Good day and welcome to the CTS Fourth Quarter and Full Year 2013 Conference Call. Today’s call is being recorded. At this time, I would like to turn the conference over to Kieran M. O’Sullivan. Please go ahead. Kieran M. O’Sullivan: Thank you. Good morning and thank you for joining us on our call today. Welcome to CTS’s fourth quarter 2013 conference call. This past year has been a year of transition for CTS as we divested our EMS business, changed our margin profile from the low 20s to the high 20s and delivered improved financial results in each quarter. We still have a lot more to accomplish on this journey. Joining me today is Ashish Agrawal, our Chief Financial Officer. Before I turn the call over to Ashish to get the Safe Harbor statement, I want to thank Tom Kroll, for his constant support this past year as we initiated changes at CTS. As you are aware we previously announced that Tom will retire in March of this year. Ashish?

Before beginning the business discussions, I would like to remind our listeners that the conference call contains forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information regarding these risks and uncertainties was set forth in last evening’s press release and more information can be found in the Company’s SEC filings. To the extent that today’s discussions refer to any non-GAAP measures relative to Reg G, the required explanations and reconciliations are available on our website in the Investor Relations section. I will now turn the discussion over to our CEO, Kieran O'Sullivan. Kieran M. O’Sullivan: Thank you, Ashish. Last year we began to simplify, focus and drive profitable growth as we set out on our journey to transition CTS and further clarify the future identity of our company. As we progressed through the simplification steps, we achieved some near-term milestones. We developed a very clear strategic plan; we divested the EMS business and thereby reduce business risk while improving our balance sheet and our margin profile. We started to address our global footprint and utilization performance to enhance our cost structure. Finally, we made changes to strengthen our management team to execute on our strategic plans with the addition of Ashish Agrawal as CFO, Tony Urban, now leading the Sensors and Mechatronic business and Bob Patton, as General Counsel. While we have met progress, we are clearly focused on the milestones we need to achieve by quarter over the next several years to strengthen and grow the business. Last evening we've reported our fourth quarter and full year 2013 financial results. Our Components and Sensors sales of a $102.4 million increased by 35% from the same period last year…

Okay, thank you Kieran. In the fourth quarter as Kieran mentioned, we divested the EMS business on October 2, 2013 for $75 million. EMS is now reported as discontinued operation. Our fourth quarter 2013 sales for continuing operations were a $102 million, which is an increase of $27 million from 2012. This reflects the acquisition of the D&R Technologies and an increase in the demand for our piezo-ceramic products, as well as the increase in automotive production volumes. Sales were $1 million lower than the third quarter of 2013. Our gross margins were 29.5% which is similar to last year. In the fourth quarter, selling, general and administrative expenses were $17.2 million versus $17.7 million last year, as a percentage of sales, the SG&A expenses were 16.8% an improvement of six points from the fourth quarter of 2012. R&D expenses were $5.5 million similar to the fourth quarter of 2012. In the fourth quarter, the net interest and other income were favorable by $1.3 million compared to the same period last year. Our interest cost was lower as we paid down debt and we had favorable currency impact as the Chinese RMB appreciated versus the U.S. dollar. The fourth-quarter net loss was $0.09 per share, compared to net earnings of $0.26 per diluted share in the same period last year. Included in the fourth quarter 2013 earnings was a $0.23 per share charge for the divestiture of EMS, $0.08 per share charge for restructuring and $0.03 per share charge for CEO transition expenses. Excluding these items, adjusted earnings per share were $0.25 in 2013 fourth quarter, compared to adjusted earnings of $0.18 in the fourth quarter of 2012 which is an increase of 39%. Looking at the full year, sales from continuing operations were $409 million an increase of 34%…

Thank you. (Operator Instructions) We will go first to John Franzreb with Sidoti & Company. John E. Franzreb – Sidoti & Co. LLC: Good morning everybody. And I would like to wish Tom good luck in his retirement. First question is regarding the fourth quarter results. Can you give me a sense of what the organic revenue growth was in the quarter ex-D&R? Kieran M. O’Sullivan: I know, let me start off with the full year, when we look at the full year, the organic growth was 18% and on the 35% overall. Ashish for the fourth quarter you want to comment?

Yes. So the fourth quarter, we had organic growth of just over 20% excluding the acquisition of D&R Technologies. John E. Franzreb – Sidoti & Co. LLC: Okay. Then, Kieran, can you explain to me, against that backdrop, why the muted 4% to 6% revenue growth outlook in 2014? Kieran M. O’Sullivan: Yes, I think if you look very carefully at our script, in terms of what we put in the press release, we’ve said that 2013, 2014 are transitional years for us. We’ve obviously been moving forward with our strategy divesting the EMS business was the first signal of that. The other thing we are doing is we are now focused very much on the core and fine-tuning it in terms of there are certain products we want to advance at a faster rate, others will fine-tune a little bit. So that’s what you are seeing and that’s why we called it a transitional year as well. John E. Franzreb – Sidoti & Co. LLC: So, are you suggesting that you might be exiting some markets in the coming year? Kieran M. O’Sullivan: No. Kind of really we have done a big part of that, we are just fine-tuning. John E. Franzreb – Sidoti & Co. LLC: Okay. The gross margin profile now ex the EMS business, Ashish, if I understand is there some restructuring charges in the cost of goods sold in the fourth-quarter number? Okay, so by my calculation the adjusted gross margin is somewhere in the neighborhood of 30%. How sustainable is that going forward?

John, you are right the gross margin excluding restructuring expenses would be right around 30%. As we announced in the June press release related to restructuring, we anticipate a lot of the savings from restructuring actions related to our footprint reduction to come into the second half or starting in the second half of 2014 into the first half of 2015. So we expect gross margin improvements as a result of those actions. And on an ongoing basis Kieran, I think you’d like to make a comment there. Kieran M. O’Sullivan: Yes, John. I presume your question is moving towards how sustainable is that going forward? John E. Franzreb – Sidoti & Co. LLC: Correct. Kieran M. O’Sullivan: So, obviously there are always pricing pressures out there, like there is in any business in different industries. Well, we have got cost reductions, cost improvements you’ve seen actions we’ve taken, but there is normal things that happen with material design cost reductions, productivity. That’s a key focus of ours to make sure not only keeping our margins, but growing our margins as well not just by new products, but by improving existing products too. John E. Franzreb – Sidoti & Co. LLC: Okay. Kieran M. O’Sullivan: You can expect the profile continue. John E. Franzreb – Sidoti & Co. LLC: I’m sorry, say that again Kieran. Kieran M. O’Sullivan: You can expect that margin profile to continue. John E. Franzreb – Sidoti & Co. LLC: Excellent. And one last question and I guess I will get back into queue. Your comments suggest a stronger second half of the year. Typically the June quarter, at least on a revenue basis, is your strongest. I am wondering if your characterization of how the year progresses suggests a revenue shift or is that more of a function of utilization of the cost savings that Ashish just mentioned? Kieran M. O’Sullivan: John, it’s a combination of things that you will think back into the last quarters call, we’ve said that we have some softness in HDD and that was going to correct itself and by the end of the first half of this year. And of course we’ve got the savings as you’ve correctly stated kicking into the second half more strongly, so that’s really the reason for it. John E. Franzreb – Sidoti & Co. LLC: Okay, guys, I will get back into queue. Thank you very much. Kieran M. O’Sullivan: Thanks John.

Thank you, we’ll go next to Hendi Susanto with Gabelli & Company. Hendi Susanto – Gabelli & Company, Inc.: Good morning and welcome on board Ashish.

Thank you, Hendi. Hendi Susanto – Gabelli & Company, Inc.: First question is for Kieran. In terms of your outlook for 2014, what are your targeted growth areas or growth markets? Kieran M. O’Sullivan: I would tell you when you look at the components and sensors and really in those markets where we focused on the emission side and the automotive, the safety side of it. You can see that we are doing some clear things on the commercial markets as well with the products we’ve added to the portfolio. Think also, you’ll see some indications of future works that’s out there in terms of ClearPlex technology, we’ve announced already with this agreement today, that’s the second agreement we have. We haven’t given any color in terms of what’s the size of those awards because we are going through predevelopment phases together, but there are some of the markets in terms of communications growing as well, defense also with our piezo products. So we’ve got a good blend of things in there. But we are just seeing very careful with the transition of the portfolio. We did a lot of work on strategy last year, we spend a lot of time getting the framework and the foundation right. And what we are doing now, and why I’m being a little bit cautious with the statements is we are really getting to that next level of debt in each of the product areas, making sure that the decisions we’re making are the right decisions that will maximize the return for shareholders going forward. Hendi Susanto – Gabelli & Company, Inc.: Okay. And, Kieran, in terms of M&A strategies, do you still have an active pipeline for M&A review and then which markets can be attractive to CTS going forward? Kieran M.…

We’ve normally not given that detailed breakdown Hendi. Hendi Susanto – Gabelli & Company, Inc.: Okay. Or could you indicate which ones will have like higher growth in that assumption? Kieran M. O’Sullivan: I would if you look at it in terms of the, when you are asked about the actuators, you remember the previous years, we were starting to ramp up, now we stabilized on the current actuator family in the 25 plus million range, and the component side of it is growing well, we’ve got some interesting things happening there with the different products and on the sensors and mechatronics more in the automotive side of it, we’ve got that solid growth as well more inline with the industry growth rates. I mean if you look you’ll see that Europe is still pretty muted on the automotive side going from about $90 million just up. There is U.S. we expect to go from just over 60 million and maybe little north of 60.5 million vehicles out there, China going from maybe 20.3 closer to 22 plus. So they’re the kind of growth rates you can correlate back to our sensors and mechatronics. Hendi Susanto – Gabelli & Company, Inc.: Okay. And then, Ashish, may I know how should we think of capital allocation strategy for 2014?

So for 2014 you can expect us to spend in the range of 4% on our capital expenditures. And we will continue to look at share buybacks as well as the dividend is obviously set at just about $5 million for the year. Hendi Susanto – Gabelli & Company, Inc.: Okay. And then what are the tax rate that we can expect after the EMS transaction versus before the EMS transaction historically? Kieran M. O’Sullivan: Hendi, I’ll hand this over to Ashish, but you can expect a change in the tax profile as the mix of products and the locations now with the new profile of the company. Ashish?

Hendi, the tax rate for 2013 was impacted favorably as we had some unusual items in the first quarter related to the R&D credit in the U.S. as well as the China high-technology tax credit which was delayed from 2012 into 2013. So taking that into account I would expect our tax rate to shift upward that combined with the mix in – shift of mix in our income we would be generating more U.S. based income going forward. And that will also drive our tax rate higher. I expect the ongoing tax rate to be in the 30% to 32% range. Hendi Susanto – Gabelli & Company, Inc.: Okay, thank you and all the best for your 2014.

Thank you. Kieran M. O’Sullivan: Thanks, Hendi.

Thank you. We will go next to Lisa Thompson with Zacks. Lisa Thompson – Zacks: Good morning. Kieran M. O’Sullivan: Good morning. Lisa Thompson – Zacks: Nice to meet you. And I was hoping if you could talk a little bit about when we look at going forward now with the new Company, with the product lines you have now, is there any customer or product, something that we can look at, to predict how well you are going to do based on how well they are doing? Kieran M. O’Sullivan: Well, let me answer that first of all by saying we are not giving you a lot of information yet. So we get deeper into some of the products. And we’ve done a lot of that work, but we want to position it correctly. Probably, the best way to answer your question because that data will emerge over the next few quarters and the best way to look at it would be, yes we are very strong with the Japanese. We are very strong with some other customers in the HDD side of it. We are looking to add new customers on the piezo side of it. We are also looking to improve our footprint in Europe and Asia. And you heard me talk about, number one, a little uptick in spending in R&D. And we are also focused on our sales and marketing. One of the things we are doing is getting our sales and marketing people out to the customer locations. Not just in North America and but in Europe and Asia, that’s very much important for us going forward. Okay, I’ll tell you, we are working on new products in the pipeline, we’ve got very clear plans and around those, but it’s bit early to talk you about what they’re going to be, but be aware that it’s active at the moment and that’s why you are seeing a little change in the, little uptick in the R&D spend. Lisa Thompson – Zacks: Okay, great. Thank you. Kieran M. O’Sullivan: You’re welcome.

You have a follow-up from John Franzreb with Sidoti & Company. John E. Franzreb – Sidoti & Co. LLC: Sure. A couple here. The $78 million of new awards, what’s the timing of revenue recognition on them? Kieran M. O’Sullivan: Most I would say, a chunk of that is out in 2016 and 2017 because of the profile of the customers in the development cycle. And there are some other pieces that will be heading into the end of this year, fourth quarter of this year, but it’s too early to give you a color in terms of some of the other awards we talked about that are in the pipeline as an examples to ClearPlex technology. We’ve got predevelopment agreements, but they are not going to show up until later this year and it’s too early to say how extensive they will be. But the majority of it is out in 2016 to 2017? John E. Franzreb – Sidoti & Co. LLC: Okay. And, Kieran, in your new sales effort and maybe going out to the customer, are you looking to improve the gross margin profile of the business when you are looking for these new awards? Is there any active management’s been trying to change or improve the gross margin or the win rate on maybe higher price point type products? Can you talk to that a bit? Kieran M. O’Sullivan: Well, think back to the strategy, first of all, we say simplifying focus to drive profitable growth. We’re looking to be very clear in terms of the future identity of the company and you heard me talked about that that something we’re still working through with the board. But I’ll tell you that we’re always focused on margins, whether it’s an option view, a casual meeting with…

The other income John, it’s made up of two components. One is our interest income and interest expanse as well as foreign currency, so gains and losses. John E. Franzreb – Sidoti & Co. LLC: Okay.

And in the numbers that we gave out the biggest drivers of the change was related to currency. John E. Franzreb – Sidoti & Co. LLC: Okay. And of the $124 million in cash, how much is domiciled in the U.S.?

About… Kieran M. O’Sullivan: I think it’s pretty small.

Yes, its relatively small number, most of it is oversees, John. John E. Franzreb – Sidoti & Co. LLC: Got it. And one last question. Regarding the divestiture of the EMS business, has there been any thought of putting out an 8-K? Will you restate all of last year’s numbers so we can kind of look at the company on a going forward apples-to-apples basis?

We’ll be doing those disclosures along with that 10-K filing, should be coming out in the next few weeks. John E. Franzreb – Sidoti & Co. LLC: Okay, thank you very much guys. Thanks for taking my questions. Kieran M. O’Sullivan: You are welcome John.

And at this time there are no further questions in queue. Kieran M. O’Sullivan: We will give it a minute just to see if there is any more questions.

(Operator Instructions) Kieran M. O’Sullivan: Okay, I think we have exhausted everything on the question side. So thank you all for joining us this morning. And we look forward to talking to you again in the next quarter and in the months ahead. Thank you very much.