Modine Reports Third Quarter Fiscal 2013 Results; Continues European Restructuring; Affirms Guidance

  Modine Reports Third Quarter Fiscal 2013 Results; Continues European
  Restructuring; Affirms Guidance

Business Wire

RACINE, Wis. -- February 1, 2013

Modine Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported its financial
results for the third quarter ended December 31, 2012. Highlights include:

  *Sales of $326.1 million;
  *GAAP basis loss per share of $0.19;
  *Impairment and restructuring charges of $9.7 million; and
  *Earnings per share excluding impairment and restructuring charges of
    $0.02.

“Most of our end markets remain below prior year levels,” said Modine
President and Chief Executive Officer, Thomas A. Burke. “Although our revenues
are down, we aggressively managed our costs resulting in positive free cash
flow during the quarter. We are on track with our critically important
restructuring program in Europe, and expect to see benefits from this program
in the new fiscal year.”

Third Quarter Financial Results

Net sales in the third quarter of fiscal 2013 decreased $47.2 million, or 12.6
percent, from the third quarter of fiscal 2012. On a constant currency basis,
net sales decreased 10.2 percent from the prior year. Sales in Europe continue
to be impacted by the planned wind down of the non-strategic automotive module
business, while sales in all regions were affected by weak end market demand.
Gross profit decreased $11.9 million or 19.8 percent, resulting in a gross
margin of 14.8 percent, down 130 basis points from the prior year. The margin
decrease was largely due to lower sales volume. Selling, general and
administrative (SG&A) expense increased $1.6 million, or 3.9 percent,
primarily due to the impact of the reversal of a trade compliance-related
reserve in the prior year. The company recorded $8.3 million of impairment
charges and $1.4 million of restructuring expenses primarily related to the
ongoing restructuring in Europe. Operating income decreased $21.0 million to a
loss of $3.8 million as a result of lower gross profit and the $9.7 million of
impairment and restructuring charges. The net loss attributable to Modine of
$8.7 million compares to net earnings attributable to Modine of $9.0 million
for the same period last year, and represents a loss per share of $0.19 on a
GAAP basis. Earnings per share excluding impairment and restructuring charges
was $0.02, compared to $0.24 in the third quarter of last year.

Net debt was $131.8 million at December 31, 2012, a decrease of $1.1 million
from the end of fiscal 2012. Cash on hand at the end of the quarter was $32.9
million.

Third Quarter Segment Results

North America segment sales decreased 7.9 percent to $128.2 million compared
to $139.2 million one year ago. The decrease was driven primarily by lower
sales to off-highway customers as orders slowed during the quarter. Operating
income decreased $2.4 million, or 22.6 percent, to $8.2 million compared to
the prior year due to lower gross profit on the lower sales and higher SG&A
expense. SG&A was lower in the prior year due to the reversal of a $2.3
million trade compliance-related liability.

Europe segment sales decreased 17.3 percent to $115.7 million compared to
$139.9 million in the prior year. On a constant currency basis, sales
decreased 13.8 percent from the prior year primarily due to the planned wind
down of the automotive module business and lower sales to commercial vehicle
and off-highway customers. Market demand in Europe continued to be impacted by
weak economic conditions, affecting both mature programs and launch volumes.
The segment operating loss was $5.7 million during the quarter compared to
$6.8 million of operating income in the prior year. The decrease was primarily
due to $9.7 million of restructuring and impairment charges, including $8.3
million of non-cash asset impairment charges and $1.4 million of restructuring
costs.

South America segment sales decreased 24.9 percent to $31.7 million compared
to $42.2 million one year ago. On a constant currency basis, sales decreased
14.0 percent from the prior year. The decrease in sales was due to the
continued weakness in the commercial vehicle market following the pre-buy
ahead of the January 1, 2012 change in emissions standards in Brazil.
Operating income of $2.6 million was lower than the prior year by $1.4 million
due to lower gross profit on lower sales volume.

Asia segment sales decreased 36.8 percent to $13.2 million compared to $20.9
million one year ago due to lower sales to off-highway customers as production
schedules have been reduced in response to low demand and high field inventory
levels caused by weak economic conditions. The operating loss in the region
increased by $1.0 million to $2.5 million compared to a loss of $1.5 million
in the prior year, as a result of lower gross profit on the lower sales
volume.

Commercial Products segment sales increased 5.1 percent to $41.3 million
compared to $39.3 million one year ago due to an increase in chiller sales in
the UK, partially offset by a decrease in heating and cooling product sales in
North America. Gross margin was down on a year-over-year basis due to
unfavorable product mix changes. Operating income decreased $1.1 million from
the prior year to $4.7 million due primarily to changes in sales mix and
higher SG&A expense from the integration of the Geofinity business and other
spending to support future growth.

Outlook

“Our primary markets remained weak during the quarter, resulting in lower
volumes than we had originally expected,” Burke commented. “While we believe
that the commercial vehicle market is stabilizing in most regions, end market
demand and high inventory levels may keep production levels relatively low
during the next several quarters. We are confirming our guidance for fiscal
2013, with a narrowed band for earnings per share.”

The company has the following expectations for fiscal 2013, excluding
impairment and restructuring charges:

  *Year-over-year sales down 10 to 12 percent, including approximately $80
    million of planned program reductions;
  *Operating income margin in the range of 2.75 to 3.25 percent; and
  *Earnings per diluted share of $0.40 to $0.45.

“We are encouraged by industry projections for market recoveries later in
calendar 2013,” Burke commented. “With this in mind, we remain focused on cost
control, including our restructuring program in Europe, while also identifying
opportunities for profitable growth.”

Conference Call and Webcast

Modine will conduct a conference call and live webcast, with a slide
presentation, on Friday, February 1, 2013 at 8:00 a.m. Central Time (9:00 a.m.
Eastern Time) to discuss its fiscal 2013 third quarter results. The webcast
and accompanying slides will be available on the Investor Relations section of
the Modine website at www.modine.com. The dial-in phone number for the audio
portion of the call is 800.901.5241 (international dial-in 617.786.2963);
access code 98660400. Participants are encouraged to log on to the webcast and
conference call about ten minutes prior to the start of the event. A replay of
the audio and the slides will be available on the Investor Relations section
of the Modine website at www.modine.com after February 1, 2013. A call-in
replay will be available through midnight on February 8, 2013, at
888.286.8010, (international replay 617.801.6888); access code 88114390. The
company will furnish a transcript of the call to the U.S. Securities Exchange
Commission, and post it on its website, after February 6, 2013.

About Modine

Modine, with fiscal 2012 revenues of $1.6 billion, specializes in thermal
management systems and components, bringing highly engineered heating and
cooling technology and solutions to diversified global markets. Modine
products are used in light, medium and heavy-duty vehicles, heating,
ventilation and air conditioning equipment, off-highway and industrial
equipment and refrigeration systems. The company employs approximately 6,600
people at 30 facilities in 16 countries. For more information about Modine,
visit www.modine.com.

Forward-Looking Statements

This press release contains statements, including information about future
financial performance and market conditions, including the information
provided under "Outlook," accompanied by phrases such as “believes,”
“estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar
“forward-looking” statements, as defined in the Private Securities Litigation
Reform Act of 1995. Modine's actual results, performance or achievements may
differ materially from those expressed or implied in these statements because
of certain risks and uncertainties, including, but not limited to, those
described under “Risk Factors” in Item 1A of Part I of the company's Annual
Report on Form 10-K for the year ended March 31, 2012 and under
Forward-Looking Statements in Item 7 of Part II of that same report and in the
company’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2012
and September 30, 2012. Other risks and uncertainties include, but are not
limited to, the following: uncertainties regarding the costs and benefits of
Modine’s European restructuring program; the overall health of Modine’s
customers, particularly in light of continued weak economic conditions;
operational inefficiencies as a result of program launches and product
transfers; economic, social and political conditions, changes and challenges
in the markets where Modine operates and competes, including currency exchange
rate fluctuations (particularly the value of the euro and Brazilian real
relative to the U.S. dollar), tariffs, inflation, changes in interest rates,
recession, restrictions associated with importing and exporting and foreign
ownership, and in particular the continuing slow recovery of certain markets
in China and Brazil and the economic uncertainties in the European Union; the
impact on Modine of increases in commodity prices, particularly aluminum and
copper, and its ability to pass these prices on to customers and/or
successfully hedge associated risk; Modine's ability to successfully execute
its strategic and operational plans; the nature of the vehicular industry and
the dependence of this industry on the health of the economy; costs and other
effects of environmental remediation or litigation; the possibility that other
or more significant issues may be identified in the ongoing assessment of
errors in applying value added tax in the Europe segment; and other risks and
uncertainties identified by the company in public filings with the U.S.
Securities and Exchange Commission. The company does not assume any obligation
to update any forward-looking statements.

Financial Disclosures

Operating income excluding impairment and restructuring charges, earnings per
share excluding impairment and restructuring charges, constant currency, net
debt and free cash flow (which are defined below) as used in this press
release are not measures that are defined in generally accepted accounting
principles (GAAP). These non-GAAP measures are used by management as
performance measures to judge liquidity and the company’s overall performance.
These measures provide a more consistent view of performance than the closest
GAAP equivalent for management and investors. Management compensates for this
by using these measures in combination with the GAAP measures. However, these
measures are not, and should not be, viewed as substitutes for the GAAP
measures.

Definition – Operating income and earnings per share excluding impairment and
restructuring charges

Operating income (loss) or earnings per share plus impairment charges and
restructuring and repositioning expenses within the Europe segment. These are
measures of overall performance not including non-cash impairment charges and
costs associated with our restructuring program in Europe.

Definition – Constant currency

Constant currency translates financial data from foreign operations for a
period into U.S. Dollars using the same foreign currency exchange rates as
those used to translate financial data for the prior period. This measure
provides a more consistent indication of our performance, without the effects
of currency exchange rate fluctuations.

Definition - Net debt

The sum of debt due within one year and long-term debt, less cash on hand.
This is an indicator of the company's debt position after considering on hand
cash balances.

Definition - Free cash flow

Net cash provided by operating activities less expenditures for property,
plant and equipment. This is a measure of cash generated from operations
during the period that is available for strategic capital decisions.

                         - Financial tables follow -

                                                             
Modine Manufacturing Company
Consolidated statements of operations (unaudited)
(In millions, except per share amounts)
                                                                   
                    Three months ended December   Nine months ended December
                    31,                           31,
                    2012          2011*          2012            2011*
Net sales           $  326.1       $  373.3       $  1,016.4       $ 1,188.4
Cost of sales         277.9        313.2        863.9         996.1   
   Gross profit        48.2           60.1           152.5           192.3
Selling, general
& administrative       42.3           40.7           126.8           140.4
expenses
Impairment             8.3            2.2            25.1            2.2
charges
Restructuring and
repositioning         1.4          -            7.3           -       
expenses
   Operating           (3.8   )       17.2           (6.7     )      49.7
   (loss) income
Interest expense       (2.8   )       (2.9   )       (9.2     )      (9.2    )
Other expense -       (0.3   )      (1.6   )      -             (7.6    )
net
   (Loss)
   earnings from
   continuing          (6.9   )       12.7           (15.9    )      32.9
   operations
   before income
   taxes
Provision for         (1.5   )      (3.9   )      (5.3     )     (10.6   )
income taxes
   (Loss)
   earnings from       (8.4   )       8.8            (21.2    )      22.3
   continuing
   operations
Earnings from
discontinued          -            0.3          -             0.7     
operations (net
of income taxes)
   Net (loss)          (8.4   )       9.1            (21.2    )      23.0
   earnings
Less: Net
earnings
attributable to       (0.3   )      (0.1   )      (0.9     )     (0.1    )
noncontrolling
interest
   Net (loss)
   earnings         $  (8.7   )    $  9.0        $  (22.1    )    $ 22.9    
   attributable
   to Modine
                                                                   
                                                                   
(Loss) earnings
per share from
continuing
operations
attributable to
Modine
shareholders:
   Basic            $  (0.19  )    $  0.18        $  (0.47    )    $ 0.47
   Diluted          $  (0.19  )    $  0.18        $  (0.47    )    $ 0.47
                                                                   
Net (loss)
earnings per
share
attributable to
Modine
shareholders:
   Basic            $  (0.19  )    $  0.19        $  (0.47    )    $ 0.49
   Diluted          $  (0.19  )    $  0.19        $  (0.47    )    $ 0.49
                                                                   
Weighted average
shares
outstanding:
   Basic               46.7           46.5           46.6            46.5
   Diluted             46.7           46.8           46.6            46.9
                                                                   
                                                          
                                                                   
Condensed
consolidated
balance sheets
(unaudited)
                              (In
                                   millions)
                 December 31,  March 31,
                    2012           2012
Assets
Cash and cash       $  32.9        $  31.4
equivalents
Trade receivables      161.8          216.1
Inventories            121.4          120.8
Other current         59.3         59.2   
assets
   Total current      375.4        427.5  
   assets
Property, plant
and equipment -        359.4          412.1
net
Other noncurrent      64.8         53.9   
assets
   Total assets     $  799.6      $  893.5  
                                                                   
Liabilities and
shareholders'
equity
Debt due within     $  27.1        $  22.4
one year
Accounts payable       123.7          156.9
Other current         90.7         118.3  
liabilities
   Total current      241.5        297.6  
   liabilities
Long-term debt         137.6          141.9
Other noncurrent      117.7        127.9  
liabilities
   Total              496.8        567.4  
   liabilities
Total equity          302.8        326.1  
   Total
   liabilities &    $  799.6      $  893.5  
   equity
                                                                   
* Prior period results have been revised to reflect the correction of errors
identified in fiscal 2012 (quarter ended March 31, 2012).

                                                              
Modine Manufacturing Company
Condensed consolidated statements of cash flows (unaudited)
                                     (In
                                           millions)
Nine months
ended                       2012       2011*
December 31,
                                                                   
Cash flows
from
operating
activities:
Net (loss)                     $ (21.2 )   $ 23.0
earnings
Adjustments
to reconcile
net (loss)
earnings with
net cash
provided by
operating
activities:
Depreciation
and                              41.8        43.4
amortization
Impairment                       25.1        2.2
charges
Other - net                      9.2         15.0
Net changes
in operating                    (13.5 )   (65.3 )
assets and
liabilities
Net cash
provided by                     41.4     18.3  
operating
activities
                                                                   
Cash flows
from
investing
activities:
Expenditures
for property,                    (33.6 )     (45.3 )
plant and
equipment
Acquisition,
net of cash                      (4.9  )     -
received
Other - net                     (1.3  )   0.2   
Net cash used
for investing                   (39.8 )   (45.1 )
activities
                                                                   
Cash flows
from
financing
activities:
Net increase                     0.3         20.4
in debt
Other - net                     (0.2  )   0.9   
Net cash
provided by                     0.1      21.3  
financing
activities
                                                                   
Effect of
exchange rate                   (0.2  )   (1.3  )
changes on
cash
                                                                   
Net increase
(decrease) in                    1.5         (6.8  )
cash and cash
equivalents
                                                                   
Cash and cash
equivalents                      31.4        32.9
at beginning
of the period
                                         
Cash and cash
equivalents                    $ 32.9    $ 26.1  
at end of the
period
                                                                   
                                                          
                                                                   
                                                                   
Segment
operating
results
(unaudited)
                                                          (In
                                                                   millions)
                                                                   
                Three months ended                   Nine months ended
                December 31,                         December 31,
                2012          2011*                 2012         2011*
Net sales:
North America   $  128.2       $ 139.2               $ 425.2       $ 444.7
Europe             115.7         139.9                 359.9         458.7
South America      31.7          42.2                  97.1          138.2
Asia               13.2          20.9                  42.8          62.1
Commercial        41.3       39.3                105.3      108.5   
Products
Segment net        330.1         381.5                 1,030.3       1,212.2
sales
Corporate and     (4.0   )    (8.2  )              (13.9   )   (23.8   )
eliminations
Net sales       $  326.1     $ 373.3              $ 1,016.4   $ 1,188.4 
                                                                   
Operating
income
(loss):
North America   $  8.2         $ 10.6                $ 28.9        $ 32.4
^(a)
Europe ^(b)        (5.7   )      6.8                   (15.8   )     26.8
South America      2.6           4.0                   7.6           9.8
Asia               (2.5   )      (1.5  )               (7.1    )     (1.4    )
Commercial        4.7        5.8                 8.3        12.1    
Products
Segment
operating          7.3           25.7                  21.9          79.7
income
Corporate and     (11.1  )    (8.5  )              (28.6   )   (30.0   )
eliminations
Operating       $  (3.8   )   $ 17.2               $ (6.7    )  $ 49.7    
(loss) income
                                                                   
^(a) The year-to-date fiscal 2013 operating income includes $1.0 million of
impairment charges.
                                                                   
^(b) The third quarter fiscal 2013 operating loss includes $9.7 million of
impairment, restructuring and repositioning charges.
The year-to-date fiscal 2013 operating loss includes $31.4 million of
impairment, restructuring and repositioning charges.
                                                                   
* Prior period results have been revised to reflect the correction of errors
identified in fiscal 2012 (quarter ended March 31, 2012).

                                                             
Modine Manufacturing Company
Operating income and earnings per share excluding impairment and restructuring
charges (unaudited)
(In millions, except per share amounts)
                                                                   
                   Three months ended December     Nine months ended December
                   31,                             31,
                   2012           2011            2012           2011
Operating          $  (3.8   )     $  17.2         $  (6.7   )     $  49.7
(loss) income
Impairment
charges -             8.3             2.2             24.1            2.2
Europe
Impairment
charges - North       -               -               1.0             -
America
Restructuring
and
repositioning        1.4           -             7.3           -      
expenses ^ -
Europe ^(a)
Operating
income
excluding
impairment and     $  5.9         $  19.4        $  25.7        $  51.9   

restructuring
charges
                                                                   
Net (loss)
earnings per
share
attributable to    $  (0.19  )     $  0.19         $  (0.47  )     $  0.49
Modine
shareholders -
diluted
Impairment
charges -             0.18            0.05            0.52            0.05
Europe
Impairment
charges - North       -               -               0.02            -
America
Restructuring
and
repositioning        0.03          -             0.15          -      
expenses ^ -
Europe ^(a)
Earnings per
share excluding
impairment and     $  0.02        $  0.24        $  0.22        $  0.54   

restructuring
charges
                                                                   
^(a) Restructuring and repositioning expenses primarily relate to salaried
headcount reductions at our regional headquarters in Germany.
                                                                   
There is no income tax impact as a result of the impairment, restructuring and
repositioning charges because of income tax valuation allowances in the U.S.
and Germany.
                                                           
                                                                   
Net debt (unaudited)
                                                           (In
                                                                   millions)
                                                                   
                                                                   
                   December 31,   March 31,
                   2012            2012
Debt due within    $  27.1         $  22.4
one year
Long-term debt       137.6         141.9  
Total debt           164.7         164.3  
                                                                   
Less: cash and
cash                 32.9          31.4   
equivalents
Net debt           $  131.8       $  132.9  
                                                           
                                                                   
Free cash flow (unaudited)
                                                           (In
                                                                   millions)
                                                                   
                   Three months ended December     Nine months ended December
                   31,                             31,
                   2012           2011            2012           2011
Net cash
provided by        $  14.6         $  15.1         $  41.4         $  18.3
operating
activities
Expenditures
for property,        (12.9  )       (12.8  )       (33.6  )       (45.3  )
plant and
equipment
Free cash flow     $  1.7         $  2.3         $  7.8         $  (27.0  )

Contact:

Modine Manufacturing Company
Kathleen T. Powers, 262-636-1687
k.t.powers@na.modine.com
 
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