Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — FY2007 Earnings Presentation
18 slides from Modine Manufacturing's earnings presentation, May 2, 2007
Slide 1: Modine Fiscal 2007 Earnings
Modine Manufacturing Company Modine Fiscal 2007 Earnings
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation regarding future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those regarding a positive impact from new business programs, accr
Slide 3: Key Takeaways
Key Takeaways More forward transparency Significant headwinds Material costs (aluminum, copper, nickel) Customer pricing Repositioning and globalization costs North American truck market Strong balance sheet and cash flow Operations performance improvements Securing new business - diversification Fu
Slide 4: Changing the Business Model
Gross margins 18-20% Growth 9-13% ROACE 11-12% Drives significant new business wins Full Year Progress Changing the Business Model Organizational changes Manufacturing realignment Rationalization – Market/customer/product Technology acceleration
Slide 5: Organizational Changes
Drives significant new business wins Gross margins 18-20% Growth 9-13% ROACE 11-12% Full Year Progress Organizational Changes New organization structure (Nov. 2006) Five global product groups Regional operations Global / regional customer focus Key global support staffs New products and R&D - Pull /
Slide 6: Manufacturing Realignment
Drives significant new business wins Gross margins 18-20% Growth 9-13% ROACE 11-12% Full Year Progress Manufacturing Realignment New capacity in low cost countries (Regional growth and LCC sourcing) – China (2) - India - Hungary - Mexico North American capacity reduction and “scale” expansion Four c
Slide 7: Market, Customer and Product Rationalization
Drives significant new business wins Gross margins 18-20% Growth 9-13% ROACE 11-12% Full Year Progress Market, Customer and Product Rationalization Commercial discipline Walk aways - strategic and profitability hurdles Contract accountability Hardship/surcharge pricing - materials Leverage technolog
Slide 8: Technology Acceleration
Drives significant new business wins Gross margins 18-20% Growth 9-13% ROACE 11-12% Full Year Progress Technology Acceleration World-class facilities Expanding predictive modeling capacity (LCC) New structure Applications • Pull • Push Product roadmaps Environmental “green” opportunities on the hori
Slide 9: Five Year Sales and Earnings
Five Year Sales and Earnings Asia Americas Europe Commercial HVAC Significant impact of raw material and price pressures - ($1.03) Repositioning and restructuring costs - ($0.27) Tax rate and planning benefits - $0.47 $1.79 $0.99 $1.04 $ * From continuing operations $1.78 Earnings Per Share* $1.31 $
Slide 10: Americas Sales by Market
Americas Americas Sales by Market Commercial Products and New Markets Automotive/Light Truck 25% Truck, Heavy duty, Off-highway Markets Today ($1.8B Revenues) Other 4% Commercial Products 9% Agriculture and Construction 14% Automotive/Light Truck 36% Medium/Heavy Truck and Bus 37% Medium/Heavy Truck
Slide 11: Full Year Fiscal 2007 Earnings Per Share Analysis
Full Year Fiscal 2007 Earnings Per Share Analysis \ Volume - strength of the North American truck and global off-highway markets Operating performance - improved asset utilization, cost reduction initiatives, and purchasing savings Net impact of commodity prices - unprecedented rise in copper, alumi
Slide 12: Fiscal 2007 Fourth Quarter Earnings Per Share Analysis
Fiscal 2007 Fourth Quarter Earnings Per Share Analysis E.P.S. Volume - reduced North American truck and automotive volumes Net impact of higher commodity prices - gaining traction on material pass-through Repositioning - North American plant closing related costs Warranty costs - two program-related
Slide 13: Metals Pricing and Sensitivity
Metals Pricing and Sensitivity
Slide 14: Gross Margin Trend
Gross Margin Trend 25% 21% 22% 21% 19% 16% 18-20 percent long-term gross margin goal Our Response 18-20% 16.1 - 16.5% Willing to slow growth to increase profitability Portfolio rationalization – Customers – Businesses Electronics Cooling – Must meet profitability and strategic hurdles Manufacturing
Slide 15: Five Year Cash Flow/Priority Uses of Cash
Five Year Cash Flow/Priority Uses of Cash Strong Cash Flow Allows for profitable investments and excess cash returns to shareholders Priority Uses of Cash (listed in order) Invest for profitable growth Acquisitions Dividends/share repurchases $180M Cash Flow From Operations $ Millions Net Income $10
Slide 16: Five Year Financial Position
Five Year Financial Position $ Debt $ Millions 10% 20% 30% 15% 25% 5% $179 Debt to Capital % Debt to Capital 0% 35% 40% Debt 85 percent fixed - average 5.33 percent Higher level due to acquisitions and share repurchases Debt to Capital Ratio of 26.7 percent Target is to remain below 40 percent Other
Slide 17: Fiscal 2008 Outlook
Fiscal 2008 Outlook Sales Americas – down due to lower U.S. truck volumes – assume 220,000 build – ramp-up of new customer 2nd half Asia – up from new product wins Europe – up from increased volumes Commercial Products – up on market strength Metals pricing Assumptions based on recent market prices
Slide 18: Changing the Business Model
Drives significant new business wins Gross margins 18-20% Growth 9-13% ROACE 11-12% Full Year Progress Changing the Business Model Organizational changes Manufacturing realignment Rationalization – Market/customer/product Technology acceleration