Thermal systems specialist Modine Manufacturing has reported lower year on year fiscal first quarter 2008 earnings but has nonetheless revised its full-year estimates upwards due to a better than expected result.
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Net sales were $444.1m versus $421.9m a year ago and earnings per share of $0.39 were off compared with $0.65 a year ago. First quarter 2007 EPS results, however, included $0.11 of tax benefits from using a net operating loss in Brazil.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) were $39.4m versus $43.4m.
First quarter fiscal 2008 earnings from continuing operations were $12.4m compared with $20.9m a year ago.
Despite strong sales, the company reported lower earnings due to declines in North American heavy duty truck build rates and year-on-year raw material increases.
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By GlobalDataThe first quarter of fiscal 2008 also included $3.0m of foreign currency exchange rate gains from Brazil and a higher tax rate in the first quarter also impacted earnings, compared to the significantly lower rate reported in the first quarter of fiscal 2007 as a result of a tax benefit from the use of a net operating loss in Brazil in the previous year.
First quarter gross profit was $71.0m, or 16.0% of sales, compared to gross profit of $78.0m, or 8.5% of sales, in the same period last year.
“The actions we are taking to change the business model, coupled with our performance in the first quarter and increased expectations for fiscal 2008, reinforces our confidence in the long term profitable growth of our company,” said Modine president and CEO David Rayburn.
“We are extremely pleased with the strong increase in sales, especially in Europe, Asia, and South America and also within commercial products.
“The growth in these markets offsets the nearly 55% decline in the North American heavy duty truck build rates following heavy demand last year prior to the change in engine emission requirements.
“As a result of the higher than expected first quarter performance, we have increased our full year earnings guidance.
“While there is still margin pressure as expected, we are beginning to experience some cost saving benefits from our manufacturing footprint realignment and product repositioning,” Rayburn added.
“We performed above our expectations in the first quarter which provides further evidence that efforts we have taken to restructure the business have gained traction,” noted chief financial officer Bradley Richardson.
“We are committed to expand the gross margin to the 18 to 20% range long term and drive return on average capital employed to our goal of 11 to 12%.”
Modine has increased its fiscal 2008 guidance for earnings from continuing operations from the previous $.80 to $1.20 to $1.05 to $1.25 per share.
