Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — Q1 2018 Earnings Presentation
30 slides from Modine Manufacturing's earnings presentation, Aug 2, 2017
Slide 1: First Quarter Fiscal 2018
First Quarter Fiscal 2018 August 2, 2017 8:00 a.m. CDT
Slide 2: Agenda
Agenda Introduction Kathy Powers VP, Treasurer, Investor Relations and Tax First Quarter Highlights Tom Burke and Segment Review President and Chief Executive Officer Financial Overview Mick Lucareli and Outlook VP, Finance and Chief Financial Officer Summary Tom Burke Q&A Tom Burke and Mick Lucarel
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements, including information about future financial performance and market conditions, accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as d
Slide 4: First Quarter Highlights and Segment Review
First Quarter Highlights and Segment Review Tom Burke President and Chief Executive Officer
Slide 5: FY2018 - First Quarter Highlights
FY2018 ‒ First Quarter Highlights • Strong sales and earnings growth, largely driven by new CIS segment • Q1 sales increased 50% on a constant-currency basis – Includes $158M of sales from CIS business – Non-CIS base business increased 4% on a constant-currency basis – Higher sales in Americas, Asia
Slide 6: Q1 FY2018 - Americas
Q1 FY2018 ‒ Americas Americas Market Outlook (Fiscal 2018) ($ in millions) Q1 Q1 Better / YOY Change 2018 2017 (Worse) NA Automotive Flat Net sales $ 148.3 $ 140.0 $ 8.3 NA Medium Duty Truck +5% NA Heavy Duty Truck +15% Gross profit 26.5 25.2 1.3 % of net sales 17.9% 18.0% (10 bp) NA Construction/Mi
Slide 7: Q1 FY2018 - Europe
Q1 FY2018 ‒ Europe Europe Market Outlook (Fiscal 2018) ($ in millions) Q1 Q1 Better / 2018 2017 (Worse) YOY Change Net sales $ 136.3 $ 146.0 $ (9.7) Automotive Flat Gross profit 19.3 25.3 (6.0) % of net sales 14.2% 17.3% (310 bp) Commercial Vehicle Flat to +5% SG&A expenses 11.1 10.3 (0.8) % of net
Slide 8: Q1 FY2018 - Asia
Q1 FY2018 ‒ Asia Asia Market Outlook (Fiscal 2018) ($ in millions) Q1 Q1 Better / 2018 2017 (Worse) YOY Change Net sales $ 35.4 $ 24.9 $ 10.5 China Automotive Flat Gross profit 6.3 4.4 1.9 % of net sales 17.7% 17.6% 10 bp Asia Excavator +20% SG&A expenses 3.0 2.9 (0.1) India Automotive +5% % of net
Slide 9: Q1 FY2018 - Building HVAC
Q1 FY2018 ‒ Building HVAC Building HVAC Market Outlook (Fiscal 2018) ($ in millions) Q1 Q1 Better / 2018 2017 (Worse) YOY Change Net sales $ 43.0 $ 39.9 $ 3.1 Commercial Heating - NA Flat to +2% Gross profit 11.1 10.0 1.1 % of net sales 25.9% 25.1% 80 bp Air Conditioning - EMEA +4% SG&A expenses 8.0
Slide 10: Q1 FY2018 - Commercial and Industrial Solutions
Q1 FY2018 ‒ Commercial and Industrial Solutions Commercial and Industrial Solutions Market Outlook (Fiscal 2018) ($ in millions) Q1 2018 YOY Change Net sales $ 157.5 Commercial & Residential AC +2% Gross profit 25.3 Refrigeration +2% % of net sales 16.0% SG&A expenses 14.5 Precision Cooling +3% % of
Slide 11: Financial Overview and Outlook
Financial Overview and Outlook Mick Lucareli Vice President, Finance and Chief Financial Officer
Slide 12: Q1 FY2018 vs. Prior Year
Q1 FY2018 vs. Prior Year • Sales increased $173M or 50% on a (In millions, except per share amounts) Q1 Q1 Better constant-currency basis 2018 2017 (Worse) – Includes CIS sales of $158M; excluding CIS up Net sales $ 515.5 $ 347.2 $ 168.3 $15M or 4% constant-currency Gross profit 88.5 62.3 26.2 • Gro
Slide 13: Cash Flow & Net Debt
Cash Flow & Net Debt (In millions) Q1 Q1 (In millions) 6/30/17 3/31/17 FY2018 FY2017 Operating cash flow $ 18.7 $ 1.6 Cash $ 41.5 $ 34.2 Capital expenditures (21.6) (14.5) Total debt 530.6 510.9 Free cash flow $ (2.9) $ (12.9) Net Debt $ 489.1 $ 476.7 Adjustments 11.9 6.3 Leverage Ratio 3.0x 2.9x Ad
Slide 14: FY2018 Guidance
FY2018 Guidance (In millions, except per share amounts) FY 2017 Results FY 2018 Guidance % Increase Net Sales $1,503 $1,879 to $1,954 +25% to +30% Adjusted Operating Income * $72.2 $100 to $110 +39% to +52% Adjusted EBITDA * $124.7 $175 to $185 +40% to +48% Adjusted EPS * $0.78 $1.20 to $1.35 +54% t
Slide 15: Q1 FY2018 - Conclusion
Q1 FY2018 – Conclusion • Started year on a strong note – Seeing improvements in some of our core end-markets – Confident in sales and earnings guidance • Priorities for fiscal 2018 remain clear – Rapid integration of CIS business and synergy capture – Focus on cash flow generation and debt reduction
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix
Slide 18: Americas (25% of Net Sales)
Americas (25% of Net Sales)1 • Six manufacturing facilities – executed our plan to FY 2017 Sales Mix close Washington, Iowa plant • Diversified revenue mix across major end-markets Heavy Truck 16% 13% • Segment well positioned for future success based on Medium Truck 5% 13% improved manufacturing fo
Slide 19: Europe (28% of Net Sales)
Europe (28% of Net Sales) 1 • Seven manufacturing facilities in Europe FY 2017 Sales Mix • Consolidated manufacturing operations in Germany • Expanding capacity in Hungary, moving production 3% 8% 3% Construction from Western Europe Truck & Bus 32% • Managing launch activity mainly in oil cooler and
Slide 20: Asia (6% of Net Sales)
Asia (6% of Net Sales) 1 • Six manufacturing facilities in China, India, Japan FY 2017 Sales Mix and Korea (3 Joint Ventures) • Strategic focus on creating new business 9% opportunities with local customers Construction/Ag 32% • Diversifying our business model; reducing exposure Truck & Bus to excav
Slide 21: Commercial and Industrial Solutions (32% of Net Sales)
Commercial and Industrial Solutions (32% of Net Sales) 1 • 16 manufacturing facilities in North America, Europe FY 2017 Sales Mix and Asia • Primary products include Coils, Coolers and Comm & Res AC 10% Coatings Mobile AC 15% 36% • CIS is a pioneer in bringing microchannel technology to the HVAC&R i
Slide 22: Building HVAC (9% of Net Sales)
Building HVAC (9% of Net Sales) 1 • Five facilities in North America, United Kingdom FY 2017 Sales Mix and Africa • Complementary business that provides Commercial Heating - NA 14% diversification to Modine’s vehicular segments 5% Air Conditioning - EMEA • Strong financials due to product differenti
Slide 23: Q1 GAAP Income Statement
Q1 GAAP Income Statement (In millions, except per share amounts) Q1 Q1 Better 2018 2017 (Worse) Net sales $ 515.5 $ 347.2 $ 168.3 Cost of sales 427.0 284.9 (142.1) Gross profit 88.5 62.3 26.2 SG&A expenses 59.2 44.2 (15.0) Restructuring expenses 1.7 2.3 0.6 Operating income 27.6 15.8 11.8 Interest e
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted operating income and earnings per share (unaudited) (In millions, except per share amounts) Twelve months ended March 31, 2017 (a) On November 30, 2016, the Company acquired Luvata HTS. Acquisition-related costs in fiscal 2017, recorded
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted financial results (unaudited) (In millions) Three months ended June 30, 2017 2016 Operating income $ 27.6 $ 15.8 (a) Acquisition and integration costs 2.1 1.4 (b) Restructuring expenses - Americas 1.4 2.2 (b) Restructuring expenses (inco
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Three months ended June 30, Americas 2017 2016 Operating income $ 12.1 $ 9.6 Restructuring expenses 1.4 2.2 Environmental charges 0.2 - Adjusted operating income $ 13.7 $ 11.8 Net sales $ 148.3 $ 140.0 Adjusted opera
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Americas 2014 2015 2016 2017 Operating income $ 50.4 $ 33.7 $ 36.9 $ 27.9 Restructuring expenses 1.2 2.7 8.8 6.9 Impairment charges 1.2 7.8 - - Gain on sale of facilities - - - (1.1) Brazil lega
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Asia 2014 2015 2016 2017 Operating income (loss) $ (3.3) $ 0.3 $ 0.8 $ 7.7 Acquisition-related costs - - 0.5 - Adjusted operating income (loss) $ (3.3) $ 0.3 $ 1.3 $ 7.7 Net sales $ 71.5 $ 81.2
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA (In millions) FY 2017 Net earnings $ 14.9 Net earnings attributable to noncontrolling interest (0.7) Interest expense 17.2 Provision for income taxes 5.9 Depreciation and amortization expense (a) 58.3 Acquisition-related costs and adjustments (b) 19.1 Restruc
Slide 30: Forward-Looking Non-GAAP Financial Measures
Forward-Looking Non-GAAP Financial Measures Our fiscal 2018 guidance includes adjusted EBITDA, adjusted operating income and adjusted EPS. These are non-GAAP measures, which exclude certain cash and non-cash charges or gains. These charges and gains may be significant and include items such as restr
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