Modine Reports Record Fiscal 2007 Second Quarter Sales of $438 Million and Net Earnings from Continuing Operations of $0.35 per Share.RACINE, Wis. -- Modine Manufacturing Company (NYSE NYSE See: New York Stock Exchange :MOD (1) See modulo and magneto-optic disk. (2) (MODify or MODification) Refers to enhancements made by PC and gaming enthusiasts to their computer systems. "Modders" alter the standard desktop computer for looks, performance or both. ), a diversified global leader in thermal management technology and solutions, today reported preliminary net earnings of $0.35 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for its fiscal 2007 second quarter ended September 26, 2006, compared with $0.41 per fully diluted share, in the second quarter of fiscal 2006. Two significant items that are outside the normal course of business affected fiscal 2007 second quarter results from continuing operations: 1) an $8.0 million tax benefit, or $0.24 per fully diluted share, related to the closure of Modine's Taiwan facility; and 2) post tax charges of $3.3 million, or $0.10 per fully diluted share, related to the impact of Modine's recently announced repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. activities. Excluding the impact of these significant items, net earnings were $0.21 per fully diluted share.(a) The following table reconciles the estimated significant differences in earnings from continuing operations from the second quarter of fiscal 2006 to the second quarter of fiscal 2007: [TABLE OMITTED] The company's underlying operational results were impacted by incrementally higher commodity prices - copper up 100 percent and aluminum up 32 percent over last year - as well as continuing customer pricing pressures in the company's vehicular business. In addition, the company's Original Equipment- Asia segment was adversely impacted by a strike at a customer facility in Korea. These were partially offset by increased volumes in the company's truck and heavy-duty markets, and operating efficiencies. "We continue to experience a challenging year but I'm confident in the strategy we've developed and our ability to execute. We anticipated these challenges and developed, implemented and have made solid progress on our five point plan to improve margins and meet our growth and return on average capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. (ROACE ROACE Returns on Average Capital Employed )(a) goals," said David B. Rayburn, Modine President and Chief Executive Officer. "Bottom line, we have the right strategy, we are putting the right people in the right positions and we are taking the steps necessary to improve our financial performance." Rayburn outlined Modine's five-point plan to improve margins and drive progress toward the company's growth and ROACE goals. The elements of the plan are: [TABLE OMITTED] Second quarter sales from continuing operations reached a record $437.5 million, an 8.3 percent improvement from $404.2 million in the second fiscal 2006 quarter. Excluding the impact of acquisitions and foreign currency exchange rate changes, underlying sales grew by $2.2 million, or 0.5 percent. Sales volumes were positively impacted by strength in the truck and heavy-duty markets, as well as revenues from the May 2006 acquisition of the remaining 50 percent of RV that the company did not already own. Net earnings from continuing operations of $11.4 million declined from $14.3 million in the same period last year, primarily driven by factors reviewed above - higher commodity pricing, customer pricing pressure from vehicular customers, a customer strike and a repositioning charge. Additionally, during the second quarter, the company was able to recover a portion of its investment in its Taiwan business through the recognition of an $8.0 million tax benefit. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the second quarter of fiscal 2007 was $35.7 million. ROACE for the four quarters ended September 26, 2006 was 8.8 percent compared with 9.8 percent for the same period a year ago and 9.7 percent at the end of fiscal 2006. Modine's ROACE target is 11.0-12.0 percent through a cycle. Second quarter fiscal 2007 selling, general and administrative (SG&A) expenses increased $4.9 million from fiscal 2006, primarily driven by approximately $1.9 million of repositioning costs and additional SG&A associated with the acquisition of RV. Absent these factors, SG&A was consistent with the comparable quarter in the 2006 fiscal year. As a percentage of sales, SG&A expenses decreased from 14.0 percent to 13.6 percent - excluding repositioning costs and the impact of Modine's acquisition in Brazil. The company expects to realize the benefits from its programs to reduce SG&A costs in its upcoming quarters. Modine's goal is to reduce these expenses by $20.0 million, or approximately 10.0 percent on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. Second Quarter Segment Data and Performance Second quarter sales for the Original Equipment - Americas segment increased $27.7 million, or 16.1 percent, to $200.3 million from $172.6 million reported one year ago with operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $16.4 million versus $22.9 million in the second quarter of fiscal 2006. The truck and the heavy-duty businesses both reported solid revenue improvements, partially offset by a decline in North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. automotive sales. Sales attributable to RV had a $21.6 million positive impact on quarterly sales results. Excluding the positive impact of the RV acquisition, operating income was down across all businesses, due to continued pricing pressure and the effect of higher raw material costs, as well as $2.2 million in pre-tax costs incurred in the company's repositioning efforts. Second quarter sales for the Original Equipment - Europe segment increased 5.4 percent to $135.7 million from $128.7 million one year ago, due to the positive effect of foreign currency on the business with operating income of $12.7 million versus $17.0 million last year. The heavy-duty business showed revenue increases driven by strong volumes from the introduction of new programs, while the automotive business was slightly down. However, the revenue growth was more than offset by higher commodity costs and customer pricing pressures. Sales for the Original Equipment - Asia segment in the second quarter decreased 15.5 percent to $42.0 million from $49.7 million one year ago, with an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of ($4.0) million versus ($0.7) million in fiscal 2006, due to customer strike activity that caused unplanned shutdowns at the customer's facilities. This disruption has ceased and current results indicate improvements in revenue and income from operations. Sales for the Commercial Heating, Ventilating ventilating Natural or mechanically induced movement of fresh air into or through an enclosed space. The hazards of poor ventilation were not clearly understood until the early 20th century. Expired air may be laden with odors, heat, gases, or dust. , Air Conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. and Refrigeration refrigeration, process for drawing heat from substances to lower their temperature, often for purposes of preservation. Refrigeration in its modern, portable form also depends on insulating materials that are thin yet effective. (Commercial HVAC&R) segment increased 8.4 percent to $50.0 million from $46.1 million one year ago due primarily to strength of Airedale product sales to the North American school market. Operating income was $2.7 million versus $4.2 million in fiscal 2006 primarily because of softer North American sales of heating products (energy price related) that carry relatively higher margins and short term costs incurred as we introduce the Airedale products into the U.S. market. Sales for the Other segment were $10.4 million up from $8.2 million one year ago with an operating loss of ($2.3) million versus ($3.2) million in fiscal 2006. The operating losses in both years are related to Modine's Taiwan operations that ceased production in July 2006. Balance Sheet and Cash Flow In commenting on the company's financial position, Bradley C. Richardson, Modine's Executive Vice President Finance and Chief Financial Officer said, "We ended the second quarter with a solid balance sheet. During the first half of fiscal 2007, we funded capital expenditures of $39.0 million in support of new business and paid a per-share dividend in the amount of approximately $11.4 million. Our cash balance at the end of September 2006 was $18.4 million compared to $30.8 million at the end of the 2006 fiscal year as we remain focused on minimizing our on-hand cash balances by investing in the business and providing returns to our shareholders." Operating cash flow was $35.7 million in the first half of fiscal 2007 compared with $50.0 million in the first half of fiscal 2006 due to increased working capital needs and declining financial performance. Total debt at the end of the fiscal 2007 second quarter was $187.3 million compared with $157.8 million at the end of fiscal 2006. The total debt to capital (total debt plus shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. ) ratio increased to 26.5 percent compared with 23.8 percent at the end of fiscal 2006. The increase in Modine's debt level in the first half of fiscal 2007 is primarily attributable to the company's acquisition of its remaining 50 percent of RV. Additionally, the company repurchased $12.1 million of its outstanding stock in the first half of fiscal 2007, comprised of 453,700 shares, at an average price of $26.60. Working capital of $144.9 million at the end of the fiscal 2007 second quarter was higher than the balance of $117.2 million at last fiscal year end primarily due to assets capitalized in conjunction with the company's acquisition of RV and increased working capital needs. Fiscal 2007 Outlook In commenting on Modine's fiscal 2007 outlook, Rayburn said, "It's clear that fiscal 2007 is a year of transition. We are faced with key opportunities this year and some ongoing challenges. An important note to remember is while truck volumes are anticipated to decline from current historical levels after the January 1, 2007 emissions law change goes into effect, the company has partially offset this decline by securing new business from Freightliner that has significantly increased our share of the U.S. truck market , as well as our content per vehicle. Additionally, we should benefit from the positive influences from the accretive acquisition Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. of RV and the closing of the company's Taiwan operation that has historically operated in a loss position. We will continue to be challenged by the effects that ongoing high raw material costs have on our margins. We are currently hedging 60 percent of our forecasted aluminum needs, and generally we are able to pass higher commodity costs to our customers on a lag basis - on average over a ten-month period. As well, demands from our original equipment customers for price-downs on our products will continue downward pressure on margins." Rayburn added, "Our five-point plan and our recent internal structural reorganization that places a more strategic emphasis on our products and performance will make us a more cost competitive, innovative and efficient technology provider to our customers and help build a larger backlog of business." Conference Call and Webcast Modine will conduct a conference call on Thursday, October 19, 2006 at 11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (10:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ) to discuss additional details regarding the company's performance for the fiscal 2007 second quarter. President and Chief Executive Officer, Dave Rayburn and Executive Vice President Finance and Chief Financial Officer, Brad Richardson Brad Richardson (born February 4, 1985 in Belleville, Ontario) is a professional ice hockey player who currently plays center and left wing for the National Hockey League's Colorado Avalanche. He was drafted by the Colorado Avalanche in the 2003 NHL Entry Draft. will host the call. Participants should dial 800.289.0496 and international participants should dial 913.981.5519. A replay will be available through November 2, 2006 by calling 719.457.0820 or 888.203.1112. Use Passcode 8084135. Additionally, an audio Webcast of the conference call, both live and as a replay, is accessible through the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section of Modine's Web site at www.modine.com. Listeners are encouraged to log on to the Webcast about 10 minutes before the start of the conference call. About Modine Modine, with fiscal 2006 revenues of $1.6 billion, specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, HVAC (Heating Ventilation Air Conditioning) In the home or small office with a handful of computers, HVAC is more for human comfort than the machines. In large datacenters, a humidity-free room with a steady, cool temperature is essential for the trouble-free equipment, industrial equipment, refrigeration systems, fuel cells, and electronics. The company employs approximately 9,000 people at 34 facilities worldwide. For more information about Modine, visit www.modine.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements made in this press release regarding future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements, including those regarding a positive impact from new business programs, accretive acquisitions, acceleration of technology, achievement of cost reductions, expansion into niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. , refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. in global manufacturing footprint, increased cash flow and continued strong financial returns are based on Modine's current expectations. 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 international economic changes and challenges; market acceptance and demand for new products and technologies; the ability of Modine to integrate the acquired operations and employees in a timely and cost-effective manner; the ability of Modine, its customers and suppliers to achieve projected sales and production levels; unanticipated product or manufacturing difficulties; and other factors affecting the company's business prospects discussed in filings made by the company, from time to time, with the SEC including the factors discussed item 1A, Risk Factors, and in the "Cautionary Factors" section in Item 7 of the company's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and its periodic reports on Form 10-Q Form 10-Q See 10-Q. . We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Modine's financial results, as reported herein, are preliminary and subject to possible adjustments. (a) Non-GAAP Financial Disclosures Financial information excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and tax benefits in this press release are not measures that are defined in generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the restructuring and tax related items. Management analyzes the company's business performance and trends excluding amounts related to the restructuring and tax benefits. These measures, as well as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and ROACE, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures. Definition - Return on average capital employed (ROACE) The sum of, net earnings and adding back after-tax interest (interest expense less the tax benefit at the total company effective tax rate), divided by the average, total debt plus shareholders' equity: this is a financial measure of the profit generated on the total capital invested in the company before any interest expenses payable to lenders, net of any tax effect. Definition - Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Divisions of a business that have been sold or written off and that no longer are maintained by the business. , depreciation and amortization: this is a financial measure of the profit generated excluding the above mentioned items. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
|
Printer friendly
Cite/link
Email
Feedback
Reader Opinion