Modine Manufacturing Company Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights

  • Q2 results significantly exceeded internal expectations, driven by stronger market conditions and aggressive cost controls.
  • Adjusted EBITDA increased 40% year-over-year (YoY), rising to $55 million.
  • Year-to-date free cash flow reached $73 million, a $97 million improvement over the prior year’s first half.
  • Leverage ratio improved to 2.2, returning to pre-pandemic levels.
  • The Board authorized a $50 million share repurchase program.

Strategic Transformation and Automotive Divestiture

  • Modine reached an agreement to sell its liquid‑cooled automotive business (approx. $300M historical revenue). This business has historically produced negative cash flow due to heavy capital spending (~$25M annually) and restructuring requirements.
  • The sale eliminates significant future liabilities, including pension obligations (~$15M) and further restructuring costs.
  • Transaction is leverage‑neutral and expected to close in the first half of calendar 2021.
  • The remaining air‑cooled automotive business (~$100M revenue) is under active strategic review; Modine is in discussions with potential buyers.
  • Once both businesses are divested, Modine expects annual corporate CapEx to fall from the historical $70–$80M range to approximately $50M (or lower), improving long‑term cash flow.

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Operator: Good morning, ladies and gentlemen and welcome to Modine Manufacturing Company's Second Quarter Fiscal 2021 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. Kathleen Powers, Vice President, Treasury, Investor Relations and Tax. Please go ahead. Kathleen Powers: Good morning and thank you for joining our conference call to discuss Modine's second quarter fiscal 2021 results. I'm joined on this call by Michael Lucareli, Interim President and Chief Executive Officer. We'll be using five of 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. 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 Michael Lucareli. Michael Lucareli: Thank you Kathy and good morning everyone. We have a lot of good news to reward. So I'll start with a brief summary of the highlights. Q2 results were significantly ahead of our expectations, including higher earnings, margins an

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