnings (loss) per share attributable to Modine shareholders:
|
||||||||||||||||
Basic
|
$
|
0.21
|
$
|
0.26
|
$
|
0.58
|
$
|
(0.08
|
)
|
|||||||
Diluted
|
$
|
0.21
|
$
|
0.26
|
$
|
0.58
|
$
|
(0.08
|
)
|
· |
Level 1 – Quoted prices for identical instruments in active markets.
|
· |
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
· |
Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
|
Three months ended
December 31,
|
Nine months ended
December 31, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Service cost
|
$
|
0.1
|
$
|
0.1
|
$
|
0.4
|
$
|
0.4
|
||||||||
Interest cost
|
2.5
|
2.5
|
7.3
|
8.6
|
||||||||||||
Expected return on plan assets
|
(3.1
|
)
|
(3.1
|
)
|
(9.2
|
)
|
(11.8
|
)
|
||||||||
Amortization of unrecognized net loss
|
1.4
|
1.4
|
4.2
|
5.0
|
||||||||||||
Settlements (a)
|
-
|
1.1
|
-
|
40.3
|
||||||||||||
Net periodic benefit cost
|
$
|
0.9
|
$
|
2.0
|
$
|
2.7
|
$
|
42.5
|
(a) |
During fiscal 2016, in an effort to reduce the size, volatility, mortality risk, and costs associated with its U.S. pension plans, the Company offered a voluntary lump-sum payout program to certain eligible former employees. Approximately 2,000 participants accepted the lump-sum settlement offer and a total of $62.4 million was paid from pension plan assets during the nine months ended December 31, 2015, which reduced the Company’s pension obligation by the same amount. In connection with these lump-sum payouts, the Company recorded $40.3 million of non-cash settlement losses related to the accelerated recognition of unamortized actuarial losses previously recorded on the consolidated balance sheets within accumulated other comprehensive loss. The Company recorded $31.8 million and $8.5 million of the settlement losses as SG&A expenses and cost of sales, respectively, within the consolidated statement of operations.
|
Nine months ended December 31,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
Shares
|
Fair Value
Per Award
|
Shares
|
Fair Value
Per Award
|
|||||||||||||
Stock options
|
0.3
|
$
|
4.60
|
0.2
|
$
|
7.11
|
||||||||||
Restricted stock - retention
|
0.3
|
$
|
10.03
|
0.3
|
$
|
11.39
|
||||||||||
Restricted stock - performance based
|
0.3
|
$
|
10.00
|
0.2
|
$
|
11.39
|
||||||||||
Unrestricted stock
|
0.1
|
$
|
9.38
|
0.1
|
$
|
10.45
|
Nine months ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Expected life of awards in years
|
6.4
|
6.3
|
||||||
Risk-free interest rate
|
1.4
|
%
|
1.9
|
%
|
||||
Expected volatility of the Company's stock
|
45.5
|
%
|
66.9
|
%
|
||||
Expected dividend yield on the Company's stock
|
0.0
|
%
|
0.0
|
%
|
Unrecognized
Compensation Cost |
Weighted-Average
Remaining Service
Period in Years
|
|||||||
Stock options
|
$
|
2.4
|
2.6
|
|||||
Restricted stock - retention
|
5.5
|
2.5
|
||||||
Restricted stock - performance based
|
4.1
|
2.0
|
||||||
Total
|
$
|
12.0
|
2.3
|
Three months ended
December 31,
|
Nine months ended
December 31, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Employee severance and related benefits
|
$
|
0.1
|
$
|
0.9
|
$
|
2.2
|
$
|
2.6
|
||||||||
Other restructuring and repositioning expenses
|
1.5
|
0.7
|
3.8
|
2.6
|
||||||||||||
Total
|
$
|
1.6
|
$
|
1.6
|
$
|
6.0
|
$
|
5.2
|
Three months ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Beginning balance
|
$
|
9.2
|
$
|
7.8
|
||||
Additions
|
0.1
|
0.9
|
||||||
Payments
|
(1.3
|
)
|
(0.9
|
)
|
||||
Effect of exchange rate changes
|
(0.5
|
)
|
(0.2
|
)
|
||||
Ending balance
|
$
|
7.5
|
$
|
7.6
|
||||
Nine months ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Beginning balance
|
$
|
14.7
|
$
|
9.9
|
||||
Additions
|
2.2
|
2.6
|
||||||
Payments
|
(8.5
|
)
|
(5.1
|
)
|
||||
Effect of exchange rate changes
|
(0.9
|
)
|
0.2
|
|||||
Ending balance
|
$
|
7.5
|
$
|
7.6
|
Three months ended
December 31,
|
Nine months ended
December 31, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Equity in earnings of non-consolidated affiliate
|
$
|
-
|
$
|
0.1
|
$
|
0.1
|
$
|
0.2
|
||||||||
Interest income
|
0.1
|
0.1
|
0.3
|
0.3
|
||||||||||||
Foreign currency transactions (a)
|
(0.4
|
)
|
(0.6
|
)
|
(1.0
|
)
|
(1.0
|
)
|
||||||||
Total other expense - net
|
$
|
(0.3
|
)
|
$
|
(0.4
|
)
|
$
|
(0.6
|
)
|
$
|
(0.5
|
)
|
(a) |
Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on foreign currency exchange contracts.
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Net earnings (loss) attributable to Modine
|
$
|
1.7
|
$
|
8.2
|
$
|
6.2
|
$
|
(9.2
|
)
|
|||||||
Less: Undistributed earnings attributable to unvested shares
|
-
|
(0.2
|
)
|
(0.1
|
)
|
-
|
||||||||||
Net earnings (loss) available to Modine shareholders
|
$
|
1.7
|
$
|
8.0
|
$
|
6.1
|
$
|
(9.2
|
)
|
|||||||
Weighted-average shares outstanding - basic
|
47.9
|
47.4
|
47.3
|
47.4
|
||||||||||||
Effect of dilutive securities
|
0.6
|
0.4
|
0.4
|
-
|
||||||||||||
Weighted-average shares outstanding - diluted
|
48.5
|
47.8
|
47.7
|
47.4
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Net earnings (loss) per share - basic
|
$
|
0.04
|
$
|
0.17
|
$
|
0.13
|
$
|
(0.19
|
)
|
|||||||
Net earnings (loss) per share - diluted
|
$
|
0.04
|
$
|
0.17
|
$
|
0.13
|
$
|
(0.19
|
)
|
December 31, 2016
|
March 31, 2016
|
|||||||
Raw materials and work in process
|
$
|
115.3
|
$
|
79.5
|
||||
Finished goods
|
41.6
|
31.5
|
||||||
Total inventories
|
$
|
156.9
|
$
|
111.0
|
December 31, 2016
|
March 31, 2016
|
|||||||
Gross property, plant and equipment
|
$
|
1,149.4
|
$
|
1,043.6
|
||||
Accumulated depreciation
|
(703.2
|
)
|
(705.0
|
)
|
||||
Net property, plant and equipment
|
$
|
446.2
|
$
|
338.6
|
Asia
|
BHVAC
|
CIS
|
Total
|
|||||||||||||
Goodwill, March 31, 2016
|
$
|
0.5
|
$
|
15.3
|
$
|
-
|
$
|
15.8
|
||||||||
Acquisition
|
-
|
-
|
159.8
|
159.8
|
||||||||||||
Effect of exchange rate changes
|
-
|
(1.8
|
)
|
(0.6
|
)
|
(2.4
|
)
|
|||||||||
Goodwill, December 31, 2016
|
$
|
0.5
|
$
|
13.5
|
$
|
159.2
|
$
|
173.2
|
December 31, 2016
|
March 31, 2016
|
|||||||||||||||||||||||
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
|||||||||||||||||||
Trade names
|
$
|
51.4
|
$
|
(6.4
|
)
|
$
|
45.0
|
$
|
8.9
|
$
|
(6.3
|
)
|
$
|
2.6
|
||||||||||
Acquired technology
|
23.2
|
(2.2
|
)
|
21.0
|
5.5
|
(1.5
|
)
|
4.0
|
||||||||||||||||
Customer relationships
|
46.0
|
(0.8
|
)
|
45.2
|
2.0
|
(0.4
|
)
|
1.6
|
||||||||||||||||
Total intangible assets
|
$
|
120.6
|
$
|
(9.4
|
)
|
$
|
111.2
|
$
|
16.4
|
$
|
(8.2
|
)
|
$
|
8.2
|
Fiscal Year
|
Estimated
Amortization
Expense
|
|||
Remainder of 2017
|
$
|
2.6
|
||
2018
|
10.2
|
|||
2019
|
10.1
|
|||
2020
|
10.0
|
|||
2021
|
9.5
|
|||
2022 & Beyond
|
68.8
|
Three months ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Beginning balance
|
$
|
8.4
|
$
|
10.0
|
||||
Warranties recorded at time of sale
|
1.4
|
1.3
|
||||||
Adjustments to pre-existing warranties
|
0.1
|
(0.2
|
)
|
|||||
Additions due to acquisition
|
4.1
|
-
|
||||||
Settlements
|
(2.1
|
)
|
(1.0
|
)
|
||||
Effect of exchange rate changes
|
(0.3
|
)
|
(0.2
|
)
|
||||
Ending balance
|
$
|
11.6
|
$
|
9.9
|
Nine months ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Beginning balance
|
$
|
8.3
|
$
|
10.4
|
||||
Warranties recorded at time of sale
|
3.9
|
3.9
|
||||||
Adjustments to pre-existing warranties
|
-
|
(0.1
|
)
|
|||||
Additions due to acquisition
|
4.1
|
-
|
||||||
Settlements
|
(4.4
|
)
|
(4.2
|
)
|
||||
Effect of exchange rate changes
|
(0.3
|
)
|
(0.1
|
)
|
||||
Ending balance
|
$
|
11.6
|
$
|
9.9
|
Fiscal year
of maturity |
December 31, 2016
|
March 31, 2016
|
||||||||||
Term loans
|
2017-2022
|
$
|
271.1
|
$
|
-
|
|||||||
6.8% Senior Notes
|
2017-2021
|
121.0
|
125.0
|
|||||||||
5.8% Senior Notes
|
2022-2027
|
50.0
|
-
|
|||||||||
Foreign credit agreements
|
2018-2020
|
0.3
|
0.4
|
|||||||||
Other (a)
|
2017-2030
|
8.0
|
8.6
|
|||||||||
450.4
|
134.0
|
|||||||||||
Less: current portion
|
(30.0
|
)
|
(8.5
|
)
|
||||||||
Less: unamortized debt issuance costs
|
(7.2
|
)
|
-
|
|||||||||
Total long-term debt
|
$
|
413.2
|
$
|
125.5
|
(a) |
Other long-term debt includes capital lease obligations and other financing-type obligations.
|
Fiscal Year
|
||||
Remainder of 2017
|
$
|
7.5
|
||
2018
|
31.7
|
|||
2019
|
38.5
|
|||
2020
|
43.7
|
|||
2021
|
98.2
|
|||
2022 & Beyond
|
230.8
|
|||
Total
|
$
|
450.4
|
Three months ended
December 31, 2016 |
Nine months ended
December 31, 2016 |
|||||||||||||||||||||||
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Total
|
|||||||||||||||||||
Beginning balance
|
$
|
(39.0
|
)
|
$
|
(136.5
|
)
|
$
|
(175.5
|
)
|
$
|
(36.0
|
)
|
$
|
(138.2
|
)
|
$
|
(174.2
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
(14.2
|
)
|
-
|
(14.2
|
)
|
(17.2
|
)
|
-
|
(17.2
|
)
|
||||||||||||||
Reclassifications for amortization of unrecognized net loss (a)
|
-
|
1.3
|
1.3
|
-
|
3.9
|
3.9
|
||||||||||||||||||
Income taxes
|
-
|
(0.4
|
)
|
(0.4
|
)
|
-
|
(1.3
|
)
|
(1.3
|
)
|
||||||||||||||
Total other comprehensive income (loss)
|
(14.2
|
)
|
0.9
|
(13.3
|
)
|
(17.2
|
)
|
2.6
|
(14.6
|
)
|
||||||||||||||
Ending balance
|
$
|
(53.2
|
)
|
$
|
(135.6
|
)
|
$
|
(188.8
|
)
|
$
|
(53.2
|
)
|
$
|
(135.6
|
)
|
$
|
(188.8
|
)
|
Three months ended
December 31, 2015 |
Nine months ended
December 31, 2015 |
|||||||||||||||||||||||
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Total
|
|||||||||||||||||||
Beginning balance
|
$
|
(40.3
|
)
|
$
|
(137.5
|
)
|
$
|
(177.8
|
)
|
$
|
(40.7
|
)
|
$
|
(157.9
|
)
|
$
|
(198.6
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
(6.2
|
)
|
2.2
|
(4.0
|
)
|
(5.8
|
)
|
(7.5
|
)
|
(13.3
|
)
|
|||||||||||||
Reclassifications:
|
||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
2.5
|
2.5
|
-
|
45.3
|
45.3
|
||||||||||||||||||
Amortization of unrecognized prior service credit (a)
|
-
|
(0.1
|
)
|
(0.1
|
)
|
-
|
(0.2
|
)
|
(0.2
|
)
|
||||||||||||||
Income taxes
|
-
|
(1.7
|
)
|
(1.7
|
)
|
-
|
(14.3
|
)
|
(14.3
|
)
|
||||||||||||||
Total other comprehensive income (loss)
|
(6.2
|
)
|
2.9
|
(3.3
|
)
|
(5.8
|
)
|
23.3
|
17.5
|
|||||||||||||||
Ending balance
|
$
|
(46.5
|
)
|
$
|
(134.6
|
)
|
$
|
(181.1
|
)
|
$
|
(46.5
|
)
|
$
|
(134.6
|
)
|
$
|
(181.1
|
)
|
(a)
|
Amounts are included in the calculation of net periodic benefit cost for the Company’s defined benefit plans, which include pension and other postretirement plans. See Note 4 for additional information about the Company’s pension plans.
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||
Net sales:
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Americas
|
$
|
123.4
|
$
|
137.1
|
$
|
389.4
|
$
|
440.4
|
||||||||
Europe
|
119.8
|
126.1
|
389.7
|
385.0
|
||||||||||||
Asia
|
28.6
|
18.7
|
78.2
|
56.1
|
||||||||||||
BHVAC
|
47.2
|
50.9
|
132.8
|
141.0
|
||||||||||||
CIS
|
34.7
|
-
|
34.7
|
-
|
||||||||||||
Segment total
|
353.7
|
332.8
|
1,024.8
|
1,022.5
|
||||||||||||
Corporate and eliminations
|
(3.9
|
)
|
(4.1
|
)
|
(10.1
|
)
|
(13.7
|
)
|
||||||||
Net sales
|
$
|
349.8
|
$
|
328.7
|
$
|
1,014.7
|
$
|
1,008.8
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
Gross profit:
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
||||||||||||||||||||||||
Americas
|
$
|
18.3
|
14.8
|
%
|
$
|
22.7
|
16.5
|
%
|
$
|
59.2
|
15.2
|
%
|
$
|
72.8
|
16.5
|
%
|
||||||||||||||||
Europe
|
18.5
|
15.4
|
%
|
17.2
|
13.7
|
%
|
59.8
|
15.3
|
%
|
47.0
|
12.2
|
%
|
||||||||||||||||||||
Asia
|
5.0
|
17.6
|
%
|
2.6
|
13.9
|
%
|
13.1
|
16.7
|
%
|
8.2
|
14.7
|
%
|
||||||||||||||||||||
BHVAC
|
15.3
|
32.4
|
%
|
17.3
|
34.0
|
%
|
37.1
|
27.9
|
%
|
43.3
|
30.8
|
%
|
||||||||||||||||||||
CIS
|
4.4
|
12.7
|
%
|
-
|
-
|
4.4
|
12.7
|
%
|
-
|
-
|
||||||||||||||||||||||
Segment total
|
61.5
|
17.5
|
%
|
59.8
|
18.0
|
%
|
173.6
|
16.9
|
%
|
171.3
|
16.8
|
%
|
||||||||||||||||||||
Corporate and eliminations (a)
|
(2.8
|
)
|
-
|
(1.2
|
)
|
-
|
(5.2
|
)
|
-
|
(10.0
|
)
|
-
|
||||||||||||||||||||
Gross profit
|
$
|
58.7
|
16.8
|
%
|
$
|
58.6
|
17.8
|
%
|
$
|
168.4
|
16.6
|
%
|
$
|
161.3
|
16.0
|
%
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||
Operating income:
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Americas
|
$
|
5.4
|
$
|
7.7
|
$
|
13.3
|
$
|
24.8
|
||||||||
Europe
|
8.3
|
7.6
|
30.0
|
18.3
|
||||||||||||
Asia
|
2.6
|
(0.1
|
)
|
4.9
|
(0.9
|
)
|
||||||||||
BHVAC
|
6.7
|
6.7
|
10.3
|
12.7
|
||||||||||||
CIS
|
(0.3
|
)
|
-
|
(0.3
|
)
|
-
|
||||||||||
Segment total
|
22.7
|
21.9
|
58.2
|
54.9
|
||||||||||||
Corporate and eliminations (a)
|
(16.7
|
)
|
(8.2
|
)
|
(39.0
|
)
|
(61.7
|
)
|
||||||||
Operating income (loss)
|
$
|
6.0
|
$
|
13.7
|
$
|
19.2
|
$
|
(6.8
|
)
|
December 31, 2016
|
March 31, 2016
|
|||||||
Total assets:
|
||||||||
Americas
|
$
|
263.3
|
$
|
267.2
|
||||
Europe
|
247.8
|
301.9
|
||||||
Asia
|
103.5
|
104.0
|
||||||
BHVAC
|
88.8
|
99.0
|
||||||
CIS
|
560.7
|
-
|
||||||
Corporate and eliminations
|
128.8
|
148.8
|
||||||
Total assets
|
$
|
1,392.9
|
$
|
920.9
|
(a) |
During the three and nine months ended December 31, 2016, the Company recorded $7.2 million and $11.6 million, respectively, of costs incurred directly related to the acquisition and integration of Luvata HTS within SG&A expenses at Corporate. In addition, as a result of purchase accounting for the Luvata HTS acquisition, the Company wrote up acquired inventory to its estimated fair value and is charging the write-up to cost of sales as the underlying inventory is sold. During the third quarter of fiscal 2017, the Company recorded $2.9 million in cost of sales related to this inventory step-up at Corporate, as the impact of this purchase accounting adjustment is excluded from the Company’s measure of segment operating performance. During the nine months ended December 31, 2015, the Company recorded a pension settlement loss of $40.3 million at Corporate, within SG&A expenses ($31.8 million) and cost of sales ($8.5 million). See Note 4 for additional information about the Company’s pension plans.
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
349.8
|
100.0
|
%
|
$
|
328.7
|
100.0
|
%
|
$
|
1,014.7
|
100.0
|
%
|
$
|
1,008.8
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
291.1
|
83.2
|
%
|
270.1
|
82.2
|
%
|
846.3
|
83.4
|
%
|
847.5
|
84.0
|
%
|
||||||||||||||||||||
Gross profit
|
58.7
|
16.8
|
%
|
58.6
|
17.8
|
%
|
168.4
|
16.6
|
%
|
161.3
|
16.0
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
51.1
|
14.6
|
%
|
43.3
|
13.2
|
%
|
144.4
|
14.2
|
%
|
162.9
|
16.2
|
%
|
||||||||||||||||||||
Restructuring expenses
|
1.6
|
0.5
|
%
|
1.6
|
0.5
|
%
|
6.0
|
0.6
|
%
|
5.2
|
0.5
|
%
|
||||||||||||||||||||
Gain on sale of facility
|
-
|
-
|
-
|
-
|
(1.2
|
)
|
-0.1
|
%
|
-
|
-
|
||||||||||||||||||||||
Operating income (loss)
|
6.0
|
1.7
|
%
|
13.7
|
4.2
|
%
|
19.2
|
1.9
|
%
|
(6.8
|
)
|
-0.7
|
%
|
|||||||||||||||||||
Interest expense
|
(4.5
|
)
|
-1.3
|
%
|
(2.7
|
)
|
-0.8
|
%
|
(10.5
|
)
|
-1.0
|
%
|
(8.2
|
)
|
-0.8
|
%
|
||||||||||||||||
Other expense – net
|
(0.3
|
)
|
-0.1
|
%
|
(0.4
|
)
|
-0.1
|
%
|
(0.6
|
)
|
-0.1
|
%
|
(0.5
|
)
|
-
|
|||||||||||||||||
Earnings (loss) before income taxes
|
1.2
|
0.3
|
%
|
10.6
|
3.2
|
%
|
8.1
|
0.8
|
%
|
(15.5
|
)
|
-1.5
|
%
|
|||||||||||||||||||
Benefit (provision) for income taxes
|
0.7
|
0.2
|
%
|
(2.4
|
)
|
-0.7
|
%
|
(1.3
|
)
|
-0.1
|
%
|
6.7
|
0.7
|
%
|
||||||||||||||||||
Net earnings (loss)
|
$
|
1.9
|
0.5
|
%
|
$
|
8.2
|
2.5
|
%
|
$
|
6.8
|
0.7
|
%
|
$
|
(8.8
|
)
|
-0.9
|
%
|
Americas
|
||||||||||||||||||||||||||||||||
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
123.4
|
100.0
|
%
|
$
|
137.1
|
100.0
|
%
|
$
|
389.4
|
100.0
|
%
|
$
|
440.4
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
105.1
|
85.2
|
%
|
114.4
|
83.5
|
%
|
330.2
|
84.8
|
%
|
367.6
|
83.5
|
%
|
||||||||||||||||||||
Gross profit
|
18.3
|
14.8
|
%
|
22.7
|
16.5
|
%
|
59.2
|
15.2
|
%
|
72.8
|
16.5
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
11.5
|
9.3
|
%
|
13.6
|
9.9
|
%
|
40.7
|
10.5
|
%
|
43.0
|
9.8
|
%
|
||||||||||||||||||||
Restructuring expenses
|
1.4
|
1.1
|
%
|
1.4
|
1.0
|
%
|
5.2
|
1.3
|
%
|
5.0
|
1.1
|
%
|
||||||||||||||||||||
Operating income
|
$
|
5.4
|
4.4
|
%
|
$
|
7.7
|
5.6
|
%
|
$
|
13.3
|
3.4
|
%
|
$
|
24.8
|
5.6
|
%
|
Europe
|
||||||||||||||||||||||||||||||||
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
119.8
|
100.0
|
%
|
$
|
126.1
|
100.0
|
%
|
$
|
389.7
|
100.0
|
%
|
$
|
385.0
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
101.3
|
84.6
|
%
|
108.9
|
86.3
|
%
|
329.9
|
84.7
|
%
|
338.0
|
87.8
|
%
|
||||||||||||||||||||
Gross profit
|
18.5
|
15.4
|
%
|
17.2
|
13.7
|
%
|
59.8
|
15.3
|
%
|
47.0
|
12.2
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
10.1
|
8.4
|
%
|
9.7
|
7.7
|
%
|
31.2
|
8.0
|
%
|
28.8
|
7.5
|
%
|
||||||||||||||||||||
Restructuring expenses (income)
|
0.1
|
0.1
|
%
|
(0.1
|
)
|
-
|
(0.2
|
)
|
-0.1
|
%
|
(0.1
|
)
|
-
|
|||||||||||||||||||
Gain on sale of facility
|
-
|
-
|
-
|
-
|
(1.2
|
)
|
-0.3
|
%
|
-
|
-
|
||||||||||||||||||||||
Operating income
|
$
|
8.3
|
6.9
|
%
|
$
|
7.6
|
6.0
|
%
|
$
|
30.0
|
7.7
|
%
|
$
|
18.3
|
4.8
|
%
|
Asia
|
||||||||||||||||||||||||||||||||
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
28.6
|
100.0
|
%
|
$
|
18.7
|
100.0
|
%
|
$
|
78.2
|
100.0
|
%
|
$
|
56.1
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
23.6
|
82.4
|
%
|
16.1
|
86.1
|
%
|
65.1
|
83.3
|
%
|
47.9
|
85.3
|
%
|
||||||||||||||||||||
Gross profit
|
5.0
|
17.6
|
%
|
2.6
|
13.9
|
%
|
13.1
|
16.7
|
%
|
8.2
|
14.7
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
2.4
|
8.4
|
%
|
2.7
|
14.2
|
%
|
8.2
|
10.4
|
%
|
9.1
|
16.3
|
%
|
||||||||||||||||||||
Operating income (loss)
|
$
|
2.6
|
9.2
|
%
|
$
|
(0.1
|
)
|
-0.3
|
%
|
$
|
4.9
|
6.3
|
%
|
$
|
(0.9
|
)
|
-1.6
|
%
|
Building HVAC
|
||||||||||||||||||||||||||||||||
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
47.2
|
100.0
|
%
|
$
|
50.9
|
100.0
|
%
|
$
|
132.8
|
100.0
|
%
|
$
|
141.0
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
31.9
|
67.6
|
%
|
33.6
|
66.0
|
%
|
95.7
|
72.1
|
%
|
97.7
|
69.2
|
%
|
||||||||||||||||||||
Gross profit
|
15.3
|
32.4
|
%
|
17.3
|
34.0
|
%
|
37.1
|
27.9
|
%
|
43.3
|
30.8
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
8.5
|
18.1
|
%
|
10.4
|
20.5
|
%
|
26.1
|
19.7
|
%
|
30.4
|
21.6
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.1
|
0.2
|
%
|
0.2
|
0.4
|
%
|
0.7
|
0.5
|
%
|
0.2
|
0.2
|
%
|
||||||||||||||||||||
Operating income
|
$
|
6.7
|
14.1
|
%
|
$
|
6.7
|
13.1
|
%
|
$
|
10.3
|
7.7
|
%
|
$
|
12.7
|
9.0
|
%
|
· |
Economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including, in particular, foreign currency exchange rate fluctuations, tariffs, inflation, changes in interest rates, recession and recovery therefrom, restrictions and uncertainty associated with crossborder trade, and, in particular, the continuing recovery and/or instability of certain markets in which we operate in China and North America, the continued deterioration in and weak forecasts for the Brazilian economy, and the general uncertainties about the impact of potential regulatory and/or policy changes, including those related to tax and trade, that may be implemented in the United States, as well as continuing uncertainty regarding the longer-term implications of “Brexit”;
|
· |
The impact of potential increases in commodity prices, including our ability to successfully manage our exposure and/or pass increasing prices of aluminum, copper, steel and stainless steel (nickel) on to customers, as well as the inherent lag in timing of such pass-through arrangements; and
|
· |
The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet environmental and/or energy standards and objectives.
|
· |
Our ability to integrate the former Luvata HTS operations into Modine, realize cost and revenue synergies in accordance with our expectations, and effectively manage any unanticipated risks that arise, while also maintaining appropriate focus on the rest of Modine’s business;
|
· |
The overall health and continually increasing price-down focus of our original equipment manufacturer customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major customers;
|
· |
Our ability to maintain current customer programs and compete effectively for new business, including our ability to offset or otherwise address increasing pricing pressures from competitors and price reduction and overall service pressures from customers, particularly in the face of macro-economic instability;
|
· |
Our ability to effectively and efficiently realize expected commercial and operational efficiencies and associated cost savings and other benefits associated with our Strengthen, Diversify and Grow transformational strategy;
|
· |
Unanticipated product or manufacturing difficulties or inefficiencies, including unanticipated program launch and product transfer challenges and warranty claims;
|
· |
Our ability to consistently obtain and retain profitable business in our Asia segment, and, in particular, in China;
|
· |
Unanticipated delays or modifications initiated by major customers with respect to product launches, product applications or requirements;
|
· |
Unanticipated problems with suppliers meeting our time, quantity, quality and price demands, and the overall health of our suppliers, particularly in light of some continuing economic challenges in areas of the world in which we and our suppliers operate;
|
· |
Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor pools, while also positioning ourselves geographically, so that we can continue to support our customers with the technical expertise and market-leading products they demand and expect from Modine;
|
· |
Our ability to complete the transition of our Washington, Iowa production to other facilities efficiently and effectively;
|
· |
Costs and other effects of the investigation and remediation of environmental contamination;
|
· |
Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith, not only for Modine’s current operations, but also for the recently-acquired Luvata HTS operations;
|
· |
Work stoppages or interference at our facilities or those of our major customers and/or suppliers; and
|
· |
Costs and other effects of unanticipated litigation, claims, or other obligations, including those associated with our acquisition of Luvata HTS, and the constant and increasing pressures associated with healthcare and insurance costs.
|
· |
Our ability to successfully increase our presence in and focus on the “industrial” markets, with our Building HVAC Systems and Commercial and Industrial Solutions businesses, without shifting attention away from the Vehicular Thermal Systems business, where we enjoy and desire to preserve a leading position; and
|
· |
Our ability to identify and execute additional growth and diversification opportunities following the Luvata HTS integration in order to position us for long-term success.
|
· |
Our ability to fund our global liquidity requirements efficiently for Modine’s current operations, particularly those in our Asia business segment, and meet our long-term commitments in the event of any unexpected disruption in or tightening of the credit markets or extended recessionary conditions in the global economy;
|
· |
Our ability to bring our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) back into our target range of 1.5-2.5x in an efficient manner following our acquisition of Luvata HTS;
|
· |
Costs arising from the integration of Luvata HTS and the timing and impact of purchase accounting adjustments;
|
· |
The impact of foreign currency exchange rate fluctuations, particularly the value of the euro, Brazilian real, and British pound, relative to the U.S. dollar; and
|
· |
Our ability to effectively realize the benefits of tax assets in various jurisdictions in which we operate.
|
(a)
|
Exhibits:
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
4.1
|
Third Amended and Restated Credit Agreement dated as of November 15, 2016, with JPMorgan Chase Bank, N.A. as Administrative Agent and Collateral Agent, Bank of Montreal, U.S. Bank National Association and Wells Fargo Bank, National Association as Syndication Agents, and Bank of America, N.A. and PNC Bank, National Association as Senior Managing Agent.
|
Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated November 15, 2016 (“November 15, 2016 8-K”)
|
|
4.2
|
Amended and Restated Note Purchase and Private Shelf Agreement dated as of November 15, 2016, with PGIM, Inc. and each of the Purchasers described therein relating to the $125,000,000 6.83% Secured Senior Notes, Series A, due August 12, 2020, the $50,000,000 5.75% Secured Senior Notes, Series B and Private Shelf Facility.
|
Exhibit 4.2 to November 15, 2016 8-K
|
|
Rule 13a-14(a)/15d-14(a) Certification of Thomas A. Burke, President and Chief Executive Officer.
|
X
|
||
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.
|
X
|
||
Section 1350 Certification of Thomas A. Burke, President and Chief Executive Officer.
|
X
|
||
Section 1350 Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.
|
X
|
||
101.INS
|
Instance Document
|
X
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
X
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
MODINE MANUFACTURING COMPANY
|
By: /s/ Michael B. Lucareli
|
Michael B. Lucareli, Vice President, Finance and Chief Financial Officer*
|
Date: February 7, 2017
|
1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2016;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 7, 2017
|
|
/s/ Thomas A. Burke
|
|
Thomas A. Burke
|
|
President and Chief Executive Officer
|
1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2016;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 7, 2017
|
|
/s/ Michael B. Lucareli
|
|
Michael B. Lucareli
|
|
Vice President, Finance and Chief Financial Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 7, 2017
|
|
/s/ Thomas A. Burke
|
|
Thomas A. Burke
|
|
President and Chief Executive Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 7, 2017
|
|
/s/ Michael B. Lucareli
|
|
Michael B. Lucareli
|
|
Vice President, Finance and Chief Financial Officer
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Feb. 02, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MODINE MANUFACTURING CO | |
Entity Central Index Key | 0000067347 | |
Current Fiscal Year End Date | --03-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,071,224 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2016 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract] | ||||
Net earnings (loss) | $ 1.9 | $ 8.2 | $ 6.8 | $ (8.8) |
Other comprehensive income (loss): | ||||
Foreign currency translation | (14.8) | (6.2) | (17.7) | (6.1) |
Defined benefit plans, net of income taxes of $0.4, $1.7, $1.3 and $14.3 million | 0.9 | 2.9 | 2.6 | 23.3 |
Total other comprehensive income (loss) | (13.9) | (3.3) | (15.1) | 17.2 |
Comprehensive income (loss) | (12.0) | 4.9 | (8.3) | 8.4 |
Comprehensive (income) loss attributable to noncontrolling interest | 0.4 | 0.0 | (0.1) | (0.1) |
Comprehensive income (loss) attributable to Modine | $ (11.6) | $ 4.9 | $ (8.4) | $ 8.3 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions |
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Dec. 31, 2016 |
Dec. 31, 2015 |
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Other comprehensive income (loss): | ||||
Defined benefit plans, tax | $ 0.4 | $ 1.7 | $ 1.3 | $ 14.3 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Dec. 31, 2016 |
Mar. 31, 2016 |
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Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.025 | $ 0.025 |
Preferred stock, shares authorized (in shares) | 16.0 | 16.0 |
Preferred stock, shares issued (in shares) | 0.0 | 0.0 |
Common stock, par value (in dollars per share) | $ 0.625 | $ 0.625 |
Common stock, shares authorized (in shares) | 80.0 | 80.0 |
Common stock, shares issued (in shares) | 51.8 | 49.0 |
Treasury stock at cost (in shares) | 1.7 | 1.6 |
General |
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General [Abstract] | |
General | Note 1: General The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States applied on a basis consistent with those principles used in the preparation of the annual consolidated financial statements of Modine Manufacturing Company (“Modine” or the “Company”) for the fiscal year ended March 31, 2016. The financial statements include all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first nine months of fiscal 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes in Modine's Annual Report on Form 10-K for the year ended March 31, 2016. Acquisition of Luvata HTS On November 30, 2016, the Company completed the acquisition of 100% of the shares of multiple companies held by Luvata Heat Transfer Solutions II AB, a company incorporated in Sweden. Combined, these acquired companies represent the Luvata Heat Transfer Solutions (“Luvata HTS”) business. This transaction is described in Note 2. Airedale Facility Fire In September 2013, a fire caused significant destruction to the Company’s Airedale manufacturing facility and offices in Rawdon (Leeds), United Kingdom. The Company reports Airedale’s financial results within the Building HVAC (“BHVAC”) segment. There were no injuries caused by the fire. The Rawdon facility, which was leased, was used to manufacture cooling products and solutions for a variety of applications, including data centers, clean rooms, retail, leisure and process cooling. The Company suspended operations at the Rawdon site as a result of the fire; however, it transferred operations to temporary facilities while it rebuilt the leased facility. The Company completed the reconstruction and relocation to the Rawdon facility in fiscal 2016. The Company’s insurance covered damage to the leased facility, equipment, inventory, and other assets, as well as business interruption and lost profits, and recovery-related expenses caused by the fire. The Company received cash proceeds totaling $99.0 million from its insurance provider for covered losses and costs caused by the fire. The Company reported the cash proceeds received in the same statement of operations line as the related losses and costs. New Accounting Guidance In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences. This guidance is effective for the Company’s first quarter of fiscal 2018. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. In February 2016, the FASB issued new comprehensive lease accounting guidance that supersedes existing lease accounting guidance. Upon adoption of this new guidance, the Company will be required to recognize most leases on its balance sheet. This guidance is effective for the Company’s first quarter of fiscal 2020. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. In May 2014, the FASB issued new guidance that outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the new guidance is that companies are to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about revenue arising from contracts with customers. This new guidance is effective for the Company’s first quarter of fiscal 2019. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. |
Acquisition of Luvata HTS |
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Acquisition of Luvata HTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Luvata HTS | Note 2: Acquisition of Luvata HTS On November 30, 2016, the Company acquired a 100% ownership interest in the Luvata HTS business for consideration totaling $415.6 million ($388.2 million, net of cash acquired). The purchase price included 2.2 million Modine common shares. The Company estimated the fair value of the common shares to be $24.3 million at November 30, 2016, which reflects a requirement that the recipients hold the shares for a minimum of one year. The issuance of these 2.2 million shares resulted in increases to common stock and additional paid-in capital of $1.4 million and $22.9 million, respectively. Luvata HTS is a leading global supplier of coils, coolers and coatings to the heating, ventilation, air conditioning, and refrigeration (“HVAC&R”) industry. Luvata HTS’s products cover a broad range of heat exchanger coils, commercial refrigeration and industrial coolers, and anti-corrosion coating solutions. The Company’s acquisition of Luvata HTS addresses, in particular, both the “Diversify” and “Grow” commitments of its transformational Strengthen, Diversify and Grow strategy launched in fiscal 2016. This acquisition provides Modine with an expanded industrial business portfolio, broader customer base, and reduced cyclical exposure. The Company reports the financial results of Luvata HTS as the Commercial and Industrial Solutions (“CIS”) segment. For both the three and nine months ended December 31, 2016, the Company included $34.7 million of net sales and an operating loss of $0.3 million within its consolidated statements of operations attributable to one month of CIS operations. During the three and nine months ended December 31, 2016, the Company recorded $7.2 million and $11.6 million, respectively, of costs incurred directly related to the acquisition and integration of Luvata HTS as selling, general and administrative (“SG&A”) expenses within the consolidated statements of operations. These costs principally consisted of fees for i) transaction advisors, ii) legal, accounting, and other professional services, and iii) incremental costs directly associated with integration activities. To fund a significant portion of the Luvata HTS purchase price, the Company entered into new credit agreements in November 2016. See Note 14 for additional information. For the December 31, 2016 condensed consolidated financial statements, the Company recorded assets acquired and liabilities assumed at their preliminary fair values as of the Luvata HTS acquisition date. The preliminary purchase price allocation, which is presented in the table below, is based on preliminary asset valuations and is subject to change when additional information is available. Changes to the preliminary values could be significant. At the time the December 31, 2016 financial statements were finalized, the Company was primarily awaiting additional information to determine and support assumptions used i) for asset valuations, including valuations of intangible assets and property, plant and equipment; ii) to determine the fair value of lease contracts; iii) to evaluate contingent liabilities, including reserves for possible environmental, legal, product warranty, and trade compliance matters; and iv) to evaluate deferred income taxes and income tax reserves. The Company’s preliminary allocation of the purchase price for its acquisition of Luvata HTS is as follows:
Preliminarily, the Company has allocated the excess of the purchase price over the net assets recognized to goodwill in the amount of $159.8 million, none of which the Company expects to be deductible for income tax purposes. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the acquisition includes Luvata HTS’s workforce and anticipated future cost and revenue synergies. Based upon preliminary asset valuations, the Company has estimated the total fair value of identifiable intangible assets to be $105.9 million, including customer relationship ($44.5 million), trade name ($43.4 million), and product technology ($18.0 million) intangible assets. The Company is in process of finalizing its intangible asset valuations and preliminarily estimates that these intangible assets will be amortized over a weighted-average useful life of approximately 12 to 14 years. The following unaudited supplemental pro forma information presents the Company’s consolidated results of operations as though the acquisition of Luvata HTS had occurred at the beginning of fiscal 2016. This pro forma financial information is presented for illustrative purposes only and is not considered to be indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated or the operating results that may be obtained in the future.
The supplemental pro forma financial information includes adjustments for: (i) estimated amortization and depreciation expense totaling approximately $3.0 million per quarter based upon the estimated fair values of acquired assets, (ii) estimated interest expense of approximately $3.0 to $4.0 million per quarter resulting from acquisition-related borrowings, and (iii) the estimated income tax impacts related to the pro forma adjustments, considering the statutory tax rates within the applicable jurisdictions. In addition, the pro forma financial information assumes that both $8.6 million of acquisition-related transaction costs, not including costs for integration-related activities, and an estimated $4.3 million total impact of inventory purchase accounting adjustments were incurred during the first quarter of fiscal 2016. The pro forma financial information does not reflect expected cost or revenue synergies. |
Fair Value Measurements |
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Fair Value Measurements [Abstract] | ||||||||||
Fair Value Measurements | Note 3: Fair Value Measurements Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy:
When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, fair value is based upon valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3. The carrying values of cash and cash equivalents, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair value due to the short-term nature of these instruments. The Company holds trading securities in a deferred compensation trust to fund obligations under Modine’s non-qualified deferred compensation plan. The securities’ fair values, which are recorded as other noncurrent assets, are determined based upon quoted prices from active markets and classified within Level 1 of the valuation hierarchy. The Company’s deferred compensation obligations, which are recorded as other noncurrent liabilities, are recorded at the fair values of the investments held by the trust. The fair values of the Company’s trading securities and deferred compensation obligations each totaled $3.4 million and $3.2 million at December 31, 2016 and March 31, 2016, respectively. The fair value of the Company’s long-term debt is disclosed in Note 14. |
Pensions |
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Pensions | Note 4: Pensions As a result of its acquisition of Luvata HTS, the Company acquired liabilities for pension plans in Italy, Austria, and the U.S. totaling $14.3 million representing the aggregate funded status of these plans. During the nine months ended December 31, 2016 and 2015, the Company contributed $6.3 million and $5.2 million, respectively, to its U.S. pension plans. Pension cost included the following components:
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Stock-Based Compensation |
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Stock-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Note 5: Stock-Based Compensation The Company’s stock-based incentive programs consist of the following: (1) a long-term incentive compensation program for officers and other executives that consists of restricted stock and stock options granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards and/or stock options for non-employee directors. Compensation cost is calculated based upon the fair value of the instrument at the time of grant, and is recognized as expense over the vesting period of the stock-based award. The Company recognized stock-based compensation cost of $2.6 million and $1.2 million for the three months ended December 31, 2016 and 2015, respectively. The Company recognized stock-based compensation cost of $6.1 million and $4.2 million for the nine months ended December 31, 2016 and 2015, respectively. The performance component of awards granted under the Company’s long-term incentive plan during the first quarter of fiscal 2017 is based upon a target three-year average consolidated return on average capital employed and three-year average revenue growth. The fair value of stock-based compensation awards granted during the nine months ended December 31, 2016 and 2015 were as follows:
The Company used the following assumptions in determining fair value for stock options:
As of December 31, 2016, unrecognized compensation cost related to non-vested stock-based compensation awards, which will be amortized over the remaining service periods, was as follows:
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Restructuring Activities |
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Restructuring Activities | Note 6: Restructuring Activities During fiscal 2017, the Company completed a voluntary retirement program for certain U.S. salaried employees and implemented targeted headcount reductions at several locations. These restructuring activities are part of the Company’s Strengthen, Diversify and Grow transformational initiative and support the objective of reducing operational and SG&A cost structures. During fiscal 2016, the Company announced a plan to close its Washington, Iowa manufacturing facility and recorded severance costs as a result. During the third quarter of fiscal 2017, the Company substantially completed the transfer of production from Washington to other Americas segment manufacturing facilities. Also during fiscal 2016, the Company completed the transfer of production from its McHenry, Illinois manufacturing facility, which is now closed. These restructuring activities reflect the Company’s focus on operating scale manufacturing facilities to improve overall competitiveness and profitability. Restructuring and repositioning expenses were as follows:
Other restructuring and repositioning expenses primarily consist of equipment transfer and plant consolidation costs. The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as follows:
During the second quarter of fiscal 2017, the Company sold a manufacturing facility in its Europe segment for cash proceeds of $4.3 million and recognized a gain of $1.2 million as a result. This facility was previously reported as an asset held for sale. At December 31, 2016 and March 31, 2016, assets held for sale, which consisted of facilities marketed for sale, totaled $5.6 million and $8.5 million, respectively, and were reported within other noncurrent assets. |
Other Income and Expense |
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Other Income and Expense | Note 7: Other Income and Expense Other income and expense consisted of the following:
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Income Taxes |
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Income Taxes [Abstract] | |
Income Taxes | Note 8: Income Taxes For the three months ended December 31, 2016 and 2015, the Company’s effective income tax rate was (58.3) percent and 22.6 percent, respectively. For the nine months ended December 31, 2016 and 2015, the Company’s effective income tax rate was 16.0 percent and 43.2 percent, respectively. The most significant factors impacting the effective tax rate for the three and nine months ended December 31, 2016, as compared with the prior-year periods, were changes in the valuation allowance related to certain foreign jurisdictions and changes in the mix of foreign and domestic earnings. At December 31, 2016, valuation allowances against deferred tax assets in certain foreign jurisdictions totaled $42.4 million and valuation allowances against certain U.S. deferred tax assets totaled $5.4 million, as it is more likely than not these assets will not be realized based upon historical financial results. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions until the need for a valuation allowance is eliminated. The need for a valuation allowance is eliminated when the Company determines it is more likely than not the deferred tax assets will be realized. The Company may release a portion (approximately $6.0 million) of its existing valuation allowance in a foreign jurisdiction in the fourth quarter of fiscal 2017 or in fiscal 2018, if the Company determines that it is more likely than not the deferred tax assets will be realized. Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. In fiscal 2016, the Company considered the pension settlement losses (see Note 4 for additional information) to be significant and infrequent; therefore, for the three and nine months ending December 31, 2015 it recorded discrete tax benefits from these losses of $0.5 million and $15.7 million, respectively. Additionally, the Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. In connection with the acquisition of Luvata HTS (see Note 2 for additional information), the Company recorded a preliminary estimate of $6.9 million for gross unrecognized tax benefits, including interest and penalties, which if recognized would impact the effective tax rate. Other than for any adjustments to finalize the fair value of assets and liabilities acquired in the acquisition of Luvata HTS, the Company does not anticipate a significant change in unrecognized tax benefits during the next twelve months. |
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Earnings Per Share | Note 9: Earnings Per Share The components of basic and diluted earnings per share were as follows:
For the three and nine months ended December 31, 2016, the calculation of diluted earnings per share excluded 0.9 million and 1.0 million stock options, respectively, because they were anti-dilutive. For the three and nine months ended December 31, 2015, the calculation of diluted earnings per share excluded 1.0 million and 0.9 million stock options, respectively, because they were anti-dilutive. For the nine months ended December 31, 2015, the total number of potential dilutive securities was 0.4 million. However, these securities were not included in the computation of diluted net loss per share since to do so would decrease the loss per share. |
Inventories |
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Inventories | Note 10: Inventories Inventories consisted of the following:
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Property, Plant and Equipment |
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Property, Plant and Equipment | Note 11: Property, Plant and Equipment Property, plant and equipment consisted of the following:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Note 12: Goodwill and Intangible Assets Changes in the carrying amount of goodwill were as follows:
Intangible assets consisted of the following:
The intangible asset values as of December 31, 2016 include the Company’s preliminary estimated fair values of acquired intangible assets resulting from the Luvata HTS acquisition. See Note 2 for additional information. The Company recorded amortization expense of $1.1 million and $0.4 million for the three months ended December 31, 2016 and 2015, respectively. The Company recorded amortization expense of $1.9 million and $1.2 million for the nine months ended December 31, 2016 and 2015, respectively. Estimated future amortization expense is as follows:
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Product Warranties |
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Product Warranties | Note 13: Product Warranties Changes in accrued warranty costs were as follows:
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Indebtedness |
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Indebtedness [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | Note 14: Indebtedness In November 2016, the Company entered into new credit agreements to fund a significant portion of its acquisition of Luvata HTS (see Note 2 for additional information). The Company executed an amended and restated credit agreement with a syndicate of banks that provides for both U.S. dollar- and euro-denominated term loan facilities and a multi-currency $175.0 million revolving credit facility expiring in November 2021, which replaced the Company’s then-existing revolver that would have expired in August 2018. Based upon the terms of the credit agreement and currency denomination, borrowings under both the term loans and revolving credit facilities bear interest at a variable rate, primarily either the London Interbank Offered Rate (“LIBOR”) or Euro Interbank Offered Rate (“EURIBOR”), plus 137.5 to 250 basis points (3.1 percent weighted-average at December 31, 2016) depending on the Company’s leverage ratio, as described below. At December 31, 2016, the Company’s term loan borrowings totaled $271.1 million, with repayments beginning in the fourth quarter of fiscal 2017 and continuing through fiscal 2022. Also in November 2016, the Company issued $50.0 million of 5.8 percent Senior Notes with repayments ending in fiscal 2027. Long-term debt consisted of the following:
Long-term debt matures as follows:
At December 31, 2016, the Company reported its revolving credit facility borrowings of $37.5 million as short-term debt on the consolidated balance sheet. At December 31, 2016, domestic letters of credit totaled $2.0 million, resulting in available borrowings under the Company’s revolving credit facility of $135.5 million. The Company also maintains credit agreements for its foreign subsidiaries, with outstanding short-term borrowings at December 31, 2016 and March 31, 2016 of $33.1 million and $28.6 million, respectively. At December 31, 2016, the Company’s foreign unused lines of credit totaled $20.0 million. In aggregate, the Company had total available lines of credit of $155.5 million at December 31, 2016. Provisions in the Company’s amended and restated credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various covenants and include certain cross-default clauses. Under its primary debt agreements in the U.S., the Company has provided liens on substantially all domestic assets. In addition, the term loans require prepayments, as defined in the credit agreement, in the event the Company’s annual excess cash flow exceeds defined levels or in the event of certain asset sales. The Company is also subject to a leverage ratio covenant, which requires the Company to limit its consolidated indebtedness, less a portion of its cash balance, both as defined by the credit agreement, to no more than three and one-quarter times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). As permitted by the credit agreements and in connection with the Company’s acquisition of Luvata HTS, this leverage ratio has been temporarily raised to no more than three and three-quarters times Adjusted EBITDA through the second quarter of fiscal 2018, and thereafter to no more than three and one-half times Adjusted EBITDA through the first quarter of fiscal 2019. The Company is also subject to an interest expense coverage ratio, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. The Company was in compliance with its debt covenants as of December 31, 2016. The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable maturities. At December 31, 2016 and March 31, 2016, the carrying value of Modine’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of approximately $174.0 million and $139.0 million, respectively. The fair value of the Senior Notes and term loans are categorized as Level 2 within the fair value hierarchy. Refer to Note 3 for the definition of a Level 2 fair value measurement. |
Contingencies and Litigation |
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Dec. 31, 2016 | |
Contingencies and Litigation [Abstract] | |
Contingencies and Litigation | Note 15: Contingencies and Litigation Environmental The United States Environmental Protection Agency has designated the Company as a potentially responsible party for remediation of three sites. These sites are: Auburn Incinerator, Inc./Lake Calumet Cluster (Illinois), Cam-Or (Indiana) and a scrap metal site known as Chemetco (Illinois). In addition, Modine is voluntarily participating in the care of an inactive landfill owned by the City of Trenton (Missouri). These sites are not Company-owned; however, they allegedly contain materials attributable to Modine from past operations. The percentage of material allegedly attributable to Modine is relatively low. Remediation of these sites is in various stages of administrative or judicial proceedings and includes recovery of past governmental costs and the costs of future investigations and remedial actions. The Company accrues for costs anticipated for the remedial settlement of the sites listed above if they are probable and can be reasonably determined. Costs anticipated for the remedial settlement of the sites listed above that are not probable or cannot be reasonably determined at this time have not been accrued; however, the Company does not believe any potential costs would be material to the Company’s financial position due to its relatively small portion of contributed materials. The Company has recorded environmental investigation and remediation accruals related to subsurface contamination at its former manufacturing facility in the Netherlands and groundwater contamination at its manufacturing facility in Brazil. In addition, the Company has recorded an environmental accrual for investigative work related to a previously-owned manufacturing facility in the United States, along with accruals for lesser environmental matters at certain other facilities in the United States. These accruals generally relate to facilities where past operations followed practices and procedures that were considered acceptable under then-existing regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance. In addition, the Company assumed certain environmental obligations as a result of the Luvata HTS acquisition. At both December 31, 2016 and March 31, 2016, the accruals for these environmental matters totaled $5.1 million. As additional information becomes available, the Company will re-assess the liabilities related to these matters and revise the estimated accruals, if necessary. Based upon currently available information, the Company believes the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject to inherent uncertainties, and unfavorable outcomes could occur, including significant monetary damages. During fiscal 2011, one of the adjacent businesses to the Company’s facility in Brazil filed suit against the Company’s subsidiary in Brazil (“Modine Brazil”), seeking remediation and certain other damages as a result of contamination allegedly attributable to its operations. The Company is defending this suit and believes that the ultimate outcome of this matter will not be material. During fiscal 2015, Brazil’s Administrative Council for Economic Defense (CADE) provided formal notice to Modine Brazil of an administrative investigation regarding alleged violations of Brazil’s antitrust regulations by Modine Brazil and certain of its employees during a period of time at least seven years prior to the notice. As of March 31, 2016, the Company accrued $2.8 million (BRL 10 million) related to this matter. During the second quarter of fiscal 2017, the Company increased this accrual to $4.7 million (BRL 15 million). As a result, the Company recorded a $1.6 million (BRL 5 million) charge within SG&A expenses. During the third quarter of fiscal 2017, the Company reached agreement to settle the matter with CADE for $4.6 million (BRL 15 million) and expects to remit payment in early fiscal 2018. Other Litigation In the normal course of business, the Company and its subsidiaries are named as defendants in various other lawsuits and enforcement proceedings by private parties, governmental agencies and/or others in which claims are asserted against Modine. In the opinion of management, the liabilities, if any, which may ultimately result from such lawsuits or proceedings are not expected to have a material adverse effect on the Company’s consolidated financial statements. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Note 16: Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss were as follows:
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Segment Information |
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Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Note 17: Segment Information Below is a summary of net sales, gross profit, operating income, and total assets by segment. The Company acquired Luvata HTS on November 30, 2016. The financial results of Luvata HTS are included in the Company’s condensed consolidated financial statements since the date of acquisition and are reported as the Commercial and Industrial Solutions (“CIS”) segment. The Luvata HTS acquisition is described in Note 2.
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General (Policies) |
9 Months Ended |
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Dec. 31, 2016 | |
General [Abstract] | |
New Accounting Guidance | New Accounting Guidance In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences. This guidance is effective for the Company’s first quarter of fiscal 2018. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. In February 2016, the FASB issued new comprehensive lease accounting guidance that supersedes existing lease accounting guidance. Upon adoption of this new guidance, the Company will be required to recognize most leases on its balance sheet. This guidance is effective for the Company’s first quarter of fiscal 2020. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. In May 2014, the FASB issued new guidance that outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the new guidance is that companies are to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about revenue arising from contracts with customers. This new guidance is effective for the Company’s first quarter of fiscal 2019. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. |
Acquisition of Luvata HTS (Tables) |
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Acquisition of Luvata HTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preliminary allocation of purchase price | The Company’s preliminary allocation of the purchase price for its acquisition of Luvata HTS is as follows:
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Supplemental proforma information | This pro forma financial information is presented for illustrative purposes only and is not considered to be indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated or the operating results that may be obtained in the future.
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Pensions (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pensions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of pension cost | Pension cost included the following components:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair market value of stock-based compensation awards | The fair value of stock-based compensation awards granted during the nine months ended December 31, 2016 and 2015 were as follows:
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Assumptions used in determining fair value of options | The Company used the following assumptions in determining fair value for stock options:
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Unrecognized compensation cost related to non-vested stock-based compensation awards | As of December 31, 2016, unrecognized compensation cost related to non-vested stock-based compensation awards, which will be amortized over the remaining service periods, was as follows:
|
Restructuring Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring costs | Restructuring and repositioning expenses were as follows:
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Changes in accrued severance | Changes in accrued severance were as follows:
|
Other Income and Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income and expense | Other income and expense consisted of the following:
|
Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of basic and diluted earnings per share | The components of basic and diluted earnings per share were as follows:
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||
Inventories | Inventories consisted of the following:
|
Property, Plant and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Property, plant and equipment | Property, plant and equipment consisted of the following:
|
Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill were as follows:
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Schedule of intangible assets | Intangible assets consisted of the following:
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Estimated future amortization expense | Estimated future amortization expense is as follows:
|
Product Warranties (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accrued warranty costs | Changes in accrued warranty costs were as follows:
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Indebtedness (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term indebtedness | Long-term debt consisted of the following:
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Maturities of long term debt and capital lease obligations | Long-term debt matures as follows:
|
Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive loss | Changes in accumulated other comprehensive loss were as follows:
|
Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales, gross profit, operating income and total assets by segment: | Below is a summary of net sales, gross profit, operating income, and total assets by segment. The Company acquired Luvata HTS on November 30, 2016. The financial results of Luvata HTS are included in the Company’s condensed consolidated financial statements since the date of acquisition and are reported as the Commercial and Industrial Solutions (“CIS”) segment. The Luvata HTS acquisition is described in Note 2.
|
General (Details) - USD ($) $ in Millions |
40 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Nov. 30, 2016 |
|
Loss by Fire [Member] | ||
Unusual of Infrequent Item [Line Items] | ||
Cash proceeds received from insurance provider | $ 99.0 | |
Luvata HTS [Member] | ||
Unusual of Infrequent Item [Line Items] | ||
Acquired ownership interest by the entity | 100.00% |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Fair Value Measurements [Abstract] | ||
Trading securities | $ 3.4 | $ 3.2 |
Deferred compensation obligations | $ 3.4 | $ 3.2 |
Pensions (Details) - Pension [Member] $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
Participant
|
|||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Aggregate funded status | $ 14.3 | $ 14.3 | ||||
Contributions by employer | 6.3 | $ 5.2 | ||||
Components of net periodic benefit cost [Abstract] | ||||||
Service cost | 0.1 | $ 0.1 | 0.4 | 0.4 | ||
Interest cost | 2.5 | 2.5 | 7.3 | 8.6 | ||
Expected return on plan assets | (3.1) | (3.1) | (9.2) | (11.8) | ||
Amortization of unrecognized net loss | 1.4 | 1.4 | 4.2 | 5.0 | ||
Settlements | [1] | 0.0 | 1.1 | 0.0 | 40.3 | |
Net periodic benefit cost | $ 0.9 | $ 2.0 | 2.7 | $ 42.5 | ||
Number of participants accepted lump-sum payout program | Participant | 2,000 | |||||
Amount paid for settlement lump-sum payout program | $ 62.4 | |||||
Selling, General and Administrative Expenses [Member] | ||||||
Components of net periodic benefit cost [Abstract] | ||||||
Settlements | 31.8 | 31.8 | ||||
Cost of Sales [Member] | ||||||
Components of net periodic benefit cost [Abstract] | ||||||
Settlements | $ 8.5 | $ 8.5 | ||||
|
Restructuring Activities (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2016 |
|
Restructuring and repositioning expenses [Abstract] | ||||||
Employee severance and related benefits | $ 0.1 | $ 0.9 | $ 2.2 | $ 2.6 | ||
Other restructuring and repositioning expenses | 1.5 | 0.7 | 3.8 | 2.6 | ||
Total | 1.6 | 1.6 | 6.0 | 5.2 | ||
Changes in accrued severance [Roll Forward] | ||||||
Beginning balance | 9.2 | 7.8 | 14.7 | 9.9 | ||
Additions | 0.1 | 0.9 | 2.2 | 2.6 | ||
Payments | (1.3) | (0.9) | (8.5) | (5.1) | ||
Effect of exchange rate changes | (0.5) | (0.2) | (0.9) | 0.2 | ||
Ending balance | 7.5 | $ 9.2 | 7.6 | 7.5 | 7.6 | |
Assets Held-for-Sale [Abstract] | ||||||
Assets held for sale | 5.6 | 5.6 | $ 8.5 | |||
Restructuring Cost and Reserve [Line Items] | ||||||
Cash proceeds from sale of assets | 4.3 | 0.2 | ||||
Gain on sale of assets | $ 0.0 | $ 0.0 | $ 1.2 | $ 0.0 | ||
Europe Segment [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Cash proceeds from sale of assets | 4.3 | |||||
Gain on sale of assets | $ 1.2 |
Other Income and Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|||
Other Income and Expense [Abstract] | ||||||
Equity in earnings of non-consolidated affiliate | $ 0.0 | $ 0.1 | $ 0.1 | $ 0.2 | ||
Interest income | 0.1 | 0.1 | 0.3 | 0.3 | ||
Foreign currency transactions | [1] | (0.4) | (0.6) | (1.0) | (1.0) | |
Total other expense - net | $ (0.3) | $ (0.4) | $ (0.6) | $ (0.5) | ||
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Taxes [Abstract] | ||||
Effective income tax rate | (58.30%) | 22.60% | 16.00% | 43.20% |
Valuation Allowance [Line Items] | ||||
Gross unrecognized tax benefits | $ 6.9 | |||
Pension [Member] | ||||
Valuation Allowance [Line Items] | ||||
Pension settlement loss, tax | $ 0.5 | $ 15.7 | ||
Foreign Tax Jurisdiction [Member] | ||||
Valuation Allowance [Line Items] | ||||
Deferred tax asset, valuation allowance | $ 42.4 | 42.4 | ||
Possible future release of valuation allowance against certain tax assets | 6.0 | 6.0 | ||
Domestic Tax Jurisdiction [Member] | ||||
Valuation Allowance [Line Items] | ||||
Deferred tax asset, valuation allowance | $ 5.4 | $ 5.4 |
Inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Inventories [Abstract] | ||
Raw materials and work in process | $ 115.3 | $ 79.5 |
Finished goods | 41.6 | 31.5 |
Total inventories | $ 156.9 | $ 111.0 |
Property, Plant and Equipment (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Property, plant and equipment [Abstract] | ||
Gross property, plant and equipment | $ 1,149.4 | $ 1,043.6 |
Accumulated depreciation | (703.2) | (705.0) |
Net property, plant and equipment | $ 446.2 | $ 338.6 |
Product Warranties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Changes in accrued warranty costs [Roll Forward] | ||||
Beginning balance | $ 8.4 | $ 10.0 | $ 8.3 | $ 10.4 |
Warranties recorded at time of sale | 1.4 | 1.3 | 3.9 | 3.9 |
Adjustments to pre-existing warranties | 0.1 | (0.2) | 0.0 | (0.1) |
Additions due to acquisition | 4.1 | 0.0 | 4.1 | 0.0 |
Settlements | (2.1) | (1.0) | (4.4) | (4.2) |
Effect of exchange rate changes | (0.3) | (0.2) | (0.3) | (0.1) |
Ending balance | $ 11.6 | $ 9.9 | $ 11.6 | $ 9.9 |
Contingencies and Litigation (Details) BRL in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2016
BRL
|
Dec. 31, 2016
USD ($)
Site
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
BRL
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2016
BRL
|
|
Environmental Matters [Abstract] | |||||||
Number of sites remediation considered for potentially responsible party | Site | 3 | ||||||
Reserves for environmental matters | $ | $ 5.1 | $ 5.1 | $ 5.1 | ||||
Legal Matters [Abstract] | |||||||
Minimum period of alleged violations of antitrust regulations | 7 years | ||||||
Selling, General and Administrative Expenses [Member] | |||||||
Legal Matters [Abstract] | |||||||
Litigation settlement expense | 1.6 | BRL 5.0 | |||||
CADE [Member] | |||||||
Legal Matters [Abstract] | |||||||
Litigation settlement expense | $ 4.6 | BRL 15.0 | |||||
Minimum [Member] | |||||||
Legal Matters [Abstract] | |||||||
Brazil legal matter | $ 4.7 | BRL 15.0 | $ 2.8 | BRL 10.0 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||
Accumulated Other Comprehensive Loss [Line Items] | |||||||
Beginning balance | $ 376.2 | ||||||
Other comprehensive income (loss) before reclassifications | $ (14.2) | $ (4.0) | (17.2) | $ (13.3) | |||
Reclassifications [Abstract] | |||||||
Amortization of unrecognized net loss | [1] | 1.3 | 2.5 | 3.9 | 45.3 | ||
Amortization of unrecognized prior service credit | [1] | (0.1) | (0.2) | ||||
Income taxes | (0.4) | (1.7) | (1.3) | (14.3) | |||
Total other comprehensive income (loss) | (13.3) | (3.3) | (14.6) | 17.5 | |||
Ending balance | 397.8 | 397.8 | |||||
Accumulated Other Comprehensive Income [Member] | |||||||
Accumulated Other Comprehensive Loss [Line Items] | |||||||
Beginning balance | (175.5) | (177.8) | (174.2) | (198.6) | |||
Reclassifications [Abstract] | |||||||
Ending balance | (188.8) | (181.1) | (188.8) | (181.1) | |||
Foreign Currency Translation [Member] | |||||||
Accumulated Other Comprehensive Loss [Line Items] | |||||||
Beginning balance | (39.0) | (40.3) | (36.0) | (40.7) | |||
Other comprehensive income (loss) before reclassifications | (14.2) | (6.2) | (17.2) | (5.8) | |||
Reclassifications [Abstract] | |||||||
Amortization of unrecognized net loss | [1] | 0.0 | 0.0 | 0.0 | 0.0 | ||
Amortization of unrecognized prior service credit | [1] | 0.0 | 0.0 | ||||
Income taxes | 0.0 | 0.0 | 0.0 | 0.0 | |||
Total other comprehensive income (loss) | (14.2) | (6.2) | (17.2) | (5.8) | |||
Ending balance | (53.2) | (46.5) | (53.2) | (46.5) | |||
Defined Benefit Plans [Member] | |||||||
Accumulated Other Comprehensive Loss [Line Items] | |||||||
Beginning balance | (136.5) | (137.5) | (138.2) | (157.9) | |||
Other comprehensive income (loss) before reclassifications | 0.0 | 2.2 | 0.0 | (7.5) | |||
Reclassifications [Abstract] | |||||||
Amortization of unrecognized net loss | [1] | 1.3 | 2.5 | 3.9 | 45.3 | ||
Amortization of unrecognized prior service credit | [1] | (0.1) | (0.2) | ||||
Income taxes | (0.4) | (1.7) | (1.3) | (14.3) | |||
Total other comprehensive income (loss) | 0.9 | 2.9 | 2.6 | 23.3 | |||
Ending balance | $ (135.6) | $ (134.6) | $ (135.6) | $ (134.6) | |||
|
Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2016 |
||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | $ 349.8 | $ 328.7 | $ 1,014.7 | $ 1,008.8 | ||||||
Gross profit | $ 58.7 | $ 58.6 | $ 168.4 | $ 161.3 | ||||||
Gross profit (% of sales) | 16.80% | 17.80% | 16.60% | 16.00% | ||||||
Operating income | $ 6.0 | $ 13.7 | $ 19.2 | $ (6.8) | ||||||
Total assets | 1,392.9 | 1,392.9 | $ 920.9 | |||||||
Pension [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Pension settlement loss | [1] | 0.0 | (1.1) | 0.0 | (40.3) | |||||
Cost of Sales [Member] | Pension [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Pension settlement loss | (8.5) | (8.5) | ||||||||
Selling, General and Administrative Expenses [Member] | Luvata HTS [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Acquisition and integration related costs | 7.2 | 11.6 | ||||||||
Selling, General and Administrative Expenses [Member] | Pension [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Pension settlement loss | (31.8) | (31.8) | ||||||||
Operating Segments [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 353.7 | 332.8 | 1,024.8 | 1,022.5 | ||||||
Gross profit | $ 61.5 | $ 59.8 | $ 173.6 | $ 171.3 | ||||||
Gross profit (% of sales) | 17.50% | 18.00% | 16.90% | 16.80% | ||||||
Operating income | $ 22.7 | $ 21.9 | $ 58.2 | $ 54.9 | ||||||
Operating Segments [Member] | Americas [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 123.4 | 137.1 | 389.4 | 440.4 | ||||||
Gross profit | $ 18.3 | $ 22.7 | $ 59.2 | $ 72.8 | ||||||
Gross profit (% of sales) | 14.80% | 16.50% | 15.20% | 16.50% | ||||||
Operating income | $ 5.4 | $ 7.7 | $ 13.3 | $ 24.8 | ||||||
Total assets | 263.3 | 263.3 | 267.2 | |||||||
Operating Segments [Member] | Europe [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 119.8 | 126.1 | 389.7 | 385.0 | ||||||
Gross profit | $ 18.5 | $ 17.2 | $ 59.8 | $ 47.0 | ||||||
Gross profit (% of sales) | 15.40% | 13.70% | 15.30% | 12.20% | ||||||
Operating income | $ 8.3 | $ 7.6 | $ 30.0 | $ 18.3 | ||||||
Total assets | 247.8 | 247.8 | 301.9 | |||||||
Operating Segments [Member] | Asia [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 28.6 | 18.7 | 78.2 | 56.1 | ||||||
Gross profit | $ 5.0 | $ 2.6 | $ 13.1 | $ 8.2 | ||||||
Gross profit (% of sales) | 17.60% | 13.90% | 16.70% | 14.70% | ||||||
Operating income | $ 2.6 | $ (0.1) | $ 4.9 | $ (0.9) | ||||||
Total assets | 103.5 | 103.5 | 104.0 | |||||||
Operating Segments [Member] | BHVAC [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 47.2 | 50.9 | 132.8 | 141.0 | ||||||
Gross profit | $ 15.3 | $ 17.3 | $ 37.1 | $ 43.3 | ||||||
Gross profit (% of sales) | 32.40% | 34.00% | 27.90% | 30.80% | ||||||
Operating income | $ 6.7 | $ 6.7 | $ 10.3 | $ 12.7 | ||||||
Total assets | 88.8 | 88.8 | 99.0 | |||||||
Operating Segments [Member] | CIS [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | 34.7 | 0.0 | 34.7 | 0.0 | ||||||
Gross profit | $ 4.4 | $ 0.0 | $ 4.4 | $ 0.0 | ||||||
Gross profit (% of sales) | 12.70% | 0.00% | 12.70% | 0.00% | ||||||
Operating income | $ (0.3) | $ 0.0 | $ (0.3) | $ 0.0 | ||||||
Total assets | 560.7 | 560.7 | 0.0 | |||||||
Corporate and Eliminations [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Net sales | (3.9) | (4.1) | (10.1) | (13.7) | ||||||
Gross profit | [2] | $ (2.8) | $ (1.2) | $ (5.2) | $ (10.0) | |||||
Gross profit (% of sales) | [2] | 0.00% | 0.00% | 0.00% | 0.00% | |||||
Operating income | [2] | $ (16.7) | $ (8.2) | $ (39.0) | $ (61.7) | |||||
Total assets | 128.8 | $ 128.8 | $ 148.8 | |||||||
Corporate and Eliminations [Member] | Cost of Sales [Member] | ||||||||||
Segment Reporting Information [Abstract] | ||||||||||
Inventory step-up cost | $ 2.9 | |||||||||
|
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