Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — Investor Presentation (September 2023)
31 slides from Modine Manufacturing's investor presentation, September 2023
Slide 1: Investor Presentation September 2023
Investor Presentation September 2023
Slide 2: 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,” “projects,” and other similar “forward-looking” stat
Slide 3: Investment Highlights
Investment Highlights ENGINEERING A CLEANER HEALTHIER WORLD™ 100+ year legacy in Shifting focus to systems We are unlocking value by thermal management solutions versus shifting resources, focusing components on end markets with favorable trends, driving for system and 80/20 as a core part of Strate
Slide 4: Our Purpose and Mission
OUR PURPOSE OUR MISSION ENGINEERING A CLEANER, 4% Ec ec WF H EALTH | ER wo RLD” Improve Reduce Lower Enable Use Indoor Water & Harmful Cleaner Environmentally Air Quality Energy Emissions Running Friendly Consumption Vehicles _ Refrigerants Building on more than 100 years of excellence in thermal ma
Slide 5: Modine at a Glance
Modine at a Glance 11,300 Employees FY2023 Sales $2.3 Billion FY2023 Adjusted EBITDA* $212.1 Million 37 Manufacturing facilities in 14 countries+ ▪ Headquartered in Racine, WI ▪ R&D and technical centers in: FY2023 Free Cash Flow* ‒ Racine, WI ‒ Grenada, MS $56.8 Million ‒ Leeds, UK ‒ Guadalajara, S
Slide 6: Business Segments and Product Groups
Business Segments and Product Groups PERFORMANCE TECHNOLOGIES • Transformational STRATEGY CLIMATE SOLUTIONS Air-Cooled Liquid-Cooled Advanced Heat Transfer HVAC & Data Applications Applications Solutions Products Refrigeration Centers Air-cooled heat Liquid-cooled heat Thermal systems and Heat excha
Slide 7: Modine Revenue Breakdown FY2023
Modine Revenue Breakdown FY2023 Sales by Product Group Sales by Geography Sales by End Market Asia, 10% Other Advanced Heating 2% Solutions 6% 6% HVAC&R Coolers Light Vehicle Indoor Air 15% 6% EMEA, 17% Quality Liquid-Cooled 3% Applications 35% 21% Data Centers Specialty 7% Vehicle Systems Climate 4
Slide 8: Transformation Update: Status
Transformation Update: Status FOCUS THE ORGANIZATION ✓ Completed segmentation ▪ Make 80/20 a core part of our DNA ✓ Mature 80/20 rollout in Climate Solutions, recently ▪ Build a high-performance organization launched in Performance ▪ Simplify and segment the business Technologies PERFO RM and ✓ Focu
Slide 9: Specialized Solutions for High Growth Markets
Specialized Solutions for High Growth Markets Key Growth Markets Data Centers IAQ Heat Pumps ATS GenSets Vertical Data Centers HVAC&R HTP Advanced Solutions Air Cooled FY24 FC Revenue >$270M ̴$75M ̴$100M ̴$100M ̴$100M 3-year CAGR 20-30% 15-20% 40-50% 35-40% 30-35% Battery Thermal Electronics Chiller
Slide 10: Financial Snapshot: Progressing Towards Targets
Financial Snapshot: Progressing Towards Targets Net Sales Adjusted EBITDA & EBITDA Margin ▪ Reported record sales $2.3B and Adjusted EBITDA in $2.1B $212M $159M FY23 & Q1FY24 34% 12% ▪ FY24 outlook in line with 9.2% June 2022 Investor Day 7.7% targets FY22 FY23 FY22 FY23 FY2025-27 Targets FY2024 Out
Slide 11: Performance Technologies
Performance Technologies Performance Technologies provides technologies Air-Cooled Liquid-Cooled Advanced and services that enhance fuel efficiency and Applications Applications Solutions durability, improve battery performance and prolong the life of components in harsh environments FY2023 Sales Sa
Slide 12: Air Cooled Applications
Air Cooled Applications Grow/maintain stationary power and higher margin vehicular business, optimize low margin business Market Opportunities ▪ Decarbonization and the focus on alternative fuels is Markets creating needs for more advanced cooling technologies ▪ Growth in data centers, electrificati
Slide 13: Liquid Cooled Applications
Liquid Cooled Applications Grow/maintain higher margin vehicular business, rationalize or improve low margin business, facilitate transition to EV Market Opportunities ▪ Decarbonization and focus on renewables creating Markets needs for more advanced cooling technologies ▪ Need to minimize wasted or
Slide 14: Advanced Solutions
Advanced Solutions Invest in growth of EV Systems business to improve mix and offset revenue decline in air and liquid cooled applications Market Opportunities ▪ Government policies and incentives supporting energy Markets source decarbonization and emission management ▪ Accelerating focus on renewa
Slide 15: Climate Solutions
Climate Solutions Climate Solutions provides energy-efficient, safe, Heat Transfer HVAC & Data climate-controlled solutions and components for a Products Refrigeration Centers wide range of critical applications. FY2023 Sales Sales & Adjusted EBITDA Margin Segment Targets Heat Transfer Products 49%
Slide 16: Heat Transfer Products
Heat Transfer Products Use 80/20 to simplify product offering and reduce operational complexity; Expand European footprint to support heat pump market demand Market Opportunities ▪ Government incentives driving growth in European heat Markets pump market, - FY23 revenue ̴ $50M, targeting 3-year Comm
Slide 17: HVAC & Refrigeration
HVAC & Refrigeration Drive growth supported by competitive advantage, develop next generation products, supplement with M&A Market Opportunities ▪ Enhanced focus on energy efficiency, food safety & quality in the cold chain Markets ▪ Government commitments to phase out HFCs in air conditioning and r
Slide 18: Data Centers
Data Centers Promote geographic expansion to new markets, utilize 80/20 to gain share of wallet with key customers, pursue M&A to gain technology Market Opportunities ▪ Increased data center investment to improve power density and meet growing demand Markets ▪ Focus on balancing data center resource
Slide 19: Financial Transformation
Financial Transformation Achieve and maintain Create stronger financial profile Provide flexibility for Launched 80/20 Initiative 10-12% EBITDA with higher margins, cash flow, acquisitions, divestitures margins and enterprise value and organic growth ▪ Simplified and ▪ Reallocated people and ▪ Move
Slide 20: Improving Free Cash Flow as a % of Sales
Improving Free Cash Flow as a % of Sales ~6-8% FY2024 Drivers FY25-27 Drivers ▪ Operating cash flow ▪ Operating cash flow margin: 5-7% margin: 8–10% ▪ Capital spending: ▪ Capex spending: ~3% of sales ~3-5% ~3% of sales ▪ Potential cash ▪ Potential cash restructuring: restructuring: ~$10-$15M ~$10-15
Slide 21: Disciplined Capital Allocation
Disciplined Capital Allocation ▪ Reallocate capital to growth businesses Capital Spending ▪ Target capital spending at ~3% of sales ▪ Plenty of debt capacity and covenant flexibility to Strategic Acquisitions execute on strategic M&A transactions Prioritization ▪ ~$10-15M potential cash spend in FY2
Slide 22: Strategic Acquisitions
Strategic Acquisitions FY2025-27 FY2024 Today Strategic Targets Bolt-On Targets (Revenue: $300-500M) Build Acquisition (Revenue: $25-100M) Pipeline PERFORMANCE Ideal Targets TECHNOLOGIES CLIMATE Financial SOLUTIONS Discipline ▪ Enhance product portfolio ▪ Short-term focus on bolt-on targets ▪ Broade
Slide 23: Financial Targets
Financial Targets 80/20 mindset underlying all key FOCUS PERFORM ACCELERATE decisions Revenue growth FY 2024 FY 2025-27 FY 2023 Targets ▪ Driven by market growth and pricing Outlook actions ▪ Targeted inorganic growth Revenue $2.3 billion 6 - 11% 8 - 10% CAGR Significant margin expansion ▪ Volume, p
Slide 24: Financial Trends
Officially launched 80/20 during Fiscal 2022 Financial Trends (In millions) Revenue Adjusted EBITDA and Adjusted EBITDA Margin $350 13.0% $3,000 $2,600 $295 Adj. EBITDA $300 Sales Outlook: 12.0% Outlook: $2,500 $2,298 +6% to +11% $250 $1,976 $2,050 $212 $280M-$295M 11.0% $2,000 $1,808 $200 $174 $165
Slide 25: Transformation Underway
Transformation Underway FOCUS THE ORGANIZATION ▪ Make 80/20 a core part of our DNA PERF ▪ Build a high-performance organization ORM ▪ Simplify and segment the business and PERFORM AND DELIVER Deliver ▪ Launch the Modine Business Cycle ▪ Maximize share of target markets ▪ Simplify and improve operati
Slide 26: Appendix
APPENDIX
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted EBITDA (In millions) Twelve months ended March 31, 2023 2022 2021 2020 Net earnings (loss) $ 153.6 $ 86.3 $ (209.5) $ (2.0) Interest expense 20.7 15.6 19.4 22.7 Provision (benefit) from income taxes (28.3) 15.2 90.2 12.4 Depreciation and
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations (a) Restructuring expenses primarily consist of employee severance expenses related to targeted headcount reductions and plant consolidation activities and equipment transfer costs. (b) The net impairment reversals during fiscal 2022 primarily relate to the Company's liquid-
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Segment adjusted financial results (unaudited) (In millions) Twelve months ended March 31, 2023 Twelve months ended March 31, 2022 Climate Performance Corporate and Climate Performance Corporate and Solutions Technologies eliminations Total Solut
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Free cash flow (In millions) Twelve months ended March 31, 2023 2022 2021 2020 Net cash provided by operating activities $ 107.5 $ 11.5 $ 149.8 $ 57.9 Expenditures for property, plant and equipment (50.7) (40.3) (32.7) (71.3) Free cash flow $ 56.8 $ (28.8) $ 117.1 $ (13.4) N
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Forward-looking non-GAAP financial measures This presentation includes forward-looking projections of non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, and free cash flow as a percentage of sales. The projections are based on management’s exp
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