Modine Manufacturing (MOD) 8-K Modine Reports Preliminary Results of Operations for Full Year and Fourth Quarter of Fiscal 2007

Modine Manufacturing Company

Modine Fiscal 2007 Earnings

Forward-Looking Statements

Statements made in this presentation regarding future matters are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements,
including those regarding a positive impact from new business programs, accretive acquisitions,
acceleration of technology, achievement of cost reductions, expansion into niche markets, refocus in
global manufacturing footprint, increased cash flow and continued financial returns are based on
Modine's current expectations. Modine's actual results, performance or achievements may differ
materially from those expressed or implied in these statements because of certain risks and
uncertainties, including international economic changes and challenges; market acceptance and
demand for new products and technologies; the ability of Modine to integrate the acquired operations
and employees in a timely and cost-effective manner; the ability of Mod
ine, its customers and
suppliers to achieve projected sales and production levels; unanticipated product or manufacturing
difficulties; and other factors affecting the company’s business prospects discussed in filings made
by the company, from time to time, with the SEC including the factors discussed item 1A, Risk
Factors, and in the "Cautionary Factors" section in Item 7 of the company's most recent Annual Report
on Form 10-K and its periodic reports on Form 10-Q. We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new information, future events or otherwise. 

In addition, with regard to non-GAAP financial information, Modine provides definitions and a
reconciliation of such information to GAAP financial information in the earnings press release that
accompanies these slides.

Modine's financial results, as reported herein, are preliminary and subject to possible adjustments.

2

Key Takeaways

•More forward transparency

•Significant headwinds

•Material costs (aluminum, copper, nickel)

•Customer pricing

•Repositioning and globalization costs

•North American truck market

•Strong balance sheet and cash flow

•Operations performance improvements

•Securing new business - diversification

•Full year fiscal 2008 - expect improved operating margins

•Great progress - changing the business model

–Full year fiscal 2007 - Strategic transition

–Full year fiscal 2008 - Financial transition

•Future of the company - BRIGHT

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Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Drives significant new business wins 

Changing the Business Model

•Organizational changes

•Manufacturing realignment

•Rationalization

– Market/customer/product

•Technology acceleration

Full Year Progress

4

Drives significant new business wins 

Organizational Changes

New organization structure (Nov. 2006)

•Five global product groups

•Regional operations

•Global / regional customer focus

Key global support staffs

•New products and R&D - Pull / Push

•Information systems - global SAP platform

•Purchasing
(low cost countries, supplier consolidation, standardization)

SG&A cost reduction - $20 million

Further actions under review

Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Full Year Progress

5

Drives significant new business wins 

Manufacturing Realignment

New capacity in low cost countries

(Regional growth and LCC sourcing)

–China (2) - India - Hungary - Mexico

North American capacity reduction and “scale” expansion

•Four closings announced

•Consolidation into existing plants

•20 percent reduction in floor space

Other actions

•Closed Taiwan plant

•Purchased Brazil joint venture

Modine Production System

•Focus - alignment, leadership, speed

•Multiple tools

–PDCA, 8D, Kaizen, value stream mapping, Six Sigma

Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Full Year Progress

6

Drives significant new business wins 

Market, Customer and Product Rationalization

Commercial discipline

•Walk aways - strategic and profitability hurdles

•Contract accountability

•Hardship/surcharge pricing - materials

•Leverage technology and diversification

•Expanding partnerships

Market and product evaluation

•e.g., Electronics Cooling business

•Automotive - 36 to 25 percent

•Acquisitions

–Four in the past three years

•Exit non-differentiating products

Making choices

•Profitability (ROACE) over growth

Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Full Year Progress

7

Drives significant new business wins 

Technology Acceleration

World-class facilities

Expanding predictive modeling capacity (LCC)

New structure

•Applications • Pull • Push

•Product roadmaps

Environmental “green” opportunities on the horizon

•Engine systems - air-cooled EGR

•High efficiency chillers

•Solid oxide fuel cell content

–Distributed power - BloomEnergy

•Next generation powertrain components

↑performance weight cost

Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Full Year Progress

8

AsiaAmericas

EuropeCommercial HVAC

•Significant impact of raw material and price pressures -
($1.03)

•Repositioning and restructuring costs - ($0.27)

•Tax rate and planning benefits - $0.47

0

$1.79

$0.99

$1.04

$

* From continuing operations

$1.78

Earnings Per Share*

$1.31

$1.8 Billion

Sales* 

$1.80B

0

Five Year Sales and Earnings

9

Commercial
Products and
New Markets

Automotive/Light
Truck 25%

Truck, Heavy duty,
Off-highway

Markets Today 
($1.8B Revenues)

Other 4%

Commercial Products 9%

Agriculture and
Construction
14%

Automotive/Light
Truck 36%

Medium/Heavy Truck
and Bus 37%

Medium/Heavy Truck and Bus

Automotive/Light Truck

Markets Five Years

($2.2B+ Revenues - organic only)

Acquisitions add to growth

Growth goal - 9-13 percent

4-6 percent organic

5-7 percent acquisition

Europe

Americas

Asia

Europe

Americas

Asia

?

Fuel Cell

Sales by Market 

10

\

•Volume - strength of the
North American truck and
global off-highway markets

•Operating performance -
improved asset utilization, cost
reduction initiatives, and
purchasing savings

•Net impact of commodity
prices - unprecedented rise
in copper, aluminum, and
nickel and lag impact

•Customer price downs -
1.5 percent

•Repositioning costs

•Other - warranty, mix,
non-material cost escalations

E.P.S.

Full Year Fiscal 2007 Earnings Per Share Analysis

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E.P.S.

•Volume - reduced North
American truck and
automotive volumes

•Net impact of higher
commodity prices -
gaining traction on material
pass-through

•Repositioning - North
American plant closing
related costs

•Warranty costs - two
program-related issues in
Europe

Fiscal 2007 Fourth Quarter Earnings Per Share Analysis

12

Metals Pricing and Sensitivity

13

25%

21%

22%

21%

19%

16%

18-20 percent long-term
gross margin goal

Our Response

18-20%

16.1-16.5%

Gross Margin Trend

•Willing to slow growth to increase
profitability

•Portfolio rationalization

–Customers

–Businesses

•Electronics Cooling

–Must meet profitability and
strategic hurdles

•Manufacturing base

–Realignment

–Modine Production System

•Product and materials standardization

•Pricing/commercial negotiations

•New, next generation technology
introductions

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Strong Cash Flow

Allows for profitable investments and excess cash returns to shareholders

Priority Uses of Cash 

(listed in order)

•Invest for profitable
growth

•Acquisitions

•Dividends/share
repurchases

$180M

Cash Flow From Operations 

$ Millions

Net Income

$102M

Five Year Cash Flow/Priority Uses of Cash

15

$ 

Debt

$ Millions

10%

20%

30%

15%

25%

5%

$179

Debt to Capital
%

Debt to
Capital

0%

35%

40%

Five Year Financial Position

Debt 

•85 percent fixed - average 5.33
percent

•Higher level due to acquisitions
and share repurchases

Debt to Capital

•Ratio of 26.7 percent

•Target is to remain below 40
percent

Other Financial Obligations

•U.S. defined benefit plan funding
improved in fiscal 2007 - $12 million

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Sales	Americas – down due to lower U.S. truck volumes – assume 220,000 build – ramp-up of new customer 2nd half
	Asia – up from new product wins
	Europe – up from increased volumes
	Commercial Products – up on market strength
Metals pricing	Assumptions based on recent market prices

These expectations are subject to a number of assumptions and other factors, and would change significantly if the
assumptions change, or if developments transpire outside the company’s control.

Fiscal 2008 Outlook

Guidance Summary
	Fiscal 2007			Fiscal 2008
				Low		High
Net sales	$	1.76 billion		$	1.65 billion	$	1.70 billion
Gross margin (%)		16.0			16.1		16.5
Operating margin (%)		2.3			2.8		3.6
Pre-tax earnings	$	39 million		$	36 million	$	50 million
Tax rate (%)		(7.6	)		29		25
Earnings per fully diluted share	$	1.31		$	0.80	$	1.20
Capital spending	$	83 million		$	85 million	$	105 million
Depreciation	$	71 million		$	75 million	$	80 million

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Drives significant new business wins 

Changing the Business Model

•Organizational changes

•Manufacturing realignment

•Rationalization

– Market/customer/product

•Technology acceleration

Gross margins 18-20%

Growth 9-13%

ROACE 11-12%

Full Year Progress

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