☑ |
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
|
||
23
|
||
34
|
||
34
|
||
PART II. OTHER INFORMATION
|
|
|
35
|
||
36
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Net sales
|
$
|
461.4
|
$
|
500.2
|
$
|
809.2
|
$
|
1,029.2
|
||||||||
Cost of sales
|
380.6
|
424.5
|
682.3
|
870.1
|
||||||||||||
Gross profit
|
80.8
|
75.7
|
126.9
|
159.1
|
||||||||||||
Selling, general and administrative expenses
|
50.8
|
67.4
|
95.5
|
130.9
|
||||||||||||
Restructuring expenses
|
1.5
|
2.3
|
6.1
|
4.1
|
||||||||||||
Operating income
|
28.5
|
6.0
|
25.3
|
24.1
|
||||||||||||
Interest expense
|
(5.2
|
)
|
(5.8
|
)
|
(10.6
|
)
|
(11.7
|
)
|
||||||||
Other expense – net
|
(0.5
|
)
|
(1.3
|
)
|
(0.5
|
)
|
(2.4
|
)
|
||||||||
Earnings (loss) before income taxes
|
22.8
|
(1.1
|
)
|
14.2
|
10.0
|
|||||||||||
Provision for income taxes
|
(13.9
|
)
|
(3.7
|
)
|
(13.7
|
)
|
(6.6
|
)
|
||||||||
Net earnings (loss)
|
8.9
|
(4.8
|
)
|
0.5
|
3.4
|
|||||||||||
Net (earnings) loss attributable to noncontrolling interest
|
(0.3
|
)
|
0.1
|
(0.5
|
)
|
(0.1
|
)
|
|||||||||
Net earnings (loss) attributable to Modine
|
$
|
8.6
|
$
|
(4.7
|
)
|
$
|
-
|
$
|
3.3
|
|||||||
|
||||||||||||||||
Net earnings (loss) per share attributable to Modine shareholders:
|
||||||||||||||||
Basic
|
$
|
0.17
|
$
|
(0.09
|
)
|
$
|
-
|
$
|
0.07
|
|||||||
Diluted
|
$
|
0.17
|
$
|
(0.09
|
)
|
$
|
-
|
$
|
0.06
|
|||||||
|
||||||||||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Basic
|
51.3
|
50.8
|
51.1
|
50.8
|
||||||||||||
Diluted
|
51.3
|
50.8
|
51.1
|
51.1
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Net earnings (loss)
|
$
|
8.9
|
$
|
(4.8
|
)
|
$
|
0.5
|
$
|
3.4
|
|||||||
Other comprehensive income (loss):
|
||||||||||||||||
Foreign currency translation
|
17.4
|
(19.5
|
)
|
22.8
|
(17.7
|
)
|
||||||||||
Defined benefit plans, net of income taxes of $0.4, $0.3, $0.8 and $0.6 million
|
1.3
|
1.1
|
2.5
|
2.2
|
||||||||||||
Cash flow hedges, net of income taxes of $0.2, $0.1, $0.5 and $0.4 million
|
0.4
|
(0.2
|
)
|
1.4
|
(1.0
|
)
|
||||||||||
Total other comprehensive income (loss)
|
19.1
|
(18.6
|
)
|
26.7
|
(16.5
|
)
|
||||||||||
|
||||||||||||||||
Comprehensive income (loss)
|
28.0
|
(23.4
|
)
|
27.2
|
(13.1
|
)
|
||||||||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(0.4
|
)
|
0.3
|
(0.7
|
)
|
0.2
|
||||||||||
Comprehensive income (loss) attributable to Modine
|
$
|
27.6
|
$
|
(23.1
|
)
|
$
|
26.5
|
$
|
(12.9
|
)
|
|
September 30, 2020
|
March 31, 2020
|
||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
62.5
|
$
|
70.9
|
||||
Trade accounts receivable – net
|
297.2
|
292.5
|
||||||
Inventories
|
201.7
|
207.4
|
||||||
Other current assets
|
55.0
|
62.5
|
||||||
Total current assets
|
616.4
|
633.3
|
||||||
Property, plant and equipment – net
|
439.1
|
448.0
|
||||||
Intangible assets – net
|
104.6
|
106.3
|
||||||
Goodwill
|
169.4
|
166.1
|
||||||
Deferred income taxes
|
102.8
|
104.8
|
||||||
Other noncurrent assets
|
78.6
|
77.6
|
||||||
Total assets
|
$
|
1,510.9
|
$
|
1,536.1
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Short-term debt
|
$
|
17.1
|
$
|
14.8
|
||||
Long-term debt – current portion
|
13.5
|
15.6
|
||||||
Accounts payable
|
224.5
|
227.4
|
||||||
Accrued compensation and employee benefits
|
75.1
|
65.0
|
||||||
Other current liabilities
|
61.3
|
49.2
|
||||||
Total current liabilities
|
391.5
|
372.0
|
||||||
Long-term debt
|
373.8
|
452.0
|
||||||
Deferred income taxes
|
7.1
|
8.1
|
||||||
Pensions
|
130.2
|
130.9
|
||||||
Other noncurrent liabilities
|
86.1
|
79.5
|
||||||
Total liabilities
|
988.7
|
1,042.5
|
||||||
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 53.8 million and 53.4 million shares
|
33.6
|
33.3
|
||||||
Additional paid-in capital
|
247.0
|
245.1
|
||||||
Retained earnings
|
469.9
|
469.9
|
||||||
Accumulated other comprehensive loss
|
(196.8
|
)
|
(223.3
|
)
|
||||
Treasury stock, at cost, 2.7 million and 2.5 million shares
|
(37.9
|
)
|
(37.1
|
)
|
||||
Total Modine shareholders’ equity
|
515.8
|
487.9
|
||||||
Noncontrolling interest
|
6.4
|
5.7
|
||||||
Total equity
|
522.2
|
493.6
|
||||||
Total liabilities and equity
|
$
|
1,510.9
|
$
|
1,536.1
|
|
Six months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
0.5
|
$
|
3.4
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
37.9
|
38.3
|
||||||
Stock-based compensation expense
|
2.1
|
4.4
|
||||||
Deferred income taxes
|
1.0
|
(0.5
|
)
|
|||||
Other – net
|
2.5
|
2.0
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
4.4
|
19.9
|
||||||
Inventories
|
11.0
|
(26.2
|
)
|
|||||
Accounts payable
|
(5.7
|
)
|
(5.6
|
)
|
||||
Other assets and liabilities
|
33.6
|
(18.2
|
)
|
|||||
Net cash provided by operating activities
|
87.3
|
17.5
|
||||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(14.6
|
)
|
(41.4
|
)
|
||||
Proceeds from disposition of assets
|
0.6
|
-
|
||||||
Proceeds from sale of investment in affiliate
|
-
|
3.8
|
||||||
Other – net
|
0.7
|
1.0
|
||||||
Net cash used for investing activities
|
(13.3
|
)
|
(36.6
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Borrowings of debt
|
8.2
|
425.0
|
||||||
Repayments of debt
|
(103.0
|
)
|
(413.1
|
)
|
||||
Borrowings on bank overdraft facilities – net
|
12.5
|
12.4
|
||||||
Financing fees paid
|
(0.8
|
)
|
(1.1
|
)
|
||||
Purchases of treasury stock under share repurchase program
|
-
|
(2.4
|
)
|
|||||
Dividend paid to noncontrolling interest
|
-
|
(1.3
|
)
|
|||||
Other – net
|
(0.8
|
)
|
(3.0
|
)
|
||||
Net cash (used for) provided by financing activities
|
(83.9
|
)
|
16.5
|
|||||
|
||||||||
Effect of exchange rate changes on cash
|
1.3
|
(0.9
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
(8.6
|
)
|
(3.5
|
)
|
||||
|
||||||||
Cash, cash equivalents and restricted cash – beginning of period
|
71.3
|
42.2
|
||||||
Cash, cash equivalents and restricted cash – end of period
|
$
|
62.7
|
$
|
38.7
|
Common stock
|
Additional
paid-in
|
Retained
|
Accumulated other
|
Treasury
stock, at
|
Non- controlling
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
capital
|
earnings
|
comprehensive loss
|
cost
|
interest
|
Total
|
||||||||||||||||||||||||
Balance, March 31, 2020
|
53.4
|
$
|
33.3
|
$
|
245.1
|
$
|
469.9
|
$
|
(223.3
|
)
|
$
|
(37.1
|
)
|
$
|
5.7
|
$
|
493.6
|
|||||||||||||||
Net loss attributable to Modine
|
-
|
-
|
-
|
(8.6
|
)
|
-
|
-
|
-
|
(8.6
|
)
|
||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
7.5
|
-
|
0.1
|
7.6
|
||||||||||||||||||||||||
Stock options and awards
|
0.3
|
0.2
|
(0.2
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(0.8
|
)
|
-
|
(0.8
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
0.7
|
-
|
-
|
-
|
-
|
0.7
|
||||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Balance, June 30, 2020
|
53.7
|
$
|
33.5
|
$
|
245.6
|
$
|
461.3
|
$
|
(215.8
|
)
|
$
|
(37.9
|
)
|
$
|
6.0
|
$
|
492.7
|
|||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
8.6
|
-
|
-
|
-
|
8.6
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
19.0
|
-
|
0.1
|
19.1
|
||||||||||||||||||||||||
Stock options and awards
|
0.1
|
0.1
|
-
|
-
|
-
|
-
|
-
|
0.1
|
||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
1.4
|
-
|
-
|
-
|
-
|
1.4
|
||||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.3
|
0.3
|
||||||||||||||||||||||||
Balance, September 30, 2020
|
53.8
|
$
|
33.6
|
$
|
247.0
|
$
|
469.9
|
$
|
(196.8
|
)
|
$
|
(37.9
|
)
|
$
|
6.4
|
$
|
522.2
|
Common stock
|
Additional
paid-in
|
Retained
|
Accumulated other
|
Treasury
stock, at
|
Non-controlling
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
capital
|
earnings
|
comprehensive 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
|
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
||||||||||||||||||||||||||||||||||||||
|
CIS
|
BHVAC
|
HDE
|
Automotive
|
Segment
Total
|
CIS
|
BHVAC
|
HDE
|
Automotive
|
Segment
Total
|
||||||||||||||||||||||||||||||
Primary end market:
|
||||||||||||||||||||||||||||||||||||||||
Commercial HVAC&R
|
$
|
105.3
|
$
|
48.1
|
$
|
-
|
$
|
-
|
$
|
153.4
|
$
|
115.9
|
$
|
46.1
|
$
|
-
|
$
|
-
|
$
|
162.0
|
||||||||||||||||||||
Data center cooling
|
14.4
|
13.6
|
-
|
-
|
28.0
|
26.7
|
9.5
|
-
|
-
|
36.2
|
||||||||||||||||||||||||||||||
Industrial cooling
|
12.7
|
-
|
-
|
-
|
12.7
|
11.7
|
-
|
-
|
-
|
11.7
|
||||||||||||||||||||||||||||||
Commercial vehicle
|
-
|
-
|
61.5
|
3.8
|
65.3
|
-
|
-
|
76.1
|
5.7
|
81.8
|
||||||||||||||||||||||||||||||
Off-highway
|
-
|
-
|
58.1
|
0.8
|
58.9
|
-
|
-
|
56.7
|
2.9
|
59.6
|
||||||||||||||||||||||||||||||
Automotive and light vehicle
|
-
|
-
|
28.0
|
97.6
|
125.6
|
-
|
-
|
30.4
|
104.7
|
135.1
|
||||||||||||||||||||||||||||||
Other
|
1.7
|
0.2
|
18.0
|
7.7
|
27.6
|
2.4
|
0.4
|
24.0
|
2.4
|
29.2
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
134.1
|
$
|
61.9
|
$
|
165.6
|
$
|
109.9
|
$
|
471.5
|
$
|
156.7
|
$
|
56.0
|
$
|
187.2
|
$
|
115.7
|
$
|
515.6
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Geographic location:
|
||||||||||||||||||||||||||||||||||||||||
Americas
|
$
|
67.6
|
$
|
38.5
|
$
|
98.6
|
$
|
16.9
|
$
|
221.6
|
$
|
86.0
|
$
|
38.1
|
$
|
127.5
|
$
|
17.6
|
$
|
269.2
|
||||||||||||||||||||
Europe
|
53.0
|
23.4
|
32.1
|
75.4
|
183.9
|
57.5
|
17.9
|
31.7
|
82.6
|
189.7
|
||||||||||||||||||||||||||||||
Asia
|
13.5
|
-
|
34.9
|
17.6
|
66.0
|
13.2
|
-
|
28.0
|
15.5
|
56.7
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
134.1
|
$
|
61.9
|
$
|
165.6
|
$
|
109.9
|
$
|
471.5
|
$
|
156.7
|
$
|
56.0
|
$
|
187.2
|
$
|
115.7
|
$
|
515.6
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
122.9
|
$
|
61.9
|
$
|
157.4
|
$
|
109.9
|
$
|
452.1
|
$
|
132.4
|
$
|
56.0
|
$
|
178.6
|
$
|
115.7
|
$
|
482.7
|
||||||||||||||||||||
Products transferred over time
|
11.2
|
-
|
8.2
|
-
|
19.4
|
24.3
|
-
|
8.6
|
-
|
32.9
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
134.1
|
$
|
61.9
|
$
|
165.6
|
$
|
109.9
|
$
|
471.5
|
$
|
156.7
|
$
|
56.0
|
$
|
187.2
|
$
|
115.7
|
$
|
515.6
|
|
Six months ended September 30, 2020
|
Six months ended September 30, 2019
|
||||||||||||||||||||||||||||||||||||||
|
CIS
|
BHVAC
|
HDE
|
Automotive
|
Segment
Total
|
CIS
|
BHVAC
|
HDE
|
Automotive
|
Segment
Total
|
||||||||||||||||||||||||||||||
Primary end market:
|
||||||||||||||||||||||||||||||||||||||||
Commercial HVAC&R
|
$
|
199.2
|
$
|
80.6
|
$
|
-
|
$
|
-
|
$
|
279.8
|
$
|
246.8
|
$
|
84.1
|
$
|
-
|
$
|
-
|
$
|
330.9
|
||||||||||||||||||||
Data center cooling
|
28.2
|
28.6
|
-
|
-
|
56.8
|
50.9
|
20.1
|
-
|
-
|
71.0
|
||||||||||||||||||||||||||||||
Industrial cooling
|
24.6
|
-
|
-
|
-
|
24.6
|
23.1
|
-
|
-
|
-
|
23.1
|
||||||||||||||||||||||||||||||
Commercial vehicle
|
-
|
-
|
107.8
|
5.9
|
113.7
|
-
|
-
|
168.8
|
11.7
|
180.5
|
||||||||||||||||||||||||||||||
Off-highway
|
-
|
-
|
111.5
|
1.5
|
113.0
|
-
|
-
|
126.9
|
6.6
|
133.5
|
||||||||||||||||||||||||||||||
Automotive and light vehicle
|
-
|
-
|
41.0
|
152.0
|
193.0
|
-
|
-
|
57.2
|
207.1
|
264.3
|
||||||||||||||||||||||||||||||
Other
|
4.6
|
0.3
|
28.8
|
12.6
|
46.3
|
4.7
|
0.8
|
50.7
|
3.9
|
60.1
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
256.6
|
$
|
109.5
|
$
|
289.1
|
$
|
172.0
|
$
|
827.2
|
$
|
325.5
|
$
|
105.0
|
$
|
403.6
|
$
|
229.3
|
$
|
1,063.4
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Geographic location:
|
||||||||||||||||||||||||||||||||||||||||
Americas
|
$
|
127.5
|
$
|
64.5
|
$
|
166.5
|
$
|
24.4
|
$
|
382.9
|
$
|
183.1
|
$
|
67.2
|
$
|
263.5
|
$
|
35.0
|
$
|
548.8
|
||||||||||||||||||||
Europe
|
103.9
|
45.0
|
56.2
|
115.0
|
320.1
|
116.1
|
37.8
|
78.1
|
165.6
|
397.6
|
||||||||||||||||||||||||||||||
Asia
|
25.2
|
-
|
66.4
|
32.6
|
124.2
|
26.3
|
-
|
62.0
|
28.7
|
117.0
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
256.6
|
$
|
109.5
|
$
|
289.1
|
$
|
172.0
|
$
|
827.2
|
$
|
325.5
|
$
|
105.0
|
$
|
403.6
|
$
|
229.3
|
$
|
1,063.4
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||||||||||||||||||||||||||
Products transferred at a point in time
|
$
|
232.2
|
$
|
109.5
|
$
|
278.7
|
$
|
172.0
|
$
|
792.4
|
$
|
276.3
|
$
|
105.0
|
$
|
387.6
|
$
|
229.3
|
$
|
998.2
|
||||||||||||||||||||
Products transferred over time
|
24.4
|
-
|
10.4
|
-
|
34.8
|
49.2
|
-
|
16.0
|
-
|
65.2
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
256.6
|
$
|
109.5
|
$
|
289.1
|
$
|
172.0
|
$
|
827.2
|
$
|
325.5
|
$
|
105.0
|
$
|
403.6
|
$
|
229.3
|
$
|
1,063.4
|
|
September 30, 2020
|
March 31, 2020
|
||||||
Contract assets
|
$
|
14.6
|
$
|
21.7
|
||||
Contract liabilities
|
8.4
|
5.6
|
● |
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,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Service cost
|
$
|
0.1
|
$
|
0.1
|
$
|
0.2
|
$
|
0.2
|
||||||||
Interest cost
|
1.9
|
2.2
|
3.9
|
4.5
|
||||||||||||
Expected return on plan assets
|
(2.8
|
)
|
(2.9
|
)
|
(5.7
|
)
|
(5.9
|
)
|
||||||||
Amortization of unrecognized net loss
|
1.8
|
1.5
|
3.5
|
3.0
|
||||||||||||
Net periodic benefit cost
|
$
|
1.0
|
$
|
0.9
|
$
|
1.9
|
$
|
1.8
|
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
Stock options
|
$
|
1.2
|
2.0
|
|||||
Restricted stock awards
|
3.9
|
2.7
|
||||||
Performance stock awards
|
0.4
|
1.5
|
||||||
Total
|
$
|
5.5
|
2.5
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Employee severance and related benefits
|
$
|
1.3
|
$
|
1.8
|
$
|
5.7
|
$
|
3.3
|
||||||||
Other restructuring and repositioning expenses
|
0.2
|
0.5
|
0.4
|
0.8
|
||||||||||||
Total
|
$
|
1.5
|
$
|
2.3
|
$
|
6.1
|
$
|
4.1
|
|
Three months ended September 30,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$
|
6.9
|
$
|
7.8
|
||||
Additions
|
1.3
|
1.8
|
||||||
Payments
|
(2.6
|
)
|
(2.0
|
)
|
||||
Effect of exchange rate changes
|
0.2
|
(0.2
|
)
|
|||||
Ending balance
|
$
|
5.8
|
$
|
7.4
|
|
Six months ended September 30,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$
|
5.0
|
$
|
10.0
|
||||
Additions
|
5.7
|
3.3
|
||||||
Payments
|
(5.2
|
)
|
(5.7
|
)
|
||||
Effect of exchange rate changes
|
0.3
|
(0.2
|
)
|
|||||
Ending balance
|
$
|
5.8
|
$
|
7.4
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Interest income
|
$
|
-
|
$
|
0.1
|
$
|
0.3
|
$
|
0.2
|
||||||||
Foreign currency transactions (a)
|
0.2
|
(0.8
|
)
|
0.7
|
(1.4
|
)
|
||||||||||
Net periodic benefit cost (b)
|
(0.7
|
)
|
(0.7
|
)
|
(1.5
|
)
|
(1.4
|
)
|
||||||||
Equity in earnings of non-consolidated affiliate (c)
|
-
|
0.1
|
-
|
0.2
|
||||||||||||
Total other expense - net
|
$
|
(0.5
|
)
|
$
|
(1.3
|
)
|
$
|
(0.5
|
)
|
$
|
(2.4
|
)
|
(a) |
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.
|
(b) |
Net periodic benefit cost for the Company’s pension and postretirement plans is exclusive of service cost.
|
(c) |
The Company sold its ownership interest in NEX during the second quarter of fiscal 2020. See Note 1 for additional information.
|
|
Three months ended
September 30,
|
Six months ended
September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Net earnings (loss) attributable to Modine
|
$
|
8.6
|
$
|
(4.7
|
)
|
$
|
-
|
$
|
3.3
|
|||||||
|
||||||||||||||||
Weighted-average shares outstanding - basic
|
51.3
|
50.8
|
51.1
|
50.8
|
||||||||||||
Effect of dilutive securities
|
-
|
-
|
-
|
0.3
|
||||||||||||
Weighted-average shares outstanding - diluted
|
51.3
|
50.8
|
51.1
|
51.1
|
||||||||||||
|
||||||||||||||||
Earnings (loss) per share:
|
||||||||||||||||
Net earnings (loss) per share - basic
|
$
|
0.17
|
$
|
(0.09
|
)
|
$
|
-
|
$
|
0.07
|
|||||||
Net earnings (loss) per share - diluted
|
$
|
0.17
|
$
|
(0.09
|
)
|
$
|
-
|
$
|
0.06
|
|
September 30, 2020
|
March 31, 2020
|
||||||
Cash and cash equivalents
|
$
|
62.5
|
$
|
70.9
|
||||
Restricted cash
|
0.2
|
0.4
|
||||||
Total cash, cash equivalents and restricted cash
|
$
|
62.7
|
$
|
71.3
|
|
September 30, 2020
|
March 31, 2020
|
||||||
Raw materials
|
$
|
120.2
|
$
|
123.6
|
||||
Work in process
|
36.5
|
34.6
|
||||||
Finished goods
|
45.0
|
49.2
|
||||||
Total inventories
|
$
|
201.7
|
$
|
207.4
|
|
September 30, 2020
|
March 31, 2020
|
||||||
Land
|
$
|
20.9
|
$
|
19.7
|
||||
Buildings and improvements (10-40 years)
|
286.0
|
276.7
|
||||||
Machinery and equipment (3-15 years)
|
921.6
|
870.3
|
||||||
Office equipment (3-10 years)
|
99.2
|
95.2
|
||||||
Construction in progress
|
27.1
|
40.5
|
||||||
|
1,354.8
|
1,302.4
|
||||||
Less: accumulated depreciation
|
(915.7
|
)
|
(854.4
|
)
|
||||
Net property, plant and equipment
|
$
|
439.1
|
$
|
448.0
|
|
CIS
|
BHVAC
|
Total
|
|||||||||
Goodwill, March 31, 2020
|
$
|
152.6
|
$
|
13.5
|
$
|
166.1
|
||||||
Effect of exchange rate changes
|
2.8
|
0.5
|
3.3
|
|||||||||
Goodwill, September 30, 2020
|
$
|
155.4
|
$
|
14.0
|
$
|
169.4
|
|
September 30, 2020
|
March 31, 2020
|
||||||||||||||||||||||
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
|||||||||||||||||||
Customer relationships
|
$
|
62.6
|
$
|
(14.9
|
)
|
$
|
47.7
|
$
|
60.8
|
$
|
(12.6
|
)
|
$
|
48.2
|
||||||||||
Trade names
|
59.3
|
(17.9
|
)
|
41.4
|
58.3
|
(16.2
|
)
|
42.1
|
||||||||||||||||
Acquired technology
|
24.4
|
(8.9
|
)
|
15.5
|
23.6
|
(7.6
|
)
|
16.0
|
||||||||||||||||
Total intangible assets
|
$
|
146.3
|
$
|
(41.7
|
)
|
$
|
104.6
|
$
|
142.7
|
$
|
(36.4
|
)
|
$
|
106.3
|
|
Three months ended September 30,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$
|
8.3
|
$
|
9.1
|
||||
Warranties recorded at time of sale
|
1.4
|
1.2
|
||||||
Adjustments to pre-existing warranties
|
0.1
|
(0.3
|
)
|
|||||
Settlements
|
(0.9
|
)
|
(1.7
|
)
|
||||
Effect of exchange rate changes
|
0.1
|
(0.2
|
)
|
|||||
Ending balance
|
$
|
9.0
|
$
|
8.1
|
|
Six months ended September 30,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$
|
7.9
|
$
|
9.2
|
||||
Warranties recorded at time of sale
|
2.5
|
2.6
|
||||||
Adjustments to pre-existing warranties
|
0.1
|
(0.9
|
)
|
|||||
Settlements
|
(1.7
|
)
|
(2.6
|
)
|
||||
Effect of exchange rate changes
|
0.2
|
(0.2
|
)
|
|||||
Ending balance
|
$
|
9.0
|
$
|
8.1
|
-
|
Balance Sheet Location
|
September 30, 2020
|
March 31, 2020
|
|||||
Lease Assets
|
||||||||
Operating lease ROU assets
|
Other noncurrent assets
|
$
|
63.3
|
$
|
61.4
|
|||
Finance lease ROU assets (a)
|
Property, plant and equipment - net
|
8.5
|
8.5
|
|||||
Lease Liabilities
|
||||||||
Operating lease liabilities
|
Other current liabilities
|
$
|
12.6
|
$
|
10.9
|
|||
Operating lease liabilities
|
Other noncurrent liabilities
|
51.2
|
50.3
|
|||||
Finance lease liabilities
|
Long-term debt - current portion
|
0.4
|
0.4
|
|||||
Finance lease liabilities
|
Long-term debt
|
3.3
|
3.3
|
(a) |
Finance lease right of use (“ROU”) assets were recorded net of accumulated amortization of $2.1 million and $1.8 million as of September 30, 2020 and March 31, 2020, respectively.
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Operating lease expense (a)
|
$
|
5.2
|
$
|
5.2
|
$
|
10.1
|
$
|
10.4
|
||||||||
Finance lease expense:
|
||||||||||||||||
Depreciation of ROU assets
|
0.1
|
0.1
|
0.2
|
0.2
|
||||||||||||
Interest on lease liabilities
|
0.1
|
0.1
|
0.1
|
0.1
|
||||||||||||
Total lease expense
|
$
|
5.4
|
$
|
5.4
|
$
|
10.4
|
$
|
10.7
|
(a)
|
For the three and six months ended September 30, 2020, operating lease expense included short-term lease expense of $0.9 million and $1.8 million, respectively. 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.
|
|
Fiscal year of maturity
|
September 30, 2020
|
March 31, 2020
|
|||||
Term loans
|
2025
|
$
|
185.5
|
$
|
189.4
|
|||
Revolving credit facility
|
2025
|
52.9
|
127.2
|
|||||
5.9% Senior Notes
|
2029
|
100.0
|
100.0
|
|||||
5.8% Senior Notes
|
2027
|
50.0
|
50.0
|
|||||
Other (a)
|
3.7
|
6.0
|
||||||
392.1
|
472.6
|
|||||||
Less: current portion
|
(13.5)
|
(15.6)
|
||||||
Less: unamortized debt issuance costs
|
(4.8)
|
(5.0)
|
||||||
Total long-term debt
|
$
|
373.8
|
$
|
452.0
|
(a) |
Other long-term debt primarily includes finance lease obligations and borrowings by foreign subsidiaries.
|
Fiscal Year
|
||||
Remainder of 2021
|
$
|
6.8
|
||
2022
|
21.9
|
|||
2023
|
21.9
|
|||
2024
|
21.9
|
|||
2025
|
201.3
|
|||
2026 & beyond
|
118.3
|
|||
Total
|
$
|
392.1
|
|
Three months ended September 30, 2020
|
Six months ended September 30, 2020
|
||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
||||||||||||||||||||||||
Beginning balance
|
$
|
(56.1
|
)
|
$
|
(159.7
|
)
|
$
|
-
|
$
|
(215.8
|
)
|
$
|
(61.4
|
)
|
$
|
(160.9
|
)
|
$
|
(1.0
|
)
|
$
|
(223.3
|
)
|
|||||||||
|
||||||||||||||||||||||||||||||||
Other comprehensive income before reclassifications
|
17.3
|
-
|
0.3
|
17.6
|
22.6
|
-
|
1.1
|
23.7
|
||||||||||||||||||||||||
Reclassifications:
|
||||||||||||||||||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
1.7
|
-
|
1.7
|
-
|
3.3
|
-
|
3.3
|
||||||||||||||||||||||||
Realized losses - net (b)
|
-
|
-
|
0.3
|
0.3
|
-
|
-
|
0.8
|
0.8
|
||||||||||||||||||||||||
Income taxes
|
-
|
(0.4
|
)
|
(0.2
|
)
|
(0.6
|
)
|
-
|
(0.8
|
)
|
(0.5
|
)
|
(1.3
|
)
|
||||||||||||||||||
Total other comprehensive income
|
17.3
|
1.3
|
0.4
|
19.0
|
22.6
|
2.5
|
1.4
|
26.5
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Ending balance
|
$
|
(38.8
|
)
|
$
|
(158.4
|
)
|
$
|
0.4
|
$
|
(196.8
|
)
|
$
|
(38.8
|
)
|
$
|
(158.4
|
)
|
$
|
0.4
|
$
|
(196.8
|
)
|
|
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
|
)
|
(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. Refer to 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.
|
|
Three months ended September 30,
|
|||||||||||||||||||||||
|
2020
|
2019
|
||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
CIS
|
$
|
133.2
|
$
|
0.9
|
$
|
134.1
|
$
|
155.7
|
$
|
1.0
|
$
|
156.7
|
||||||||||||
BHVAC
|
61.9
|
-
|
61.9
|
55.7
|
0.3
|
56.0
|
||||||||||||||||||
HDE
|
157.6
|
8.0
|
165.6
|
173.9
|
13.3
|
187.2
|
||||||||||||||||||
Automotive
|
108.7
|
1.2
|
109.9
|
114.9
|
0.8
|
115.7
|
||||||||||||||||||
Segment total
|
461.4
|
10.1
|
471.5
|
500.2
|
15.4
|
515.6
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(10.1
|
)
|
(10.1
|
)
|
-
|
(15.4
|
)
|
(15.4
|
)
|
||||||||||||||
Net sales
|
$
|
461.4
|
$
|
-
|
$
|
461.4
|
$
|
500.2
|
$
|
-
|
$
|
500.2
|
|
Six months ended September 30,
|
|||||||||||||||||||||||
|
2020
|
2019
|
||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
CIS
|
$
|
254.5
|
$
|
2.1
|
$
|
256.6
|
$
|
323.6
|
$
|
1.9
|
$
|
325.5
|
||||||||||||
BHVAC
|
109.3
|
0.2
|
109.5
|
104.2
|
0.8
|
105.0
|
||||||||||||||||||
HDE
|
275.9
|
13.2
|
289.1
|
373.6
|
30.0
|
403.6
|
||||||||||||||||||
Automotive
|
169.5
|
2.5
|
172.0
|
227.8
|
1.5
|
229.3
|
||||||||||||||||||
Segment total
|
809.2
|
18.0
|
827.2
|
1,029.2
|
34.2
|
1,063.4
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(18.0
|
)
|
(18.0
|
)
|
-
|
(34.2
|
)
|
(34.2
|
)
|
||||||||||||||
Net sales
|
$
|
809.2
|
$
|
-
|
$
|
809.2
|
$
|
1,029.2
|
$
|
-
|
$
|
1,029.2
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||||||||||||||||||
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
$'s
|
% of
sales
|
||||||||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||||||||||
CIS
|
$
|
19.3
|
14.4
|
%
|
$
|
22.9
|
14.6
|
%
|
$
|
34.8
|
13.5
|
%
|
$
|
47.2
|
14.5
|
%
|
||||||||||||||||
BHVAC
|
21.7
|
35.1
|
%
|
17.7
|
31.7
|
%
|
36.2
|
33.1
|
%
|
31.4
|
29.9
|
%
|
||||||||||||||||||||
HDE
|
23.6
|
14.2
|
%
|
22.4
|
12.0
|
%
|
34.9
|
12.1
|
%
|
54.9
|
13.6
|
%
|
||||||||||||||||||||
Automotive
|
16.6
|
15.2
|
%
|
13.0
|
11.2
|
%
|
21.4
|
12.5
|
%
|
25.5
|
11.1
|
%
|
||||||||||||||||||||
Segment total
|
81.2
|
17.2
|
%
|
76.0
|
14.7
|
%
|
127.3
|
15.4
|
%
|
159.0
|
15.0
|
%
|
||||||||||||||||||||
Corporate and eliminations
|
(0.4
|
)
|
-
|
(0.3
|
)
|
-
|
(0.4
|
)
|
-
|
0.1
|
-
|
|||||||||||||||||||||
Gross profit
|
$
|
80.8
|
17.5
|
%
|
$
|
75.7
|
15.1
|
%
|
$
|
126.9
|
15.7
|
%
|
$
|
159.1
|
15.5
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Operating income:
|
||||||||||||||||
CIS
|
$
|
5.6
|
$
|
8.5
|
$
|
5.6
|
$
|
17.5
|
||||||||
BHVAC
|
13.1
|
8.8
|
20.2
|
14.1
|
||||||||||||
HDE
|
13.3
|
7.1
|
10.8
|
24.4
|
||||||||||||
Automotive
|
8.0
|
0.4
|
4.2
|
0.4
|
||||||||||||
Segment total
|
40.0
|
24.8
|
40.8
|
56.4
|
||||||||||||
Corporate and eliminations
|
(11.5
|
)
|
(18.8
|
)
|
(15.5
|
)
|
(32.3
|
)
|
||||||||
Operating income
|
$
|
28.5
|
$
|
6.0
|
$
|
25.3
|
$
|
24.1
|
|
September 30, 2020
|
March 31, 2020
|
||||||
Total assets:
|
||||||||
CIS
|
$
|
598.2
|
$
|
617.7
|
||||
BHVAC
|
105.4
|
102.3
|
||||||
HDE
|
418.8
|
417.4
|
||||||
Automotive
|
281.7
|
272.5
|
||||||
Corporate and eliminations
|
106.8
|
126.2
|
||||||
Total assets
|
$
|
1,510.9
|
$
|
1,536.1
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
461.4
|
100.0
|
%
|
$
|
500.2
|
100.0
|
%
|
$
|
809.2
|
100.0
|
%
|
$
|
1,029.2
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
380.6
|
82.5
|
%
|
424.5
|
84.9
|
%
|
682.3
|
84.3
|
%
|
870.1
|
84.5
|
%
|
||||||||||||||||||||
Gross profit
|
80.8
|
17.5
|
%
|
75.7
|
15.1
|
%
|
126.9
|
15.7
|
%
|
159.1
|
15.5
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
50.8
|
11.0
|
%
|
67.4
|
13.5
|
%
|
95.5
|
11.8
|
%
|
130.9
|
12.7
|
%
|
||||||||||||||||||||
Restructuring expenses
|
1.5
|
0.3
|
%
|
2.3
|
0.4
|
%
|
6.1
|
0.8
|
%
|
4.1
|
0.4
|
%
|
||||||||||||||||||||
Operating income
|
28.5
|
6.2
|
%
|
6.0
|
1.2
|
%
|
25.3
|
3.1
|
%
|
24.1
|
2.3
|
%
|
||||||||||||||||||||
Interest expense
|
(5.2
|
)
|
-1.1
|
%
|
(5.8
|
)
|
-1.1
|
%
|
(10.6
|
)
|
-1.3
|
%
|
(11.7
|
)
|
-1.1
|
%
|
||||||||||||||||
Other expense – net
|
(0.5
|
)
|
-0.1
|
%
|
(1.3
|
)
|
-0.3
|
%
|
(0.5
|
)
|
-0.1
|
%
|
(2.4
|
)
|
-0.2
|
%
|
||||||||||||||||
Earnings (loss) before income taxes
|
22.8
|
4.9
|
%
|
(1.1
|
)
|
-0.2
|
%
|
14.2
|
1.8
|
%
|
10.0
|
1.0
|
%
|
|||||||||||||||||||
Provision for income taxes
|
(13.9
|
)
|
-3.0
|
%
|
(3.7
|
)
|
-0.7
|
%
|
(13.7
|
)
|
-1.7
|
%
|
(6.6
|
)
|
-0.6
|
%
|
||||||||||||||||
Net earnings (loss)
|
$
|
8.9
|
1.9
|
%
|
$
|
(4.8
|
)
|
-1.0
|
%
|
$
|
0.5
|
0.1
|
%
|
$
|
3.4
|
0.3
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
134.1
|
100.0
|
%
|
$
|
156.7
|
100.0
|
%
|
$
|
256.6
|
100.0
|
%
|
$
|
325.5
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
114.8
|
85.6
|
%
|
133.8
|
85.4
|
%
|
221.8
|
86.5
|
%
|
278.3
|
85.5
|
%
|
||||||||||||||||||||
Gross profit
|
19.3
|
14.4
|
%
|
22.9
|
14.6
|
%
|
34.8
|
13.5
|
%
|
47.2
|
14.5
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
12.2
|
9.1
|
%
|
14.0
|
9.0
|
%
|
25.3
|
9.8
|
%
|
29.1
|
8.9
|
%
|
||||||||||||||||||||
Restructuring expenses
|
1.5
|
1.2
|
%
|
0.4
|
0.2
|
%
|
3.9
|
1.5
|
%
|
0.6
|
0.2
|
%
|
||||||||||||||||||||
Operating income
|
$
|
5.6
|
4.2
|
%
|
$
|
8.5
|
5.4
|
%
|
$
|
5.6
|
2.2
|
%
|
$
|
17.5
|
5.4
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
61.9
|
100.0
|
%
|
$
|
56.0
|
100.0
|
%
|
$
|
109.5
|
100.0
|
%
|
$
|
105.0
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
40.2
|
64.9
|
%
|
38.3
|
68.3
|
%
|
73.3
|
66.9
|
%
|
73.6
|
70.1
|
%
|
||||||||||||||||||||
Gross profit
|
21.7
|
35.1
|
%
|
17.7
|
31.7
|
%
|
36.2
|
33.1
|
%
|
31.4
|
29.9
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
8.6
|
14.0
|
%
|
8.9
|
15.9
|
%
|
16.0
|
14.7
|
%
|
17.3
|
16.5
|
%
|
||||||||||||||||||||
Operating income
|
$
|
13.1
|
21.1
|
%
|
$
|
8.8
|
15.8
|
%
|
$
|
20.2
|
18.4
|
%
|
$
|
14.1
|
13.4
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
165.6
|
100.0
|
%
|
$
|
187.2
|
100.0
|
%
|
$
|
289.1
|
100.0
|
%
|
$
|
403.6
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
142.0
|
85.8
|
%
|
164.8
|
88.0
|
%
|
254.2
|
87.9
|
%
|
348.7
|
86.4
|
%
|
||||||||||||||||||||
Gross profit
|
23.6
|
14.2
|
%
|
22.4
|
12.0
|
%
|
34.9
|
12.1
|
%
|
54.9
|
13.6
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
10.3
|
6.2
|
%
|
14.9
|
8.0
|
%
|
22.2
|
7.7
|
%
|
29.7
|
7.4
|
%
|
||||||||||||||||||||
Restructuring expenses
|
-
|
-
|
0.4
|
0.2
|
%
|
1.9
|
0.6
|
%
|
0.8
|
0.2
|
%
|
|||||||||||||||||||||
Operating income
|
$
|
13.3
|
8.1
|
%
|
$
|
7.1
|
3.8
|
%
|
$
|
10.8
|
3.8
|
%
|
$
|
24.4
|
6.0
|
%
|
|
Three months ended September 30,
|
Six months ended September 30,
|
||||||||||||||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||||||||||||
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
Net sales
|
$
|
109.9
|
100.0
|
%
|
$
|
115.7
|
100.0
|
%
|
$
|
172.0
|
100.0
|
%
|
$
|
229.3
|
100.0
|
%
|
||||||||||||||||
Cost of sales
|
93.3
|
84.8
|
%
|
102.7
|
88.8
|
%
|
150.6
|
87.5
|
%
|
203.8
|
88.9
|
%
|
||||||||||||||||||||
Gross profit
|
16.6
|
15.2
|
%
|
13.0
|
11.2
|
%
|
21.4
|
12.5
|
%
|
25.5
|
11.1
|
%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
8.6
|
7.9
|
%
|
11.1
|
9.6
|
%
|
17.0
|
9.9
|
%
|
22.4
|
9.8
|
%
|
||||||||||||||||||||
Restructuring expenses
|
-
|
-
|
1.5
|
1.3
|
%
|
0.2
|
0.1
|
%
|
2.7
|
1.2
|
%
|
|||||||||||||||||||||
Operating income
|
$
|
8.0
|
7.3
|
%
|
$
|
0.4
|
0.3
|
%
|
$
|
4.2
|
2.4
|
%
|
$
|
0.4
|
0.2
|
%
|
• |
The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers, customers, and employees;
|
• |
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 any potential trade war resulting from tariffs or retaliatory actions); inflation; changes in interest rates; recession and recovery therefrom; restrictions and uncertainty associated with cross-border trade, public health crises, such as pandemics and epidemics, including the ongoing COVID-19 pandemic; and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade, the COVID-19 pandemic and other matters, that have been or may be implemented in the U.S. or abroad, as well as continuing uncertainty regarding 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 components including, but not limited to, increases in the underlying material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs, the behavior of our suppliers and significant fluctuations in demand. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, 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, the concentration of sales within our CIS segment attributable to one customer, and the potential impact on us from any deterioration in the stability or performance of any of our major customers;
|
• |
The impact of any 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;
|
• |
The impact of product or manufacturing difficulties or operating inefficiencies, including any program launch and product transfer challenges and warranty claims and delays or inefficiencies resulting from restrictions imposed in response to the COVID-19 pandemic;
|
• |
The impact of any 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 litigation, claims, or other obligations.
|
• |
Our ability to successfully complete the pending sale of our liquid-cooled automotive business, including the receipt of governmental and third-party approvals and satisfaction of other closing conditions, and our ability to successfully exit our other automotive businesses in a manner that is in the best interest of our shareholders;
|
• |
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 HDE and Automotive businesses;
|
• |
Our ability to identify and execute growth and diversification opportunities in order to position us for long-term success; and
|
• |
The potential impacts from any 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, particularly in light of the volatility and negative pressure in the financial markets as a result of the COVID-19 pandemic and in the event of 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 comply with the financial covenants, as amended, in our credit agreements, including our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) and our interest coverage ratio (Adjusted EBITDA divided by interest expense, as defined in our credit agreements);
|
• |
The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
|
• |
Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
Item 6. |
Exhibits.
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
|
|
|
|
Form of Retention Letter, effective August 31, 2020, between the Company and each of Michael B. Lucareli, Scott L. Bowser and Sylvia A. Stein
|
Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated August 31, 2020
|
|
|
|
|
|
|
Form of Fiscal 2021 Modine Performance Cash Award Agreement
|
Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated September 30, 2020 (“September 30, 2020 8-K”)
|
|
|
|
|
|
|
Form of Fiscal 2021 Modine Incentive Stock Option Award Agreement
|
Exhibit 10.2 to September 30, 2020 8-K
|
|
|
|
|
|
|
Form of Fiscal 2021 Modine Non-Qualified Stock Option Award Agreement
|
Exhibit 10.3 to September 30, 2020 8-K
|
|
|
|
|
|
|
Form of Fiscal 2021 Modine Restricted Stock Unit Award Agreement
|
Exhibit 10.4 to September 30, 2020 8-K
|
|
|
|
|
|
|
Transition and Separation Agreement between Thomas A. Burke and Modine Manufacturing Company effective as of August 4, 2020
|
|
X
|
|
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Interim President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer.
|
|
X
|
|
|
|
|
|
Section 1350 Certification of Michael B. Lucareli, Interim President and Chief Executive Officer and 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
|
Dated: August 4, 2020
|
/s/ Thomas A. Burke
|
Thomas A. Burke
|
|
Dated: August 3, 2020
|
/s/Marsha C. Williams
|
Modine Manufacturing Company
|
|
Name: Marsha C. Williams
|
|
Title: Lead Director, Board of Directors
|
Type of Equity
Award
|
Grant Date
|
Exercise Price
|
Vest (and Exercisable) Shares*
|
Expiration Date
|
||||||
Stock Option
|
July 21, 2011
|
$
|
14.93
|
27,622
|
July 21, 2021
|
|||||
Stock Option
|
June 5, 2012
|
$
|
5.75
|
69,565
|
August 28, 2021
|
|||||
Stock Option
|
June 3, 2013
|
$
|
10.40
|
47,690
|
August 28, 2021
|
|||||
Stock Option
|
June 2, 2014
|
$
|
14.94
|
37,832
|
August 28, 2021
|
|||||
Stock Option
|
June 2, 2015
|
$
|
11.39
|
55,538
|
August 28, 2021
|
|||||
Stock Option
|
May 31, 2016
|
$
|
10.00
|
96,848
|
August 28, 2021
|
|||||
Stock Option
|
June 1, 2017
|
$
|
15.90
|
47,937
|
August 28, 2021
|
|||||
Stock Option
|
May 30, 2018
|
$
|
17.90
|
34,042
|
August 28, 2021
|
|||||
Stock Option
|
May 29, 2019
|
$
|
13.26
|
25,385
|
August 28, 2021
|
|||||
Restricted Stock Unit Award
|
June 1, 2017
|
Forfeit unvested RSUs as of the Separation Date**
|
||||||||
Restricted Stock Unit Award
|
May 30, 2018
|
Forfeit unvested RSUs as of the Separation Date**
|
||||||||
Restricted Stock Unit Award
|
May 29, 2019
|
Forfeit unvested RSUs as of the Separation Date**
|
||||||||
Performance Stock Award
|
May 30, 2018
|
Forfeit entire award as of the Separation Date
|
||||||||
Performance Stock Award
|
May 29, 2019
|
Forfeit entire award as of the Separation Date
|
/s/ Thomas A. Burke
|
|
Thomas A. Burke
|
|
1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended September 30, 2020;
|
|
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. |
I am 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 my supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to me 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 my 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 my 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. |
I have disclosed, based on my 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 6, 2020
|
|
/s/ Michael B. Lucareli
|
|
Michael B. Lucareli
|
|
Interim President and Chief Executive Officer and 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 6, 2020
|
/s/ Michael B. Lucareli
|
|
Michael B. Lucareli
|
|
Interim President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer
|