On this page of StockholderLetter.com we present the latest annual shareholder letter from MODINE MANUFACTURING CO — ticker symbol MOD. Reading current and past MOD letters to shareholders can bring important insights into the investment thesis.
2024
ANNUAL REPORT
THE ROAD AHEAD
OUR PURPOSE
The world is moving in a cleaner, healthier direction
and companies are expected to contribute to building
a more sustainable future. Heating, cooling and
ventilation must be about more than just creating a
comfortable environment; it must be about creating
a better environment.
history
We are leveraging our technology and histor
ry
ry of
innovation to achieve our purpose of Engineering
Enginneering
ne ring a
Cleaner, Healthier World   .
At Modine, we are committed to doing
ng business
bu
business the right
quality,
way     without compromise to qua
quality, integrity or our
values
people. Our longstanding value
ues help inform and guide
every decision we make andd our
o actions re   ect that. It   s a
employees, customers, partners,
promise we make to our em
suppliers, and shareholders.
old
AT-A-GLANCE
AT
AT-A-GLA
A GLA
ANCE
- Modine (NYSE:M
(NYSE:MOD):
MOD): A diversi   ed global leader in
management
thermal managemen
ment technology and solutions
me
- Founded in 1916, headquartered
rter
rt
ered
ed in
in Racine,
Raci
Ra
cine
ne Wisconsin
Wi
Designs,
- De
gns, manufactures, and distributes thermal
the al
management
manage
geme
gement
menn systems
ms and
a components
pone
po
nent
nts for a variety
off endd markets
k
- Operates globally with manufacturing facilities in
North America, Europe, Asia, and South America
- Focuses on innovation, sustainability, energy
efficiency, and customer support
Modine Manufacturing Company 2024 Annual Report
DEAR SHAREHOLDERS,
I am pleased to report another year of
record-breaking revenues and earnings
for Modine as we continued to successfully
execute against our targets and advance
our transformation.
It is hard to believe that as we celebrated our 100th anniversary eight
years ago, 87% of our $1.4 billion in revenue came from sales to vehicular
customers, while our    Building HVAC    segment generated only $181 million
of revenue.
This year, we reported revenues of $2.4 billion, with a greatly improved sales
mix and margin profile. Back in fiscal 2016, our Board of Directors made the
strategic decision to shift our business mix to reduce customer concentration
and cyclical exposure to our most challenging end markets. We took the first
step in this transformation with the acquisition of Luvata. That acquisition,
along with Modine   s Building HVAC business, form what is today our Climate
Solutions segment.
The Luvata acquisition, along with the prior acquisition of Airedale in the
UK, were important first steps in building the Modine of the future. Over
the past two years we have pursued additional acquisitions and operational
improvements that have further changed our business mix, expanded our
market opportunities, and accelerated our growth. We believe our strong
performance this past year is just the beginning of what Modine can achieve.
This type of transformation, led by our 80/20 philosophy, takes more than a
single acquisition or even a series of acquisitions. It takes a cultural change
at the core of the business, from the annual strategic planning process to
the day-to-day decisions made on the factory floor. I am incredibly proud
of the Modine team and have confidence that we will continue to drive
improvement and produce results as we execute on our long-term strategic
initiatives and work toward our long-term financial targets.
NEIL D. BRINKER
President and CEO
Modine Manufacturing Company 2024 Annual Report
ANOTHER RECORD YEAR
Fiscal 2024 net sales were a record-breaking $2.4 billion, a 5% increase
from the prior year. We reported adjusted EBITDA of $314 million, a
48% increase from the prior year and another all-time high, and free cash
   ow of $127 million.
Our Climate Solutions segment had an outstanding year. Revenue growth was
driven by our data center business, which reported sales of $294 million, up
69% from the prior year. Adjusted EBITDA margin improved 370 basis points
to 18.3%, which exceeded our expectations and was above the top end of the
long-term margin goals laid out during our Investor Day in 2022.
We made several important strategic investments in our Climate Solutions
segment this year, including the purchase of the assets of TMGcore.
This intellectual property, along with our internally developed cooling
distribution unit, expands our solution set for both immersion and
direct-to-chip liquid cooling technology to address the growing heat loads
of high-density computing applications. It is difficult to predict the exact
thermal management needs of data centers in the future. We are strategically
positioning ourselves with a modular and comprehensive suite of products
to address our customers    diverse and changing needs. Our suite of data
center cooling products, along with our controls and monitoring systems,
will help meet the cooling requirements of today and tomorrow, while
optimizing power and water usage.
Another important investment this year was our acquisition of Scott Spring   eld
Manufacturing (   SSM   ). SSM is a strong strategic    t because its core products
align with two of our key growth verticals, Data Centers and Indoor Air Quality
(   IAQ   ). The acquisition added an evaporative cooling system to our data center
product line and brought a strategic relationship with an important hyperscale
customer. Adding additional hyperscale customers is a top strategic priority for
our Climate Solutions segment, and this acquisition accelerated the expansion
and diversi   cation of our customer base. We are very excited about the growth
prospects these investments will bring to Modine.
See appendix for information regarding Non-GAAP    nancial measures
Modine Manufacturing Company 2024 Annual Report
For a long time, I   ve been calling Data Centers    the tip of the spear    of our
long-term strategic transformation. We have signi   cantly expanded our
manufacturing capacity for data center products and are in the process of
converting our Grenada, MS, location to a dedicated data center facility.
In addition, we recently added a third manufacturing location in the UK to
support growing demand for our chiller products. In total, we are now up to
nine manufacturing facilities supporting data center products globally. We
will continue to add capacity as needed to ensure that we can meet both current
and future customer demand.
Our Heat Transfer Product business faced some headwinds this year following
changes to the mandatory heat pump adoption rules in Europe, but we
capitalized on the opportunity to further apply 80/20 principles to improve
margins. Despite the revenue drop in    scal 2024, this business signi   cantly
improved its pro   tability and we estimate that the revenue impact from 80/20
actions alone was more than $10 million. This vertical stands as a testament to
what our 80/20 approach can achieve, contributing to the more than 700
basis points improvement in adjusted EBITDA margins for the Climate Solutions
segment since    scal 2022.
Our HVAC&R vertical contains three distinct businesses: Heating, IAQ, and
Refrigeration Coolers. We made some important investments in our IAQ business
this year, including the acquisitions of SSM and Napps Technology. Napps
brought us air- and water-cooled chillers, condensing units, and heat pumps
to complement our existing offerings to the K-12 school market and other
similar applications. In addition, the SSM acquisition brought us custom-built
air handling units targeted at the healthcare market and a sales representative
network in the U.S. and Canada. We are dedicated to growing our IAQ business
and these acquisitions expand our product offerings and market reach.
In Heating, we have a proven and trusted brand with almost 100 years of
industry experience and a large installed base that drives replacement sales.
We have focused our product development efforts on expanding electric
offerings, including the introduction of the new Amp Dawg    residential unit
heater, and an expanded line of infrared products that provide excellent
heating for backyard patios, restaurants, workshops, and more. We believe
the investments made in our designated HVAC&R growth areas position us
well to drive top and bottom-line growth as we innovate to provide the
sustainable, electric solutions demanded by the market.
See appendix for information regarding Non-GAAP    nancial measures
Modine Manufacturing Company 2024 Annual Report
 • shareholder letter icon 7/1/2024 Letter Continued (Full PDF)
 • stockholder letter icon 7/7/2023 MOD Stockholder Letter
 • stockholder letter icon More "Auto Parts" Category Stockholder Letters
 • Benford's Law Stocks icon MOD Benford's Law Stock Score = 97


MOD Shareholder/Stockholder Letter Transcript:

2024
ANNUAL REPORT
THE ROAD AHEAD

OUR PURPOSE
The world is moving in a cleaner, healthier direction
and companies are expected to contribute to building
a more sustainable future. Heating, cooling and
ventilation must be about more than just creating a
comfortable environment; it must be about creating
a better environment.
history
We are leveraging our technology and histor
ry
ry of
innovation to achieve our purpose of Engineering
Enginneering
ne ring a
Cleaner, Healthier World   .
At Modine, we are committed to doing
ng business
bu
business the right
quality,
way     without compromise to qua
quality, integrity or our
values
people. Our longstanding value
ues help inform and guide
every decision we make andd our
o actions re   ect that. It   s a
employees, customers, partners,
promise we make to our em
suppliers, and shareholders.
old
AT-A-GLANCE
AT
AT-A-GLA
A GLA
ANCE
- Modine (NYSE:M
(NYSE:MOD):
MOD): A diversi   ed global leader in
management
thermal managemen
ment technology and solutions
me
- Founded in 1916, headquartered
rter
rt
ered
ed in
in Racine,
Raci
Ra
cine
ne Wisconsin
Wi
Designs,
- De
gns, manufactures, and distributes thermal
the al
management
manage
geme
gement
menn systems
ms and
a components
pone
po
nent
nts for a variety
off endd markets
k
- Operates globally with manufacturing facilities in
North America, Europe, Asia, and South America
- Focuses on innovation, sustainability, energy
efficiency, and customer support
Modine Manufacturing Company 2024 Annual Report

DEAR SHAREHOLDERS,
I am pleased to report another year of
record-breaking revenues and earnings
for Modine as we continued to successfully
execute against our targets and advance
our transformation.
It is hard to believe that as we celebrated our 100th anniversary eight
years ago, 87% of our $1.4 billion in revenue came from sales to vehicular
customers, while our    Building HVAC    segment generated only $181 million
of revenue.
This year, we reported revenues of $2.4 billion, with a greatly improved sales
mix and margin profile. Back in fiscal 2016, our Board of Directors made the
strategic decision to shift our business mix to reduce customer concentration
and cyclical exposure to our most challenging end markets. We took the first
step in this transformation with the acquisition of Luvata. That acquisition,
along with Modine   s Building HVAC business, form what is today our Climate
Solutions segment.
The Luvata acquisition, along with the prior acquisition of Airedale in the
UK, were important first steps in building the Modine of the future. Over
the past two years we have pursued additional acquisitions and operational
improvements that have further changed our business mix, expanded our
market opportunities, and accelerated our growth. We believe our strong
performance this past year is just the beginning of what Modine can achieve.
This type of transformation, led by our 80/20 philosophy, takes more than a
single acquisition or even a series of acquisitions. It takes a cultural change
at the core of the business, from the annual strategic planning process to
the day-to-day decisions made on the factory floor. I am incredibly proud
of the Modine team and have confidence that we will continue to drive
improvement and produce results as we execute on our long-term strategic
initiatives and work toward our long-term financial targets.
NEIL D. BRINKER
President and CEO
Modine Manufacturing Company 2024 Annual Report

ANOTHER RECORD YEAR
Fiscal 2024 net sales were a record-breaking $2.4 billion, a 5% increase
from the prior year. We reported adjusted EBITDA of $314 million, a
48% increase from the prior year and another all-time high, and free cash
   ow of $127 million.
Our Climate Solutions segment had an outstanding year. Revenue growth was
driven by our data center business, which reported sales of $294 million, up
69% from the prior year. Adjusted EBITDA margin improved 370 basis points
to 18.3%, which exceeded our expectations and was above the top end of the
long-term margin goals laid out during our Investor Day in 2022.
We made several important strategic investments in our Climate Solutions
segment this year, including the purchase of the assets of TMGcore.
This intellectual property, along with our internally developed cooling
distribution unit, expands our solution set for both immersion and
direct-to-chip liquid cooling technology to address the growing heat loads
of high-density computing applications. It is difficult to predict the exact
thermal management needs of data centers in the future. We are strategically
positioning ourselves with a modular and comprehensive suite of products
to address our customers    diverse and changing needs. Our suite of data
center cooling products, along with our controls and monitoring systems,
will help meet the cooling requirements of today and tomorrow, while
optimizing power and water usage.
Another important investment this year was our acquisition of Scott Spring   eld
Manufacturing (   SSM   ). SSM is a strong strategic    t because its core products
align with two of our key growth verticals, Data Centers and Indoor Air Quality
(   IAQ   ). The acquisition added an evaporative cooling system to our data center
product line and brought a strategic relationship with an important hyperscale
customer. Adding additional hyperscale customers is a top strategic priority for
our Climate Solutions segment, and this acquisition accelerated the expansion
and diversi   cation of our customer base. We are very excited about the growth
prospects these investments will bring to Modine.
See appendix for information regarding Non-GAAP    nancial measures
Modine Manufacturing Company 2024 Annual Report

For a long time, I   ve been calling Data Centers    the tip of the spear    of our
long-term strategic transformation. We have signi   cantly expanded our
manufacturing capacity for data center products and are in the process of
converting our Grenada, MS, location to a dedicated data center facility.
In addition, we recently added a third manufacturing location in the UK to
support growing demand for our chiller products. In total, we are now up to
nine manufacturing facilities supporting data center products globally. We
will continue to add capacity as needed to ensure that we can meet both current
and future customer demand.
Our Heat Transfer Product business faced some headwinds this year following
changes to the mandatory heat pump adoption rules in Europe, but we
capitalized on the opportunity to further apply 80/20 principles to improve
margins. Despite the revenue drop in    scal 2024, this business signi   cantly
improved its pro   tability and we estimate that the revenue impact from 80/20
actions alone was more than $10 million. This vertical stands as a testament to
what our 80/20 approach can achieve, contributing to the more than 700
basis points improvement in adjusted EBITDA margins for the Climate Solutions
segment since    scal 2022.
Our HVAC&R vertical contains three distinct businesses: Heating, IAQ, and
Refrigeration Coolers. We made some important investments in our IAQ business
this year, including the acquisitions of SSM and Napps Technology. Napps
brought us air- and water-cooled chillers, condensing units, and heat pumps
to complement our existing offerings to the K-12 school market and other
similar applications. In addition, the SSM acquisition brought us custom-built
air handling units targeted at the healthcare market and a sales representative
network in the U.S. and Canada. We are dedicated to growing our IAQ business
and these acquisitions expand our product offerings and market reach.
In Heating, we have a proven and trusted brand with almost 100 years of
industry experience and a large installed base that drives replacement sales.
We have focused our product development efforts on expanding electric
offerings, including the introduction of the new Amp Dawg    residential unit
heater, and an expanded line of infrared products that provide excellent
heating for backyard patios, restaurants, workshops, and more. We believe
the investments made in our designated HVAC&R growth areas position us
well to drive top and bottom-line growth as we innovate to provide the
sustainable, electric solutions demanded by the market.
See appendix for information regarding Non-GAAP    nancial measures
Modine Manufacturing Company 2024 Annual Report



shareholder letter icon 7/1/2024 Letter Continued (Full PDF)
 

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