Modine Manufacturing Company (MOD) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Modine Manufacturing Company's First Quarter Fiscal 2018 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer, Investor Relations and Tax. You may begin.

各位女士、先生，大家好，歡迎參加 Modine Manufacturing Company 2018 會計年度第一季財報電話會議。(接線員指示) 提醒各位，本次會議將被錄音。現在我想把會議交給本次主持人——Kathy Powers 女士，她是公司副總裁、財務主管、投資人關係與稅務負責人。您可以開始了。

Thank you. Thank you for joining us today for Modine's First Quarter Fiscal 2018 Earnings Call. With me today are Modine's President and CEO, Tom Burke; and Michael Lucareli, our Vice President of Finance and Chief Financial Officer. We'll 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. Also, should you need to exit the call prior to its conclusion, a replay will be available through our website beginning approximately two hours after the call concludes. On slide 2 is an outline for today's call. Tom and Mick will provide comments on our first quarter results and review our revenue and earnings guidance for fiscal '18. At the end of the call, there will be a question-and-answer session. 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. With that, it's my pleasure to turn the call over to Tom Burke.

謝謝。感謝各位今天加入 Modine 2018 會計年度第一季財報電話會議。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 Michael Lucareli。我們將使用今天簡報的投影片。相關連結可透過網路直播連結，以及張貼於公司網站 modine.com「投資人關係」專區的 PDF 檔取得。另外，若您需要在會議結束前提前離線，會議結束約兩小時後，將可透過我們的網站收聽重播。投影片第 2 頁為今天會議的議程大綱。Tom 與 Mick 將就第一季業績提供評論，並回顧 2018 會計年度的營收與獲利指引。會議最後將進行問答環節。投影片第 3 頁為我們關於前瞻性陳述的提示。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以及公司向美國證券交易委員會提交之文件中所述。接下來，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 first quarter results and provide an update on the status of our end markets and on the integration of our CIS business. After that, Mick will provide a more detailed review of our consolidated financial results, and we'll also discuss our revenue and earnings guidance for fiscal 2018. I'll then provide a few closing remarks prior to opening up the call for questions. I am pleased to report another strong quarter, with significant sales and earnings improvements, largely driven by the addition of our recently acquired CIS segment and solid organic growth as well. Sales increased 50% on a constant currency basis including $158 million of sales from our CIS business in the quarter. Our non-CIS or base business increased 4% on a constant-currency basis, primarily due to higher sales in the Americas, Asia and Building HVAC segments, partially offset by lower sales in the Europe segment. Our adjusted operating income was $31.6 million, a 62% increase from the prior year, primarily due to the addition of the CIS business, which contributed $10.8 million of operating income in the quarter. Our adjusted earnings per share were $0.39 for the quarter, a $0.16 increase from the prior year, primarily due to higher operator -- operating earnings, partially offset by higher interest expense from the debt taken on to finance the Luvata acquisition. The integration of the CIS business is proceeding as planned and our cultures and business processes are meshing together well. In fact, based on our short-term momentum, we believe we are in a position to exceed our goal of $15 million of annual cost synergies and we'll meet it ahead of our 3- to 4-year timeline. Now I'd like to briefly review the segment results for the first quarter, and review our market outlook for fiscal 2018.

謝謝你，Kathy，各位早安。在今天的電話會議中，我將討論第一季業績，並就我們終端市場的狀況以及 CIS 業務的整合進度提供最新資訊。之後，Mick 將更詳細地回顧我們的合併財務結果，我們也會討論 2018 會計年度的營收與獲利指引。接著在開放提問之前，我會做幾點結語。我很高興報告本季再度表現強勁，銷售與獲利均顯著改善，主要受惠於近期收購的 CIS 事業部門納入，以及穩健的有機成長。以固定匯率計算，銷售成長 50%，其中本季 CIS 業務貢獻 1.58 億美元銷售額。我們的非 CIS（或基礎）業務以固定匯率計算成長 4%，主要來自美洲、亞洲與建築 HVAC 事業部門銷售增加，部分被歐洲事業部門銷售下滑所抵銷。調整後營業利益為 3,160 萬美元，較去年同期增加 62%，主要因 CIS 業務納入，本季貢獻 1,080 萬美元營業利益。本季調整後每股盈餘為 0.39 美元，較去年同期增加 0.16 美元，主要因營運——營業獲利提高，部分被為籌措 Luvata 收購而承擔之債務所帶來的利息費用增加所抵銷。CIS 業務整合正按計畫進行，我們的企業文化與業務流程也正順利融合。事實上，基於短期動能，我們認為有機會超越每年 1,500 萬美元成本綜效的目標，並將在原先 3 至 4 年的時程之前達成。接下來我將簡要回顧第一季各事業部門的表現，並說明我們對 2018 會計年度的市場展望。

Turning to Page 6, sales for the Americas segment increased 5% on a constant currency basis to $148.3 million. This improvement was driven by higher sales to major North American off-highway customers and stronger sales in Brazil. We are seeing improved order quantities from our off-highway customers, which confirms early signs of recovery in this critical market. In Brazil, we had increases in sales to commercial vehicle and off-highway customers, along with higher after-market sales. This is certainly an encouraging sign after the multi-year declines we have seen in the Brazilian markets. In North America, improvements in the off-highway sales were partially offset by lower sales to commercial vehicle and automotive customers. The decrease in commercial vehicle sales were partially due to lower service sales and program wind-downs by gains -- and program wind-downs offset by gains in specialty vehicles. As we continue to diversify our business, we may accept changes in market share as we hold to our capital allocation discipline, particularly in highly competitive markets. I am pleased that we did have several automotive launches in North America but these volumes were offset by lower EGR cooler sales due to an automotive program that ended last year. Adjusted operating income for the Americas segment was $13.7 million, an increase of 16% or $1.9 million from the prior year, driven by higher sales volume and lower SG&A expense. I am very encouraged by the improving markets in North America. We have adjusted our market outlook for the year for commercial vehicles in both North America and Brazil. In addition, we now expect the Construction and Mining segments in North America to be up 5% to 10% over the prior year.

請看第 6 頁，美洲事業部門銷售以固定匯率計算成長 5%，至 1.483 億美元。此改善主要來自對北美主要非公路（off-highway）客戶的銷售增加，以及巴西銷售走強。我們看到非公路客戶的訂單數量有所改善，這印證了此關鍵市場復甦的早期跡象。在巴西，我們對商用車與非公路客戶的銷售增加，售後市場銷售也提高。在巴西市場經歷多年下滑之後，這無疑是令人鼓舞的訊號。在北美，非公路銷售改善部分被對商用車與汽車客戶的銷售下滑所抵銷。商用車銷售下滑部分原因是服務銷售降低與部分專案逐步結束——以及專案逐步結束，部分被特種車輛的成長所抵銷。隨著我們持續推動業務多元化，在維持資本配置紀律的前提下，特別是在競爭激烈的市場中，我們可能會接受市占率的變動。我很高興我們在北美確實有數個汽車新案導入，但其量能被 EGR 冷卻器銷售下滑所抵銷，原因是去年結束的一項汽車專案。美洲事業部門調整後營業利益為 1,370 萬美元，較去年同期增加 16% 或 190 萬美元，主要受惠於銷售量增加與 SG&A 費用降低。我對北美市場的改善感到非常振奮。我們已調整本年度對北美與巴西商用車市場的展望。此外，我們目前預期北美的建築與礦業（Construction and Mining）市場將較去年成長 5% 至 10%。

Please turn to Page 7. Sales for our Europe segment decreased 4% on a constant currency basis to $136.3 million, primarily driven by the planned wind-down of certain commercial vehicle programs. As we mentioned last year, we expect to see lower sales in our Europe segment this year due to continued wind-down of low margin Origami radiator programs that started in the third quarter of last year. Overall, sales to commercial vehicle customers decreased 20% from the prior year. This was partially offset by higher sales to off-highway customers but this is a much smaller component of our European sales segment. Gross margin decreased 310 basis points to 14.2%. As a reminder, Europe had a very strong first quarter last year, reporting its highest gross margin of the year. The decrease in margin this year is due to a significantly higher material cost and lower sales volume. Although higher metal prices impact all of our segments this quarter, the largest impact was in Europe. This was primarily due to the timing and nature of our pass-through agreements. We have started to see the positive impacts of these agreements in our Europe segment but expect additional benefits later this year. This should result in improved margin performances as we progress through fiscal 2018. Adjusted operating income decreased $6.8 million to $8.2 million from the strong first quarter of last year. The decrease is due to the lower gross profit and slightly higher SG&A expenses. We expect more favorable earnings comparisons in Europe -- in the Europe segment for the remainder of the year.

請翻到第 7 頁。我們歐洲事業部門的銷售以固定匯率計算下滑 4%，至 1.363 億美元，主要因部分商用車專案按計畫逐步結束。如同我們去年所提到的，由於低毛利 Origami 散熱器專案自去年第三季開始持續逐步結束，我們預期今年歐洲事業部門的銷售將較低。整體而言，對商用車客戶的銷售較去年同期下降 20%。此部分被對非公路客戶的銷售增加所抵銷，但這在我們歐洲銷售組合中占比小得多。毛利率下降 310 個基點至 14.2%。提醒各位，歐洲事業部門去年第一季表現非常強勁，創下當年度最高毛利率。今年毛利率下滑係因材料成本顯著上升以及銷售量下降。雖然金屬價格上漲在本季影響我們所有事業部門，但影響最大的是歐洲。這主要與我們轉嫁（pass-through）協議的時點與性質有關。我們已開始在歐洲事業部門看到這些協議帶來的正面影響，但預期今年稍晚將有更多效益顯現。隨著 2018 會計年度的推進，這應可帶來毛利表現的改善。調整後營業利益較去年強勁的第一季減少 680 萬美元至 820 萬美元。下滑原因為毛利降低以及 SG&A 費用略為增加。我們預期歐洲——在歐洲事業部門於今年剩餘期間的獲利比較將更為有利。

Please turn to Page 8. We had an exciting quarter across our Asia segment as sales increased 45% compared with the prior year on a constant currency basis. This segment -- this significant improvement was driven by stronger sales to automotive and off-highway customers in China, India and Korea. Higher sales volume led to a 43% increase in gross profit and a 10 basis point improvement in gross margin to 17.7%. As I mentioned last quarter, we are investing in capital equipment to meet our growing market demand, further assisting with the capacity constraints and positioning us for a solid performance in the future. Operating income for the Asia segment increased $1.8 million, more than double our operating earnings last year. This is primarily due to the higher sales volumes and flat SG&A year-over-year. I'm also very pleased that we were able to keep our SG&A flat given the strong growth we have seen over the past year. As I mentioned, we continue to see improvements in our off-highway sales in Asia, which is being driven by improved markets for excavators. We have increased our market outlook for excavators in China to up to 20% for the year from our previous outlook of up 10%.

請翻到第 8 頁。我們亞洲事業部本季表現亮眼，以固定匯率計算，銷售額較去年同期成長 45%。本事業部——這項顯著改善主要來自中國、印度與韓國汽車及非公路（off-highway）客戶銷售走強所帶動。較高的銷售量使毛利增加 43%，毛利率提升 10 個基點至 17.7%。如同我在上季提到的，我們正投資資本設備以滿足日益成長的市場需求，進一步協助緩解產能限制，並為未來的穩健表現做好布局。亞洲事業部營業利益增加 180 萬美元，較去年營業獲利增加逾一倍。這主要是因為銷售量提高，且 SG&A 年對年持平。我也非常高興，在過去一年看到強勁成長的情況下，我們仍能將 SG&A 維持持平。如我所述，我們持續看到亞洲非公路銷售改善，這是由挖掘機市場回溫所帶動。我們已將中國挖掘機市場的年度展望由先前的成長 10% 上調至最高可達 20%。

Turning to Page 9. Sales for our Building HVAC segment increased 13% compared with the prior year on a constant currency basis, with improvements across the board in air conditioning, ventilation and heating products. We had our particularly strong sales of school products, which increased 17% with corresponding peak volume shipments during June and July during the summer school break. Overall, market conditions remain positive with both residential and nonresidential construction up over the prior year. Our gross profit increased 11% and gross margin improved by 80 basis points to 25.9%. SG&A expenses were lower by $700,000 or a decrease of 8% due to actions taken last year to reduce cost. This resulted in adjusted operating income of $3.1 million, more than double that of the prior year. After facing many challenges last year, it's very encouraging to see this level of sales growth and profitability in this segment. It's a real tribute to the team's collective focus.

接著看第 9 頁。以固定匯率計算，我們建築 HVAC 事業部的銷售額較去年同期成長 13%，空調、通風與供暖產品全面改善。我們的學校產品銷售特別強勁，成長 17%，並在暑假學校休假期間的 6 月與 7 月出現相對應的出貨高峰量。整體而言，市場狀況仍然正向，住宅與非住宅建築均較去年同期成長。我們的毛利增加 11%，毛利率提升 80 個基點至 25.9%。由於去年採取降低成本的措施，SG&A 費用減少 70 萬美元，或下降 8%。因此，調整後營業利益為 310 萬美元，較去年同期增加逾一倍。在去年面臨諸多挑戰之後，看到本事業部達到這樣的銷售成長與獲利水準，令人非常振奮。這充分展現團隊共同專注投入的成果。

Please turn to Page 10. The CIS segment reported $157.5 million in sales. Gross profit was $25.3 million which resulted in a gross margin of 16%. The segment reported operating income of $10.8 million. As a reminder, this includes $3.2 million in depreciation and amortization expense recorded as a result of purchase accounting, split equally between cost of sales and SG&A. As I mentioned last quarter, we are addressing a change in product mix with a large data center customer that's resulted in lower sales volumes and margins than in prior years. We knew about this change prior to completing the acquisition and understand that these sales volumes can be somewhat unpredictable. Higher sales volumes in North America were offsetting some of this impact, and overall, the CIS business is performing in line with our expectations. As I previously mentioned, our integration is well underway and we are confident that we will exceed our goal of delivering $15 million of annual cost synergies ahead of our 3 to 4-year timeline. Our focus this year is on absorbing the corporate functions that were not acquired with the business, aligning and combining the coils organizations in North America and conducting a complete assessment of our manufacturing operations. We're also working hard to capture ongoing purchasing synergies, following on to the global procurement initiatives started as part of our SDG program. We are well on our way to harmonizing our controls and compliance framework to be sure that our internal control structure, safety standards and compliance and ethics policies and practices are fully in line with Modine's standards. Significant future actions include ERP integration, shared-service opportunities and further evaluation of our combined manufacturing footprint. These items will certainly bring some upfront investment but they would result in significant savings. We are balancing the timing of any such investments with our priority to delever the balance -- to delever the business by quickly repaying our debt. Our goal is to have our leverage ratio below 2.5x debt to EBITDA by the end of the fiscal year and I am confident that we will achieve this target. With that, I'd like to turn it over to Mick for an overview of our consolidated financial results. Mick will also provide revenue and earnings guidance for fiscal 2018.

請翻到第 10 頁。CIS 事業部銷售額為 1.575 億美元。毛利為 2,530 萬美元，毛利率為 16%。本事業部營業利益為 1,080 萬美元。提醒一下，其中包含因收購會計（purchase accounting）而認列的 320 萬美元折舊與攤銷費用，並平均分攤於銷貨成本與 SG&A。如同我上季提到的，我們正在因應某大型資料中心客戶的產品組合變動，該變動導致銷售量與毛利率低於往年。我們在完成收購前就已知悉此變動，也了解這些銷售量可能具有一定程度的不確定性。北美較高的銷售量抵銷了部分影響；整體而言，CIS 業務表現符合我們的預期。如我先前所述，我們的整合工作進展順利，我們有信心能在原先 3 到 4 年的時程之前，超越每年 1,500 萬美元成本綜效的目標。我們今年的重點是承接該業務未隨收購取得的公司職能、在北美對線圈（coils）組織進行對齊與整併，並對我們的製造營運進行全面評估。我們也正努力延續並擷取持續性的採購綜效，承接 SDG 計畫中啟動的全球採購倡議。我們正穩步推進控制與法遵架構的整合與一致化，以確保我們的內部控制架構、安全標準，以及法遵與道德政策與實務，完全符合 Modine 的標準。未來的重要行動包括 ERP 整合、共享服務機會，以及進一步評估我們合併後的製造據點布局。這些項目確實會帶來一些前期投資，但將可帶來顯著節省。我們正就此類投資的時點進行權衡，同時以去槓桿為優先——透過快速償還債務來降低槓桿。我們的目標是在本會計年度結束前，將槓桿比率降至低於 2.5 倍（債務／EBITDA），我有信心能達成此目標。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 2018 會計年度的營收與獲利指引。

Thanks, Tom. Good morning. Please turn to Slide 12. We are pleased with the results this quarter and off to a very good start for fiscal 2018. Beginning with the top line, our first quarter sales increased $173 million on a constant currency basis. Sales in our recently acquired CIS segment totaled $158 million. Excluding CIS, constant currency sales were up $15 million or 4%. Gross profit of $88.5 million was up $26 million or 42%. This includes $25.3 million from CIS. Excluding CIS, and a $700,000 negative FX impact, gross profit was up $1.6 million or 50 basis points. This improvement was driven by higher sales volume in the Americas, Asia and Building HVAC, but was mostly offset by higher metals cost. As discussed last quarter, we anticipated a negative metals impact for most of fiscal '18. However, the negative impact should improve as we pass through -- as our pass-through agreements begin to take effect later this year. SG&A of $59.2 million was up $15 million. The CIS segment added the majority of this increase. Excluding CIS, SG&A was up only $500,000 or 1% from the prior year. Our SDG actions are truly helping to offset wage and benefit inflation. Please note that during the quarter, we added back $2.1 million of acquisition-related items, which includes integration costs. We also recorded $1.7 million of restructuring expenses. These expenses primarily relate to equipment transfer and severance costs in the Americas segment. First quarter adjusted operating income of $31.6 million was up $12.1 million or 62%, and our adjusted earnings per share was $0.39, up $0.16 compared to last year. Our EPS was positively impacted by the tax benefit associated with our plant expansion in Hungary. As a reminder, our U.S. GAAP income statement is included in the appendix of this presentation and in our earnings release. This includes a full reconciliation between our reported results and adjusted operating results.

謝謝你，Tom。各位早安。請翻到投影片第 12 頁。我們對本季的結果感到滿意，並且在 2018 會計年度有一個非常好的開局。先從營收（top line）來看，以固定匯率計算，我們第一季銷售額增加 1.73 億美元。我們近期收購的 CIS 事業部銷售額合計為 1.58 億美元。排除 CIS 後，以固定匯率計算的銷售額增加 1,500 萬美元，或 4%。毛利 8,850 萬美元，增加 2,600 萬美元，或 42%。其中包含 CIS 貢獻的 2,530 萬美元。排除 CIS 以及 70 萬美元的負向匯率影響後，毛利增加 160 萬美元，或 50 個基點。此改善主要由美洲、亞洲與建築 HVAC 的較高銷售量所帶動，但大多被金屬成本上升所抵銷。如同上季所討論，我們預期 2018 會計年度大部分期間都會受到金屬成本的負面影響。然而，隨著我們的轉嫁（pass-through）協議在今年稍晚開始生效，該負面影響應會改善——也就是說，當我們的轉嫁協議開始發揮作用時。SG&A 為 5,920 萬美元，增加 1,500 萬美元。CIS 事業部貢獻了這項增加的大部分。排除 CIS 後，SG&A 僅較去年增加 50 萬美元，或 1%。我們的 SDG 行動確實有助於抵銷薪資與福利的通膨。請注意，本季我們加回 210 萬美元的收購相關項目，其中包含整合成本。我們也認列 170 萬美元的重整費用。這些費用主要與美洲事業部的設備移轉與資遣成本相關。第一季調整後營業利益為 3,160 萬美元，增加 1,210 萬美元，或 62%；調整後每股盈餘為 0.39 美元，較去年增加 0.16 美元。我們的 EPS 受到匈牙利廠房擴建相關稅務優惠的正面影響。提醒一下，我們依美國一般公認會計原則（U.S. GAAP）編製的損益表，收錄於本簡報的附錄以及我們的財報新聞稿中。其中包含我們已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, operating cash flow was $18.7 million, which is significantly better than the prior year. The year-over-year increase was due to the combination of several items, starting with higher cash earnings, as the quarter benefited from our CIS segment. Lower working capital also contributed to the improved cash flow. Higher operating cash flow was partially offset by the timing of capital expenditures, which were higher than the prior year by $7 million. We expect CapEx spending for the full year to be in line with fiscal 2017. We reported negative free cash flow of $2.9 million, which was better than the prior year by $10 million. However, this includes $11.9 million of special items. The free cash flow adjustments include restructuring payments of $4.5 million, which are related to plant consolidation and severance, $4.7 million for the payment related to the settlement of the Brazil legal matter we previously disclosed, and the remaining payments were for acquisition and integration type activities. Finally, our debt leverage ratio is currently 3.0x; this is well below our covenant ratio requirement of 3.75x as shown in the table in the upper right. We continue to anticipate much improved cash flow in fiscal 2018. We remain focused on paying down our debt and getting our leverage ratio back below 2.5x by the end of the fiscal year.

接著看第13頁投影片。本季營運現金流為1,870萬美元，明顯優於去年同期。年增主要來自多項因素的綜合作用，首先是現金獲利提高，因本季受惠於我們的CIS事業部門。營運資金下降也促成現金流改善。較高的營運現金流部分被資本支出時點所抵銷；資本支出較去年同期增加700萬美元。我們預期全年資本支出將與2017會計年度大致一致。我們報告自由現金流為負290萬美元，較去年同期改善1,000萬美元。然而，其中包含1,190萬美元的特殊項目。自由現金流調整項目包括450萬美元的重整付款（與工廠整併及資遣相關）、470萬美元（用於支付我們先前揭露之巴西法律事項和解相關款項），其餘付款則用於併購與整合類活動。最後，我們目前的債務槓桿比率為3.0倍；如右上表所示，這明顯低於契約要求的3.75倍。我們仍預期2018會計年度的現金流將大幅改善。我們將持續專注於償還債務，並在本會計年度結束前將槓桿比率降回2.5倍以下。

Now let's turn to our fiscal 2018 guidance on Slide 14. We are excited with our first quarter results and pleased to report we are confirming our fiscal 2018 guidance. As Tom discussed in the segment slides, it appears that we may have a few market tailwinds, and the global off-highway market in particular is showing signs of growth. CIS is performing in line with our expectations, and synergy identification is proceeding ahead of schedule. Also we have included a number of synergies in our guidance. Building HVAC sales are recovering after a down year and are expected to grow in all markets served. 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 or an increase of 39% to 52%. SDG cost savings and CIS synergies are more than offsetting the negative impacts of certain commercial pricing agreements, normal economic cost increases and the higher metals prices. The full year impact of CIS will be a big driver of growth in operating income in fiscal '18. 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. We provided some key assumptions with our guidance last quarter, and I want to review these briefly with you. First, we have summarized our market assumptions on the previous slides; next, we anticipate that copper and aluminum will hold at current levels which average about 20% higher than last year. Our current outlook includes approximately $15 million to $20 million of temporary cost increases as we absorb the higher metals costs during the customary lag period; third, we expect the U.S. dollar to hold to current levels versus most major currencies; finally, we assume interest expense of approximately $26 million. Moving on, we expect adjusted EPS to be between $1.20 and $1.35, which is up significantly from $0.78 in fiscal 2017. To reiterate from last quarter, we are including the impact of the tax credit associated with the plant expansion in Hungary. This tax benefit is expected to lower our adjusted tax expense significantly to the 15% range in 2018. We expect our effective tax rate to return to 28% to 30% in fiscal 2019. Finally, with regards to the quarterly run rate, we expect the customary seasonal pattern as we proceed through the year. On a sequential basis, we expect the second quarter results will be lower than the first quarter given the seasonal slowdowns in our vehicular business, yet significantly higher than the prior year's results. We anticipate that Q2 will be followed by sequential improvements in Q3 and in Q4. For the past two quarters, we've been able to take advantage of some tailwinds and we look forward to reporting more good news in the coming quarters. Tom, I'll turn it back to you.

現在讓我們看第14頁投影片上的2018會計年度財測指引。我們對第一季結果感到振奮，並很高興宣布我們確認2018會計年度的指引不變。如Tom在各事業部門投影片中所談，看起來我們可能有一些市場順風因素，尤其是全球非公路（off-highway）市場正顯示成長跡象。CIS的表現符合我們的預期，且協同效益的辨識進度超前。此外，我們已在指引中納入若干協同效益。建築HVAC銷售在經歷低迷的一年後正在復甦，預期在所有服務市場皆將成長。總結而言，我們預估銷售額將較去年增加25%至30%。我們預期調整後營業利益將落在1億至1.1億美元區間，亦即增加39%至52%。SDG成本節省與CIS協同效益，足以抵銷某些商業定價協議的不利影響、正常的經濟性成本上升，以及金屬價格上漲。CIS在2018會計年度的全年影響，將是推動營業利益成長的重要動能。我們預期調整後EBITDA將落在1.75億至1.85億美元區間，相當於較去年增加超過40%。上季我們在指引中提供了一些關鍵假設，我想在此簡要回顧。首先，我們已在前面投影片彙總市場假設；其次，我們預期銅與鋁將維持在目前水準，平均約較去年高出20%。我們目前的展望包含約1,500萬至2,000萬美元的暫時性成本增加，因我們在慣常的滯後期間吸收較高的金屬成本；第三，我們預期美元兌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為2,600萬美元。接著，我們預期調整後每股盈餘（EPS）介於1.20至1.35美元，較2017會計年度的0.78美元大幅提升。重申上季所述，我們已納入與匈牙利工廠擴建相關的稅額抵減影響。此稅務利益預期將使我們2018年的調整後稅費顯著降低至約15%的水準。我們預期有效稅率將於2019會計年度回到28%至30%。最後，就季度運行率而言，我們預期全年將呈現慣常的季節性型態。以季比而言，考量車輛業務的季節性放緩，我們預期第二季結果將低於第一季，但仍將顯著高於去年同期。我們預期第二季之後，第三季與第四季將逐季改善。過去兩季我們得以受惠於一些順風因素，並期待在接下來幾季帶來更多好消息。Tom，我把時間交還給你。

Thanks, Mick. We have started the year on a very strong note, with positive signs of improvement in many of our core markets. I'm confident that we will deliver strong results on revenue and earnings growth outlined in our guidance. That being said, our priorities are clear. We will continue with the rapid integration of the CIS business so that we can exceed the synergy objectives to which we committed. We will focus on cash flow generation so that we can repay our debt and reach the top end of our target leverage range by the end of this fiscal year. At the same time, we'll be very disciplined with our capital allocation strategy, making sure that we are investing where we need to grow including our plant and capacity expansions at Hungary and China. I'm very pleased with the quarter we just reported and optimistic about our outlook for the balance of the year. And with that, we will take your questions. Thank you.

謝謝你，Mick。我們以非常強勁的態勢展開新年度，在許多核心市場都出現改善的正面跡象。我有信心我們將達成指引中所述的營收與獲利成長強勁表現。話雖如此，我們的優先事項很明確。我們將持續快速整合CIS業務，以便超越我們所承諾的協同效益目標。我們將專注於現金流創造，以便償還債務，並在本會計年度結束前達到目標槓桿區間的上緣。同時，我們也會以高度紀律執行資本配置策略，確保在需要成長之處進行投資，包括匈牙利與中國的工廠與產能擴建。我對剛公布的本季表現非常滿意，並對今年剩餘期間的展望感到樂觀。接下來我們將開始回答各位的提問。謝謝。

(Operator Instructions) And our first question comes from Matthew Paige of Gabelli and Company.

(接線員指示) 我們的第一個問題來自Gabelli and Company的Matthew Paige。

Congratulations on a nice quarter.

恭喜本季表現不錯。

Thank you, Matthew.

謝謝你，Matthew。

The first question was, Asia was strong again obviously in the quarter. Is this growth rate sustainable in the near term? And along those lines, could you update us on content per vehicle in Asia and if that's continuing to grow?

第一個問題是，亞洲本季顯然再次表現強勁。這樣的成長率在短期內是否可持續？另外，能否更新一下亞洲每輛車的內容價值（content per vehicle）情況，以及是否仍在持續成長？

Well, obviously the tailwind of the excavator market is very encouraging to see which is the base business that we've established in Asia for some time now. And our growing content on the automotive business that we have with our expansion of diversifying the business with our oil cooler product which is -- we're investing in significantly right now. So we see in the near term that, that growth rate will continue. That will slow down in out-years a little bit as that matures. Content per vehicle, we really haven't provided that. I know that it's significant from an excavator standpoint. On a vehicular basis, on the automotive side, it's equal with what our content is on the oil cooler products in our mature markets in Europe and North America.

嗯，顯然，挖掘機市場的順風非常令人鼓舞，這也是我們在亞洲已建立一段時間的核心業務。此外，隨著我們透過機油冷卻器產品擴張、推動業務多元化，我們在汽車業務上的內容量也在成長——而我們目前正大幅投資於此。因此，我們認為短期內該成長率將會延續。隨著業務成熟，往後幾年成長會稍微放緩一些。至於每輛車的內容量，我們其實尚未提供這個數字。我知道從挖掘機的角度來看，這是相當可觀的。以車輛為基礎、在汽車端而言，這與我們在歐洲與北美成熟市場的機油冷卻器產品內容量相當。

Great. And then moving to the HVAC side, could you just, kind of, speak to the weather impact that the business faces and what conditions typically drive growth and how has that played out so far this summer?

很好。接著談到 HVAC 這一塊，能否請你大致說明一下天氣對該業務的影響、通常在什麼條件下會帶動成長，以及今年夏天到目前為止的情況如何？

Yes, well it's a great question. It is a very seasonal business. Obviously, traditionally, we've had a very strong heating season which really kicks off in late summer, going into fall. So that's the upcoming question of how that heating season will -- stocking orders will come in and so on. So that's anticipated to be stronger as we approach that season. And of course, I mentioned our school products, which kind of helps balance that seasonality out with stronger summer sales with air conditioning for school systems going in over the summer. So again, I mentioned we had strong school product sales this season with a strong June and July, okay? That we just are wrapping up. So we're pleased with that. So with that behind us, which really contributed to a strong first quarter in Building HVAC market, we anticipate and are planning for an improved heating season sales pattern to start later this summer, going into the fall.

是的，這是個很好的問題。這是一個非常具季節性的業務。顯然，傳統上我們的供暖旺季非常強勁，通常在夏末開始、一路延續到秋季。所以接下來的問題是，供暖季將會如何——補庫存訂單會如何進來等等。因此，隨著我們接近該季節，預期會更強。當然，我也提到我們的學校產品，這在某種程度上可透過夏季較強的銷售來平衡季節性，因為學校系統會在暑假期間安裝空調。所以再說一次，我提到我們本季學校產品銷售強勁，6 月與 7 月表現很強，對吧？我們剛剛也正要結束這段期間。因此我們對此感到滿意。在此之後——這確實促成了建築 HVAC 市場第一季的強勁表現——我們預期並規劃供暖季的銷售型態將有所改善，並在今年夏末開始、一路進入秋季。

Great. And the last question from me and I'll pass it on, could you just remind us how your pass-through agreements work and typical time delays and any retroactive charges that you can get?

很好。我最後一個問題，問完我就交給下一位：能否請你提醒我們，你們的轉嫁（pass-through）協議是如何運作的、一般的時間延遲，以及是否能取得任何追溯性費用？

Yes, it's Mick here. The -- we average -- we shoot for quarterly and we go anywhere from quarterly pass-throughs to semiannual and then we have a few larger customers that go up to a year or an annual price adjustment. So I would say it kind of floats on an average between that 3 to 6-month lag. And then, it does vary a little bit by region. As Tom mentioned in his opening comments, the business in Europe tends to have more of the longer-term agreements. North America averages a little bit shorter but I would say a 3 to 6-month lag is kind of typical, the average across the company.

是的，我是 Mick。我們——平均而言——目標是按季進行；實務上從按季轉嫁到半年一次都有，另外也有少數較大的客戶是長達一年、或年度一次的價格調整。所以我會說平均大概落在 3 到 6 個月的滯後期。而且確實會因地區而略有不同。如 Tom 在開場所提到的，歐洲的業務通常有較多長期協議。北美平均會短一些，但我會說 3 到 6 個月的滯後期算是典型情況，也是全公司平均值。

And our next question comes from Mike Shlisky of Seaport Global.

下一個問題來自 Seaport Global 的 Mike Shlisky。

Good morning, this is Jordan Bender on for Mike this morning. You guys recently upgraded -- I guess, you upgraded your heavy-duty outlook to about 15%. It seems net-net there, overall, market outlook has improved. Are you guys leaning on the side of conservatism by reaffirming your EPS guidance?

早安，我是今天早上代替 Mike 的 Jordan Bender。你們最近上調了——我想是把重型車的展望上調到大約 15%。整體來看，市場展望似乎有所改善。那你們在重申 EPS 指引時，是否是偏向保守？

Yes, I'll let Tom comment. We've got a lot of moving -- I'll let Tom comment specifically to your truck question. There's a lot of moving pieces between our truck outlook and then specifics going on with each of our programs behind that. From just the total company and how we looked at the outlook and guidance from in the year, clearly, we came out with a really strong start and we're really pleased with it. When we look at the discussion we just had with the remainder of the year left and a big portion of the heating season to come, we'd like to get another quarter through and see how the preseason heating orders are looking heading into the fall. We are still getting a really good -- great quarter for commercial industrial solutions, there's the Luvata. We're still getting a handle on them. We do know that, that is a very short lead time business, very much more like our Building HVAC. So we'd like to have another solid quarter there before raising guidance. So really, it's just -- really, we'd like to have another quarter run rate before we look at that. As Tom mentioned, we're definitely trending towards the higher end, which is great news. Tom, anything you would -- you want to add just on the truck side?

是的，我讓 Tom 來回應。我們有很多變動因素——我讓 Tom 針對你的卡車問題具體說明。在我們的卡車展望與其背後各個專案的具體情況之間，有很多環節在變動。就整體公司以及我們年內如何看待展望與指引而言，很明顯我們開局非常強勁，我們也非常滿意。當我們看待剛才討論的、今年剩餘期間以及即將到來的供暖季（其中占比很大）時，我們希望再走過一個季度，看看進入秋季前的供暖季預備訂單（preseason heating orders）情況如何。我們的商用工業解決方案仍然有非常好——非常棒的一季，其中包括 Luvata。我們仍在掌握他們的狀況。我們確實知道那是一個交期非常短的業務，性質更像我們的建築 HVAC。因此，在上調指引之前，我們希望那邊再有一個穩健的季度。所以其實就是——我們希望在評估之前，再看到一個季度的運行水準。如 Tom 所提到的，我們確實正朝向區間高端發展，這是好消息。Tom，你在卡車端還有什麼想補充的嗎？

Yes, on trucks specifically, on your question. We are raising guidance as far as heavy-duty trucks in North America to 15% as you mentioned. There are some dynamics changing there. I mentioned a drop-in service orders that we did receive this year that's impacting our projection a little bit on that. And there are some shifting elements globally. As I mentioned in Europe, we've had some wind-downs because the Origami production, and again as I mentioned, I think it's important to note, with our diversification strategy really developing well, okay? I mentioned a couple of times our capital allocation discipline as far as putting investment towards returns that guide us towards our overall objectives. So we are going to look carefully at those competitive assessments and making sure that we're putting that money wisely to use. Saying that, on the commercial vehicle market, you know we invested significantly to move footprint to low-cost country in North America as well as in the process in Europe, so that we are prepared for our product strategy and a competitive assessment going forward.

是的，針對卡車、也就是你問的部分。如你所提到的，我們將北美重型卡車的指引上調至 15%。那裡有一些動態正在改變。我提到今年我們確實收到一些「插入式」（drop-in）的服務訂單，這對我們的預測有些影響。而全球也有一些因素正在移動。如我在歐洲所提到的，由於 Origami 產量的因素，我們出現了一些收尾（wind-downs）；同時我也再次強調，我認為重要的是，我們的多元化策略正在良好發展，好嗎？我也多次提到我們在資本配置上的紀律，也就是把投資導向能帶來回報、並引導我們達成整體目標的方向。因此，我們會仔細檢視那些競爭評估，並確保資金被明智地使用。話雖如此，在商用車市場方面，你知道我們已大幅投資，將北美的製造據點轉移到低成本國家，同時歐洲也在進行中，讓我們能為未來的產品策略與競爭評估做好準備。

Okay. And then dig into the outlook a little bit more. Most of the HVAC folks out there are saying mid single-digit growth in calendar 2017 and even off-highway the construction companies are mostly looking for double-digit growth. Are there any major concerns maybe surrounding your market share with that?

好的。接著再更深入談一下展望。外面多數 HVAC 業者都在說 2017 年曆年是中個位數成長，而非公路（off-highway）的建築公司多半也在看雙位數成長。在這樣的背景下，你們是否對市占率有任何重大疑慮？

I'm sorry, I missed that, was that the off-highway you're talking about as far as...

抱歉，我漏聽了，你指的是越野（off-highway）那一塊嗎，還是說就……

Yes, the HVAC outlook and the off-highway.

是的，HVAC 的展望以及越野（off-highway）。

HVAC and off-highway. Well, let me see. Right now, we feel very strong about our -- let's start with HVAC position. The product offerings that we brought along, and strengthening our core positions in the heating and air-conditioning markets with improved ventilation products in North America. We feel very strong about the holding or increasing our opportunity to gain share as we've proven that in heating over the last several seasons of gaining share. And in the off-highway segment, again, a very strong segment for us, something that's globally driven with strong product platforms, we feel very good about the win rates we see in every region that we participate in. So recent business wins confirm that. So I really see ourselves holding or gaining opportunity to gain share in the market sub segments that we play in, in the off-highway side.

HVAC 和越野（off-highway）。好，我想一下。目前，我們對我們的——先從 HVAC 的布局談起——非常有信心。我們所帶來的產品組合，以及透過在北美推出改良的通風產品，強化我們在供暖與空調市場的核心地位。我們對於維持或提升我們擴大市占的機會非常有信心，因為過去幾個季節我們在供暖領域持續提升市占，已經證明了這一點。而在越野（off-highway）領域，同樣地，這對我們而言也是非常強勁的板塊；這是由全球需求驅動、且我們擁有強大的產品平台。我們對於在各個我們參與的區域所看到的得標率（win rates）感到非常樂觀。近期的業務得標也印證了這點。因此，我確實認為，在我們所參與的越野（off-highway）市場子領域中，我們能夠維持或取得進一步提升市占的機會。

Okay. And I just want to follow up on -- from the first question. It looks like that Luvata had a pretty strong quarter at least compared to what we were expecting. Are you guys running at the $150 million per quarter run rate at this point or is there something with seasonality for their shipments that mean fiscal first quarter are higher than average quarter?

好的。我想再追問一下——回到第一個問題。看起來 Luvata 這一季表現相當強，至少比我們原先預期的要好。你們目前是以每季 1.5 億美元的運行水準（run rate）在跑嗎？還是他們出貨有季節性，導致會計年度第一季通常會高於平均季度？

Yes, great question. The -- clearly if we annualize Q1, that would be well above what we've talked about in the past for a pro forma, outlook as we go to this year. So, I think, a couple of things going on there. It's definitely a seasonal pattern. We're still learning it, but I would point to when we first reported on them, and our December quarter. So they will -- our projections show and their seasonal pattern would show their weakest quarter would be the December quarter. So there's definitely a seasonal pattern there that you should expect to see. And then secondly, we are doing well on the synergies side, so if we continue to build those in and get confidence, that's a potential upside to a lot of the pro forma numbers that we've used in the past. So, second half of the year opportunity would be synergy, but definitely plan on not of a steady 4-quarter run rate. There'll be a significant dip if things go as normal in the December or our Q3.

是的，問得很好。——很明顯，如果把第一季年化，那會遠高於我們過去談到的、今年以備考（pro forma）口徑所給的展望。所以，我想這裡有幾件事在發生。這確實是一種季節性模式。我們仍在學習，但我會請你回想我們第一次對外報告他們的情況，也就是我們的 12 月季度。因此，他們——我們的預測以及他們的季節性模式都顯示，他們最弱的季度會是 12 月季度。所以那裡確實存在你應該預期會看到的季節性。第二，我們在協同效益（synergies）方面做得不錯，因此如果我們持續把這些效益逐步落地並建立信心，這可能會成為我們過去使用的許多備考數字的上行空間。所以，下半年可能的機會在於協同效益，但也請務必不要把它視為穩定的四季等速運行水準（steady 4-quarter run rate）。如果一切如常，我們在 12 月、也就是我們的第三季（Q3），會出現明顯下滑。

(Operator Instructions) And our next question comes from David Leiker of Baird.

（接線員指示）下一個問題來自 Baird 的 David Leiker。

Hey guys, this is Joe Vruwink for David. Can you maybe recalibrate the synergy targets and timelines for Luvata? So 3% to 4% is going to be -- or 3 to 4 years is going to be shorter, $15 million is going to be higher. Just any more specifics around those 2?

各位好，我是 Joe Vruwink，代 David 提問。你們能否重新校準一下 Luvata 的協同效益目標與時程？也就是說，3% 到 4% 會——或是 3 到 4 年會縮短，而 1,500 萬美元會提高。能否就這兩點提供更具體的說明？

Yes, I'll give you the short-term view and then Tom can add some more color. The -- as Tom said, we originally came out before we closed and we were able to, kind of, go through all the details with the new team on board. We wanted to set a target we know we could hit with very, very high confidence. So as we've gone forward, we have a very high confidence of hitting and exceeding the $15 million. Tom and I are pushing that to get that down to more of the 2-year window, not the 3- to 4-year window. As we headed into this year, I mentioned we had some synergies built in. We had a target and we're pushing to get north of $5 million in this fiscal year. And a portion of that was in our earnings guidance and our planning when we set up the fiscal year. So as we get more confidence and runway, I would think that's an opportunity for us to continue to roll more of these in, in the second half of the year. Tom, anything?

好的，我先給你短期觀點，然後 Tom 可以再補充一些細節。——如 Tom 所說，我們最初在交割前對外提出時，當時還無法在新團隊到位後把所有細節逐一梳理。我們希望設定一個我們能以非常、非常高的信心達成的目標。因此，隨著我們往前推進，我們對於達成並超越 1,500 萬美元有非常高的信心。Tom 和我也在推動把時程縮短到更接近 2 年，而不是 3 到 4 年的窗口。進入今年時，我提到我們已經把一些協同效益納入規劃。我們有一個目標，並且正推動在本會計年度達到 500 萬美元以上。其中一部分已經反映在我們設定本會計年度時的獲利指引與規劃中。因此，隨著我們更有信心、也有更長的推進跑道，我認為這會是我們在下半年持續把更多協同效益納入的機會。Tom，有要補充的嗎？

Yes, Joe, it's a great question. I'll remind everybody that we invested in a strong integration management office way back even before the close of the deal. We have an executive experienced leader leading now with a dedicated team focused on every element. So again, that started off with our expectation assumptions based on the due diligence, that's then gone into -- once the deal was closed, to confirm that. So those assumptions have matured. The timing ability to move things forward, we feel confident about it as Mick said. And so we can strongly say that we will exceed the $15 million and that 2-year time frame is what we're looking at. So, again, it's a result of a lot of good effort and organization and discipline that the team is making. So -- and really supporting the fact of the due diligence assumptions that we made going into the close.

有的，Joe，這是個很好的問題。我想提醒大家，我們早在交易交割之前就投資建立了一個強而有力的整合管理辦公室（integration management office）。我們現在由一位具備豐富經驗的高階主管領導，並有一個專責團隊聚焦於每一個要素。因此，同樣地，這一開始是基於盡職調查（due diligence）的預期假設；在交易完成後，我們再進一步——去確認這些假設。所以這些假設已經更成熟。如 Mick 所說，我們對於把事情往前推進的時程能力很有信心。因此我們可以很有把握地說，我們將會超過 1,500 萬美元，而我們所看的是 2 年的時間框架。所以——這是團隊投入大量努力、良好組織與紀律所帶來的成果。同時也確實支持了我們在交割前所做的盡職調查假設。

Any revenue synergies yet between CIS and your traditional Building HVAC business?

CIS 與你們傳統的建築 HVAC 業務之間，是否已經有任何營收協同效益？

Yes, it's a great question, one I'm not prepared to give an answer today, other than saying that we're investigating several interesting revenue synergies that are available to us. So they're in the works and you can look for some updates, probably getting into the next call.

是的，這是個很好的問題；我今天還沒準備好給出答案，只能先說我們正在評估幾項對我們而言可行且有意思的營收協同效益。所以這些正在進行中，你可以期待一些更新，可能會在下一次電話會議時提供。

Okay. And then switching back to the vehicle business. If I look at your Europe and commercial vehicle, I think you said was down 20% and that's 1/3 of the business. So it would actually imply the remainder is growing pretty nicely and off-highway markets are good, automotive volumes were actually as an industry down in this quarter. So it would seem like Europe automotive is launching a fair amount of content. I'm just wondering if that's true, if I did my reconciliation correctly. And then, what sort of products or programs are you seeing demand for in that region?

好的。接著切回車用業務。如果我看你們的歐洲與商用車業務，我記得你說下滑了 20%，而那約占業務的三分之一。因此這其實意味著其餘部分成長相當不錯；越野（off-highway）市場表現良好，而本季汽車產業整體的出貨量其實是下滑的。所以看起來歐洲汽車端正在導入相當多的產品內容（content）。我想確認這是否屬實、以及我這樣對帳（reconciliation）是否正確。另外，在該區域你們看到哪些產品或專案（programs）的需求較強？

Well, your assessment is correct. Good work as usual, Joe. Yes, we're pleased with the launching of a lot of engine product related to the automotive industry in Europe. Oil cooler platform, the LC product line is the baseline for that, but that's expanding into -- including liquid charge-air coolers and other LC products going into subsystems and also a lot of interest going in with the EV opportunities looking forward. Again, nothing to report there yet but a lot of activity. So, pleased with that side. Again, the commercial vehicle market, we are repositioning ourselves coming out of the Origami wind-down and investing towards Hungary, as we've said. Hungarian expansion is on track, I might add, with equipment being installed as we speak, with launches scheduled to take -- to support the growth in the automotive side that I just mentioned and support the future commercial vehicle business needs that we have in the region. So again, good points on your side.

嗯，您的評估是正確的。一如往常，做得很好，Joe。是的，我們對於在歐洲推出許多與汽車產業相關的引擎產品感到滿意。機油冷卻器平台，LC 產品線是其基礎，但也正在擴展——包括液冷增壓空氣冷卻器以及其他 LC 產品，進一步導入子系統；同時，展望未來，我們也對電動車（EV）機會投入了大量關注並引發高度興趣。再次強調，目前還沒有可報告的事項，但活動非常多。因此，我們對這一塊感到滿意。另外，商用車市場方面，我們正從 Origami 結束（wind-down）後重新定位自己，並如先前所說，朝匈牙利投資。我補充一下，匈牙利擴產進度如期進行，設備正在安裝中；相關投產計畫預計將——用以支援我剛提到的汽車業務成長，並支援我們在該區域未來商用車業務的需求。所以，再次說，您提出的觀點都很到位。

And then the last question for me. Your fiscal Q2 has been a tough one to predict in recent years and we've ended up with fairly large Q1 to Q2 decremental margins. It seems like you've added more revenue diversity, so that should help. Any additional guidance so -- we trying to model, don't miss it like we have been. Q1, Q2, what's your contribution margin at the EBIT line should end up being?

接著是我最後一個問題。近幾年你們的會計年度第二季（Q2）一直很難預測，而我們最後看到第一季到第二季的遞減毛利（decremental margins）相當大。看起來你們增加了更多收入多元性，這應該會有幫助。是否能提供一些額外指引——我們在建模時想更貼近，不要像過去那樣失準。第一季、第二季，在 EBIT 這一行的貢獻毛利（contribution margin）最後大概會是多少？

Yes, another great question, Joe, and I'd say, last year for sure, if you recall, that was not only the normal seasonality but we ran into a number of operational issues that we've then since had to correct in the second half. So by no means are we looking at that magnitude of a drop from what happened a year ago. I guess, maybe to just help out and so you're right, we kind of -- we get it -- level set with you guys. We are looking, there will be little bit of a revenue drop that's due to the seasonality, and mainly in our vehicular business, North America and Europe with the summer shutdowns. And then with that volume, it's really volume related. There'll be a little bit of a margin decline too with an operating margin this quarter being in the 6% range. We'd probably be more in a 4.5% to 5% kind of range in Q2 with -- on a little bit lower volume. But again, significantly up from the prior year. And then as we get into Q3 and Q4, not only will Q3 and Q4 should be at or above prior years but Q3 will be above Q2 and Q4 will be above Q3. Lots to go there but that's as close as we want to go without getting into quarterly guidance. Hope that helps.

是的，Joe，這又是個很好的問題。我會說，去年確實如此；如果你還記得，那不只是正常的季節性因素，我們也遇到了一些營運問題，而我們之後在下半年已經加以修正。因此，我們絕對不會預期出現像去年那樣幅度的下滑。我想，為了協助你們理解——你說得對，我們有點——我們理解——想和各位把基準對齊。我們預期營收會因季節性而小幅下滑，主要是在我們的車用業務，北美與歐洲因夏季停工（shutdowns）所致。而且就這個量來看，基本上是與出貨量相關。因此，毛利也會小幅下滑，本季營業利益率大約在 6% 左右。到了第二季，在出貨量略低的情況下，我們大概會落在 4.5% 到 5% 的區間。但再次強調，仍將顯著高於去年同期。接著進入第三季與第四季，不僅第三季與第四季應該會達到或高於往年水準，而且第三季會高於第二季、第四季會高於第三季。其中還有很多細節，但在不提供逐季指引的前提下，這已經是我們願意提供的最接近的說法。希望這能有所幫助。

And I'm showing no further questions at this time. I would like to turn conference back to Kathy Powers.

目前我這邊顯示沒有進一步的提問。我想把電話會議交回給 Kathy Powers。

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

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

And ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.

各位女士、先生，今天的會議到此結束。感謝各位的參與，祝各位有美好的一天。