Modine Manufacturing (NYSE: MOD) reported Q3 EPS of $0.42, $0.08 better than the analyst estimate of $0.34. Revenue for the quarter came in at $541 million versus the consensus estimate of $532.7 million.

• Net sales of $541.0 million increased 6 percent from the prior year, 8 percent on a constant-currency basis
• Operating income of $33.6 million was more than double the prior year and adjusted operating income of $34.8 million was up 29 percent from the prior year
• Earnings per share of $0.35 increased $0.92 from the prior year primarily due to improved operating earnings and lower income tax expense, and adjusted earnings per share of $0.42 increased $0.07 from the prior year
• Adjusted guidance ranges for revenue and earnings

"Top line growth in all three business segments contributed to a significant earnings improvement this quarter," said Modine President and Chief Executive Officer, Thomas A. Burke. "The CIS and Building HVAC segments delivered strong performances with significant market share gains and earnings growth. However, cost pressures in the VTS segment continued to drive lower operating margins, due primarily to tariff-related costs and temporary operating inefficiencies. The operating inefficiencies are a function of new program launches, but we have made leadership changes in the affected areas and are seeing improvements."

Outlook

"Our CIS and Building HVAC segments are both performing well and continue to drive earnings improvement," commented Burke. "However, our VTS segment is still experiencing cost increases related to the direct and indirect impact of tariffs on our raw material purchases. Although we are diligently working to recover these costs, the rate of recovery may be lower than originally planned."

GUIDANCE:

Modine Manufacturing sees FY2019 EPS of $1.50-$1.60, versus the consensus of $1.69.

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