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
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large Accelerated Filer ☐
|
|
||
Non-accelerated Filer ☐
|
Smaller reporting company
|
||
Emerging growth company
|
PART I. FINANCIAL INFORMATION
|
|
|
1
|
||
23
|
||
34
|
||
34
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
35
|
||
35
|
||
|
36
|
|
37
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
Cost of sales
|
|
|
||||||||||||||
Gross profit
|
|
|
||||||||||||||
Selling, general and administrative expenses
|
|
|
||||||||||||||
Restructuring expenses
|
|
|
||||||||||||||
Impairment charges (reversals) – net
|
|
(
|
)
|
( |
) | |||||||||||
Loss on sale of assets
|
|
|
||||||||||||||
Operating income
|
|
|
||||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Other expense – net
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Earnings before income taxes
|
|
|
||||||||||||||
Provision for income taxes
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Net earnings
|
|
|
||||||||||||||
Net earnings attributable to noncontrolling interest
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Net earnings attributable to Modine
|
$
|
|
$
|
|
$ | $ | ||||||||||
Net earnings per share attributable to Modine shareholders:
|
||||||||||||||||
Basic
|
$
|
|
$
|
|
$ | $ | ||||||||||
Diluted
|
$
|
|
$
|
|
$ | $ | ||||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Basic
|
|
|
||||||||||||||
Diluted
|
|
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net earnings
|
$
|
|
$
|
|
$ | $ | ||||||||||
Other comprehensive income (loss), net of income taxes:
|
||||||||||||||||
Foreign currency translation
|
|
(
|
)
|
( |
) | ( |
) | |||||||||
Defined
benefit plans
|
|
|
||||||||||||||
Cash
flow hedges
|
|
|
( |
) | ( |
) | ||||||||||
Total other comprehensive income (loss)
|
|
(
|
)
|
( |
) | |||||||||||
Comprehensive income (loss)
|
|
|
||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(
|
)
|
(
|
)
|
( |
) | ||||||||||
Comprehensive income (loss) attributable to Modine
|
$
|
|
$
|
|
$ | $ |
December 31, 2022
|
March 31, 2022
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Trade accounts receivable – net
|
|
|
||||||
Inventories
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property, plant and equipment – net
|
|
|
||||||
Intangible assets – net
|
|
|
||||||
Goodwill
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Other noncurrent assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Short-term debt
|
$
|
|
$
|
|
||||
Long-term debt – current portion
|
|
|
||||||
Accounts payable
|
|
|
||||||
Accrued compensation and employee benefits
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term debt
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Pensions
|
|
|
||||||
Other noncurrent liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (see Note 17)
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Treasury stock, at cost,
|
(
|
)
|
(
|
)
|
||||
Total Modine shareholders’ equity
|
|
|
||||||
Noncontrolling interest
|
|
|
||||||
Total equity
|
|
|
||||||
Total liabilities and equity
|
$
|
|
$
|
|
Nine months ended December 31,
|
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
|
$
|
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Impairment charges (reversals) – net
|
|
(
|
)
|
|||||
Loss on sale of assets
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
||||
Other – net
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
|
|
||||||
Inventories
|
(
|
)
|
(
|
)
|
||||
Accounts payable
|
(
|
)
|
|
|||||
Other assets and liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
Proceeds from (payments for) disposition of assets
|
|
(
|
)
|
|||||
Disbursements for loan origination (see Note 1)
|
( |
) | ||||||
Other – net
|
(
|
)
|
|
|||||
Net cash used for investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings of debt
|
|
|
||||||
Repayments of debt
|
(
|
)
|
(
|
)
|
||||
Borrowings (repayments) on bank overdraft facilities – net
|
|
(
|
)
|
|||||
Financing fees paid |
( |
) | ( |
) | ||||
Purchases of treasury stock under share repurchase program
|
(
|
)
|
|
|||||
Dividend paid to noncontrolling interest
|
(
|
)
|
(
|
)
|
||||
Other – net
|
|
(
|
)
|
|||||
Net cash provided by financing activities
|
|
|
||||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
||||
Net increase in cash, cash equivalents, and restricted cash
|
|
|
||||||
Cash, cash equivalents, and restricted cash – beginning of period
|
|
|
||||||
Cash, cash equivalents, and restricted cash – end of period
|
$
|
|
$
|
|
Common stock
|
Additional
paid-in
|
Retained
|
Accumulated
other
comprehensive
|
Treasury stock, at
|
Non-
controlling
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
capital
|
earnings
|
loss
|
cost
|
interest
|
Total
|
|||||||||||||||||||||||||
Balance, March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Stock options and awards
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Purchase of treasury stock
|
-
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Balance, June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Net earnings (loss)
|
-
|
( |
) | |||||||||||||||||||||||||||||
Other comprehensive loss
|
-
|
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
Stock options and awards
|
||||||||||||||||||||||||||||||||
Purchase of treasury stock
|
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
Balance, September 30, 2022
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
Net earnings
|
-
|
|||||||||||||||||||||||||||||||
Other comprehensive income
|
-
|
|||||||||||||||||||||||||||||||
Stock options and awards
|
||||||||||||||||||||||||||||||||
Purchase of treasury stock
|
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2022
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ |
Common stock
|
Additional
paid-in
|
Retained
|
Accumulated
other
comprehensive
|
Treasury stock, at
|
Non-
controlling
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
capital
|
earnings
|
loss
|
cost
|
interest
|
Total
|
|||||||||||||||||||||||||
Balance, March 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Stock options and awards
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Purchase of treasury stock
|
-
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Balance, June 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Net earnings
|
-
|
|||||||||||||||||||||||||||||||
Other comprehensive loss
|
-
|
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
Stock options and awards
|
||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
Balance, September 30, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
Net earnings
|
-
|
|||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
( |
) | ( |
) | |||||||||||||||||||||||||||
Stock options and awards
|
||||||||||||||||||||||||||||||||
Purchase of treasury stock
|
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ |
Three months ended December 31, 2022
|
Three months ended December 31, 2021
|
|||||||||||||||||||||||
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
Product groups:
|
||||||||||||||||||||||||
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
HVAC & refrigeration
|
||||||||||||||||||||||||
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Geographic location:
|
||||||||||||||||||||||||
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Europe
|
|
|
|
|
|
|
||||||||||||||||||
Asia
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine months ended December 31, 2022
|
Nine
months ended December 31, 2021
|
|||||||||||||||||||||||
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
Product groups:
|
||||||||||||||||||||||||
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
HVAC & refrigeration
|
|
|
|
|
|
|
||||||||||||||||||
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Geographic location:
|
||||||||||||||||||||||||
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Europe
|
|
|
|
|
|
|
||||||||||||||||||
Asia
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31, 2022
|
March 31, 2022
|
||||||
Contract assets
|
$
|
|
$
|
|
||||
Contract liabilities
|
|
|
• |
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,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest cost
|
|
|
|
|
||||||||||||
Expected return on plan assets
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Amortization of unrecognized net loss
|
|
|
|
|
||||||||||||
Net periodic benefit cost
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine months ended December 31, |
||||||||||||||||
2022 | 2021 | |||||||||||||||
Fair Value | Fair Value | |||||||||||||||
Shares
|
Per Award
|
Shares |
Per Award
|
|||||||||||||
Stock options
|
|
$
|
|
$ | ||||||||||||
Restricted stock awards
|
|
$
|
|
$ | ||||||||||||
Unrestricted stock awards |
$ |
Nine months ended December 31, |
||||||||
2022 |
2021 | |||||||
Expected life of awards in years
|
|
|||||||
Risk-free interest rate
|
|
%
|
% | |||||
Expected volatility of the Company’s stock
|
|
%
|
% | |||||
Expected dividend yield on the Company’s stock
|
|
%
|
% |
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
Stock options
|
$
|
|
|
|||||
Restricted stock awards
|
|
|
||||||
Total
|
$
|
|
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Employee severance and related benefits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other restructuring and repositioning expenses
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Three months ended December 31,
|
||||||||
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Additions
|
|
|
||||||
Payments
|
(
|
)
|
(
|
)
|
||||
Reclassified from held for sale | ||||||||
Effect of exchange rate changes
|
|
(
|
)
|
|||||
Ending balance
|
$
|
|
$
|
|
Nine months ended December 31, | ||||||||
2022 |
2021 |
|||||||
Beginning balance | $ | $ | ||||||
Additions | ||||||||
Payments | ( |
) | ( |
) | ||||
Reclassified from held for sale | ||||||||
Effect of exchange rate changes | ( |
) | ( |
) | ||||
Ending balance | $ | $ |
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Foreign currency transactions (a)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net periodic benefit cost (b)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total other expense – net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|
(a) |
|
|
(b) |
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net earnings attributable to Modine
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted-average shares outstanding – basic
|
|
|
|
|
||||||||||||
Effect of dilutive securities
|
|
|
|
|
||||||||||||
Weighted-average shares outstanding – diluted
|
|
|
|
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Net earnings per share – basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net earnings per share – diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
March 31, 2022
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
|
December 31, 2022
|
March 31, 2022
|
||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|
||||||
Finished goods
|
|
|
||||||
Total inventories
|
$
|
|
$
|
|
December 31, 2022
|
March 31, 2022
|
|||||||
Land
|
$
|
|
$
|
|
||||
Buildings and improvements (
|
|
|
||||||
Machinery and equipment (
|
|
|
||||||
Office equipment (
|
|
|
||||||
Construction in progress
|
|
|
||||||
|
|
|||||||
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Net property, plant and equipment
|
$
|
|
$
|
|
Climate
Solutions
|
Performance
Technologies
|
Total
|
||||||||||
Goodwill, March 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Goodwill, December 31,
2022
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
March 31, 2022
|
|||||||||||||||||||||||
Gross | Net | Gross | Net | |||||||||||||||||||||
Carrying | Accumulated |
Intangible |
Carrying |
Accumulated |
Intangible |
|||||||||||||||||||
Value
|
Amortization
|
Assets
|
Value
|
Amortization
|
Assets
|
|||||||||||||||||||
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Trade names
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
Acquired technology
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
Total intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Three months ended December 31,
|
||||||||
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Warranties recorded at time of sale
|
|
|
||||||
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
Settlements
|
(
|
)
|
(
|
)
|
||||
Reclassified from held for sale |
||||||||
Effect of exchange rate changes
|
|
|
||||||
Ending balance
|
$
|
|
$
|
|
Nine months
ended December 31,
|
||||||||
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Warranties recorded at time of sale
|
|
|
||||||
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
Settlements
|
(
|
)
|
(
|
)
|
||||
Reclassified from held for sale |
||||||||
Effect of exchange rate changes
|
(
|
)
|
|
|||||
Ending balance
|
$
|
|
$
|
|
Balance Sheet Location
|
December 31, 2022
|
March 31, 2022
|
||||||||
Lease Assets
|
||||||||||
Operating lease ROU assets
|
|
$
|
|
$
|
|
|||||
Finance lease ROU assets (a)
|
|
|
|
|||||||
Lease Liabilities
|
||||||||||
Operating lease liabilities
|
|
$
|
|
$
|
|
|||||
Operating lease liabilities
|
|
|
|
|||||||
Finance lease liabilities
|
|
|
|
|||||||
Finance lease liabilities
|
|
|
|
(a) |
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Operating lease
expense (a)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Finance lease
expense:
|
||||||||||||||||
Depreciation of
ROU assets
|
|
|
|
|
||||||||||||
Interest on
lease liabilities
|
|
|
||||||||||||||
Total lease
expense
|
$
|
|
$
|
|
$
|
|
$
|
|
(a)
|
|
|
Fiscal year of
maturity
|
December 31, 2022
|
March 31, 2022
|
||||||
Term loans
|
|
$
|
|
$
|
|
||||
Revolving credit facility
|
|
|
|
||||||
|
|
|
|
||||||
|
|
|
|
||||||
Other (a)
|
|
|
|||||||
|
|
||||||||
Less: current portion
|
(
|
)
|
(
|
)
|
|||||
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
|||||
Total long-term debt
|
$
|
|
$
|
|
|
(a) |
|
Fiscal Year
|
||||
Remainder of 2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028 & beyond
|
|
|||
Total
|
$
|
|
Three months ended December 31, 2022
|
Nine months
ended December 31, 2022
|
|||||||||||||||||||||||||||||||
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||
Other comprehensive income (loss) before reclassifications
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
Reclassifications:
|
||||||||||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
Realized losses – net (b)
|
-
|
-
|
|
|
- | - | ||||||||||||||||||||||||||
Income taxes
|
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | |||||||||||||||||||||||
Total other comprehensive income (loss)
|
|
|
|
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) |
Three months ended December 31, 2021
|
Nine months
ended December 31, 2021
|
|||||||||||||||||||||||||||||||
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
Reclassifications:
|
||||||||||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
Realized gains – net (b)
|
- | - | ( |
) | ( |
) | - | - | ( |
) | ( |
) | ||||||||||||||||||||
Unrecognized net pension loss in disposed business (c)
|
- | - | - | - | ||||||||||||||||||||||||||||
Income taxes
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
Total other comprehensive income (loss)
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) |
(a) |
|
(b) |
|
(c) |
|
Three months ended December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
|||||||||||||||||||||||
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
Climate Solutions |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Performance Technologies |
||||||||||||||||||||||||
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
Nine months
ended December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
|||||||||||||||||||||||
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
Climate Solutions
|
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Performance Technologies
|
||||||||||||||||||||||||
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
Three months ended December 31,
|
Nine months
ended December 31,
|
|||||||||||||||||||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
$’s |
% of sales | $’s |
% of sales | $’s |
% of sales | $’s |
% of sales | |||||||||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||||||||||
Climate Solutions | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
Performance Technologies | % | % | % | % | ||||||||||||||||||||||||||||
Segment total
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
Corporate and eliminations
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||
Gross profit
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Operating income:
|
||||||||||||||||
Climate Solutions | $ |
$ | $ |
$ |
||||||||||||
Performance Technologies | ||||||||||||||||
Segment total
|
|
|
|
|
||||||||||||
Corporate and eliminations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Operating income
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
March 31, 2022
|
|||||||
Assets:
|
||||||||
Climate Solutions | $ |
$ |
||||||
Performance Technologies | ||||||||
Other (a) |
||||||||
Total assets
|
$
|
|
$
|
|
(a)
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
560.0
|
100.0
|
%
|
$
|
502.2
|
100.0
|
%
|
$
|
1,679.8
|
100.0
|
%
|
$
|
1,475.7
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
462.4
|
82.6
|
%
|
427.6
|
85.1
|
%
|
1,402.6
|
83.5
|
%
|
1,261.6
|
85.5
|
%
|
||||||||||||||||||||
Gross profit
|
97.6
|
17.4
|
%
|
74.6
|
14.9
|
%
|
277.2
|
16.5
|
%
|
214.1
|
14.5
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
58.0
|
10.3
|
%
|
50.3
|
10.0
|
%
|
173.1
|
10.3
|
%
|
161.6
|
11.0
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.1
|
-
|
2.1
|
0.4
|
%
|
2.2
|
0.1
|
%
|
3.0
|
0.2
|
%
|
|||||||||||||||||||||
Impairment charges (reversals) – net
|
-
|
-
|
(57.2
|
)
|
-11.4
|
%
|
-
|
-
|
(55.7
|
)
|
-3.8
|
%
|
||||||||||||||||||||
Loss on sale of assets
|
-
|
-
|
-
|
-
|
-
|
-
|
6.6
|
0.4
|
%
|
|||||||||||||||||||||||
Operating income
|
39.5
|
7.1
|
%
|
79.4
|
15.8
|
%
|
101.9
|
6.1
|
%
|
98.6
|
6.7
|
%
|
||||||||||||||||||||
Interest expense
|
(5.9
|
)
|
-1.1
|
%
|
(3.8
|
)
|
-0.8
|
%
|
(14.7
|
)
|
-0.9
|
%
|
(11.8
|
)
|
-0.8
|
%
|
||||||||||||||||
Other expense – net
|
(0.4
|
)
|
-0.1
|
%
|
(1.1
|
)
|
-0.2
|
%
|
(4.1
|
)
|
-0.2
|
%
|
(1.6
|
)
|
-0.1
|
%
|
||||||||||||||||
Earnings before income taxes
|
33.2
|
5.9
|
%
|
74.5
|
14.8
|
%
|
83.1
|
4.9
|
%
|
85.2
|
5.8
|
%
|
||||||||||||||||||||
Provision for income taxes
|
(8.5
|
)
|
-1.5
|
%
|
(0.1
|
)
|
-
|
(19.8
|
)
|
-1.2
|
%
|
(7.4
|
)
|
-0.5
|
%
|
|||||||||||||||||
Net earnings
|
$
|
24.7
|
4.4
|
%
|
$
|
74.4
|
14.8
|
%
|
$
|
63.3
|
3.8
|
%
|
$
|
77.8
|
5.3
|
%
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
248.6
|
100.0
|
%
|
$
|
227.3
|
100.0
|
%
|
$
|
748.9
|
100.0
|
%
|
$
|
651.0
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
193.8
|
78.0
|
%
|
185.4
|
81.6
|
%
|
586.4
|
78.3
|
%
|
540.6
|
83.0
|
%
|
||||||||||||||||||||
Gross profit
|
54.8
|
22.0
|
%
|
41.9
|
18.4
|
%
|
162.5
|
21.7
|
%
|
110.4
|
17.0
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
24.6
|
9.9
|
%
|
23.6
|
10.4
|
%
|
72.3
|
9.7
|
%
|
67.0
|
10.3
|
%
|
||||||||||||||||||||
Restructuring expenses
|
-
|
-
|
1.5
|
0.6
|
%
|
0.3
|
-
|
1.7
|
0.3
|
%
|
||||||||||||||||||||||
Impairment charge
|
-
|
-
|
-
|
-
|
-
|
-
|
0.3
|
-
|
||||||||||||||||||||||||
Operating income
|
$
|
30.2
|
12.2
|
%
|
$
|
16.8
|
7.4
|
%
|
$
|
89.9
|
12.0
|
%
|
$
|
41.4
|
6.4
|
%
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
317.8
|
100.0
|
%
|
$
|
282.0
|
100.0
|
%
|
$
|
952.1
|
100.0
|
%
|
$
|
849.9
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
274.8
|
86.5
|
%
|
249.1
|
88.3
|
%
|
836.9
|
87.9
|
%
|
747.3
|
87.9
|
%
|
||||||||||||||||||||
Gross profit
|
43.0
|
13.5
|
%
|
32.9
|
11.7
|
%
|
115.2
|
12.1
|
%
|
102.6
|
12.1
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
25.5
|
8.0
|
%
|
23.4
|
8.3
|
%
|
72.2
|
7.6
|
%
|
73.4
|
8.6
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.1
|
-
|
0.6
|
0.2
|
%
|
1.9
|
0.2
|
%
|
1.3
|
0.2
|
%
|
|||||||||||||||||||||
Impairment reversals - net
|
-
|
-
|
(57.2
|
)
|
-20.3
|
%
|
-
|
-
|
(56.0
|
)
|
-6.6
|
%
|
||||||||||||||||||||
Operating income
|
$
|
17.4
|
5.5
|
%
|
$
|
66.1
|
23.5
|
%
|
$
|
41.1
|
4.3
|
%
|
$
|
83.9
|
9.9
|
%
|
• |
The impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, including rising energy costs, along with supply chain challenges, tariffs, sanctions and
other trade issues or cross-border trade restrictions (and any potential resulting trade war), and including impacts associated with the military conflict between Russia and Ukraine;
|
• |
The impact of other 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 foreign currency
exchange rate fluctuations; increases in interest rates; recession and recovery therefrom; and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade that have been or may be
implemented in the U.S. or abroad;
|
• |
The impact of potential further price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but not limited to, increases in the
underlying material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs, the behavior of our suppliers and
significant fluctuations in demand. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, including through our quotation process or through contract
provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions;
|
• |
Our ability to mitigate increased labor costs and labor shortages;
|
• |
The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers (and the supply chain), customers, and employees; 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.
|
• |
The impact of problems, including logistic and transportation challenges, associated with suppliers meeting our quantity, quality, price and timing demands, and the overall health of our suppliers, including their ability and willingness
to supply our volume demands if their production capacity becomes constrained;
|
• |
The overall health of and price-reduction pressure from our vehicular 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 relationships and compete effectively for new business, including our ability to achieve profit margins acceptable to us by offsetting or otherwise addressing any cost increases associated with
supply chain challenges and inflationary market conditions;
|
• |
The impact of product or manufacturing difficulties or operating inefficiencies, including program launch and product transfer challenges and warranty claims;
|
• |
The impact of delays or modifications initiated by major customers with respect to program launches, product applications or requirements;
|
• |
Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, 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 effectively and efficiently manage our cost structure in response to sales volume increases or decreases;
|
• |
Costs and other effects of the investigation and remediation of environmental contamination; including when related to the actions or inactions of others and/or facilities over which we have no control;
|
• |
Our ability to recruit and maintain talent, including personnel in managerial, leadership, operational and administrative functions, in light of tight global labor markets;
|
• |
Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;
|
• |
The impact of a substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;
|
• |
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;
|
• |
Work stoppages or interference at our facilities or those of our major customers and/or suppliers;
|
• |
The constant and increasing pressures associated with healthcare and associated insurance costs; and
|
• |
Costs and other effects of litigation, claims, or other obligations.
|
• |
Our ability to successfully realize anticipated benefits from strategic initiatives and our continued application of 80/20 principles across our business, through which we are focused on reducing complexity and growing businesses with
strong market drivers;
|
• |
Our ability to successfully execute and realize anticipated benefits from strategies, including restructuring activities, to reduce costs and improve operating margins; and
|
• |
The potential impacts from actions by activist shareholders, including disruption of our business and related costs.
|
• |
Our ability to fund our global liquidity requirements efficiently for our current operations and meet our long-term commitments in the event of disruption in or tightening of the credit markets or extended recessionary conditions in the
global economy;
|
• |
The impact of increases in interest rates in relation to our variable-rate debt obligations;
|
• |
The impact of changes in federal, state or local taxes that could have the effect of increasing our income tax expense;
|
• |
Our ability to comply with the financial covenants in our credit agreements, including our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) and our interest coverage ratio (Adjusted EBITDA divided
by interest expense, as defined in our credit agreements);
|
• |
The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
|
• |
Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
Total Number of
Shares Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Maximum Number (or
Approximate Dollar
Value) of Shares
that May Yet Be Purchased
Under the Plans or Programs (a)
|
October 1 – October 31, 2022
|
34,225 (b)
|
$13.06
|
_______
|
$47,359,156
|
November 1 – November 30, 2022
|
20,000 (c)
|
$20.80
|
20,000
|
$49,583,934
|
December 1 – December 31, 2022
|
90,866 (b)(c)
|
$20.87
|
80,000
|
$47,909,372
|
Total
|
145,091
|
$19.02
|
100,000
|
(a) |
Effective November 5, 2022, the Company’s Board of Directors authorized officers to repurchase up to $50.0 million of Modine common stock at such times and prices they deem appropriate. This authorization, which expires in November 2024,
replaced the previous repurchase program, which expired in early November 2022.
|
(b) |
Includes shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the
opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares.
|
(c) |
Includes shares acquired pursuant to the repurchase program described in (a) above.
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
Bylaws of Modine Manufacturing Company, as amended, effective January 19, 2023.
|
Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated January 19, 2023
|
||
Bylaws of Modine Manufacturing Company as amended, effective January 19, 2023 (marked version).
|
X
|
||
Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of November 21, 2022.
|
X
|
||
Rule 13a-14(a)/15d-14(a) Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
||
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
||
Section 1350 Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
||
Section 1350 Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
X
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema.
|
X
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
X
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
X
|
|
10.1.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
X
|
|
10.1.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
X
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
X
|