Modine Manufacturing Company (MOD) 2018 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Modine Manufacturing Company's Second Quarter Fiscal 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and information will follow at that time. (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.

各位女士、先生，早安，歡迎參加 Modine Manufacturing Company 2018 會計年度第二季財報電話會議。此時，所有與會者將以僅聆聽模式參與。稍後我們將進行問答環節，屆時將提供相關說明。(接線員指示) 提醒各位，本次會議將被錄音。現在我想將會議交給本次主持人——Kathy Powers 女士，副總裁、財務主管、投資人關係與稅務負責人。

Thank you. Thank you for joining us today for Modine Second Quarter Fiscal 2018 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. We will be using slides with today's presentation. Those links are available through both the webcast link as well as the PDF file posted on the Investor Relations section of our company website, modine.com.

謝謝。感謝各位今天參加 Modine 2018 會計年度第二季財報電話會議。今天與我一同出席的有 Modine 總裁暨執行長 Tom Burke，以及我們的財務副總裁兼財務長 Mick Lucareli。我們將使用投影片進行今天的簡報。相關連結可透過網路直播連結，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 two hours after the call concludes. 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.

此外，若您需要在會議結束前退出，會議重播將於電話會議結束約兩小時後，透過我們的網站提供。投影片第 2 頁為今天會議的議程大綱，Tom 與 Mick 將就我們第四季及全年業績發表評論，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，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。

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

接下來，我很高興將電話會議交給 Tom Burke。

Thank you, Kathy and good morning everyone. On today's call, I will discuss our second quarter results including an update on our business segments and strategic initiatives. After that, Mick will provide a more detailed review of our consolidated financial results and will update our revenue and earnings guidance for fiscal 2018. I will then provide a few closing remarks prior to opening up the call for questions.

謝謝 Kathy，各位早安。在今天的電話會議中，我將討論我們第二季的業績，包括各事業部門以及策略性計畫的最新進展。接著 Mick 將更詳細地檢視我們的合併財務結果，並更新 2018 會計年度的營收與獲利指引。之後在開放提問前，我會做幾點結語。

I'm pleased to report another strong quarter with significant sales and earnings improvements driven by growth across all of our business segments including a significant contribution from the CIS segment that we acquired last year. In addition to significant sales growth, each business segment observed gross margin expansion in the second quarter led by higher volumes and operating performance.

我很高興報告本季再度繳出強勁表現，銷售與獲利皆顯著提升，成長動能來自我們所有事業部門的擴張，其中也包含我們去年收購的 CIS 事業部門所帶來的重大貢獻。除銷售大幅成長外，各事業部門在第二季的毛利率亦皆有所擴張，主要受惠於更高的出貨量與營運表現。

Overall, sales increased 60% including $149 million of sales from our CIS business in the quarter. Our non-CIS business grew 11% on a constant currency basis with increases reported in each of our segments. This growth was fueled by improvements in many of our key end markets along with continued launch activity for automotive programs in the Americas and Asia segments. Our adjusted operating income was $26.8 million, up $22.4 million from the prior year. Each segment reported year over year improvements in earnings, and the CIS business contributed $8.1 million of operating income during the quarter.

整體而言，銷售成長 60%，其中本季 CIS 業務貢獻銷售額 1.49 億美元。在不含 CIS 的業務方面，以固定匯率計算成長 11%，且各事業部門皆呈現增長。此一成長來自多個關鍵終端市場的改善，以及美洲與亞洲事業部門汽車專案持續的量產導入活動。調整後營業利益為 2,680 萬美元，較去年同期增加 2,240 萬美元。各事業部門的獲利皆較去年同期改善，而 CIS 業務本季貢獻營業利益 810 萬美元。

Our adjusted earnings per share were $0.36 for the quarter, a $0.37 improvement from the prior year primarily due to higher operating earnings partially offset by higher interest expense from the debt taken on to finance the Luvata acquisition.

本季調整後每股盈餘為 0.36 美元，較去年同期提升 0.37 美元，主要因營業獲利提高；但部分被利息費用增加所抵銷，該利息費用係因為為籌措 Luvata 收購案而承擔的債務所致。

Now I would like to briefly review the segment results for the second quarter. Turning to Page 6, sales for the Americas segment increased 12% on a constant currency basis to $141.9 million driven by end market improvements in both North America and Brazil. In North America we saw sales increases across all end markets with substantial increases in off-highway and specialty vehicle sales.

接下來我將簡要回顧第二季各事業部門的表現。請看第 6 頁，美洲事業部門銷售以固定匯率計算成長 12% 至 1.419 億美元，主要受北美與巴西終端市場改善所帶動。在北美，我們看到所有終端市場的銷售皆增加，其中非公路（off-highway）與特種車輛的銷售增幅尤為顯著。

We are also benefiting from ramp-up volumes on new automotive programs. In Brazil, we are seeing continued improvements in our markets with the recovery in our after-market business and higher commercial vehicle sales.

我們也受惠於新汽車專案的爬坡放量。在巴西，隨著售後市場業務復甦以及商用車銷售提高，我們持續看到市場改善。

Gross margin improved 260 basis point to 15.2%. This is driven by the higher sales volumes and improved performance partially offset by the impact of higher material costs. Adjusted operating income for the Americas segment was $8.6 million, an increase of $6.5 million from the prior year driven by the higher sales volume and lower SG&A expense. We continue to be very encouraged by the improving markets in North America and Brazil.

毛利率提升 260 個基點至 15.2%。此一改善主要由更高的銷售量與營運表現提升所帶動，但部分被原物料成本上升的影響所抵銷。美洲事業部門調整後營業利益為 860 萬美元，較去年同期增加 650 萬美元，主要受更高銷售量與較低的銷售、一般及管理費用（SG&A）所驅動。我們對北美與巴西市場的改善仍深受鼓舞。

In addition, I am particularly pleased with our strong sales conversion this quarter as higher volume and production efficiency improvements led to a considerable gross margin expansion. However, as I mentioned last quarter the global commercial vehicle power train cooling business has become increasingly competitive. And in some cases the investment required to launch these programs did not meet our return on capital expectations.

此外，我對本季強勁的銷售轉換表現尤其滿意；更高的出貨量與生產效率改善帶動毛利率大幅擴張。然而，如同我上季所提到的，全球商用車動力系統冷卻業務的競爭正日益激烈。在某些情況下，為導入這些專案所需的投資未能符合我們對資本報酬的期望。

Our capital allocation discipline, which has been further honed by our Strengthen, Diversify, and Grow Strategic Initiatives is driving our focus for improved returns in our new business pursuits. As a result, we do expect to see some lower volumes in our North America commercial vehicle business during the second half of the fiscal year as certain power train cooling and service programs begin to wind down.

我們的資本配置紀律，在「強化、分散、成長」策略性計畫的進一步淬鍊下，正推動我們在新業務開發上聚焦於提升報酬。因此，我們預期在本會計年度下半年，北美商用車業務的部分出貨量將下降，因為某些動力系統冷卻與服務專案將開始逐步結束。

With our new diversified business structure, we will continue to be selective with our choices supporting programs and markets to provide an acceptable return on the use of our capital. This improved discipline in our capital allocation strategy is aimed directly at yielding the highest possible return for our shareholders.

在我們新的多元化業務架構下，我們將持續審慎選擇所支持的專案與市場，以確保資本使用能帶來可接受的報酬。此一在資本配置策略上的紀律提升，目標是直接為股東創造盡可能高的報酬。

Please turn to Page 7, sales for our Europe segment increased to 3% on a constant currency basis to $134.5 million. Primarily driven by higher sales to automotive and off-highway customers. This was partially offset by lower sales to commercial vehicle customers as certain programs continue to wind down as we've announced in prior calls.

請翻到第 7 頁，歐洲事業部門銷售以固定匯率計算成長 3% 至 1.345 億美元。主要由對汽車與非公路（off-highway）客戶的銷售增加所帶動。但部分被對商用車客戶的銷售下滑所抵銷，因為如同我們在先前電話會議中所宣布的，某些專案仍在逐步結束。

Gross margin increased 130 basis point to 14.5%. The increase in margin is due to improved plant performance, procurement savings, and a higher sales volume. Higher gross profit led to a $3.1 million increase in adjusted operating income which was $8.9 million in the quarter. Additionally, the construction of our new production facility in Hungary is nearly complete.

毛利率提升 130 個基點至 14.5%。毛利率提升主要來自工廠營運表現改善、採購節省，以及更高的銷售量。較高的毛利帶動調整後營業利益增加 310 萬美元，本季為 890 萬美元。此外，我們在匈牙利的新生產設施建置已接近完工。

We've begun equipment installation and will commence process validation and production next month. The additional capacity in Hungary is an important step in our growth strategy and will further enhance our already competitive global footprint. We continue to see a great deal of quote activity for electric vehicle programs in Europe with a significant number of RFQs in process with several European manufacturers.

我們已開始進行設備安裝，並將於下個月啟動製程驗證與生產。匈牙利新增產能是我們成長策略的重要一步，並將進一步強化我們既有的全球競爭性布局。我們持續看到歐洲電動車專案有大量報價活動，且與多家歐洲製造商之間有相當數量的詢價（RFQ）正在進行中。

Please turn to Page 8. Our Asia segment continued to lead our vehicular segments in both sales growth and gross margin. Overall, Asia sales grew 60% compared to the prior year. This significant improvement was driven by stronger sales to off-highway customers in China, India, and Korea along with higher automotive and commercial vehicle sales in China and India.

請翻到第 8 頁。我們的亞洲事業部在銷售成長與毛利率方面，持續領先我們的車用事業群。整體而言，亞洲銷售額較去年同期成長 60%。這項顯著改善主要來自於對中國、印度與韓國非公路客戶的銷售更強勁，以及在中國與印度汽車與商用車銷售增加所帶動。

Higher sales volume led to a 400 basis point improvement in gross margin which at 18.9% leads our vehicular segments. This resulted in a doubling of our gross profit from $3.7 million last year to $7.4 million this year.

較高的銷售量使毛利率提升 400 個基點，達到 18.9%，為我們車用事業群之首。因此，我們的毛利由去年的 370 萬美元倍增至今年的 740 萬美元。

Operating income for the Asia segment increased $3.4 million to $4.2 million due to the higher sales volume. As I mentioned in the past, our strong growth in Asia over the past year has challenged our capacity in the region. This has been a direct result of the growth of our automotive oil cooler business which has seen growing market share as well as recovery of excavator market sales across Asia. We will need additional capacity in China to meet the demands of our current order book and the needs of our incremental business and growth strategies. We are planning a fourth manufacturing facility to support our vehicular segment in China. This is a great example of how we are strategically allocating our capital to where we expect to deliver the highest return for our shareholders.

由於銷售量提高，亞洲事業部的營業利益增加 340 萬美元至 420 萬美元。如我過去所提到的，我們過去一年在亞洲的強勁成長已對區域產能造成挑戰。這直接源自於我們汽車用油冷卻器業務的成長，該業務市占率持續提升，同時亞洲各地挖掘機市場銷售亦出現復甦。為了滿足目前訂單量的需求，以及增量業務與成長策略的需要，我們將需要在中國增加產能。我們正規劃在中國設立第四座製造工廠，以支援我們的車用事業群。這是我們如何策略性配置資本、投向我們預期能為股東帶來最高報酬之處的絕佳例子。

Turning to Page 9, the CIS segment reported $149.2 million in sales. Gross profit was $22.5 million which resulted in a gross margin of 15.1%. The segment reporting operating income of $8.1 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.

翻到第 9 頁，CIS 事業部報告銷售額為 1.492 億美元。毛利為 2,250 萬美元，毛利率為 15.1%。該事業部報告營業利益為 810 萬美元。提醒一下，其中包含因收購會計而認列的 320 萬美元折舊與攤銷費用，並平均分攤於銷貨成本與 SG&A。

We are confident that our synergy savings will offset these costs and bring this segment back to its historical operating margins. The markets we serve in our CIS segment are generally stable with positive growth projected for the rest of the fiscal year. There are some opportunities for additional growth in the precision cooling market as demand for new data center capacity in the U.S. continues to grow with one of our major customers. In addition, the recent major weather events in the south have increased demand for mobile air conditioning and dehumidification which could drive additional demand for our products.

我們有信心，協同效益節省將可抵銷這些成本，並使該事業部回到其歷史營業利潤率水準。我們在 CIS 事業部所服務的市場整體穩定，且預期本會計年度剩餘期間將呈現正向成長。在精密冷卻市場方面仍有一些額外成長機會，因為我們的一家主要客戶在美國持續擴增新的資料中心產能，帶動需求成長。此外，南部近期重大天候事件提高了對行動式空調與除濕設備的需求，可能進一步帶動對我們產品的需求。

In China, the transformer oil cooler growth market remains robust driven by increased infrastructure investment. In addition, we are well on our way to achieving our synergy goals ahead of our initial timeline. Our current focus is on our global manufacturing footprint where we are evaluating expansion from our current low-cost country presence.

在中國，變壓器油冷卻器的成長市場仍然強勁，主要由基礎建設投資增加所驅動。此外，我們正順利在原先時程之前達成協同效益目標。我們目前的重點在於全球製造版圖，正在評估在現有低成本國家據點的基礎上進一步擴張。

Please turn to Page 10. Sales for our building HVAC segment increased 7% compared with the prior year. With improvements in heating and ventilation partially offset by lower air conditioning sales. We continue to see strong sales of school products which nearly doubled from the prior year.

請翻到第 10 頁。我們建築 HVAC 事業部的銷售額較去年同期成長 7%。其中供暖與通風的改善，部分被空調銷售下滑所抵銷。我們持續看到學校相關產品的強勁銷售，較去年同期幾乎倍增。

Gross profit increased 26% and gross margin improved by 470 basis points to 30.5%. This along with a slight decrease in SG&A resulted in adjusted operating income of $6.3 million, more than double that of the prior year. This improvement is largely due to improved pricing and better performance in the U.K. As you may recall, our U.K. business struggled last year with sales mix issues and operational inefficiencies. We took several actions to correct these issues, and are now seeing positive results. This is the second consecutive quarter where operating earnings have more than doubled resulting from the cost saving and operational improvements made last year.

毛利增加 26%，毛利率提升 470 個基點至 30.5%。再加上 SG&A 略為下降，使調整後營業利益達 630 萬美元，較去年同期增加逾一倍。此改善主要來自於定價提升以及英國業務表現改善。如各位所記得，我們英國業務去年因銷售組合問題與營運效率不彰而表現不佳。我們採取了多項措施來修正這些問題，現在已看到正面成果。這是連續第二個季度，因去年所推動的成本節省與營運改善，使營業獲利增加逾一倍。

In addition, our order book remains strong. We have seen good demand for our ventilation products in North America and are encouraged to see pre-season stocking orders for the heating products up over the prior year. In the U.K., we are seeing solid demand for precision air conditioning and air handlers. And expect growth in these markets in the second half of this year.

此外，我們的訂單量仍然強勁。我們看到北美對通風產品的需求良好，也很高興看到供暖產品的旺季前備貨訂單較去年增加。在英國，我們看到對精密空調與空氣處理機的穩健需求。並預期今年下半年這些市場將成長。

Please turn to Page 11, it has been two years since we first announced our Strengthen, Diversify, and Grow strategy along with our initial objectives, and I am very pleased with the results. Modine is now a more diversified business that has seen significant topline growth along with improved earnings and cash flow. Although the initial goals of that program have largely been met, our strategic focus has not changed. We are continuing to look for ways to strengthen, diversify, and grow now and in the future.

請翻到第 11 頁。自我們首次宣布「強化、多元化與成長」策略及其初始目標以來已過兩年，我對成果非常滿意。Modine 現在是一家更多元化的企業，營收顯著成長，同時獲利與現金流也有所改善。雖然該計畫的初始目標大多已達成，但我們的策略重點並未改變。我們將持續尋找現在與未來強化、多元化與成長的方法。

As I've shared in the past, our main operational focus of this year is to resolve the remaining operational inefficiencies in North America and the U.K., complete the integration of the CIS business, meet or exceed our synergy targets and to generate cash to repay the acquisition debt. I am pleased to report that we are well on our way to achieving all of these goals.

如我過去所分享的，我們今年主要的營運重點是解決北美與英國剩餘的營運效率不彰問題、完成 CIS 業務整合、達成或超越協同效益目標，並產生現金以償還收購負債。我很高興地報告，我們正穩步朝著達成所有這些目標前進。

In addition to these operational goals, we have also set some strategic goals for ourselves to make sure that we are thinking ahead to determine how we can best continue to provide profitable growth. This review is focused on creating a disciplined framework to analyze our business portfolio and to better understand how to prioritize our capital resources in order to continue to create value for our shareholders.

除了這些營運目標之外，我們也為自己設定了一些策略目標，以確保我們能前瞻思考，判斷如何才能最好地持續提供獲利性成長。這項檢視聚焦於建立一套嚴謹的架構來分析我們的業務組合，並更清楚了解如何優先配置資本資源，以持續為股東創造價值。

Some examples of this strategy include the investments in additional capacity in China and our focus on electric vehicles. We know that our customers are making electric vehicles a development priority. We understand these vehicles have different thermal management needs than internal combustion engines. Some of these needs can be met with products that are very similar to those we've already produced particularly with our plate type or engine-based products.

此策略的一些例子包括在中國增加產能的投資，以及我們對電動車的聚焦。我們知道客戶正將電動車列為開發優先事項。我們了解這些車輛在熱管理方面的需求不同於內燃機。其中部分需求可透過與我們既有產品非常相似的產品來滿足，特別是我們的板式或引擎相關產品。

In addition, there is also the opportunity for us to add adjacencies to our product offering such as battery plate cooling. This would be a new product platform for Modine, and we're going to take a balanced prudent approach to our investments around this technology as the market continues to develop.

此外，我們也有機會在產品組合中加入相鄰領域，例如電池板冷卻。這將是 Modine 的一個新產品平台；隨著市場持續發展，我們將以平衡且審慎的方式來推進與此技術相關的投資。

We consider this our next phase of our Strengthen, Diversify, and Grow Strategic Initiative which will guide our actions over the coming years. This is a great opportunity for Modine as our stronger profitability and market diversification makes us truly a diversified industrial company.

我們將此視為「強化、多元化與成長」策略倡議的下一階段，將在未來數年引導我們的行動。這對 Modine 而言是極佳的機會，因為更強的獲利能力與市場多元化，使我們真正成為一家多元化的工業公司。

With that, I'd like to turn it over to Mick for an overview of our consolidated financial results. Mick will also update 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 也將更新我們 2018 會計年度的營收與獲利指引。

Thanks, Tom. Good morning everyone. Please turn to Slide 13. We are extremely pleased with the results this quarter with year over year sales and earnings improvement in each segment. In particular, we benefited from favorable volumes on the vehicular side and strong margin improvement in building HVAC.

謝謝，Tom。各位早安。請翻到第13頁投影片。我們對本季的成果感到非常滿意，各事業部門的銷售與獲利均較去年同期改善。尤其是，我們受惠於車用端出貨量有利，以及建築用 HVAC 的毛利率大幅改善。

Beginning with the top line, sales increased $183 million or 58% on a constant currency basis. Sales in our new CIS segment totaled $149 million. Excluding CIS, constant currency sales were up $34 million or 11% year over year. Gross profit of $86.1 million was up $38 million or nearly 80%. This includes $22.5 million from CIS. Excluding CIS, gross profit was up $15.6 million or 32%.

先從營收來看，以固定匯率計算，銷售額增加1.83億美元，增幅58%。我們新設的 CIS 事業部門銷售額合計為1.49億美元。排除 CIS，以固定匯率計算的銷售額較去年同期增加3,400萬美元，增幅11%。毛利為8,610萬美元，增加3,800萬美元，增幅接近80%。其中包含 CIS 貢獻的2,250萬美元。排除 CIS，毛利增加1,560萬美元，增幅32%。

As Tom mentioned, this improvement was driven by all of our segments from higher sales volume and operational improvements. SG&A of $62.2 million was up $14 million, the year over year increase is primarily due to the addition of CIS.

如 Tom 所提到，這項改善是由我們所有事業部門共同帶動，來自更高的銷售量與營運改善。銷售、一般及行政費用（SG&A）為6,220萬美元，增加1,400萬美元；年增主要是因為納入 CIS。

Please note that at the bottom of the page we've included a table with adjustments to operating income. In total, adjustments were $3.3 million for the quarter. We added back $2.2 million of acquisition-related items. The remaining $1.1 million is for restructuring and environmental expenses relating to plant closures.

請注意，在頁面底部我們附上一張表，列示對營業利益的調整項目。本季調整合計為330萬美元。我們加回了220萬美元的併購相關項目。其餘110萬美元為與工廠關閉相關的重整與環境費用。

Second quarter adjusted operating income of $26.8 million was up $22.4 million. And our adjusted earnings per share was $0.36, an improvement of $0.37 compared to last year. As discussed last quarter, EPS was positively impacted by the tax benefit from the development credit in Hungary.

第二季調整後營業利益為2,680萬美元，增加2,240萬美元。調整後每股盈餘（EPS）為0.36美元，較去年改善0.37美元。如上季所討論，EPS 受到匈牙利研發稅額抵減帶來的稅務利益而正向影響。

As a reminder, our U.S. GAAP income statement is included in the appendix of this presentation and in our earnings release. In addition, we provide a full reconciliation between our reported results and our adjusted operating results.

提醒各位，我們依美國一般公認會計原則（U.S. GAAP）編製的損益表已收錄於本簡報附錄以及我們的財報新聞稿中。此外，我們也提供已報告結果與調整後營運結果之間的完整調節表。

So let's turn to Slide 14. Year to date operating cash flow was $71.1 million, which is $57.5 million higher than the prior year. The year over year increase was due to the combination of several items including favorable changes in working capital, the inclusion of CIS this year, and higher earnings in all our segments.

接著請看第14頁投影片。年初至今的營業活動現金流量為7,110萬美元，較去年同期增加5,750萬美元。年增主要來自多項因素的綜合影響，包括營運資金的有利變動、今年納入 CIS，以及各事業部門獲利提升。

Capital expenditures were above the prior year by $4.8 million and we expect CapEx for the full year to be $65 million to $70 million. This is slightly higher than the last year, and primarily due to foreign exchange rate changes and capital spending in our new CIS segment.

資本支出較去年增加480萬美元，我們預期全年資本支出（CapEx）為6,500萬至7,000萬美元。這略高於去年，主要是因外匯匯率變動以及新 CIS 事業部門的資本支出所致。

We reported year to date free cash flow of $34.3 million, which was better than the prior year by $52.7 million. Please note that this does include $15.5 million of cash payments for restructuring activities, legal and environmental charges, along with acquisition and integration costs.

我們年初至今的自由現金流為3,430萬美元，較去年同期改善5,270萬美元。請注意，其中包含1,550萬美元的現金支出，用於重整活動、法律與環境費用，以及併購與整合成本。

For the second quarter, free cash flow was $37.2 million, an increase of $42.7 million over the prior year. And this includes $3.6 million of cash payments for the areas I just described.

就第二季而言，自由現金流為3,720萬美元，較去年同期增加4,270萬美元。其中包含我剛才所述領域的360萬美元現金支出。

Finally, our debt leverage ratio is currently 2.6. Down from 2.9 at the end of fiscal 2017. This is well below our current covenant ratio requirement of 3.75.

最後，我們目前的負債槓桿比率為2.6。較2017會計年度末的2.9下降。這遠低於我們現行契約條款要求的3.75。

With the addition of CIS and the strong first half performance, we continue to anticipate much improved cash flow in fiscal 2018. We remain focused on paying down our debt and getting our leverage ratio below 2.5 by the end of this fiscal year.

隨著納入 CIS 以及上半年強勁表現，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至2.5以下。

Now let's turn to fiscal 2018 guidance on Slide 15. We are happy with our second quarter results, and excited to report we are raising our fiscal 2018 sales and earnings guidance. To summarize, we project sales to be up 32% to 36% from the prior year. An increase from the previous range of 25% to 30%. We expect our topline will continue to benefit from automotive growth in Asia and improvements in the global off-highway markets.

現在請看第15頁投影片的2018會計年度財測。我們對第二季結果感到滿意，也很高興宣布上調2018會計年度的銷售與獲利指引。總結而言，我們預估銷售額將較去年增加32%至36%。高於先前25%至30%的區間。我們預期營收將持續受惠於亞洲汽車市場成長，以及全球非道路（off-highway）市場的改善。

We also anticipate more favorable exchange rates than last quarter, as the euro and British pound is strengthened against the U.S. dollar. We expect adjusted operating income to be in the range of $107 million to $117 million, an increase from the previous guidance of $100 million to $110 million. We currently expect an increase of 48% to 62% compared to the prior year.

我們也預期匯率將較上季更為有利，因歐元與英鎊相對美元走強。我們預期調整後營業利益將介於1.07億至1.17億美元，高於先前1.00億至1.10億美元的指引。目前我們預期較去年增加48%至62%。

We anticipate adjusted EBITDA to be in the range of $182 million to $192 million, up from $175 million to $185 million. Our current expectation equates to an increase of more than 46% over the prior year.

我們預期調整後 EBITDA 將介於1.82億至1.92億美元，高於先前1.75億至1.85億美元。依我們目前預期，這相當於較去年增加超過46%。

As usual I want to briefly review some of our key assumptions. First our guidance includes planned wind downs of certain commercial vehicle programs in Europe and North America. As a result, forecasted sales may not fully align with the overall commercial vehicle market growth.

照例我想簡要回顧幾項關鍵假設。首先，我們的指引包含在歐洲與北美逐步結束（wind down）部分商用車專案。因此，預估銷售額可能無法完全反映整體商用車市場的成長。

Next, we anticipate that copper and aluminum will hold at current levels, which are about 20% and 25% higher than last year. With the additional increases over the last few months, we are watching and managing this area closely. Third, we expect the U.S. dollar will hold at current levels versus most major currencies. Lastly, we assume annual interest expense of approximately $26 million.

其次，我們預期銅與鋁將維持在目前水準，約較去年高出20%與25%。鑑於過去幾個月的額外上漲，我們正密切關注並積極管理此一領域。第三，我們預期美元相對多數主要貨幣將維持在目前水準。最後，我們假設年度利息費用約為2,600萬美元。

Moving on, we expect our adjusted EPS to be between $1.30 and $1.45 which is up from $1.20 to $1.35. And up significantly from $0.78 in fiscal 2017. This includes the impact of the Hungarian Development Tax Credit, and a resulting adjusted tax rate of approximately 12% to 14% in fiscal 2018.

接下來，我們預期調整後 EPS 介於1.30至1.45美元，高於先前1.20至1.35美元。也較2017會計年度的0.78美元大幅提升。其中包含匈牙利開發稅額抵減的影響，並使2018會計年度的調整後有效稅率約為12%至14%。

Finally, I would like to cover several important factors with regards to our increase in guidance and the second half run rate. First, a significant portion of our additional revenue relates to currency translation and materials pricing adjustments which have minimal conversion. The volume portion of our revenue increase does include normal profit conversion, and we have increased our outlook accordingly.

最後，我想就我們上調指引以及下半年運行水準（run rate）說明幾項重要因素。首先，我們新增營收中有相當一部分與匯率換算及材料價格調整有關，其轉換為利潤的比例很低。而營收增量中的出貨量部分則包含正常的利潤轉換，因此我們相應上調了展望。

Offsetting a portion of the volume is the additional increase in metals up approximately 15% since last quarter, and a significant mix effect relating to the loss of some commercial vehicles service business. In addition, given the strengthening of our business, we expect some limited SG&A increases. Consistent with last quarter's comments, we expect the next two quarters to proceed at a similar run rate to our second quarter. And lastly, our year over year comparables will become more normalized in the fourth quarter as CIS results will be included in both years.

抵銷部分出貨量效益的因素包括：自上季以來金屬價格再上漲約15%，以及因部分商用車售後服務業務流失所造成的顯著產品組合影響。此外，隨著業務走強，我們預期 SG&A 會有一些有限的增加。與上季評論一致，我們預期接下來兩季將以與第二季相近的運行水準推進。最後，隨著 CIS 的結果在兩個年度中都將被納入，我們的年對年比較將在第四季趨於正常化。

So just to summarize, we have adjusted for the positive impact of exchange rates and volume in certain markets. While also factoring the additional metals increase and reduction of commercial vehicle service business. Our employees have made excellent progress during the first six months while taking advantage of some market tailwinds. And we're excited about the opportunities ahead and look forward to further improvements in our business.

總結來說，我們已就匯率與特定市場的銷量所帶來的正面影響進行調整。同時也納入額外的金屬成本上升，以及商用車輛售後服務業務的縮減。我們的員工在前六個月把握了一些市場順風因素，並取得了極佳的進展。我們也對未來的機會感到振奮，並期待公司業務能進一步改善。

Tom?

Tom？

Thanks, Mick. As Mick outlined, our performance this year is clearly exceeding our initial expectations. This is in large part due to improving markets, but is equally the result of the actions taken in the past to ensure our future success. As we near the one year anniversary of the Luvata acquisition I would like to look back on some of the actions we have taken that positively impacted our quarter and fiscal year so far.

謝謝，Mick。如同 Mick 所概述的，我們今年的表現顯然超出最初的預期。這在很大程度上歸因於市場改善，但同樣也是過去為確保未來成功而採取行動的成果。在 Luvata 併購即將滿一週年之際，我想回顧一下我們採取的一些行動，這些行動對本季以及迄今的會計年度帶來了正面影響。

Clearly, the addition of the CIS business has been an incredible success with significant accretion to our bottom line. In our vehicular business the investments made in China have led to tremendous growth. So much so, that we're running out of capacity and eyeing opportunities for expansion.

很明顯，CIS 業務的加入取得了令人難以置信的成功，並對我們的淨利帶來顯著增益。在車用業務方面，我們在中國的投資帶來了驚人的成長。成長幅度之大，以至於我們的產能已接近滿載，並正尋找擴產機會。

In our building HVAC segment, I am pleased that we have returned to growth and are seeing margins that are closer to historical levels. This is a direct result of the actions taken to improve this business, particularly in the U.K.

在建築 HVAC 事業部門，我很高興我們已重回成長，且利潤率正接近歷史水準。這是改善該業務所採取行動的直接成果，尤其是在英國。

Over the past few years, Mick and I have often discussed the earnings potential of this business if only we'd see some improvements across our markets. We are now seeing the strength of that potential in our results while positioning ourselves as a more diversified industrial company. This is truly an exciting time to be a shareholder of Modine. And I'm thankful for your ongoing support and excited for our future.

在過去幾年，Mick 和我經常討論這項業務的獲利潛力——只要我們的各個市場能有所改善。我們現在正從成果中看到這種潛力的強勁展現，同時也將公司定位為更多元化的工業企業。對 Modine 的股東而言，這確實是一個令人振奮的時刻。我也感謝各位持續的支持，並對我們的未來感到期待。

And with that, we'll take your questions.

接下來我們將開始回答各位的提問。

(Operator Instructions) Our first question comes from Mike Shlisky from Seaport Global. Mike, your line is now open.

(接線員指示) 我們的第一個問題來自 Seaport Global 的 Mike Shlisky。Mike，您的線路已開通。

Want to start off with questions about Asia. An interesting quarter here. It looks like that's really gone from kind of last place to first place over the last 12 to 18 months. I guess I'm kind of curious about the potential for expansion or capacity in Asia and the new business that could be on the way for you guys.

我想先從亞洲的問題開始。這一季很有意思。看起來在過去 12 到 18 個月間，亞洲真的從相對落後的位置躍升到領先。我想了解的是，亞洲的擴張或產能提升的潛力，以及你們可能即將到來的新業務。

I guess I'm curious to see kind of what's your benchmark operating margin rate for that business or gross margin rate? Are you looking at trying to keep the EBIT at double digits here going forward? And what's the timeframe for any kind of CapEx or spending that you might have to take in Asia over the next couple of years here?

我也想請教，你們對該業務的營運利潤率或毛利率，有沒有一個基準目標？未來是否希望將 EBIT 維持在雙位數？另外，未來幾年在亞洲可能需要投入的資本支出（CapEx）或相關支出的時間表大概是什麼？

Yes, Mike it's Mick. I'll go first and then Tom can add his comments. But yes we're very, very pleased with both the gross profit margin and operating margin in Asia. I think as we go forward what we're modeling and we would hold ourselves to is holding at similar margins somewhere between gross between the 18% and 20% gross margin range. And we'd be quite happy with a 10% operating margin.

是的，Mike，我是 Mick。我先回答，之後 Tom 可以補充。我們對亞洲的毛利率與營業利益率都非常、非常滿意。我認為往後我們的模型假設、也是我們對自己要求的，是維持類似的利潤率：毛利率大約在 18% 到 20% 的區間。而若營業利益率能達到 10%，我們會相當滿意。

And with regards to capital spending and CapEx, the majority of that will just continue to be on equipment and tooling to support the new business. The expansion that Tom referenced is really we're looking to be within an existing campus and looking at more leasing of square footage than a major greenfield plant expansion.

至於資本支出與 CapEx，大部分將持續用於設備與工裝治具，以支援新業務。Tom 所提到的擴張，主要是考慮在既有園區內進行，更多是透過租賃增加使用面積，而不是大規模的新建（greenfield）工廠擴建。

Mike, I just came back from China. I was there last week, and visited each of our VTS businesses and one of our new CIS businesses. And I can tell you I'm very excited with what's happening there. The team has matured extremely well. This has been well groomed over the years to get to this position of getting the right not only products there but talent in place, leadership in place, and it's clicking on all cylinders right now. With the expansion for growth both with multinationals, the multinationals, and domestic OEs looking very strong.

Mike，我剛從中國回來。我上週在那裡，拜訪了我們各個 VTS 業務以及其中一個新的 CIS 業務。我可以告訴你，我對那裡正在發生的事情感到非常振奮。團隊成熟度提升得非常好。多年來我們一直在精心培育，才走到今天這個位置——不僅把合適的產品帶到當地，也把人才、領導團隊配置到位；目前一切運作得非常順暢。在成長擴張方面，無論是跨國企業或本土 OEM 的需求看起來都非常強勁。

And on the CIS business, which is kind of new to us as far as China, I'm very pleased with what we have down there as far as really supporting infrastructure gains that are focused on China specifically and elsewhere. So I expect the Asia segment in both the VTS and the CIS business to be very big contributors going forward.

至於 CIS 業務，就中國而言對我們算是較新的領域；我對我們在當地所建立的能力非常滿意，尤其是在支援以中國及其他地區為重點的基礎建設成長方面。因此我預期，亞洲事業部門在 VTS 與 CIS 兩項業務上，未來都將成為非常重要的貢獻來源。

I wanted to turn quickly to building HVAC as well. Again, also a very strong margin growth there obviously year over year. And I'm kind of curious can you keep the double digit range going over the next couple of quarters here? Or can you give us some sense with all the cost reductions and changes in strategy, changes in facility kind of is there a different seasonality now than you've had in the past? And kind of your near to midterm outlook there as well. Thanks.

我也想快速轉到建築 HVAC。同樣地，那裡的利潤率成長也非常強勁，顯然是年對年大幅提升。我想請教，你們能否在接下來幾季維持雙位數的水準？或者，隨著各項成本削減、策略調整與廠房變更，季節性是否與過去不同了？也請談談你們對該業務短中期的展望。謝謝。

Well first off, it starts with the leadership changes we made in the U.K. Specifically really getting to understand that the market connection as far as channels in the market and getting the order book set up the right way which is strong. Inside the business they made all the right decisions on streamlining as necessary to get the cost in line and that's starting to pay off as well.

首先，關鍵在於我們在英國所做的領導團隊調整。特別是更深入理解市場連結——包括市場通路——並以正確方式建立訂單能見度（order book），目前表現強勁。

Looking forward to growth, they're all great segments that we're participating in whether it's precision, ventilation, heating, air conditioning, and the added ventilation product line that we're adding to North America with the Atherion product line. We're launching the new D-cabinet as we speak this month which will really kind of broaden that out. So I see again the opportunity for growth in this segment and making sure that this segment gets its fair share of capital to take advantage of that in the market. Something I'm really excited about as well.

展望成長，我們參與的都是很好的細分市場，無論是精密、通風、供暖、空調，以及我們正把 Atherion 產品線所新增的通風產品導入北美。我們本月也正在推出新的 D-cabinet，這將進一步擴大產品覆蓋。因此我再次看到這個事業部門的成長機會，並確保該部門能獲得其應有的資本配置，以把握市場機會。這也是我非常期待的一點。

Great. And finally, I wanted to turn to the Americas segment and your changes you've made in your portfolio business and I guess at the truck market. It looks like you walked away from some business and that's in line with what you've been talking about for a couple of years now. It just doesn't meet. Your goal is just to kind of walk away here.

很好。最後，我想談談美洲事業部門，以及你們在產品組合業務上的調整，還有卡車市場方面。看起來你們放棄了一些業務，這也符合你們過去幾年一直在談的方向。只是它不符合。你們的目標就是在這裡選擇退出。

I'm curious about two things. One, did somebody else win this business that is quite a bit smaller than you that just wanted to kind of get the bookings? And do you stand ready to kind of step in if they can't deliver? And then kind of secondly, is this one of the first of what could be several different program wind downs? But there are other market share gains as other new platforms kind of ramp up in 2018, 2019?

我對兩件事感到好奇。第一，是不是有一家規模比你們小得多的公司拿下了這筆業務，只是想先把訂單（bookings）拿到手？如果他們無法交付，你們是否已準備好在需要時介入接手？第二，這是否是可能出現數個不同專案收尾（wind downs）中的第一個？但隨著其他新平台在2018、2019年逐步放量，是否也會帶來其他市占率提升？

Well, first let me say we are not walking away from the commercial vehicle business, okay? One element of that business being the power train cooling segment is in the heavy duty section or market, sub segment is kind of the challenging moment. And I just want to say the VTS growth opportunities across all of our products and markets I'm very pleased with. This happens to be the one challenging element in the heavy-duty PTC area. I'll remind you that it's about 7% of our total sales, and if I take the engine product out of that that's about half of that, okay? And again we have about a 30% global market share on the engine product inside of the commercial vehicle program. So again commercial vehicle very important to Modine.

好，首先我要說，我們並沒有要退出商用車業務，好嗎？該業務中的一個要素，也就是動力總成冷卻（power train cooling, PTC）領域，在重型（heavy duty）板塊/市場的子分項目前確實比較具挑戰。我也想說，我對我們在所有產品與市場上的VTS成長機會非常滿意。這剛好是重型PTC領域中一個具挑戰的要素。我提醒各位，這約占我們總銷售額的7%；如果把其中的引擎產品拿掉，那大約是其中的一半，好嗎？再者，在商用車專案中的引擎產品，我們在全球約有30%的市占率。所以，商用車對Modine仍然非常重要。

Specifically on PTC, with diversification and growth plans that we laid with the acquisition of CIS and with the focus we've had on VTS and building HVAC we have lots of options as far as making sure we invest our capital in a disciplined manner to return rates that meet our expectations. And that's kind of the key point. We aren't going to chase market share for the sake of market share. Let me just be clear about that. We're going to make sure that business, that investment is growing to accrete our business according to our expectations. So again, we're not walking away from commercial vehicles we are reprioritizing our portfolio inside of that specifically heavy-duty PTC.

就PTC而言，透過我們收購CIS所提出的多元化與成長計畫，以及我們對VTS與建築HVAC的聚焦，我們在確保以紀律方式投入資本、並取得符合我們預期的報酬率方面，有很多選項。這就是關鍵點。我們不會為了市占率而追逐市占率。這點我要講清楚。我們會確保那項業務、那筆投資的成長，能依照我們的預期為公司帶來增益（accrete）。所以再次強調，我們沒有要退出商用車；我們是在商用車內部，特別是重型PTC，重新調整我們的投資優先順序。

As far as new entrance or whatever, I don't really have a comment on that. I think that clearly there's competitors we know well that are focused on that area, and quite frankly we made decisions on where we're going to stop at our quoting thresholds and we're going to hold that discipline for the benefit of our shareholders.

至於新進入者或其他情況，我沒有特別評論。我認為很明顯有我們熟悉的競爭對手正聚焦在那個領域；坦白說，我們已經決定在報價門檻（quoting thresholds）上要停在哪裡，我們會維持這份紀律，以股東利益為依歸。

Your next question comes from the line of Matthew Paige from Gabelli. Matthew, your line is now open.

下一個問題來自Gabelli的Matthew Paige。Matthew，您的線路已開通。

We had spoken in the past about your view on leverage and you mentioned it today. I guess just given the strong stock performance of late, I just wanted to ask for your thoughts on alternative sources to finance what you had perceived to be a lack of margin of safety in your finances.

我們過去談過你們對槓桿的看法，你今天也提到了。我想，鑑於近期股價表現強勁，我想請教你們對於替代性資金來源的看法，以因應你們先前認為財務上安全邊際不足的問題。

Yes, could you repeat the first part of your question you said V1?

是的，您能重複一下問題的第一部分嗎？您剛剛說V1？

No, I just thought given where we had been in the stock price and the strong movement lately I was just curious what your thoughts were on financing options.

沒有，我只是想說，考量到我們股價之前的位置以及近期的強勁走勢，我只是好奇你們對融資選項有什麼想法。

It's Mick. So we are quite pleased to see the stock moving up and reflecting, as Tom said, all the hard work we did. We've been so focused on since the Luvata acquisition about driving cash flow and ensuring we get our leverage ratio back to that 2.5 times range. So the strong cash flow this quarter, the strong results in the raise in the guidance and the current ratio is sitting about 2.6. We feel really good about our capital structure.

我是Mick。我們很高興看到股價上漲，並如Tom所說，反映了我們所做的所有努力。自Luvata收購案以來，我們一直非常專注於推動現金流，並確保把槓桿比率拉回到2.5倍左右的區間。因此，本季強勁的現金流、強勁的業績、上調財測，以及目前槓桿比率約在2.6倍。我們對我們的資本結構感到非常滿意。

I think especially on the debt side, we've got favorable borrowing rates and we feel really good about the leverage ratio and cash flow. With regards to any type of equity raise, Tom and I've talked a lot about that. I think that would have to be tied to something very specific and a very large project before we would think about any type of equity raise.

我認為，特別是在負債端，我們有有利的借款利率，且我們對槓桿比率與現金流都很有信心。至於任何形式的增資（equity raise），Tom和我談過很多。我認為，除非是與非常具體且非常大型的專案綁定，否則我們不會考慮任何形式的增資。

(Operator Instructions) Our next question comes from the line of David Leiker from Baird. David, your line is no open.

(接線員指示) 我們的下一個問題來自Baird的David Leiker。David，您的線路已開通。

Hi, good morning this is Joe Vruwink for David. One, just can you maybe size the magnitude of the program exits in North America in the second half? And then if you could, maybe the profit implication?

嗨，早安，我是代替David的Joe Vruwink。第一，能否請你們大致量化一下北美在下半年退出專案（program exits）的規模？另外，如果可以的話，對獲利的影響是什麼？

So, Joe, it's Mick. I'll kind of ballpark the volume sides. But we'll prefer not to comment. I'll give you some color potentially on margins. So we've said through the year on European just to be clear on that we've been talking about somewhere between 25 million and 30 million euros of that commercial vehicle related there to the Origami radiator business.

Joe，我是Mick。我會大概估一下量的部分。但我們傾向不做太多評論。我可以就毛利率提供一些補充說明。我們今年一直在談歐洲那邊——先說清楚——我們提到與商用車相關、屬於Origami散熱器業務的規模大約在2,500萬到3,000萬歐元之間。

And the North America side we're looking at approximately $10 million this year. That's a combination of heavy duty OE business and service. And there's a mix in there. As Tom mentioned, on the OE production business clearly more challenge from a returns standpoint. Service business historically has always been across the market, across the distribution channel a relatively higher margin less capital intensive profile.

北美方面，我們今年預估約1,000萬美元。這包含重型OE（原廠配套）業務與售後服務（service）。其中有不同組合。如Tom提到的，OE量產業務從報酬角度來看顯然更具挑戰。而服務業務在市場上、在通路端歷來都是相對較高毛利、資本密集度較低的型態。

Okay, and it sounds like $10 million beginning in the second half. So presumably focusing on North America for now, so probably first half of next fiscal year you probably grandfather that?

好的，聽起來是下半年開始的1,000萬美元。所以先聚焦北美的話，推測到下一財年的上半年你們可能會沿用（grandfather）那部分？

Yes, it's still a little bit early. But looking into next year, it's probably a similar level for fiscal 2019.

是的，現在還稍微早了一點。但看明年，2019財年的水準可能也差不多。

Okay, on the materials side, what is the headwind now contemplated in guidance? And can you maybe just update us on where that number stood in June when you first issued guidance for the fiscal year?

好的，在原物料方面，目前財測中所考量的逆風是多少？另外，你能否更新一下你們在6月首次發布本財年財測時，那個數字是多少？

Yes, when we talked earlier in the year and last quarter we were estimating $15 million to $20 million of material cost increases. I think that range still holds, but we've moved from that low end to the high end. Incrementally, Joe, I think from last quarter to this quarter we're looking at least a $3 million to $4 million, I would say, of increased metals. And that's really due to the timing with the spike in the last quarter. Again we'll catch it up, but we'll start to catch that next fiscal year or late in our Q4.

是的，我們在今年稍早以及上季談到時，估計原物料成本增加約1,500萬到2,000萬美元。我認為這個區間仍然成立，但我們已從區間低端移到高端。就增量而言，Joe，我認為從上季到本季，金屬成本至少增加了約300萬到400萬美元。這主要是因為上季價格飆升的時間點所致。我們會把它補回來，但要到下一財年或我們第四季後段才會開始逐步反映。

So where I'm going with this, I think at the midpoint revenue guidance moved up round numbers about $100 million at the midpoint. EBIT moved up I think about $7 million. Maybe I can add back material headwinds, it sounds like maybe that's $5 million. There's obviously some volume implications to consider.

所以我想表達的是，我認為在指引中點，營收指引在中點大約上調了整數約1億美元。EBIT 我想上調了約700萬美元。也許我可以把重大逆風加回來，聽起來可能是500萬美元。顯然還有一些量的影響需要考量。

But when Modine thinks about quote unquote normal contribution margins for the organic piece of the business, is that more like 15% to 20% number at this point at the EBIT line? And as you think into next year given you have some plan actions in place, SGG continues to contribute savings. Is 15% to 20% kind of the new status quo going forward? Or could you actually operate above that when thinking about Luvata synergies and things like that?

但當 Modine 思考所謂「正常」的有機業務貢獻毛利率時，就 EBIT 這一行來看，目前更像是15%到20%的水準嗎？再看明年，考量你們已經有一些計畫性行動到位，SGG 也持續貢獻節省。15%到20%是否就是往後的新常態？或者在考量 Luvata 協同效益等因素時，實際上能否高於這個水準運作？

Yes, a great question, Joe. A lot of questions in there. When we target volume conversions we still stand behind a 25% gross margin conversion is what we expect to see all else equal. One of the challenges we see -- and again if you just do the midpoint clearly we try to give you guys ranges at any one point. All numbers don't line up right down the midpoint, but I get your question.

是的，Joe，這是個很好的問題。裡面有很多問題。當我們以量的轉換（volume conversions）為目標時，我們仍然堅持：在其他條件相同下，我們預期看到的是25%的毛利率轉換。我們看到的其中一個挑戰是——再說一次，如果你只看中點，我們很清楚會在任何時點盡量給各位區間。所有數字不會在中點完全一一對上，但我理解你的問題。

If you take the increase in revenue and the operating income of $7 million at the midpoint, at least 40% or so of that revenue increase is as you mentioned FX and metals that isn't volume. So we're not going to convert on that. But even taking a 25% conversion then on a smaller number, we would expect and we did see the gross profit come through.

如果你把營收增加與中點的營業利益增加700萬美元拿來看，至少約40%的營收增加如你所提到，是匯率與金屬因素，並不是量。所以我們不會在那部分做出轉換。但即便只對較小的數字套用25%的轉換，我們也會預期、而且確實看到毛利貢獻反映出來。

The offsets to that are the metals and the service business on the commercial vehicle side which both of those were second half impacts to us. So that took a significant negative impact on the volume. Then your second question or your bigger question is is there a different conversion rate running for Modine going forward? And I would say no. On volume we still see 25% plus conversions, and you've seen a lot of quarters like that. This quarter or this half we have some of those headwinds, and we've had quarters where our conversion is 60%. The positive as we look to next year is we will start to recoup the metals increases.

抵銷因素是商用車端的金屬與服務業務，這兩者對我們都是下半年影響。因此對量造成了顯著的負面影響。接著你的第二個問題、或更大的問題是：Modine 往後是否會以不同的轉換率運行？我會說不會。在量的部分，我們仍看到25%以上的轉換，你也看過很多季都是如此。本季或本半年度我們有一些逆風，而我們也曾有季度的轉換率達到60%。展望明年的正面因素是，我們將開始收回金屬上漲的影響。

And you also mentioned synergies. So not to get too far out in front of us, but we're not setting a new low conversion rate for Modine. There's some unique factors here on the second half, but more importantly as we start those become recoveries or tail winds and synergies. You can see a conversion rate that looks by the time you get to EBIT more favorable. Hopefully I'm making sense to you Joe. I'll just pause.

你也提到了協同效益。所以不想說得太超前，但我們並沒有要為 Modine 設定一個新的、較低的轉換率。下半年有一些特殊因素，但更重要的是，當這些開始變成回收、或轉為順風以及協同效益時，你會看到轉換率在走到 EBIT 時看起來更有利。希望我對你說得清楚，Joe。我先停一下。

Yes, that's exactly what I was looking for. That's great detail. I wanted to finish up on just recalibrating around Luvata. One more quarter in, so maybe just an update on how the business continues to operate relative to your expectations. And I want to be sure I'm thinking about the business correctly and into the December quarter obviously we got a one month look at a year ago of what Luvata can do in the month of December and it's seasonally weak. And so with the expectation into the December quarter this year probably a sequential step down in EBIT margin just given seasonality. And then Q4 kind of jumps back up and potentially the strongest margin quarter of the year?

是的，這正是我想要的。細節很棒。我想最後再就 Luvata 做個重新校準。又過了一季，所以想請你更新一下，這項業務的運作表現相對於你們預期的情況如何。我也想確認我對這項業務的理解是否正確；進入12月季度時，顯然我們從去年只能看到12月一個月的表現，而 Luvata 在12月是季節性偏弱的。因此預期今年的12月季度，僅因季節性因素，EBIT 利潤率可能會較前一季下滑。然後第四季又會回升，並可能成為全年利潤率最強的一季？

You answered your question very well, Joe. No, that's exactly right. First off, I'm very pleased with the performance of CIS obviously on how they're contributing and more importantly really excited about the synergy opportunities that are developing. U.S. last quarter about how we've seen the synergies between CIS and building HVAC and those are coming together well through procurement, through some other make versus buy things that we're looking at. And so again, very positive with that outlook. So a great performing business, brings the diversification we wanted and obviously cash flow.

你把問題回答得很好，Joe。不，完全正確。首先，我對 CIS 的表現非常滿意，顯然他們的貢獻很不錯；更重要的是，我也對正在形成的協同效益機會感到非常興奮。我們上季在美國提到過，我們看到 CIS 與建築 HVAC 之間的協同效益，而這些正透過採購、以及我們在評估的一些自製或外購（make versus buy）事項順利整合。所以，再次強調，這個展望非常正面。因此這是一個表現很好的業務，帶來我們想要的多元化，當然也帶來現金流。

But fiscal Q3 is its weak quarter, going into December. Obviously there's short order lead time. It falls into the holiday period so things kind of shut down, if you will, for a couple weeks in there so we'll see that. But it comes back strong in the fourth quarter next year which we anticipate.

但財年第三季是它的弱季，會進入12月。顯然交期很短。又落在假期期間，所以如果你願意這麼說的話，期間會有幾週幾乎是停擺的，因此我們會看到這種情況。但我們預期明年第四季會強勁回升。

I did mention that we see the precision air condition business that they have a very significant position in specifically with one customer that we see that outlook brightening. We think that can have some additional impact potentially in Q4 this fiscal year and going forward. So again they really bring exactly what we want into the company and very pleased with what they're contributing. And again, some major steps we're considering forward on synergy when we add to that. So that's my quick summary on that.

我也提到，他們的精密空調（precision air condition）業務在特定領域具有非常顯著的地位，尤其是對某一位客戶；我們看到該展望正在轉亮。我們認為這可能在本財年第四季以及往後帶來一些額外影響。所以再次強調，他們確實為公司帶來我們想要的元素，我們對他們的貢獻非常滿意。而且再加上這些之後，我們也在往前考量一些在協同效益方面的重大步驟。以上是我對此的簡要總結。

I am showing no further questions at this time. I would now like to turn the conference back to Kathy Powers.

我這邊顯示目前沒有其他問題。現在我想把會議交回給 Kathy Powers。

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

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，也謝謝各位持續關注 Modine。

And that concludes today's teleconference. You may now disconnect.

今天的電話會議到此結束。各位現在可以掛線。