Modine Announces First-Quarter Results, Fiscal-Year Outlook
19 July 2000
Modine Announces First-Quarter Results, Fiscal-Year Outlook
RACINE, Wis - Modine Manufacturing Company announced first-quarter sales and earnings and offered a fiscal-year outlook at its Annual Meeting of Shareholders today.The current fiscal year will continue to provide a stable base for Modine. The company stated in its most recent Annual Report that total revenues in fiscal 2001 are expected to be about the same as the year before, setting the stage for more-rapid growth in the future. Results for the first fiscal quarter, released today, are on par with that projection. Sales were $286.5 million, up about one percent from last year's first quarter. Sales would have been $14-million higher if the U.S. dollar had not strengthened to well above last year's level, relative to the Euro.
Net earnings were slightly lower than the year before. Earnings, at $18 million or 61 cents per diluted share, were down $1.5 million or four cents per share from the year before. This was mainly due to exchange fluctuation, which reduced consolidated earnings by four cents per share. The quarter, like last year, included a patent settlement, this time with Mitsubishi Heavy Industries for $1.9 million as a partial settlement for past infringement of Modine's PF technology.
In addition to the first-quarter effect of the patent settlement with Mitsubishi, Modine was pleased to announce a patent settlement and licensing agreement with Showa Aluminum Corporation. The agreement with Showa calls for cross-licensing of Modine's PF patents and their SC patents on air-conditioning condensers and for Showa to give Modine an initial payment of $14.3 million as a partial settlement for past infringement. In addition, Showa and Mitsubishi have agreed to pay royalties of approximately $27 million, depending on final confirmation of the Japanese PF patent's validity. Also, running royalties are payable on future sales.
For the fiscal year, with steady sales, net income will be up about five percent with a strong assist from increased patent settlements and running royalties. Negatives that Modine has to face will include currency exchange -- which looks likely to continue its depressing effect on earnings -- weakening of the U.S. truck market from its all-time high last year, and some delay in anticipated new automotive business. On the plus side, European sales and earnings, despite the negative currency impact, are improving and the company sees some strength in off-highway markets. Last year, in the third quarter, Modine realized a significant one-time gain in tax credits, relative to earlier losses, of $4 million, or 13 cents per diluted share, which will be a negative to this year's earnings comparison.
These and other forward-looking statements about sales, earnings, and operations involve risks and uncertainties, as detailed on page 17 of Modine's Annual Report to shareholders.
Modine is a world leader at solving heating and cooling problems in vehicles, buildings, and off-highway and industrial equipment. Modine has annual sales of more than $1 billion and has about 8,300 employees worldwide.
Modine Manufacturing Company
Consolidated statements of earnings for the first quarter and trailing
12 months ended June 26, 2000 and 1999 (unaudited)
(In thousands, except per-share amounts)
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Three months Twelve months
ended June 26 ended June 26
2000 1999 2000 1999
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Net sales $286,484 $283,847 $1,141,906 $1,122,190
Cost of sales 203,897 201,882 823,794 808,756
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Gross profit 82,587 81,965 318,112 313,434
Selling, general, &
administrative
expenses 53,288 51,744 219,996 202,768
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Income from operations 29,299 30,221 98,116 110,666
Interest (expense) (2,145) (1,593) (9,019) (6,269)
Other income -- net 2,600 2,674 4,686 12,319
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Earnings before
income taxes 29,754 31,302 93,783 116,716
Provision for
income taxes 11,792 11,793 29,927 43,344
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Net earnings $ 17,962 $ 19,509 $ 63,856 $ 73,372
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Net earnings as a
percent of net sales 6.3% 6.9% 5.6% 6.5%
Net earnings per share of common stock:
Basic $0.61 $0.66 $2.17 $2.48
Assuming dilution 0.61 0.65 2.16 2.44
Weighted average shares outstanding:
Basic 29,264 29,529 29,404 29,550
Assuming dilution 29,384 29,849 29,597 30,010
Cash flow provided by
operations before working
capital changes $31,788 $31,055 $112,316 $122,391
Earnings before interest
expense, income taxes,
depreciation, and
amortization expense $44,151 $45,455 $151,316 $167,929
Dividends paid per
share $0.25 $0.23 $0.94 $0.86
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 June 26, 2000
and 1999, respectively, were $14,455 and $18,954 for 3 months and
$57,616 and $62,188 for 12 months.
Modine Manufacturing Company
Consolidated condensed balance sheets (unaudited)
(In thousands)
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June 26, 2000 March 31, 1999
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Assets
Cash and cash equivalents $ 24,478 $ 31,070
Trade receivables -- net 187,390 182,724
Inventories 168,920 168,597
Other current assets 40,290 47,164
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Total current assets 421,078 429,555
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Property, plant, and
equipment -- net 342,541 337,987
Other noncurrent assets 160,448 163,565
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Total assets $924,067 $931,107
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Liabilities
Debt due within one year $ 6,971 $ 9,447
Accounts payable 83,953 84,893
Other current liabilities 94,357 81,137
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Total current liabilities 185,281 175,477
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Long-term debt 186,154 211,112
Deferred income taxes 25,119 24,536
Other noncurrent liabilities 40,176 39,740
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Total liabilities 436,730 450,865
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Shareholders' investment 487,337 480,242
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Total liabilities and
shareholders' investment $924,067 $931,107
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