Fourth Quarter Fiscal 2017 · 2018. 8. 29. · • Q4 Adjusted operating income of $29.2 million, up 23% from the prior year – Includes $7.8 million from CIS business – Beginning

Fourth Quarter

Fiscal 2017 May 25, 2017 8:00 a.m. CDT

Agenda

2

Introduction Kathy Powers

VP, Treasurer, Investor Relations and Tax

Fourth Quarter Highlights Tom Burke

and Segment Review President and Chief Executive Officer

Financial Overview Mick Lucareli

and Outlook VP, Finance and Chief Financial Officer

Summary Tom Burke

Q & A Tom Burke and Mick Lucareli

Forward-Looking Statements

3

This presentation contains statements, including information about future financial performance and market conditions,

accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar

“forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. 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, but not limited to, those described under “Risk Factors” in Item 1A of Part I of the

Company's Annual Report on Form 10-K for the year ended March 31, 2016 and under Forward-Looking Statements in Item

7 of Part II of that same report and in the Company’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2016,

September 30, 2016 and December 31, 2016. Other risks and uncertainties include, but are not limited to, the following:

Modine’s ability to integrate the former Luvata HTS operations into Modine, to harness the anticipated synergies associated

with the transaction, and to achieve projected cash flows sufficient to enable Modine to maintain a desirable leverage ratio;

the overall health and price-down focus of Modine’s customers, particularly in light of economic and market-specific

challenges; uncertainties regarding the costs and benefits of Modine’s restructuring activities; operational inefficiencies as a

result of program launches, unexpected volume increases and product transfers; economic, social and political conditions,

changes and challenges in the markets where Modine operates and competes, including foreign currency exchange rate

fluctuations (particularly the value of the euro, Brazilian real and British pound relative to the U.S. dollar), tariffs, inflation,

changes in interest rates, recession, restrictions associated with importing and exporting and foreign ownership, and in

particular the economic and market conditions in Brazil and China, the remaining economic uncertainties in certain markets

in North America, and the general uncertainties about the impact of potential regulatory and/or policy changes in the U.S. as

a result of a change in administration, and continuing uncertainty regarding “Brexit”; the impact on Modine of any significant

increases in commodity prices, particularly aluminum and copper, and our ability to pass these prices on to customers;

Modine's ability to successfully execute its strategic and operational plans; the nature of and Modine’s significant exposure

to the vehicular industry and the dependence of this industry on the health of the economy; the concentration of sales within

our CIS segment attributed to one customer, and our ability to manage troughs and take advantage of peaks; costs and

other effects of environmental investigation, remediation or litigation; and other risks and uncertainties identified by the

Company in public filings with the U.S. Securities and Exchange Commission. The Company does not

assume any obligation to update any forward-looking statements.

Fourth Quarter Highlights

and Segment Review

Tom Burke

President and Chief Executive Officer

FY2017 ‒ Fourth Quarter and Full Year Highlights

5

• Significant progress on SDG initiative, achieving our $40-50 million savings target

• Integration of Luvata HTS (now referred to as Commercial and Industrial Solutions, or “CIS”) well underway with focus on synergies

• Q4 sales up 44% on a constant-currency basis – Includes $143 million of sales from CIS business

– Non-CIS base business up 2% on a constant-currency basis

– Higher sales in Asia segment, partially offset by lower sales in Americas segment

• Q4 Adjusted operating income of $29.2 million, up 23% from the prior year – Includes $7.8 million from CIS business

– Beginning to see the temporary impact of higher metals prices

• Q4 Adjusted earnings per share of $0.35, down $0.01 from the prior year – Improvement in operating earnings offset in-part by higher interest expense

• Strong full-year results – Sales of $1.5 billion up 12% on a constant-currency basis

– Adjusted operating income of $69.3 million up 10%

– Adjusted EPS of $0.78 up $0.02

* See Appendix for Non-GAAP reconciliations

North America YOY Change

Automotive Flat

Medium Duty Truck Flat to +5%

Heavy Duty Truck Flat

Construction/Mining Flat

Agriculture -5%

Brazil

Aftermarket +10%

Commercial Vehicle +5%

Agriculture +10% to +15%

Market Outlook (Fiscal 2018)

($ in millions) Q4 Q4 Better /

2017 2016 (Worse)

Net sales 144.6$ 145.1$ (0.5)$

Gross profit 27.4 27.3 0.1

% of net sales 18.9% 18.8% 10 bp

SG&A expenses 13.4 12.1 (1.3)

% of net sales 9.2% 8.3% (90 bp)

Adjusted operating income* 14.3$ 16.3$ (2.0)$

% of net sales 9.9% 11.2% (130 bp)

Americas

Q4 FY2017 ‒ Americas

6 * See Appendix for Non-GAAP reconciliations

• Sales down 2.5% on a constant currency basis

– Continued weakness in the heavy-duty commercial vehicle market

– Partially offset by higher sales to off-highway customers in North America and Brazil

– Beginning to see improvements in the off-highway markets

• Gross margin up 10 bps to 18.9%; cost savings initiatives temporarily offset by higher material costs

• Increase in SG&A due to higher incentive compensation and benefits expense

• Expecting very little end market growth in fiscal 2018 (see table above)

• Revenue growth will be driven by new automotive programs

• Encouraged with recent business wins/opportunities in off-highway and commercial vehicle

YOY Change

Automotive Flat

Commercial Vehicle Flat to +5%

Off-Highway Flat to -5%



2017 2016 (Worse)

Net sales 134.6$ 139.1$ (4.5)$

Gross profit 21.1 21.1 -

% of net sales 15.7% 15.2% 50 bp

SG&A expenses 10.5 9.9 (0.6)

% of net sales 7.8% 7.1% (70 bp)

Adjusted operating income* 10.6$ 11.2$ (0.6)$

% of net sales 7.9% 8.1% (20 bp)

Europe

Q4 FY2017 ‒ Europe


• Sales were flat excluding an unfavorable FX impact of $4.9M

– Higher automotive sales offset by planned reductions to commercial vehicle customers

• Gross margin improved by 50 bps due to improved sales mix, partially offset by higher material costs

• Adjusted operating income down 5%, driven by an unfavorable FX impact of $0.4M and slightly higher

SG&A expenses

• Expecting automotive and commercial vehicle markets to be stable in fiscal 2018

• Anticipating sales in fiscal 2018 to be flat-to-down due to continued wind-down of commercial vehicle

programs, offset by growth in automotive products

YOY Change

China Automotive +3%

Asia Excavator +10%

India Automotive +5%

India Commercial Vehicle +5%



2017 2016 (Worse)

Net sales 33.3$ 22.9$ 10.4$


% of net sales 16.9% 17.4% (50 bp)

SG&A expenses 2.8 2.3 (0.5)

% of net sales 8.5% 10.2% 170 bp

Adjusted operating income* 2.8$ 1.9$ 0.9$

% of net sales 8.4% 8.3% 10 bp

Asia

Q4 FY2017 ‒ Asia


• Sales increased 49% excluding unfavorable FX impact of $0.8M

– Increased sales to automotive and off-highway customers in China, India and Korea

• Temporary operating inefficiencies at Shanghai plant due to strong demand

– Installed new furnace with second to be installed later this year

• 47% increase in adjusted operating income due to higher sales volume

• Anticipating growth trends to continue in fiscal 2018

– Continued improvement in the construction markets across the region

– Revenue growth to be driven by market growth and continued automotive launches (share gains)


2017 2016 (Worse)

Net sales 38.8$ 40.4$ (1.6)$

Gross profit 10.7 10.9 (0.2)

% of net sales 27.5% 26.9% 60 bp

SG&A expenses 7.9 8.8 0.9

% of net sales 20.2% 21.7% 150 bp


% of net sales 7.3% 5.2% 210 bp

Building HVAC

YOY Change

Commercial Heating - NA Flat to +2%

Air Conditioning - EMEA +4%

Commercial Ventilation - NA +2%

Commercial Ventilation - UK +2%


Q4 FY2017 ‒ Building HVAC


• Sales up 2% excluding unfavorable FX impact of $2.6M

– Higher sales of air conditioning products in the UK partially offset by lower sales of heating and

ventilation products in North America

• SG&A expenses were down $0.9M due to planned cost reductions

• Adjusted operating income up $0.7M, or 25 percent, due to various actions taken earlier this year

– Volume and operational improvements in the UK are beginning to show

• Expecting low single-digit market growth in fiscal 2018

• Anticipating sales will grow in-line with the markets, with continued margin improvement

– Strong order book, particularly with North America school products and rooftop ventilation products

($ in millions) Q4

2017

Net sales 143.0$

Gross profit 21.6

% of net sales 15.1%

SG&A expenses 13.8

% of net sales 9.6%

Operating income 7.8$

% of net sales 5.5%

Commercial and Industrial Solutions

YOY Change

Commercial & Residential AC +2%

Refrigeration +2%

Precision Cooling +3%

Industrial Cooling +2%

Mobile AC +2%


Q4 FY2017 ‒ Commercial and Industrial Solutions

10

• Integration of business is proceeding according to plan

• Maintaining speed and flexibility in response to customer requests

• Sales for first full quarter under Modine ownership were $143M

• Results include $3.2M of incremental depreciation and amortization expense recorded as a result of

purchase accounting

– $1.8M in cost of goods sold and $1.4 in SG&A expenses

• Operating income of $7.8M was significantly above prior estimate of $4-5M

• Market outlook shows modest improvements in all major markets served

• Remain committed to delivering at least $15M of annual cost synergies

Financial Overview and Outlook

Mick Lucareli

Vice President, Finance and Chief Financial Officer

(In millions, except per share amounts) Q4 Q4 Better

2017 2016 (Worse)

Net sales 488.3$ 343.7$ 144.6$


% of net sales 17.4% 18.1% (70 bp)

SG&A expenses 60.6 41.6 (19.0)

% of net sales 12.4% 12.1% (30 bp)

Adjusted operating income * 29.2 23.7 5.5

% of net sales 6.0% 6.9% (90 bp)

Adjusted earnings per share * 0.35$ 0.36$ (0.01)$

Q4 FY2017 vs. Prior Year

12 * See Appendix for the full GAAP income statement and Non-GAAP reconciliations

• Sales up $149.8M or 44% on a constant

currency basis – Includes CIS sales of $143M – Base business sales up $6.8M or 2%

• Gross profit includes $1.4M (30 bps) impact

from inventory step-up due to purchase

accounting – Gross margin on the base business improved

70 bps to 18.8%

• SG&A is up $5.2M, excluding CIS SG&A – Primarily due to $3.2M of acquisition-related

costs

• Adjustments include the following: – Restructuring expenses mainly due to Europe

severance ($3.2M) and Washington, Iowa closure ($1.7M)

– $4.6M for acquisition-related items

• Adjusted operating income up $5.5M or 23%

• Adjusted EPS down $0.01, driven by higher

shares and interest expense

Operating income (loss) 20.2$ (0.7)$ 20.9$

Restructuring expenses 4.9 11.4

Gain on sale of facilities (0.8) -

Impairment charge - 9.9

Acquisition-related costs 3.2 0.2

Inventory adjustment 1.4 -

Environmental charges 0.3 1.1

Pension settlement losses - 1.8


Cash Flow & Net Debt

13

• Adjusted free cash flow of ($0.9M) for the quarter, $7.8M better than the prior year

• Full year operating cash flow temporarily impacted by higher working capital, cash

restructuring and acquisition-related costs

• Adjustments of $32.7M include restructuring payments of $18.3M, primarily due to

plant consolidation and severance – Remaining adjustments primarily for acquisition-related activities

• Leverage ratio of 2.9x is well below covenant requirement

• Anticipating improved free cash flow in the new year

• Targeting a leverage ratio of 2.5x in fiscal 2018

(In millions) FY

2017

FY

2016

Operating cash flow $ 41.6 $ 72.4

Restructuring & other adjustments 32.7 12.8

Adjusted operating cash flow 74.3 85.2

Capital expenditures (64.4) (62.8)

Adjusted free cash flow $ 9.9 $ 22.4

(In millions)

3/31/17 3/31/16

Cash $ 34.2 $ 68.9

Total debt 510.9 162.6

Net Debt $ 476.7 $ 93.7

Leverage Ratio 2.9x 1.2x

Covenant Ratio 3.75x 3.25x

FY2018 Guidance

14

FY 2017 Results FY 2018 Guidance % Increase

Net Sales $1,503 million $1,879 to $1,954 million +25% to +30%

Adjusted Operating Income $69.3 million $100 to $110 million +44% to +59%

Adjusted EBITDA $124.7 million $175 to $185 million +40% to +48%

Adjusted EPS $0.78 $1.20 to $1.35 +54% to +73%

• Anticipating strong earnings growth driven by the full year impact of CIS and SDG savings

• Expecting continued revenue growth in Asia and Building HVAC, flat-to-low single-digit growth in Americas and flat-to-down revenue in Europe

• Critical guidance assumptions; – Market volumes materialize as anticipated – Key metals prices hold at current levels; significant cost increase and lag built into the guidance – US dollar holds versus other major currencies at current exchange rates – Approximately $26M of interest expense and a 15% effective tax rate

• Adjusted EPS of $1.20 to $1.35; up 54% to 73% – Lower tax rate in fiscal 2018 due to Hungary development credit

* See Appendix for Non-GAAP reconciliations

Q4 FY2017 – Conclusion

15

• Remarkable year for Modine – 100th anniversary – Largest acquisition in company’s history

• Priorities for fiscal 2018 – CIS integration and synergy capture – Reduction of leverage

• New global organization – Will continue to manage and report results for our three existing regional vehicular

segments in fiscal 2018

– Plan to report one vehicular segment in fiscal 2019, referred to as Vehicular Thermal Solutions or “VTS”

• Result: three complementary business units: VTS, CIS and Building HVAC – Enables us to make strategic decisions and allocate capital more efficiently

– Strengthens Modine’s unwavering commitment to proven leadership in providing thermal management solutions

• Exciting year ahead with significant sales and earnings growth

Q&A

Appendix

Americas (35% of Net Sales)

FY Ended

March 31, 2014 2015 2016 2017

Net sales $688.3 $666.9 $585.5 $534.0

Adjusted

operating income* 52.0 47.1 46.6 34.4

Adjusted

operating margin* 7.6% 7.1% 8.0% 6.4%

(In millions)

* See Non-GAAP reconciliations

• Six manufacturing facilities – executed our plan to

close Washington, Iowa plant

• Diversified revenue mix across major end-markets

• Segment well positioned for future success based on

improved manufacturing footprint and cost structure

• New growth opportunities with off-highway and

automotive customers

• Key customers: CAT, Deere, Navistar, Daimler

Trucks North America (DTNA), MAN, AGCO, CNH,

FCA, GM, Tesla, Volvo

FY 2017 Sales Mix

18

13%

13%

21%

14%

18%

5%

16% Heavy Truck

Medium Truck

Light Vehicle

Ag/Construction

Service

SA Aftermarket

NA Coils/Industrial/Other

3%

32%

54%

3% 8% Construction

Truck & Bus

Light Vehicle

Agriculture

Service/Other

Europe (35% of Net Sales)

FY Ended

March 31, 2014 2015 2016 2017

Net sales $584.4 $578.2 $524.1 $524.3

Adjusted


Adjusted


(In millions)


• Seven manufacturing facilities in Europe

• Consolidated manufacturing operations in Germany

• Expanding capacity in Hungary, moving production

from Western Europe

• Managing launch activity mainly in oil cooler and

liquid charge air cooler (LCAC) products

• Key customers: VW Group, Daimler AG, BMW, ZF,

Volvo, John Deere

FY 2017 Sales Mix

19

Asia (7% of Net Sales)

FY Ended

March 31, 2014 2015 2016 2017

Net sales $71.5 $81.2 $79.0 $111.5

Adjusted

operating income

(loss)*

(3.3) 0.3 1.3 7.7

Adjusted

operating margin* (4.7%) 0.3% 1.5% 6.9%

(In millions)


FY 2017 Sales Mix • Six manufacturing facilities in China, India, Japan

and Korea (3 Joint Ventures)

• Strategic focus on creating new business

opportunities with local customers

• Diversifying our business model; reducing exposure

to excavator market

• Shifting longer-term focus to local commercial

vehicle customers due to more stringent emissions

standards in China

• Key customers: Volvo CE, VW Group, CAT,

Hyundai Heavy Industries, Ashok Leyland, Renault

20

32%

7% 52%

9%

Construction/Ag

Truck & Bus

Light Vehicle

Other

41%

27%

13%

5%

14% Commercial Heating - NA

Air Conditioning - EMEA

Commercial Ventilation - NA

Commercial Ventilation - UK

Aftersales - Controls, service,spares

Building HVAC (11% of Net Sales)

FY Ended

March 31, 2014 2015 2016 2017

Net sales $146.5 $186.3 $181.4 $171.6

Adjusted


Adjusted


(In millions)


FY 2017 Sales Mix • Five facilities in North America, United Kingdom

and Africa

• Complementary business that provides

diversification to Modine’s vehicular segments

• Strong financials due to product differentiation,

manufacturing efficiencies and brand strength

• Pursuing growth opportunities based on energy

efficiency and other “green” initiatives

– Ventilation and data center cooling

21

36%

9% 30%

15%

10% Comm & Res AC

Mobile AC

Refrigeration

Precision

Industrial

Commercial and Industrial Solutions

(12% of Net Sales)

FY Ended

March 31, 2017

Net sales $177.7

Operating income 7.5

Operating margin 4.2%

(In millions)

FY 2017 Sales Mix • 16 manufacturing facilities in North America, Europe

and Asia

• Primary products include Coils, Coolers and

Coatings

• CIS is a pioneer in bringing microchannel technology

to the HVAC&R industry, which has been used in the

auto industry for more than 20 years

• Broadens and complements BHVAC sales channels

• Fiscal 2017 financial results represent the four

months ended March 31, 2017

22

Q4 GAAP Income Statement

23

(In millions, except per share amounts)

Q4 Q4 Better

2017 2016 (Worse)

Net sales 488.3$ 343.7$ 144.6$

Cost of sales 403.4 281.5 (121.9)


SG&A expenses 60.6 41.6 (19.0)

Restructuring expenses 4.9 11.4 6.5

Gain on sale of facilities (0.8) - 0.8

Impairment charge - 9.9 9.9

Operating income (loss) 20.2 (0.7) 20.9

Interest expense (6.7) (2.9) (3.8)

Other (expense) income - net (0.8) 9.2 (10.0)

Earnings before income taxes 12.7 5.6 7.1

(Provision) benefit for income taxes (4.6) 2.2 (6.8)

Net earnings 8.1 7.8 0.3

Net earnings attributable to noncontrolling interest (0.1) (0.2) 0.1

Net earnings attributable to Modine 8.0$ 7.6$ 0.4$

Earnings per share - diluted 0.16$ 0.16$ -$

Non-GAAP Reconciliations

24

Modine Manufacturing Company

Adjusted operating income and earnings per share (unaudited)(In millions, except per share amounts)

2017 2016 2017 2016

Operating income (loss) 20.2$ (0.7)$ 39.4$ (7.5)$

Acquisition-related costs and adjustments (a)

4.6 0.2 19.1 0.5

Restructuring expenses - Americas (b)

1.7 3.8 6.9 8.8

Restructuring expenses - Europe(b)

3.2 6.3 3.0 6.2

Restructuring expenses - other (b)

- 1.3 1.0 1.6

Gain on sale of facilities (c)

(0.8) - (2.0) -

Legal and environmental charges (d)

0.3 1.1 1.9 1.6

Pension settlement losses (e)

- 1.8 - 42.1

Impairment charge (f)

- 9.9 - 9.9

Adjusted operating income 29.2$ 23.7$ 69.3$ 63.2$

Net earnings (loss) per share attributable to Modine

shareholders - diluted 0.16$ 0.16$ 0.29$ (0.03)$

Acquisition-related costs and adjustments (a)

0.07 - 0.28 0.01

Restructuring expenses (b)

0.09 0.20 0.17 0.27

Gain on sale of facilities (c)

(0.01) - (0.04) -

Legal and environmental charges (d)

- 0.02 0.04 0.02

Pension settlement losses (e)

- 0.02 - 0.54

Impairment charge (f)

- 0.21 - 0.21

Gain from fire insurance recovery (g)

- (0.19) - (0.19)

Tax valuation allowances (h)

0.04 (0.06) 0.04 (0.06)

Adjusted earnings per share 0.35$ 0.36$ 0.78$ 0.76$

Three months ended March 31, Twelve months ended March 31,

(a) On November 30, 2016, the Company acquired Luvata HTS. Acquisition-related costs in fiscal 2017, recorded as SG&A

expenses at Corporate, primarily included costs for i) transaction advisors, ii) legal, accounting, and other professional

serv ices, and iii) incremental costs directly associated with integration activ ities, including third-party consulting fees.

Additionally , the adjustments include $4.3 million, also recorded at Corporate, for the impact of an inventory purchase

accounting adjustment. The Company wrote up acquired inventory to its estimated fair value and charged the write-up to cost

of sales as the underly ing inventory was sold. Certain acquisition-related costs are non-deductible for income tax purposes.

The tax benefit related to acquisition-related costs and adjustments for the three and twelve months ended March 31, 2017 was

$1.1 million and $5.5 million, respectively .

(b) Restructuring amounts primarily relate to equipment transfer and plant consolidation costs and employee severance

expenses, and include activ ities under the Company's Strengthen Diversify and Grow strategic platform. During fiscal 2017

and 2016, restructuring expenses within the Building HVAC segment totaled $0.7 million and $1.1 million, respectively .

(c) During the fourth quarter of fiscal 2017, the Company sold two prev iously-closed manufacturing facilities in its Americas

segment. In addition, during the second quarter of fiscal 2017, the Company sold a manufacturing facility in its Europe

segment. As a result of these sales, the Company recorded net gains totaling $2.0 million.

(d) During fiscal 2017, the Company increased a legal reserve recorded in Brazil by $1.6 million (within SG&A expenses in

the Americas segment) associated with a formal administrative investigation under Brazil’s antitrust laws and incurred

environmental charges related to a prev iously-owned manufacturing facility in the Americas segment. During fiscal 2016, the

Company incurred environmental charges totaling $1.6 million related to the prev iously-owned facility . The Company recorded

the environmental charges within cost of sales.

(e) During fiscal 2016, the Company recorded pension settlement losses related to lump-sum payouts to certain U.S. pension

plan participants at Corporate, within SG&A expenses ($33.3 million), and cost of sales ($8.8 million). The income tax benefit

related to pension settlement losses for the three and twelve months ended March 31, 2016 was $0.7 million and $16.4 million,

respectively .

(f) During fiscal 2016, the Company recorded a $9.9 million impairment charge within the Europe segment related to a

manufacturing facility in Germany.

(g) During fiscal 2016, the Company settled an insurance claim related to machinery and equipment destroyed in a fiscal 2014

fire at its Airedale facility in the U.K. and recorded a gain in other income of $9.5 million. The income tax prov ision related to this

gain was $0.8 million.

(h) On March 31, 2017, the Company recorded a valuation allowance on its deferred tax assets in Brazil, and, as a result,

recorded income tax expense of $2.0 million. On March 31, 2016, the Company reversed the valuation allowance on its

deferred tax assets in India, and, as a result, recorded an income tax benefit of $3.0 million.

Europe 2017 2016

Operating income (loss) 7.1$ (5.0)$


Impairment charge - 9.9

Loss from asset sales 0.3 -

Adjusted operating income 10.6$ 11.2$

Net sales 134.6$ 139.1$

Adjusted operating margin 7.9% 8.1%

Three months ended March 31,

Segment adjusted operating income and margin

(In millions)

Americas 2017 2016

Operating income 13.4$ 11.4$


Gain on sale of facilities (1.1) -

Environmental charges 0.3 1.1


Net sales 144.6$ 145.1$




25


(In millions)

Asia 2017 2016


Acquisition-related costs - 0.2


Net sales 33.3$ 22.9$



Building HVAC 2017 2016


Restructuring expenses - 0.9


Net sales 38.8$ 40.4$




26

Europe 2014 2015 2016 2017

Operating income 9.6$ 25.7$ 13.3$ 37.1$

Restructuring expenses 19.2 2.0 6.2 3.0

Impairment charges 2.0 - 9.9 -

Gain on sale of facilities - (3.2) - (0.9)


Net sales 584.4$ 578.2$ 524.1$ 524.3$

Adjusted operating margin 5.3% 4.2% 5.6% 7.5%

Years ended March 31,

(In millions)

Americas 2014 2015 2016 2017


Restructuring expenses 1.2 2.7 8.8 6.9

Impairment charges 1.2 7.8 - -

Gain on sale of facilities - - - (1.1)

Brazil legal reserve - 3.2 - 1.6

Environmental charges - - 1.6 0.3


Net sales 688.3$ 666.9$ 585.5$ 534.0$





27

(In millions)

Asia 2014 2015 2016 2017

Operating income (loss) (3.3)$ 0.3$ 0.8$ 7.7$

Acquisition-related costs - - 0.5 -

Adjusted operating income (loss) (3.3)$ 0.3$ 1.3$ 7.7$

Net sales 71.5$ 81.2$ 79.0$ 111.5$

Adjusted operating margin (4.7%) 0.3% 1.5% 6.9%



Building HVAC 2014 2015 2016 2017


Loss from Airedale fire 0.5 - - -

Restructuring expenses - - 1.1 0.7


Net sales 146.5$ 186.3$ 181.4$ 171.6$




28


29

Forward-Looking Non-GAAP Financial Measures

30

Our fiscal 2018 guidance includes certain non-GAAP measures, such as adjusted operating income, adjusted EBITDA and adjusted EPS. These metrics are not measures that are defined in generally accepted accounting principles (GAAP). We use these non-GAAP measures as performance measures to evaluate our overall performance. We exclude certain cash and non-cash charges or gains to calculate these non-GAAP metrics. These charges and gains may be significant and include items such as restructuring expenses (including severance costs and plant consolidation and relocation expenses), impairment charges, acquisition- and integration-related costs, and certain other items. The adjustments for fiscal 2017 are included on page 24 of this presentation. Estimates of these adjustments for fiscal 2018, on a forward-looking basis, are not available due to the low visibility and unpredictability of these items.

Documents

Fourth Quarter Fiscal 2017 · 2018. 8. 29. · • Q4 Adjusted operating income of $29.2 million, up 23% from the prior year – Includes $7.8 million from CIS business – Beginning