Earnings call transcript Q4 2023

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Operator

Good morning, ladies and gentlemen, and welcome to Modine's Fourth Quarter and Full Year Fiscal 2023 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.

And I would now like to turn the conference over to your host, Ms. Treasurer Relations. President, Vice Powers, and Investor Kathy Thank you, Ms. you may begin. Powers,

Kathy Powers

results. joining and and call XXXX thank morning, our full you fiscal quarter Good fourth for conference Modine's to year discuss

Brinker, I'm our and joined Lucareli, Vice Financial Executive and our call on by Mick President Chief Executive this and Officer; Chief Officer. President Neil

website, using file today's the our presentation, be or by posted link section webcast the modine.com. accessing can Relations be will We PDF which slides for the on Investor through accessed either of

X as earnings Slide our forward-looking well statements. Securities notice This call forward-looking On the in is regarding outlined and our will as Exchange company's with contain release statements filings our Commission. in as

is With call to to my the turn pleasure that, Neil. it over

Neil Brinker

Thank you, Kathy, and good morning, everyone.

We quarter of with record from up up this and reported X% basis. and million, of our We delivered saw $XXX on year. sales prior up EBITDA year clearly sales constant generated that currency adjusted adjusted XX% XX% cash We the of This free our in record results resulted million, in EBITDA $XX surpassed EPS. the performance of and expectations adjusted and a million $X.XX history. highest $XX flow strong

that focused how better sound to testament and unlocked to a business, approach particularly were actions higher instead a example company. the these remarkable the value result we've taken transform not over of we've that of especially is is It the across driven by What our years can two strong is margins. but conditions, an internal economic gains were the returns the XX/XX past drive

Investor by streamlining infrastructure groups. world. this our focused structures past engineering where XXXX. in purpose introduced in segments, and establishing We statement, and our accomplished product June, cleaner, Day we back, announcing Taking reporting a step a deal great market-based held Analyst our healthier fiscal started change year we first a We an with the a

growth revenue for towards over next say setting this clear shared past of the goals strategies of plan even and and path their five ahead a financial are we happy leadership progress them. running on targets both team and I'm their presented those senior outstanding how these to margin made years. Our many targets improvement, meet year we that to

our this We Overall, have Technologies mindset, a We complexity started immediately improved taken. are we our best the where started which past also in We XX/XX of XX/XX and established shift year, thus the from far segment the our and incremental Climate expect results. prioritizing an within what created journey segment culture achieved out has the reducing XX/XX began and this Performance last through organization. we already in fall rolling Solutions fiscal with are actions journey proud opportunities. we year next benefits seeing

ahead. so remarkable and year XX% year. up generated and a margin, X.X% our company's look sales prior flow points XX% full a This adjusted million breaking For cash million. free $XXX of were EPS of the from to EBITDA EBITDA the up to forward and of I'm basis $X.XX. our up was the record year, accomplishments $XX adjusted We proud equates to reported the XXX

Investor in across gains Day. revenue groups, from the the goal Annual Please with the and prior X% prior largest year data sales to their Climate up XXXX product fantastic the like had highlight increased presented for turn XX% centers, Slide the would Full some accomplishments. year. was well which above segment to year, The Solutions I a year of to X% XX% fiscal X. our increased from at

our new chiller A including good to portion America, of this gain North related from is plant. sales

product serve to data fiscal gains us has our the been data us XXXX. to North The well the allowing center sale last quarter, a full bringing chiller better and digit mentioned chiller in double we market supplier further are As expecting product very systems center to makes America co-location received I customers.

Solutions Climate year expansion. the past in success segment was this Another margin

points one this For prior the them XX% previously This heat of planned. the XX.X%, full target year. aspects earlier achieve of XX/XX A many products for the improvements meets already by year, the in group, our improvements XXXX, who in segment on, margins transfer year segment their resulted of large basis than up operations. the EBITDA helping this margin embraced reported from fiscal XX% from adjusted of part gain of to our end XXX early

are recently customers demand I growth this our pump in at Serbia quarter, that mentioned of campus to We that manufacturing increasing we are will the we looking capacity. us market. the sales expanding in we Last to and announced products to meet seeing heat in allow transfer heat be

Over double. next are three more expecting the these sales years, to we than

from to targets Looking operational ahead, strong the is being all improve improving gross supply The to processes and from production this fueled work margin. and enhancing simplify hard year. by strong segment's and markets healthy as focus and cost improve to this our productivity This leadership team momentum more is commercial a backlog, past we includes process. further shifting work control chain

is product development as to on new we where on focus use when our invest make developing decisions growth technology XX/XX Our to roadmaps.

focus look their to building They early and and they year margin acquisition of proud the reached goal. is team as product gearing strategies. further development initial business ahead our make very supporting towards a target pipeline technology a next improvements its on addition, I'm are team. this In with up

in groups segment sales Sales turn gains air coming the this Technologies products cooled largest all Please from prior also The market. genset XX% year the performance Performance with Slide of delivered strong year, to full to with year. up revenue product the X. increased from

adjusted year, prior of fourth margin points an an higher X.X% the X.X%, than improvement points. XXX margin of basis The reported full the segment of basis PT XXX quarter EBITDA for The EBITDA year. reported adjusted segment

margin has each in is first quarter building. improvement sequential The PT quarter. year, of shown segment this the momentum clearly the Since this segment

part and improved on volumes Investor reach is team product targets in our large strong mix. due track Our to to margin Day

Our years. over few PT due with supply to in continue the markets be last and chain backlogs the underproduction ongoing segment steady to challenges

construction market equipment continued are and in expect certain gensets, softening sectors. growth vehicles, although seeing We we commercial in

We vehicles continue with the internal combustion and driving to development incentives from regulations zero-emission focus engine government strong on EV. to transition for the market

have cooling recently introductions, new product fuel market. several We and made condenser BTMS, including for new fuel cooled applications stack a cell the heavy-duty for liquid cell with a package

for one volume. progress made million at revenue over incremental EV of has this integration into nine systems cell programs, $XXX quarter. The Modine the in accelerate to XX program engineering team This brings program new our vehicle with including system cleaner, This to projected from adding products plug-and-play healthier fourth example a the our customers how is chassis, fuel wins markets. timeline allowing just is year, of rapid product great world. another new This these mature to a production bringing is total

a milestone up, or sum was an either hit point XXXX fiscal believe and year, inflection We goals surpassed Modine. them To for I them. aggressive set and

years, few changed our radically significantly we've last our expanding while business long-term the Over commercial opportunities.

clear the of the as sharing We last to a forward line year. sight you we and XXXX all goals greatest unified presented excitement journey fiscal this we reposition continue to vision XXXX have We around enter to with to We you. a with potential. reach look of

segment will to our review I'd financial quarter and like provide Now, Mick, results the for to updates. turn who call the over

Mick Lucareli

everyone. to X results. segment review Neil, Thanks, good Slide turn and to morning, the Please

Climate quarter constant from sales. improved slightly improved Revenue Solutions basis. with earnings X% and was a had X% prior another stellar currency and up year higher the on

the million, $XX sales were American XX% including North up center benefit or Data chiller expansion. of the

market by driven levels, As was products reversion driven heating sales $X by heating versus partially normal sales HVAC&R higher with anticipated, were sales. X% mostly a million, cooler to strong last lower offset The quarter or mild a a winter. down by relatively pre-COVID along year, decline of

year. Sales from or of decreased million transfer prior X% $X heat products the

around As with discussed applications, market combined quarter, to quarter comparisons some strong we last last softness and difficult rationalization an anticipated year. exceptionally XX/XX residential

strong XX.X%. were commercial resulting point XXX We margin by from primarily adjusted X%, positive in as earnings improvement our increased and improvements earnings EBITDA the and very pleased benefits pricing, initiative. mix are driven The to XX/XX a conversion sales basis margin with

explained, margin a previously objectives. about their As segment the performing is meeting of ahead and Solutions Neil well year Climate in schedule is

improvements fiscal these continue expect 'XX. We to in

quarter a constant on to Technologies volume Performance had turn X. XX% XX% also both basis, and from Slide up sales or up great benefiting with a Please currency Revenue was million. improvements. pricing $XX

XX% Europe. solutions or vehicle North up million Advanced our were sales product and in America growth in continued sales electric $X both with

due increased sales $XX and X% to vehicle commercial application million to higher automotive or customers. Liquid-cooled sales

XX% power sales primarily Lastly, $XX from sales applications. increased in demand or customers higher air-cooled off-highway strong to due million, genset stationary or with application

this growth resulting X.X% early into point a XX/XX deep up The XXX are Performance strong was Technology activities and Adjusted team clear in results with earnings the and improvement. XX%, EBITDA a margin basis is quarter.

momentum clearly Neil As improvement discussed, building during the with is fiscal year. Performance sequential the Technologies segment margin

We are see expect segment. the towards improvements as the targets benefits Investor tracking margin we the XX/XX our additional throughout Day rollout continue to ongoing of and from

results. Now, let's to company total Slide review Please turn X.

of X% by by a pricing another volume, up FX growth rate. $XX gains million. added driven Climate and XX%, million Solutions. X% Growth $XX in was were sales Fourth both excluding Revenue higher Commercial $XX impact in or quarter up million, negative Performance resulting primarily and a driven Technologies million. of was materials $X

points, basis primarily gross driven by Our higher XXX and pricing. margin volume improved

due primarily employee year, to prior the from million compensation-related higher $X increased SG&A expenses.

I'm of margin EBITDA that with in basis adjusted fifth improvement $X very increase to was quarter a improvement. of higher This the the year-over-year XX we XX% anticipated quarter or consecutive an and pleased represents report than million. point

certain valuation earnings year. tax of higher share mostly an that note per prior resulted than which basis on tax GAAP of a was benefit $XX to in on which was deferred income reversal due allowance the the million. Please $X.XX, a assets, $X.XX This U.S. was

outlook This U.S. news improved in is and additional earnings the the good reflects

an earnings the allowance fourth restructuring can found and valuation per the reconciliations increase charges, the from of the These share Excluding year. presentation. quarter environmental our XX% non-GAAP impact $X.XX, for be $X.XX adjusted in in this adjustments prior impact was or appendix and of the of

Please to metrics. XX. turn to flow Slide cash Now, moving

cash for headcount including of cash of impact We cash free flow of $XX quarter, negative $XX primarily reductions full generated million the million $XX European year in the of year. last free the the includes in flow payments, fourth resulting year. activities, restructuring announced for cash fiscal The million flow

of debt improved in during $XXX ratio a of Net X.Xx. resulting leverage the $XX by quarter, million million

shares year. another During fiscal the quarter, for we XXX,XXX shares for of a XXX,XXX the total repurchased

quite As initiatives. earnings we a in by and expect driven Modine's acquisition working look and we higher the flow, ready balance fiscal to sheet support remains to continued free year, capital. cash next strong, continued on growth focus our growth

XX Slide our to fiscal outlook. 'XX turn let's Now, for

First, targets presented June. with financial the fiscal our 'XX Day is Investor fully aligned at last

backlogs and strong markets, proceeding also with Climate stable relatively remain growth revenue Solutions. we strong electric and rationalization to markets in We're indoor that in data targeted through we've expect schools, product end XX/XX air deemphasize. most activities expecting centers, vehicles. decreases are are certain volume in areas to We anticipating for quality with chosen Last,

range total the As XX%. company a will of result, revenue in X% to grow we believe

In XX%. the XX% we expect revenue grow to Climate center Solutions data to segment,

we grow year, to revenues As North mid-single residential previously especially backlog we in HVAC&R as mentioned, the America. have the into some market. softness, going particularly digits strong in ongoing market in the a expect We heating anticipate

more commercial the growth this commercial offset in However, refrigeration by and should products, school be heaters. than

product weakness We in heat pump product be will growth, as from strong residential growth to heat ongoing and offset the also somewhat market modest XX/XX actions. applications transfer by rationalization expect

Performance Moving to Technologies.

from in We this XX/XX relatively expect segment. from benefits markets our momentum and stable continued rollout

We and launches range, program systems by components. continued XX% a XX% demand and EV have growth in to the expect to solutions driven advanced rate for

liquid- to business. air-cooled low-margin product XX/XX We expect will we for products growth continue pricing as and out segment. the partially and be rationalization we offset lower throughout additional growth roll Market benefits as by deemphasize

an standpoint, growth in strong we terms anticipate of earnings year and another margin improvement. earnings From

the XX% fiscal We EBITDA be adjusted million, representing to of to expect increase of $XXX $XXX in range 'XX XX%. an million to

That first increasing sequentially show the seasonality improvement. the QX run quarter the to the lowest anticipate we we year. quarter, to quarterly look year-over-year expect fully said, earnings through we then being ongoing some strong rate, and As margin with

capital spending With to with cash approximately flow be flow, anticipate regards further $XX million. in we improvement to free cash

the presentation our expense, depreciation to included attached release. Other assumptions, press in including are and interest taxes, this and and amortization appendices

track with fourth To pleased the results, results Investor in we're fiscal wrap We're very towards the year on fiscal we up, record transformation, revenue quarter long-term and including are margin in targets our and and presented working last Day 'XX. June. with our

in improvement look year of As a result, we to fiscal another forward 'XX.

questions. Neil take will that, and I your With

Operator

question Davidson. Please first your our And comes from with with D.A. Instructions] the [Operator Summerville Matt line question. of proceed

Matt Summerville

how good -- kind And specifically about of Performance on morning. that strategy first here. we to respect be start that follow-up. expect segmentation on calling with deliberate looking that you next What at touched completed, and as kind to attrition the to from me, today process fact XX/XX, inform Wanted Tech should it year thinking as then should analytical talk we go-forward to of kind to you've attrition rationalization, does I How based Excuse pertains revenue it. Thanks. And I what you're given think the now your have business? revenue both businesses? some much it pertains you're a of this

Neil Brinker

they how subsegment as organization into to the with for learning, continue business, is the can have Thanks that it side Performance very those behind more Matt. it, Got the aligned they get This to the so six into they're so intelligence Yes, that I'll and information further months Technologies of want to, question. our verticals. continue business specific say, what we and Neil.

we So, have some ideas.

some to to probably have next be months. within of that able through, firmer and expect would up some the we're line on ranges We I concepts couple working

Matt Summerville

to pivot an those could talk you data seeing and Europe? I'll geographies also North how guidance? the growth much about in you're Can the hyperscale over as in speak centers. kind Maybe versus is markets of you. relative that it. Thank both you rates Got And What to America to if co-location overlay of that? business versus

Neil Brinker

than that the question, majority the the area of gaining the a is data much We're be center Matt. as in where is That is we're of growth winning from a seeing at faster we business Neil is for ramp for in North us. Certainly, up our in area share. growing continues they're We're Thanks is revenue Virginia that that's Europe, it the rate the the That supports this both to core to again. continue business America Europe, Yes, facility market. albeit market. growing.

that we So customers. right partnered We've focus. the have with

technology, their North pull-through that right our and are in the seeing that about have. have customers products have that The to sustainability excited and and both We targets, help we we're we're the America. products we meet Europe

both, faster North growth in side. America the So but it's in

aligned unique behind, is that they're that Relative where the especially still market, looking to co-location we're strong, providing the with customers the solutions we've for.

in our to of in that us that through have front best they're customers in XX/XX our opportunities terms dividends. Our sure focus help starting in actually and of essentially to with making we them pay space grow the is market

and So seeing North Europe is that on as energy America the critical focus field and that growth the in why well. we're

centers, with hyperscaler hyperscaler that On large data customer. we're We're pretty still working there slowdown We're the next-generation connected seeing new well. not any in the with along a product development as and with far we're side, process.

Matt Summerville

one then more just And sneak can I if in. Thanks. maybe

two And them European about you businesses, to can fall you from 'XX 'XX restructuring? If where the to maybe you. X% range? you about you then, you sales look in talk maybe where if that savings can at relative the incremental over cost guidance, to plus Thank talk expect XX% the expect

Mick Lucareli

Hey, the Yes. it's Mick. part Matt, first that. I'll of take

think itself, range. we've that I lower the range within the end the got higher and

hard it's first of in know, So just to product past rationalization, off. customers or early phases your question, drop which the to XX/XX, first, broader you will planned in business I as speaking think predict

on it with comfortable sometimes we we're And expect. stays than profit And that. higher with the longer much it, quite margin

low end have or difference which to about is crystal So would end not. the say, first, exactly will big think just and ball wind a really between off business I I high our trying

Performance for range, for in are pricing top-line we've kind initiatives significant within Technologies. question to and Climate Technologies lot going across be commercial power launches said, Climate and both off. then really And Performance in revenue kicking which your that that both got slightly the too Performance good far program expect for But generation than higher will really not gensets of year, help Technologies. Performance and probably Technologies, around this I a of I growth within guess,

question, end, with the at had you had repeat? restructuring. do it then, you could to I think just And a if

Matt Summerville

that hit incremental versus you've should how 'XX cost Yes, that the from much savings European 'XX in completed? restructuring P&L

Mick Lucareli

of rolled We've most Yes. through it. got

net-net, $X as I German, region the think headquarters European about net million far just expect would net I that a in savings year. in as new

Matt Summerville

Great. Thank guys. you,

Operator

And Gabelli question next of the Please from line comes question. with the proceed with Brian your Sponheimer Funds.

Brian Sponheimer

of sheet, million receivables you've of One, the or everyone a working saw that you business year-over-year extra an the $XX morning, questions. collection of kind and $XX and and thinking of through as you whether the balance about good Good flow Hi. year? cash XX/XX transition of the you sort in just so basis, needs million about congratulations. inventory. of any performance, Can Couple just also got but we as work talk on capital there's you're

Mick Lucareli

Yes. Hey, Brian, Mick. it's

of right, plan in XX supply continue down months. beginning You're that much with really chain, of really improved. to we've inventory seen And is availability the last XX is the the kind to parts as to work post-COVID rise

some So improvement we there. have there's

Accounts receivable little expect. too normally and higher a bit have we than

imagine, that too, see renegotiating a the at But prices, negotiating has I capital. a you of is, kind we customers as that flat short can answer in AR. of part of can speaking, talking think times, are caught of XX/XX get level and been initiatives working generally to and lot as we up

that capital should So grow then standpoint. while from free continuing revenue a convert we're hold working nicely going to and flow to cash

Brian Sponheimer

where -- I'm you're then, there. targets you to into sorry, mentioned that mean go? can this potentially about be you that had business simply profitability for of of a for plan? greater Climate Tech this to of ahead is this ahead Appreciate wanted you rather. just where you year are possibilities see as Okay. Or the color the Solutions margin Does that Performance And

Mick Lucareli

Mick out I'll we years that we in should XXX clear that were the basis had our fast about Brian, that good year, push are improvement. when and year margin again, to first, We first higher. go really Yes, margin Neil be to Day, drove team, this jump on. from From think there, was five question. two points Analyst we Yes. it about goals how I it's can happy

that So but We margin to year. yes, year, almost was drive points thought every it further peaking in out basis one. short we We we that do expect year don't we each to really XXX see won't answer but it is improvement. faster than higher drive here, expect

Neil, anything to add?

Neil Brinker

No, that's a great summary.

Brian Sponheimer

Congratulations. forward look what do next. to Great. seeing all you I

Mick Lucareli

Thank you.

Neil Brinker

Thanks, Brian.

Operator

And the your Moore with Tim with from Hutton. line next question question. proceed EF comes the Please of

Tim Moore

Thanks, strong against high-growth on and EBITDA growth year ago, congratulations the a comparable.

just those your $XXX gears taking like of it some bit you that million EVs going of only done? investors. margins the are engines pricing but and ramping business, you're up or Just is on, combustion by ICE auto a maybe shifting business your maybe and for Isn't sales that possibly internal a or XX% you've seems still not little probably biased misconceived new might on hikes sales maybe up orders that, business the stopped because have the

Neil Brinker

our serving still relatively products. business overall. the of We're it's has small some certainly. year-over-year, with there. customers We're we've revenue PT, -- Yes, actively the declined portion working a In

and margin to provide our We analytics. those we thresholds And what side the to have those there's there, and meets shift we're that's a And as more looking that filters systems we technology, place well. through in have we targets and going the certain can focus value thresholds if because on our continue put we're for. that solution XX/XX

Tim Moore

sales to your just capacity helpful in what the given those heat the Did production for years compared I you your of it can on Great. Europe? plant. earlier expect subsidy houses color. hear switching over call the European gears I expansion mentioned transfer ago. is Because at imagine credit to kind the pumps Maybe to And just you there correctly Serbia double. that for I'm you of expect up of curious kind a margin couple timeframe That's going

Neil Brinker

Yes.

but we're the Mick you that in on let excited I'll space timeline So, that, about that give market.

need on of several terms there that market, to plant, our because market getting we facilities start our Serbia. in We're healthy. in is growth. place of the so that lines put the of first and a so process as equipment in up order that regulated see capital expanded equipment, have It's campus we the we in we the So, highly into multiple certainly book buying can years

infrastructure So the and in pretty team a in got the book. the place. team is The putting healthy order is capital and we've

Mick Lucareli

Neil, within than pump $XX that we've few really bit million, on doubling heat more over talked little the Yes, currently a three side, but just next rapidly years. the growing about years

Tim Moore

a hear, to and terrific allocation. capital seems it terrific use like That's of Great.

wondering, just March -- improve and around sequentially sequentially the of curious being sales the Just each color Should you than gave expansion kind that. about You the I'm quarter? also will margin just margin to And be a cadence. think just this fiscal about some will quarter the I'm this gross possibly then quarter gross first reported lower trying magnitude quarter in that the growing. year, June of figure March? lowest

Mick Lucareli

But you really -- good a years quarter the of to -- tends still coming some QX -- really be to the last weakest HVAC the in year, a Yes, up schools. QX, where slowest question. side and sure. has a also with little Climate Modine business so do the be of be the It's have strong. to few on on that can the we of have I'm followed heating ramping bit seasonality the that. off We at do year. has of typically, up part really that's in of glad strong the QX been one

up to in in QX, fully we than up year-over-year, margin, earnings. expect look it up be -- revenue, at little But QX a in probably and don't bit both see in lower you We if significantly and margin gross we being earnings. in QX,

line a helps. we So, Hopefully, year-over-year fully can't really on with in roll that QX to forward but basis, be guidance. QX, QX our expect to

Tim Moore

happen. and of I for what might exactly thought I kind what That's looking was

million is the line $XXX free America. from you this really and question maybe -- North a and know recall like the obviously seasonality. It you have and do And next and I as just in maybe correctly, your I'm next a of investors $XXX sales expect growth to year, around I few U.S. maybe look orders. how wrong, I'm the year. there, America did million is business out year? few chilling last in trajectory million next mean, on that's that me My think co-location strong this down sight year something you hyperscale North years, eventually centers for million businesses fiscal So correct data the does maybe fiscal for I wondering if could you Feel do but revenue and $XXX $XXX the good it appears years road?

Neil Brinker

Yes, for us, Because today. think we're in about that's focus right. question. building a When great you're those a you such it's capacity the rates, growth

our utilizing gap I fit how rates. footprint we and fill as investments we're space where in and those model expansion of making in But see a have technology, we're this growth labs well where we for think of been the visibility market. We capacity support clever terms really we're building manufacturing our as to our we've type with to manufacturing growth.

Mick Lucareli

a to over bit range the the a XX% good to over XX% it grow is years wrapped year, we'll to higher guidance Obviously, a and a to want next just XX% think sales up three three- a going off roll target next rate, five-year the to I $XXX us. visibility of over little lot probably XX%. was I more if XX% center Yes, year, to year, window. of have should growth this you much there, data current million rate, expect our of coming got forward, term to in for that in -- similar we've this globally. fiscal XX% And north long we add But

Tim Moore

That's and for color my terrific granularity. and That's Thanks, it Mick. questions. Neil

Mick Lucareli

Thank you.

Neil Brinker

Thank you.

Operator

with Instructions] from next Please with the [Operator comes question. Company. your Steve Sidoti proceed our And line & question Ferazani of

Steve Ferazani

very, color all morning. market appreciate on the this incentives. Mick, to Neil, the by has morning, know I which very supported wanted heat Good up in government we strong, been follow Europe, pump

saw You're this and were heat the pump association up double it, trade talking mean of of about quarter but the reporting from to Scandinavian some the substantially. some we potential data providers -- I smaller some

much I'm a transfer right products the a that smaller part down. there Are was surprised So, little bit overall Or you heat your HTP? now? constrained of is just capacity

Neil Brinker

it is right, Steve. you're -- Yes,

the smaller, where we're But why we've that's substantial. For right. for exactly lines in it it That's additional and it's the trends that. that in with moment, We've but the headed be yes, necessary that are is invested plant. will invested

running that up. in the we're capacity So, starting we that to ramp we We're XX/X start with Serbia. capacity that expand to as have

Steve Ferazani

Excellent.

We much Did I Okay. 'XX this And ground I know. covered may have morning, a you missed that. provide fiscal so CapEx range?

Mick Lucareli

that expect we Yes, below. to be around or million $XX

Steve Ferazani

million? $XX

Mick Lucareli

in out, to off being point And new rates go valuation the It's in the $XX But effective to range, tax the $XX coming XX% U.S., we're being up with a Steve. back good with situation. the taxpayer the guiding in appendix. U.S., then, guided interest year. in a had bit, a allowance a important to rate little to million we we is million. million expense provided Yes, then about $XX also which we'll to And

Steve Ferazani

thinking unused helpful. That's that stands? decision market expect playing next market government how still back makers. predict obviously, you three two discussions you out Okay. about you want Any is are you. or funds. pulling Washington can't But Thank I in terms now it you all the right -- I and the touch -- don't currently over to And years in as risks on how that right out? to some now retrofits playing with wanted of school

Neil Brinker

the question. rates production orders. of the that very that good the with terms we're business to. I And asking we're comfortable question. a comfortable in the We're phone at with got where it's manager Yes, literally of we're just running yesterday, general with that off

beyond have year a We of what visibility in intake like. terms looks the order

So, has say, with months, XX over the we're been. what our the comfortable even term, in short position next,

Steve Ferazani

now in M&A shape? balance capital develop on starting flow you're plan more cash just sheet the and to for that is become any a generator And allocation, great of starting significant to kind

Mick Lucareli

Yes. Mick. I quarters. few Neil Hey, a and Steve, it's Yes, talked for

implementing we development our to really message the head funnel. a down, was was side the I The business went some skills starting really last if rebuilt XX/XX, added year think we've and back trying to strong on refill ago, few generate quarters cash.

are look in more some optimistic starting that today, actionable I Neil targets a in we so. the funnel that think, now to and we're can potential next I and the As be encouraged or see year lot

business the team. from progress whole development good really So,

Neil Brinker

would just one Steve, making organically, with of that the organically add of we're success Yes. that businesses we're Climate that that, ago in organically, it. with growing control that and changes we with around to we're the thing -- we because is having Organically, I to we're have the be we York good year plan we're in pretty PT. have kicking ahead this Solutions, it where off New a

particularly So, when that to larger where M&A, can goals place. to leading-edge we're grow? It's Climate we that so Solutions. want But Where continue we the fill we're in we acquisitions do where do we those up technologies, need really, our if to do technology, put that do with have thinking we we about want sure growth thinking to catch verticals, about gaps? support we technology to in as not make

Steve Ferazani

hole not on fill growth? it to And accretive, would as thinking maybe you longer-term when as be -- focused that about or not be wouldn't being we a provides accretive think those better trying about you

Neil Brinker

Correct.

Steve Ferazani

the more Yes. you would bigger type bolt-on anything be the screen, on radar or focused on size? And

Mick Lucareli

Yes.

can't larger, -- few going the on consistent on things we that And that our We the those of then had that been a to and in tuck keep targets pipeline, we've focus to to on we'll are eye midsized continue within control to map. our you focus and under continue that we But are product pretty market. but there if always our some way, road ones bolt-ons. can we be when come technology

Steve Ferazani

Neil. Thanks, Thanks, Mick. Right.

Operator

with the with Dethy And of D.C. line question. comes Capital proceed question from next Florence your Please the Advisors.

Florence Dethy

how guessing it's your Thanks. more sort opportunities area and forward? impact on morning, Good about does -- question you the a that for present? the AI investing I'm Thanks how What side. Hi. development have does in and Neil question. And that on center the in data of taking are I thinking the rollout acceleration Mick. business? going

Neil Brinker

Neil. Hey, Flo, a That's question. very This from Great hear to question. is good you. relevant

really technologies supplier, As it's that space supplier a and data we we, critical as to this centers provide technologies that. current shift, these see in start support important to

working center space, we're data moving high-performance customers they supports So, AI. computing, with the our the start away computing evolve to to traditional from in which as

heat, heat. point more at ways hit we'll remove to market that you with things from will heating have things that a higher-performance that market and supports supports time, to have in computing. some a you issue, a in And you supports it you a AV, It power computing, all have the it's it And supports density threshold shift. AI, the of creative high-performance lot require density get these drivers, supports have when have when power And mechanical solutions IoT, And XG, it. it to today issue. you are start the currently

also and are customers we a sure backcast our to that that technology. there's -- have to in it's very sure very other potentially ways to we area pretty we teams we closely make make that can being an that we're acquire that So, big space. are And curious, innovative working and with our

So and there's the path. inorganic organic

challenge. looking the we and welcome we centers data And this tip of spear with this to want and change. We welcome engineering the we're new for welcome because both. at that's we us So grow, technology, at the where it's

Florence Dethy

a what seeing on hiring. front? that turnover, of on number higher companies that And side? seeing about are a you difficulty It talking ago, wasn't topic, capital human What you are were Thanks. long on different the

Neil Brinker

seeing recruit the very and that in and making more move we've good much regionally. ago. we've this the absolutely we're the year multiple we to how where have talents across we're retain talented different today individuals salary rate place. in what able that then, right company a part, workforce some that here rate been have. we side we the than plants And can transform moving were at And we on our That's at it's industries. But got that fact is for on sure had our stability that most of we've pretty the based inside Yes, that's are the policies

Florence Dethy

just from there Is you you the way any cost-wise that? all to benefit to for quantify

Neil Brinker

Is I didn't catch question, quantify... to the full Flo. there way any

Florence Dethy

turnover need terms recruiters from less of use reduced hiring? I lower or to guess, for costs in

Neil Brinker

Yes.

So, that the we're that we're sure efficient. in as closely and -- making Mick I watch and margin

not a back go you're You year time that's that of of is efficient, ago you and training, lot a productive. overtime workforce have a a not as when used, transient, there's there's you're lot

stability you like some once improve freight, hours because time. relative have people over place, relative right to in we at time, in and to the to the you labor see start expedited place relative the get So don't to margins right things

Florence Dethy

Thanks.

Neil Brinker

Sure.

Operator

I'm would turn this Powers. over And Kathy back showing to further I now no to the time. like conference questions at

Kathy Powers

Thank joining this everybody thanks us for and morning. you, to

You'll We a of to in website day. hope be this everybody the access has two replay through hours. our call great able about

Operator

That concludes today's conference.

this time. at lines and your you disconnect may have your participation, day. for Thank a You great

Modine Manufacturing (MOD) 25 May 232023 Q4 Earnings call transcript