Modine Manufacturing Company · NYSE:MOD
Modine Manufacturing — Q4 FY2018 Earnings Presentation
31 slides from Modine Manufacturing's earnings presentation, May 24, 2018
Slide 1: Fourth Quarter Fiscal 2018
Fourth Quarter Fiscal 2018 May 24, 2018 8:00 a.m. CDT
Slide 2: Agenda
Agenda Introduction Kathy Powers VP, Treasurer, Investor Relations and Tax Fourth Quarter and FY 2018 Tom Burke Highlights 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
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
Slide 4: Fourth Quarter Highlights and Segment Review
Fourth Quarter Highlights and Segment Review Tom Burke President and Chief Executive Officer
Slide 5: FY2018 ‒ Fourth Quarter and Full-Year Highlights
FY2018 ‒ Fourth Quarter and Full-Year Highlights • Successful year for Modine, cumulative revenue increase of more than 50% over the past two years – From $1.4 billion in Fiscal 2016 to $2.1 billion in Fiscal 2018 – Sales growth due to the addition of the CIS business in Fiscal 2017 and meaningful o
Slide 6: Q4 FY2018 ‒ Americas
Q4 FY2018 ‒ Americas Americas Market Outlook (Fiscal 2019) ($ in millions) Q4 Q4 Better / 2018 2017 (Worse) YOY Change Net sales $ 150.0 $ 144.6 $ 5.4 NA Automotive +1% Gross profit 22.2 27.5 (5.3) % of net sales 14.8% 19.0% (420 bps) NA Medium Duty Truck +3% SG&A expenses 12.8 13.2 0.4 % of net sal
Slide 7: Q4 FY2018 ‒ Europe
Q4 FY2018 ‒ Europe Europe Market Outlook (Fiscal 2019) ($ in millions) Q4 Q4 Better / 2018 2017 (Worse) YOY Change Net sales $ 162.9 $ 134.6 $ 28.3 Automotive Flat Gross profit 27.0 21.3 5.7 % of net sales 16.6% 15.9% 70 bps Commercial Vehicle +2% SG&A expenses 12.2 10.5 (1.7) % of net sales 7.5% 7.
Slide 8: Q4 FY2018 ‒ Asia
Q4 FY2018 ‒ Asia Asia Market Outlook (Fiscal 2019) ($ in millions) Q4 Q4 Better / 2018 2017 (Worse) YOY Change Net sales $ 48.1 $ 33.3 $ 14.8 China Automotive +3% Gross profit 8.4 5.6 2.8 % of net sales 17.6% 16.9% 70 bps Asia Excavator +10% SG&A expenses 3.4 2.8 (0.6) India Automotive +8% % of net
Slide 9: Q4 FY2018 ‒ Commercial and Industrial Solutions
Q4 FY2018 ‒ Commercial and Industrial Solutions Commercial and Industrial Solutions Market Outlook (Fiscal 2019) ($ in millions) Q4 Q4 Better / YOY Change 2018 2017 (Worse) Net sales $ 168.4 $ 143.0 $ 25.4 Commercial & Residential AC +2% Gross profit 25.7 21.6 4.1 Refrigeration +2% % of net sales 15
Slide 10: Q4 FY2018 ‒ Building HVAC
Q4 FY2018 ‒ Building HVAC Building HVAC Market Outlook (Fiscal 2019) ($ in millions) Q4 Q4 Better / 2018 2017 (Worse) YOY Change Net sales $ 43.3 $ 38.8 $ 4.5 Commercial Heating - NA +3% Gross profit 13.0 10.7 2.3 % of net sales 30.0% 27.5% 250 bps Air Conditioning - EMEA +1% SG&A expenses 9.7 7.9 (
Slide 11: Financial Overview and Outlook
Financial Overview and Outlook Mick Lucareli Vice President, Finance and Chief Financial Officer
Slide 12: Q4 FY2018 vs. Prior Year
Q4 FY2018 vs. Prior Year (In millions, except per share amounts) Q4 Q4 • Sales increased $42M or 9% on a constant- Better 2018 2017 (Worse) currency basis Net sales $ 566.6 $ 488.3 $ 78.3 • Gross profit increased 13% Gross profit 96.5 85.1 11.4 – Positive impact from sales volume, FX rates and % of
Slide 13: Cash Flow & Net Debt
Cash Flow & Net Debt (In millions) (In millions) FY2018 FY2017 3/31/18 3/31/17 Cash $ 39.3 $ 34.2 Operating cash flow $ 123.8 $ 41.6 Total debt 479.4 510.9 Capital expenditures (71.0) (64.4) Net Debt $ 440.1 $ 476.7 Free cash flow $ 52.8 $ (22.8) Leverage Ratio 2.4x 2.9x • Fiscal 2018 operating cash
Slide 14: FY2019 Guidance
FY2019 Guidance (In millions, except per share amounts) FY 2018 Results FY 2019 Guidance % Increase Net Sales $2,103.1 $2,166 to $2,271 3% to 8% Adjusted Operating Income * $120.1 $135 to $145 12% to 21% Adjusted EPS * $1.54 $1.50 to $1.65 -3% to 7% • Expecting sales growth of 3% to 8%, driven by gr
Slide 15: Q4 FY2018 – Conclusion
Q4 FY2018 – Conclusion • Focused significant resources on strategic review of our product portfolio • Continuing with Strengthen, Diversify and Grow strategy – Will define new targets and actions – Goal remains to be a more diversified, global thermal management company • Strengthen business by opti
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix
Slide 18: Americas (24% of Net Sales)
Americas (24% of Net Sales)1 • Six manufacturing facilities FY 2018 Sales Mix • Diversified revenue mix across major end-markets Heavy Truck • Segment well positioned for future success based on Medium Truck 15% 12% improved manufacturing footprint and cost structure Light Vehicle 5% 13% • New growt
Slide 19: Europe (27% of Net Sales)
Europe (27% of Net Sales) • Seven manufacturing facilities in Europe FY 2018 Sales Mix • Consolidated manufacturing operations in Germany • Expanded capacity in Hungary, moved production 9% 5% Construction 3% from Western Europe Truck & Bus 28% • Managing launch activity mainly in oil cooler and liq
Slide 20: Asia (8% of Net Sales)
Asia (8% of Net Sales) • Six manufacturing facilities in China, India, Japan FY 2018 Sales Mix and Korea (3 Joint Ventures) 1% • Strategic focus on creating new business opportunities with local customers Construction/Ag • Diversifying our business model; reducing exposure 41% Truck & Bus to excavat
Slide 21: Commercial and Industrial Solutions (32% of Net Sales)
Commercial and Industrial Solutions (32% of Net Sales) 1 • 15 manufacturing facilities in North America, Europe FY 2018 Sales Mix and Asia (closed Austria manufacturing facility) • Primary products include Coils, Coolers and Comm & Res AC 11% Coatings Mobile AC 37% • CIS is a pioneer in bringing mic
Slide 22: Building HVAC (9% of Net Sales)
Building HVAC (9% of Net Sales) • Six manufacturing facilities in North America and FY 2018 Sales Mix United Kingdom • Complementary business that provides Commercial Heating ‐ NA 17% diversification to Modine’s vehicular segments Air Conditioning ‐ EMEA 5% 41% • Strong financials due to product dif
Slide 23: Q4 GAAP Income Statement
Q4 GAAP Income Statement (In millions, except per share amounts) Q4 Q4 Better 2018 2017 (Worse) Net sales $ 566.6 $ 488.3 $ 78.3 Cost of sales 470.1 403.2 (66.9) Gross profit 96.5 85.1 11.4 SG&A expenses 63.6 60.1 (3.5) Restructuring expenses 4.5 4.9 0.4 Impairment charges 1.2 - (1.2) Gain on sale o
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Modine Manufacturing Company Adjusted financial results (unaudited) (In millions, except per share amounts) Three months ended March 31, Twelve months ended March 31, 2018 2017 2018 2017 Operating income $ 27.2 $ 20.9 $ 92.2 $ 42.3 (a) Acquisition and integration costs 0.6 4
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations * Footnotes relate to the previous slide. (a) On November 30, 2016, the Company acquired Luvata Heat Transfer Solutions and has since operated the business as its Commercial and Industrial Solutions segment ("CIS"). Acquisition and integration costs in fiscal 2018, recorded
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Three months ended March 31, Americas 2018 2017 Operating income $ 9.4 $ 13.7 Restructuring expenses ‐ 1.7 Environmental and legal charges 0.3 0.3 Gain on sale of facilities ‐ (1.1) Adjusted operating income $ 9.7 $
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Three months ended March 31, Commercial and Industrial Solutions 2018 2017 Operating income $ 11.5 $ 7.8 Restructuring expenses 0.1 ‐ Adjusted operating income $ 11.6 $ 7.8 Net sales $ 168.4 $ 143.0 Adjusted operatin
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Americas 2014 2015 2016 2017 2018 Operating income $ 50.4 $ 33.7 $ 36.9 $ 27.9 $ 38.2 Restructuring expenses 1.2 2.7 8.8 6.9 1.6 Environmental and legal charges ‐ 3.2 1.6 1.9 1.4 Impairment char
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment adjusted operating income and margin (In millions) Years ended March 31, Asia 2014 2015 2016 2017 2018 Operating income (loss) $ (3.3) $ 0.3 $ 0.8 $ 7.7 $ 17.6 Acquisition‐related costs ‐ ‐ 0.5 ‐ ‐ Adjusted operating income (loss) $ (3.3) $ 0.3 $ 1.3 $ 7.7 $ 17.6 Net
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net sales - constant currency (unaudited) (In millions) Three months ended March 31, 2018 2017 Effect of Exchange Net Sales - Net Sales Rate Changes Constant Currency Net Sales Americas $ 150.0 $ 0.6 $ 150.6 $ 144.6 Europe 162.9 (21.7) 141.2 134.6 Asia 48.1 (3.2) 44.9 33.3 C
Slide 31: Forward-Looking Non-GAAP Financial Measures
Forward-Looking Non-GAAP Financial Measures Our fiscal 2019 guidance includes 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 restructuring expense
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