Modine Manufacturing updates credit agreement with new five-year facilities

Modine Manufacturing Company (NYSE:MOD), a $4.8 billion market cap industrial manufacturer with annual revenues of $2.6 billion, announced Wednesday it has entered into a Sixth Amended and Restated Credit Agreement, replacing its previous credit facility. According to InvestingPro data, the company maintains a moderate debt level with a debt-to-equity ratio of 0.49, positioning it well for this refinancing. The new agreement, effective July 10, 2025, establishes a senior secured revolving credit facility of up to $400 million and a $200 million term loan facility. Both facilities mature on July 10, 2030.

Under the agreement, the term loan is payable in quarterly installments of 1.25% of the original principal amount, starting December 31, 2025, with any remaining balance due at maturity. The revolving credit facility provides ongoing borrowing capacity through the five-year term.

The amended credit agreement updates the financial covenants for Modine Manufacturing, including a maximum net leverage ratio of 3.50 to 1.00 and a minimum interest expense coverage ratio of 3.00 to 1.00. The company’s strong financial position is reflected in its current ratio of 1.78, indicating healthy liquidity, and an overall "GOOD" financial health score from InvestingPro’s comprehensive analysis. The company may temporarily increase the net leverage ratio to up to 4.00 to 1.00 in connection with certain material acquisitions, but this option is limited to three times during any five-year term.

Additional provisions allow for certain restructuring charges not to exceed $30 million in any fiscal year or $90 million in aggregate, plus a separate allowance for charges tied to the exit of the automotive business within the Performance Technologies segment, capped at $25 million per year or $55 million in total. The agreement also permits the disposition of the automotive business under specified conditions. Compared to the previous agreement, these restructuring charge allowances have increased.

The new agreement provides for the release of existing mortgages on Modine’s real property currently held as collateral and excludes real property assets as collateral going forward. The agreement includes customary events of default, under which outstanding obligations may become immediately due if certain conditions occur.

On July 10, 2025, Modine also entered into a Fifth Amendment to its Note Purchase Agreement, aligning its terms with the new credit agreement.

This information is based on a press release statement included in a filing with the Securities and Exchange Commission. For deeper insights into Modine Manufacturing’s financial health and future prospects, InvestingPro offers a detailed research report, part of its coverage of over 1,400 US stocks, providing comprehensive analysis and actionable intelligence for informed investment decisions.

In other recent news, Modine Manufacturing has made significant strides with its acquisition strategy. The company announced the purchase of Climate by Design International (CDI) for $65 million, expanding its indoor air quality product portfolio into new markets such as pharmaceutical manufacturing and healthcare. This acquisition is expected to be accretive to earnings per share even before considering potential synergies, according to DA Davidson, which maintained its Buy rating and $135 price target on Modine. Additionally, Modine has entered into a definitive agreement to acquire L.B. White, a specialty heater maker, for approximately $112 million. This deal, anticipated to close by May 31, 2025, is also expected to be immediately accretive to earnings.

Oppenheimer has raised its price target for Modine to $122, maintaining an Outperform rating, while noting the company’s growth trajectory in the data center segment. KeyBanc Capital Markets has initiated coverage on Modine with an overweight rating and a $125 price target, highlighting the company’s transformation strategy and focus on high-growth climate opportunities. Modine’s strategic acquisitions and focus on expanding its commercial IAQ business and data center segment are seen as pivotal for its long-term growth. The company is expected to benefit from both incremental growth and future cost savings through its 80/20 operating model. These recent developments reflect Modine’s ongoing efforts to strengthen its position in the thermal management technology sector.

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