Modine Manufacturing Company Q1 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Total sales decreased 7% year-over-year (down 3% on a constant-currency basis), driven primarily by weakness in the Vehicular Thermal Solutions (VTS) and Commercial & Industrial Solutions (CIS) segments.
  • Building HVAC outperformed with strong growth (+11% constant currency), while VTS and CIS declined due to softer end markets and unfavorable foreign exchange.
  • Adjusted operating income was $28.4 million, a decline of $7.6 million (21%) from the prior-year quarter.
  • Key macro pressures included: stronger U.S. dollar, global automotive and off-highway slowdown, cooling in data center demand timing, and tariff impacts partially offset by lower commodity prices.

Strategic Update

  • The formal sale process for Modine’s automotive business is well underway, with active engagement from interested parties and internal preparation for separation.
  • No new details were provided due to ongoing negotiations, but management reiterated confidence in maximizing long-term shareholder value.

Segment Performance

Vehicular Thermal Solutions (VTS)
  • Sales declined 7% (down 4% constant currency) compared to Q1 FY19.
  • Europe saw a 15% drop, heavily driven by currency and lower automotive demand.
  • Asia posted a rare decline (-12%), led by lower off-highway demand in China and Korea.

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Operator: Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company’s First Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer, Investor Relations and Tax. Kathleen Powers: Good morning, and thank you for joining our conference call to discuss Modine’s first quarter fiscal 2020 results. I’m here with Modine’s President and CEO, Tom Burke; and Michael Lucareli, our Vice President, Finance and Chief Financial Officer. We will be using slides for today’s presentation, which can be accessed either through the webcast link or by accessing the PDF file posted on the Investor Relations section of our website modine.com. This morning, Tom and Mick will present our first quarter results for fiscal 2020 and will provide an update to our outlook for the rest of the year. At the end of the call, there will be a question-and-answer session. On Slide 2 is our notice regarding forward-looking statements. This call may contain forward-looking statements as outlined in our 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. Thomas Burke:

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