Modine Manufacturing Company (MOD) 2017 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Modine Manufacturing Company's Fourth Quarter Fiscal 2017 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

各位女士、先生，早安，歡迎參加 Modine Manufacturing Company 2017 會計年度第四季財報電話會議。(接線員指示) 提醒各位，本次會議將被錄音。

I would now like to turn the conference over to your host, 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，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 Fourth Quarter Fiscal 2017 Earnings Call. With me today are Modine's President and CEO, Tom Burke; and Mick Lucareli, our Vice President of Finance and Chief Financial Officer. They'll 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。也感謝各位今天參加 Modine 2017 會計年度第四季財報電話會議。今天與我一同出席的有 Modine 總裁暨執行長 Tom Burke，以及我們的財務副總裁兼財務長 Mick Lucareli。他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，以及公司網站 modine.com 投資人關係專區所張貼的 PDF 檔取得。

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先行離線，會議結束約 2 小時後，您可透過我們的網站收聽重播。

On Slide 2 is an outline for today's call, Tom and Mick will provide comments on our fourth quarter and full year results, and provide our revenue and earnings guidance for fiscal '18. At the end of the call, there will be a question-and-answer session.

投影片第 2 頁為今日會議大綱。Tom 與 Mick 將就第四季與全年業績提供評論，並提供 2018 會計年度的營收與獲利指引。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。提醒各位，本次電話會議可能包含前瞻性陳述，其內容如同我們的財報新聞稿以及公司向美國證券交易委員會提交之文件所述。

With that, it's my pleasure to turn the call over to Tom Burke

接下來，我很榮幸將電話會議交給 Tom Burke。

Thank you, Kathy, and good morning, everyone. On today's call, I will discuss our fourth quarter and full year results and provide an update on our integration of Luvata HTS business that we acquired in the third quarter and now operate as our Commercial & Industrial Solutions segment. After that, Mick will provide a more detailed review of our consolidated financial results. Then we'll also provide our revenue and earnings guidance for fiscal 2018. I'll then provide a few closing remarks prior to opening up the call for questions.

謝謝你，Kathy，各位早安。在今天的會議中，我將討論我們第四季與全年業績，並更新我們對於第三季收購之 Luvata HTS 業務的整合進度；該業務目前以我們的商用與工業解決方案（Commercial & Industrial Solutions，CIS）事業部運作。之後，Mick 將更詳細地檢視我們的合併財務結果。接著我們也將提供 2018 會計年度的營收與獲利指引。最後在開放提問前，我會做幾點結語。

Fiscal 2017 was a year of transformation for Modine and the basis for that transformation was the Strengthen, Diversify and Grow strategy we announced over 18 months ago. During fiscal 2017, we strengthened Modine by achieving our $40 million to $50 million of annual savings target and diversified and grew the company by acquiring Luvata HTS. The integration of this business is well underway and we remain focused on executing the actions required to achieve our synergy targets.

2017 會計年度對 Modine 而言是轉型的一年，而這項轉型的基礎，是我們在 18 個多月前宣布的「強化、分散與成長（Strengthen, Diversify and Grow）」策略。在 2017 會計年度期間，我們透過達成每年 4,000 萬至 5,000 萬美元的節省目標來強化 Modine，並透過收購 Luvata HTS 來分散並成長公司。該業務的整合正在順利推進，我們仍專注於執行達成協同效益目標所需的各項行動。

As importantly, we ended the year on a strong note in our base business. In other words, our vehicular and building HVAC business. We're encouraged to see signs of recovery in some of our key markets, but that comes with some short-term pressures due to rising metals prices. As you know, we have material pass-through agreements that allow us to pass through metal cost increases, there is often a lag of 6 months or more. So in the short term, we expect our earnings will be impacted by higher metals prices. We are confident we will be more than able to offset these costs with savings from the various cost savings initiatives taken over the past 2 years.

同樣重要的是，我們的核心業務在年末表現強勁。換言之，就是我們的車用與建築 HVAC 業務。我們樂見部分關鍵市場出現復甦跡象，但短期也面臨金屬價格上漲帶來的壓力。如各位所知，我們有材料成本轉嫁（pass-through）協議，允許我們轉嫁金屬成本上升，但通常會有 6 個月或更久的時間落差。因此短期內，我們預期較高的金屬價格將影響獲利。我們有信心，過去兩年推動的各項成本節省措施所帶來的節省，將足以抵銷這些成本。

Moving on to our fourth quarter results. Sales were up 44% on a constant currency basis, including $143 million of sales from our CIS business in the quarter. Our non-CIS, or base business, was up 2% on a constant currency basis, primarily due to higher sales in the Asia segment partially offset by lower sales in the Americas segment.

接著談第四季業績。以固定匯率計，銷售額成長 44%，其中包含本季 CIS 業務貢獻的 1.43 億美元銷售額。我們的非 CIS（或核心）業務以固定匯率計成長 2%，主要因亞洲事業部銷售增加，部分被美洲事業部銷售下滑所抵銷。

Our adjusted operating income was $29.2 million, up 23% from the prior year, primarily due to the addition of the CIS business which contributed $7.8 million of operating earnings in the quarter. In our base business, the procurement savings were offset by higher material cost and higher compensation and benefits expense.

本季調整後營業利益為 2,920 萬美元，較去年同期成長 23%，主要來自新增 CIS 業務，本季貢獻 780 萬美元的營業獲利。在核心業務方面，採購節省被較高的材料成本以及較高的薪酬與福利費用所抵銷。

Our adjusted earnings per share were $0.35 for the quarter, down $0.01 from the prior year, as expected, primarily due to the increase of interest expense from the debt taken on to finance the acquisition.

本季調整後每股盈餘為 0.35 美元，較去年同期減少 0.01 美元，符合預期，主要因為為收購融資而新增的負債導致利息費用上升。

For the full year, sales were up 12% on a constant currency basis from the prior year, and adjusted operating income of $69.3 million was up 10% from the prior year. Adjusted earnings per share of $0.78 were up $0.02 from the prior year.

全年而言，以固定匯率計，銷售額較去年成長 12%，調整後營業利益為 6,930 萬美元，較去年成長 10%。調整後每股盈餘為 0.78 美元，較去年增加 0.02 美元。

Now I'd like to briefly review the segment results for the fourth quarter and provide an update to our market outlook for fiscal 2018.

接下來我將簡要回顧第四季各事業部門的表現，並更新我們對 2018 會計年度的市場展望。

Turning to Page 6. Sales for the Americas segment were down 2.5% on a constant currency basis to $144.6 million. Once again, sales were significantly impacted by continued weakness in the heavy-duty commercial vehicle market. This is partially offset by higher sales to off-highway customers in both North America and Brazil. I am encouraged to finally see some improvements in the off-highway markets.

請看第 6 頁。美洲事業部以固定匯率計銷售額下滑 2.5% 至 1.446 億美元。銷售再次受到重型商用車市場持續疲弱的顯著影響。此影響部分被北美與巴西的非道路（off-highway）客戶銷售增加所抵銷。我很高興終於看到非道路市場出現一些改善。

Gross margin was up slightly to 18.9%. Although we saw an increase in raw material prices during the quarter, we were able to more than offset this impact with savings from procurement and other cost-reduction initiatives.

毛利率小幅上升至 18.9%。雖然本季原物料價格上漲，但我們透過採購節省及其他降成本措施所帶來的節省，足以抵銷其影響。

SG&A expense was up $1.3 million to $13.4 million during the quarter, primarily due to higher incentive compensation and benefits expense. All together, adjusted operating income for the Americas segment was $14.3 million, down $2 million from the prior year but up significantly from the previous 3 quarters.

本季 SG&A 費用增加 130 萬美元至 1,340 萬美元，主要因激勵性薪酬與福利費用較高。整體而言，美洲事業部調整後營業利益為 1,430 萬美元，較去年同期減少 200 萬美元，但較前三季明顯改善。

As I mentioned last quarter, we're not expecting significant improvement in our North America markets in fiscal 2018. We expect the automotive, heavy-duty truck and off-highway markets to be flat; the medium-duty truck market to be flat to up 5%; and some additional declines in agricultural equipment market. We expect to see improvement in Brazil from the currently depressed levels. As I mentioned, we saw some improvement in our off-highway sales in the fourth quarter and expect these markets to grow 10% to 15% in fiscal '18, albeit off a low base.

如我上季所提，我們預期 2018 會計年度北美市場不會有顯著改善。我們預期汽車、重型卡車與非道路市場持平；中型卡車市場持平至成長 5%；農業設備市場則將進一步下滑。我們預期巴西將自目前低迷水準回升。如我所述，我們在第四季看到非道路銷售有所改善，並預期 2018 會計年度這些市場將成長 10% 至 15%，儘管是從較低基期起算。

Looking forward, we are forecasting sales growth in the Americas to be driven by new automotive programs. I am also encouraged by a number of new business wins and opportunities with off-highway and commercial vehicle customers. We expect profitability to improve from the actions taken this past year in conjunction with our SDG program, including the closure of the Washington, Iowa plant. However, we expect these improvements will be somewhat offset by higher raw material cost.

展望未來，我們預測美洲地區的銷售成長將由新的汽車專案所帶動。我也對多項新業務得標以及與非道路與商用車客戶的機會感到鼓舞。我們預期獲利能力將因過去一年配合 SDG 計畫所採取的行動而改善，包括關閉愛荷華州華盛頓（Washington, Iowa）工廠。然而，我們預期這些改善將部分被較高的原物料成本所抵銷。

Please turn to Page 7. Sales for our Europe segment were flat in a constant currency basis as higher automotive sales were offset by planned reductions to commercial vehicle customers. Gross margin improved by 50 basis points from the prior year to 15.7%, primarily due to procurement savings and favorable sales mix, partially offset by unfavorable raw material costs. SG&A expense was up slightly due to higher compensation and benefits expense, resulting in adjusted operating income of $10.6 million, down 5% from the prior year.

請翻到第 7 頁。我們歐洲事業部的銷售額以固定匯率計算持平，因汽車銷售增加被對商用車客戶的計畫性減量所抵銷。毛利率較去年提升 50 個基點至 15.7%，主要受惠於採購節省與有利的銷售組合，部分被不利的原物料成本所抵銷。由於薪酬與福利費用較高，SG&A 費用小幅上升，導致調整後營業利益為 1,060 萬美元，較去年下降 5%。

We expect the European automotive market to remain stable, the commercial vehicle market to be flat to up 5% and the off-highway markets to be flat to down 5% in fiscal 2018. We also expect sales in Europe to continue to be impacted by planned wind-downs of our low-margin commercial vehicle programs, offset by continued growth in our automotive products.

我們預期 2018 會計年度歐洲汽車市場將維持穩定，商用車市場持平至成長 5%，非公路（off-highway）市場持平至下滑 5%。我們也預期歐洲銷售將持續受到我們低毛利商用車專案計畫性退場的影響，但將由汽車產品的持續成長所抵銷。

Operationally, we continue to execute significant changes to our manufacturing footprint. We are well on our way with the expansion of one of our facilities in Hungary, and we'll transfer production of various product lines throughout the year. Expanding our low-cost country footprint in Europe is critical to our continued competitiveness in the region. These industrial transfers are always challenging, but they allow us to achieve our long-range earnings target.

在營運面，我們持續推動對製造據點版圖的重大調整。我們在匈牙利其中一座廠房的擴建進展順利，並將在全年陸續移轉多條產品線的生產。在歐洲擴大我們低成本國家據點的布局，對於我們在該區域持續保持競爭力至關重要。這些產業移轉一向充滿挑戰，但能協助我們達成長期獲利目標。

We've done a number of these transfers over the past few years and are confident we will manage the Hungary expansion without any customer disruptions. We are very pleased with the business environment and climate -- the business environment in Hungary and will benefit from the significant tax incentives in fiscal '18.

過去幾年我們已完成多次此類移轉，並有信心在不影響客戶的情況下管理匈牙利擴建案。我們對匈牙利的商業環境與氛圍——匈牙利的商業環境——感到非常滿意，並將在 2018 會計年度受惠於可觀的稅務優惠。

Please turn to Page 8. Sales for our Asia segment were up 49% compared with the prior year on a constant currency basis. This significant improvement was driven by higher sales to automotive and off-highway customers in China, India and Korea. Higher sales volume led to a $1.6 million improvement in gross profit. Gross margin was down 50 basis points as the fourth quarter of the prior year was particularly strong.

請翻到第 8 頁。我們亞洲事業部的銷售額以固定匯率計算較去年成長 49%。這項顯著改善主要來自中國、印度與韓國對汽車與非公路客戶的銷售增加。較高的銷售量帶動毛利增加 160 萬美元。毛利率下降 50 個基點，因去年第四季表現特別強勁。

Also with our strong sales growth, we experienced some temporary operating inefficiencies at our Shanghai plant which is currently operating at full capacity. We have installed a new furnace at this plant and will install a second one later this fiscal year. This additional capacity will allow us to continue to expand our production of automotive oil coolers which has been so instrumental to our recent growth in Asia.

此外，在銷售強勁成長之際，我們位於上海的工廠目前滿載運轉，因而出現一些暫時性的營運效率不彰。我們已在該廠安裝一座新爐，並將於本會計年度稍晚再安裝第二座。新增產能將使我們得以持續擴大汽車用油冷卻器的產量，而該產品一直是我們近來在亞洲成長的重要推手。

Adjusted operating income in Asia segment increased $900,000 or 47% in the fourth quarter compared to the prior year, primarily due to higher sales volumes.

亞洲事業部第四季的調整後營業利益較去年增加 90 萬美元（或 47%），主要由於銷售量提高。

As we look to fiscal 2018, we expect the growth trends to continue in Asia and -- with the China automotive market up 3% and driven by ongoing improvement in the construction markets across the region. We also expect both the automotive and commercial vehicle markets in India to grow by 5%, which is great news for our high-performing India operations.

展望 2018 會計年度，我們預期亞洲的成長趨勢將持續——其中中國汽車市場成長 3%，並受惠於區域內建築市場持續改善所帶動。我們也預期印度的汽車與商用車市場皆將成長 5%，這對我們表現優異的印度營運而言是個好消息。

Overall, we expect revenue growth in our Asia segment to driven by -- equally by market growth and maturing volumes from automotive oil cooler launches. In addition, we'll be launching a heavy-duty powertrain cooling module with JAC, a major commercial vehicle customer in China, this year. We expect similar growth in earnings in the region with the benefit of higher volumes partially offset by higher raw material cost. I am very pleased with the growth in this segment over the past 2 years, and it's great to see that the investments we made to diversify our sales have led to a level of sustained profitability for this segment.

整體而言，我們預期亞洲事業部的營收成長將——同等程度地——由市場成長與汽車用油冷卻器新案導入後逐步成熟的出貨量所驅動。此外，我們今年將與中國主要商用車客戶江淮汽車（JAC）推出一款重型動力總成冷卻模組。我們預期該區域獲利也將有類似的成長，高出貨量的效益將部分被較高的原物料成本所抵銷。我對過去兩年此事業部的成長非常滿意，也很高興看到我們為分散銷售所做的投資，已為該事業部帶來可持續的獲利水準。

Please turn to Page 9. Sales for our Building HVAC segment were up 2% compared with the prior year on a constant currency basis. Higher sales of air conditioning products in the U.K. were partially offset by lower sales of heating and ventilation products in North America. Our gross margin improved by 60 basis points to 27.5%, and SG&A expense was lower by $900,000 or a decrease of 10% due to planned cost reductions. This resulted in a $700,000 improvement in adjusted operating income from the prior year.

請翻到第 9 頁。我們建築 HVAC 事業部的銷售額以固定匯率計算較去年成長 2%。英國空調產品銷售增加，部分被北美暖氣與通風產品銷售下滑所抵銷。我們的毛利率提升 60 個基點至 27.5%，且因計畫性成本削減，SG&A 費用減少 90 萬美元（或下降 10%）。因此，調整後營業利益較去年改善 70 萬美元。

As expected, we are continuing to see improvements in this segment resulting from the actions taken earlier this year. We had a particularly weak heating season in North America again this year, but we are seeing volume and operational improvements in the U.K.

如預期所示，我們持續看到本事業部因今年稍早採取的措施而帶來的改善。今年北美的供暖季仍然特別疲弱，但我們在英國看到出貨量與營運面的改善。

For fiscal '18, we're expecting to see further improvements in our markets. We expect the North American heating market to be flat to up 2%, the air-conditioning market in Europe to be up 4% and the commercial ventilation markets of both North America and the U.K. to be up 2%. We expect our sales growth to be in line with the market or slightly above as we continue to grow market share and to see continued improvement in earnings and margins.

就 2018 會計年度而言，我們預期市場將進一步改善。我們預期北美供暖市場持平至成長 2%，歐洲空調市場成長 4%，而北美與英國的商用通風市場皆成長 2%。隨著我們持續提升市占率，並看到獲利與毛利率持續改善，我們預期銷售成長將與市場一致或略高於市場。

With the challenges in the U.K. during the past several years now behind us, our new leadership team is focused on operational performance, efficiencies and long-term growth. In North America, we have been crossing the country with our Innovation Tour, demonstrating our products and solutions to our customers and distributors. As a result, we have a strong order book in place, particularly with school products and rooftop ventilation units.

過去幾年英國所面臨的挑戰如今已成過去，我們的新領導團隊正專注於營運績效、效率與長期成長。在北美，我們透過創新巡迴（Innovation Tour）走遍各地，向客戶與經銷商展示我們的產品與解決方案。因此，我們已建立強勁的訂單能見度，尤其是在校園產品與屋頂式通風機組方面。

Please turn to Page 10. It has been nearly 6 months since our acquisition of Luvata HTS, and I'm very pleased with the progress we have made in bringing our 2 companies together. From a business perspective, Modine CIS is a leader in a majority of the markets we serve. Our strategy of being fast and flexible in response to customer requests allows the CIS team to respond quickly to discrete customer orders that make up the majority of CIS sales. The capability of the CIS business units to provide a large and diverse set of customers with highly effective and competitive thermal management solutions is why we decided to add this business to our portfolio.

請翻到第 10 頁。自我們收購 Luvata HTS 以來已將近 6 個月，我對我們在整合兩家公司方面所取得的進展感到非常滿意。從業務角度來看，Modine CIS 在我們所服務的大多數市場中居於領先地位。我們以快速且具彈性回應客戶需求的策略，使 CIS 團隊能迅速回應構成 CIS 銷售大宗的單筆客戶訂單。CIS 各事業單位能為廣泛且多元的客戶群提供高效且具競爭力的熱管理解決方案，正是我們決定將此業務納入投資組合的原因。

This was the first full quarter since we made the acquisition, and the CIS segment reported $143 million in sales. Gross profit was $21.6 million which resulted in a gross margin of 15.1%. As a reminder, there's $3.2 million in depreciation amortization expense recorded as a result of purchase accounting. The segment reported operating income of $7.8 million, which is above the estimate we've provided last quarter. We expect the markets served by the CIS segment will be up 2% for fiscal 2018 other than precision cooling, which we expect to be up 3%.

這是我們完成收購後的第一個完整季度，CIS 事業部報告銷售額為 1.43 億美元。毛利為 2,160 萬美元，毛利率為 15.1%。提醒一下，因收購會計（purchase accounting）而認列的折舊與攤銷費用為 320 萬美元。該事業部報告營業利益為 780 萬美元，高於我們上季提供的估計。我們預期 2018 會計年度 CIS 事業部所服務的市場將成長 2%，精密冷卻（precision cooling）除外；精密冷卻我們預期成長 3%。

Our integration efforts are continuing, and we remain committed to delivering synergies in excess of our goal of $15 million annual savings over the next 3 or 4 years.

我們的整合作業仍在持續推進，我們也仍致力於在未來 3 到 4 年內實現超過目標的協同效益，即每年節省 1,500 萬美元以上。

With that, I'd like to turn it over to Mick for an overview of our consolidated financial results. And Mick will also provide us our revenue and earnings guidance for fiscal 2018.

接下來，我想把時間交給 Mick，請他概述我們的合併財務結果。Mick 也將提供我們 2018 會計年度的營收與獲利指引。

Thanks, Tom. Please turn to Slide 12. We are pleased with the results this quarter, especially given the contribution from CIS in its first full quarter with Modine. As expected, sales challenges remained in some areas of our base business. Also, aluminum and copper increased significantly in the quarter.

謝謝你，Tom。請翻到第 12 頁投影片。我們對本季的結果感到滿意，尤其是 CIS 在加入 Modine 後的第一個完整季度所帶來的貢獻。如預期所示，我們基礎業務的部分領域仍面臨銷售挑戰。此外，本季鋁與銅的價格大幅上漲。

Beginning with the top line. Our fourth quarter sales increased $150 million on a constant currency basis, including $143 million of sales from our new CIS segment. Excluding CIS, constant currency sales were up $7 million or 2% year-over-year.

先從營收來看。以固定匯率計算，我們第四季銷售額增加了 1.5 億美元，其中包含新 CIS 事業部帶來的 1.43 億美元銷售額。若排除 CIS，以固定匯率計算的銷售額年增 700 萬美元或 2%。

Reported gross profit of $84.9 million was up $23 million. This includes $21.6 million from CIS. The reported gross margin was negatively impacted by $1.4 million from the inventory step-up related to purchase accounting. We backed this out for our adjusted operating income, and this is the last time we'll need to do that. Excluding CIS and this adjustment, gross margin on the base business improved 70 basis points over the prior year to 18.8%.

報告毛利為 8,490 萬美元，增加了 2,300 萬美元。其中包含 CIS 貢獻的 2,160 萬美元。報告毛利率受到與購買會計相關的存貨增值（inventory step-up）影響，減少了 140 萬美元。我們在調整後營業利益中已將此項剔除，而這也是我們最後一次需要這麼做。若排除 CIS 與此項調整，基礎業務的毛利率較去年提升 70 個基點至 18.8%。

SG&A of $60.6 million includes 2 significant items worth noting. First, we incurred fees of $3.2 million on integration-related cost. These are again added back for our adjusted operating results. Second, the CIS segment added $13.8 million of SG&A. Excluding these items, SG&A was up only $2 million or 5% from the prior year.

SG&A（銷售、一般及行政費用）為 6,060 萬美元，其中包含兩項值得注意的重大項目。第一，我們因整合相關成本而發生 320 萬美元費用。這些同樣會在我們的調整後營運結果中加回。第二，CIS 事業部增加了 1,380 萬美元的 SG&A。排除上述項目後，SG&A 僅較去年增加 200 萬美元或 5%。

During the quarter, we recorded $4.9 million of restructuring expenses. These relate to European severance of $3.2 million and $1.7 million of equipment transfers and plant consolidation cost for the Washington, Iowa closure. We also added back $4.6 million of acquisition-related items, which are comprised of the inventory step-up and various integration cost.

本季我們認列了 490 萬美元的重整費用。其中包括歐洲資遣費 320 萬美元，以及因關閉愛荷華州華盛頓（Washington, Iowa）廠而產生的設備移轉與廠房整併成本 170 萬美元。我們也加回了 460 萬美元的併購相關項目，包含存貨增值以及各項整合成本。

I'd like to note that we sold our McHenry, Illinois and Washington, Iowa facilities during the quarter. These asset sales gains were excluded from our adjusted operating income.

我想特別說明，我們在本季出售了伊利諾州麥亨利（McHenry, Illinois）與愛荷華州華盛頓（Washington, Iowa）的廠房。這些資產出售收益已自我們的調整後營業利益中排除。

Fourth quarter adjusted operating income was $29.2 million was up $5.5 million or 23%, and our adjusted earnings per share was $0.35, down $0.01 compared to last year. Our EPS was negatively impacted by more shares outstanding and incremental interest due to the Luvata HTS acquisition.

第四季調整後營業利益為 2,920 萬美元，增加 550 萬美元或 23%；調整後每股盈餘為 0.35 美元，較去年下降 0.01 美元。我們的 EPS 受到流通在外股數增加，以及因 Luvata HTS 併購而增加的利息費用所拖累。

As a reminder, our U.S. GAAP income statement is included in the appendix to this presentation and in our earnings release. This includes a full reconciliation between our reported results and adjusted operating results.

提醒各位，我們的美國 GAAP 損益表已收錄於本簡報附錄以及我們的財報新聞稿中。其中包含報告結果與調整後營運結果之間的完整調節表。

Turning to Slide 13. In the quarter, adjusted free cash flow was a negative $900,000, which is down from last quarter but better than the prior year by $7.8 million. Full year operating cash flow was temporarily impacted by cash restructuring and acquisition-related payments.

接著看第 13 頁投影片。本季調整後自由現金流為負 90 萬美元，較上季下滑，但較去年同期改善 780 萬美元。全年營運現金流受到重整與併購相關付款的暫時性影響。

Adjusted free cash flow for the full year was $9.9 million. The year-over-year decline was due to the combination of several items, including lower cash earnings, higher levels of working capital and slightly increased capital expenditures.

全年調整後自由現金流為 990 萬美元。年減主要是多項因素共同造成，包括現金獲利較低、營運資金水位較高，以及資本支出略為增加。

The free cash flow adjustments of $32.7 million include restructuring payments of $18 million, which are related to plant consolidation and severance, with the remaining items related to acquisition and integration activities.

自由現金流調整項合計 3,270 萬美元，其中包括 1,800 萬美元的重整付款，與廠房整併及資遣相關；其餘項目則與併購及整合活動相關。

Finally, our debt leverage ratio is currently 2.9. This is well below the covenant requirement of 3.75, as shown in the table on the upper right.

最後，我們目前的負債槓桿比率為 2.9。如右上方表格所示，這明顯低於契約要求的 3.75。

Looking ahead to fiscal '18, we are anticipating a much improved adjusted free cash flow. We're focused on paying down our debt and getting our leverage ratio back below 2.5 by the end of the fiscal year.

展望 2018 會計年度，我們預期調整後自由現金流將大幅改善。我們將專注於償還債務，並在會計年度結束前把槓桿比率降回 2.5 以下。

Now let's turn to our fiscal 2018 full year guidance on Slide 14. I'm pleased to report that we're expecting strong sales and earnings growth in the new fiscal year, which includes the full year impact of the Luvata HTS acquisition. As Tom discussed the segment slide -- on the segments slide, we anticipate good growth in Asia and Building HVAC with less in the Americas and Europe.

現在請看第 14 頁投影片，這是我們 2018 會計年度的全年指引。我很高興報告，我們預期新會計年度的營收與獲利將強勁成長，其中包含 Luvata HTS 併購的全年影響。如 Tom 在事業部投影片中所討論，我們預期亞洲與建築 HVAC 將有良好成長，而美洲與歐洲的成長相對較少。

We've made some key assumptions on our guidance, and I want to review those with you since any one of them could cause some change in our outlook. First, we have summarized our major end market assumptions on the previous slide. Next, we anticipate that copper and aluminum will hold at current levels. Our current outlook includes approximately $15 million to $20 million of temporary cost increases as we absorb the higher metals cost during the customary lag period. Third, we expect the U.S. dollar will hold at current levels versus most major currencies. And last, we assume interest rate expense of approximately $26 million and an effective tax rate in the 15% range.

我們在指引中做了一些關鍵假設，我想與各位回顧，因為其中任何一項都可能使我們的展望有所變動。第一，我們已在前一頁彙總主要終端市場的假設。第二，我們預期銅與鋁將維持在目前水準。目前展望包含約 1,500 萬至 2,000 萬美元的暫時性成本增加，因為在慣常的遞延期間內，我們需要吸收較高的金屬成本。第三，我們預期美元兌大多數主要貨幣將維持在目前水準。最後，我們假設利息費用約 2,600 萬美元，且有效稅率約在 15% 左右。

So to summarize. We project sales to be up 25% to 30% from the prior year. We expect adjusted operating income to be in the range of $100 million to $110 million. Our SDG cost-savings initiatives will offset the impact to commercial pricing agreements, normal economic cost increases and the higher metals. The full year impact of CIS will be a big driver of operating income in fiscal 2018.

總結來說。我們預估銷售額將較去年成長 25% 至 30%。我們預期調整後營業利益將落在 1 億至 1.1 億美元之間。我們的 SDG 成本節省計畫將抵銷商業定價協議的影響、正常的經濟性成本上升，以及較高的金屬成本。CIS 的全年影響將是 2018 會計年度營業利益的重要驅動因素。

Please note that we are including adjusted EBITDA in our guidance this year to help assess the impact from CIS and the complexities of purchase accounting. We expect adjusted EBITDA to be in the range of $175 million to $185 million which equates to an increase of more than 40% over the prior year. Finally, we expect our adjusted EPS to be between $1.20 and $1.35, which is up significantly from $0.78 in fiscal '17.

請注意，我們今年在指引中納入調整後 EBITDA，以協助評估 CIS 的影響以及購買會計的複雜性。我們預期調整後 EBITDA 將落在 1.75 億至 1.85 億美元之間，相當於較去年增加超過 40%。最後，我們預期調整後 EPS 將介於 1.20 至 1.35 美元，較 2017 會計年度的 0.78 美元大幅提升。

In addition to the pretax earnings improvement, we are assuming a tax credit associated with the plant expansion in Hungary. This is a onetime tax benefit that is expected to lower our adjusted tax expense to the 15% range in fiscal 2018.

除了稅前獲利改善之外，我們也假設與匈牙利廠房擴建相關的稅額抵減。這是一項一次性的稅務利益，預期將使我們 2018 會計年度的調整後稅費降至約 15% 的水準。

We've made great progress in fiscal 2017, and we've set the stage for a strong fiscal '18. It appears the market headwinds are lessening for our vehicular business. And we're glad to have CIS onboard. Integration is proceeding as expected, and we're excited about the opportunities in front of us.

我們在 2017 會計年度取得了很大進展，也為強勁的 2018 會計年度奠定了基礎。看起來，我們車用業務所面臨的市場逆風正在減弱。我們也很高興 CIS 加入我們的團隊。整合進度符合預期，我們對眼前的機會感到振奮。

With that, Tom, I'll turn it back to you.

那麼，Tom，我把話交回給你。

Thanks, Mick. This has been a remarkable year for Modine. In addition to celebrating our 100th anniversary, we completed the largest acquisition in our company's history. In doing so, we achieved our goal of diversifying our end markets and customer base with 40% of our revenues now stemming from industrial applications. Meanwhile, we remain focused on our core competency, that is, solving thermal management challenges for our customers.

謝謝，Mick。對 Modine 而言，這是一個非凡的一年。除了慶祝我們的 100 週年，我們也完成了公司史上最大的一筆併購。藉此，我們達成了分散終端市場與客戶基礎的目標，目前有 40% 的營收來自工業應用。同時，我們仍專注於核心能力，也就是為客戶解決熱管理方面的挑戰。

Our priorities for the year ahead include continuing the integration of the CIS business and capturing the synergies to which we committed. In some cases, it takes cash up front to achieve synergies, so we are balancing these needs with our desire to pay down the debt we took on to finance the acquisition as quickly as possible. As Mick mentioned, we expect to get down to our target leverage range by the end of this fiscal year. We will therefore be very disciplined with our capital allocation strategy, balancing our need to invest for both synergies and growth with debt repayment.

我們明年的優先事項包括持續整合 CIS 業務，並實現我們所承諾的協同效益。在某些情況下，為了達成協同效益需要先行投入現金，因此我們在這些需求與希望盡快償還為併購融資而承擔的債務之間取得平衡。如 Mick 所提到的，我們預期在本會計年度結束前將槓桿比率降至目標區間。因此，我們在資本配置策略上將非常嚴謹，在投資協同效益與成長，以及償還債務之間取得平衡。

As I have previously mentioned, for the past year, we have been working on becoming a more global organization. For fiscal 2018, we will continue to manage and report results for our vehicular business under the 3 existing regional segments, but plan to combine them into 1 segment in fiscal 2019 which we will call Vehicular Thermal Solutions, or VTS. The advantage of combining these vehicular segments is to have a more global approach to our business, including how we interact with our customers, manage our operations and develop our products.

如我先前提過，過去一年我們一直致力於成為更全球化的組織。在 2018 會計年度，我們將持續以現有的 3 個區域分部來管理並揭露車用業務的業績，但計畫在 2019 會計年度將其合併為 1 個分部，稱為 Vehicular Thermal Solutions，或 VTS。合併這些車用分部的優勢在於，能以更全球化的方式經營我們的業務，包括我們如何與客戶互動、管理營運以及開發產品。

With our transformation into the 3 business units: VTS, CIS and Building HVAC, we are in a much better position to make strategic decisions and allocate capital more efficiently. We can better assess the markets we serve and consolidate the relative strength of our competitive positions.

隨著我們轉型為 3 個事業單位：VTS、CIS 與 Building HVAC，我們在制定策略決策與更有效率地配置資本方面，處於更有利的位置。我們能更好地評估所服務的市場，並整合我們競爭地位的相對優勢。

The common and an unwavering commitment among our businesses is our proven leadership in providing thermal management solutions. Leveraging this core competency across our various markets will drive greater value by minimizing the risk of market cyclicality and by providing greater scale to better withstand the competitive forces we will continue to face. This is a big change for our company, but we have the right team in place to continue our focus on growth and diversification by leveraging our position as a global leader in thermal management solutions.

我們各項業務共同且堅定不移的承諾，是在提供熱管理解決方案方面經驗證的領導地位。在不同市場中運用這項核心能力，將透過降低市場景氣循環的風險，以及提供更大的規模以更好地承受我們將持續面對的競爭力量，來創造更高的價值。這對公司而言是一項重大改變，但我們已具備合適的團隊，能持續聚焦於成長與多元化，並運用我們作為全球熱管理解決方案領導者的地位。

I am very excited about the year ahead of us. As Mick outlined in his overview of our guidance for fiscal 2018, we're expecting a year of significant sales and earnings growth driven by the addition of the CIS business. Through the execution of our SDG strategy, we have clearly met our goal of transforming Modine into a more diversified thermal management leader.

我對接下來的一年感到非常振奮。正如 Mick 在其對 2018 會計年度指引的概述中所說，我們預期在 CIS 業務加入的帶動下，將迎來銷售與獲利顯著成長的一年。透過執行我們的 SDG 策略，我們已明確達成將 Modine 轉型為更為多元化的熱管理領導者之目標。

And with that, we will take your questions.

那麼，接下來我們將回答各位的提問。

(Operator Instructions) Our first question will come from the line of David Leiker with Robert W. Baird.

(接線員指示) 我們的第一個問題來自 Robert W. Baird 的 David Leiker。

This is Joe Vruwink for David. I wanted to start in and try to maybe get at the growth for Modine coming from things like new business, content, market share. So if I just look at your fiscal '17 results, I think the base business maybe declined 1% organically. Can you quantify it? You have some CV programs rolling up, you had some BMW business rolling off, all of that was planned, so that's a headwind. The end markets were obviously negative. It just seems like if I try to get at kind of the Modine growth not related to those other things, you're doing a pretty nice rate of growth. And I'm wondering what that number is exactly.

我是代替 David 的 Joe Vruwink。我想先從 Modine 的成長來源切入，例如新業務、單車價值（content）、市占率等。如果我看你們 2017 會計年度的結果，我認為基礎業務有機下滑約 1%。你們能量化一下嗎？你們有一些 CV 專案逐步納入，也有一些 BMW 業務逐步退出，這些都是計畫內的，因此形成逆風。終端市場顯然是負面的。但如果我試著看 Modine 不受那些因素影響的成長，你們其實呈現相當不錯的成長速度。我想知道那個數字到底是多少。

Yes, Joe, difficult to quantify, but what I can tell you is in the areas where we've targeted our growth and have really built that strong global product platform, we're growing -- we've been growing, in some cases, double-digits top line. I would say longer term, it's been growing in the mid-single digits. And then what you've seen offset that has been the wind-down of certain programs which you've named that we knew about. And then candidly, we've also, in the last, really, 18, 24 months, have been battling some market declines on the overall heavy-duty side or off-highway side as well. Tom, do you have anything to add?

是的，Joe，這很難量化，但我可以告訴你的是，在我們鎖定成長、並真正建立起強大全球產品平台的領域，我們正在成長——而且在某些情況下，營收年增是雙位數。我會說從較長期來看，成長大約在中個位數。而你看到用來抵銷的部分，是你提到的某些專案逐步結束，我們事先就知道會發生。坦白說，過去大概 18 到 24 個月，我們也一直在因應整體重型車或非公路（off-highway）市場的下滑。Tom，你要補充什麼嗎？

No. You hit it.

沒有。你說得很到位。

Is there a point in time where some of those negative items -- I know end markets, you can't really predict quarters in advance or years in advance. But is there a point in time where the planned program exits subside and Modine will more clearly be a mid- to high-single digit grower in the reported results?

是否有一個時間點，讓那些負面因素——我知道終端市場你們無法提前以季度或年度去預測——但是否有一個時間點，計畫性的專案退出會趨緩，讓 Modine 在揭露的結果中更清楚地成為中到高個位數的成長者？

Yes. From my side, I think we're getting to that, really to that point now where we're starting to turn the corner on some of the major headwinds we've had on the wind-downs. I think this is -- we're through the BMW wind-down. Most of the issues we've been through in the last year or 2. Restructuring in the Americas is behind us. We're seeing stability in Brazil and then gaining share, winning our programs in Brazil. So that seems to be stable. Asia is stable. I think the only remaining issue that we need to manage in the next year is the wind-down of some commercial vehicle programs in Europe. Other than that and in the magnitude, that's not huge on a $1 billion, $2 billion, $3 billion vehicular business. That would be the last item I see. Tom?

是的。就我這邊來看，我認為我們現在正接近那個時間點，開始在一些主要的專案退出逆風上轉折。我認為——我們已經度過 BMW 的逐步退出。過去 1 到 2 年的大多數問題我們都已經處理過；美洲的重整也已告一段落。我們看到巴西趨於穩定，並且正在提升市占、在巴西贏得專案。所以那邊看起來是穩定的。亞洲也穩定。我認為接下來一年唯一仍需管理的議題，是歐洲部分商用車專案的逐步退出。除此之外，就規模而言，對於一個 10 億、20 億、30 億美元規模的車用業務來說，影響並不大。那會是我看到的最後一項因素。Tom？

Yes, no, I agree. I think the focus on the portfolio on the product side, the vehicular business, is we've got it in excellent position on platform bases located in the right places, namely low-cost country. The big trends in industry from a standpoint of fuel efficiency, electrification and so on are -- we're positioned very well. So I feel very good about how we worked to get the portfolio right and the cost structure right. Again, Mick mentioned the challenges or the headwinds of the off-highway market which has been a significant drag on revenue. We continue to be very satisfied with our relationships with customers, our win rate in that market, in specifically heavy-duty, especially related in the mining side. As that comes back, we will fare very well. And in ag as well.

是的，我同意。我認為在產品面、車用業務的組合聚焦上，我們已把它調整到非常好的位置：以平台為基礎，並設在正確的地點，也就是低成本國家。從燃油效率、電動化等產業大趨勢來看——我們的布局非常到位。因此，我對我們在調整產品組合與成本結構方面所做的工作感到非常有信心。再次強調，Mick 提到非公路市場的挑戰或逆風，這一直是營收的一個顯著拖累。我們仍對與客戶的關係、以及在該市場的得標率非常滿意，特別是在重型領域，尤其與礦業相關的部分。當那個市場回溫時，我們將會表現得非常好。農業領域也是如此。

Okay, great. If I shift to the cost side, so obviously, a tremendous amount has been done to generate better incremental profits going forward. If I just look at Q4 and I did my math right, it's about a $2.5 million gross profit improvement on a $6.8 million revenue improvement for the base business, so pretty healthy contribution margins. Is that the right incremental to think about, not factoring in materials, obviously, but given the work you've done on incremental volume? In the near term, we can be expecting that type of performance?

好的，很棒。如果我轉到成本面來看，顯然，為了在未來帶來更好的增量利潤，你們已經做了大量工作。如果我只看第四季，而且我算得沒錯的話，基礎業務在營收增加 680 萬美元的情況下，毛利改善約 250 萬美元，所以貢獻毛利率相當健康。這樣的增量理解是否正確？當然不把材料因素納入，但就你們在增量產量方面所做的工作而言。短期內，我們可以期待這種表現嗎？

Joe, I'd say I think we still hold to 25% to 30% conversion on volume, which I think is what we should expect to see and would be good. And then you pointed out the other thing, it's just at least in the next 6 months as we start to pass through materials, we've got a pretty big headwind this year, $15 million to $20 million on the copper, aluminum side. But absent anything on the metals side, I would say 25% to 30%. In some cases, we can do a little bit better, but that would be the average.

Joe，我會說我們仍然維持在產量的 25% 到 30% 轉換率，我認為這就是我們應該預期會看到的，而且會是不錯的表現。另外你也指出另一點，至少在接下來 6 個月，當我們開始把材料成本轉嫁出去時，今年在銅、鋁方面會有相當大的逆風，大約 1,500 萬到 2,000 萬美元。但如果不考慮金屬那一塊，我會說是 25% 到 30%。在某些情況下我們可以做得更好一些，但平均而言就是這個水準。

Is that an EBIT contribution?

那是 EBIT 的貢獻嗎？

Well, great question. It should be close. We've got -- we've really gotten our SG&A down to pretty lean and where we need it from the SDG program, so most of our SG&A moves will frankly just be with general economics. So I would say gross profit, 25% to 30% conversion, less any kind of general economics on SG&A.

嗯，很好的問題。應該會很接近。我們已經把 SG&A 透過 SDG 計畫降到相當精實、也達到我們需要的水準，所以我們的 SG&A 變動坦白說大多只會隨著整體經濟環境而動。所以我會說毛利的 25% 到 30% 轉換率，再扣除 SG&A 方面任何一般經濟因素的影響。

And then my last question, on free cash flow. So to do what you've done to the vehicle business, obviously, that consumed cash. It sounds like you're in the later innings, so probably tailwinds for free cash from the vehicle business. What would be your expectation in fiscal '18 for free cash flow? And then maybe a blue sky scenario for what's the vehicle business and Luvata ultimately could do, free cash flow generation.

然後我最後一個問題是關於自由現金流。為了把車輛業務做到你們現在的程度，顯然是消耗了現金。聽起來你們已經進入後段局數，所以車輛業務的自由現金流應該會有順風。你們對 2018 財年的自由現金流有什麼預期？另外，也許在最樂觀的情境下，車輛業務與 Luvata 最終能做到什麼程度的自由現金流產生能力？

Yes. I think in fiscal '18, Joe, we'd expect free cash flow to be up in line with the increase in EBITDA. I don't really expect a big change in working capital and only CapEx should be within $5 million or so of what we spent this year. So we should see a really nice move next year of free cash flow, up with the EBITDA. Up -- it's going to be up about $50 million to $60 million. And then longer term, I think the company has the ability to generate, for sure, $75 million to $100 million type of free cash flow with top line growth.

是的。Joe，我們預期 2018 財年的自由現金流會隨 EBITDA 的增加而同步上升。我不太預期營運資金會有很大的變化，而資本支出也應該只會比今年的支出上下差不多 500 萬美元左右。所以明年我們應該會看到自由現金流有非常漂亮的提升，跟著 EBITDA 一起上來。將會增加——大約會增加 5,000 萬到 6,000 萬美元。而更長期來看，我認為公司在營收成長的情況下，絕對有能力產生大約 7,500 萬到 1 億美元等級的自由現金流。

Our next question will come from the line of Matthew Paige with Gabelli and Company.

我們的下一個問題來自 Gabelli and Company 的 Matthew Paige。

You noted $15 million in synergies over the next 3 to 4 years. Could you put any of that into buckets for us?

你提到未來 3 到 4 年有 1,500 萬美元的綜效。你能否把這些綜效大致分成幾個類別給我們？

Yes. I think you said $15 million? Or did you say...

可以。我想你說的是 1,500 萬美元？還是你說的是……

$15 million.

1,500 萬美元。

$15 million, yes.

1,500 萬美元，是的。

$15 million is the -- yes, okay. I thought maybe you said $50 million for a second there...

1,500 萬美元就是——是的，好。我剛剛還以為你一度說的是 5,000 萬美元……

One could hope.

那當然是大家都希望的。

Yes. No, clearly, we are looking at all the traditional elements of synergy opportunities, as we've reported with the planning of the acquisition to close, we stood up integration management office, an executive oversight, dedicated team, work stream leaders on both sides of -- in both companies as we came together. And we've generated many ideas. So you can think of all the traditional operational, procurement, back office opportunities that are in place to make sure we drive that. So I feel very good about when I -- when we say meet or exceed that commitment of being very much achievable. So breaking that up right now will be a little premature, but you can take away that we're -- every opportunity is being looked at and every major value stream is going to be -- is being impacted as far as looking for opportunity.

是的。不，顯然我們正在檢視所有傳統的綜效機會要素；正如我們在規劃收購到交割的過程中所報告的，我們成立了整合管理辦公室（integration management office）、高階主管監督機制、專責團隊，以及在雙方公司各自配置的工作流（work stream）負責人，隨著我們合併在一起。我們也產生了許多想法。所以你可以把它想成所有傳統的營運、採購、後勤/後台（back office）等機會都已就位，以確保我們推動落實。因此我對於我們所說「達成或超越」該承諾非常有信心，因為這是非常可達成的。至於現在就把它細分會有點言之過早，但你可以帶走的重點是：我們正在檢視每一個機會，而且每一條主要價值流都將會——也正在——受到影響，因為我們在尋找機會。

Great. And as you noted, Asia growth was particularly strong. Could you talk about some of the potential drivers, such as regulation enforcement, there? As well as how you're faring on domestic versus JV platforms?

很好。另外，如你所提到，亞洲成長特別強勁。你能談談一些可能的驅動因素嗎，例如法規執行的力度等？以及你們在國內平台與合資（JV）平台上的表現如何？

Sure. No. We are very excited. We invested early with the right product platforms in Asia, anticipating the regulatory changes on emission controls similar to the rest of Europe and North America. Those -- that strategy is paying off now with the right product mix that customers need, both multinationals and domestics, as I mentioned. One example, a major win with JAC, a major truck player in China. But we're seeing the same clearly with automotive drive, with oil coolers as the need for higher-efficiency performing vehicles in the China region are demanding the product that we, quite frankly, are a leader in providing solutions to and all the adjacent opportunities that those bring, things like charge air coolers and transmission oil coolers and other devices that are very important to balance out the engine powertrain performance of these higher-performing cars. So the mix is right. Again, China very specifically. But India right there with it as well, so I feel very positive that we're set up well for those trends in regulatory changes to meet the needs of that region.

當然。不。我們非常振奮。我們很早就以正確的產品平台在亞洲投資，預期排放控制的法規變化會與歐洲其他地區及北美類似。如我所提到的，這項策略現在正在奏效，因為我們具備客戶所需要的正確產品組合，無論是跨國企業或本土客戶。舉例來說，我們在中國一家大型卡車業者江淮（JAC）拿下了一個重大案子。但我們也同樣清楚地看到在汽車驅動相關領域的需求，例如油冷卻器；隨著中國地區對更高效率、性能更佳的車輛需求提升，市場正在要求我們所提供的產品，而坦白說，我們在提供解決方案方面是領導者；以及這些所帶來的所有相鄰機會，例如增壓進氣冷卻器（charge air coolers）、變速箱油冷卻器（transmission oil coolers）以及其他裝置，這些對於平衡高性能車款的引擎與動力總成（powertrain）表現都非常重要。所以產品組合是對的。再次強調，特別是中國。但印度也同樣緊跟其後，因此我非常正面地認為，我們已為這些法規變化趨勢做好良好布局，以滿足該地區的需求。

Great. That's very helpful. And last question from me is you spoke to improvement, particularly in the off-highway segment. Could you just touch on what regions primarily are seeing this? And any cadence throughout the quarter that you saw?

很好。這非常有幫助。我最後一個問題是，你提到非公路（off-highway）部門的改善特別明顯。你能否簡單談談主要是哪些地區看到這種改善？以及你在整個季度中觀察到的任何節奏/走勢？

Yes. Well, clearly, we mentioned Asia. We're seeing construction infrastructure gains really kicking off. The excavator business up a little bit, which is very much a target focus for us in Asia. So that's one. We're also seeing off-highway mining-related opportunities that are developing from the low base in North America. So those are both very encouraging demands. There's some indication of ag business, off-highway on the ag side coming back, Brazil showing some signs, but also indications coming from some of our larger customers. So all in all, as Mick pointed out, we're anticipating some tailwinds this year, which is great coming from a very important segment -- or set of segments of our business portfolio.

是的。嗯，顯然我們提到了亞洲。我們看到建築基礎設施的成長動能確實開始啟動。挖掘機業務小幅上升，而這在亞洲是我們非常聚焦的目標領域。所以這是一個。我們也看到北美從低基期開始，與非公路礦業相關的機會正在發展。所以這兩方面的需求都非常令人鼓舞。另外也有一些跡象顯示農業（ag）業務、農業端的非公路需求正在回升，巴西出現一些訊號，同時也從我們一些較大的客戶那裡看到相關跡象。總體而言，正如 Mick 所指出的，我們預期今年會有一些順風，這很好，因為這些來自我們業務組合中非常重要的一個部門——或一組部門。

Our next question will come from the line of Mike Shlisky from Seaport Global.

我們的下一個問題將來自 Seaport Global 的 Mike Shlisky 專線。

I want to turn to your -- back to your slide for North America. So you're saying that you're seeing a flat outlook for Class 8 for fiscal '18, but the big forecasting services, like ACT, they're now saying up double digits. I'd say similarly in medium-duty, I think you're saying flat to up 5%, while the big survey forecasters are saying up double digits there as well for Class 5 to 7 trucks. So I'm just kind of confused why you're saying flat, maybe up slightly, when you've got double digit outlook for the big forecasters. And I've never known you guys to deviate much from what those guys have been saying. Could you help bridge the gap there?

我想回到你們——回到你們北美的投影片。所以你們是說，2018 財年 Class 8 的展望持平，但像 ACT 這類大型預測服務機構現在說會有兩位數成長。我覺得在中型車方面也類似，你們說持平到成長 5%，而大型調查型預測機構也說 Class 5 到 7 卡車會有兩位數成長。所以我有點困惑，為什麼你們說持平、可能小幅上升，但大型預測機構卻是兩位數的展望。而且我從來沒看過你們偏離那些機構的說法太多。你們能幫忙解釋一下這中間的落差嗎？

Yes. Mike, we talked a lot about that this week. It seems like in the last set of earnings announcements, there's been some more positive news on the truck side. We are really basing it off of what we're seeing on some of our order intakes on the short-term order intakes and directions from the customer. I guess I would say we've been reading this week the same news that you've been doing, and I hope that would be a tailwind for us. So we've primarily built it on our specific programs and what we're hearing in particular from our customers and our plants. Tom, anything?

是的。Mike，我們這週談了很多這件事。看起來在上一輪財報公告中，卡車端出現了一些更正面的消息。我們主要是根據我們在短期接單量、以及客戶給的方向所看到的情況來判斷。我想我會說，我們這週讀到的新聞跟你讀到的是一樣的，我希望那會成為我們的順風。所以我們主要是建立在我們特定的專案，以及我們特別從客戶與工廠聽到的訊息之上。Tom，有要補充的嗎？

No. That's exactly right. So we've -- we hope that comes through, but basically right now, what we're seeing is kind of numbers that hold to those projections we gave. That's feedback from -- customer feedback.

沒有。完全正確。所以我們——我們希望那會實現，但基本上目前我們看到的數字大致仍符合我們給出的那些預測。那是來自——客戶回饋。

Got it. Quick follow-up there. Have any truck makers kind of thrown a wrench in their production plans, I mean, for the coming quarter here because of some suppliers elsewhere that are having problems shipping, so they're not ordering all the other components from you or anybody else? I guess, are there any big wrenches in the production process right now?

了解。快速追問一下。有沒有任何卡車製造商因為其他供應商出貨出問題，而在接下來這一季的生產計畫上被打亂？也就是說，他們因此沒有向你們或其他人訂購所有其他零組件？我想問的是，目前生產流程中有沒有什麼重大的干擾因素？

I'm not aware of anything, Mike.

Mike，我沒有注意到有任何這種情況。

Okay. I'll say, I guess, kind of similarly in off-highway, I mean, you just saw Deere just raise their outlook to positive 13% and CAT's looking at an up year as well. I imagine those are 2 of your bigger customers there. And yet, you're flat. I guess I was kind of wondering, again, for North America at least, I mean, is -- does your outlook for flat based upon what you're seeing from your main customers? Or again, is there a potential for a hopeful better back half of the year here?

好的。我想說，類似地在非公路（off-highway）領域，你剛看到 Deere 把展望上調到正成長 13%，而 CAT 也預期今年會成長。我想那兩家應該是你們在那邊比較大的客戶。但你們卻是持平。所以我想再問一次，至少就北美而言，你們持平的展望是基於你們從主要客戶看到的狀況嗎？或者，今年下半年是否有機會更好、值得期待？

Yes. Mike, I think we're as hopeful as everybody else. It's just after the last 2 years of really, we'd like to see more. Clearly, we had a very strong Q4 and strong month of March, and a lot of that came from the off-highway, heavy equipment people. So we are hearing a lot of favorable news for the first time in a while, a lot of green shoots, I guess. So I wouldn't disagree with you. We just would like to see more than 1 or 2 months before we change the full year outlook. Hopefully, we -- as I said on my concluding thoughts, for once, it feels like here, we have potentially more tailwind than headwind coming at us.

是的。Mike，我想我們跟其他人一樣抱持希望。只是經過過去兩年，我們真的——我們希望看到更多。很明顯地，我們第四季非常強勁，3 月也很強，而其中很大一部分來自非公路、重型設備客戶。所以我們確實第一次在一段時間內聽到很多有利的消息，我想可以說是一些復甦的萌芽。所以我不會不同意你的看法。我們只是希望在調整全年展望之前，能看到不只 1、2 個月的表現。希望我們——正如我在結語提到的，這次感覺我們可能迎來的順風多於逆風。

And Mike, we forecast on released [EDI], right, that comes from our customers. So right now, we hear the optimism, they talk about the optimism and that sort of stuff. But we convert forecast when we see that released into our EDI .

另外，Mike，我們是依據客戶釋出的 [EDI] 來做預測，對吧，那是由客戶提供的。所以目前我們聽到樂觀情緒，他們也談到樂觀等等。但我們會在看到那些預測被釋出到我們的 EDI 後，才把它轉成正式預測。

Okay, got it. And then turning to the CIS segment, I guess I was kind of wondering, do your previously released sort of financials and outlook for that segment, back when you first did the deal, I guess do those still hold going forward for the most part? Do we take that, just maybe add 2% to it based on what was in the slide? Give us a sense as to how that's progressing as far as all the numbers, holistically, for you.

好的，了解。接著談到 CIS 事業部，我想問的是，你們先前在剛完成交易時所公布的該事業部財務與展望，往後大致上還成立嗎？我們是否可以把那個基礎上，依照投影片內容大概再加 2%？請你從整體角度，說明一下目前那邊各項數字的進展情況。

Yes. So one of the things we try to do, Mike, is there was clearly a lot of questions around the impact of purchase accounting. I would say it's absolutely in line with what we've modeled and did on the due diligence side. It's -- that business, depending on the exchange rate, has been in the $500 million to $550 million range. When you add in the purchase accounting, the $13 million-ish of increased amortization, depreciation, it's about a -- temporarily here, a 200 to 300 basis point decline in margins that we will work back as we continue to push through synergies. So as we look ahead, I think it's going to be in that $500 million, $550 million revenue range with an operating margin of 5.5%, 6.5% range, which again, is down a little bit from historical. But you got to back out -- you have to back out the purchase accounting. For example, in the last quarter here, absent the purchase accounting, their operating margin was about 7.75%. So as you look forward, just to kind of maybe be clear here, I think operating margin in the 5.5% to 6.5% with all-in GAAP reporting going forward. Hope that answers your question.

是的。Mike，我們嘗試做的一件事是——顯然大家對收購會計（purchase accounting）的影響有很多問題。我會說，結果完全符合我們在模型中、以及盡職調查時所做的假設。那個業務依匯率不同，營收大約落在 5 億到 5.5 億美元區間。當你把收購會計納入後，約 1,300 萬美元左右的攤銷、折舊增加，會使利潤率在短期內暫時下降約 200 到 300 個基點；我們會在持續推動綜效的過程中把它拉回來。所以往前看，我認為營收會在 5 億到 5.5 億美元區間，營業利益率約在 5.5% 到 6.5% 區間；這同樣比歷史水準略低一些。但你必須把——你必須把收購會計的影響扣除。例如在上一季，如果不計收購會計，他們的營業利益率大約是 7.75%。所以往後看，為了把話說清楚，我認為在未來以 GAAP 全額入帳的報表口徑下，營業利益率會落在 5.5% 到 6.5%。希望有回答到你的問題。

Yes, that helps tremendously. Maybe I can squeeze in one last one here on the cost of metals. Did you say that cost savings initiatives will fully offset any of the high materials costs? Will it -- might be a headwind in the first half and a tailwind in the back half? Give us a sense as to what that -- might transpire there over the course of the year.

有，這幫助非常大。我最後再擠一個問題，關於金屬成本。你是說成本節省措施會完全抵銷原物料成本上升的影響嗎？會不會上半年是逆風、下半年變成順風？請你說明一下今年整體可能會如何發展。

Yes. We're -- we'll offset during the year. And primarily, we've committed to and we've got in our plans, we've got the $20 million of the remaining SDG savings. But what partially offsetting all those savings is the $15 million to $20 million of materials. The metals really ran in -- beginning around January through March, so it'll be -- we'll be hardest hit in our first quarter, second quarter. And then it'll start to catch up, Mike, in Q3 and Q4.

是的。我們——會在年度內抵銷掉。主要是我們已承諾、也已納入計畫中的剩餘 SDG 節省 2,000 萬美元。但會部分抵銷這些節省的是 1,500 萬到 2,000 萬美元的材料成本。金屬價格大概從 1 月到 3 月開始上漲，所以我們在第一季、第二季受到的衝擊會最大。然後到了第三季、第四季就會開始追上來、逐步反映，Mike。

Okay. But there aren't any, like, new initiatives being done to offset these costs specifically, so it's the general SDG...

好的。但並沒有任何像是專門用來抵銷這些成本的新措施，所以就是一般的 SDG……

No. Yes, SDG. And that work's done, behind us, so we're capturing those benefits. Just us getting the full benefit of those will be a lag until we really can push through contractually our metals increases.

沒有。是的，SDG。而且那項工作已經完成、告一段落，所以我們正在把那些效益納入。只是我們要完全享受到那些效益會有些滯後，直到我們真的能在合約上把金屬漲價推進去。

Our next question will come from the line of [Douglas D.C. with D.C. Capital].

下一個問題來自 [D.C. Capital 的 Douglas D.C.]。

Could you elaborate a little bit on Asia? And what -- kind of 3 years out, what you might see there in revenues and kind of a target operating income, maybe percentage or margin? And do you have the footprint there now to get there?

你能否再多談一點亞洲？以及大概往後看 3 年，你可能看到那邊的營收，以及目標營業利益（也許是百分比或利潤率）會是什麼樣子？另外，你們目前在那邊的據點是否足以達成？

I'll start and let Mick come through on margins discussion. Clearly, a big, huge jump this year on revenue top line, which we've been really -- we're really glad to see that come through as our strategy of the automotive investment to get our oil cooler and LC product line over there to support that growing opportunity. Obviously, we see growth continuing, not at that pace, okay? But probably in the mid-teen range for the next few years. Capacity-wise, as I've pointed out, we've kind of hit the first level of capacity constraint, that we've added essentially 2 additional furnaces that will be in place by the end of this year that will manage the near-term growth needs. But clearly, we have a nice leverage in our capacity in place now with the projections going forward. We don't have plans for additional brick-and-mortar expansion this time, but as we see that going forward, we will look at it. But we plan to leverage every opportunity as we see these growing trends of our product portfolio set up that we put in place, which includes commercial truck, off-highway and automotive balance on the vehicular side, as well as supporting the CIS growing opportunities over there that Mike mentioned, that they have with their 2 operations. So from a overall perspective, I'm very pleased with the leadership guidance in Asia that were in place to really capture that upside. From a margin perspective, Mick, do you want to add your comments?

我先開始，然後讓 Mick 接著談利潤率。很明顯，今年營收（上線）有非常大幅的跳升；我們一直——我們真的很高興看到這個結果，因為這符合我們在汽車領域投資的策略，把我們的油冷器與 LC 產品線帶到那邊，以支援那個正在成長的機會。顯然，我們看到成長會持續，但不會是那樣的速度，好嗎？不過接下來幾年大概會在十幾%的中段區間。就產能而言，如我先前指出的，我們算是碰到第一階段的產能限制；我們基本上新增了 2 座熔爐，會在今年底前到位，以因應短期成長需求。但很明顯，以未來的預測來看，我們目前既有產能有不錯的槓桿空間。目前我們沒有額外的實體擴建計畫，但隨著未來發展，我們會再評估。不過，隨著我們看到產品組合的成長趨勢——我們已經把它建置到位——我們會把握每一個機會；在車輛端包含商用卡車、非公路與汽車的平衡配置，同時也支援 Mike 提到的 CIS 在那邊的成長機會，他們有 2 個營運據點。所以從整體角度來看，我對亞洲現有的領導團隊與指引非常滿意，能真正掌握上行空間。至於利潤率方面，Mick，你要補充嗎？

Yes. We finished '17 here just a little bit north of $100 million and a 7% operating margin. The next few years, with the growth we've got booked, that business can be $150 million several years out. And it's capacitized, so we'd like to see it get to $200 million, longer term. And operating margins probably in the 8% to 9% range.

是的。我們在 2017 年結束時，這裡的規模略高於 1 億美元，營業利潤率為 7%。未來幾年，依照我們已經拿到的成長訂單，那個業務在幾年後可以到 1.5 億美元。而且產能已配置到位，所以我們希望長期能到 2 億美元。營業利潤率大概在 8% 到 9% 的區間。

Our next question will come from the line of David Leiker with Robert W. Baird.

下一個問題來自 Robert W. Baird 的 David Leiker。

I wanted to follow-up on maybe a high-level discussion on electrification. You're clearly well positioned in automotive. I don't think there's any debate that, as you bring in bigger batteries, the thermal contents really needs to rise to facilitate that. Electric trucks are becoming an increasingly big piece of the conversation on the heavy-duty side of the equation. Are you seeing customers' quotes for those types of programs, engage you in discussions? And how would you do your competitive positioning in that potential opportunity as it develops?

我想就電動化做個高層次的追問。你們在汽車領域顯然具備良好布局。我想沒有爭議的是，當你導入更大的電池時，為了促成這件事，熱管理的含量確實需要提高。在重型端的討論中，電動卡車正變得越來越重要。你們是否看到客戶針對這類專案的報價，並與你們展開討論？而隨著這個潛在機會發展，你們會如何看待自身的競爭定位？

So I'm going to take those in order. The answer is yes. We are seeing truck development opportunities, engagements with some of those names that are out there that you are familiar with. I will say that the pace across the board on EV automotive programs is picking up. We are currently awarded programs with 5 different OEs right now, okay, with multiple opportunities or programs per OE, but we're probably working with another 2 dozen companies as well. I mean, it's really a -- been a real acceleration along these lines. So again, I'm very, very excited about the opportunity and we've got both feet on the ground, though, okay? I mean, it's making sure that we make the right -- get allocations on resource and capital going forward. So -- but yes, this is one that's gone from something that is on the fringe to come into the core element across the vehicular business. As you mentioned, not just automotive business, which is the biggest push, but now things like truck as well.

我會依序回答。答案是會。我們確實看到卡車開發的機會，並與一些你熟悉、外界也知道的那些公司名稱有所接觸。我會說，整體而言，電動車（EV）汽車專案的推進速度正在加快。我們目前已獲得 5 家不同 OE 的專案授予，好嗎？每家 OE 之下都有多個機會或專案；此外我們也大概正在與另外 20 多家公司合作。我的意思是，這方面確實——加速得很明顯。所以我再次強調，我對這個機會非常、非常興奮，但我們也腳踏實地，好嗎？也就是要確保我們在未來把資源與資本做正確的——配置與投入。所以——但沒錯，這已經從原本邊緣的事情，變成車輛業務的核心要素。如你所提到的，不只是汽車業務（推動力最大），現在也包括像卡車這類。

Is it possible maybe to frame the incremental content? So you've outlined $300 in addressable content on an automotive EV. What would that number look like if it was a heavy-duty class 7, Class 8 truck?

是否可以幫我們框定一下增量含量？你們已經提出在電動乘用車上可觸及的含量是 300 美元。如果是重型的 7 級、8 級卡車，那個數字會是什麼樣子？

A little early to give you a number there, Joe. Great question and something we can take away and think about as that matures as an opportunity. But clearly, there's a lot going on there, you're right, as far as content.

Joe，現在要給你那個數字還有點早。這是個很好的問題，我們可以帶回去，隨著這個機會成熟再思考。但很明顯，那邊確實有很多事情在發生，你說得對，就含量而言。

I'm guessing higher, but (inaudible) want to quantify it...

我猜會更高，但（聽不清）想把它量化……

Yes, guessing higher, but (inaudible), so...

是的，猜會更高，但（聽不清），所以……

Thank you. I'm showing no further questions at this time. I would now like to turn the conference back to Kathy Powers.

謝謝。目前顯示沒有其他問題。我現在把電話會議交回給 Kathy Powers。

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

謝謝你，Brian。今天的電話會議到此結束。感謝各位今天早上加入我們，也謝謝各位持續關注 Modine。再見。

Ladies and gentlemen, thank you for participation in today's conference. This does conclude the program and you may all disconnect. Everybody, have a wonderful day.

各位女士、先生，感謝各位參與今天的會議。本次議程到此結束，大家可以掛線。祝各位有美好的一天。