Modine Manufacturing : Q4 2024 Earnings Presentation

Fourth Quarter Fiscal 2024

May 22, 2024

NEIL BRINKER

President and Chief Executive Officer

MICK LUCARELI

Executive Vice President and Chief Financial Officer

KATHY POWERS

Vice President, Treasurer, and Investor Relations

Forward-Looking Statements

This presentation contains statements, including information about future financial performance and market conditions, accompanied by phrases such as "believes," "estimates," "expects," "plans," "anticipates," "intends," "projects," 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, 2023 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, 2023, September 30, 2023, and December 31, 2023. Other risks and uncertainties include, but are not limited to, the following: the impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, energy costs, supply chain challenges or supplier constraints, tariffs, sanctions and other trade issues or cross-border trade restrictions; the impact of other economic, social and political conditions, changes and challenges in the markets where we operate and compete, including foreign currency exchange rate fluctuations, increases in interest rates or tightening of the credit markets, recession or recovery therefrom, restrictions associated with importing and exporting and foreign ownership, public health crises, and the general uncertainties, including the impact on demand for our products and the markets we serve from regulatory and/or policy changes that have been or may be implemented in the U.S. or abroad, including those related to tax and trade, climate change, COVID-19 or future public health threats, and military conflicts, including the current conflicts in Ukraine and in the Middle East and heightened tensions in the Red Sea; the overall health and pricing focus of our customers; our ability to successfully realize anticipated benefits, including improved profit margins and cash flow, from our strategic initiatives and our application of 80/20 principles across our businesses; our ability to be at the forefront of technological advances and the impacts of any changes in the adoption rate of technologies that we expect to drive sales growth; our ability to accelerate growth organically and through acquisitions and successfully integrate acquired businesses; our ability to effectively and efficiently manage our operations in response to sales volume changes, including maintaining adequate production capacity to meet demand in our growing businesses while also completing restructuring activities and realizing benefits thereof; our ability to fund our global liquidity requirements efficiently and comply with the financial covenants in our credit agreements; operational inefficiencies as a result of product or program launches, unexpected volume increases or decreases, product transfers and warranty claims; the impact on Modine of any significant increases in commodity prices, particularly aluminum, copper, steel and stainless steel (nickel) and other purchased components and related costs, and our ability to adjust product pricing in response to any such increases; our ability to recruit and maintain talent in managerial, leadership, operational and administrative functions and to mitigate increased labor costs; our ability to protect our proprietary information and intellectual property from theft or attack; the impact of any substantial disruption or material breach of our information technology ("IT") systems; the impact of a material weakness identified in our internal controls related to IT system access in Europe on our financial reporting process; costs and other effects of environmental investigation, remediation or litigation and the increasing emphasis on environmental, social and corporate governance matters; our ability to realize the benefits of deferred tax assets; and other risks and uncertainties identified in our public filings with the U.S. Securities and Exchange Commission. Forward-looking statements are as of the date of this presentation, and we do not assume any obligation to update any forward-looking statements.

3

Opening Comments

• Strong fourth quarter performance closed out another record year
• Full year sales increased 5% to $2.4 billion and adjusted EBITDA increased 48% to $314 million
• Earnings growth driven by shifting business mix to targeted markets with strong growth drivers
• Completed strategic acquisitions and divestitures this year
• • Liquid immersion cooling technology from TMGcore
  • Scott Springfield, air handling units for data centers and other strategic applications
  • Divestitures of three European automotive businesses

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

Climate Solutions

• Outstanding year, adjusted EBITDA increased 31% on a 4% sales increase
• Data Center sales increased 69% to $294 million
• Scott Springfield acquisition
• • Acquired two facilities, one dedicated to data center products, the other supporting custom air handling units for other end markets
  • Revenues will be included in Data Centers and HVAC&R product groups
  • Complementary cooling technology and strong customer base
  • Strategic relationship with new data center customer, secured additional location in Calgary to increase capacity to support sales growth
• Secured additional capacity for data center products in U.K. with addition of Bradford facility

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

5

Performance Technologies

• Fantastic year, adjusted EBITDA increased 67% on a 5% sales increase
• Advancing 80/20 throughout the organization, from commercial activities to the factory floor
• Improved sales mix by focusing resources on strategic product lines and de- emphasizing lower margin business
• Focusing on markets where we have strong customer relationships and a clear strategic advantage

• • Advanced Solutions added 16 new programs for EV and other specialty vehicle systems during the year
  • Making progress on consolidating technical services, testing and tooling operations
  • Planning for additional mix shift in Fiscal 2025, with improvement in adjusted EBITDA dollars and margin
• See appendix for the full GAAP income statement and Non-GAAP reconciliations

Modine Genset module produced

in Lawrenceburg, TN.

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Climate Solutions

(In millions)	Net Sales
$263.0	$264.5

Q4 FY23

Q4 FY24

Adjusted EBITDA & EBITDA Margin*

40% Data Centers

▪ Growth driven by hyperscale and colocation market demand plus acquisition

1% HVAC&R

• Increase in IAQ product sales related to acquisitions along with a slight increase in the Heating market

-20% Heat Transfer Products

▪ Lower demand across several markets along with

planned 80/20 initiatives

▪ Good earnings conversion on slightly higher sales,

resulting in a 210 bps margin improvement

$41.8

$47.5

▪ 80/20 disciplines remain at the heart of procurement

18.0%

15.9%

Q4 FY23

Q4 FY24

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

savings, productivity and customer pricing

▪ Expect revenue and earnings growth to continue;

product portfolio expansion through the recent

investments in Scott Springfield and immersion

cooling technology

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Performance Technologies

(In millions)	Net Sales

$364.1

$344.4

Q4 FY23

Q4 FY24

Adjusted EBITDA & EBITDA Margin*

$46.1

$33.3

13.4%

9.1%

Q4 FY23

Q4 FY24

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

15% Advanced Solutions

• Growth driven by EVantage product sales and other electric vehicles, along with higher coatings sales

-13%Liquid-Cooled Applications

• Mainly driven by German divestitures and market softness in Europe and Asia

-2%Air-Cooled Applications

• • Primarily driven by lower auto product sales from 80/20 initiatives and German divestitures
• Lower sales were driven by divestitures and automotive, partially offset by growth in off-highway and specialty vehicle customers
• Organic sales increased 2%
• Excellent earnings growth, with a 38% increase in Adjusted EBITDA and 430 bps of margin improvement
• Anticipating 80/20 disciplines to result in ongoing earnings improvement for the upcoming fiscal year

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Financial Review

(In millions)

Net Sales

Gross Profit

% of net sales

SG&A expenses

Q4 FY24

$603.5

135.3

22.4%

75.6

	(In millions)	Net Sales		Adjusted EBITDA &
Q4 FY23				EBITDA Margin*
$618.1	$618.1	$603.5	$78.8
$65.5
112.2				13.1%
18.2%

10.6%

60.9

% of net sales

Operating Income

12.5%

46.8

9.9%

Q4 FY23

Q4 FY24

Q4 FY23

Q4 FY24

48.5 ▪ Sales declined due to planned 80/20 initiatives and divestitures, partially offset by growth in targeted areas

% of net sales	7.8%	7.8%
Adjusted EBITDA*	78.8	65.5
% of net sales	13.1%	10.6%
Adjusted EPS*	$0.77	$0.67

• Results include a negative $24 million sales impact of divestitures
• Strong conversion of 420 bps gross margin improvement driven by ongoing 80/20 initiatives and lower commodity metals
• Increased SG&A driven by employee compensation along with recent acquisitions and transaction related costs of $2.5M
• Excellent Adjusted EBITDA growth of 20%, along with a 250 bps margin improvement

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

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Cash Flow and Metrics

Cash Flow and Metrics

Free Cash Flow

Net Debt (as of March 31)

Leverage Ratio (as of March 31)

Capital Expenditures

$127 million

$372 million

1.2x

$88 million

Modine Maintains Strong Balance Sheet & Liquidity

• Free cash flow improved $70M over the prior year; negative ($4M) during the quarter, primarily due to higher capital expenditures including the purchase of the Bradford U.K. manufacturing facility
• Net debt increased $86M YTD; increasing $188M during the quarter largely due to the Scott Springfield acquisition
• Leverage ratio increased from 0.7x to 1.2x during the quarter
• Anti-dilutiveshare repurchase program; no shares repurchased this quarter
• Balance sheet remains strong to support both organic growth and acquisition initiatives

* See appendix for the full GAAP income statement and Non-GAAP reconciliations	10