10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 1-1373

MODINE MANUFACTURING COMPANY

(Exact name of registrant as specified in its charter)

Wisconsin	39-0482000
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin	53403
---	---
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (262) 636-1200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.625 par value	MOD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☑
Non-accelerated Filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of the registrant’s common stock, $0.625 par value, was 51,913,896 at January 28, 2022.

MODINE MANUFACTURING COMPANY

TABLE OF CONTENTS

PART I.<br> FINANCIAL INFORMATION
Item 1. Financial Statements.	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	41
Item 4. Controls and Procedures.	42
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	42
Item 5. Other Information.	43
Item 6. Exhibits.	43
SIGNATURE	44

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended December 31, 2021 and 2020

(In millions, except per share amounts)

(Unaudited)

	Three months ended<br><br> <br>December 31,						Nine months<br> ended<br><br> <br>December 31,
	2021			2020			2021			2020
Net sales	$	502.2		$	484.3		$	1,475.7		$	1,293.5
Cost of sales		427.6			401.6			1,261.6			1,083.9
Gross profit		74.6			82.7			214.1			209.6
Selling, general and administrative expenses		50.3			56.1			161.6			151.6
Restructuring expenses		2.1			0.9			3.0			7.0
Impairment charges (reversals) – net		(57.2	)		134.4			(55.7	)		134.4
Loss on sale of assets		-			-			6.6			-
Operating income (loss)		79.4			(108.7	)		98.6			(83.4	)
Interest expense		(3.8	)		(4.6	)		(11.8	)		(15.2	)
Other expense – net		(1.1	)		(0.5	)		(1.6	)		(1.0	)
Earnings (loss) before income taxes		74.5			(113.8	)		85.2			(99.6	)
Provision for income taxes		(0.1	)		(81.6	)		(7.4	)		(95.3	)
Net earnings (loss)		74.4			(195.4	)		77.8			(194.9	)
Net earnings attributable to noncontrolling interest		(0.3	)		(0.3	)		(1.0	)		(0.8	)
Net earnings (loss) attributable to Modine	$	74.1		$	(195.7	)	$	76.8		$	(195.7	)
Net earnings (loss) per share attributable to Modine shareholders:
Basic	$	1.42		$	(3.81	)	$	1.48		$	(3.82	)
Diluted	$	1.41		$	(3.81	)	$	1.46		$	(3.82	)
Weighted-average shares outstanding:
Basic		52.0			51.3			51.9			51.2
Diluted		52.4			51.3			52.5			51.2

The notes to condensed consolidated financial statements are an integral part of these statements.

MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended December 31, 2021 and 2020

(In millions)

(Unaudited)

						Nine months<br> ended<br><br> <br>December 31,
			2020			2021			2020
Net earnings (loss)	74.4		$	(195.4	)	$	77.8		$	(194.9	)
Other comprehensive income (loss):
Foreign currency translation	(3.3	)		18.4			(6.1	)		41.2
Defined<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br> benefit plans, net of income taxes of 0, 0.3, 0, and 1.1 million	1.6			1.3			6.6			3.8
Cash<br> flow hedges, net of income taxes of 0, 0, 0.1, and 0.5 million	0.2			-			(0.2	)		1.4
Total other comprehensive income (loss)	(1.5	)		19.7			0.3			46.4
Comprehensive income (loss)	72.9			(175.7	)		78.1			(148.5	)
Comprehensive income attributable to noncontrolling interest	(0.4	)		(0.7	)		(0.9	)		(1.4	)
Comprehensive income (loss) attributable to Modine	72.5		$	(176.4	)	$	77.2		$	(149.9	)

All values are in US Dollars.

The notes to condensed consolidated financial statements are an integral part of these statements.

MODINE MANUFACTURING COMPANY

CONSOLIDATED BALANCE SHEETS

December 31, 2021 and March 31, 2021

(In millions, except per share amounts)

(Unaudited)

			March 31, 2021
ASSETS
Cash and cash equivalents	61.1		$	37.8
Trade accounts receivable – net	309.3			267.9
Inventories	278.1			195.6
Assets held for sale	-			107.6
Other current assets	53.1			35.9
Total current assets	701.6			644.8
Property, plant and equipment – net	318.1			269.9
Intangible assets – net	93.2			100.6
Goodwill	169.5			170.7
Deferred income taxes	28.9			24.5
Other noncurrent assets	70.1			66.2
Total assets	1,381.4		$	1,276.7
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt	-		$	1.4
Long-term debt – current portion	21.8			21.9
Accounts payable	295.4			233.9
Accrued compensation and employee benefits	64.2			66.5
Liabilities held for sale	-			103.3
Other current liabilities	52.7			42.2
Total current liabilities	434.1			469.2
Long-term debt	368.8			311.2
Deferred income taxes	6.0			5.9
Pensions	61.0			58.6
Other noncurrent liabilities	73.9			75.7
Total liabilities	943.8			920.6
Commitments and contingencies (see Note 18)
Shareholders’ equity:
Preferred stock, 0.025 par value, authorized 16.0 million shares, issued - none	-			-
Common stock, 0.625 par value, authorized 80.0 million shares, issued 54.6 million and 54.3 million<br> shares	34.2			33.9
Additional paid-in capital	260.5			255.0
Retained earnings	336.0			259.2
Accumulated other comprehensive loss	(160.8	)		(161.2	)
Treasury stock, at cost, 2.8 million and 2.7 million shares	(39.7	)		(38.2	)
Total Modine shareholders’ equity	430.2			348.7
Noncontrolling interest	7.4			7.4
Total equity	437.6			356.1
Total liabilities and equity	1,381.4		$	1,276.7

All values are in US Dollars.

The notes to condensed consolidated financial statements are an integral part of these statements.

MODINE MANUFACTURING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended December 31, 2021 and 2020

(In millions)

(Unaudited)

	Nine months<br> ended December 31,
	2021			2020
Cash flows from operating activities:
Net earnings (loss)	$	77.8		$	(194.9	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		40.4			54.2
Impairment charges (reversals) – net		(55.7	)		134.4
Loss on sale of assets		6.6			-
Stock-based compensation expense		4.7			4.2
Deferred income taxes		(4.7	)		77.5
Other – net		2.0			4.7
Changes in operating assets and liabilities:
Trade accounts receivable		5.8			24.5
Inventories		(66.6	)		9.9
Accounts payable		24.9			1.1
Other assets and liabilities		(27.8	)		30.9
Net cash provided by operating activities		7.4			146.5
Cash flows from investing activities:
Expenditures for property, plant and equipment		(30.7	)		(23.7	)
Proceeds from (payments for) disposition of assets		(7.6	)		0.7
Disbursements for loan origination (see Note 1)		(4.7	)		-
Other – net		1.3			0.6
Net cash used for investing activities		(41.7	)		(22.4	)
Cash flows from financing activities:
Borrowings of debt		278.6			12.0
Repayments of debt		(221.9	)		(134.5	)
Borrowings (repayments) on bank overdraft facilities – net		(5.0	)		3.5
Financing fees paid		(0.2	)		(0.8	)
Dividend paid to noncontrolling interest		(0.9	)		-
Other – net		(0.4	)		(0.8	)
Net cash provided by (used for) financing activities		50.2			(120.6	)
Effect of exchange rate changes on cash		(0.7	)		3.6
Net increase in cash, cash equivalents, restricted cash and cash held for sale		15.2			7.1
Cash, cash equivalents, restricted cash and cash held for sale – beginning of period		46.1			71.3
Cash, cash equivalents, restricted cash and cash held for sale – end of period	$	61.3		$	78.4

The notes to condensed consolidated financial statements are an integral part of these statements.

MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three and nine months ended December 31, 2021 and 2020

(In millions)

(Unaudited)

	Common stock				Additional		Retained		Accumulated other			Treasury stock,			Non-controlling
	Shares		Amount		paid-in capital		earnings		comprehensive loss			at cost			interest			Total
Balance, March 31, 2021		54.3	$	33.9	$	255.0	$	259.2	$	(161.2	)	$	(38.2	)	$	7.4		$	356.1
Net earnings		-		-		-		2.3		-			-			0.5			2.8
Other comprehensive income		-		-		-		-		8.0			-			0.2			8.2
Stock options and awards		0.2		0.1		0.7		-		-			-			-			0.8
Purchase of treasury stock		-		-		-		-		-			(1.0	)		-			(1.0	)
Stock-based compensation expense		-		-		1.2		-		-			-			-			1.2
Dividend paid to noncontrolling interest		-		-		-		-		-			-			(0.9	)		(0.9	)
Balance, June 30, 2021		54.5	$	34.0	$	256.9	$	261.5	$	(153.2	)	$	(39.2	)	$	7.2		$	367.2
Net earnings		-		-		-		0.4		-			-			0.2			0.6
Other comprehensive loss		-		-		-		-		(6.0	)		-			(0.4	)		(6.4	)
Stock options and awards		-		0.1		0.1		-		-			-			-			0.2
Stock-based compensation expense		-		-		2.4		-		-			-			-			2.4
Balance, September 30, 2021		54.5	$	34.1	$	259.4	$	261.9	$	(159.2	)	$	(39.2	)	$	7.0		$	364.0
Net earnings		-		-		-		74.1		-			-			0.3			74.4
Other comprehensive income (loss)		-		-		-		-		(1.6	)		-			0.1			(1.5	)
Stock options and awards		0.1		0.1		-		-		-			-			-			0.1
Purchase of treasury stock		-		-		-		-		-			(0.5	)		-			(0.5	)
Stock-based compensation expense		-		-		1.1		-		-			-			-			1.1
Balance, December 31, 2021		54.6	$	34.2	$	260.5	$	336.0	$	(160.8	)	$	(39.7	)	$	7.4		$	437.6
	Common stock				Additional			Retained			Accumulated other			Treasury stock,			Non-controlling
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Shares		Amount		paid-in capital			earnings			comprehensive loss			at cost			interest		Total
Balance, March 31, 2020		53.4	$	33.3	$	245.1		$	469.9		$	(223.3	)	$	(37.1	)	$	5.7	$	493.6
Net (loss) earnings		-		-		-			(8.6	)		-			-			0.2		(8.4	)
Other comprehensive income		-		-		-			-			7.5			-			0.1		7.6
Stock options and awards		0.3		0.2		(0.2	)		-			-			-			-		-
Purchase of treasury stock		-		-		-			-			-			(0.8	)		-		(0.8	)
Stock-based compensation expense		-		-		0.7			-			-			-			-		0.7
Balance, June 30, 2020		53.7	$	33.5	$	245.6		$	461.3		$	(215.8	)	$	(37.9	)	$	6.0	$	492.7
Net earnings		-		-		-			8.6			-			-			0.3		8.9
Other comprehensive income		-		-		-			-			19.0			-			0.1		19.1
Stock options and awards		0.1		0.1		-			-			-			-			-		0.1
Stock-based compensation expense		-		-		1.4			-			-			-			-		1.4
Balance, September 30, 2020		53.8	$	33.6	$	247.0		$	469.9		$	(196.8	)	$	(37.9	)	$	6.4	$	522.2
Net (loss) earnings		-		-		-			(195.7	)		-			-			0.3		(195.4	)
Other comprehensive income		-		-		-			-			19.3			-			0.4		19.7
Stock-based compensation expense		-		-		2.1			-			-			-			-		2.1
Balance, December 31, 2020		53.8	$	33.6	$	249.1		$	274.2		$	(177.5	)	$	(37.9	)	$	7.1	$	348.6

The notes to condensed consolidated financial statements are an integral part of these statements.

MODINE MANUFACTURING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share amounts)

(unaudited)

Note 1: General

The accompanying unaudited condensed consolidated financial statements of Modine Manufacturing Company (“Modine” or the “Company”) were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flows required by GAAP for complete financial statements. The financial statements include all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first nine months of fiscal 2022 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2021.

Disposition of Air-cooled Automotive Business

On April 30, 2021, the Company sold its air-cooled automotive business to Schmid Metall GmbH. As a result of this transaction, the Company recorded a loss of $6.6 million during the first quarter of fiscal 2022, which included the write-off of $1.7 million of net actuarial losses related to the business’s pension plan. The Company reported this loss within the loss on sale of assets line on the consolidated statement of operations. Upon transaction closing, $5.9 million of cash within the business transferred to the buyer. During the third quarter of fiscal 2022, a purchase price adjustment for net working capital and certain other items was finalized and the Company paid the buyer $2.4 million. The final purchase price adjustment was consistent with the Company’s prior estimate and no adjustment was required to the $6.6 million loss on sale recorded during the first quarter fiscal 2022. Prior to the disposition, the Company reported the financial results of this business within the Automotive segment. The air-cooled automotive business’s net sales were $63.0 million in fiscal 2021.

In connection with the sale of the air-cooled automotive business, the Company provided the buyer with a 5-year, €4.0 million loan facility. Borrowings under the agreement currently bear interest at 2.6 percent. During the second quarter of fiscal 2022, the Company disbursed €4.0 million ($4.7 million) to the buyer under this facility. The Company recorded the loan receivable within other noncurrent assets on its consolidated balance sheet because the Company expects to receive the principal repayment more than twelve months from the balance sheet date.

Disposition of Previously-Closed Facility

During the first quarter of fiscal 2022, the Company signed a definitive agreement to sell a previously-closed manufacturing facility in the U.S. As a result, the Company recorded an impairment charge of $0.3 million within the Commercial and Industrial Solutions (“CIS”) segment to write down the property to fair value less costs to sell. During July 2021, the sale was completed and the Company received net cash proceeds of $0.7 million.

Chief Executive Officer (“CEO”) Transition in Fiscal 2021

In August 2020, Thomas A. Burke stepped down from his position as President and CEO. The Board of Directors subsequently conducted a search for his successor and, effective December 1, 2020, appointed Neil D. Brinker as President and CEO.

As a result of Mr. Burke’s departure and in connection with the search for his successor, the Company recorded costs totaling $5.9 million during the first nine months of fiscal 2021. These costs, which were recorded as selling, general and administrative (“SG&A”) expenses at Corporate, primarily consisted of severance and benefit-related expenses based upon the terms of Mr. Burke’s transition and separation agreement and costs directly associated with the CEO search, partially offset by the impact of Mr. Burke’s forfeited stock-based compensation awards.

Table of Contents
MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 2: Assets Held for Sale

Liquid-cooled Automotive Business

On October 25, 2021, the Company announced that it agreed with Dana Incorporated (“Dana”) to terminate an agreement for the sale of the liquid-cooled automotive business. Both companies had been actively engaged in the regulatory review process in Germany for many months and agreed that it was no longer in the best interest of either party to pursue the sale transaction further.

In connection with the termination of the sale agreement, the Company determined that the liquid-cooled automotive business no longer met the requirements to be classified as held for sale during the third quarter of fiscal 2022. As a result, the Company remeasured the long-lived assets reverting back to held and used classification at the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value at the date of the decision not to sell. These long-lived assets consisted primarily of property, plant and equipment assets and were fully impaired while classified as held for sale.

During the third quarter of fiscal 2022, the Company reversed $57.2 million of held for sale impairment charges based on the remeasurement of the long-lived assets of the liquid-cooled automotive business. The Company engaged third-party valuation specialists to assist in estimating the fair values of the assets. The Company primarily used the market and cost valuation approaches and utilized third-party information from various industry-accepted sources, including applicable government-published statistics and data from appraisal and resale service providers. The market approach focused on prices for comparable assets in arm’s length transactions. For land and building assets, for example, sales of similar properties near the Company’s facilities were analyzed. For machinery and equipment assets, the Company referenced available third-party information regarding the selling prices of similar equipment. The cost approach focused on the amount for which an asset could be replaced or reproduced. The cost of an asset was then adjusted downward based on various factors including, but not limited to, age, location, and physical condition. After estimating the fair values of the assets reverting back to held and used classification, the Company compared the fair value for each asset to its carrying value. Carrying value represented each asset’s carrying value before the initial impairment charge, reduced for depreciation that would have been recorded if the asset had not been classified as held for sale. The Company then adjusted each asset to the lower of fair value or carrying value, resulting in the reversal of $57.2 million of previous impairment charges. In addition, the Company resumed depreciating the property, plant and equipment assets of the liquid-cooled automotive business based on the remeasured asset values during the third quarter of fiscal 2022.

On a year-to-date basis, the $57.2 million held for sale impairment reversal during the third quarter of fiscal 2022 was partially offset by $1.2 million of net held for sale impairment charges recorded during the first six months of fiscal 2022. At both June 30, 2021 and September 30, 2021, while the liquid-cooled automotive business was held for sale, the Company reassessed its fair value less costs to sell. As a result of these evaluations, the Company recorded a total of $8.6 million of impairment charges during the first and second quarters of fiscal 2022. These impairment charges reduced the net carrying value of property, plant and equipment additions during each quarter to zero. In addition, in connection with a modification of the sale perimeter in the first quarter of fiscal 2022, the Company determined that certain manufacturing operations no longer met the requirements to be classified as held for sale. As a result, the Company reversed $7.4 million of previous impairment charges to adjust the long-lived assets within the asset groups impacted by the sale perimeter change to their estimated fair value as of June 30, 2021. The Company’s determination of fair value for the long-lived assets within these businesses involved judgement and the use of significant estimates and assumptions, including assumptions regarding future revenue projections and operating profit margins, risk-adjusted discount rates, business trends and market conditions.

The Company’s fair value measurements of the property, plant and equipment assets within the liquid-cooled automotive business are categorized as Level 3 within the fair value hierarchy. Refer to Note 4 for the definition of a Level 3 fair value measurement.

The liquid-cooled automotive business was initially classified as held for sale during the third quarter of fiscal 2021. At that time, the Company recorded $134.4 million of impairment charges primarily related to the long-lived assets within the liquid-cooled automotive business. Upon classification as held for sale, the Company assessed the disposal group’s fair value less costs to sell and reduced the net carrying value of the disposal group’s long-lived assets to zero.

The Company reported all impairment charges and reversals during fiscal 2021 and 2022 within the impairment charges (reversals) line on the consolidated statements of operations.

Table of Contents
MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Assets and Liabilities Held for Sale

As of March 31, 2021, the Company presented the assets and liabilities of the liquid- and air-cooled automotive businesses as held for sale. See Note 1 for additional information regarding the sale of the air-cooled automotive business, which was completed on April 30, 2021.

The major classes of assets and liabilities held for sale at March 31, 2021 were as follows:

ASSETS
Cash and cash equivalents	$	8.0
Trade accounts receivable – net		54.4
Inventories		24.7
Other current assets		12.8
Property, plant and equipment – net		164.0
Other noncurrent assets		8.8
Impairment of carrying value		(165.1	)
Total assets held for sale	$	107.6
LIABILITIES
Short-term debt	$	5.0
Accounts payable		46.3
Accrued compensation and employee benefits		15.5
Other current liabilities		12.2
Pensions		17.8
Other noncurrent liabilities		6.5
Total liabilities held for sale	$	103.3

Note 3: Revenue Recognition

Disaggregation of Revenue

The table below presents revenue for each of the Company’s business segments, Building HVAC Systems (“BHVAC”), CIS, Heavy Duty Equipment (“HDE”) and Automotive. Each segment’s revenue is disaggregated by primary end market, by geographic location and based upon the timing of revenue recognition and includes inter-segment sales.

Effective July 1, 2021, the Company aligned the data center businesses previously managed by and reported within the CIS segment under the BHVAC segment; see Note 20 for additional information regarding the Company’s operating segments. In connection with this segment realignment, the Company also reassessed end market classifications within the impacted businesses. The primary end market revenue information presented in the tables below for fiscal 2021 has been recast to conform to the Company’s new classifications for its end markets.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)
	Three months ended December 31,<br> 2021										Three months ended December 31,<br> 2020
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	BHVAC		CIS		HDE		Automotive		Segment<br><br> <br>Total		BHVAC		CIS		HDE		Automotive		Segment<br><br> <br>Total
Primary end market:
Commercial HVAC&R	$	66.1	$	129.6	$	-	$	-	$	195.7	$	60.9	$	105.1	$	-	$	-	$	166.0
Data center cooling		24.2		-		-		-		24.2		12.6		-		-		-		12.6
Industrial cooling		-		16.9		-		-		16.9		-		17.5		-		-		17.5
Commercial vehicle		-		-		77.7		3.1		80.8		-		-		67.0		5.5		72.5
Off-highway		-		-		80.6		1.1		81.7		-		-		68.3		0.8		69.1
Automotive and light vehicle		-		-		21.1		66.7		87.8		-		-		28.8		105.4		134.2
Other		0.3		2.1		21.4		1.5		25.3		0.2		2.3		21.5		2.2		26.2
Net sales	$	90.6	$	148.6	$	200.8	$	72.4	$	512.4	$	73.7	$	124.9	$	185.6	$	113.9	$	498.1
Geographic location:
Americas	$	55.0	$	79.4	$	124.7	$	8.0	$	267.1	$	45.0	$	66.8	$	107.9	$	14.8	$	234.5
Europe		35.6		63.1		36.2		49.2		184.1		28.7		47.9		35.0		80.9		192.5
Asia		-		6.1		39.9		15.2		61.2		-		10.2		42.7		18.2		71.1
Net sales	$	90.6	$	148.6	$	200.8	$	72.4	$	512.4	$	73.7	$	124.9	$	185.6	$	113.9	$	498.1
Timing of revenue recognition:
Products transferred at a point in time	$	86.6	$	138.6	$	192.2	$	72.4	$	489.8	$	73.3	$	115.8	$	177.6	$	113.9	$	480.6
Products transferred over time		4.0		10.0		8.6		-		22.6		0.4		9.1		8.0		-		17.5
Net sales	$	90.6	$	148.6	$	200.8	$	72.4	$	512.4	$	73.7	$	124.9	$	185.6	$	113.9	$	498.1
	Nine months<br> ended December 31, 2021										Nine months<br> ended December 31, 2020
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	BHVAC		CIS		HDE		Automotive		Segment<br><br> <br>Total		BHVAC		CIS		HDE		Automotive		Segment<br><br> <br>Total
Primary end market:
Commercial HVAC&R	$	173.4	$	396.5	$	-	$	-	$	569.9	$	148.9	$	309.0	$	-	$	-	$	457.9
Data center cooling		59.7		-		-		-		59.7		46.7		-		-		-		46.7
Industrial cooling		-		50.9		-		-		50.9		-		53.2		-		-		53.2
Commercial vehicle		-		-		233.8		10.8		244.6		-		-		174.8		11.4		186.2
Off-highway		-		-		237.5		3.5		241.0		-		-		179.8		2.3		182.1
Automotive and light vehicle		-		-		61.9		205.6		267.5		-		-		69.8		257.4		327.2
Other		1.6		8.8		65.2		4.1		79.7		0.7		7.4		50.3		14.8		73.2
Net sales	$	234.7	$	456.2	$	598.4	$	224.0	$	1,513.3	$	196.3	$	369.6	$	474.7	$	285.9	$	1,326.5
Geographic location:
Americas	$	131.6	$	244.7	$	371.0	$	25.0	$	772.3	$	109.5	$	194.8	$	274.4	$	39.2	$	617.9
Europe		103.1		189.4		112.8		158.1		563.4		86.8		139.4		91.2		195.9		513.3
Asia		-		22.1		114.6		40.9		177.6		-		35.4		109.1		50.8		195.3
Net sales	$	234.7	$	456.2	$	598.4	$	224.0	$	1,513.3	$	196.3	$	369.6	$	474.7	$	285.9	$	1,326.5
Timing of revenue recognition:
Products transferred at a point in time	$	226.0	$	421.8	$	572.7	$	224.0	$	1,444.5	$	190.6	$	341.4	$	456.3	$	285.9	$	1,274.2
Products transferred over time		8.7		34.4		25.7		-		68.8		5.7		28.2		18.4		-		52.3
Net sales	$	234.7	$	456.2	$	598.4	$	224.0	$	1,513.3	$	196.3	$	369.6	$	474.7	$	285.9	$	1,326.5

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Contract Balances

Contract assets and contract liabilities from contracts with customers were as follows:

	December 31, 2021		March 31, 2021
Contract assets	$	18.0	$	5.7
Contract liabilities		9.9		5.6

At March 31, 2021, $7.1 million and $2.9 million of contract assets and contract liabilities, respectively, were classified as held for sale and excluded from the amounts above. See Note 2 for additional information.

Contract assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed. The $12.3 million increase in contract assets during the first nine months of fiscal 2022 primarily resulted from the reclassification of contract assets previously held for sale and an increase in contract assets for revenue recognized over time.

Contract liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for customer-owned tooling. The $4.3 million increase in contract liabilities during the first nine months of fiscal 2022 primarily resulted from the reclassification of contract liabilities previously held for sale and payments received in advance of the Company’s satisfaction of performance obligations.

Note 4: Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy:

•	Level 1 – Quoted prices for identical instruments in active markets.
•	Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived<br> valuations in which all significant inputs are observable in active markets.
---	---
•	Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
---	---

When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, the Company determines fair value based upon valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3.

The carrying values of cash, cash equivalents, restricted cash, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair value due to the short-term nature of these instruments. In addition, the Company assesses the fair value of a disposal group for each reporting period it is held for sale. See Note 2 for additional information regarding assets held for sale. The fair value of the Company’s long-term debt is disclosed in Note 17.

The Company holds investments in deferred compensation trusts to fund obligations under certain non-qualified deferred compensation plans. The Company records the fair value of these investments within other noncurrent assets on its consolidated balance sheets. The Company classifies money market investments held by the trusts within Level 2 of the valuation hierarchy. The Company classifies all other investments held by the trusts within Level 1 of the valuation hierarchy, as it uses quoted market prices to determine the investments’ fair value. The Company’s deferred compensation obligations, which are recorded as other noncurrent liabilities, are recorded at the fair values of the investments held by the trust. At December 31, 2021 and March 31, 2021, the fair values of the investments and obligations for the Company’s deferred compensation plans each totaled $3.0 million and $2.8 million, respectively.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 5: Pensions

Pension cost included the following components:

	Three months ended<br><br> <br>December 31,						Nine months ended<br><br> <br>December 31,
	2021			2020			2021			2020
Service cost	$	0.1		$	0.1		$	0.2		$	0.3
Interest cost		1.8			2.0			5.5			5.9
Expected return on plan assets		(3.2	)		(2.9	)		(9.6	)		(8.6	)
Amortization of unrecognized net loss		1.7			1.7			5.1			5.2
Net periodic benefit cost	$	0.4		$	0.9		$	1.2		$	2.8

During the nine months ended December 31, 2021, the Company contributed $3.5 million to its U.S. pension plans.

Note 6: Stock-Based Compensation

The Company’s stock-based incentive programs consist of the following: (1) a long-term incentive plan (“LTIP”) for officers and other executives that consists of stock awards, stock options, and performance-based stock awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.

The Company calculates compensation expense based upon the fair value of the instruments at the time of grant and subsequently recognizes expense ratably over the respective vesting periods of the stock-based awards. The Company recognized stock-based compensation expense of $1.1 million and $2.1 million for the three months ended December 31, 2021 and 2020, respectively. The Company recognized stock-based compensation expense of $4.7 million and $4.2 million for the nine months ended December 31, 2021 and 2020, respectively.

The fair value of stock-based compensation awards granted during the nine months ended December 31, 2021 and 2020 were as follows:

	Nine months ended December 31,
	2021				2020
	Shares		Fair Value<br><br> <br>Per Award		Shares		Fair Value<br><br> <br>Per Award
Stock options		0.2	$	8.79		0.4	$	3.46
Restricted stock awards		0.3	$	14.96		0.6	$	8.34
Unrestricted stock awards		0.1	$	15.93		0.2	$	5.21

In lieu of performance-based stock awards, the Company granted performance cash awards to the LTIP participants during the first nine months of fiscal 2022. The performance metrics for the cash awards are based upon a target three-year average cash flow return on invested capital and a target three-year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the three-year performance period ending March 31, 2024.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

The Company used the following assumptions in determining fair value for stock options:

	Nine months ended December 31,
	2021			2020
Expected life of awards in years		6.1			6.1
Risk-free interest rate		1.1	%		0.4	%
Expected volatility of the Company’s stock		56.5	%		54.1	%
Expected dividend yield on the Company’s stock		0.0	%		0.0	%

As of December 31, 2021, unrecognized compensation expense related to non-vested stock-based compensation awards, which will be amortized over the remaining service periods, was as follows:

	Unrecognized<br><br> <br>Compensation<br><br> <br>Expense
Stock options	$	2.4	2.9
Restricted stock awards		7.2	2.5
Performance stock awards		0.1	0.3
Total	$	9.7	2.6

Note 7: Restructuring Activities

During the first nine months of fiscal 2022, restructuring and repositioning expenses primarily consisted of severance-related costs associated with targeted headcount reductions in the CIS and Automotive segments and equipment transfer costs within the HDE segment.

During the first nine months of fiscal 2021, the Company recorded $3.1 million of severance expenses related to plant consolidation activities in China within the CIS segment. The Company also implemented targeted headcount reductions in the HDE and CIS segments.

Restructuring and repositioning expenses were as follows:

	Three months ended<br><br> <br>December 31,				Nine months ended<br><br> <br>December 31,
	2021		2020		2021		2020
Employee severance and related benefits	$	1.4	$	0.5	$	1.7	$	6.2
Other restructuring and repositioning expenses		0.7		0.4		1.3		0.8
Total	$	2.1	$	0.9	$	3.0	$	7.0

Other restructuring and repositioning expenses primarily consist of equipment transfers and plant consolidation costs.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as follows:

	Three months ended December 31,
	2021			2020
Beginning balance	$	2.8		$	5.8
Additions		1.4			0.5
Payments		(0.9	)		(2.5	)
Reclassified from (to) held for sale		0.4			(0.8	)
Effect of exchange rate changes		(0.1	)		0.2
Ending balance	$	3.6		$	3.2
	Nine months ended December 31,
---	---	---	---	---	---	---
	2021			2020
Beginning balance	$	4.0		$	5.0
Additions		1.7			6.2
Payments		(2.3	)		(7.7	)
Reclassified from (to) held for sale		0.4			(0.8	)
Effect of exchange rate changes		(0.2	)		0.5
Ending balance	$	3.6		$	3.2

Note 8: Other Income and Expense

Other income and expense consisted of the following:

	Three months ended<br><br> <br>December 31,						Nine months<br> ended<br><br> <br>December 31,
	2021			2020			2021			2020
Interest income	$	0.2		$	0.1		$	0.3		$	0.4
Foreign currency transactions (a)		(1.0	)		0.2			(1.1	)		0.9
Net periodic benefit cost (b)		(0.3	)		(0.8	)		(0.8	)		(2.3	)
Total other expense – net	$	(1.1	)	$	(0.5	)	$	(1.6	)	$	(1.0	)

(a)	Foreign currency transactions primarily consist of<br> foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and<br> losses on certain foreign currency exchange contracts.
(b)	Net periodic benefit cost for the Company’s pension<br> and postretirement plans is exclusive of service cost.
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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 9: Income Taxes

The Company’s effective tax rate for the three months ended December 31, 2021 and 2020 was 0.1 percent and (71.7) percent, respectively. The Company’s effective tax rate for the nine months ended December 31, 2021 and 2020 was 8.7 percent and (95.7) percent, respectively.

The effective tax rates in the fiscal 2021 and 2022 periods were significantly impacted by the Company’s accounting for the liquid-cooled automotive business. During the third quarter of fiscal 2021, the Company initially classified its liquid-cooled automotive business as held for sale and recorded $134.4 million of impairment charges. The income tax benefits associated with these impairment charges totaled $37.7 million and increased the deferred tax assets in the applicable jurisdictions. Upon evaluating the deferred tax assets for realizability, the Company recorded income tax charges totaling $109.9 million related to valuation allowances in the third quarter of fiscal 2021. In fiscal 2022, the Company recorded net impairment reversals totaling $56.0 million related to this business, primarily driven by the remeasurement of its property, plant and equipment assets upon reverting back to held and used classification during the third quarter of fiscal 2022. In addition, the effective tax rates for the third quarter and the first nine months of fiscal 2022 were favorably impacted by $8.2 million and $11.4 million, respectively, from income tax benefits related to valuation allowances on deferred tax assets in foreign jurisdictions, as further described below. See Note 2 for additional information regarding the impairment charges and reversals related to the liquid-cooled automotive business.

The Company records valuation allowances against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future. Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies. In addition, the Company considers the duration of statutory carryforward periods and historical financial results.

Based upon its quarterly analyses in fiscal 2022, the Company determined it was more likely than not that the deferred tax assets in certain foreign

    jurisdictions will be realized.  As a result, the need for the valuation allowances recorded thereon was eliminated and the Company recorded income tax benefits of $4.8
    million and $8.2 million during the first and third quarters of fiscal 2022, respectively.  The Company’s analyses in these quarters included consideration
    of the transaction perimeter modification during the first quarter and the termination of the sale agreement during the third quarter for the liquid-cooled automotive business and the related impairment reversals.  Based upon its analysis as of
    September 30, 2021, the Company recorded an income tax charge of $1.6 million in the second quarter of fiscal 2022 since it determined it was more likely than not
    that the deferred tax assets in a foreign jurisdiction would not be realized.  This income tax charge partially offset the $13.0 million
    of income tax benefits recorded during the first and third quarters.  Together, these valuation allowance adjustments resulted in a net income tax benefit of $11.4
    million during the first nine months of fiscal 2022.

Based upon its quarterly analyses for the first three quarters of fiscal 2021, the Company determined it was more likely than not that deferred tax assets in the U.S. and in certain foreign jurisdictions would not be realized and, as a result, recorded income tax charges of $6.6 million and $109.9 million during the second and third quarters of fiscal 2021, respectively. These fiscal 2021 valuation allowance adjustments resulted in income tax charges totaling $116.5 million during the first nine months of fiscal 2021.

As of December 31, 2021, valuation allowances against deferred tax assets in the U.S. and in certain foreign jurisdictions totaled $90.1 million and $21.9 million, respectively. These totals include the valuation allowances recorded for certain net deferred tax assets of the liquid-cooled automotive business which was previously classified as held for sale. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely than not the deferred tax assets will be realized, thereby eliminating the need for a valuation allowance. Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s operations in certain foreign jurisdictions, could necessitate the establishment of further valuation allowances.

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in the U.S. and certain foreign locations from the overall effective tax rate methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. The Company does not anticipate a significant change in unrecognized tax benefits during the remainder of fiscal 2022.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 10: Earnings Per Share

The components of basic and diluted earnings per share were as follows:

	Three months ended<br><br> <br>December 31,					Nine months ended<br><br> <br>December 31,
	2021		2020			2021		2020
Net earnings (loss) attributable to Modine	$	74.1	$	(195.7	)	$	76.8	$	(195.7	)
Weighted-average shares outstanding - basic		52.0		51.3			51.9		51.2
Effect of dilutive securities		0.4		-			0.6		-
Weighted-average shares outstanding - diluted		52.4		51.3			52.5		51.2
Earnings (loss) per share:
Net earnings (loss) per share - basic	$	1.42	$	(3.81	)	$	1.48	$	(3.82	)
Net earnings (loss) per share - diluted	$	1.41	$	(3.81	)	$	1.46	$	(3.82	)

For both the three and nine months ended December 31, 2021, the calculation of diluted earnings per share excluded 0.6 million and 0.2 million stock options and restricted stock awards, respectively, because they were anti-dilutive.

For the three and nine months ended December 31, 2020, the calculation of diluted earnings per share excluded 1.4 million and 1.5 million stock options, respectively, because they were anti-dilutive. In addition, the calculation for the three and nine months ended December 31, 2020 excluded 0.5 million and 0.6 million restricted stock awards, respectively, because they were anti-dilutive. For the three months and nine months ended December 31, 2020, the total number of potentially-dilutive securities was 0.2 million and 0.1 million, respectively. However, these securities were not included in the computation of diluted net loss per share since to do so would have decreased the loss per share.

Note 11: Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following:

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	61.1	$	37.8
Restricted cash		0.2		0.1
Cash and restricted cash held for sale		-		8.2
Total cash, cash equivalents, restricted cash and cash held for sale	$	61.3	$	46.1

Restricted cash, which is reported within other current assets in the consolidated balance sheets, consists primarily of deposits for contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 12: Inventories

Inventories consisted of the following:

	December 31, 2021		March 31, 2021
Raw materials	$	178.2	$	117.1
Work in process		55.3		38.5
Finished goods		44.6		40.0
Total inventories	$	278.1	$	195.6

Inventories in the table above as of March 31, 2021 exclude amounts classified as held for sale. See Note 2 for additional information.

Note 13: Property, Plant and Equipment

Property, plant and equipment, including depreciable lives, consisted of the following:

	December 31, 2021			March 31, 2021
Land	$	17.4		$	16.4
Buildings and improvements (10-40 years)		266.9			203.5
Machinery and equipment (3-15 years)		866.9			623.2
Office equipment (3-10 years)		98.1			81.3
Construction in progress		31.7			19.0
		1,281.0			943.4
Less: accumulated depreciation		(962.9	)		(673.5	)
Net property, plant and equipment	$	318.1		$	269.9

Property, plant and equipment in the table above as of March 31, 2021 exclude amounts classified as held for sale. See Note 2 for additional information.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 14: Goodwill and Intangible Assets

Effective July 1, 2021, the Company aligned the data center businesses previously managed by and reported within the CIS segment under

    the BHVAC segment; see Note 20 for additional information.  As a result of this segment realignment, the Company reassigned a total of $32.5
    million of goodwill from a reporting unit within the CIS segment to the reporting units within the BHVAC segment using the relative fair
    value approach.  To determine the amount of goodwill to be reassigned, the Company compared the estimated fair values of the businesses transferred to the BHVAC segment with the CIS reporting unit immediately prior to the segment change.  The
    Company estimated the fair values of the affected businesses based upon the present value of their estimated future cash flows.  The Company’s determination of fair value involved judgment and the use of significant estimates and assumptions,
    including assumptions regarding the revenue growth rates and operating profit margins used to calculate estimated future cash flows, risk-adjusted discount rates, business trends and market conditions.

The following table presents a rollforward of the carrying value of goodwill from March 31, 2021 to December 31, 2021. The Company has revised the March 31, 2021 goodwill balances to be comparable with the current segment structure.

	BHVAC			CIS			Total
Goodwill, March 31, 2021	$	47.0		$	123.7		$	170.7
Effect of exchange rate changes		(0.7	)		(0.5	)		(1.2	)
Goodwill, December 31, 2021	$	46.3		$	123.2		$	169.5

In conjunction with the goodwill reassignment evaluation described above, the Company tested its reporting units for potential impairment during the second quarter of fiscal 2022 and concluded that the estimated fair value of each reporting unit exceeded its respective carrying value.

Although the Company concluded goodwill was not impaired, the Company identified that subsequent to the segment realignment, the estimated fair value of the Coils and Coolers reporting unit within the CIS segment exceeded its carrying value by approximately 8.0 percent. As such, there is a heightened risk of a future impairment charge with respect to the $63.0 million of goodwill recorded in this reporting unit as of December 31, 2021. In estimating the fair value of the Coils and Coolers reporting unit, the Company calculated the present value of its estimated future cash flows using a discounted cash flow model. The most significant estimates and assumptions inherent in the discounted cash flow model are forecasted financial results, the terminal growth rate, and the discount rate. These assumptions are classified as Level 3 inputs. Refer to Note 4 for the definition of a Level 3 fair value measurement. The Company utilized its multi-year projections for revenue and operating income margins and considered both historical revenue growth rates and earnings levels as well as its assessment of future market potential and expectations for the future financial performance of the reporting unit. The Company used a discount rate corresponding to its estimated cost of capital, adjusting for country-specific risks based upon the location of the businesses within the reporting unit.

While the Company believes the assumptions it used in estimating the Coils and Coolers reporting unit’s fair value were appropriate and resulted in a reasonable estimate of its fair value, future events or circumstances could have a negative effect on its estimated fair value and could trigger an impairment charge. These potential future events or circumstances could include lower than forecasted revenues or earnings, market trends that fall below the Company’s current expectations, actions of key customers or suppliers, or increases in the discount rate. The Company cannot predict the occurrence of events or changes in circumstances that could adversely affect the reporting unit’s future revenue and operating income margins or increase the discount rate, thereby resulting in an impairment charge which could be material to the Company’s consolidated financial statements.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Intangible assets consisted of the following:

	December 31, 2021							March 31, 2021
	Gross<br><br> <br>Carrying<br><br> <br>Value		Accumulated<br><br> <br>Amortization			Net<br><br> <br>Intangible<br><br> <br>Assets		Gross<br><br> <br>Carrying<br><br> <br>Value		Accumulated<br><br> <br>Amortization			Net<br><br> <br>Intangible<br><br> <br>Assets
Customer relationships	$	61.9	$	(19.4	)	$	42.5	$	62.8	$	(16.9	)	$	45.9
Trade names		51.1		(13.2	)		37.9		51.5		(11.4	)		40.1
Acquired technology		23.5		(10.7	)		12.8		23.9		(9.3	)		14.6
Total intangible assets	$	136.5	$	(43.3	)	$	93.2	$	138.2	$	(37.6	)	$	100.6

The Company recorded amortization expense of $2.1 million and $2.2 million for the three months ended December 31, 2021 and 2020, respectively. The Company recorded amortization expense of $6.3 million and $6.4 million for the nine months ended December 31, 2021 and 2020, respectively. The Company estimates that it will record $2.1 million of amortization expense during the remainder of fiscal 2022 and approximately $8.0 million of annual amortization expense in fiscal 2023 through 2027.

Note 15: Product Warranties

Changes in accrued warranty costs were as follows:

	Three months ended December 31,
	2021			2020
Beginning balance	$	5.6		$	9.0
Warranties recorded at time of sale		1.1			1.8
Adjustments to pre-existing warranties		(0.3	)		(0.4	)
Settlements		(1.1	)		(1.1	)
Reclassified from (to) held for sale		1.3			(1.5	)
Effect of exchange rate changes		-			0.1
Ending balance	$	6.6		$	7.9
	Nine months<br> ended December 31,
---	---	---	---	---	---	---
	2021			2020
Beginning balance	$	5.2		$	7.9
Warranties recorded at time of sale		4.1			4.3
Adjustments to pre-existing warranties		(0.8	)		(0.3	)
Settlements		(3.2	)		(2.8	)
Reclassified from (to) held for sale		1.3			(1.5	)
Effect of exchange rate changes		-			0.3
Ending balance	$	6.6		$	7.9

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 16: Leases

Lease Assets and Liabilities

The following table provides a summary of leases recorded on the consolidated balance sheets. The amounts as of March 31, 2021 exclude operating lease right of use (“ROU”) assets and liabilities, which each totaled $6.1 million, that were classified as held for sale on the Company’s consolidated balance sheet; see Note 2 for additional information.

	Balance Sheet Location	December 31, 2021		March 31, 2021
Lease Assets
Operating lease ROU assets	Other noncurrent assets	$	52.8	$	54.1
Finance lease ROU assets (a)	Property, plant and equipment - net		8.0		8.3
Lease Liabilities
Operating lease liabilities	Other current liabilities	$	12.7	$	11.2
Operating lease liabilities	Other noncurrent liabilities		41.8		44.8
Finance lease liabilities	Long-term debt - current portion		0.4		0.4
Finance lease liabilities	Long-term debt		3.0		3.2

(a)	Finance lease ROU assets were recorded net of accumulated<br> amortization of $2.7 million and $2.4<br> million as of December 31, 2021 and March 31, 2021, respectively.

Components of Lease Expense

The components of lease expense were as follows:

	Three months ended<br><br> <br>December 31,				Nine months ended<br><br> <br>December 31,
	2021		2020		2021		2020
Operating lease<br> expense (a)	$	5.2	$	4.8	$	14.6	$	14.9
Finance lease<br> expense:
Depreciation of<br> ROU assets		0.1		0.2		0.4		0.4
Interest on<br> lease liabilities		-		-		0.1		0.1
Total lease<br> expense	$	5.3	$	5.0	$	15.1	$	15.4

(a)	For the three and nine months ended December 31, 2021, operating lease expense included short-term lease expense of<br> $1.0 million and $2.8 million, respectively. For the three and nine months ended December<br> 31, 2020, operating lease expense included short-term lease expense of $0.9 million and $2.7 million, respectively. Variable lease expense was not significant.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 17: Indebtedness

Long-term debt consisted of the following:

_	Fiscal year of maturity	December 31, 2021			March 31, 2021
Term loans	2025	$	167.9		$	178.9
Revolving credit facility	2025		81.2			4.8
5.9% Senior Notes	2029		100.0			100.0
5.8% Senior Notes	2027		41.7			50.0
Other (a)			3.4			3.6
			394.2			337.3
Less: current portion			(21.8	)		(21.9	)
Less: unamortized debt issuance costs			(3.6	)		(4.2	)
Total long-term debt		$	368.8		$	311.2

(a)	Other long-term debt primarily includes finance lease<br> obligations.

Long-term debt, including the current portion of long-term debt, matures as follows:

Fiscal Year
Remainder of 2022	$	3.4
2023		21.8
2024		21.8
2025		228.6
2026		33.8
2027 & beyond		84.8
Total	$	394.2

The Company maintains a credit agreement with a syndicate of banks that provides for a multi-currency $250.0 million revolving credit facility expiring in June 2024. In addition, this credit agreement provides for both U.S. dollar- and euro-denominated term loan facilities and shorter-duration swingline loans. Borrowings under the revolving credit, swingline and term loan facilities bear interest at a variable rate based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below. At December 31, 2021, the weighted-average interest rates for revolving credit facility borrowings and the term loans were 1.7 and 1.8 percent, respectively. Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline facilities as long-term and short-term debt, respectively, on its consolidated balance sheets.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

At December 31, 2021, the Company’s revolving credit facility borrowings totaled $81.2 million and domestic letters of credit totaled $5.7 million, resulting in available borrowings under the revolving credit facility of $163.1 million. At March 31, 2021, swingline borrowings totaled $1.4 million. There were no swingline borrowings outstanding as of December 31, 2021.

The Company also maintains credit agreements for its foreign subsidiaries. There were no outstanding short-term borrowings related to these foreign credit agreements at December 31, 2021. At March 31, 2021, $5.0 million of outstanding short-term foreign borrowings were classified as held for sale. See Note 2 for additional information.

Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various covenants and include certain cross-default clauses. Under its primary debt agreements in the U.S., the Company has provided liens on substantially all domestic assets. Also, as specified in the credit agreement, the term loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on its business, property, or results of operations.

The leverage ratio covenant requires the Company to limit its consolidated indebtedness, less a portion of its cash balances, both as defined by the credit agreements, to no more than three and one-quarter times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”.) The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. As of December 31, 2021, the Company was in compliance with its debt covenants; its leverage ratio and interest coverage ratio were 2.5 and 10.0, respectively.

The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable maturities. As of December 31, 2021 and March 31, 2021, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $146.5 million and $146.0 million, respectively. The fair value of the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy. Refer to Note 4 for the definition of a Level 2 fair value measurement.

Note 18: Risks, Uncertainties, Contingencies and Litigation

COVID-

19 Pandemic and Supply Chain Disruptions

The COVID-19 pandemic has broadly impacted the global economy and the Company’s key end markets, which were most severely impacted during the first quarter of fiscal 2021. During fiscal 2022, the direct effects on the Company from the COVID-19 pandemic have lessened. Although the Company’s manufacturing locations are open and operating, production has been negatively affected at times by employee absences due to COVID-19.

The COVID-19 pandemic and other market and economic dynamics have contributed to global supply chain challenges and inflationary market conditions. The Company is focused on mitigating the negative impacts of labor shortages and supply chain challenges, which have included rising raw material and logistic prices as well as delays and shortages in certain purchased commodities and components. The Company has implemented selling price increases for its products in response to raw material and other price increases and is engaged with suppliers to ensure availability of purchased commodities and components. In addition, the Company’s Automotive segment has been impacted by lower order volume associated with semiconductor shortages, which have caused lower global automotive production.

At this time, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic or the ongoing supply chain challenges. If the Company, its suppliers, or its customers experience prolonged shutdowns or other significant business disruptions, it is possible that the Company’s ability to conduct business in the manner and on the timelines presently planned could be materially and negatively impacted, which could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Environmental

The Company has recorded environmental investigation and remediation accruals related to manufacturing facilities in the U.S., one of which the Company currently owns and operates, and a former manufacturing facility in the Netherlands. These accruals primarily relate to soil and groundwater contamination at facilities where past operations followed practices and procedures that were considered acceptable under then-existing regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance. In instances where a range of loss can be reasonably estimated for a probable environmental liability, but no amount within the range is a better estimate than any other amount, the Company accrues the minimum of the range. The Company’s accruals for environmental matters totaled $18.7 million and $16.0 million as of December 31, 2021 and March 31, 2021, respectively. During the first quarter of fiscal 2022, the Company increased its remediation accrual related to a former manufacturing facility in the U.S. by $3.4 million. As additional information becomes available regarding the environmental matters, the Company will re-assess the liabilities and revise the estimated accruals, if necessary. While it is possible that the ultimate environmental remediation costs may be in excess of amounts accrued, the Company believes, based upon currently available information, that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject to inherent uncertainties, and unfavorable outcomes could occur, including significant monetary damages.

Other Litigation

In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, governmental agencies and/or others in which claims are asserted against Modine. The Company believes that any additional loss in excess of amounts already accrued would not have a material effect on the Company’s consolidated balance sheet, results of operations, and cash flows. In addition, management expects that the liabilities which may ultimately result from such lawsuits or proceedings, if any, would not have a material adverse effect on the Company’s financial position.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 19: Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss were as follows:

	Three months ended December 31, 2021												Nine months ended<br> December 31, 2021
	Foreign<br><br> <br>Currency<br><br> <br>Translation			Defined<br><br> <br>Benefit<br><br> <br>Plans			Cash Flow<br><br> <br>Hedges			Total			Foreign<br><br> <br>Currency<br><br> <br>Translation			Defined<br><br> <br>Benefit<br><br> <br>Plans			Cash Flow<br><br> <br>Hedges			Total
Beginning balance	$	(33.6	)	$	(125.8	)	$	0.2		$	(159.2	)	$	(31.0	)	$	(130.8	)	$	0.6		$	(161.2	)
Other comprehensive income (loss) before reclassifications		(3.4	)		-			0.4			(3.0	)		(6.0	)		-			1.1			(4.9	)
Reclassifications:
Amortization of unrecognized net loss (a)		-			1.6			-			1.6			-			4.9			-			4.9
Unrecognized net pension loss in disposed business (b)		-			-			-			-			-			1.7			-			1.7
Realized gains - net (c)		-			-			(0.2	)		(0.2	)		-			-			(1.2	)		(1.2	)
Income taxes		-			-			-			-			-			-			(0.1	)		(0.1	)
Total other comprehensive income (loss)		(3.4	)		1.6			0.2			(1.6	)		(6.0	)		6.6			(0.2	)		0.4
Ending balance	$	(37.0	)	$	(124.2	)	$	0.4		$	(160.8	)	$	(37.0	)	$	(124.2	)	$	0.4		$	(160.8	)
	Three months ended December 31, 2020												Nine months ended<br> December 31, 2020
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Foreign<br><br> <br>Currency<br><br> <br>Translation			Defined<br><br> <br>Benefit<br><br> <br>Plans			Cash Flow<br><br> <br>Hedges			Total			Foreign<br><br> <br>Currency<br><br> <br>Translation			Defined<br><br> <br>Benefit<br><br> <br>Plans			Cash Flow<br><br> <br>Hedges			Total
Beginning balance	$	(38.8	)	$	(158.4	)	$	0.4		$	(196.8	)	$	(61.4	)	$	(160.9	)	$	(1.0	)	$	(223.3	)
Other comprehensive income before reclassifications		18.0			-			0.4			18.4			40.6			-			1.5			42.1
Reclassifications:
Amortization of unrecognized net loss (a)		-			1.6			-			1.6			-			4.9			-			4.9
Realized (gains) losses - net (c)		-			-			(0.4	)		(0.4	)		-			-			0.4			0.4
Income taxes		-			(0.3	)		-			(0.3	)		-			(1.1	)		(0.5	)		(1.6	)
Total other comprehensive income		18.0			1.3			-			19.3			40.6			3.8			1.4			45.8
Ending balance	$	(20.8	)	$	(157.1	)	$	0.4		$	(177.5	)	$	(20.8	)	$	(157.1	)	$	0.4		$	(177.5	)

(a)	Amounts are included in the calculation of<br> net periodic benefit cost for the Company’s defined benefit plans, which include pension and other postretirement plans. See Note 5 for additional information about the Company’s pension plans.
(b)	As a result of the sale of the air-cooled<br> automotive business, the Company wrote-off $1.7 million of net actuarial losses related to the disposed business’s pension plan as a<br> component of the loss on sale recorded during the first quarter of fiscal 2022. See Note 1 for additional information.
---	---
(c)	Amounts represent net gains and losses<br> associated with cash flow hedges that were reclassified to net earnings.
---	---

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 20: Segment Information

Effective July 1, 2021, the Company aligned the data center businesses previously managed by and reported within the CIS segment under the BHVAC segment. The BHVAC segment assumed management of the Company’s business in Guadalajara, Spain and a portion of its business in Grenada, Mississippi. Through this segment realignment, the Company has aligned all of its data center businesses under the BHVAC leadership team in order to accelerate commercial excellence, operational improvements, and organizational efficiencies. As a result, the Company revised its reporting segments and is reporting the financial results of the transferred businesses within the BHVAC segment, consistent with how the Company’s chief operating decision maker is assessing operating performance and allocating capital resources. The segment realignment had no impact on the HDE and Automotive segments or on the Company’s consolidated financial position, results of operations, and cash flows. Segment financial information for the prior periods has been recast to conform to the current presentation.

The following is a summary of net sales, gross profit, operating income, and total assets by segment:

	Three months ended December 31,
	2021								2020
	External<br><br> <br>Sales		Inter-segment<br><br> <br>Sales			Total			External<br><br> <br>Sales		Inter-segment<br><br> <br>Sales			Total
Net sales:
BHVAC	$	90.3	$	0.3		$	90.6		$	73.5	$	0.2		$	73.7
CIS		146.9		1.7			148.6			123.5		1.4			124.9
HDE		193.3		7.5			200.8			173.7		11.9			185.6
Automotive		71.7		0.7			72.4			113.6		0.3			113.9
Segment total		502.2		10.2			512.4			484.3		13.8			498.1
Corporate and eliminations		-		(10.2	)		(10.2	)		-		(13.8	)		(13.8	)
Net sales	$	502.2	$	-		$	502.2		$	484.3	$	-		$	484.3
	Nine months<br> ended December 31,
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	2021								2020
	External<br><br> <br>Sales		Inter-segment<br><br> <br>Sales			Total			External<br><br> <br>Sales		Inter-segment<br><br> <br>Sales			Total
Net sales:
BHVAC	$	233.1	$	1.6		$	234.7		$	195.6	$	0.7		$	196.3
CIS		450.3		5.9			456.2			365.2		4.4			369.6
HDE		571.0		27.4			598.4			449.6		25.1			474.7
Automotive		221.3		2.7			224.0			283.1		2.8			285.9
Segment total		1,475.7		37.6			1,513.3			1,293.5		33.0			1,326.5
Corporate and eliminations		-		(37.6	)		(37.6	)		-		(33.0	)		(33.0	)
Net sales	$	1,475.7	$	-		$	1,475.7		$	1,293.5	$	-		$	1,293.5

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)
	Three months ended December 31,										Nine months<br> ended December 31,
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	2021					2020					2021					2020
		’s	% of sales				$’s	% of sales				$’s	% of sales				’s	% of sales
Gross profit:
BHVAC	$	27.4		30.3	%	$	25.4		34.5	%	$	65.2		27.8	%	$	64.5		32.9	%
CIS		17.7		11.9	%		12.9		10.3	%		56.8		12.5	%		44.8		12.1	%
HDE		22.2		11.1	%		26.0		14.0	%		63.1		10.5	%		60.9		12.8	%
Automotive		7.5		10.4	%		18.4		16.1	%		27.9		12.4	%		39.8		13.9	%
Segment total		74.8		14.6	%		82.7		16.6	%		213.0		14.1	%		210.0		15.8	%
Corporate and eliminations		(0.2		-			-		-			1.1		-			(0.4		-
Gross profit	$	74.6		14.9	%	$	82.7		17.1	%	$	214.1		14.5	%	$	209.6		16.2	%

All values are in US Dollars.

	Three months ended December 31,						Nine months<br> ended December 31,
	2021			2020			2021			2020
Operating income:
BHVAC	$	14.4		$	14.9		$	30.1		$	35.6
CIS		3.4			(0.7	)		16.7			4.4
HDE		10.3			12.8			25.0			23.6
Automotive		55.0			(124.9	)		53.6			(120.7	)
Segment total		83.1			(97.9	)		125.4			(57.1	)
Corporate and eliminations		(3.7	)		(10.8	)		(26.8	)		(26.3	)
Operating income (loss)	$	79.4		$	(108.7	)	$	98.6		$	(83.4	)
	December 31, 2021			March 31, 2021
---	---	---	---	---	---	---
Total assets:
BHVAC	$	213.6		$	181.1
CIS		520.7			540.1
HDE		473.7			438.7
Automotive		181.6			124.2
Corporate and eliminations (a)		(8.2	)		(7.4	)
Total assets	$	1,381.4		$	1,276.7

(a)	At December 31, 2021 and March 31,<br> 2021, Corporate assets totaled $21.4 million and $17.5 million, respectively and were more than offset by eliminations for intercompany balances, including accounts receivable.

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MODINE MANUFACTURING COMPANY<br><br> <br>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br><br> <br>(In millions, except per share amounts)<br><br> <br>(unaudited)

Note 21: Subsequent Event

The Company has committed to restructuring actions intended to reduce SG&A and operational expenses, particularly within the Automotive segment. Under this restructuring program, the Company is targeting approximately $20.0 million of annual cost savings on a consolidated basis. The Company is currently determining the specific actions necessary to achieve its objectives. At this time, the Company is unable to precisely estimate the timing and amount of the associated costs, but currently expects to record approximately $20.0 million to $25.0 million of restructuring expenses during either the fourth quarter of fiscal 2022 or early in fiscal 2023. The Company expects most of the restructuring expenses will be related to severance for headcount reductions.

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.

When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, we are referring to Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to quarters refer to our fiscal quarters. The quarter ended December 31, 2021 was the third quarter of fiscal 2022.

COVID-19 Pandemic and Supply Chain Disruptions

During fiscal 2022, the effects on our company from the COVID-19 pandemic have lessened, particularly compared with the heavily-impacted first half of fiscal 2021. Although our manufacturing locations are open and operating, production has been negatively affected at times by employee absences due to COVID-19.

The COVID-19 pandemic and other market and economic dynamics have contributed to global supply chain challenges and inflationary market conditions. We, like many companies, have experienced labor shortages and negative impacts from supply chain challenges, including rising prices for raw materials and logistics, as well as delays and shortages in certain commodities and components we purchase from suppliers. In addition, our Automotive segment has been impacted by lower order volume associated with semiconductor shortages, which have caused lower global automotive production. We are focused on mitigating the negative impacts of these supply chain challenges. We have implemented selling price increases for our products in response to raw material and other price increases and are engaged with suppliers to ensure availability of key raw materials.

We expect temporary disruptions due to illness-related employee absences and the pressures associated with supply chain challenges will continue, at least in the near term. We cannot reasonably estimate the full impact that the COVID-19 pandemic or the ongoing supply chain challenges could have on our business, results of operations, or cash flows in the future.

Liquid-cooled Automotive Business

On October 25, 2021, we announced that we agreed with Dana Incorporated (“Dana”) to terminate an agreement for the sale of the liquid-cooled automotive business. We agreed that it was no longer in the best interest of either party to pursue the sale transaction further after being actively engaged in the regulatory review process in Germany for many months.

In connection with the termination of the sale agreement, we determined that the liquid-cooled automotive business no longer met the requirements to be classified as held for sale during the third quarter of fiscal 2022. While held for sale, we had fully impaired the liquid-cooled automotive business’s long-lived assets, which primarily consisted of property, plant and equipment assets. Upon reverting back to held and used classification, we adjusted the long-lived assets to the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value. As a result, we reversed $57.2 million of previous impairment charges during the third quarter of fiscal 2022 within the Automotive segment. In addition, we resumed depreciating the property, plant and equipment assets based upon the remeasured asset values during the third quarter of fiscal 2022.

Air-cooled Automotive Business

On April 30, 2021, we sold our air-cooled automotive business to Schmid Metall GmbH. As a result of this transaction, we recorded a loss of $6.6 million during the first quarter of fiscal 2022.

Third Quarter Highlights

Net sales in the third quarter of fiscal 2022 increased $17.9 million, or 4 percent, from the third quarter of fiscal 2021, primarily due to higher sales in our Commercial Industrial Solutions (“CIS”), Building HVAC Systems (“BHVAC”), and Heavy Duty Equipment (“HDE”) segments, partially offset by lower sales in our Automotive segment. Cost of sales increased $26.0 million, or 6 percent, compared with the third quarter of fiscal 2021, primarily due to higher raw material prices, including underlying metal prices and related premiums, fabrication, freight, and packaging costs. Gross profit decreased $8.1 million and gross margin declined 220 basis points to 14.9 percent. Selling, general and administrative (“SG&A”) expenses decreased $5.8 million, primarily due to lower expenses for our review of strategic alternatives for the Automotive segment and lower compensation-related expenses. Operating income of $79.4 million during the third quarter of fiscal 2022 represents an improvement of $188.1 million from the prior-year operating loss of $108.7 million. The operating income and operating loss during the third quarters of fiscal 2022 and 2021 include $57.2 million of impairment reversals and $134.4 million of impairment charges, respectively, related to the liquid-cooled automotive business.

Year-to-date Highlights

Net sales in the first nine months of fiscal 2022 increased $182.2 million, or 14 percent, from the same period last year, primarily due to higher sales in our HDE, CIS and BHVAC segments, partially offset by lower sales in our Automotive segment. Cost of sales increased $177.7 million, or 16 percent, from the same period last year, primarily due to higher raw material prices and higher sales volume. Gross profit increased $4.5 million and gross margin declined 170 basis points to 14.5 percent. SG&A expenses increased $10.0 million, primarily due to higher compensation-related expenses as the prior-year benefitted from cost-saving actions implemented in response to COVID-19. We withdrew most of these cost-saving actions in the third quarter of fiscal 2021 as production returned to more normal levels. Operating income of $98.6 million during the first nine months of fiscal 2022 represents an improvement of $182.0 million from the prior-year operating loss of $83.4 million. The operating income and operating loss during the year-to-date fiscal 2022 and 2021 periods include $55.7 million of impairment reversals and $134.4 million of impairment charges, respectively, primarily related to the liquid-cooled automotive business.

Restructuring

We have committed to restructuring actions intended to reduce SG&A and operational expenses, particularly within the Automotive segment. Under this restructuring program, we are targeting approximately $20.0 million of annual cost savings on a consolidated basis. We are currently determining the specific actions necessary to achieve our objectives. At this time, we are unable to precisely estimate the timing and amount of the associated costs, but currently expect to record approximately $20.0 million to $25.0 million of restructuring expenses during either the fourth quarter of fiscal 2022 or early in fiscal 2023. We expect most of the restructuring expenses will be related to severance for headcount reductions.

CONSOLIDATED RESULTS OF OPERATIONS

The following table presents our consolidated financial results on a comparative basis for the three and nine months ended December 31, 2021 and 2020:

	Three months ended December 31,										Nine months ended December 31,
	2021					2020					2021					2020
(in millions)	's		% of sales			's		% of sales			's		% of sales			's		% of sales
Net sales				100.0	%				100.0	%				100.0	%				100.0	%
Cost of sales				85.1	%				82.9	%				85.5	%				83.8	%
Gross profit				14.9	%				17.1	%				14.5	%				16.2	%
Selling, general and administrative expenses				10.0	%				11.6	%				11.0	%				11.7	%
Restructuring expenses				0.4	%				0.2	%				0.2	%				0.5	%
Impairment charges (reversals) – net		)		-11.4	%				27.8	%		)		-3.8	%				10.4	%
Loss on sale of assets				-					-					0.4	%				-
Operating income (loss)				15.8	%		)		-22.5	%				6.7	%		)		-6.5	%
Interest expense		)		-0.8	%		)		-0.9	%		)		-0.8	%		)		-1.2	%
Other expense – net		)		-0.2	%		)		-0.1	%		)		-0.1	%		)		-0.1	%
Earnings (loss) before income taxes				14.8	%		)		-23.5	%				5.8	%		)		-7.7	%
Provision for income taxes		)		-			)		-16.8	%		)		-0.5	%		)		-7.4	%
Net earnings (loss)				14.8	%		)		-40.3	%				5.3	%		)		-15.1	%

All values are in US Dollars.

Comparison of Three Months ended December 31, 2021 and 2020

Third quarter net sales of $502.2 million were $17.9 million, or 4 percent, higher than the third quarter of the prior year, primarily due to higher sales volume and favorable pricing adjustments in response to raw material price increases in our CIS, BHVAC, and HDE segments, partially offset by lower sales volume in our Automotive segment. Sales in the CIS, BHVAC, and HDE segments increased $23.7 million, $16.9 million, and $15.2 million, respectively. Sales in the Automotive segment decreased $41.5 million, primarily due to the disposition of the air-cooled automotive business in the first quarter of fiscal 2022 and the negative impacts of the semiconductor shortages on the global automotive market.

Third quarter cost of sales increased $26.0 million, or 6 percent, primarily due to higher raw material prices, which increased approximately $39.0 million, and higher sales volume in our CIS, BHVAC, and HDE segments. These drivers, which increased cost of sales, were partially offset by lower sales volume in the Automotive segment and improved operating efficiencies. As a percentage of sales, cost of sales increased 220 basis points to 85.1 percent.

As a result of higher sales and higher cost of sales as a percentage of sales, third quarter gross profit decreased $8.1 million and gross margin declined 220 basis points to 14.9 percent.

Third quarter SG&A expenses decreased $5.8 million, primary driven by $2.6 million of lower costs at Corporate related to our review of strategic alternatives for the Automotive segment businesses and lower compensation-related expenses, which decreased approximately $2.0 million. The lower compensation-related expenses were primarily due to lower incentive compensation expenses at Corporate in the current year.

Restructuring expenses of $2.1 million in the third quarter of fiscal 2022 increased $1.2 million compared with the third quarter of fiscal 2021, primarily due to higher severance expenses in the CIS segment.

During the third quarter of fiscal 2022 and in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges to adjust the business’s long-lived assets to the lower of their carrying or fair value. During the third quarter of fiscal 2021, when the liquid-cooled automotive business was first classified as held for sale, we recorded $134.4 million of impairment charges and reduced the carrying value of the disposal group’s long-lived assets to zero.

Operating income of $79.4 million in the third quarter of fiscal 2022 represents a $188.1 million improvement from the prior-year operating loss of $108.7 million. The operating income and operating loss during the third quarters of fiscal 2022 and 2021 included the significant impairment reversal and impairment charges, respectively, recorded within the Automotive segment. In addition, as compared with the third quarter of fiscal 2021, operating income was unfavorably impacted by lower gross profit and favorably impacted by lower SG&A expenses.

Interest expense in the third quarter of fiscal 2022 decreased $0.8 million compared with the third quarter of fiscal 2021, primarily due to favorable changes in interest rates.

The provision for income taxes was $0.1 million and $81.6 million in the third quarter of fiscal 2022 and 2021, respectively. The $81.5 million decrease was primarily due to the absence of $109.9 million of income tax charges recorded in the prior year to increase the valuation allowances on deferred tax assets in the U.S. and in certain foreign jurisdictions and an $8.2 million income tax benefit recorded in the current year resulting from the reversal of tax valuation allowances in foreign jurisdictions. These drivers, which decreased the provision for income taxes, were partially offset by the absence of $37.7 million of income tax benefits recorded during the prior year related to the Automotive segment impairment charges.

Comparison of Nine Months ended December 31, 2021 and 2020

Fiscal 2022 year-to-date net sales of $1,475.7 million were $182.2 million, or 14 percent, higher than the same period last year, primarily due to higher sales volumes and favorable pricing adjustments in response to raw material price increases in our HDE, CIS, and BHVAC segments. Sales in these segments increased $123.7 million, $86.6 million, and $38.4 million, respectively. Automotive segment sales decreased $61.9 million.

Fiscal 2022 year-to-date cost of sales of $1,261.6 million increased $177.7 million, or 16 percent, primarily due to higher raw material prices, which increased approximately $117.0 million, and higher sales volume. In addition, cost of sales in the first nine months of fiscal 2021 was favorably impacted by cost-saving actions taken in response to the COVID-19 pandemic. These factors, which caused an increase in cost of sales compared with the same period in the prior year, were partially offset by lower depreciation expense in the Automotive segment and improved operating efficiencies. As a percentage of sales, cost of sales increased 170 basis points to 85.5 percent.

As a result of higher sales and higher cost of sales as a percentage of sales, gross profit increased $4.5 million and gross margin declined 170 basis points to 14.5 percent.

Fiscal 2022 year-to-date SG&A expenses increased $10.0 million. The increase in SG&A expenses was primarily due to higher compensation-related expenses, as the prior year was favorably impacted by cost-saving actions implemented to mitigate the negative impacts of COVID-19. In addition, environmental charges related to a previously-owned manufacturing facility in the U.S. increased $3.2 million. These increases were partially offset by lower strategic reorganization costs and lower costs related to our review of strategic alternatives for the Automotive segment businesses, which decreased $2.8 million and $1.3 million, respectively. The lower strategic reorganization costs primarily resulted from lower severance expenses for executive management positions.

Restructuring expenses of $3.0 million in the first nine months of fiscal 2022 decreased $4.0 million compared with the same period last year, primarily due to lower severance expenses in the CIS and HDE segments.

The net impairment reversals of $55.7 million during the first nine months of fiscal 2022 primarily related to the liquid-cooled automotive business within the Automotive segment. In the prior year, we recorded $134.4 million of impairment charges to write down the long-lived assets in the liquid-cooled automotive business upon classification as held for sale. In the current year, we adjusted the assets to the lower of carrying or fair value once they no longer met the held for sale classification criteria.

We sold our air-cooled automotive business on April 30, 2021. As a result of the sale, we recorded a $6.6 million loss on sale at Corporate during the first quarter of fiscal 2022.

Operating income of $98.6 million during the first nine months of fiscal 2022 represents an improvement of $182.0 million from the prior-year operating loss of $83.4 million. The operating income and operating loss during the year-to-date fiscal 2022 and 2021 periods included the significant impairment reversal and impairment charges, respectively, related to the liquid-cooled automotive business. In addition, as compared with the first nine months of fiscal 2021, the year-to-date fiscal 2022 operating income was favorably impacted by higher gross profit and lower restructuring expenses. Operating income was negatively impacted by higher SG&A expenses and the loss on sale of the air-cooled automotive business.

Interest expense during the first nine months of fiscal 2022 decreased $3.4 million compared with the same period last year, primarily due to favorable changes in interest rates and lower debt outstanding during the current-year.

The provision for income taxes was $7.4 million and $95.3 million during the first nine months of fiscal 2022 and 2021, respectively. The $87.9 million decrease was primarily due to the absence of $116.5 million of income tax charges recorded in the prior year to increase the valuation allowances on deferred tax assets in the U.S. and in certain foreign jurisdictions and a net $11.4 million income tax benefit recorded in the current year related to valuation allowances on deferred tax assets in foreign jurisdictions. These drivers, which decreased the provision for income taxes, were partially offset by the absence of $37.7 million of income tax benefits recorded during the prior year related to the Automotive segment impairment charges.

SEGMENT RESULTS OF OPERATIONS

Effective July 1, 2021, we aligned the data center businesses previously managed by and reported within the CIS segment under the BHVAC segment. The BHVAC segment assumed management of our business in Guadalajara, Spain and a portion of our business in Grenada, Mississippi. Through this segment change, we have aligned our data center businesses under the BHVAC leadership team in order to accelerate commercial excellence, operational improvements, and organizational efficiencies. As a result, we revised our reporting segments and are reporting the financial results of the transferred businesses within the BHVAC segment. The segment realignment had no impact on the HDE and Automotive segments or on our consolidated financial position, results of operations, and cash flows. Segment financial information for the prior periods has been recast to conform to the current presentation.

As part of the July 1, 2021 segment realignment, we reassigned a portion of goodwill from the CIS segment to the BHVAC segment and tested our reporting units for potential impairment. While we concluded that goodwill was not impaired, we identified that the Coils and Coolers reporting unit has a heightened risk of impairment. See Note 14 of the Notes to Condensed Consolidated Financial Statements for further information.

The following is a discussion of our segment results of operations for the three months and nine months ended December 31, 2021 and 2020:

Building HVAC Systems

	Three months ended December 31,								Nine months ended December 31,
	2021				2020				2021				2020
(in millions)	's	% of sales			's	% of sales			's	% of sales			's	% of sales
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Cost of sales			69.7	%			65.5	%			72.2	%			67.1	%
Gross profit			30.3	%			34.5	%			27.8	%			32.9	%
Selling, general and administrative expenses			14.4	%			14.3	%			15.0	%			14.8	%
Operating income			15.9	%			20.1	%			12.8	%			18.1	%

All values are in US Dollars.

Comparison of Three Months ended December 31, 2021 and 2020

BHVAC net sales increased $16.9 million, or 23 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher sales volume and, to a lesser extent, favorable pricing adjustments in response to raw material price increases. Compared with the third quarter of the prior year, BHVAC sales to data center customers increased $11.6 million. In addition, sales to commercial HVAC customers increased $5.2 million, primarily due to higher sales of ventilation and heating products in North America.

BHVAC cost of sales increased $14.9 million, or 31 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher sales volume, higher raw material prices, which increased by approximately $4.0 million, and, to a lesser extent, higher labor costs. As a percentage of sales, cost of sales increased 420 basis points to 69.7 percent, primarily due to the higher material costs.

As a result of the higher sales and higher cost of sales as a percentage of sales, gross profit increased $2.0 million and gross margin declined 420 basis points to 30.3 percent. While we have been focused on adjusting selling prices in response to higher material costs, gross margin was unfavorably impacted due to the timing lag of such price adjustments as compared with material prices at the purchase date.

SG&A expenses increased $2.5 million, or 10 basis points as a percentage of sales, from the prior year. The increase in SG&A expenses was primarily due to higher compensation-related expenses.

Operating income of $14.4 million decreased $0.5 million from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher SG&A expenses, partially offset by higher gross profit.

Comparison of Nine Months ended December 31, 2021 and 2020

BHVAC year-to-date sales increased $38.4 million, or 20 percent, from the same period last year, primarily due to higher sales volume and, to a lesser extent, favorable pricing adjustments in response to raw material price increases and a $5.7 million favorable impact of foreign currency exchange rates. Sales to commercial HVAC customers increased $24.5 million, primarily due to higher sales of heating and air conditioning products. In addition, sales to data center customers increased $13.0 million.

BHVAC year-to-date cost of sales increased $37.7 million, or 29 percent, from the same period last year, primarily due to higher sales volume and higher raw material prices, which increased by approximately $12.0 million. In addition, cost of sales was unfavorably impacted by $4.8 million from foreign currency exchange rate changes. As a percentage of sales, cost of sales increased 510 basis points to 72.2 percent, primarily due to the higher material costs.

As a result of the higher sales and higher cost of sales as a percentage of sales, gross profit increased $0.7 million and gross margin declined 510 basis points to 27.8 percent.

BHVAC year-to-date SG&A expenses increased $6.2 million, or 20 basis points as a percentage of sales, compared with the prior year. The increase in SG&A expenses was primarily due to higher compensation-related expenses, which increased approximately $4.0 million.

Operating income of $30.1 million decreased $5.5 million from the same period last year, primarily due to higher SG&A expenses.

Commercial and Industrial Solutions

	Three months ended December 31,									Nine months ended December 31,
	2021				2020					2021				2020
(in millions)	's	% of sales			's		% of sales			's	% of sales			's	% of sales
Net sales			100.0	%				100.0	%			100.0	%			100.0	%
Cost of sales			88.1	%				89.7	%			87.5	%			87.9	%
Gross profit			11.9	%				10.3	%			12.5	%			12.1	%
Selling, general and administrative expenses			8.4	%				10.4	%			8.3	%			9.7	%
Restructuring expenses			1.3	%				0.4	%			0.5	%			1.2	%
Impairment charge			-					-				0.1	%			-
Operating income (loss)			2.2	%		)		-0.5	%			3.6	%			1.2	%

All values are in US Dollars.

Comparison of Three Months ended December 31, 2021 and 2020

CIS net sales increased $23.7 million, or 19 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher sales volume and favorable product pricing adjustments in response to raw material price increases. Compared with the third quarter of the prior year, sales to commercial HVAC&R customers increased $24.5 million.

CIS cost of sales increased $18.9 million, or 17 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher sales volume and higher raw material prices, which increased by approximately $12.0 million. As a percentage of sales, cost of sales decreased 160 basis points to 88.1 percent, primarily due to the favorable impacts of the higher sales volume and improved operating efficiencies, partially offset by higher material costs.

As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $4.8 million and gross margin improved 160 basis points to 11.9 percent.

SG&A expenses decreased $0.7 million compared with the third quarter of the prior year. As a percentage of sales, SG&A expenses decreased by 200 basis points.

Restructuring expenses increased $1.4 million compared with the third quarter of fiscal 2021, primarily due to higher severance expenses. The severance expenses in the third quarter of fiscal 2022 primarily related to targeted headcount reductions in Europe and China.

Operating income of $3.4 million represents a $4.1 million improvement from the prior-year operating loss of $0.7 million and was primarily due to higher gross profit.

Comparison of Nine Months ended December 31, 2021 and 2020

CIS year-to-date net sales increased $86.6 million, or 23 percent, from the same period last year, primarily due to higher sales volume and favorable product pricing adjustments in response to raw material price increases. In addition, sales were favorably impacted by $5.7 million from foreign currency exchange rates. The fiscal 2021 CIS sales were negatively impacted by the COVID-19 pandemic, primarily in the first half of the fiscal year. Sales to commercial HVAC&R customers increased $87.5 million during the first nine months of fiscal 2022, compared with the same period in the prior year.

CIS year-to-date cost of sales increased $74.6 million, or 23 percent, from the same period last year, primarily due to higher sales volume and higher raw material prices, which increased by approximately $43.0 million. In addition, cost of sales was unfavorably impacted by $5.1 million from foreign currency exchange rate changes. As a percentage of sales, cost of sales decreased 40 basis points to 87.5 percent, primarily due to the favorable impacts of the higher sales volume and improved operating efficiencies, partially offset by higher material costs.

As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $12.0 million and gross margin improved 40 basis points to 12.5 percent.

CIS year-to-date SG&A expenses increased $1.7 million, yet decreased 140 basis points as a percentage of sales, from the same period last year. The increase in SG&A expenses was primarily due to higher compensation-related expenses.

Restructuring expenses during the first nine months of fiscal 2022 decreased $2.3 million from the same period last year, primarily due to lower severance expenses. The severance expenses during the first nine months of fiscal 2022 primarily related to targeted headcount reductions in Europe and China. The severance-related expenses during the first nine months of fiscal 2021 primarily related to plant consolidation activities in China and targeted headcount reductions in North America.

During the first quarter of fiscal 2022, we recorded an impairment charge of $0.3 million to write down a previously-closed manufacturing facility in the U.S to fair value less costs to sell. We sold the facility and received net cash proceeds of $0.7 million during July 2021.

Operating income during the first nine months of fiscal 2022 increased $12.3 million from the same period last year, primarily due to higher gross profit and lower restructuring expenses, partially offset by higher SG&A expenses.

Heavy Duty Equipment

	Three months ended December 31,								Nine months ended December 31,
	2021				2020				2021				2020
(in millions)	's	% of sales			's	% of sales			's	% of sales			's	% of sales
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Cost of sales			88.9	%			86.0	%			89.5	%			87.2	%
Gross profit			11.1	%			14.0	%			10.5	%			12.8	%
Selling, general and administrative expenses			5.9	%			7.1	%			6.2	%			7.4	%
Restructuring expenses			0.1	%			-				0.1	%			0.4	%
Operating income			5.1	%			6.8	%			4.2	%			5.0	%

All values are in US Dollars.

Comparison of Three Months ended December 31, 2021 and 2020

HDE net sales increased $15.2 million, or 8 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to pricing adjustments associated with raw material price increases and higher sales volume. Sales to off-highway and commercial vehicle customers increased $12.3 million and $10.7 million, respectively. Sales to automotive and light vehicle customers decreased $7.7 million.

HDE cost of sales increased $19.0 million, or 12 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to higher raw material prices, which increased approximately $19.0 million, and to a lesser extent, higher sales volume. These drivers, which increased cost of sales, were partially offset by improved operating efficiencies. While we have provisions within many of our long-term customer contracts that provide for prospective selling price adjustments based upon changes in raw material costs, there is often a three-month to one-year lag until the time the price adjustments take effect, and the contract provisions are typically limited to the underlying cost of the material and do not include related premiums or fabrication costs. As a percentage of sales, cost of sales increased 290 basis points to 88.9 percent, primarily due to the higher material prices.

As a result of the higher sales and higher cost of sales as a percentage of sales, gross profit decreased $3.8 million and gross margin declined 290 basis points to 11.1 percent.

SG&A expenses decreased $1.5 million, or 120 basis points as a percentage of sales, compared with the third quarter of the prior year. The decrease in SG&A expenses was primarily due to lower development costs and environmental charges. These decreases were partially offset by higher compensation-related expenses, which increased approximately $1.0 million.

Restructuring expenses during the third quarter of fiscal 2022 were $0.2 million and primarily consisted of equipment transfer costs in North America.

Operating income decreased $2.5 million from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to lower gross profit, partially offset by lower SG&A expenses.

Comparison of Nine Months ended December 31, 2021 and 2020

HDE year-to-date net sales increased $123.7 million, or 26 percent, from the same period last year, primarily due to higher sales volume and, to a lesser extent, pricing adjustments associated with raw material price increases. HDE sales in fiscal 2021, primarily in the first quarter, were negatively impacted by the COVID-19 pandemic. Sales to commercial vehicle and off-highway customers increased $59.0 million and $57.7 million, respectively.

HDE year-to-date cost of sales increased $121.5 million, or 29 percent, from the same period last year, primarily due to higher sales volume and higher raw material prices, which increased approximately $53.0 million. As a percentage of sales, cost of sales increased 230 basis points to 89.5 percent, primarily due to the higher material prices.

As a result of the higher sales and higher cost of sales as a percentage of sales, gross profit increased $2.2 million and gross margin declined 230 basis points to 10.5 percent.

HDE year-to-date SG&A expenses increased $2.0 million, but decreased 120 basis points as a percentage of sales, compared with the same period in the prior year. The increase in SG&A expenses was primarily due to higher compensation-related expenses, which increased approximately $5.0 million, partially offset by lower development and other administrative costs.

Restructuring expenses decreased $1.2 million from the same period last year, primarily due to lower severance expenses and equipment transfer costs.

Operating income during the first nine months of fiscal 2022 increased $1.4 million from the same period last year, primarily due to higher gross profit and lower restructuring expenses, partially offset by higher SG&A expenses.

Automotive

	Three months ended December 31,										Nine months ended December 31,
	2021					2020					2021					2020
(in millions)	's		% of sales			's		% of sales			's		% of sales			's		% of sales
Net sales				100.0	%				100.0	%				100.0	%				100.0	%
Cost of sales				89.6	%				83.9	%				87.6	%				86.1	%
Gross profit				10.4	%				16.1	%				12.4	%				13.9	%
Selling, general and administrative expenses				13.4	%				7.4	%				13.4	%				8.9	%
Restructuring expenses				-					0.4	%				0.1	%				0.2	%
Impairment charges (reversals) – net		)		-79.0	%				118.0	%		)		-25.0	%				47.0	%
Operating income (loss)				76.0	%		)		-109.7	%				24.0	%		)		-42.2	%

All values are in US Dollars.

Comparison of Three Months ended December 31, 2021 and 2020

Automotive net sales decreased $41.5 million, or 36 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to the disposition of the air-cooled automotive business, which closed on April 30, 2021, and lower sales volume, largely associated with the negative impacts of the semiconductor shortages on the global automotive market. The air-cooled automotive sales were $18.0 million during the third quarter of fiscal 2021. Sales in Europe, North America, and Asia decreased $31.7 million, $6.8 million and $3.0 million, respectively.

Automotive cost of sales decreased $30.6 million, or 32 percent, from the third quarter of fiscal 2021 to the third quarter of fiscal 2022, primarily due to lower sales volume. This decrease was partially offset by higher raw material prices, which increased approximately $4.0 million. As a percentage of sales, cost of sales increased 570 basis points to 89.6 percent.

As a result of the lower sales and higher cost of sales as a percentage of sales, gross profit decreased $10.9 million and gross margin declined 570 basis points to 10.4 percent.

SG&A expenses increased $1.2 million compared with the third quarter of the prior year. The increase in SG&A expenses was primarily due to higher compensation-related expenses.

During the third quarter of fiscal 2022 and in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges to adjust the long-lived assets of the liquid-cooled automotive business to the lower of their carrying or fair value. The $134.4 million of impairment charges in the same period last year also primarily related to the liquid-cooled automotive business, which was first classified as held for sale during the third quarter of fiscal 2021.

Operating income of $55.0 million during the third quarter of fiscal 2022 represents a $179.9 million improvement from the prior-year operating loss of $124.9 million. The operating income and operating loss during the third quarters of fiscal 2022 and 2021 were driven by the significant impairment reversal and impairment charges, respectively, related to the liquid-cooled automotive business. In addition, as compared with the third quarter of fiscal 2021, operating income was unfavorably impacted by lower gross profit and higher SG&A expenses.

Comparison of Nine Months ended December 31, 2021 and 2020

Automotive year-to-date net sales decreased $61.9 million, or 22 percent, from the same period last year, primarily due to $40.0 million of lower sales from the air-cooled automotive business that we sold earlier this fiscal year and lower sales volume, partially offset by a $6.4 million favorable impact of foreign currency exchange rate changes. The fiscal 2021 year-to-date sales were negatively impacted by the COVID-19 pandemic, primarily in the first half of the fiscal year. Fiscal 2022 year-to-date sales have been negatively impacted by the semiconductor shortages and its impact on the global automotive market. Sales in Europe, North America, and Asia decreased $37.8 million, $14.2 million, and $9.9 million, respectively.

Automotive year-to-date cost of sales decreased $50.0 million, or 20 percent, from the same period last year, primarily due to lower sales volume and lower depreciation expenses, which decreased $9.9 million. We ceased depreciating the property, plant and equipment assets within the liquid- and air-cooled automotive businesses when they were classified as held for sale during the second half of fiscal 2021. Upon reverting back to held and used classification during the third quarter of fiscal 2022, we resumed depreciating the property, plant and equipment assets in the liquid-cooled automotive business. These decreases were partially offset by higher raw material prices, which increased approximately $9.0 million, and a $5.3 million unfavorable impact of foreign currency exchange rate changes. As a percentage of sales, cost of sales increased 150 basis points to 87.6 percent.

As a result of the lower sales and higher cost of sales as a percentage of sales, gross profit decreased $11.9 million and gross margin declined 150 basis points to 12.4 percent.

Automotive year-to-date SG&A expenses increased $4.6 million compared with the same period last year. The increase in SG&A expenses was primarily due to higher compensation-related expenses, which increased approximately $2.0 million, and a $0.7 million unfavorable impact of foreign currency exchange rate changes.

The year-to-date net impairment reversal of $56.0 million primarily related to assets in our liquid-cooled automotive business. The $57.2 million impairment reversal during the third quarter of fiscal 2022 was partially offset by $1.2 million of net impairment charges recorded during the first six months of fiscal 2022. During the first two quarters of fiscal 2022, we recorded a total of $8.6 million of non-cash impairment charges related to the Automotive segment’s held for sale assets. These impairment charges were partially offset by a $7.4 million impairment reversal related to certain manufacturing operations that no longer met the requirements to be classified as held for sale due to a modification in the sale perimeter during the first quarter of fiscal 2022.

Operating income of $53.6 million during the first nine months of fiscal 2022 represents a $174.3 million improvement from the operating loss of $120.7 million in the same period last year. The operating income and operating loss during the year-to-date fiscal 2022 and 2021 periods were driven by the significant impairment reversal and impairment charges, respectively, related to the liquid-cooled automotive business. In addition, as compared with the first nine months of fiscal 2021, year-to-date fiscal 2022 operating income was unfavorably impacted by lower gross profit and higher SG&A expenses.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flow from operating activities, our cash and cash equivalents of $61.1 million as of December 31, 2021 and an available borrowing capacity of $163.1 million under our revolving credit facility. Given our extensive international operations, approximately $59.0 million of our cash and cash equivalents is held by our non-U.S. subsidiaries. Amounts held by non-U.S. subsidiaries are available for general corporate use; however, these funds may be subject to foreign withholding taxes if repatriated. We believe our sources of liquidity will provide sufficient cash flow to adequately cover our funding needs on both a short-term and long-term basis.

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the nine months ended December 31, 2021 was $7.4 million, which represents a $139.1 million decrease compared with the same period in the prior year. This decrease in operating cash flow was primarily due to unfavorable net changes in working capital, including higher inventory levels and higher payments for incentive compensation and employee benefits as compared with the same period in the prior year. Inventory, including amounts held for sale, increased $57.8 million from March 31, 2021 to December 31, 2021. The higher inventory levels in fiscal 2022 have largely resulted from both increased raw material prices and strategic safety stock builds in connection with global supply chain constraints and challenges.

Capital Expenditures

Capital expenditures of $30.7 million during the first nine months of fiscal 2022 increased $7.0 million compared with the same period in the prior year. In fiscal 2021, we delayed certain projects and the purchase of certain program-related equipment and tooling to preserve our financial liquidity in response to the COVID-19 pandemic.

Debt

Our credit agreements require us to maintain compliance with various covenants, including a leverage ratio covenant and an interest expense coverage ratio covenant discussed further below. Also, as specified in the credit agreement, the term loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, we must represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on our business, property, or results of operations.

The leverage ratio covenant within our primary credit agreements requires us to limit our consolidated indebtedness, less a portion of our cash balance, both as defined by the credit agreements, to no more than three and one-quarter times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). We are also subject to an interest expense coverage ratio covenant, which requires us to maintain Adjusted EBITDA of at least three times consolidated interest expense. As of December 31, 2021, our leverage ratio and interest coverage ratio were 2.5 and 10.0, respectively. We expect to remain in compliance with our debt covenants during the remainder of fiscal 2022 and beyond.

Forward-Looking Statements

This report, including, but not limited to, the discussion under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements, including information about future financial performance, 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. in Part I. of the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. Other risks and uncertainties include, but are not limited to, the following:

Market Risks:

•	The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers (and the supply chain), customers, and employees;
•	Economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and<br> compete, including, in particular, foreign currency exchange rate fluctuations; supply chain disruptions; inflation; tariffs (and any potential trade war resulting from tariffs or retaliatory actions); changes in interest rates; recession<br> and recovery therefrom; restrictions and uncertainty associated with cross-border trade or public health crises, such as pandemics and epidemics, including the ongoing COVID-19 pandemic; and the general uncertainties about the impact of<br> regulatory and/or policy changes, including those related to tax and trade, the COVID-19 pandemic and other matters, that have been or may be implemented in the U.S. or abroad, as well as continuing uncertainty regarding the implications<br> of “Brexit”;
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•	The impact of price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but<br> not limited to, increases in the underlying material cost based upon the London Metal Exchange and related premiums, fabrication, or freight costs. These prices may be impacted by a variety of factors, including changes in trade laws and<br> tariffs, the behavior of our suppliers and significant fluctuations in demand. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, whether through<br> our quotation process or through contract provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions; and
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•	The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to<br> supply alternative new technologies to meet environmental and/or energy standards and objectives.
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Operational Risks:

•	The overall health and continually increasing price-down focus of our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any<br> deterioration in the stability or performance of any of our major customers;
•	The impact of any problems, including logistic and transportation challenges, associated with suppliers meeting our quantity, quality, price and timing demands, and the overall<br> health of our suppliers, including their ability and willingness to supply our volume demands if their production capacity becomes constrained;
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•	Our ability to maintain current customer relationships and compete effectively for new business, including our ability to offset or otherwise address increasing pricing pressures<br> from competitors and price reduction and overall service pressures from customers, particularly in the face of macro-economic instability;
•	The impact of product or manufacturing difficulties or operating inefficiencies, including any program launch and product transfer challenges and warranty claims and delays or<br> inefficiencies resulting from restrictions imposed in response to the COVID-19 pandemic;
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•	The impact of any delays or modifications initiated by major customers with respect to the timing of projects, program launches, product applications or volume requirements,<br> including order volume changes associated with supply chain challenges, such as semiconductor shortages;
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•	Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, while also positioning<br> ourselves geographically, so that we can continue to support our customers with the technical expertise and market-leading products they demand and expect from Modine;
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•	Our ability to effectively and efficiently modify our cost structure in response to sales volume increases or decreases and to complete restructuring activities and realize the<br> anticipated benefits of those activities;
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•	Costs and other effects of the investigation and remediation of environmental contamination; particularly when related to the actions or inactions of others and/or facilities over<br> which we have no control;
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•	Our ability to recruit and maintain talent, including personnel in managerial, leadership, operational and administrative functions, in light of tight global labor markets;
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•	Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;
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•	The impact of any substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;
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•	Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we<br> operate, and the costs associated with compliance therewith;
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•	Work stoppages or interference at our facilities or those of our major customers and/or suppliers;
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•	The constant and increasing pressures associated with healthcare and associated insurance costs; and
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•	Costs and other effects of litigation, claims, or other obligations.
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Strategic Risks:

•	Our ability to successfully realize anticipated benefits from strategic initiatives and the implementation of our 80/20 strategy, through which we are focused on growing businesses<br> with strong market drivers;
•	Our ability to identify and execute strategies in our automotive businesses to reduce costs and improve operating margins;
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•	Our ability to identify and execute growth and diversification opportunities in order to position us for long-term success; and
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•	The potential impacts from any actions by activist shareholders, including disruption of our business and related costs.
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Financial Risks:

•	Our ability to fund our global liquidity requirements efficiently for Modine’s current operations and meet our long-term commitments in the event of disruption in or tightening of<br> the credit markets or extended recessionary conditions in the global economy;
•	The impact of potential increases in interest rates, particularly in LIBOR and the Euro Interbank Offered Rate (“EURIBOR”) in relation to our variable-rate debt obligations;
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•	The impact of changes in federal, state or local tax regulations that could have the effect of increasing our income tax expense;
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•	Our ability to comply with the financial covenants in our credit agreements, including our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements)<br> and our interest coverage ratio (Adjusted EBITDA divided by interest expense, as defined in our credit agreements);
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•	The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
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•	Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
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Forward-looking statements are as of the date of this report; we do not assume any obligation to update any forward-looking statements.

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. of the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. The Company’s market risks have not materially changed since the fiscal 2021 Form 10-K was filed.

Item 4.	Controls and Procedures.

Evaluation Regarding Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, management of the Company, under the supervision, and with the participation, of the Company’s President and Chief Executive Officer and Executive Vice President, Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures, at a reasonable assurance level, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the President and Chief Executive Officer and Executive Vice President, Chief Financial Officer have concluded that the design and operation of the Company’s disclosure controls and procedures were effective, at a reasonable assurance level, as of December 31, 2021.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting during the third quarter of fiscal 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

The following describes the Company’s purchases of common stock during the third quarter of fiscal 2022:

Period	Total Number of<br><br> <br>Shares Purchased	Average<br><br> <br>Price Paid<br><br> <br>Per Share	Total Number of<br><br> <br>Shares Purchased<br><br> <br>as Part of Publicly<br><br> <br>Announced Plans<br><br> <br>or Programs	Maximum Number (or<br><br> <br>Approximate Dollar Value)<br><br> <br>of Shares that May Yet<br><br> <br>Be Purchased Under the<br><br> <br>Plans or Programs (a)
October 1 – October 31, 2021	36,644 (b)	$11.94	_______	$50,000,000
November 1 – November 30, 2021	_______	_______	_______	50,000,000
December 1 – December 31, 2021	4,189 (b)	$10.20	_______	50,000,000
Total	40,833 (b)	$11.76	_______
(a)	Effective November 5, 2020, the Board of Directors approved a two-year, $50.0 million share repurchase program, which allows the Company to repurchase Modine common stock through<br> solicited and unsolicited transactions in the open market or in privately-negotiated or other transactions, at such times and prices and upon such other terms as the authorized officers of the Company deem appropriate.
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(b)	Consists of shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company,<br> pursuant to its equity compensation plans, gives participants the opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of<br> restrictions. These shares are held as treasury shares.
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Item 5.	Other Information.

Item 6.	Exhibits.
(a)	Exhibits:
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Exhibit No.	Description	Incorporated Herein By<br><br> <br>Reference To	Filed<br><br> <br>Herewith
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2.1	Termination Agreement by and between the Company and Dana Incorporated, dated as of October 25, 2021.	Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated October 25, 2021
10.1	Separation Letter Agreement between the Company and Joel T. Casterton, dated as of October 25, 2021.		X
10.2	Separation Letter Agreement between the Company and Matthew J. McBurney, dated as of October 30, 2021.		X
31.1	Rule 13a-14(a)/15d-14(a) Certification of Neil D. Brinker, President and Chief Executive Officer.		X
31.2	Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.		X
32.1	Section 1350 Certification of Neil D. Brinker, President and Chief Executive Officer.		X
32.2	Section 1350 Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.		X
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).		X
101.SCH	Inline XBRL Taxonomy Extension Schema.		X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.		X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.		X
10.1.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.		X
10.1.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.		X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).		X

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MODINE MANUFACTURING COMPANY

(Registrant)

By: /s/ Michael B. Lucareli

Michael B. Lucareli, Executive Vice President, Chief Financial Officer*

Date: February 3, 2022

* Executing as both the principal financial officer and a duly authorized officer of the Company

Exhibit 10.1

October 25, 2021	Modine Manufacturing Company<br><br> <br>1500 DeKoven Avenue<br><br> <br>Racine, Wisconsin 53403-2552<br><br> <br>Tel. 262.636.1200<br><br> <br>Fax 262.631.7720

Joel Casterton

[address withheld]

Re:	Separation from Modine Manufacturing Company

Dear Joel:

As we have discussed, the company has elected to make a change to the leadership structure of the HDE organization and as a result your employment as an officer with Modine Manufacturing Company and certain affiliates (“Modine” or the “Company”) will be terminated. The planned effective date of this separation is October 29, 2021. This separation date can be extended with mutual written agreement.

Pursuant to certain incentive compensation plans, you were granted Retention Restricted Stock Unit Awards, options to purchase common stock, Performance Stock Awards and Management Incentive Plan (“MIP”) awards. You may exercise vested options to purchase common stock in accordance with the terms of your stock option award agreements and the incentive compensation plans under which they were issued after you cease to be employed with the Company. In order to obtain the favorable tax benefits of incentive stock options, you must exercise these options no later than 90 days after your termination of employment. Attachment C contains a list of all of your outstanding and vested options to purchase common stock.

Under the equity plans, all Performance Stock Awards for which the performance period has not been completed will terminate. Also, separation prior to the time of equity grant vesting results in forfeiture of all unvested Retention Restricted Stock Unit Awards, unvested options to purchase common stock and the Performance Share awards for FY 20-22 and Performance Cash Awards for FY21-23 and FY22-24. However, in light of your service to the Company, and in consideration for certain additional requirements, you may receive a MIP payout, as well as continued vesting on certain Restricted Stock Unit, Stock Option and Performance Stock Awards as set forth in Attachment A, and subject to the terms of the Restrictive Covenant Agreement attached as Attachment D.

Please note the following:

•	Any earned but unused FY2022 vacation, minus typical wage and tax deductions, will be paid to you in a lump sum on your final active employee paycheck.
•	If you file for unemployment compensation, it will not be contested by Modine. Eligibility will be determined by the state unemployment commission.
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•	Your participation in all other Modine benefit programs ends upon your separation date. Information on your benefit plan options, including COBRA for health, dental and vision, life<br> insurance conversion and retirement plan distributions is included with this letter.

We also want to remind you that any person who ceases to be an officer or director (i.e., an “insider”) of the Company continues to have certain obligations under the federal securities laws. Specifically, in order to avoid penalties, you should be aware of the following:

Insider Trading Restrictions. You may not buy or sell securities of the Company if you are in possession of material nonpublic information obtained from the Company or any party associated with the Company. In addition, you may not furnish ("tip") material nonpublic information about the Company to any person who might trade on the information.

Short-Swing Profit Rule Applies Up to Six months After Termination. Section 16(b) of the Securities and Exchange Act of 1934, as amended, which subjects insiders to the loss of profits on any sale and purchase of the Company’s equity securities within a six-month period, continues to apply to non-exempt transactions that occur within less than six months of an opposite-way, non-exempt transaction that took place while you were an officer. According to our records, your last non-exempt transaction was more than six months ago.

Form 4. You must file a Form 4 to report any non-exempt transaction in Company stock. It is our understanding that the Company has filed on your behalf all Forms 4 required to be filed and all transactions that are reportable on a Form 4, have been reported.

Form 5. You must file a Form 5 within 45 days after the close of the Company’s current fiscal year (i.e., not later than May 15, 2021) to report any pre-termination transactions and any reportable post-termination transactions not previously reported on a Form 4.

Exit Box. We will be happy to file any necessary Forms 4 and 5 for you after January 7, 2021. However, in the event you file them yourself, please check the “exit” box in the upper left-hand corner of the form.

Section 16 reporting requirements are quite complex. If you have any questions regarding reporting requirements, please don’t hesitate to consult with Sylvia Stein.

Sincerely,
/s/ Brian Agen
Brian J. Agen

Attachment A

Separation Payments & Benefits

Supplemental Severance Plan

Under the Supplemental Severance Plan, you are eligible for separation pay and benefits as follows:

•	Annual base salary (52 weeks of severance pay at the same base rate paid to you prior to your termination), which is subject to applicable wage and tax deductions. Severance benefits will<br> be paid on a bi-weekly basis.
•	If you participate in Modine’s health and/or dental plans, your active health coverage ends immediately. You may elect to continue your coverage for up to 18 months through COBRA. Modine<br> will pay your full COBRA premium for the twelve (12) months following your termination of employment. This will be a taxable benefit to you. If you elect COBRA coverage beyond these twelve (12) months, you will be responsible for the full<br> cost of the coverage. Additional details regarding benefit continuation will be provided to you by our COBRA administer.
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•	Modine will also coordinate an executive outplacement program to support you in this career transition, should you choose to participate in such program.
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Please note that you will not receive the foregoing separation benefits described above unless you sign the Release Agreement (“Agreement”) at Attachment B. Please review carefully. We advise you to consult your attorney or tax advisor prior to signing the Agreement. You have Twenty-one (21) days following your separation date to consider whether or not to sign the Agreement.

Treatment of Certain Unvested Restricted Stock Units, Options Performance Shares, Performance Cash Awards and FY22 MIP

Subject to your execution of the Restrictive Covenant Agreement, Attachment D, the Company will waive certain vesting requirements such that your unvested Restricted Stock Units (“RSUs”) granted under the FY19, FY20 and FY21 LTIP plans and scheduled to vest in 2022 and 2023, unvested Options granted under the FY19, FY20 and FY21 LTIP plans and scheduled to vest in 2022, and a pro-rata portion of your unvested Performance Shares applicable to the FY20- 22 period will continue to vest on their normal vesting schedule, and a pro-rated MIP payment for FY22 may be available.

A-1

Attachment A

Outlined below is a summary of such benefits:

RSU Grant Date and Vesting Schedule	2022	2023
5/30/18 LTIP RSU	1,755
5/29/19 LTIP RSU	2571	2,574
10/2/2020 LTIP RSU	5,151	5,151
Options Grant Date and Vesting Schedule	2022
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5/30/18 LTIP Options	1,995
5/29/19 LTIP Options	3,061
10/2/2020 LTIP Options	5,139
•	RSUs in the schedule above shall vest, and with respect to RSUs, and shares will be issued thereunder, pursuant to the normal vesting schedule as if you were actively employed on such<br> vesting dates.
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•	Should a payout be earned under the FY20-22 Long-term Incentive Plan, you will receive a Performance Share payout pro-rated based upon your months of active service during the performance<br> period, payable in 2022 at the same time that other active participants receive payment, if any.
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•	A June 2022 lump-sum payment equivalent to any FY22 MIP Payout which you would have received, if a MIP payout is authorized by the HCC committee. This payment will be pro-rated based upon<br> your months of active employment during FY22.
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Please note that any remaining unvested RSUs, Options or Performance Cash Awards related to the FY20 or FY21 LTIP plans not shown on the vesting tables above, and all unvested RSU’s, Stock Options and Performance Cash awards related to the FY22 LTIP Plan will be forfeited effective upon your separation date.

A-2

Attachment B

MODINE MANUFACTURING COMPANY

RELEASE AGREEMENT (“AGREEMENT”)

1.	General Release of Claims.

In exchange for the Severance Payment in Paragraph 8, I hereby release Modine from, and covenant not to sue Modine with respect to, any and all claims I have or may have against Modine.

2.	Claims to Which Release Applies.

This release applies both to claims that are now known or are later discovered.

However, this release does not apply to any claims that may arise after the date I execute this release. This release does not apply to any claims that may not be released under applicable law, including, but not limited to any charge or complaint filed with any administrative agencies such as the United States Equal Employment Opportunity Commission (“EEOC”).

3.	Claims Released Include Age Discrimination and Employment Claims.

U.S.C. Title 42; National Labor Relations Act; Employee Retirement Income Security Act of 1974; the Equal Pay Act; state or federal parental, family and medical leave acts; invasion of privacy; the Uniformed Services Employment and Reemployment Rights Act (USERRA), or any other local, state, or federal military and/or veterans rights act, or any other claim based on veteran status; or arising under any other local, state or federal statute, ordinance, regulation or order); and (3) claims arising under any other federal, state or local law, regulation, ordinance or order that regulates the employment relationship and/or employee benefits. Neither Modine’s signing of this release, nor any actions taken toward compliance with its terms, constitutes Modine’s admission of any liability to me other than under this release, or of any wrongdoing under any federal, state or local laws.

B-1

Attachment B

4.	Release Covers Claims Against Related Parties.

For purposes of this release the term “Modine” includes Modine Manufacturing Company and any of its present, former and future owners, parents, affiliates and subsidiaries, and its and their directors, officers, shareholders, employees, agents, servants, representatives, predecessors, successors, assigns, and retirement plan administrators and fiduciaries.

Therefore, the claims released include claims I have against any such persons or entities, as of the date of my execution of this Agreement.

5.	The Terms “Claims” and “Release” are Construed Broadly.

As used in this release, the term “claims” shall be construed broadly and shall be read to include, for example, the terms “rights”, “causes of action (whether arising in law or equity)”, “damages”, “demands”, “obligations”, “grievances” and “liabilities” of any kind or character. Similarly, the term “release” shall be construed broadly and shall be read to include, for example, the terms “discharge” and “waive.”

6.	Release Binding on Employee and Related Parties.

This release shall be binding upon me and my agents, attorneys, personal representatives, executors, administrators, heirs, beneficiaries, successors and assigns.

7.	Employee Rights and Protections.

Nothing in this Agreement, or any agreement or policy referenced in it, is intended or interpreted to prohibit me: (a) from participating, cooperating or providing information in an investigation by the EEOC or other government agency or entity regarding any claim released in this Agreement, any of the terms and conditions of this release or my employment with Modine, or as may be required or permitted by law; (b) from seeking a judicial or administrative determination regarding the validity of the waiver and release set forth in this Agreement or from filing a charge or complaint with the EEOC or other government agency or entity; or (c) from reporting possible violations of federal law or regulation to any government agency or entity or making any disclosures that are protected under the whistleblower provisions of federal law or regulation or otherwise cooperating with any government inquiry without advance approval by or notice to Modine. Further, nothing in this Agreement shall be construed to prevent me from communicating with any government agency regarding matters that are within the agency’s jurisdiction. Specifically, I may provide information to the Securities and Exchange Commission regarding any possible securities law violations, and recover an award from the Securities and Exchange Commission as a result of my reporting such possible violations. Modine’s acknowledgment of this exception does not otherwise limit the scope of the waiver and release in Paragraphs 2 – 6 of this Agreement; I do, however, waive any right to recover damages or obtain any monetary or any other personal relief of any kind based on (y) a charge filed with the EEOC or state or local EEO agency, or (z) any lawsuit arising from such a charge.

B-2

Attachment B

8.	Severance Payment.

I have executed this release in consideration of the benefits under the Modine Salaried Employee Severance Plan (the “Severance Payment”), as further described in the letter to which this Agreement is affixed (the “Letter”) accompanying this Agreement. I acknowledge that these benefits represent consideration in addition to anything of value that I am otherwise entitled to receive from Modine. I further acknowledge that the benefits described in the Plan are sufficient to support this release.

9.	Representations.

In connection with my decision to provide this release I acknowledge that I have not relied on any verbal or written representations by Modine other than those explicitly set forth in this Agreement itself.

10.	Opportunity to Consider this Release; Consultation with Attorney.

Because I am over 40 years of age, the Company hereby provides me with the following disclosures to ensure that my release and waiver of claims arising under the Age Discrimination in Employment Act (“ADEA”) is knowing and voluntary. The Company and I agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. I acknowledge that the consideration of the Severance Payment given for my release under this Agreement is in addition to anything of value to which I was already entitled. By signing (and not revoking) this Agreement, I am permanently giving up, surrendering, and waiving any claim that the Company subjected me to unlawful discrimination or harassment, took any other unlawful adverse action against me, or violated any other provision of law in connection with my employment or termination from employment. I have read this release and fully understand its terms. I have been offered twenty-one (21) days to consider its terms. MODINE HEREBY RECOMMENDS AND I ACKNOWLEDGE THAT I HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE.

11.	Voluntary Agreement.

I have entered into this Agreement knowingly and voluntarily and understand that its terms are binding on me.

B-3

Attachment B

12.	Partial Invalidity of Release.

If any part of this Agreement is held to be unenforceable, invalid or void, then the balance of this Agreement shall nonetheless remain in full force and effect to the extent permitted by law.

13.	Return of Modine Property; Confidentiality.

I have returned or will return to Modine any and all Modine property, including all equipment, telephones, keycards, records, files, papers, handbooks, Confidential Information (as defined below), computers and computer equipment that I had in my possession in whatever form, including electronic media.

During the course of my employment with Modine, I have had access to, received and/or developed information that is confidential to Modine including, without limitation, information pertaining to financial matters, budgets, strategic plans, marketing, sales, customers, business plans, inventions, processes, formulas, designs, supplies, products and employees (the “Confidential Information”). Confidential Information shall not include any information that is in the public domain by means other than improper disclosure, but shall include non-public compilations, combinations or analysis of otherwise public information. The restrictions set forth in this paragraph are in addition to and not in lieu of any obligations I may have under the law with respect to Modine’s Confidential Information, including any obligations I may owe under Wis. Stat. § 134.90 or similar statutes governing trade secrets which may extend beyond the contractual period restrictions herein. I acknowledge and agree that all Confidential Information was or is hereby assigned to and remains the exclusive property of Modine. I agree that I will maintain the Confidential Information in strict confidence and not disclose it to any person or use it in any way to harm Modine for a period of two (2) years following the end of my employment unless specifically required by this Agreement, by law or by written permission of Modine.

I further agree that I have not and will not, except as specifically noted below, make known the negotiations leading to and contents or terms of this Agreement except to my spouse, counsel or tax advisor or except as required by law or as may be necessary in order to enforce this Agreement, and agree that if disclosure is made to my spouse, counsel or tax advisor, they shall also be bound by this confidentiality provision and I shall take all reasonable steps to ensure that they comply with it.

14.	Headings.

The headings and subheadings in this Agreement are inserted for convenience and reference only and are not to be used in construing this Agreement.

B-4

Attachment B

15.	Applicable Law.

Wisconsin state law will apply in connection with any dispute or proceeding concerning this Agreement.

16.	Suit in Violation of this Agreement - Loss of Benefits and Payment of Costs.

If I bring an action against Modine in violation of this Agreement or if I bring an action asking that this Agreement be declared invalid or unenforceable, I agree that prior to the commencement of such an action I will tender back to Modine all payments that I have received as consideration for my release under this Agreement. If my action is unsuccessful, I further agree that I will pay all costs, expenses and reasonable attorneys’ fees incurred by Modine in its successful defense against the action. However, the previous two sentences shall not be applicable to an action, if I bring it, challenging the validity of this Agreement under the Age Discrimination in Employment Act (which I may do without penalty under this release). I acknowledge and understand that all remaining benefits to be provided to me as consideration for this Agreement will permanently cease as of the date such action is instituted.

17.	No Further Employment.

By executing this Agreement and accepting the Severance Payment, I agree not to seek further employment with Modine, directly or indirectly through another entity, including but not limited to a temporary employment agency or independent contractor.

18.	Non-disparagement.

I agree that I will not make disparaging remarks about Modine or its products, practices, or conduct (including personnel practices), provided, however, that I may give truthful testimony about such matters if properly subpoenaed to do so or requested to do so by a government agency.

19.	Preservation of Rights under Benefit Plans and Indemnities.

This Agreement shall not adversely affect my rights to receive any benefit that I am otherwise entitled to receive under any of Modine’s qualified and nonqualified benefit plans, or any rights I may have to indemnification under Modine’s officers and directors’ insurance coverage, Modine’s Articles of Incorporation or Bylaws or any expressly written indemnity agreement between Modine and me.

B-5

Attachment B

20.	7 Day Revocation Period.

I understand that I have a period of seven calendar days following the date I deliver a signed copy of this Agreement to Modine Manufacturing Company, Attn: Brian J. Agen, 1500 DeKoven Avenue, Racine, Wisconsin 53403 to revoke this Agreement by giving written notice to that person. This Agreement and my entitlement to the Severance Payment described in the Letter will be binding and effective upon the expiration of this seven day period if I do not revoke, but not before.

21.	Total Amount of Severance Payments.

I understand that the Severance Payment and all other benefits payable to me in connection with this Agreement have been designed to qualify as a separation pay plan that is exempt from certain federal tax laws that govern the payment of non-qualified, deferred compensation. I further understand that, because of this, the total amount of severance payments that I receive, as described in the Letter, will not be greater than two times the lower of the following two amounts: (1) my annualized compensation for the year prior to the year of my termination (as determined by Modine under Treasury Regulation 1.409A-1(b)(9)(iii)) or (2) the dollar limitation set by the Internal Revenue Service under Internal Revenue Code section 401(a)(17) for the calendar year of my termination ($260,000 in 2014). In addition, I further understand that, except for possibly COBRA coverage, no severance payment or benefit due to me in connection with this Agreement will, under any circumstances, be provided after December 31 of the second calendar year after the year of my termination. I understand that any future employment and income tax consequences (including related penalties and interest) on payments or consideration received under this Agreement are my responsibility and will not provide a basis to set aside or in any way alter this release.

22.	Cooperation with Government Agencies.

Nothing in this Agreement, including but not limited to the provisions in Sections 2, 3, 4, 5, 6, 13, and 18 above, (a) limits or affects my right to challenge the validity of this Agreement, including a challenge under the Age Discrimination in Employment Act of 1967, as amended; (b) interferes with my right and obligations to give truthful testimony under oath; or (c) precludes me from participating in an investigation, filing a charge, or otherwise communicating with the Equal Employment Opportunity or other state or federal agencies responsible for enforcing anti-discrimination laws. That notwithstanding, by signing below, I agree and acknowledge that I do, however, waive any right to recover damages or obtain individual relief that might otherwise result from the filing of any such charge.

B-6

Attachment B

23.	Entire Agreement.

Unless otherwise stated in this Agreement, I acknowledge that I have not relied on any verbal or written representations by any Company representative other than those explicitly set forth in this Agreement. This Agreement sets forth the entire agreement between the Company and me and completely supersedes any prior agreements, oral statements or understandings concerning the termination of my employment and any benefits I might receive following that termination. This Agreement does not supersede my obligations and the Company's rights under any confidentiality, intellectual property, or any other restrictive covenant I may have signed with the Company. I agree that I am not entitled to any other severance, benefits, vacation accrual, bonus, commission or other payments of any kinds from the Company, except those described in this Agreement or in the Letter accompanying this Agreement.

EXECUTED THIS 29^th^ DAY OF Oct., 2021.

/s/ Joel Casterton
Employee's Signature
Employee’s Name:	Joel Casterton	(please print)
---	---	---

Received by:

/s/ Brian Agen

Modine Manufacturing Company

1500 DeKoven Avenue

Racine WI 53403

Name:	Brian Agen	Date:	11/1/21

Title: Vice President – Human Resources

B-7

Attachment C

Outstanding and Vested Options

Vested But Unexercised Options
	ISO<br><br> <br>Options	NQ<br><br> <br>Options
Casterton Vested Options
6/2/14 Grant - $14.94	204		Option grants expire one (1) year from termination date unless ten-year grant expiration is earlier.
6/2/15 Grant - $11.39	632
5/31/16 Grant - $10.00	1,569
6/1/17 Grant - $15.90	1,355
5/30/18 Grant - $17.90	5,979
5/29/19 Grant - $13.26	6,122
10/2/20 Grant - $6.62	2,766	2,373
	18,627	2,373
In all cases, Incentive Stock Options (ISO) become Non-Qualified (NQ) Options ninety (90) days after termination

C-1

Attachment D

RESTRICTIVE COVENANT AGREEMENT

This RESTRICTIVE COVENANT AGREEMENT (this “RCA”), dated as of Nov. 1, 2021 (the “Effective Date”), is entered into by and between Modine Manufacturing Company on behalf of itself and its affiliates, subsidiaries, and successors (the “Company” or “ Modine”), and Joel T. Casterton (“Casterton”) (collectively, referred to herein as the “parties”).

WHEREAS, in connection with the termination of Casterton’s employment with the Company, the Company and Casterton have entered into a Release Agreement, dated Nov. 1, 2021.

WHEREAS, during the course of employment, Casterton established, maintained, and/or improved knowledge of or relationships or goodwill with Company employees and customers and/or has learned Company’s Trade Secrets or Confidential Information (as defined below). Company’s Confidential Information, Trade Secrets, and employee relationships have been developed by Company at considerable expense and effort and/or over a number of years, and but for Casterton’s employment with Company, Casterton would not know Company’s Trade Secrets and Confidential Information, and Casterton would not be able to create, improve, and maintain relationships with Company employees. Company would not offer the additional consideration contained in this RCA if Casterton did not accept the terms hereof.

WHEREAS, the Company and Casterton agree that the Company has a substantial and legitimate business interest in, among other things, the Company’s Confidential Information and Trade Secrets and employee and customer relationships.

NOW, THEREFORE, for good and valuable consideration, to which Casterton would not otherwise be entitled without entering into this RCA, including the Consideration, the sufficiency of which are hereby acknowledged, the parties agree as follows:

(a)	Definitions.
1.	“Business of the Company” or “the Company’s Business” means the business of Modine’s Heavy Duty Equipment business unit (“HDE”) business unit, including, without limitation, the design,<br> manufacturing and sale of heat transfer components and systems and software and services related thereto, all as performed by the Company on the Termination Date or within the twenty-four (24) months prior to the Termination Date.
---	---
2.	“Competitor” means any Person (including Casterton or an entity that Casterton becomes affiliated with or renders services to) that conducts or that is directly engaged in whole or in<br> relevant part in any business or enterprise which is the same as, or substantially the same as, the Business of the Company.
---	---
3.	“Competitive Services” means owning, managing, operating, joining, controlling, being employed by or with, or participating in any manner with a Competitor, where Casterton is providing<br> the same or substantially similar services that Casterton provided to the Company during his employment.
---	---

D-1

Attachment D

4.	“Competitive Products” means (i) any product which is sold or provided in competition with a product sold or offered by the HDE Unit during the twenty-four (24) months immediately<br> preceding the date of Casterton’s termination of employment with the Company and for which the Company has over $1 million in annual sales during that twenty-four (24) month period, and (ii) any products which are sold or provided in<br> competition with a product that the Company can show by written evidence is in active development by the Company in connection with the HDE business.
5.	“Confidential Information” means information and the compilation of information related to the operation of the Company that derives economic value, actual or potential, from not being<br> generally known to or readily available or ascertainable by other Persons who can obtain economic value from its disclosure to or use by them. Assuming the foregoing criteria are met, Confidential Information includes, but is not limited to:
---	---
•	Potential acquisitions and future growth plans;
---	---
•	Company succession and planning information;
---	---
•	Employee personnel information;
---	---
•	Compilations of information concerning research and development of the Company’s products or services;
---	---
•	Designs, discoveries, ideas, algorithms, computer software code, protocols, formulas, mask works, compositions, patents, copyrights and trademarks;
---	---
•	Names and other listings of Restricted Customers and Prospective Customers (including contact information);
---	---
•	Proposals made to Restricted Customers or Prospective Customers or other information contained in bids or offers to such Restricted Customers or Prospective Customers;
---	---
•	The terms of any arrangements or agreements with Customers, including the amounts paid for such services or how pricing was developed by the Company;
---	---
•	The layout, design, and implementation of Restricted Customer-specific projects;
---	---
•	The identity of vendors/suppliers and vendor/supplier pricing information and subcontractors;
---	---
•	The composition or description of future services and/or products that are going to be or may be provided by the Company;
---	---
•	The Company’s financial, marketing, and sales information;
---	---
•	Costing information;
---	---
•	Profit, loss, and margin information;
---	---
•	Technical expertise and know-how developed by the Company, including the unique manner in which the Company conducts its business; and
---	---
•	Any information disclosed to the Company by a third party (including, but not limited to, the Company’s customers and Prospective Customers) which the Company is obliged to treat as<br> confidential.
---	---

Confidential Information excludes information that:

•	Is already known to the disclosed-to party prior to such disclosure, and is not obtained or derived directly or indirectly from Casterton;
•	Is commercially available;
---	---
•	Is or becomes known or generally available in the public domain other than through Casterton’s act or default;
---	---

D-2

Attachment D

•	Is obtained from a third party lawfully in possession of the information, which is not subject to any non-disclosure or non-use obligations owed to the disclosing party or any third<br> party; or
•	Is independently protected as a Trade Secret under applicable statutory law.
---	---
6.	“Consideration” means (i) the value of certain unvested Restricted Stock Units and Options under the otherwise forfeited FY19, FY20, and FY21 Long-term Incentive Plans, (ii) a performance<br> share payout equivalent to any prorated FY20 -22 LTIP Performance Share Payout earned, (iii) a June 2022 lump-sum payment equivalent to any pro-rated MIP payout authorized by the HCC Committee and subject to the continued fulfillment by<br> Casterton of the obligations set forth in this RCA. Any Consideration shall be subject to ordinary tax withholding and all required deductions; however, payment of any Consideration does not entitle Casterton to any retirement plan<br> contributions by the Company for Casterton’s benefit or account
---	---
7.	“Key Employee” means any person who is or was employed or engaged by the Company at any time in the twelve (12) months preceding Casterton’s Termination Date, and (i) with whom Casterton<br> had material contact as a result of his position at the Company or (ii) about whom Casterton learned Confidential Information in the course of employment during the twenty-four (24) months immediately preceding Casterton’s termination. Key<br> employee is limited to employees who (i) are or were managers, officers, directors, or executives of the Company and (ii) are in possession of Confidential Information and/or Trade Secrets of the Company.
---	---
8.	“Key Services” means services of the type performed by an employee for the Company during the final twenty-four (24) months of their Company employment, but shall not include clerical or<br> menial labor.
---	---
9.	“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or other entity.
---	---
10.	“Prospective Customer” means a business, and any of its affiliates and subsidiaries, to whom Casterton, or one or more individuals directly or indirectly supervised, managed, or<br> directed by Casterton, made a proposal to sell or provide products or services on behalf of Company in the twenty-four (24) month period immediately preceding the Termination Date.
---	---
11.	“Restrictive Covenant Period” means the twelve (12) month period after Casterton’s Termination Date.
---	---
12.	“Restricted Customer” means a customer of HDE, including any of Company’s affiliates and subsidiaries that operates as HDE, to which Casterton, or one or more individuals directly or<br> indirectly supervised, managed, or directed by Casterton, sold or provided products or services on behalf of Company during the twenty-four (24) month period immediately preceding the Termination Date. The term Restricted Customer is limited<br> to Company customers that purchased or received in excess of $100,000 (US) worth of products or services from Company during the twenty-four (24) month period immediately preceding the Termination Date.
---	---
13.	“Termination Date” means October 29, 2021
---	---

D-3

Attachment D

14.	“Trade Secret” shall have the same meaning as defined under any applicable Trade Secrets Act.
(b)	Acknowledgements.
---	---

Casterton agrees that the Covenants below (including the geographic and temporal scope of each individual Covenant) are necessary, reasonable, fair, valid, enforceable, and directly connected with the Company’s need to protect its legitimate business interests—including, but not limited to, goodwill, market reputation, Restricted Customer relationships, Prospective Customer relationships, Confidential Information, and Trade Secrets—and to prevent irreparable injury to the Company’s Business. Casterton agrees he has received good and valuable consideration for the covenants below (the “Covenants”).

Casterton acknowledges that the Covenants will not impede Casterton’s ability to earn a livelihood. Casterton acknowledges that he is capable of obtaining suitable employment following the Termination Date, even though he has agreed to the Covenants. Casterton further acknowledges the Consideration is significant and will enable him to support himself and his family during the period in which the Covenants are in force. Casterton further agrees that the Covenants, though they may temporarily and narrowly limit future employment opportunities, are neither unduly harsh nor oppressive in curtailing Casterton's legitimate efforts to earn a livelihood.

In exchange for Casterton’s continuing adherence to all of the Covenants, Casterton will receive the Consideration. Casterton acknowledges that the Consideration is not an amount to which he is already entitled and is in sole consideration for the promises made in this RCA.

(c)	Covenant Not to Compete.

Casterton covenants that during the Restrictive Covenant Period, Casterton will not, directly or indirectly, provide Competitive Services:

(i)	Anywhere in the United States of America. Casterton acknowledges that (i) the geographic territory in which Casterton was responsible for representing the Company includes the entire<br> United States, and (ii) the nature of Casterton’s duties and responsibilities for and on behalf of the Company directly impacted and related to the Business of the Company across the United States. Therefore, Casterton expressly agrees that<br> the geographic scope of this covenant is reasonably limited and should be enforced; or
(ii)	In any geographic area in which or to which Casterton (i) performed work on behalf of the Company during his employment, (ii) was assigned during his employment, and/or (iii) was able to<br> make contact with any Restricted Customers or Prospective Customers during the time of his employment.
---	---
(d)	Covenant Not to Solicit Prospective Customers.
---	---

Casterton covenants that during the Restrictive Covenant Period, Casterton will not, directly or indirectly, solicit, divert, or appropriate, or attempt to solicit, divert or appropriate, any Prospective Customers, for the purposes of providing products or services to such Prospective Customers that are within the Business of the Company, on behalf of either Casterton or any Competitor.

D-4

Attachment D

Casterton agrees that the Restrictive Covenant Period will be necessary for the Company to re-establish the relationships and goodwill between its Prospective Customers and other employees of the Company, so that Casterton’s knowledge of the Company’s Prospective Customers, the goodwill established by Casterton’s representation of the Company, and the Company’s Confidential Information and Trade Secrets obtained by Casterton in the course of employment with the Company will no longer give Casterton an unfair competitive advantage with Prospective Customers.

(e)	Covenant Not to Solicit Key Employees.

Casterton covenants that during the Restrictive Covenant Period, Casterton shall not, directly or indirectly, without the prior written consent of the Company, cause or solicit, or assist others in causing or soliciting any Key Employee of the Company to terminate his or her employment with the Company to provide Key Services for a Competitor.

(f)	Severability.

Should any one or more of the provisions or parts of a provision contained in this RCA, for any reason, be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or any other jurisdiction, but this RCA shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision or part of a provision had never been contained in this RCA, and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. Without limiting the foregoing, the parties intend that the covenants and agreements contained herein shall be deemed to be a series of separate covenants and agreements. If, in any legal proceeding, a court or arbitrator shall refuse to enforce all the separate covenants and agreements deemed to be included in parts herein, it is the intention of the parties that the remaining non-eliminated separate covenants be enforced in such a proceeding.

(g)	Non-Disclosure and Non-Use of Confidential Information Covenant.

Casterton agrees that, during the Restrictive Covenant Period, Casterton will not disclose to any Competitor or other Person, or make or permit any use of, any of the Company’s Confidential Information that Casterton has learned during his employment, by reason of employment with the Company, through the existence of any relationship with the Company, or through his/her interaction with the Restricted Customers, Prospective Customers, or the Company’s vendors or suppliers in any place where such disclosure may result in competitive harm to the Company.

Casterton agrees that a minimum period of twelve (12) months following the Termination Date will be necessary to protect the Company’s Confidential Information which does not qualify as a Trade Secret, after which time Casterton’s knowledge or use of such information will no longer have as much of an injurious effect on the Company’s business operations. Casterton acknowledges that the Company has taken reasonable steps to control and restrict disclosure of its Confidential Information.

Casterton and the Company agree that neither this provision nor the recognition of a period of protection for Confidential Information shall be deemed a waiver or limitation of the Company’s ability to use common law or statutory means, including any applicable Trade Secrets Act, to protect information that is a Trade Secret.

D-5

Attachment D

Nothing in this RCA is intended to prohibit good faith reporting of possible violations of federal law or regulation to any government agency or entity, receiving compensation under any whistleblower reward program for information provided to the Securities and Exchange Commission, or in making disclosures where such disclosures are protected under federal law or regulation, and advance notice of such disclosures is not required to be provided to the Company.

(h)	Non-Disclosure and Non-Use of Trade Secrets Covenant.

Casterton agrees that after the Termination Date, Casterton will hold the Company’s Trade Secrets in trust and strictest confidence to the fullest extent contemplated and permitted under any applicable Trade Secrets Act or common law, and will not take any action causing any such Trade Secrets to lose their character or cease to qualify as Trade Secrets, or fail to take any action necessary in order to prevent such from occurring. This obligation shall last as long as the information maintains trade secret status under State or Federal law.

The parties agree that the Company has taken reasonable steps to control and restrict disclosure of its Trade Secrets.

Nothing in this RCA is intended to discourage or restrict Casterton from reporting any theft of Trade Secrets pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. The DTSA provides: An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to any attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation or law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to an attorney for the individual and use the trade secret information in the court proceeding, if the individual (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

(i)	Penalties for Violation.

Casterton acknowledges and agrees that a breach of any provision of the Covenants will cause serious and irreparable damage to the Company that will be difficult to quantify and for which a remedy at law for monetary damages alone will not be adequate. Accordingly, Casterton agrees that if the Company brings an action to enforce its rights under any of the Covenants and establishes that Casterton has breached or threatened to breach any of his obligations under the Covenants, the Company shall be entitled to injunctive relief without the requirement that the Company post bond, to the extent allowed by law. Casterton specifically waives any assertion that there is an adequate remedy at law for any such breach of this RCA. Nothing in this RCA, however, shall be construed to prohibit the Company from pursuing any other legal or equitable remedy.

Casterton further acknowledges that Company may recoup the Consideration should a court of competent jurisdiction find that he violated this RCA. Casterton acknowledges the sole reason the Company is providing the Consideration is in exchange for the promises made in this RCA.

D-6

Attachment D

Casterton consents to personal jurisdiction in Racine, Wisconsin, and agrees that the state and federal courts having jurisdiction over Racine, Wisconsin are proper venue for any relief sought by the Company. The parties agree and acknowledge that this RCA will be governed by and interpreted in accordance with the laws of the State of Wisconsin, without regard to its principles of conflicts of law.

CASTERTON HAS BEEN GIVEN AN OPPORTUNITY TO CONSULT AN ATTORNEY REGARDING THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this RCA as of the day and year first written above.

MODINE MANUFACTURING COMPANY:
	/s/ Brian Agen	11/1/21
	Name: Brian Agen
	Title: Vice President – Human Resources
JOEL CASTERTON:
	/s/ Joel Casterton

D-7

Exhibit 10.2

October 30, 2021<br><br> <br>Matt McBurney<br><br> <br>[address withheld]	Modine Manufacturing Company<br><br> <br>1500 DeKoven Avenue<br><br> <br>Racine, Wisconsin 53403-2552<br><br> <br>Tel. 262.636.1200<br><br> <br>Fax 262.631.7720
Re:	Separation from Modine Manufacturing Company
---	---

Dear Matt:

As we have discussed, the company has elected to make a leadership change in the Building HVAC organization and as a result your employment as an officer with Modine Manufacturing Company and certain affiliates (“Modine” or the “Company”) will be terminated. The planned effective date of this separation is Friday, October 29. However, either party to this separation agreement can identify an earlier separation date by providing a written 2-week notice to the other party. In addition, the separation date can be extended with mutual written agreement.

Subject to certain terms and conditions (including execution of a release), you are eligible to participate in and receive severance payments under the Supplemental Severance Plan, as amended and restated, effective January 25, 2012 (the “Severance Plan”). In addition, under the CEO Transition Retention Agreement Letter, dated August 31, 2020, you will be eligible to receive a lump-sum cash payment equivalent to 40% of your annual salary and 45% of your prevailing LTIP Target. These payments and benefits are summarized in Attachment A hereto. The required Release Agreement is provided as Attachment B.

Under the equity plans, all Performance Stock Awards for which the performance period has not been completed will terminate. Also, separation prior to the time of equity grant vesting results in forfeiture of all unvested Retention Restricted Stock Unit Awards, unvested options to purchase common stock and the Performance Share awards for FY 20-22 and Performance Cash Awards for FY21-23 and FY22-24. However, in light of your service to the Company, and in consideration for certain additional requirements, you may receive a MIP payout, as well as continued vesting on certain Restricted Stock Unit and Performance Stock Awards as set forth in Attachment A, and subject to the terms of the Restrictive Covenant Agreement attached as Attachment D.

Please note the following:

•	Any earned but unused FY2022 vacation, minus typical wage and tax deductions, will be paid to you in a lump sum on your final active employee paycheck.
•	If you file for unemployment compensation, it will not be contested by Modine. Eligibility will be determined by the state unemployment commission.
---	---
•	Your participation in all other Modine benefit programs ends upon your separation date. Information on your benefit plan options, including COBRA for health, dental and vision, life<br> insurance conversion and retirement plan distributions is included with this letter.
---	---

Section 16 reporting requirements are quite complex. If you have any questions regarding reporting requirements, please don’t hesitate to consult with Sylvia Stein.

Sincerely,
/s/ Brian Agen
Brian J. Agen

Attachment A

Separation Payments & Benefits

Supplemental Severance Plan

Under the Supplemental Severance Plan, you are eligible for separation pay and benefits as follows:

•	Annual base salary (52 weeks of severance pay at the same base rate paid to you prior to your termination), which is subject to applicable wage and tax deductions. Severance benefits<br> will be paid on a bi-weekly basis.
•	If you participate in Modine’s health and/or dental plans, your active health coverage ends immediately. You may elect to continue your coverage for up to 18 months through COBRA.<br> Modine will pay your full COBRA premium for the twelve (12) months following your termination of employment. This will be a taxable benefit to you. If you elect COBRA coverage beyond these twelve (12) months, you will be responsible for the<br> full cost of the coverage. Additional details regarding benefit continuation will be provided to you by our COBRA administer.
---	---
•	Modine will also coordinate an executive outplacement program to support you in this career transition, should you choose to participate in such program.
---	---

CEO Transition Retention Program

Under the terms of the CEO Transition Retention Agreement Letter dated August 31, 2020, you are eligible to receive a lump-sum cash payment equivalent to:

•	40% of your annual salary ($342,000 x .4 = $136,800); and
•	45% of your prevailing LTIP Target ($342,000x 1.00 x .45 = $153,900)
---	---

Treatment of Certain Unvested Restricted Stock Units, Options Performance Shares, Performance Cash Awards and FY22 MIP

A-1

Attachment A

Outlined below is a summary of such benefits:

RSU Grant Date and Vesting Schedule	2022	2023
5/30/18 LTIP RSU	1,029
5/29/19 LTIP RSU	2,428	2,429
10/2/2020 LTIP RSU	5,166	5,166
Options Grant Date and Vesting Schedule	2022
---	---
5/30/18 LTIP Options	1,171
5/29/19 LTIP Options	2,891
10/2/2020 LTIP Options	5,154
•	RSUs in the schedule above shall vest, and with respect to RSUs, and shares will be issued thereunder, pursuant to the normal vesting schedule as if you were actively employed on such<br> vesting dates.
---	---
•	Should a payout be earned under the FY20-22 Long-term Incentive Plan, you will receive a Performance Share payout pro-rated based upon your months of active service during the<br> performance period, payable in 2022 at the same time that other active participants receive payment, if any.
---	---
•	A June 2022 lump-sum payment equivalent to any FY22 MIP Payout which you would have received, if a MIP payout is authorized by the HCC committee. This payment will be pro-rated based<br> upon your months of active employment during FY22.
---	---

A-2

Attachment B

MODINE MANUFACTURING COMPANY

RELEASE AGREEMENT (“AGREEMENT”)

1.	General Release of Claims.

In exchange for the Severance Payment in Paragraph 8, I hereby release Modine from, and covenant not to sue Modine with respect to, any and all claims I have or may have against Modine.

2.	Claims to Which Release Applies.

This release applies both to claims that are now known or are later discovered.

3.	Claims Released Include Age Discrimination and Employment Claims.

The claims released include, but are not limited to (1) claims arising out of or relating in any way to my employment with Modine or the conclusion of that employment; (2) claims for wrongful discharge, breach of contract, harassment, unlawful terms and conditions of employment, retaliation, defamation, invasion of privacy, discrimination (including, but not limited to, discrimination on the basis of age under the Age Discrimination in Employment Act, as amended (29 U.S.C. Section 621 et. seq.); Wisconsin Fair Employment Act, Wis. Stats. §111.33, et seq.; Wis. Stats. § 101.11; 943.39; Title VII of the Civil Rights Act of 1964, as amended; the Genetic Information Nondiscrimination Act; the Americans With Disabilities Act, as amended; Section 1981 of U.S.C. Title 42; National Labor Relations Act; Employee Retirement Income Security Act of 1974; the Equal Pay Act; state or federal parental, family and medical leave acts; invasion of privacy; the Uniformed Services Employment and Reemployment Rights Act (USERRA), or any other local, state, or federal military and/or veterans rights act, or any other claim based on veteran status; or arising under any other local, state or federal statute, ordinance, regulation or order); and (3) claims arising under any other federal, state or local law, regulation, ordinance or order that regulates the employment relationship and/or employee benefits. Neither Modine’s signing of this release, nor any actions taken toward compliance with its terms, constitutes Modine’s admission of any liability to me other than under this release, or of any wrongdoing under any federal, state or local laws.

B-1

Attachment B

4.	Release Covers Claims Against Related Parties.

Therefore, the claims released include claims I have against any such persons or entities, as of the date of my execution of this Agreement.

5.	The Terms “Claims” and “Release” are Construed Broadly.

6.	Release Binding on Employee and Related Parties.

This release shall be binding upon me and my agents, attorneys, personal representatives, executors, administrators, heirs, beneficiaries, successors and assigns.

7.	Employee Rights and Protections.

B-2

Attachment B

8.	Severance Payment.

9.	Representations.

10.	Opportunity to Consider this Release; Consultation with Attorney.

11.	Voluntary Agreement.

I have entered into this Agreement knowingly and voluntarily and understand that its terms are binding on me.

B-3

Attachment B

12.	Partial Invalidity of Release.

If any part of this Agreement is held to be unenforceable, invalid or void, then the balance of this Agreement shall nonetheless remain in full force and effect to the extent permitted by law.

13.	Return of Modine Property; Confidentiality.

14.	Headings.

The headings and subheadings in this Agreement are inserted for convenience and reference only and are not to be used in construing this Agreement.

B-4

Attachment B

15.	Applicable Law.

Wisconsin state law will apply in connection with any dispute or proceeding concerning this Agreement.

16.	Suit in Violation of this Agreement - Loss of Benefits and Payment of Costs.

17.	No Further Employment.

18.	Non-disparagement.

19.	Preservation of Rights under Benefit Plans and Indemnities.

B-5

Attachment B

20.	7 Day Revocation Period.

21.	Total Amount of Severance Payments.

22.	Cooperation with Government Agencies.

B-6

Attachment B

23.	Entire Agreement.

EXECUTED THIS 31^st^ DAY OF OCTOBER, 2021.

/s/ Matthew McBurney
Employee's Signature
Employee’s Name:	Matthew McBurney	(please print)
---	---	---

Received by:

/s/ Brian Agen

Modine Manufacturing Company

1500 DeKoven Avenue

Racine WI 53403

Name:	Brian Agen	Date:	11/1/21

Title: VP – Human Resources

B-7

Attachment C

Outstanding and Vested Options

Vested But Unexercised Options
	ISO
M cBurney Vested Options	Options
6/3/13 Grant - $10.40	1,323	2013 - 2019 option grants expire one (1) year from termination date unless ten- year grant expiration is earlier.
6/2/14 Grant - $14.94	2,791
6/2/15 Grant - $11.39	4,118
5/31/16 Grant - $10.00	3,790
6/1/17 Grant - $15.90	4,889
5/30/18 Grant - $17.90	3,507
5/29/19 Grant - $13.26	5,782
	26,200
In all cases, Incentive Stock Options (ISO) become Non-Qualified (NQ) Options ninety (90) days<br><br> <br>after termination

C-1

Attachment D

RESTRICTIVE COVENANT AGREEMENT

This RESTRICTIVE COVENANT AGREEMENT (this “RCA”), dated as of Nov. 1, 2021 (the “Effective Date”), is entered into by and between Modine Manufacturing Company on behalf of itself and its affiliates, subsidiaries, and successors (the “Company” or “Modine”), and Matt J. McBurney (“McBurney”) (collectively, referred to herein as the “parties”).

WHEREAS, in connection with the termination of McBurney’s employment with the Company, the Company and McBurney have entered into a Release Agreement, dated Nov. 1, 2021.

WHEREAS, during the course of employment, McBurney established, maintained, and/or improved knowledge of or relationships or goodwill with Company employees and customers and/or has learned Company’s Trade Secrets or Confidential Information (as defined below). Company’s Confidential Information, Trade Secrets, and employee relationships have been developed by Company at considerable expense and effort and/or over a number of years, and but for McBurney’s employment with Company, McBurney would not know Company’s Trade Secrets and Confidential Information, and McBurney would not be able to create, improve, and maintain relationships with Company employees. Company would not offer the additional consideration contained in this RCA if McBurney did not accept the terms hereof.

WHEREAS, the Company and McBurney agree that the Company has a substantial and legitimate business interest in, among other things, the Company’s Confidential Information and Trade Secrets and employee and customer relationships.

NOW, THEREFORE, for good and valuable consideration, to which McBurney would not otherwise be entitled without entering into this RCA, including the Consideration, the sufficiency of which are hereby acknowledged, the parties agree as follows:

(a)	Definitions.
1.	“Business of the Company” or “the Company’s Business” means the business of Modine’s Building HVAC business unit (“BHVAC”), including, without limitation, the design, manufacturing<br> and sale of unit heaters, precision cooling systems, indoor- air/ventilation products, related controls and software and services related thereto, all as performed by the Company on the Termination Date or within the twenty-four (24) months<br> prior to the Termination Date.
---	---
2.	“Competitor” means any Person (including McBurney or an entity that McBurney becomes affiliated with or renders services to) that conducts or that is directly engaged in whole or in<br> relevant part (Related revenue greater than $1,000,000) in any business or enterprise which is the same as, or substantially the same as, the Business of the Company.
---	---
3.	“Competitive Services” means owning, managing, operating, joining, controlling, being employed by or with, or participating in any manner with a Competitor, where McBurney is<br> providing the same or substantially similar services in connection with Competitive Products that McBurney provided to the Company while running the Building, HVAC business segment.
---	---

D-1

Attachment D

4.	“Competitive Products” means (i) any product which is sold or provided in competition with a product sold or offered by BHVAC during the twenty-four (24) months immediately preceding<br> the date of McBurney’s termination of employment with the Company and for which the Company has over $1 million in annual sales during that twenty-four (24) month period, and (ii) any products which are sold or provided in competition with<br> a product that the Company can show by written evidence is in active development by the Company in connection with the BHVAC business
5.	“Confidential Information” means information and the compilation of information related to the operation of the Company that derives economic value, actual or potential, from not<br> being generally known to or readily available or ascertainable by other Persons who can obtain economic value from its disclosure to or use by them. Assuming the foregoing criteria are met, Confidential Information includes, but is not<br> limited to:
---	---
•	Potential acquisitions and future growth plans;
---	---
•	Company succession and planning information;
---	---
•	Employee personnel information;
---	---
•	Compilations of information concerning research and development of the Company’s products or services;
---	---
•	Designs, discoveries, ideas, algorithms, computer software code, protocols, formulas, mask works, compositions, patents, copyrights and trademarks;
---	---
•	Names and other listings of Restricted Customers and Prospective Customers (including contact information);
---	---
•	Proposals made to Restricted Customers or Prospective Customers or other information contained in bids or offers to such Restricted Customers or Prospective Customers;
---	---
•	The terms of any arrangements or agreements with Customers, including the amounts paid for such services or how pricing was developed by the Company;
---	---
•	The layout, design, and implementation of Restricted Customer-specific projects;
---	---
•	Vendor/supplier proprietary pricing information and subcontractors;
---	---
•	The composition or description of future services and/or products that are going to be or may be provided by the Company;
---	---
•	The Company’s financial, marketing, and sales information;
---	---
•	Costing information;
---	---
•	Profit, loss, and margin information;
---	---
•	Technical expertise and know-how developed by the Company, including the unique manner in which the Company conducts its business; and
---	---
•	Any information disclosed to the Company by a third party (including, but not limited to, the Company’s customers and Prospective Customers) which the Company is obliged to treat as<br> confidential.
---	---

Confidential Information excludes information that:

•	Is already known to the disclosed-to party prior to such disclosure, and is not obtained or derived directly or indirectly from McBurney;
•	Is commercially available;
---	---

D-2

Attachment D

•	Is or becomes known or generally available in the public domain other than through McBurney’s act or default;
•	Is obtained from a third party lawfully in possession of the information, which is not subject to any non-disclosure or non-use obligations owed to the disclosing party or any third<br> party; or
---	---
•	Is independently protected as a Trade Secret under applicable statutory law.
---	---
6.	“Consideration” means (i) the value of certain unvested Restricted Stock Units and Options under the otherwise forfeited FY19, FY20, and FY21 Long-term Incentive Plans, (ii) a<br> performance share payout equivalent to any prorated FY20 -22 LTIP Performance Share Payout earned, (iii) a June 2022 lump-sum payment equivalent to any pro-rated MIP payout authorized by the HCC Committee and subject to the continued<br> fulfillment by McBurney of the obligations set forth in this RCA. Any Consideration shall be subject to ordinary tax withholding and all required deductions; however, payment of any Consideration does not entitle McBurney to any retirement<br> plan contributions by the Company for McBurney’s benefit or account
---	---
7.	“Key Employee” means any person who is or was employed or engaged by the Company at any time in the twelve (12) months preceding McBurney’s Termination Date, and (i) with whom<br> McBurney had material contact as a result of his position at the Company or (ii) about whom McBurney learned Confidential Information in the course of employment during the twenty-four (24) months immediately preceding McBurney’s<br> termination. Key employee is limited to employees who (i) are or were managers, officers, directors, or executives of the Company and (ii) are in possession of Confidential Information and/or Trade Secrets of the Company.
---	---
8.	“Key Services” means services of the type performed by an employee for the Company during the final twenty-four (24) months of their Company employment, but shall not include clerical<br> or menial labor.
---	---
9.	“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or other<br> entity.
---	---
10.	“Prospective Customer” means a business, and any of its affiliates and subsidiaries, to whom McBurney, or one or more individuals directly or indirectly supervised, managed, or<br> directed by McBurney, made a proposal to sell or provide products or services on behalf of Company in the twenty-four (24) month period immediately preceding the Termination Date.
---	---
11.	“Restrictive Covenant Period” means the twelve (12) month period after McBurney’s Termination Date.
---	---
12.	“Restricted Customer” means a customer of BHVAC, including any of Company’s affiliates and subsidiaries that operates as BHVAC, to which McBurney, or one or more individuals directly<br> or indirectly supervised, managed, or directed by McBurney, sold or provided products or services on behalf of Company during the twenty-four (24) month period immediately preceding the Termination Date. The term Restricted Customer is<br> limited to Company customers that purchased or received in excess of $100,000 (US) worth of products or services from Company during the twenty-four (24) month period immediately preceding the Termination Date.
---	---

D-3

Attachment D

13.	“Termination Date” means October 29, 2021.
14.	“Trade Secret” shall have the same meaning as defined under any applicable Trade Secrets Act.
---	---
(b)	Acknowledgements.
---	---

McBurney agrees that the Covenants below (including the geographic and temporal scope of each individual Covenant) are necessary, reasonable, fair, valid, enforceable, and directly connected with the Company’s need to protect its legitimate business interests—including, but not limited to, goodwill, market reputation, Restricted Customer relationships, Prospective Customer relationships, Confidential Information, and Trade Secrets—and to prevent irreparable injury to the Company’s Business. McBurney agrees he has received good and valuable consideration for the covenants below (the “Covenants”).

McBurney acknowledges that the Covenants will not impede McBurney’s ability to earn a livelihood. McBurney acknowledges that he is capable of obtaining suitable employment following the Termination Date, even though he has agreed to the Covenants. McBurney further acknowledges the Consideration is significant and will enable him to support himself and his family during the period in which the Covenants are in force. McBurney further agrees that the Covenants, though they may temporarily and narrowly limit future employment opportunities, are neither unduly harsh nor oppressive in curtailing McBurney's legitimate efforts to earn a livelihood.

In exchange for McBurney’s continuing adherence to all of the Covenants, McBurney will receive the Consideration. McBurney acknowledges that the Consideration is not an amount to which he is already entitled and is in sole consideration for the promises made in this RCA.

(c)	Covenant Not to Compete.

McBurney covenants that during the Restrictive Covenant Period, McBurney will not, directly or indirectly, provide Competitive Services:

(i)

Anywhere in the United States of America. McBurney acknowledges that (i) the geographic territory in which McBurney was responsible for representing the Company includes the entire<br> United States, and (ii) the nature of McBurney’s duties and responsibilities for and on behalf of the Company directly impacted and related to the Business of the Company across the United States. Therefore, McBurney expressly agrees that<br> the geographic scope of this covenant is reasonably limited and should be enforced; or

(ii)

In any geographic area in which or to which McBurney (i) performed work on behalf of the Company during his employment, (ii) was assigned during his employment, and/or (iii) was able<br> to make contact with any Restricted Customers or Prospective Customers during the time of his employment.

---

D-4

Attachment D

(d)	Covenant Not to Solicit Prospective Customers.

McBurney covenants that during the Restrictive Covenant Period, McBurney will not, directly or indirectly, solicit, divert, or appropriate, or attempt to solicit, divert or appropriate, any Prospective Customers, for the purposes of providing products or services to such Prospective Customers that are within the Business of the Company, on behalf of either McBurney or any Competitor.

McBurney agrees that the Restrictive Covenant Period will be necessary for the Company to re-establish the relationships and goodwill between its Prospective Customers and other employees of the Company, so that McBurney’s knowledge of the Company’s Prospective Customers, the goodwill established by McBurney’s representation of the Company, and the Company’s Confidential Information and Trade Secrets obtained by McBurney in the course of employment with the Company will no longer give McBurney an unfair competitive advantage with Prospective Customers.

(e)	Covenant Not to Solicit Key Employees.

McBurney covenants that during the Restrictive Covenant Period, McBurney shall not, directly or indirectly, without the prior written consent of the Company, cause or solicit, or assist others in causing or soliciting any Key Employee of the Company to terminate his or her employment with the Company to provide Key Services for a Competitor.

(f)	Severability.

(g)	Non-Disclosure and Non-Use of Confidential Information Covenant.

McBurney agrees that, during the Restrictive Covenant Period, McBurney will not disclose to any Competitor or other Person, or make or permit any use of, any of the Company’s Confidential Information that McBurney has learned during his employment, by reason of employment with the Company, through the existence of any relationship with the Company, or through his/her interaction with the Restricted Customers, Prospective Customers, or the Company’s vendors or suppliers in any place where such disclosure may result in competitive harm to the Company.

McBurney agrees that a minimum period of twelve (12) months following the Termination Date will be necessary to protect the Company’s Confidential Information which does not qualify as a Trade Secret, after which time McBurney’s knowledge or use of such information will no longer have as much of an injurious effect on the Company’s business operations. McBurney acknowledges that the Company has taken reasonable steps to control and restrict disclosure of its Confidential Information.

D-5

Attachment D

McBurney and the Company agree that neither this provision nor the recognition of a period of protection for Confidential Information shall be deemed a waiver or limitation of the Company’s ability to use common law or statutory means, including any applicable Trade Secrets Act, to protect information that is a Trade Secret.

(h)	Non-Disclosure and Non-Use of Trade Secrets Covenant.

McBurney agrees that after the Termination Date, McBurney will hold the Company’s Trade Secrets in trust and strictest confidence to the fullest extent contemplated and permitted under any applicable Trade Secrets Act or common law, and will not take any action causing any such Trade Secrets to lose their character or cease to qualify as Trade Secrets, or fail to take any action necessary in order to prevent such from occurring. This obligation shall last as long as the information maintains trade secret status under State or Federal law.

The parties agree that the Company has taken reasonable steps to control and restrict disclosure of its Trade Secrets.

Nothing in this RCA is intended to discourage or restrict McBurney from reporting any theft of Trade Secrets pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. The DTSA provides: An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to any attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation or law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to an attorney for the individual and use the trade secret information in the court proceeding, if the individual (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

(i)	Penalties for Violation.

McBurney acknowledges and agrees that a breach of any provision of the Covenants will cause serious and irreparable damage to the Company that will be difficult to quantify and for which a remedy at law for monetary damages alone will not be adequate. Accordingly, McBurney agrees that if the Company brings an action to enforce its rights under any of the Covenants and establishes that McBurney has breached or threatened to breach any of his obligations under the Covenants, the Company shall be entitled to injunctive relief without the requirement that the Company post bond, to the extent allowed by law. McBurney specifically waives any assertion that there is an adequate remedy at law for any such breach of this RCA. Nothing in this RCA, however, shall be construed to prohibit the Company from pursuing any other legal or equitable remedy.

D-6

Attachment D

McBurney further acknowledges that Company may recoup the Consideration should a court of competent jurisdiction find that he violated this RCA. McBurney acknowledges the sole reason the Company is providing the Consideration is in exchange for the promises made in this RCA.

McBurney consents to personal jurisdiction in Racine, Wisconsin, and agrees that the state and federal courts having jurisdiction over Racine, Wisconsin are proper venue for any relief sought by the Company. The parties agree and acknowledge that this RCA will be governed by and interpreted in accordance with the laws of the State of Wisconsin, without regard to its principles of conflicts of law.

D-7

Attachment D

MCBURNEY HAS BEEN GIVEN AN OPPORTUNITY TO CONSULT AN ATTORNEY REGARDING THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this RCA as of the day and year first written above.

MODINE MANUFACTURING COMPANY:
/s/ Brian Agen
Name: Brian Agen
Title: Vice President – Human Resources
MATT MCBURNEY:
/s/ Matthew McBurney

D-8

Exhibit 31.1

Certification

I, Neil D. Brinker, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2021;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the<br> circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of<br> operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and<br> 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information<br> relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable<br> assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls<br> and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---

d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s<br> fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and<br> the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the<br> registrant’s ability to record, process, summarize and report financial information; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---
Date:	February 3, 2022
---	---
/s/ Neil D. Brinker
---
Neil D. Brinker
President and Chief Executive Officer

Exhibit 31.2

Certification

I, Michael B. Lucareli, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2021;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in<br> light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial<br> condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules<br> 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material<br> information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide<br> reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the<br> disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---

d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter<br> (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s<br> auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely<br> affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial<br> reporting.
---	---
Date:	February 3, 2022
---	---
/s/ Michael B. Lucareli
---
Michael B. Lucareli
Executive Vice President, Chief Financial Officer

Exhibit 32.1

Certification

Pursuant to 18 United States Code § 1350

In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Neil D. Brinker, President and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
---	---
Date:	February 3, 2022
---	---
/s/ Neil D. Brinker
---
Neil D. Brinker
President and Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Exhibit 32.2

Certification

Pursuant to 18 United States Code § 1350

In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael B. Lucareli, Executive Vice President, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
---	---
Date:	February 3, 2022
---	---
/s/ Michael B. Lucareli
---
Michael B. Lucareli
Executive Vice President, Chief Financial Officer

Commission file number 1-1373

MODINE MANUFACTURING COMPANY

Registrant’s telephone number, including area code (262) 636-1200

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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Based upon its quarterly analyses in fiscal 2022, the Company determined it was more likely than not that the deferred tax assets in certain foreign

Effective July 1, 2021, the Company aligned the data center businesses previously managed by and reported within the CIS segment under

COVID-

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CONSOLIDATED RESULTS OF OPERATIONS

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SEGMENT RESULTS OF OPERATIONS

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