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Modine Reports Second Quarter Fiscal 2013 Results; Continues European Restructuring

Modine Manufacturing Company (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported its financial results for the second quarter ended September 30, 2012. Highlights include:
  • Sales of $339.9 million;
  • GAAP basis loss per share of $0.26;
  • Impairment and restructuring charges of $18.1 million; and
  • Earnings per share excluding impairment and restructuring charges increased to $0.13.

“Our revenue was impacted by weakness in our end markets, but we remain focused on operational improvements,” said Modine President and Chief Executive Officer, Thomas A. Burke. “During the quarter, we made further progress on our restructuring efforts in Europe, negotiated some favorable commercial agreements, and generated significant year-over-year cost reductions.”

Second Quarter Financial Results

Net sales in the second quarter of fiscal 2013 decreased $57.4 million, or 14.4 percent, from the second quarter of fiscal 2012. On a constant currency basis, net sales decreased 8.3 percent from the prior year. Sales in Europe were impacted by the continued wind down of the non-strategic automotive module business, while sales in all regions were impacted by weakening end market demand. Gross profit decreased 15.7 percent, or $9.8 million, resulting in a gross margin of 15.5 percent, down 20 basis points from the prior year. The margin decrease was largely due to lower sales volume offset by improved pricing and product mix, and lower material costs. Selling, general and administrative (SG&A) expense decreased $8.9 million or 17.7 percent, primarily due to lower compensation-related expense and foreign currency translation. The company recorded $18.1 million of impairment and restructuring charges, consisting of $17.1 million in Europe and $1.0 million in North America. Operating income decreased $19.0 million to a loss of $6.8 million, as a result of lower gross profit, and the $18.1 million of impairment and restructuring charges, partially offset by lower SG&A expense. The net loss attributable to Modine of $12.2 million represents a $13.5 million decrease from net earnings of $1.3 million for the same period last year. This represents a loss per share of $0.26 on a GAAP basis. Earnings per share excluding impairment and restructuring charges was $0.13, which represents a $0.10 per share improvement compared to earnings per share of $0.03 in the second quarter of last year.

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