Wisconsin
|
1-1373
|
39-0482000
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification Number)
|
1500 DeKoven Avenue, Racine, Wisconsin
|
53403
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code:
|
(262) 636-1200
|
(Former name or former address, if changed since last report.)
|
N/A
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02 |
Results of Operations and Financial Condition
|
Item 9.01 |
Financial Statements and Exhibits
|
(d) |
Exhibits
|
99.1 |
Press Release dated August 1, 2017 announcing the results of operations and financial condition for the first quarter ended June 30, 2017.
|
Modine Manufacturing Company
|
|||
By:
|
/s/ Thomas A. Burke
|
||
Thomas A. Burke
|
|||
President and Chief Executive Officer
|
|||
Date: August 1, 2017
|
Exhibit No.
|
Exhibit Description
|
99.1 |
Press Release dated August 1, 2017 announcing the results of operations and financial condition for the first quarter ended June 30, 2017.
|
· |
Net sales of $515.5 million, up 48 percent from the prior year, including $157.5 million of sales from the recently acquired Commercial and Industrial Solutions (“CIS”) segment
|
· |
Non-CIS (“base business”) sales up 4 percent on a constant-currency basis
|
· |
Operating income of $27.6 million, up 75 percent from the prior year
|
· |
Adjusted operating income of $31.6 million, up 62 percent from the prior year
|
· |
Earnings per share of $0.34 and adjusted earnings per share of $0.39, up 89% and 70%, respectively, from the prior year.
|
· |
Americas segment sales were $148.3 million compared with $140.0 million one year ago, an increase of 6.0 percent. On a constant-currency basis, sales increased 5.0 percent year-over-year, primarily due to improved off-highway sales and stronger sales in Brazil. The segment reported operating income of $12.1 million, up $2.5 million from the prior year, primarily due to higher sales volume and lower restructuring expenses.
|
· |
Europe segment sales were $136.3 million compared with $146.0 million one year ago, a decrease of 6.6 percent. On a constant-currency basis, sales were down 4.3 percent, driven primarily by the planned wind-down of certain commercial vehicle programs. The segment reported operating income of $7.9 million as compared with $15.3 million in the prior year. This decrease was driven by higher material costs and lower sales volume.
|
· |
Asia segment sales were $35.4 million compared with $24.9 million one year ago, an increase of 42.2 percent. This increase was driven by higher sales to automotive customers in China and India and higher sales to off-highway customers in all our geographic markets as the excavator market continues to improve. Operating income of $3.3 million improved $1.8 million from the prior year, primarily due to higher sales volume.
|
· |
CIS segment sales were $157.5 million in the first quarter. The segment reported operating income of $10.8 million. In addition, the segment results include $3.2 million of intangible asset amortization expense and fixed asset step-up depreciation expense related to purchase accounting for the acquisition of Luvata HTS, which was completed on November 30, 2016.
|
· |
Building HVAC segment sales were $43.0 million compared with $39.9 million one year ago, an increase of 7.7 percent. On a constant-currency basis, sales were up 13.3 percent as compared with the prior year. This increase was due to higher sales of air conditioning, ventilation and heating products. Operating income of $3.1 million was up $2.2 million compared with the prior year, primarily a result of higher sales volume and lower SG&A expenses driven by cost-savings initiatives in the prior year.
|
· |
Full fiscal year-over-year sales up 25 to 30 percent;
|
· |
Adjusted EBITDA of $175 million to $185 million;
|
· |
Adjusted operating income of $100 million to $110 million; and
|
· |
Adjusted earnings per share of $1.20 to $1.35.
|
(In millions, except per share amounts) | ||||||||
Three months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Net sales
|
$
|
515.5
|
$
|
347.2
|
||||
Cost of sales
|
427.0
|
284.9
|
||||||
Gross profit
|
88.5
|
62.3
|
||||||
Selling, general & administrative expenses
|
59.2
|
44.2
|
||||||
Restructuring expenses
|
1.7
|
2.3
|
||||||
Operating income
|
27.6
|
15.8
|
||||||
Interest expense
|
(6.6
|
)
|
(3.0
|
)
|
||||
Other expense - net
|
(0.9
|
)
|
(0.9
|
)
|
||||
Earnings before income taxes
|
20.1
|
11.9
|
||||||
Provision for income taxes
|
(2.7
|
)
|
(3.0
|
)
|
||||
Net earnings
|
17.4
|
8.9
|
||||||
Net earnings attributable to noncontrolling interest
|
(0.4
|
)
|
(0.3
|
)
|
||||
Net earnings attributable to Modine
|
$
|
17.0
|
$
|
8.6
|
||||
Net earnings per share attributable to Modine shareholders - diluted:
|
$
|
0.34
|
$
|
0.18
|
||||
Weighted-average shares outstanding - diluted:
|
50.1
|
47.2
|
||||||
(In millions) | ||||||||
June 30, 2017
|
March 31, 2017
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
41.5
|
$
|
34.2
|
||||
Trade receivables
|
317.8
|
295.2
|
||||||
Inventories
|
180.2
|
168.5
|
||||||
Other current assets
|
61.4
|
55.4
|
||||||
Total current assets
|
600.9
|
553.3
|
||||||
Property, plant and equipment - net
|
473.0
|
459.0
|
||||||
Intangible assets - net
|
135.0
|
134.1
|
||||||
Goodwill
|
169.4
|
165.1
|
||||||
Deferred income taxes
|
111.7
|
108.4
|
||||||
Other noncurrent assets
|
30.2
|
29.6
|
||||||
Total assets
|
$
|
1,520.2
|
$
|
1,449.5
|
||||
Liabilities and shareholders' equity
|
||||||||
Debt due within one year
|
$
|
124.6
|
$
|
105.2
|
||||
Accounts payable
|
246.8
|
230.3
|
||||||
Other current liabilities
|
117.3
|
119.9
|
||||||
Total current liabilities
|
488.7
|
455.4
|
||||||
Long-term debt
|
406.0
|
405.7
|
||||||
Deferred income taxes
|
9.5
|
9.7
|
||||||
Other noncurrent liabilities
|
159.4
|
157.5
|
||||||
Total liabilities
|
1,063.6
|
1,028.3
|
||||||
Total equity
|
456.6
|
421.2
|
||||||
Total liabilities & equity
|
$
|
1,520.2
|
$
|
1,449.5
|
(In millions) | ||||||||
Three months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
17.4
|
$
|
8.9
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
18.5
|
12.5
|
||||||
Other - net
|
0.4
|
0.8
|
||||||
Net changes in operating assets and liabilities
|
(17.6
|
)
|
(20.6
|
)
|
||||
Net cash provided by operating activities
|
18.7
|
1.6
|
||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(21.6
|
)
|
(14.5
|
)
|
||||
Other - net
|
(0.8
|
)
|
1.1
|
|||||
Net cash used for investing activities
|
(22.4
|
)
|
(13.4
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Net increase in debt
|
11.4
|
9.3
|
||||||
Other - net
|
(1.8
|
)
|
(1.1
|
)
|
||||
Net cash provided by financing activities
|
9.6
|
8.2
|
||||||
Effect of exchange rate changes on cash
|
1.4
|
(1.2
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
7.3
|
(4.8
|
)
|
|||||
Cash and cash equivalents - beginning of period
|
34.2
|
68.9
|
||||||
Cash and cash equivalents - end of period
|
$
|
41.5
|
$
|
64.1
|
Segment operating results (unaudited) | ||||||||
(In millions)
|
||||||||
Three months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Net sales:
|
||||||||
Americas
|
$
|
148.3
|
$
|
140.0
|
||||
Europe
|
136.3
|
146.0
|
||||||
Asia
|
35.4
|
24.9
|
||||||
Commercial and Industrial Solutions
|
157.5
|
-
|
||||||
Building HVAC
|
43.0
|
39.9
|
||||||
Segment total
|
520.5
|
350.8
|
||||||
Corporate and eliminations
|
(5.0
|
)
|
(3.6
|
)
|
||||
Net sales
|
$
|
515.5
|
$
|
347.2
|
||||
Operating income:
|
||||||||
Americas
|
$
|
12.1
|
$
|
9.6
|
||||
Europe
|
7.9
|
15.3
|
||||||
Asia
|
3.3
|
1.5
|
||||||
Commercial and Industrial Solutions
|
10.8
|
-
|
||||||
Building HVAC
|
3.1
|
0.9
|
||||||
Segment total
|
37.2
|
27.3
|
||||||
Corporate and eliminations
|
(9.6
|
)
|
(11.5
|
)
|
||||
Operating income (a)
|
$
|
27.6
|
$
|
15.8
|
(a)
|
See the adjusted operating income reconciliation on the next page for information on acquisition and integration costs, restructuring expenses and other adjustments.
|
(In millions) | ||||||||
Three months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Operating income
|
$
|
27.6
|
$
|
15.8
|
||||
Acquisition and integration costs (a)
|
2.1
|
1.4
|
||||||
Restructuring expenses - Americas (b)
|
1.4
|
2.2
|
||||||
Restructuring expenses (income) - Europe(b)
|
0.3
|
(0.3
|
)
|
|||||
Restructuring expenses - Building HVAC (b)
|
-
|
0.4
|
||||||
Environmental charges (c)
|
0.2
|
-
|
||||||
Adjusted operating income
|
$
|
31.6
|
$
|
19.5
|
||||
Net earnings per share attributable to Modine shareholders - diluted:
|
$
|
0.34
|
$
|
0.18
|
||||
Acquisition and integration costs (a)
|
0.03
|
0.02
|
||||||
Restructuring expenses (b)
|
0.02
|
0.03
|
||||||
Environmental charges (c)
|
-
|
-
|
||||||
Adjusted earnings per share
|
$
|
0.39
|
$
|
0.23
|
||||
Net earnings
|
$
|
17.4
|
$
|
8.9
|
||||
Net earnings attributable to noncontrolling interest
|
(0.4
|
)
|
(0.3
|
)
|
||||
Interest expense
|
6.6
|
3.0
|
||||||
Provision for income taxes
|
2.7
|
3.0
|
||||||
Depreciation and amortization expense (d)
|
18.5
|
12.5
|
||||||
Acquisition and integration costs (a)
|
2.1
|
1.4
|
||||||
Restructuring expenses (b) (d)
|
1.7
|
2.1
|
||||||
Environmental charges (c)
|
0.2
|
-
|
||||||
Adjusted EBITDA
|
$
|
48.8
|
$
|
30.6
|
(a) |
On November 30, 2016, the Company acquired Luvata Heat Transfer Solutions and has since operated the business as its Commercial and Industrial Solutions segment. Acquisition and integration costs in fiscal 2018, recorded as SG&A expenses at Corporate, primarily consisted of
incremental costs directly associated with integration activities, including fees for third-party strategy consulting and accounting services and severance expenses. Acquisition costs in fiscal 2017 primarily consisted of due diligence costs. The tax benefit related to these acquisition and integration costs, for the three months ended June 30, 2017 and 2016 was $0.8 million and $0.6 million, respectively. |
(b) |
Restructuring amounts primarily relate to equipment transfer and plant consolidation costs and employee severance expenses.
|
(c) |
Adjustment relates to environmental charges and related legal costs associated with a previously-owned manufacturing facility in the Americas segment.
|
(d) |
Fiscal 2017 restructuring expenses included accelerated depreciation totaling of $0.2 million, which is included within depreciation expense for this schedule and the cash flow statement.
|
(In millions) | ||||||||
June 30, 2017
|
March 31, 2017
|
|||||||
Debt due within one year
|
$
|
124.6
|
$
|
105.2
|
||||
Long-term debt
|
406.0
|
405.7
|
||||||
Total debt
|
530.6
|
510.9
|
||||||
Less: cash and cash equivalents
|
41.5
|
34.2
|
||||||
Net debt
|
$
|
489.1
|
$
|
476.7
|
(In millions) | ||||||||
Three months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Net cash provided by operating activities
|
$
|
18.7
|
$
|
1.6
|
||||
Expenditures for property, plant and equipment
|
(21.6
|
)
|
(14.5
|
)
|
||||
Free cash flow
|
$
|
(2.9
|
)
|
$
|
(12.9
|
)
|
||
Payments for restructuring, acquisition and integration costs, and certain other expenses (a)
|
11.9
|
6.3
|
||||||
Adjusted free cash flow
|
$
|
9.0
|
$
|
(6.6
|
)
|
(a)
|
During the first quarter of fiscal 2018, the Company paid $4.9 million for legal and environmental charges, primarily related to the settlement of a legal matter in Brazil, $4.5 million for restructuring activities, including severance, and $2.5 million for acquisition and integration costs.
|
(In millions) | ||||||||||||||||
Three months ended June 30,
|
||||||||||||||||
2017
|
2016
|
|||||||||||||||
Net Sales
|
Effect of exchange
rate changes
|
Net sales -
constant currency |
Net Sales
|
|||||||||||||
Americas
|
$
|
148.3
|
$
|
(1.3
|
)
|
$
|
147.0
|
$
|
140.0
|
|||||||
Europe
|
136.3
|
3.4
|
139.7
|
146.0
|
||||||||||||
Asia
|
35.4
|
0.6
|
36.0
|
24.9
|
||||||||||||
Commercial and Industrial Solutions
|
157.5
|
-
|
157.5
|
-
|
||||||||||||
Building HVAC
|
43.0
|
2.2
|
45.2
|
39.9
|
||||||||||||
Segment total
|
520.5
|
4.9
|
525.4
|
350.8
|
||||||||||||
Corporate and eliminations
|
(5.0
|
)
|
(0.2
|
)
|
(5.2
|
)
|
(3.6
|
)
|
||||||||
Net sales
|
$
|
515.5
|
$
|
4.7
|
$
|
520.2
|
$
|
347.2
|
Previously reported fiscal 2017 segment operating income (unaudited)
|
(In millions)
|
|||||||||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
June 30, 2016
|
September 30, 2016
|
December 31, 2016
|
March 31, 2017
|
March 31, 2017
|
||||||||||||||||
Operating income:
|
||||||||||||||||||||
Americas
|
$
|
9.3
|
$
|
(1.4
|
)
|
$
|
5.4
|
$
|
13.4
|
$
|
26.7
|
|||||||||
Europe
|
15.0
|
6.7
|
8.3
|
7.1
|
37.1
|
|||||||||||||||
Asia
|
1.5
|
0.8
|
2.6
|
2.8
|
7.7
|
|||||||||||||||
Commercial and Industrial Solutions
|
-
|
-
|
(0.3
|
)
|
7.8
|
7.5
|
||||||||||||||
Building HVAC
|
0.9
|
2.7
|
6.7
|
2.8
|
13.1
|
|||||||||||||||
Segment total
|
26.7
|
8.8
|
22.7
|
33.9
|
92.1
|
|||||||||||||||
Corporate and eliminations
|
(11.6
|
)
|
(10.7
|
)
|
(16.7
|
)
|
(13.7
|
)
|
(52.7
|
)
|
||||||||||
Operating income (loss)
|
$
|
15.1
|
$
|
(1.9
|
)
|
$
|
6.0
|
$
|
20.2
|
$
|
39.4
|
Recast fiscal 2017 segment operating income (unaudited)
|
(In millions)
|
|||||||||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
June 30, 2016
|
September 30, 2016
|
December 31, 2016
|
March 31, 2017
|
March 31, 2017
|
||||||||||||||||
Operating income:
|
||||||||||||||||||||
Americas
|
$
|
9.6
|
$
|
(1.1
|
)
|
$
|
5.7
|
$
|
13.7
|
$
|
27.9
|
|||||||||
Europe
|
15.3
|
7.0
|
8.6
|
7.3
|
38.2
|
|||||||||||||||
Asia
|
1.5
|
0.8
|
2.6
|
2.8
|
7.7
|
|||||||||||||||
Commercial and Industrial Solutions
|
-
|
-
|
(0.3
|
)
|
7.8
|
7.5
|
||||||||||||||
Building HVAC
|
0.9
|
2.8
|
6.7
|
2.8
|
13.2
|
|||||||||||||||
Segment total
|
27.3
|
9.5
|
23.3
|
34.4
|
94.5
|
|||||||||||||||
Corporate and eliminations
|
(11.5
|
)
|
(10.6
|
)
|
(16.6
|
)
|
(13.5
|
)
|
(52.2
|
)
|
||||||||||
Operating income (loss)
|
$
|
15.8
|
$
|
(1.1
|
)
|
$
|
6.7
|
$
|
20.9
|
$
|
42.3
|