Please stand by. Good day, everyone, and welcome to the CTS Corporation Third Quarter Earnings Call. Today’s conference is being recorded and at this time, I’d like to turn the call over to Mr. Kieran O’Sullivan. Please go ahead, sir. Kieran O’Sullivan: Thank you. Good morning. Thank you for joining us today and welcome to CTS’ third quarter 2014 conference call. The following are the key takeaways from today’s call. We continue to deliver improvement in margins and EPS. We also have continued progress in our effort to simplify and focus our business while strengthening the foundation for our future. Our focus on execution is well aligned to our strategic plan. You can expect greater clarity on our future growth, direction in the second half of 2015, as we reshape and complete our branding works to further clarify our future identity. Our strategy to invest in sales and marketing and R & D globally, is succeeding as we focus on growth and adding new customers. This is the most important focus for us going forward as we continue to simplify and manage our operating expenses. Joining me today is Ashish Agrawal, our Chief Financial Officer. Ashish will take us through the Safe Harbor statement. Ashish?

Before beginning the business discussions, I would like to remind our listeners that this 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 is contained in the press release issued yesterday 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 Regulation G, the required explanations and reconciliations are available in the Investor Relations section of the CTS website. On this call, we will refer to 2013 financials on a continuing operations basis, excluding results for the EMS segment, which was divested in the fourth quarter of 2013. I will now turn the discussion back over to our CEO, Kieran. Kieran O’Sullivan: Thank you, Ashish. Yesterday, we reported our third quarter 2014 financial results. Sales were $100 million, down 3.6% from the same period last year. Our sales to automotive markets were down 3.1% year-over-year. However, included in the sales for the third quarter of 2013 was a onetime special order shipment up $3.9 million to an automotive OEM. Excluding this shipment 2014 sales to automotive markets were 2.9% higher than the same period last year All other sales were down 4.5% year-over-year a softness in shipments of our frequency products were offset by an improvement in shipments of HDD and other piezo products. Frequency products which were soft in the second quarter 2014, have improved sequentially. We continue to strengthen our front end sales and are making progress towards refreshing our product portfolio. We’re focused on reference design wins and we’ll also release our new low power OCXO product in the first half of 2015. Our…

Thank you, Kieran. Third quarter 2014 sales were $100 million, down 3.6% compared to the same quarter last year from continuing operations. As Kieran mentioned, we filled the special order to an automotive customer in 2013, which accounted for $3.9 million in the third quarter of 2013. This puts pressure on our year-over-year growth. Sales declined 2.9% sequentially from the second quarter to the third quarter. Gross margin for the third quarter of 2014 was 32.5% versus 30.9% in the same quarter a year ago. Similar to last quarter, margins increased as we continue to achieve efficiency gains and implement material and labor productivity projects. We are also realizing margin improvement from our restructuring projects as anticipated. Operating expenses in the third quarter of 2014 were 21.3% compared to 23.6% in the same period last year. Operating expenses for the third quarter of 2014 include 1.6 million in restructuring charges compared to 900,000 in restructuring charges and 800,000 in CEO transition costs in the third quarter of 2013. Providing some breakdown on the operating expenses, SG&A expenses were $13.9 million, down $3.9 million from the third quarter of 2013. The main drivers for this reduction are savings generated from restructuring and cost containment actions and a reduction in pension expenses and CEO transition costs that were recorded in 2013. As discussed previously, we continue to enhance our sales and marketing capabilities which resulted in higher selling and marketing costs in the third quarter and year-to-date for 2014 compared to last year. However, the increase in sales, selling and marketing costs were more than offset by the reduction in general and administrative costs. R&D expenses were $5.8 million in the third quarter of 2014 compared to $5.7 million in the third quarter of 2013. R&D expenses are slightly higher than last…

Thank you. [Operator Instructions] And we’ll go first to John Franzreb with Sidoti & Company. John Franzreb – Sidoti & Company: Good morning, Kieran and Ashish.

Hi John. John Franzreb – Sidoti & Company: I guess I like to start with the top-line during the quarter. It seems to me that in years passed, your automotive business would outperform general trends in automotive production due to capturing new business via new platforms or increased penetration within an existing platform. Starting to – it seems like it’s starting to deviate from that historical trend with even axing out the onetime item only up 3.1% in the quarter. It looks like production of North America was roughly 7% in the quarter. Could you talk a little bit about that and explain what’s going on? Kieran O’Sullivan: Yes, John, maybe at a macro level what we are seeing is obviously U.S. running well. You can see the numbers out there for the market. Europe soft and then Asia is up but it depends on Asia, which especially in China which JV is your weapon there and that’s a pretty important part of the equation. The other thing to think about is revenues today in automotive are what you booked to back in 2010 and 2011. So obviously that’s why we said we are in a transition period. On previous calls, we said we are increasing the order intake and we’ve been pretty clear in terms of saying, hey, we are in transition in 2013 and 2014, refining the portfolio, refining it little bit. You can see some of that around the component side not the automotive side. But we really increased the order intake goals and as I said in the opening comments that’s really the big focus for us. We settled the foundation. We are improving the operating efficiency, but our big focus is order intake, how we’re booking and getting that investment in sales and marketing, and…

John, did you mean one-time benefits in the fourth quarter or in the third quarter? John Franzreb – Sidoti & Company: The fourth quarter.

We talked about one-time benefits in the third quarter. John Franzreb – Sidoti & Company: Okay. I could have swung when you were talking about the guy to say, have you enclosed one-time benefits in 4Q?

No – one-time John, in third quarter, we had some collections of bad debt receivables, old customers as well as some one-time tax benefits. The combined impact of those two is just about a little over $0.02 per share. John Franzreb – Sidoti & Company: But it’s nothing expected in the fourth quarter there?

Correct. John Franzreb – Sidoti & Company: Okay. Thank you. I’ll jump back in queue.

Thank you, John.

Thank you. We’ll go next to Lisa Thompson with Zacks Investment Research. Lisa Thompson – Zacks Investment Research: Good morning.

Good morning, Lisa. Lisa Thompson – Zacks Investment Research: Hi could we talk a little bit about margins each quarter you seem to be ticking up a little bit more in operating margin given what’s going on when do you think you’re going to pick out on those?

Lisa we are continuing to realize benefits from the restructuring actions that we initiated last year. And as we have highlighted in the previous calls we are slightly ahead of our expectations on that. We expect somewhere between 70% in the range of 70% of the expected margin improvement to be realized this year and the balance coming in next year. Lisa Thompson – Zacks Investment Research: So we’ll see it first few more quarters, the second half should everything flatten out or?

Just from the restructuring actions yes but there are offsetting factors like product mix as well as various business actions that we do to in terms of volume that will also have an impact on the margins. Kieran O’Sullivan: Lisa, overall when we talk about the business model and the mix we said you expect gross margins to be in the low 30s and obviously we’re obviously trying to improve that and focus on it but that’s where if you want model that’s where you can expect this to be. Lisa Thompson – Zacks Investment Research: Okay. And when do you think could be an end to restructuring costs in the quarters?

We have restructuring actions that are already announced that go through the middle of next year. Lisa Thompson – Zacks Investment Research: Okay.

But Lisa, we will continue to look at how we improve efficiency of our cost structure going forward. So as if new ideas are emerging and we take action on those we will be making those announcements as we get to that point. Lisa Thompson – Zacks Investment Research: Okay. And then I tried to understand the business a little, so obviously next year’s automotive is related to 2012 sales or bookings or whatever. So how does if a client, say I mean I read about China having weakness because of the new emission standards and things so I would think that delays production. How does like current events change your orders?

Lisa, if you look at North America as an example or you can pick China, you’ve got yield, number of units being shipped over 16 million or 16.5 million in North America, higher than 22 million in China, if those volumes potentially go up or down, that can impact our number of units shipped to vehicles. Europe is a little softer for us and that’s one thing we are focused on in terms of driving growth in that region. And if you look back to the prior quarters, we are not guiding on 2015 at this stage, but we’ve been very clear that you can expect modest growth now in earnings and EPS, as we target higher growth rates in ‘17 with the revenue focus we have today. And we’re trying to get much more focused between organic and inorganic growth in the ‘17 period of 10%. Lisa Thompson – Zacks Investment Research: Okay. And finally let’s talk about the cash, you have 130 million, I know it’s almost all overseas, so we’ve nearly [indiscernible] hole in the pocket. But are you getting any closer or are you seriously going through list of potential acquisitions to reduce some of that cash?

We are evaluating acquisitions at, on a regular basis and most of these acquisitions have pretty diverse geographic footprint that we look at. So our expectation is to utilize a good portion of the cash that’s oversees to make acquisitions. And also as we grow the business organically, there will be some pockets of CapEx requirement to fund that growth. Kieran O’Sullivan: And Lisa, I would tell you, we’re very curious in terms of what we want to do in that area. And we’re a lot deeper on it than we were two quarters ago so and we’re working in pretty hard. Lisa Thompson – Zacks Investment Research: Okay. And what’s the – kind of the game plan on acquisition, are you looking for compactable product lines or is it looking for market share and products you already have, are you looking to diversify out of automotive like what’s kind of – what’s the general thinking? Kieran O’Sullivan: Longer-term, if you look at transportation in our portfolio, it’s about high 60s %, we’d like that to be a little bit lower. We’ve certainly been very curious on the regional aspects of our business that we’d like to focus more internationally, and look at M&A internationally as well given our cash situation. But when you break it into the details that we have, and we don’t talk about all of this under strategic plan, we have certain key things into each of the product lines that we want to achieve. It might be a technology we want to pull down in one area, it might be some new customers in another area, it might be a core technology relating to auto in another area. So we’ve got very define plans. And I will tell you, in alignment with our leadership team and Board of Directors, we look at that on a regular basis. Lisa Thompson – Zacks Investment Research: Okay. Great. Thank you. Kieran O’Sullivan: You’re welcome.

Thank you. We’ll take our next question from Hendi Susanto with Gabelli & Company. Hendi Susanto – Gabelli & Company: Ashish, in the Q2 call, you mentioned the CTS had some front-end sales performance and execution on working with OEM and channels, are those issues behind us now?

Good morning, we’re making good progress there. We’ve actually been moving people into the different regions, beeping up in the area, not just in sales and marketing, but R&D as you mentioned. I would say we’re 50% away through some of the things we want to achieve, but made good progress and we’re tracking with a little bit more to do. And we’re also in the early stages, but we’re seeing some good traction for some of that, and I hope to talk to you about that in the next quarters as well. Hendi Susanto – Gabelli & Company: Okay, got it. And then Kieran, I wonder whether you can give more insight into which end markets contributed a weakness in your frequency products, and whether they are – whether it’s a mix or whether you’re still seeing of some pockets of strength in certain end markets in frequency products? Kieran O’Sullivan: I would tell you probably the biggest thing is, when you look at telecom and the capital investment in telecom, that’s really where some of the softness has been at a high level. On the flip side, we’re repositioning some of the products in the portfolio. I would tell you as an example, some of the winds that we had this quarter were much more towards test and measurement, some of them are still in the telecom area. What we’re really trying to diversify a little bit and we’ve just taken the right time here to move it in the right direction. But telecom is probably the bigger part. Hendi Susanto – Gabelli & Company: And then when you said telecom, may I know what the root cause, is it make lower capital spending in general, or there is more to that? Kieran O’Sullivan: I would say there’s…

Thank you. We’ll take our next question from Brad Evans with Heartland Brad Evans – Heartland: Gentlemen, good morning. Kieran O’Sullivan: Good morning.

Good morning. Brad Evans – Heartland: Thanks for taking the questions. Kieran, can you just expand a little bit further upon the optimism you have into the second half of ‘15 it sounds like you’re feeling optimistic. Perhaps some of the fruits of your labor, both in terms of new design win activity as well as may be a reflection of the lower cost base where it really start to become more evident in the second half of ‘15, can you just expand upon that a little bit please? Kieran O’Sullivan: Yes, Brett. And really, and I think the message we talked about in terms of a new framework for identity in the company. And I’m being very open when I say it’s, we haven’t spent time even looking at our website. If you go to our website we’d talk about it is inside the company. It’s pretty old, it’s pretty dated, and we’re trying to reshape the identity. And what we’ve gone through is, I mentioned the cycles of strategy and operational cycles of learning. And we’re giving just a glimpse into the future in terms of; we’ve got a framework where we’re going to start building the investments around and we’re already obviously doing that. So, you get a lot more color on that in the second half of ‘15, I know it’s a long way away, but we wanted you to know we’re working on it. And there is … Brad Evans – Heartland: Well, they’re only almost – they’re only seven months away, so not that far way, but so I didn’t misinterpret your comments today (inaudible) correctly based on what you’re intimating? Kieran O’Sullivan: Yes. That we’re actually shaping the identity a lot more and the focus a lot more, absolutely, that’s what we’re doing…

That could be a reasonable way to think about it, Brad. Brad Evans – Heartland: Okay. I’m sorry, how much of the cash now is in the United States?

Almost all of it is overseas. Brad Evans – Heartland: Okay. And just kind of thinking outside the box, I mean, over half your sales are international, is it there a strategic transaction that would be beneficial to CTS where perhaps you could re-domicile outside of the U.S. to have access to your cash and maybe also facilitate a more attractive tax rate. Can you contemplate it for me along those lines? Kieran O’Sullivan: You know, we’re really looking at it from the strategy perspective as to what we want to do, and we have a very clear plan aligned with the board by quarter at 17, 18. If some of those things happen to be international, it’s a nice fit for us and that would be perfect, but it’s really driven by the strategy. Brad Evans – Heartland: Did my comment – does my question, is it clear to you though in terms of, it would make sense that perhaps if there will be a transaction that would allow you to have a headquarters or domicile that would allow you to have access to your balance sheet without punitive tax consequences. That would seem to make sense and it would lower your tax rate as well. I mean, are there transactions out there that could achieve that type of benefit for shareholders? Kieran O’Sullivan: Certainly we wouldn’t have any aversion to that, and there are tractions out there but, I mean you know what it’s like working through transactions, you’ve got to work and get the right fit. But I mean again, it’s right back to the strategy, if it fits in our strategy, that’s really what we want to do. Brad Evans – Heartland: Yes, it’s just we applaud what you’re doing, we think you’re doing all the…

[Operator Instructions]. And with no further questions in the queue, I’d like to turn the program back over to Mr. O’Sullivan for any additional or closing comments. Kieran O’Sullivan: I just want to thank everybody for joining the call today. We’ve had our strategy, we have been very clear on it to simplify focus and grow. And as I mentioned on today’s call, you’ll get a lot more color going forward in the second half of next year around those segments of growth. But to be very clear that’s something we’re already working on. And I thank you for your time. Thanks, again. Bye, bye.

That does conclude today’s call. Thank you for your participation.