Modine Manufacturing Company (MOD) 2016 Q2 法說會逐字稿

Good day, ladies and gentlemen. And welcome to Modine Manufacturing Company's Second Quarter Fiscal 2016 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)

各位女士、先生，大家好。歡迎參加莫丁製造公司（Modine Manufacturing Company）2016 會計年度第二季財報電話會議。目前所有與會者皆處於僅收聽模式。稍後我們將進行問答環節，屆時將提供相關指示。（接線員指示）

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer and Investor Relations.

提醒各位，本次電話會議將被錄音。現在我想把會議交給今天的主持人——Kathy Powers 女士，副總裁、財務主管兼投資人關係負責人。

Thank you. Thank you for joining us today for Modine's Second Quarter Fiscal 2016 Earnings Call. With me today are Modine's President and CEO, Tom Burke; and Mick Lucareli, our Vice President - Finance and Chief Financial Officer.

謝謝。感謝各位今天參加莫丁 2016 會計年度第二季財報電話會議。與我一同出席的有莫丁總裁暨執行長 Tom Burke，以及我們的財務副總裁兼財務長 Mick Lucareli。

We will be using slides for today's presentation. Those links are available through both the webcast link as well as a PDF file posted on the Investor Relations section of our company website modine.com. Also, should you need to exit the call prior to its conclusion a replay is available through our website beginning approximately two hours after the call concludes.

我們今天的簡報將使用投影片。相關連結可透過網路直播連結取得，也可在公司網站 modine.com 的投資人關係專區下載 PDF 檔。此外，若您需要在會議結束前離線，我們的網站將於會議結束約兩小時後提供重播。

On slide two is an outline for today's call. Tom and Mick will provide comments on our second quarter results and provide an update to our revenue and earnings guidance for fiscal 2016. At the end of the call, there will be a question-and-answer session.

投影片第 2 頁為今天會議的議程大綱。Tom 與 Mick 將就第二季業績發表評論，並更新我們對 2016 會計年度營收與獲利的指引。會議最後將進行問答環節。

On slide three is our notice regarding forward-looking statements. I want to remind you that this call may contain forward-looking statements as outlined in today's earnings release, as well as in our company's filings with the Securities and Exchange Commission.

投影片第 3 頁為我們關於前瞻性陳述的聲明提醒。我想提醒各位，本次電話會議可能包含前瞻性陳述，相關內容已載明於今日的財報新聞稿，以及本公司向美國證券交易委員會提交的文件中。

With that, it is my pleasure to turn the call over to Tom Burke.

接下來，我很高興把電話會議交給 Tom Burke。

Thank you, Kathy and good morning, everyone. On today's call I will first discuss two important announcements the company made last night, then we'll cover our second quarter results. After that Mick will provide a more detailed review of our financial results. I will then provide final remarks prior to opening up the call for questions.

謝謝 Kathy，大家早安。今天的會議上，我將先談公司昨晚發布的兩項重要公告，接著說明我們第二季的業績。之後 Mick 會更詳細地回顧我們的財務結果。最後在開放提問前，我會做結語。

Last night, we announced our new strengthened, diversified and growth strategic platform for the future. We outlined this plan on page 5 of our supplemental slides. This is important transformative step for Modine that will enable us to evolve into a more diversified thermal management company while being aggressive in our efforts to increase long-term shareholder value. We have created a plan to guide our actions. This plan has three major components.

昨晚，我們宣布了面向未來、更加強化、多元化且以成長為導向的全新策略平台。我們在補充投影片第 5 頁概述了此計畫。這是莫丁重要的轉型一步，將使我們在積極提升長期股東價值的同時，演進為更為多元化的熱管理公司。我們已制定一項行動指引計畫，該計畫包含三大要素。

First, we will strengthen our business by implementing a global product-based organization. We believe this new organization will improve our speed to market and allow us to capture synergies among our vehicular, Building HVAC and coils businesses. We will also leverage our global scale to optimize our manufacturing footprint and drive cost reductions throughout our business. This also includes a comprehensive overhaul of our procurement process, we expect to significantly reduce our total spend on materials and services. Finally, we will optimize our vehicular product portfolio to drive higher operating margins and leverage technology drivers in building blocks within our product portfolio.

第一，我們將透過導入全球以產品為基礎的組織架構來強化業務。我們相信此新組織將提升我們的上市速度，並使我們能在車用、建築 HVAC 與盤管（coils）業務之間取得綜效。我們也將運用全球規模優勢，最佳化製造據點布局，並推動全公司成本降低。這也包括對採購流程的全面改革，我們預期將大幅降低在材料與服務上的總支出。最後，我們將最佳化車用產品組合，以提升營業利益率，並在產品組合中運用技術驅動因素與模組化基礎（building blocks）。

Second, we will diversify our business. We will invest significant financial and human resources in our industrial businesses, which today include Building HVAC and coils. This will create a more balanced exposure to our end markets, decrease our customer concentration and reduce cyclicality. Increasing the resources allocated to Building HVAC and coils will bring more focus to higher margin organic and inorganic growth opportunities, while allowing us to build global market-leading positions in Building HVAC and coils. Through more concentrated resource allocation in these areas, we expect to achieve more appropriate market recognition and value for these two important businesses.

第二，我們將使業務多元化。我們將在工業業務投入大量財務與人力資源，目前工業業務包括建築 HVAC 與盤管。這將使我們對終端市場的曝險更均衡，降低客戶集中度並減少景氣循環性。增加分配給建築 HVAC 與盤管的資源，將更聚焦於較高毛利的有機與無機成長機會，同時讓我們能在建築 HVAC 與盤管領域建立全球市場領先地位。透過在這些領域更集中的資源配置，我們預期能讓市場對這兩項重要業務給予更適切的認可與估值。

Third, we will grow our business. This means aggressively pursuing strategic acquisitions, primarily in the Building HVAC and coils markets. We are looking at both large and bolt-on targets. We clearly have had balance sheet capacity to grow through acquisition but we'll be responsible with the amount of leverage we carry. In addition, we will focus our R&D, product development and commercial pursuits in high-growth vehicular areas. We have favorable industry trends that we will continue to require innovative thermal management solutions. We will leverage our advantage global designs in our building block strategy to increase our market share. This is ambitious plan.

第三，我們將推動業務成長。這代表我們將積極尋求策略性併購，主要聚焦於建築 HVAC 與盤管市場。我們同時評估大型標的與補強型（bolt-on）標的。我們顯然具備透過併購成長的資產負債表能力，但也會對槓桿水準保持審慎。此外，我們將把研發、產品開發與商務拓展重點放在高成長的車用領域。我們面臨有利的產業趨勢，未來仍將需要創新的熱管理解決方案。我們將運用在模組化策略中的全球設計優勢來提升市占率。這是一項具企圖心的計畫。

Our customer and competitor dynamics are changing rapidly and we must adjust our business to position Modine for a long term market leadership position. By strengthening, diversifying and growing our business we will improve our margins, while lowering our dependence on cyclical markets. The successful execution of our plan will result in significant growth and earnings improvement.

我們的客戶與競爭態勢正在快速改變，我們必須調整業務，以使莫丁能在長期取得市場領導地位。透過強化、多元化與成長，我們將提升利潤率，同時降低對景氣循環市場的依賴。成功執行此計畫將帶來顯著的成長與獲利改善。

Refer to page 6 in our supplemental slides for a snapshot of this plans targets. To strength in our business, we will increase our operating margin from the current 4% to 5% to 7% to 8% by the end of fiscal 2018. This will be accomplished through expansion of our current low-cost manufacturing footprint, SG&A reductions and savings achieved through our global procurement project. Overall, we are targeting $40 million to $50 million of annual savings from these initiatives over the next 18 months. Our diversified goals are to reduce our customer concentration cyclical exposure by increasing our industrial business as a percentage of our portfolio in the current state of 15% to 20% to 30% to 40% or roughly doubling in size. I want to be very clear about something though. This does not mean we are deemphasizing our core vehicular business. As is clear from our stated goals, this will remain a critical part of Modine. In order to grow our business, we plan to target at least $100 million of incremental industrial revenue through acquisition by the end of fiscal 2018. We will approach any acquisitions in a disciplined manner and we recognize our ability to achieve this goal depends on a number of factors, some of which are outside our control.

請參閱補充投影片第 6 頁，以了解此計畫目標的概覽。就強化業務而言，我們將在 2018 會計年度末把營業利益率由目前的 4% 提升至 5%～7%～8%。這將透過擴大現有低成本製造據點布局、降低 SG&A（銷售、一般及行政費用），以及全球採購專案所帶來的節省來達成。整體而言，我們的目標是在未來 18 個月內，透過這些措施達成每年 4,000 萬至 5,000 萬美元的節省。多元化方面，我們的目標是透過提高工業業務在產品組合中的占比，將客戶集中度與景氣循環曝險降低；工業業務占比將由目前的 15%～20% 提升至 30%～40%，約等於規模翻倍。不過我想非常清楚地說明：這並不代表我們會弱化核心車用業務。正如我們所述目標所示，車用業務仍將是莫丁的關鍵部分。為了推動成長，我們計畫在 2018 會計年度末前，透過併購帶來至少 1 億美元的新增工業營收。我們將以嚴謹的方式評估任何併購，並且我們也了解能否達成此目標取決於多項因素，其中部分因素不在我們控制範圍內。

We are also targeting a net debt to EBITDA ratio of between 1.5 and 2 times. We feel this is a responsible model leverage for our business. However, we acknowledge that we may operate outside this range at times due to the economic changes in order to pursue compelling acquisition opportunities. The company will pursue acquisitions that make sound business sense or align with our strategic priorities and they are accretive to the business such they will allow us to return to our target leverage ratio of 1.5 to 2.5 times within a reasonable period.

我們也將淨負債對 EBITDA 比率目標設定在 1.5 倍至 2 倍之間。我們認為這是對本業而言負責任的槓桿水準。然而，我們也承認，因應經濟變化或為了把握具吸引力的併購機會，我們有時可能會在此區間之外運作。本公司將尋求在商業上合理、或與策略優先事項一致，且對公司具增益（accretive）的併購，使我們能在合理期間內回到 1.5 倍至 2.5 倍的目標槓桿比率。

Please turn to page 7. In addition to the announcement about our strategy, we also announced that our Board of Directors authorized a repurchase of up to $50 million of shares, which will expire on November 3, 2016. We'll make a decision to repurchase shares or suspend the buyback program based on a number of factors including ongoing assessments of the capital needs of the business, stock price in general market conditions. Although, our priority remains to invest in our business, we believe we can reach our targets while providing a return to our shareholders.

請翻到第 7 頁。除了策略公告之外，我們也宣布董事會已授權回購最多 5,000 萬美元的股份，該授權將於 2016 年 11 月 3 日到期。我們將基於多項因素決定是否回購或暫停回購計畫，包括對業務資本需求的持續評估、股價以及整體市場狀況。雖然我們的優先事項仍是投資本業，但我們相信在達成目標的同時，也能為股東提供回報。

Now, I'd like to move on to discuss our second quarter results starting on slide 8. Sales in the second quarter were down 2% on a constant currency basis with decreases in the Americas segment more than offsetting increases in all other segments. Adjusted operating income of $8.1 million was down $800,000 from the prior year and adjusted earnings per share of $0.04, were $0.01 lower than the prior year.

接下來我想從投影片第 8 頁開始，討論第二季業績。以固定匯率計算，第二季銷售額下滑 2%，其中美洲事業部的下滑幅度超過其他所有事業部的成長幅度。調整後營業利益為 810 萬美元，較去年同期減少 80 萬美元；調整後每股盈餘為 0.04 美元，較去年同期低 0.01 美元。

Adjusted operating income was negatively impacted by $1.2 million of foreign currency. Excluding these impacts both adjusted operating income and adjusted earnings per share would have increased year-over-year. With the first half of the fiscal year completed, we expect our second half earnings to be significantly stronger than the first half. Mick will go through the consolidated results in greater detail but now I will review the segment performance for the second quarter.

調整後營業利益受到 120 萬美元外匯因素的不利影響。若排除這些影響，調整後營業利益與調整後每股盈餘皆將較去年同期成長。隨著本會計年度上半年結束，我們預期下半年獲利將明顯強於上半年。Mick 將更詳細說明合併結果，但現在我將先回顧第二季各事業部的表現。

Turning to page 9. Sales for the Americas segment decreased 11% on a constant currency basis with lower sales in both North America and Brazil. Brazil is mired in a recession that has continued to deepen and we don't believe that we have found the bottom yet. Sales in Brazil were down 18% on a constant currency basis with decreases to both vehicular OE and aftermarket customers. Aftermarket sales normally increase in a recession as consumers repair, not replace their vehicles. However, this is not occurring in Brazil which demonstrates the severity of the economic downturn. In response, we have transitioned to a four-day work week and expect to stay on this schedule for at least six months. We've reduced our workforce in Brazil by one-third and continue to identify synergies between our North and South American businesses. We expect to see the savings from these cost reduction efforts in the second half of the year. In North America, sales were down 10% with lower sales to off-highway and commercial vehicle customers. Our off-highway sales were down due to continued weakness in the agricultural equipment and mining sectors and our commercial vehicle sales continue to be impacted by changes in our customer's market shares.

翻到第 9 頁。美洲事業部門的銷售額以固定匯率計算下降 11%，北美與巴西的銷售均下滑。巴西深陷衰退且持續惡化，我們認為尚未觸底。巴西銷售以固定匯率計算下降 18%，車用原廠配套（OE）與售後市場客戶皆出現下滑。通常在衰退期間，因消費者傾向維修而非更換車輛，售後市場銷售會增加；然而巴西並未出現此情況，顯示經濟下行的嚴重程度。為此，我們已轉為每週四天工作制，並預期至少維持六個月。我們已將巴西人力縮減三分之一，並持續尋找北美與南美業務之間的協同效益。我們預期這些成本削減措施的節省將在下半年顯現。在北美，銷售下降 10%，主要因非公路（off-highway）與商用車客戶的銷售較低。我們的非公路銷售下滑，係因農業設備與礦業部門持續疲弱；而商用車銷售則持續受到客戶市場占有率變動的影響。

Gross margin improved by 190 basis points from the prior year to 16.3% as the impact from lower sales volume was more than offset by improved operating performance, lower material cost and savings from the closure of the McHenry facility. Adjusted operating income for the America segment was up $300,000 to $8.7 million despite the significant drop in sales and a $300,000 negative currency impact. This is excellent performance from this segment considering the significant market and currency challenges.

毛利率較去年提升 190 個基點至 16.3%，因較低的銷售量影響已被營運表現改善、材料成本下降，以及關閉 McHenry 廠所帶來的節省所抵銷。美洲事業部門的調整後營業利益增加 30 萬美元至 870 萬美元，儘管銷售大幅下滑且匯率帶來 30 萬美元的不利影響。考量到重大的市場與匯率挑戰，該部門表現相當出色。

In the second half of the year, we expect to see higher earnings in the Americas segment. We have significant launch activity that will benefit the topline and we will continue to win business throughout the segment. We've additional savings from McHenry closure and cost savings initiatives in Brazil. We have lowered our break-even point in Brazil and we'll continue to make adjustments as needed. Finally, we expect to have year-over-year savings from lower material costs. All of this will lead to a stronger second half of the year. All-in-all I am very pleased with how our Americas' teams have responded to the adverse market conditions in this segment.

在下半年，我們預期美洲事業部門的獲利將更高。我們有大量的新案導入（launch）活動將帶動營收，且我們將持續在該部門贏得新業務。我們也將因 McHenry 廠關閉以及巴西的成本節省措施而取得額外節省。我們已降低巴西的損益兩平點，並將視需要持續調整。最後，我們預期材料成本下降將帶來年對年節省。上述因素將使下半年表現更為強勁。總體而言，我對美洲團隊在不利市場環境下的應對方式感到非常滿意。

Turning to page 10. Sales for our Europe segment increased 4% in the second quarter on a constant currency basis, as higher sales to automotive and commercial vehicle customers were partially offset by lower sales to off-highway customers. The European automotive and commercial vehicle markets remain strong and we expect moderate growth to continue for the rest of our fiscal year. Gross margin improved by 10 basis points from the prior year. The positive impact from the higher volumes of favorable material cost were partially offset by volume related manufacturing inefficiencies, due to high automotive volumes. As I mentioned in last quarter, we are working at full capacity, I mean 24x7 capacity at certain production facilities in Western Europe, which has driven up cost for ship premiums and expedited freight. In response, we're adding first capacity or plant in the Netherlands and transferring production of certain product lines from these high-volume plants to our Hungarian facilities, where we will also be expanding capacity. In particular, we are in the process of acquiring a land adjacent to one of our Hungarian facilities and plan to proceed with a phased expansion of this facility. This will allow us to increase our competitive position in Europe and fully alleviate our current capacity constraints.

翻到第 10 頁。我們歐洲事業部門第二季銷售以固定匯率計算成長 4%，對汽車與商用車客戶的較高銷售，部分被對非公路客戶的較低銷售所抵銷。歐洲汽車與商用車市場仍然強勁，我們預期在本會計年度剩餘期間將持續溫和成長。毛利率較去年提升 10 個基點。較高的銷量與有利的材料成本帶來的正面影響，部分被因汽車高產量所致、與產量相關的製造效率不佳所抵銷。如同我在上季提到的，我們在西歐某些生產據點以滿載運轉（也就是 24x7），這推升了加急出貨溢價與急件運費成本。為此，我們正在荷蘭新增產能或工廠，並將部分產品線的生產自這些高產量工廠移轉至匈牙利廠區，同時也將擴充匈牙利的產能。具體而言，我們正進行收購匈牙利其中一座廠區旁的土地，並計畫分階段擴建該廠。這將使我們提升在歐洲的競爭地位，並完全緩解目前的產能限制。

We also expect our Europe segment to have higher earnings in the second half of the year, adding furnace capacity in Netherlands will stabilize our manufacturing process, reducing direct labor cost, premium freight and scrap. We also expect to benefit from lower material costs in the second half of the year.

我們也預期歐洲事業部門在下半年將有更高獲利；在荷蘭新增爐體產能將使製造流程更穩定，降低直接人工成本、加急運費與報廢。我們也預期在下半年受惠於較低的材料成本。

I'd like to take a second and address how the recent announcements by Volkswagen may impact our business. As many of you know, Volkswagen is a very significant customer for us, both in automotive and commercial vehicle markets. We have automotive products on both diesel and gasoline engines across many of their brands. However, it is important I point out that Modine did not supply any of the components at issue in the investigation. At this point, we have not seen any volume change from BW. If they lower their orders in the future, it likely would impact our business, but we have no way to assess the likelihood of that or quantify the potential impact at this time.

我想花點時間說明 Volkswagen 近期公告可能如何影響我們的業務。各位都知道，Volkswagen 是我們非常重要的客戶，涵蓋汽車與商用車市場。我們在其多個品牌的柴油與汽油引擎上皆有汽車產品。不過，我必須強調，Modine 並未供應此次調查所涉及的任何相關零組件。截至目前，我們尚未看到來自 VW 的出貨量變化。若其未來降低訂單，可能會影響我們的業務，但我們目前無法評估其發生的可能性，也無法量化潛在影響。

Turning to page 11. Our Asia segment was up 1% compared to the prior year on a constant currency basis. Increased sales to automotive customers in China and India of $4 million were partially offset by lower sales to off-highway customers in China and Korea of $3 million. The off-highway market in China has continued to weaken with excavator production 30% lower than the prior year and approximately 70% of the market high. Market conditions are worse than expected and we don't anticipate any improvement in the second half of our fiscal year.

翻到第 11 頁。我們亞洲事業部門以固定匯率計算較去年成長 1%。中國與印度汽車客戶的銷售增加 400 萬美元，部分被中國與韓國非公路客戶的銷售下降 300 萬美元所抵銷。中國非公路市場持續走弱，挖掘機產量較去年下降 30%，且市場約有 70%處於高位。市場狀況比預期更差，我們不預期在本會計年度下半年會有任何改善。

The automotive market is stable and we continue to benefit from increased launch volumes of automotive oil coolers. These programs will continue to ramp up in the second half of the year, offsetting the continued declines in the off-highway market. Our operating loss was higher than the prior year due to higher personnel cost we are investing in the region.

汽車市場維持穩定，我們持續受惠於汽車用機油冷卻器的新案導入量增加。這些專案將在下半年持續放量，以抵銷非公路市場持續下滑。我們的營業虧損較去年擴大，原因是我們在該區域投入的人員成本較高。

Turning to page 12. Our Building HVAC segment hit another very good quarter. The segment sales increased 11% in the quarter on a constant currency basis. This increase was largely driven by higher sales of heating and ventilation products in North America where the market continues to be strong. In the UK, our sales were up slightly with increases in sales of air handling units, offset by lower sales of data center cooling products. The stronger British pound is creating competitive pricing pressures particularly for export to mainland Europe.

翻到第 12 頁。我們的建築 HVAC 事業部門再度繳出非常亮眼的一季。該部門本季銷售以固定匯率計算成長 11%。此成長主要由北美暖氣與通風產品銷售增加所帶動，該市場仍然強勁。在英國，我們的銷售小幅成長，空氣處理機組銷售增加，但被資料中心冷卻產品銷售下降所抵銷。英鎊走強正帶來競爭性定價壓力，特別是在出口至歐洲大陸方面。

Gross margin for this segment increased 70 basis points, higher sales volumes during the quarter and operating income was up $700,000 to $3.9 million. We expect higher sales in the second half of the year for the Building HVAC business as compared to the first half, primarily due to seasonality of our heating business. We are preparing for another strong season in North America and our current order intake indicates a sequential increase in sales in the UK as well. Work continues to progress on the rebuild of our manufacturing facility in UK after the fire that destroyed our building in 2013. We are still on track for construction to be completed in December with the plan to have all business functions moved out of our temporary facilities to the new building by the end of our fiscal year in March.

該部門毛利率提升 70 個基點，本季銷售量增加，營業利益增加 70 萬美元至 390 萬美元。我們預期建築 HVAC 業務下半年銷售將高於上半年，主要因暖氣業務的季節性因素。我們正為北美另一個強勁旺季做準備，而目前的接單量也顯示英國銷售將呈現季增。2013 年火災摧毀英國廠房後，我們的製造設施重建工作持續推進。我們仍按計畫於 12 月完成施工，並計畫在本會計年度 3 月底前，將所有業務功能自臨時設施搬遷至新大樓。

With that, I'd like to turn over to Mick for an overview of our consolidated financial results and guidance.

接下來，我想把時間交給 Mick，請他概述我們的合併財務結果與財測指引。

Thanks, Tom and good morning, everyone. Please turn to slide 14. Our financial results on this page have been adjusted to exclude $1 million of restructuring expenses and a non-cash charge of $39 million related to a voluntary pension lump-sum payout as described in yesterday's press release. The lump-sum payout reduces the size, the risk volatility and cost associated with our U.S. pension plan. We succeeded in reducing our pension obligation by over $60 million. We recorded $30.9 million of the settlement loss to SG&A expenses and the remaining $8.3 million to cost of sales.

謝謝你，Tom，各位早安。請翻到第 14 張投影片。本頁的財務結果已調整，排除 100 萬美元的重整費用，以及如同昨日新聞稿所述、與自願性退休金一次性（lump-sum）給付相關的 3,900 萬美元非現金費用。該一次性給付可降低我們美國退休金計畫的規模、風險波動與相關成本。我們成功將退休金義務減少超過 6,000 萬美元。我們將 3,090 萬美元的結算損失認列於銷售、一般及管理費用（SG&A），其餘 830 萬美元認列於銷貨成本。

Our U.S. GAAP income statement is included in the appendix of this presentation and in our earnings release along with reconciliations. As anticipated, we experienced slightly lower volumes in our second quarter due in part to our typical summer seasonality. We also continue to experience significant market softening in foreign exchange headwind. As a result, our second quarter sales were down 11% primarily due to the strength of the U.S. dollar compared to last year. And as Tom mentioned, sales decreased 2% on a constant currency basis, excluding an unfavorable exchange rate impact of $35 million. On a constant currency basis, sales improved in Europe, Building HVAC in Asia. However, these increases were more than offset by lower sales in the Americas segment, where we experienced continued weakness in Brazil and in the North American off-highway market.

我們的美國 GAAP 損益表收錄於本簡報附錄，並在我們的財報新聞稿中提供，同時附有調節表。如同預期，我們第二季的出貨量略低，部分原因是典型的夏季季節性因素。我們也持續面臨外匯逆風下的顯著市場趨緩。因此，第二季銷售下降 11%，主要因美元相較去年走強。正如 Tom 所提，若排除 3,500 萬美元不利匯率影響，銷售以固定匯率計算下降 2%。以固定匯率計算，歐洲、建築 HVAC 與亞洲的銷售有所改善；然而，這些增幅被美洲事業部門較低的銷售所抵銷，該部門仍受巴西與北美非公路市場持續疲弱影響。

I am pleased to report that our gross margin improved by 120 basis points to 16.2% despite the decline in sales and the inclusion of $1.3 million of consulting expenses related to our global procurement project. The improvement was driven by lower material costs and better conversion in our America's and Building HVAC segments. With the higher margin, our gross profit was up 3% excluding $4.2 million of negative foreign exchange rate impact.

我很高興報告，儘管銷售下滑，且納入與我們全球採購專案相關的130萬美元顧問費用，我們的毛利率仍提升120個基點至16.2%。此改善主要由於材料成本降低，以及我們美洲與建築HVAC事業部門的轉換效率提升所帶動。在較高毛利率的帶動下，若排除420萬美元的不利外匯匯率影響，我們的毛利（gross profit）成長3%。

Moving on to SG&A, costs were lower than the prior year by $1.9 million and the exchange rate impact was favorable at $3.1 million in the quarter. Excluding the favorable exchange rates, SG&A was up 2.5% from the prior year, a significant portion of the increase came from higher commissions in our Building HVAC segment and higher sales volume.

接著談SG&A（銷售、一般及行政費用），本季成本較去年同期減少190萬美元，且匯率影響在本季帶來310萬美元的有利貢獻。若排除有利匯率因素，SG&A較去年同期增加2.5%，增幅中相當一部分來自我們建築HVAC事業部門較高的佣金支出以及較高的銷售量。

Q2's adjusted operating income of $8.1 million was $800,000 lower than the prior year. This excludes the $39.2 million lump-sum pension settlement expense and the $1 million of restructuring costs. However, our adjusted operating income does include $1.3 million of procurement consulting costs, which we incurred in support of our future savings goals. And adjusted operating income was up 4.5% on a constant currency basis and 19% when excluding FX and the procurement consulting fees.

第二季調整後營業利益為810萬美元，較去年同期減少80萬美元。此數字排除3,920萬美元的一次性退休金結算費用以及100萬美元的重整成本。不過，我們的調整後營業利益包含130萬美元的採購顧問費用，該費用是為支持我們未來的節省目標而發生。以固定匯率計算，調整後營業利益成長4.5%；若排除外匯與採購顧問費用，則成長19%。

Adjusted earnings per share of $0.04 were down $0.01 from the prior year. We're pleased with the overall performance this quarter, considering the lower sales volumes. We improved our gross margin, controlled our SG&A spending and positioned ourselves for a stronger second half of the year. Last, we are starting to see the positive impact of our previous cost saving efforts and restructuring actions. This includes the headcount reductions in Brazil and the recently completed closing of our McHenry plant.

調整後每股盈餘為0.04美元，較去年同期下降0.01美元。考量銷售量較低，我們對本季整體表現感到滿意。我們提升了毛利率、控管了SG&A支出，並為下半年更強勁的表現做好布局。最後，我們開始看到先前節省成本努力與重整措施帶來的正面影響，其中包括巴西的人力縮減，以及近期完成關閉McHenry工廠。

Turning to slide 15, free cash flow in the quarter was $18.5 million driven by an improvement in our operating cash flow. Working capital levels and capital expenditures were lower than the prior year. Our free cash flow in the first half of the fiscal year was $5.5 million and we continue to expect positive free cash flow for the full fiscal year. Our balance sheet remains strong, we ended the quarter with a net debt to capital ratio of 19% and $65 million of cash. Our Board recently authorized a $50 million share repurchase plan, which gives us the ability to repurchase shares on an opportunistic basis. While we see solid value in our stock price especially in light of our new strategic direction, we plan to balance the repurchase efforts with our priorities of investment that support diversification and growth. And we believe that we are in a strong position with a solid balance sheet to make these significant investments in the company and provide a return to our shareholders.

請看第15頁，本季自由現金流為1,850萬美元，主要由營運現金流改善所帶動。營運資金水位與資本支出均低於去年同期。本會計年度上半年自由現金流為550萬美元，我們仍預期全年將為正的自由現金流。資產負債表依然穩健，本季末淨負債對資本比率為19%，現金為6,500萬美元。董事會近期核准5,000萬美元的庫藏股回購計畫，使我們能以機會性方式回購股份。雖然我們認為目前股價具備不錯的價值，特別是考量我們新的策略方向，但我們將在回購與支持多元化與成長的投資優先事項之間取得平衡。我們相信，憑藉穩健的資產負債表，我們具備強勁的能力進行這些對公司而言重大的投資，並為股東帶來報酬。

Now let's turn to our full year guidance on slide16. While we are being proactive with our cost controls and thinking long-term with strategic actions we announced, we do continue to face challenges in many of our key end markets. As most of you know more than 60% of Modine sales are located outside of the United States, with a heavy dependence in both Europe and Brazil. We estimate the full year exchange rate impact will likely be a $110 million on the topline. Also approximately 15% of our sales are tied to the very challenged global agriculture, heavy construction and mining markets. Similar to last year, we expect a stronger second half based on several factors.

現在請看第16頁的全年財測指引。雖然我們在成本控管上採取主動作為，並以長期角度推動我們所宣布的策略行動，但我們在多個主要終端市場仍持續面臨挑戰。如各位所知，Modine超過60%的銷售位於美國以外，且對歐洲與巴西的依賴程度很高。我們估計全年匯率影響對營收（topline）的衝擊可能約為1.10億美元。此外，約15%的銷售與全球農業、重型建築與採礦等極具挑戰的市場相關。與去年類似，我們預期下半年將更強勁，原因基於數項因素。

First their topline should benefit from new program launches in our Americas and Asia segments. This is driven by several automotive programs with customers such as Tesla and General Motors. Also, we are approaching the heating season in our Building HVAC segment, which typically provide higher sales and profitability.

首先，營收（topline）應可受惠於我們美洲與亞洲事業部門的新專案/新計畫（program）上市。這主要由多項汽車專案所帶動，客戶包括Tesla與通用汽車（General Motors）。此外，我們的建築HVAC事業部門即將進入供暖季，該季節通常帶來較高的銷售與獲利能力。

Last, but not least, we expect to benefit from our restructuring actions in Brazil and North America and also expect to achieve higher operating efficiencies in several of our European plants. We are trying to manage these projected benefits with the concerns of further volume declines in Brazil or China. The team is also focused on balancing the procurement cost and savings during the balance of the year. With this in mind, we will provide the following guidance for fiscal 2016: Sales down 2% to 7% from the prior year, which is slightly lower than our previous guidance of flat to down 5%. However on a constant currency, sales guidance is up, flat -- I'm sorry sales guidance is actually flat to up 5%. Please note that at this time we are trending towards the lower end of our sales guidance range, also we have not included any impact from the public announcements of BW as we haven't seen any information that would cause us to lower our forecast. Adjusted operating income is anticipated to be $65 million to $70 million and is unchanged from our previous guidance.

最後同樣重要的是，我們預期可受惠於在巴西與北美的重整措施，並預期在歐洲數座工廠達成更高的營運效率。我們在管理這些預期效益的同時，也關注巴西或中國可能進一步出現的量下滑。團隊也專注於在今年剩餘期間平衡採購成本與節省效益。基於上述，我們提供2016會計年度指引如下：銷售較去年下降2%至7%，略低於先前「持平至下降5%」的指引。不過以固定匯率計算，銷售指引為持平至成長5%。請注意，目前我們的趨勢偏向銷售指引區間的低端；此外，我們尚未納入BW公開公告的任何影響，因為我們尚未看到任何資訊會使我們下修預測。調整後營業利益預期為6,500萬至7,000萬美元，與先前指引一致。

This range equates the earnings growth of flat to up 7%. On a constant currency basis, we expect the adjusted operating income to be up 6% to 13%. Our adjusted earnings per share guidance of $0.75 to $0.82 or up 19% to 30% is also unchanged. We have a lot of hard work in front of us in order to combat the market challenges and achieve our financial goals. However many of the improvements in cost reductions that we've been working on and that we announced yesterday are within our control. Additionally, we announced a solid strategic framework that will allow us to strengthen, diversify and grow our business, so that we will be less exposed to the cyclicality of our end markets and better position to grow and have value for shareholders. I look forward to reporting on our progress next quarter. Tom?

此區間相當於盈餘成長持平至增加7%。以固定匯率計算，我們預期調整後營業利益成長6%至13%。我們的調整後每股盈餘指引為0.75至0.82美元（或成長19%至30%）亦維持不變。為了因應市場挑戰並達成財務目標，我們面前仍有大量艱鉅工作。然而，我們一直在推動、且昨天宣布的許多成本降低改善措施，都在我們可控範圍內。此外，我們宣布了一套穩健的策略架構，將使我們能強化、多元化並成長我們的業務，降低對終端市場循環性的曝險，並更好地定位以成長並為股東創造價值。我期待在下季向各位報告我們的進展。Tom？

Thanks, Mick. This is an exciting time for Modine. We're working hard to transform our business and I am pleased that we're able to do so from a position of strength, our business to be more diversified and we will be able to provide higher returns to our shareholders throughout the market cycle.

謝謝，Mick。對Modine而言，這是一個令人振奮的時刻。我們正努力推動業務轉型，我很高興我們能在強勢的基礎上做到這一點，讓我們的業務更加多元化，並能在整個市場循環中為股東提供更高的報酬。

Moving to a global product based organization is a right thing to do. It will provide us with several advantages. We will increase our speed to market and leverage our global scale, while we continue to optimize our manufacturing footprint and take costs out of the business.

轉向以全球產品為基礎的組織是正確的做法。這將為我們帶來多項優勢。我們將加快產品上市速度並發揮全球規模效益，同時持續優化製造布局並降低業務成本。

We have a strong balance sheet and we'll use that capacity to grow and diversify our business by investing in the segments with the highest growth and margin profiles primarily to building HVAC and coils businesses. As I mentioned, our objective is to increase our non-vehicular revenues from 15% to 30% to 40% of our business within the next three years. At the same time, while we are looking for these investments, we have the ability to provide a return to our shareholders by opportunistically repurchasing Modine's stock. With successful execution of our plans, we clearly result in a transformation of our business one at least to significant earnings and improvement in a more diversified global business. With that, we will take your questions.

我們擁有強健的資產負債表，並將運用這項能力，透過投資於具最高成長與毛利特性的事業部門來成長並多元化我們的業務，主要聚焦於建築HVAC與盤管（coils）業務。如我所提，我們的目標是在未來三年內，將非車用營收占比由15%提升至30%至40%。同時，在尋找這些投資機會之際，我們也有能力透過機會性回購Modine股票來為股東提供報酬。若能成功執行我們的計畫，將可明確帶來業務轉型，至少可望在獲利上有顯著提升，並打造更為多元化的全球業務。接下來我們將開始回答各位的提問。

(Operator Instructions) David Leiker, Baird.

（接線員指示）David Leiker，Baird。

Good morning, everyone.

各位早安。

Hi, David.

嗨，David。

So, in terms of the steps, the actions that you've announced here today -- and I'm sure it's more complicated than this, but we've essentially taken the three vehicles, regional segments, collapsing them in the one and then you're building products, is that the right way to look at this?

所以，就你們今天在這裡宣布的步驟與行動而言——我相信實際上更複雜——但本質上我們是把三個車用、區域事業部門整併為一個，然後再建立產品事業，這樣理解對嗎？

Yes, the right way to look at this David is and I'm kind of go back to our last organizational change in 2006 and 2007, where we went from a divisional structure to a regional structure supported by global product lines running through each regional segment. It was a great step forward and brought a lot of strengths to the Company. What we're doing now is taking that and actually concentrating our product lines as a businesses' P&L divided into certain product groups globally.

是的，David，這樣看是對的。我想回到我們在2006與2007年的上一次組織調整，當時我們從事業部制轉為區域制，並由貫穿各區域事業部門的全球產品線提供支援。那是很大的進步，也為公司帶來許多優勢。我們現在要做的是在此基礎上更進一步，將產品線集中化，並把業務的損益表（P&L）在全球範圍內按特定產品群組來劃分。

So, we will kind of take the regional structure P&L and transform it towards a product line P&L globally ran so we could optimize the product strategy, the synergies across each of the segments and to prioritize which products and allocate accordingly. So, it's going to be a real true global product line. Again, it's going to be hitting all regions but we're just removing the P&L and the decision rights of product strategy and focus in leveraging in a smart way to a full global product line.

因此，我們將把以區域架構呈現的損益表（P&L）轉型為由全球統一管理的產品線損益表，以便我們能夠最佳化產品策略、強化各事業區隔之間的協同效益，並優先排序產品、據以配置資源。因此，這將會是一條真正的全球產品線。再次強調，它會涵蓋所有區域，但我們只是移除以區域為單位的損益表，以及產品策略的決策權與焦點，改以更聰明的方式加以運用，全面導向全球產品線。

Now, despite you having a regional structure, I do believe did introduce product development across the regions. When you talk about optimizing that portfolio, where would you be -- if you know the baseball analogy, where would you be in that because you've already taken quite a few actions in that regard.

現在，儘管你們採用區域架構，我確實相信你們已在各區域導入產品開發。當你談到最佳化該產品組合時——如果用棒球的比喻，你們目前大概處於哪個階段？因為你們在這方面已經採取了不少行動。

Yes. I mean I guess baseball analogy inning -- is that what you are talking about, what inning are we in, as far as....

是的。我想，用棒球比喻的話是指局數——你是想問這個嗎？就……而言，我們現在打到第幾局？

Yeah.

對。

Yes, so.

是的，所以。

In terms of optimizing the product portfolio.

就最佳化產品組合而言。

Yes, so I mean, we have strong global product strategies include our powertrain cooling engine, now we're developing our coils and of course Building HVAC. And I would say that we're probably into the late innings of work that can do. This is the last step, I guess we're bringing in the key reliever right now. Okay, if you would use that analogy to close it out, okay and get us to make those decisions. We -- I don't want to say we've suboptimized our product strategies, but we don't fully gain the opportunity by saying we're going to capitalize once, we're going to leverage this capacity, we're going to engineer it once, we're going to go through that portfolio of 52 product lines and optimize the best way to get the contribution out of each of those. That's the way to look at it.

是的，所以我的意思是，我們有強而有力的全球產品策略，包括我們的動力系統冷卻、引擎（產品），現在也在開發我們的盤管（coils），當然還有建築 HVAC。我會說，我們大概已經進入可以做的工作的後段局數。這是最後一步，我想我們現在正派出關鍵的後援投手。好，如果用那個比喻，就是要把比賽關門結束，好讓我們做出那些決策。我們——我不想說我們的產品策略做得不夠最佳化，但我們並沒有完全把機會吃滿：也就是說，我們要一次性地資本化、要槓桿運用這些產能、要一次性完成工程設計，然後針對 52 條產品線的組合逐一檢視，找出最佳方式，讓每一條產品線都能貢獻最大的價值。應該這樣來看。

Yeah. I guess, something that came across my thoughts along the way as you're talking is this isn't necessarily a step function change how much you're doing, it's a next step of the evolution of the path that you've been on for the last eight or nine years. And this is the last step that kind of optimized that structure, as you've been all through that journey, is that the right way to look at that?

對。我想，隨著你在講的過程中，我腦中浮現的是：這不一定是你們做的事情在量級上的跳躍式改變，而是你們過去八、九年所走路徑的下一步演進。而這是最後一步，去把那個架構最佳化；你們一路走過這段旅程後，這樣理解對嗎？

You actually said it better than I did. Okay. This is actually the next -- the last natural evolution of how to get to or we need to go to, yes.

你其實講得比我更好。好。這確實就是下一步——也是最後一個自然的演進，讓我們走到、或說我們需要走到的地方，是的。

David, it's Mick, Just to add to that you -- and a follow-up, you know when we -- Tom, referenced when we did our last reorganization a number of years ago went to the global product base structure, there were a number of products and businesses we exited and we've continued that discipline of looking at the lower return, lower margin products. So, just to emphasize what Tom said and from my seat, this is really about optimizing our global product platforms and in some regions we are very well, we're very strong and have the product platform and how you take that to other regions of the globe or leverage it, which is very different than big pieces of the company going to have to be carved up or sold off. We've gone through that heavy lifting already.

David，我是 Mick，補充一下——也追問一下。你知道，當我們——Tom 提到我們幾年前上一次重組、轉向全球產品為基礎的架構時，我們退出了若干產品與業務，而我們也持續維持檢視低報酬、低毛利產品的紀律。所以，強調 Tom 所說的，從我的角度看，這真的在於最佳化我們的全球產品平台；而在某些區域我們做得非常好、非常強，已經有產品平台，接下來是如何把它帶到全球其他區域或加以槓桿運用——這和公司必須被大幅切割或出售是非常不同的。我們已經完成那些艱鉅的整頓工作了。

Yes. I guess I am -- from my point this is an incremental change, not a radical change, I guess is the --.

是的。我想，就我看來，這是一個漸進式的改變，而不是激進式的改變，我想重點是——。

Very good point.

非常好的觀點。

And then, just two last items here. If you look at the opportunity increased market share, there has been a lot of consolidation in the thermal space, do you have the scale and the product capability to compete in that environment as you got much larger competitors today than you had a few years ago?

然後，最後兩點。如果你看提高市占率的機會，熱管理領域已經出現很多整併；在這樣的環境下，你們是否具備足夠的規模與產品能力來競爭？因為相較幾年前，你們今天面對的競爭對手大得多。

We definitely feel we do and it varies by product family. Okay, obviously in certain areas like our engine products group, we are a leading market share participant in global range that we're supporting all the major global automotive suppliers with unique engine products and we expect to expand that. On powertrain cooling, a little bit more challenging in certain products, especially when you get to automotive, but on commercial truck and off-highway, we feel very strong, especially vehicle we feel very strong about. So it's -- each one varies in degree and this change -- this next step of evolution is going to allow us to really concentrate on honing on those strengths we have, allocate the capital resources appropriately and make sure we gain, the opportunity is there for us to take and also may be deemphasize, I only use that word at any one market but certain products are just don't hit that return on capital and we don't see in the future, but we can make sure we can take that resource and capital and put that to work in a different place.

我們確實認為具備，而且會因產品家族而異。好，顯然在某些領域，例如我們的引擎產品事業群，我們在全球範圍內是市占率領先的參與者，為所有主要的全球汽車供應商提供具獨特性的引擎產品，我們也預期會擴大這一塊。在動力系統冷卻方面，某些產品會更具挑戰，特別是進到乘用車領域時；但在商用卡車與非公路（off-highway）領域，我們覺得非常強，尤其在車輛方面我們非常有信心。所以——每一塊的程度不同，而這次變革——這下一步的演進——將讓我們能真正聚焦打磨我們既有的優勢，適當配置資本資源，並確保我們能把握住擺在眼前的機會；同時也可能在某些市場上降低比重——我只是在任何單一市場使用「降低比重」這個詞——因為有些產品就是達不到資本報酬率，我們也看不到未來改善，但我們可以確保把那些資源與資本移出，投入到其他更有效的地方。

Again, then the last item here is on the margin target, the 78% by fiscal 2018. If I recall correctly, you've always had a target similar to that. Some might look at this as, you need to take these actions to get to that number or you could come out that this was always part of the process of getting to that level of profitability with -- how should we look at that?

再來最後一點是關於利潤率目標：到 2018 財政年度達到 7% 到 8%。如果我沒記錯，你們一直都有類似的目標。有些人可能會認為，你們需要採取這些行動才能達到那個數字；或者也可以說，這一直都是達到那個獲利水準的流程之一——我們應該怎麼看？

I'll take the question first and then Tom can add. The way we've approachingly looked at it, David is yes, we've had this target out there for a while. If you recall, when we originally did our four point plan, the biggest difference here is, there have been a lot of ups and downs in the market. And as we look forward with everything, we know what's going on and the off-highway market, heavy equipment; volume has been the biggest challenge including FX. If we had all of the market tailwinds behind us and all of the heavy lifting we've done to get our footprint right, we can clearly get to our operating margin goals, but in addition given the climate we are in, we want to accelerate that and that strictly depend on volumes. So what we are doing here in addition to all the strategic benefits Tom laid out about being leaner, faster, more consisting globally, these actions are really going to move us more rapidly towards our goals regardless of what happens to the topline and in the end-market.

我先回答，然後 Tom 可以補充。我們看待這件事的方式是，David，沒錯，我們把這個目標放在那裡已經一段時間了。你如果記得，當我們最初提出四點計畫時，這裡最大的不同在於：市場出現了很多起伏。而當我們往前看，考量所有事情，我們知道非公路市場、重型設備等領域正在發生什麼；其中最大的挑戰一直是出貨量（volume），也包括匯率（FX）。如果市場的順風都在我們這邊，再加上我們已經完成的那些讓我們的據點布局（footprint）到位的艱鉅工作，我們顯然可以達到營業利益率目標；但此外，鑑於我們所處的環境，我們希望加速達成，而這並不完全取決於出貨量。因此，我們在這裡所做的，除了 Tom 所列出的所有策略性效益——讓我們在全球更精實、更快速、更一致——這些行動也將讓我們更快朝目標前進，不論營收端（topline）與終端市場接下來如何變化。

Okay. Great. Thank you very much.

好的。非常好。非常感謝。

Thank you.

謝謝。

(Operator Instructions) Mike Shlisky, Seaport Global Securities.

（接線生指示）Mike Shlisky，Seaport Global Securities。

Can you hear me.

你聽得到我嗎？

I can hear, I am Mike.

我聽得到，我是 Mike。

Okay. Great. Just a few quick questions on the new strategy here. In the past, you've discussed entering a lot of non-truck and auto markets, such as the white goods market, the commercial vehicles, et cetera, are there any other new areas, that you're going to be targeting as a part your plan to diversify here, outside of those two or three new categories you've been talking about recently?

好的。很好。關於這個新策略我有幾個簡短問題。過去你們談過要進入許多非卡車與汽車的市場，例如白色家電市場、商用車等。除了你們最近談到的那兩三個新類別之外，作為你們多元化計畫的一部分，還有其他你們將要鎖定的新領域嗎？

No, I think what we really tried to specifically say that our very well established Building HVAC presence both here and in the UK and our coils business is well established and now growing to $60 million in the near future, in North America has leading North America position, both of those are areas that we are going to leverage for our non-vehicular expansion and growth. We have adjacent opportunities that go from there, so you can go into the pure industrial areas that we are looking to expand as opportunities that could include things like, power generation and things along those nature, plus the coils market opens up an opportunity to get into other areas it could be food processing and other things of that nature. So we feel there is a lot of expansion opportunities that we have in our ability to grow because of the strong established positions that are non-vehicular related and they're growing at a sizable rates already. Okay. So, we want to build on that with both organic and inorganic opportunities.

沒有，我想我們真正想明確表達的是：我們在建築 HVAC 的布局非常成熟，不論是在這裡或在英國；而我們的盤管（coils）業務也已相當成熟，且目前正成長，近期可望成長到 6,000 萬美元；在北美也處於領先地位。這兩個領域都是我們將用來槓桿推動非車用擴張與成長的方向。我們也有從這裡延伸出去的相鄰機會，因此你可以進一步進入我們正在尋求擴張的純工業領域，可能包括像發電等這類型的機會；另外，盤管市場也開啟了進入其他領域的機會，例如食品加工以及其他類似領域。因此，我們認為我們有很多擴張機會，且因為我們在非車用相關領域已建立強勢地位，而這些領域本身也已在以相當可觀的速度成長，所以我們具備成長能力。好，所以我們希望在此基礎上，透過有機與無機的機會一起推進。

And then within vehicular going forward, do you plan to maybe change the mix between truck and auto? Is it -- I would assume it's little bit better probably in truck right now as far as margins are concerned. Is that a piece of it and if so with certain truck markets entering somewhat of a down phase here, which could last for a couple of years and how you plan to address getting those volumes, good enough to kind of keep the margin going?

接下來在車用業務方面，往後你們是否計畫在卡車與乘用車之間調整產品組合？也就是說——我猜就毛利率而言，目前卡車端可能稍微好一些。這是否是其中一部分原因？如果是的話，隨著某些卡車市場正進入某種下行階段，可能會持續幾年，你們打算如何取得足夠的出貨量，以便大致維持毛利率的走勢？

Well, I think the best way to say is, that we've always been a strong truck market supplier and we always continue to be a strong truck market supplier, making sure that we optimize our business there. On the automotive side, clearly the technical trends going on with fuel efficiency and that type of thing, really offer a lot of opportunity for us to look at both electrical vehicle, which we are doing well, as we've talked with Tesla and a growing opportunity with the Model X, but other electrical suppliers as well, but also inside of that we -- let's say traditional internal combustion engine opportunities as they need more fuel efficiency, we have lots about air and engine content that we're looking at. So we look at, again I stressed it in my opening comments that we are in the vehicular business, where we're strong in the vehicular business in all the segments including auto and truck and off-highway are going to be still core to our future. So I guess that's the best way for me to answer that.

嗯，我想最好的說法是，我們一直都是卡車市場的強勢供應商，而且我們也會持續作為卡車市場的強勢供應商，確保在那裡把業務最佳化。在汽車端，顯然燃油效率等技術趨勢，確實為我們帶來很多機會，讓我們同時看電動車領域——我們在這方面做得不錯，正如我們談到與特斯拉的合作，以及 Model X 帶來的成長機會——也包括其他電動車供應商；同時在此之內，我們——比如說在傳統內燃機方面，隨著它們需要更高的燃油效率，我們在進氣與引擎相關的產品內容上有很多正在評估的機會。所以我們的看法是——我在開場時也強調過——我們是在車用業務裡，我們在車用業務的所有細分領域都很強，包括乘用車、卡車以及非公路（off-highway），這些仍將是我們未來的核心。所以我想這是我回答這個問題的最佳方式。

Okay. I'm going to just throw in two more here. The first one being on procurement. How challenging is that going to be (inaudible) started it sounds like, but how challenging would that be to kind of get to where you want to go there, given that you've got such low commodity prices today currently. Is it a matter of changing how you -- imagine your actual scale of your orders, your freight costs, your kind of locking in prices over time or if we see the prices of let's say copper or aluminum go up from here, is that a challenge to getting those kind of upside -- is that a challenge to kind of fulfilling this kind of plan basically?

好的。我再補兩個問題。第一個是關於採購。要做到你們想達到的目標，這會有多具挑戰性？聽起來你們已經開始了（聽不清），但考量到目前大宗商品價格這麼低，要走到你們想去的方向會有多難？這是要改變你們——我想像可能是實際下單規模、運輸費用、以及隨時間鎖定價格的方式之類；或者如果我們看到例如銅或鋁的價格從這裡開始上漲，這會不會讓你們取得那種上行空間變得更具挑戰——也就是說，這會不會成為基本上要落實這個計畫的一個挑戰？

Yeah. Let me -- I want to kick start and I'd like Mick to finish up on the details of which you are talking about. We've been working on this for a while. Okay. And as Mick alluded we spent $1.3 million investigating, developing and really globalizing our procurement processes. This is another great example with our strategy going forward as we are really going to globalize these key functions, support functions that integrate with the business in a strong manner. So we feel very confident with the targets so to answer your question. We have not been optimizing our $700 million to $800 million purchase spend, we kind of done that more regionally than as ideal and by globalizing these (inaudible) whether it be on raw material or purchase components or services and (inaudible) we see and then have proven and have compared ourselves, we really have the opportunities to build on this. Mick, you want to add to that?

是的。讓我——我先開個頭，然後我想請 Mick 把你提到的細節補充完整。我們已經做這件事一段時間了，好嗎？正如 Mick 提到的，我們投入了 130 萬美元來調查、建置並真正把我們的採購流程全球化。這也是我們往前策略的另一個很好的例子：我們確實要把這些關鍵職能、支援職能全球化，並以強而有力的方式與業務整合。因此，為了回答你的問題，我們對這些目標非常有信心。我們過去並沒有把 7 億到 8 億美元的採購支出最佳化；我們比較是以區域方式在做，而不是以理想的全球方式。透過把這些（聽不清）全球化——不論是原物料、採購零組件或服務，以及（聽不清）——我們看到、也已經證明並且與自身做過比較，我們確實有機會在此基礎上再提升。Mick，你要補充嗎？

Just as in what I would add Mike is that through our analysis, we've backed out the raw material content and obviously we can't control raw material prices in that, but the controllable portion of our spent is where we really see the value and it is for the reason that Tom said, becoming a truly global organization with more global standards is going to allow us to consolidate our supply base and consolidate the complexity of the number of parts we buy and the number of people we deal with in a major way. So it is a huge opportunity for the company as we go forward. And we're still really excited about it.

我想我會補充的是，Mike，透過我們的分析，我們已經把原物料含量扣除掉了；很明顯我們無法控制原物料價格，但在我們支出中可控的那一部分，才是我們真正看到價值所在。原因正如 Tom 所說，成為一個真正全球化的組織、採用更多全球標準，將使我們能夠大幅整併供應基礎，並大幅降低我們採購零件數量的複雜度，以及我們往來對象的人數。因此，這對公司未來而言是個巨大的機會。我們對此仍然非常興奮。

Let me build on little. These actions that we're talking about today weren't built in the last few weeks. We've been working for months and for months and even to the beginning of year working with our Board and developing how we can get ourselves to this kind of position going forward. So each one of these elements that we've defined, they have thought through and gone through benchmark against our competition on how get to market and the speed at which we need to move and I just want to make sure that Mike, that you understand, this is something that has a lot of deep thought review and analysis and process development to get to this point.

我再補充一點。我們今天談到的這些行動，不是過去幾週才做出來的。我們已經努力了好幾個月、好幾個月，甚至從年初開始就與董事會合作，並制定我們如何讓自己在未來走到這樣的位置。因此，我們所定義的每一個要素，都經過深思熟慮，也做過與競爭對手的標竿比較，評估如何進入市場，以及我們需要推進的速度。我只是想確保，Mike，你能理解：這些是經過非常深入的思考、檢視與分析，以及流程開發，才走到今天這一步。

Got it, yes, sure, perfect. And then just kind of throwing one last one here on the other side, outside of the program here. I was little surprised on your Building HVAC outlook here. I mean certainly very positive but I mean, I am seeing you know (inaudible) construction trends up double digits and if you exclude oil and gas which isn't in building, we are up over probably about 15% in certain parts of the country. So, is there any upside that you think possibly to Building HVAC or it's perhaps sound as due to (inaudible) we have to kind of wait and see how cold it gets until we change the outlook here?

了解，是的，當然，很好。最後我再丟一個題外的問題，跟這個計畫之外的另一面有關。我對你們在建築 HVAC 的展望有點意外。我的意思是，確實非常正面，但我看到（聽不清）建築趨勢是兩位數成長；如果排除不屬於建築的油氣產業，在某些地區我們可能上升超過約 15%。所以，你們認為建築 HVAC 是否可能還有任何上行空間？還是說，或許因為（聽不清），我們得先觀察天氣會冷到什麼程度，才會調整這裡的展望？

Well, cold weather definitely helps the heating business, there is no doubt about that. There is a direct correlation but we have the leading market share position on heating in North America. We have a developing growth strategy in ventilation business both in what we call the school business and also commercially with our (inaudible) product line growing in North America and so the trends there will continue on a positive way is the modernize and to replace, we are getting a big installed base, is another big driver for sales for us. On the data center process, our UK business in Leeds has the leading position in the UK, expanding that into the Middle East, where there are growth opportunities. Again, the drivers of that with the digitalization, we see favorable growth. And the ventilation acquisition, we made in Barkell is going to complement that a lot because there is a trend of moving to what we call more frequently we've talked about in earlier calls, to really build up lower energy cost to build that computer digitalization capacity has been driven by the Internet of things. So we feel -- we see growing strong growth trends that are going to continue in those markets where we're specifically placed.

嗯，寒冷天氣確實有助於供暖業務，這點毫無疑問。兩者有直接的相關性，而且我們在北美供暖市場擁有領先的市占地位。我們在通風業務也有正在發展的成長策略，涵蓋我們所稱的學校業務，以及商用端，我們的（聽不清）產品線在北美持續成長；因此，隨著現代化與汰換的趨勢，這些走勢將持續正向。我們正在累積龐大的既有安裝基礎，這也是推動我們銷售的另一個重要動能。在資料中心流程方面，我們位於英國里茲（Leeds）的英國業務在英國居於領先地位，並正把這個優勢擴展到中東，那裡有成長機會。同樣地，隨著數位化的推進，我們看到有利的成長。再者，我們在 Barkell 進行的通風併購將大幅補強這一點，因為市場正朝向我們所說的——我們在先前的電話會議中也更頻繁談到——以更低能耗成本來建置這些由物聯網驅動的電腦數位化能力。因此我們認為——我們看到在我們特別布局的那些市場中，強勁的成長趨勢將會持續。

Okay, great. I'll leave it there. Thanks guys.

好的，很棒。我就先到這裡。謝謝各位。

And I'm showing no further questions at this time. I would now like to turn the conference back to Kathy Powers for any closing remarks.

我這邊顯示目前沒有進一步的提問。現在我想把電話會議交回給 Kathy Powers，請她做結語。

Thank you, this concludes today's call. Thanks for joining us this morning and thank you for your interest in Modine. Good bye.

謝謝，今天的電話會議到此結束。感謝各位今天早上加入我們，也謝謝各位對 Modine 的關注。再見。

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Have a great day.

各位女士、先生，感謝各位參與今天的電話會議。今天的議程到此結束。各位現在可以掛線。祝各位有美好的一天。