Modine Manufacturing Company

Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company's first quarter fiscal 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchstone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Cathy Powers, Vice President, Treasury, Investor Relations and Tax.

Good morning, and thank you for joining our conference call to discuss Modine's first quarter fiscal 2022 results. I'm joined on this call by Neil Brinker, our President and Chief Executive Officer, and Mick Luccarelli, our Executive Vice President and Chief Financial Officer. We'll be using slides for today's presentation, which can be accessed either through the webcast link or by accessing the PDF file posted on the investor relations section of our website, modine.com. On slide two is our notice regarding forward-looking statements. This call will contain forward-looking statements as outlined in our earnings release as well as in our company's filings with the Securities and Exchange Commission. With that, it's my pleasure to turn the call over to Neil.

Thank you, Kathy, and good morning, everyone. Before reviewing our first quarter results, I would like to provide an update on our most important strategic initiatives and provide some additional information on our recently announced leadership changes. To start off, I would like to provide an update on our automotive exit strategy and the current status of the sale of our liquid-cooled automotive business to Dana. As I mentioned last quarter, the regulatory process in Germany has taken longer than originally expected. In response to concerns raised by the authorities, we voluntarily withdrew our regulatory filing in May. We then worked with Dana to revise the transaction and have resubmitted the filing in Germany, reflecting the new transactions. We will continue to work through this regulatory process, but cannot provide an estimated date of completion or guarantee any outcome. Both companies are committed to completing the sale, but at this point, it remains subject to approval by the German regulatory authorities. Now I would like to move on to the state of our markets. In general, we continue to enjoy a robust business environment, which is positive for revenue, but is creating inflationary challenges. A number of items negatively impacting the first quarter, including incremental material and supply chain costs, along with continued impact of the tight labor markets. Metals costs have continued to rise, with aluminum, copper, and steel prices up substantially from the prior year. In addition, we are working through mill capacity constraints, which impact both our direct spend and supplier availability. We are relying on alternative sourcing when necessary, and are recovering inbound premium freight costs wherever possible. From a logistics standpoint, we are dealing with the shortages of sea containers out of China, which is also driving up costs, and are routing international inbound shipments to alternative ports in order to minimize the impact of the West Coast congestion. Like many others, we are definitely experiencing temporary cost issues and inefficiencies driven by all these supply chain issues. We have dedicated resources managing our supply base and logistics, prioritizing our greatest needs, and establishing dual sourcing where possible. To address labor shortages, we are sharpening our demand planning process so that we can more efficiently manage our manpower requirements and avoid overloading our daily capacity. We're also using 8020 to differentiate lead times by product and region. And finally, we continue to monitor the impact of the chip shortage, particularly related to our automotive business. This is an evolving situation and we are developing plans and actions on how to mitigate the potential impact on our operations. Next, I would now like to discuss our recently announced leadership changes and give an update on our business transformation. I'm very pleased to have Adrian Peace and Eric McGinnis join our executive management team. Both Eric and Adrian have over 25 years of global industrial leadership experience and a proven track record of driving profitable P&L growth. Adrian will be leading our CIS segment and comes to Modine with a tremendous amount of global leadership experience executing on business turnarounds and driving operational excellence. Adrian spent 23 years with GE, where he served as president and CEO of their consumer and industrials business in Latin America, and prior to that served as President, Chemicals and Monitoring Solutions North America, GE Water, and Process Technologies. From there, he moved on to Grainger and was tasked with leading their international growth strategy, and lastly to Republic Services, where he served as the Senior Vice President, Emerging Business Operations, and led their sustainability initiatives. Our 80-20 work in the CIS segment will provide a roadmap of priorities for Adrian, And I'm confident that he will be able to improve margins in this segment by focusing our resources on our most important products and customers. This includes improving pricing on low volume products, removing complexity through product line simplification, and implementing precision selling techniques to differentiate how we engage commercially. I know that he is up for this challenge and his leadership will allow us to achieve our goals. Eric McGinnis will be leading our building HVAC segment and is coming to us from Regal Beloy, where he most recently served as the president of their industrial systems segment. As many of you know, Regal has been on an 80-20 journey for several years and has undergone a successful business transformation, both improving businesses and through a successful growth and acquisition strategy. Eric's experience with 8020 and his prior role as vice president business development, where he led Regal's M&A and strategy group, make him the perfect candidate to lead our building HVAC segment. Eric will be responsible for leading our transformation in this segment, which shares some of the fastest growing end markets for Modine. Using the 8020 framework, We have been focusing on segmentation, which involves creating market-based verticals led by general managers who can operate entrepreneurially while improving speed and accountability. Each of these general managers will have a supporting organization structure designed to focus commercial resources and drive end market demand and share growth. We are currently focusing on several attractive markets, including data centers, heating and indoor air quality for schools and commercial buildings. As I shared last quarter, we are expecting the strong growth in our data center markets to continue and are providing the leadership and resources necessary to allow the continued success of this business. We plan to launch a new computer room air handling unit in both Europe and the U.S. later this year that will provide higher system efficiency and flexibility through customization and controls targeted both the co-location and hyperscale markets. To support these initiatives, we have shifted our plant in Spain from our CIS organization to building HVAC to provide additional capacity for growth in the data center market. This is an exciting time for Modine as we build a foundation for our future. We're getting our leadership team in place to strengthen our commercial and operational organizations so that we can reduce complexity and accelerate growth. Now, I'd like to turn the call over to Mick, who will review our results for the quarter and provide the segment updates.