Welcome to the Q1 2013 Modine Manufacturing Earnings Conference Call. My name is Robin and I will be your coordinator for today. (Operator Instructions). I would now like to turn the conference to Ms. Kathy Powers, Vice President, Treasurer and Investment Relations. Please proceed.

Thank you for joining us today for Modine’s First Quarter Fiscal 2013 earnings call. With me today are Modine’s President and CEO, Tom Burke and Mic Lucareli, our Vice President, Finance and Chief Financial Officer. We will be using slides with today’s presentation; those lines are available through both the webcast link as well as a PDF file posted on the investor relation section of our company website modine.com. Also should you need to exit the call prior to its conclusion a replay will be available through our website beginning approximately 2 hours after the call concludes. On slide two, is an outline for today’s call, Tom and Mic will provide comments on our first quarter results and review our fiscal 2013 guidance. At the end of the call there will be a question and answer session. On slide three, is our noticed regarding forward-looking statements and want to remind you that this call may contain forward-looking statements as outlined in today’s earnings release as well as in our company’s filing with the Securities and Exchange Commission. With that it is my pleasure to turn the call over to Tom Burke.

Thank you Kathy and good morning everyone. As expected we continue to see weakening in our served markets during the quarter resulting in a 16% decrease in sales volume as compared to the prior year. Adjusting for the impact of a stronger U.S. dollar and a negative impact on currency translation, normalized sales volumes were down 10.5% year-over-year. The sales drop includes the plant wind down of automotive programs in Europe, North America and Asia and the impact of volume declines in the commercial vehicle markets in Europe and South America and in the construction equipment market in Asia. We reported operating income with $3.9 million and a $0.03 loss per share. Our earnings during the quarter include a 4.5 million in restructuring charges against our European segment which equates to approximately $0.10 per share. As previously announced we have embarked upon a restructuring program in Europe with a clear goal of reaching a target return on average capital employed at 15% by the end of our fiscal 2014. During the quarter we took charges related to headcount reductions in our European regional headquarters. We are in a process of finalizing options for our manufacturing operations and administrative facilities in Europe and we’ll provide updates on decisions as appropriate. Our European team is highly focused on executing the plan and providing the required results effectively and on time. Before reviewing the segments I would like to highlight some important management changes we announced during the quarter. Holger Schwab is doing Modine as our Regional Vice President of Europe, Holger is responsible for leading Modine Europe’s restructuring program and we will manage the multiple high value launches that are important component of our growth strategy. Holger has a strong track record as an executive at a major global automotive supplier. Scott…

Thanks Tom and good morning everyone. Please turn to slide eight and I will walk through the income statements. As Tom mentioned this was a very challenging quarter, we experienced weaker customer demand in our end market, to wind down of automotive programs in Europe, North America and Asia and the impacts of the stronger U.S. dollar on our foreign sales. So first quarter sales decreased 68 million or 16% excluding the foreign currency impact which was 22 million, sales decreased 46 million or 11%. All four of our vehicular segments experienced flat to down revenue and revenue in our commercial product segment was down 12%. We were able to reduce the volume impact somewhat by limiting the downsize gross profit conversion to 27%, despite the manufacturing cost control gross margin decline due to significant drop in volume. Given the current economic environment, we remain focused on SG&A which decreased by 6 million or 13% and please note that the income tax rate was extremely high in the quarter and was driven by our global mix of earnings. I also want to point out that we reported 4.5 million in restructuring charges relating to head-count reductions at our European headquarters, this negatively impacted the EPS by approximately $0.10. Now turning to slide 9, we have a summary of the European restructuring cost for the quarter as you know and as Tom mentioned we are in the process of shifting our European focus away from high volume automotive module program and towards a better balance of heavy duty programs especially commercial vehicle. During the quarter our restructuring actions were primarily related to salaried headcount reductions in our Bonlanden in Germany, headquarters and these cost totaled 4.5 million as previously mentioned and negatively impacted EPS by approximately $0.10. These actions will result…

Thanks Mick. Please turn to page 17, last quarter we outlined our near term challenges which have indeed turned into three significant head winds for us. First lower sales volumes due to economic conditions in our major markets particularly commercial vehicles in Europe and Brazil construction equipment in China and the data center cooling market in UK. Secondly, the plant wind down of automotive programs in Europe, North America and China all of which are been phased out effectively while we remain a top line channel engine in near term and third the continuing impact of the strengthening U.S. dollar on our revenues and earnings. We knew that these conditions would lead to difficult year-over-year comparisons and this was built into our expectation for the year. We believe these conditions will continue in the second quarter and then improve in the second half of our fiscal year. As a result as Mick noted we are reaffirming the full year guidance we have provided in June. In conclusion, I want to confirm that remain on track and committed to our growth strategies. We have made key important changes to strengthen our leadership team and we are beginning to implement key aspects of our European restructuring program. A program we expect to be largely complete within the next 18 or 24 months and I am confident that by that time we would have achieved our objective transforming our global manufacturing footprint. Our new business launch activity is robust and we are currently quoting a high level of new business in all of our segments. As a result we are excited about our net new business wins which currently totals over $250 million of net new business over the next three years and with that we would like to take your questions.

(Operator Instructions). And your first question comes from the line of Ann Duignan of JPMorgan. Please proceed.

This is Mike Shlisky filling in for Ann this morning. Firstly just wanted to ask about the North America and European truck markets, we have been hearing from some OEMs that there may be some cut backs in production if they happened already in the I guess the calendar third quarter, there may have be some layouts at some of those OEMs, just wondering what you guys anticipate happening sequentially in both North America and Europe on the heavy duty truck side.

Well as I mentioned in my comments Mike like in last we anticipated this profit and we have kind of lowered our expectations and leveled that out based on some of the things you just said. We have got kind of a run-rate that’s dropped down for us and starting Q2 and balancing that through North America, so we are ready to react to any adjustments and are anticipating that we are at the right level from our standpoint. In Europe, our smaller market share as you know we are about 10% to 15% market share and outgrowing significantly and what we are seeing there is the impact on these launches that I mentioned, Mick as well. The ramp up rates are slower and in some cases being slightly delayed so we are seeing up the impact of the truck market grow the market share a little bit slower than we anticipated coming into the year but we got that take care as far as our forecast is concerned.

And if I can just perhaps follow-up on that. I noticed you had some delays launching some new products over in Europe. Just wondering how much feasibility you currently have on those launches and whether there could be any further delays or are you pretty set now with how things are going to unfold on all those new programs?

They are rolling forward. So I am mean there is no doubt that they are launching. I just think, I can't speak for the OEM but I am sure there is a case you are looking to balance out inventory and trying to hit the right target volume to ramp up. So right now, clearly these are major (inaudible) are going to produce. I just think that they are adjusting to optimize there to balance out in market demand. Also, we don't see any, what I would call permanent changes from those launches. They are on track. They are just a matter of getting a full strike.

And just quickly ask you about your guidance. Maybe it’s a two part question here. So, it's as if though you guys kept your revenue and your EPS guidance the same, but you did raise your tax rating guidance so if you back that out, that might imply that you have maybe a better pre-tax income, but your previous quarter's guidance. And I was wondering if that's what should be sort of ringing into or if it's just really not a very big change there. And then so, I guess what's your biggest risk to the full year guidance given what we saw so far in the first quarter?

We did have a small increase in our effective tax rate that we don't see that as the biggest driver in the year from a dollar standpoint or from an EPS standpoint though we did bump this from 25 to 30% effective tax rate. Your question about the biggest risk in the year is clearly this is for us is kind of a tail of two halves. It sounds that we knew heading into the year. We knew Q1 and Q2 are going to be weak and primarily due to the foreign currency comparables from a year ago, the wind down of programs and then the ramp of our other programs. The biggest factors we really need to make sure, we deliver on from our side and we need to markets to cooperate. We have some margin improvement in South America region in the second half of the year best as we completed our restructuring in that facility there. We've completed the launch of the new aluminum products with the truck commission standards. So we see some margin improvement in the second half of the year in South America. Tom and me were just talking about Europe. We have some modest increases in volume in Q3 and Q4 in Europe that is as the launch volumes continue to increase even though they've been slower and behind schedule, we do have projections for those and orders from the customer that they will continue to increase volumes. And then Asia, we've got a little bit stronger Q3 and Q4 on the excavator side and we are continuing to launch programs in Asia. And last but not least, our commercial products group is more of a seasonality, has more of a seasonality to it. So while we're looking for a little bit of uptick in the server market in the UK, that really halted all construction in London and the UK during the Olympics, so we've got to push out some orders there. But also, a very profitable piece of our business in our North American heating and cooling, really starts to kick in this fall.

And your next question comes from the line of David Leiker of Baird. Please proceed.

Mick I want to first, on the cash flow, great performance there. In your slide, in your comments you talked about it being more non-operating items but it make take receivables, payables and the inventories that number, you're down $20 million year-over-year. Is that just the revenue, it seems like it's more than just a revenue line is being the weakness in the revenue line. Is there any other color you can get there?

No, even I have talked in the past. Most of that improvement in working capital is volume driven. I would tell you, we've got a significant focus on inventory and actually we think we've got more room to go with regard to improving on our inventory. That decrease upon us all last year with the stronger volume. So, yes, short answer is with volumes David, but we still think we've got more room to go.

And then on the capital spending line, I don't think you've put a number out in terms of what you think that is for the year.

Yes, I think we see CapEx very similar to last year. We've been targeting 60 to 70 million. Obviously with volumes down, we're going to focus on keeping it at the lower end of that as the lower we can.

And then as we look at Asia, understandably you have very tough end markets there, you exited the year generally around this 100 million revenue number that you’ve talked about for getting breakeven. Given the business that you’ve picked up, if those normalized I would suspect that you're about that 100 million. Can you give us any sense of how much above that you might be given those new volumes have been.

With our order book David, that's kind of what you're thinking.

Yes, with the new business you picked up, your run rate with normalized markets is north of a 100 million I would guess.

Yes, and we've talked about this on other calls that we've got three facilities in Asia and at full capacity, we see ourselves at $200 million run rate in that region and you're right. We have enough order book over the next three years to approach that. We'll approach our full capacity. So at least it is easily between 100 and 200 million.

Okay and that on the European restructuring, the 4.5 million, given its headcount reduction, I'm presuming that's all cash.

Yes, that's all cash.

And guess as we talked about the restructuring, you focused mostly on the manufacturing operations. It looks like you're doing some fixed cost reduction there as well from a headquarters perspective. How would you characterize that mix between those two going forward?

Yes, we're reshaping the base in Europe David, so from a standpoint of our new focus on being commercial truck off highway focused, is a different requirement as far as European headquarters. So we'll be downsizing that facility to match it quarterly with our new scope of business on an SG&A basis and then obviously the additional manufacturing restructuring that we talked about quite a bit. So, it’s a complete reshaping of the European business model.

Yes and David, when we ticked off that project in last quarter, we looked at this as similar to the 4 point plan we did for North America. Not only are we targeting the gross margin, the manufacturing that you laid out, but we've also set a target of 5 to 7 million euro savings, there's a restructure.

Then on Brazil, we're hearing from some of the companies involved down there that the end markets kind of stabilize in terms of demand and inventory has been brought to more normalized levels, that there is some sequential uptick in the production rate. Are you seeing that at all?

We're hearing the same things, okay. And we're told to be ready for the second half of the year and so that's why we are pretty confident about our outlook as far as sales gross. So we're hearing those same things David and feel good about it.

One is big question (inaudible) in Europe between the end market demand is whether there is a pre-buy or not with the euro sticks. It sounds like some of these new launches being pushed later in the year, your customers aren't really expecting that there is much of a pre-buy over there. Would that be a fair characterization?

That's fair. We're not hearing that at all. I just think they are being cautious on managing their inventory, ensuring these launches are robust and that's everything I am picking up. So, everything we're on track from all our initial engagements on production validation and stuff. We feel very confident that these are going in the right direction and we don't sense that pre-buy effect over there.

And your next question comes from the line of Adam Brooks of Sidoti & Company. Please proceed. Adam Brooks of Sidoti & Company: Just wanted to head to North America quickly. Can you maybe quantify the impact of raw material costs in the quarter?

Adam that's hard to do, to quantify for you. It’s a fairly small impact. The biggest driver of the margin improvement for this segment in the last three quarters in year-over-year has been the manufacturing realignment. The metals have been more stable and with our past due agreements and our hedging activity, it’s a very small number. If I had to guess, I would say it’s a million or less impact. Adam Brooks of Sidoti & Company: And what utilization rates are you going to get now in North America?

I would guess 70%. We still have leg room to go. Adam Brooks of Sidoti & Company: So I guess the question becoming, can you hit double digit margins as markets continue to recover over the next few years in North America?

Operating margins? Adam Brooks of Sidoti & Company: Yes.

Yes, well that's our target. Adam Brooks of Sidoti & Company: And then quickly looking at South America. Can you maybe talk a little bit about the after-market, you gave a little bit of color. I know it’s a nice chunk of business down there. Can you give us a stance of where you think that goes over the next few quarters?

Well it’s a great solid business for us and so we have a leading position down there. So we anticipate that, they continue to do well. There is a demand for servicing past monstrous vehicles continues. So we leverage that, everything is worse. So as far as direction, I think from a macroeconomic standpoint, macro to market standpoint, the big box pressures that have hit the aftermarket segments in North America are not relevant and South America and conversations with other suppliers in that market. So we think this is going to be a stable and profitable business for us for some time.

And Adam, just add to what Tom was saying, that business ebbs and flows a little bit and what we're keeping our eye on is in the last year, when the reais strengthened, it seemed like that's when more competition comes in from Asia. There is a lot of protection that the Brazilian government has in place but we found that the reais really made a run, that's when there was some more competition. Also believe it or not, there is some economic sensitivity to that market. There is always the replacement for an accident where you don't have a choice on your radiator but there are a lot of people that, it’s a market where you're looking at optional repairs and it's not a true crash and repair situation. People delay that believe it or not, when the economic times are slow.

And you have a follow-up question from Ann Duignan of JPMorgan. Please proceed.

: First on Ag outlook, I noticed that you did bring down as you mentioned in the South America Ag outlook I guess I was curious, given what we saw yesterday from the tractor sales in Brazil and of course the outlook for increased planting of soybeans right around this year, given the job we have here. I was wondering what caused you to take that outlook down a bit and then in North America I was just wondering what is behind your Ag outlook. Do you actually talk with the OEMs, do you get that or is that more just a feel for how the drop might impact things?

From South America you're right, we were looking at a plus kind of 3%. We're a little bit I think like everybody else. We saw the same numbers come out that everybody did this week. Our reaction and the downgrade in our expectation of minus 2% was really based on the severe weakness we saw in our Q1. Obviously we're coming up right on another forecast cycle in August that we do every month. We're going to roll in any new news we have but I think ours was a reaction that how slow things were in the June quarter. Tom on North America?

North America really is BoEs signaling, there's been a couple of signaled risk, one I think was down 5% potentially as a risk, one just cautioned. So I think we're just preparing for that, that's all we picked up on that.

And I just want to talk with you on a second topic and that is your outlook that you've mentioned in India. That's also down, down a bit. Just wonder if you can give a little more color on what's going on over there both with your business and just maybe the overall market. What's changed over the last couple of months. It seems relatively steady. I want to know what your thoughts are.

In India we have a multi-market approach, we have both (inaudible) and commercial truck in our focus and the truck launches we've been on it just been slow to come together. I think we're in the recession, there was delays and launches that a couple OE programs. There's a major European OE that's launched now that we have some excitement above supporting and we'll see where those volumes materialize later in this calendar year. But everything just hit a slow down over the last couple of years from the launching. On the highway side, their mechanization that was growing, as they are growing to a larger piece of equipment and we have business going and I say that in a more traditional excavator market and real order business that again is getting up the ground but just slow to materialize. So it just feels like that in every front in India there is this slowness that is coming together. This economy is challenged right now. We've all read about, so on top of those things, so I think there is a challenged market demand for India as well.

(Operator Instructions). You have another follow-up question from the line of David Leiker of Baird. Please proceed.

As we see these automotive revenues wind down, that those look, that have been in North America and also in Europe. Is there an inflection point at some point where you see the margin impact of that in the numbers, I realized the end markets are volatile and there is a visibility maybe somewhere around that.

Are you thinking about like a mix-up in margins?

Yes.

Yes, I think other than we've absorbed a pretty big hit this quarter in North America on the lying down on the auto end on the military program, I'm just grabbing my notes to make sure I give you the right number, what we had in there that was 10 million and we're talking about a 15 million negative for the year. So kind of that we took in Q1 here. But we've got most of the manufacturing right sized in North America. So I would say, you are not going to see a lot additional margin improvement there just from those issues. And Europe is the big question and we have a more even ramp about 10 to 12 million euros. Every quarter BMW this year and the issue there is while its low margin, those are fairly dedicated facilities and this restructuring in the second leg of our restructuring, we really need to come up with strategy to address those manufacturing facilities. We're putting the truck volume and the heavy duty volumes in different locations for many parts, still we're adding capacity to support heavy duty application and at the same time, as automotive winds down, we'll have to come up with our strategies to take those big cost sell before you'll see the margin improvements there.

And David, those exactly are the options that I referred to in my comments that are being evaluated fully right now that with all the right constituents, we need to do that with, that we anticipate completing that over the next 18 months or so.

I don't think you'll see a short answer this year. You're going to see much margin improvement just from the auto lying down.

Will that potentially get worse before it gets better?

No I don't think materially. Every quarter it's just lying down, it's becoming less of an impact.

And then as we look at your second quarter versus the first quarter, it looks like currency is going to be worse North America, truck is going to be worse, but it sounds like most of the other markets sequentially are in Q1 are a whole lot different than Q1. Is that fair?

Yes, I think the best in the way we are looking and trying to guide for Q2 is going to be very similar to Q1. A lot of moving pieces that you nailed were not out of the currency issue. We're not out of a lot of the market weakness and we still have some lying down. So it's going to be very similar quarter to Q1.

Out of this (inaudible) shareholders, can you think the future earnings potential on at the back end of that? It hit that 11% return on capital. There's a 5 to 7% margin target in there. And somehow I have a recollection that that number was higher in the past. Has there been a tradeoff between the margin and the capital turn in there? Or am I just not recalling that correctly?

No I think, we'll take another look at and make sure we're comparing apples to apples for you. I think what we're trying to do is say step one, we absolutely need to get to a 11 to 12. We just need to get our margin to that 5 to 7. And then for the question earlier, do we think we can go higher beyond that, absolutely. So that was kind of meant to be next step for us in the next couple of years, if it gets to that far I guess and we like to go higher. It's possible we have before was a little bit more of a long-term vision of the company.

There are no further questions. I would now like to turn the call back over to Ms. Kathy Powers for closing remarks.