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Modine Manufacturing Q4 net sales grew $31 million

Staff writer ▼ | May 30, 2014
Modine Manufacturing Company reported its financial results for the fourth quarter ended March 31, 2014. Net sales grew $31 million, or 9 percent, from the fourth quarter of fiscal 2013, with increases in all segments other than South America.
Modine Manufacturing
Modine ManufacturingModine Manufacturing Company reported its financial results for the fourth quarter ended March 31, 2014. Net sales grew $31 million, or 9 percent, from the fourth quarter of fiscal 2013, with increases in all segments other than South America.


Gross profit increased $6.2 million, or 11 percent, and gross margin improved 30 basis points to 15.9 percent, largely due to higher sales volume and favorable material costs. Selling, general and administrative (SG&A) expenses increased $9.3 million, due primarily to higher compensation-related expenses, including higher incentive compensation, increased expenses related to the February 2014 Barkell Limited acquisition, and lower recovery of development costs.

The company recorded $5.6 million of restructuring expenses, of which $4.4 million related to the ongoing restructuring in Europe and $1.2 million related to the previously announced closure of the McHenry, Illinois manufacturing facility. In addition, the company recorded $1.2 million of impairment charges related to the closure of the McHenry facility. Net income attributable to Modine of $119.4 million compares to a loss of $2.1 million for the same period last year, and represents GAAP earnings per share of $2.49 compared to a loss per share of $0.04 last year.

Excluding the impact of the U.S. tax valuation allowance reversal of $2.49 per share, and restructuring expenses and impairment charges of $0.15 per share, the company reported adjusted earnings per share of $0.15 in the fourth quarter of fiscal 2014, compared with $0.18 in the fourth quarter of last year.

On March 31, 2014, Modine recorded an income tax benefit of $119.2 million related to the reversal of the valuation allowance on certain U.S. deferred tax assets. Modine’s improved profitability in North America over the last several years, among other factors, led to this reversal in the quarter.

Beginning in the first quarter of fiscal 2015, net earnings will be reduced to reflect a U.S. effective tax rate that is expected to be 35-40%. However, the company does not expect to pay U.S. cash taxes in the near future as Modine’s net operating loss carryforwards are expected to offset cash taxes on the next $130 million of future taxable income in the U.S.

Free cash flow in the quarter was $0.7 million, a $9.5 million improvement from the prior year. Net debt was $77.2 million at March 31, 2014, a decrease of $62.6 million from the end of fiscal 2013. Cash and cash equivalents at the end of the fourth quarter were $87.2 million.


 

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