Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — Q3 FY2014 Earnings Presentation
21 slides from Modine Manufacturing's earnings presentation, Jan 31, 2014
Slide 1: Third Quarter Fiscal 2014 Earnings Call
Third Quarter Fiscal 2014 Earnings Call January 31, 2014 8:00 a.m. CT Presented by: Tom Burke – President and CEO Mick Lucareli – Vice President, Finance and CFO Kathy Powers – Vice President, Treasurer and Investor Relations
Slide 2: Agenda
Agenda Introduction Kathy Powers Third Quarter Highlights Tom Burke Financial Review & Outlook Mick Lucareli Summary Tom Burke Q&A Tom Burke and Mick Lucareli 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements, including information about future financial performance and market conditions, including the information provided under "Outlook," accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,”
Slide 4: Third Quarter Highlights
Third Quarter Highlights Tom Burke President and Chief Executive Officer
Slide 5: Fiscal 2014 - Third Quarter Highlights
Fiscal 2014 - Third Quarter Highlights • Third consecutive quarter of year-over-year growth in revenue, earnings and cash flow • Adjusted EPS of $0.16, up $0.14 from the prior year • Revenue up 6% year-over-year, slightly better than anticipated • Good sales growth in Europe and Asia • Strong heatin
Slide 6: North America
North America • Revenue up 1%, with higher sales to commercial Market Outlook (Calendar 2014) vehicle and automotive customers • Off-highway markets remain under pressure, Flat to Heavy Duty Truck +5% particularly agricultural and mining equipment +3% to • Construction market showing signs of improv
Slide 7: Europe
Europe • Revenue up 21%, driven by sales to commercial vehicle customers and higher tooling sales Market Outlook (Calendar 2014) – Excluding the FX impact, sales were up 16% Flat to Automotive +5% • Commercial vehicle sales benefited from Euro 6 program launches and Euro 5 pre-buy -3% to Commercial
Slide 8: South America
South America Market Outlook (Calendar 2014) • Sales down 5%, excluding the exchange rate impact Flat to Commercial Vehicle +5% – Lower sales to commercial vehicle, automotive and power generation customers Agriculture Flat to +3% – Aftermarket down slightly Flat to • Growth rate has slowed consider
Slide 9: Asia
Asia Market Outlook (Calendar 2014) • Strong sales growth of 30% Flat to – Export sales from India to European Asia Excavator +5% automotive customers – China construction showing improvement India Commercial Flat to Vehicle +5% • India commercial vehicle and off-highway markets Flat to remain weak,
Slide 10: Commercial Products
Commercial Products • Sales down $4.3 million in the quarter (-10%) Market Outlook (Calendar 2014) – $7.4 million decrease due to Airedale fire – 17% increase in North American heating products N.A. Market +3% to 5% • Airedale producing in temporary facilities – Orders remain strong despite long lea
Slide 11: Financial Review and Outlook
Financial Review and Outlook Mick Lucareli Vice President and Chief Financial Officer
Slide 12: Financial Review – 3Q Fiscal 2014 vs. Prior Year
Financial Review – 3Q Fiscal 2014 vs. Prior Year ($ in millions, except per share amounts) Fiscal Fiscal Better / 2014 2013 (Worse) • Revenue increased 6%, or $21M, over Net sales $ 347.0 $ 326.1 $ 20.9 the prior year Cost of sales 290.2 277.9 (12.3) Gross profit 56.8 48.2 8.6 • Strong gross profit
Slide 13: Financial Review – Net Debt & Cash Flow
Financial Review – Net Debt & Cash Flow ($ in millions) 9 Mos 9 Mos ($ in millions) Ended Ended 12/31/13 3/31/13 12/31/13 12/31/12 Operating Cash Flow $ 86.7 $ 41.4 Cash $ 86.3 $ 23.8 Capital Expenditures (36.0) (33.6) Debt 168.3 163.6 Free Cash Flow $ 50.7 $ 7.8 Net Debt $ 82.0 $ 139.8 • Year-to-da
Slide 14: Q3 Fiscal 2014 Review – North America & Europe
Q3 Fiscal 2014 Review – North America & Europe North America ($ in millions) Europe ($ in millions) Better / Better / FY'14 FY'13 (Worse) FY'14 FY'13 (Worse) Net sales $ 128.9 $ 128.2 $ 0.7 Net sales $ 140.5 $ 115.7 $ 24.8 Gross profit 20.0 17.3 2.7 Gross profit 17.2 12.1 5.1 % of net sales 15.5% 13
Slide 15: Q3 Fiscal 2014 Review – South America & Asia
Q3 Fiscal 2014 Review – South America & Asia South America ($ in millions) Asia ($ in millions) Better / Better / FY'14 FY'13 (Worse) FY'14 FY'13 (Worse) Net sales $ 27.4 $ 31.7 $ (4.3) Net sales $ 17.1 $ 13.2 $ 3.9 Gross profit 4.5 5.6 (1.1) Gross profit 2.0 - 2.0 % of net sales 16.3% 17.5% (120 bp
Slide 16: Q3 Fiscal 2014 Review – Building HVAC
Q3 Fiscal 2014 Review – Building HVAC Commercial Products (Building HVAC) ($ in millions) Better / FY'14 FY'13 (Worse) Net sales $ 37.0 $ 41.3 $ (4.3) Gross profit 13.1 13.1 - % of net sales 35.5% 31.6% 390 bp SG&A expenses 7.8 8.4 0.6 % of net sales 21.2% 20.3% (90 bp) Operating income $ 5.3 $ 4.7
Slide 17: Fiscal 2014 Guidance
Fiscal 2014 Guidance FY 2014 Guidance Assumptions 5% – 8% increase • BMW wind down impact of approximately $12 million Revenue from prior year • Forecasts are based on 12/31/2013 FX rates • Excludes European restructuring costs and losses related to Airedale fire • SG&A at approximately 12.3% of sal
Slide 18: Summary
Summary • Third consecutive quarter of free cash flow generation • Our end markets continue to hold steady, expect flat-to-low growth in calendar 2014 • European team focused on improving manufacturing processes and executing final phase of restructuring program • Airedale is up and running at tempo
Slide 19: Modine Thermal Innovation
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Slide 20: Appendix
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Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted operating income and earnings per share (unaudited) (In millions, except per share amounts) Three months ended December 31, Nine months ended December 31, 2013 2012 2013 2012 Operating income (loss) $ 0.9 $ (3.8) $ 30.5 $ (6.7) Restructu
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