Modine Reports Record Second-Quarter Results
21 October 1998
Modine Reports Record Second-Quarter Results; Announces Expanding Technology Licensing Agreements
RACINE, Wis.--Oct. 21, 1998--Modine Manufacturing Company set records for sales and net earnings for the second fiscal quarter and first six months ended Sept. 26. Net quarterly results were favorably impacted by the receipt of a lump-sum back royalty payment in conjunction with Modine's recently awarded PF (parallel-flow) patent. The company expects to achieve a growing and sustainable stream of royalty payments from this technology in succeeding quarters and years.Modine earned $19.1 million, or $0.63 per diluted share, on sales of $273.0 million in the second fiscal quarter. Both sales and earnings grew 4.7 percent over the prior-year quarter. Net earnings included an amount from other income for past royalties related to expanding worldwide licensing agreements for Modine's patented PF technology used in vehicular air-conditioning condensers.
"Revenue growth in the quarter was hampered slightly by slower-than-anticipated sales in certain sectors," said Donald R. Johnson, president and chief executive officer. "However, we remain optimistic about our continued prospects for growth, are pleased with the continuing demand for our proprietary technology, and feel confident about earlier, full-year projections.
"Modine's quarterly sales increased substantially in Europe as a result of new programs," Johnson said. "For the total company, our business in the original-equipment automotive and industrial markets had the largest growth as a result of market penetration."
Sales for the first half of the fiscal year grew 5.5 percent to $546.1 million. Selling, general, and administrative increases would have been normal without the input of Year 2000 conversion expenses. Net earnings for the first half grew 7.5 percent to $39.2 million, or $1.30 per diluted share.
"Our new PF patents shore up Modine's stature as a worldwide leader in heat-transfer technology and signal development of a sustainable stream of royalty payments that will grow in future years," Johnson said. "The growing stream of royalties adds justification to our decision to invest in two new technical centers, which will enhance our ability to develop future patentable technology."
The forward-looking statements about sales, earnings, and operations involve risks and uncertainties, as detailed on page 17 of Modine's Annual Report for fiscal 1998.
Modine is a world leader at solving heating and cooling problems in vehicles, buildings, and off-highway and industrial equipment.
-- Financial Tables Follow --
Modine Manufacturing Company
Consolidated statements of earnings for the second quarter, six-month
period, and trailing 12 months ended September 26, 1998 and 1997
(In thousands, except per-share amounts)
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Three months Six months
ended September 26 ended September 26
1998 1997 1998 1997
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Net sales $272,961 $260,806 $546,065 $517,729
Cost of sales 197,003 185,517 391,649 367,399
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Gross profit 75,958 75,289 154,416 150,330
Selling, general, &
administrative expenses 48,390 46,275 94,002 90,824
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Income from operations 27,568 29,014 60,414 59,506
Interest (expense) (979) (973) (2,025) (2,108)
Other income - net 3,083 387 3,939 850
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Earnings before income taxes 29,672 28,428 62,328 58,248
Provision for income taxes 10,591 10,199 23,167 21,834
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Net earnings $ 19,081 $ 18,229 $ 39,161 $ 36,414
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Net earnings as a percent
of net sales 7.0% 7.0% 7.2% 7.0%
Net earnings per share of
common stock:
Basic $0.64 $0.61 $1.32 $1.22
Assuming dilution 0.63 0.60 1.30 1.20
Weighted average shares
outstanding:
Basic 29,617 29,764 29,631 29,783
Assuming dilution 30,049 30,303 30,117 30,287
Cash flow provided by operations
before working capital changes $29,406 $30,770 $61,068 $60,888
Dividends paid per share $0.21 $0.19 $0.42 $0.38
Twelve months
ended September 26
1998 1997
----------------------------
Net sales $1,068,754 $1,014,037
Cost of sales 763,869 722,753
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Gross profit 304,885 291,284
Selling, general, &
administrative expenses 186,501 180,909
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Income from operations 118,384 110,375
Interest (expense) (3,927) (4,216)
Other income - net 5,595 1,053
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Earnings before income taxes 120,052 107,212
Provision for income taxes 44,834 39,079
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Net earnings $ 75,218 $ 68,133
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Net earnings as a percent
of net sales 7.0% 6.7%
Net earnings per share of
common stock:
Basic $2.54 $2.29
Assuming dilution 2.49 2.24
Weighted average shares
outstanding:
Basic 29,650 29,816
Assuming dilution 30,204 30,349
Cash flow provided by operations
before working capital
changes $117,912 $110,140
Dividends paid per share $0.80 $0.72
Comprehensive earnings, which represent net earnings adjusted by
the change in foreign-currency translation recorded in shareholders'
equity, for the periods ended Sept. 26, 1998 and 1997, respectively,
were $18,061 and $15,637 for 3 months, $38,531 and $33,000 for 6
months, and $72,916 and $59,103 for the trailing 12 months.
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Modine Manufacturing Company
Consolidated condensed balance sheets
(In thousands)
September 26, 1998 March 31, 1998
Assets
Cash and cash equivalents $ 30,230 $ 36,410
Trade receivables - net 178,458 162,177
Inventories 142,150 152,674
Other current assets 45,301 41,922
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Total current assets 396,139 393,183
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Property, plant,
and equipment - net 279,555 248,253
Other noncurrent assets 144,535 117,588
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Total assets $820,229 $759,024
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Liabilities
Debt due within one year $ 19,320 $ 23,713
Accounts payable 75,212 84,345
Other current liabilities 90,200 84,670
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Total current liabilities 184,732 192,728
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Long-term debt 135,123 89,587
Deferred income taxes 14,256 14,258
Other noncurrent liabilities 41,115 39,976
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Total liabilities 375,226 336,549
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Shareholders' investment 445,003 422,475
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Total liabilities and
shareholders' investment $820,229 $759,024
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