Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — Q4 FY2017 Earnings Presentation
30 slides from Modine Manufacturing's earnings presentation, May 25, 2017
Slide 1: Fourth Quarter Fiscal 2017
Fourth Quarter Fiscal 2017 May 25, 2017 8:00 a.m. CDT
Slide 2: Agenda
Agenda Introduction Kathy Powers VP, Treasurer, Investor Relations and Tax Fourth Quarter Highlights Tom Burke and Segment Review President and Chief Executive Officer Financial Overview Mick Lucareli and Outlook VP, Finance and Chief Financial Officer Summary Tom Burke Q&A Tom Burke and Mick Lucare
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements, including information about future financial performance and market conditions, accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as d
Slide 4: Fourth Quarter Highlights and Segment Review
Fourth Quarter Highlights and Segment Review Tom Burke President and Chief Executive Officer
Slide 5: FY2017 Fourth Quarter and Full Year Highlights
FY2017 ‒ Fourth Quarter and Full Year Highlights • Significant progress on SDG initiative, achieving our $40-50 million savings target • Integration of Luvata HTS (now referred to as Commercial and Industrial Solutions, or “CIS”) well underway with focus on synergies • Q4 sales up 44% on a constant-
Slide 6: Q4 FY2017 Americas
Q4 FY2017 ‒ Americas Americas Market Outlook (Fiscal 2018) ($ in millions) Q4 Q4 Better / North America YOY Change 2017 2016 (Worse) Automotive Flat Net sales $ 144.6 $ 145.1 $ (0.5) Medium Duty Truck Flat to +5% Heavy Duty Truck Flat Gross profit 27.4 27.3 0.1 Construction/Mining Flat % of net sale
Slide 7: Q4 FY2017 Europe
Q4 FY2017 ‒ Europe Europe Market Outlook (Fiscal 2018) ($ in millions) Q4 Q4 Better / 2017 2016 (Worse) YOY Change Net sales $ 134.6 $ 139.1 $ (4.5) Automotive Flat Gross profit 21.1 21.1 - % of net sales 15.7% 15.2% 50 bp Commercial Vehicle Flat to +5% SG&A expenses 10.5 9.9 (0.6) % of net sales 7.
Slide 8: Q4 FY2017 Asia
Q4 FY2017 ‒ Asia Asia Market Outlook (Fiscal 2018) ($ in millions) Q4 Q4 Better / 2017 2016 (Worse) YOY Change Net sales $ 33.3 $ 22.9 $ 10.4 China Automotive +3% Gross profit 5.6 4.0 1.6 % of net sales 16.9% 17.4% (50 bp) Asia Excavator +10% SG&A expenses 2.8 2.3 (0.5) % of net sales 8.5% 10.2% 170
Slide 9: Q4 FY2017 Building HVAC
Q4 FY2017 ‒ Building HVAC Building HVAC Market Outlook (Fiscal 2018) ($ in millions) Q4 Q4 Better / 2017 2016 (Worse) YOY Change Net sales $ 38.8 $ 40.4 $ (1.6) Commercial Heating - NA Flat to +2% Gross profit 10.7 10.9 (0.2) % of net sales 27.5% 26.9% 60 bp Air Conditioning - EMEA +4% SG&A expenses
Slide 10: Q4 FY2017 Commercial and Industrial Solutions
Q4 FY2017 ‒ Commercial and Industrial Solutions Commercial and Industrial Solutions Market Outlook (Fiscal 2018) ($ in millions) Q4 2017 YOY Change Net sales $ 143.0 Commercial & Residential AC +2% Gross profit 21.6 Refrigeration +2% % of net sales 15.1% SG&A expenses 13.8 Precision Cooling +3% % of
Slide 11: Financial Overview and Outlook
Financial Overview and Outlook Mick Lucareli Vice President, Finance and Chief Financial Officer
Slide 12: Q4 FY2017 vs. Prior Year
Q4 FY2017 vs. Prior Year (In millions, except per share amounts) Q4 Q4 Better • Sales up $149.8M or 44% on a constant 2017 2016 (Worse) currency basis – Includes CIS sales of $143M Net sales $ 488.3 $ 343.7 $ 144.6 – Base business sales up $6.8M or 2% Gross profit 84.9 62.2 22.7 • Gross profit inclu
Slide 13: Cash Flow & Net Debt
Cash Flow & Net Debt (In millions) FY FY (In millions) 3/31/17 3/31/16 2017 2016 Operating cash flow $ 41.6 $ 72.4 Cash $ 34.2 $ 68.9 Restructuring & other adjustments 32.7 12.8 Total debt 510.9 162.6 Adjusted operating cash flow 74.3 85.2 Net Debt $ 476.7 $ 93.7 Capital expenditures (64.4) (62.8) L
Slide 14: FY2018 Guidance
FY2018 Guidance FY 2017 Results FY 2018 Guidance % Increase Net Sales $1,503 million $1,879 to $1,954 million +25% to +30% Adjusted Operating Income $69.3 million $100 to $110 million +44% to +59% Adjusted EBITDA $124.7 million $175 to $185 million +40% to +48% Adjusted EPS $0.78 $1.20 to $1.35 +54%
Slide 15: Q4 FY2017 Conclusion
Q4 FY2017 – Conclusion • Remarkable year for Modine – 100th anniversary – Largest acquisition in company’s history • Priorities for fiscal 2018 – CIS integration and synergy capture – Reduction of leverage • New global organization – Will continue to manage and report results for our three existing
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix
Slide 18: Americas (35% of Net Sales)
Americas (35% of Net Sales) • Six manufacturing facilities – executed our plan to FY 2017 Sales Mix close Washington, Iowa plant • Diversified revenue mix across major end-markets Heavy Truck 16% 13% • Segment well positioned for future success based on Medium Truck 5% 13% improved manufacturing foo
Slide 19: Europe (35% of Net Sales)
Europe (35% of Net Sales) • Seven manufacturing facilities in Europe FY 2017 Sales Mix • Consolidated manufacturing operations in Germany • Expanding capacity in Hungary, moving production 3% 8% 3% Construction from Western Europe Truck & Bus 32% • Managing launch activity mainly in oil cooler and L
Slide 20: Asia (7% of Net Sales)
Asia (7% of Net Sales) • Six manufacturing facilities in China, India, Japan FY 2017 Sales Mix and Korea (3 Joint Ventures) • Strategic focus on creating new business 9% opportunities with local customers Construction/Ag 32% • Diversifying our business model; reducing exposure Truck & Bus to excavat
Slide 21: Building HVAC (11% of Net Sales)
Building HVAC (11% of Net Sales) • Five facilities in North America, United Kingdom FY 2017 Sales Mix and Africa • Complementary business that provides Commercial Heating - NA 14% diversification to Modine’s vehicular segments 5% Air Conditioning - EMEA • Strong financials due to product differentia
Slide 22: Commercial and Industrial Solutions (12% of Net Sales)
Commercial and Industrial Solutions (12% of Net Sales) • 16 manufacturing facilities in North America, Europe FY 2017 Sales Mix and Asia • Primary products include Coils, Coolers and Comm & Res AC 10% Coatings Mobile AC 15% 36% • CIS is a pioneer in bringing microchannel technology to the HVAC&R ind
Slide 23: Q4 GAAP Income Statement
Q4 GAAP Income Statement (In millions, except per share amounts) Q4 Q4 Better 2017 2016 (Worse) Net sales $ 488.3 $ 343.7 $ 144.6 Cost of sales 403.4 281.5 (121.9) Gross profit 84.9 62.2 22.7 SG&A expenses 60.6 41.6 (19.0) Restructuring expenses 4.9 11.4 6.5 Gain on sale of facilities (0.8) - 0.8 Im
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted operating income and earnings per share (unaudited) (a) (In millions, except per share amounts) On November 30, 2016, the Company acquired Luvata HTS. Acquisition-related costs in fiscal 2017, recorded as SG&A expenses at Corporate, prim
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Three months ended March 31, Americas 2017 2016 Operating income $ 13.4 $ 11.4 Restructuring expenses 1.7 3.8 Gain on sale of facilities (1.1) - Environmental charges 0.3 1.1 Adjusted operating income $ 14.3 $ 16.3 N
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Three months ended March 31, Asia 2017 2016 Operating income $ 2.8 $ 1.7 Acquisition-related costs - 0.2 Adjusted operating income $ 2.8 $ 1.9 Net sales $ 33.3 $ 22.9 Adjusted operating margin 8.4% 8.3% Three months
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Americas 2014 2015 2016 2017 Operating income $ 49.6 $ 33.4 $ 36.2 $ 26.7 Restructuring expenses 1.2 2.7 8.8 6.9 Impairment charges 1.2 7.8 - - Gain on sale of facilities - - - (1.1) Brazil lega
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Asia 2014 2015 2016 2017 Operating income (loss) $ (3.3) $ 0.3 $ 0.8 $ 7.7 Acquisition-related costs - - 0.5 - Adjusted operating income (loss) $ (3.3) $ 0.3 $ 1.3 $ 7.7 Net sales $ 71.5 $ 81.2
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations 29
Slide 30: Forward-Looking Non-GAAP Financial Measures
Forward-Looking Non-GAAP Financial Measures Our fiscal 2018 guidance includes certain non-GAAP measures, such as adjusted operating income, adjusted EBITDA and adjusted EPS. These metrics are not measures that are defined in generally accepted accounting principles (GAAP). We use these non-GAAP meas
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