Modine Announces Fourth Quarter and Full-Year Results for Fiscal 2002
RACINE, Wis.--May 6, 2002--Modine Manufacturing Company today reported fourth quarter net earnings of $5.0 million or $0.15 per fully diluted share and $254.6 million in revenue for period ending March 31, 2002. Compared to the prior year, revenue decreased 6.2% and net earnings decreased 2.9%. Modine's quarterly results contain several one-time items relating to its restructuring, other closure-related costs, and the sale of a long-term asset. Excluding these one-time items, Modine would have earned $0.11 per fully diluted share, a 31.3% decline from $0.16 per fully diluted share reported a year ago.Sales for the full year declined by 4.2% to $1,074.8 million from $1,121.4 million. Modine's reported net earnings declined 55.0% to $23.3 million or $0.70 per fully diluted share from $51.8 million or $1.58 per fully diluted share reported a year ago. The company's current fiscal year results contain several one-time items relating to its restructuring, other closure-related costs, changes in workers' compensation reserves, the Thermacore acquisition, and the sale of a long-term asset. In addition, Modine's prior fiscal year included pretax patent settlements totaling $17.0 million. Excluding all one-time items, twelve-month earnings per share would have declined 26.1% to $0.88 per fully diluted share from $1.19 per fully diluted share. These results exceeded the company's previous forecast of $0.75 to $0.85 per fully diluted share.
During the fiscal year, Modine was able to strengthen its balance sheet and generate record operating cash flow. The company reduced its plant, property, and equipment by $26.5 million or 7.2% over the last twelve months. Modine's working capital, excluding cash and debt due within one year, declined $52.1 million or 23.5% from the prior year. Total debt was reduced by $32.5 million or 17.8% for the period. Modine's balance sheet improvements helped generate a record $131.4 million in operating cash flow, a 4.5% increase from the previous record established one year ago. For the year, Modine's capital expenditures were $35.8 million, down 50.9% from $72.9 million.
For the fiscal fourth quarter, Modine's results were negatively affected by continued weakness in the heavy-duty truck and electronics markets. Full-year results were adversely affected by the aftermarket, heavy-duty truck, off-highway, and electronics markets. Modine experienced strength in both the quarter and fiscal year from its North American automotive group. The company's aftermarket business is continuing to experience severe pricing pressure related to soft demand and excess industry capacity. Also in the aftermarket business, Modine and Advance Auto Parts mutually agreed to let their supply agreement expire at the end of May 2002.
Modine's fiscal 2002 operating margins were lower due in part to increased depreciation, which was up by $9.2 million or 20.8% over the prior year. The company continues to work on improving short-term profitability by reducing operating expenses and increasing asset utilization. During the year, SG&A expenses were reduced by $7.7 million or 3.4% from a year ago. Also, Modine announced in October that the company would take a restructuring charge and close six operating facilities in an effort to improve asset utilization. Personnel reductions and the final phase-out of the six facilities have already been initiated.
During the year, Modine announced new business programs with BMW and DaimlerChrysler. The company ended the year with 1,459 worldwide patents, an increase of 148 patents over last year. In addition, Modine introduced several new electronics cooling products and continued to solidify its position in the fuel cell market. The company is also enthusiastic about the opportunities for its EGR coolers and CO2 technologies. Despite the short-term challenges, Modine continues to focus on long-term growth opportunities and maximizing shareholder value.
Modine specializes in thermal management, bringing heating and cooling technology to diversified markets. Modine products are used in light, medium and heavy-duty vehicles, HVAC (heating, ventilating, air conditioning) equipment, industrial equipment, refrigeration systems, fuel cells, and electronics. Modine can be found on the Internet at www.modine.com.
This news release contains forward-looking statements that involve assumptions, risks, and uncertainties, and Modine's actual results, performance, or achievements may differ materially from those expressed or implied in these statements. A detailed discussion of factors that could affect Modine's results are on page 19 of the company's fiscal 2001 Annual Report to Shareholders and in other public filings with the U.S. Securities and Exchange Commission. Modine does not assume any obligation to update any of these forward-looking statements.
Modine Manufacturing Company
Consolidated statements of earnings for the periods ended March 31,
2002 and 2001(a)
(In thousands, except per-share amounts)
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Three months Twelve months
ended March 31 ended March 31
2002 2001 2002 2001
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Net sales $254,582 $271,509 $1,074,760 $1,121,399
Cost of sales 195,880 207,302 810,291 823,220
---------------------- -------------------------
Gross profit 58,702 64,207 264,469 298,179
Selling, general, &
administrative
expenses 56,295 55,922 221,733 229,443
Restructuring charges (967) - 7,540 -
---------------------- -------------------------
Income from
operations 3,374 8,285 35,196 68,736
Interest (expense) (1,764) (1,373) (7,793) (8,784)
Patent settlement - - - 16,959
Other income - net 6,497 1,280 12,707 8,152
---------------------- -------------------------
Earnings before income
taxes 8,107 8,192 40,110 85,063
Provision for
income taxes 3,061 2,997 16,765 33,233
---------------------- -------------------------
Net earnings $5,046 $ 5,195 $ 23,345 $ 51,830
---------------------- -------------------------
Net earnings as a percent
of net sales 2.0% 1.9% 2.2% 4.6%
Net earnings per share
of common stock:
Basic $0.15 $0.16 $0.70 $1.61
Assuming dilution 0.15 0.16 0.70 1.58
Weighted average shares
outstanding:
Basic 33,380 32,492 33,132 32,258
Assuming dilution 33,652 32,938 33,406 32,859
Net cash provided by
operating
activities $23,793 $5,806 $131,404 $125,764
Earnings before interest
expense, income taxes,
depreciation, and
amortization
expense $28,245 $25,426 $111,411 $145,755
Dividends paid
per share $0.125 $0.25 $0.875 $1.00
Comprehensive earnings, which represents net earnings adjusted by the
change in foreign-currency translation and minimum pension liability
recorded in shareholders' equity, for the periods ended March 31, 2002
and 2001, respectively, were $1,413 and $16,634 for 3 months, and
$13,494 and $49,803 for 12 months.
(a) In April 2001, Modine acquired Thermacore International, Inc., in
a merger accounted for as a pooling of interests. Financial statements
are presented as though Thermacore had always been a part of Modine.
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Consolidated condensed balance sheets(b)
(In thousands)
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March 31, 2002 March 31, 2001
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Assets
Cash and cash equivalents $75,402 $21,744
Trade receivables - net 162,462 177,972
Inventories 121,663 153,096
Other current assets 46,443 55,219
---------------------------------------
Total current assets 405,970 408,031
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Property, plant, and equipment - net 340,388 366,854
Other noncurrent assets 156,686 162,286
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Total assets $903,044 $937,171
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Liabilities
Debt due within one year $10,756 $45,477
Accounts payable 80,112 80,028
Other current liabilities 80,636 84,348
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Total current liabilities 171,504 209,853
---------------------------------------
Long-term debt 139,654 137,449
Deferred income taxes 35,127 32,263
Other noncurrent liabilities 40,760 38,909
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Total liabilities 387,045 418,474
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Shareholders' equity 515,999 518,697
-------------------- ---------------------------------------
Total liabilities &
shareholder's equity $903,044 $937,171
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(b) In April 2001, Modine acquired Thermacore International, Inc., in
a merger accounted for as a pooling of interests. Financial statements
are presented as though Thermacore had always been a part of Modine.