Good day, ladies and gentlemen and welcome to the F3Q 2013 Modine Manufacturing Company Earnings Conference Call. My name is Shaquana and I will be your Conference Coordinator for today. (Operator instructions.) I would now like to turn the presentation over to your host for today’s call, Ms. Kathy Powers, Vice President, Treasurer and Investor Relations. Please proceed, ma’am.

Thank you, and thank you for joining us today for Modine’s F3Q 2013 Earnings Call. With me today are 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. Those links are available through both the webcast link as well as a PDF file posted on the Investor Relations section of our company website at www.modine.com. Also, should you need to exit the call prior to its conclusion a replay will be available through our website beginning approximately two hours after the call concludes. On Slide 2 is an outline for today’s call. Tom and Mick will provide comments on our F3Q results and review our F2013 guidance. At the end of the call there will be a question-and-answer session. On Slide 3 is our notice regarding forward-looking statements. I want to remind you that this call may contain forward-looking statements as outlined in today’s 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.

Thank you, Kathy, and good morning everyone. As you would expect, Modine like many others was not immune to the continued weakness in our end markets. We continued to see year-over-year sales declines in the quarter in all of our segments except our commercial products group which reported a 5% increase. Conditions in our vehicular segment remain weak but we are optimistic about industry projections that our primary markets will begin to strengthen later in calendar 2013. This year, OE manufacturers have been cautious about demand, resulting in extended shutdowns and lower order volumes. Our revenue was down 12.6% compared to the prior year, largely driven by weak end markets, delayed program launches, and unfavorable currency exchange rates. Please note that our financial results for the quarter include $9.7 million of impairment and restructuring charges primarily related to the write down of assets in Europe as a part of our European restructuring program. Excluding these charges we reported earnings per share of $0.02, down $0.22 from a strong F3Q last year. Mick will provide some more details on our financial results in a few minutes, but first I would like to comment briefly on our segment results. Turning to page 5, revenue was down in the North American segment primarily driven by lower sales to the off-highway customers, while sales to commercial truck customers were relatively flat year-over-year. Looking forward we expect mixed market conditions in North America for calendar 2013 with heavy truck production down while medium truck and off-highway production will be up versus calendar 2012. Our Europe segment’s year-over-year sales remain depressed due to the wind down of the automotive module business and overall soft market conditions. The truck market remains weak and launch volumes related to the Euro-6 compliant commercial vehicles continues to be slow. We…

Good morning, everybody. Please turn to Slide 8 and I’ll walk through the income statement. As Tom already mentioned, during the quarter ongoing weakness in our end markets combined with the BMW wind down and delayed truck launches led to lower year-over-year revenue. Also foreign exchange continues to challenge our year-over-year comparisons. Excluding the foreign currency impact sales decreased $38 million or 10%. All of our vehicular segments experienced down revenue. Automotive sales were down 17% largely due to the BMW wind down. Also our commercial vehicle and off-highway sales were down 18% and 19% respectively. But on a positive note we were able to limit our gross margin downside conversion to approximately 25%. Obviously we remain very focused on cost control in this environment. SG&A increased by $1.6 million but the prior year benefitted from the reversal of a $2.3 million trade compliance accrual, so excluding that impact SG&A spending would have actually been down versus the prior year. I’d like to point out that we recorded $9.7 million in impairment and restructuring charges during the quarter relating to our European restructuring activities. The combined impact on EPS was $0.21, so excluding impairment and restructuring charges EPS was $0.02 during the quarter. Turning to Slide 9 we have a summary table that highlights the main restructuring costs incurred so far this year, and as you know we are in the process of restructuring the European segment to match our strategic interest and cost requirements. In the F3Q column you see $1.4 million of cash restructuring and $8.3 million of non-cash impairments. During the quarter we made the decision to accelerate the sale of a portion of our European headquarters which led to an impairment. The $1.4 million of cash restructuring charges relates primarily to headcount reductions. The actions taken…

Thanks, Mick. If you turn to page 17, as we’ve discussed Modine has been battling numerous headwinds that are impacting our business including weak conditions in all of our major markets; the planned wind down of the automotive module business, particularly in Europe; and the impact of the stronger US dollar on our revenues and earnings. However, as we look forward into calendar 2013 we expect the near-term conditions to remain relatively stable with slow recovery in some markets. Even though this has been a very challenging year for us I am very pleased with how our teams have responded to these conditions that are largely out of our control. We continue to focus on what we can control. We are managing our costs in a responsible manner. We’re on track implementing our European restructuring program. We also managed to generate free cash flow for the first nine months of our fiscal year despite these challenges. This is a clear testament to the effectiveness of the restructuring actions we have taken in the past and also clear evidence that our focus on return on capital employed and cash generation is working. These actions are setting Modine up for profitable and sustainable sales growth. With that we’d like to take your questions.

(Operator instructions.) Your first question comes from the line of David Leiker representing Robert W Baird. Please proceed. David Leiker – Robert W Baird: Good morning, everyone. It’s good to see the numbers you’re able to put up in these challenging environments. I know it’s tough for you but it looks like under the surface you’re doing well on everything. With that comment, Tom, I want to start with if you take the end markets off the table, what are the biggest challenges you’re facing right now?

End markets are off the table, clearly the European team is facing the restructuring challenges and just doing a great job I’ll say. But it’s a very deliberate, engaging process to make the steps that we’re taking in Europe and I’m very pleased with how all parties are coming together, working on that. We’re making steady progress and my confidence is high but we still have a ways to go as you know. I’d say the second issue is clearly Asia. Asia has, from where we were a year and a half ago kind of planning on the bubble I guess you’d call it, we’ve had to revamp and take some different approaches quickly and we’ve got the right leadership and the team coming together over there – a lot of good focus on as we said, how to do that combination of lowering your fixed costs while also keeping that focus on growth. So that’s a challenge because as you know, the opportunities are there but you’re handling in a down market that we’ve been facing on the construction side. So it’s juggling both those balls at the same time but I feel very good with how we’re focused on that and again, this oil cooler opportunity has really come along strongly. We’ve definitely found a good place to focus on that. David Leiker – Robert W Baird: And then as a follow-up on Asia, a year and a half ago, two years ago when you were talking about Asia being breakeven with $100 million in revenue – it looks like you’ve lowered that breakeven level. Where do you think that is today?

Yeah, we’re probably 10% down from where we were and we’d like to get a little bit more than that. We can’t fix it by lowering our costs but we can definitely kind of manage the bleeding if you will. But clearly how we’re doing that is looking at maybe bringing back some expats that can help that cost base and bringing on some more local talent as far as business development, looking for a diversification plan that we need to make over there significantly. So I feel we’ve got the right things in place but it’s going to take another year, year and a half to get us to the point where we’re kind of breaking even again. David Leiker – Robert W Baird: And is that a business today, that if you get those end markets to normalize… I think at one point we were talking about doubling the revenue over four years or something. Is there any context you can put that in for us today?

Well, we still plan on hitting those targets that are out there. I think it’s obviously been delayed a little bit. We’ve got the footprint we want, we’ve got the plants, we’ve got the products. We need to add another product or two to that region as part of this diversification plan but the talent, leadership and footprint is where we need it. And if you look at India, again it’s the same story – the right products going into the right markets and we just need a market recovery. So it’s a little bit of a waiting game so you have to manage that well. David Leiker – Robert W Baird: Okay, and then lastly Mick, on the guidance here it implies a F4Q number that’s not quite doubling the year-to-date numbers but it’s close. And I understand there are more build days but in the environment of what we’re hearing from a lot of folks about this first calendar quarter it just seems like a stretch to get there. Can you help flesh that out a little bit?

Yeah, you know, good question. We knew it would come and we challenged ourselves throughout the forecasting process. Year-to-date adjusting for all the restructuring items we’re about at a $0.22 EPS so that’s clearly implying an $0.18-type F4Q. We look hard as I mentioned in the script, David, at the amount of sales per production day, and the biggest thing we have going in our favor is our OE businesses, and the biggest piece of the entire company – North America and Europe – we’re really looking at our F4Q at a constant sales production day. Could we have a surprise from maybe an unknown, unannounced customer shutdown? We could, but we feel good about that number and we certainly wouldn’t put it out if we didn’t believe we could hit that estimate. Also last year we had a lot of things going in our favor but we had a similar trend last year, and even F4Q a year ago was a $0.33-type quarter. So really that’s what it’s banking on – North America, Europe, and Asia hitting the revenues side. David Leiker – Robert W Baird: Yeah, on the revenue side of that line last year your revenues were up call it $15 million; this year you’re looking at a $65 million increase. When you look at that revenue per production day being flat is that sequentially or is that versus last year?

No, that’s sequentially. David Leiker – Robert W Baird: Sequentially, well yeah, that sounds reasonable. Okay thanks, I’ll let some other folks go. Thanks.

Your next question comes from the line of Ann Duignan representing JP Morgan. Please proceed. [Mike Shlitski] – JP Morgan: Hi there, it’s [Mike Shlitski] filling in for Ann, good morning. Hey, I wanted to start off with a question about your North America commercial truck business. You mentioned it was flat in the quarter but the industry was actually down like 20% or more during the quarter. So I wanted to see if you had any big successes during the quarter or was it a kind of timing issue?

Mike, your question is about North America, right? [Mike Shlitski] – JP Morgan: Yes sir.

Yeah, we’ve been talking a little bit about the shift in Modine in the last year in North America. Right now we’ve become much more of a balanced business between mediums and heavies, so heavies – everyone was following heavies closely and they clearly got pounded in the December quarter, I think down about 23%. Mediums were up about, depending on who you talk to up about 18%, so I think what you’re seeing from us actually in this quarter it worked a little bit in our favor. I think earlier in the year people were asking us where the sales were because Class 8’s were doing so well on a year-over-year. So I think the short answer to your question is what you’re seeing is a balance – we were actually up in mediums and we were down in heavies. [Mike Shlitski] – JP Morgan: Great, and I guess that does bring up my follow-up question to that, about when you were doing your outlook for 2013 I’m kind of wondering if you can tell us what content trucks are driving that in that segment in 2013 in North America? Is it vocational or…

Well, we have Class 8’s in 2013 as Mick said being down somewhere between 8% and 12% is our outlook for this year, and again, the mediums are flat to up. So the mix is again a little bit more favorable in the mediums. I think as far as the balance it’s going to be kind of a lower frontend and a stronger backend, so and it’s definitely very customer-dependent. So that’s the other key thing. We have some customers that are strengthening market share and maybe some others that are dropping as well, so you balance that together is how we get to our outlook of 8% to 12%. [Mike Shlitski] – JP Morgan: Okay. Then switching over briefly to Europe, you guys mentioned down 5% to 10% - that’s probably a bit lower than some folks out there have been predicting for the market. I just wanted to clarify, this sounds like then what you’re saying it’s down 5% to 10% for the industry without any kind of pre-buy or full forward. I wanted to kind of delineate between pre-buy and pull forward with you guys. Is this a pure number basically?

Yeah, great question and I’ll tell you as I mentioned also, we are in the middle of our planning process and this commercial vehicle market continues to move. So what we had talked about on the slide is really using third-party data, probably the same data all of you use, and a couple of weeks ago that was flat to modestly up; and most recently consensus, if that’s what you’d call it, is saying more of a decline in commercial vehicles. But I would say people that we follow are everything from down a little bit to up a little bit. With that said, I’d maybe let Tom comment because clearly what’s going on in here between the market being down is this what’s the mix of sales going to be between Euro-5 vehicles and Euro-6, because frankly our business is going to grow as Euro-6 launches. Tom, maybe you can talk about the mix.

Yeah, clearly with the market dynamics that are going on and the slowdown in the economy, the Euro-6 introductions have come on much more slowly than we had planned. As a matter of fact as I mentioned in my earlier comments, the Euro-5 compliant vehicles sales will extend well into calendar 2013. We’re anticipating a maybe two thirds/one third mix or Euro-5 to Euro-6 going into calendar ’13. So we have a mix issue that’s on top of this normal market dynamic that’s happening. [Mike Shlitski] – JP Morgan: Great. If I may just squeeze in one more about your cost control efforts. Can you maybe just tell us a little about what the scale and scope of that might be, when we could start seeing some benefits from that that are large? And then what’s a good sort of SG&A run rate going forward given some of your efforts there?

Are you talking about in Europe? [Mike Shlitski] – JP Morgan: Actually overall. You guys had mentioned you were going to control costs in a responsible manner. Just wondering if I could get some more detail on that, that’s all.

Yeah, you’ve got a lot of questions there built in but it’s a good one. I will tell you that it’s at every level of the company and if the full management team were in the room here they’d agree. We managed to the level of travel and entertainment and you name it, and in the year we’ve been in we’re managing at a very small level of spending. So it’s everything from headcount to new growth initiatives to just kind of daily costs. Clearly what we’re trying to do and we tried to communicate to you is we’re trying to protect the future growth. We’re hiring where we need to hire; we are investing in new engineering products and our R&D, but everywhere where we’ve got discretionary costs we have a serious discussion about it. This year we’ll clearly finish, if you look at our run rate at the kind of $42 million, $43 million mark. We’re going to finish this year well below last year in SG&A. I would say as we go forward, absent a Europe which we would expect to see some cost reductions coming out of all the actions we’ve taken, Modine globally would resume probably a more normal growth rate or increase, maybe call it inflation-type growth in SG&A, meaning we’ve taken out and squeezed everywhere we can but we’ll probably need to get back to more normal levels of inflation for salaries and benefits. Tom, did you want to add anything?

No, I think you said that perfectly, Mick. I think the example we’re trying to balance when we say “responsible” is contain costs but don’t take the focus off growth. And I think the Asia team is a classic example of that where we’ve kind of gotten to the phase where we have a stable operation on the ground. Bringing back expats have helped develop that and bringing in maybe local new business development talent that can help us grow across the Asia region. So we’re not just controlling costs but making sure that we keep our eye on the future as well. [Mike Shlitski] – JP Morgan: Alright guys, thanks so much. I’ll hop back in line.

(Operator instructions.) Your next question comes from the line of Walt Liptak representing Barrington Research. Please proceed. Walt Liptak – Barrington Research: Hi, thanks, good morning everyone. I hope you don’t mind if we go back to the F4Q guidance because it is a pretty big revenue delta going from F3Q to F4Q. I’m coming up with about $40 million, $45 million of higher sales in F4Q. So I understand the comment about the production day but are you saying that in January your production or sales per day is tracking to get you to that higher revenue level?

Yeah, as we sit today and we are coming at the end of January, we are tracking to the guidance we’re giving you and we’ve been tracking this month to this F4Q. So that’s why we said with really less than a quarter to go. Still you guys are right to ask – there’s a lot going on out there in the market. We were probably more concerned, Tom, about what would happen after the holidays coming back in January. That has held up pretty well. But it’s basically we get hit pretty hard in North America with Thanksgiving and Christmas and then in Europe the extended Christmas shutdowns. Those two segments alone have an additional significant number of production days in our F4Q. Also in there, since it’s such a focus for the analysts here, there is some tooling sales that we have in F4Q that I don’t have the exact numbers with me but could account to $5 million to $10 million of that increase. As a reminder that is production tooling that we buy and validate on behalf of our customers, and then when it’s validated we sell those tools to the customers. It flows through the sales and gross profit line in that manner. Walt Liptak – Barrington Research: Okay. Are those tools sales related to the new products?

Yeah, and our biggest piece of that frankly would be in Europe relating to all of the truck program launches. Walt Liptak – Barrington Research: Okay. Are margins pretty good at that tooling or do you sell it at cost?

No, I mean it depends on the program but the customers are very good at managing that tightly. Walt Liptak – Barrington Research: Okay. And I wanted to go back to the Euro-6 and just make sure I understand this, that your products are geared towards Euro-6 and so if there is a pre-buy and continued higher sales of Euro-5 that these new product launches push out.

That’s exactly right. To quantify it, we had a 10% to 12% market share in the commercial truck market going into the Euro-6 transition, and with the technology we brought into capture more market share that came in with the opportunity of Euro-6 compliant engines. With the way that the dynamics are working in the market, Euro-5 sales, January 1, 2014 is the key date for compliance. So Euro-5 production is going well into the current calendar year, and as I said the mix that we’re sending up is there’s higher demand for Euro-5 than there is Euro-6. So our market share is going to be delayed at getting up to that approaching 50% level that we’ve been discussing in previous calls until later in the year. But it’s been a slow ride which is impacting our revenue obviously as that delay occurs. Walt Liptak – Barrington Research: Okay. Is there also a transition inventory that the companies are allowed to build with Euro-5?

I’m not sure. I’ve not heard of that, Walt. I think part of this why they did not have an incentive to pull things forward is to let a natural transition in the marketplace occur. So I don’t think that’s as planned out in that manner so I think we’ll have a more normal run rate going into this transition. Walt Liptak – Barrington Research: Okay. And just one last one on those market outlook boxes that you’ve got, just to clarify: these are kind of a macro or whatever industrial service you use to track those end markets. This is not based on your customer outlook or your individual expected production for 2013 calendar year?

Yeah, good clarification, Walt. We use independent third-party data and then we use that to feed our planning process. So right now it’s a fairly high-level look on where we see the end markets, you’re right in that; and also frankly Modine can be both better and worse than the market outlook depending on, as Tom pointed out in one case we’re not with every truck customer so sometimes it depends on which customers we’re with. Also in the case of like agricultural and construction equipment, we tend to be on certain platforms – for example, in agricultural we tend to be much bigger on the higher combine kind of size. So a lot of times this data is a little bit general and that’s why I wanted to point out we’ll give you a lot more specifics next quarter as it relates to Modine. Walt Liptak – Barrington Research: Okay, thanks guys.

You have a follow-up question from the line of David Leiker representing Robert W Baird. Please proceed. David Leiker – Robert W Baird: Yeah, just a couple of things to follow up on. Not to belabor this Euro-6 thing but I just wanted to try and sketch out a couple of details. Are you shipping, I know there are fewer truck makers with Euro-6 trucks in the market today – are you shipping any Euro-6 product today?

Yes, we are shipping Euro-6 product at a much lower than anticipated production rate. David Leiker – Robert W Baird: And so do you see this choppiness in the European production, is that impacting the Euro-5 stuff you’re not on or is that impacting some of your Euro-6 product?

That is having more of an impact on Euro-6 product. We had a very small exposure to Euro-5 as far as components and systems, so there’s some impact there but the upside on that is because our exposure is low it’s not having much of a bottom line impact. David Leiker – Robert W Baird: So what do you anticipate right now from your customers on the timeline of when you’re going to begin shipping Euro-6 product? Is that a calendar Q3 event or is that calendar Q4?

Well, it’s ramping up in both cases. It’s just a matter of getting that launch curve ramped up and so we’re staying very close with customer projections. And I really don’t have a timeline of when it hits full run rate but it’s definitely a slower launch curve than they projected to us early in the game. As you know with any launch curve it’s subject to a lot of factors, supply base being one of them which we’re in good shape; but also market receptivity. And what we’re seeing is our customers having a much bigger headwind on staying with Euro-5 vehicles before jumping to Euro-6. David Leiker – Robert W Baird: Absolutely. So you’re essentially getting a double whammy now because you’re producing and so those costs are running through your P&L but the revenue’s not there. So not only did your revenue get pushed out but the cost of the launch is higher than what you had expected – is that right?

Yeah David, this is Mick. I was just going to jump in to add that comment, and those that have followed us for a while know this journey started with deemphasizing some of the module business in automotive and replacing it with truck where we had a very small share. So we’ve invested a large amount of capital because of the requirements of the manufacturing process and frankly, making sure we put everything in the right locations. But we’ve invested a significant amount of assets to produce at a large, 40% of the truck market in Europe. So you’re right – as the auto has winded down and they’ve delayed the Euro-6 we not only have the volume impact but now we’ve got that excess capacity that we need to fill. And when we give you guidance next quarter we’ll spend a little time to help you out. We’ll talk a little bit about how Europe is flowing through the year because I know that’ll be a critical assumption for us as well as all of you, of how Euro-6 launch activity ramps up. David Leiker – Robert W Baird: Okay, and then on the wind down of the legacy business, it seems like you’re managing the cost side of that pretty well. Is that a fair observation?

Yes, absolutely. The team over in Europe gets kudos for that. It’s very difficult. The last three years have probably been oh, €50 million to €75 million. We knew at the beginning of this journey it was going to be €100 million plus and we’ve managed down the assembly operations very well and also the plants that supply each of those components have been very well managed. David Leiker – Robert W Baird: Great, and then just two last things here: Tom, after all of these changes that have gone on with Navistar and Cummins and the 15 liter internally sourced going away, at the end of the day there was an opportunity for you to pick up some new business. Can you talk of anything that’s come to light on that?

Well, as a policy we don’t obviously announce what wins or opportunities that are out there, but we feel very confident with the relationship with Navistar. We’re engaged closely with them to help them through this transition any way we can and clearly with that, that brings opportunities that we’re positive on. David Leiker – Robert W Baird: Okay, and then I guess the last thing: as we look at, we haven’t talked in a bit about new business wins and I’m guessing on your call next quarter you’ll talk about that a little bit, but can you give us any sense of what the new business activity is in terms of opportunities to quote for new business, your win rate and things like that as we look out at 2014/2015-type business?

Yeah, I think it’d be a great subject to go into more detail in our year-end call, but clearly we’re happy with our pursuits. We’ve focused down on our product portfolio over the last several years to where we have that right to win as we talked about, and so the pursuits in all those areas are on target. Our win rate percentages are where we expect and so we’re feeling very positive about that, and clearly our diversification focus in Asia is going to bring the strength of that whole approach to bear within that Asia region as well – not to also miss pointing out that the CPG business which has been a big priority for us is a very strong focus. And as I mentioned in my comments we just came back from Dallas earlier this week and spent a couple days on the stand down there with our new products – our Geofinity and our new rooftop and additional heating and schoolroom products, and we’re very pleased with what the attention is on that. We’re starting to get a lot of looks, a lot of quotes and we’re looking to get a high hit rate on those products as well. David Leiker – Robert W Baird: Okay, great. Thank you very much.

I would now like to turn the presentation back over to Ms. Kathy Powers for closing remarks.

Thank you. This concludes today’s call. Thank you for joining us this morning and thanks for your interest in Modine. Good-bye.

Thank you for your participation in today’s call. This concludes the presentation. You may now disconnect and have a great day.