Modine Manufacturing CEO Discusses F2Q2011 Results – Earnings Call Transcript

Modine Manufacturing CEO Discusses F2Q2011 Results â¿¿ Earnings Call Transcript
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Modine Manufacturing Company. (

MOD

)

F2Q2011 Earnings Call

October 28, 2010; 11:30 am ET

Executives

Tom Burke - President & Chief Executive Officer

Mic Lucareli - Vice President of Finance, Chief Financial Officer & Treasurer

Robert Kampstra - Vice President of Investor Relations & Corporate Controller

Analysts

Greg William - JPMorgan

Keith Schicker - Robert W. Baird

Walt Liptak - Barrington Research

Greg Macosko - Lord Abbett & Co.

Presentation

Operator

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Good day ladies and gentlemen and welcome to the second quarter 2011 Modine Manufacturing Company earnings conference call. My name is Francis and I will be your coordinator for today. (Operator Instructions)

I will now turn the presentation over to your host for today call, to Robert Kampstra, Vice President of Investor Relations and Corporate Controller. You may proceed.

Bob Kampstra

Thank you for joining us today for Modine’s second quarter fiscal 2011 earnings call. With me today are Modine’s President and Chief Executive Officer, Tom Burke; as well as Mic Lucareli, our Vice President of Finance, Chief Financial Officer and Treasurer.

We’ll be using slides for today’s presentation. Those slides are available through both the webcast link, as well as a PDF file posted on the Investor Relations section of our company website, modine.com. Also, should you need to exit the call prior to its conclusion, a replay will be available through our website beginning approximately two hours after the call concludes.

On page two is an outline for today’s call. Tom and Mic will provide comments on our second quarter results, as well as on our strategic overview. At the end of the call there will be a question-and-answer session.

On page three is our notice regarding forward-looking statements. I 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 filings with the Securities and Exchange Commission.

With that, it is my pleasure to turn the call over to Tom Burke. Tom.

Tom Burke

Thanks Bob and good morning everyone. Starting on page four, I am pleased to announce that we continue to move our company forward with solid performance in our second quarter. This performance gives us increased confidence that we are rapidly moving towards our stated objective of 11% to 12 % return on capital employed by March 2013, inline with our three year plan.

The hard work by all of our employees over the last two years in driving our four point plan framework is resulting in improved financial performance across the Board. Mick will walk you through the financial details in just a minute, but first let’s turn to page five.

I would like to provide some details on key events in the quarter and summarize my thoughts and views on the markets. In September, we presented our latest technology roadmaps that the IAA truck show at Hannover, Germany. This is the preeminent truck show globally and we came away very enthused about the engagement with all of our major truck customers.

The interest in our product offerings was extremely high and provided us further confidence so we can attain our growth objective of increasing our market share for the power tranquilly module business in Europe. To that point, we recently were rewarded an order with a second major commercial truck OEM for year ‘06 emission standards, which underscores our strong reputation and presence in the market enable by the value provided by our Origami technology.

The IAA truck show also provided an opportunity to meet with several of our Asia truck customers. Our team in Asia continues to make great progress in gaining market share in India and just recently we received a significant order for a power tranquilly module with the major truck producer in China.

I want to stress that we are continuing to make the right moves in our cost base and product portfolio to assure we attain and sustain a strong and profitable presence in the global commercial vehicle markets. Our strategic decision is too deep in our focus on commercial trough an also the off-highway markets through the economic crisis that have proven to be very successful.

New business wins and prospects with our off-highway customers continue to provide us with significant growth in China, in India. We forecast that our sales revenue in Asia will grow by approximately 90% this fiscal year, with many launches coming inline, online in both China and India, primarily in the off-highway markets.

Turning to the broader markets, we continue to see increasing sales of commercial trucks in North America and Europe. In North-America we are assuming a total class A market of 149,000 units per calendar year 2010 with medium duty trucks coming at 111,000 units for the same period.

Our current estimates for calendar 2011 are consistent with ACT research at approximately 230,000 units for class A and 130,000 for medium duty vehicles. In Europe, the growth in demand has been slower to response from the economic recession, but we expect it to increase more significantly over the next year.

Our current assumptions are that Western Europe truck and bus sales are reached 320,000 units for 2010 and will increase to 380,000 units for 2011 calendar year. We project the truck sales in Asia market and in South America will continue at their current strong levels through 2011. Nearly every OE off-highway customer in Asia and South America is running at full capacity and high demand also exist in the North America.

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