Michael Mason - Investor Relations Daniel Coker - President and Chief Executive Officer Barry Steele - Vice President, Chief Financial Officer and Treasurer.

Matt Koranda - ROTH Capital Partners Christopher Van Horn - FBR & Company. Gary Prestopino - Barrington Research Steven Dyer - Craig-Hallum.

Greetings and welcome to the Gentherm Inc. 2016 Second Quarter and Six Months Results Conference Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Michael Mason. Thank you, sir. You may begin..

Thanks, Tessie. Good morning and thank you for joining us for the Gentherm Incorporated 2016 second quarter results conference call. Before we start the call, there are a couple of items I’d like to cover.

In addition to disseminating through PR Newswire this morning’s news release announcing Gentherm’s results, an e-mail copy of the release was also sent to a number of conference call participants. If you need a copy of the release, you may download a copy from the Gentherm website at www.gentherm.com.

Additionally, a replay of the call will be available via a link provided on the Events page of the Investor Relations section at Gentherm’s website. During this call, representatives of the company may make forward-looking statements within the meaning of federal securities laws.

These statements reflect the current views with respect to future events and financial performance and actual results may materially differ. Please see the company's SEC filings including the latest 10-K and subsequent reports for discussions of various risks and uncertainties underlying such forward-looking statements.

During the call, the company may discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in the company's earnings release. On the call, we have Mr. Bud Marx, Chairman of the Board; Mr.

Dan Coker, President and Chief Executive Officer; and Mr. Barry Steele, Chief Financial Officer. Management will provide a review of the results, after which there will be a question-and-answer period. I would now like to turn the call over to Dan. Good morning, Dan..

Good morning, Mike and good morning, everyone. Thank you for joining us for our call. We want to start off this call with well wishes for our friends and colleagues who are living in our Vietnamese market area. There was a large typhoon came through last night and was disruptive to the community.

Our operations lost power for a couple of hours and our facility received minor damage to our roof structure. But everyone seems to be safe and we are giving all of our well wishes for all of the residents of the area, our people and their families as well as all the other residents as well. The second quarter for us was a good solid quarter.

It was not a fantastic quarter, but it was a good quarter. We saw lots of good things occurring and we're very pleased and encouraged by these good news. The theme for our story is our new acquisition Cincinnati Sub Zero is performing very well.

We're very impressed with the products, the markets that we're attacking, the management team and the leadership there. This is a very good sign for us. It gives us entrance into the medical market which we've been studying for quite some time.

It also gives us an entrance into the industrial heating and cooling environmental test chambers which is a good solid business which we are very excited about as well.

The acquisition of Cincinnati Sub Zero provides us a clear path to being able to satisfy our previous work being done on our Navy contract and a subsequent contract that we now have for the Air Force for similar types of products. So all in all, that has been a very, very good situation for us and we are very pleased.

Many of our products are responding exactly as we had hoped. We are seeing continued strong growth from our heated [indiscernible] businesses. These are over 20%.

The heated ventilated business is doing very well as it is being introduced into the moderate and midrange vehicle lines, being well accepted across the board and several of our businesses are doing extremely well. The electronics business continues to make progress and it is a launch preparation as does our battery thermal management business.

We did see softness in the growth rate of our Climate Control Seat business and that's attributable to a couple of programs that have been shifted out, moved away from its initial launch dates that were anticipated to be early this year, this was discussed in our last quarter results call and it has continued into the second quarter.

We also have seen very, I'd say impactal results due to the oil and gas industry constriction with our Global Power business.

That business has seen a tremendous amount of push out on their order rates, their businesses are much more capital driven and the oil and gas industry issues have now gotten down to us and good business continues to be pushed back and into next year.

We're not receiving cancellations at the moment, but we are receiving push outs and those push outs are going to impact our revenue and have impacted our revenue in a soft way. We are going to continue pushing and talking to new customers about new products. We've got lots of exciting things coming, but we're going to today do as we normally do.

We're going to have Barry explain in his normal clear and concise way all of the numbers in the factories of the business and then we will open the floor for discussions.

Barry?.

Good morning and good morning everyone. Thanks for joining us today. Our earnings for the 2016 second quarter were $0.30 a share on a fully diluted basis. This included one-time transaction expenses and purchase accounting adjustments associated with the CSZ acquisition. Without these expenses our diluted earnings per share would have been $0.39.

This represents an increase of $0.06 or 11% over the second quarter of 2015. The improvement comes from our continued product revenue growth including the new sales from CSZ and payroll margin performance offset by higher operating expensing.

As mentioned, we acquired CSZ on April 1, and we had a full quarter of results with the new company during this year's second quarter.

CSZ's reported revenue of $17 million and operating income of $1.6 million and adjusted EBITDA of $2.3 million during the quarter before the impact of purchasing accounting adjustments those purchasing accounting impact included additional depreciation and amortization of intangible assets totaling $320,000 and a one-time additional cost associated with the fair market value adjustment for inventory on the acquisition date of $4 million.

That is a one-time adjustment that we won't see again in the future period. Those are all added back, but these amounts that I am stating were the earnings and the EBITDA. Our gross margins were 32.4% and adjusting for the one-time purchase accounting is up for inventory adjustment for CSZ that I just mentioned.

This amount was 1.6% higher than prior year amount of 30.8% mainly due to the higher gross margin of CSZ and some other improvements. Our operating expenses were $49.1 million during the second quarter. This was $10.1 million higher than the prior year period.

About half of this increases were attributable to the new operating expenses of CSZ the acquisition, these totaled $5.6 million. The remaining increase were additional resources primarily additional employees in engineering and development positions which has supported the many new business initiatives we are working on in the company.

These include the battery thermal management, which Dan mentioned. This was launched about a year from now, the new electronics business award that we are now working on developing further and our new battery management initiative and quite a few others that we're working on at various stages.

Our first quarter adjusted EBITDA was $35.5 million, again when adding back the one-time purchase accounting adjustment for inventory of CSZ, this was $1.6 million or 5% higher than that of the prior year. Let's look on the balance sheet which continued to be a very strong balance sheet. We had cash totaling $132 million at the end of the quarter.

We had borrowed the funds required to acquire CSZ which totaled $75 million during the first quarter, but we repaid approximately $30 million of our cash reserves for the revolver borrowing that we did.

Our available liquidity from both cash reserves and our revolving line of credit capacity totaled about $260 million at the end of the quarter, so again we have lots of liquidity to run the business. Dan, those are my initial comments, so I'll turn it back to you..

All right, thanks Barry. Good job as usual. Operator, I think we're ready to open the phones for questions from the field..

Thank you. [Operator Instructions] Our first question is coming from the line of Matt Koranda with ROTH Capital Partners. Please proceed with your questions..

Good morning, Dan, good morning, Barry..

Good morning, sir..

I just wanted to start out with the outlook for 2016. Just kind of trying to back into organic growth assumptions for the second half and what I'm kind of getting to is around 5% to 6% organic growth depending on what I assume for CSZ contribution.

So first of all does that seem directionally correct and could you help us understand what CSZ is going to contribute in the second half of the year?.

I'd say generally that's about what we see in terms of the directional growth.

We are as we said in our press release, we are indicating that we expect full year growth for 2016 to be at the low end of our guidance at around 10% and I would say that roughly speaking, Barry will correct me here very quickly as soon as I say this, but I think you will roughly see about 5% of that coming from the CSZ acquisition.

Three quarters of that business' operation during this year will fall under our P&L and you would see about 5% impact on our total revenue.

Barry is that correct?.

That is correct..

Got it, that's helpful.

And then in terms of just the organic growth expectations for CCS in the second half, are we looking for reacceleration in the growth rate and just what gives you the confidence that if there is a reacceleration coming sort of maybe just talk about the granularity you are seeing from in terms of releases or program launches from customers on that front?.

Yes with the growth rate in the auto business is kind of episodic.

So what we predicted in the – what we actually commented on in the first quarter where we saw some programs that didn’t release and were actually deferred for a year, that impact carries over for the whole year, but we won't the impact from those rather happy programs until sometime early next year.

So we are not going to see a resurgence of 15% and 20% growth rate, I don't believe, but we will see continued strength in the marketplace. We have an interesting thing coming for us. In the third quarter we had a historic quarter of revenue for our Global Power, thermal, electric group.

The business in that one particular quarter was, it was an accident of scheduling, but there was a tremendous amount of volume that went out. So the third quarter comps are very difficult for us to match up with Global Power now falling on harder times. But in general, the core business we see, we do see some strengthening in the base business.

So we are fairly confident right now that the 10% looks solid for the full year based upon what we see in terms of releases for the third and early releases for the fourth quarter..

Got it, okay.

And then I know you guys alluded to in the press release and you guys have talked about this for a little bit now in terms of the shift in growth within CCS toward heated and ventilated versus heated and cooled, so just maybe you could talk about what the relative orders [ph] might like there at the moment and then maybe over the next couple of quarters what you're expecting and how the sort of bifurcates, but then maybe how they blend into the overall CCS growth rate for the remainder of 2016?.

Sure, certainly Matt. Well, for years we said that the heated and the cooled seat are premium seat was targeted through the luxury marketplace and that luxury marketplace is, well it is a very good market to be in. It is also one of the smaller segments of the market globally.

We have targeted the heated and cooled business for the luxury markets and have been very successful in that arena. We've also commented in the past and have said publicly that we believe that the market for seat vent products is significantly larger than that, orders of magnitude larger than the heat and cool business.

We are beginning to see strong interest in that market now in the target market which is the midrange market. There are two reasons for that being a critical combination. The first is power. The electrical power consumption of a thermoelectric driven heated and cooled seat is significant and in the midrange vehicles power is at a premium.

So only the vehicles that are looking at adding a comfort feature for seat occupants in their cars are challenged to be able to find the amount of power thermoelectric needs. There is also the cost impact of course in the midrange vehicle a premium type of vehicle is something that is not in the target market for the demographic customer range.

So we've always expected the vent business to be much larger than the heat cool business, but we also think it's going to be a very nice growth opportunity for us over the next five years.

So we do see continued strength in heat vent and we see strength in heat cool, but we also believe that heat vent will overtake heat cool over the next few years in terms of contributing to our growth. We also will see some conversion.

There will be some people who added heat cooled to their vehicles lines because they simply they want any better choices for them to make and they still suffer from the same issues of power and price. So we will see some of the people who have been buying heat cooled switchover the heat vent and that will be happening in the future as well.

So I think you are going to continue to see good solid growth and strength out of the heat cooled and heat vent business which we refer to as the Climate Controlled Seat business. But the dynamics in the markets will shift a bit where heat vent will overtake and eventually surpass dramatically the heat cooled business.

The margins for us on both of those two segments are very comparable and we are very happy with the opportunity to see a kind of a new segment for us open up to be able to add to our original heat cooled marketplace..

Got it, okay. And then maybe just lastly on the heat vent, heat cooled front here, maybe you could just talk about the competitive landscape and then sort of how it is different within heat vent, relative to your heat cooled product which my understanding was there was much more differentiated.

But could you just talk about the competitive landscape in the heat vent category and what you guys are doing to kind of try to combat any form of commodification of that product, it will be helpful to hear your comments on that?.

Sure, well obviously the heat cooled product has a couple of unique factors and we have a group of technologies that we know better than anybody in the world, we know how to design and install, implement and manage a system with a thermoelectric core generator.

This is critical when you're trying to increase the time to comfort for seat occupants and this is a particularly handy thing when you're targeting the high-end consumer who is focused on creature comforts in the cabin.

If you are not looking for that, then or if you are not as concerned about time to comfort and you have more time for the HVAC system in the car to aid in the seat occupant comfort, then you can use the heat vent system and that's what we're really referring to is that's the biggest differentiation here is the time to comfort at.

So when we designed all of the heat cooled systems, we had to become experts at air distribution, at air movement devices, channeling throughout seats, how to manage these systems themselves for noise, for vibration. How to learn, how to install them and we've essentially had about a 15-year head start on anybody else in the marketplace.

It is more susceptible to competition in the marketplace. Several of our customers in fact have attempted to design their own symptoms, most notably some of the European German luxury carmakers have their own designs of heat vent systems.

But in our view these are inappropriately placed in many of the high-end German luxury vehicles and we see that as a big opportunity for our heat cooled systems. That's another big area of potential growth for us.

Many of these German luxury carmakers set the standard for luxury worldwide offering a heat vent system in a very, very high-end German luxury car where the global customer is very focused on creature comforts and technology is a, we believe is an opportunity for Gentherm to be able to introduce our product line.

On the heat vent side, we know how to do it better than anybody in the world, not only know how to do it we are actually very good, we're the largest supplier in the world. So our strengths there are real advantage. We also have some techniques that we have been able to patent and we're able to prevent people from copying what we do.

We have successfully enforced these patents in the marketplace and I think all of our competitors are very aware of our keen interest to protect our intellectual property and our ideas.

So I would say that in general it is more susceptible to competition and the best way to fight that is to be the best in the business, have the best design product at the most competitive prices and to most importantly be able to deliver to your customer's standards.

And the automotive industry has the highest quality and service standards in the world. So, we believe we are uniquely qualified and uniquely positioned and have a very unique product line in the heat vent systems..

Got it, that’s very helpful Dan. Just last one and I'll jump back in queue….

Matt you don’t have to, you asked a quarter, you've got a lot of questions out of your one question..

Over by and my last quarter in here, I work for the CSZ acquisition, and I just wanted to kind of touch on the pro forma growth here.

I mean it looks like, was there any unique I guess being under Gentherm's wing that drove that Q2 growth, was there cross-selling that you saw initially or was that just good execution by the existing team in place?.

I think it’s a little bit of excitement, but I think it's actually good execution for the local team. They just did a great job there, a good team, they’ve got great leadership and they’ve got great products. What we are going to bring to their business opportunity is more scope. We're going to be able to go after larger international markets.

We're going to be after - be able to go after new verticals for their core technologies and we’re certainly going to be able to focus on the medical side of the world for them as well, the our excitement about our progress with the Navy and now the Air Force contract for patient warming systems are going to be really, really big drivers for them in the future.

Being a part of a larger company they had more scope now. They have more financial resources available to them. Our initial project whenever we look at a new acquisition is getting to know the markets, getting to know the management team, getting to know what their strategies are and trying to find ways that we can help.

With CSZ we found an excellent management team in place. They have good leadership. They have a very good strategy, a little capital will be helpful for them and our international scope being able to introduce them to locations and markets and customers in Europe and in Asia. I think we're going to be very, very helpful in the long run.

But event with that said, we see very good response from their customers and their markets coming up in the future quarters, unlike the auto business, their business and the global power business has a longer lead time. These are custom devices in many cases.

And so, when we look forward into the booked orders, we see very, very strong results and we are very excited about our new partners at Cincinnati Sub-Zero..

Got it, I’ll jump back in queue. Thanks Dan..

All right, don’t forget that quarter..

Thank you. Our next question is coming from the line of Christopher Van Horn with FBR & Company. Please proceed with your question. .

Good morning. Thanks for taking my questions, just a quick question on R&D and SG&A. I know you mentioned you’re - the spend there is ramping up a little bit.

Do you feel comfortable at the levels now or do you see that kind of continuing to ramp up slightly this year and may be kind of flattening next year, what’s kind of the cadence there?.

Well, we are at this at our core we are a technology company and technology requires you to be innovative and be creative and think about problems in a different way and that requires technical talent to be able to do this, so we do not see us flattening out. We see lots of new opportunities coming for us.

Some of the base businesses that we have engaged in today is an example, the electronics business. We’re going to continued to build capacities and capabilities there hopefully forever.

I mean these are interesting products or interesting challenges that this team is trying to attack and it requires a full plethora of good skilled people to be able to come in and help us design, develop and implement these new technologies.

Our strategy in the electronics business is an example was to build a core team and then with that core team establish manufacturing capability.

Once we had manufacturing capability online and running then expand the team to be able to go after outside business beyond our own business which was roughly $100 million worth of electronic controlling devices, something we understood very well and moved very well.

And we got all of those assets in place and now we have our first really significant outside contract. It has been announced. It has been discussed and it's something that we as a company see as a perfect example and opportunity. Now we have that first contract and we can take that technology to many other customers.

All of that requires additional staff, additional team, additional class. And so, as businesses grow, you invest in those businesses. These businesses are valuable to us.

The margins are healthy, the growth rates are strong and the opportunity for us to incorporate a full what we would call a system level product as opposed to a component supplier is very high if you have these types of capabilities. The same situation holds true in our battery businesses.

We initially start to find ways to cool batteries, operating in the automotive industry in the field and we were given the challenge by a couple of very good solid significant customers.

We worked on that challenge and came up with a very unique and innovative design to be able to satisfy not only a cooling requirement, but also a very complex packaging requirement and always the core of our business were challenged by cost.

So we were able to come up with a great idea and that led us into broader applications, additional customers for these types of technologies.

And as we were into that, many of these customers are asking for additional solid suppliers who understand electrical system management and have asked us to look at electronics, some of the management systems that are required to coordinate and manage the charge and discharge of the battery cycles inside the car.

So that is almost exactly the perfect picture of what we would like to do.

We have taken our skills in heating and cooling and we have converted those and sorry, we've added those, multiplied those by having the capacities to build electronics including high power electronics and management systems for battery systems and that is leading us deeper into the energy management systems.

So, all of those things require additional power. In some cases, new talent and as new challenges arise from our entree into a segment. So this is not something that we see we're going to flatten out and cut off additional investment in R&D.

But I'm pretty excited about spending more money on R&D because that means more opportunities are coming our way..

Got it. Thanks, thanks for the detail, that's great. And then you mentioned battery thermal management, the pipeline there it seems like that is very strong.

Can you just have it again, how you differentiate that product line relative to the competition because doing some research here, you see a lot of these battery thermal management type products coming online, but I think yours is little differentiated, if you could just highlight couple of data points why you think so?.

Well certainly. There are all types of ways to cool things. The traditional method is the compressed gas system where you push coolant through a very complex network of systems from the engine cabin all the way back to where batteries are stored. These are expensive.

They are expensive not only in terms of cost, but also the complexity, the design of your vehicle and the additional feature that has to be added to keep these devices cool.

The beauty of thermal efforts which is our unique differentiator is that it is a self contained and can be isolated from the rest of the HVAC system of the car and can be targeted and packaged directly with the battery packs wherever they are in the vehicle.

The system itself is actually very, very low profile and very slim and can fit inside usually an existing battery pack without a major redesign of a vehicle or a tear up of the vehicle which is very costly for a car maker. This is the biggest thing.

A lot of people including us by the way, we make, we have designed systems that simply use air and in some applications, air is sufficient, certain battery types, there is an example of simple lead acid battery that is inside of the engine compartment of a vehicle in very hot ambient operating conditions, simply blowing air over the battery or through the enclosure for the battery is sufficient to keep damage from occurring.

In other types of batteries, there are many types of batteries that are highly sensitive to temperature, particularly to heat. This is the core of the problem that we have been to resolve. If you have any type of lithium type batteries these things don’t like to ever be above 50 degrees.

So if you have a system that where you can protect that battery pack from seeing 50 degree temperatures then you have reduced the warranty cost and increased the service life of the battery pack. And these things are quite expensive.

These as an example of our European 48 volt pack for a typical car in the European market sells for around €600, €700 per piece. That is a significant investment on the OEM and on the consumer’s part when they buy a vehicle with stop-start or mild hybrid type vehicle.

So this package that we have using thermoelectric is a very, very unique feature and that sets us apart from the average company..

Great. That's it from me. Thank you so much..

Thanks a lot. Thanks for your questions..

Thank you. Our next question is coming from the line of Gary Prestopino with Barrington Research. Please proceed with your question..

Hi, good morning. Couple of questions here.

I don’t think you cited this Dan, but in the mix between heat vent and heat cool given the kind of sluggish revenue growth overall, is it safe to assume that the heat cooled seat your follow up was down year-over-year in terms of revenue?.

Yes, I think they actually work..

Can you give us an idea of how far down or?.

I can't, no. I don’t know it. I'm not being quiet, I don’t know what the numbers are..

Okay.

And then couple of things here, I just have a hard time understanding it, if you've got a model that's supposed to come out in 2017, how is it that this can get pushed out, there is a significant amount of planning that goes into launching a new car model and if they are going to launch it in 2017one would assume that they don’t – or 2016, I’m sorry, one would assume that they don’t push it out another year because of whatever reason, so could you may be help me understand that a little bit?.

It’s a very dynamic environment and then you are launching a vehicle and some vehicles get launched or in many cases were being added to a vehicle, that's something probably more the case here where we’re being added to an existing vehicle.

And the decision to do that can be made literally at the last minute, if they decide that they don’t want to go. The decision to go is a very complex decision. It takes years of development and effort and testing and investment frankly in that.

So, to getting ready to go is very difficult to decide to defer or delay is actually can be made at the last minute. It's not unheard of in the auto industry to decide that other factors in the vehicle.

We were never the case here where we were the driving factor behind that, but other factors in the vehicle may drive the decision to try to reduce the complexity of a midyear change or a model launch..

Okay, so you really have no control over that?.

No, we have no control over it..

All right and then in terms of your gross margin when you factor out the non-recurring items, obviously there was some currency impact there, but it's encouraging that it was over 32% even with what’s going on in the seat business, I mean is that kind of sustainable throughout the rest of the year?.

We're adding the sales, we've been targeting that, that low 30s has been our objective for five years and we believe we’ve gotten our operations and our business model tuned to about that range.

So, we are pleased with how the gross margins turned out and I guess we're obviously always wanted to have better margins and we’re focusing on programs to try to improve that in the future, but for right now we’re right on target with where we wanted to be with gross margins..

Yes, this is Barry. I'll add to that Dan. We have various margins on different products and different times and so we operate in a range plus or minus 1% to 1.5%. We are probably at the upper end of that range right now. So there might be lower quarters, there might be better quarters, but in that range..

That’s a good point. Gross margin is driven by product mix anytime..

Right, okay and then given what you’re seeing in GPT in terms of what’s going on in the energy industry, over the next couple of quarters is it are these - this level of sales here which was a pretty dramatic decline year-over-year and that things are getting pushed out, is that pretty much where you think you are going to be?.

Yes, that business is driven by basically a capital investment project. So, when we see the business doesn’t - like it's not like a regular recurring stocking, restocking business. People implement programs. The pipelines are being built. They are being serviced to maintain when they are run and being run hard.

When they are not being run hard or they are not being built there is no demand for the product. So what we are seeing is kind of the new type of business kind of fall off and what we are left with is the service and the lingering pieces of the old projects that are coming in.

So, no we don’t expect the second half of this year to pick up and we won’t expect to see big activities or huge changes until oil and gas recovers and people and by the way we are most directly focused on the gas pipeline industry. We are not so strong in the oil field business.

We are much stronger in gas and gas is continuing to hold up pretty well in terms of demand worldwide and will certainly beat I think the petroleum based products back to the market much more rapidly. But like with some of our other businesses, this market was, our segment of the market was very slow.

We trailed the front end of the downturn in oil and gas. But we'll probably be pretty quick to come back as soon as the market strengthens and we start seeing demand again. The market will come back and they will require and push our factories.

So, we are taking advantage of this downtime and prepping our operations and getting our team ready and beginning to examine new markets on a global basis to be able to be ready for that upturn when it comes..

Okay thank you..

All right, thanks Gary..

Thank you. [Operator Instructions] Our next question is coming from the line of Steven Dyer with Craig-Hallum. Please proceed with your question..

Thanks. Good morning and – battery thermal management I think you had indicated that will launch next year which I think is may be a little bit later than I had assumed.

Did something push there or may be talk about getting your first program went there and when you expect to see some revenue?.

Well, yes we will have some dribs and drabs of revenues as these things start to go, but when we are referring to a launch in 2017, the full volume will start at one of our programs in 2017 and the second program will follow at 2018.

So there will actually be small revenues here and there as the customers buy early stage production runs, but it won’t be anything significant until 2017 and 2018.

Barry, would you like to comment on that?.

Yes, it hasn’t changed. It's always been sort of getting started in 2017 and the program starts will come on in the latter half of the year. It is this ramp up because the one of the programs has several vehicles to it and they come on line over a period time, a couple of years..

Okay, so kind of given all the moving pieces with GPT slowing and then the couple of CCS programs pushing to next year and CSZ et cetera, as you look into next year, I realize you’re not going to give sort of revenue guidance yet, but how do you think about kind of top line growth expectations over the next year or two just given the different things you have coming together?.

Yes, well we are very focused on achieving our corporate goal of growing 10% to 15% per year and we believe that we have the underpinnings for that to continue in 2017 and actually may be even accelerate in 2018 and 2019. So, generally speaking I think we are still pretty good with our corporate objective..

Okay and then I didn’t catch if there was anything kind of one-time in the operating expenses from an acquisition or purchase accounting standpoint.

I guess, should we be thinking about 49 as kind of the new level 49, 50, somewhere in there?.

The expenses first which obviously aren’t gone, but there is no one-time things that go away in that operating expenses..

Okay, got it. All right, thank you, the answer is yes..

Thank you. It appears we have no additional questions at this time. So I’d like to turn the floor back over to management for additional concluding comments..

Thank you very much, Tessie, and we'd like to thank everyone for joining us today. We've had a very good year so far. We've been able to successfully expand our operations and our support in a little bit of a slowdown in some of the increasing demand for our business.

We've been able to open new facilities in Vietnam, which is a beautiful new factory and lots of good people in there working helping us satisfy current and future demand in our Asian marketplaces.

We just last week were in Europe and we went and saw the grand opening of our Macedonian facility, another beautiful state of the art factory staffed with world class technology and a tremendous team of people and a new staff of, we have 300 new associates there all completing their training and getting themselves ready to help us satisfy the future growth in the European market and that will also be the manufacturing site for our first products in the battery thermal management businesses and all of these things are on schedule and performing to expectation.

In fact they are exceeding expectations, not only of ourselves, but also of our customers. We will be opening a New Mexican facility here in North America to help satisfy the future demands of our North America business.

And so, this growth, this expansion is very, very good and puts us at the forefront of all the automotive industry and being able to satisfy these demands. In addition to that, we're making great progress and moving into our strategic initiatives.

We have found great partners in the medical product lines that are going to help us bring to production and bring to the marketplaces both, government, military, and the general medical industry some of our heating and heating and cooling products for the medical markets.

We got a bonus in that we also got into the industrial chamber business, which is going to provide another new market for us on a global basis and another engine of growth.

We got into batteries by knowing how to cool batteries and that has led us into an additional operational activity for the electronics that control batteries, and as we look at that there's lots of opportunities in the energy management systems.

And so we made an acquisition of a group of people and technologies that would help expand our ability to understand how battery systems need to be managed and designed, and that's going to provide tremendous opportunity for us as a future growth driver in a new place to expand our knowledge base.

And just the core electronics technology, we bring an innovators approach to a business that in many areas is commoditized, but we've been able to find very unique segments in the electronics world that we think will be a tremendous growth for us, and a good opportunity for us for a long time in the future. So we're very happy with the business.

We're very happy with the conditions. We continue to struggle with market conditions where they exist. We continue to win and we have a very strong balance sheet and we have all the capacities necessary to continue operations as we have seen them in the past.

And we also are adding to that additional pieces that we see necessary for us to be able to achieve our long term growth objectives of 10% to 15% revenue growth per year with a small bit of profit at the end of every day. So we thank you all for joining and we ask you to join us again in 90 days. Thank you, operator..

Thank you. Ladies and gentlemen this does conclude teleconference. Again, we thank you for your participation and you may disconnect your lines at this time..