Modine Reports Second-Quarter Results, Amends Outlook
19 October 2000
Modine Reports Second-Quarter Results, Amends Outlook, Continues Emphasis On New Technologies for Long-Term Growth
RACINE, Wis.--Oct. 18, 2000--Second-quarter sales for Modine Manufacturing Company were $269.8 million; earnings were $19.0 million, or 65 cents per diluted share. Sales declined 5.9 percent, compared with the year before, but earnings were up 26.0 percent due to partial settlement for patent infringement by a Japanese competitor.The quarter's results were affected by a number of factors: an extremely soft aftermarket; North American heavy truck sales that decreased from an all-time high in the prior year to a lower-than-average level this year; North American automotive results that are weaker than expected due to lower demand; preparations for large new programs; and currency-translation impact. Improved results in worldwide off-highway businesses and in the European automotive market are positive factors. Sales would have been $10.7-million higher without the impact of a stronger U.S. dollar. The currency-translation effect also reduced consolidated earnings by two cents per share.
Six-month sales of $556.3 million decreased 2.5 percent from the year before. Net earnings for the half were up 6.9 percent to $37.0 million, or $1.26 per diluted share. The currency-translation effect amounted to a reduction of $24.9 million for sales and six cents per share for earnings.
Modine continues to work on reducing working capital. Compared with the same period in the prior year, inventories are down 16.3 percent, operating cash flows are up 176.4 percent. Capital expenditures are down 24.1 percent and will remain lower for the full fiscal year reflecting completion of several large projects begun in earlier years. Total debt to equity decreased to 33.3 percent from 53.7 percent the year before.
In July, Modine indicated expectation of steady sales for the fiscal year, with earnings up about five percent because of the patent settlements. Due to unanticipated weakness in several of Modine's markets, coupled with the continued stagnation of the Euro versus the U.S. dollar and the deferment of some new programs until fiscal 2002, the company is updating its forecasts. Modine now expects fiscal 2001 revenues to be about five- to ten-percent below the prior year with net earnings down commensurately.
Modine continues to aggressively address cost and working-capital reductions, which takes on even greater importance under current business conditions. In addition, the company remains optimistic about future programs. Over the next year, they include some marketshare gains and the startup of a new product line -- exhaust-gas-recirculation coolers. Longer term, the programs include thermal management of fuel cells, heat-exchange systems for microturbines, and CO2 (carbon dioxide) air-conditioning systems. Modine will continue to leverage its technological expertise and established global relationships to realize the full potential each of these opportunities represents.
Modine Manufacturing Company
Consolidated statements of earnings for the second quarter, six-month
period, and trailing 12 months ended September 26, 2000 and 1999
(unaudited)
(In thousands, except per-share amounts)
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Three months Six months
ended September 26 ended September 26
2000 1999 2000 1999
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Net sales $269,775 $286,691 $556,259 $570,538
Cost of sales 198,764 207,103 402,661 408,985
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Gross profit 71,011 79,588 153,598 161,553
Selling, general, &
administrative expenses 57,654 54,707 110,942 106,451
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Income from operations 13,357 24,881 42,656 55,102
Interest (expense) (2,026) (1,921) (4,171) (3,514)
Patent settlements 15,084 0 16,959 1,000
Other income -- net 3,829 921 4,554 2,595
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Earnings before income taxes 30,244 23,881 59,998 55,183
Provision for income taxes 11,226 8,785 23,018 20,578
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Net earnings $ 19,018 $ 15,096 $ 36,980 $ 34,605
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Net earnings as a percent of
net sales 7.0% 5.3% 6.6% 6.1%
Net earnings per share of
common stock:
Basic $0.65 $0.51 $1.26 $1.17
Assuming dilution 0.65 0.51 1.26 1.16
Weighted average shares
outstanding:
Basic 29,275 29,536 29,270 29,532
Assuming dilution 29,484 29,838 29,434 29,844
Cash flow provided by
operations before working
capital changes $29,107 $26,336 $60,895 $57,391
Earnings before interest
expense, income taxes,
depreciation, and
amortization expense $44,494 $37,536 $88,645 $82,991
Dividends paid per share $0.25 $0.23 $0.50 $0.46
(In thousands, except per-share amounts)
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Twelve months
ended September 26
2000 1999
--------------------------------------------------
Net sales $1,124,990 $1,135,920
Cost of sales 815,455 818,856
----------------------
Gross profit 309,535 317,064
Selling, general, &
administrative expenses 222,943 209,085
----------------------
Income from operations 86,592 107,979
Interest (expense) (9,124) (7,211)
Patent settlements 16,959 1,000
Other income -- net 5,719 9,157
----------------------
Earnings before income taxes 100,146 110,925
Provision for income taxes 32,368 41,538
Net earnings $ 67,778 $ 69,387
======================
Net earnings as a percent of
net sales 6.0% 6.1%
Net earnings per share of
common stock:
Basic $2.31 $2.35
Assuming dilution 2.30 2.32
Weighted average shares
outstanding:
Basic 29,339 29,530
Assuming dilution 29,508 29,878
Cash flow provided by
operations before working
capital changes $115,087 $119,321
Earnings before interest
expense, income taxes,
depreciation, and
amortization expense $158,274 $164,081
Dividends paid per share $0.96 $0.88
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 September 26,
2000 and 1999, respectively, were $17,228 and $15,762 for 3 months,
$31,683 and $34,716 for 6 months, and $59,802 and $59,889 for 12
months.
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Modine Manufacturing Company
Consolidated condensed balance sheets (unaudited)
(In thousands)
September 26, 2000 March 31, 2000
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Assets
------
Cash and cash equivalents $ 17,914 $ 31,070
Trade receivables -- net 169,229 182,724
Inventories 152,749 168,597
Other current assets 39,180 47,164
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Total current assets 379,072 429,555
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Property, plant, and
equipment -- net 345,802 337,987
Other noncurrent assets 160,537 163,565
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Total assets $885,411 $931,107
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Liabilities
-----------
Debt due within one year $ 10,058 $ 9,447
Accounts payable 72,124 84,893
Other current liabilities 85,994 81,137
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Total current liabilities 168,176 175,477
=========================================
Long-term debt 155,274 211,112
Deferred income taxes 25,256 24,536
Other noncurrent liabilities 39,740 39,740
-----------------------------------------
Total liabilities 388,446 450,865
=========================================
Shareholders' investment 496,965 480,242
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Total liabilities and
shareholders' investment $885,411 $931,107
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