Form 10-Q MODINE MANUFACTURING CO For: Dec 31
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended December 31, 2022
or
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
Commission file number 1-1373
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code (262 ) 636-1200
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer ☐
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Non-accelerated Filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☑
The number of shares outstanding of the registrant’s common stock, $0.625 par value, was 52,120,189 at January 27, 2023.
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PART I. FINANCIAL INFORMATION
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1
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23
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34
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34
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PART II. OTHER INFORMATION
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35
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35
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36
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37
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PART I. FINANCIAL INFORMATION
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended December 31, 2022 and 2021
(In millions, except per share amounts)
(Unaudited)
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Three months ended
December 31,
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Nine months
ended
December 31,
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2022
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2021
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2022
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2021
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Net sales
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$
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$
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$ | $ | ||||||||||
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Cost of sales
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Gross profit
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Selling, general and administrative expenses
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Restructuring expenses
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Impairment charges (reversals) – net
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(
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)
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( |
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Loss on sale of assets
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Operating income
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Interest expense
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(
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)
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(
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)
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( |
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Other expense – net
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(
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(
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( |
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Earnings before income taxes
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Provision for income taxes
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(
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(
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( |
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Net earnings
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Net earnings attributable to noncontrolling interest
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(
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)
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(
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)
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( |
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Net earnings attributable to Modine
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$
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$
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$ | $ | ||||||||||
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Net earnings per share attributable to Modine shareholders:
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Basic
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$
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$
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$ | $ | ||||||||||
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Diluted
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$
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$
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$ | $ | ||||||||||
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Weighted-average shares outstanding:
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Basic
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Diluted
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the three and nine months ended December 31, 2022 and 2021
(In millions)
(Unaudited)
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Three months ended
December 31,
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Nine months
ended
December 31,
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2022
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2021
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2022
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2021
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Net earnings
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$
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$
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$ | $ | ||||||||||
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Other comprehensive income (loss), net of income taxes:
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Foreign currency translation
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(
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)
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( |
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Defined
benefit plans
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Cash
flow hedges
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( |
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Total other comprehensive income (loss)
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(
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( |
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Comprehensive income (loss)
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Comprehensive (income) loss attributable to noncontrolling interest
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(
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)
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(
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)
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( |
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Comprehensive income (loss) attributable to Modine
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$
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$
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$ | $ | ||||||||||
The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED
BALANCE SHEETS
December 31, 2022 and March 31, 2022
(In millions, except per share amounts)
(Unaudited)
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December 31, 2022
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March 31, 2022
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ASSETS
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Cash and cash equivalents
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$
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$
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Trade accounts receivable – net
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Inventories
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Other current assets
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Total current assets
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Property, plant and equipment – net
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Intangible assets – net
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Goodwill
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Deferred income taxes
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Other noncurrent assets
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Total assets
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$
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$
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Short-term debt
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$
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$
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Long-term debt – current portion
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Accounts payable
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Accrued compensation and employee benefits
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Other current liabilities
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Total current liabilities
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Long-term debt
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Deferred income taxes
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Pensions
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Other noncurrent liabilities
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Total liabilities
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Commitments and contingencies (see Note 17)
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Shareholders’ equity:
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Preferred stock, $
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Common stock, $
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive loss
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(
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(
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Treasury stock, at cost,
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(
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(
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Total Modine shareholders’ equity
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Noncontrolling interest
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Total equity
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Total liabilities and equity
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the nine months ended December 31, 2022 and 2021
(In millions)
(Unaudited)
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Nine months ended December 31,
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2022
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2021
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Cash flows from operating activities:
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Net earnings
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$
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$
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Adjustments to reconcile net earnings to net cash provided by operating activities:
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Depreciation and amortization
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Impairment charges (reversals) – net
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(
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Loss on sale of assets
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Stock-based compensation expense
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Deferred income taxes
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(
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(
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Other – net
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Changes in operating assets and liabilities:
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Trade accounts receivable
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Inventories
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(
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(
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Accounts payable
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(
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Other assets and liabilities
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(
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(
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Net cash provided by operating activities
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Cash flows from investing activities:
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Expenditures for property, plant and equipment
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(
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)
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(
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Proceeds from (payments for) disposition of assets
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(
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Disbursements for loan origination (see Note 1)
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( |
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Other – net
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(
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Net cash used for investing activities
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(
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(
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Cash flows from financing activities:
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Borrowings of debt
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Repayments of debt
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(
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)
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(
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Borrowings (repayments) on bank overdraft facilities – net
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(
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)
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| Financing fees paid |
( |
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Purchases of treasury stock under share repurchase program
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(
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)
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Dividend paid to noncontrolling interest
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(
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)
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(
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)
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Other – net
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(
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)
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Net cash provided by financing activities
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Effect of exchange rate changes on cash
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(
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)
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(
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)
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Net increase in cash, cash equivalents, and restricted cash
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Cash, cash equivalents, and restricted cash – beginning of period
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Cash, cash equivalents, and restricted cash – end of period
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the three and nine months ended December 31,
2022 and 2021
(In millions)
(Unaudited)
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Common stock
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Additional
paid-in
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Retained
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Accumulated
other
comprehensive
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Treasury stock, at
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Non-
controlling
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Shares
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Amount
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capital
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earnings
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loss
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cost
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interest
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Total
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|||||||||||||||||||||||||
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Balance, March 31, 2022
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|
$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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|||||||||||||||
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Net earnings
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-
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Other comprehensive loss
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-
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(
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)
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(
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)
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(
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)
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Stock options and awards
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Purchase of treasury stock
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-
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(
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)
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(
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)
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Stock-based compensation expense
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-
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Dividend paid to noncontrolling interest
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Balance, June 30, 2022
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|
$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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|||||||||||||||
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Net earnings (loss)
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-
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( |
) | |||||||||||||||||||||||||||||
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Other comprehensive loss
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-
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( |
) | ( |
) | ( |
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Stock options and awards
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||||||||||||||||||||||||||||||||
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock-based compensation expense
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-
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|||||||||||||||||||||||||||||||
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Balance, September 30, 2022
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$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
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Net earnings
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-
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|||||||||||||||||||||||||||||||
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Other comprehensive income
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-
|
|||||||||||||||||||||||||||||||
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Stock options and awards
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock-based compensation expense
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-
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|||||||||||||||||||||||||||||||
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Balance, December 31, 2022
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$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
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Common stock
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Additional
paid-in
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Retained
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Accumulated
other
comprehensive
|
Treasury stock, at
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Non-
controlling
|
|||||||||||||||||||||||||||
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Shares
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Amount
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capital
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earnings
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loss
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cost
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interest
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Total
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Balance, March 31, 2021
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$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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Net earnings
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-
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Other comprehensive income
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-
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Stock options and awards
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Purchase of treasury stock
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-
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(
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)
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(
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)
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||||||||||||||||||||||
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Stock-based compensation expense
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-
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Dividend paid to noncontrolling interest
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Balance, June 30, 2021
|
|
$
|
|
$
|
|
$
|
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$
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(
|
)
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$
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(
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)
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$
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$
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Net earnings
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-
|
|||||||||||||||||||||||||||||||
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Other comprehensive loss
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-
|
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
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Stock options and awards
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||||||||||||||||||||||||||||||||
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Stock-based compensation expense
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-
|
|||||||||||||||||||||||||||||||
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Balance, September 30, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
|
Net earnings
|
-
|
|||||||||||||||||||||||||||||||
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Other comprehensive income (loss)
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-
|
( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock options and awards
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||||||||||||||||||||||||||||||||
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
|
Balance, December 31, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 1: General
The accompanying unaudited condensed consolidated financial statements of Modine Manufacturing Company
(“Modine” or the “Company”) were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flows required by GAAP for complete financial statements. The financial statements include all normal recurring
adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first nine months of fiscal 2023 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and
related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2022.
Disposition of Austrian Air-cooled Automotive Business in Fiscal 2022
On April 30, 2021, the Company sold
its air-cooled automotive business in Austria to Schmid Metall GmbH. As a result of this transaction, the Company recorded a loss of $6.6
million during the first quarter of fiscal 2022, which included the write-off of $1.7 million of net
actuarial losses related to its pension plan. The Company reported this loss within the loss on sale of assets line on the consolidated statement of operations. Upon transaction closing, $5.9 million of cash within the business transferred to the buyer. During the third quarter of fiscal 2022, a
purchase price adjustment for net working capital and certain other items was finalized and the Company paid the buyer $2.4 million.
In connection with the sale of this business, the Company provided the buyer with a 5 -year, €4.0 million loan facility. The buyer began borrowing
under this facility during the second quarter of fiscal 2022. At both December 31, 2022 and March 31, 2022, the Company recorded a €4.0 4.6 percent.
Liquid-Cooled
Automotive Business Held for Sale in Fiscal 2022
The Company previously
agreed to sell its liquid-cooled automotive business. During the first quarter of fiscal 2022, the Company and the prospective buyer modified the transaction perimeter to remove certain manufacturing operations. U.S. GAAP requires companies
to measure asset groups that revert back to held and used classification at the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value at the date of the decision not to sell. As a result,
the Company evaluated the long-lived assets of these businesses that no longer met the requirements to be classified as held for sale and reversed $7.4
million of previously-recorded impairment charges during the first quarter of fiscal 2022 to adjust the long-lived assets to their estimated fair value.
During the third
quarter of fiscal 2022, the Company and the prospective buyer terminated the sale agreement and the liquid-cooled automotive business reverted back to held and used classification. As a result, the Company remeasured the long-lived assets
within the liquid-cooled automotive business and reversed $57.2 million of previously-recorded held for sale impairment charges
during the third quarter of fiscal 2022.
On a year-to-date
basis, the $64.6 million of impairment reversals described above were partially offset by $8.6 million of impairment charges related to the automotive assets while they were classified as held for sale during fiscal 2022, resulting in a net impairment reversal of
$56.0 million. The Company reported all impairment charges and reversals during fiscal 2022 within the impairment charges
(reversals) line on the consolidated statements of operations.
6
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Disposition of Previously-Closed Facility in Fiscal 2022
During the first quarter of fiscal 2022, the Company signed a definitive agreement to sell a previously-closed manufacturing facility in the U.S.
As a result, the Company recorded an impairment charge of $0.3 million within the Climate Solutions segment to write down the property
to fair value less costs to sell. During July 2021, the sale was completed and the Company received net cash proceeds of $0.7 million.
New Accounting Guidance: Supplier Finance Programs
In September 2022, the Financial Accounting Standards Board (“FASB”) issued new guidance that will require companies that use supplier finance
programs to disclose information about the programs, including key terms, outstanding obligations under such programs and where outstanding amounts are presented within their financial statements. In addition, a roll forward of obligations
under supplier finance programs will be required annually. The new guidance is effective for the Company’s fiscal 2024 financial statements, with the exception of the roll forward disclosure requirement, which will become effective one year
later. The Company is currently evaluating the new disclosures, but does not expect the guidance will have a material impact on its consolidated financial statements.
Note 2: Revenue Recognition
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported Building HVAC Systems (“BHVAC”) and the Commercial
and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported Heavy Duty Equipment (“HDE”) and Automotive segments and the CIS Coatings business. See Note 19
for additional segment financial information.
The Company’s operating segments and their principal revenue-generating activities are as follows:
Climate Solutions
The Climate Solutions segment provides energy-efficient, climate-controlled components and solutions for a wide array of
applications. The Climate Solutions segment principally generates revenue from selling heat transfer products, heating, ventilating, air conditioning, and refrigeration (“HVAC & refrigeration”) products, and data center cooling solutions.
Heat transfer products include heat transfer coils used in commercial and residential HVAC and refrigeration applications. HVAC and refrigeration products include commercial and residential unit heaters, vertical and horizontal unit ventilators,
air conditioning chillers, low global warming potential unit coolers, air-cooled condensers, and dry coolers. Data center cooling solutions, which are integrated with system controls, include air- and liquid-cooled chillers, computer room air
conditioner and air handler units, and fan walls.
Performance Technologies
The Performance Technologies segment provides products and solutions that enhance the performance of customer applications.
The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products include radiators, charge air coolers, condensers, and engine cooling
modules. Liquid-cooled products include engine oil coolers, charge air coolers, condensers, and exhaust gas recirculation coolers. In addition, the Performance Technologies segment provides advanced solutions, which are designed to improve
battery range and vehicle life, to zero-emission and hybrid commercial vehicle and automotive customers. These solutions include battery thermal management systems, electronics cooling packages, and battery chillers. The advanced solutions
provided by the segment also include coating products and application services that extend the life of equipment and components by protecting against corrosion.
7
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Disaggregation of Revenue
The tables below present revenue for each of the Company’s operating segments. Each segment’s revenue is disaggregated by product group, by geographic location and based upon the timing of revenue recognition. The disaggregated revenue
information presented in the tables below for fiscal 2022 has been recast to be comparable with the fiscal 2023 presentation.
|
Three months ended December 31, 2022
|
Three months ended December 31, 2021
|
|||||||||||||||||||||||
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
|
Product groups:
|
||||||||||||||||||||||||
|
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
HVAC & refrigeration
|
||||||||||||||||||||||||
|
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
|
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
|
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Geographic location:
|
||||||||||||||||||||||||
|
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Europe
|
|
|
|
|
|
|
||||||||||||||||||
|
Asia
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Timing of revenue recognition:
|
||||||||||||||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Nine months ended December 31, 2022
|
Nine
months ended December 31, 2021
|
|||||||||||||||||||||||
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
|
Product groups:
|
||||||||||||||||||||||||
|
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
HVAC & refrigeration
|
|
|
|
|
|
|
||||||||||||||||||
|
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
|
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
|
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Geographic location:
|
||||||||||||||||||||||||
|
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Europe
|
|
|
|
|
|
|
||||||||||||||||||
|
Asia
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Timing of revenue recognition:
|
||||||||||||||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
8
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Contract Balances
Contract assets and contract liabilities from contracts with customers were as follows:
| |
December 31, 2022
|
March 31, 2022
|
||||||
|
Contract assets
|
$
|
|
$
|
|
||||
|
Contract liabilities
|
|
|
||||||
Contract
assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue
recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed. The $3.0 million
decrease in contract assets during the first nine months of fiscal 2023 primarily resulted from a decrease in contract assets for revenue recognized over time.
Contract
liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for customer-owned tooling. The
$0.1 million increase in contract liabilities during the first nine months of fiscal 2023 primarily resulted from payments received in
advance of the Company’s satisfaction of performance obligations.
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy:
| • |
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.
|
When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not
available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, the Company determines fair value based upon
valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3.
The carrying values of cash, cash equivalents, restricted cash, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair
value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt is disclosed in Note 16.
9
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 4: Pensions
Pension cost included the following components:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest cost
|
|
|
|
|
||||||||||||
|
Expected return on plan assets
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Amortization of unrecognized net loss
|
|
|
|
|
||||||||||||
|
Net periodic benefit cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The Company’s funding policy is to contribute annually, at a minimum, the amount
necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations. In connection with funding relief provisions within the American Rescue Plan Act of 2021, the Company does not expect to make cash
contributions to its U.S. pension plans during fiscal 2023.
Note 5: Stock-Based Compensation
The Company’s stock-based incentive programs consist of the following: (1) a long-term incentive plan (“LTIP”) for officers and other executives that
consists of stock awards, stock options, and performance-based awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.
The Company calculates compensation expense based upon the fair value of the awards at the time of grant and subsequently recognizes expense ratably over
the respective vesting periods of the stock-based awards. The Company recognized stock-based compensation expense of $1.5 million and $1.1 million for the three months ended December 31, 2022 and 2021, respectively. The Company recognized stock-based compensation expense of $5.0 million and $4.7 million for the nine months ended December 31, 2022 and 2021, respectively.
The weighted-average fair value of stock-based compensation awards granted during the nine months
ended December 31, 2022 and 2021 were as follows:
| Nine months ended December 31, |
||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Fair Value | Fair Value | |||||||||||||||
|
Shares
|
Per Award
|
Shares |
Per Award
|
|||||||||||||
|
Stock options
|
|
$
|
|
$ | ||||||||||||
|
Restricted stock awards
|
|
$
|
|
$ | ||||||||||||
| Unrestricted stock awards |
$ |
|||||||||||||||
In lieu of performance-based stock awards, the Company granted performance cash
awards to the LTIP participants during the first nine months of fiscal 2023. The performance metrics for the cash awards are based upon a target three-year average cash flow return on invested capital and a target three-year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the performance period ending March 31, 2025.
10
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
The Company used the following assumptions in
determining fair value for stock options:
| Nine months ended December 31, |
||||||||
| 2022 |
2021 | |||||||
|
Expected life of awards in years
|
|
|||||||
|
Risk-free interest rate
|
|
%
|
% | |||||
|
Expected volatility of the Company’s stock
|
|
%
|
% | |||||
|
Expected dividend yield on the Company’s stock
|
|
%
|
% | |||||
As of December 31, 2022, unrecognized compensation expense related to non-vested
stock-based compensation awards, which will be recognized as expense over the remaining service periods, was as follows:
| |
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
|
Stock options
|
$
|
|
|
|||||
|
Restricted stock awards
|
|
|
||||||
|
Total
|
$
|
|
|
|||||
Note 6: Restructuring Activities
During
the first nine months of fiscal 2023, restructuring and repositioning expenses primarily consisted of severance expenses related to targeted headcount reductions in Europe within the Performance Technologies segment. In addition, the Company
incurred equipment transfer costs and closure costs related to a previously-leased facility in the Performance Technologies and Climate Solutions segments, respectively.
During the first nine months of fiscal 2022, restructuring and repositioning expenses primarily consisted
of severance-related expenses within the Climate Solutions and Performance Technologies segments and equipment transfer costs within the Performance Technologies segment.
Restructuring and repositioning expenses were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Employee severance and related benefits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Other restructuring and repositioning expenses
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other restructuring and repositioning expenses primarily consist of equipment transfer and plant consolidation costs.
11
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as
follows:
|
Three months ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Additions
|
|
|
||||||
|
Payments
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale | ||||||||
|
Effect of exchange rate changes
|
|
(
|
)
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
| Nine months ended December 31, | ||||||||
| 2022 |
2021 |
|||||||
| Beginning balance | $ | $ | ||||||
| Additions | ||||||||
| Payments | ( |
) | ( |
) | ||||
| Reclassified from held for sale | ||||||||
| Effect of exchange rate changes | ( |
) | ( |
) | ||||
| Ending balance | $ | $ | ||||||
Note 7: Other Income and Expense
Other income and expense consisted of the following:
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Foreign currency transactions (a)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net periodic benefit cost (b)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Total other expense – net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
|
(a) |
|
|
|
(b) |
|
12
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 8: Income Taxes
The Company’s effective tax rate for the three months ended December 31, 2022 and 2021 was 25.6 percent and 0.1 percent, respectively. The
Company’s effective tax rate for the nine months ended December 31, 2022 and 2021 was 23.8 percent and 8.7 percent, respectively.
The
effective tax rates for the fiscal 2022 periods were significantly impacted by the Company’s accounting for the liquid-cooled automotive business, which had been previously classified as held for sale. During the nine months ended December 31,
2021, the Company recorded net impairment reversals totaling $56.0 million related to this business, primarily driven by the
remeasurement of its property, plant and equipment assets upon reverting back to held and used classification during the third quarter of fiscal 2022. In addition, the effective tax rates for the third quarter and the first nine months of fiscal
2022 were favorably impacted by $8.2 million and $11.4 million, respectively, from income tax benefits related to valuation allowances on deferred tax assets in foreign jurisdictions, as further described below. See Note 1 for additional
information regarding the net impairment reversals related to the liquid-cooled automotive business.
The Company records valuation allowances
against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future. Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and
determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies. In
addition, the Company considers the duration of statutory carryforward periods and historical financial results.
Based upon its quarterly analyses in fiscal 2022, the Company determined it was more likely than not that the deferred tax assets in certain foreign jurisdictions will be
realized. As a result, the need for the valuation allowances recorded thereon was eliminated and the Company recorded income tax benefits of $4.8
million and $8.2 million during the first and third quarters of fiscal 2022, respectively. The Company’s analyses in these quarters
included consideration of the transaction perimeter modification during the first quarter and the termination of the sale agreement during the third quarter for the liquid-cooled automotive business and the related impairment reversals. In
addition, based upon the Company’s analysis as of September 30, 2021, the Company determined it was more likely than not that the deferred tax assets in a foreign jurisdiction will not be realized. As a result, the Company recorded an income tax
charge of $1.6 million in the second quarter of fiscal 2022, which partially offset the $13.0 million of income tax benefits recorded during the first and third quarters. Combined, these fiscal 2022 valuation allowance adjustments resulted in a net income tax
benefit of $11.4 million during the first nine months of fiscal 2022.
At December 31, 2022, valuation allowances against deferred tax assets in the U.S. and in certain foreign
jurisdictions totaled $84.9 million and $28.1 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more
likely than not the deferred tax assets will be realized, thereby eliminating the need for a valuation allowance. Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s
operations in certain foreign jurisdictions, could necessitate the establishment of further valuation allowances. At present, the Company has recorded a full valuation allowance on its U.S. deferred tax assets. Based upon current and anticipated future
earnings in the U.S., the Company believes it is reasonably possible that in the fourth quarter of fiscal 2023 or in fiscal 2024, sufficient positive evidence may be available to conclude that a significant portion of the U.S. valuation allowance
is not needed. The Company estimates such valuation allowance release would result in a decrease to income tax expense of up to $65.0
million in the period recorded. However, the ultimate timing of such a release, if any, and the resulting decrease to income tax expense, could differ from the Company’s current estimates.
Accounting policies for interim reporting require the Company to adjust its effective tax rate each
quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The
Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate
methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. The Company does not anticipate a significant change in unrecognized tax
benefits during the remainder of fiscal 2023.
13
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 9: Earnings Per Share
The components of basic and diluted earnings per share were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Net earnings attributable to Modine
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Weighted-average shares outstanding – basic
|
|
|
|
|
||||||||||||
|
Effect of dilutive securities
|
|
|
|
|
||||||||||||
|
Weighted-average shares outstanding – diluted
|
|
|
|
|
||||||||||||
|
Earnings per share:
|
||||||||||||||||
|
Net earnings per share – basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Net earnings per share – diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
For the three and nine months ended
December 31, 2022, the calculation of diluted earnings per share excluded 0.1 million and 0.6 million stock options, respectively, because they were anti-dilutive. In addition, the calculation for the three and nine months ended December 31, 2022 excluded less
than 0.1 million and 0.2
million restricted stock awards, respectively, because they were anti-dilutive.
For both the three and nine months ended December 31, 2021, the calculation of diluted earnings per share
excluded 0.6 0.2
Note 10: Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Restricted cash
|
|
|
||||||
|
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
||||
Restricted cash, which is reported within other current assets and other noncurrent assets in the consolidated balance sheets, consists primarily of deposits for
contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.
14
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 11: Inventories
Inventories consisted of the following:
| |
December 31, 2022
|
March 31, 2022
|
||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Total inventories
|
$
|
|
$
|
|
||||
Note 12: Property, Plant and Equipment
Property, plant and equipment, including depreciable lives, consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Land
|
$
|
|
$
|
|
||||
|
Buildings and improvements (
|
|
|
||||||
|
Machinery and equipment (
|
|
|
||||||
|
Office equipment (
|
|
|
||||||
|
Construction in progress
|
|
|
||||||
|
|
|
|||||||
|
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Net property, plant and equipment
|
$
|
|
$
|
|
||||
Note 13: Goodwill and Intangible Assets
The following table presents a roll forward of the carrying value of goodwill from March 31, 2022 to December 31, 2022. The Company has recast the March 31, 2022 goodwill balances to
be comparable with the current segment structure. There was no impact to the underlying reporting units as a result of the segment realignment during fiscal 2023.
|
Climate
Solutions
|
Performance
Technologies
|
Total
|
||||||||||
|
Goodwill, March 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
|
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Goodwill, December 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
15
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Intangible assets consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||||||||||||||||||
| Gross | Net | Gross | Net | |||||||||||||||||||||
| Carrying | Accumulated |
Intangible |
Carrying |
Accumulated |
Intangible |
|||||||||||||||||||
|
Value
|
Amortization
|
Assets
|
Value
|
Amortization
|
Assets
|
|||||||||||||||||||
|
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
|
Trade names
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Acquired technology
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Total intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
The Company recorded amortization expense of $2.0 million and $2.1 million for the three months ended December 31, 2022 and 2021, respectively. The Company recorded amortization expense of $6.0 million and $6.3 million for the nine months ended December 31, 2022
and 2021, respectively. The Company estimates that it will record approximately $2.0 million of amortization expense
during the remainder of fiscal 2023 and approximately $8.0
Note 14: Product Warranties
Changes in accrued warranty costs were as follows:
|
Three months ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Warranties recorded at time of sale
|
|
|
||||||
|
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Settlements
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale |
||||||||
|
Effect of exchange rate changes
|
|
|
||||||
|
Ending balance
|
$
|
|
$
|
|
||||
|
Nine months
ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Warranties recorded at time of sale
|
|
|
||||||
|
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Settlements
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale |
||||||||
|
Effect of exchange rate changes
|
(
|
)
|
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
16
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 15: Leases
Lease Assets and Liabilities
The following table provides a summary of leases recorded on
the consolidated balance sheets.
|
Balance Sheet Location
|
December 31, 2022
|
March 31, 2022
|
||||||||
|
Lease Assets
|
||||||||||
|
Operating lease ROU assets
|
|
$
|
|
$
|
|
|||||
|
Finance lease ROU assets (a)
|
|
|
|
|||||||
|
Lease Liabilities
|
||||||||||
|
Operating lease liabilities
|
|
$
|
|
$
|
|
|||||
|
Operating lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
| (a) |
|
Components of Lease Expense
The components of lease expense were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Operating lease
expense (a)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Finance lease
expense:
|
||||||||||||||||
|
Depreciation of
ROU assets
|
|
|
|
|
||||||||||||
|
Interest on
lease liabilities
|
|
|
||||||||||||||
|
Total lease
expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
(a)
|
|
17
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 16: Indebtedness
In October 2022, the Company executed an
amended and restated credit agreement with a syndicate of banks that provides for a multi-currency $275.0 million revolving credit
facility and U.S. dollar- and euro-denominated term loan facilities maturing in October 2027. In addition, the credit agreement provides for shorter-duration swingline loans. This credit agreement modified the Company’s then existing $250.0 million revolver and term loan facilities, which would have matured in June 2024.
In connection with the credit agreement
modification, the Company incurred $2.2 million of debt issuance costs. Of these costs, the Company deferred $1.5 million, which will be amortized as interest expense over the term of the debt, and recorded $0.7 million as interest expense on the consolidated statement of operations during the third quarter of fiscal 2023. The Company paid $0.6 million of the debt issuance costs during the third quarter of fiscal 2023 and the remaining issuance costs were added to the new term loan principal at the time of the modification.
Long-term debt consisted of the following:
| |
Fiscal year of
maturity
|
December 31, 2022
|
March 31, 2022
|
||||||
|
Term loans
|
|
$
|
|
$
|
|
||||
|
Revolving credit facility
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
Other (a)
|
|
|
|||||||
|
|
|
||||||||
|
Less: current portion
|
(
|
)
|
(
|
)
|
|||||
|
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
|||||
|
Total long-term debt
|
$
|
|
$
|
|
|||||
|
|
(a) |
|
Long-term debt, including the current portion of long-term debt, matures as
follows:
|
Fiscal Year
|
||||
|
Remainder of 2023
|
$
|
|
||
|
2024
|
|
|||
|
2025
|
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028 & beyond
|
|
|||
|
Total
|
$
|
|
||
Borrowings under the revolving credit,
swingline and term loan facilities bear interest at a variable rate based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below. At December 31, 2022, the
weighted-average interest rates for revolving credit facility borrowings and the term loans were 4.1 and 5.6 percent, respectively. Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline
facilities as long-term and short-term debt, respectively, on its consolidated balance sheets.
18
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
At December 31, 2022, the Company’s borrowings under its revolving credit and swingline facilities totaled $27.5
million and $6.0 million, respectively, and domestic letters of credit totaled $5.3 million. As a result, available borrowing capacity under the Company’s revolving credit facility was $236.2 million as of December 31, 2022. At March 31, 2022, the Company’s borrowings under its revolving credit and
swingline facilities totaled $64.9 million and $7.0 million, respectively.
The Company also maintains credit agreements for its foreign subsidiaries. The
outstanding short-term borrowings related to these foreign credit agreements totaled $5.3 million and $0.7 million at December 31, 2022 and March 31, 2022, respectively.
Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various
covenants and include certain cross-default clauses. Under its primary debt agreements in the U.S., the Company has provided liens on substantially all domestic assets. Also, as specified in the credit agreement, the term loans may require
prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as
defined in the credit agreement, on its business, property, or results of operations.
The leverage ratio covenant requires the Company to limit its consolidated indebtedness, less a portion of its cash balances, both as defined by the credit agreements, to
no more than times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other
adjustments (“Adjusted EBITDA”). The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. The Company was in compliance with its debt covenants as of December 31, 2022.
The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable
maturities. As of December 31, 2022 and March 31, 2022, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $123.7 million and $138.9 million, respectively. The fair value of
the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy. Refer to Note 3 for the definition of a Level 2 fair value measurement.
Note 17: Risks, Uncertainties, Contingencies and Litigation
Supply Chain Disruptions and Inflationary Market
Conditions
Market and economic dynamics, including the impacts of the COVID-19 pandemic and the military conflict between Russia and the Ukraine, have contributed to global supply chain challenges and
inflationary market conditions. The Company is focused on mitigating the negative impacts of labor shortages, supply chain challenges and inflationary market conditions, including changes in raw material, energy, logistic, and interest costs, as
well as delays and shortages in certain purchased commodities and components.
The Company cannot reasonably estimate the full impact that the ongoing
supply chain challenges and other related economic and market dynamics will have on
the Company’s business, results of operations and cash flows in the future.
Environmental
The Company has recorded environmental investigation and remediation accruals related to manufacturing facilities in the U.S., one of which the Company currently owns and operates, and a former
manufacturing facility in the Netherlands. These accruals primarily relate to soil and groundwater contamination at facilities where past operations followed practices and procedures that were considered acceptable under then-existing
regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance. In instances where a range of loss
can be reasonably estimated for a probable environmental liability, but no amount within the range is a better estimate than any other amount, the Company accrues the minimum of the range. The Company’s accruals for environmental matters totaled
$18.6 million and $18.2
million as of December 31, 2022 and March 31, 2022, respectively. During the first quarter of fiscal 2023 and 2022, the Company increased its remediation accrual related to a former manufacturing facility in the U.S. by $1.0 million and $3.4 million, respectively. As additional information becomes
available regarding the environmental matters, the Company will re-assess the liabilities and revise the estimated accruals, if necessary. While it is possible that the ultimate environmental remediation costs may be in excess of amounts accrued,
the Company believes, based upon currently available information, that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject
to inherent uncertainties, and unfavorable outcomes could occur, including significant monetary damages.
Other Litigation
In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, governmental
agencies and/or others in which claims are asserted against Modine. The Company believes that any additional loss in excess of amounts already accrued would not have a material effect on the Company’s consolidated balance sheet, results of
operations, and cash flows. In addition, management expects that the liabilities which may ultimately result from such lawsuits or proceedings, if any, would not have a material adverse effect on the Company’s financial position.
19
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 18: Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss were as follows:
|
Three months ended December 31, 2022
|
Nine months
ended December 31, 2022
|
|||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||
|
Other comprehensive income (loss) before reclassifications
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
|
Reclassifications:
|
||||||||||||||||||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
|
Realized losses – net (b)
|
-
|
-
|
|
|
- | - | ||||||||||||||||||||||||||
|
Income taxes
|
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | |||||||||||||||||||||||
|
Total other comprehensive income (loss)
|
|
|
|
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
|
Three months ended December 31, 2021
|
Nine months
ended December 31, 2021
|
|||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
|
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
|
Reclassifications:
|
||||||||||||||||||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
|
Realized gains – net (b)
|
- | - | ( |
) | ( |
) | - | - | ( |
) | ( |
) | ||||||||||||||||||||
|
Unrecognized net pension loss in disposed business (c)
|
- | - | - | - | ||||||||||||||||||||||||||||
|
Income taxes
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
|
Total other comprehensive income (loss)
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
| (a) |
|
| (b) |
|
| (c) |
|
20
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 19: Segment Information
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported BHVAC and CIS
segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported HDE and Automotive segments and the CIS Coatings business. See Note 2 for information regarding the primary operating activities of
each segment. The Company’s new segment structure aligns businesses serving similar or complimentary end markets, products and technologies under common segment management.
The Company
believes this simplified segment structure allows it to better focus resources on targeted growth opportunities and better enables for an efficient application of 80/20 principles across all product lines to optimize profit margins and cash flow.
The segment realignment had no impact on the Company’s consolidated financial position, results of operations, and cash flows. Segment financial information for the prior periods has been recast to conform to the current presentation.
The following is a summary of net sales, gross profit and operating income by segment:
|
Three months ended December 31,
|
||||||||||||||||||||||||
|
2022
|
2021
|
|||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||
| Climate Solutions |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Performance Technologies |
||||||||||||||||||||||||
|
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
||||||||||||
|
Nine months
ended December 31,
|
||||||||||||||||||||||||
|
2022
|
2021
|
|||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||
|
Climate Solutions
|
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
|
Performance Technologies
|
||||||||||||||||||||||||
|
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
||||||||||||
21
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
|
Three months ended December 31,
|
Nine months
ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
| $’s |
% of sales | $’s |
% of sales | $’s |
% of sales | $’s |
% of sales | |||||||||||||||||||||||||
|
Gross profit:
|
||||||||||||||||||||||||||||||||
| Climate Solutions | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Performance Technologies | % | % | % | % | ||||||||||||||||||||||||||||
|
Segment total
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Corporate and eliminations
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||
|
Gross profit
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||||||
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Operating income:
|
||||||||||||||||
| Climate Solutions | $ |
$ | $ |
$ |
||||||||||||
| Performance Technologies | ||||||||||||||||
|
Segment total
|
|
|
|
|
||||||||||||
|
Corporate and eliminations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Operating income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The following is a summary of segment assets, comprised entirely of trade
accounts receivable and inventories, and other assets:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Assets:
|
||||||||
| Climate Solutions | $ |
$ |
||||||
| Performance Technologies | ||||||||
| Other (a) |
||||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
(a)
|
|
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, we are referring to Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to quarters refer to our fiscal quarters. The
quarter ended December 31, 2022 was the third quarter of fiscal 2023.
Supply Chain Disruptions and Inflationary Market Conditions
Market and economic dynamics, including the impacts of the COVID-19 pandemic and the military conflict between Russia and Ukraine, have contributed to global supply chain challenges and inflationary market conditions. We are focused on mitigating
the negative impacts of labor shortages, supply chain challenges and inflationary market conditions, including changes in raw material, energy, logistic, and interest costs, as well as delays and shortages in certain purchased commodities and
components. We have implemented selling price increases for many of our products in response to raw material and other cost increases and are engaged with suppliers to ensure availability of key raw materials.
We cannot reasonably estimate the full impact that the ongoing supply chain challenges and other related economic and market dynamics will have on our business, results of operations, or cash flows in the future.
Third Quarter Highlights
Net sales in the third quarter of fiscal 2023 increased $57.8 million, or 12 percent, from the third quarter of fiscal 2022, primarily due to higher sales in our Performance Technologies and Climate Solutions segments. Cost of sales increased
$34.8 million, or 8 percent, primarily due to higher sales volume. Gross profit increased $23.0 million and gross margin improved 250 basis points to 17.4 percent. Selling, general and administrative (“SG&A”) expenses increased $7.7 million,
primarily due to higher compensation-related expenses. Operating income of $39.5 million during the third quarter of fiscal 2023 decreased $39.9 million from the prior year, primarily due to the absence of a $57.2 million impairment reversal
recorded in the prior year related to the liquid-cooled automotive business, which reverted back to held and used classification upon the termination of a sale agreement with the prospective buyer during the third quarter of fiscal 2022. See Note 1
of the Notes to Condensed Consolidated Financial Statements for further information regarding the liquid-cooled automotive business, which was classified as held for sale during the first seven months of fiscal 2022.
Year-to-date Highlights
Net sales in the first nine months of fiscal 2023 increased $204.1 million, or 14 percent, from the same period last year, primarily due to higher sales in each of our operating segments. Cost of sales increased $141.0 million, or 11 percent,
from the same period last year, primarily due to higher sales volume and higher raw material costs, including underlying metal prices and related premiums, fabrication, freight, and packaging costs. Gross profit increased $63.1 million and gross
margin improved 200 basis points to 16.5 percent. SG&A expenses increased $11.5 million, primarily due to higher compensation-related expenses. Operating income of $101.9 million during the first nine months of fiscal 2023 increased $3.3
million from the prior year, primarily due to higher gross profit, partially offset by the absence of a $55.7 million net impairment reversal recorded in the prior year that primarily related to the liquid-cooled automotive business.
CONSOLIDATED RESULTS OF OPERATIONS
The following table presents our consolidated financial results on a comparative basis for the three and nine months ended December 31, 2022 and 2021:
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
560.0
|
100.0
|
%
|
$
|
502.2
|
100.0
|
%
|
$
|
1,679.8
|
100.0
|
%
|
$
|
1,475.7
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
462.4
|
82.6
|
%
|
427.6
|
85.1
|
%
|
1,402.6
|
83.5
|
%
|
1,261.6
|
85.5
|
%
|
||||||||||||||||||||
|
Gross profit
|
97.6
|
17.4
|
%
|
74.6
|
14.9
|
%
|
277.2
|
16.5
|
%
|
214.1
|
14.5
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
58.0
|
10.3
|
%
|
50.3
|
10.0
|
%
|
173.1
|
10.3
|
%
|
161.6
|
11.0
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
0.1
|
-
|
2.1
|
0.4
|
%
|
2.2
|
0.1
|
%
|
3.0
|
0.2
|
%
|
|||||||||||||||||||||
|
Impairment charges (reversals) – net
|
-
|
-
|
(57.2
|
)
|
-11.4
|
%
|
-
|
-
|
(55.7
|
)
|
-3.8
|
%
|
||||||||||||||||||||
|
Loss on sale of assets
|
-
|
-
|
-
|
-
|
-
|
-
|
6.6
|
0.4
|
%
|
|||||||||||||||||||||||
|
Operating income
|
39.5
|
7.1
|
%
|
79.4
|
15.8
|
%
|
101.9
|
6.1
|
%
|
98.6
|
6.7
|
%
|
||||||||||||||||||||
|
Interest expense
|
(5.9
|
)
|
-1.1
|
%
|
(3.8
|
)
|
-0.8
|
%
|
(14.7
|
)
|
-0.9
|
%
|
(11.8
|
)
|
-0.8
|
%
|
||||||||||||||||
|
Other expense – net
|
(0.4
|
)
|
-0.1
|
%
|
(1.1
|
)
|
-0.2
|
%
|
(4.1
|
)
|
-0.2
|
%
|
(1.6
|
)
|
-0.1
|
%
|
||||||||||||||||
|
Earnings before income taxes
|
33.2
|
5.9
|
%
|
74.5
|
14.8
|
%
|
83.1
|
4.9
|
%
|
85.2
|
5.8
|
%
|
||||||||||||||||||||
|
Provision for income taxes
|
(8.5
|
)
|
-1.5
|
%
|
(0.1
|
)
|
-
|
(19.8
|
)
|
-1.2
|
%
|
(7.4
|
)
|
-0.5
|
%
|
|||||||||||||||||
|
Net earnings
|
$
|
24.7
|
4.4
|
%
|
$
|
74.4
|
14.8
|
%
|
$
|
63.3
|
3.8
|
%
|
$
|
77.8
|
5.3
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Third quarter net sales of $560.0 million were $57.8 million, or 12 percent, higher than the third quarter of the prior year, primarily due to higher sales volume in each of our segments and favorable commercial pricing. These increases were
partially offset by a $30.2 million unfavorable impact of foreign currency exchange rates. Sales in the Performance Technologies and Climate Solutions segments increased $35.8 million and $21.3 million, respectively.
Third quarter cost of sales increased $34.8 million, or 8 percent, primarily due to higher sales volume, partially offset by a $25.5 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased
250 basis points to 82.6 percent, primarily due to the favorable impacts of higher sales volume and commercial pricing, partially offset by higher labor and inflationary costs.
As a result of higher sales and lower cost of sales as a percentage of sales, third quarter gross profit increased $23.0 million and gross margin improved 250 basis points to 17.4 percent.
Third quarter SG&A expenses increased $7.7 million, primarily driven by higher compensation-related expenses, which increased approximately $5.0 million, and, to a lesser extent, increases in other general and administrative expenses that have
been impacted by inflationary market conditions. The compensation-related expenses included higher incentive compensation expenses driven by improved financial results, as compared with the prior year. These increases were partially offset by a
$2.3 million favorable impact of foreign currency exchange rates and lower strategic reorganization costs recorded at Corporate, which decreased $0.9 million.
Restructuring expenses of $0.1 million in the third quarter of fiscal 2023 decreased $2.0 million compared with the third quarter of fiscal 2022, primarily due to lower severance and equipment transfer costs in the Climate Solutions and
Performance Technologies segments, respectively.
During the third quarter of fiscal 2022, in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges within the Performance Technologies
segment. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $39.5 million in the third quarter of fiscal 2023 decreased $39.9 million compared with the third quarter of fiscal 2022, primarily due to the absence of the significant impairment reversal recorded in the prior year, partially
offset by higher gross profit.
Interest expense during the third quarter of fiscal 2023 increased $2.1 million compared with the third quarter of fiscal 2022, primarily due to unfavorable changes in interest rates. In addition, we amended and extended our U.S. credit agreement
that provides for a multi-currency revolving credit facility and U.S. dollar- and euro- denominated term loans maturing in October 2027, along with shorter-duration swingline loans. In connection with this credit agreement modification, we recorded
$0.7 million of costs as interest expense during the third quarter of fiscal 2023.
The provision for income taxes was $8.5 million and $0.1 million in the third quarter of fiscal 2023 and 2022, respectively. The $8.4 million increase was primarily due the absence of an $8.2 million income tax benefit recorded during the third
quarter of fiscal 2022 resulting from the reversal of valuation allowances in foreign jurisdictions.
Comparison of Nine Months ended December 31, 2022 and 2021
Fiscal 2023 year-to-date net sales of $1,679.8 million were $204.1 million, or 14 percent, higher than the same period last year, primarily due to higher sales volume in both of our segments and favorable commercial pricing, including adjustments
in response to raw material price increases. These increases were partially offset by a $93.1 million unfavorable impact of foreign currency exchange rates. Sales in the Performance Technologies and Climate Solutions segments increased $102.2
million and $97.9 million, respectively.
Fiscal 2023 year-to-date cost of sales of $1,402.6 million increased $141.0 million, or 11 percent, primarily due to higher sales volume and higher raw material prices, which increased approximately $42.0 million. These increases were partially
offset by an $80.2 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 200 basis points to 83.5 percent, primarily due to the favorable impact of higher sales volume and favorable commercial
pricing, partially offset by higher material, labor and other inflationary costs.
As a result of higher sales and lower cost of sales as a percentage of sales, gross profit increased $63.1 million and gross margin improved 200 basis points to 16.5 percent.
Fiscal 2023 year-to-date SG&A expenses increased $11.5 million, primarily driven by higher compensation-related expenses, which increased approximately $14.0 million and included higher incentive compensation and commission-related expenses,
and, to a lesser extent, increases in other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $7.1 million favorable impact of foreign currency exchange rates.
In addition, strategic reorganization costs, costs associated with our review of strategic alternatives for our automotive businesses, and environmental charges related to a previously-closed manufacturing facility in the U.S., which are each
recorded at Corporate, decreased $3.1 million, $2.3 million, and $1.8 million, respectively, during the first nine months of fiscal 2023 compared with the same period in the prior year.
Restructuring expenses of $2.2 million in the first nine months of fiscal 2023 decreased $0.8 million compared with the same period last year, primarily due to lower severance expenses in the Climate Solutions segment, partially offset by higher
restructuring expenses in the Performance Technologies segment.
The net impairment reversal of $55.7 million during the first nine months of fiscal 2022 primarily related to the liquid-cooled automotive business within the Performance Technologies segment. See Note 1 of the Notes to Condensed Consolidated
Financial Statements for further information.
We sold our Austrian air-cooled automotive business on April 30, 2021. As a result of the sale, we recorded a $6.6 million loss on sale at Corporate during the first quarter of fiscal 2022.
Operating income of $101.9 million during the first nine months of fiscal 2023 increased $3.3 million compared with the same period last year, primarily due to the $63.1 million increase in gross profit and the absence of the $6.6 million loss on
the sale of the Austrian air-cooled automotive business in the prior year. These drivers, which increased operating income in the first nine months of fiscal 2023, were partially offset by the absence of the $55.7 million net impairment reversal
recorded in the prior year and higher SG&A expenses.
Interest expense during the first nine months of fiscal 2023 increased $2.9 million compared with the same period in the prior year, primarily due to unfavorable changes in interest rates and $0.7 million of costs recorded in connection with the
credit agreement modification during the third quarter of fiscal 2023.
The provision for income taxes was $19.8 million and $7.4 million during the first nine months of fiscal 2023 and 2022, respectively. The $12.4 million increase was primarily due to the absence of a net $11.4 million income tax benefit related to
valuation allowances on deferred tax assets in foreign jurisdictions recorded in the prior year.
SEGMENT RESULTS OF OPERATIONS
Effective April 1, 2022, we began managing the company under two operating segments, Climate Solutions and Performance Technologies. Our new segment structure aligns businesses serving similar or complimentary end markets, products and
technologies under common segment management. This simplified segment structure allows us to better focus resources on targeted growth opportunities and better enables an efficient application of 80/20 principles across all product lines to optimize
profit margins and cash flow.
The Climate Solutions segment provides energy-efficient, climate-controlled solutions and components for a wide array of applications. The Climate Solutions segment sells heat transfer products, heating, ventilating, air conditioning and
refrigeration (“HVAC and refrigeration”) products, and data center cooling solutions. The Performance Technologies segment provides products and solutions that enhance the performance of customer applications and develops solutions that increase
fuel economy and lower emissions in light of increasingly stringent government regulations. The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial
applications. In addition, the Performance Technologies segment provides advanced thermal solutions to zero-emission and hybrid commercial vehicle and automotive customers and coating products and application services.
The Climate Solutions segment includes the previously-reported Building HVAC Systems and Commercial and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the
previously-reported Heavy Duty Equipment and Automotive segments and the CIS Coatings business. The segment realignment had no impact on our consolidated financial position, results of operations, and cash flows. Segment financial information for
fiscal 2022 has been recast to conform to the current presentation.
The following is a discussion of our segment results of operations for the three months and nine months ended December 31, 2022 and 2021:
Climate Solutions
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
248.6
|
100.0
|
%
|
$
|
227.3
|
100.0
|
%
|
$
|
748.9
|
100.0
|
%
|
$
|
651.0
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
193.8
|
78.0
|
%
|
185.4
|
81.6
|
%
|
586.4
|
78.3
|
%
|
540.6
|
83.0
|
%
|
||||||||||||||||||||
|
Gross profit
|
54.8
|
22.0
|
%
|
41.9
|
18.4
|
%
|
162.5
|
21.7
|
%
|
110.4
|
17.0
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
24.6
|
9.9
|
%
|
23.6
|
10.4
|
%
|
72.3
|
9.7
|
%
|
67.0
|
10.3
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
-
|
-
|
1.5
|
0.6
|
%
|
0.3
|
-
|
1.7
|
0.3
|
%
|
||||||||||||||||||||||
|
Impairment charge
|
-
|
-
|
-
|
-
|
-
|
-
|
0.3
|
-
|
||||||||||||||||||||||||
|
Operating income
|
$
|
30.2
|
12.2
|
%
|
$
|
16.8
|
7.4
|
%
|
$
|
89.9
|
12.0
|
%
|
$
|
41.4
|
6.4
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Climate Solutions net sales increased $21.3 million, or 9 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and favorable commercial pricing. This increase was partially
offset by a $13.7 million unfavorable impact of foreign currency exchange rates. Compared with the third quarter of the prior year, sales of data center cooling, heat transfer, and HVAC & refrigeration products increased $16.3 million, $2.8
million, and $2.2 million, respectively.
Climate Solutions cost of sales increased $8.4 million, or 5 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume, partially offset by an $11.6 million favorable impact of foreign
currency exchange rates. As a percentage of sales, cost of sales decreased 360 basis points to 78.0 percent, primarily due to the favorable impact of higher sales volume, and improved operating efficiencies, partially offset by higher labor and
inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $12.9 million and gross margin improved 360 basis points to 22.0 percent.
SG&A expenses increased $1.0 million, yet decreased 50 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to increases in general and administrative expenses that have been impacted by inflationary
market conditions and, to a lesser extent, higher compensation-related expenses. These increases were partially offset by a $1.1 million favorable impact of foreign currency exchange rate changes.
Restructuring expenses decreased $1.5 million compared with the third quarter of fiscal 2022. The fiscal 2022 restructuring expenses primarily consisted of severance expenses related to targeted headcount reductions in Europe and China.
Operating income of $30.2 million increased $13.4 million from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher gross profit.
Comparison of Nine Months ended December 31, 2022 and 2021
Climate Solutions year-to-date net sales increased $97.9 million, or 15 percent, from the same period last year, primarily due to higher sales volume and favorable commercial pricing, including adjustments in response to raw material price
increases. These increases were partially offset by a $43.6 million unfavorable impact of foreign currency exchange rates. Compared with the same period in the prior year, sales of heat transfer, data center cooling, and HVAC & refrigeration
products increased $41.3 million, $37.6 million, and $18.9 million, respectively.
Climate Solutions year-to-date cost of sales increased $45.8 million, or 8 percent, from the same period last year, primarily due to higher sales volume and, to a lesser extent, higher raw material prices, which increased by approximately $10.0
million. These increases were partially offset by a $37.0 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 470 basis points to 78.3 percent, primarily due to the favorable impact of
higher sales volume, favorable commercial pricing, and improved operating efficiencies, partially offset by higher labor and inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $52.1 million and gross margin improved 470 basis points to 21.7 percent.
Climate Solutions year-to-date SG&A expenses increased $5.3 million, yet decreased 60 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to higher compensation-related expenses, including higher
commission expenses, and increases in other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $3.5 million favorable impact
of foreign currency exchange rate changes.
Restructuring expenses of $0.3 million during the first nine months of fiscal 2023 decreased $1.4 million compared with the same period last year, primarily due to lower severance expenses. The severance expenses during the first nine months of
fiscal 2022 primarily related to targeted headcount reductions in Europe and China. The $0.3 million of restructuring expenses during the first nine months of fiscal 2023 primarily consisted of closure costs related to a previously-leased facility.
During the first quarter of fiscal 2022, we recorded an impairment charge of $0.3 million to write-down a previously-closed manufacturing facility in the U.S. to fair value less costs to sell. We sold the facility and received net cash proceeds
of $0.7 million during July 2021.
Operating income of $89.9 million increased $48.5 million from the same period last year, primarily due to higher gross profit and lower restructuring expenses, partially offset by higher SG&A expenses.
Performance Technologies
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
317.8
|
100.0
|
%
|
$
|
282.0
|
100.0
|
%
|
$
|
952.1
|
100.0
|
%
|
$
|
849.9
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
274.8
|
86.5
|
%
|
249.1
|
88.3
|
%
|
836.9
|
87.9
|
%
|
747.3
|
87.9
|
%
|
||||||||||||||||||||
|
Gross profit
|
43.0
|
13.5
|
%
|
32.9
|
11.7
|
%
|
115.2
|
12.1
|
%
|
102.6
|
12.1
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
25.5
|
8.0
|
%
|
23.4
|
8.3
|
%
|
72.2
|
7.6
|
%
|
73.4
|
8.6
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
0.1
|
-
|
0.6
|
0.2
|
%
|
1.9
|
0.2
|
%
|
1.3
|
0.2
|
%
|
|||||||||||||||||||||
|
Impairment reversals - net
|
-
|
-
|
(57.2
|
)
|
-20.3
|
%
|
-
|
-
|
(56.0
|
)
|
-6.6
|
%
|
||||||||||||||||||||
|
Operating income
|
$
|
17.4
|
5.5
|
%
|
$
|
66.1
|
23.5
|
%
|
$
|
41.1
|
4.3
|
%
|
$
|
83.9
|
9.9
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Performance Technologies net sales increased $35.8 million, or 13 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and favorable commercial pricing. These increases were
partially offset by a $16.5 million unfavorable impact of foreign currency exchange rates. Compared with the third quarter of the prior year, sales of air-cooled, liquid-cooled, and advanced solutions products increased $20.8 million, $10.5 million,
and $5.2 million respectively.
Performance Technologies cost of sales increased $25.7 million, or 10 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and, to a lesser extent, higher labor costs. These
increases were partially offset by a $14.0 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 180 basis points to 86.5 percent, primarily due to the favorable impact of higher sales volume
and commercial pricing, partially offset by higher labor and inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $10.1 million and gross margin improved 180 basis points to 13.5 percent.
SG&A expenses increased $2.1 million compared with the third quarter of the prior year. As a percentage of sales, SG&A expenses decreased by 30 basis points. The increase in SG&A expenses was primarily due to higher product
development costs and other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $1.2 million favorable impact of foreign currency exchange rate changes.
Restructuring expenses of $0.1 million during the third quarter of fiscal 2023 decreased $0.5 million compared with the third quarter of fiscal 2022, primarily due to lower equipment transfer costs.
During the third quarter of fiscal 2022 and in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges to adjust the long-lived assets of
the liquid-cooled automotive business to the lower of their carrying or fair value. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $17.4 million decreased $48.7 million from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to the absence of the significant impairment reversal recorded in the prior year, partially offset
by higher gross profit.
Comparison of Nine Months ended December 31, 2022 and 2021
Performance Technologies year-to-date net sales increased $102.2 million, or 12 percent, from the same period last year, primarily due to higher sales volume and favorable commercial pricing, including adjustments in response to raw material price
increases. These increases were partially offset by a $49.6 million unfavorable impact of foreign currency exchange rates and, to a lesser extent, the absence of sales from the Austrian air-cooled automotive business, which we sold on April 30,
2021. Compared with the same period in the prior year, sales of air-cooled, liquid-cooled, and advanced solutions products increased $65.4 million, $24.6 million, and $16.3 million respectively.
Performance Technologies year-to-date cost of sales increased $89.6 million, or 12 percent, from the same period last year, primarily due to higher sales volume and higher raw material prices, which increased by approximately $32.0 million. In
addition, to a lesser extent, higher labor costs and higher depreciation expenses negatively impacted cost of sales. During fiscal 2022, we did not depreciate the held for sale property, plant and equipment assets within the liquid-cooled automotive
business until they reverted back to held and used classification during the third quarter of fiscal 2022. These increases were partially offset by a $43.4 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost
of sales was consistent with the same period in the prior year, as the higher material, labor and other inflationary costs were offset by the favorable impact of higher sales.
As a result of the higher sales and a consistent gross margin at 12.1 percent, gross profit increased $12.6 million.
Performance Technologies year-to-date SG&A expenses decreased $1.2 million compared with the same period last year. As a percentage of sales, year-to-date SG&A expenses decreased by 100 basis points. The decrease in SG&A expenses was
primarily due to a $3.8 million favorable impact of foreign currency exchange rate changes and, to a lesser extent, lower compensation-related expenses, partially offset by higher product development costs and other general and administrative
expenses that have been impacted by inflationary market conditions.
Restructuring expenses during the first nine months of fiscal 2023 increased $0.6 million compared with the same period last year, primarily due to higher severance expenses, partially offset by lower equipment transfer costs. The severance
expenses during the first nine months of fiscal 2023 primarily related to targeted headcount reductions in Europe. Restructuring expenses during the first nine months of fiscal 2022 primarily consisted of equipment transfer costs.
The year-to-date net impairment reversal of $56.0 million in fiscal 2022 primarily related to assets in our liquid-cooled automotive business. The $57.2 million impairment reversal during the third quarter of fiscal 2022 was partially offset by
$1.2 million of net impairment charges recorded during the first six months of fiscal 2022. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $41.1 million during the first nine months of fiscal 2023 decreased $42.8 million from the same period last year, primarily due to the absence of the significant net impairment reversal recorded in the prior year, partially
offset by higher gross profit.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow from operating activities, our cash and cash equivalents as of December 31, 2022 of $82.2 million, and available borrowing capacity of $236.2 million under our revolving credit facility. Given our
extensive international operations, approximately $78.0 million of our cash and cash equivalents is held by our non-U.S. subsidiaries. Amounts held by non-U.S. subsidiaries are available for general corporate use; however, these funds may be subject
to foreign withholding taxes if repatriated. We believe our sources of liquidity will provide sufficient cash flow to adequately cover our funding needs on both a short-term and long-term basis.
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the nine months ended December 31, 2022 was $67.9 million, which represents a $60.5 million increase compared with the same period in the prior year. This increase in operating cash flow was primarily
due to the favorable impact of higher earnings and favorable net changes in working capital, as compared with the same period in the prior year. While inventories have increased $32.4 million from March 31, 2022 to December 31, 2022, the increase
has been less significant than the increase during the same period last year. In fiscal 2023, the Company has increased its inventory levels to support higher production levels. In fiscal 2022, the higher
inventory levels largely resulted from increased raw material prices and impacts from global supply constraints and challenges, which continue to impact our businesses in fiscal 2023. In addition, the favorable changes in working capital include
lower payments for incentive compensation and lower pension plan contributions in fiscal 2023, as compared with the same period in the prior year.
Capital Expenditures
Capital expenditures of $35.2 million during the first nine months of fiscal 2023 increased $4.5 million compared with the same period in the prior year. The fiscal 2023 capital expenditures include investments supporting our strategic growth
initiatives, including expanding our data center business.
Debt
In October 2022, we executed an amended and restated credit agreement with a syndicate of banks that provides for a multi-currency $275.0 million revolving credit facility and term loan facilities maturing in October 2027. This credit agreement
modified our then existing $250.0 million revolver and term loan facilities, which would have matured in June 2024.
Our credit agreements require us to maintain compliance with various covenants, including a leverage ratio covenant and an interest expense coverage ratio covenant discussed further below. The permitted leverage and interest expense coverage
ratios were not modified by the recent credit agreement amendment. Also, as specified in the credit agreement, the term loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under
the revolving credit facility, we must represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on our business, property, or results of operations.
The leverage ratio covenant requires us to limit our consolidated indebtedness, less a portion of our cash balance, both as defined by the credit agreements, to no more than three and one-quarter times consolidated net earnings before interest,
taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). We are also subject to an interest expense coverage ratio covenant, which requires us to maintain Adjusted EBITDA of at least three times consolidated interest
expense. As of December 31, 2022, our leverage ratio and interest coverage ratio were 1.6 and 12.4, respectively. We expect to remain in compliance with our debt covenants during the remainder of fiscal 2023 and beyond.
Share Repurchase Program
During the first nine months of fiscal 2023, we repurchased $4.7 million of our common stock. As of December 31, 2022, we had $47.9 million of authorized share repurchases remaining under the current repurchase program, which expires in
November 2024. Our decision whether and to what extent to repurchase additional shares will depend on a number of factors, including business conditions, other cash priorities, and stock price.
Forward-Looking Statements
This report, including, but not limited to, the discussion under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements, including information about future financial performance,
accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine’s actual results,
performance or achievements may differ materially from those expressed or implied in these statements, because of certain risks and uncertainties, including, but not limited to, those described under “Risk Factors” in Item 1A. in Part I. of the
Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Other risks and uncertainties include, but are not limited to, the following:
Market Risks:
| • |
The impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, including rising energy costs, along with supply chain challenges, tariffs, sanctions and
other trade issues or cross-border trade restrictions (and any potential resulting trade war), and including impacts associated with the military conflict between Russia and Ukraine;
|
| • |
The impact of other 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 foreign currency
exchange rate fluctuations; increases in interest rates; recession and recovery therefrom; 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 U.S. or abroad;
|
| • |
The impact of potential further 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, 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, including through our quotation process or through contract
provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions;
|
| • |
Our ability to mitigate increased labor costs and labor shortages;
|
| • |
The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers (and the supply chain), customers, and employees; 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.
|
Operational Risks:
| • |
The impact of problems, including logistic and transportation challenges, associated with suppliers meeting our quantity, quality, price and timing demands, and the overall health of our suppliers, including their ability and willingness
to supply our volume demands if their production capacity becomes constrained;
|
| • |
The overall health of and price-reduction pressure from 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;
|
| • |
Our ability to maintain current customer relationships and compete effectively for new business, including our ability to achieve profit margins acceptable to us by offsetting or otherwise addressing any cost increases associated with
supply chain challenges and inflationary market conditions;
|
| • |
The impact of product or manufacturing difficulties or operating inefficiencies, including program launch and product transfer challenges and warranty claims;
|
| • |
The impact of 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 manage our cost structure in response to sales volume increases or decreases;
|
| • |
Costs and other effects of the investigation and remediation of environmental contamination; including 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, operational 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 a 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.
|
Strategic Risks:
| • |
Our ability to successfully realize anticipated benefits from strategic initiatives and our continued application of 80/20 principles across our business, through which we are focused on reducing complexity and growing businesses with
strong market drivers;
|
| • |
Our ability to successfully execute and realize anticipated benefits from strategies, including restructuring activities, to reduce costs and improve operating margins; and
|
| • |
The potential impacts from actions by activist shareholders, including disruption of our business and related costs.
|
Financial Risks:
| • |
Our ability to fund our global liquidity requirements efficiently for our current operations and meet our long-term commitments in the event of disruption in or tightening of the credit markets or extended recessionary conditions in the
global economy;
|
| • |
The impact of increases in interest rates in relation to our variable-rate debt obligations;
|
| • |
The impact of changes in federal, state or local taxes that could have the effect of increasing our income tax expense;
|
| • |
Our ability to comply with the financial covenants 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.
|
Forward-looking statements are as of the date of this report; we do not assume any obligation to update any forward-looking statements.
The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. of the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. The Company’s market risks have not
materially changed since the fiscal 2022 Form 10-K was filed.
Evaluation Regarding Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report on Form 10-Q, management of the Company, under the supervision, and with the participation, of the Company’s President and Chief Executive Officer and
Executive Vice President, Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures, at a reasonable assurance level, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon
that evaluation, the President and Chief Executive Officer and Executive Vice President, Chief Financial Officer have concluded that the design and operation of the Company’s disclosure controls and procedures were effective, at a reasonable
assurance level, as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the third quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
ISSUER PURCHASES OF EQUITY SECURITIES
The following describes the Company’s purchases of common stock during the third quarter of fiscal 2023:
|
Period
|
Total Number of
Shares Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Maximum Number (or
Approximate Dollar
Value) of Shares
that May Yet Be Purchased
Under the Plans or Programs (a)
|
|
October 1 – October 31, 2022
|
34,225 (b)
|
$13.06
|
_______
|
$47,359,156
|
|
November 1 – November 30, 2022
|
20,000 (c)
|
$20.80
|
20,000
|
$49,583,934
|
|
December 1 – December 31, 2022
|
90,866 (b)(c)
|
$20.87
|
80,000
|
$47,909,372
|
|
Total
|
145,091
|
$19.02
|
100,000
|
| (a) |
Effective November 5, 2022, the Company’s Board of Directors authorized officers to repurchase up to $50.0 million of Modine common stock at such times and prices they deem appropriate. This authorization, which expires in November 2024,
replaced the previous repurchase program, which expired in early November 2022.
|
| (b) |
Includes shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the
opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares.
|
| (c) |
Includes shares acquired pursuant to the repurchase program described in (a) above.
|
On January 19, 2023, the Board of Directors of the Company approved and adopted amended and restated bylaws (the “Amended and Restated Bylaws”), which became effective the same day. Among other things, the amendments
effected by the Amended and Restated Bylaws: (1) address the universal proxy rules adopted by the U.S. Securities and Exchange Commission, by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s
nominees unless such person has complied with Rule 14a-19 under the Securities Exchange Act of 1934, as amended, including applicable notice and solicitation requirements; (2) require that a shareholder directly or indirectly soliciting proxies from
other shareholders use a proxy card color other than white, which shall be reserved for exclusive use by the Board; (3) enhance procedural mechanics and disclosure requirements in connection with shareholder nominations of directors and submissions
of proposals regarding other business at shareholder meetings, including requiring additional background information and disclosures regarding proposing shareholders, proposed nominees and business, and other persons related to a shareholder’s
solicitation of proxies, such as additional information about the ownership of securities of the Company.
The preceding summary of the amendments to the Amended and Restated Bylaws is qualified in its entirety by reference to, and should be read in connection with, the complete copy of the Amended and Restated Bylaws filed
herewith as Exhibits 3.1 (clean) and 3.2 (marked).
(a) Exhibits:
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
|
Bylaws of Modine Manufacturing Company, as amended, effective January 19, 2023.
|
Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated January 19, 2023
|
||
|
Bylaws of Modine Manufacturing Company as amended, effective January 19, 2023 (marked version).
|
X
|
||
|
Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of November 21, 2022.
|
X
|
||
|
Rule 13a-14(a)/15d-14(a) Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
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||
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Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
||
|
Section 1350 Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
||
|
Section 1350 Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
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||
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101.INS
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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).
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X
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101.SCH
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Inline XBRL Taxonomy Extension Schema.
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X
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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X
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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X
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10.1.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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X
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10.1.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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X
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104
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
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X
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MODINE MANUFACTURING COMPANY
(Registrant)
By: /s/ Michael B. Lucareli
Michael B. Lucareli, Executive Vice President, Chief Financial Officer*
Date: February 2, 2023
* Executing as both the principal financial officer and a duly authorized officer of the Company
37
ATTACHMENTS / EXHIBITS
XBRL TAXONOMY EXTENSION SCHEMA
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
XBRL TAXONOMY EXTENSION LABEL LINKBASE
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
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