Modine Manufacturing Company (MOD) 2020 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Modine Manufacturing Company's First Quarter Fiscal 2020 Earnings 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.

各位女士、各位先生，早安，歡迎參加 Modine Manufacturing Company 2020 會計年度第一季財報電話會議。(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。

Good morning, and thank you for joining our conference call to discuss Modine's First Quarter Fiscal 2020 Results. 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.

各位早安，感謝各位參加我們的電話會議，一同討論 Modine 2020 會計年度第一季的業績結果。今天與我一同出席的有 Modine 總裁暨執行長 Tom Burke，以及我們的財務副總裁兼財務長 Mick Lucareli。我們將使用今天簡報的投影片，各位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上傳的 PDF 檔。

This morning, Tom and Mick will present our first quarter results for fiscal '20 and will provide an update to our outlook for the rest of the year. At the end of the call, there will be a question-and-answer session.

今天上午，Tom 與 Mick 將說明我們 2020 會計年度第一季的業績，並就今年其餘期間的展望提供最新更新。電話會議最後將進行問答環節。

On Slide 2 is our notice regarding forward-looking statements. This call may contain forward-looking statements as outlined in our earnings release as well as in our company's filings with the Securities and Exchange Commission.

投影片第 2 頁為我們關於前瞻性陳述的提示。本次電話會議可能包含前瞻性陳述，其內容如同我們的財報新聞稿以及公司向美國證券交易委員會提交之文件中所述。

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

接下來，我很高興將電話會議交給 Tom Burke。

Thank you, Kathy, and good morning, everyone. Overall, first quarter sales decreased 7% or 3% on a constant currency basis. Our Building HVAC segment had another strong quarter with sales up 11% on a constant currency basis versus the prior year. However, both our VTS and CIS businesses had year-over-year sales declines, primarily due to currency impacts and softening end markets. Our first quarter adjusted operating income was $28.4 million, down $7.6 million or 21% from the prior year.

謝謝你，Kathy，各位早安。整體而言，第一季銷售額年減 7%，若以固定匯率計算則年減 3%。我們的建築 HVAC 事業部本季再度表現強勁，以固定匯率計算銷售額較去年同期成長 11%。然而，我們的 VTS 與 CIS 兩項業務的銷售額皆較去年同期下滑，主要原因為匯率影響與終端市場走弱。第一季調整後營業利益為 2,840 萬美元，較去年同期減少 760 萬美元，降幅 21%。

Operating margins in our VTS and CIS segments were negatively impacted by lower sales volumes. While our performance this quarter wasn't too far off our internal expectations, we did see some recent softness that caused us to adjust our expectations for the rest of fiscal 2020. This has been driven by a number of trends and macroeconomic factors.

VTS 與 CIS 事業部的營業利益率受到銷售量下滑的負面影響。雖然本季表現與我們內部預期相差不大，但近期我們確實看到一些疲弱跡象，因此調整了 2020 會計年度其餘期間的預期。這主要是由多項趨勢與總體經濟因素所驅動。

First, the stronger U.S. dollar is having a significant impact on our year-over-year revenue comparisons. Second, in recent weeks, we've experienced a significant slowdown in some of our key vehicular end markets, including the global automotive and off-highway markets. In addition, we're now expecting slower growth in our served data center markets, particularly related to the timing of sales to our large data center customer in the CIS segment. Finally, we are benefiting from lower commodity prices. They continue to be somewhat offset by the negative impact of tariffs on our earnings. As a result, we're taking a number of actions to reduce this negative impact in the fiscal 2020, and I'll highlight those in a few minutes.

第一，美元走強對我們與去年同期的營收比較造成顯著影響。第二，近幾週我們在部分關鍵車用終端市場出現明顯放緩，包括全球汽車與非道路（off-highway）市場。此外，我們目前也預期所服務的資料中心市場成長將放慢，特別是與 CIS 事業部大型資料中心客戶的銷售時點相關。最後，我們正受惠於較低的商品價格。但其效益仍部分被關稅對獲利的負面影響所抵銷。因此，我們正採取多項行動以降低 2020 會計年度的負面影響，我將在幾分鐘後重點說明。

We are focused on improving what we can control, and I'm pleased with the improvements within our operations group, and the procurement team is currently exceeding our cost savings targets.

我們專注於改善可控事項；我對營運團隊內部的改善感到滿意，而採購團隊目前的成本節省成果也超越我們的目標。

Before reviewing the segment results, I would like to provide a brief update on the potential sale of our automotive business. As I previously communicated, we have launched a formal sale process to further evaluate the best strategic alternative for Modine's automotive business. This process is well underway, including a lot of work to prepare for a separation while engaging with all interested parties.

在檢視各事業部業績之前，我想先簡要更新我們車用業務可能出售的進度。如我先前所述，我們已啟動正式出售程序，以進一步評估 Modine 車用業務的最佳策略替代方案。該程序正在順利推進中，包括為分拆作業進行大量準備工作，同時與所有有興趣的各方接洽。

As you can appreciate, I can't provide any more information at the current time given that we're in the middle of a process. We will be able to provide a more in-depth update once the process is completed or we reach a definitive agreement. In the meantime, I can assure you that we will move forward with the best option to maximize long-term shareholder value.

各位可以理解，由於我們正處於程序進行中，目前我無法提供更多資訊。待程序完成或我們達成具約束力的最終協議後，我們將能提供更深入的更新。在此期間，我可以向各位保證，我們將以前進的最佳方案來最大化股東的長期價值。

Turning to Page 5. Sales for the VTS segment were down 7% from the prior year, were down 4% on a constant currency basis. The most significant driver of the lower sales in this segment was in Europe, where sales were down 15% from the prior year. A large component of this decrease was currency, driven by the stronger U.S. dollar versus the euro as compared to the prior year. In addition, sales were down across all end markets, with an 11% drop in automotive sales as global light vehicle production volumes have fallen significantly.

接著看第 5 頁。VTS 事業部銷售額較去年同期下滑 7%，以固定匯率計算則下滑 4%。本事業部銷售下滑最主要的因素來自歐洲，歐洲銷售額較去年同期下滑 15%。其中很大一部分來自匯率因素，主要是美元相對歐元較去年同期更為強勢所致。此外，各終端市場的銷售皆下滑，其中汽車銷售下滑 11%，因全球輕型車產量已大幅下降。

This is the first quarter in a long time that we've experienced a sales decline in Asia. Sales in Asia were down 12%, driven primarily by lower off-highway sales in China and Korea. Auto and commercial vehicle sales in India were down slightly, while sales to these end markets were slightly up in China year-over-year.

這是我們很長一段時間以來首次在亞洲出現銷售下滑。亞洲銷售額下滑 12%，主要由中國與韓國非道路（off-highway）銷售下降所致。印度的汽車與商用車銷售小幅下滑；而在中國，對這些終端市場的銷售則較去年同期小幅成長。

Vehicular sales in the Americas region were up 2% from the prior year, primarily due to higher commercial vehicle sales. After a long period of stable or growing vehicular markets, we're starting to see some significant softening. As I mentioned, automotive markets are slowing globally, and sales of this end market were down 11% versus the prior year. We expect the automotive market to be down 3% in the Americas region, 5% in Europe, and 7% in Asia in fiscal 2020. We have recently revised this market outlook and have updated our forecast to reflect these weakening conditions.

美洲地區的車用銷售較去年同期成長 2%，主要因商用車銷售較高。在車用市場長期維持穩定或成長之後，我們開始看到一些明顯的走弱。如我所提，全球汽車市場正在放緩，該終端市場的銷售較去年同期下滑 11%。我們預期 2020 會計年度汽車市場在美洲地區將下滑 3%、歐洲下滑 5%、亞洲下滑 7%。我們近期已修正此市場展望，並更新預測以反映這些轉弱的情況。

In addition, we're expecting the off-highway market to slow considerably this year. Off-highway sales were down 12% as compared to the prior year. We're expecting off-highway market to be down 6% in the Americas, 2% in Europe and 4% in Asia in fiscal 2020. We are also clearly seeing the results of this market slowdown this quarter in Asia and have also updated our expectations for the balance of the year.

此外，我們預期今年非道路（off-highway）市場將明顯放緩。非道路銷售較去年同期下滑 12%。我們預期 2020 會計年度非道路市場在美洲將下滑 6%、歐洲下滑 2%、亞洲下滑 4%。本季我們在亞洲也清楚看到此市場放緩的結果，並已更新我們對今年其餘期間的預期。

Adjusted operating income for the VTS segment was $19 million for the quarter, which is $7.5 million lower than the prior year. Adjusted operating margin was down 170 basis points to 5.8%. This decrease was primarily due to lower sales volume, currency and higher labor costs. We also had costs related to tariffs this quarter, but this was offset by lower commodity metal costs.

VTS 事業部本季調整後營業利益為 1,900 萬美元，較去年同期減少 750 萬美元。調整後營業利益率下滑 170 個基點至 5.8%。此降幅主要由銷售量下滑、匯率以及較高的人力成本所致。本季亦產生與關稅相關的成本，但部分被較低的金屬原物料成本所抵銷。

We spoke a great deal about the impact that tariffs had on the business this last year. So I'd like to give an update on some of the actions that we have taken to mitigate these costs.

過去一年我們已多次談到關稅對業務的影響。因此，我想就我們為降低這些成本所採取的一些行動提供最新進展。

First, in certain situations, we have been able to partially offset the direct costs of tariffs by negotiating cost-sharing agreements with our key customers. We began to see some of the initial benefits of these agreements in the fourth quarter of last year. Second, we've applied for exclusions. In certain cases, we have seen progress with the government granting these exclusions and are working with our suppliers to recover the cost of the tariffs that have previously been paid. Last, our procurement team is continuing to work on strategic sourcing initiatives. We have been able to resource much of our raw material supply to lower cost overseas suppliers. As previously mentioned, we are focusing on improving what we can control. And this group, in particular, is doing a great job. Although these actions won't allow us to fully recover our costs, they have clearly led to lower tariff-related costs this quarter, and we'll continue to drive improvements in subsequent quarters.

第一，在某些情況下，我們已能透過與主要客戶協商成本分攤協議，部分抵銷關稅的直接成本。我們在去年第四季開始看到這些協議帶來的初步效益。第二，我們已申請豁免。在某些案例中，我們看到政府核准這些豁免的進展，並正與供應商合作，追回先前已支付的關稅成本。最後，我們的採購團隊持續推動策略性採購計畫。我們已能將多數原物料供應來源轉向成本較低的海外供應商。如先前所述，我們專注於改善可控事項。而這個團隊尤其表現出色。雖然這些行動無法讓我們完全收回成本，但它們已明顯降低本季與關稅相關的成本，我們也將在後續季度持續推動改善。

Turning to Page 6. As we anticipated and as Mick discussed last quarter, we had some revenue challenges within our CIS segment in Q1.

接著看第 6 頁。如同我們所預期、也如 Mick 在上季所討論的，我們在第一季的 CIS 事業部面臨一些營收挑戰。

Sales decreased 8% from the prior year or 6% on a constant currency basis. Data center sales were down 29% from the prior year, driven by both lower sales to a large cloud computing customer and by lower sales of coils to other customers that sell into the data center end market.

銷售額較去年同期下降 8%，若以固定匯率計算則下降 6%。資料中心銷售額較去年同期下降 29%，主因包括對某大型雲端運算客戶的銷售降低，以及對其他銷往資料中心終端市場之客戶的線圈銷售減少。

Last year, we saw a growth of cooler sales to the data center end market in excess of market growth. And this quarter, we're going to see the opposite. It is often difficult to forecast these sales more than 3 to 6 months out. And as we have mentioned many times, project-based sales in this market tend to change drastically quarter-to-quarter.

去年，我們對資料中心終端市場的冷卻器銷售成長超過市場成長。而本季，我們將看到相反的情況。這類銷售往往很難提前 3 到 6 個月以上進行預測。且如我們多次提到的，該市場以專案為基礎的銷售通常會在各季度之間出現劇烈變動。

Last year, we had record-breaking sales to this market. And this year, there's been a pullback, driven primarily by a slowdown in data center expansion by our major customer. Overall, we expect our data center revenue to be down this year, even though we expect the market to be generally flat.

去年，我們對該市場的銷售創下歷史新高。而今年出現回落，主要是因為我們主要客戶的資料中心擴建放緩所致。整體而言，即使我們預期市場大致持平，我們仍預期今年的資料中心營收將下滑。

This segment reported adjusted operating income of $9.2 million, down 31% from the prior year. This decrease was primarily due to lower margins, driven by negative sales mix and higher labor costs, particularly in Mexico. The adjusted operating margin was down 170 basis points year-over-year to 5.5%, primarily due to lower gross profit on sales.

本事業部的調整後營業利益為 920 萬美元，較去年同期下降 31%。此降幅主要由於毛利率下降，原因包括不利的銷售組合以及較高的勞動成本，尤其是在墨西哥。調整後營業利益率年減 170 個基點至 5.5%，主要因銷售毛利降低所致。

Please turn to Page 7. Sales for our Building HVAC segment increased 9% or 11% on a constant currency basis, driven primarily by higher sales of school, ventilation products and heating products in North America and higher data center sales in the U.K., partially offset by lower nondata center air conditioning-related product sales in the U.K. Operating income increased 66% from the prior year to $5.3 million, and operating margin increased 360 basis points to 10.7%. This increase was driven by higher sales volume and favorable sales mix.

請翻到第 7 頁。我們建築 HVAC 事業部的銷售額成長 9%，若以固定匯率計算則成長 11%，主要受北美學校、通風產品與加熱產品銷售增加，以及英國資料中心銷售增加所帶動；部分被英國非資料中心之空調相關產品銷售下滑所抵銷。營業利益較去年同期成長 66% 至 530 萬美元，營業利益率提升 360 個基點至 10.7%。此成長主要由較高的銷售量與有利的銷售組合所驅動。

We continue to be encouraged by strong performance and our competitive position in this segment. With that, I'd like to turn it over to Mick for an overview of our consolidated results and an update for our outlook for fiscal 2020.

我們持續對該事業部的強勁表現與競爭地位感到鼓舞。接下來，我想把時間交給 Mick，請他概述我們的合併業績，並更新 2020 會計年度的展望。

Good morning, everyone. Please turn to Slide 9. As Tom previously mentioned, we anticipate a difficult first quarter comparisons based on year-over-year volume and cost variances. First quarter sales decreased $37 million or 7%. As covered in previous slides, this was mostly due to weakness across our vehicular markets, a difficult year-over-year data center comparison and negative foreign currency impact. On a constant currency basis, sales were down 3%. Gross profit of $83 million was lower by 12%, resulting in a gross margin of 15.8%. The downside conversion was generally in line with our expectations based on typical fixed-cost absorption.

各位早安。請看第 9 張投影片。如 Tom 先前提到的，基於年對年出貨量與成本差異，我們預期第一季的比較將相當艱難。第一季銷售額減少 3,700 萬美元，或下降 7%。如前面投影片所述，這主要是因我們車用市場全面走弱、資料中心年對年比較基期偏高，以及外幣的不利影響。若以固定匯率計算，銷售額下降 3%。毛利為 8,300 萬美元，下降 12%，毛利率為 15.8%。下行轉換率大致符合我們對典型固定成本吸收的預期。

In addition, foreign exchange had a negative impact on our gross profit compared to the prior year. Within VTS and CIS, gross margins were down due primarily to lower volumes, combined with the doubling of our Mexican labor rate and negative tariff impacts. Building HVAC had strong gross margin improvement, up 200 basis points on higher sales and volume and favorable pricing.

此外，與去年相比，外匯對我們的毛利造成負面影響。在 VTS 與 CIS 方面，毛利率下滑主要是因出貨量較低，加上墨西哥勞動成本倍增以及關稅的不利影響。建築 HVAC 的毛利率顯著改善，在較高銷售與出貨量以及有利定價的帶動下，上升 200 個基點。

I want to take a moment to review our reported SG&A cost of $63.5 million. Please note, this includes $8.4 million of consulting and advisory fees related to the potential automotive business sale. In order to help offset the volume and tariff challenges, we are reducing other SG&A costs. As an example, excluding the unique costs related to our automotive business sale, SG&A would be down significantly from the prior year.

我想花點時間說明我們申報的 SG&A 費用為 6,350 萬美元。請注意，其中包含 840 萬美元與潛在出售汽車業務相關的顧問與諮詢費用。為協助抵銷出貨量與關稅方面的挑戰，我們正在降低其他 SG&A 成本。例如，若排除與汽車業務出售相關的特殊成本，SG&A 將較去年同期顯著下降。

Last, please note these items have been excluded from our adjusted operating income, and you can see the detail in our appendix. Adjusted operating income was $28.4 million, which is down $7.6 million from the prior year. As Tom reviewed the earnings growth in Building HVAC was offset by the decline in VTS and CIS.

最後，請注意這些項目已自我們的調整後營業利益中排除，您可在附錄中看到明細。調整後營業利益為 2,840 萬美元，較去年同期減少 760 萬美元。如 Tom 所回顧，建築 HVAC 的獲利成長被 VTS 與 CIS 的下滑所抵銷。

In addition to the volume decline in tariffs, operating income was negatively impacted by the change in foreign exchange rates.

除了出貨量下滑與關稅因素外，匯率變動也對營業利益造成負面影響。

As usual, the appendix includes an itemized list of adjustments and a full reconciliation to our U.S. GAAP results. These adjustments totaled $10.3 million. As I previously mentioned, there was $8.4 million relating to the potential sale of our automotive business, another $1.8 million was primarily employee severance costs in Europe and the Americas within the VTS segment. Our adjusted earnings per share was $0.31, which is down $0.10 from the prior year.

如往常一樣，附錄包含逐項列示的調整項目清單，以及與我們美國 GAAP 結果的完整調節。這些調整合計為 1,030 萬美元。如我先前提到，其中 840 萬美元與潛在出售汽車業務相關，另有 180 萬美元主要為 VTS 事業部在歐洲與美洲的員工資遣費用。我們的調整後每股盈餘為 0.31 美元，較去年同期下降 0.10 美元。

Turning to Slide 10. As anticipated, in customary, our first quarter free cash flow was negative. Operating cash flow was minimal but was $4.6 million higher as compared to last year. Capital expenditures were slightly lower than the prior year. Full year capital spending is expected to be slightly higher, largely due to the costs related to the anticipated sale of our auto business. Some additional capital spending will be necessary to prepare for a potential separation.

接著看第 10 張投影片。如預期且一如往常，我們第一季的自由現金流為負值。營運現金流量不多，但較去年增加 460 萬美元。資本支出略低於去年同期。全年資本支出預期將略高，主要是因與預期出售汽車業務相關的成本。為準備潛在的分拆，仍需要一些額外的資本支出。

I want to point out that first quarter cash flow includes $13 million of payments related to consulting, advisory, restructuring and environmental costs. With regards to our outlook for the balance of the fiscal year, we do expect positive full year free cash flow with an improvement over fiscal 2019.

我想指出，第一季現金流包含 1,300 萬美元與顧問、諮詢、重整及環境成本相關的付款。就本會計年度剩餘期間的展望而言，我們預期全年自由現金流為正，且較 2019 會計年度有所改善。

Finally, our net debt increased $20 million during the quarter, and our leverage ratio is 2.2.

最後，本季我們的淨負債增加 2,000 萬美元，槓桿比率為 2.2。

Now let's turn to our fiscal 2020 guidance on Slide 11. Based on the latest trends and customer feedback, we are reducing our guidance to reflect additional market weakness, primarily in the second half of the year. In particular, we are seeing further softening in the global automotive and off-highway markets, along with some slowing in data center sales.

現在讓我們看第 11 張投影片中 2020 會計年度的財測指引。根據最新趨勢與客戶回饋，我們下修指引以反映額外的市場疲弱，主要發生在下半年。特別是，我們看到全球汽車與非公路市場進一步走軟，同時資料中心銷售也有些放緩。

To summarize our updated fiscal '20 guidance, we now project sales to be down 5% to flat, which was previously flat to up 5%. In Building HVAC, we're expecting the sales growth to continue although somewhat slower in the second half.

總結我們更新後的 2020 會計年度指引，我們目前預估銷售額將下降 5% 至持平，先前為持平至成長 5%。在建築 HVAC 方面，我們預期銷售成長將持續，但下半年增速會稍微放緩。

With regards to CIS, we're now expecting sales to be slightly down this year, primarily due to a negative foreign exchange impact, combined with slowing data center sales. We also anticipate a decline in our VTS segment sales versus the prior year. The largest challenge remains in Europe with the weakening of the automotive market and the continued wind down of certain commercial vehicle programs. We have also reduced our Asia market forecast but expect modest sales growth for the year. And finally, we expect sales in the Americas region to decrease due to lower automotive and off-highway markets.

就 CIS 而言，我們目前預期今年銷售額將小幅下滑，主要因外匯的不利影響，加上資料中心銷售放緩。我們也預期 VTS 事業部的銷售額將較去年下降。最大的挑戰仍在歐洲，因汽車市場走弱以及部分商用車專案持續收尾。我們也下修亞洲市場預測，但仍預期全年銷售將小幅成長。最後，我們預期美洲地區的銷售將因汽車與非公路市場走弱而下降。

The updated adjusted operating income is expected to be in the range of $120 million to $130 million compared to our previous guidance of $135 million to $145 million. Based on the expected tax rate of approximately 26%, we anticipate our adjusted earnings per share will be between $1.35 and $1.50.

更新後的調整後營業利益預期介於 1.2 億至 1.3 億美元，相較於先前指引的 1.35 億至 1.45 億美元。以約 26% 的預期稅率計算，我們預期調整後每股盈餘將介於 1.35 至 1.50 美元。

And before turning the call back over to Tom, I want to reiterate my outlook for the overall run rate of quarterly earnings this year. As I reviewed in May, we expected significant challenges in the first quarter, and our results were generally in line with these expectations.

在把電話會議交回給 Tom 之前，我想再次強調我對今年整體季度獲利運行水準的看法。如我在 5 月所回顧的，我們預期第一季將面臨重大挑戰，而我們的結果整體上大致符合這些預期。

We also discussed challenges in Q2 due to difficult VTS and CIS comparisons. In the CIS segment, we continue to expect lower revenue year-over-year in the first half, primarily due to robust data center sales in fiscal 2019. The second half of fiscal '20 should be more favorable with projections for orders ramping up later this year. For VTS, we anticipate a reduced volume impact and more favorable cost comparisons in the second half of the year.

我們也討論了第二季因 VTS 與 CIS 的比較基期艱難所帶來的挑戰。在 CIS 事業部，我們仍預期上半年營收將較去年同期下降，主要是因為 2019 會計年度資料中心銷售表現強勁。2020 會計年度下半年應會較為有利，因為預估訂單將在今年稍晚加速成長。就 VTS 而言，我們預期下半年出貨量影響將減少，且成本比較將更為有利。

Lastly, I want to point out that our current outlook includes the full year results for our automotive business. If a transaction is completed this fiscal year, it will obviously have an impact on our fiscal 2020 financial results. Once we have certainty regarding deal details, timing and outcome, we will address this further.

最後，我想指出，我們目前的展望包含汽車業務的全年結果。若本會計年度完成交易，顯然將對我們 2020 會計年度的財務結果造成影響。一旦我們對交易細節、時程與結果有明確性，我們將進一步說明。

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

接下來，Tom，我把時間交還給你。

Thanks, Mick. And with that, we will take your questions.

謝謝，Mick。接下來我們將回答各位的提問。

(Operator Instructions) Our first question is from David Leiker from Baird.

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

A couple of things. On the data center business, we're hearing mixed things. Some people talk about it being really strong. Other people talk about it being a little bit weaker. Can you talk a little bit about what you're seeing in particular? And is this something that's just a soft spot we're going through? Or is there something more structural there?

有幾點想請教。關於資料中心業務，我們聽到的說法不一。有些人說非常強勁。也有人說稍微偏弱。你能否談談你們特別觀察到的情況？這只是我們正在經歷的一段疲弱期嗎？還是背後有更結構性的因素？

Yes. I think it's -- as we've said all along, David, we kind of use the word lumpy to describe data center sales. If you look at it, when we closed the deal with the acquisition of Nevada, the sales have increased significantly from a lower point initial year to the record high of last year was capacity buildout with the -- with one customer and others that we supply through components growing significantly.

是的。David，我想這——正如我們一直以來所說，我們用「波動」這個詞來形容資料中心銷售。如果你回頭看，當我們完成收購 Nevada 的交易後，銷售額從初期較低的基期顯著成長；去年創下歷史新高，主要是因為某一位客戶的產能擴建，以及我們透過零組件供應的其他客戶也大幅成長。

The drop is really kind of focused on the capacity needs. So there's no -- as we have communication with -- through the customer, we had a team out there just in the last couple, couple of weeks, said that everything appears to be normal. Just as they look at their capacity, their capacity needs, they drop projects or add projects. And right now, they just said there was this thing that they're going to drop their capacity needs a little bit in the near term, but that could change. But we don't see anything from a general market standpoint that's driving, let's say, a macroeconomic change and it just happens to be timing right now based on all the feedback we received.

這次下滑其實主要聚焦在產能需求上。因此沒有——我們透過與客戶的溝通，我們的團隊就在最近兩三週到現場，他們表示一切看起來都很正常。他們會依照自身產能與產能需求，取消專案或新增專案。而目前他們只是表示短期內會把產能需求稍微下調，但這也可能改變。但從整體市場角度來看，我們沒有看到任何因素在推動，例如總體經濟的變化；就我們收到的所有回饋而言，這只是目前時點的問題。

So I mean we have some other companies with exposure into that segment, and they seem -- they don't seem to be experiencing the same thing. So is this a customer mix issue that's more of a concentration as opposed to the whole space?

所以我的意思是，我們也看到其他一些公司同樣曝險於該領域，而他們似乎——他們似乎沒有遇到同樣的情況。所以這是客戶組合的問題，也就是集中度較高，而不是整個產業空間的問題嗎？

No doubt. It's a way that we're concentrated. We have a high mix with a certain customer. And that's driving what the change is near term right now.

毫無疑問。這與我們的集中度有關。我們對某一位客戶的占比很高。而這正是目前短期變化的驅動因素。

There is some a little bit on the other side with the general components that we supply into engineering firms and contractors to supply that. But that's not as significant making...

另一方面，我們也有一些一般性零組件供應給工程公司與承包商來提供相關供應。但那部分的影響沒有那麼顯著……

And then on the guidance on the end markets, what are you -- you directionally gave some comments in terms of those end markets. But the big swing factor, as we've been going through things right now, has been China. So what are your assumptions there as you look at the vehicular markets there and kind of (inaudible)

另外，關於終端市場的財測指引，你們——你們在終端市場方面方向性地給了一些評論。但我們目前一路看下來，最大的波動因素一直是中國。所以你們對那邊的假設是什麼？尤其是你們看待當地車用市場，以及（聽不清楚）

Yes. For the balance of our year, we see China, automotive, Asia automotive. Let's just talk about China specifically right now, about 7% down for the balance of the year. I think that pretty much ties in with your estimate. I think you're at 8% down.

是的。就我們本年度剩餘期間而言，我們看到中國、汽車、亞洲汽車。先就中國具體來說，本年度剩餘期間我們預估約下滑 7%。我想這大致與你的估計一致。我記得你是估下滑 8%。

We're also seeing a pretty significant drop in India, okay, which isn't as big as the China market, obviously, but we have a pretty good concentration there with a large customer that we actually export from India with, and they're seeing a significant drop in India, about 9%, which is really kind of tied to some of the banking changes they're making or financing availability, that type of thing is what we think. So -- but overall, a pretty high single-digit number across Asia on the automotive side.

我們也看到印度出現相當顯著的下滑，好嗎？印度市場當然不如中國大，但我們在那裡對一位大型客戶的集中度相當高；我們實際上也透過該客戶從印度出口，而他們在印度看到顯著下滑，約 9%，我們認為這主要與他們正在進行的一些銀行體系變動或融資可得性等因素有關。所以——但整體而言，亞洲汽車端大約是高個位數的下滑。

And then some of the regular -- regulatory things going on in China that's disrupting some of the end markets. Is that having any ripple effect in terms of your product and launches? And new technologies you bring to market for China 6?

另外，中國正在進行的一些常規——監管方面的事情正在擾動部分終端市場。這是否對你們的產品與上市時程造成任何連鎖效應？以及你們為中國 6 帶入市場的新技術？

Well, not new technologies, but you're talking -- regulatory changes in China you're talking about or in India? I didn't...

嗯，不是新技術，但你指的是——你說的監管變動是在中國，還是在印度？我沒有……

China has gone from -- to essentially Euro 6 emission standards right now. And there are some -- there looks like a little bit of stutter step in terms of how that's getting implemented.

中國目前已從——轉為基本上採用歐盟 6 排放標準。而在實施方式上似乎——看起來有一點點卡頓。

Yes. No. So we're seeing some push out on launches because of that. So with Europe, with China 6 being delayed a little bit, we had some planned launches, specifically on commercial vehicle programs that are being delayed. So yes, we're -- there's an impact there. On the technology, no, just a delay.

是的。沒有錯。因此我們看到一些上市時程被往後推延。由於歐洲以及中國 6 的推行稍有延後，我們原先規劃的一些上市，特別是商用車專案，正在延後。所以是的——這確實有影響。至於技術方面，沒有，只是延遲。

And then the last item here and this -- I guess the strategic review process that you're going through. Sometimes when companies announce a strategic review for a certain part of their business, customers become reluctant of bidding new contracts or awarding new business. Is any of that happening with you in that business right now?

最後一點，關於——我想是你們正在進行的策略檢討流程。有時候公司宣布針對某個事業部進行策略檢討時，客戶會對投標新合約或授予新業務變得較為保守。你們目前在該業務上有發生這種情況嗎？

That's a great question and that was, of course, one of the concerns we had upfront publicly announcing that. We've actually won business, okay, since the announcement. And can't give more specifics but a significant global supplier -- a customer, excuse me, that sourced us with a significant program and even a second opportunity. So right now, I think what I'd like to think is because of our transparency in getting out there and really forming a strong automotive team that's clear to the marketplace, and they've been engaged with our current customers and current pursuits,

這是個很好的問題，當然也是我們一開始公開宣布時所擔心的事項之一。事實上，自公告以來我們已經贏得了業務，好嗎？我無法提供更多細節，但有一家重要的全球供應商——更正，是客戶——把一個重要專案交由我們承接，甚至還有第二個機會。所以目前，我希望可以這麼說：因為我們透明地對外溝通，並真正建立了一支對市場清晰可見的強大汽車團隊，他們也一直與我們現有客戶及目前的爭取案保持互動，

I think there's kind of a confidence that is being built that this transaction will be successful. So knock on wood, right now, we're not seeing any negative impact.

我認為市場對這筆交易將成功完成的信心正在建立。所以敲敲木頭，目前我們沒有看到任何負面影響。

Okay. I was on another call, so I missed the very beginning part of it. But did you give any update on the process, timing or anything along those lines?

好的。我剛才在另一通電話上，所以錯過了一開始的部分。但你們有沒有就流程、時程或類似事項提供任何更新？

No, just generally that we're in process. Can't give any updates. We're moving along as planned. And as soon as we can give something, we will. So -- but nothing new to report.

沒有，只是一般性地說我們正在進行中。無法提供任何更新。我們正依計畫推進。一旦可以對外提供資訊，我們就會提供。所以——目前沒有新的內容可報告。

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

(接線員指示) 目前顯示沒有其他提問。現在我想把會議交回給 Kathy Powers。

Thank you, and thank you for joining us this morning. A replay of the call will be available through our website in about 2 hours. We hope you have a great day. Goodbye.

謝謝，也謝謝各位今天早上加入我們。約 2 小時後，可透過我們的網站收聽本次電話會議的重播。祝各位有美好的一天。再見。