☑ |
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
|
Wisconsin
|
|
39-0482000
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
1500 DeKoven Avenue, Racine, Wisconsin
|
|
53403
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Common Stock, $0.625 par value
|
MOD
|
New York Stock Exchange
|
Large Accelerated Filer ☑
|
Accelerated Filer ☐
|
|
|
Non-accelerated Filer ☐
|
Smaller reporting company ☐
|
|
|
|
Emerging growth company ☐
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
1
|
||
|
|
|
26
|
||
|
|
|
36
|
||
|
|
|
36
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
37
|
||
|
|
|
38
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Net sales
|
$
|
500.2
|
$
|
548.9
|
$
|
1,029.2
|
$
|
1,115.0
|
||||||||
Cost of sales
|
424.5
|
461.0
|
870.1
|
932.8
|
||||||||||||
Gross profit
|
75.7
|
87.9
|
159.1
|
182.2
|
||||||||||||
Selling, general and administrative expenses
|
67.4
|
63.4
|
130.9
|
122.7
|
||||||||||||
Restructuring expenses
|
2.3
|
-
|
4.1
|
0.2
|
||||||||||||
Loss on sale of assets
|
-
|
1.7
|
-
|
1.7
|
||||||||||||
Operating income
|
6.0
|
22.8
|
24.1
|
57.6
|
||||||||||||
Interest expense
|
(5.8
|
)
|
(6.5
|
)
|
(11.7
|
)
|
(12.7
|
)
|
||||||||
Other expense – net
|
(1.3
|
)
|
(0.5
|
)
|
(2.4
|
)
|
(1.6
|
)
|
||||||||
(Loss) earnings before income taxes
|
(1.1
|
)
|
15.8
|
10.0
|
43.3
|
|||||||||||
(Provision) benefit for income taxes
|
(3.7
|
)
|
22.9
|
(6.6
|
)
|
17.9
|
||||||||||
Net (loss) earnings
|
(4.8
|
)
|
38.7
|
3.4
|
61.2
|
|||||||||||
Net loss (earnings) attributable to noncontrolling interest
|
0.1
|
(0.2
|
)
|
(0.1
|
)
|
(0.7
|
)
|
|||||||||
Net (loss) earnings attributable to Modine
|
$
|
(4.7
|
)
|
$
|
38.5
|
$
|
3.3
|
$
|
60.5
|
|||||||
|
||||||||||||||||
Net (loss) earnings per share attributable to Modine shareholders:
|
||||||||||||||||
Basic
|
$
|
(0.09
|
)
|
$
|
0.76
|
$
|
0.07
|
$
|
1.19
|
|||||||
Diluted
|
$
|
(0.09
|
)
|
$
|
0.75
|
$
|
0.06
|
$
|
1.18
|
|||||||
|
||||||||||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Basic
|
50.8
|
50.5
|
50.8
|
50.4
|
||||||||||||
Diluted
|
50.8
|
51.4
|
51.1
|
51.3
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Net (loss) earnings
|
$
|
(4.8
|
)
|
$
|
38.7
|
$
|
3.4
|
$
|
61.2
|
|||||||
Other comprehensive income (loss):
|
||||||||||||||||
Foreign currency translation
|
(19.5
|
)
|
(5.4
|
)
|
(17.7
|
)
|
(30.5
|
)
|
||||||||
Defined benefit plans, net of income taxes of $0.3, $0.3, $0.6 and $0.6 million
|
1.1
|
1.0
|
2.2
|
2.0
|
||||||||||||
Cash flow hedges, net of income taxes of 0.1, $0.2, 0.4 and $0.1 million
|
(0.2
|
)
|
(0.5
|
)
|
(1.0
|
)
|
(0.1
|
)
|
||||||||
Total other comprehensive loss
|
(18.6
|
)
|
(4.9
|
)
|
(16.5
|
)
|
(28.6
|
)
|
||||||||
|
||||||||||||||||
Comprehensive (loss) income
|
(23.4
|
)
|
33.8
|
(13.1
|
)
|
32.6
|
||||||||||
Comprehensive loss (income) attributable to noncontrolling interest
|
0.3
|
(0.1
|
)
|
0.2
|
(0.2
|
)
|
||||||||||
Comprehensive (loss) income attributable to Modine
|
$
|
(23.1
|
)
|
$
|
33.7
|
$
|
(12.9
|
)
|
$
|
32.4
|
|
September 30, 2019
|
March 31, 2019
|
||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
32.3
|
$
|
41.7
|
||||
Trade accounts receivable – net
|
310.4
|
338.6
|
||||||
Inventories
|
222.6
|
200.7
|
||||||
Other current assets
|
77.1
|
65.8
|
||||||
Total current assets
|
642.4
|
646.8
|
||||||
Property, plant and equipment – net
|
465.7
|
484.7
|
||||||
Intangible assets – net
|
110.3
|
116.2
|
||||||
Goodwill
|
166.1
|
168.5
|
||||||
Deferred income taxes
|
97.0
|
97.1
|
||||||
Other noncurrent assets
|
83.0
|
24.7
|
||||||
Total assets
|
$
|
1,564.5
|
$
|
1,538.0
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Short-term debt
|
$
|
139.4
|
$
|
66.0
|
||||
Long-term debt – current portion
|
93.6
|
48.6
|
||||||
Accounts payable
|
260.2
|
280.9
|
||||||
Accrued compensation and employee benefits
|
73.5
|
81.7
|
||||||
Other current liabilities
|
51.1
|
39.9
|
||||||
Total current liabilities
|
617.8
|
517.1
|
||||||
Long-term debt
|
232.2
|
335.1
|
||||||
Deferred income taxes
|
8.5
|
8.2
|
||||||
Pensions
|
96.7
|
101.7
|
||||||
Other noncurrent liabilities
|
83.7
|
34.8
|
||||||
Total liabilities
|
1,038.9
|
996.9
|
||||||
Commitments and contingencies (see Note 17)
|
|
|
||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $0.025 par value, authorized 16.0 million shares, issued - none
|
-
|
-
|
||||||
Common stock, $0.625 par value, authorized 80.0 million shares, issued 53.3 million and 52.8 million shares
|
33.2
|
33.0
|
||||||
Additional paid-in capital
|
242.9
|
238.6
|
||||||
Retained earnings
|
475.4
|
472.1
|
||||||
Accumulated other comprehensive loss
|
(194.6
|
)
|
(178.4
|
)
|
||||
Treasury stock, at cost, 2.5 million and 2.1 million shares
|
(37.0
|
)
|
(31.4
|
)
|
||||
Total Modine shareholders’ equity
|
519.9
|
533.9
|
||||||
Noncontrolling interest
|
5.7
|
7.2
|
||||||
Total equity
|
525.6
|
541.1
|
||||||
Total liabilities and equity
|
$
|
1,564.5
|
$
|
1,538.0
|
|
Six months ended September 30,
|
|||||||
2019
|
2018
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
3.4
|
$
|
61.2
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
38.3
|
38.5
|
||||||
Loss on sale of assets
|
-
|
1.7
|
||||||
Stock-based compensation expense
|
4.4
|
5.2
|
||||||
Deferred income taxes
|
(0.5
|
)
|
(6.4
|
)
|
||||
Other – net
|
2.0
|
1.6
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
19.9
|
(13.2
|
)
|
|||||
Inventories
|
(26.2
|
)
|
(30.4
|
)
|
||||
Accounts payable
|
(5.6
|
)
|
25.5
|
|||||
Other assets and liabilities
|
(18.2
|
)
|
(47.0
|
)
|
||||
Net cash provided by operating activities
|
17.5
|
36.7
|
||||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(41.4
|
)
|
(37.9
|
)
|
||||
Proceeds from sale of investment in affiliate
|
3.8
|
-
|
||||||
Other – net
|
1.0
|
0.9
|
||||||
Net cash used for investing activities
|
(36.6
|
)
|
(37.0
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Borrowings of debt
|
438.0
|
146.7
|
||||||
Repayments of debt
|
(413.7
|
)
|
(142.2
|
)
|
||||
Dividend paid to noncontrolling interest
|
(1.3
|
)
|
(1.8
|
)
|
||||
Purchases of treasury stock under share repurchase program
|
(2.4
|
)
|
-
|
|||||
Financing fees paid
|
(1.1
|
)
|
-
|
|||||
Other – net
|
(3.0
|
)
|
(3.6
|
)
|
||||
Net cash provided by (used for) financing activities
|
16.5
|
(0.9
|
)
|
|||||
|
||||||||
Effect of exchange rate changes on cash
|
(0.9
|
)
|
(2.5
|
)
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(3.5
|
)
|
(3.7
|
)
|
||||
|
||||||||
Cash, cash equivalents and restricted cash – beginning of period
|
42.2
|
40.3
|
||||||
Cash, cash equivalents and restricted cash – end of period
|
$
|
38.7
|
$
|
36.6
|
|
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, 2019
|
52.8
|
$
|
33.0
|
$
|
238.6
|
$
|
472.1
|
$
|
(178.4
|
)
|
$
|
(31.4
|
)
|
$
|
7.2
|
$
|
541.1
|
|||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
8.0
|
-
|
-
|
-
|
8.0
|
||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
-
|
2.2
|
-
|
(0.1
|
)
|
2.1
|
|||||||||||||||||||||||
Stock options and awards
|
0.5
|
0.2
|
(0.1
|
)
|
-
|
-
|
-
|
-
|
0.1
|
|||||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(5.6
|
)
|
-
|
(5.6
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
1.7
|
-
|
-
|
-
|
-
|
1.7
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(1.3
|
)
|
(1.3
|
)
|
||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Balance, June 30, 2019
|
53.3
|
$
|
33.2
|
$
|
240.2
|
$
|
480.1
|
$
|
(176.2
|
)
|
$
|
(37.0
|
)
|
$
|
6.0
|
$
|
546.3
|
|||||||||||||||
Net loss attributable to Modine
|
-
|
-
|
-
|
(4.7
|
)
|
-
|
-
|
-
|
(4.7
|
)
|
||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(18.4
|
)
|
-
|
(0.2
|
)
|
(18.6
|
)
|
|||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
2.7
|
-
|
-
|
-
|
-
|
2.7
|
||||||||||||||||||||||||
Net loss attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||||||||||||||
Balance, September 30, 2019
|
53.3
|
$
|
33.2
|
$
|
242.9
|
$
|
475.4
|
$
|
(194.6
|
)
|
$
|
(37.0
|
)
|
$
|
5.7
|
$
|
525.6
|
|
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, 2018
|
52.3
|
$
|
32.7
|
$
|
229.9
|
$
|
394.9
|
$
|
(140.3
|
)
|
$
|
(27.1
|
)
|
$
|
8.4
|
$
|
498.5
|
|||||||||||||||
Adoption of new accounting guidance (Note 1)
|
-
|
-
|
-
|
(7.6
|
)
|
-
|
-
|
-
|
(7.6
|
)
|
||||||||||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
22.0
|
-
|
-
|
-
|
22.0
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(23.3
|
)
|
-
|
(0.4
|
)
|
(23.7
|
)
|
|||||||||||||||||||||
Stock options and awards
|
0.4
|
0.2
|
(0.2
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(3.7
|
)
|
-
|
(3.7
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
2.0
|
-
|
-
|
-
|
-
|
2.0
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(1.8
|
)
|
(1.8
|
)
|
||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
||||||||||||||||||||||||
Balance, June 30, 2018
|
52.7
|
$
|
32.9
|
$
|
231.7
|
$
|
409.3
|
$
|
(163.6
|
)
|
$
|
(30.8
|
)
|
6.7
|
$
|
486.2
|
||||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
38.5
|
-
|
-
|
-
|
38.5
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(4.8
|
)
|
-
|
(0.1
|
)
|
(4.9
|
)
|
|||||||||||||||||||||
Stock options and awards
|
-
|
0.1
|
0.1
|
-
|
-
|
-
|
-
|
0.2
|
||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
3.2
|
-
|
-
|
-
|
-
|
3.2
|
||||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Balance, September 30, 2018
|
52.7
|
$
|
33.0
|
$
|
235.0
|
$
|
447.8
|
$
|
(168.4
|
)
|
$
|
(30.8
|
)
|
$
|
6.8
|
$
|
523.4
|
|
Three months ended September 30, 2019
|
Three months ended September 30, 2018
|
||||||||||||||||||||||||||||||
|
VTS
|
CIS
|
BHVAC
|
Segment
Total |
VTS
|
CIS
|
BHVAC
|
Segment
Total |
||||||||||||||||||||||||
Primary end market:
|
||||||||||||||||||||||||||||||||
Automotive
|
$
|
135.1
|
$
|
-
|
$
|
-
|
$
|
135.1
|
$
|
136.4
|
$
|
-
|
$
|
-
|
$
|
136.4
|
||||||||||||||||
Commercial vehicle
|
81.8
|
-
|
-
|
81.8
|
95.8
|
-
|
-
|
95.8
|
||||||||||||||||||||||||
Off-highway
|
59.6
|
-
|
-
|
59.6
|
76.9
|
-
|
-
|
76.9
|
||||||||||||||||||||||||
Commercial HVAC&R
|
-
|
115.9
|
46.1
|
162.0
|
-
|
127.6
|
42.3
|
169.9
|
||||||||||||||||||||||||
Data center cooling
|
-
|
26.7
|
9.5
|
36.2
|
-
|
36.0
|
8.4
|
44.4
|
||||||||||||||||||||||||
Industrial cooling
|
-
|
11.7
|
-
|
11.7
|
-
|
13.1
|
-
|
13.1
|
||||||||||||||||||||||||
Other
|
22.8
|
2.4
|
0.4
|
25.6
|
26.5
|
1.5
|
-
|
28.0
|
||||||||||||||||||||||||
Net sales
|
$
|
299.3
|
$
|
156.7
|
$
|
56.0
|
$
|
512.0
|
$
|
335.6
|
$
|
178.2
|
$
|
50.7
|
$
|
564.5
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Geographic location:
|
||||||||||||||||||||||||||||||||
Americas
|
$
|
144.9
|
$
|
86.0
|
$
|
38.1
|
$
|
269.0
|
$
|
159.2
|
$
|
103.2
|
$
|
31.8
|
$
|
294.2
|
||||||||||||||||
Europe
|
111.0
|
57.5
|
17.9
|
186.4
|
127.3
|
62.0
|
18.9
|
208.2
|
||||||||||||||||||||||||
Asia
|
43.4
|
13.2
|
-
|
56.6
|
49.1
|
13.0
|
-
|
62.1
|
||||||||||||||||||||||||
Net sales
|
$
|
299.3
|
$
|
156.7
|
$
|
56.0
|
$
|
512.0
|
$
|
335.6
|
$
|
178.2
|
$
|
50.7
|
$
|
564.5
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
290.7
|
$
|
132.4
|
$
|
56.0
|
$
|
479.1
|
$
|
322.5
|
$
|
142.7
|
$
|
50.7
|
$
|
515.9
|
||||||||||||||||
Products transferred over time
|
8.6
|
24.3
|
-
|
32.9
|
13.1
|
35.5
|
-
|
48.6
|
||||||||||||||||||||||||
Net sales
|
$
|
299.3
|
$
|
156.7
|
$
|
56.0
|
$
|
512.0
|
$
|
335.6
|
$
|
178.2
|
$
|
50.7
|
$
|
564.5
|
|
Six months ended September 30, 2019
|
Six months ended September 30, 2018
|
||||||||||||||||||||||||||||||
|
VTS
|
CIS
|
BHVAC
|
Segment
Total
|
VTS
|
CIS
|
BHVAC
|
Segment
Total
|
||||||||||||||||||||||||
Primary end market:
|
||||||||||||||||||||||||||||||||
Automotive
|
$
|
264.3
|
$
|
-
|
$
|
-
|
$
|
264.3
|
$
|
281.5
|
$
|
-
|
$
|
-
|
$
|
281.5
|
||||||||||||||||
Commercial vehicle
|
180.5
|
-
|
-
|
180.5
|
195.5
|
-
|
-
|
195.5
|
||||||||||||||||||||||||
Off-highway
|
133.5
|
-
|
-
|
133.5
|
160.7
|
-
|
-
|
160.7
|
||||||||||||||||||||||||
Commercial HVAC&R
|
-
|
246.8
|
84.1
|
330.9
|
-
|
262.9
|
77.4
|
340.3
|
||||||||||||||||||||||||
Data center cooling
|
-
|
50.9
|
20.1
|
71.0
|
-
|
70.1
|
18.3
|
88.4
|
||||||||||||||||||||||||
Industrial cooling
|
-
|
23.1
|
-
|
23.1
|
-
|
24.6
|
-
|
24.6
|
||||||||||||||||||||||||
Other
|
47.5
|
4.7
|
0.8
|
53.0
|
50.7
|
4.5
|
-
|
55.2
|
||||||||||||||||||||||||
Net sales
|
$
|
625.8
|
$
|
325.5
|
$
|
105.0
|
$
|
1,056.3
|
$
|
688.4
|
$
|
362.1
|
$
|
95.7
|
$
|
1,146.2
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Geographic location:
|
||||||||||||||||||||||||||||||||
Americas
|
$
|
298.2
|
$
|
183.1
|
$
|
67.2
|
$
|
548.5
|
$
|
310.1
|
$
|
208.0
|
$
|
57.1
|
$
|
575.2
|
||||||||||||||||
Europe
|
237.1
|
116.1
|
37.8
|
391.0
|
275.7
|
127.2
|
38.6
|
441.5
|
||||||||||||||||||||||||
Asia
|
90.5
|
26.3
|
-
|
116.8
|
102.6
|
26.9
|
-
|
129.5
|
||||||||||||||||||||||||
Net sales
|
$
|
625.8
|
$
|
325.5
|
$
|
105.0
|
$
|
1,056.3
|
$
|
688.4
|
$
|
362.1
|
$
|
95.7
|
$
|
1,146.2
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
609.8
|
$
|
276.3
|
$
|
105.0
|
$
|
991.1
|
$
|
665.3
|
$
|
296.3
|
$
|
95.7
|
$
|
1,057.3
|
||||||||||||||||
Products transferred over time
|
16.0
|
49.2
|
-
|
65.2
|
23.1
|
65.8
|
-
|
88.9
|
||||||||||||||||||||||||
Net sales
|
$
|
625.8
|
$
|
325.5
|
$
|
105.0
|
$
|
1,056.3
|
$
|
688.4
|
$
|
362.1
|
$
|
95.7
|
$
|
1,146.2
|
|
September 30, 2019
|
March 31, 2019
|
||||||
Contract assets
|
$
|
26.9
|
$
|
22.6
|
||||
Contract liabilities
|
5.8
|
4.0
|
• |
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,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Service cost
|
$
|
0.1
|
$
|
0.1
|
$
|
0.2
|
$
|
0.2
|
||||||||
Interest cost
|
2.2
|
2.4
|
4.5
|
4.8
|
||||||||||||
Expected return on plan assets
|
(2.9
|
)
|
(3.1
|
)
|
(5.9
|
)
|
(6.1
|
)
|
||||||||
Amortization of unrecognized net loss
|
1.5
|
1.4
|
3.0
|
2.8
|
||||||||||||
Net periodic benefit cost
|
$
|
0.9
|
$
|
0.8
|
$
|
1.8
|
$
|
1.7
|
|
Six months ended September 30,
|
|||||||||||||||
2019
|
2018
|
|||||||||||||||
Shares
|
Fair Value
Per Award
|
Shares
|
Fair Value
Per Award
|
|||||||||||||
Stock options
|
0.3
|
$
|
5.56
|
0.2
|
$
|
7.81
|
||||||||||
Restricted stock awards
|
0.3
|
$
|
13.26
|
0.2
|
$
|
17.90
|
||||||||||
Performance stock awards
|
0.3
|
$
|
13.26
|
0.2
|
$
|
17.90
|
||||||||||
Unrestricted stock awards
|
0.1
|
$
|
14.50
|
0.1
|
$
|
17.60
|
|
Six months ended September 30,
|
|||||||
2019
|
2018
|
|||||||
Expected life of awards in years
|
6.3
|
6.3
|
||||||
Risk-free interest rate
|
2.2
|
%
|
2.8
|
%
|
||||
Expected volatility of the Company’s stock
|
39.2
|
%
|
39.7
|
%
|
||||
Expected dividend yield on the Company’s stock
|
0.0
|
%
|
0.0
|
%
|
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
Stock options
|
$
|
3.1
|
2.9
|
|||||
Restricted stock awards
|
7.1
|
2.8
|
||||||
Performance stock awards
|
3.8
|
2.1
|
||||||
Total
|
$
|
14.0
|
2.6
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Employee severance and related benefits
|
$
|
1.8
|
$
|
-
|
$
|
3.3
|
$
|
0.1
|
||||||||
Other restructuring and repositioning expenses
|
0.5
|
-
|
0.8
|
0.1
|
||||||||||||
Total
|
$
|
2.3
|
$
|
-
|
$
|
4.1
|
$
|
0.2
|
|
Three months ended September 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
7.8
|
$
|
4.8
|
||||
Additions
|
1.8
|
-
|
||||||
Payments
|
(2.0
|
)
|
(1.4
|
)
|
||||
Effect of exchange rate changes
|
(0.2
|
)
|
-
|
|||||
Ending balance
|
$
|
7.4
|
$
|
3.4
|
|
Six months ended September 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
10.0
|
$
|
11.0
|
||||
Additions
|
3.3
|
0.1
|
||||||
Payments
|
(5.7
|
)
|
(7.2
|
)
|
||||
Effect of exchange rate changes
|
(0.2
|
)
|
(0.5
|
)
|
||||
Ending balance
|
$
|
7.4
|
$
|
3.4
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Equity in earnings of non-consolidated affiliate (a)
|
$
|
0.1
|
$
|
0.2
|
$
|
0.2
|
$
|
0.4
|
||||||||
Interest income
|
0.1
|
0.1
|
0.2
|
0.3
|
||||||||||||
Foreign currency transactions (b)
|
(0.8
|
)
|
(0.1
|
)
|
(1.4
|
)
|
(0.9
|
)
|
||||||||
Net periodic benefit cost (c)
|
(0.7
|
)
|
(0.7
|
)
|
(1.4
|
)
|
(1.4
|
)
|
||||||||
Total other expense - net
|
$
|
(1.3
|
)
|
$
|
(0.5
|
)
|
$
|
(2.4
|
)
|
$
|
(1.6
|
)
|
(a) |
The amounts reported in fiscal 2020 include a $0.1 million gain recorded as a result of the Company's sale of its ownership interest in NEX. See Note 1 for additional information.
|
(b) |
Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on certain foreign currency exchange contracts.
|
(c) |
Net periodic benefit cost for the Company’s pension and postretirement plans is exclusive of service cost.
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Net (loss) earnings attributable to Modine
|
$
|
(4.7
|
)
|
$
|
38.5
|
$
|
3.3
|
$
|
60.5
|
|||||||
Less: Undistributed earnings attributable to unvested shares
|
-
|
(0.1
|
)
|
-
|
(0.2
|
)
|
||||||||||
Net (loss) earnings available to Modine shareholders
|
$
|
(4.7
|
)
|
$
|
38.4
|
$
|
3.3
|
$
|
60.3
|
|||||||
|
||||||||||||||||
Weighted-average shares outstanding - basic
|
50.8
|
50.5
|
50.8
|
50.4
|
||||||||||||
Effect of dilutive securities
|
-
|
0.9
|
0.3
|
0.9
|
||||||||||||
Weighted-average shares outstanding - diluted
|
50.8
|
51.4
|
51.1
|
51.3
|
||||||||||||
|
||||||||||||||||
(Loss) earnings per share:
|
||||||||||||||||
Net (loss) earnings per share - basic
|
$
|
(0.09
|
)
|
$
|
0.76
|
$
|
0.07
|
$
|
1.19
|
|||||||
Net (loss) earnings per share - diluted
|
$
|
(0.09
|
)
|
$
|
0.75
|
$
|
0.06
|
$
|
1.18
|
|
September 30, 2019
|
March 31, 2019
|
||||||
Cash and cash equivalents
|
$
|
32.3
|
$
|
41.7
|
||||
Restricted cash
|
6.4
|
0.5
|
||||||
Total cash, cash equivalents and restricted cash
|
$
|
38.7
|
$
|
42.2
|
|
September 30, 2019
|
March 31, 2019
|
||||||
Raw materials
|
$
|
133.8
|
$
|
122.8
|
||||
Work in process
|
36.5
|
32.2
|
||||||
Finished goods
|
52.3
|
45.7
|
||||||
Total inventories
|
$
|
222.6
|
$
|
200.7
|
|
September 30, 2019
|
March 31, 2019
|
||||||
Land
|
$
|
20.1
|
$
|
20.7
|
||||
Buildings and improvements (10-40 years)
|
281.6
|
285.9
|
||||||
Machinery and equipment (3-15 years)
|
863.9
|
848.7
|
||||||
Office equipment (3-10 years)
|
93.5
|
92.0
|
||||||
Construction in progress
|
42.3
|
57.4
|
||||||
|
1,301.4
|
1,304.7
|
||||||
Less: accumulated depreciation
|
(835.7
|
)
|
(820.0
|
)
|
||||
Net property, plant and equipment
|
$
|
465.7
|
$
|
484.7
|
|
VTS
|
CIS
|
BHVAC
|
Total
|
||||||||||||
Goodwill, March 31, 2019
|
$
|
0.5
|
$
|
153.9
|
$
|
14.1
|
$
|
168.5
|
||||||||
Effect of exchange rate changes
|
-
|
(1.7
|
)
|
(0.7
|
)
|
(2.4
|
)
|
|||||||||
Goodwill, September 30, 2019
|
$
|
0.5
|
$
|
152.2
|
$
|
13.4
|
$
|
166.1
|
|
September 30, 2019
|
March 31, 2019
|
||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||
Carrying
|
Accumulated
|
Intangible
|
Carrying
|
Accumulated
|
Intangible
|
|||||||||||||||||||
Value
|
Amortization
|
Assets
|
Value
|
Amortization
|
Assets
|
|||||||||||||||||||
Customer relationships
|
$
|
60.5
|
$
|
(10.7
|
)
|
$
|
49.8
|
$
|
61.5
|
$
|
(9.1
|
)
|
$
|
52.4
|
||||||||||
Trade names
|
58.2
|
(14.7
|
)
|
43.5
|
58.9
|
(13.5
|
)
|
45.4
|
||||||||||||||||
Acquired technology
|
23.5
|
(6.5
|
)
|
17.0
|
23.9
|
(5.5
|
)
|
18.4
|
||||||||||||||||
Total intangible assets
|
$
|
142.2
|
$
|
(31.9
|
)
|
$
|
110.3
|
$
|
144.3
|
$
|
(28.1
|
)
|
$
|
116.2
|
|
Three months ended September 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
9.1
|
$
|
8.7
|
||||
Warranties recorded at time of sale
|
1.2
|
1.3
|
||||||
Adjustments to pre-existing warranties
|
(0.3
|
)
|
0.2
|
|||||
Settlements
|
(1.7
|
)
|
(1.8
|
)
|
||||
Effect of exchange rate changes
|
(0.2
|
)
|
(0.1
|
)
|
||||
Ending balance
|
$
|
8.1
|
$
|
8.3
|
|
Six months ended September 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
9.2
|
$
|
9.3
|
||||
Warranties recorded at time of sale
|
2.6
|
2.7
|
||||||
Adjustments to pre-existing warranties
|
(0.9
|
)
|
(0.2
|
)
|
||||
Settlements
|
(2.6
|
)
|
(3.1
|
)
|
||||
Effect of exchange rate changes
|
(0.2
|
)
|
(0.4
|
)
|
||||
Ending balance
|
$
|
8.1
|
$
|
8.3
|
|
Balance Sheet Location
|
September 30, 2019
|
|
Lease Assets
|
|||
Operating lease ROU assets
|
Other noncurrent assets
|
$
|
64.7
|
Finance lease ROU assets (a)
|
Property, plant and equipment - net
|
8.6
|
|
Lease Liabilities
|
|||
Operating lease liabilities
|
Other current liabilities
|
$
|
10.1
|
Operating lease liabilities
|
Other noncurrent liabilities
|
53.1
|
|
Finance lease liabilities
|
Long-term debt - current portion
|
0.3
|
|
Finance lease liabilities
|
Long-term debt
|
3.5
|
(a) |
Finance lease ROU assets were recorded net of accumulated amortization of $1.5 million as of September 30, 2019.
|
|
Three months ended
September 30, 2019
|
Six months ended
September 30, 2019
|
||||||
Operating lease expense (a)
|
$
|
5.2
|
$
|
10.4
|
||||
Finance lease expense:
|
||||||||
Depreciation of ROU assets
|
0.1
|
0.2
|
||||||
Interest on lease liabilities
|
0.1
|
0.1
|
||||||
Total lease expense
|
$
|
5.4
|
$
|
10.7
|
(a) |
For the three and six months ended September 30, 2019, operating lease expense included short-term lease expense of $1.0 million and $1.9 million, respectively. Variable lease expense was not significant.
|
|
Three months ended
September 30, 2019
|
Six months ended
September 30, 2019
|
||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||
Operating cash flows for operating leases
|
$
|
4.2
|
$
|
7.9
|
||||
Financing cash flows for finance leases
|
0.1
|
0.2
|
||||||
ROU assets obtained in exchange for lease liabilities
|
||||||||
Operating leases
|
$
|
5.1
|
$
|
5.4
|
||||
Finance leases
|
0.1
|
0.1
|
|
September 30, 2019
|
Weighted-average remaining lease term:
|
|
Operating leases
|
9.3 years
|
Finance leases
|
9.3 years
|
Weighted-average discount rate:
|
|
Operating leases
|
3.5%
|
Finance leases
|
4.8%
|
Fiscal Year
|
Operating Leases
|
Finance Leases
|
||||||
Remainder of fiscal 2020
|
$
|
6.0
|
$
|
0.3
|
||||
2021
|
12.1
|
0.5
|
||||||
2022
|
10.6
|
0.5
|
||||||
2023
|
8.6
|
0.5
|
||||||
2024
|
6.1
|
0.5
|
||||||
2025 and beyond
|
31.1
|
2.4
|
||||||
Total lease payments
|
74.5
|
4.7
|
||||||
Less: Interest
|
(11.3
|
)
|
(0.9
|
)
|
||||
Present value of lease liabilities
|
$
|
63.2
|
$
|
3.8
|
Fiscal Year
|
||||
2020
|
$
|
14.2
|
||
2021
|
12.4
|
|||
2022
|
9.1
|
|||
2023
|
7.1
|
|||
2024
|
4.7
|
|||
2025 and beyond
|
22.9
|
|||
Total
|
$
|
70.4
|
|
Fiscal year
of maturity
|
September 30, 2019
|
March 31, 2019
|
|||||||||
Term loans
|
2025
|
$
|
195.4
|
$
|
238.4
|
|||||||
6.8% Senior Notes
|
2021
|
77.0
|
85.0
|
|||||||||
5.8% Senior Notes
|
2027
|
50.0
|
50.0
|
|||||||||
Other (a)
|
-
|
7.1
|
14.3
|
|||||||||
329.5
|
387.7
|
|||||||||||
Less: current portion
|
(93.6
|
)
|
(48.6
|
)
|
||||||||
Less: unamortized debt issuance costs
|
(3.7
|
)
|
(4.0
|
)
|
||||||||
Total long-term debt
|
$
|
232.2
|
$
|
335.1
|
(a) |
Other long-term debt primarily includes borrowings by foreign subsidiaries and finance lease obligations.
|
Fiscal Year
|
||||
Remainder of 2020
|
$
|
15.9
|
||
2021
|
84.5
|
|||
2022
|
21.6
|
|||
2023
|
21.6
|
|||
2024
|
21.6
|
|||
2025 & beyond
|
164.3
|
|||
Total
|
$
|
329.5
|
|
Three months ended September 30, 2019
|
Six months ended September 30, 2019
|
||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
||||||||||||||||||||||||
Beginning balance
|
$
|
(40.7
|
)
|
$
|
(135.2
|
)
|
$
|
(0.3
|
)
|
$
|
(176.2
|
)
|
$
|
(42.6
|
)
|
$
|
(136.3
|
)
|
$
|
0.5
|
$
|
(178.4
|
)
|
|||||||||
|
||||||||||||||||||||||||||||||||
Other comprehensive loss before reclassifications
|
(18.7
|
)
|
-
|
(0.6
|
)
|
(19.3
|
)
|
(16.8
|
)
|
-
|
(1.6
|
)
|
(18.4
|
)
|
||||||||||||||||||
Reclassifications:
|
||||||||||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
1.4
|
-
|
1.4
|
-
|
2.8
|
-
|
2.8
|
||||||||||||||||||||||||
Realized losses - net (b)
|
-
|
-
|
0.3
|
0.3
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Foreign currency translation gains (c)
|
(0.6
|
)
|
-
|
-
|
(0.6
|
)
|
(0.6
|
)
|
-
|
-
|
(0.6
|
)
|
||||||||||||||||||||
Income taxes
|
-
|
(0.3
|
)
|
0.1
|
(0.2
|
)
|
-
|
(0.6
|
)
|
0.4
|
(0.2
|
)
|
||||||||||||||||||||
Total other comprehensive income (loss)
|
(19.3
|
)
|
1.1
|
(0.2
|
)
|
(18.4
|
)
|
(17.4
|
)
|
2.2
|
(1.0
|
)
|
(16.2
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Ending balance
|
$
|
(60.0
|
)
|
$
|
(134.1
|
)
|
$
|
(0.5
|
)
|
$
|
(194.6
|
)
|
$
|
(60.0
|
)
|
$
|
(134.1
|
)
|
$
|
(0.5
|
)
|
$
|
(194.6
|
)
|
|
Three months ended September 30, 2018
|
Six months ended September 30, 2018
|
||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
||||||||||||||||||||||||
Beginning balance
|
$
|
(30.2
|
)
|
$
|
(133.9
|
)
|
$
|
0.5
|
$
|
(163.6
|
)
|
$
|
(5.5
|
)
|
$
|
(134.9
|
)
|
$
|
0.1
|
$
|
(140.3
|
)
|
||||||||||
|
||||||||||||||||||||||||||||||||
Other comprehensive loss before reclassifications
|
(6.1
|
)
|
-
|
(0.7
|
)
|
(6.8
|
)
|
(30.8
|
)
|
-
|
(0.2
|
)
|
(31.0
|
)
|
||||||||||||||||||
Reclassifications:
|
||||||||||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
1.3
|
-
|
1.3
|
-
|
2.6
|
-
|
2.6
|
||||||||||||||||||||||||
Foreign currency translation losses (d)
|
0.8
|
-
|
-
|
0.8
|
0.8
|
-
|
-
|
0.8
|
||||||||||||||||||||||||
Income taxes
|
-
|
(0.3
|
)
|
0.2
|
(0.1
|
)
|
-
|
(0.6
|
)
|
0.1
|
(0.5
|
)
|
||||||||||||||||||||
Total other comprehensive income (loss)
|
(5.3
|
)
|
1.0
|
(0.5
|
)
|
(4.8
|
)
|
(30.0
|
)
|
2.0
|
(0.1
|
)
|
(28.1
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Ending balance
|
$
|
(35.5
|
)
|
$
|
(132.9
|
)
|
$
|
-
|
$
|
(168.4
|
)
|
$
|
(35.5
|
)
|
$
|
(132.9
|
)
|
$
|
-
|
$
|
(168.4
|
)
|
(a) |
Amounts are included in the calculation of net periodic benefit cost for the Company’s defined benefit plans, which include pension and other postretirement plans. See Note 4 for additional information about the Company’s pension plans.
|
(b) |
Amounts represent net gains and losses associated with cash flow hedges that were reclassified to net earnings.
|
(c) |
As a result of the sale of its investment in NEX during the second quarter of fiscal 2020, the Company wrote off $0.6 million of accumulated foreign currency translation gains.
|
(d) |
As a result of the sale of a business in South Africa during the second quarter of fiscal 2019, the Company wrote off $0.8 million of accumulated foreign currency translation losses.
|
|
Three months ended September 30,
|
|||||||||||||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
VTS
|
$
|
288.8
|
$
|
10.5
|
$
|
299.3
|
$
|
321.5
|
$
|
14.1
|
$
|
335.6
|
||||||||||||
CIS
|
155.7
|
1.0
|
156.7
|
177.4
|
0.8
|
178.2
|
||||||||||||||||||
BHVAC
|
55.7
|
0.3
|
56.0
|
50.0
|
0.7
|
50.7
|
||||||||||||||||||
Segment total
|
500.2
|
11.8
|
512.0
|
548.9
|
15.6
|
564.5
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(11.8
|
)
|
(11.8
|
)
|
-
|
(15.6
|
)
|
(15.6
|
)
|
||||||||||||||
Net sales
|
$
|
500.2
|
$
|
-
|
$
|
500.2
|
$
|
548.9
|
$
|
-
|
$
|
548.9
|
|
Six months ended September 30,
|
|||||||||||||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
VTS
|
$
|
601.4
|
$
|
24.4
|
$
|
625.8
|
$
|
659.8
|
$
|
28.6
|
$
|
688.4
|
||||||||||||
CIS
|
323.6
|
1.9
|
325.5
|
360.9
|
1.2
|
362.1
|
||||||||||||||||||
BHVAC
|
104.2
|
0.8
|
105.0
|
94.3
|
1.4
|
95.7
|
||||||||||||||||||
Segment total
|
1,029.2
|
27.1
|
1,056.3
|
1,115.0
|
31.2
|
1,146.2
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(27.1
|
)
|
(27.1
|
)
|
-
|
(31.2
|
)
|
(31.2
|
)
|
||||||||||||||
Net sales
|
$
|
1,029.2
|
$
|
-
|
$
|
1,029.2
|
$
|
1,115.0
|
$
|
-
|
$
|
1,115.0
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||||||||||||||||||
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
||||||||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||||||||||
VTS
|
$
|
35.3
|
11.8
|
%
|
$
|
44.6
|
13.3
|
%
|
$
|
80.3
|
12.8
|
%
|
$
|
98.6
|
14.3
|
%
|
||||||||||||||||
CIS
|
22.9
|
14.6
|
%
|
28.3
|
15.9
|
%
|
47.2
|
14.5
|
%
|
56.9
|
15.7
|
%
|
||||||||||||||||||||
BHVAC
|
17.7
|
31.7
|
%
|
15.0
|
29.5
|
%
|
31.4
|
29.9
|
%
|
26.6
|
27.8
|
%
|
||||||||||||||||||||
Segment total
|
75.9
|
14.8
|
%
|
87.9
|
15.6
|
%
|
158.9
|
15.0
|
%
|
182.1
|
15.9
|
%
|
||||||||||||||||||||
Corporate and eliminations
|
(0.2
|
)
|
-
|
-
|
-
|
0.2
|
-
|
0.1
|
-
|
|||||||||||||||||||||||
Gross profit
|
$
|
75.7
|
15.1
|
%
|
$
|
87.9
|
16.0
|
%
|
$
|
159.1
|
15.5
|
%
|
$
|
182.2
|
16.3
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Operating income:
|
||||||||||||||||
VTS
|
$
|
7.4
|
$
|
14.1
|
$
|
24.7
|
$
|
39.6
|
||||||||
CIS
|
8.5
|
12.9
|
17.5
|
26.1
|
||||||||||||
BHVAC
|
8.8
|
4.8
|
14.1
|
8.0
|
||||||||||||
Segment total
|
24.7
|
31.8
|
56.3
|
73.7
|
||||||||||||
Corporate and eliminations
|
(18.7
|
)
|
(9.0
|
)
|
(32.2
|
)
|
(16.1
|
)
|
||||||||
Operating income
|
$
|
6.0
|
$
|
22.8
|
$
|
24.1
|
$
|
57.6
|
|
September 30, 2019
|
March 31, 2019
|
||||||
Total assets: (a)
|
||||||||
VTS
|
$
|
755.3
|
$
|
749.9
|
||||
CIS
|
612.8
|
604.2
|
||||||
BHVAC
|
103.4
|
89.4
|
||||||
Corporate and eliminations
|
93.0
|
94.5
|
||||||
Total assets
|
$
|
1,564.5
|
$
|
1,538.0
|
(a) |
The Company adopted new lease accounting guidance and, as a result, recorded $61.3 million of operating lease assets on its consolidated balance sheet on April 1, 2019. See Note 1 for additional information.
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
500.2
|
100.0
|
%
|
$
|
548.9
|
100.0
|
%
|
$
|
1,029.2
|
100.0
|
%
|
$
|
1,115.0
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
424.5
|
84.9
|
%
|
461.0
|
84.0
|
%
|
870.1
|
84.5
|
%
|
932.8
|
83.7
|
%
|
||||||||||||||||||||
Gross profit
|
75.7
|
15.1
|
%
|
87.9
|
16.0
|
%
|
159.1
|
15.5
|
%
|
182.2
|
16.3
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
67.4
|
13.5
|
%
|
63.4
|
11.5
|
%
|
130.9
|
12.7
|
%
|
122.7
|
11.0
|
%
|
||||||||||||||||||||
Restructuring expenses
|
2.3
|
0.4
|
%
|
-
|
-
|
4.1
|
0.4
|
%
|
0.2
|
-
|
||||||||||||||||||||||
Loss on sale of assets
|
-
|
-
|
1.7
|
0.3
|
%
|
-
|
-
|
1.7
|
0.1
|
%
|
||||||||||||||||||||||
Operating income
|
6.0
|
1.2
|
%
|
22.8
|
4.2
|
%
|
24.1
|
2.3
|
%
|
57.6
|
5.2
|
%
|
||||||||||||||||||||
Interest expense
|
(5.8
|
)
|
-1.1
|
%
|
(6.5
|
)
|
-1.2
|
%
|
(11.7
|
)
|
-1.1
|
%
|
(12.7
|
)
|
-1.1
|
%
|
||||||||||||||||
Other expense – net
|
(1.3
|
)
|
-0.3
|
%
|
(0.5
|
)
|
-0.1
|
%
|
(2.4
|
)
|
-0.2
|
%
|
(1.6
|
)
|
-0.1
|
%
|
||||||||||||||||
(Loss) earnings before income taxes
|
(1.1
|
)
|
-0.2
|
%
|
15.8
|
2.9
|
%
|
10.0
|
1.0
|
%
|
43.3
|
3.9
|
%
|
|||||||||||||||||||
(Provision) benefit for income taxes
|
(3.7
|
)
|
-0.7
|
%
|
22.9
|
4.2
|
%
|
(6.6
|
)
|
-0.6
|
%
|
17.9
|
1.6
|
%
|
||||||||||||||||||
Net (loss) earnings
|
$
|
(4.8
|
)
|
-1.0
|
%
|
$
|
38.7
|
7.1
|
%
|
$
|
3.4
|
0.3
|
%
|
$
|
61.2
|
5.5
|
%
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
299.3
|
100.0
|
%
|
$
|
335.6
|
100.0
|
%
|
$
|
625.8
|
100.0
|
%
|
$
|
688.4
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
264.0
|
88.2
|
%
|
291.0
|
86.7
|
%
|
545.5
|
87.2
|
%
|
589.8
|
85.7
|
%
|
||||||||||||||||||||
Gross profit
|
35.3
|
11.8
|
%
|
44.6
|
13.3
|
%
|
80.3
|
12.8
|
%
|
98.6
|
14.3
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
26.0
|
8.7
|
%
|
30.5
|
9.1
|
%
|
52.1
|
8.3
|
%
|
58.9
|
8.5
|
%
|
||||||||||||||||||||
Restructuring expenses
|
1.9
|
0.6
|
%
|
-
|
-
|
3.5
|
0.6
|
%
|
0.1
|
-
|
||||||||||||||||||||||
Operating income
|
$
|
7.4
|
2.5
|
%
|
$
|
14.1
|
4.2
|
%
|
$
|
24.7
|
3.9
|
%
|
$
|
39.6
|
5.8
|
%
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
156.7
|
100.0
|
%
|
$
|
178.2
|
100.0
|
%
|
$
|
325.5
|
100.0
|
%
|
$
|
362.1
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
133.8
|
85.4
|
%
|
149.9
|
84.1
|
%
|
278.3
|
85.5
|
%
|
305.2
|
84.3
|
%
|
||||||||||||||||||||
Gross profit
|
22.9
|
14.6
|
%
|
28.3
|
15.9
|
%
|
47.2
|
14.5
|
%
|
56.9
|
15.7
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
14.0
|
9.0
|
%
|
15.4
|
8.7
|
%
|
29.1
|
8.9
|
%
|
30.7
|
8.5
|
%
|
||||||||||||||||||||
Restructuring expenses
|
0.4
|
0.2
|
%
|
-
|
-
|
0.6
|
0.2
|
%
|
0.1
|
-
|
||||||||||||||||||||||
Operating income
|
$
|
8.5
|
5.4
|
%
|
$
|
12.9
|
7.2
|
%
|
$
|
17.5
|
5.4
|
%
|
$
|
26.1
|
7.2
|
%
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
56.0
|
100.0
|
%
|
$
|
50.7
|
100.0
|
%
|
$
|
105.0
|
100.0
|
%
|
$
|
95.7
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
38.3
|
68.3
|
%
|
35.7
|
70.5
|
%
|
73.6
|
70.1
|
%
|
69.1
|
72.2
|
%
|
||||||||||||||||||||
Gross profit
|
17.7
|
31.7
|
%
|
15.0
|
29.5
|
%
|
31.4
|
29.9
|
%
|
26.6
|
27.8
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
8.9
|
15.9
|
%
|
8.5
|
16.7
|
%
|
17.3
|
16.5
|
%
|
16.9
|
17.7
|
%
|
||||||||||||||||||||
Loss on sale of assets
|
-
|
-
|
1.7
|
3.4
|
%
|
-
|
-
|
1.7
|
1.8
|
%
|
||||||||||||||||||||||
Operating income
|
$
|
8.8
|
15.8
|
%
|
$
|
4.8
|
9.4
|
%
|
$
|
14.1
|
13.4
|
%
|
$
|
8.0
|
8.3
|
%
|
• |
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, in particular, foreign currency exchange rate fluctuations, tariffs (and potential trade war impacts resulting from tariffs or retaliatory actions), inflation, changes in interest rates, recession and recovery therefrom, restrictions and uncertainty associated with cross-border trade, 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 United States or by its trade partners, as well as continuing uncertainty regarding the timing and the short- and long-term implications of “Brexit”;
|
• |
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 and the behavior of our suppliers. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, whether through our quotation process or through contract provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions; 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 overall health and continually increasing price-down focus of 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;
|
• |
Unanticipated problems with suppliers meeting our time, quantity, quality and price demands, and the overall health of our suppliers, including their ability and willingness to supply our volume demands if their production capacity becomes constrained;
|
• |
Our ability to maintain current customer programs and compete effectively for new business, including our ability to offset or otherwise address increasing pricing pressures from competitors and price reduction and overall service pressures from customers, particularly in the face of macro-economic instability;
|
• |
Unanticipated product or manufacturing difficulties or operating inefficiencies, including unanticipated program launch and product transfer challenges and warranty claims;
|
• |
Unanticipated 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 reduce our cost structure in response to sales volume declines and to complete restructuring activities and realize the anticipated benefits of those activities;
|
• |
Costs and other effects of the investigation and remediation of environmental contamination; particularly 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 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 any 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 unanticipated litigation, claims, or other obligations.
|
• |
Our ability to successfully realize anticipated benefits from our increased “industrial” market presence, with our CIS and BHVAC businesses, while maintaining appropriate focus on the market opportunities presented by our VTS business;
|
• |
Our ability to successfully separate and sell our automotive business within our VTS segment at a price that is sufficient to maximize the value of the business, and in order to optimize the segment’s future financial performance;
|
• |
Our ability to identify and execute growth and diversification opportunities in order to position us for long-term success; and
|
• |
The potential impacts from unanticipated actions by activist shareholders, including disruption of our business and related costs.
|
• |
Our ability to fund our global liquidity requirements efficiently for Modine’s current operations and meet our long-term commitments in the event of an unexpected disruption in or tightening of the credit markets or extended recessionary conditions in the global economy;
|
• |
The impact of potential increases in interest rates, particularly in LIBOR and the Euro Interbank Offered Rate (“EURIBOR”) in relation to our variable-rate debt obligations, and of the continued uncertainty around the utilization of LIBOR or alternative reference rates;
|
• |
Our ability to maintain our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) in our target range of 1.5 to 2.5 in an efficient manner;
|
• |
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.
|
(a) |
Exhibits:
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
Form of Fiscal 2020 Modine Non-Employee Director Restricted Stock Unit Award Agreement
|
X
|
||
Rule 13a-14(a)/15d-14(a) Certification of Thomas A. Burke, President and Chief Executive Officer.
|
X
|
||
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.
|
X
|
||
Section 1350 Certification of Thomas A. Burke, President and Chief Executive Officer.
|
X
|
||
Section 1350 Certification of Michael B. Lucareli, Vice President, Finance and 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
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|
101.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
|
Full name of Grantee:
|
||
Date of Award:
|
July 25, 2019
|
|
Total number of
|
||
Restricted Stock Units:
|
|
MODINE MANUFACTURING COMPANY
|
|
|
By:
|
|
|
Thomas A. Burke
|
|
|
President and Chief Executive Officer
|
|
|
|
1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended September 30, 2019;
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 8, 2019
|
|
/s/ Thomas A. Burke
|
|
Thomas A. Burke
|
|
President and Chief Executive Officer
|
|
1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended September 30, 2019;
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 8, 2019
|
|
/s/ Michael B. Lucareli
|
|
Michael B. Lucareli
|
|
Vice President, Finance and Chief Financial Officer
|
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 8, 2019
|
|
/s/ Thomas A. Burke
|
|
Thomas A. Burke
|
|
President and Chief Executive Officer
|
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: |
November 8, 2019
|
/s/ Michael B. Lucareli | |
Michael B. Lucareli | |
Vice President, Finance and Chief Financial Officer
|