Modine Manufacturing Company (MOD) 2018 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company's fourth-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, Ms. Kathy Powers, Vice President, Treasurer, Investor Relations and Tax. You may begin.

各位女士、先生，早安，歡迎參加 Modine Manufacturing Company 2018 會計年度第四季財報電話會議。(接線員指示)。提醒各位，本次電話會議將被錄音。現在我想將電話會議交給今天的主持人——Kathy Powers 女士，副總裁、財務主管、投資人關係與稅務負責人。您可以開始了。

Good morning and thank you for joining us for today's call. I am here with Modine's President and CEO, Tom Burke, and Mick Lucareli, our Vice President Finance and Chief Financial Officer. We will be using slides with today's presentation which can be accessed either through the webcast link or by accessing the PDF file posted on the Investor Relations section of our website, Modine.com.

早安，感謝各位參加今天的電話會議。我與 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 一同出席。我們將使用今天簡報的投影片，您可透過網路直播連結存取，或至我們網站 Modine.com 的投資人關係專區下載已張貼的 PDF 檔。

On slide 2 of the presentation is an outline for today's call. Tom and Mick will present our fourth-quarter and full-year results and provide our revenue and earnings guidance for fiscal 2019. At the end of the call there will be a question-and-answer session.

簡報第 2 頁為今天電話會議的議程大綱。Tom 與 Mick 將說明我們第四季與全年業績，並提供 2019 會計年度的營收與獲利指引。電話會議最後將進行問答環節。

On slide 3 is our notice regarding forward-looking statements. This call may contain forward-looking statements as outlined in our earnings release, as well 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.

第 3 頁為我們關於前瞻性陳述的聲明。本次電話會議可能包含前瞻性陳述，相關內容如我們的財報新聞稿所述，亦載於本公司向美國證券交易委員會提交的文件中。接下來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 fourth quarter and full-year 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 provide our revenue and earnings guidance for fiscal 2019. I will then provide a few closing remarks prior to opening up the call for your questions.

謝謝妳，Kathy，各位早安。在今天的電話會議中，我將討論我們第四季與全年業績，包括各事業部門與策略性計畫的最新進展。接著 Mick 將更詳細地說明我們的合併財務結果，並提供 2019 會計年度的營收與獲利指引。之後在開放各位提問之前，我會做幾點結語。

Fiscal 2018 was a very successful year for Modine, continuing the positive momentum from the prior year. Looking back over the past two years, we have increased our revenues by over 50% from $1.4 billion in fiscal 2016 to $2.1 billion today. This increase was jointly due to the addition of the CIS business in fiscal 2017 and meaningful sales growth in our vehicular and Building HVAC segments.

2018 會計年度對 Modine 而言是非常成功的一年，延續前一年度的正向動能。回顧過去兩年，我們的營收成長超過 50%，自 2016 會計年度的 14 億美元提升至目前的 21 億美元。這項成長同時來自於 2017 會計年度併入 CIS 業務，以及我們車用與建築 HVAC 事業部門的顯著銷售成長。

Of particular note is our Asia segment where our local team has executed very well and more than doubled revenues over the past two years, increased operating earnings by almost $17 million. In total we reported full-year adjusted operating income of $120.1 million, an increase of 66%, and adjusted EPS of $1.54, which is nearly double the prior year.

特別值得一提的是亞洲事業部門，我們的在地團隊執行表現非常出色，過去兩年營收成長超過一倍，營業利益增加近 1,700 萬美元。整體而言，我們全年調整後營業利益為 1.201 億美元，成長 66%；調整後每股盈餘（EPS）為 1.54 美元，幾乎是前一年的兩倍。

Moving to our fourth-quarter results, I am pleased to report another strong quarter with significant sales and earnings improvements. Overall sales increased 16% with the largest contributions from the Europe, Asia and CIS segments. Our fourth-quarter adjusted operating income was $34.7 million, up $4.8 million or 16% from the prior year. And our adjusted earnings per share were $0.44 for the quarter, a $0.09 improvement from the prior year.

接著看第四季業績，我很高興報告我們再度繳出強勁的一季，銷售與獲利皆有顯著改善。整體銷售成長 16%，主要貢獻來自歐洲、亞洲與 CIS 事業部門。第四季調整後營業利益為 3,470 萬美元，較去年同期增加 480 萬美元或 16%。本季調整後每股盈餘為 0.44 美元，較去年同期提升 0.09 美元。

Now I'd like to briefly review the segment results for the fourth quarter. Turning to page 6, sales for the Americas segment increased 4% on a constant currency basis to $150 million driven primarily by higher sales to off-highway and automotive customers. Gross margin declined 420 basis points to 14.8% as compared to the prior year.

接下來我將簡要回顧第四季各事業部門的表現。請翻到第 6 頁，美洲事業部門銷售以固定匯率計成長 4% 至 1.50 億美元，主要由非公路與汽車客戶的銷售增加所帶動。毛利率較去年同期下滑 420 個基點至 14.8%。

We anticipated we would have a tough comparison particularly due to the extremely strong fourth-quarter last year. This decrease was driven by several factors including higher material cost, which had a $2.6 million negative impact during the quarter. Material pass-through provisions in many of our customer contracts should alleviate this negative impact in subsequent quarters as long as metal prices stabilize.

我們原先就預期比較基期會較為嚴峻，特別是因為去年第四季表現極為強勁。本次下滑由多項因素所致，包括原物料成本上升，於本季造成 260 萬美元的不利影響。我們與多數客戶合約中的材料轉嫁條款，若金屬價格趨於穩定，應可在後續季度減輕此不利影響。

In addition, we had higher labor and benefit expense in our Nuevo Laredo, Mexico plant as we prepare for new business launches that will lead to future sales growth. Lastly, we had a negative currency impact from the stronger Mexican peso.

此外，隨著我們為新業務導入做準備以帶動未來銷售成長，我們在墨西哥新拉雷多（Nuevo Laredo）工廠的勞工與福利費用也有所增加。最後，墨西哥披索走強亦帶來不利的匯率影響。

While we are subject to labor cost increases in addition to having to offset customer price downs, we are continually working to offset these impacts by controlling our supply chain cost and improving efficiency and productivity. We expect margins in the Americas to improve in the next one to two quarters.

雖然我們除了面臨勞動成本上升外，也必須抵銷客戶的降價壓力，但我們持續透過控管供應鏈成本、提升效率與生產力來抵銷這些影響。我們預期美洲事業部門的毛利率將在未來一到兩季改善。

As a result of these factors, and the tough comparables, adjusted operating income for the Americas segment was $9.7 million; $4.9 million lower than the prior year primarily related to the decrease in gross profit partially offset by lower SG&A expense.

受上述因素及嚴峻比較基期影響，美洲事業部門調整後營業利益為 970 萬美元，較去年同期減少 490 萬美元，主要與毛利下滑有關，部分由較低的銷售、一般及管理費用（SG&A）所抵銷。

Our markets in the Americas segment continue to be strong with growth expected in all of our end markets. We are still working through some of the wind down of commercial vehicle programs, but are launching new business in automotive, off-highway, specialty vehicle and new commercial vehicle customer programs.

美洲事業部門的市場需求仍然強勁，預期我們所有終端市場皆可望成長。我們仍在處理部分商用車專案的逐步收尾，但同時也在汽車、非公路、特種車輛，以及新的商用車客戶專案上導入新業務。

Higher material prices continue to be a concern and will impact our margins in the short-term, but the pricing mechanisms in our contracts will allow us to recover much of this cost increase over time, as I mentioned earlier.

原物料價格上漲仍是我們關注的議題，短期內將影響毛利率；但如我先前所提，我們合約中的定價機制將使我們能隨時間回收其中大部分的成本增加。

Please turn to page 7. Sales for Europe segment increased 5% on a constant currency basis to $162.9 million with improvements across all markets. Gross margin increased 70 basis points to 16.6%. The increase in margin is primarily due to higher sales volume, procurement cost savings and plant production efficiencies.

請翻到第 7 頁。歐洲事業部門銷售以固定匯率計成長 5% 至 1.629 億美元，各市場皆有改善。毛利率增加 70 個基點至 16.6%。毛利率提升主要來自銷售量增加、採購成本節省以及工廠生產效率提升。

Adjusted operating income increased $4 million to $14.8 million due to higher sales and improved gross margin along with favorable foreign currency exchange rates. Our European team, as is the case in each region, is managing a high level of quote activity for electric vehicles, leveraging our strong product portfolio and manufacturing footprint.

調整後營業利益增加 400 萬美元至 1,480 萬美元，原因包括銷售增加與毛利率改善，以及有利的外匯匯率變動。如同各區域一樣，我們的歐洲團隊正管理大量電動車報價活動，並運用我們強大的產品組合與製造據點布局。

As you know we have completed construction of our plant expansion in Hungary, allowing us to expand our low-cost country footprint for automotive oil coolers and charge air coolers. We have seen the benefit of this investment in our income tax expense this year as we are able to take advantage of development credits in Hungary.

如各位所知，我們已完成匈牙利廠房擴建工程，使我們得以擴大在低成本國家的布局，用於生產汽車用機油冷卻器與增壓空氣冷卻器。今年我們已在所得稅費用上看到這項投資的效益，因為我們能夠利用匈牙利的開發抵減（development credits）。

We are also transferring production of certain product lines from our Austrian plant to our Hungary -- to our facility in Hungary and those transfers have been going smoothly.

我們也正將部分產品線的生產自奧地利工廠轉移至匈牙利——轉移至我們在匈牙利的廠區，而這些轉移作業進行得相當順利。

Please turn to page 8. Our Asia segment continues to report significant sales and earnings growth. Overall Asia segment sales grew 35% compared to the prior year on a constant currency basis. We increased sales in China, India and Korea with the most significant increases in automotive and off-highway sales in China.

請翻到第 8 頁。我們的亞洲事業部門持續呈現顯著的銷售與獲利成長。以固定匯率計，亞洲事業部門整體銷售較去年同期成長 35%。我們在中國、印度與韓國的銷售均有所提升，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 70 basis point improvement in gross margin to 17.6%. This resulted in a $2.8 million increase in our gross profit from $5.6 million last year to $8.4 million this year. Operating income for the Asia segment increased $2.2 million or 79% to $5 million due to higher sales volume.

較高的銷售量使毛利率提升70個基點至17.6%。因此，我們的毛利由去年的560萬美元增加至今年的840萬美元，增加280萬美元。由於銷售量提高，亞洲事業部的營業利益增加220萬美元（增幅79%）至500萬美元。

As I mentioned last quarter, higher sales volumes have continued to stretch our capacity in China. To allow for further growth in the region we announced our intention to construct a second building at our Changzhou site and have finalized design for a facility and have broken ground on construction. We anticipate that construction of the building will be complete by the end of calendar 2018.

如我在上季所提到，較高的銷售量持續使我們在中國的產能吃緊。為了支持該地區進一步成長，我們宣布有意在常州廠區興建第二棟建築，並已完成設施設計且已動工。我們預期該建築的施工將於2018曆年年底前完工。

Turning to page 9, sales for our CIS segment increased 10% on a constant currency basis to $168.4 million, primarily due to higher sales of precision cooling, mobile air-conditioning and coatings products. Gross profit was $25.7 million, which resulted in a gross margin of 15.3%, up 20 basis points on the higher sales volume.

翻到第9頁，我們CIS事業部的銷售額以固定匯率計算增加10%至1.684億美元，主要由於精密冷卻、移動式空調及塗料產品的銷售增加。毛利為2,570萬美元，毛利率為15.3%，在較高銷售量帶動下提升20個基點。

The segment reported adjusted operating income of $11.6 million, a $3.8 million or 49% improvement over the prior year. This improvement evidences the synergy savings we have been able to attain this year as we work towards our goal of attaining $15 million in synergy savings over the first two years of operation, which is on track.

該事業部的調整後營業利益為1,160萬美元，較前一年增加380萬美元（增幅49%）。此改善反映出我們今年在推動協同效益節省方面所取得的成果；我們正朝著營運前兩年達成1,500萬美元協同效益節省的目標邁進，目前進度符合預期。

We've done a great job this year achieving the procurement synergy cost savings outlined in our plans and now we will turn to manufacturing cost savings to further reach our goals. As a first step we closed a plant in Austria and expanding our footprint in Serbia; second, we will add an additional lease capacity to our facility in Juarez, Mexico to allow for production increases. Our goal over time is to enhance production capabilities at the Juarez plant to continue its development to a scale coils manufacturing facility.

今年我們在達成計畫中所列的採購協同效益成本節省方面表現出色，接下來將轉向製造成本節省，以進一步達成目標。第一步，我們關閉奧地利的一座工廠並擴大在塞爾維亞的據點；第二步，我們將在墨西哥華雷斯（Juarez）廠區增加額外的租賃產能，以支持產量提升。我們的長期目標是強化華雷斯工廠的生產能力，持續將其發展為具規模的盤管製造基地。

Please turn to page 10. Sales for our Building HVAC segment increased 7% on a constant currency basis compared to the prior year to $43.3 million. The increase in sales was driven by a strong North American heating season.

請翻到第10頁。我們建築HVAC事業部的銷售額以固定匯率計算較前一年增加7%至4,330萬美元。銷售成長主要由北美強勁的供暖季帶動。

Gross profit increased 21% and gross margin improved by 250 basis points to 30% driven by solid conversion due to a favorable sales mix and improved pricing. This resulted in adjusted operating income of $3.3 million, up 18% from the prior year driven by higher gross profit on higher sales.

毛利增加21%，毛利率提升250個基點至30%，主要受惠於有利的產品組合與定價改善所帶來的良好轉換。因此，調整後營業利益為330萬美元，較前一年增加18%，主要由於銷售增加帶動毛利提升。

As part of our broader strategic portfolio analysis, we discontinued our geothermal product line during the fourth quarter. Sales growth in this product line was continually below our expectations and we were not able to reach the critical size to be competitive in this market with annual sales of less than $1 million.

作為更廣泛的策略性產品組合分析的一部分，我們在第四季停止了地熱產品線。該產品線的銷售成長長期低於預期，且年銷售額不到100萬美元，無法達到在此市場具競爭力所需的關鍵規模。

In addition, we have decided to sell our South African business to a local entity which will allow the business to have greater opportunities for success. Fiscal year 2018 sales for this business were less than $2 million.

此外，我們已決定將南非業務出售給當地實體，這將使該業務擁有更大的成功機會。2018會計年度該業務的銷售額低於200萬美元。

And finally, just as a reminder, this will be the last quarter that we report on five business segments. Starting with the first quarter of fiscal 2019 we will report on one vehicular segment called Vehicular Thermal Solutions, or VTS, that will include the current Americas, Europe and Asia segments. So our three segments going forward will then be VTS, CIS and the Building HVAC segments.

最後提醒一下，這將是我們以五個業務事業部進行揭露的最後一季。自2019會計年度第一季起，我們將以一個名為「車輛熱管理解決方案」（Vehicular Thermal Solutions，簡稱VTS）的車輛事業部進行揭露，該事業部將包含目前的美洲、歐洲與亞洲事業部。因此，未來我們的三個事業部將為VTS、CIS以及建築HVAC事業部。

With that I'd like to turn it over to Mick for an overview of our consolidated financial results as well as our outlook for guidance in fiscal 2019.

接下來我想把時間交給Mick，請他概述我們的合併財務結果，以及2019會計年度的展望與指引。

Thanks, Tom. Please turn to slide 12. Reported sales increased $78 million, or 16%, which includes a positive FX impact. On a constant currency basis sales increased $42 million or 9%. Our top-line benefitted again this quarter from favorable markets, foreign exchange rates and pricing tied to metals pass-throughs. Gross profit of $96.5 million was up 13%.

謝謝，Tom。請翻到第12張投影片。報告銷售額增加7,800萬美元（增幅16%），其中包含正向的外匯影響。以固定匯率計算，銷售額增加4,200萬美元（增幅9%）。本季我們的營收再次受惠於有利的市場、外匯匯率以及與金屬轉嫁（pass-through）相關的定價。毛利為9,650萬美元，增加13%。

Our results were positively impacted by the higher sales volume, FX rates and ongoing purchasing initiatives. Gross profit and gross margin improved in our Europe, Asia, CIS and Building HVAC segments. Total Company gross margin was down slightly to 17%, mainly due to the temporary challenges in the Americas as Tom just reviewed.

我們的結果受到較高銷售量、外匯匯率以及持續的採購措施正面影響。歐洲、亞洲、CIS及建築HVAC事業部的毛利與毛利率皆有所改善。全公司毛利率小幅下降至17%，主要是因為Tom剛剛回顧的美洲事業部短期挑戰。

SG&A of $63.6 million was up $3.5 million primarily due to the change in foreign exchange rates. Unfavorable exchange rates accounted for $2.9 million of the increase and, on a constant currency basis, SG&A increased just 1%.

銷售、一般及管理費用（SG&A）為6,360萬美元，增加350萬美元，主要由於外匯匯率變動。不利的匯率變動占增加額中的290萬美元；以固定匯率計算，SG&A僅增加1%。

Please note at the bottom of the page we've included a table with adjustments to operating income which totaled $7.5 million for the quarter. The largest item represents our restructuring expenses which primarily relates to severance in Europe. We also adjusted $600,000 for acquisition and integration costs along with $900,000 for strategy consulting fees.

請注意在頁面底部，我們列示了一張營業利益調整項目的表格，本季合計為750萬美元。其中最大項目為重整費用，主要與歐洲的資遣費相關。我們也調整了60萬美元的併購與整合成本，以及90萬美元的策略顧問費。

The $1.2 million impairment charge relates to the Building HVAC segment which discontinued its geothermal product line during the quarter. The remaining adjustments relate to environmental expenses in the Americas for a plant that was previously closed.

120萬美元的減損費用與建築HVAC事業部相關，該事業部於本季停止其地熱產品線。其餘調整項目與美洲一座先前已關閉工廠的環境費用相關。

Fourth-quarter adjusted operating income of $34.7 million was up 16%. Our adjusted earnings per share was $0.44, an improvement of 26%.

第四季調整後營業利益為3,470萬美元，增加16%。我們的調整後每股盈餘為0.44美元，提升26%。

Note that our US GAAP earnings per share of $0.34 was impacted again this quarter by tax reform legislation enacted in December. We recorded $2.3 million of provisional charges to income tax expense in the quarter. This included a US deferred tax benefit of $1.7 million as a result of higher US taxable 2018 earnings compared to our forecast.

請注意，我們本季的美國一般公認會計原則（US GAAP）每股盈餘0.34美元，再次受到12月通過的稅改法案影響。本季我們就所得稅費用認列了230萬美元的暫估（provisional）費用。其中包含170萬美元的美國遞延所得稅利益，係因2018年美國應稅所得高於我們的預測所致。

Also, a $4 million charge for the transition tax on foreign earnings that have not been previously taxed in the US was recorded in the quarter. The US tax environment is quite fluid and additional legislative guidance is expected which we will be monitoring closely.

此外，本季亦認列了400萬美元的過渡稅（transition tax）費用，係針對先前未在美國課稅的海外盈餘。美國稅務環境相當多變，預期將有進一步的立法指引，我們將密切關注。

As a reminder, we benefited during fiscal 2018 from $9 million in development tax credits related to our Hungary expansion. This is a one-time benefit that will not carry over into fiscal 2019.

提醒一下，我們在2018會計年度受惠於與匈牙利擴建相關的900萬美元研發稅額抵減。這是一項一次性利益，不會延續至2019會計年度。

In addition, we reversed a portion of the valuation allowance on our deferred tax assets in China resulting in a $2.8 million benefit in income tax expense. In our adjusted EPS we made income tax adjustments related to tax reform and the reversal of the valuation allowance in China.

此外，我們沖回了在中國遞延所得稅資產之估值備抵的一部分，使所得稅費用產生 280 萬美元的利益。在我們的調整後 EPS 中，我們針對稅改以及中國估值備抵沖回相關事項進行了所得稅調整。

Last, please note that our US GAAP income statement is included in this presentation and in our earnings release, including a full reconciliation.

最後，請注意，我們的美國 GAAP 損益表已包含在本簡報以及我們的盈餘新聞稿中，並附有完整的調節表。

Turning to slide 13, fiscal 2018 operating cash flow was $123.8 million, or $82.2 million higher than the prior year. Full-year capital expenditures were higher than the prior year by $6.6 million. This is primarily due to capital spending in our new CIS segment and unfavorable foreign exchange rate changes.

接著看第 13 頁投影片，2018 會計年度營運現金流為 1.238 億美元，較前一年增加 8,220 萬美元。全年資本支出較前一年增加 660 萬美元。這主要是因為我們新的 CIS 事業部門的資本支出，以及不利的外匯匯率變動。

In addition, we made equipment purchases to expand manufacturing capacity in Hungary and China to support new product launches. We reported free cash flow of $52.8 million in fiscal 2018. Please note that this includes a negative $26.1 million impact of cash payments for restructuring activities, strategy costs, acquisition and integration costs and environmental-related expenses.

此外，我們也購置設備以擴充匈牙利與中國的製造產能，以支援新產品上市。我們在 2018 會計年度的自由現金流為 5,280 萬美元。請注意，其中包含因重整活動、策略成本、併購與整合成本以及環境相關費用之現金支付所造成的 2,610 萬美元負面影響。

Finally, our net debt declined by $37 million during the year and our leverage ratio was at 2.4, down from 2.9 at the end of fiscal 2017.

最後，我們的淨負債在年度期間下降 3,700 萬美元，槓桿比率為 2.4，低於 2017 會計年度末的 2.9。

Now let's turn to our fiscal 2019 guidance on slide 14. I'm pleased to report that we are expecting another year of good earnings growth driven by improving margins and continued market growth. To summarize our guidance, we project sales to be up 3% to 8%. We expect ongoing vehicular market growth, as Tom described earlier, partially offset by the wind down of multiple truck programs. For our industrial and HVAC markets we expect low to mid-single-digit market growth.

現在讓我們看第 14 頁投影片的 2019 會計年度指引。我很高興報告，我們預期在毛利率改善與市場持續成長的帶動下，將再迎來一年良好的獲利成長。概述我們的指引，我們預估銷售額將成長 3% 至 8%。我們預期車用市場將持續成長，如 Tom 先前所述，但將部分被多個卡車專案逐步結束所抵銷。至於工業與 HVAC 市場，我們預期市場將呈現低至中個位數的成長。

In addition to the revenue growth, we are planning to drive earnings through margin improvements across all business segments. We expect adjusted operating income to be in the range of $135 million to $145 million. This equates to year-over-year growth of 12% to 21%.

除了營收成長之外，我們也計畫透過各事業部門的毛利率改善來推動獲利。我們預期調整後營業利益將介於 1.35 億至 1.45 億美元。這相當於年增 12% 至 21%。

As usual, I want to briefly review some of our key assumptions. First, metals prices have continued to increase and we anticipate that this will be an ongoing headwind. Second, we expect annual interest expense of approximately $23 million. Third, we are using current foreign exchange rates which will result in a slight benefit year-over-year.

如同以往，我想簡要回顧幾項關鍵假設。第一，金屬價格持續上升，我們預期這將持續成為不利因素。第二，我們預期年度利息費用約為 2,300 萬美元。第三，我們採用目前的外匯匯率，預期將帶來較去年略為有利的影響。

Also I want to spend a moment reviewing our very complicated and fluid tax environment. To start, we had a significant benefit in fiscal 2018 related to the Hungarian development tax credit that will not repeat in 2019. Next we have impacts from the change of our expected mix of earnings particularly related to those jurisdictions where we have valuation allowances.

另外，我想花點時間回顧我們非常複雜且變動快速的稅務環境。首先，我們在 2018 會計年度因匈牙利開發稅額抵減而獲得顯著利益，但 2019 年不會重複出現。接著，因我們預期獲利組合的變動而產生影響，特別是與那些我們設有估值備抵的司法管轄區相關。

And last we have the impact of the US tax reform legislation which is causing a significant increase to our tax rate in fiscal 2019. We previously expected our US tax rate to drop due to the lowering of the federal rate. However, we are now expecting to have additional US tax related to a specific provision in the new law. We estimate this to be about $6 million in fiscal 2019.

最後，是美國稅改法案的影響，這將使我們 2019 會計年度的稅率顯著上升。我們先前預期美國稅率會因聯邦稅率下調而下降。然而，我們現在預期將因新法中的一項特定條款而產生額外的美國稅負。我們估計 2019 會計年度約為 600 萬美元。

Given all these factors, we expect our adjusted tax rate to be approximately 27% to 28% in fiscal 2019 versus 12% in fiscal 2018. Based on the expected tax rate we anticipate our adjusted EPS to be between $1.50 to $1.65.

綜合上述因素，我們預期 2019 會計年度的調整後有效稅率約為 27% 至 28%，相較於 2018 會計年度的 12%。基於預期稅率，我們預估調整後 EPS 將介於 1.50 至 1.65 美元。

So to wrap up, we finished a strong year, closed out one of our best years in terms of financial results and increased shareholder value. I look forward to reporting back on our continued momentum throughout fiscal 2019. Tom?

總結來說，我們完成了強勁的一年，以財務成果而言締造了我們表現最佳的年度之一，並提升了股東價值。我期待在 2019 會計年度持續的動能中，向各位回報進展。Tom？

Thanks, Mick. Please turn to slide 15. As I mentioned last quarter, we have focused significant resources this year on performing a strategic review of our product portfolio. And as we assessed our strategic progress over this time, we kept coming back to strengthen, diversify and grow, or what we refer to as SDG, the strategy that has successfully guided our decisions over the past 2.5 years.

謝謝，Mick。請翻到第 15 頁投影片。如我在上季提到的，今年我們投入大量資源，對產品組合進行策略性檢視。在這段期間評估我們的策略進展時，我們一再回到「強化、分散與成長」，也就是我們所稱的 SDG；這項策略在過去 2.5 年成功引導了我們的決策。

Although we will define new targets and new actions for reaching our long-term goals, the overall strategy will remain consistent. As we strive to become a more diversified global thermal management leader I look forward to sharing details on the next phase of SDG in the near future.

雖然我們將為達成長期目標訂定新的目標與新的行動，但整體策略將維持一致。在我們努力成為更為多元化的全球熱管理領導者之際，我期待在不久的將來分享 SDG 下一階段的細節。

But to be clear, we will continue to strengthen our business by optimizing our global manufacturing and operational capabilities, working hard to continually improve our global business processes. Today I outlined many examples of how we are expanding our low-cost country footprint around the world in order to continue to competitively meet demand for our advantaged products.

但為了說清楚，我們將持續透過最佳化全球製造與營運能力來強化業務，並努力持續改善我們的全球業務流程。今天我列舉了許多例子，說明我們如何在全球擴大低成本國家的布局，以持續以具競爭力的方式滿足市場對我們具優勢產品的需求。

Our global operations team recently coined the phrase One Modine to describe their approach on developing Modine operating system discipline deeply and consistently around the world. This has proven to be a powerful competitive advantage along with our growing size and scale.

我們的全球營運團隊最近提出「One Modine」這個說法，用以描述他們在全球各地深度且一致地建立 Modine 營運系統紀律的方法。這已被證明是一項強大的競爭優勢，並與我們日益擴大的規模與量體相輔相成。

Secondly, we will continue to diversify the business following on the success of our acquisition of the CIS business. We proved we can deliver on our promises by completing the biggest acquisition in the Company's history, having it be accretive to earnings in the first year, and allowing us to generate sufficient free cash flow to bring our leverage ratio back down into our targeted range.

第二，我們將延續收購 CIS 業務的成功，持續推動業務多元化。我們證明了自己能夠實現承諾：完成公司史上最大的一筆收購、在第一年即對獲利具增益效果，並使我們得以產生足夠的自由現金流，將槓桿比率降回我們的目標區間。

This success will allow us to look for other opportunities for acquisitions that will add to our industrial portfolio, increasing our diversification and decreasing our customer concentration and reducing our exposure to market cyclicality.

這項成功將使我們能夠尋找其他併購機會，以擴充我們的工業產品組合，提升多元化、降低客戶集中度，並減少我們對市場循環性的曝險。

And finally, we will continue to grow by seeking those investments where we have the right to win and making wise choices with our capital. Whether the growth comes from new inorganic opportunities, or from our proven organic growth capability, we will continually seek high returns on our invested capital.

最後，我們將持續成長，尋求那些我們具備勝出條件的投資，並以審慎方式運用資本做出明智選擇。無論成長來自新的外部（非有機）機會，或來自我們已被驗證的有機成長能力，我們都將持續追求投入資本的高報酬。

In some cases we may choose to deemphasize certain products or end markets, as I described earlier in the Building HVAC segment. But we've been making these types of decisions for the past several years. But this is a special time as we embrace technological advancement and societal changes that will be disruptive to our markets. This is where Modine will thrive.

在某些情況下，我們可能會選擇降低對某些產品或終端市場的著墨，正如我先前在建築 HVAC 事業部門所描述的。但我們在過去幾年一直在做這類決策。然而，這是一個特別的時刻，因為我們正擁抱技術進步與社會變遷，而這些將對我們的市場帶來顛覆性影響。這正是 Modine 將蓬勃發展之處。

As a technology leader we will be able to deliver the products that our customers need to meet higher energy and fuel efficiency requirements, enable the introduction of advanced refrigerants and provide thermal solutions for electric vehicles. This is Modine at its best. And with that we will take your questions.

作為技術領導者，我們將能夠交付客戶所需的產品，以滿足更高的能源與燃油效率要求，促進先進冷媒的導入，並為電動車提供熱管理解決方案。這就是Modine最出色的表現。接下來我們將開始回答各位的提問。

(Operator Instructions). Ryan Amberger, Seaport Global.

(接線員指示)。Ryan Amberger，Seaport Global。

Hi, good morning. This is Ryan Amberger on for Mike Shlisky. Just two quick ones. So looking at the segments, Asia was your leader for fiscal 2018. Margins were up nearly 4 points for the year and were above 10%. Do you still think there's more expansion ahead for margins in Asia, or is the 10% to 11% range a reasonable number going forward?

嗨，早安。我是Ryan Amberger，代替Mike Shlisky提問。我有兩個簡短問題。從各事業部來看，亞洲是你們2018會計年度的領先者。全年毛利率提高了將近4個百分點，並且高於10%。你們是否仍認為亞洲的利潤率還有進一步擴張空間，還是未來維持在10%到11%的區間是合理的？

That's the range we'd expect going forward. I'm the first to say they've surpassed our expectations. But I think at this point we've leveraged the existing scale and now, as you know, we are starting to put in some additional capacity. So we'll reach a natural level here and I think it's probably in that 10%-11% operating range.

我們預期未來會落在那個區間。我必須先說，他們的表現確實超出我們的預期。但我認為目前我們已經充分運用既有規模效益，而現在，如你所知，我們也開始增加一些產能。因此利潤率會達到一個自然水準，我認為大概就是10%到11%的營業利潤率區間。

Okay, great. Appreciate it. And then one other one quick. In looking at your guidance, the incremental margins look like they are high teens for fiscal 2019. That's an improvement over the last year or two but still maybe could be a little better.

好的，很好。感謝。另外再問一個。從你們的財測來看，2019會計年度的增量利潤率看起來在十幾個百分點的高段。這比過去一兩年有所改善，但可能仍有再好一些的空間。

Is it just a matter of raw material costs at this point? And if we were to see raw materials come back to more normalized levels, could we get a sense of where operating profits could be for fiscal 2019?

目前主要只是原物料成本的問題嗎？如果原物料回到較正常的水準，我們能否大致了解2019會計年度的營業利益可能會落在哪個水準？

Yes, great question and a lot going on there with regards to our guidance this year and then next year. From a gross profit standpoint, if you look at our outlook for next year, at a gross profit line we're really planning to convert pretty nicely in a 25% plus range. And then I think you're representing the operating income.

是的，這個問題很好，而且關於我們今年與明年的財測，確實有很多因素在作用。從毛利的角度來看，如果你看我們對明年的展望，在毛利這一行，我們其實規劃能以相當不錯的水準轉化，約在25%以上的區間。而我想你指的是營業利益。

One of the headwinds we do have next year, and that's part of it, is metals. We are not as concerned about all the discussion on the tariffs and trade wars; but it's really on the LME and the raw material price. For most of this year we talked about a $10 million to $15 million headwind and we are passing that through in the new year.

明年我們確實有一個逆風因素，而這也是其中一部分，就是金屬。相較於外界對關稅與貿易戰的各種討論，我們更關注的是LME以及原物料價格。今年大部分時間我們談到約1,000萬到1,500萬美元的逆風，而我們會在新年度把這些成本轉嫁出去。

Really around the spring here we saw another run-up in raw material, especially copper and aluminum prices. And there we are looking at another $30 million to $40 million increase in costs in fiscal 2019. And we will start passing that through, but there will be a lag on that. So that would pull down the margin a little bit this year until we pass through the balance of the material change. Does that make sense?

大約在今年春季，我們看到原物料再次上漲，尤其是銅與鋁的價格。因此在2019會計年度，我們預估成本會再增加約3,000萬到4,000萬美元。我們會開始把這些成本轉嫁出去，但會有時間落差。所以在我們把材料變動的剩餘部分轉嫁完成之前，今年的利潤率會被拉低一些。這樣說清楚嗎？

Yes, yes, no, that's perfect. I appreciate the color. Thank you.

是的，是的，完全清楚。感謝你補充說明。謝謝。

David Leiker, Baird.

David Leiker，Baird。

Good morning, everyone. First of all, great finish to the year. These numbers are great; the returns are great and look for more to go forward. On China, is there a way to break apart the revenue growth of how much of that is what's going on in the market as opposed to new contract awards, content, market share? Is there a way to separate those two?

各位早安。首先，年度收官非常漂亮。這些數字很棒；報酬也很棒，而且看起來未來還會更好。關於中國，有沒有辦法拆分營收成長：其中多少是市場本身的變化，多少是來自新合約得標、單車價值（content）、市占率？能否把這兩者區分開來？

Yes, I can kind of qualify it. Clearly our big markets have -- were the traditional off-highway construction markets where we are really benefiting from a bounce back of construction sales, namely heavy excavators. So that is market driven, but also inside there are new awards. And again, when we talk about that it's China that's driving the bulk of that, but also seeing strong performance out of India and some out of Korea.

可以，我可以大致說明一下。很明顯，我們的大型市場一直是傳統的非公路建築機械市場；我們確實受惠於建築銷售回升，尤其是大型挖掘機。所以這部分是市場驅動，但其中也包含新案子得標。另外，當我們談到這點時，主要動能來自中國，但我們也看到印度表現強勁，韓國也有一些成長。

The real growth side as far as new wins is really around the automotive engine products, specifically supplying engine content as the lower displacement boosted engine phenomenon takes place in China that has given us great opportunity for content and increase in business wins. So that's really how that breaks down. I'd quantify that -- Mick, do you have any way of --?

至於新案得標帶來的真正成長，主要是在汽車引擎產品，特別是隨著中國出現小排量渦輪增壓引擎的趨勢，我們在引擎相關的供應內容上獲得很好的機會，帶動單車價值提升與更多業務得標。大致就是這樣的拆分。我會這樣量化——Mick，你有沒有什麼方式可以——？

Yes, I would say, David, it's -- less than half is market, maybe a third. So out of 35% or 40% growth we look across the end markets in India, the construction market in Asia and auto in China. The excavator market, by our external data, was up 10% to 20% in Asia. Most of the markets in India in the quarter were 10% to 15% and just a pretty low growth rate by our data on auto in China.

是的，David，我會說——市場因素不到一半，可能約三分之一。所以在35%或40%的成長之中，我們看印度的終端市場、亞洲的建築市場，以及中國的汽車市場。依我們取得的外部數據，亞洲的挖掘機市場成長約10%到20%。印度在該季度多數市場約成長10%到15%，而依我們的數據，中國汽車市場的成長率相當低。

And across all of our -- so then Modine sales, up 40%, it was pretty across the board. Our auto sales were up 30% to 40%. Our off-highway sales, our construction sales were 20% to 40%. And then India sales were up another 20% to 40% depending on off-highway or commercial vehicles. So I would say about a third of the growth would be market and then the balance is us winning new programs and launching new programs.

而在我們所有——因此Modine銷售成長40%，其實是全面性的。我們的汽車銷售成長30%到40%。我們的非公路銷售、建築相關銷售成長20%到40%。另外印度銷售也再成長20%到40%，視非公路或商用車而定。所以我會說約三分之一的成長來自市場，其餘則是我們贏得新專案並推出新專案。

That's great. If we look at that, it seems like you are bumping up against some capacity constraints. Is that incremental growth opportunities slow down a little bit before it ratchets up again? How would you look at that?

很好。照這樣看起來，你們似乎正碰到一些產能限制。這是否會讓新增的成長機會在短期內放緩一些，之後再重新加速？你們會怎麼看這件事？

Well, it clearly is driven -- the growth acceleration has forced us to look ahead and we looked at many options on how to solve that. We decided to build right on the same campus where our Changzhou facility is so we can leverage the management structure and other infrastructure there. But yes, that's completely driven by this growth that Mick said.

嗯，這很明顯是由——成長加速迫使我們必須提前規劃，我們也評估了許多解決方案。我們決定就在常州廠區同一園區內擴建，這樣可以利用既有的管理架構與其他基礎設施。但沒錯，這完全是由Mick所說的成長所驅動。

The participation, the business wins that we are taking on there are really looking positive. Obviously those markets, and also truck market in China as well, that we are looking for opportunities. So, I'd say the continued growth -- the percentage of growth may not be like it has been the last year or two, but it's still going to be growing double digit.

我們在那邊的參與度、以及正在拿下的業務案子，確實看起來非常正面。顯然在那些市場，以及中國的卡車市場，我們也在尋找機會。所以，我會說持續成長——成長的百分比可能不會像過去一兩年那樣，但仍然會維持兩位數成長。

And David, it's not prohibiting or limiting our quote activity or our win rate; that's for sure. I think in the last six months and probably the next six months the challenge is just as volumes ramp up in the existing facility, the conversion and the productivity to keep up with it.

而且，David，這絕對不會禁止或限制我們的報價活動或我們的得標率；這是肯定的。我認為在過去六個月以及可能接下來六個月的挑戰，只是隨著現有廠房的產量爬升，轉換與生產力要跟得上。

And it's kind of success breeds success. If we have success with certain customers they can open the door for more opportunities. So we are getting more share of wallet as well, which is really encouraging.

而且這有點像成功帶來成功。如果我們在某些客戶上取得成功，他們就可能為我們打開更多機會的大門。因此我們也在提高錢包份額，這真的很令人鼓舞。

That sounds great. Thanks for the time.

聽起來很棒。謝謝你撥冗。

(Operator Instructions). Matthew Paige, Gabelli.

（接線員指示）。Matthew Paige，Gabelli。

Good morning. You had strong cash flow in the quarter. Does this change your thoughts on your leverage target? Does that go up at all?

早安。你們本季的現金流很強。這會改變你們對槓桿目標的看法嗎？會提高一些嗎？

No. We're going to stay disciplined on the leverage. But I think what -- I think what it does is it builds our confidence in two things. We will continue to look at acquisitions, and now we're getting the balance sheet back in a position where we have, I'd say, the right to go look at acquisitions.

不會。我們會在槓桿上保持紀律。但我認為——我認為它帶來的是讓我們在兩件事上更有信心。我們會持續尋找併購機會，而現在我們正把資產負債表恢復到一個位置，我會說，我們有條件去看併購案。

And then secondly, Tom commented on his comments that the Luvata integration has gone quite well. With anything, you always know where your tough points are and your opportunities, but everything we really set out to do we achieved.

其次，Tom 在他的發言中提到，Luvata 的整合進展相當順利。任何事情都是如此，你總是知道哪些是難點、哪些是機會，但我們真正想要做到的事情都達成了。

So I think it's a combination of we're building the cash flow, the balance sheet is in a reasonable position, and we've had good success with Luvata. So, we don't want to go -- again, we are going to stay long-term to the 1.5 to 2.5 leverage ratio. But if the right opportunity came, I think we would look at it again, like we did Luvata, for a temporary spike with a strong commitment to get it quickly back under our target ratio.

所以我認為這是多項因素的組合：我們正在建立現金流，資產負債表處於合理位置，而且我們在 Luvata 上取得了良好成果。因此，我們不想——再次強調，我們長期仍會維持 1.5 到 2.5 的槓桿比率。但如果出現合適的機會，我想我們會再評估，就像當初做 Luvata 一樣，允許槓桿短期上升，但會強力承諾盡快把槓桿拉回到目標比率以下。

Okay. And then I guess maybe along those lines could you provide a little color into your M&A pipeline? What areas are you looking to expand? And have you seen reasonable valuation multiples? Kind of along those lines.

好的。那我想也許沿著這個方向，你能否多提供一些你們併購（M&A）管線的資訊？你們想在哪些領域擴張？你們看到的估值倍數是否合理？大概是這類問題。

Yes, so we set up an office -- a new function strategy and business development office and manned that up on a search that's looking through key markets. As I mentioned in my comments that our focus is on diversification is to keep that momentum going. Right now we've got a 60/40 split between vehicular and what we call industrial.

是的，所以我們成立了一個辦公室——一個新的職能：策略與業務開發辦公室，並已完成編制，透過一項搜尋在關鍵市場中尋找機會。如我在發言中提到，我們的重點在於多元化，以維持這股動能。目前我們在車用與我們所稱的工業領域之間的比重是 60/40。

We see the benefits of that and we think that improving that ratio to more parity between the two is a way to go because of, again, diversification with a solid focus on our core technical strength of thermal management gives us lots of advantages both on earnings, quality of earnings, capital -- intensity being less and, again, more diversification across markets and customers.

我們看到了這樣配置的好處，也認為把這個比率改善到兩者更接近對等是可行方向，因為——再次強調——在堅守我們以熱管理為核心技術強項的前提下，多元化能在獲利、獲利品質、資本——資本密集度較低，以及在市場與客戶之間更分散等方面，帶來許多優勢。

So, look for us to be spending a lot of time in the industrial space which could -- and we are seeing opportunities and clearly we're going to be shopping wisely.

所以，請期待我們會在工業領域投入大量時間；這可能——而且我們確實看到機會，當然我們也會審慎地挑選標的。

It took us -- we talked quite a few quarters about -- maybe a year or more about -- before we announced Luvata. And valuations are really -- depends on each opportunity and there are some that are going to be quite reasonable and fit well with our competencies and then there will be ones like we had before Luvata that we won't participate or we will pass. Either the multiple goes up or we don't see the synergy benefits to justify the cost. So, really the answer will be it really depends on the particular company we're talking about.

在我們宣布 Luvata 之前——我們談了好幾季——可能一年或更久。而估值真的——取決於每一個機會；有些會相當合理，且與我們的能力非常契合；也會有一些像我們在 Luvata 之前遇到的那樣，我們不會參與或會選擇放棄。要嘛倍數太高，要嘛我們看不到足夠的綜效來合理化成本。所以，答案其實是：這真的取決於我們正在談的那一家特定公司。

All right. And then one more question from me. Through the presentation it seems like you are forecasting continued end market improvements, and you noted some expected margin expansion. How much conservatism is baked into your EPS guidance?

了解。那我再問最後一個問題。從簡報來看，你們似乎在預測終端市場將持續改善，並提到一些預期的毛利率擴張。你們的 EPS 指引中包含了多少保守性？

This will be the CFO talking here (laughter). We stretch the team really hard and we always try to go forward with the shareholders and we always try to deliver guidance that is right in line with what we are pushing the teams for. With the metals headwinds this year and all of the volume launches we really have pushed the teams hard.

這裡由財務長來回答（笑聲）。我們對團隊要求非常高，我們也總是希望能夠對股東持續向前推進，並且我們總是試著提供與我們對團隊要求一致的指引。今年面對金屬價格的逆風以及所有的量產導入，我們確實把團隊逼得很緊。

So I will leave it at I don't think you ever have any management -- no management team is ever going to say we can't hit the numbers so they are sandbagged. But I think we're trying to build an expectation with all of you that we are coming right down the middle and this year we really pushed hard to deliver another year of strong growth and there's a lot of work to do to hit those numbers.

所以我就先說到這裡：我不認為你會看到任何管理層——沒有任何管理團隊會說我們達不到數字，所以指引是刻意保守的。但我認為我們想和各位建立的預期是：我們的指引是走在正中間；而今年我們確實非常努力，希望再交出一年強勁成長，且要達成這些數字還有很多工作要做。

Okay, well I appreciate the color and good luck in the next quarter.

好的，我很感謝這些補充資訊，祝你們下季順利。

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

我目前沒有看到其他問題。現在我想把電話會議交回給 Kathy Powers。

Thank you. Thank you for joining us this morning. A replay of this call will be available through our website in about two hours. We hope you have a great day.

謝謝。感謝各位今天早上加入我們。本次電話會議的重播將在約兩小時後於我們的網站提供。祝各位有美好的一天。

Ladies and gentlemen, thank you for participating in today's conference. This does conclude our presentation and you may all disconnect. Everyone have a great day.

各位女士、先生，感謝參與今天的電話會議。我們的簡報到此結束，大家可以掛線。祝各位有美好的一天。