Professional Documents
Culture Documents
Investor Presentation
December 2015
Forward-Looking Statements
This presentation contains statements, including information about future financial performance and market conditions,
accompanied by phrases such as believes, estimates, expects, plans, anticipates, intends, and other similar
forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine's actual results,
performance or achievements may differ materially from those expressed or implied in these statements because of certain
risks and uncertainties, including, but not limited to, those described under Risk Factors in Item 1A of Part I of the
company's Annual Report on Form 10-K for the year ended March 31, 2015 and under Forward-Looking Statements in Item
7 of Part II of that same report and in the companys Quarterly Report on Form 10-Q for the quarters ended June 30, 2015
and September 30, 2015. Other risks and uncertainties include, but are not limited to, the following: the overall health and
price-down focus of Modines customers, particularly in light of remaining market challenges; the ability of the company to
successfully implement its Strengthen, Diversify and Grow strategic transformation; uncertainties regarding the costs and
benefits of Modines restructuring activities in our Americas and Europe segments, including the activities associated with
the closure of Modines facility in Washington, Iowa; operational inefficiencies as a result of program launches, unexpected
volume increases and product transfers; the effects of the fire at Modines Airedale facility, including inefficiencies associated
with Airedales operations in temporary sites, timely, continued recovery of insurance proceeds, and disruptions associated
with Airedales relocation into its rebuilt facility; economic, social and political conditions, changes and challenges in the
markets where Modine operates and competes, including currency exchange rate fluctuations (particularly the value of the
euro, Brazilian real and British pound relative to the U.S. dollar), tariffs, inflation, changes in interest rates, recession,
restrictions associated with importing and exporting and foreign ownership, and in particular the economic and market
conditions in Brazil and China and the remaining economic uncertainties in certain markets in Western Europe, Russia and
North America; the impact on Modine of any significant increases in commodity prices, particularly aluminum and copper,
and our ability to pass these prices on to customers and/or successfully hedge the associated risk; Modine's ability to
successfully execute its strategic and operational plans; the nature of and Modines significant exposure to the vehicular
industry and the dependence of this industry on the health of the economy; costs and other effects of environmental
remediation or litigation; and other risks and uncertainties identified by the company in public filings with the U.S. Securities
and Exchange Commission. The company does not assume any obligation to update any forward-looking statements.
Modine Overview
A Global Leader In Thermal Management Technology And Solutions
Ticker: NYSE: MOD
EGR Cooler
Condenser
Oil Cooler
Copper Coil
European Headquarters
Bonlanden, Germany
11 Locations serving Europe
Asian Headquarters
Shanghai, China
5 Locations and 2 JVs
serving Asia customers
& markets
FY15 Sales
So Paulo, Brazil
(Americas)
Johannesburg, South Africa
(Building HVAC)
Investment Highlights
Product Portfolio
Positioned to Leverage
Current Market Trends
Focused Management
Team Executing
Transformation Strategy
Disciplined
Management, Flexible
Balance Sheet, & New
Repurchase Program
Increase Energy
Efficiency
Reduce
Greenhouse Gas
Emissions
Recover / Reuse
Waste Heat
Modine Products
Increase fuel efficiency
Reduce vehicular emissions
Leverage waste heat recovery
technology
Improve efficiency of
HVAC&R equipment
Reduce A/C refrigerant
charge requirements
Improve Indoor
Air Quality
6
Powertrain
Cooling (PTC)
MAINTAIN strong
market position
Cooling module
Radiator
Charge air cooler
Oil cooler
Condenser
Industrial 16%
Engine (EPG)
Coils
Building HVAC
PRIORITIZE
investment for
growth
EXECUTE growth
and consolidation
strategy
EXPAND product
offering and reach
Oil cooler
Charge air cooler
EGR cooler
Condenser
$12-14B
$5-6B
Modine Priorities
Powertrain cooling
Focus on fuel economy is driving the
need for higher efficiency and lower
weight products
Customers demand global support
Engine products
New heat exchangers are required for
fuel economy and emissions standards
Customers are looking for innovation
to create their own competitive
advantage
Address underperformers in
global product portfolio
Accelerate low cost
manufacturing footprint,
leverage global production scale
Optimize supply chain
management
Focus product development on
supporting lower fuel economy
standards and emission targets
10
Modine Priorities
Drive organic growth through
expanded product offering and
geographic reach
Develop and maintain strong
relationships with specifiers
Achieve and maintain large
installed base to leverage
replacement business
Pursue inorganic growth through
strategic acquisitions
11
Transformation Goals
Diversify
Strengthen
Optimize global
manufacturing capabilities
Execute global procurement
project
Operational & SG&A
expense reductions
GOALS:
Reduced customer concentration
and cyclical exposure
Increase share of high margin
business
Shift mix:
GOALS:
Cost reductions: $40-$50M
within 18 months
Operating margin expansion
from 4-5% to 7-8% by end
of FY18
FY15
FY18
Vehicular
84%
60-70%
Industrial
16%
30-40%
Grow
Continuous
improvement Modine Operating
System (MOS)
New product/
matrix
organizational
structure
Rationalized
product portfolio by
divesting of
underperforming
businesses
Lowered annual
operating costs
by $16M
Reduced assets
by $30M
Reduced global
manufacturing
footprint from 34
manufacturing
plants to 25
(currently 24, going
to 22)
Consolidated
German
manufacturing
operations
Refinanced and
recapitalized the
balance sheet
Lowered SG&A by
one third
Strengthen,
Diversify &
Grow
2015 - 2018
European
Restructuring
2012 - 2015
Diversify- increase
investment in Industrial
business, with target
portfolio of 60-70%
Vehicular, 30-40%
Industrial
13
Financial Review
Highlights FY13 vs. FY 15
Revenue up 9% (+11% excluding FX impact)
Gross margin up 130 bps
Adjusted operating income* up $23 million or 55%
Significant earnings growth despite unfavorable FX
impact and weak conditions in some end-markets
Closed McHenry, Ill. facility and announced plans to
close plant in Washington, Iowa
Financial Highlights
($ in millions, except per share amounts)
FY Ended
March 31,
2013
2014
2015
Revenues
$1,376
$1,478
$1,496
Gross margin
15.2%
16.1%
16.5%
Adjusted operating
income*
$42
$61
$65
Adjusted operating
margin*
3.1%
4.1%
4.3%
Adjusted EPS*
$0.40
$0.73
$0.63
ROACE*
6.0%
8.7%
7.8%
Net debt-to-capital*
34.3%
15.3%
17.8%
14
Conclusion
Robust product portfolio positioned to leverage current market
trends to increase fuel economy, reduce vehicular emissions,
improve indoor air quality and increase energy efficiency
Strong core vehicular business and growing industrial with
strategies to capitalize on industry trends and drivers
Focused and experienced management team with proven track
record executing transformation strategy to Strengthen, Diversify
and Grow the business
Disciplined management, flexible balance sheet, & new $50M
share repurchase authorization
15
Appendix
17%
Heavy Truck
Medium Truck
18%
6%
12%
Light Vehicle
Ag/Construction
20%
Service
SA Aftermarket
11%
16%
NA Coils/Industrial/Other
($ in millions) (Unaudited)
FY Ended
March 31,
2013
2014
2015
$692.3
$688.3
$666.9
Adjusted operating
income*
52.2
52.0
47.1
Adjusted operating
margin*
7.5%
7.6%
7.1%
Net sales
17
($ in millions)
FY Ended
March 31,
2013
2014
2015
$498.0
$584.4
$578.2
Adjusted operating
income*
15.7
30.8
24.5
Adjusted operating
margin*
3.2%
5.3%
4.2%
Net sales
18
($ in millions)
FY Ended
March 31,
2013
2014
2015
Net sales
$59.5
$71.5
$81.2
Operating (loss)
income
(8.8)
(3.3)
0.3
(14.8%)
(4.7%)
0.3%
Operating margin
19
($ in millions)
FY Ended
March 31,
2013
2014
2015
$139.3
$146.5
$186.3
Adjusted operating
income*
10.0
9.9
19.1
Adjusted operating
margin*
7.2%
6.8%
10.2%
Net sales
20
Non-GAAP Reconciliations
Adjusted operating income and margin
($ in millions)
Years ended March 31,
2013
2014
2015
Net sales
$ 1,376.0
$ 1,477.6
$ 1,496.4
3.1%
4.1%
4.3%
(0.6)
17.0
25.9
42.3
Adjusted EPS
52.7
4.7
7.8
(3.2)
3.2
65.2
37.2
20.4
3.2
0.5
61.3
(0.52)
0.36
0.56
0.40
2014
$
2.72
(2.50)
0.43
0.07
0.01
0.73
2015
$
0.44
0.08
0.11
(0.07)
0.07
0.63
21
Non-GAAP Reconciliations
ROACE (Return on Average Capital Employed)
($ in millions)
(0.6)
2014
$
37.2
17.0
20.4
25.9
3.2
2015
$
52.7
4.7
7.8
(3.2)
3.2
0.5
42.3
61.3
65.2
(12.7)
(18.4)
(19.6)
(1.4)
(1.5)
(1.0)
28.2
41.4
44.6
468.0
475.5
570.5
6.0%
468.0
489.2
8.7%
429.3
7.8%
589.2
490.9
440.0
604.5
465.7
460.0
582.0
465.1
459.2
572.0
429.3
589.2
504.7
475.5
570.5
22
Non-GAAP Reconciliations
Net debt-to-capital
($ in millions)
Years ended March 31,
2013
Total debt
Less: cash and cash equivalents
Net debt
Total equity
Capital
Net debt-to-capital
163.6
23.8
139.8
268.3
408.1
34.3%
2014
$
164.4
87.2
77.2
428.6
505.8
15.3%
2015
$
148.7
70.5
78.2
360.6
438.8
17.8%
23
Non-GAAP Reconciliations
Segment adjusted operating income and margin
($ in millions)
Years ended March 31,
Americas (unaudited)
2013
2014
2015
Operating income
Restructuring expenses
Impairment charges
Brazil legal reserve
Adjusted operating income
50.4
1.8
52.2
49.6
1.2
1.2
52.0
33.4
2.7
7.8
3.2
47.1
Net sales
692.3
688.3
666.9
7.5%
7.6%
7.1%
2013
2014
2015
(25.4)
17.0
24.1
15.7
9.6
19.2
2.0
30.8
25.7
2.0
(3.2)
24.5
Net sales
498.0
584.4
578.2
3.2%
5.3%
4.2%
24
Non-GAAP Reconciliations
Segment adjusted operating income and margin
($ in millions)
Years ended March 31,
Building HVAC
2013
2014
2015
Operating income
Loss from Airedale fire
Adjusted operating income
10.0
10.0
9.4
0.5
9.9
19.1
19.1
Net sales
139.3
146.5
186.3
7.2%
6.8%
10.2%
25