Modine Reports Fourth Quarter Fiscal 2013 Results; Provides Guidance for Fiscal 2014

  Modine Reports Fourth Quarter Fiscal 2013 Results; Provides Guidance for
  Fiscal 2014

Business Wire

RACINE, Wis. -- May 30, 2013

Modine Manufacturing Company (NYSE: MOD), a diversified global leader in
thermal management technology and solutions, today reported its financial
results for the fourth quarter ended March 31, 2013. Highlights include:

  *Sales of $359.6 million;
  *GAAP basis loss per share of $0.04;
  *Impairment and restructuring charges of $10.5 million; and
  *Earnings per share excluding impairment and restructuring charges of
    $0.18.

“We finished our fiscal year with a solid quarter, our strongest in terms of
revenue and adjusted earnings,” said Modine President and Chief Executive
Officer, Thomas A. Burke. “We delivered full year earnings per share of $0.40
before impairment and restructuring charges, consistent with our earlier
guidance.”

Fourth Quarter Financial Results

Net sales in the fourth quarter of fiscal 2013 decreased $29.2 million, or 7.5
percent, from the fourth quarter of fiscal 2012. On a constant currency basis,
net sales decreased 6.4 percent from the prior year. Sales were affected by
continuing weak end market demand, particularly in North America, Europe and
Asia. As expected, sales in Europe were also impacted by the planned wind-down
of the non-strategic automotive module business. Gross profit decreased $8.2
million, or 12.8 percent, largely due to lower sales volume. Selling, general
and administrative (SG&A) expense decreased $6.7 million, or 14.5 percent, due
to several factors, including lower compensation-related expenses, cost
savings from European headcount reductions, lower professional service fees
and the reduction of an accrual related to indirect tax obligations in Europe.
The company recorded $0.8 million of impairment charges and $9.7 million of
restructuring expenses related to the ongoing restructuring in Europe.
Earnings were also impacted by a $2.0 million charge, within the provision for
income taxes, for the initial recognition of a tax valuation allowance in
Asia. The net loss attributable to Modine of $2.1 million compares to net
earnings attributable to Modine of $15.6 million for the same period last
year, and represents a loss per share of $0.04 on a GAAP basis compared to
earnings per share of $0.33 last year. Earnings per share excluding impairment
and restructuring charges was $0.18 in the fourth quarter, compared to $0.34
in the fourth quarter of last year.

Net debt was $139.8 million at March 31, 2013, an increase of $6.9 million
from the end of fiscal 2012. Cash on hand at the end of the quarter was $23.8
million.

Fourth Quarter Segment Results

North America segment sales decreased 11.4 percent to $139.3 million compared
to $157.3 million one year ago. The decrease was driven primarily by lower
sales to commercial vehicle and off-highway customers as economic conditions
in these markets remained weak. Operating income decreased $5.2 million to
$10.3 million compared to the prior year due to lower gross profit on the
lower sales and a $0.8 million asset impairment charge related to idle
manufacturing facilities that were previously closed in conjunction with the
now completed North American restructuring program.

Europe segment sales decreased 4.2 percent to $138.1 million compared to
$144.1 million in the prior year, primarily due to lower sales to commercial
vehicle and off-highway customers and lower tooling sales. Economic conditions
in Europe remain weak, and Euro 6 truck program volumes continue to be low as
a result. The segment operating loss was $0.3 million during the quarter
compared to $10.5 million of operating income in the prior year. The decrease
was primarily due to $9.7 million of restructuring charges, largely consisting
of severance costs.

South America segment sales decreased 1.9 percent to $36.7 million compared to
$37.4 million one year ago. On a constant currency basis, sales increased 11.0
percent from the prior year, due to sales volume increases to commercial
vehicle, power generation and aftermarket customers. Operating income of $3.6
million was higher than the prior year by $3.0 million due to a 370 basis
point improvement in gross margin and lower SG&A expense.

Asia segment sales decreased 24.1 percent to $16.7 million compared to $22.0
million one year ago due to lower sales to off-highway customers. Excavator
volumes are stabilizing, but remain depressed as a result of low demand and
high field inventory levels. The operating loss in the region increased by
$0.6 million to $1.7 million as a result of lower gross profit on the lower
sales volume.

Commercial Products segment sales increased 0.9 percent to $34.0 million
compared to $33.7 million one year ago due to an increase in heating and
cooling product sales in North America, partially offset by decreased chiller
sales in the UK. Operating income decreased $0.5 million from the prior year
to $1.7 million due primarily to higher product development costs.

Full Year Fiscal 2013 Overview

In fiscal 2013, sales decreased 12.8 percent to $1,376.0 million. On a
constant currency basis, net sales decreased 8.9 percent from the prior year.
Gross margin decreased 110 basis points from 16.3 percent in fiscal 2012 to
15.2 percent in fiscal 2013, primarily due to the impact of the lower sales
volume, partially offset by the impact of lower metals costs. SG&A expense
decreased $20.3 million or 10.9 percent, primarily as a result of the fourth
quarter items previously mentioned, along with the reversal of a $2.0 million
acquisition-related liability in Brazil and foreign currency exchange rates.
The company recorded $25.9 million of impairment charges and $17.0 million of
restructuring expenses primarily related to the ongoing restructuring program
in Europe. The lower sales and gross margin resulted in a net loss
attributable to Modine of $24.2 million or $0.52 per fully diluted share.
Earnings per share excluding impairment and restructuring charges in fiscal
2013 was $0.40, compared to $0.87 in fiscal 2012.

“As we have reported through the entire fiscal year, our annual results were
heavily impacted by the weak economic conditions in all of our markets,
leading to significantly lower volumes,” Burke commented. “However, we
actively controlled our costs, limiting the downside impact on margins and
significantly reduced SG&A. We benefited in a significant way from our
previous restructuring actions, which have resulted in a more competitive cost
structure for the company.”

Outlook

“Although headwinds remain, we see stabilization in some of our markets, and
anticipate improving year-over-year comparisons as the fiscal year
progresses,” Burke commented. “Our expectations for fiscal 2014 include growth
in South America, sequential improvement in the North American commercial
vehicle market, and stabilization in the China off-highway market. Controlling
costs will remain a priority and we will continue our focus on free cash flow
and improvement in return on average capital employed.”

"During this past year, we saw significant changes in the market dynamics with
the slow launch of Euro 6 programs, the collapse of the China excavator market
and weakness in the North American off-highway and commercial vehicle markets.
However, our new program win rate remains strong,” Burke commented. "We will
continue to implement our restructuring program in Europe, and are beginning
to realize benefits from the actions taken so far.”

Based on the current market outlook, Modine has the following expectations for
fiscal 2014:

  *Year-over-year sales flat to up 5 percent;
  *Earnings per diluted share of $0.45 to $0.55 (excluding European
    restructuring costs)

"Our longer term outlook includes net new booked business of over $225 million
over the next three years,” said Burke. “This new business, combined with
market improvements and the benefit of our strategic business initiatives,
gives me great confidence in Modine’s future."

Conference Call and Webcast

Modine will conduct a conference call and live webcast, with a slide
presentation, on Thursday, May 30, 2013 at 8:00 a.m. Central Time (9:00 a.m.
Eastern Time) to discuss its fiscal 2013 fourth 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 877.340.2553 (international dial-in 678.224.7860).
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 May 30, 2013. A call-in replay will be
available through midnight on June 7, 2013, at 855.859.2056, (international
replay 404.537.3406); Conference ID# 60107566. The company will furnish a
transcript of the call to the U.S. Securities Exchange Commission, and post it
on its website, after June 4, 2013.

About Modine

Modine, with fiscal 2013 revenues of $1.4 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 6,500
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,
September 30, 2012 and December 31, 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;
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 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 and cash
equivalents. 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 March      Twelve months ended March
                    31,                           31,
                    2013          2012           2013            2012
Net sales           $  359.6       $  388.8       $  1,376.0       $ 1,577.2
Cost of sales         303.5        324.5        1,167.4       1,320.6 
Gross profit           56.1           64.3           208.6           256.6
Selling, general
& administrative       39.5           46.2           166.3           186.6
expenses
Impairment             0.8            0.3            25.9            2.5
charges
Restructuring         9.7          -            17.0          -       
expenses
Operating income       6.1            17.8           (0.6     )      67.5
(loss)
Interest expense       (3.4   )       (3.3   )       (12.6    )      (12.5   )
Other income          0.2          0.5          0.2           (7.1    )
(expense) - net
Earnings (loss)
from continuing
operations             2.9            15.0           (13.0    )      47.9
before income
taxes
(Provision for)
benefit from          (4.5   )      0.7          (9.8     )     (9.9    )
income taxes
(Loss) earnings
from continuing        (1.6   )       15.7           (22.8    )      38.0
operations
Earnings from
discontinued          -            0.1          -             0.8     
operations, net
of income taxes
Net (loss)             (1.6   )       15.8           (22.8    )      38.8
earnings
Net earnings
attributable to       (0.5   )      (0.2   )      (1.4     )     (0.3    )
noncontrolling
interest
Net (loss)
earnings            $  (2.1   )    $  15.6       $  (24.2    )    $ 38.5    
attributable to
Modine
                                                                   
                                                                   
(Loss) earnings per share from
continuing operations
attributable to Modine
shareholders:
Basic               $  (0.04  )    $  0.33        $  (0.52    )    $ 0.81
Diluted             $  (0.04  )    $  0.33        $  (0.52    )    $ 0.80
                                                                   
Net (loss)
earnings per
share
attributable to
Modine
shareholders:
Basic               $  (0.04  )    $  0.33        $  (0.52    )    $ 0.83
Diluted             $  (0.04  )    $  0.33        $  (0.52    )    $ 0.82
                                                                   
Weighted average
shares
outstanding:
Basic                  46.7           46.5           46.6            46.5
Diluted                46.7           46.9           46.6            46.9
                                                                   
                                                           
                                                                   
Condensed consolidated balance sheets
(unaudited)
(In millions)
                  March 31,     March 31,
                    2013           2012
Assets
Cash and cash       $  23.8        $  31.4
equivalents
Trade                  194.5          216.1
receivables
Inventories            118.8          120.8
Other current         61.9         59.2   
assets
Total current         399.0        427.5  
assets
Property, plant
and equipment -        355.9          412.1
net
Other noncurrent      63.9         53.9   
assets
Total assets        $  818.8      $  893.5  
                                                                   
Liabilities and
shareholders'
equity
Debt due within     $  31.1        $  22.4
one year
Accounts payable       150.7          156.9
Other current         98.3         118.3  
liabilities
Total current         280.1        297.6  
liabilities
Long-term debt         132.5          141.9
Other noncurrent      137.9        127.9  
liabilities
Total                 550.5        567.4  
liabilities
Total
shareholders'         268.3        326.1  
equity
Total
liabilities &       $  818.8      $  893.5  
shareholders'
equity


Modine Manufacturing Company
Condensed consolidated statements of cash flows (unaudited)
(In millions)                                                    
Twelve months ended March     2013       2012
31,
                                       
Cash flows from operating
activities:
Net (loss) earnings            $ (22.8 )   $ 38.8
Adjustments to reconcile net (loss)
earnings with net cash provided
by operating activities:
Depreciation and                 55.8        57.7
amortization
Impairment charges               25.9        2.5
Other - net                      12.2        11.8
Net changes in operating        (22.3 )   (65.0 )
assets and liabilities
Net cash provided by            48.8     45.8  
operating activities
                                                                   
Cash flows from investing
activities:
Expenditures for property,       (49.8 )     (64.4 )
plant and equipment
Acquisition, net of cash         (4.9  )     -
received
Other - net                     (1.2  )   (0.6  )
Net cash used for investing     (55.9 )   (65.0 )
activities
                                                                   
Cash flows from financing
activities:
Net (decrease) increase in       (0.4  )     18.2
debt
Other - net                     0.7      0.6   
Net cash provided by            0.3      18.8  
financing activities
                                                                   
Effect of exchange rate         (0.8  )   (1.1  )
changes on cash
                                                                   
Net decrease in cash and         (7.6  )     (1.5  )
cash equivalents
                                                                   
Cash and cash equivalents at     31.4        32.9
beginning of the period
                                         
Cash and cash equivalents at   $ 23.8    $ 31.4  
end of the period
                                                                   
                                                          
                                                                   
                                                                   
Segment operating results (unaudited)
(In millions)
                                                                   
                 Three months ended                  Twelve months ended March
                 March 31,                           31,
                 2013         2012                  2013         2012
Net sales:
North America    $  139.3      $ 157.3               $ 564.5       $ 602.0
Europe              138.1        144.1                 498.0         602.8
South America       36.7         37.4                  133.8         175.6
Asia                16.7         22.0                  59.5          84.1
Commercial         34.0      33.7                139.3      142.2   
Products
Segment net         364.8        394.5                 1,395.1       1,606.7
sales
Corporate and      (5.2   )   (5.7  )              (19.1   )   (29.5   )
eliminations
Net sales        $  359.6    $ 388.8              $ 1,376.0   $ 1,577.2 
                                                                   
Operating
income
(loss):
North America    $  10.3       $ 15.5                $ 39.2        $ 47.9
^(a)
Europe ^(b)         (0.3   )     10.5                  (16.1   )     37.3
South America       3.6          0.6                   11.2          10.4
Asia                (1.7   )     (1.1  )               (8.8    )     (2.5    )
Commercial         1.7       2.2                 10.0       14.3    
Products
Segment
operating           13.6         27.7                  35.5          107.4
income
Corporate and      (7.5   )   (9.9  )              (36.1   )   (39.9   )
eliminations
Operating        $  6.1      $ 17.8               $ (0.6    )  $ 67.5    
income (loss)
                                                                   
^(a) The fourth quarter fiscal 2013 operating income includes $0.8 million of
impairment charges.
The full year fiscal 2013 operating income includes $1.8 million of impairment
charges.
                                                                   
^(b) The fourth quarter fiscal 2013 operating loss includes $9.7 million of
restructuring charges.
The full year fiscal 2013 operating loss includes $41.1 million of impairment
and restructuring charges.

                                                             
Modine Manufacturing Company
Operating income and earnings per share excluding impairment and restructuring
charges (unaudited)
(In millions, except per share amounts)
                                                                   
                   Three months ended March 31,    Twelve months ended March
                                                   31,
                   2013           2012            2013           2012
Operating          $  6.1          $  17.8         $  (0.6   )     $  67.5
income (loss)
Impairment
charges -             -               0.3             24.1            2.5
Europe
Impairment
charges - North       0.8             -               1.8             -
America
Restructuring
expenses ^ -         9.7           -             17.0          -      
Europe ^(a)
Operating
income
excluding
impairment and     $  16.6        $  18.1        $  42.3        $  70.0   

restructuring
charges
                                                                   
Net (loss)
earnings per
share
attributable to
Modine             $  (0.04  )     $  0.33         $  (0.52  )     $  0.82
shareholders -
diluted


Impairment
charges -             -               0.01            0.52            0.05
Europe
Impairment
charges - North       0.02            -               0.04            -
America
Restructuring
expenses ^ -         0.20          -             0.36          -      
Europe ^(a)
Earnings per
share excluding
impairment and     $  0.18        $  0.34        $  0.40        $  0.87   

restructuring
charges
                                                                   
^(a) Restructuring expenses primarily relate to severance charges in Germany.
                                                                   
There is no income tax impact as a result of the impairment and restructuring
charges because of income tax valuation allowances in the U.S. and Germany.
                                                           
                                                                   
Net debt (unaudited)
(In millions)
                                                                   
                                                                   
                   March 31,      March 31,    
                   2013            2012
Debt due within    $  31.1         $  22.4
one year
Long-term debt       132.5         141.9  
Total debt           163.6         164.3  
                                                                   
Less: cash and
cash                 23.8          31.4   
equivalents
Net debt           $  139.8       $  132.9  
                                                           
                                                                   
Free cash flow (unaudited)
(In millions)
                                                                   
                   Three months ended March 31,    Twelve months ended March
                                                   31,
                   2013           2012            2013           2012
Net cash
provided by        $  7.4          $  27.5         $  48.8         $  45.8
operating
activities
Expenditures
for property,        (16.2  )       (19.1  )       (49.8  )       (64.4  )
plant and
equipment
Free cash flow     $  (8.8   )     $  8.4         $  (1.0   )     $  (18.6  )

Contact:

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