What changed in this filing

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Item 1. Financial Statements

2025-02-05 compared with 2024-10-30 · 163 added, 131 removed, 499 unchanged (37% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended September 30, 2024 and 2023

For the three and nine months ended December 31, 2024 and 2023

(In millions, except per share amounts)

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Cost of sales

1 unchanged sentence

Restructuring expenses

Gain on sale of assets

Operating income

Interest expense

Other (expense) income – net

Other income (expense) – net

Earnings before income taxes

7 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended September 30, 2024 and 2023

For the three and nine months ended December 31, 2024 and 2023

(In millions)

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Other comprehensive income (loss), net of income taxes:

3 unchanged sentences

Total other comprehensive income (loss)

Comprehensive income

Comprehensive income attributable to noncontrolling interest

Comprehensive income attributable to Modine

Comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interest

Comprehensive income (loss) attributable to Modine

The notes to condensed consolidated financial statements are an integral part of these statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

September 30, 2024 and March 31, 2024

December 31, 2024 and March 31, 2024

(In millions, except per share amounts)

September 30, 2024

December 31, 2024

March 31, 2024

32 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended September 30, 2024 and 2023

For the nine months ended December 31, 2024 and 2023

(In millions)

Six months ended September 30,

Nine months ended December 31,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Gain on sale of assets

Stock-based compensation expense

8 unchanged sentences

Payments for business acquisitions

Proceeds from disposition of assets

Proceeds from (payments for) disposition of assets

Net cash used for investing activities

13 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the three and six months ended September 30, 2024

For the three and nine months ended December 31, 2024

(In millions)

3 unchanged sentences

Stock options and awards

Purchase of treasury stock

Purchases of treasury stock

Stock-based compensation expense

3 unchanged sentences

Stock options and awards

Purchase of treasury stock

Purchases of treasury stock

Stock-based compensation expense

Balance, September 30, 2024

Other comprehensive loss

Stock options and awards

Purchases of treasury stock

Stock-based compensation expense

Balance, December 31, 2024

The notes to condensed consolidated financial statements are an integral part of these statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the three and six months ended September 30, 2023

For the three and nine months ended December 31, 2023

(In millions)

3 unchanged sentences

Stock options and awards

Purchase of treasury stock

Purchases of treasury stock

Stock-based compensation expense

3 unchanged sentences

Stock options and awards

Purchase of treasury stock

Purchases of treasury stock

Stock-based compensation expense

Balance, September 30, 2023

Other comprehensive income

Stock options and awards

Purchases of treasury stock

Stock-based compensation expense

Balance, December 31, 2023

The notes to condensed consolidated financial statements are an integral part of these statements.

5 unchanged sentences

The financial statements include all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods.

Results for the first six months of fiscal 2025 are not necessarily indicative of the results to be expected for the full year.

Results for the first nine months of fiscal 2025 are not necessarily indicative of the results to be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2024.

6 unchanged sentences

Under this program, the Company confirms the validity of supplier invoices to the financial institution and remits payments to it based on the original payment terms, which typically range from 60 to 120 days.

The outstanding obligations under this program, included within accounts payable in the consolidated balance sheets, totaled $ 17.8 million and $ 23.6 million at September 30, 2024 and March 31, 2024, respectively.

The outstanding obligations under this program, included within accounts payable on the consolidated balance sheets, totaled $ 15.0 million and $ 23.6 million at December 31, 2024 and March 31, 2024, respectively.

New accounting guidance

Segment reporting disclosures

In November 2023, the Financial Accounting Standards Board issued new disclosure guidance for reportable segments.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued new disclosure guidance for reportable segments.

The new guidance will require disclosure of significant segment expenses, which are expenses that are (i) significant to the segment, (ii) regularly provided to the chief operating decision maker (“CODM”) and (iii) included in the reported measure of segment profit or loss.

3 unchanged sentences

The Company is currently evaluating the new disclosures, but does not expect the guidance will have a material impact on its consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued new guidance that will require additional disclosure regarding the nature of expenses presented within expense captions on the consolidated statements of operations and selling expenses.

The new disclosure requirements will become effective for the Company’s fiscal 2028 annual financial statements.

The Company is currently evaluating the new disclosures, but does not expect the guidance will have a material impact on its consolidated financial statements.

MODINE MANUFACTURING COMPANY

9 unchanged sentences

Since the date of the acquisition, the Company has reported the financial results of the Scott Springfield Manufacturing business within the Climate Solutions segment.

For the three and six months ended September 30, 2024, the Company included $ 53.4 million and $ 93.1 million of net sales, respectively, within its consolidated statements of operations attributable to Scott Springfield Manufacturing.

For the three and nine months ended December 31, 2024, the Company included $ 73.6 million and $ 166.7 million of net sales, respectively, within its consolidated statements of operations attributable to Scott Springfield Manufacturing.

The Company has completed the purchase price allocation for its acquisition of Scott Springfield Manufacturing.

14 unchanged sentences

Three months ended

Six months ended

September 30, 2023

Nine months ended

December 31, 2023

Net earnings attributable to Modine

5 unchanged sentences

The pro forma information includes adjustments for:

i) amortization and depreciation expense totaling approximately $ 2.0 million and $ 5.0 million for the three and six months ended September 30, 2023, respectively, for acquired tangible and intangible assets, (ii) estimated quarterly interest expense of $ 1.5 million resulting from acquisition-related borrowings, and (iii) the estimated income tax impacts related to the pro forma adjustments, considering the statutory tax rates within Canada.

The pro forma financial information does not reflect any expected revenue or cost synergies.

i) amortization and depreciation expense totaling approximately $ 2.0 million and $ 7.0 million for the three and nine months ended December 31, 2023, respectively, for acquired tangible and intangible assets, (ii) estimated quarterly interest expense of $ 1.5 million resulting from acquisition-related borrowings, and (iii) the estimated income tax impacts related to the pro forma adjustments, considering the statutory tax rates within Canada.

The pro forma financial information does not reflect revenue or cost synergies.

Acquisition of Napps Technology Corporation

2 unchanged sentences

The Company has reported the financial results of the Napps business within the Climate Solutions segment since the date of the acquisition.

Disposition of Germany automotive businesses

Disposition of automotive businesses in Germany

In October 2023, the Company sold three automotive businesses based in Germany (the “disposal group”) to affiliates of Regent, L.P.

Prior to the disposition, the Company reported the financial results of the disposal group within its Performance Technologies segment.

Net sales of the disposal group included within the Company’s consolidated statement of operations for the three and six months ended September 30, 2023 totaled $ 21.9 million and $ 46.2 million, respectively.

Net sales of the disposal group included within the Company’s consolidated statement of operations for the three and nine months ended December 31, 2023 totaled $ 8.0 million and $ 54.2 million, respectively.

Pending disposition of facilities in Germany

In December 2024, the Company signed a definitive agreement to sell its technical service center and administrative support facility in Germany to a real estate investment firm for € 11.5 million ( $ 11.9 million).

Earlier this fiscal year, the Company closed the technical service center and reduced headcount in light of the sale of three automotive businesses in Germany during fiscal 2024.

The Company expects the sale transaction will close during the first half of fiscal 2026, subject to remaining closing conditions.

The Company expects to record a gain on sale, net of costs to sell, of approximately $ 3.0 million when the transaction is completed.

As of December 31, 2024, the Company classified $ 7.8 million of building and related assets expected to transfer to the buyer as held for sale and presented them within other current assets on its consolidated balance sheet.

MODINE MANUFACTURING COMPANY

8 unchanged sentences

The disaggregated revenue information presented in the tables below for fiscal 2024 has been recast to be comparable with the fiscal 2025 presentation.

Three months ended September 30, 2024

Three months ended September 30, 2023

Three months ended December 31, 2024

Three months ended December 31, 2023

Product groups:

11 unchanged sentences

(In millions, except per share amounts)

Six months ended September 30, 2024

Six months ended September 30, 2023

Nine months ended December 31, 2024

Nine months ended December 31, 2023

Product groups:

10 unchanged sentences

Contract assets and contract liabilities from contracts with customers were as follows:

September 30, 2024

December 31, 2024

March 31, 2024

1 unchanged sentence

Contract liabilities

Contract assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed.

The $ 1.6 million increase in contract assets during the first six months of fiscal 2025 primarily resulted from increases in contract assets for revenue recognized over time and in capitalized costs related to the Company’s fulfillment of its performance obligations.

Contract liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for data center cooling products and customer-owned tooling.

The $ 27.5 million decrease in contract liabilities during the first six months of fiscal 2025 primarily resulted from the Company’s satisfaction of performance obligations under contracts that had required advanced payments, largely associated with long inventory lead times.

Contract assets, included within other current assets on the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed.

The $ 1.6 million decrease in contract assets during the first nine months of fiscal 2025 primarily resulted from decreases in capitalized costs related to the Company’s fulfillment of its performance obligations, partially offset by an increase in contract assets for revenue recognized over time.

Contract liabilities, included within other current liabilities on the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for data center cooling products and customer-owned tooling.

The $ 35.3 million decrease in contract liabilities during the first nine months of fiscal 2025 primarily resulted from the Company’s satisfaction of performance obligations under contracts that had required advanced payments, largely associated with long inventory lead times.

MODINE MANUFACTURING COMPANY

16 unchanged sentences

Pension cost included the following components:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Interest cost

2 unchanged sentences

Net periodic benefit cost

During the six months ended September 30, 2024, the Company contributed $ 6.5 million to its U.S.

During the nine months ended December 31, 2024, the Company contributed $ 6.5 million to its U.S.

pension plan.

The Company did no t make cash contributions to its U.S.

pension plan during the nine months ended December 31, 2023.

In June 2024, the Company approved the termination of its U.S.

10 unchanged sentences

The Company calculates compensation expense based upon the fair value of the awards at the time of grant and subsequently recognizes expense ratably over the respective vesting periods of the stock-based awards.

The Company recognized stock-based compensation expense of $ 5.6 million and $ 3.1 million for the three months ended September 30, 2024 and 2023, respectively.

The Company recognized stock-based compensation expense of $ 9.8 million and $ 4.6 million for the six months ended September 30, 2024 and 2023, respectively.

During the first six months of fiscal 2025, the Company granted performance-based stock awards and restricted stock awards.

The Company recognized stock-based compensation expense of $ 6.9 million and $ 3.1 million for the three months ended December 31, 2024 and 2023, respectively.

The Company recognized stock-based compensation expense of $ 16.7 million and $ 7.7 million for the nine months ended December 31, 2024 and 2023, respectively.

During the first nine months of fiscal 2025, the Company granted performance-based stock awards and restricted stock awards.

The performance metrics for the performance-based stock awards are based upon a target three -year average cash flow return on invested capital and a target three -year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the performance period ending March 31, 2027.

The weighted-average fair value of stock-based compensation awards granted during the six months ended September 30, 2024 and 2023 were as follows:

Six months ended September 30,

The weighted-average fair value of stock-based compensation awards granted during the nine months ended December 31, 2024 and 2023 were as follows:

Nine months ended December 31,

Performance stock awards

Restricted stock awards

As of September 30, 2024, unrecognized compensation expense related to non-vested stock-based compensation awards, which will be recognized as expense over the remaining service periods, was as follows:

As of December 31, 2024, unrecognized compensation expense related to non-vested stock-based compensation awards, which will be recognized as expense over the remaining service periods, was as follows:

Weighted-Average

4 unchanged sentences

Stock options

Restructuring Activities

During the first six months of fiscal 2025, restructuring and repositioning expenses primarily consisted of severance expenses recorded in the Performance Technologies segment.

These severance charges were primarily recorded in Europe and include severance related to the closure of a technical service center and other targeted headcount reductions.

In addition, as part of its transformational initiatives supported by 80/20 principles, the Company is taking steps to optimize the efficiency of its supply chain and manufacturing processes in order to improve profit margins in the Climate Solutions and Performance Technologies segments.

These restructuring activities have included transferring the production and warehousing for certain product lines among its facilities.

MODINE MANUFACTURING COMPANY

1 unchanged sentence

(In millions, except per share amounts)

During the first six months of fiscal 2024, restructuring and repositioning expenses primarily consisted of equipment transfer costs in the Climate Solutions and Performance Technologies segments.

Restructuring Activities

During the first nine months of fiscal 2025, restructuring and repositioning expenses primarily consisted of severance expenses, the majority of which were recorded in the Performance Technologies segment.

The Performance Technologies severance charges were primarily recorded in Europe and North America and include severance related to the closure of a European technical service center and other targeted headcount reductions intended to reduce selling, general and administrative (“SG&A”) and operational expenses.

These restructuring activities have included transferring the production and warehousing for certain product lines among its facilities.

During the first nine months of fiscal 2024, restructuring and repositioning expenses primarily consisted of equipment transfer costs and severance expenses in the Climate Solutions and Performance Technologies segments.

Restructuring and repositioning expenses were as follows:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Employee severance and related benefits

3 unchanged sentences

Changes in accrued severance were as follows:

Three months ended September 30,

Three months ended December 31,

Beginning balance

Reclassified as held for sale (a)

Additions (a)

Effect of exchange rate changes

Ending balance

Six months ended September 30,

Nine months ended December 31,

Beginning balance

Reclassified as held for sale (a)

Additions (a)

Disposition of businesses (b)

Effect of exchange rate changes

Ending balance

(a) The Company reclassified the assets and liabilities of three businesses based in Germany as held for sale on the September 30, 2023 balance sheet.

These businesses were subsequently sold in October 2023.

See Note 2 for additional information regarding the sale.

(a) The fiscal 2025 amounts exclude $ 1.4 million of non-cash severance expense resulting from the accelerated vesting of certain stock-based compensation awards in connection with restructuring actions.

MODINE MANUFACTURING COMPANY

1 unchanged sentence

(In millions, except per share amounts)

(b) The Company sold three automotive businesses based in Germany during the third quarter of fiscal 2024.

Prior to the sale, the Company reclassified the severance liability related to these businesses as held for sale.

See Note 2 for additional information regarding the sale.

Other Income and Expense

Other income and expense consisted of the following:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Interest income

1 unchanged sentence

Net periodic benefit cost (b)

Total other (expense) income - net

Total other income (expense) – net

(a) Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on certain foreign currency exchange contracts.

(b) Net periodic benefit cost for the Company’s pension and postretirement plans is exclusive of service cost.

The Company’s effective tax rate for the three months ended September 30, 2024 and 2023 was 30.1 percent and 21.4 percent, respectively.

The Company’s effective tax rate for the six months ended September 30, 2024 and 2023 was 29.2 percent and 23.0 percent, respectively.

The Company’s effective tax rate for the three months ended December 31, 2024 and 2023 was 24.0 percent and 18.6 percent, respectively.

The Company’s effective tax rate for the nine months ended December 31, 2024 and 2023 was 27.7 percent and 21.6 percent, respectively.

The effective tax rates for fiscal 2025 are higher than the prior year, primarily due to changes in the mix and amount of foreign and U.S.

In addition, the effective tax rates for the prior-year periods were favorably impacted by the release of a $ 1.8 million unrecognized tax benefit during the second quarter of fiscal 2024, due to a lapse in statute of limitations.

The effective tax rates for the prior-year periods were also favorably impacted by a $ 3.1 million tax benefit related to the sale of three automotive businesses based in Germany during the third quarter of fiscal 2024.

See Note 2 for additional information regarding the sale.

In addition, the effective tax rate for the first nine months of the prior-year period was favorably impacted by the release of a $ 1.8 million unrecognized tax benefit during the second quarter of fiscal 2024, due to a lapse in statute of limitations.

The Company records valuation allowances against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future.

Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed.

This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies.

This determination involves judgment and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies.

In addition, the Company considers the duration of statutory carryforward periods and historical financial results.

At September 30, 2024, valuation allowances against deferred tax assets in the U.S.

At December 31, 2024, valuation allowances against deferred tax assets in the U.S.

and in certain foreign jurisdictions totaled $ 46.5 million and $ 22.5 million, respectively.

2 unchanged sentences

and certain foreign jurisdictions, could necessitate the establishment of further valuation allowances.

MODINE MANUFACTURING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share amounts)

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate.

3 unchanged sentences

The Company does not anticipate a significant change in unrecognized tax benefits during the remainder of fiscal 2025.

MODINE MANUFACTURING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share amounts)

Earnings Per Share

The components of basic and diluted earnings per share were as follows:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Net earnings attributable to Modine

5 unchanged sentences

Net earnings per share – diluted

There were no anti-dilutive securities outstanding for the three and six months ended September 30, 2024 and the three months ended September 30, 2023.

For the six months ended September 30, 2023, the Company excluded 0.1 million of restricted stock awards for the calculation of diluted earnings per share because they were anti-dilutive.

There were no securities that were anti-dilutive in the periods presented above.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following:

September 30, 2024

December 31, 2024

March 31, 2024

2 unchanged sentences

Total cash, cash equivalents and restricted cash

Restricted cash, which is reported within other current assets and other noncurrent assets in the consolidated balance sheets, consists primarily of deposits for contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.

Restricted cash, which is reported within other current assets and other noncurrent assets on the consolidated balance sheets, consists primarily of deposits for contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.

Inventories consisted of the following:

September 30, 2024

December 31, 2024

March 31, 2024

8 unchanged sentences

Property, plant and equipment, including depreciable lives, consisted of the following:

September 30, 2024

December 31, 2024

March 31, 2024

5 unchanged sentences

Net property, plant and equipment

The December 31, 2024 property, plant and equipment in the table above excludes amounts classified as held for sale.

See Note 2 for additional information.

Goodwill and Intangible Assets

3 unchanged sentences

As a result of the segment realignment during the first quarter of fiscal 2025, the Company’s goodwill now resides entirely within the Climate Solutions segment.

The following table presents a roll forward of the carrying value of goodwill from March 31, 2024 to September 30, 2024.

The following table presents a roll forward of the carrying value of goodwill from March 31, 2024 to December 31, 2024.

Climate Solutions

2 unchanged sentences

Effect of exchange rate changes

Goodwill, September 30, 2024

Goodwill, December 31, 2024

Intangible assets consisted of the following:

September 30, 2024

December 31, 2024

March 31, 2024

2 unchanged sentences

Total intangible assets

The Company recorded amortization expense of $ 6.9 million and $ 2.0 million for the three months ended September 30, 2024 and 2023, respectively.

The Company recorded amortization expense of $ 13.8 million and $ 4.0 million for the six months ended September 30, 2024 and 2023, respectively.

The Company estimates that it will record approximately $ 14.0 million of amortization expense during the remainder of fiscal 2025.

The Company estimates that it will record approximately $ 18.0 million, $ 16.0 million, $ 16.0 million, and $ 15.0 million of annual amortization expense in fiscal 2026 through 2029, respectively.

MODINE MANUFACTURING COMPANY

1 unchanged sentence

(In millions, except per share amounts)

The Company recorded amortization expense of $ 6.9 million and $ 2.1 million for the three months ended December 31, 2024 and 2023, respectively.

The Company recorded amortization expense of $ 20.7 million and $ 6.1 million for the nine months ended December 31, 2024 and 2023, respectively.

The Company estimates that it will record approximately $ 7.0 million of amortization expense during the remainder of fiscal 2025.

The Company estimates that it will record approximately $ 17.0 million, $ 15.0 million, $ 15.0 million, $ 15.0 million, and $ 13.0 million of annual amortization expense in fiscal 2026 through 2030, respectively.

Product Warranties

Changes in accrued warranty costs were as follows:

Three months ended September 30,

Three months ended December 31,

Beginning balance

1 unchanged sentence

Adjustments to pre-existing warranties

Reclassified as held for sale (a)

Effect of exchange rate changes

Ending balance

Six months ended September 30,

Nine months ended December 31,

Beginning balance

1 unchanged sentence

Adjustments to pre-existing warranties

Reclassified as held for sale (a)

Disposition of businesses (a)

Effect of exchange rate changes

Ending balance

(a) The Company reclassified the assets and liabilities of three businesses based in Germany as held for sale on the September 30, 2023 balance sheet.

These businesses were subsequently sold in October 2023.

(a) The Company s old three automotive businesses based in Germany during the third quarter of fiscal 2024.

Prior to the sale, the Company reclassified the warranty liability related to these businesses as held for sale.

See Note 2 for additional information regarding the sale.

5 unchanged sentences

Balance Sheet Location

September 30, 2024

December 31, 2024

March 31, 2024

12 unchanged sentences

Long-term debt

(a) Finance right of use ( “ ROU ” ) assets were recorded net of accumulated amortization of $ 4.0 million and $ 3.7 million as of September 30, 2024 and March 31, 2024, respectively.

The increases in operating lease ROU assets and liabilities from March 31, 2024 to September 30, 2024 primarily resulted from the commencement of a 10 - year manufacturing facility lease within the Climate Solutions segment.

The Company entered into this new lease to increase production capacity for data center products.

(a) Finance right of use ( “ ROU ” ) assets were recorded net of accumulated amortization of $ 4.0 million and $ 3.7 million as of December 31, 2024 and March 31, 2024, respectively.

The increases in operating lease ROU assets and liabilities from March 31, 2024 to December 31, 2024 primarily resulted from the commencement of new facility leases.

The Company is increasing its production capacity to support organic growth opportunities, including within its Data Center Cooling business.

Components of lease expense

The components of lease expense were as follows:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Operating lease expense (a)

3 unchanged sentences

Total lease expense

(a) For three and six months ended September 30, 2024, operating lease expense included short-term lease expense of $ 1.8 million and $ 3.1 million, respectively.

For three and six months ended September 30, 2023, operating lease expense included short-term lease expense of $ 1.4 million and $ 2.9 million, respectively.

(a) For the three and nine months ended December 31, 2024, operating lease expense included short-term lease expense of $ 1.7 million and $ 4.8 million, respectively.

For the three and nine months ended December 31, 2023, operating lease expense included short-term lease expense of $ 1.4 million and $ 4.3 million, respectively.

Variable lease expense was not significant.

During July 2024, the Company signed a 10-year operating lease of a manufacturing facility with future lease payments totaling approximately $ 12.0 million which is expected to commence in the third quarter of fiscal 2025.

MODINE MANUFACTURING COMPANY

2 unchanged sentences

Long-term debt consisted of the following:

September 30, 2024

December 31, 2024

March 31, 2024

12 unchanged sentences

In addition, the credit agreement provides for shorter-duration swingline loans.

Borrowings under the revolving credit, swingline and term loan facilities bear interest at a variable rate, based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below.

At September 30, 2024, the weighted-average interest rate for revolving credit facility borrowings and the term loans was 6.3 and 5.8 percent, respectively.

Borrowings under the revolving credit, swingline and term loan facilities bear interest at variable rates, based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below.

At December 31, 2024, the weighted-average interest rate for revolving credit facility borrowings and the term loans was 5.8 and 5.5 percent, respectively.

Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline facilities as long-term and short-term debt, respectively, on its consolidated balance sheets.

At September 30, 2024, the Company’s borrowings under its revolving credit and swingline facilities totaled $ 65.0 million and $ 13.0 million, respectively, and domestic letters of credit totaled $ 6.2 million.

As a result, available borrowing capacity under the Company’s revolving credit facility was $ 190.8 million as of September 30, 2024.

At December 31, 2024, the Company’s borrowings under its revolving credit and swingline facilities totaled $ 56.0 million and $ 2.0 million, respectively, and domestic letters of credit totaled $ 6.2 million.

As a result, available borrowing capacity under the Company’s revolving credit facility was $ 210.8 million as of December 31, 2024.

At March 31, 2024, the Company’s borrowings under its revolving credit and swingline facilities totaled $ 90.0 million and $ 2.0 million, respectively.

The Company also maintains credit agreements for its foreign subsidiaries.

The outstanding short-term borrowings related to these foreign credit agreements totaled $ 1.0 million and $ 10.0 million at September 30, 2024 and March 31, 2024, respectively.

The outstanding short-term borrowings related to these foreign credit agreements totaled $ 0.4 million and $ 10.0 million at December 31, 2024 and March 31, 2024, respectively.

MODINE MANUFACTURING COMPANY

1 unchanged sentence

(In millions, except per share amounts)

Indebtedness under the Company’s credit agreement and Senior Note agreements is secured by liens on substantially all domestic assets.

Indebtedness under the Company’s credit agreement and Senior Notes is secured by liens on substantially all domestic assets.

These agreements further require compliance with various covenants that may limit the Company’s ability to incur additional indebtedness;

5 unchanged sentences

The Company must also maintain a ratio of Adjusted EBITDA of at least three times consolidated interest expense.

As of September 30, 2024, the Company was in compliance with its debt covenants.

As of December 31, 2024, the Company was in compliance with its debt covenants.

The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable maturities.

As of September 30, 2024 and March 31, 2024, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $ 124.9 million and $ 120.9 million, respectively.

As of December 31, 2024 and March 31, 2024, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $ 116.6 million and $ 120.9 million, respectively.

The fair value of the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy.

5 unchanged sentences

In instances where a range of loss can be reasonably estimated for a probable environmental liability, but no amount within the range is a better estimate than any other amount, the Company accrues the minimum of the range.

The Company’s accruals for environmental matters totaled $ 17.4 million and $ 17.6 million as of September 30, 2024 and March 31, 2024, respectively.

The Company’s accruals for environmental matters totaled $ 17.2 million and $ 17.6 million as of December 31, 2024 and March 31, 2024, respectively.

During the third quarter of fiscal 2024, the Company increased its remediation accrual related to a former manufacturing facility in the U.S.

by $ 1.0 million.

As additional information becomes available regarding environmental matters, the Company will re-assess the liabilities and revise the estimated accruals, if necessary.

10 unchanged sentences

Changes in accumulated other comprehensive loss were as follows:

Three months ended September 30, 2024

Six months ended September 30, 2024

Three months ended December 31, 2024

Nine months ended December 31, 2024

Benefit Plans

1 unchanged sentence

Beginning balance

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

Reclassifications:

1 unchanged sentence

Realized gains - net (b)

Total other comprehensive income

Total other comprehensive income (loss)

Ending balance

Three months ended September 30, 2023

Six months ended September 30, 2023

Three months ended December 31, 2023

Nine months ended December 31, 2023

Benefit Plans

1 unchanged sentence

Beginning balance

Other comprehensive income (loss) before reclassifications

Other comprehensive income before reclassifications

Reclassifications:

Amortization of unrecognized net loss (a)

Realized gains - net (b)

Realized losses (gains) - net (b)

Unrecognized net pension gain in disposed businesses (c)

Total other comprehensive income (loss)

3 unchanged sentences

(b) Amounts represent net gains and losses associated with cash flow hedges that were reclassified to net earnings.

(c) As a result of the sale of three automotive businesses based in Germany, the Company wrote-off $ 0.6 million of net actuarial gains related to the disposal group’s pension plans.

See Note 2 for additional information regarding the sale.

MODINE MANUFACTURING COMPANY

7 unchanged sentences

The following is a summary of net sales, gross profit and operating income by segment:

Three months ended September 30,

Three months ended December 31,

Inter-segment

4 unchanged sentences

Corporate and eliminations

Six months ended September 30,

Nine months ended December 31,

Inter-segment

4 unchanged sentences

Corporate and eliminations

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Gross profit:

6 unchanged sentences

(In millions, except per share amounts)

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

Operating income:

5 unchanged sentences

The following is a summary of segment assets, comprised entirely of trade accounts receivable and inventories, and other assets:

September 30, 2024

December 31, 2024

March 31, 2024

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements