Bill Tryon - Director, Investor & Public Relations Bruce Hoechner - President and CEO David Mathieson - VP, Finance and CFO.

Daniel Moore - CJS Securities Christopher Butler - Sidoti & Company David Cohen - Midwood Capital.

Good morning. My name is Kyle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation second quarter 2015 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. I’d now like to turn the call over to Mr. Bill Tryon, Director of Investor & Public Relations. Sir, you may begin your conference..

Thank you, Kyle. Good morning, everyone, and welcome to the Rogers Corporation second quarter 2015 earnings conference call. The slides for today's call can be found on the Investors section of our website along with the news release that was issued yesterday. Turning to Slide 2.

With me here today is Bruce Hoechner, President and CEO; David Mathieson, Vice President-Finance and CFO; and Bob Daigle, Senior Vice President and CTO. Please turn to Slide 3.

Before we begin, I would like to note that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and should be considered as subject to the many uncertainness that exist in Rogers' operations and environment.

These uncertainties include economic conditions, market demands and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statement.

Also, the discussions during this conference call may include certain financial measures that were not prepared in accordance with generally accepted accounting principles.

Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today's call, which is posted in the Investors section of our website. I will now turn the call over to Bruce..

operational excellence. Over the past two years we have invested in resources to drive process and system improvements that have helped us increase yields, achieve greater manufacturing efficiency and control costs.

Each of our business segments are improving yields and increasing throughput utilizing formalized programs such as Six Sigma and business process management as well as grassroots efforts from our dedicated front-line employees.

This effort is helping us deliver strong organic margins, higher profitability, better service to our customers and greater returns to our shareholders. At the bottom of this slide, you'll see our interim three-year financial goals which serve as a checkpoint in our long-term plan.

While we may face some unanticipated short-term market hit time to time, we are confident in our longer-term growth prospects of achieving 15% revenue growth through a combination of organic and acquired growth. Turning to Slide 5. I'd like to review our Q2 operating highlights.

As mentioned, we achieved net sales of $163.1 million, an increase of 6.3% and delivered strong earnings results with non-GAAP EPS of $0.67 per diluted share, which is a 15.5% increase over last year. On a currency adjusted basis, organic net sales declined 4.9% compared to Q2 2014.

In addition to the aforementioned market dynamics in China, fluctuations in foreign currency exchange rates unfavorably impacted Rogers’ revenue by approximately $8.3 million or 5.4%. We are very pleased with the consistent performance of the recently acquired Arlon business which added $25.4 million in net sales and EPS of $0.14.

This performance more than offset the decline in organic sales during the quarter. Gross margin was 37.1% which is essentially flat year-over-year. Non-GAAP operating margin was 12.9%, up 230 basis points over Q2 2014. We expect to see continued margin strength from our ongoing commitment to process and system improvements.

In fact, during the second quarter our organic gross margins improved by 60 basis points demonstrating our disciplined approach of our operational excellence programs. Turning to Slide 6. I want to take a moment to introduce the new name of our printed circuit materials operating segment, which is now known as Advanced Connectivity Solutions or ACS.

As we look at our business from an outside in perspective we determined that the name printed circuit materials was somewhat limiting. The new name better reflects our capabilities and takes into account the addition of the Arlon business.

This change represents an important philosophical shift in how Rogers approaches this segment by expanding its potential areas of business beyond existing material sets into new areas of RF, microwave and digital connectivity.

In Q2, 2015 ACS achieved net sales of $66.4 million, including $13.8 million from Arlon, which is an increase of 8% over Q2 2014. We continue to see healthy demand for advanced driver assistance systems as well as aerospace and defense applications.

The strong growth in [indiscernible] was more than offset by a sudden sales decline in the Chinese wireless telecom market which resulted in a higher than expected inventory build in the supply chain.

We are beginning to see acceleration in the 4G LTE build-out in China and believe that demand will progressively improve during the remainder of the year. The ACS team has been implementing industry best practices to increase productivity and improve yields across its three global manufacturing facilities.

These initiatives have helped the business reduce manufacturing costs and delivered consistent margin performance. As I mentioned earlier, we expect to see improving demand moving forward for the ACS business in China and driven by 4G LTE build out.

Recently one of the top three telecom providers in China announced plans to build additional base stations in 2015. This increases the total announced base station build of all three telecom providers to 930,000, up from the previous estimate of 800,000.

While the industry outlook for base station deployments in China is positive for the second half of the year, we remain cautious in Q3 about the timing of that buildout. In the automotive market, we expect to see continued growth in advanced driver assistance systems where the compounded annual growth rate is projected to be 31% through 2019.

Turning to Slide 7. You will see that we have also changed the name of our high-performance foams or HPF operating segment. Moving forward we will refer to this business as Elastomeric Material Solutions, EMS.

Like we did in ACS, we arrived at this new name by taking a market-driven approach viewing the business from the perspective of our customers and markets. Our intent is to more clearly reflect the broad capabilities we offer our customers, particularly with the addition of the Arlon product lines.

By definition, elastomerics are elastic materials composed of long chainlike molecules or polymers which are capable of recovering their original shape after being stretched to great extents. Our PORON, BISCO, ARLON and eSorba materials would all be classified as elastomeric materials.

These solutions help our customers to protect, isolate and secure their products to ensure optimal performance and reliability. For the quarter, EMS achieved net sales of $47 million, including $6.7 million from Arlon, yielding an increase of 9.9% over Q2 2014.

Weaker demand in portable electronics partially offset strong demand in applications for the general industrial and mass transit markets. There are two main drivers for the demand change impacting EMS in the portable electronics market.

First is a decline in overall volume in tablets and mobile phones, specifically feature phone volume; and second, the continued migration away from the use of LCD foam gaskets in smartphones and tablet designs. EMS has implemented a number of process improvements that contributed to yield increases.

In addition, enhancements to sales and operation planning have helped lead to greater accuracy in production planning and improvement in our on-time delivery. The EMS organization is addressing the headwinds in the portable electronic markets by refocusing the business on other growth categories.

For example, we see opportunity in the mass transit segment where the confluence of global urbanization along with long-term climate and energy goals [ph] is expected to drive a compounded annual growth rate of 7% through 2020.

In addition, EMS has intensified its efforts around the higher growth market segment within general industrial and consumer comfort and impact protection sectors. We see more opportunities for growth through geographic expansion in both consumer and general industrial segments. Turning to Slide 8.

PES net sales were $38.5 million, a decrease of 10.2% compared to Q2 2014. On a currency adjusted basis, PES sales grew 5.3% from the prior year indicating solid volume growth. Our results primarily reflect strong demand in EV, HEV applications as well as laser diodes.

This performance was offset in part by weaker demand in variable frequency drives and certain renewable energy applications. From an operational standpoint, PES is investing in automation and process technology improvements to lower costs and reduce lead times.

These efforts are also leading to yield increases and substantial improvement in on-time delivery. Looking ahead, in PES, we see continued growth in the EV, HEV markets where the compounded annual growth rate is expected to be 32% through 2020 based on worldwide demand for improved fuel efficiency and reduction in carbon dioxide emissions.

This focus is also driving growth in vehicle electrification or x-by-wire where the compounded annual growth rate is estimated to be at 12% through 2020. Turning to Slide 9. You will see that 62% of Rogers’ Q2 revenues were in our key megatrend markets.

We remain confident that we are in the right global growth markets based on the projected growth rates in key applications. For example, consumer demand for mobile video content is expected to drive nearly 60% growth in mobile data traffic over the next four years presenting a great opportunity for Rogers wireless telecommunications applications.

As previously mentioned, consumer demand and government mandates for clean energy alternatives are contributing to a strong growth outlook in the EV, HEV market and we expect additional growth from our newest megatrend safety and protection. This is due in large part to the strong demand for applications in automotive radar systems.

Industry experts are predicting a compounded annual growth rate of more than 30% through 2020 and growth from less than 20 million units in 2014 to nearly 96 million units in 2020. I will now turn the call over to David who will report our Q2 results in greater detail as well as additional financial highlights. .

Thanks, Bruce. Coming to Slide 11, in the second quarter of 2015 we achieved net sales of $163.1 million, up 6.3% compared to the second quarter of 2014.

Actual second quarter of 2015 results were within the preliminary results announced on July 9, 2015 but below the original guidance provided on April 29, 2015 due primarily to sudden sales decline into the Chinese wireless telecom market.

As previously announced, non-GAAP earnings per diluted share were also below the original guidance range due to the lower volume. However we were pleased with our margins despite the lower organic volume due to operational excellence initiatives and cost management consultants [ph].

Coming to Slide 12, organic sales declined in the quarter by 4.9% and we estimate an unfavorable currency impact of 5.4%. The acquisition of Arlon contributed $25.4 million or 16.5% of additional revenue in the quarter. On Slide 13, we have introduced the waterfall charts to help explain the changes to EPS from Q2 2014 to Q2 2015.

Starting with $0.58 of EPS last year this is reduced by the low volume impact to margin of $0.27 partially offset by gross margin improvements of $0.10 due to the continuation of our efforts in operational excellence plus favorable absorption.

We also had a favorable benefit from lower commercial expenses of $0.19 due to lower inventive comp relative to 2014 and other discrete items encountered [ph] in the same quarter of 2014. In addition, lower variable costs and controlled spending also reduced commercial expenses.

This was further offset by another $0.05 relative to lower joint venture results and increased interest expense due to the debt related to the Arlon acquisition. The tax rate and share dilution had an unfavorable impact of $0.02. Arlon added $0.14 to EPS.

This results in a sub-total of $0.67 which is a non-GAAP earnings from these adjustments after which we had $0.06 from discrete favorable tax benefits related to state tax planning initiatives and finally we deduct $0.02 of integration costs to arrive at our GAAP EPS of $0.71 for the quarter.

On Slide 14, consolidated gross margin of 37.1% in the quarter is lowered by 10 basis points compared to the previous year.

However gross margin from organic business improved by 60 basis points despite a lower organic sales from operational excellence programs, favorable absorption due to building some inventory, especially in the ACS business and the favorable mix particularly in the PES business.

This was offset by a lower gross margin from the acquired Arlon business of 70 basis points. On Slide 15, year-over-year non-GAAP SG&A decreased by 260 basis points from 22.5% to 19.9%.

This amount excludes the integration costs but does not include $3.9 million of incremental costs from the Arlon business, consisting of $2.3 million of SG&A and $1.6 million of purchase accounting. Organic SG&A decreased by 170 basis points mainly because of the discrete items in Q2 2014.

We also had lower variable costs primarily due to incentive compensation and spending control due to the lower organic volume in 2015. Arlon helped improve overall SG&A by 90 basis points which includes amortization related to purchase accounting.

Research and development was $7.1 million or 4.3% compared to $6.4 million or 4.2% in the second quarter of 2014. The overall increase of 10 basis points was driven by a 40 basis points increase in organic R&D due to continued investment in the innovation center.

Lower R&D as a percent of sales from the acquired Arlon business lowered the rate by 30 basis points. On Slide 16, non-GAAP operating income was $21.1 million, up 30.2% from the prior year. Non-GAAP operating margin was 12.9% in Q2 of 2015, up 230 basis points from the prior year.

This was due to lower commercial expenses adding 240 basis points partially offset by a reduction of gross margin by 10 basis points. On Slide 17, ACS achieved second-quarter sales of $66.4 million, up 8% from Q2 2014. Organically, sales were down 13.3% and currency lowered sales by 1.2%. The Arlon acquisition increased net sales by 22.5%.

Non-GAAP operating income was 12.3%, up $2 million from Q2 2014 or 180basis points as a percent of sales. This increase was the result of acquisition revenue growth, favorable inventory absorption and operational efficiency improvement. On Slide 18, EMS achieved second-quarter sales of $47 million, up 9.9% from Q2 2014.

Organically, sales were down 4% and currency lowered sales by 1.7%. This was offset by the Arlon acquisition that added 15.5% to net sales. Non-GAAP operating income was $5.8 million, up $1.2 million from Q2 2014 or 170 basis points as a percent of sales. This increase was a result of operating income from the acquisition.

On Slide 19, PES achieved second-quarter sales of $38.5 million, down 10.2% from Q2 2014. Sales were positively impacted by organic growth of 5.3% which is more than offset by an unfavorable impact of currency of 15.5%. Operating income was $0.9 million, up $1.6 million. As a percent of sales, the increase was 390 basis points.

This increase is due to favorable product mix and yield improvement programs. On Slide 20, in the first quarter 2015 we acquired Arlon for an aggregate purchase price of $157 million. We used borrowings of $125 million under our bank credit facility in addition to cash on hand to fund the acquisition.

Cash flow from operations for the six months was $22.4 million with capital expenditures of $14.3 million and we repaid debt including leases of $5.1 million. We ended the quarter with a cash balance of $209.8 million and a debt balance of $180 million.

In our continued effort to build a more flexible balance sheet, we entered into a secured five year credit agreement on June 18, 2015. The amended credit agreement increased the borrowing capacity from $265 million to $350 million with an additional $50 million expansion option.

This new agreement will support our future growth and investment plans at very attractive terms while maintaining a high level of liquidity. On Slide 21, guidance for the third quarter is for the revenues to be in the range of $162 million to $172 million and for non-GAAP net earnings to be in the range of $0.67 to $0.77 per diluted share.

This excludes $0.05 of integration costs and other discrete charges. GAAP EPS is expected to be in the range of $0.62 to $0.72 per diluted share. We are using a euro rate of 1.09 for our guidance for the third quarter. At the midpoint, our Q3 revenue guidance represents organic sales decline of 8.5% over Q3 2014.

The company expects sales will be unfavorably impacted by approximately $6.6 million due to the decline in value of the euro on a year-over-year basis or 4%. Acquisition growth will be approximately 15% over prior year.

Guidance for the non-GAAP EPS which excludes estimated integration costs and other discrete charges has a midpoint of $0.72 per diluted share. This guidance shows a reduction of $0.37 per diluted share compared to the EPS in Q3 2014.

This decrease is due to several factors, including first, commercial [ph] expense related to the lower volume; secondly, lower JV results and higher interest expense related to the Arlon acquisition of $0.05; thirdly, higher tax rate and share dilution of $0.07 partially offset by, fourthly, the Arlon business adding $;0.11 per diluted share.

Now given the results of our second quarter, I’d like to take a moment to also compare the Q3 2015 guidance estimates sequentially to the Q2 2015 results. Compared to Q2 2015 we expect the third quarter to grow sequentially in revenues by approximately 2.5% at the midpoint due to organic growth.

We also expect a sequential increase in non-GAAP EPS of $0.05 per diluted share at the midpoint from Q2 2015 non-GAAP EPS. This increase is due to $0.10 from the higher volume partially offset by $0.05 from an increase in commercial expenses due to incremental expenditures in key strategic areas, such as information systems and sales and marketing.

This completes my commentary and I will now turn the call back over to Bruce. .

Thank you, David and this concludes our prepared remarks. So we will now open the line for Q&A.

Kyle?.

[Operator Instructions] Your first question comes from the line of Daniel Moore from CJS Securities..

Good morning gentlemen and bear with me as I get used to your new vernacular. Want to hone in on obviously the decline that we saw in Q2 in 4G related circuit material sales to China.

Can you describe, Bruce, kind of the monthly sequential trends? You mentioned you’re cautious still in Q3 what you saw in July and what kind of, I guess, what you're seeing are pointing to that, that would lead you to believe that Q2 was in fact the bottom there?.

So first of all, it’s very interesting to see what happened in Q2. When we look back at April's numbers, it was within what we had projected in our guidance and then it just fell off the cliff in May and June. As we look forward through the third quarter, we see orders building in our pipeline that our bookings are increasing.

So we have confidence that it's recovering. Now the rate of recovery is where we’re somewhat cautious. But as we look forward we know that the buildout will occur. There has been already announcements by one of the three China mobile or China telecom organizations that they are increasing their build for the year.

So our sense is that this is increasing, to put a very fine point on it at this point, it's too early for us in order to do that. But we do see that progressively through the quarter and through the rest of the year we see this increasing. I think the interesting thing also is to take a look at where the global LTE 4G -- 4G LTE buildout is.

Globally we’re only about 25% built out and specifically when we look at China we’re in the range of 35% to 40%. So we’re very confident about the future of the buildouts here.

The question is just what I would term sort of short term spikiness that that’s happened, primarily in our view because of some of the actions that were taken by the Chinese government some of the investigations that went on in the telecom area. So we think we’re through that and now we’re looking forward at the recovery. .

And is it fair to characterize that cautious as being embedded into your Q3 guidance?.

Yes, I think that would be a fair characterization. .

Can you give us a little better sense if I drill into the guidance and David gave us nice color.

But what it implies for Arlon in terms of organic growth and then -- as well as your legacy advanced connectivity and elastomeric material segments just on an organic growth basis?.

I think Arlon, they are flat, so down a little bit but they are essentially flat, maybe down between 0% and 5%. .

And I think on the EMS side, formerly HPF, we’re looking at Q3, it tends to be a high point. We’re being cautious there. Again there is a confluence of design changes that come through in this quarter, how that affects the business is, we’re still determining because it’s a short -- I would say short cycle, let’s say.

I think the other thing is as we’ve seen the decrease in demand for handhelds, specifically some of the feature phones where we have content and as the unit volumes go down, we’re somewhat concerned about that. But overall I'd say there's some small upside there that we think will occur..

And just looking at the quarter, we’re intrigued that Arlon held up much better than Rogers’ kind of legacy circuit materials business.

Just can you describe, maybe contrast, remind us of the different end markets and what you're seeing and why that business appears to be holding up little bit better at least in the short term?.

Yes, in the Arlon ACS component, two major areas -- one is the antennas, the tower antennas, the circuit materials that go into antenna systems. And the second one is military, defense high reliability. Military high reliability is very steady and so we've enjoyed a very consistent performance there.

And on the antenna side of the business, that runs in a different cycle, actually somewhat disconnected. While related to base station builds, it's not necessarily directly related.

So we continue to see very good results there and as we look forward in Q3, we see what -- looking back on the history of Arlon, we see there's a little bit of seasonality decline in Q3. But generally we see the orders holding up on the antenna side..

And last one, I will jump back in queue.

X-by-wire, significant area of growth, anything causing that little bit of a slowdown near term?.

I think the order pattern is probably the best way that I would describe it. We don't see any significant change in that market outlook for us and so we’re just looking at how the patterns go. There were some issues I believe with some of the customers moving plant facilities and so forth that kind of caused some spikiness. .

Your next question comes from the line of Christopher Butler from Sidoti & Company..

Going back to the China 4G question, if you read the reports coming out of the telecoms in China, they’re still going at 100 miles per hour but we've seen this from you and others that there is this temporary slowdown.

Could you give us an idea of how much of this is end market slowdown versus too much inventory in the channel that kind of caught up to you?.

So very good question. I think when we look – we have to go back into 2014 and look at what happened there – a huge demand surge in 2014 in the base stations. And so we had really been stretching ourselves, we had 35% growth last year in ACS.

And so there was, we believe, building of inventory by the board shops, as they move forward when they could get materials they started building inventory. So that's added to the -- or exacerbated the situation in the supply chain with excess inventory.

So as the telecom ordering reduced during Q2, the pullback was accentuated by people also pulling down their inventories in the supply chain that goes into the builds of the base stations. So it was somewhat a double whammy between sort of readjusting the supply chain inventories in the system and then just the orders having dropped off.

And so we think we’re back in balance. What we view, though, is – and if you look at some of the announcements from some of the OEMs of the base stations, they were saying that they had a good Q2. We are 3 to 5 months before them in demand.

And so the base stations get built based on our circuit materials and so by the time they sell it, it's 3 to 5 months out. So our view is that, that's the way that the value or the supply chain is working for us. So as we start seeing impact and improvements , it will flow through the system over the next five months.

So we should look at OEM – at the OEM announcements and you'll see the same..

And you’d indicated that your organic gross margins held up pretty well.

Could we assume that sales into the 4G space held up as well even with the softer than normal demand?.

Well, what we did there -- the sales into 4G business is really where we had the second quarter decline but what we've done on the margin side is through our process improvements and so forth, we’ve been able to hold margin. We did build a bit of inventory in Q2 which also helped absorption and helped margins as well.

But I think I would focus on the fact that even with the volume down somewhat on the circuit materials that go into 4G we were able to maintain the organic side of the house on margins..

Your next question comes from the line of David Cohen from Midwood Capital..

Thanks guys, good morning. My questions actually have been answered. .

[Operator Instructions] Your next question comes from the line of Daniel Moore from CJS Securities..

Thank you again.

Bruce, you mentioned the long-term goal of 15% growth, combination of organic and acquired, how much of that do you expect to come organically over the next several years?.

Again the way that we've categorized or viewed this is -- we've historically had a target of about 10% organic growth. Now we have certainly some headwinds this year between the situation in China, the situation with the currency exchange rates in the euro.

But as we look at the markets that we’re in, the tailwinds in our megatrend markets are still very strong. And so we continue to assess and look at what we believe to be a very strong market areas.

Overall we’re looking at the 15% between organic and inorganic and over a course of two or three years that's going to fluctuate back and forth between organic and inorganic growth. But we’re still looking at strong markets and the 10% organic is not something that at this point we’re saying is not achievable.

But again you do have spikiness here and there. .

And then turning quickly to balance sheet, $30 million net cash and growing given a pretty strong cash flow and probably even stronger next year and then you have the Increased liquidity.

I know you are looking for acquisitions, maybe you described the pipeline but is there anything that would preclude you from looking both at your own stock and acquisition at the same point given the material decline in the shares over the last couple of months?.

So in terms of acquisitions, we have a robust process in place and Bob Daigle is leading that and we continue to be out there seeking synergistic acquisitions that we think will add value, much like Arlon. And that's number one.

Number two, there's always a question of what else can we do with our cash in addition to the acquisition approach? So we continue to review the option of share buyback, that’s something that's in front of the board at every meeting. And we continue to discuss that as another approach for the use of cash over the shorter term.

But I would refocus just on the acquisition side which is really core to our strategy and where we are as I said working hard to find other good opportunities. Operator Your next question comes from the line of Daniel Locker [ph] from Kalmar Investment..

Glad to be here.

Can you talk about or remind us how much revenue in the EMS category now comes from handheld devices?.

It’s approximately $25 million annually. .

25% of that business. .

Yes. .

So that’s what, 40 some odd million or so. .

Yes, it’s in the range of 40 million..

And as you think going forward with new product and culling of existing content, how would you expect that to track recognizing that you’ve focused on other areas as you talk about the growth opportunities?.

Right. We still have a very very good to focus on MID where we think there's opportunities, things like back cushions, ripple pad cushion and so forth for the MID applications. But I would say that will continue to decline over the next 2, 3 years to some steady-state level and at this point it's really hard to project exactly where it will even out.

But we continue to work, as I said, on some other application areas in MID where we think we have some uniqueness and then we’re refocusing our efforts on the consumer side as well as industrial side.

Yes, this market, the MID market is one that still has some -- a little bit of a decline in front of it for us but again we’re working on the other side of the house to grow that. .

And what timeframe would you expect that segment to go organic positive?.

I would say we’re talking probably two years – for MID to go positive?.

For EMS..

Oh, EMS, we’re looking forward that into 2016 we should start seeing some level of organic increase. .

Could you, if you would please, focus a bit on some of the design-in activity, maybe you got to this already in the call and I just wasn't – didn’t note the conversation but if you could talk about some of the design-in activity and some of the things you are most keen on?.

So just on a general basis, when we look at the design wins that we've had, or second [ph] wins, in Q1 there were 469, in Q2 we went up to 536. So we’re still on am increasing basis and the overall funnel is increasing as well. We’re almost to 1000 projects that are being evaluated right now.

And this is all on the megatrend areas and that's a wide distribution across the 33 megatrends. So we’re confident when we look at the pipeline of projects that we have very good things that have been approved that are expecting, we’re waiting for them to hit into, go into production.

So we don't -- that's a great leading indicator in our view, the question is when does it actually come into production – but we don't see any diminishment of designing activity and design wins from the Rogers perspective. .

Finally, if you would, we've had tentative focus on a 50% flow-through on revenue both up and down.

As you look at the different segments, would the flow-through economics differ based on the segment?.

Yeah I think the EMS business has the highest flow through followed by the ACS business and lastly coming to PES depending on the maximum [ph]. End of Q&A.

There are no further questions at this time. I will turn the call back over to Bruce. .

All right. Thank you, Kyle. In closing, we expect to see progressive improvement in organic sales in the second half of 2015 as the China market stabilizes and inventory levels normalize. We remain confident in our growth strategy which has led us to record results in 2014.

Moving forward we will continue to execute the four elements of our strategy, being market driven, innovation leadership, synergistic M&A and operational excellence. Our record second-quarter sales were buoyed by a solid performance from Arlon which is an excellent example of our approach to M&A.

The integration continues to exceed our expectations as we finalize the integration and begin to capitalize on opportunities to expand our market reach, broaden our portfolio and deepen customer relationships.

Our discipline around operational excellence and cost management helped us maintain consistently strong organic margins in Q2 even in the face of market headwinds. We will maintain focus on driving down costs through operational improvements in our manufacturing operations.

In our markets we expect to experience growth in Rogers’ applications for wireless telecommunications, automotive safety systems, rail traction, EV, HEV, energy-efficient motor controls, automotive electrification and safety and protective cushioning.

We continue to pursue synergistic acquisition opportunities to leverage our global strengths and broaden the portfolio of solutions that we provide our customers.

We believe that many opportunities will adequately exist particularly as we expand our presence across new markets and regions as well as a further diversification of our product portfolio into markets we already serve today. So thank you for joining us on the call today. Have a good day. .

This concludes today’s conference call. You may now disconnect..