Modine Manufacturing Company (MOD) 2018 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Modine Manufacturing Company's third-quarter fiscal 2018 conference call. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Miss 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 會計年度第三季財報電話會議。（接線員指示）提醒各位，本次電話會議將被錄音。現在我想把電話交給今天的主持人——Kathy Powers 女士，副總裁、財務長、投資人關係與稅務負責人。

Thank you. Thank you for joining us today for Modine's third-quarter fiscal 2018 earnings call. With me today are Modine's President and CEO, Tom Burke, and Mick Lucareli, our Vice President, Finance and Chief Financial Officer. They 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 會計年度第三季財報電話會議。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。他們將使用今天簡報的投影片。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.

另外，若您需要在會議結束前先行離線，會議結束約兩小時後，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 third-quarter results and provide an update to our revenue and earnings guidance for fiscal 2018. At the end of the call there will be a question-and-answer session.

投影片第 2 頁為今天電話會議的大綱。Tom 與 Mick 將就我們第三季的業績發表評論，並更新 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. With that it is my pleasure to turn the call over to Tom Burke.

投影片第 3 頁為我們關於前瞻性陳述的聲明提醒。我想提醒各位，本次電話會議可能包含前瞻性陳述，相關內容已在我們的財報新聞稿以及公司向美國證券交易委員會提交的文件中說明。接下來很高興把電話交給 Tom Burke。

Thank you, Kathy and good morning, everyone. On today's call, I will discuss our third-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 review 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，我將討論我們第三季的業績，包括各事業部門與策略性計畫的最新進展。之後 Mick 會更詳細地回顧我們的合併財務結果，並說明 2018 會計年度的營收與獲利指引。接著在開放提問前，我會做幾點結語。

I am pleased to report another strong quarter with significant sales and earnings improvements. Overall, sales increased 47% including an incremental $110 million of sales from our CIS segment in the quarter. As a reminder, we only owned this business for one month in the third quarter in the prior year. Next quarter we will have a more meaningful year-over-year comparison.

我很高興報告本季再度繳出強勁表現，銷售與獲利均顯著提升。整體而言，銷售額成長 47%，其中包含本季來自我們 CIS 事業部新增的 1.10 億美元銷售額。提醒各位，去年第三季我們僅擁有該業務一個月；下季將會有更具意義的年對年比較。

Our adjusted operating income was $27 million, up $8.6 million or 47% from the prior year, and our adjusted earnings per share were $0.35 for the quarter, a $0.14 improvement from the prior year. These improvements were primarily due to strong sales volumes and the addition of the CIS business.

我們的調整後營業利益為 2,700 萬美元，較去年增加 860 萬美元或 47%；本季調整後每股盈餘為 0.35 美元，較去年提升 0.14 美元。這些改善主要來自強勁的銷售量以及 CIS 業務的併入。

We had $35.7 million in charges to income tax expense during the quarter due to the recently enacted US tax reform legislation. Mick will provide more insight on these adjustments during his portion of the presentation. Now I would like to briefly review the segment results for the third quarter.

由於近期通過的美國稅改法案，本季我們在所得稅費用中認列了 3,570 萬美元的費用。Mick 將在他簡報的部分提供更多關於這些調整的說明。現在我想先簡要回顧第三季各事業部門的表現。

Turning to page 6, sales for the Americas segment increased 14% on a constant currency basis to $140.5 million driven primarily by continued strength in our end markets. We saw sales increases across all of our major markets with substantial increases in off-highway, automotive and specialty vehicle sales.

請看第 6 頁。美洲事業部銷售額以固定匯率計成長 14% 至 1.405 億美元，主要受惠於我們終端市場持續強勁。我們在所有主要市場均見到銷售成長，其中以非公路、汽車與特種車輛的銷售增幅最為顯著。

I am pleased to report that gross margins improved 50 basis points to 15.4%. This was 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 $9.2 million, an increase of 30% from the prior year driven by the higher sales volume.

我很高興報告毛利率提升 50 個基點至 15.4%。這主要由較高的銷售量與績效改善所帶動，但部分被原材料成本上升的影響所抵銷。美洲事業部調整後營業利益為 920 萬美元，較去年成長 30%，主要由較高的銷售量所驅動。

The Americas segment continues to benefit from the rebound in the off-highway market with significant sales increases in North America. In addition, many of our plants are launching multiple off-highway programs. We have indications from our customers to expect this growth to continue which will certainly benefit the segment.

美洲事業部持續受惠於非公路市場回溫，北美銷售大幅增加。此外，我們許多工廠正同時導入多個非公路專案。我們從客戶端得到訊號，預期此成長將持續，這將確實有利於該事業部。

Please turn to page 7. Sales for our Europe segment increased 3% on a constant currency basis to $134.6 million primarily driven by higher sales to automotive and off-highway customers. Consistent with our expectations, this growth was partially offset by lower sales to commercial vehicle customers as certain programs continue to wind down.

請翻到第 7 頁。歐洲事業部銷售額以固定匯率計成長 3% 至 1.346 億美元，主要由對汽車與非公路客戶的銷售增加所帶動。符合我們的預期，由於部分專案持續進入收尾階段，對商用車客戶的銷售下滑，部分抵銷了上述成長。

Gross margin decreased 220 basis points to 13.3%. The decrease in margin was primarily due to a -- $2.3 million of favorable pricing settlements in the prior year on end of program production. We did not have a similar benefit this year. Excluding these settlements we would have seen an increase in gross profit.

毛利率下降 220 個基點至 13.3%。毛利率下滑主要是因為去年在專案結束時的生產中，曾有 230 萬美元的有利價格結算；今年沒有類似的利益。若排除這些結算因素，我們的毛利其實會呈現增加。

Lower gross profit coupled with higher SG&A due to currency led to a $1.3 million decrease in adjusted operating income, which was $7.4 million in the quarter.

毛利較低，加上因匯率因素導致的較高銷管費用（SG&A），使調整後營業利益減少 130 萬美元，本季為 740 萬美元。

The construction of our new production facility in Hungary is complete and we've initiated production. Two years ago we decided to expand our production capacity by building a third manufacturing plant adjacent to the larger of our two existing manufacturing facilities. The combined plant has both aluminum and stainless steel production capabilities, allowing us to quote competitively and providing additional capacity for our most rapidly growing engine product lines.

我們在匈牙利的新生產設施已完工，並已啟動生產。兩年前我們決定透過在兩座既有製造廠中較大型的那一座旁邊興建第三座工廠，以擴充產能。合併後的廠區同時具備鋁與不鏽鋼的生產能力，使我們能更具競爭力地報價，並為成長最快的引擎產品線提供額外產能。

We continue to see a high level of global activity relating to electric vehicle in the automotive, specialty truck and bus markets. We are working with our current customers as they develop their strategies and we see significant quote volume. We recently won a program for an automotive battery chiller program with an existing customer in Europe and are confident we are well positioned in this important area.

我們持續看到全球在電動車相關領域的高度活動，涵蓋汽車、特種卡車與巴士市場。我們正與現有客戶合作，協助其制定策略，同時也看到大量的報價機會。我們近期在歐洲與一位既有客戶贏得一項汽車電池冷卻器（battery chiller）專案，我們有信心在這個重要領域具備良好布局。

Please turn to page 8. Our Asia segment continues to report significant sales and earnings growth. Overall Asia segment sales grew 44% compared to the prior year on a constant currency basis. We still have growth in all end markets in China, India and Korea with the most significant increases in automotive and off-highway sales in China.

請看第 8 頁。亞洲事業部持續呈現顯著的銷售與獲利成長。整體而言，亞洲事業部銷售額以固定匯率計較去年成長 44%。我們在中國、印度與韓國的所有終端市場仍維持成長，其中以中國的汽車與非公路銷售增幅最為顯著。

Higher sales volume led to a 140 basis point improvement in gross margin which hit 19% this quarter. This resulted in a $3.2 million increase in our gross profit from $5 million last year to $8.2 million this year. Operating income for the Asia segment nearly doubled to $5.1 million due to the higher sales volume.

較高的銷售量帶動毛利率提升 140 個基點，本季達到 19%。因此毛利增加 320 萬美元，從去年的 500 萬美元提升至今年的 820 萬美元。由於銷售量提高，亞洲事業部營業利益幾乎倍增至 510 萬美元。

As I mentioned last quarter, our rapid growth in Asia over the past year has nearly filled one of our manufacturing facilities in the region. In order to provide additional capacity for growth we will be expanding our manufacturing capacity at our site in Changzhou.

如我上季所提，過去一年我們在亞洲的快速成長，已使區域內其中一座製造廠的產能幾乎滿載。為了提供成長所需的額外產能，我們將在常州廠區擴充製造產能。

Our fourth vehicular plant in China will be built adjacent to our existing facility allowing us to leverage our seasoned management team at that location. We expect to begin construction in the spring and complete the project in 2019. This expansion is critically important to meet our ever increasing customer forecasted demand for engine oil, transmission cooling products, as well as additional powertrain cooling products.

我們在中國的第四座車用工廠將興建於現有廠房旁邊，使我們能運用該地點成熟的管理團隊。我們預期於春季開始動工，並在 2019 年完成該專案。此擴建對於滿足客戶對引擎機油、變速箱冷卻產品以及其他動力系統冷卻產品日益增加的預測需求至關重要。

Turning to page 9, the CIS segment reported $144.9 million of sales compared to $34.7 million in the month of December last year. Gross profit was $18.6 million which resulted in a gross margin of 12.9%. This segment reported adjusted operating income of $4.9 million, a $5.2 million improvement over the operating loss reported last year.

請看第 9 頁。CIS 事業部本季銷售額為 1.449 億美元，相較去年 12 月單月的 3,470 萬美元。毛利為 1,860 萬美元，毛利率為 12.9%。本事業部調整後營業利益為 490 萬美元，較去年所報告的營業損失改善 520 萬美元。

The third quarter is the seasonally weakest quarter for the CIS business and we expect both revenues and margins to be higher in the fourth quarter. We continue to focus on addressing our performance challenges at certain CIS locations and on driving operational improvements. There are many opportunities to drive efficiencies in the business and we have the right leadership team in place to leverage operating discipline built by Modine with the product and market knowledge of the CIS business.

第三季在季節性上是 CIS 業務最疲弱的一季，我們預期第四季的營收與毛利率都將更高。我們持續聚焦於解決 CIS 部分據點的績效挑戰，並推動營運改善。該業務在提升效率方面有許多機會；我們也已建立合適的領導團隊，能結合 Modine 所建立的營運紀律，以及 CIS 業務的產品與市場知識。

Operating margins are clearly lower than we would like them to be, especially when you include the significant impact from purchase accounting. However, we are focused on achieving our synergy targets for this business while bringing technical and manufacturing resources to grow both revenues and, of course, profitability.

營業利潤率顯然低於我們期望的水準，尤其在納入收購會計（purchase accounting）的重大影響後更是如此。然而，我們正專注於達成此業務的協同效益目標，同時投入技術與製造資源，以推動營收成長，當然也包括獲利能力的提升。

In November we took our first major step towards this goal by announcing the closure of our manufacturing facility in Gailtal, Austria. This closure reduces excess capacity and lowers our manufacturing cost in Europe.

11 月，我們朝此目標邁出第一個重大步驟，宣布關閉位於奧地利 Gailtal 的製造工廠。此舉可降低過剩產能，並降低我們在歐洲的製造成本。

Please turn to page 10. Sales for our building HVAC segment increased 16% on a constant currency basis compared with the prior year, continuing the upward momentum we have seen each quarter this fiscal year. The increase in sales was driven by improvements in ventilation, North American heating, and UK air-conditioning.

請看第 10 頁。我們建築 HVAC 事業部的銷售額以固定匯率計較去年成長 16%，延續本會計年度每一季所見的上升動能。銷售成長主要由通風業務、北美供暖，以及英國空調業務的改善所帶動。

Gross profit increased 24% and gross margin improved by 140 basis points to 33.8%, benefiting from operational improvements in this segment. This resulted in adjusted operating income of $9.2 million, up 36% from the prior year driven by the good conversion on higher sales volume.

毛利增加 24%，毛利率提升 140 個基點至 33.8%，受惠於該事業部的營運改善。因此調整後營業利益為 920 萬美元，較去年成長 36%，主要來自較高銷售量帶來的良好轉換效益。

We are benefiting from a better heating season this year after experiencing two years of market declines. In addition to market growth we are also gaining market share in our historically strong Midwest and Northeast region along with making gains in the Canadian market.

在經歷兩年的市場下滑後，我們今年受惠於較佳的供暖季節。除了市場成長之外，我們也在歷來表現強勁的美國中西部與東北部地區提升市占率，同時在加拿大市場亦有所斬獲。

We also expanded our product offering in our ventilation line in North America launching the D-cabinet, which is the largest capacity rooftop ventilation product to date. We showcased this product at the recent AHRI (sic - see slide 10 - AHR) Expo in Chicago and quoting activity is now underway.

我們也在北美的通風產品線擴充產品組合，推出 D-cabinet，這是迄今容量最大的屋頂通風產品。我們在近期於芝加哥舉行的 AHRI（原文如此—見投影片 10—AHR）博覽會上展示了此產品，目前報價活動已在進行中。

With that, I would like to turn it over to Mick for an overview of our consolidated financial results and Mick will also review 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 也將回顧我們 2018 會計年度的營收與獲利指引。

Good morning, everybody. Please turn to slide 12. As Tom mentioned, sales increased $147 million or 42% on a constant currency basis. Sales in our CIS segment totaled $145 million, which was $110 million more than last year. As a reminder, the prior year only included one month of results.

各位早安。請翻到投影片 12。如 Tom 所提，按固定匯率基礎計算，銷售額增加 1.47 億美元，增幅 42%。我們 CIS 事業部門的銷售額合計 1.45 億美元，較去年增加 1.10 億美元。提醒一下，去年僅納入一個月的業績。

Besides the favorable markets, revenue also benefited from favorable foreign exchange rates and metals pass through. Excluding CIS, constant currency sales were up $39 million or 12%. Gross profit of $85.4 million was up $26.4 million or 45%. $14.2 million of the increase can be attributed to the year-over-year impact of CIS.

除了有利的市場環境外，營收也受惠於有利的外匯匯率以及金屬轉嫁（pass-through）。若排除 CIS，按固定匯率計算的銷售額增加 3,900 萬美元，增幅 12%。毛利 8,540 萬美元，增加 2,640 萬美元，增幅 45%。其中 1,420 萬美元的增幅可歸因於 CIS 的年對年影響。

Excluding CIS, gross profit was up $12.2 million or 22%. There was good growth in gross profit in the Americas, Asia and building HVAC including margin improvements. Our gross margin was down slightly for a few reasons.

若排除 CIS，毛利增加 1,220 萬美元，增幅 22%。美洲、亞洲以及建築 HVAC（含毛利率改善）均帶來良好的毛利成長。我們的毛利率略有下滑，原因有幾點。

First, we had a sizable sales mix impact on a year-over-year basis due to the inclusion of CIS which had a lower gross margin than the Company average. Second, net metals impact was negative compared to the prior year. In addition, Europe recorded some special pricing settlements last year in the third quarter that did not repeat this year. Despite these impacts our business, excluding CIS, showed year-over-year margin improvement.

第一，由於納入 CIS（其毛利率低於公司平均），年對年出現顯著的銷售組合影響。第二，相較前一年，金屬淨影響為負。此外，歐洲在去年第三季認列了一些特殊定價結算（pricing settlements），今年未再發生。儘管有這些影響，我們的業務（排除 CIS）仍呈現年對年毛利率改善。

SG&A of $60.8 million was up $10 million, which is primarily due to the incremental increase from CIS and the change in foreign exchange rates. CIS accounted for $9 million of the increase along with another $1.4 million from unfavorable exchange rates.

SG&A 為 6,080 萬美元，增加 1,000 萬美元，主要是因 CIS 帶來的增量增加以及外匯匯率變動所致。CIS 佔增幅 900 萬美元，另有 140 萬美元來自不利匯率。

Please note that at the bottom of the page we've included a table with adjustments to operating income which totaled $13.1 million for the quarter. The single largest item was the announced closure of a manufacturing facility in Austria within the CIS segment. This resulted in restructuring expenses and an asset impairment charge totaling $9.5 million during the quarter.

請注意，在頁面底部我們列出一張表，說明對營業利益的調整，本季合計 1,310 萬美元。單一最大項目為已宣布關閉 CIS 事業部門在奧地利的一座製造工廠。此舉在本季產生重整費用與資產減損費用合計 950 萬美元。

We also adjusted for $1 million of acquisition integration costs along with $1.2 million of strategy consulting fees. The remaining balance relates to restructuring expenses in Europe and Americas and environmental expenses for a plant that was previously owned.

我們也調整了 100 萬美元的併購整合成本，以及 120 萬美元的策略顧問費。其餘餘額與歐洲及美洲的重整費用，以及一座先前持有之工廠的環境費用相關。

Third-quarter adjusted operating income of $27 million was up $8.6 million or 47%. Our adjusted earnings per share was $0.35, an improvement of $0.14 or 67%.

第三季調整後營業利益為 2,700 萬美元，增加 860 萬美元，增幅 47%。我們的調整後每股盈餘為 0.35 美元，改善 0.14 美元，增幅 67%。

Note that Modine's GAAP EPS, a loss of $0.57, was significantly impacted by tax reform legislation enacted in December. We recorded $35.7 million of provisional charges to income tax expense in the quarter related to tax reform. This included an adjustment to our deferred tax assets of $20.7 million due to the reduction of the US federal corporate tax rate and $15 million for the transition tax on foreign earnings. After adjusting for the tax reform charges we had a low effective tax rate which was positively impacted by a credit in Hungary.

請注意，Modine 的 GAAP 每股盈餘為虧損 0.57 美元，主要受到 12 月通過之稅改法案的重大影響。我們在本季就稅改相關事項，對所得稅費用認列 3,570 萬美元的暫估（provisional）費用。內容包括：因美國聯邦公司稅率下調而對遞延所得稅資產進行 2,070 萬美元的調整，以及就海外盈餘課徵之一次性過渡稅（transition tax）1,500 萬美元。剔除稅改費用後，我們的有效稅率偏低，並受到匈牙利稅額抵減的正面影響。

Turning to slide 13, year-to-date operating cash flow was $105.6 million, which is $70.6 million higher than the prior year. The year-over-year increase was due to the combination of several items including the inclusion of CIS this year and higher earnings along with improved working capital.

接著看投影片 13，年初至今的營運現金流為 1.056 億美元，較前一年增加 7,060 萬美元。年對年增加主要來自多項因素的組合，包括今年納入 CIS、獲利提高，以及營運資金改善。

Capital expenditures were higher than the prior year by $9 million and we expect capital spending for the full year to be around $70 million. This is higher than last year primarily due to the unfavorable foreign exchange rates and capital spending in our new CIS segment. In addition, we made equipment purchases to expand manufacturing capacity in China.

資本支出較前一年增加 900 萬美元，我們預期全年資本支出約為 7,000 萬美元。此金額高於去年，主要因不利的外匯匯率以及新 CIS 事業部門的資本支出所致。此外，我們也購置設備以擴充中國的製造產能。

We reported year-to-date free cash flow of $50.6 million, which was better than the prior year by $61.6 million. Please note this includes $20 million of cash payments for restructuring activities, acquisition and integration costs along with legal and environmental expenses.

我們年初至今的自由現金流為 5,060 萬美元，較前一年改善 6,160 萬美元。請注意，其中包含 2,000 萬美元的現金支出，用於重整活動、併購與整合成本，以及法律與環境費用。

Finally, our debt leverage ratio is currently 2.5, down from 2.9 at the end of fiscal 2017. This is well below our current covenant ratio requirement of 3.25 times. We set a goal of getting our leverage ratio back to 2.5 times by the end of this fiscal year. With strong cash flow performance through the first nine months, I am pleased to report that we are ahead of schedule.

最後，我們目前的負債槓桿比率為 2.5，低於 2017 會計年度末的 2.9。這也明顯低於我們現行契約條款要求的 3.25 倍。我們設定的目標是在本會計年度結束前將槓桿比率恢復至 2.5 倍。憑藉前九個月強勁的現金流表現，我很高興地報告，我們進度超前。

Now let's turn to our fiscal 2018 guidance on slide 14. Based on the tailwinds in some end markets along with additional FX benefits and favorable taxes, we are raising our fiscal 2018 sales and adjusted earnings per share guidance. We are also tightening by raising the lower end of our adjusted operating income and adjusted EBITDA guidance.

現在請看投影片 14 的 2018 會計年度指引。基於部分終端市場的順風因素、額外的外匯收益以及有利的稅務因素，我們上調 2018 會計年度的銷售額與調整後每股盈餘指引。我們也透過提高調整後營業利益與調整後 EBITDA 指引區間的下限，來收斂（tightening）指引。

To summarize our revised guidance, we project sales to be up 36% to 40% from the prior year. We expect adjusted operating income to be in the range of $112 million to $117 million. We raised the lower end of this range and currently expect an increase of 55% to 62% compared with the prior year. We anticipate adjusted EBITDA to be in the range of $187 million to $192 million. Our current expectation equates to an increase of more than 50% over the prior year.

總結修訂後的指引，我們預估銷售額將較前一年成長 36% 至 40%。我們預期調整後營業利益將介於 1.12 億至 1.17 億美元。我們提高了該區間的下限，目前預期較前一年增加 55% 至 62%。我們預估調整後 EBITDA 將介於 1.87 億至 1.92 億美元。以目前預期而言，相當於較前一年增加超過 50%。

As usual I want to review our other key assumptions. Metals prices have continued to increase and we are seeing an increase in sales due to the metals pass-through process. This is contributing to our change in the sales outlook. In line with last quarter, we assume annual interest expense of approximately $26 million.

照例我想回顧其他關鍵假設。金屬價格持續上漲，我們也看到因金屬轉嫁機制而帶動的銷售增加。這正是我們調整銷售展望的原因之一。與上季一致，我們假設全年利息費用約為 2,600 萬美元。

Moving on, we expect our adjusted EPS to be between $1.44 and $1.52, which is up significantly from $0.78 in fiscal 2017. This includes the change in our expected mix of earnings and the impact of the lower US tax rate resulting in an adjusted tax rate of approximately 10% to 12% in fiscal 2018.

接下來，我們預期調整後每股盈餘介於 1.44 至 1.52 美元，較 2017 會計年度的 0.78 美元大幅提升。此預期包含我們預期獲利組合的變化，以及美國稅率下調的影響，使 2018 會計年度的調整後稅率約為 10% 至 12%。

So to wrap up, we progressed nicely as a Company following the Luvata acquisition. Our earnings through the first three quarters of 2018 -- fiscal 2018 I should say -- are more consistent than the past few years. And we have an opportunity to close out a truly great year in terms of financial results and shareholder value. With that, Tom, I'll turn it back to you.

總結來說，Luvata 併購案完成後，我們公司推進得相當順利。我們在 2018 年前三季——我應該說是 2018 會計年度前三季——的獲利表現，比過去幾年更為穩定。而且我們有機會在財務成果與股東價值方面，為這一年畫下真正亮眼的句點。接下來，Tom，我把時間交還給你。

Thanks, Mick. Please turn to slide 15. Following on the success of our Strengthen, Diversify and Grow strategic initiative, Modine is now a more profitable, diversified industrial Company. At the same time we have reorganized our regional vehicular business segments into one global business unit, enabling a more structured approach to optimize our portfolio across our served markets.

謝謝，Mick。請翻到投影片 15。延續我們「強化、分散與成長」（Strengthen, Diversify and Grow）策略倡議的成功，Modine 現在是一家更具獲利能力、更多元化的工業公司。同時，我們已將區域性的車用業務事業部門重組為單一全球事業單位，使我們能以更有架構的方法，在所服務的市場中最佳化我們的產品組合。

We are performing a strategic review of all of our business units that will help us prioritize our capital and resources where we see the best opportunities for profitable growth. This will help to create our capital allocation plan and prioritize future investments. These investments may be in the form of R&D spending, capacity expansion, and/or acquisitions.

我們正在對所有事業單位進行策略檢視，以協助我們在看到最佳獲利成長機會之處，優先配置資本與資源。這將有助於制定我們的資本配置計畫並優先排序未來投資。這些投資可能以研發支出、產能擴張，及／或併購的形式進行。

It has been a year since we completed the acquisition of the CIS business and overall I am very pleased with the result. As promised the acquisition has been immediately accretive to earnings and has generated significant cash flow to repay our debt. This will allow us to evaluate our next major strategy moves to grow the Company and drive value for our shareholders.

自我們完成 CIS 業務的併購以來已滿一年，整體而言我對成果非常滿意。如同承諾，該併購案立即對獲利具有增益（accretive），並產生可觀的現金流以償還我們的債務。這將使我們得以評估下一步重大的策略行動，以推動公司成長並為股東創造價值。

We continue to see both top- and bottom-line growth resulting from strength in our end markets along with market share gains and new program launches. We are clearly benefiting from a strong automotive and off-highway market situation and are capitalizing on our leading position in engine cooling to win business in electric vehicle space.

我們持續看到在終端市場強勁、市占率提升以及新專案（program）啟動的帶動下，營收與獲利（上、下線）同步成長。我們顯然受惠於強勁的汽車與非公路（off-highway）市場態勢，並正利用我們在引擎冷卻領域的領先地位，在電動車領域贏得業務。

I mentioned earlier that we secured a significant order for battery plate cooling with an existing customer in Europe. Our teams are engaged in multiple opportunities globally and we are very well positioned with our products and footprint and have a strong "right to win" as the acceleration to electric vehicles continues in the automotive as well as specialty truck and bus markets.

我先前提到，我們已在歐洲與既有客戶取得一筆重大的電池板冷卻訂單。我們的團隊在全球多個機會上積極投入；憑藉我們的產品與據點布局，我們具備強勁的「勝出權」（"right to win"）。隨著汽車以及特種卡車與巴士市場加速電動化，我們的定位非常有利。

I'm very pleased with our results so far this year, which has resulted from all the hard work done over the past several years to strengthen and diversify our business. In addition, I'm excited for the new fiscal year especially given our strategic initiatives which provide us with the opportunities to continue investing in profitable growth for years to come. And with that, we would like to take your questions.

我對我們今年迄今的成果感到非常滿意，這些成果來自過去幾年為強化並多元化我們業務所付出的所有努力。此外，我也對新的會計年度感到振奮，特別是考量到我們的策略性倡議，這些倡議為我們提供了機會，讓我們在未來多年持續投資於具獲利性的成長。接下來，我們想請各位提問。

(Operator Instructions). David Leiker, Baird.

（接線員指示）。Baird 的 David Leiker。

I don't usually say this -- awesome quarter, way to go.

我通常不會這麼說——這一季太棒了，做得好。

Thank you.

謝謝。

On the off-highway business and the strength you are seeing there, is there a way you can break that out a little bit of how much of it is the market, how much of it is new launches, how much of it is share gains? And I know it's going to be tough to do, but any thoughts you have there?

關於非公路（off-highway）業務以及你們在那裡看到的強勁表現，有沒有辦法再拆解一下：其中有多少來自市場，有多少來自新產品導入（new launches），又有多少來自市占率提升（share gains）？我知道這會很難，但想聽聽你們的看法。

I can't quantify it, but I'll try to give you qualified response to that. Clearly we are seeing the tailwinds of strong construction and infrastructure changes in China which has really boosted up there. North America as well with construction and we are seeing that. You know the names we are dealing with there.

我無法量化，但我會試著給你一個定性的回答。很明顯地，我們正受惠於中國強勁的建築活動與基礎建設變化所帶來的順風，這確實大幅推升了那邊的表現。北美也同樣受惠於建築活動，我們也看到了。你也知道我們在那邊合作的客戶是哪些。

But what's most exciting is that -- besides taking those tailwinds, is we are winning a lot of business in new programs that we are launching right now on work that has been done with our product portfolio -- focusing on a more competitive situation that leads to more profitable opportunities on winning business both in the construction side and in the ag side. So we've won some significant business with the major global players there.

但最令人振奮的是——除了乘著這些順風之外——我們也在許多目前正在導入的新專案中贏得了大量業務，這些都來自我們在產品組合上所做的工作——聚焦在更具競爭力的態勢，進而帶來更具獲利性的機會，讓我們在建築端與農業端都能贏得業務。因此，我們已經在那裡與主要的全球玩家拿下了一些重要案子。

So, we probably have not been in this strong an off-highway position in a long time, being able to capitalize on tailwinds, but bringing the right products at the right time that's bringing new business which means share gain as well. So, that's kind of the high level summary. I can't really break that down any deeper by numbers. Mick, do you have any thoughts on that?

所以，我們可能很久沒有處在這麼強勢的非公路市場位置了：一方面能夠把握順風，另一方面也在對的時間帶來對的產品，帶來新業務，也就意味著市占提升。因此，這是高層次的總結。我無法用數字再更深入拆解。Mick，你有什麼想法嗎？

Just as we went through the data and the performance in the quarter, I was going to make the same comment, David. Generally across the markets we were in line with market growth, slightly ahead. And then the biggest impact, as Tom mentioned, is the win rate, the quote activity and the order book is clearly outpacing the last few years and the market growth rate. So we are really optimistic about the order book that is building.

就我們檢視數據與本季表現時，我本來也想做同樣的評論，David。整體而言，在我們所處的各個市場，我們大致與市場成長一致，略微領先。而最大的影響，如 Tom 所提到的，是我們的得標率（win rate）、報價活動（quote activity）以及訂單簿（order book）明顯超越過去幾年以及市場成長率。因此，我們對正在累積的訂單簿非常樂觀。

How broad-based is it across the products? Is it a handful of products or -- some sense that you have there in terms of the product offering you are winning with?

在產品面上，這種成長有多廣泛？是少數幾個產品帶動，還是——就你們贏單的產品組合而言，你們有什麼感覺或判斷？

I think this is a really good example of the global product strategy we put in place years ago, getting that matured up and really determining what we need to be to be in a strong right to win position. So, when you think about the PTC module aspect, we brought in some new products to go along with that on the oil cooler line to compete against some of the stronger players out there that we've gone head to head with over the years. It really is conquesting sales.

我認為這正是一個很好的例子，說明我們多年前制定的全球產品策略，如今已經成熟，並且真正釐清我們需要成為什麼樣子，才能處在強而有力、具備「贏的權利」（right to win）的定位。以 PTC 模組這一塊來看，我們也導入了一些新產品，搭配油冷卻器（oil cooler）產品線，去與那些多年來我們一直正面交鋒的強勢競爭者競爭。這確實是在搶奪式（conquesting）的銷售。

So, it has been both on what I would say the PT side and PTC side, powertrain cooling, as well as the engine products that are going into those businesses as well, oil cooling and so on. I can tell you this is a broad strategic focus on really building up the off-highway product portfolio that's really paying off for us now. And with the singular focus on the VTS side we're able to really deploy those resources critically.

所以，這同時涵蓋我所說的 PT 端與 PTC 端，也就是傳動系統冷卻（powertrain cooling），以及同樣導入到這些業務中的引擎相關產品，例如油冷卻等。我可以告訴你，這是一個廣泛的策略性聚焦，目標是把非公路產品組合真正建立起來，而現在正開始為我們帶來回報。並且因為我們在 VTS 端有單一聚焦，我們能夠更關鍵地部署這些資源。

So this is North America and Asia I mentioned, but Europe and South America are also benefiting well. We know Brazil is still challenged down there, but we feel very strong with the position we've established down there and we will definitely capitalize on the upside as that market comes back because we have gained a lot of share in that region as well.

因此，除了我提到的北美與亞洲之外，歐洲與南美也同樣受惠。我們知道巴西那邊仍然充滿挑戰，但我們對自己在當地建立的定位非常有信心；當市場回升時，我們一定能把握上行機會，因為我們在該區域也取得了不少市占。

Yes, it's great to see the actions you've taken there or discussions in terms of the global structure of the business. And it seems like this has really put you in a position to win.

是的，很高興看到你們在那裡採取的行動，或是就業務全球架構所做的討論。看起來這真的讓你們處在一個能夠贏的有利位置。

And then just one other item here. It has been a year since you bought Luvata. Just some thoughts on where you are on the integration and the synergies, cost and revenue synergies. And some context of how that's tracking versus what you would've expected.

另外還有一點：距離你們收購 Luvata 已經一年了。想請你們談談整合與綜效的進度，包括成本綜效與營收綜效，以及相較於你們原先預期，目前的追蹤狀況如何。

Yes, I will kick this off and let Mick take the backend of those questions you mentioned when it comes to synergy achievement and his thoughts. But could not be happier with the acquisition. Yes, we have some margin improvement opportunities but we knew that going in. And that was very keyed up in the due diligence that we did and the engagement upfront in negotiations.

是的，我先開頭，然後讓 Mick 來回答你提到的後半段問題，特別是綜效達成與他的看法。我對這次收購再滿意不過了。是的，我們確實有一些毛利率改善的機會，但我們在交易前就知道了，而且在我們做的盡職調查（due diligence）以及前期談判的投入中，這些都被明確納入考量。

The action we took with closing the plant in Austria was something that was keyed up inside of due diligence. We knew we had to take action there. We got some other product portfolios specifically maybe in the industrial side of the business at one of the locations that's going to need some support. So we knew those going in.

我們關閉奧地利工廠的行動，是在盡職調查中就已經被點出來的。我們知道必須在那裡採取行動。我們也有其他產品組合——特別可能是在某個據點的工業端業務——需要一些支援。所以這些我們在交易前就都知道。

Taking those off to the side, the core business, being the largest coil supplier in the world, adding our portion of that North America. Could not be happier with the synergy of the teams, the cultural integration which, again, is very important in any successful acquisition of that size. Very pleased with how our leadership teams have come together. You can see it all the way down through each function that's been engaged.

撇開那些不談，核心業務方面，作為全球最大的盤管（coil）供應商，再加上我們在北美的布局，我們非常滿意。團隊之間的協同、文化整合——再次強調，對任何這種規模的成功收購都非常重要——都讓我們非常滿意。我們也很高興看到領導團隊凝聚在一起。你可以從每一個被動員的職能一路往下看到這點。

So from a strategic standpoint it's delivering exactly what we wanted to, leveraging our thermal management expertise across a broader set of products and markets that we can use the synergy there. Again, a leading position in coils that is generating the accretive aspect of earnings. Cash flow of the business is excellent, as you know that what I call the quality of earnings, the capital intensity is less, but yet the business is very different.

因此，從策略角度來看，它正如我們所期望地交付成果：把我們的熱管理（thermal management）專業延伸到更廣泛的產品與市場，並在其中發揮協同效應。同樣地，在盤管領域的領先地位，正在帶來盈餘增益（accretive）的效果。該業務的現金流非常出色；如你所知，我所說的「盈餘品質」（quality of earnings）也很高，資本密集度較低，但這門業務的型態又非常不同。

At the same time, it is thermal management, but they have thousands of customers versus the handful that we deal with on the vehicular side. And that diversification, small order size, responding quickly to orders gives us a whole different dynamic that we really are benefiting from and look forward to supporting even more and making sure we capitalize on every opportunity.

同時，它仍然屬於熱管理，但他們面對的是數以千計的客戶，而不是我們在車用端所面對的少數幾家。這種多元化、小訂單規模、快速回應訂單的能力，帶給我們完全不同的動能，我們正從中受益，也期待投入更多支援，並確保把握每一個機會。

We just came off of the AHRI (sic - see slide 10) show down in Chicago where we had two booths set up, one being our building HVAC booth and a separate booth for the CIS segment because they are separate channels of market. CIS is more of an OE supplier. A lot of good engagement with a lot of the big names you know on the building HVAC, on the commercial heating and cooling and refrigeration side. And very pleased with the feedback we are getting there.

我們剛從芝加哥的 AHRI（原文如此—見投影片 10）展會回來，當時我們設了兩個攤位：一個是我們的建築 HVAC 攤位，另一個是 CIS 事業部的獨立攤位，因為它們面對的是不同的市場通路。CIS 更偏向 OE 供應商。在建築 HVAC、商用供暖與冷卻以及冷凍（refrigeration）領域，我們與許多你熟悉的大品牌有很好的互動。我們對收到的回饋非常滿意。

So, all in all strategically I'm very pleased. Again, work to do on driving share, but -- as far as driving margins. But Mick, do you want to add any of your thoughts on synergies and the like?

所以，整體而言在策略面我非常滿意。當然，在推動市占方面還有工作要做，但——就毛利率提升而言也還有工作。不過 Mick，你要不要補充一下你對綜效等方面的看法？

Yes, just quickly on that, David. We talked about the onset of the acquisition, $15 million in three to four years. And in the last couple quarters Tom has pulled that in. So we are well on track to exceed the $15 million in synergies. The step up, if I recall correctly, of all the purchase accounting was right in that $13 million to $15 million range and our goal at a minimum was to offset all of that. And our plan is to get to $15 million plus within the first two years.

好的，David，我簡單補充一下。我們在收購初期談到的是三到四年達成 1,500 萬美元的綜效。而在最近幾個季度，Tom 已經把時程往前拉了。因此，我們很有把握能超越 1,500 萬美元的綜效。若我沒記錯，所有購買會計（purchase accounting）的增量影響大約就在 1,300 萬到 1,500 萬美元之間，而我們的最低目標是至少把這些全部抵銷掉。我們的計畫是在前兩年內達到 1,500 萬美元以上。

And have been really happy, as Tom said, on the cash flow side. We've talked about it being a very stable business. It has a slightly different seasonal pattern, but kind of a GDP grower. I think the things we need to continue to focus on this first year is a big pop. We get the first year-over-year benefit of the acquisition. As Tom said, we know it needs to refresh the product portfolio and keep up with the conversion in the industry to aluminum.

而且如 Tom 所說，我們對現金流表現非常滿意。我們也談過這是一門非常穩定的業務。它的季節性型態略有不同，但大致上屬於隨 GDP 成長的業務。我認為在第一年我們需要持續聚焦的事情是：第一年會有一個很大的跳升，因為我們會首次享受到收購帶來的年對年（year-over-year）效益。正如 Tom 所說，我們知道需要更新產品組合，並跟上產業向鋁材（aluminum）轉換的趨勢。

We have to ensure they've got a low -- lowest cost footprint and manufacturing cost. You saw our first move here with the closure in Austria. And then making sure they've got the right infrastructure and that's really around -- we are going to have some aggressive plans to implement an ERP system globally here in the next couple years.

我們必須確保他們擁有低成本——最低成本的據點布局與製造成本。你已經看到我們第一個動作：關閉奧地利的工廠。接著要確保他們具備正確的基礎建設，而這主要是圍繞——我們計畫在未來幾年內，積極推動在全球導入 ERP 系統。

Great, great, thank you. Again, great quarter.

太好了，太好了，謝謝。再次恭喜，這一季表現很棒。

Mike Shlisky, Seaport Global.

Seaport Global 的 Mike Shlisky。

So starting off, in the heating world, whether it is CIS or building HVAC, what you're talking about today has been the results through 12/31. It got a lot colder in January over much of the country -- snowing in Florida and Texas and things like that.

那我先從供暖領域開始，不論是 CIS 或建築 HVAC，你們今天談到的都是截至 12/31 的結果。1 月全國多數地區變得冷很多——佛羅里達和德州都下雪之類的。

Could you comment, I guess, on the order pattern to kind of start the quarter? And is there a long tail that goes through the entire calendar year as people and institutions want to make sure that they are prepared for next winter? Or is it a very short-term short tail kind of a product for you?

可否請你評論一下，我想是本季一開始的接單型態？以及是否存在一個會延伸到整個曆年的長尾效應，因為個人與機構會想確保為下一個冬天做好準備？還是說對你們而言，這更像是一種非常短期、短尾的產品？

Well, it's a little early to give you the full answer there. Clearly we saw a market rebound, as I mentioned, over the last two years of a market that was a little bit down compared to some of the polar vortex winters of three or four years ago. So we are pleased with that. And on top of that, as I mentioned, market share gain has been very improved. We've got a lot of focus on sales channel and rep engagement out in the field.

嗯，現在要給你完整答案還稍微早了一點。很明顯地，如我提到的，過去兩年市場出現反彈；此前市場相較於三、四年前一些極地渦旋冬季時期是偏弱的。所以我們對此感到滿意。此外，如我所說，市占率的提升也非常明顯。我們在銷售通路與前線業務/代理商（rep）投入了很多心力。

As far as the extended performance of the heating season, typically you start seeing, as you get into January, a tail off of sales, okay, as the major work is done as the replacement business, which is about half the business in the heating sales is kind of determined because of the cold snap that usually happens before -- in the early part of the winter season.

至於供暖季的延伸表現，一般來說，進入 1 月後你會開始看到銷售下滑，因為主要工作已完成；而供暖銷售中約有一半是汰換需求，通常會在冬季初期、也就是通常在——冬季早期發生的那波寒流之前/期間就大致決定了。

The longer tail is definitely seeing some benefit this year. Can't quantify it yet, but pleased with what that's driving and we think that has some positive effect on Q4 opportunity in the building HVAC business.

今年較長的尾端確實帶來一些好處。現在還無法量化，但我們對其帶動的效果感到滿意，並且認為這對建築 HVAC 業務的第四季機會有正面影響。

What that does coming out of the winter season, replenishment of inventory is really a great question, number one, and one that we keep a real close eye on. Typically we have some restocking programs that we offer in the spring. We try to help with that and hopefully what we'll find is that we took a lot of product off-the-shelf over the winter and that we don't have to necessarily be as aggressive.

冬季結束後會發生什麼——庫存回補確實是個很好的問題，第一點，而且我們也非常密切地關注。通常我們會在春季提供一些補貨（restocking）方案。我們會嘗試協助，並希望看到的是：冬天期間我們從貨架上消化了大量產品，因此不一定需要那麼積極地推動補貨。

The restocking program is getting into the late winter/ early spring setting up the next season. So, we will have more clarity of that in our Q4 call and year-end call in May. But right now we are pleased with what we see and it's a really good question, Mike.

補貨方案通常是在冬末/初春，用來為下一季做準備。所以我們會在第四季電話會議以及 5 月的年度電話會議上有更清楚的資訊。但就目前而言，我們對所看到的情況感到滿意，這真的是個很好的問題，Mike。

Okay, got it. Secondly, can you update us on the raw material situation going into calendar 2018 here? I know some of these prices have gone up for the last couple of months. Is there a point where you see us lapping in calendar 2018? Or is there going to still be a headwind through much of the year?

好的，了解。第二個問題，能否更新一下進入 2018 曆年後原物料的狀況？我知道過去幾個月有些價格又上漲了。你們是否看到在 2018 曆年會出現基期效應（lapping）的時間點？還是說今年大部分時間仍會有逆風？

Did you say a lapping, Mike, or a catch-up kind of question?

Mike，你是說基期效應（lapping），還是追趕/補回（catch-up）那類的問題？

Yes, or just -- it's been high for a year and so you've had a chance to price it in over a period of time.

對，或者說——它已經高了一年，所以你們有機會在一段時間內把它反映到定價裡。

Yes, I think as we -- probably the biggest change we've seen since October was I really thought our Q4 would probably be the end of the negative impact. Year to date the first three quarters the net metals impact to us has probably been in the $10 million range.

是的，我想我們——自 10 月以來看到最大的變化是：我原本認為第四季大概會是負面影響的終點。年初至今前三季，金屬淨影響對我們大概在 1,000 萬美元左右。

With the rise in the last few months again of metals it just kind of pushes out the curve. So, if we hold and metals start to stabilize we will get some catch-up in the new fiscal year.

但最近幾個月金屬價格再次上升，等於把那條曲線往後推。所以如果我們能撐住、且金屬開始趨於穩定，我們在新的會計年度會有一些追趕回補。

It's these environments where if it's a long and steady increase it's not a huge quarterly impact and you've seen that in the last three quarters for us and eventually you catch-up. And it just seems to have been pushed a little bit out with the additional run here in the last few months in metals.

在這種環境下，如果是長期且穩定的上漲，單季衝擊不會太大；你們在我們過去三季的表現中也看得到，最後會逐步追上。只是最近幾個月金屬又多漲了一段，讓追上的時間點看起來又往後延了一些。

Okay. Can you update us on the electrified commercial vehicle programs that might be out there? I keep hearing about some companies out there looking to launch electrified platforms as early as calendar 2019.

好的。能否更新一下目前可能存在的商用車電動化專案？我一直聽到有些公司打算最早在 2019 曆年推出電動化平台。

I guess I'm curious, are you involved, [and assuming] that you are, in electric automobiles? Could you confirm with us that in general it's a bit higher dollar content in an EV truck as opposed to a diesel truck from your contract perspective?

我想了解的是，你們是否有參與——[並假設]你們有參與——電動車？另外，能否請你確認，從你們合約的角度來看，EV 卡車相較於柴油卡車，一般而言單車的價值含量（dollar content）會更高？

That's a great question. Looking at my list of what I'd say EV customers right now, and there's at least 2.5 dozen customers we are dealing with across auto, bus, commercial vehicle and specialty vehicle. I really like to make you throw that in there, specialty vehicle and bus. Our engagement right now in this segment is extremely high.

這是個很好的問題。就我目前列出的所謂 EV 客戶來看，至少有 2.5 打（約 30 家）客戶，我們正在跨乘用車、巴士、商用車與特種車輛領域合作。我很想把特種車輛和巴士也加進來。我們目前在這個區塊的參與度非常高。

Obviously there's the names of people that you know well on the vehicle side, on what I'd call light-duty, that we are engaged with. I mentioned the recent purchase that we had with a European automotive supplier of note that we won the battery plate cooling. We are seeing that same dynamic across both existing players as well as new entrants, startups and, by the way, in every region of the world. So US, Europe and specifically in China.

顯然，在車輛端、我所謂的輕型車（light-duty）方面，有一些你很熟悉的公司名稱，我們也有合作。我提到過我們最近與一家知名的歐洲汽車供應商合作取得的案子，我們拿下了電池板冷卻（battery plate cooling）。我們在既有玩家以及新進者、創業公司身上都看到同樣的趨勢，而且順帶一提，遍及全球各區域：美國、歐洲，尤其是在中國。

On the commercial vehicle side, yes, we are engaged with names that are out there and content can be significant. Development work is high and, as far as to announce any sort of sourcing, it would be premature at this point. But I can tell you that our teams are heavily engaged.

在商用車方面，是的，我們正與市場上那些公司名稱合作，而且價值含量可能相當可觀。開發工作量很高；至於要宣布任何定點採購（sourcing）結果，現階段都還言之過早。但我可以告訴你，我們的團隊正高度投入。

I really want to talk about is that you kind of mentioned the commercial vehicle. And really getting off the light-duty vehicle that gets all the attention is the specialty truck and bus segments that we serve. And by the way, as you know, we have a strong participation rate there both in North America and Europe.

我真正想談的是你剛提到的商用車。相較於獲得所有關注的輕型車，我們所服務的其實是特種卡車與巴士等區隔。順帶一提，如你所知，我們在北美與歐洲的參與率都很高。

The EV what I would say transition into those segments is really moving fast. And we are talking about significant content. But the municipalities that have both infrastructure benefits for the EV because of recharging capabilities and things that are already kind of in place, plus the fact that you have a lot of municipalities that are starting to demand more let's say green type policies on how urban centers need to be managed as far as the environment. So, we really see a lot of activity there and it's very, very encouraging.

我所說 EV 轉進這些區隔的速度真的很快。我們談的是相當可觀的價值含量。而且一些市政單位同時具備 EV 的基礎建設優勢，例如充電能力等既有條件；再加上許多市政單位開始要求更偏向綠色政策，來管理都市中心在環境面應如何運作。因此我們看到那裡有很多活動，這非常、非常令人鼓舞。

So across all markets of the vehicular side -- and I also want to say there is EV and then there's this hybrid -- plug-in hybrid aspect as well. We are very engaged with that. So the product portfolio that we've established through the engine product work of the last several years and making sure that that can be integrated and used on EV content is really paying off. We are going to see a benefit in both battery EV, BEV and plug-in hybrid EV.

所以在車輛端的所有市場——我也想補充，除了純電（EV）之外，還有混合動力——插電式混合動力（plug-in hybrid）這一塊。我們也非常投入。我們過去幾年透過引擎產品的工作所建立的產品組合，並確保它能整合並用於 EV 的價值含量，現在正開始展現成效。我們將在純電（BEV）與插電式混合動力 EV 兩者上都看到效益。

And the content -- we have kind of done some work on this, Mike, on we've kind of said in general, thermal content -- ICE thermal content electric vehicle, significantly higher for EV when you take everything into account. We've kind of broken it down on a product portfolio basis for us and we see a significant proven opportunity there.

至於價值含量——Mike，我們在這方面做過一些分析；我們大致認為，若把所有因素都納入考量，熱管理價值含量——內燃機（ICE）的熱管理價值含量相較之下，電動車的熱管理價值含量會顯著更高。我們已按產品組合的角度拆解過，並看到一個相當明確且可驗證的機會。

That's not including things like cabin cooling where you're going to have specific HVAC kind of systems where we're not participating. But when it comes down to the traditional engine-related products such as chillers, liquid condensers and getting into the powertrain cooling aspect of [inverter] cooling, those things, our products are very well-established as well as the powertrain side on light-duty radiators and the like.

這還不包含像座艙冷卻這類，你會需要特定的 HVAC 系統，而我們並未參與。但若回到傳統的引擎相關產品，例如冷卻器（chillers）、液冷冷凝器（liquid condensers），以及進一步到動力系統冷卻面向，例如 [inverter] 逆變器冷卻等，我們的產品都非常成熟；另外在輕型車的動力系統端，例如散熱器（radiators）等也同樣如此。

So, our portfolio is right, the research and development we're putting into it is the right time. And I'm really excited with the pull that's starting to come from the market that we've seen over the last year.

所以，我們的產品組合方向正確，我們投入的研發也正逢其時。而且我對過去一年我們看到市場開始出現的拉動力（pull）感到非常興奮。

Great. And then looking at the current dealer truck market, it's kind of been in the news recently. One of the big US truck makers has teamed up with one of the big global European truck makers on a JV with the intent of -- I'm not really sure how to explain it -- but perhaps to squeeze the suppliers and perhaps even pit them against each other for a single global contract.

很好。接著看目前的經銷商卡車市場，最近新聞也有報導。有一家美國大型卡車製造商與一家全球大型歐洲卡車製造商成立合資公司（JV），其意圖是——我不太確定該怎麼形容——但可能是要擠壓供應商，甚至讓供應商彼此競爭，以爭取單一的全球合約。

I'm kind of curious, is this a big risk to your business right now? Or perhaps do you think that your new structure is actually optimal for this type of global procurement JV, versus your competitors.

我有點好奇，這對你們目前的業務是很大的風險嗎？或者你認為你們新的組織架構其實更適合這種全球採購的合資模式，相較於你們的競爭對手？

I think the work we've done over the last several years really culminating with this singular focused vehicular business unit has us well prepared to engage with the market dynamics wherever they may fall.

我認為我們過去幾年所做的工作，最終在這個單一、聚焦的車輛事業單位上達到整合，讓我們已經做好充分準備，能夠因應市場動態，不論它們會以何種形式出現。

The confidence we have in the portfolio, the confidence we have in how we've built a strong engine business, how we've built PTC products that can be used across off-highway and in commercial vehicle space so that we can really use that asset the right way has given us position where we don't need to -- I want to use this word -- run scared.

我們對投資組合的信心、對我們如何打造出強勁的引擎業務的信心，以及對我們如何打造可同時應用於非公路與商用車領域、讓我們能真正以正確方式運用該資產的 PTC 產品的信心，使我們處於一個不需要——我想用這個詞——「驚慌失措」地行事的位置。

I think I made this comment last quarter, that we don't feel the need to go chasing market share. We feel confident that we have the options, now that we have this stronger right to win, that we can participate accordingly and feel confident with what that will year for us and namely for our shareholders.

我想我在上一季也提過這點：我們不覺得有必要去追逐市占率。我們有信心，現在我們擁有更強的致勝優勢，我們可以相應地參與其中，並對這將為我們、尤其是為我們股東帶來的成果充滿信心。

So, the portfolio, the diversification, the focus we have on vehicular now so we can make good global decision has us very well positioned to let's say engage appropriately with those new market dynamics you described.

因此，投資組合、多元化，以及我們現在對車用領域的聚焦，讓我們能做出良好的全球性決策，使我們在面對你所描述的那些新的市場動態時，處於非常有利的位置，能夠以適當的方式參與其中。

Okay. I'm just going to squeeze in one last one here. And I told myself I would not ask about the fiscal 2019 outlook, and I'm not going to. This is more of a housekeeping question.

好的。我這裡再塞最後一個問題。我告訴自己不會問 2019 財年的展望，我也不會問。這比較像是行政／例行性的問題。

As far as the tax rate goes now that you've gotten past the tax reform, can you give us a go-forward cash rate we could start to model for fiscal 2019 at the very least?

就稅率而言，既然你們已經度過稅改的影響，能否提供一個未來可延續的現金稅率，讓我們至少可以開始用來建模 2019 財年？

Yeah, Mike, I think for now I would say we think we'll most likely be in the low 20s and (multiple speakers) total company blended basis.

是的，Mike，我想目前我會說，我們認為我們很可能會落在 20% 出頭，並且（多位發言者）以全公司合併後的加權平均基礎來看。

And that is -- is there still a Hungarian tax benefit next fiscal year or that's over by the fourth quarter?

那麼——明年財年還會有匈牙利的稅務優惠嗎？還是到第四季就結束了？

No, that's over -- that will be -- after this year we'll be done with that. So we would expect to be after that next year low 20s.

不，那已經結束了——那會是——今年之後我們就不再有了。所以我們預期明年在那之後會是 20% 出頭。

Alrighty. I've got it. Thanks so much, everybody. Appreciate it.

好的。我明白了。非常感謝各位。感激不盡。

Operator: Matthew Paige, Gabelli & Co.

接線員：Gabelli & Co. 的 Matthew Paige。

Good morning and congratulations. I wanted to touch on -- on your balance sheet. You demonstrated your ability to delever obviously through free cash flow, but you also mentioned some capital projects, especially in Asia. So, what are your thoughts on current leverage? Are you comfortable here?

早安，恭喜。我想談一下——你們的資產負債表。你們顯然透過自由現金流展現了去槓桿的能力，但你們也提到一些資本專案，尤其是在亞洲。因此，你們對目前的槓桿水準有何看法？你們在這個水準感到安心嗎？

Yeah, we've -- our goal since the acquisition was to get the leverage back to 2.5 times and we'd like to keep it below 2.5 times and continue to push it down. Next year we should be able to drive it further down with our optimism next year from earnings and still continuing to hold CapEx tight. And that just really allows us to keep the dry powder of the balance sheet for the next strategic move or acquisition we want to make. But we do feel comfortable with the path we are on and where we are going.

是的——自收購以來，我們的目標就是把槓桿降回 2.5 倍，我們也希望把它維持在 2.5 倍以下並持續往下推。明年在我們對獲利的樂觀預期下，加上仍然嚴控資本支出，我們應該能進一步把槓桿降下來。這也讓我們能保留資產負債表的「乾粉」，以便進行下一步策略行動或我們想做的收購。不過，我們對目前所走的路徑以及未來方向感到放心。

Let me just add on that as far as the investment in China specifically. When we went to China with our greenfield site strategy we were aiming ahead towards a day when emission requirements in China were going to start matching Western world standards, namely Euro 6 and the like.

我再補充一下，特別是關於在中國的投資。當我們以綠地（greenfield）設廠策略進入中國時，我們是提前布局，預期有一天中國的排放要求會開始與西方世界的標準接軌，尤其是 Euro 6 等標準。

So the products we invested in were the aluminum products, higher efficiency, kind of euro focused because of the strong association with the OEs coming out of Europe supporting into China. That strategy laid down by the leadership team years ago is now really starting to pay.

因此，我們投資的產品是鋁製產品、更高效率、偏向歐規導向，因為來自歐洲、支援進入中國的原始設備製造商（OE）具有很強的關聯性。多年前由領導團隊制定的這項策略，現在真的開始見到成效。

This investment that we're making is a reflection of the success of that strategy. Having to add a fourth vehicular plant inside of China is a great story that's going to have great returns. So, I just want to say that this is a go forward strategy built on investment because of the growth of that focus years ago they put in place.

我們正在進行的這項投資，正是該策略成功的反映。在中國境內新增第四座車用工廠是一個很棒的故事，也將帶來很好的報酬。因此，我只想說，這是一項面向未來、建立在投資之上的策略，源自於多年前他們所確立的聚焦成長。

Yes, absolutely. And maybe along those lines, could you speak to what is in your current M&A pipeline? And what areas, either geographically or product line wise, do you want to expand or get into?

是的，完全同意。也許順著這個方向，你能談談你們目前的併購（M&A）案源管線有哪些嗎？以及你們希望在哪些領域擴張或切入——不論是地理區域或產品線？

I will say this is early days. I noted, you might have noted in my comments that we are doing a strategic evaluation over each of our business units now. We've brought in some help to really kind of what we call the next phase of our Strengthen, Diversify and Grow initiative. That is, where are we going to put our investment for the best possible growth in returns. And with that the opportunities for looking at adding via acquisition as well.

我會說這還在早期階段。我提到過——你可能也注意到我在評論中說，我們現在正在對各個事業單位進行策略性評估。我們也引進了一些外部協助，來推進我們所稱的「強化、多元化與成長」倡議的下一階段。也就是：我們要把投資放在哪裡，才能在報酬上取得最佳的成長。並且在此之下，也包含透過收購來增加的機會。

So, it is early days in that yet, but we've established a formal structure inside the Company and have a new Vice President of Global Strategy and Business Development that's been assigned. We're putting in the right resources so this becomes a focus every day of what we are updating.

所以，這確實仍在早期，但我們已在公司內建立正式架構，並指派了一位新的全球策略與業務發展副總裁。我們正在配置正確的資源，讓這件事成為我們每天都在更新、每天都在聚焦的重點。

So, I look forward to bringing new findings and developments of how that's going to go in the future. But right now I feel pretty positive that we've got multiple options in front of us and we're making the best decisions for our shareholders.

因此，我期待未來能帶來新的發現與進展，說明這將如何推進。但就目前而言，我相當正面地認為我們面前有多種選項，而我們正在為股東做出最佳決策。

Great. Well, congratulations again and thanks for taking my questions.

很好。再次恭喜，也謝謝你回答我的問題。

Douglas Dethy, DC Capital.

DC Capital 的 Douglas Dethy。

Good morning, Modine team. Good quarter, terrific, thank you. A question, you had recently announced a couple major hires I think in the IT, general counsel area. Can you just come in on those? You had some consulting fees during the quarter. Just a little bit of like is the focus here you're trying to keep up with what you've already got on the plate or is it really about looking forward or both probably? If you would elaborate.

早安，Modine 團隊。本季表現很好，太棒了，謝謝。有個問題：我想你們最近宣布了幾項重要的人才招募，像是 IT、總法律顧問等領域。你能否談談這些任命？本季你們也有一些顧問費用。想了解一下，這裡的重點是你們想跟上目前手上既有的工作量，還是更偏向前瞻布局，或可能兩者都有？如果可以請多說一些。

It's clearly looking forward. I will say first since she is sitting in the room, Sylvia Stein has joined the team just recently and we're very, very thrilled about that. It was an opening because of our previous GC having a personal opportunity to move into a new role for her. And we had a great search and really I can tell you a great result. And I'm very pleased with the experience that Sylvia brings where she was at Kraft Heinz before and a lot of global experience that's going to help us out significantly.

這顯然是著眼於未來。我先說，因為她就坐在會議室裡，Sylvia Stein 最近剛加入團隊，我們對此非常、非常興奮。這個職缺是因為我們先前的總法律顧問（GC）有個個人機會轉任新的職務。我們進行了一次很好的搜尋，而我可以告訴你結果非常理想。我對 Sylvia 帶來的經驗非常滿意——她之前在 Kraft Heinz 任職，擁有大量全球經驗，將對我們有很大幫助。

And Mick mentioned the need for IT work and strategy going forward. And so, we did a deep search there and likewise Steve Langer will be joining us again with a lot of experience coming from a consumer business background globally very focused. So that's going to be a key element for us as well.

Mick 也提到未來在 IT 工作與策略上的需求。因此，我們也做了深入的人才搜尋，同樣地，Steve Langer 也將加入我們，他擁有豐富經驗，來自消費性業務背景，且具全球視野、非常聚焦。這也將是我們的一個關鍵要素。

You mentioned some -- I mentioned the strategy work that we did before. That was really the expense we put into some outside consulting. I can say that our focus is to build that capability in-house. So we invested some to make sure we had a good current state assessment of our businesses, as I mentioned, so that we can now make the right decisions going forward on how to best do that.

你提到一些——我先前提到我們做過的策略工作。那主要就是我們投入在一些外部顧問上的費用。我可以說，我們的重點是把這項能力建立在內部。因此我們先投資一些，確保我們對各項業務有良好的現況評估，如我所提，這樣我們接下來才能做出正確的決策，決定如何以最佳方式推進。

So that SG&A hit on consultancy will minimize -- be minimized this fiscal year and build up with the team I mentioned before on the strategy side. Mick, did I miss anything?

因此，因顧問而產生的 SG&A 衝擊將在本財年降低——被降到最低，並由我先前提到的策略團隊逐步建立起來。Mick，我有漏掉什麼嗎？

Just to emphasize that what Tom said, we put an existing leader in charge of strategy and we are going to put a team under that individual linked to our business units to drive strategic thought and discussion daily within the building and IT side. I was glad Tom used the word where -- lots of opportunities.

只是要強調 Tom 所說的：我們讓一位現有的領導者負責策略，我們也會在該人士之下建立一個團隊，並與各事業單位連結，推動大樓內每天的策略思考與討論，以及 IT 端的工作。我很高興 Tom 用了那個詞——有很多機會。

We have to put a few of the foundation pieces in place with IT, but thinking strategically about maximizing IT and how to use it and in some cases it being a competitive advantage for us on the front lines and in the marketplace. So excited about the investments we are making.

我們必須先把 IT 的一些基礎建設到位，但同時也要從策略角度思考如何把 IT 的效益最大化、如何運用它，並在某些情況下讓它成為我們在第一線與市場上的競爭優勢。因此，我們對正在進行的投資感到很振奮。

Okay, good. Thank you very much.

好的，很好。非常謝謝。

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

謝謝。目前我這邊顯示沒有進一步的問題。現在我想把電話會議交回給 Kathy Powers。

Thank you. And this concludes today's call. Thank you to everybody who joined us this morning on the call and thanks for your continued interest in Modine. Goodbye.

謝謝。今天的電話會議到此結束。感謝今天早上加入電話會議的各位，也謝謝大家持續關注 Modine。再見。