Modine Manufacturing Company (MOD) 2017 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company's second-quarter fiscal 2017 conference call. (Operator Instructions). As a reminder, this conference call is being recorded.

各位女士、先生，早安，歡迎參加 Modine Manufacturing Company 2017 會計年度第二季財報電話會議。（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, Investor Relations, and Tax.

現在我想把會議交給今天的主持人——Kathy Powers 女士，她是副總裁、財務長、投資人關係與稅務主管。

Thank you. And thank you for joining us today for Modine's second-quarter fiscal 2017 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 with 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。也感謝各位今天加入 Modine 2017 會計年度第二季財報電話會議。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）暨財務長 Mick Lucareli。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已上傳的 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.

另外，若您需要在會議結束前提前離線，會議重播將於電話會議結束後約 2 小時起，透過我們的網站提供。

On slide 2 is an outline for today's call. Tom and Mick will provide comments on our second-quarter results; an update on our Strengthen, Diversify, and Grow strategic initiative; and review our revenue and earnings guidance for fiscal 2017. At the end of the call, there will be a question-and-answer session.

投影片第 2 頁為今天電話會議的大綱。Tom 與 Mick 將就我們第二季的結果發表評論；更新我們「強化、多元化與成長（Strengthen, Diversify, and Grow）」策略倡議的進展；並檢視我們 2017 會計年度的營收與獲利指引。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 our 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，相關內容如同我們的財報新聞稿所述，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 our second-quarter results and provide an update on our Strengthen, Diversify, and Grow strategic transformation, including the pending acquisition of Luvata HTS announced in early September. After that, Mick will provide a more detailed review of our consolidated financial results and review our revenue and earnings guidance for fiscal 2017. I will then provide a few closing remarks prior to opening the call for questions.

謝謝 Kathy，各位早安。今天的電話會議中，我將討論我們第二季的業績，並提供我們「強化、多元化與成長」策略轉型的最新進展，包括 9 月初宣布、目前仍在進行中的 Luvata HTS 擬議收購案。之後 Mick 將更詳細檢視我們的合併財務結果，並回顧 2017 會計年度的營收與獲利指引。接著在開放提問前，我會做幾點結語。

Like many other global industrial companies, we experienced a continuation of weak market conditions last quarter, especially in North and South America. Global off-highway markets continue to post significant year-over-year declines, except in China, where recent infrastructure investments are driving meaningful improvements in construction equipment volumes.

與許多其他全球工業公司一樣，我們在上季持續面臨疲弱的市場環境，尤其是在北美與南美。全球非公路（off-highway）市場仍呈現顯著的年對年下滑，唯獨中國例外；近期的基礎建設投資正帶動工程機械銷量出現明顯改善。

Commercial vehicle markets are mixed, with Asia and Europe seeing solid growth, while North America continues to be weak. Unfortunately, we're not expecting to see improvements in the North America heavy-duty truck market until the second half of calendar 2017. On the positive side, global automotive markets continue to be strong, particularly in Europe and China.

商用車市場表現分歧：亞洲與歐洲呈現穩健成長，而北美仍然疲弱。不幸的是，我們預期北美重型卡車市場要到 2017 年曆年下半年才會出現改善。正面的一點是，全球汽車市場仍然強勁，尤其是歐洲與中國。

Building HVAC markets have remained flat from the prior year, with weaker-than-expected preseason stocking sales of heating products in North America.

建築 HVAC 市場與去年同期持平，但北美暖氣產品的旺季前備貨銷售低於預期。

Overall, our sales in the second quarter were down 4% from the prior year on a constant currency basis. The largest decline was in our Americas segment, driven by two things: market weakness in heavy-duty trucks and in the off-highway market; and slower-than-expected new program launches.

整體而言，以固定匯率計算，我們第二季銷售額較去年同期下降 4%。最大降幅出現在美洲事業部，主要由兩項因素所致：重型卡車與非公路市場的疲弱；以及新專案導入進度慢於預期。

Our adjusted operating income was $3.6 million, down $4.5 million from the prior year. Adjusted loss per share was $0.01 for the quarter, down $0.05 from the prior year.

我們的調整後營業利益為 360 萬美元，較去年同期減少 450 萬美元。本季調整後每股虧損為 0.01 美元，較去年同期下滑 0.05 美元。

Let me be clear up front: I am disappointed with the performance of this quarter. In addition to the volume decline, we also experienced temporary operational inefficiencies that I will describe in more detail during my segment review. Despite these challenges, I have high confidence in our ability to deliver a much improved second half, and am pleased that we'll be able to maintain our full-year guidance.

我先把話說清楚：我對本季的表現感到失望。除了出貨量下滑之外，我們也遭遇了暫時性的營運效率不彰，我會在各事業部回顧時更詳細說明。儘管面臨這些挑戰，我對我們在下半年交出大幅改善的成績深具信心，也很高興我們仍能維持全年指引不變。

We are addressing these challenges head-on; and, in most circumstances, have already corrected the issues. We're able to improve, even in the face of continued market weakness, due to our focus on delivering the benefits outlined in our Strengthen, Diversify, and Grow strategy. We have achieved significant and sustainable savings to date from this program, and expect this to be evident in our second-half results.

我們正正面迎戰這些挑戰；而且在多數情況下，問題已經修正完成。即使市場持續疲弱，我們仍能改善，原因在於我們專注於落實「強化、多元化與成長」策略所列出的效益。迄今我們已透過此計畫達成顯著且可持續的節省，並預期這些成果將在下半年業績中清楚反映。

Now I'd like to briefly review the segment results. Turning to page 6, as I mentioned, sales for the Americas segment were lower than expected, and our gross margins were also impacted by temporary operating inefficiencies. This was a very complex quarter for the North America team due mostly to challenging product transfers, multiple program launches, and wind-downs. We are actively addressing these issues, with the majority of these inefficiencies now corrected. This will contribute to a second-half earnings improvement.

接下來我想簡要回顧各事業部表現。請看第 6 頁。如我所提，美洲事業部的銷售低於預期，而毛利率也受到暫時性營運效率不彰的影響。對北美團隊而言，這是一個非常複雜的季度，主要因為具挑戰性的產品移轉、多項專案同時導入，以及部分專案的收尾（wind-down）。我們正積極處理這些問題，目前大多數效率不彰已修正完成，這將有助於下半年獲利改善。

Sales decreased 13% year-over-year on a constant currency basis, primarily due to continued weakness in the commercial vehicle and off-highway markets, partially offset by higher sales to automotive customers. Sales to commercial vehicle customers in North America were down 38% from the prior year, and off-highway sales were down 20%. Brazil continues to be in a recession, with declines in the commercial vehicle and automotive markets. Our largest year-over-year decline in Brazil was in our aftermarket business, which was down 26% versus the prior year.

以固定匯率計算，銷售額年對年下降 13%，主要因商用車與非公路市場持續疲弱，部分被對汽車客戶較高的銷售所抵銷。北美對商用車客戶的銷售較去年同期下降 38%，非公路銷售下降 20%。巴西仍處於衰退之中，商用車與汽車市場皆下滑。我們在巴西年對年降幅最大的是售後市場業務，較去年同期下降 26%。

Markets were down slightly, but the largest driver relating to the aftermarket decline was our SAP conversion in Brazil, which necessitated an extended shutdown for cut-over and implementation of a new warehouse management system. Modine Brazil is our last business unit to covert to SAP and we expect aftermarket sales to return to normal volumes for the second half of the year.

市場僅小幅下滑，但造成售後市場下滑的最大因素是我們在巴西進行 SAP 轉換，為了切換與導入新的倉儲管理系統，必須延長停機時間。Modine 巴西是我們最後一個轉換至 SAP 的事業單位，我們預期售後市場銷售將在今年下半年恢復至正常水準。

Gross margin declined by 370 basis points to 12.6%, due to the drop in sales volume and temporary operating inefficiencies in the quarter. As I mentioned earlier, we had higher manufacturing costs related to the transfer of production from Washington, Iowa, along with higher scrap and labor inefficiencies in both launches and planned reductions in sales. These concerns are now well in hand. In addition, we are ahead of schedule in transferring production from Washington, Iowa, and expect to cease production in the plant this quarter.

毛利率下降 370 個基點至 12.6%，原因在於銷售量下滑，以及本季暫時性的營運效率不彰。如先前所述，我們因自愛荷華州華盛頓市（Washington, Iowa）移轉生產而產生較高的製造成本，同時在新案導入以及因應計畫性銷售下調的過程中，廢料增加與勞動效率不彰也推升成本。這些疑慮目前已獲妥善控制。此外，我們在從愛荷華州華盛頓市移轉生產方面進度超前，並預期本季將停止該廠生產。

SG&A was up $900,000 or 6%, primarily due to a $1.6 million increase in a legal reserve in Brazil for a previously disclosed matter. This was partially offset by savings from our SDG initiatives.

SG&A 增加 90 萬美元或 6%，主要因巴西就先前已揭露事項提列的法律準備金增加 160 萬美元。此影響部分被我們 SDG 計畫帶來的節省所抵銷。

Adjusted operating income in the Americas segment was $1.8 million, down $6.9 million from the prior year. As previously discussed, this is due to lower gross profit resulting from the lower sales volume and operating inefficiencies in the quarter.

美洲事業部的調整後營業利益為 180 萬美元，較去年同期減少 690 萬美元。如前所述，主要原因是銷售量下降與本季營運效率不彰，導致毛利減少。

Although we are not planning for significant market improvements in the second half of the year, we are already seeing significant improvements in our operating performance based on the actions addressing the issues I described earlier. We expect to see an improvement in volume from the product launches and in sales mix, along with continued benefits from the closure of the Washington, Iowa, plant and transfer of production to our expanded facility in Nuevo Laredo, Mexico. I just returned from Nuevo Laredo, and I was very pleased with the progress the team is making in launching our new facility.

雖然我們並未規劃下半年市場會有顯著改善，但基於我們針對前述問題所採取的行動，我們已看到營運表現出現明顯改善。我們預期產品導入將帶動出貨量提升與銷售組合改善，同時也將持續受惠於關閉愛荷華州華盛頓市工廠，以及將生產移轉至我們在墨西哥新拉雷多（Nuevo Laredo）擴建後的廠房。我剛從新拉雷多返回，對團隊在新廠導入方面的進展感到非常滿意。

Finally, we remain diligent in our cost reduction efforts, and we will continue to benefit from lower compensation-related expense due to headcount reduction.

最後，我們仍嚴格執行成本削減工作，並將持續受惠於因人力精簡而降低的薪酬相關費用。

Please turn to page 7. Sales for our Europe segment was down 3% in the second quarter on a constant currency basis as a result of planned program wind-downs and lower sales to off-highway customers. Our automotive sales were flat during the quarter as market-related volume increases were offset by a $4 million decrease in BMW modules, as this wind-down of production nears completion.

請翻到第 7 頁。以固定匯率計算，我們歐洲事業部第二季銷售額下降 3%，原因是計畫性的專案收尾（wind-down）以及對非公路客戶的銷售降低。本季我們的汽車業務銷售持平，因市場帶動的出貨量增加被 BMW 模組銷售減少 400 萬美元所抵銷，這是因為該項生產收尾已接近完成。

Gross margin improved by 160 basis points from the prior year, despite the decrease in sales. This improvement was due to both favorable sales mix and operating performance.

儘管銷售下滑，毛利率仍較前一年提升160個基點。此改善係由於有利的銷售組合與營運表現共同帶動。

The positive sales mix was due in part to the planned reduction of the low-margin Origami commercial vehicle radiator program and higher volumes of automotive oil coolers. The performance improvement was largely due to procurement savings and lower expedited freight as compared to the prior year.

正向的銷售組合部分來自於按計畫縮減低毛利的Origami商用車散熱器專案，以及汽車用機油冷卻器出貨量增加。績效改善主要歸因於採購節省，以及相較前一年較低的緊急空運費用。

I continue to be pleased with the operating performance of the European segment. Adjusted operating income was up $400,000 to $5.5 million, due primarily to the higher gross profit. We're seeing ongoing growth in our automotive engine business, and we see further opportunities in the market as Europe automotive OEs intensify their development of electric vehicles, where Modine is well-positioned with our proven technology for this growing market.

我仍對歐洲事業部的營運表現感到滿意。調整後營業利益增加40萬美元至550萬美元，主要由較高的毛利所帶動。我們的汽車引擎業務持續成長；同時，隨著歐洲汽車原廠（OE）加速電動車開發，我們也看到市場上更多機會。Modine憑藉已驗證的技術，在此成長市場中具備良好布局。

In addition, I am pleased to announce that we were awarded our first business win in Europe with our new global commercial vehicle radiator platform. As I previously mentioned, our focus is on expanding our low-cost country footprint in Hungary in order to offer the best possible products to our commercial vehicle customers at a competitive price. This win, along with other awards in India, China, and North America, validates our commercial vehicle radiator strategy.

此外，我很高興宣布，我們以全新的全球商用車散熱器平台在歐洲取得首個業務得標。如我先前所提，我們的重點是擴大在匈牙利的低成本國家據點，以具競爭力的價格，為商用車客戶提供最佳產品。此一得標，連同在印度、中國與北美的其他獲獎案，驗證了我們的商用車散熱器策略。

Please turn to page 8. Sales for our Asia segment were up 41% compared to the prior year, on a constant currency basis. This improvement was primarily related to higher sales to automotive and off-highway customers in China, and incremental sales related to our new joint venture. We continue to see strong volumes for our automotive products from both market improvements and launch activities, particularly for automotive oil coolers. We are pleased with the growth of our Asia segment, and expect this high growth rate to continue.

請翻到第8頁。以固定匯率計算，我們亞洲事業部的銷售較前一年成長41%。此改善主要與在中國對汽車與非公路（off-highway）客戶的銷售增加，以及與新合資企業相關的新增銷售有關。我們持續看到汽車產品的強勁出貨量，來源包括市場回溫與新產品導入活動，尤其是汽車用機油冷卻器。我們對亞洲事業部的成長感到滿意，並預期此高成長率將持續。

In addition, we're finally starting to see improvements in the construction market in China, with substantial increases in the sale of excavators. We have a strong position in this market which has been depressed for several years, and I am encouraged that we are finally seeing market and volume improvement.

此外，我們終於開始看到中國建築市場改善，挖掘機銷售大幅增加。我們在這個已低迷數年的市場中具備強勢地位；看到市場與出貨量終於回升，令我備感鼓舞。

The higher sales volume led to a $1.6 million improvement in gross profit, or a 76% increase from the prior year. Gross margin improved by 310 basis points to 14.9%. Operating income for the Asia segment increased $2 million for the second quarter compared to the prior year, primarily due to higher sales volumes and lower SG&A expenses. I'm very pleased with the progress that our Asia team is making across the region in growing our business.

較高的銷售量帶動毛利增加160萬美元，較前一年成長76%。毛利率提升310個基點至14.9%。亞洲事業部第二季營業利益較前一年增加200萬美元，主要由較高的銷售量與較低的SG&A費用所致。我對亞洲團隊在區域內推動業務成長所取得的進展感到非常滿意。

Turning to page 9, sales for our Building HVAC segment were up approximately 1% on a constant currency basis. In North America, there were lower sales of heating products during the preseason stocking season versus the prior year, and a lower sales of ventilation products for the school market, as our Canadian competitors benefited from the weaker Canadian dollar. This was offset by higher sales of both cooling and ventilation products in the UK.

接著看第9頁，以固定匯率計算，我們建築HVAC事業部的銷售約成長1%。在北美，預先備貨季期間的暖氣產品銷售較前一年降低；同時，學校市場的通風產品銷售也較低，因加幣走弱使加拿大競爭對手受益。上述影響被英國冷卻與通風產品銷售增加所抵銷。

Our team is focused on correcting the decline in gross margin, which fell to 25.8% in the quarter. This decrease was due mainly to product mix, as cooling products in the UK generally have lower margins than North American heating products. UK margins continue to be pressured by the labor inefficiencies, which we are actively addressing. Also, we have higher year-over-year depreciation expense related to the replacement assets associated with the Airedale fire.

我們的團隊正專注於改善毛利率下滑的情況，本季毛利率降至25.8%。此下降主要由產品組合所致，因英國的冷卻產品毛利通常低於北美的暖氣產品。英國毛利率仍受到勞動效率不佳的壓力，我們正積極處理。此外，與Airedale火災相關的替換資產使折舊費用年增。

Similar to the Americas segment, we expect to see significant sales and margin improvement in the second half of the year, particularly since that is when we customarily have stronger heating sales. We have put some additional resources and expertise in this segment, and are focused on making improvements to our UK business. This includes implementing aggressive pricing practices, reducing headcount significantly in both of our UK locations, and implementing across-the-board overhead reduction and spending limits. We expect that these actions will quickly result in improved profitability for this segment starting in the third quarter, with the full effect in the fourth quarter.

與美洲事業部類似，我們預期下半年銷售與毛利率將顯著改善，尤其因為下半年通常是暖氣產品銷售較強的時期。我們已在此事業部投入額外資源與專業能力，並專注於改善英國業務，包括採取更積極的定價作法、在英國兩個據點大幅縮減人力，以及全面推動間接費用削減與支出上限。我們預期這些措施將自第三季起迅速提升該事業部獲利能力，並於第四季完全反映。

Please turn to page 10. Before turning it over to Mick, I'd like to give an update on our Strengthen, Diversify, and Grow objectives, including our pending Luvata HTS acquisition.

請翻到第10頁。在交給Mick之前，我想就我們的「強化、分散與成長」（Strengthen, Diversify, and Grow）目標提供最新進度，包括我們尚待完成的Luvata HTS收購案。

As announced on September 6, we have entered into an agreement to acquire Luvata HTS, a leading manufacturer of commercial and industrial coils, coolers, and related products, primarily for the HVAC&R markets. This acquisition brings together all of the key attributes of our Strengthen, Diversify, and Grow strategy, and is a key component in the transformation of our business into a more diversified thermal management company.

如9月6日所宣布，我們已簽訂協議收購Luvata HTS。該公司為商用與工業用盤管、冷卻器及相關產品的領先製造商，主要服務HVAC&R市場。此收購結合了我們「強化、分散與成長」策略的所有關鍵要素，並是將公司轉型為更為多元化的熱管理企業之重要一環。

After the acquisition is completed, approximately 40% of our revenue will be from sales to industrial end markets, which is directly in line with the goals laid out in conjunction with our SDG framework. Luvata HTS will diversify our customer base, which is currently relatively concentrated in the vehicular segment; and will also reduce our exposure to these cyclical markets. Subject to customary closing conditions, we expect this acquisition and related financing to close by the end of this calendar year.

收購完成後，約40%的營收將來自工業終端市場的銷售，這與我們SDG架構所設定的目標直接一致。Luvata HTS將分散我們目前相對集中於車用事業的客戶基礎，並降低我們對這些景氣循環市場的曝險。在符合一般交割條件之前提下，我們預期本次收購及相關融資將於本曆年年底前完成交割。

We are also on target to achieve gross cost reductions of $40 million to $50 million, designed to help move us toward a higher operating margin of 7% to 8%. In fact, we will benefit yet this fiscal year from a large portion of the cost reductions which will support our strong second-half earnings forecast.

我們也按計畫推進總成本削減4,000萬至5,000萬美元，旨在協助我們朝7%至8%的較高營業利益率邁進。事實上，本會計年度我們將受益於其中相當大一部分的成本削減，這將支持我們對下半年強勁獲利的預測。

As a reminder, our operating margin target is ultimately dependent upon revenue growth, since the metric is net of other economic factors. To date, we have identified or implemented actions that will lead to $40 million of total gross savings on an annual run rate basis.

提醒一下，我們的營業利益率目標最終仍取決於營收成長，因該指標已扣除其他經濟因素。迄今為止，我們已辨識或已執行可在年度化運行率（annual run rate）基礎上帶來總計4,000萬美元總節省的措施。

To achieve these savings, we have focused on SG&A reductions, manufacturing footprint savings, and our global procurement initiative. Our team in North America has accelerated the timetable for the closure of the Washington, Iowa, plant. This production is being transferred to other Modine facilities and the plant will be closed during our third fiscal quarter, as I mentioned earlier.

為達成這些節省，我們聚焦於SG&A削減、製造據點（footprint）節省，以及全球採購倡議。北美團隊已加速關閉愛荷華州華盛頓（Washington, Iowa）工廠的時程。正如我先前提到的，該工廠的產能正移轉至其他Modine設施，並將於我們第三個會計季度期間關廠。

We're also making changes to our European region, transferring production of certain product lines from our plant in Pontevico, Italy, to one of our two facilities in Hungary. We continue to work on our plant expansions in Hungary and Mexico, and are actively quoting from these cost-competitive facilities.

我們也在歐洲區域進行調整，將部分產品線的生產自義大利Pontevico工廠移轉至匈牙利兩座工廠之一。我們持續推進匈牙利與墨西哥的工廠擴建，並正積極以這些具成本競爭力的設施進行報價。

We have achieved significant savings from our global procurement initiative, and we are still identifying and negotiating additional savings as we work through a wide range of product and commodity value streams. The procurement teams have done an excellent job in driving these savings, even in markets where volumes were down year-over-year.

我們已透過全球採購倡議取得顯著節省，且在涵蓋廣泛的產品與大宗商品價值流（value streams）推進過程中，仍持續辨識並協商額外節省。採購團隊在推動這些節省方面表現出色，即使在出貨量年減的市場亦然。

We announced the Strengthen, Diversify, and Grow strategic framework one year ago, and remain fully confident we'll be able to achieve the objectives outlined in that program within the specified time frame.

我們於一年前宣布「強化、分散與成長」策略架構，並仍完全有信心能在既定時程內達成該計畫所列目標。

With that, I'd like to turn it over to Mick for an overview of our consolidated financial results and review of our fiscal 2017 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，並回顧我們對2017會計年度的財測指引。

Thanks, Tom, and good morning. Please turn to slide 12. Our financial results on this page have been adjusted to exclude the non-cash charge of $39 million related to a voluntary pension lump sum payout, which occurred in the second quarter of last year. This payout was done to reduce the size, risk, and costs associated with our U.S. pension plans and we succeeded by reducing our pension obligation by over $60 million. Our U.S. GAAP income statement is included in the appendix of this presentation and our earnings release.

謝謝你，Tom，大家早安。請翻到投影片12。本頁的財務結果已調整，排除與前一年度第二季發生之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。此給付旨在降低與我們美國退休金計畫相關的規模、風險與成本；我們也成功將退休金義務減少逾6,000萬美元。我們的美國GAAP損益表已收錄於本簡報與財報新聞稿的附錄中。

Starting with the top-line, our second-quarter sales decreased due to the continued weakness in certain end markets and program wind-downs in Europe. Sales decreased 4% on a constant currency basis, excluding an unfavorable currency exchange impact of $2.6 million. In our Americas segment, we continue to see lower sales in the North American commercial vehicle and off-highway markets. We also saw a temporary decrease in our aftermarket sales in Brazil, but expect these volumes to come back in the second half of the year.

先從營收（top-line）來看，由於部分終端市場持續疲弱，以及歐洲部分專案逐步結束，我們第二季銷售下滑。若以固定匯率計算，銷售下滑 4%，其中不利的匯率換算影響為 260 萬美元（已排除）。在美洲事業部，我們持續看到北美商用車與非道路（off-highway）市場的銷售較低。我們也看到巴西售後市場銷售短暫下滑，但預期這些量能將在下半年回升。

Lower sales in Europe were primarily driven by a decline in off-highway sales and the planned wind-down of certain programs. These declines were partially offset by market growth across our automotive business. We also experienced strong growth in Asia due to higher launch volumes of our automotive engine products, and some recovery in the China construction market.

歐洲銷售下滑主要是由於非道路（off-highway）銷售下降，以及部分專案按計畫逐步結束所致。這些下滑部分被我們汽車業務的市場成長所抵銷。我們在亞洲也因汽車引擎產品的上市（launch）量增加而出現強勁成長，且中國建築市場亦有部分復甦。

The gross margin decline of 120 basis points was somewhat higher than we would have normally anticipated, but we believe the dip is temporary in nature. We had a normal fixed cost absorption impact due to the decline in sales volume.

毛利率下滑 120 個基點，幅度略高於我們通常的預期，但我們認為這次下滑屬於暫時性。我們因銷售量下降而出現正常的固定成本吸收（fixed cost absorption）不利影響。

In addition, and as discussed last quarter, we passed along lower material cost to our customers. Last, there was an additional impact from temporary production inefficiencies in several plants, primarily in the Americas and Building HVAC segments.

此外，如同上季所討論，我們已將較低的材料成本轉嫁（passed along）給客戶。最後，數座工廠出現暫時性的生產效率不佳，帶來額外影響，主要發生在美洲與建築 HVAC 事業部。

In the Americas, challenges were primarily due to higher labor costs related to Washington, Iowa product transfer, along with scrap and labor costs related to new program launches.

在美洲，挑戰主要來自華盛頓州、愛荷華州產品移轉相關的較高勞動成本，以及新專案導入（launch）所產生的報廢（scrap）與勞動成本。

In Building HVAC, our new leadership team is working to address labor inefficiencies and improve through-put in our two UK facilities. As Tom said, we are taking actions to address these issues, and expect significant improvement in the second half of the year. I am pleased to report the team's hard work on our procurement initiatives is generating savings, and helped to offset the operating challenges.

在建築 HVAC 方面，我們新的領導團隊正著手改善英國兩座廠的勞動效率不佳問題，並提升產能通過量（through-put）。如 Tom 所說，我們正在採取行動解決這些問題，並預期下半年將有顯著改善。我也很高興回報，團隊在採購（procurement）計畫上的努力正帶來節省，並有助於抵銷營運上的挑戰。

Moving on to SG&A, we are benefiting from our Strengthen, Diversify, and Grow initiatives, along with a relentless focus on cost control. The reported SG&A of $48.7 million includes two nonrecurring items. First, we increased our legal reserve in Brazil by $1.6 million, based on our current estimate of the cost that will be incurred to resolve this previously disclosed matter. In addition, we incurred professional fees of $3 million related to due diligence and integration costs for our planned acquisition of Luvata Heat Transfer Solutions.

接著談 SG&A（銷售、一般及行政費用），我們受惠於「強化、分散與成長」（Strengthen, Diversify, and Grow；SDG）計畫，以及對成本控管的持續專注。報告的 SG&A 為 4,870 萬美元，包含兩項一次性（nonrecurring）項目。第一，我們依據目前對解決先前已揭露事項所需成本的估計，在巴西增加 160 萬美元的法律準備（legal reserve）。此外，針對我們規劃收購 Luvata Heat Transfer Solutions 的盡職調查與整合成本，我們發生 300 萬美元的專業服務費用。

Excluding these items, core SG&A was 4% lower than the prior year. Please note that during the quarter we recorded $2.1 million of restructuring expenses. These costs relate to the equipment transfer and plant consolidation costs in the Americas, and severance expenses in the Americas Building HVAC and Corporate.

排除上述項目後，核心 SG&A 較去年同期下降 4%。請注意，本季我們認列 210 萬美元的重整費用（restructuring expenses）。這些成本與美洲的設備移轉與工廠整併成本，以及美洲建築 HVAC 與公司層級（Corporate）的資遣費用相關。

Finally, we recorded a gain on an asset sale of $1.2 million as we sold a manufacturing facility in Europe during the quarter. Consistent with past practice, this gain was not included in our adjusted operating income.

最後，我們在本季出售歐洲一座製造設施，認列 120 萬美元的資產出售利益。依照過往慣例，該利益未納入我們的調整後營業利益（adjusted operating income）。

Second-quarter adjusted operating income of $3.6 million was down $4.5 million, and our adjusted loss per share of $0.01 was down $0.05 compared to last year. The lower table on slide 12 shows the walk of our adjusted operating income. As usual, we have included a full reconciliation between our reported results and adjusted operating results in the appendix.

第二季調整後營業利益為 360 萬美元，較去年減少 450 萬美元；調整後每股虧損（adjusted loss per share）為 0.01 美元，較去年下降 0.05 美元。第 12 頁投影片下方表格顯示我們調整後營業利益的變動橋接（walk）。如同以往，我們在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。

This was clearly a difficult quarter, as volume challenges in both the Americans and Building HVAC segments were compounded by the impact of unplanned production inefficiencies in certain plants.

這顯然是一個艱難的季度，因為美洲與建築 HVAC 兩個事業部的出貨量挑戰，再加上部分工廠非計畫性的生產效率不佳影響，使情況更加嚴峻。

That being said, I was pleased with our cost control, and we continue to see the positive impacts of our SDG initiatives. Similar to the past few years, we do anticipate a stronger second half of the year, and I will go over those details with you in a minute.

即便如此，我對我們的成本控管感到滿意，且我們持續看到 SDG 計畫帶來的正面效益。與過去幾年類似，我們預期下半年會更強勁，我稍後會為各位說明細節。

Turning to slide 13. Free cash flow in the quarter was $800,000, which is down from $18.5 million last year. This is due to the combination of several items, some of which are timing-related. First, we had lower cash earnings in the quarter. Next, operating working capital requirements were $3 million higher. There were also other unfavorable changes in other working capital, including compensation and income tax accruals. And finally, capital expenditures were $3 million higher than the prior year, which is primarily timing-related.

請看第 13 頁投影片。本季自由現金流為 80 萬美元，低於去年同期的 1,850 萬美元。這是多項因素共同造成，其中部分與時點（timing）相關。首先，本季現金獲利較低。其次，營運周轉資金需求增加 300 萬美元。此外，其他周轉資金也出現不利變動，包括薪酬與所得稅應計（accruals）。最後，資本支出較去年增加 300 萬美元，主要亦屬時點因素。

Please note that we received $4.3 million of cash proceeds from the sale of a European manufacturing facility, which I mentioned earlier. These proceeds are not included in our free cash flow calculation.

請注意，我們從出售歐洲製造設施取得 430 萬美元現金收入（我先前已提及）。這些收入未納入我們的自由現金流計算。

We expect our full-year capital spending will remain in the $60 million range. We continue to forecast another positive year of free cash flow, mainly driven by the stronger second-half earnings. And our balance sheet provides the liquidity necessary to support our growth and diversification initiatives, specifically the announced acquisition of Luvata HTS.

我們預期全年資本支出將維持在約 6,000 萬美元的水準。我們仍預測全年自由現金流將為正，主要由下半年較強的獲利所帶動。同時，我們的資產負債表提供支持成長與分散化計畫所需的流動性，特別是已宣布的 Luvata HTS 收購案。

$108 million in net debt was up $14.3 million from prior year-end. We also ended the quarter with $63 million of cash, and a net leverage ratio of one.

淨負債 1.08 億美元，較前一會計年度年底增加 1,430 萬美元。本季末我們亦持有 6,300 萬美元現金，淨槓桿比率（net leverage ratio）為 1。

Now let's turn to fiscal 2017 full-year guidance on slide 14. First, we are confirming our fiscal 2017 full-year sales and earnings guidance. We expect sales to be down 1% to up 3% from the prior year. Throughout the Americas segment, we expect difficult market conditions to continue. This includes ongoing weakness in the North American off-highway and commercial vehicle markets, along with difficult economic conditions in Brazil. Currently our revenue is trending toward the lower end of our full-year range, but the impact will be largely offset by continued cost reductions and operational improvements.

接著看第 14 頁投影片的 2017 會計年度全年指引。首先，我們確認 2017 會計年度全年銷售與獲利指引不變。我們預期銷售較去年下降 1% 至成長 3%。在美洲事業部，我們預期艱困的市場狀況將持續，包括北美非道路（off-highway）與商用車市場持續疲弱，以及巴西艱難的經濟環境。目前我們的營收走勢偏向全年區間的低端，但其影響將大致被持續的成本降低與營運改善所抵銷。

Therefore, we continue to expect adjusted operating income to be $65 million to $71 million. This equates to an increase of 3% to 12% over the prior year. We will continue to drive margin and SG&A improvements through actions planned as part of our SDG initiative. We expect our adjusted EPS to be between $0.77 and $0.87. With our full-year tax expense to run between $12 million and $14 million.

因此，我們仍預期調整後營業利益為 6,500 萬至 7,100 萬美元，較去年增加 3% 至 12%。我們將持續透過 SDG 計畫所規劃的行動，推動毛利率與 SG&A 的改善。我們預期調整後 EPS 介於 0.77 至 0.87 美元之間，全年所得稅費用預計介於 1,200 萬至 1,400 萬美元。

Following the pattern of last year, we expect a much stronger second half of the year. First, we anticipate incremental sales and earnings as we approach the heating season in our Building HVAC segment. We expect our top-line will benefit from the continued ramp-up of program launches in Asia and improvements in the construction equipment market.

延續去年的型態，我們預期下半年將明顯更強。首先，隨著建築 HVAC 事業部接近供暖季（heating season），我們預期將帶來額外的銷售與獲利。我們也預期營收將受惠於亞洲專案導入的持續爬坡（ramp-up），以及建築設備市場的改善。

Much of the groundwork has been completed by our SDG initiatives to reduce and control costs. These actions will continue to positively impact our results in the quarters to come. In fact, much of the targeted savings are reflected in our fiscal 2017 results, which is helping to offset the volume challenges.

我們的 SDG 計畫已完成多數降低與控管成本的基礎工作。這些行動將在未來幾季持續對業績帶來正面影響。事實上，許多目標節省已反映在 2017 會計年度的結果中，有助於抵銷出貨量方面的挑戰。

Last, and very importantly, we are already implementing operational improvements at several plants, and beginning to see the improvements. We anticipate labor efficiencies and overhead improvement in the second half. We have a lot of hard work ahead of us to finish the fiscal year on a strong note. We are also maintaining the focus on cost reduction initiatives to achieve our financial goals.

最後且非常重要的是，我們已在數座工廠推動營運改善，並開始看到成效。我們預期下半年勞動效率與間接費用（overhead）將有所改善。為了讓本會計年度能以強勁表現作結，我們仍有大量工作要完成。我們也將持續聚焦成本降低計畫，以達成財務目標。

We are managing these activities while many team members are working diligently on completing the Luvata HTS acquisition by the end of the calendar year. Integration plans are well underway, and we are excited to combine these two great companies into one.

在管理這些活動的同時，許多團隊成員也正努力在日曆年年底前完成 Luvata HTS 收購案。整合計畫已在積極推進，我們也很期待將這兩家優秀公司合而為一。

Finally, I want to point out that our current-year earnings outlook does not include any impact from the acquisition. We are planning to provide guidance on the combined Company in connection with our third-quarter communication.

最後我要指出，我們對本年度獲利的展望並未包含收購案的任何影響。我們計畫在第三季對外溝通時，提供合併後公司的指引。

Tom, I'll turn it back to you.

Tom，我把時間交還給你。

Thanks, Mick. We continue to experience challenging market conditions in certain of our key end-markets. As Mick outlined, we are holding our guidance despite a difficult second quarter, and are confident that our performance will improve significantly in the second half of the year. In addition, our management team remains committed to the objectives we set out one year ago when we announced our Strengthen, Diversify, and Grow strategic framework.

謝謝，Mick。我們在部分關鍵終端市場仍持續面臨具挑戰性的市場狀況。如 Mick 所概述，儘管第二季艱難，我們仍維持既有指引，並有信心我們的表現將在下半年顯著改善。此外，我們的管理團隊仍致力於一年前在宣布「強化、多元化與成長」（Strengthen, Diversify, and Grow）策略架構時所設定的目標。

The acquisition of Luvata HTS is a key component of achieving these objectives, and we are pleased that we are on track to close on this transaction during the third quarter. As we previously reported, we expect this transaction will be accretive immediately, with targeted annual cost savings of approximately $15 million anticipated over a 3- to 4-year time frame.

收購 Luvata HTS 是達成這些目標的關鍵組成部分，我們很高興目前進度符合預期，預計將於第三季完成此交易的交割。如先前所報告，我們預期此交易將立即具增益效果（accretive），並在 3 至 4 年期間內實現約 1,500 萬美元的年度成本節省目標。

As we are very deep in the integration planning process, I am confident we will be able to achieve these targets. Of course, we will provide an update after closing, as Mick said, likely in connection with our Q3 release.

由於我們已深入整合規劃流程，我有信心能夠達成這些目標。當然，正如 Mick 所說，我們將在交割後提供最新進展，可能會在我們第三季（Q3）發布時一併更新。

We are very excited about the benefits of this acquisition as we continue to deliver on the commitments of our Strengthen, Diversify, and Grow strategy while transforming Modine into a more diversified thermal management company.

我們對這項收購所帶來的效益感到非常振奮；在持續履行「強化、多元化與成長」策略承諾的同時，也將 Modine 轉型為一家更多元化的熱管理公司。

And with that, we'll take your questions.

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。

This is Joe Vruwink for David. I wanted to start, Tom, with some of the new business wins you discussed on the call. And just a couple of questions. Is it possible, first, to say, since the global product strategy was put into place or since you started thinking about quoting from Mexico, Hungary, the low-cost centers, whether your win rates or the pace of bookings have stepped up meaningfully from historical levels? Just trying to get a sense of whether, over the past year since that strategy was put into place, whether growth rates in the backlog have stepped up.

我是代替 David 的 Joe Vruwink。我想先從你在電話會議中提到的一些新業務得標開始，Tom。我有幾個問題。首先，是否可以說，自從全球產品策略上路，或自從你們開始考慮從墨西哥、匈牙利等低成本中心進行報價以來，你們的得標率或接單速度是否相較於歷史水準有明顯提升？我想了解的是，在該策略實施後的過去一年中，未交訂單（backlog）的成長率是否有所加快。

Great question; and, clearly, yes. Our global products strategy has had a direct impact. Just at a high level, since being at Modine, we are in the best position of really understanding our product portfolio and aligning our cost strategy with that. That includes manufacturing footprint and our procurement strategies. So, yes, we are better positioned than we've ever been before, and that's being reflected in our win rate that we're very confident in. Especially as you look at engine products, where we have what we think a very significant position, that we have confidence that we can grow with a win rate that we have confidence in; and a more improving powertrain cooling win rate on the vehicular side.

這個問題問得很好；而且很明確，答案是肯定的。我們的全球產品策略已產生直接影響。就高層次而言，自從我在 Modine 以來，我們在真正理解產品組合並使成本策略與之對齊方面，處於最佳位置。這包括製造據點布局以及採購策略。因此，是的，我們比以往任何時候都更具優勢，而這也反映在我們非常有信心的得標率上。特別是就引擎產品而言，我們認為自己擁有非常重要的市場地位，我們有信心能以我們所掌握的得標率來推動成長；而在車用端的動力系統冷卻（powertrain cooling）方面，得標率也在改善。

So, clearly there's been an improvement. And I expect to see that will drive higher incremental organic growth.

因此，顯然已有所改善。我預期這將帶動更高的增量有機成長。

Mick, you want to add anything to that?

Mick，你要補充嗎？

No, Tom.

不用，Tom。

And then with the lower-cost footprint, are you able to expand what you are bidding on? So, let's say there's a particular customer that typically is very tough on pricing. Modine, certainly this cycle, has walked away from a lot of business in order to bring returns up. Given the cost savings you have achieved, can you essentially go back to some of those programs and customers and now bid on them profitably?

另外，隨著低成本布局，你們是否能擴大投標範圍？例如，有些客戶通常在價格上非常強勢。Modine 在這一輪景氣循環中，為了提高報酬率，確實放棄了不少業務。鑑於你們已達成的成本節省，你們是否基本上可以回到其中一些專案與客戶，並且現在能以獲利的方式去投標？

I feel confidently, yes, that we can. Clearly the market pressures are continuing to increase. But clearly the cost reduction, the scale we put into our plants, the location, the low-cost footprint, the product designs themselves are really being aggressive on evolutionary improvements to take material cost out and improve performance has given us that confidence that we can go back and win against any competitor that's out there.

我有信心，答案是可以的。市場壓力確實仍在加大。但我們的降本、在工廠導入的規模效益、據點位置、低成本布局，以及產品設計本身——我們正積極透過漸進式改良來降低材料成本並提升性能——都讓我們有信心可以回去，並在面對任何競爭對手時贏得訂單。

And then I wanted to shift to the cadence of this fiscal year. Obviously this is a tough quarter for certainly people in my seat to model. It sounds like in your seat, there are things that can launch or not launch that creates some volatility.

接著我想把話題轉到本會計年度的節奏。顯然，這是一個很難建模的季度，至少對坐在我這個位置的人來說是如此。聽起來對你們而言，有些事情可能會如期量產（launch）或不如期量產，因而造成一些波動。

So, any help maybe you can provide in thinking about the quarterly cadence going forward of whether this ends up being a very back-end-weighted FQ4 type year? Anything that can help maybe smooth the quarter-to-quarter modeling of your earnings.

所以，你們是否能提供一些協助，讓我們思考未來各季的節奏？例如，這是否會變成一個非常偏向後段、以第四財季（FQ4）為主的年度？任何能幫助我們更平滑地進行逐季獲利建模的資訊都很有幫助。

Joe, it's Mick. I'll take that question. Last year, as you recall, we had a very similar situation; I think almost identical. Last year, the first half of the year, I think we were about $22 million of operating income, and nearly double that in the second half of the year. And this year, the first six months are about $22 million of operating income, and looking at a similar ramp rate. When we look at it, to help with the outlook and modeling the run rate of the quarters, we do see it happening similar to last year.

Joe，我是 Mick。我來回答這題。你還記得去年我們有非常類似的情況；我想幾乎一模一樣。去年上半年，我們的營業利益大約是 2,200 萬美元，而下半年幾乎是其兩倍。今年前六個月的營業利益也大約是 2,200 萬美元，我們預期爬升的速度會相近。就協助展望與各季運行率建模而言，我們確實看到它會以類似去年的方式發生。

So running from Q2 to Q3, we see volume and sales increasing as we come out of the slow, typically our weakest,, slowest quarter. In Q2 we see some revenue increasing into Q3, and then further increasing in Q4. And then the same with resulting in operating income. We see sequential improvement from Q2 to Q3, and then further improvement from Q3 to Q4. So, not a stair step function, but probably more of a linear look, rising all the way from Q4, with the expectation of Q4 being the highest quarter of the year, similar to last year.

因此從 Q2 到 Q3，我們看到隨著走出通常最疲弱、最慢的季度，出貨量與銷售會增加。Q2 的營收會在 Q3 增加，並在 Q4 進一步增加；營業利益亦同。我們看到從 Q2 到 Q3 會逐季改善，從 Q3 到 Q4 也會再進一步改善。因此不會是階梯式跳升，但可能更像線性上升，一路走到 Q4；並預期 Q4 會是全年最高的一季，與去年相似。

And my last question related to this: it seems like achieving a 7% operating margin, maybe by FQ4, is possible, given where the guidance stands. And that would obviously be the low end of the SDG targeted range, I think it was the end of fiscal 2018.

我最後一個問題也與此相關：在目前的指引之下，看起來到第四財季（FQ4）達成 7% 的營業利益率似乎是可能的。而那顯然會是 SDG 目標區間的低端，我記得是到 2018 會計年度末。

It seems like end markets haven't helped you all in being able to deliver volume needed to get to that margin level. So the fact that you might be on track anyways seems like maybe the plan is running ahead of schedule, or you've been able maybe to uncover more than you expected. Am I thinking about this right, or forgetting something in the equation?

看起來終端市場並沒有幫助你們提供達到該利益率水準所需的出貨量。因此，如果你們仍可能按計畫達成，似乎代表計畫進度超前，或你們挖掘到比預期更多的改善空間。我這樣想對嗎？還是我在等式中漏掉了什麼？

I'll start, and let Mick add to it. Clearly, as I mentioned, that 7% to 8% sustainable is really depending on some top-line growth, as I mentioned in my comments. To your point, that is dependent. However, our targeted $40 million to $50 million of savings is starting to come into fruition. So we're at the low end of that range now that we feel we'll be hitting a run rate as we get through fiscal 2018. So that's encouraging.

我先回答，然後讓 Mick 補充。正如我提到的，7% 到 8% 的可持續水準確實取決於一些營收端的成長，如我在評論中所說。你提到的點沒錯，這是有依賴性的。不過，我們目標的 4,000 萬到 5,000 萬美元節省正開始實現。因此我們目前處於該區間的低端，我們認為在 2018 會計年度進行期間，將達到我們所預期的運行率（run rate）。這是令人鼓舞的。

And yes, I'd say as we look at the new organizational structure that's going to be a little bit leaner and meaner, and yet more focused on strategically managing our portfolio globally on the vehicular side, the changes that we're looking at the Building HVAC side, and of course, on top of that, the acquisition opportunity, we feel strong about that.

此外，隨著新的組織架構將更精實、更有效率，同時在車用端更聚焦於全球層面的策略性產品組合管理；再加上我們在建築 HVAC 端所推動的變革，當然還有收購機會，我們對此感到很有信心。

But clearly, overall in the vehicular segment, we need markets to come our way to really hit that on a sustainable level.

但很明確的是，就整體車用事業部而言，我們仍需要市場朝有利方向發展，才能在可持續的基礎上真正達到那個水準。

Mick, you want to add to that?

Mick，你要補充嗎？

Yes. I guess two points. When we get to Q4, I think, yes, we can touch the low end of that range, Joe. And hopefully, at that point, we can be talking about Luvata combined with Modine, which we know is going to help margin Modine up. That business runs a couple hundred [to] basis points higher in margin. So that will be an additional benefit. But without that, we can touch that. And you're right; it's really driven by -- we frankly have taken more cost out and we pushed harder on the cost as the markets have been a challenge.

是的。我想有兩點。當我們到 Q4 時，我認為是的，我們可以觸及該區間的低端，Joe。並且希望到那時，我們可以談到 Luvata 與 Modine 合併後的情況；我們知道那將有助於提升 Modine 的利潤率。那項業務的利潤率高出幾百個基點。因此這會是額外的助益。但即使沒有它，我們也能觸及該水準。你說得對；這主要是因為——坦白說，隨著市場充滿挑戰，我們已經進一步加大力道、採取更積極的成本削減。

When we built our goals and we talked the last year about SDG, we really felt that Modine running at a $1.5 billion run rate with the cost savings is a good model to get to that operating margin. So, we do need some support here from the end markets.

當我們建立目標、並在去年談到 SDG 時，我們確實覺得，Modine 以 15 億美元的營運規模（run rate）再加上成本節省，是達到該營業利益率的一個良好模型。因此，我們確實需要終端市場在這裡給一些支撐。

I went back and I've looked; you asked about the win rate. The order book -- the win rate is there in the last few years, just from the global off-highway and truck markets, just on unit volumes, I estimate that's at least a $200 million impact to Modine that we've been battling despite the win rate of new programs. We've had a lot of headwinds on, especially the heavy equipment markets partially offsetting those launch volumes.

我回頭看了一下；你問到贏單率（win rate）。訂單簿——過去幾年贏單率是有的，但僅就全球非公路與卡車市場、只看出貨量（unit volumes），我估計這至少對 Modine 造成了 2 億美元的影響；儘管我們新專案的贏單率不錯，我們仍一直在對抗這些影響。我們面臨了很多逆風，尤其是重型設備市場，部分抵銷了那些量產導入（launch）帶來的出貨量。

That's great color. I'll step back in queue. Thank you.

這些補充很有幫助。我先回到排隊等候。謝謝。

(Operator Instructions). Mike Shlisky, Seaport Global.

（接線員指示）。Seaport Global 的 Mike Shlisky。

Wanted to talk, see if we can talk quickly here about maybe calendar 2017 already. Some of the major customers that you have across off-highway and on-highway have both put out some kind of outlook for 2017. And when you map it out, I wonder if you'll be able to -- if you're thinking maybe you'll be in the same range as you are for fiscal 2017 and your fiscal 2018, if everyone is looking flat to down modestly. Are you thinking roughly in the same band next year, potentially with some organic growth on some new product launches? Is that the way to look at it right now for calendar 2017?

想談一下，看看我們能否快速聊聊可能已經在看的 2017 年曆年。你們在非公路與公路領域的一些主要客戶都發布了某種 2017 年展望。把它們對照起來看，我在想——如果大家都預期持平到小幅下滑，你們是否會——是否在想你們可能會落在與 2017 財年及 2018 財年相近的區間？明年是否大致會在同一個區間，並可能透過一些新產品導入帶來有機成長？就目前而言，這是否是看待 2017 年曆年的方式？

Yes. Mike, it's Mick. I think it's early for us to comment on that. We're beginning the March year-end, we're beginning our planning season. And then, as usual, what we'll do in our next quarter, the January communication, is we'll provide some outlook to calendar 2017, as we normally do.

是的。Mike，我是 Mick。我認為現在對此評論還太早。我們的會計年度在 3 月結束，我們正開始進入規劃季。然後照慣例，我們在下一季、也就是 1 月的溝通中，會像往常一樣提供對 2017 年曆年的一些展望。

I think from what we see, and you're referencing, especially the off-highway, the heavy equipment, construction side, commercial vehicle North America, I think we are expecting flattish type markets in that area.

我想就我們所看到的、以及你所提到的，特別是非公路的重型設備、建築端，以及北美商用車，我認為我們預期那一塊市場大致持平。

I think where we see potential growth is clearly continued growth on automotive in Asia; launching a lot of automotive engine products in North America and in Europe; and expecting further growth in Building HVAC. Then we have to model Luvata on top of that.

我認為我們看到的潛在成長，顯然包括：亞洲汽車業務持續成長；在北美與歐洲推出許多汽車引擎產品；並預期建築 HVAC 進一步成長。接著我們還必須把 Luvata 的因素納入模型。

So, not to punt your question; I think certainly we've had the same concerns with some of the large OE's comments about next year. But we also have to model in some of the growth opportunities we see coming before we can net all that out for you.

所以，不是要迴避你的問題；我想我們確實也對一些大型 OEM 對明年的評論抱有同樣的疑慮。但在我們能把所有因素相互抵銷、給你一個淨結果之前，我們也必須把我們看到的一些成長機會納入模型。

Got it. That's excellent color. Thank you. I also wanted to touch on Building HVAC. I was wondering if you could tell us if you have a reason why it was somewhat weak here in the fiscal second-quarter. And whether already in October, now that we're getting closer and closer to the wintertime, are you seeing any improvement there, just over the last couple of weeks, at least?

了解。這些補充非常有幫助，謝謝。我也想談一下建築 HVAC。我想知道你們是否能說明，為什麼在第二財季表現有些疲弱。以及現在到了 10 月、我們越來越接近冬季，你們是否在最近幾週至少已經看到一些改善？

Well, I think we spoke about this before, Mike. We came off of last winter with people having stock on their shelves at our distributors, so the restocking was lower. And I think there was a fear of building up too much stock going into the season again. So we have anticipated that we should see an improvement with the winter season coming on. This is the quarter to do it. October sales are up, okay, from the prior quarter and prior month.

嗯，我想我們之前談過這點，Mike。我們從去年冬季結束後，經銷商那邊的貨架上仍有庫存，所以補庫（restocking）較少。而且我想大家也擔心在季節來臨前再次把庫存堆得太高。因此我們預期隨著冬季到來應該會看到改善。這一季就是要發生的季度。10 月銷售額上升了，好嗎，相較於上一季與上個月。

So, we're hoping that that trend continues on for the rest of this quarter. But the biggest dynamic is just the inventory management at our distributors. And then, of course, the cold snap that generally occurs in this quarter, going forward.

所以，我們希望這個趨勢在本季剩餘時間能持續。但最大的變數就是經銷商端的庫存管理。然後當然，通常在本季會出現的寒流（cold snap），往後也是如此。

All right. I also want to ask about, in the Americas segment, the Brazilian ag industry has got an emissions-related changeover starting on the first of the year. And I was wondering -- and of course, that market also seems to be on the ag side, at least flattening out, if not improving for the rest of this year.

好。我也想問，在美洲事業部方面，巴西農業產業在明年年初開始會有一個與排放相關的切換（changeover）。我想知道——當然，那個市場在農業端看起來至少是持平，甚至在今年剩餘時間可能有所改善。

I was wondering if you had any kind of view whether that emissions changeover is helping your business in Brazil this year, and/or if you think it will help you next year if there's some higher needs for cooling technology there.

我想知道你們是否有任何看法：這個排放切換是否在今年對你們在巴西的業務有幫助，和／或你們是否認為明年會有幫助，若那邊對冷卻技術的需求更高的話。

It is definitely helping now. We are winning just about everything we quote on down in Brazil, as far as being very satisfied with our targeted ag, in construction, in growing commercial vehicle. But clearly the products we brought down there are to support that transition. We're winning the business. Obviously the markets are extremely low, so it's not really turning into the revenue that we'd like to see. But when it comes back, we're gaining market share significantly in Brazil.

現在確實有幫助。我們在巴西那邊幾乎把我們報價的案子都拿下了，就我們鎖定的農業、建築，以及成長中的商用車而言，我們非常滿意。但很明顯，我們帶到那邊的產品就是為了支援那個轉換。我們正在贏得業務。當然市場水位非常低，所以營收還沒有轉化成我們希望看到的程度。但當市場回來時，我們在巴西的市占率正在顯著提升。

Okay. And then also I wanted to see if anything has changed for you since you announced it, with respect to the financing terms or interest rate for the Luvata deal. Is everything the same as when you first said it? Or have you or are you seeing anything better on the interest rate side, if you have any debt to raise?

好的。另外我也想看看，自從你們宣布之後，關於 Luvata 交易的融資條件或利率是否有任何變化？是否一切都和你們一開始說的一樣？或者如果你們需要舉債，利率方面是否有看到更好的條件？

No. Everything has been proceeding just as planned, Mike; no changes. And we expect to complete all those financing agreements very shortly.

沒有。一切都按計畫進行，Mike；沒有變更。而且我們預期很快就會完成所有那些融資協議。

Okay. If I can just squeeze in one last one here, back to Building HVAC. Is the outlook for Luvata the same as, or similar to, your current Building HVAC segment? Or do you see that as having a whole different set of factors we should be watching over the next 12 to 18 months?

好的。若我可以再塞最後一題，回到建築 HVAC。Luvata 的展望是否與你們目前的建築 HVAC 事業部相同或相近？還是你們認為那會是一套完全不同的因素，我們在未來 12 到 18 個月應該關注？

I think there are similar factors. But, clearly, they cover a much broader market than our Building HVAC folks, which tend to focus on heating, ventilation, and in air-conditioning; though they supply a lot of refrigeration and everything else that's out there, as far as food storage and industrial applications, as well.

我認為有相似的因素。但很明顯，他們涵蓋的市場比我們建築 HVAC 團隊廣得多；我們的團隊通常聚焦在供暖、通風與空調（air-conditioning），雖然他們也供應很多冷凍（refrigeration）以及其他各種領域，例如食品儲存與工業應用等。

But in those applications that are similar to Building HVAC, the drivers are similar. Clearly the tech drivers are significant, with getting from the field to the market. And a lot of things going on in food storage that's really, we feel, is a great tech driver that they are well positioned for; and other similar type things that right now that we aren't really involved in. So we're looking forward to those key markets that will join that we'll be able to benefit from going forward.

但在那些與建築 HVAC 類似的應用中，驅動因素是相似的。很明顯，技術驅動因素很重要，從現場到市場的導入（getting from the field to the market）。而且在食品儲存方面有很多事情正在發生，我們覺得那是一個很好的技術驅動領域，他們也具備很好的布局；以及其他一些類似的事情，目前我們其實還沒有真正涉入。所以我們很期待那些將加入的關鍵市場，讓我們未來能從中受益。

Okay. Great, guys. I'm going hop back in the queue. Thank you.

好的。各位，很好。我先回到排隊等候。謝謝。

Thank you. And I'm showing no further questions from our phone lines.

謝謝。我這邊顯示電話線上沒有其他問題。

I would now like to turn the conference back over to Kathy Powers for any closing remarks.

我現在想把電話會議交回給 Kathy Powers，請她做結語。

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

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 does conclude the program, and you may all disconnect. Everyone have a wonderful day.

各位女士先生，感謝參與今天的電話會議。本次議程至此結束，各位可以掛線。祝大家有美好的一天。