Modine Manufacturing Company (MOD) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Modine Manufacturing Company's third-quarter fiscal 2016 conference call. (Operator Instructions). As a reminder, this conference call is being recorded.

各位女士、各位先生，大家好，歡迎參加Modine Manufacturing Company 2016會計年度第三季財報電話會議。(接線員指示)。提醒各位，本次電話會議將被錄音。

I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer, and Investor Relations.

現在我想把電話會議交給今天的主持人——Kathy Powers女士，副總裁、財務主管暨投資人關係負責人。

Thank you. Thank you for joining us today for Modine's third-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. We will be using slides for today's presentation. Those links are available through both the webcast link as well as the PDF file posted on the Investor Relations section of our Company website, Modine.com.

謝謝。感謝各位今天參加Modine 2016會計年度第三季財報電話會議。今天與我一同出席的有Modine總裁暨執行長Tom Burke，以及我們的副總裁（財務）兼財務長Mick Lucareli。我們將使用投影片進行今天的簡報。相關連結可透過網路直播連結取得，也可在本公司網站Modine.com之投資人關係專區下載所張貼的PDF檔。

Also, should you need to exit the call prior to its conclusion, a replay will be available through our website beginning approximately 2 hours after the call concludes. On slide 2 is an outline for today's call. Tom and Mick will provide comments on our third-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.

另外，若您需要在會議結束前離線，會議結束約2小時後，您可透過我們的網站收聽重播。投影片第2頁為今天電話會議的議程大綱。Tom與Mick將就第三季業績發表評論，並更新我們2016會計年度的營收與獲利指引。在電話會議最後將進行問答環節。

On slide 3 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。提醒各位，本次電話會議可能包含前瞻性陳述，其內容如同今日盈餘新聞稿所述，亦載於本公司向美國證券交易委員會提交的文件中。

With that, it's 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 discuss third-quarter results and provide an update on the various activities taking place with regard to our Strengthen, Diversify, and Grow strategic transformation that we announced last quarter. After that, Mick will provide a more detailed review of our financial results. Then I will provide final remarks prior to opening up the call for questions.

謝謝你，Kathy，各位早安。在今天的電話會議中，我將討論第三季業績，並就我們在上季宣布的「強化、多元化與成長」（Strengthen, Diversify, and Grow）策略轉型所進行的各項活動提供最新進展。之後，Mick將更詳細地回顧我們的財務結果。接著我會在開放提問前做最後結語。

Sales in the third quarter were down 2% on a constant currency basis, with decreases in the Americas, building HVAC, and Asia segments more than offsetting increases in the Europe segment. We continue to see significant weakness in the heavy-duty construction and agriculture equipment markets, and are also beginning to see some softening in the North America commercial vehicle market. In addition, the warm winter weather and a negative impact on heating sales in our building HVAC segment. Brazil remains in the deep recession, and the economy in China continues to stagnate.

第三季銷售額以固定匯率計算下降2%，其中美洲、建築HVAC與亞洲事業部的下滑，超過了歐洲事業部的成長。我們持續看到重型建築與農業設備市場顯著疲弱，也開始看到北美商用車市場出現一些趨緩。此外，冬季氣候偏暖，對我們建築HVAC事業部的供暖銷售造成負面影響。巴西仍深陷嚴重衰退，而中國經濟則持續停滯。

Offsetting some of these headwinds have been strong auto sales in Europe and North America. German premium auto sales, which remain one of the true bright spots of our markets, helped drive the strong performance in our Europe segment this quarter. Despite our overall decrease in sales this quarter, I'm pleased to report that our adjusted operating income of $17.2 million was up 21% from the prior year. On a constant currency basis, adjusted operating income was up 30% from the prior year.

抵銷部分逆風因素的是歐洲與北美強勁的汽車銷售。德國高端汽車銷售仍是我們市場中少數真正的亮點之一，並帶動本季歐洲事業部的強勁表現。儘管本季整體銷售下滑，我很高興報告調整後營業利益為1,720萬美元，較去年同期成長21%。以固定匯率計算，調整後營業利益較去年同期成長30%。

This increase was driven by a 140 basis point improvement in gross margin which benefited from favorable materials cost, improved plant performance, and savings from the closure of the McHenry, Illinois, manufacturing facility.

此一成長主要來自毛利率提升140個基點，受惠於原物料成本有利、工廠績效改善，以及伊利諾州McHenry製造廠關閉所帶來的節省。

The restructuring initiatives we have taken over the past few years have clearly benefited our margins and provide excellent foundation for us to execute on the strategies outlined in our Strengthen, Diversify, and Grow plan moving forward.

我們過去幾年所採取的重整措施，已明顯改善毛利率，並為我們未來執行「強化、多元化與成長」計畫中所列策略奠定了極佳基礎。

Turning to page 6, sales for the Americas segment decreased 6% year-over-year on a constant currency basis, with sales in Brazil down 14% due to decreases in both vehicular OE and aftermarket customers. Volumes continue to decline in Brazil, and we are currently not planning for any appreciable improvement there for the next 12 to 18 months. As reported last quarter, we implemented a four-day work week in Brazil. This has significantly lowered our cost basis, allowing us to continue to generate positive operating income despite the significant reduction in volume levels.

翻到第6頁，美洲事業部銷售額以固定匯率計算年減6%，其中巴西銷售額下滑14%，原因是車用原廠（OE）與售後市場客戶皆出現下滑。巴西的出貨量仍持續下降，我們目前不預期未來12至18個月會有任何顯著改善。如同上季所報告，我們在巴西實施每週四天工作制。此舉大幅降低了我們的成本基礎，使我們即使在出貨量顯著下滑的情況下，仍能持續創造正的營業利益。

In North America, sales were down 5%, with lower sales to off-highway and commercial vehicle customers. Our off-highway sales are under pressure from weak conditions in the heavy-duty construction and agricultural sectors. We expect this trend to continue as both oil and overall commodity prices are projected to remain low for the foreseeable future. We also saw a drop in orders from commercial vehicle customers, as that market slowed last quarter.

在北美，銷售額下滑5%，主要因非公路（off-highway）與商用車客戶的銷售減少。我們的非公路業務銷售受到重型建築與農業領域疲弱景氣的壓力。我們預期此趨勢將持續，因為油價與整體大宗商品價格預計在可預見的未來仍將維持低檔。我們也看到商用車客戶的訂單下滑，因該市場在上季已開始放緩。

However, despite this drop in sales, gross margin improved by 190 basis points from the prior year to 16.5%. This is a continuation of the trend we saw last quarter, as the impact from lower sales volume was more than offset by improved operating performance, lower material costs, and savings from plant consolidation.

然而，儘管銷售下滑，毛利率仍較去年同期提升190個基點至16.5%。這延續了我們上季看到的趨勢，因為銷售量下滑的影響，已被營運績效改善、原物料成本下降，以及工廠整併節省所抵銷且有餘。

Adjusted operating income for the Americas segment was up $2.7 million to $9.6 million despite the significant drop in sales. The actions we have taken to reduce costs have been critically important, given the continued market weakness in this segment.

美洲事業部調整後營業利益增加270萬美元至960萬美元，儘管銷售額顯著下滑。鑑於該事業部市場持續疲弱，我們為降低成本所採取的行動至關重要。

The closure of the McHenry plant and the various cost-saving initiatives in Brazil have allowed is not only to remain profitable, but to even improve our profitability in this challenging environment. We expect these difficult market conditions to continue in 2016.

McHenry工廠的關閉以及巴西各項節省成本措施，使我們不僅能維持獲利，甚至在此充滿挑戰的環境中提升獲利能力。我們預期這些艱困的市場狀況將在2016年持續。

In North America, the truck market has begun to soften, and we expect volumes to be down 20% in 2016. We also expect the heavy-duty construction and agricultural equipment markets to continue to decline further. Autos continue to be relatively strong, and we expect the market to hold flat to possibly up 5%.

在北美，卡車市場已開始趨緩，我們預期2016年出貨量將下滑20%。我們也預期重型建築與農業設備市場將持續進一步下滑。汽車市場仍相對強勁，我們預期市場將持平，或最多成長5%。

In Brazil, we expect the commercial vehicle and agricultural equipment markets each to be down another 10%, and the aftermarket to be flat to possibly up 5%.

在巴西，我們預期商用車與農業設備市場各自將再下滑10%，而售後市場將持平，或最多成長5%。

Please turn to page 7. Sales for our Europe segment increased 5% in the third quarter on a constant currency basis as a result of the higher sales to automotive and commercial vehicle customers. The European automotive and commercial vehicle markets remain strong, and we expect low to moderate growth to continue through 2016.

請翻到第7頁。我們歐洲事業部第三季銷售額以固定匯率計算成長5%，主要因對汽車與商用車客戶的銷售增加。歐洲汽車與商用車市場仍然強勁，我們預期2016年將持續呈現低至中度成長。

Gross margin improved by 340 basis points from the prior year, driven by higher sales volume, favorable material cost, and improved operating performance.

毛利率較去年同期提升340個基點，主要由較高的銷售量、有利的原物料成本，以及營運績效改善所帶動。

We are still experiencing very high volumes at certain European plants, but had made significant progress in adding the needed capacity, which has improved our efficiency and greatly reduced our order backlog.

我們在部分歐洲工廠仍面臨非常高的產量，但在增加所需產能方面已取得顯著進展，這提升了效率並大幅降低了訂單積壓。

As mentioned last quarter, we are adding furnace capacity at our plant in the Netherlands, and expect to have this complete by the end of March. In addition, we are moving ahead with capacity expansion in Hungary. This incremental capacity, scheduled to be completed in 24 months, will take additional pressure off our high-volume plans, lead to further operational improvements, and enable additional sales growth.

如同上季所提及，我們正在荷蘭工廠增加爐體產能，預期將於三月底前完成。此外，我們也正推進匈牙利的產能擴充。這些新增產能預計在24個月內完成，將進一步減輕我們高產量廠區的壓力，帶來更多營運改善，並支持額外的銷售成長。

Adjusted operating income in Europe was up $4.2 million to $7.5 million, including a negative $1.1 million currency impact. The increase was primarily due to volume and gross margin improvements.

歐洲調整後營業利益增加420萬美元至750萬美元，其中包含110萬美元的匯率負面影響。增幅主要來自銷量與毛利率的改善。

Please turn to page 8. Sales for our Asia segment were down 3% compared to the prior year, on a constant currency basis. Lower sales to off-highway customers in China and Korea and lower tooling sales were partially offset by higher sales to automotive customers, as volumes continued to grow at a fast pace with many programs we have been awarded.

請翻到第8頁。以固定匯率計算，我們亞洲事業部本年度銷售額較去年同期下降3%。中國與韓國非公路（off-highway）客戶銷售下滑以及工裝（tooling）銷售降低，部分被汽車客戶銷售增加所抵銷；由於我們獲得多個專案，相關出貨量仍以快速步調成長。

Adjusted operating income increased $0.5 million to $0.2 million in the third quarter, primarily due to continued cost control efforts. We believe that the off-highway market is finally nearing bottom in Asia, but we're not expecting any meaningful near-term recovery.

第三季調整後營業利益增加50萬美元至20萬美元，主要受惠於持續的成本控管努力。我們認為亞洲的非公路市場終於接近觸底，但不預期短期內會有任何具意義的復甦。

Since the 2011 construction peak in China, our excavator sales have dropped about 60% or $16 million. We are offsetting this loss with market share gains in the China automotive and truck segments, and we expect this to accelerate with our recently announced joint venture with Puxin. Overall, we expect to see flat to 5% growth in the China automotive market in 2016, and continued strength in our primary end markets in India.

自2011年中國建築高峰以來，我們的挖掘機銷售已下滑約60%，約1,600萬美元。我們正透過在中國汽車與卡車市場的市占率提升來彌補這項損失，並預期隨著近期宣布與普鑫（Puxin）的合資案，這一趨勢將加速。整體而言，我們預期2016年中國汽車市場將持平至成長5%，且印度主要終端市場將持續強勁。

Turning to page 9, sales for our building HVAC segment were down 8% for the quarter on a constant currency basis, with decreases in both North America and in the UK. The decrease in North America was largely driven by lower heating sales due to the warmer-than-normal temperatures in December. We remain very confident in our ability to grow this business, with new products scheduled for introduction in fiscal 2017.

接著看第9頁。以固定匯率計算，本季我們建築HVAC事業部銷售額下降8%，北美與英國皆出現下滑。北美的下滑主要是因12月氣溫高於常年，導致供暖產品銷售較低。我們對於成長此業務的能力仍非常有信心，並計畫於2017會計年度推出新產品。

In the UK, a softer euro-to-pound exchange rate created pricing pressure as the euro-based competitors were able to reduce prices in the UK, impacting our win rate in the precision air conditioning market.

在英國，歐元兌英鎊匯率走弱造成定價壓力，因以歐元計價的競爭對手得以在英國降價，影響我們在精密空調市場的得標率。

However, our order intake for our air handling and chiller business remains strong. We are currently working through a backlog of orders. Gross margin for this segment decreased 70 basis points on the lower sales volume during the quarter, and adjusted operating income was down $2.9 million to $6.9 million. Last year's results included $2 million of business interruption insurance recoveries.

然而，我們空氣處理與冷水機（chiller）業務的接單量仍維持強勁。我們目前正消化一批積壓訂單。由於本季銷售量較低，該事業部毛利率下降70個基點，調整後營業利益減少290萬美元至690萬美元。去年結果包含200萬美元的營業中斷保險理賠回收。

We completed the move back to our new Airedale manufacturing facility in the UK after the building was destroyed by a fire in 2013. Although it has been a challenging 2 1/2 years for our team in the UK, they have done a great job serving our customers from the temporary facilities used during the rebuild period. The good news is that we are now operating in a state-of-the-art manufacturing and product testing facility which will allow us to continue to improve our competitive position over time.

在2013年廠房遭火災摧毀後，我們已完成搬回英國全新的Airedale製造基地。儘管對英國團隊而言這是艱難的兩年半，他們在重建期間仍從臨時設施為客戶提供了出色的服務。好消息是，我們現在於最先進的製造與產品測試設施中營運，這將使我們能隨時間持續提升競爭地位。

Please turn to page 10. Before turning it over to Mick, I would like to give an update on some of the activities we've been working on as part of our Strength, Diversify, and Grow transformation. As I mentioned last quarter, we expect this program will enable us to evolve into a more competitive and diversified thermal management company, one that increases long-term shareholder value.

請翻到第10頁。在交棒給Mick之前，我想就我們在「強化、分散與成長」（Strength, Diversify, and Grow）轉型計畫中推動的一些工作進展做個更新。如同我上季所提到，我們預期此計畫將使我們演進為更具競爭力且更多元的熱管理公司，進而提升股東長期價值。

As a reminder, the program has three major components: first, to strengthen our business by implementing a true global, product-based organization; second, to diversify our business by investing in our industrial business, namely the building HVAC and coils businesses; and, third, to grow our business, primarily by aggressively pursuing strategic acquisitions, but also by organically growing those parts of Modine's business that have a right to win in the market.

提醒一下，該計畫有三大組成：第一，透過導入真正的全球化、以產品為導向的組織來強化我們的業務；第二，透過投資我們的工業業務（即建築HVAC與盤管業務）來分散業務；第三，推動業務成長，主要是積極尋求策略性併購，同時也透過有機成長，擴大Modine在市場上具備勝出條件的業務領域。

Our plan includes a number of costs discipline initiatives designed to improve our operating margins. This will be accomplished through expansion of our current low-cost manufacturing footprint, savings achieved through our global procurement project, and SG&A and personnel-related savings. Overall, we are targeting $40 million to $50 million of annual savings from these initiatives over the next five quarters. And based on all of our activities to date, I remain very confident in this goal.

我們的計畫包含多項成本紀律措施，旨在提升營業利益率。這將透過擴大現有低成本製造據點、全球採購專案所帶來的節省，以及SG&A與人員相關節省來達成。整體而言，我們目標是在未來五個季度內，透過這些措施達成每年4,000萬至5,000萬美元的節省。根據目前為止的各項進展，我對達成此目標仍非常有信心。

A significant component of our Strengthen objective is to optimize our manufacturing footprint. The transfer of production from our Washington, Iowa, facility is running ahead of schedule. We plan to have this facility closed in fiscal 2017. The expansion of our Nuevo Laredo facility is nearing completion. As I previously mentioned, we are making progress on the early phases of our plant expansion in Hungary.

我們「強化」目標的一個重要組成是最佳化製造據點布局。將產能自愛荷華州華盛頓（Washington, Iowa）廠移轉的進度超前。我們計畫在2017會計年度關閉該廠。我們Nuevo Laredo廠的擴建已接近完工。如我先前所述，我們在匈牙利的工廠擴建前期階段也正取得進展。

For our procurement initiative, we have finalized the structure of our procurement organization and are currently focused on supplier negotiations. Based upon current activities, we believe that we are approximately 25% of the way towards our targeted annual procurement savings.

在採購計畫方面，我們已完成採購組織架構的定案，目前聚焦於與供應商的談判。依據目前的進展，我們認為已達成目標年度採購節省的約25%。

In an effort to accelerate SG&A savings, we offered an early retirement program to eligible US employees. We had a large number of employees elect to participate in the program. Based on these and other actions, we are targeting annualized salary savings of $7 million.

為加速SG&A節省，我們向符合資格的美國員工提供提前退休方案。有相當多員工選擇參與該方案。基於這些及其他措施，我們目標為年化薪資節省700萬美元。

We have implemented the first series of the changes of our new product-based organization structure, and are in the process of rolling these through the organization. These changes will enable a more thorough analysis of our product platforms to further develop and drive our global strategies for each product group.

我們已實施新產品導向組織架構的第一階段變更，並正逐步在組織內推行。這些變更將使我們能更全面地分析產品平台，進一步制定並推動各產品群的全球策略。

As I mentioned earlier, we recently announced the formation of a new joint venture in China. Puxin is a manufacturer of stainless steel heat exchangers located in Yangzhou, China, approximately 200 miles northwest of Shanghai. Through this joint venture, we will primarily produce stainless steel heat exchangers for the China light-, medium-, and heavy-duty commercial vehicle markets.

如我先前提到，我們近期宣布在中國成立新的合資企業。普鑫（Puxin）為不鏽鋼熱交換器製造商，位於中國揚州，約在上海西北方200英里處。透過此合資企業，我們將主要為中國輕型、中型與重型商用車市場生產不鏽鋼熱交換器。

This is an exciting investment for Modine, and will not only allow us to expand our product offering in China, but will also serve to diversify our customer base and expand our low-cost manufacturing footprint.

這對Modine而言是一項令人振奮的投資，不僅能讓我們擴大在中國的產品供應，也將有助於分散客戶基礎並擴展我們的低成本製造布局。

And, finally, last quarter we announced a new share repurchase program. During the quarter we repurchased approximately $2.1 million, or 230 (sic, see press release, "230,000") shares, at an average price of $9.04 per share.

最後，上季我們宣布新的庫藏股回購計畫。本季期間，我們以每股平均9.04美元回購約210萬美元、或230（原文如此，見新聞稿「230,000」）股。

With that, I'd like to turn it over to Mick for an overview of our consolidated financial results, and to update our fiscal 2016 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，並更新我們 2016 會計年度的財測指引。

Thanks, Tom. Please turn to slide 12. Our third-quarter sales decreased 10% as we continued to experience significant foreign currency headwinds and weakness in certain end markets. Early winter warm weather, along with declines in the North American Commercial-Vehicle and off-highway orders contributed to the sales decline. However, the vast majority of our sales decline was due to changes in exchange rates.

謝謝你，Tom。請翻到第 12 頁投影片。我們第三季銷售額下滑 10%，因為我們仍持續面臨顯著的外匯逆風，以及部分終端市場的疲弱。初冬的暖和天氣，加上北美商用車與非公路（off-highway）訂單下滑，皆促成了銷售下滑。不過，我們銷售下滑的絕大部分是由匯率變動所致。

As Tom mentioned, sales decreased 2% on a constant currency basis, excluding an unfavorable currency exchange rate impact of $26 million. Fortunately, we expect the year-over-year impact of foreign currency to be less significant, starting in Q4.

如 Tom 所提到，若以固定匯率計算，銷售額下滑 2%，並排除不利匯率影響 2,600 萬美元。所幸，我們預期外匯對年對年（YoY）的影響將自第四季起變得較不顯著。

I am pleased to report that our gross margin improved by 140 basis points to 17.8%, despite the decline in sales. This improvement was driven by lower commodity prices and operational improvements. Similar to last quarter, a portion of the lower material cost was attributed to the significant drop in aluminum transaction premium.

我很高興報告，儘管銷售下滑，我們的毛利率仍提升 140 個基點至 17.8%。此改善主要來自較低的商品原物料價格與營運改善。與上季類似，部分材料成本下降可歸因於鋁交易溢價（transaction premium）的大幅下跌。

In addition, we delivered operational improvements at our plants. As expected and discussed last quarter, we had better conversion in our Europe segment, driven by production efficiencies. Excluding a $3.4 million negative foreign currency exchange impact, our gross profit was up 4% in the quarter on the lower sales.

此外，我們在各工廠也達成了營運改善。如預期且如上季所討論，我們歐洲事業部的轉換效率（conversion）更佳，主要受生產效率提升所帶動。若排除 340 萬美元的不利外匯影響，我們本季毛利在銷售較低的情況下仍年增 4%。

Moving on to SG&A, costs were lower than the prior year by 4%. The exchange rate impact was $2 million favorable in the quarter, but this benefit was offset by $2 million from business interruption insurance recoveries last year. Cost control efforts continue at each of our global locations, and they will continue further as we execute on our Strengthen, Diversify, and Grow initiatives.

接著談 SG&A（銷售、一般及行政費用），成本較去年同期下降 4%。本季匯率影響帶來 200 萬美元的有利因素，但此利益被去年同期 200 萬美元的營業中斷保險理賠回收所抵銷。我們在全球各據點持續推動成本控管，並將在執行「強化、分散、成長」（Strengthen, Diversify, and Grow）計畫時進一步延續。

Our reported SG&A number includes several items that were backed out to arrive at our adjusted operating income. These include a $900,000 non-pension settlement loss related to our lump sum payout program that was offered last quarter. To date, we have made $62 million in lump sum payments from pension fund assets under this program. We also adjusted $300,000 for third-party legal and due diligence costs related to the new joint venture in China.

我們所揭露的 SG&A 數字包含數個項目，這些項目在計算調整後營業利益時已被剔除。其中包括與上季提供的一次性領取（lump sum）給付方案相關的 90 萬美元非退休金結算損失。截至目前，我們已在此方案下自退休金基金資產支付 6,200 萬美元的一次性款項。我們也就與中國新合資企業相關的第三方法律與盡職調查費用調整了 30 萬美元。

In addition, we recorded $1.6 million of restructuring expenses during the quarter. The majority of these restructuring charges related to employee severance, equipment transfer, and plant consolidation cost in the Americas segment.

此外，我們在本季認列了 160 萬美元的重整費用。這些重整費用的大部分與美洲事業部的員工資遣、設備移轉以及工廠整併成本相關。

As usual, we show a full reconciliation between our reported results and adjusted operating results in the press release and the appendix following these slides.

如同以往，我們在新聞稿以及本簡報後的附錄中，提供已報告結果與調整後營運結果之間的完整調節表。

Q3 adjusted operating income of $17.2 million was up 21% from last year. On a constant currency basis, adjusted operating income was up $4 million or 30%. In addition, I want to point out that we incurred $1.3 million of expenses related to our procurement project during the quarter. As I mentioned last quarter, the costs are front-end loaded, with savings to follow. Adjusted EPS was $0.22, up $0.07 compared to last year.

第三季調整後營業利益為 1,720 萬美元，較去年同期成長 21%。以固定匯率計算，調整後營業利益增加 400 萬美元或 30%。另外我想指出，本季我們因採購專案產生 130 萬美元費用。如我上季所提到，這些成本在前期較為集中，後續將帶來節省效益。調整後 EPS 為 0.22 美元，較去年增加 0.07 美元。

Overall, we are pleased with the financial performance this quarter. In spite of the lower sales volume, we improved our gross margin and reduced our SG&A spending.

整體而言，我們對本季的財務表現感到滿意。儘管銷售量較低，我們仍提升了毛利率並降低了 SG&A 支出。

In last quarter, we discussed the outlook for a much stronger second half. On a sequential basis, we more than doubled our adjusted Q2 earnings, and remain on track for further improvement in Q4.

在上季，我們討論了下半年將顯著轉強的展望。以季比（QoQ）來看，我們的第二季調整後獲利增加逾一倍，且仍按計畫在第四季進一步改善。

Turning to slide 13, free cash flow in the quarter was $25.6 million. Our cash flow benefited from reductions in working capital. Year to date, we have generated free cash flow of more than $31 million. Our balance sheet provides plenty of liquidity to support our growth and strategic initiatives. We ended the quarter with over $80 million of cash on hand, and a leverage ratio of 0.68.

接著看第 13 頁投影片，本季自由現金流為 2,560 萬美元。我們的現金流受惠於營運資金的降低。年初至今，我們已創造超過 3,100 萬美元的自由現金流。我們的資產負債表提供充足流動性，以支持成長與策略性計畫。本季末我們手上現金超過 8,000 萬美元，槓桿比率為 0.68。

Also, Tom mentioned we repurchased stock during the first two months of the stock buyback program we announced last quarter. In the quarter, we purchased 230,000 shares of stock. We remain committed to balance future share repurchases with our strategic priorities to make investments that will lead to diversification and growth.

另外，Tom 提到我們在上季宣布的庫藏股計畫啟動後的前兩個月進行了股票回購。本季我們買回 230,000 股股票。我們仍致力於在未來的股票回購與我們的策略優先事項之間取得平衡，並進行可帶來分散化與成長的投資。

So let's turn to our fiscal 2016 full-year guidance on slide 14. Tom and I discussed the major challenges in our third quarter, and we expect many to remain throughout fourth quarter.

接下來看第 14 頁投影片，我們 2016 會計年度全年財測指引如下。Tom 和我已討論第三季的主要挑戰，我們預期其中許多將在第四季持續存在。

First, the US dollar has continued to strengthen. We estimate the full-year exchange rate impact at approximately $110 million on the top line. Next, the warm winter weather negatively impacted heating sales. Last, our off-highway and commercial vehicle production schedules in Americas have softened.

首先，美元持續走強。我們估計全年匯率對營收（top line）的影響約為 1.10 億美元。其次，暖冬天氣對暖氣相關銷售造成負面影響。最後，美洲地區的非公路與商用車生產排程已轉弱。

Despite some of the challenging markets, we continue to expect stronger earnings in the fourth quarter, both sequentially and year-over-year. This outlook is based on several factors. Our sales will benefit from new automotive program launches. We expect a favorable tailwind from commodity metals pricing, especially the year-over-year transaction premiums. We will continue to realize manufacturing cost reductions in North America and Brazil. And we anticipate further operating efficiencies in several of our European plants.

儘管部分市場具挑戰性，我們仍預期第四季獲利將更強，無論是季比或年比皆然。此展望基於數項因素。我們的銷售將受惠於新的汽車專案量產上市。我們預期商品金屬價格將帶來有利順風，尤其是年對年的交易溢價。我們將持續在北美與巴西實現製造成本降低。並且我們預期歐洲數座工廠將進一步提升營運效率。

After considering each of the factors, we are adjusting our full-year sales and earnings guidance. We now expect sales to be down 8% to 10% from the prior year. On a constant currency basis, this equates to sales that are flat to down 2%. We expect adjusted operating income to be $62 million to $66 million, slightly lower than our previous guidance of $65 million to $70 million. And on a constant currency basis, this equates to an increase of 2% to 8%. And we anticipate adjusted EPS to be $0.70 to $0.76, or up 11% to 21% compared with the prior year.

在考量各項因素後，我們調整全年銷售與獲利指引。我們目前預期銷售將較去年下降 8% 至 10%。以固定匯率計算，這相當於銷售持平至下降 2%。我們預期調整後營業利益為 6,200 萬至 6,600 萬美元，略低於先前指引的 6,500 萬至 7,000 萬美元。以固定匯率計算，這相當於成長 2% 至 8%。我們並預期調整後 EPS 為 0.70 至 0.76 美元，較去年增加 11% 至 21%。

With that, I will turn it over to Tom to wrap up.

接下來，我把時間交回 Tom 做結語。

Thanks, Mick. There is no doubt that the markets we serve are facing some challenges, and some of them are quite significant. However, despite the decrease in sales during fiscal 2016, I'm very pleased by the performance of our Company.

謝謝你，Mick。毫無疑問，我們所服務的市場正面臨一些挑戰，其中有些相當重大。然而，儘管 2016 會計年度銷售下滑，我對公司表現仍感到非常滿意。

We are in a strong competitive position because of our product portfolio and cost structure. We have significant quote activity in our vehicular business, and are winning our fair share of new programs. Just this past quarter, we won several new auto programs in North America and in Europe, some of which will have production both in-region and in China. We also won business with agricultural equipment customer and specialty vehicle customer in North America, and with two commercial vehicle customers in Europe.

由於我們的產品組合與成本結構，我們處於強勁的競爭地位。我們在車用業務方面有大量報價活動，並且在新專案上贏得了我們應得的份額。就在上一季，我們在北美與歐洲贏得了數個新的汽車專案，其中部分將在區域內以及在中國同時量產。我們也在北美贏得了農業設備客戶與特種車輛客戶的業務，並在歐洲贏得了兩家商用車客戶的業務。

In Asia, in addition to the incremental aluminum oil cooler awards, we won multiple new genset towards and an agriculture equipment award that will include production from our new joint venture. In Brazil, we have been awarded multiple agricultural and construction customer awards.

在亞洲，除了新增的鋁製油冷器得標案之外，我們還贏得了多個新的發電機組（genset）得標案，以及一項農業設備得標案，該案將包含由我們新的合資企業進行生產。在巴西，我們獲得了多項農業與工程建設客戶的得標案。

There are a lot of 2016 market uncertainties, but we are encouraged by our win rate and our Strengthen, Diversify, and Grow initiatives. We are in the middle of our planning process, and will provide fiscal 2017 guidance in our fourth quarter, but we fully anticipate an increase in our earnings next year.

2016年市場存在許多不確定性，但我們對於得標率以及「強化、分散、成長」（Strengthen, Diversify, and Grow）各項倡議感到鼓舞。我們正處於規劃流程中，將在第四季提供2017財年的指引，但我們完全預期明年獲利將會增加。

And, with that, we would like to take your questions.

那麼，接下來我們想請各位提問。

(Operator Instructions). David Leiker, Baird.

（接線員指示）。Baird 的 David Leiker。

Good morning. It's Joe Vruwink for David. Handful of questions on gross margins. Maybe to begin, do you have finer details on the year-over-year improvements, split between maybe pure materials versus any early procurement savings, versus some of these operational gains you cited?

早安。我是代替 David 的 Joe Vruwink。我有幾個關於毛利率的問題。首先，能否提供年對年改善的更細部拆解，例如純材料因素、任何早期採購節省，以及你們提到的一些營運改善所帶來的貢獻？

Yes, Joe. It's Mick. The high level, there's clearly an impact of materials. And we have to -- you got to think of that between the transaction premium and then just the pure LME. Because last year, if you recall, we absorbed really the doubling of the transaction premium, and this year we benefited as that comes down. And that will stay as part of our operating performance going forward. The LME is the more traditional pass-through portion.

好的，Joe。我是 Mick。從高層次來看，材料確實有影響。而且你得把它拆成交易溢價（transaction premium）以及純粹的 LME。因為去年如果你還記得，我們吸收了交易溢價幾乎翻倍的影響，而今年隨著它下降，我們因此受益。而這將在未來持續成為我們營運表現的一部分。LME 則是較傳統的轉嫁（pass-through）部分。

So about $3.5 million was a benefit, the benefit from the LME portion of that. We had over $4 million of plant performance, year-over-year plant improvements and performance in the quarter. Also in that gross margin, which is negative, there's about $1.3 million of our procurement expenses. And so far, that's been a net cost to the Company. We do expect Q4 will start to turn that corner, and start moving towards not only neutral; but beginning in the Q4 and into certainly next fiscal year, a net positive from the procurement projects.

因此大約有350萬美元的受益，來自其中的 LME 部分。本季我們有超過400萬美元的工廠表現改善，也就是年對年的工廠改善與績效提升。另外在毛利率中（這部分是負向的），約有130萬美元是我們的採購費用。到目前為止，這對公司而言是淨成本。我們確實預期第四季會開始扭轉，並開始朝向不僅是持平；而且從第四季開始並延續到下一財年，採購專案將帶來淨正向貢獻。

So hopefully that answers your question.

希望這回答了你的問題。

Yes, that's great detail. I think when you go region by region, you are seeing margin improvement, gross margin improvement, in a lot of the areas the market, and a lot of investors are worried about the most. So, Americas facing the Brazil headwinds, margins are up; Asia, margins are up. Europe is arguably one of the stronger regions, from an end market standpoint, and margins are way up.

是的，這些細節很棒。我想當你按地區逐一檢視時，你會看到在許多市場、也是市場與許多投資人最擔心的那些區域，毛利率其實在改善、毛利率在提升。因此，美洲面臨巴西逆風，毛利率卻上升；亞洲毛利率也上升。歐洲從終端市場角度看可說是較強的區域之一，而毛利率大幅上升。

When you look into next year, as you said, the end market headwinds don't subside. But you are already at the point where things are pretty dicey in a lot of those markets, and there's margin improvement. So, it's probably not too much of a stretch -- correct me if I'm wrong -- to think that a lot of these gains you are realizing already continue at the gross profit line into next year.

當你展望明年，如你所說，終端市場的逆風並未消退。但你們已經處在許多市場情勢相當艱難的階段，卻仍有毛利率改善。所以，認為你們目前已實現的許多改善在明年仍會延續到毛利這一行，應該不算太牽強——如果我說錯請糾正我。

Yes. I think what's really encouraging to us is we've been talking for a while about getting the Company to 16% to 18% gross margin, and, this quarter, getting awfully close to an 18% gross margin. And that's due to the hard work everybody has been doing at the Company to reduce our operating costs, manufacturing costs, SG&A.

是的。我認為真正讓我們感到鼓舞的是，我們談了一段時間要把公司毛利率提升到16%到18%，而本季已非常接近18%的毛利率。這要歸功於公司所有人為降低營運成本、製造成本以及銷售、一般及行政費用（SG&A）所付出的努力。

There's a portion of -- this year, year to date, of our gross margin that's going to be a materials pass-through. But as we look at the numbers, the first two quarters were basically neutral from a materials. And then as I said, Q3 portion of materials was about $3.5 million. That means to us, eventually, we will pass that through to the customer. But everything else, from my side, is sustainable.

今年截至目前，我們的毛利率中有一部分將是材料的轉嫁。但從數字來看，前兩季在材料方面基本上是持平。然後如我所說，第三季材料部分約為350萬美元。這對我們而言意味著，最終我們會把這部分轉嫁給客戶。但除此之外，就我這邊來看，其他都是可持續的。

Tom, would you add anything to that?

Tom，你要補充什麼嗎？

No, I think it's pretty good. And I think we're getting much more confidence in continuing this momentum with our Strengthen, Diversify, and Grow initiatives that are going to keep that momentum on margins increasing, despite potential headwinds.

沒有，我覺得已經說得很好。而且我認為，隨著我們「強化、分散、成長」的各項倡議推進，我們對於延續這股動能更有信心；即使面臨潛在逆風，也能讓毛利率持續提升。

And then just one last question from me. The fiscal 2018 targets and getting EBIT margins to 7% to 8%, that's quite a bit of improvement in essentially two years' time. So any detail maybe on timing? Is it equal between fiscal 2017 and 2018? And then source, whether we should expect maybe equal between COGS and SG&A, or concentrated one way or another. Just any detail on the ramp in margin improvement.

最後我還有一個問題。2018財年的目標是把 EBIT 利潤率提升到7%到8%，這在本質上等於在兩年內要有相當大的改善。所以能否談談時程上的細節？改善會在2017與2018財年之間平均分配嗎？另外就來源而言，我們是否應預期在銷貨成本（COGS）與 SG&A 之間大致平均，或是會更集中在某一端？請提供任何關於利潤率改善爬坡（ramp）的細節。

Joe, it's Mick again. When we announced this, and we discussed the program internally, we had always targeted that we had a fiscal 2018 goal, and a ramp to get there. We think we can get about a quarter of the savings in fiscal 2017, so next fiscal year. But our goal is to have, in fiscal 2018, the $40 million to $50 million of savings. So about a quarter we think we can get next fiscal year, and Tom walked you through. We've got a really good run rate.

Joe，我是 Mick。當我們宣布這件事並在內部討論該計畫時，我們一直以2018財年的目標為準，並規劃達成該目標的爬坡路徑。我們認為在2017財年，也就是下一個財年，可以實現約四分之一的節省。但我們的目標是在2018財年達到4,000萬到5,000萬美元的節省。因此我們認為下一財年可達成約四分之一，而 Tom 也已向你說明。我們目前的執行速度（run rate）非常不錯。

We're about a quarter of the way of our targeted procurement savings; about $7 million run rate of personnel-related cost reductions. And already we see significant improvement just from our plant closure and our ramp-up in Nuevo Laredo, so moving from Illinois to Nuevo Laredo, Mexico. It's going to be -- so that $40 million to $50 million is about -- 50% of it, we are thinking of as roughly procurement. So clearly that's in a cost of goods line.

我們在目標採購節省方面已完成約四分之一；人員相關成本削減的執行速度約為700萬美元。而且我們已經看到因工廠關閉以及在 Nuevo Laredo 的產能爬坡所帶來的顯著改善，也就是把生產從伊利諾伊移轉到墨西哥 Nuevo Laredo。因此那4,000萬到5,000萬美元大約——其中50%我們認為大致來自採購。所以很明顯這會反映在銷貨成本這一行。

The other part is fairly equally split between -- so, say a quarter of it from our plant consolidation operational improvements. That will show up obviously in the gross profit line. And then another quarter-ish of the $40 million to $50 million is SG&A and personnel costs. And that will be split between SG&A and overhead. So I would say it's a good piece up in cost of goods sold, Joe, and also at least a quarter or so in SG&A.

另一部分則相當平均地分配在——也就是說，其中約四分之一來自我們工廠整併帶來的營運改善。這將很明顯地反映在毛利項目上。另外約四分之一、也就是4,000萬至5,000萬美元中的一部分，來自SG&A與人事成本。而這將分攤在SG&A與間接費用之間。所以我會說，Joe，其中相當一部分會體現在銷貨成本上，另外至少約四分之一會在SG&A。

And it seems like you have a lot of visibility on a large dollar piece of a lot of these items. I'm just thinking if you are already at a $7 million personnel run rate, and SG&A is a quarter of total, at $17 million of $11 million, you are most of the way there. Obviously procurement is not a give me, but it seems like you have visibility there. And then the operational gains from plant consolidation, I think Europe in this quarter shows you are getting those. So we would seem like, while nothing is easy, there is visibility on each -- or three of these things.

而且看起來你對這些項目中金額很大的部分有很高的能見度。我只是想，如果你的人事費用目前已經是每期700萬美元的水準，而SG&A占總額的四分之一、也就是1,700萬（在1,100萬之上），那你其實已經完成了大半。顯然採購並不是理所當然，但看起來你在那裡也有能見度。然後工廠整併帶來的營運改善，我認為本季歐洲的表現顯示你正在取得那些成果。所以看起來，雖然沒有一件事是容易的，但對每一項——或其中三項——都有能見度。

Yes, good summary, Joe. That's why I said I'm very confident in our ability to hit these targets going forward.

是的，總結得很好，Joe。這也是我說我對我們未來達成這些目標的能力非常有信心的原因。

Joe, one other thing to add to that. The biggest challenge for us is the ramp rate on any of the savings. So, we launched an early retirement program here, and that was very well received, and that gives us a very good run rate.

Joe，另外補充一點。對我們而言最大的挑戰是任何節省項目的爬坡速度（ramp rate）。因此，我們在這裡推出了提前退休方案，反應非常好，這讓我們得到非常不錯的費用水準（run rate）。

What we're working through now is when all of those individuals, what each of those retirement dates are over the next -- it can be anything from a month out to six months out. Some of those positions will have to be back-filled, as well. So those are the things we need, when we talk about the run rate between now and fiscal 2018.

我們現在正在處理的是，這些人各自的退休日期在接下來——可能從一個月後到六個月後不等。其中一些職位也必須補人（back-fill）。所以當我們談到從現在到2018財年的費用水準（run rate）時，這些就是我們需要考量的事情。

And then on procurement, it's the same thing. Even though we will complete a negotiation with a supplier, there's the whole process of ramping down -- if it is a transition to one supplier or away from one, there's a whole process, obviously, of working off existing inventory and beginning to ramp up. And then you have to get a full year's worth of volume to reach that annualized savings.

然後在採購方面也是一樣。即使我們完成了與供應商的談判，如果是轉換到單一供應商或從某一家轉出，還有一整套逐步降低的流程——顯然包括消化既有庫存並開始逐步拉升。而且你必須取得一整年的採購量，才能達到那個年化節省金額。

Great. That's very helpful. Thanks, guys.

很好。這非常有幫助。謝謝各位。

Brian Sponheimer, Gabelli & Company.

Brian Sponheimer，Gabelli & Company。

One question. You mentioned, with Europe, German auto being a bright spot. And we've clearly seen some real excess inventory building in the US, and elsewhere on the German sedan side. Any concern, as you look into fiscal 2017, that you are going to have to potentially dial back your expectations for what you're seeing from Europe auto, just based on the German luxury makers?

一個問題。你提到在歐洲，德國汽車是一個亮點。而我們顯然看到美國以及其他地方在德國轎車這一端出現相當多的過剩庫存累積。展望2017財年，基於德國豪華車製造商的情況，你是否擔心可能需要下調你對歐洲汽車業務的預期？

We do not see any indications of that, Brian. Right now, we are running 24/7 at two of our facilities that really support those German premiums almost 100%. So we've been able to get on top of that. That's been a big reason for the improvement in Europe's performance because of getting through the operating inefficiencies of that. But right now, we do not see anything that's giving us signal to pull back at all. Clearly, from the releases, and clearly they're not signaling that at all.

Brian，我們沒有看到任何這方面的跡象。目前，我們有兩座幾乎100%支援那些德國高端品牌的工廠是24/7運轉。所以我們已經能夠把那部分掌握住。這也是歐洲表現改善的一個重要原因，因為我們克服了那裡的營運低效率。但就目前而言，我們沒有看到任何訊號顯示需要收縮。從他們發布的資訊來看也很清楚，他們完全沒有釋出那樣的訊號。

Do you have any -- just remind me, do you have any more exposure to diesel versus gas, when it comes to the German luxury manufacturers?

你們是否有——提醒我一下，針對德國豪華車製造商，你們在柴油相對於汽油方面的曝險是否更高？

We supply both, as there is a significant diesel proportion in Europe that we support. But yes, so it's the -- I think it's pretty evenly distributed between -- proportionally between the German OEs, split between diesel and petrol.

我們兩者都有供應，因為歐洲柴油占比相當高，我們也有支援。但對，是的——我認為在德國OEM之間，按比例來看，柴油與汽油的分布相當平均。

Okay. All right. One thing: it's very clear that you have some very defined runway for cost improvement over the course of the next couple of years, and it is bucketed very well. But if you take a step back and take a look at where your shares are trading, and where you expect them to trade. And you've got a building HVAC business that you are currently -- or at least shareholders currently aren't being effectively paid for in the market. Would it ever occur to the Board, or to you, Tom, to consider separating the two businesses to potentially surface that value for that HVAC business?

好的。好。有一點很清楚：未來幾年你們在成本改善方面有非常明確的跑道，而且分類也做得很好。但如果退一步看你們股價目前的交易水準，以及你們預期它應該交易的水準。你們有一個建築HVAC業務，而你們目前——或至少股東目前——在市場上並沒有被有效地反映其價值。董事會或你，Tom，是否曾考慮把兩個事業分拆，以便可能釋放該HVAC業務的價值？

Well, first, let me say that the stock is not trading anywhere near where we expect it to trade, to your opening comment. Building HVAC and the coils business, we are kind of terming the industrial business as a key part of our diversification play. And, yes, it is a different business, versus the B2B aspect of the vehicular side. But it is a more controllable channel that we really like and enjoy; and enjoy the higher margins, less capital intensity, more flexibility we have in bringing new products through those channels.

嗯，首先，針對你開頭的評論，我先說股價目前的交易水準遠遠不是我們預期它應該交易的水準。建築HVAC與盤管（coils）業務，我們把工業業務視為我們多元化策略中的關鍵一環。而且，是的，這確實是一個不同的業務，相較於車用端的B2B屬性。但它是一個我們非常喜歡、也享受的、較可控的通路；我們也享受較高的毛利、較低的資本密集度，以及在這些通路中導入新產品時更高的彈性。

So we feel we really have the right to expand that side of the business and grow that diversification benefit across the whole Company. There are a lot of things that relate between the thermal aspects of components going to vehicular, and systems that we create on the building HVAC side. A natural synergy, we feel, makes it very natural for us to build off that strategy and build a better diversified Company and getting higher mix; and, thus, a better return to our shareholders that's more identified and clearer to our shareholders.

因此，我們認為我們確實有權利去擴大那一端的業務，並把多元化的效益擴展到整個公司。車用零組件的熱管理特性，與我們在建築HVAC端所打造的系統之間，有很多相互關聯之處。我們認為這種天然的協同效應，使我們很自然可以在該策略上持續深化，打造一個更多元化、產品組合更佳的公司；因此，為股東帶來更好的報酬，而且對股東而言更容易辨識、也更清楚。

All right. Thank you for having me on.

好的。謝謝讓我參與。

Mike Shlisky, Seaport Global.

Mike Shlisky，Seaport Global。

I want to start off with a two-part question. First part of it would be on the US Class 8 markets. Could your fiscal fourth-quarter or calendar first quarter be worse than the 20% that you are talking about for the full 2016, given some of the OEMs need to balance their dealer inventories with their production?

我想先從一個兩部分的問題開始。第一部分是關於美國Class 8市場。考量到部分OEM需要在經銷商庫存與其產量之間做平衡，你們的第四財季或曆年第一季是否可能比你們對2016全年所談的下滑20%還要更糟？

And then the other part of the question would be on the building HVAC side. Perhaps some of the heating business may have been lost, back in your fiscal third quarter. But was there any catch-up thus far in your fiscal fourth quarter? It got a little bit colder, at least, in some parts of the country.

第二部分的問題是關於建築HVAC業務。也許在你們第三財季時，部分供暖業務曾經流失。但到目前為止，在你們第四財季是否有任何追回（catch-up）？至少在全國某些地區，天氣確實變得更冷了一些。

Okay, so I want you to repeat the second part of that question, because I was still thinking about the first part when you jumped into (multiple speakers).

好的，所以我想請你重複一下那個問題的第二部分，因為當你插話進來時（多位講者），我還在想第一部分。

Okay, sure. I was just was wondering on the HVAC side, whether -- sure, you did lose some business perhaps in the fourth quarter, because it was a bit warmer than normal. But things have normalized a bit in the first quarter, or the first calendar quarter here. So could you see a catch-up on the HVAC side in your fiscal fourth quarter?

好的，當然。我只是想問在 HVAC 這一塊，是否——當然，你們第四季可能確實流失了一些業務，因為天氣比正常偏暖。但在第一季，或這裡所說的第一個曆年季度，情況已經稍微正常化。所以你們是否可能在你們的會計年度第四季看到 HVAC 這邊出現補回（catch-up）？

Yes, okay, I'm going to let Mick take the second part of that. On the commercial truck in North America, yes, I know there's some reports out that there's inventory issues out there potentially that may slow production rates potentially. I haven't seen anything -- we have not seen anything to say that we're suggesting anything below what we've identified. But I know there's some reports that that's possible, that it could normalize through the second half of the year.

是的，好的，我會讓 Mick 回答第二部分。至於北美的商用卡車，是的，我知道外面有一些報告指出可能存在庫存問題，可能會使生產速率放緩。我沒有看到任何——我們也沒有看到任何跡象顯示我們會低於我們已經指出的水準。但我知道有一些報告說這是有可能的，而且可能在今年下半年趨於正常化。

Right now, our mix of who we supply, we feel comfortable with what we've guided on this 20% number, and we see that in our releases thus far.

就目前我們供應對象的組合而言，我們對於我們所給出的這個 20% 指引數字感到放心，而且我們在迄今的發布中也看到了這一點。

Mick, you want to talk about second portion?

Mick，你要談談第二部分嗎？

Yes, clearly, from the early part -- say, the fall pre-heating season, and when we were with you last, in October, to now -- there was a significant drop in the outlook for not just our sales, but the overall really heating market. And that was due to the early warm winter, first part. We have lowered part of our -- a big portion of our lowered top line and earnings guidance was due to trying to reflect that. Both Q3 and Q4, Mike, is who we tried to take down both numbers.

是的，很明顯，從較早的時期——比如秋季、供暖季前的那段時間，以及我們上次在十月與你們見面，到現在——不僅是我們的銷售展望，整體供暖市場的展望都出現了顯著下滑。而那是由於冬季前段異常偏暖所致。我們下調了部分——我們下調營收與獲利指引中相當大的一部分，就是為了反映這一點。Mike，我們試圖在 Q3 和 Q4 兩個季度都把這兩個數字下調。

Frankly, one of the things we're watching and what are concerned about, we'll need to make sure is that how full that channel is. In the heating season everybody works overtime, pre-heating sales, and you fill the channel from our warehouse to our distributors' warehouse. And the challenge we'll have right now, even though the weather has started to cooperate, is how full the entire channel is, from the distributor back to Modine.

坦白說，我們正在觀察、也擔心的一件事是——我們需要確保——通路的庫存到底有多滿。在供暖季，每個人都加班，做供暖季前的銷售，並把通路從我們的倉庫補到經銷商的倉庫。而我們現在面臨的挑戰是，即使天氣已開始配合，整個通路到底有多滿——從經銷商一路回到 Modine。

So we're not planning on any kind of recovery. We hope we have a conservative forecast. But we have to watch this, call it the channel, how much pull-through we will see.

所以我們並沒有規劃任何形式的回升。我們希望我們的預測是保守的。但我們必須觀察這個——稱之為通路——我們會看到多少實際拉貨（pull-through）。

Okay, great. I also wanted to turn to Europe for a moment. I might have misheard this, but it sounds like you've got some quarters to go here before your Hungary expansion is up and running, maybe even two years, if I heard it right. Are you concerned at all that the market could turn by the time this is all up and running, and that the auto market and truck markets don't last for more than a couple of years here? Or do you feel pretty confident that your long (multiple speakers)?

好的，很好。我也想把話題轉到歐洲一下。我可能聽錯了，但聽起來在你們匈牙利擴產真正投產之前，還有幾個季度要走，甚至可能要兩年，如果我沒聽錯的話。你們是否擔心等到一切都投產時，市場可能已經轉向，而汽車與卡車市場可能撐不了超過這裡的幾年？或者你們是否相當有信心你們的長期（多位講者）？

Well, the expansion is driven by business wins directly, Mike. So we're expanding based on business wins that we're getting right now. So really, I can say here it's a share increase on our part that we need to expand our capacity to meet the demand that's coming. Now, where the market goes at that time, as far as off-peak or below, is the question. But this is not speculative building. It's tied to program wins, so that's the two-year time frame we have to prepare for the launch of new programs.

嗯，這次擴產是直接由我們贏得的業務所驅動的，Mike。所以我們是基於目前正在取得的業務勝出而擴產。因此我可以說，這其實是我們市佔提升的一部分，我們需要擴充產能來滿足即將到來的需求。至於到那個時點市場走向如何——不論是淡季或低於高峰——那是個問題。但這不是投機性建廠。它與專案（program）得標綁定，所以我們才有兩年的時間框架來為新專案的量產導入做準備。

Okay. I also wanted to ask about the share repurchase. Clearly, you bought back at $9, so you clearly were thinking that $9 might have been a little bit [on the value side]. And now we're at -- it looks like we're about $5.50 or less, at this point. Have you considered buying back more shares in pretty short order here, or perhaps entering into some kind of accelerated share repurchase program?

好的。我也想問一下庫藏股回購。很明顯，你們在 9 美元回購，所以你們顯然認為 9 美元可能有點（偏價值面）。而現在我們在——看起來目前大約是 5.50 美元或更低。你們是否考慮在短期內回購更多股票，或是可能進行某種加速庫藏股回購（accelerated share repurchase）計畫？

Yes, it's Mick, Mike. We're clearly -- well, we'll balance any of the -- or obviously organic growth, but also acquisition opportunities. While balancing those, we will clearly be more aggressive on the share buyback side.

是的，Mike，我是 Mick。我們很明確——嗯，我們會在——當然在有機成長以及併購機會之間取得平衡。在平衡這些之際，我們會在股票回購方面更積極。

Okay. And I've got one last one for you on M&A. Can you give us a sense as to how that that's looking right now? Are you able to, with your good cash generation, find some good deals out there on some of the smaller companies out there, given where the overall market is today?

好的。我最後還有一個關於併購（M&A）的问题。你能否讓我們了解一下目前看起來如何？以你們良好的現金創造能力，在當前整體市場環境下，你們是否能在一些較小公司中找到不錯的交易機會？

Well, we've been, for a couple years now, really been aggressively evaluating opportunities in this space and being very disciplined about it. And there are opportunities. Obviously, we're very pleased to announce the Puxin. Although smallish, it really fits a portfolio need that we have in the Asia segment. But yes, we see opportunities and we are aggressively pursuing those. And we will report when we can, as appropriate, what we see. But, yes, we think there are clear opportunities.

嗯，過去幾年，我們一直在這個領域相當積極地評估機會，而且非常自律。確實有機會。顯然，我們也很高興宣布 Puxin。雖然規模不大，但它非常符合我們在亞洲事業部的產品組合需求。不過是的，我們看到機會，也正在積極追求。在適當的時候、在我們可以的情況下，我們會就我們所看到的進行報告。但，是的，我們認為確實存在明確的機會。

Okay. Fair enough. I'll leave it there, guys. Thank you.

好的。可以。我就先到這裡，各位。謝謝。

I'm showing no further questions at this time.

我這邊顯示目前沒有其他問題。

I would now like to turn the call back over to Ms. Kathy Powers.

我現在想把電話會議交回給 Kathy Powers 女士。

Thank you. This concludes today's call. Thank you for joining us this morning, and thanks for your interest in Modine. Goodbye.

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。