Modine Manufacturing Company Q4 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Modine Manufacturing Company – Q4 & Full Year Fiscal 2020 Earnings Summary

Overview

  • Q4 results exceeded internal expectations despite significant COVID-19 disruptions across global operations.
  • Full-year sales were just under $2 billion, down 11% year-over-year.
  • Q4 sales were $473 million, down 15% from the prior year.
  • Adjusted operating income was $25 million in Q4 (down $10 million year-over-year) and $97 million for the full year.
  • The company implemented extensive cost-cutting, including salary reductions, furloughs, reduced CapEx, and board compensation cuts.
  • Liquidity is described as “strong,” bolstered by proactive amendments to credit facilities.

Financial & Operational Highlights

  • Gross margin: 15.8% in Q4, impacted by volume declines in automotive and CIS segments.
  • SG&A down 14% year-over-year due to cost savings and lower compensation expenses.
  • Q4 free cash flow was slightly negative at $1 million; full-year free cash flow was negative $13 million, largely due to auto-separation costs.
  • Cash on hand at year-end: $71 million with $118 million of undrawn revolver capacity.
  • Leverage ratio: 2.4x, well within expanded covenant limits.

Segment Performance

Building HVAC

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Operator: Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company’s Fourth Quarter Fiscal 2020 Earnings Conference Call. [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. Kathy Powers: Good morning and thank you for joining our conference call to discuss Modine’s fourth quarter and full year fiscal 2020 results. I am here with Modine’s President and CEO, Tom Burke; and Mick 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. 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. Tom Burke: Thank you Kathy, and good morning everyone. First, I’d like to start by extending my well wishes to everyone and I hope you have all remained safe and healthy during the crisis. World’s a vastly different place since Modine reported its third quarter earnings in early February. Fiscal 2020 was a very challenging year for Modine, but we ended on a positive note wi

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