Modine Manufacturing Company (MOD) 2020 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Modine Manufacturing Company's Fourth 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、先生，早安，歡迎參加 Modine Manufacturing Company 2020 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。現在我想把電話會議交給本次主持人——Kathy Powers 女士，副總裁、財務主管、投資人關係與稅務負責人。

Good morning, and thank you for joining our conference call to discuss Modine's Fourth Quarter and Full Year 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 for 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，感謝各位參加我們的電話會議，一同討論 Modine 2020 會計年度第四季及全年業績。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。我們今天的簡報將使用投影片，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。

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

投影片第 2 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，其定義如同我們的財報新聞稿以及公司向美國證券交易委員會提交之文件中所述。接下來，很高興把電話會議交給 Tom Burke。

Thank you, Kathy, and good morning, everyone. First, I'd like to start by extending my well wishes to everyone, and I hope you have all remained safe and healthy during the crisis. The world is a vastly different place since Modine reported its third quarter earnings in early February. Fiscal 2020 was a very challenging year for Modine, but we ended on a positive note with Q4 results coming in ahead of our expectations. Our main focus during this period of uncertainty was the protection of our employees, customers and shareholders. But I'd also like to highlight the press release that we issued last week regarding the amendments to our credit facilities. This was a key proactive measure we took as a part of our COVID-19 plan.

謝謝你，Kathy，各位早安。首先，我想向各位致上祝福，並希望大家在這次危機期間都能平安健康。自 Modine 於 2 月初公布第三季財報以來，世界已大不相同。2020 會計年度對 Modine 而言是非常具挑戰的一年，但我們以正面的態勢作結，第四季的結果優於我們的預期。在這段不確定期間，我們的主要重點是保護員工、客戶與股東。同時，我也想特別提及我們上週發布的新聞稿，內容是關於我們信貸融資安排的修訂。這是我們 COVID-19 計畫中所採取的一項關鍵且具前瞻性的措施。

Mick will summarize those details during his report. Today on this call, Mick and I will provide an overview of fourth quarter and full year results for fiscal '20; an update on the status of our automotive exit and sale process; a segment update, including challenges and opportunities resulting from the pandemic and current market environment; a description of the actions we are taking to protect our employees and the business in response to the current economic environment and the global crisis; and finally, a brief overview of the state of our markets and expectations for the next few months.

Mick 將在他的報告中摘要說明相關細節。在今天的電話會議中，Mick 與我將提供：2020 會計年度第四季與全年業績概覽；汽車業務退出與出售流程的最新進度；各事業部門更新（包含疫情與目前市場環境所帶來的挑戰與機會）；我們為因應當前經濟環境與全球危機、用以保護員工與業務所採取的行動說明；最後，簡要概述我們市場的現況以及未來幾個月的預期。

Let's start with the actions we've taken so far to protect our people and facilities. As you all know, the COVID-19 prices began early in our fiscal fourth quarter in China, and then moved into Europe and then the Americas. We have implemented the necessary steps to mitigate the risk in our manufacturing locations and administrative offices worldwide. We have remained in compliance with health organization and governmental orders in countries where we operate. This led to a number of our locations being temporarily closed, either due to government mandate or a significant drop in customer demand. All of our locations are now open, but many are operating at reduced capacity. We have also taken many actions to reduce cost and preserve liquidity in light of these economic conditions and in response to an expected further decrease in revenues in fiscal '21.

先從我們迄今為止為保護員工與設施所採取的行動談起。各位都知道，COVID-19 疫情在我們 2020 會計年度第四季初期先於中國爆發，之後蔓延至歐洲，再到美洲。我們已在全球各地的製造據點與行政辦公室採取必要步驟，以降低風險。我們在營運所在國家皆遵循衛生組織與政府的命令。因此，我們有多個據點暫時關閉，原因包括政府命令或客戶需求大幅下滑。目前我們所有據點都已重新開放，但許多據點仍以較低產能運作。鑑於這些經濟情勢，並因應我們預期 2021 會計年度營收將進一步下滑，我們也採取多項行動以降低成本並維持流動性。

We have reduced employee and executive salaries by 10% to 20%, and implemented furloughs and short workweeks where possible, cut production schedules in line with customer demand, resulting in a temporary layoff of many manufacturing employees, reduced planned capital expenditures by approximately 25% and reduced Board of Director cash compensation by 20% for this fiscal year.

我們將員工與高階主管薪資下調 10% 至 20%，並在可行之處實施無薪假與縮短工時；依客戶需求調整生產排程，導致許多製造員工暫時裁員；將原規劃的資本支出削減約 25%；並在本會計年度將董事會現金報酬下調 20%。

Throughout this crisis, our top priority has been the health and safety of our employees, their families and our communities. In addition, we are laser-focused on maintaining adequate liquidity and continuing to serve our customers without disruption.

在整個危機期間，我們的首要任務一直是員工、其家人以及我們社區的健康與安全。此外，我們也高度專注於維持充足的流動性，並持續在不受干擾的情況下服務客戶。

Next, let's cover our fourth quarter and full year fiscal 2020 results. Please turn to Page 4. Our fourth quarter earnings were ahead of our expectations despite early COVID-19 impacts. Fourth quarter sales of $473 million were down 15% from the prior year. For the full year, we reported sales just below $2 billion, down 11% from the prior year. Revenues this year were impacted by market weakness in our VTS segment and lower data center sales in our CIS segment. During the fourth quarter, we also felt the impact of COVID related plant closures in China in the February time frame and in Europe and North America in March. Offsetting this was a strong performance by Building HVAC segment where full year sales increased 4% from the prior year.

接下來，我們說明 2020 會計年度第四季與全年業績。請翻到第 4 頁。儘管 COVID-19 在早期已帶來影響，我們第四季獲利仍優於預期。第四季銷售額為 4.73 億美元，較去年同期下降 15%。全年方面，我們的銷售額略低於 20 億美元，較去年下降 11%。本年度營收受到 VTS 事業部市場疲弱，以及 CIS 事業部資料中心銷售下滑的影響。在第四季期間，我們也感受到與 COVID 相關的工廠停工影響：2 月在中國、3 月在歐洲與北美。抵銷上述影響的是 Building HVAC 事業部的強勁表現，其全年銷售額較去年成長 4%。

We reported $25 million of adjusted operating income in the fourth quarter and $97 million for the full year. We had strong conversion in the fourth quarter due to the cost-saving actions taken earlier in the year in response to the market downturn. Before diving into our quarterly segment results, I would like to provide an update on our automotive exit strategy.

我們第四季調整後營業利益為 2,500 萬美元，全年為 9,700 萬美元。由於我們在年初因應市場下行所採取的節省成本措施，第四季的轉換表現強勁。在深入說明各事業部季度表現之前，我想先更新我們的汽車業務退出策略。

As a reminder, we will begin reporting the automotive business as a separate segment in our first quarter fiscal '21 results. We have spent a considerable amount of time and investment during fiscal '20 separating the auto business from the VTS segment. This was a necessary investment required to allow us to operate automotive separately and ultimately exit this line of business. In January and March, we actively engaged with potential strategic buyers of this business and received multiple indications of interest. However, as we entered the March time frame and the COVID-19 pandemic moved into Europe, we were forced to put the process on hold due to: first, travel restrictions; and then due to global lockdowns. The process currently remains on hold, but we are staying in contact with all interested parties and are confident that we will reinitiate the process as soon as possible. Taking into account the current international travel restrictions.

提醒各位，我們將自 2021 會計年度第一季起，把汽車業務作為獨立事業部門進行揭露。在 2020 會計年度期間，我們投入相當多的時間與資源，將汽車業務自 VTS 事業部中分離。這是一項必要投資，使我們能夠將汽車業務獨立營運，並最終退出該業務線。在 1 月與 3 月，我們積極與該業務的潛在策略買家接洽，並收到多份意向表示。然而，進入 3 月、COVID-19 疫情擴散至歐洲後，我們因以下原因被迫暫停流程：首先是旅行限制；接著是全球封鎖。目前該流程仍暫停中，但我們持續與所有有興趣的各方保持聯繫，並有信心在可行時儘快重新啟動流程。並將把目前的國際旅行限制納入考量。

Our objectives with regard to the automotive business have not changed. We will run the separated business segment to optimize earnings and cash flow, maximize cash value by divesting most valuable assets and exit the remaining business in an orderly fashion to minimize cash outlay and customer disruption. The remainder of our VTS segment has been renamed heavy-duty equipment or HDE, and will include sales to commercial vehicle and off-highway customers which will also be reported as a separate business segment.

我們對汽車業務的目標並未改變。我們將以獨立後的事業部門方式營運，以最佳化獲利與現金流；透過處分最具價值的資產來最大化現金價值；並以有序方式退出剩餘業務，以將現金支出與對客戶的干擾降至最低。我們 VTS 事業部的其餘部分已更名為重型設備（HDE），將包含對商用車與非公路（off-highway）客戶的銷售，並同樣以獨立事業部門進行揭露。

As I have discussed in the past, we believe the heavy-duty markets, especially truck, agricultural and construction equipment have fundamentally different market dynamics. Although this process has taken longer than originally anticipated, we firmly believe this is the right long-term solution for Modine and our shareholders. While we evaluate all alternatives for our auto business, we will focus on reducing cost and limiting capital investments in order to reallocate capital to other markets and growth opportunities.

如我過去所提，我們相信重型市場，特別是卡車、農業與建築設備，具有根本不同的市場動態。雖然此流程耗時比原先預期更久，但我們堅信這是對 Modine 與股東而言正確的長期解決方案。在我們評估汽車業務所有替代方案的同時，我們將專注於降低成本並限制資本投資，以便將資本重新配置至其他市場與成長機會。

Now turning to our fourth quarter segment results. Please turn to Page 5. Building HVAC sales were down 2% in the fourth quarter, primarily driven by lower air conditioning sales in the U.K., partially offset by higher sales of school ventilation heating products in North America. Despite this drop in sales, operating income increased substantially from the prior year, primarily due to improved pricing and lower material costs. The Building HVAC segment has clearly been a bright spot for this year. For the full fiscal year, sales increased 4% and operating income was up $9.5 million or 35% compared to the prior year driven primarily by strong sales of school ventilation and heating products in the North American market. This is a tremendous performance from this segment, and we're working hard to drive continued growth in the future.

接著來看第四季各事業部門的業績。請翻到第 5 頁。Building HVAC 第四季銷售額下降 2%，主要因英國空調銷售下滑所致，部分由北美學校通風與供暖產品銷售增加所抵銷。儘管銷售下滑，營業利益仍較去年大幅增加，主要因定價改善與材料成本下降。Building HVAC 事業部顯然是本年度的一大亮點。就全年而言，銷售額成長 4%，營業利益較去年增加 950 萬美元（或 35%），主要由北美市場學校通風與供暖產品的強勁銷售所帶動。這是該事業部非常出色的表現，我們也正努力推動未來持續成長。

As I mentioned last quarter, we have announced a new single-focused approach to the data center market by combining the resources and capabilities for Building HVAC and CIS teams. This new structure has led to some exciting wins with existing European customers primarily in the colocation arena.

如同我在上一季所提到的，我們已宣布透過整合建築 HVAC 與 CIS 團隊的資源與能力，採取一項針對資料中心市場的全新單一聚焦策略。這項新架構已在既有的歐洲客戶（主要為主機代管 colocation 領域）取得一些令人振奮的勝利。

Another goal of this effort is to assess the North American data center market, we have commissioned a third-party study focused on understanding the needs of data center operators and specifiers. Along with the product trends and buying preferences in order to develop a road map and a business case for expanding into this market. We are utilizing the talents of our U.K. team to build relationships with new and existing customers in this rapidly growing end market. The other aspect of this plan is to industrialize new data center specific products in the U.S. We currently manufacture these products in the U.K. and are making significant progress toward our goal of being able to build units in the U.S. by the end of this calendar year. This is a key component of our growth strategy, and I'm pleased with the progress we've made despite the current environment. Based on the weekly changes and limited customer visibility, we are not providing guidance at this time. However, I can share our current outlook on certain key end markets. Again, I want to reiterate, this can change almost daily, but we believe it's important to share how we currently see the markets. We expect the commercial HVAC market to be flat to down slightly and the data center market to be up slightly. Based on our current order book, I think we have strong momentum in the U.K. data center market and a solid growth strategy for moving into the U.S.

此項工作的另一個目標是評估北美資料中心市場；我們已委託第三方研究，聚焦於了解資料中心營運商與規格制定者的需求。並結合產品趨勢與採購偏好，以制定進入該市場的路線圖與商業案例。我們正運用英國團隊的專長，在這個快速成長的終端市場與新舊客戶建立關係。此計畫的另一面向是在美國推動資料中心專用新產品的工業化量產。我們目前在英國製造這些產品，並正朝著在本曆年年底前能在美國組裝機組的目標取得顯著進展。這是我們成長策略的關鍵組成部分，儘管目前環境充滿挑戰，我仍對我們所取得的進展感到欣慰。基於每週變化以及客戶能見度有限，我們目前不提供財測指引。不過，我可以分享我們對某些關鍵終端市場的目前展望。再次強調，這幾乎可能每天都會改變，但我們認為分享我們目前對市場的看法很重要。我們預期商用 HVAC 市場持平至小幅下滑，而資料中心市場小幅成長。根據我們目前的訂單簿，我認為我們在英國資料中心市場具備強勁動能，並且有一套穩健的成長策略可推進至美國市場。

The North American Heating market has been strong, but we are expecting that to be flat in fiscal 2021. Obviously, weather can have a significant impact beyond the general economic climate.

北美供暖市場一直表現強勁，但我們預期在 2021 會計年度將持平。顯然，天候可能在整體經濟環境之外帶來顯著影響。

Turning to Page 6. Sales in our CIS segment were significantly impacted by the onset of the pandemic in the fourth quarter, decreasing 15% from the prior year. Sales to data center customers was down 25% from the prior year, with the majority of that decline coming from one large customer. This is consistent with the decrease in Q3 and our expectations. This was also in line with the temporary low in data center construction by our major customer in this segment.

請看第 6 頁。CIS 事業部在第四季因疫情爆發而受到顯著影響，銷售額較去年同期下降 15%。對資料中心客戶的銷售較去年同期下降 25%，其中大部分降幅來自一位大型客戶。這與第三季的下滑以及我們的預期一致。這也符合本事業部主要客戶在資料中心建置活動出現暫時低點的情況。

We expect these lower volumes to continue into fiscal '21 with a strong recovery in fiscal '22. Sales to our commercial HVAC and refrigeration end markets were down as well, primarily related to the global crisis. Our CIS plants in China, Italy and Spain were temporarily shut down during the fourth quarter, but have subsequently reopened and are able to operate at normal production level.

我們預期這些較低的出貨量將延續至 2021 會計年度，並在 2022 會計年度強勁復甦。我們對商用 HVAC 與冷凍終端市場的銷售也下滑，主要與全球危機相關。我們位於中國、義大利與西班牙的 CIS 工廠在第四季曾暫時停工，但其後已重新開工，並可在正常產能水準運作。

Plants in the U.S. have remained open, but are operating at low -- below normal capacity. Our CIS plant in Mexico was shut down by the government in late April and is in the process of reopening, but at a significantly reduced volume level. Even though we're actively managing these operational challenges, we are also using the opportunity to move forward in our strategic plans for this segment. This includes continued focus on our coils pricing, our distribution model, SG&A cost reductions and consolidation of our manufacturing footprint.

美國的工廠一直維持開放，但目前以低於正常的產能運作。我們在墨西哥的 CIS 工廠於 4 月下旬因政府命令而停工，現正逐步復工，但產量水準顯著降低。即使我們正積極管理這些營運挑戰，我們也把握機會推進本事業部的策略計畫。這包括持續聚焦於我們的盤管（coils）定價、通路模式、SG&A 成本削減，以及製造據點的整併。

In fact, we're in the process of consolidating manufacturing operations in China. We will be closing a plant in Zhongshan and consolidating production in our large coils and coolers plant in Wuxi.

事實上，我們正進行中國的製造營運整併。我們將關閉中山的一座工廠，並把產能整合至無錫的大型盤管與冷卻器工廠。

We're able to accelerate the timing of this consolidation due to the lower production volumes caused by the pandemic. Although the CIS segment is being impacted by the current economic environment, we have also benefited from new opportunities. For example, our ability to rapidly respond to and deliver emergency replacement coils has allowed us to support healthcare facilities and laboratories that are on the front line fighting the virus.

由於疫情造成的較低產量，我們得以加速這次整併的時程。雖然 CIS 事業部受到目前經濟環境影響，我們也從新機會中受益。例如，我們能快速回應並交付緊急替換盤管，使我們得以支援在第一線對抗病毒的醫療機構與實驗室。

In addition, we have seen significant increase in orders to customers that make sanitizing systems. We will continue to look for new ways to provide the best hospital solutions to our customers, including continuing to play a role in supporting those combating the COVID-19 virus.

此外，我們也看到來自製造消毒系統客戶的訂單顯著增加。我們將持續尋找新方法，為客戶提供最佳的醫院解決方案，包括持續在支援對抗 COVID-19 病毒方面扮演角色。

Again, it is very difficult for us to provide a market outlook. But in reviewing the data we have, we expect the commercial HVAC, refrigeration and industrial coils markets to be down in fiscal '21. We anticipate that our first quarter will be down the most with some slight improvement in the back half of the year.

再次強調，我們很難提供市場展望。但在檢視我們掌握的資料後，我們預期在 2021 會計年度，商用 HVAC、冷凍以及工業盤管市場將下滑。我們預期第一季降幅最大，並在下半年略有改善。

With regard to data centers, as previously mentioned, we expect the market to be up slightly. We expect our revenues to be down compared to the prior year. As I mentioned, our data center sales in the CIS segment are highly concentrated with one customer and a pause in their construction schedule resulted in our sales being down as compared to last year. However, we have successfully managed to grow our share of water with this customer expanding sales with additional product offerings.

至於資料中心，如先前所提，我們預期市場將小幅成長。我們預期營收將較去年同期下滑。如我所提，我們 CIS 事業部的資料中心銷售高度集中於單一客戶，而其建置時程的暫停導致我們的銷售較去年下降。然而，我們已成功提升在該客戶的水側（water）市占率，並透過增加產品供應來擴大銷售。

Please turn to Page 7. As expected, we experienced a significant decline in sales across our vehicular markets during the fourth quarter. Sales for the VTS segment were down 18% from the prior year. Our key vehicular markets slowed significantly during the second half of fiscal '20 and the decline accelerated with the onset of the COVID-19 pandemic in the fourth quarter.

請翻到第 7 頁。如預期， 我們在第四季的車用市場整體銷售出現顯著下滑。VTS 事業部銷售較去年同期下降 18%。我們的主要車用終端市場在 2020 會計年度下半年明顯放緩，並在第四季 COVID-19 疫情爆發後加速下滑。

In Asia, sales decreased 25% from the prior year, primarily due to the impact of the coronavirus in January. During this time period, all of our manufacturing operations were temporally shut down, but reopened as quickly as possible in line with government regulations. Today, all of our Asian plants are open at or near-normal capacity. The China Off-Highway market is a bright spot, led by the strong recovery of the excavator market. The Automotive market is also somewhat recovered, but it's still operating at lower volumes than the prior year.

在亞洲，銷售較去年同期下降 25%，主要因 1 月冠狀病毒的影響。在此期間，我們所有製造營運皆曾暫時停工，但依政府規定盡快復工。目前，我們所有亞洲工廠均已開工，產能達到或接近正常水準。中國非公路（Off-Highway）市場是一個亮點，主要由挖掘機市場的強勁復甦所帶動。汽車市場也有所復甦，但其運作量仍低於去年同期。

Sales in Europe also dropped significantly during the fourth quarter, down 21% from the prior year across all major end markets. As the pandemic moved into Europe, our automotive customers quickly shut down their plants, and we closed our plants as well in response. European automotive sales decreased 9% from the prior year, and commercial vehicle sales were down 38%, including the impact of program line downs. All of our VTS plants in Europe have subsequently reopened, but most are operating at significantly reduced capacity. We will continue to increase production in our European VTS plants in line with customer demand.

歐洲的銷售在第四季也大幅下滑，涵蓋所有主要終端市場，較去年同期下降 21%。隨著疫情蔓延至歐洲，我們的汽車客戶迅速關閉其工廠，我們也因應而關廠。歐洲汽車銷售較去年同期下降 9%，商用車銷售下降 38%，其中包含專案產線下調的影響。我們在歐洲的所有 VTS 工廠其後已重新開工，但多數以顯著降低的產能運作。我們將依客戶需求，持續提高歐洲 VTS 工廠的產量。

There is a similar story in the Americas region, where sales were down 13% from the prior year. Our Automotive plants were also closed in line with customer planned shutdowns. And our main Automotive plant in U.S. was just reopened last week. Off-highway and commercial vehicle production continued through the quarter in Americas, but at reduced volumes. Automotive sales in the Americas region were up 7% from the prior year, while commercial vehicle sales were down 14% and off-highway sales were down 19%. One of the significant issues we faced in the VTS segment is a very limited customer outlook. Our customers typically provide us with a good view of the projected volumes for the next 2 or 3 months that allows us to plan our production and build our forecast.

美洲地區也有類似情況，銷售較去年同期下降 13%。我們的汽車工廠也配合客戶規劃的停工而關閉。而我們在美國的主要汽車工廠上週才剛重新開工。美洲地區的非公路與商用車生產在本季仍持續進行，但產量降低。美洲地區汽車銷售較去年同期成長 7%，商用車銷售下降 14%，非公路銷售下降 19%。我們在 VTS 事業部面臨的重大問題之一，是客戶展望能見度非常有限。我們的客戶通常會提供未來 2 到 3 個月的預估產量良好視野，使我們能規劃生產並建立預測。

Today, we're getting very limited information from our customers as economic conditions remain volatile and overall visibility remains temporarily challenged.

今天，由於經濟狀況仍然動盪，整體能見度暫時仍具挑戰，我們從客戶那裡獲得的資訊非常有限。

Our teams remain in daily contact with our customers, and we continue to manage our manufacturing operations prudently and cautiously through this global crisis. Actions taken to date include reducing our delayed CapEx spending, including program capital where possible. This is somewhat of a challenge as we often need to spend CapEx well in advance of program launches. So delaying purchases now could risk program deadlines in the future. So we are communicating with our customers and putting increased scrutiny on requests for capital and postponing purchases where possible. We expect significant declines in the global automotive and commercial and off highway markets. Similar to CIS, we expect the largest negative impact in our first fiscal quarter. Beyond that, it's extremely difficult to predict whether the recovery will be a V, U are hopefully not an L shaped recovery. Geographically, we expect Europe and North America to be hit the hardest.

我們的團隊仍每天與客戶保持聯繫，並在這場全球危機期間，以審慎且保守的方式持續管理我們的製造營運。迄今採取的行動包括削減我們延後的資本支出（CapEx），並在可能的情況下包含專案資本支出。這在某種程度上是一項挑戰，因為我們往往需要在專案啟動前很久就投入資本支出。因此，現在延後採購可能會在未來對專案期限造成風險。所以我們正與客戶溝通，並對資本需求申請加強審查，且在可能的情況下延後採購。我們預期全球汽車、商用車以及非公路市場將出現顯著下滑。與 CIS 類似，我們預期最大的負面影響將出現在我們的第一個會計季度。除此之外，極難預測復甦會是 V 型、U 型，並希望不會是 L 型復甦。就地理區域而言，我們預期歐洲與北美將受到最嚴重的衝擊。

With regards to Asia, we're beginning to see some bright spots in the off-highway market with higher year-over-year excavator sales in China. While we're navigating never before seen challenges, there are bright spots in the VTS segment that are well-worth noting. In addition to a strong demand for excavators we are seeing in China, we are actively bidding and winning heavy-duty equipment business. We had a recent win in the large GenSet market and also expanded our reach into the E-bus market with significant added content for battery cooling. I am pleased with the strategic work this team has done to reduce costs in light of demand challenges while staying focused on growing the business.

至於亞洲，我們開始在非公路市場看到一些亮點，例如中國挖掘機銷量年增。儘管我們正面對前所未見的挑戰，VTS 部門仍有一些值得注意的亮點。除了在中國看到挖掘機需求強勁之外，我們也正積極投標並贏得重型設備業務。我們近期在大型發電機組（GenSet）市場取得一項勝利，並且也擴大觸角進入電動巴士（E-bus）市場，在電池冷卻方面新增了大量內容。我對這個團隊所做的策略性工作感到滿意：在需求面臨挑戰之際降低成本，同時仍專注於業務成長。

With that, I'd like to turn over to Mick for an overview of our consolidated financial results.

接下來，我想把時間交給 Mick，請他概述我們的合併財務結果。

Good morning, everyone. Please turn to Slide 8. As expected, our fourth quarter results were impacted by multiple headwinds. Coming into the quarter, we anticipated that our end markets would remain soft. And we pressed ahead with savings initiatives launched during the third quarter. It then became apparent that the spread of COVID-19 would create significant disruptions. We responded with incremental cost recovery actions, which allowed us to finish the year above our expectations in both adjusted operating income and adjusted earnings per share. Fourth quarter sales declined $84 million or 15%, largely from volume declines in the automotive, off-highway and commercial vehicle markets. We also experienced lower CIS sales due to our largest data center customer. Gross profit decreased by 18% to $75 million, resulting in a gross margin of 15.8%. The team worked hard to achieve a 20% downside conversion during the quarter, which resulted from cost reductions earlier this year.

各位早安。請翻到第 8 張投影片。如預期所示，我們第四季的結果受到多重逆風影響。進入本季時，我們預期終端市場將持續疲弱。我們也持續推進第三季啟動的節省措施。隨後很明顯地，COVID-19 的擴散將造成重大干擾。我們採取了額外的成本回收行動，使我們在調整後營業利益與調整後每股盈餘兩方面，全年表現均高於預期。第四季銷售額下滑 8,400 萬美元或 15%，主要來自汽車、非公路與商用車市場的出貨量下滑。由於我們最大的資料中心客戶，我們也經歷了較低的 CIS 銷售。毛利下降 18% 至 7,500 萬美元，毛利率為 15.8%。團隊在本季努力達成 20% 的下行轉換率，這得益於今年稍早的成本削減。

In addition to the lower volume, CIS was impacted by a negative sales mix from the decline in data center volumes. CIS and VTS margin declines were partially offset by a significantly higher gross margin in Building HVAC. SG&A for the quarter was $55 million and lower than prior year by 14%. This decrease was primarily due to lower compensation related expenses, including incentive compensation as well as cost savings initiatives across the entire organization. We have continued to aggressively control costs during downturns in our markets and the broader economy.

除了出貨量較低之外，CIS 也受到資料中心出貨量下滑所帶來的不利銷售組合影響。CIS 與 VTS 的毛利率下滑，部分被建築 HVAC 顯著較高的毛利率所抵銷。本季 SG&A 為 5,500 萬美元，較去年同期下降 14%。此下降主要由較低的薪酬相關費用所致，包括獎勵性薪酬，以及全組織範圍的成本節省措施。在我們市場及更廣泛經濟下行期間，我們持續積極控管成本。

Adjusted operating income of $25 million was down $10 million from the prior year, again, this decline is a result of lower volumes in the VTS and CIS segments, partially offset by an improvement in Building HVAC.

調整後營業利益為 2,500 萬美元，較去年同期減少 1,000 萬美元；同樣地，這一下滑是 VTS 與 CIS 部門出貨量較低所致，部分被建築 HVAC 的改善所抵銷。

In addition, lower SG&A helped offset a portion of the negative impact of the volume declines. As usual, our appendix includes an itemized list of adjustments on a full reconciliation to our U.S. GAAP results. These adjustments totaled $19.2 million in the quarter, comprised of 3 main areas: first, we incurred $8.6 million of asset impairment charges relating primarily to manufacturing facilities in Austria and Germany; next, we had $5.5 million of planned restructuring expenses from headcount reductions, equipment transfers and plant consolidation costs. Finally, we incurred $5 million of costs directly associated with the automotive separation, most of which were incurred earlier in the calendar year. This work is now mostly complete and ongoing expenses will be minimal. Any remaining costs would mainly relate to the completion of a sale transaction. Our adjusted income tax expense was $4.3 million or 26% in the quarter and adjusted earnings per share was $0.24.

此外，較低的 SG&A 也幫助抵銷了部分出貨量下滑的負面影響。如同以往，我們的附錄包含調整項目的逐項清單，並完整對帳至我們的美國 GAAP 結果。本季這些調整合計 1,920 萬美元，主要由三個部分構成：第一，我們認列 860 萬美元的資產減損費用，主要與奧地利與德國的製造設施相關；其次，我們認列 550 萬美元的計畫性重整費用，來自人力縮減、設備移轉與工廠整併成本。最後，我們發生 500 萬美元與汽車業務分拆直接相關的成本，其中大部分發生在曆年較早時期。這項工作目前大致已完成，後續費用將很少。任何剩餘成本主要將與完成出售交易相關。本季調整後所得稅費用為 430 萬美元（稅率 26%），調整後每股盈餘為 0.24 美元。

Turning to Slide 9. Cash flow and balance sheet protection were focal points as we adjusted to the pandemic. I'm pleased to report that we ended the year with $71 million of cash and net debt of $412 million, which is consistent with the end of the third quarter.

接著看第 9 張投影片。當我們因應疫情調整之際，現金流與資產負債表防護是我們的重點。我很高興報告，我們年底現金為 7,100 萬美元，淨負債為 4.12 億美元，與第三季末一致。

Fourth quarter free cash flow was slightly negative at $1 million. For the full year, negative cash flow of $13 million was significantly impacted by cash spent on the automotive exit strategy. Throughout the year, we reviewed in great detail the required actions to support our strategy and completely separate the automotive business. Also during the year, we incurred approximately $17 million of cash restructuring costs, primarily related to the headcount reduction, including payments for actions accrued last year. The majority relates to plant and administrative restructuring in Europe, with the balance for plant headcount reductions in Mexico and plant consolidation in China.

第四季自由現金流略為負值，為負 100 萬美元。全年負現金流 1,300 萬美元，主要受到汽車退出策略所支出的現金顯著影響。全年期間，我們非常詳細地檢視支持策略所需的行動，並將汽車業務完全分離。同時，全年我們也發生約 1,700 萬美元的現金重整成本，主要與人力縮減相關，包括支付去年已提列的行動款項。其中大部分與歐洲的工廠與行政重整相關，其餘則用於墨西哥工廠人力縮減以及中國的工廠整併。

Last week, we announced that we proactively amended our credit facilities in order to provide the maximum flexibility we may need to manage our liquidity through the COVID crisis. This was a big success which will benefit Modine and our shareholders as the markets adjust to the economic ramifications of this pandemic. We ended the fiscal year with a leverage ratio of 2.4 which is well within our current covenant limits. We believe that we have sufficient liquidity, but wanted to ensure that we have plenty of leverage cushion to safely manage through the crisis. The amendment significantly raises our leverage ratio limit during the next 2 years, returning to the previous limit of 3.25 at the end of fiscal 2022. We also received some additional flexibility to execute on our automotive exit strategy. Overall, our balance sheet is in good shape. And our liquidity has sufficient demands through this difficult period.

上週，我們宣布主動修訂我們的信貸融資安排，以在 COVID 危機期間為管理流動性提供我們可能需要的最大彈性。這是一項重大成功，當市場調整以因應這場疫情的經濟影響時，將使 Modine 及我們的股東受益。我們以 2.4 的槓桿比率結束本會計年度，遠在目前契約限制範圍內。我們相信我們具備充足的流動性，但仍希望確保有足夠的槓桿緩衝，以安全度過這場危機。該修訂在未來兩年顯著提高我們的槓桿比率上限，並於 2022 會計年度末回到先前 3.25 的上限。我們也獲得一些額外彈性，以執行汽車退出策略。整體而言，我們的資產負債表狀況良好。而我們的流動性足以應付這段艱難期間的需求。

In addition to the cash, we had nearly $118 million of undrawn capacity on our revolving credit facility for a total of $188 million of available liquidity. This does not include additional capacity and credit lines available to our foreign subsidiaries.

除了現金之外，我們在循環信貸融資項下尚有近 1.18 億美元的未動用額度，使可用流動性合計達 1.88 億美元。此數字不包含我們海外子公司可取得的額外額度與信用額度。

Last but not least, I want to point out that we have no major debt maturities in the near future. In total, we have a very manageable $16 million of mandatory repayments related to our long-term debt obligations in fiscal '21.

最後但同樣重要的是，我想指出我們在近期沒有任何重大到期債務。合計而言，我們在 21 會計年度與長期債務義務相關的強制償還金額僅 1,600 萬美元，十分可控。

Now let's turn to Slide 10 for our fiscal '21 outlook. Based on the uncertainties surrounding the global economic environment, we are not issuing guidance for fiscal '21 at this time. We are currently getting rather limited information from our customer base.

現在請看第 10 張投影片，了解我們對 21 會計年度的展望。基於全球經濟環境的不確定性，我們目前不對 21 會計年度提供財測指引。我們目前從客戶群獲得的資訊相當有限。

That said, we are using all information sources to track and project market trends. As Tom mentioned, we had a number of plant closures that extended into the first quarter of fiscal '21. Although all of our plans are currently open, more than half of them are operating at well below normal capacity. Based on the current economics in order trends, we anticipate a significant impact on revenue and earnings in Q1. In fact, we expect that Q1 revenue could be down as much as 40% from the prior year. Forecasting beyond Q1 is extremely difficult, but we currently believe that our markets will recover in the latter half of the fiscal year. With that, we anticipate positive free cash flow despite the lower revenue.

話雖如此，我們正運用所有資訊來源來追蹤並推估市場趨勢。如 Tom 所提到的，我們有多座工廠停工，且延續到 21 財年第一季。雖然我們目前所有工廠都已復工，但超過一半的工廠產能仍遠低於正常水準。根據目前訂單趨勢的經濟狀況，我們預期第一季營收與獲利將受到顯著影響。事實上，我們預期第一季營收可能較去年同期下滑多達 40%。要預測第一季之後的情況極為困難，但我們目前相信市場將在本財年下半年復甦。因此，儘管營收降低，我們仍預期自由現金流為正。

As I wrap up, I want to assure everyone that we are taking all the necessary steps to protect our employees, customers and shareholders. We are focused on maintaining a strong balance sheet, preserving cash, controlling discretionary spending, and reducing labor costs in order to limit the downside conversion on lower revenue and generating free cash flow. We will reevaluate issuing guidance during our first quarter earnings release. Tom, I'll turn it back to you.

在我做結語之前，我想向各位保證，我們正採取一切必要措施來保護員工、客戶與股東。我們專注於維持強健的資產負債表、保留現金、控管非必要支出，並降低人力成本，以在營收下滑時限制不利的利潤轉換並創造自由現金流。我們將在第一季財報發布時重新評估是否提供財測指引。Tom，交還給你。

Thanks, Mick. In conclusion, I would like to reiterate that we are taking all the necessary actions to protect our employees, our customers and our shareholders. We have taken a swift and decisive action to significantly cut costs and preserve liquidity. In addition, the proactive amendments to our credit agreements ensure that we'll be able to continue to access ample liquidity should this period of reduced customer demand be prolonged. We will also tightly manage our capital investments, and we'll work to continue towards our automotive exit strategy. I am confident that we will emerge stronger on the other side of this crisis. And with that, we'll take your questions.

謝謝，Mick。總結來說，我想再次強調，我們正採取一切必要行動來保護員工、客戶與股東。我們已迅速且果斷地採取行動，大幅削減成本並維持流動性。此外，我們主動修訂信貸協議，確保若客戶需求降低的期間延長，我們仍能持續取得充足的流動性。我們也將嚴格管理資本投資，並持續推進汽車業務退出策略。我有信心，我們將在這場危機過後以更強的姿態走出來。接下來我們開始回答各位的提問。

(Operator Instructions) Your first question comes from Matt Summerville of D.A. Davidson.

(接線員指示) 第一個問題來自 D.A. Davidson 的 Matt Summerville。

A couple of questions. First, now with the auto business, sort of the carve-out officially complete at this point. Are you able to give us a feel for what operating profit and EBITDA for that business would have looked like in fiscal '19 and '20? And then, Mick, I was wondering if you're able to give, even if there's a somewhat wide range, what a reasonable free cash flow expectation might be beyond positive for fiscal '21?

我有幾個問題。第一，現在汽車業務的剝離在此時點算是正式完成了。你們能否讓我們了解一下，該業務在 19 與 20 財年若以持續經營來看，其營業利益與 EBITDA 大概會是什麼樣子？另外，Mick，我想請問你是否能提供一個合理的自由現金流預期，即使區間較寬也可以；在 21 財年除了「為正」之外，大概會落在什麼範圍？

Yes. Great. Matt, yes. So okay, I'll try to give you a little bit of color on the automotive -- the VTS split between automotive and then what we'll call the heavy-duty equipment portion, which would be the truck, primarily truck and off-highway. If we look pre-COVID, and last year, we had hit really hard on the off-highway and the truck market. But our heavy-duty equipment business had been running EBITDA margins right around 10% or so. And we see a lot of room there for improvement. So with some additional focus on planned operating metrics and productivity at the plant level, some manufacturing opportunities there. We do see opportunity to grow and improve the heavy-duty equipment side.

可以。很好。Matt，是的。我試著補充一些關於汽車業務的細節——也就是 VTS 在汽車與我們稱之為重型設備部分（主要是卡車與非公路）之間的拆分。如果看 COVID 之前以及去年，我們在非公路與卡車市場受到很大衝擊。但我們的重型設備業務 EBITDA 利潤率大約維持在 10% 左右。而我們認為這部分仍有很大的改善空間。因此，透過在工廠層級更聚焦於既定的營運指標與生產力，以及一些製造端的改善機會，我們確實看到重型設備端有成長與改善的機會。

Auto, same thing. If we look, call it, pre-COVID, the auto business was more of a mid-single-digit EBITDA business. And consumed a lot more capital, our highest capital consuming business. So it had been running more of in a negative cash flow manner as well versus the heavy-duty side, which is less capital intensive. What's important to note, too, is within the auto business, and Thomas talked about this in the past, there's 2/3 or so of that business that is engine cooling, liquid cooling business that's been on a high-growth path that we've seen some quarters in the last few years tied to emissions and fuel economy and EV that has had good EBITDA margin, I would say, 10% plus. The other 1/3 is our legacy air cool business, I think front-end module, condenser, that has been very challenged and has been operating more in a negative EBITDA level. And when we go back to the beginning, when we decided to exit the auto business, the original perimeter was to exit the full piece and bundle both together as we decided to come back out and remarket the business and feedback from buyers. What we're focused on, on the sale process is that more attractive growth, higher-margin engine cooling business. And then we need to look at our strategic options to deemphasize and -- that air cooler side.

汽車業務也是同樣的概念。若以 COVID 之前來看，汽車業務的 EBITDA 大約是中個位數百分比水準。而且它消耗的資本更多，是我們資本占用最高的業務。因此，相較於資本密集度較低的重型設備端，汽車業務也更常呈現負的現金流狀態。另外需要注意的是，在汽車業務內部，Thomas 過去也提過，其中約 2/3 是引擎冷卻、液冷業務，處於高成長軌道；過去幾年某些季度受排放法規、燃油經濟性與電動車（EV）趨勢帶動，EBITDA 利潤率表現不錯，我會說在 10% 以上。另外 1/3 則是我們的傳統風冷業務，我想是前端模組、冷凝器等，面臨很大挑戰，EBITDA 多在負值水準。回到最初我們決定退出汽車業務時，原本的範圍是整體退出，並將兩者打包在一起；但當我們決定重新推出並再行銷該業務時，從買方回饋來看，我們在出售流程中聚焦的是更具吸引力、成長性更高且毛利率更高的引擎冷卻業務。至於風冷那一端，我們則需要評估策略選項，以降低其比重並——處理該風冷業務。

Last, with regards to cash flow next year. Really, really hard to predict. As you can imagine, I would say, Q1, we're expecting, clearly, our June quarter to be a negative cash flow if the second half of the year improves as we're looking at it and we've some customer feedback, I think we'd be -- I mentioned positive, but probably somewhere between $0 million and $20 million. Not a huge cash flow year, but we're focused on making that a positive just to fully protect the balance sheet.

最後，關於明年的現金流。真的非常、非常難以預測。如你所想，我會說第一季，我們預期——很明顯地——我們的 6 月季度將是負的現金流；如果下半年如我們所看、且我們也收到一些客戶回饋而有所改善，我想我們會——我先前提到會是正的，但可能大約落在 0 百萬到 2,000 萬美元之間。不會是現金流很大的一年，但我們專注於讓它轉為正值，以充分保護資產負債表。

Your next question comes from Mike Shlisky of Dougherty & Company.

下一個問題來自 Dougherty & Company 的 Mike Shlisky。

I have a quick housekeeping question first on the restructuring costs. Could you break those down by segment? I didn't skid into the release of the slides?

我先有個關於重整成本的簡單釐清問題。你能否按事業部拆分說明？我沒有在簡報投影片的發布內容裡看到？

Yes, sure. We can go through the -- in the appendix, we've got the restructuring basket for you. The first one on the $5 million of auto separation costs. Those are at the corporate level. The impairment charges of $8.6 million, 99% of that, nearly all of that -- actually, all of that is in the VTS segment.

可以，當然。我們可以帶你看一下——在附錄裡，我們有提供重整費用的彙總給你。第一項是 500 萬美元的汽車分拆成本。那是在公司層級。8.6 百萬美元的減損費用，其中 99%——幾乎全部——其實全部都在 VTS 事業部。

Yes. And then the restructuring charges of $5.5 million are nearly all in the VTS segment as well. In fact, we also do it in the back by segment for you, Mike, if you want to go into any more detail there.

是的。另外 550 萬美元的重整費用也幾乎全部在 VTS 事業部。事實上，我們在後面也有按事業部分列給你，Mike，如果你想再深入看更多細節的話。

Sorry, I looked for it. I didn't see it. I'll have to look at that again. I apologize for that.

抱歉，我有找過。我沒看到。我得再看一次。為此我很抱歉。

Yes. No problem.

是的。沒問題。

I saw the numbers, but not the amounts by segment and the little comment there. I'll dig into it and I'll follow-up off-line, if I have to. I wanted to also ask secondly, I wasn't sure -- I wanted to get some clarity on your comments on the data center business.

我有看到數字，但沒有看到按事業部拆分的金額以及那段簡短說明。我會再深入看一下，必要的話我會在會後再跟進。另外第二個問題，我不太確定——我想釐清你們對資料中心業務的評論。

In the final slide here, it looks like you're saying that it will be an up industry for the quarter and for the full year. But then also some of your comments kind of sound like maybe the Modine business might be a little bit challenged. Do you think you're going to be underperforming the kind of broader market this year? Or did I not hear that comment correctly?

在最後一張投影片上，看起來你們是說本季以及全年都會是產業上行。但你們的一些評論聽起來又像是 Modine 的業務可能會有些壓力。你們認為今年會落後於整體市場的表現嗎？還是我沒有正確聽到你剛才的意思？

Well, no, this is a great question to clarify. Obviously, the biggest customer we have right now is in the CIS segment with the customer that -- the large customer we have contracts with, and they have a down year this year. They've been projecting that for a while. So that drop in sales in CIS of -- what is it, the $22 million, I think, in the quarter for CIS quarter-over-quarter. I think about half of that is due to that one data center customer. So we've had -- that's kind of put a -- overall, data center sales drop a little more magnified.

嗯，不是，這是個很值得釐清的問題。顯然，我們目前最大的客戶是在 CIS 事業部門，來自我們簽有合約的那位大型客戶，而他們今年是景氣較差的一年。他們已經預告這種情況一段時間了。因此，CIS 的銷售下滑——是什麼來著，我想本季 CIS 季對季大約下滑 2,200 萬美元。我認為其中大約一半是因為那一家資料中心客戶。所以我們——這使得整體資料中心銷售下滑看起來被放大了一些。

In the U.K., we're very, very much pleased with the order book that's coming in as strong and growing. So we're overall very, very bullish on the data center market, just kind of having an explanation of this count this fiscal year for the one customer in North America.

在英國，我們對目前進來的訂單簿非常、非常滿意，表現強勁且持續成長。因此，我們整體上對資料中心市場非常、非常樂觀；只是需要解釋一下，本會計年度北美有一位客戶的情況。

So just kind of follow-up there. The outlook for the industry is positive. Do you think that's because of easy cost in the previous year? Or are there things due to the shutdown, work from home, higher e-commerce sales. That's more driving that...

所以就此再追問一下。產業前景是正向的。你認為這是因為前一年的比較基期較低嗎？還是有一些因素，例如停工、在家工作、電商銷售增加，這些更在推動……

No -- yes, I think we're seeing definitely an increase in demand, especially in the colocation piece in the U.K. and Europe, driven by a lot of this work-from-home technology, Microsoft and others have been very aggressive in that we're supplying support through colocation companies to -- for that growth and that order book is really filling up well in the U.K. The pause in North America was one specific customer who's been projecting this build-out of capacity of being on pause, but coming back strong in the next calendar year, or fiscal year '22. So we see all indications being green from a standpoint of data center business. We're focused with our strategy. Now in North America expansion, as I mentioned in my comments, we're really -- our intention is to have a good portion of our content capability in North America by the end of calendar year, leveraging the capability of our CIS segment with the focus of a single based in the market in -- and we put together between Building HVAC and CIS, which is really paying off, leveraging the relationships, the product strategy, the technology to bring that capability in North America to this -- to the large addressable market here. So again, all things are looking very positive from a strategic growth strategy to build off that market dynamic.

不——是的，我認為我們確實看到需求增加，尤其是在英國與歐洲的機房代管（colocation）領域，這是由許多在家工作技術所帶動；微軟及其他公司在這方面非常積極，我們透過代管公司提供支援——以因應這樣的成長，而英國的訂單簿確實填得很滿、表現很好。北美的暫停是某一位特定客戶，他們一直在預告其擴建產能的計畫會暫停，但在下一個曆年或 2022 會計年度會強勁回歸。因此，從資料中心業務的角度來看，我們看到的各項指標都是綠燈。我們正依策略聚焦推進。至於北美擴張，如我在評論中提到的，我們的意圖是在曆年年底前，讓我們相當一部分的內容/產能能力落地北美，並運用 CIS 事業部門的能力，聚焦於在市場中——以單一……為重點；我們把 Building HVAC 與 CIS 結合起來，成效非常好，藉由既有關係、產品策略與技術，把這項能力帶到北美，切入這裡龐大的可服務市場。所以再次強調，從策略性成長、以及順勢市場動能來擴大布局的角度來看，一切都非常正面。

That's great color. And then turning to the debt covenant, the -- or the debt restructuring that you guys did I kind of want to get a sense to your kind of motivations for getting that done. At some point during the last few months you stood down and look at the next 12-month period or next 24-month period and say, yes, we're going to definitely trip our covenants basically just to get this picked up. Did you do it because maybe you thought you're going to be close to tripping? Or was this all about kind of taking away any kind of doubt in a worst-case scenario?

這些說明很有幫助。接著談到債務契約——或你們做的債務重整，我想了解你們完成這件事的動機。在過去幾個月的某個時間點，你們是否停下來看接下來 12 個月或 24 個月，並認為：是的，我們基本上一定會觸發（違反）財務契約，所以要先把這件事處理好。你們這麼做是因為覺得可能會接近觸發嗎？還是這完全是為了在最壞情境下消除任何疑慮？

Yes. I think majority of the decision, Mike, is based on being overly conservative. And as we've just covered, we finished the year at 2.4x than our current -- our previous leverage limit was 3.25. We -- when the pandemic was kicking in, really, really hard, and we saw April that big chunk of our plants shut down. We were doing a lot of sensitivity analysis. And really, the way we approached it was we wanted to model all the potential scenarios. And one of the things we felt strongly about was we didn't want to wait and get into a situation where -- and I think we're seeing it now, talking to the banks, where they're just inundated looking with companies looking for amendments and new liquidity. So majority of it was not out of a necessity and a forecast that so we have to run to the banks. But not knowing how this year would shake out we want to just make sure we got out in front of it before there's a long line with the banks to deal with these issues.

是的。我認為這個決策的大部分原因，Mike，是基於過度保守的考量。如我們剛才提到的，我們年度結束時的槓桿倍數是 2.4 倍，而我們先前的槓桿上限是 3.25 倍。當疫情開始非常、非常嚴重地爆發時，我們在 4 月看到我們很大一部分工廠停工。我們做了大量敏感度分析。我們的做法其實是希望把所有可能情境都建模。我們強烈認為的一點是：我們不想等到陷入某種情況——而我想我們現在也看到了，跟銀行談時，他們已經被大量尋求修約與新增流動性資金的公司淹沒。所以這件事多半不是出於必要性，也不是因為預測顯示我們必須趕去找銀行。而是在不知道今年會如何發展的情況下，我們想確保能提前布局，在銀行那邊出現長隊、需要處理這些問題之前先把事情做好。

Your next question comes from Joe Mondillo of Sidoti & Company.

下一個問題來自 Sidoti & Company 的 Joe Mondillo。

First, just a follow-up on the CIS data center customer. Is the downturn in fiscal '21 that you foresee at this point in time? Is it still sort of the same expectations as they were before? Or has it changed at all? Is it further down, not as down as much?

首先，針對 CIS 的資料中心客戶再追問一下。你們目前所預見的 2021 會計年度下滑，是否仍大致符合他們先前的預期？還是有任何改變？是更差，還是沒有那麼差？

No, it's exactly what we said before. So no change. It's going to be what we projected last quarter -- last couple of quarters because it's been well-released by the customer to us that this is going to be a year that was going to be down, especially in North America as far as build-out in -- so no changes there. And then the expectation is for their build-out schedules to increase. And that's been a consistent message from them as well. So -- and what we're really building on that is bringing that U.K.-based technology to the North America market to help build that out and have that capability here to supply global customers that have opportunities in North America. So we're really -- that's a big press for growth in this market. Again, we see a very strong opportunity for growth that we have the right to go and participate in.

沒有，完全就是我們之前說的那樣。所以沒有變化。會如同我們上季——過去幾季所預測的，因為客戶已經很明確地告知我們，今年會是下滑的一年，尤其是在北美，就擴建（build-out）而言——所以這部分沒有變動。接著，預期他們的擴建時程會增加。這也是他們一貫傳達的訊息。因此——而我們真正要在此基礎上推進的是，把以英國為基礎的技術帶到北美市場，協助推動擴建，並在這裡建立供應能力，以服務在北美有機會的全球客戶。所以我們真的——這是我們在這個市場推動成長的一大重點。再次強調，我們看到非常強勁的成長機會，而且我們有資格去參與其中。

Okay. And how much does refrigeration makeup of CIS?

好的。那冷凍（refrigeration）在 CIS 裡占比多少？

That would -- if I look at -- inside of -- refrigeration is about 1/4 of it. Yes.

那會——如果我看——在其中，冷凍大約占四分之一。是的。

Okay. At the BHVAC segment, your sort of outlook, a little better than I think some of the bigger peers have talked about. Is that a case in point of maybe some of these bigger peers reporting a month ago and just not having as much visibility as you guys have at this point in time? Or is it maybe something Modine-specific that you're just seeing maybe a little better than market -- expect market expectations?

好的。在 BHVAC 事業部門，你們的展望似乎比一些較大的同業所談到的還要好一些。這是否是因為那些較大的同業是一個月前就已經公布，因此目前不像你們現在這樣有那麼高的能見度？或者是因為某些 Modine 特有的因素，使你們看到的情況比市場——比市場預期稍微好一些？

Yes. I mean, I think we have some uniquenesses in our portfolio, a very strong heating business that is a lot replacement, so that is pretty stable. So we project that to be flat versus maybe some of the down pressures that have been seen on some of the residential providers of systems. And again, our ventilation systems are growing because of kind of coming off of a small share and projecting to larger win opportunities. So I think our dynamics where we're set up in the portfolio versus the market are well positioned and with the data center growth on top of that, we think that, that really adds to a stronger position overall.

是的。我的意思是，我認為我們的產品組合有一些獨特性：我們有非常強的供暖（heating）業務，其中很大一部分是汰換需求，因此相當穩定。所以我們預期它會持平，而不是像一些住宅系統供應商所面臨的下行壓力。另外，我們的通風系統正在成長，因為我們是從較小的市占起步，並預期能取得更大的得標機會。因此，我認為相較於市場，我們在產品組合中的布局動態是有利的；再加上資料中心成長，我們認為這確實讓我們整體處於更強的位置。

And sometimes -- and some of the market data, we have to filter through, and we'll get questions on that can be heavily impacted on the residential consumer side. So obviously, HVAC is a huge industry. We just -- when we break it down, we have a real large majority of our business on the commercial side. So that can be a little bit different. And then even like within Refrigeration, we've got some large customers on transport, refrigeration, RV. And we've seen the RV market kind of go all the way from large downturns in this crisis to now. So maybe hope of people will travel more and want to do more of that via RV. So probably within the numbers, is a little bit more Modine-specific.

而且有時候——有些市場數據我們必須過濾整理，我們也會被問到那些可能在住宅消費者端受到很大影響的問題。所以很明顯，HVAC 是一個非常龐大的產業。只是——當我們拆解來看時，我們的業務有非常大一部分是在商用端。所以那會有一點不同。然後即使在冷凍（Refrigeration）領域，我們也有一些大型客戶在運輸冷凍、冷藏、RV（休旅車）方面。而我們看到 RV 市場在這次危機中從大幅下滑一路走到現在。所以也許人們會更期待多旅行，並且想透過 RV 來做更多這類活動。因此在數字裡面，可能會更偏向 Modine 自身的特性。

Okay. And the margin at that segment expanded pretty significantly year-over-year. Was that a case in point of the year-over-year comp just being pretty easy? Or what was the bigger -- what was the big driver there?

好的。而且該事業部的毛利率年對年擴張得相當顯著。這是否只是因為年對年的比較基期很容易？還是更大的——主要驅動因素是什麼？

Well, I think we said: number one, we were pass-through pricing at a pretty strong rate, which is no reason why we really enjoy that market; and then secondly, we had some great material pricing that was advantaging us. And I think that just the mix of the way that the business came through. So we had a large ventilation school of business. This will past year record for us, and that contributed well along with a good heating season. And again, the mix of business in the U.K., really building up with the data center business and less comfort cooling, which, again, is a better mix for us. So I think just the good dynamics overall in the Building HVAC segment.

嗯，我想我們說過：第一，我們以相當強的幅度進行轉嫁式定價（pass-through pricing），這也是我們很喜歡那個市場的原因之一；第二，我們在材料價格上取得了很好的優勢。另外我認為也與業務進來的組合方式有關。所以我們有一個很大的學校通風（ventilation school）業務。過去這一年對我們來說是創紀錄的一年，這在良好的供暖季節之下也帶來了很好的貢獻。再者，英國的業務組合也在改善，資料中心業務比重提高、舒適性冷卻（comfort cooling）比重降低，而這對我們來說同樣是更好的組合。所以我認為整體而言，Building HVAC 事業部的動能都很不錯。

All right. And then on the cost reductions, I assume a majority of that is at the VTS segment. Is there any way you can help us think about decremental margins going forward? And how the volume sort of affects your margins?

了解。那關於成本削減，我假設其中大部分是在 VTS 事業部。你們能否協助我們思考未來的遞減毛利率（decremental margins）？以及出貨量如何影響你們的利潤率？

Yes. This is Mick. I think -- so clearly, two of the most challenged in the upcoming year will be the VTS side, auto and HDE. And also, as Tom mentioned, CIS a little bit on the market side, but also then on top of it the one customer. Both of those in a -- we look at it at a gross margin level and then SG&A separate, most of those would be downside decremental conversion rates at 25% to 30%, with all of the plant cost reduction work we're doing, this fiscal year, we're trying to target the decremental gross margins in the 20%, 25% range. So that will help a little bit. And then SG&A wise, right now, we're running and trying to target about a 10% or so SG&A reduction.

是的。我是 Mick。我想——很明顯，在接下來的一年裡，最具挑戰的兩塊會是 VTS 端，也就是汽車與 HDE。另外，如 Tom 提到的，CIS 在市場端也會有一些影響，再加上那個單一客戶的因素。這兩塊——我們會在毛利層級來看，並把 SG&A 分開看——大多會呈現下行的遞減轉換率（decremental conversion rates）約 25% 到 30%；而透過我們本會計年度正在進行的各項工廠成本削減工作，我們希望把遞減毛利率目標拉到 20% 到 25% 的區間。所以這會有一些幫助。至於 SG&A，目前我們的運作目標是約 10% 左右的 SG&A 降幅。

And I would add on that, Mick, our procurement efficiency is also really picking up well off, it'll also offset and help that decremental effect. So really pleased with that.

我再補充一下，Mick，我們的採購效率也確實提升得很不錯，這也會抵銷並幫助降低那種遞減效應。所以我們對此非常滿意。

Okay. I guess just lastly, the interest rate on the new amended agreement?

好的。我想最後一個問題，新修訂協議的利率是多少？

Yes. So versus last year and the prior year, we had been between 4% and 4.5% weighted average interest rate and this year, will probably be about 3.94%.

是的。相較於去年與前年，我們的加權平均利率大約在 4% 到 4.5% 之間；而今年大概會是 3.94% 左右。

So even with the amendments, it's going to be lower, actually?

所以即使做了修訂，利率其實還會更低？

Correct. 2 things -- well, 2 or 3 things. One is, if you recall, last quarter, we refinanced our long-term loans. So that's part of the year-over-year impact. And then secondly, one of the best part about the occurrent amendment as we really don't see higher interest rates unless we move into the higher leverage ratios. There was a little bit of movement on some other things between spreads and LIBOR, but that was immaterial. We really won't pay more unless our leverage ratios increase. Plus then we have the long-term notes.

沒錯。兩件事——嗯，兩到三件事。第一，如果你還記得，上個季度我們把長期貸款做了再融資。所以這是年對年影響的一部分。第二，這次修訂的一個最好之處在於，除非我們進入更高的槓桿比率區間，否則我們不會看到更高的利率。在利差與 LIBOR 等一些項目上有一點變動，但影響不大。除非我們的槓桿比率上升，否則我們其實不會付更多。另外我們還有長期票據。

So right, I want to say, 3.9% to 4% is a good blended rate.

所以對，3.9% 到 4% 是一個不錯的綜合利率水準。

Our next question comes from David Leiker of Baird.

下一個問題來自 Baird 的 David Leiker。

A couple of things. On the automotive side of the business from some of the suppliers, we heard that some of the assembly plants were still taking shipments of products the last 2 weeks of March, despite there being no production, just kind of stockpiling inventory for restart. Did you see any of that on the automotive side of your business?

有幾點。在汽車業務方面，從一些供應商那邊我們聽到，儘管沒有生產，部分組裝廠在 3 月最後兩週仍在收貨，算是在為復工囤積庫存。你們在汽車業務這邊有看到類似情況嗎？

I don't know. To answer your question. I know that we stayed real laser-focused. We can get back to you on that one, David, I'm not sure -- I can't right off the top of my head.

我不確定。要回答你的問題。我知道我們一直非常聚焦。我們可以再回覆你這題，David，我不太確定——我一時想不起來。

Okay. And then there's pretty good news flow on where the auto industry is in terms of coming up and the choppiness on -- in that. The truck side is a little bit more opaque. Is there anything you can share there in terms of what -- when the volumes might start to ramp back up there?

好的。另外，關於汽車產業復甦進度以及其中的波動性，近期有不少正面消息。卡車端就比較不透明。你們能否分享一下那邊的情況，例如——出貨量可能何時開始回升？

Obviously, there's inventory in the channel and the order rates aren't all that good. But any insights on that across the 3...

很明顯通路裡有庫存，而且接單率也不怎麼好。但對於這三個領域有沒有任何洞見……

No, it's really frustrating. Typically, between staying close to customers. And clearly, for instance, last and third quarter, we were out with most of our customers at meetings, and they were giving us this projection of what the down cycle is going to be and modeling it. And obviously, there's plenty of pictures of saying 20% down is kind of the common theme. And right now, they've just -- a communication on what they see has just bottled up. So we're really relying on third-party right now to kind of get the best predictions, but both on commercial vehicle and off-highway, we're not giving much -- even though we're in constant contact trying to pull out what they see as far as ramping back up. They're holding that pretty tight right now. So that's why we're kind of pulling the fourth quarter -- or first quarter projections as pretty -- being pretty challenging and kind of assuming worst case, and then we'll see what happens as that brightens up through the rest of this quarter, hopefully we'll start getting better projections, but not much of a picture coming out of the customers at all.

沒有，真的很令人沮喪。通常我們會緊貼客戶。而且很明顯，例如在上一季和第三季，我們和大多數客戶開會，他們會給我們對下行週期的預測並建立模型。而且顯然，有很多跡象顯示「下滑 20%」算是普遍共識。但現在，他們對於所見情況的溝通幾乎都卡住了。所以我們目前非常依賴第三方來取得最佳預測；不論是商用車或非公路（off-highway）領域，我們都拿不到太多資訊——即使我們持續保持聯繫、試圖挖掘他們對回升節奏的看法。他們現在把這些資訊抓得很緊。因此我們才會把第四季——或第一季——的預測視為相當具挑戰，並偏向以最壞情境來假設；接著看看本季後續若情況轉亮，希望能開始拿到更好的預測，但目前從客戶端幾乎看不到任何清晰圖像。

Okay. And then on the data center side, this has been big topic in the last several quarters. Now we have some of the companies we follow or selling products and components into that data center channel. And they're all talking about very strong growth rates. So trying to understand why this -- and we understand that your business is concentrated with one player, but it would seemed like that customer is losing share in the broader data center space? Is there anything you can share? Any insights you can share on that?

好的。再來談資料中心端，這在過去幾季一直是個大議題。現在我們追蹤的一些公司正在把產品與零組件賣進資料中心通路。他們都在談非常強勁的成長率。所以想了解為什麼你們這邊——我們理解你們的業務集中在單一客戶，但看起來那位客戶在更廣泛的資料中心市場裡似乎正在流失市占？你們能分享些什麼嗎？有任何洞見可以分享嗎？

Yes. Well, again, this has been a well-forecasted production shift by the large customer we're talking about for some time. It has not varied. We're in constant contact with them, great relationship, all the way up and down as far as delivery and all the commercial elements and everything else. So they're being very open with us in what they're doing. I don't know if -- what we're seeing -- and again, I'm not really including this customer in this regard. But what we're seeing is the colocation space that's really building out, especially in Europe. We're seeing a lot of what I would call the hyper-scale people, kind of building up capacity in these colocation companies that are building out and the real estate companies that build-out capacity and lease ad capacity, and we see some hyper-scale people buying that straight up flat-out capacity of whole building, for instance, and that's really dynamic happening in Europe. So I don't know that maybe that customer is participating that way in those scale right now. We're not losing share by using colocation type thing and making the capital investments themselves. But what we do know is their projections to kick in capacity starting in the next calendar year as projected, and we feel very positive and confident about that based on our communications. So -- and the other thing that's really important is that the colocation relationships that we built both with operators and specifiers is we want to leverage that because they are global and bring that to North America.

是的。嗯，再次強調，這是我們所談到的那家大型客戶在一段時間以來就已充分預測到的生產轉移。這並沒有改變。我們與他們保持持續聯繫，關係非常好，從交付到所有商務要素以及其他一切，上上下下都保持緊密合作。因此，他們對我們非常坦誠，讓我們清楚他們在做什麼。我不知道——我們所看到的——而且再次說明，我並不是在這方面把這位客戶納入其中。但我們看到的是機房代管（colocation）空間正在大幅擴建，尤其是在歐洲。我們看到許多我稱之為超大規模（hyper-scale）的業者，正在這些擴建中的代管公司以及擴建容量並出租容量的房地產公司中建立產能；我們也看到一些超大規模業者直接購買那種「現成」的容量，例如整棟大樓的容量，而這在歐洲正非常動態地發生。所以我不確定那位客戶目前是否以那種規模參與其中。我們並沒有因為採用代管類型的方式、而不是由他們自行進行資本投資而流失市占。但我們確實知道，他們的預測是如先前所規劃，從下一個曆年開始啟動產能，我們基於與他們的溝通，對此感到非常正面且有信心。所以——另外一個非常重要的點是，我們與代管業者與規格制定者建立的合作關係，我們希望加以槓桿運用，因為他們是全球性的，並把這些關係帶到北美。

So let's focus on a single focus to the marketplace and combining the resources and talents of both the Building HVAC and CIS and leveraging our U.K. relationships and bringing that to North America, and we will have what we call the computer room handling unit. Be able to leveraging the capability of the CIS team in our Grenada, Mississippi plant, and we're going through prototype bills right now and have that available for the market by the end of the year, which should really give us a leg into this addressable market for us, which is about $1 billion in North America and about $1 billion in Europe. So again, we're winning our share with multiple customers in Europe right now, we want to bring that to North America to diversify the opportunity. And I'll say, even with the large customer, we are building share of wallet with them, we are providing new products with them. That don't necessarily build out with their plans, and that's what we call a dry cooler, which is when there's water restrictions in certain areas, they want the dry coolers versus -- or idiomatic solution that can be more water efficient. So we picked up quite a bit of business with them on that one. So the relationship is good. They're growing differently I think right now before they kick back in a traditional route, which we're ready for that, and plus we're bringing strategy to continue advantaging the whole marketplace, both in the North America and Europe that should really help us in the future to grow this business.

因此，讓我們聚焦於以單一面向對市場發力，整合 Building HVAC 與 CIS 兩邊的資源與人才，並槓桿運用我們在英國的關係，把它帶到北美；我們將推出我們所稱的電腦機房處理機組（computer room handling unit）。我們將能夠槓桿運用 CIS 團隊在密西西比州格林納達（Grenada）工廠的能力；我們目前正在進行原型的物料清單（BOM），並將在年底前提供給市場，這應能讓我們切入這個可服務市場（addressable market），其規模在北美約 10 億美元、在歐洲也約 10 億美元。所以再次強調，我們目前在歐洲正與多家客戶贏得我們的市占，我們希望把這帶到北美，以分散機會。我也要說，即便是那家大型客戶，我們也在提升與其合作的錢包份額（share of wallet），我們也在與他們提供新產品。這些產品不一定完全配合他們的擴建計畫；其中之一是我們所稱的乾式冷卻器（dry cooler），也就是在某些地區有用水限制時，他們會希望使用乾式冷卻器，或是——或採用更節水的絕熱（adiabatic）解決方案。因此，我們在這一項上從他們那裡拿到了相當多的業務。所以關係很好。我認為他們目前的成長方式有所不同，之後才會回到傳統路徑，而我們已準備就緒；此外，我們也在推動策略，持續強化整體市場的競爭優勢，涵蓋北美與歐洲，這將在未來真正幫助我們成長這項業務。

Okay. And then lastly, 2 somewhat related questions. One is on the cost side, a lot of companies are taking actions on the cost side to mitigate the cash outflow. And then on the other side of it, we're seeing working capital disappear as the volumes come down. What do those 2 dynamics look like as volume starts to ramp up? How much of that cost reduction is temporary versus permanent that we'll see benefits in the future? And how much of that working capital comes back 2 quarters, 3 quarters, 4 quarters from now as volumes ramp back up?

好的。最後，兩個某種程度相關的問題。第一個是成本端，許多公司都在成本端採取行動以減緩現金流出。另一方面，隨著量下滑，我們看到營運資金在消失。當量開始回升時，這兩個動態會是什麼樣子？我們未來會看到的成本降低，有多少是暫時性的、又有多少是永久性的、能在未來帶來效益？而當量回升時，有多少營運資金會在 2 季、3 季、4 季之後回流？

Yes. So David, if I understand your question, right, we're -- we run pretty low working capital as the company sub-10% or so. During this period and first fiscal quarter, it will be a source of funds, right? It will be a decline. We think of it as it's going to -- it will come back. There aren't areas really that I see as permanent working capital reductions. I would say last year with all of the automotive stuff going on, separation and moves. We ended -- we headed into the crisis a little heavy on inventory. And it's been hard to work off inventory while customers were shut down. So I see some maybe permanent opportunity as things improve to actually lean out inventory a little bit, which should be positive. And then the biggest source of cash savings for us besides the fluctuation in working capital would be the teams worked really hard to flex direct labor in every country around the world has got different programs and incentives and reimbursements. And then Tom covered our -- from an SG&A fixed cost rate. Those -- obviously, those are temporary salary reductions, furloughs are temporary in nature.

是的。所以 David，如果我理解你的問題沒錯，我們——我們公司的營運資金一向維持得很低，大約低於 10% 左右。在這段期間以及第一個會計季度，它會成為資金來源，對吧？它會下降。我們的看法是——它會回來。我看不出有哪些領域會形成永久性的營運資金降低。我會說，去年汽車業務有很多事情在進行，分拆與搬遷。我們在進入危機時，庫存稍微偏高。而在客戶停工期間，要消化庫存一直很困難。所以我看到一些可能的永久性機會：隨著情況改善，實際上可以把庫存再精實一些，這應該是正面的。另外，除了營運資金的波動之外，對我們而言最大的現金節省來源，是各團隊非常努力地在各國彈性調整直接人力；全球每個國家都有不同的方案、激勵與補助。然後 Tom 也談到了我們——從 SG&A 的固定成本率來看。那些——很明顯，這些都是暫時性的薪資調降，停薪留職（furlough）本質上也是暫時性的。

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

我目前顯示沒有其他問題。我現在要把會議交回給 Kathy Powers。

Thank you. Before wrapping up, I'd like to point out that an add-back adjustment by segment is included in the appendix to the slide deck.

謝謝。在結束之前，我想指出，按部門（segment）劃分的加回（add-back）調整已包含在投影片簡報的附錄中。

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

感謝各位今天早上加入我們。本次電話會議的重播將在約 2 小時後於我們的網站提供。祝各位有美好的一天。

And this concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以掛線。