Modine Reports Results for Fiscal 2000
27 April 2000
Modine Reports Results for Fiscal 2000
RACINE, Wis.--April 26, 2000--Modine Manufacturing Company (Nasdaq: MODI), a leading, global provider of heat-transfer technology, today reported results for the fiscal year ended March 31, 2000.Despite lower demand in agricultural and construction markets and the negative impact of a strengthening U.S. dollar internationally, Modine's annual sales rose 2.5 percent to $1,139.3 million, with increases to the aftermarket, truck, and automotive markets. Excluding the impact of changes in currency exchange rates, worldwide consolidated sales were five-percent higher than the prior year.
Earnings for the fiscal year decreased 11.5 percent to $65.4 million, or $2.20 per diluted share. Major factors were: increased aftermarket distribution costs and price pressures, new-plant startup costs, and the negative effect on international results of the strong U.S. dollar.
Modine's worldwide sales to the automotive aftermarket grew 14 percent, primarily due to a full year's operation of an aftermarket acquisition compared with six months in the prior year. The acquisition added to Modine's product lines and increased the number of sales branches in the United States.
Sales to original-equipment manufacturers (OEMs) of heavy and medium trucks showed the next highest increase of 11 percent, due both to heavy demand and continued market penetration. Sales to off-highway-equipment OEM customers declined 25 percent as the agricultural- and construction-equipment markets continued to contract due to low grain prices and to lagging equipment-export markets worldwide.
Selling, general, and administrative expenses, at 19.2 percent of sales, increased mainly because of the North American aftermarket acquisition halfway through the prior year and because of higher distribution costs. Other factors include upgrading computer-related business systems as well as increased depreciation due to recent facility additions, including a new Technical Center in Racine.
Interest expense was up, principally from additional borrowings in the prior year to fund acquisitions and long-term capital projects. Other income declined from the previous fiscal year's total, which included a large royalty settlement and also a gain relative to the earlier sale of a facility in Michigan.
The company's income-tax rate decreased six percentage points from the prior year due largely to release of a tax-valuation allowance relative to net operating-loss carryforwards at a foreign subsidiary. Rate benefits were also realized from Modine's other international activities.
Trade receivables were flat despite sales increases. Inventories were down 5.8 percent year-over-year. Total debt to equity fell 2.1 percentage points to 45.9 percent.
For the fourth fiscal quarter ended March 31, 2000, sales increased 1.5 percent to $285.2 million, reflecting a similar pattern of variation as the full year. Earnings for the period declined 16.3 percent to $14.6 million, or $0.49 per diluted share, consistent with expectations.
Modine currently is well positioned, with capacity in place, to take advantage of new business programs -- some beginning later in Fiscal 2001 -- that will bring large incremental increases in total revenues over the next few years. The additional business is a combination of increased market penetration and of new product lines, such as exhaust-gas-recirculation coolers. Operating income should begin to improve during the new fiscal year after several plant startups are complete.
Modine Manufacturing Company Consolidated statements of earnings for the fourth quarter and 12 months ended March 31, 2000 and 1999 (In thousands, except per-share amounts) ---------------------------------------------------------------------- Three months Twelve months ended March 31 ended March 31 2000 1999 2000 1999 ---------------------------------------------------------------------- Net sales $285,211 $281,027 $1,139,269 $1,111,447 Cost of sales 207,610 202,629 821,779 801,520 ----------------------------------------------- Gross profit 77,601 78,398 317,490 309,927 Selling, general, & administrative expenses 54,985 51,614 218,452 196,636 ----------------------------------------------- Income from operations 22,616 26,784 99,038 113,291 Interest (expense) (2,463) (1,979) (8,467) (5,722) Other income-- net 393 2,975 4,760 10,501 ----------------------------------------------- Earnings before income taxes 20,546 27,780 95,331 118,070 Provision for income taxes 5,943 10,339 29,928 44,127 ----------------------------------------------- Net earnings $ 14,603 $ 17,441 $ 65,403 $ 73,943 ----------------------------------------------- Net earnings as a percent of net sales 5.1% 6.2% 5.7% 6.7% Net earnings per share of common stock: Basic $0.50 $0.59 $2.22 $2.50 Assuming dilution 0.49 0.58 2.20 2.46 Weighted average shares outstanding: Basic 29,325 29,507 29,471 29,579 Assuming dilution 29,507 29,832 29,703 30,015 Earnings before interest expense, income taxes, depreciation, and amortization expense $34,951 $39,998 $152,620 $167,974 Dividends paid per share $0.23 $0.21 $0.92 $0.84 Comprehensive earnings, which represent net earnings adjusted by the change in foreign-currency translation and minimum pension liability recorded in shareholders' equity, for the periods ended March 31, 2000 and 1999, respectively, were $14,692 and $5,714 for 3 months and $62,115 and $63,704 for 12 months. Consolidated condensed balance sheets (In thousands) -------------------------------------------------------------------- March 31, 2000 March 31, 1999 -------------------------------------------------------------------- Assets Cash and cash equivalents $ 31,070 $ 49,163 Trade receivables-- net 182,724 182,910 Inventories 168,597 178,949 Other current assets 47,164 42,074 ---------------------------- Total current assets 429,555 453,096 --------------------------- Property, plant, and equipment-- net 337,987 303,764 Other noncurrent assets 163,565 158,879 --------------------------- Total assets $931,107 $915,739 --------------------------- Liabilities Debt due within one year $ 9,447 $ 73,764 Accounts payable 84,893 97,443 Other current liabilities 81,137 85,388 --------------------------- Total current liabilities 175,477 256,595 -------------------------- Long-term debt 211,112 143,838 Deferred income taxes 24,536 20,533 Other noncurrent liabilities 39,740 41,554 --------------------------- Total liabilities 450,865 462,520 -------------------------- Shareholders' investment 480,242 453,219 ------------------------ -------------------------- Total liabilities and shareholders' investment $931,107 $915,739