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
|
||
24
|
||
34
|
||
34
|
||
PART II. OTHER INFORMATION
|
||
35
|
||
35
|
||
36
|
||
37
|
Three months ended
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
Cost of sales
|
|
|
||||||||||||||
Gross profit
|
|
|
||||||||||||||
Selling, general and administrative expenses
|
|
|
||||||||||||||
Restructuring expenses
|
|
|
||||||||||||||
Operating income
|
|
|
||||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Other income (expense) – net |
|
(
|
)
|
( |
) | ( |
) | |||||||||
Earnings before income taxes
|
|
|
||||||||||||||
Provision for income taxes
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Net earnings
|
|
|
||||||||||||||
Net (earnings) loss 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
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net earnings
|
$
|
|
$
|
|
$ | $ | ||||||||||
Other comprehensive income (loss), net of income taxes:
|
||||||||||||||||
Foreign currency translation
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Defined benefit
plans, net of income taxes of $
|
|
|
||||||||||||||
Cash flow
hedges, net of income taxes of ($
|
(
|
)
|
|
( |
) | ( |
) | |||||||||
Total other comprehensive income (loss)
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Comprehensive income (loss)
|
|
|
( |
) | ||||||||||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(
|
)
|
|
( |
) | |||||||||||
Comprehensive income (loss) attributable to Modine
|
$
|
|
$
|
|
$ | $ | ( |
) |
September 30, 2023
|
March 31, 2023
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Trade accounts receivable – net
|
|
|
||||||
Inventories
|
|
|
||||||
Assets held for sale |
||||||||
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
|
|
|
||||||
Liabilities held for sale |
||||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term debt
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Pensions
|
|
|
||||||
Other noncurrent liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (see Note 18)
|
||||||||
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
|
$
|
|
$
|
|
Six months ended September 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
|
$
|
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
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
|
(
|
)
|
(
|
)
|
||||
Payments for business acquisition |
( |
) | ||||||
Proceeds from disposition of assets |
||||||||
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
|
(
|
)
|
|
|||||
Purchases of treasury stock under share repurchase program
|
(
|
)
|
(
|
)
|
||||
Dividend paid to noncontrolling interest
|
(
|
)
|
(
|
)
|
||||
Other – net
|
|
|
||||||
Net cash used for financing activities |
(
|
)
|
(
|
)
|
||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
||||
Net increase in cash, cash equivalents, restricted cash and cash held for sale |
|
|
||||||
Cash, cash equivalents, restricted cash and cash held for sale – beginning of period |
|
|
||||||
Cash, cash equivalents, restricted cash and cash held for sale – end of period |
$
|
|
$
|
|
|
Common stock
|
Additional paid-in
capital
|
Retained
earnings
|
Accumulated
other
comprehensive
loss
|
Treasury
stock, at
cost
|
Non- controlling
interest
|
Total
|
|||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance, March 31,
2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
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, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Stock options and awards
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Purchase of treasury stock |
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance, September 30,
2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
Common stock
|
Additional
paid-in
capital
|
Retained
earnings
|
Accumulated
other
comprehensive loss
|
Treasury
stock, at
cost
|
Non-
controlling
interest
|
Total
|
||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
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
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
Trade accounts receivable
|
$
|
|
||
Inventories
|
|
|||
Property, plant and equipment and other assets
|
|
|||
Intangible assets
|
|
|||
Goodwill
|
|
|||
Accounts payable and other liabilities
|
(
|
)
|
||
Purchase price
|
$
|
|
September 30, 2023
|
||||
ASSETS
|
||||
Cash and cash equivalents
|
$
|
|
||
Trade accounts receivables – net
|
|
|||
Inventories
|
|
|||
Other current assets
|
|
|||
Property, plant and equipment – net
|
|
|||
Other noncurrent assets
|
|
|||
Total assets held for sale
|
$
|
|
||
LIABILITIES
|
||||
Accounts payable
|
$
|
|
||
Accrued compensation and employee benefits
|
|
|||
Other current liabilities
|
|
|||
Pensions
|
|
|||
Other noncurrent liabilities
|
|
|||
Total liabilities held for sale
|
$
|
|
Three months ended September 30, 2023
|
Three months ended September 30, 2022
|
|||||||||||||||||||||||
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six months ended September 30, 2023
|
Six
months ended September 30, 2022
|
|||||||||||||||||||||||
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
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
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest cost
|
|
|
|
|
||||||||||||
Expected return on plan assets
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Amortization of unrecognized net loss
|
|
|
|
|
||||||||||||
Net periodic benefit cost
|
$
|
|
$
|
|
$
|
|
$
|
|
Six months ended September 30, |
||||||||||||||||
2023 |
2022 |
|||||||||||||||
Fair Value | Fair Value | |||||||||||||||
Shares
|
Per Award
|
Shares |
Per Award
|
|||||||||||||
Performance stock awards
|
|
$
|
|
|||||||||||||
Restricted stock awards
|
|
$
|
|
$ | ||||||||||||
Stock options | $ |
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
Performance stock awards | $ | |||||||
Restricted stock awards
|
|
|
|
|||||
Stock options
|
|
|
||||||
Total
|
$
|
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Employee severance and related benefits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other restructuring and repositioning expenses
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Three months ended September 30,
|
||||||||
2023
|
2022
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Additions
|
|
|
||||||
Payments
|
(
|
)
|
(
|
)
|
||||
Reclassified to held for sale | ( |
) | ||||||
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
Six months ended September 30, | ||||||||
2023 |
2022 |
|||||||
Beginning balance | $ | $ | ||||||
Additions | ||||||||
Payments | ( |
) | ( |
) | ||||
Reclassified to held for sale | ( |
) | ||||||
Effect of exchange rate changes | ( |
) | ( |
) | ||||
Ending balance | $ | $ |
Three months ended
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Foreign currency transactions (a)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net periodic benefit cost (b)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total other income (expense) – net
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|
(a) |
|
|
(b) |
|
Three months ended
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
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
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2023
|
March 31, 2023
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Cash held for sale | ||||||||
Total cash, cash equivalents, restricted cash and cash held for sale
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|
||||||
Finished goods
|
|
|
||||||
Total inventories
|
$
|
|
$
|
|
September 30, 2023
|
March 31, 2023
|
|||||||
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, 2023
|
$
|
|
$
|
|
$
|
|
||||||
Acquisition (disposition) (a)
|
|
(
|
)
|
|
||||||||
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Goodwill, September 30, 2023
|
$
|
|
$
|
|
$
|
|
|
(a) | |
September 30, 2023
|
March 31, 2023
|
|||||||||||||||||||||||
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 September 30,
|
||||||||
2023
|
2022
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Warranties recorded at time of sale
|
|
|
||||||
Adjustments to pre-existing warranties
|
|
(
|
)
|
|||||
Settlements
|
(
|
)
|
(
|
)
|
||||
Reclassified to held for sale | ( |
) | ||||||
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
Six months ended September 30,
|
||||||||
2023
|
2022
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Warranties recorded at time of sale
|
|
|
||||||
Adjustments to pre-existing warranties
|
|
(
|
)
|
|||||
Settlements
|
(
|
)
|
(
|
)
|
||||
Reclassified to held for sale | ( |
) | ||||||
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
Balance Sheet Location
|
September 30, 2023
|
March 31, 2023
|
||||||||
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
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Operating lease
expense (a)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Finance lease
expense:
|
||||||||||||||||
Depreciation of
ROU assets
|
|
|
|
|
||||||||||||
Interest on
lease liabilities
|
|
|
||||||||||||||
Total lease
expense
|
$
|
|
$
|
|
$
|
|
$
|
|
(a)
|
|
|
Fiscal year
of maturity
|
September 30, 2023
|
March 31, 2023
|
||||||
Term loans
|
|
$
|
|
$
|
|
||||
|
|
|
|
||||||
|
|
|
|
||||||
Other (a)
|
|
|
|||||||
|
|
||||||||
Less: current portion
|
(
|
)
|
(
|
)
|
|||||
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
|||||
Total long-term debt
|
$
|
|
$
|
|
|
(a) |
|
Fiscal Year
|
||||
Remainder of 2024
|
$
|
|
||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
2029 & beyond
|
|
|||
Total
|
$
|
|
Three months ended September 30, 2023
|
Six months ended September 30, 2023
|
|||||||||||||||||||||||||||||||
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)
|
-
|
-
|
(
|
)
|
(
|
)
|
- | - | ( |
) | ( |
) | ||||||||||||||||||||
Income taxes
|
(
|
)
|
|
(
|
)
|
( |
) | ( |
) | |||||||||||||||||||||||
Total other comprehensive income (loss)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ( |
) | |||||||||||||||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Three months ended September 30, 2022
|
Six months ended September 30, 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 gains – net (b)
|
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||
Income taxes
|
|
|
|
|
||||||||||||||||||||||||||||
Total other comprehensive income (loss)
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
(a) |
|
(b) |
|
Three months ended September 30,
|
||||||||||||||||||||||||
2023
|
2022
|
|||||||||||||||||||||||
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
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
Six months ended September 30,
|
||||||||||||||||||||||||
2023
|
2022
|
|||||||||||||||||||||||
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 September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||||||
$’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
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Operating income:
|
||||||||||||||||
Climate Solutions | $ |
$ | $ |
$ |
||||||||||||
Performance Technologies | ||||||||||||||||
Segment total
|
|
|
|
|
||||||||||||
Corporate and eliminations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Operating income
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2023
|
March 31, 2023
|
|||||||
Assets:
|
||||||||
Climate Solutions | $ |
$ |
||||||
Performance Technologies | ||||||||
Other (a) |
||||||||
Total assets
|
$
|
|
$
|
|
(a)
|
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||||||
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
620.5
|
100.0
|
%
|
$
|
578.8
|
100.0
|
%
|
$
|
1,242.9
|
100.0
|
%
|
$
|
1,119.8
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
485.4
|
78.2
|
%
|
482.6
|
83.4
|
%
|
979.9
|
78.8
|
%
|
940.2
|
84.0
|
%
|
||||||||||||||||||||
Gross profit
|
135.1
|
21.8
|
%
|
96.2
|
16.6
|
%
|
263.0
|
21.2
|
%
|
179.6
|
16.0
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
68.9
|
11.1
|
%
|
58.8
|
10.1
|
%
|
130.3
|
10.5
|
%
|
115.1
|
10.3
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.5
|
0.1
|
%
|
0.6
|
0.1
|
%
|
0.5
|
-
|
2.1
|
0.2
|
%
|
|||||||||||||||||||||
Operating income
|
65.7
|
10.6
|
%
|
36.8
|
6.4
|
%
|
132.2
|
10.6
|
%
|
62.4
|
5.6
|
%
|
||||||||||||||||||||
Interest expense
|
(6.1
|
)
|
-1.0
|
%
|
(4.7
|
)
|
-0.8
|
%
|
(12.0
|
)
|
-1.0
|
%
|
(8.8
|
)
|
-0.8
|
%
|
||||||||||||||||
Other income (expense) – net
|
0.1
|
-
|
(1.4
|
)
|
-0.3
|
%
|
(0.5
|
)
|
-
|
(3.7
|
)
|
-0.3
|
%
|
|||||||||||||||||||
Earnings before income taxes
|
59.7
|
9.6
|
%
|
30.7
|
5.3
|
%
|
119.7
|
9.6
|
%
|
49.9
|
4.5
|
%
|
||||||||||||||||||||
Provision for income taxes
|
(12.8
|
)
|
-2.1
|
%
|
(6.4
|
)
|
-1.1
|
%
|
(27.5
|
)
|
-2.2
|
%
|
(11.3
|
)
|
-1.0
|
%
|
||||||||||||||||
Net earnings
|
$
|
46.9
|
7.6
|
%
|
$
|
24.3
|
4.2
|
%
|
$
|
92.2
|
7.4
|
%
|
$
|
38.6
|
3.4
|
%
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||||||
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
275.8
|
100.0
|
%
|
$
|
255.9
|
100.0
|
%
|
$
|
547.6
|
100.0
|
%
|
$
|
500.3
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
204.0
|
74.0
|
%
|
198.6
|
77.6
|
%
|
406.8
|
74.3
|
%
|
392.6
|
78.5
|
%
|
||||||||||||||||||||
Gross profit
|
71.8
|
26.0
|
%
|
57.3
|
22.4
|
%
|
140.8
|
25.7
|
%
|
107.7
|
21.5
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
26.9
|
9.7
|
%
|
24.3
|
9.5
|
%
|
51.6
|
9.4
|
%
|
47.7
|
9.5
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.3
|
0.1
|
%
|
0.3
|
0.1
|
%
|
0.3
|
0.1
|
%
|
0.3
|
0.1
|
%
|
||||||||||||||||||||
Operating income
|
$
|
44.6
|
16.2
|
%
|
$
|
32.7
|
12.8
|
%
|
$
|
88.9
|
16.2
|
%
|
$
|
59.7
|
11.9
|
%
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||||||
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
351.7
|
100.0
|
%
|
$
|
330.0
|
100.0
|
%
|
$
|
710.6
|
100.0
|
%
|
$
|
634.3
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
288.9
|
82.2
|
%
|
290.8
|
88.1
|
%
|
589.2
|
82.9
|
%
|
562.1
|
88.6
|
%
|
||||||||||||||||||||
Gross profit
|
62.8
|
17.8
|
%
|
39.2
|
11.9
|
%
|
121.4
|
17.1
|
%
|
72.2
|
11.4
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
29.0
|
8.2
|
%
|
22.6
|
6.9
|
%
|
55.6
|
7.8
|
%
|
46.7
|
7.4
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.2
|
-
|
0.3
|
0.1
|
%
|
0.2
|
-
|
1.8
|
0.3
|
%
|
||||||||||||||||||||||
Operating income
|
$
|
33.6
|
9.6
|
%
|
$
|
16.3
|
4.9
|
%
|
$
|
65.6
|
9.2
|
%
|
$
|
23.7
|
3.7
|
%
|
• |
The impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, energy costs, supply chain challenges, tariffs, sanctions and other trade issues or
cross-border trade restrictions (and any potential resulting trade war), and military conflicts, including the current conflicts in Ukraine and in the Middle East;
|
• |
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 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 public health threats, such as COVID-19, on the national and global economy, our business, suppliers (and the supply chain), customers, and employees; and
|
• |
The impact of legislation, regulations, and government incentive programs, including those addressing climate change, on demand for our products and the markets we serve, 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 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,
including impacts associated with the recent United Auto Workers union strikes;
|
• |
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 any product or program launches, product transfer challenges and warranty claims;
|
• |
The impact of delays or modifications initiated by major customers with respect to product or 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 operations in response to sales volume changes, including maintaining adequate production capacity to meet demand in our growing businesses while also completing restructuring
activities and realizing the anticipated benefits thereof;
|
• |
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;
|
• |
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;
|
• |
Increasing emphasis by customers, investors, and employees on environmental, social and corporate governance matters may impose additional costs on us, adversely affect our reputation or expose us to new risks;
|
• |
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, including those that may be asserted against us in connection with divested businesses.
|
• |
Our ability to successfully realize anticipated benefits, including improved profit margins and cash flow, from strategic initiatives and our continued application of 80/20 principles across our businesses;
|
• |
Our ability to accelerate growth by identifying and executing on organic growth opportunities and acquisitions, and to efficiently and successfully integrate acquired businesses; 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.
|
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)
|
July 1 – July 31, 2023
|
_______
|
_______
|
_______
|
$45,372,391
|
|
||||
August 1 – August 31, 2023
|
1,222 (b)
|
$45.91
|
_______
|
$45,372,391
|
|
||||
September 1 – September 30, 2023
|
200,000 (c)
|
$45.01
|
200,000
|
$36,370,398
|
|
||||
Total
|
201,222
|
$45.02
|
200,000 |
(a) |
Effective November 5, 2022, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of Modine common stock at such times and prices that it deems to be appropriate. This authorization expires in
November 2024.
|
(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.
|
Item 5. |
Other Information.
|
(a)
|
Exhibits:
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
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
|
*
|
Executing as both the principal financial officer and a duly authorized officer of the Company
|