Modine Manufacturing (MOD)
Q1 2013 Earnings Call
August 7, 2012 09:00 AM ET
Kathy Powers - VP, Treasurer & Investment Relations
Tom Burke - President & CEO
Mic Lucareli - VP, Finance & CFO
Mike Shlisky - JPMorgan
Previous Statements by MOD
» Modine Manufacturing CEO Discusses F2Q2011 Results – Earnings Call Transcript
» Modine Manufacturing Co. F1Q11 (Qtr End 06/30/2010) Earnings Conference Call Transcript
» Modine Manufacturing Company F4Q10 (Qtr End 03/31/10) Earnings Call Transcript
» Modine Manufacturing Company F3Q10 (Qtr End 12/31/09) Earnings Call Transcript
Welcome to the Q1 2013 Modine Manufacturing Earnings Conference Call. My name is Robin and I will be your coordinator for today. (Operator Instructions). I would now like to turn the conference to Ms. Kathy Powers, Vice President, Treasurer and Investment Relations. Please proceed.
Thank you for joining us today for Modine’s First Quarter Fiscal 2013 earnings call. With me today are Modine’s President and CEO, Tom Burke and Mic Lucareli, our Vice President, Finance and Chief Financial Officer.
We will be using slides with today’s presentation, those lines are available through both the webcast link as well as a PDF file posted on the investor relation section of our company website modine.com.
Also should you need to exit the call prior to it's conclusion a replay will be available through our website beginning approximately 2 hours after the call concludes. On slide two, is an outline for today’s call, Tom and Mic will provide comments on our first quarter results and review our fiscal 2013 guidance.
At the end of the call there will be a question and answer session. On slide three, is our noticed regarding forward-looking statements and want to remind you that this call may contain forward-looking statements as outlined in today’s earnings release as well as in our company’s filing with the Securities and Exchange Commission. With that it is my pleasure to turn the call over to Tom Burke.
Thank you Kathy and good morning everyone. As expected we continue to see weakening in our served markets during the quarter resulting in a 16% decrease in sales volume as compared to the prior year. Adjusting for the impact of a stronger U.S. dollar and a negative impact on currency translation, normalized sales volumes were down 10.5% year-over-year. The sales drop includes the plant wind down of automotive programs in Europe, North America and Asia and the impact of volume declines in the commercial vehicle markets in Europe and South America and in the construction equipment market in Asia.
We reported operating income with $3.9 million and a $0.03 loss per share. Our earnings during the quarter include a 4.5 million in restructuring charges against our European segment which equates to approximately $0.10 per share.
As previously announced we have embarked upon a restructuring program in Europe with a clear goal of reaching a target return on average capital employed at 15% by the end of our fiscal 2014. During the quarter we took charges related to head count reductions in our European regional headquarters. We are in a process of finalizing options for our manufacturing operations and administrative facilities in Europe and we’ll provide updates on decisions as appropriate.
Our European team is highly focused on executing the plan and providing the required results effectively and on time. Before reviewing the segments I would like to highlight some important management changes we announced during the quarter.
Holger Schwab is doing Modine as our Regional Vice President of Europe, Holger is responsible for leading Modine Europe’s restructuring program and we will manage the multiple high value launches that are important component of our growth strategy.
Holger has a strong track record as an executive at a major global automotive supplier. Scott Bowser previously a Regional Vice President of Americas is heading over to Shanghai to take responsibility for the Asia Region. Scott is a proven leader who guided the rationalization of the manufacturing footprint in North America and previously served as a Managing Director of Modine in Brazil.
She has built strong relationship with our global customers and is a right person to lead this important region to profitable growth. Scott Wollenberg, our Vice President and Chief Technology Officer has assumed a responsibility for the North American region after effectively leading our global product organization for the past four years. Scott will retain his position as Chief Technology Officer.
Ralf Beck, a proven Senior Leader at Modine and previously the Managing Director of Sales and Engineering in Europe has been promoted to Vice President of Research and Engineering on a global basis.
I am excited about these changes and about the full alignment of our leadership team, we have worked hard over the past several years to rebuild this company and are well positioned to bring solutions to our customers and grow our business profitability.
Mic will provide a full financial overview in a few minutes but first I would like to comment briefly on our segment results. Turning to page six, the North American segment had another solid quarter with higher operating income on slightly lower sales. As mentioned during our last call we have seen some slowing in the commercial vehicle market and have lowered our outlook in the heavy duty truck segment.
Domestic construction market has continued to be stable but current drought conditions have added uncertainty to the outlook for the agricultural equipment market. Sales in our European segment were also lower than prior year down 16% excluding currency, this decrease was primarily due to the continued wind down of the automotive module business but was also impacted by weaker end market demand in light of the economic uncertainty in the region.