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TheStreet Open House

Modine Reports Third Quarter Fiscal 2013 Results; Continues European Restructuring; Affirms Guidance

Asia segment sales decreased 36.8 percent to $13.2 million compared to $20.9 million one year ago due to lower sales to off-highway customers as production schedules have been reduced in response to low demand and high field inventory levels caused by weak economic conditions. The operating loss in the region increased by $1.0 million to $2.5 million compared to a loss of $1.5 million in the prior year, as a result of lower gross profit on the lower sales volume.

Commercial Products segment sales increased 5.1 percent to $41.3 million compared to $39.3 million one year ago due to an increase in chiller sales in the UK, partially offset by a decrease in heating and cooling product sales in North America. Gross margin was down on a year-over-year basis due to unfavorable product mix changes. Operating income decreased $1.1 million from the prior year to $4.7 million due primarily to changes in sales mix and higher SG&A expense from the integration of the Geofinity business and other spending to support future growth.

Outlook

“Our primary markets remained weak during the quarter, resulting in lower volumes than we had originally expected,” Burke commented. “While we believe that the commercial vehicle market is stabilizing in most regions, end market demand and high inventory levels may keep production levels relatively low during the next several quarters. We are confirming our guidance for fiscal 2013, with a narrowed band for earnings per share.”

The company has the following expectations for fiscal 2013, excluding impairment and restructuring charges:

  • Year-over-year sales down 10 to 12 percent, including approximately $80 million of planned program reductions;
  • Operating income margin in the range of 2.75 to 3.25 percent; and
  • Earnings per diluted share of $0.40 to $0.45.

“We are encouraged by industry projections for market recoveries later in calendar 2013,” Burke commented. “With this in mind, we remain focused on cost control, including our restructuring program in Europe, while also identifying opportunities for profitable growth.”

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