Modine Manufacturing Reports 6% Revenue Growth, Improved Gross Profit and Operating Income in Q2 and H1 Fiscal 2025

Modine Manufacturing Company reported significant financial performance improvements for the second quarter and first half of fiscal 2025, ending September 30, 2024. Net sales for the three months reached $658.0 million, a 6% increase from $620.5 million in the same period of the previous year. For the six months, net sales totaled $1,319.5 million, up from $1,242.9 million, reflecting a similar 6% growth.

The Climate Solutions segment was a key driver of this growth, with net sales increasing to $366.4 million from $289.2 million year-over-year, bolstered by $53.4 million in sales from the recently acquired Scott Springfield Manufacturing. Conversely, the Performance Technologies segment saw a decline in sales, dropping to $297.5 million from $337.3 million, primarily due to the sale of three automotive businesses in Germany, which accounted for a $21.9 million decrease.

Gross profit for the quarter improved to $165.6 million, up from $135.1 million, with a gross margin increase to 25.2%, compared to 21.8% in the prior year. Operating income also rose to $75.3 million from $65.7 million. For the first half, gross profit increased to $328.2 million from $263.0 million, with operating income rising to $149.7 million from $132.2 million.

Despite these gains, net earnings for the three months ended September 30, 2024, slightly decreased to $46.4 million from $46.9 million in the prior year. However, net earnings for the six months increased to $94.2 million from $92.2 million. The effective tax rate rose significantly, reaching 30.1% for the quarter, compared to 21.4% in the previous year, attributed to changes in the earnings mix.

Strategically, Modine completed the acquisition of Scott Springfield Manufacturing for $184.1 million in March 2024, which has contributed positively to sales. Additionally, the company acquired Napps Technology Corporation for $5.8 million in July 2023. However, it also divested three automotive businesses in Germany in October 2023.

The company is currently undergoing restructuring efforts, particularly in its Performance Technologies segment, which includes severance expenses related to the closure of a technical service center in Europe. SG&A expenses increased by 25% in the second quarter, primarily due to higher compensation-related costs.

As of September 30, 2024, Modine's total assets were $1,915.6 million, up from $1,851.5 million at the end of the previous fiscal year, while total liabilities decreased to $1,048.2 million from $1,096.0 million. The company reported cash and cash equivalents of $78.6 million, an increase from $60.1 million at the end of March 2024.