Good afternoon. Thank you for standing by, and welcome to the GSI Group 2015 Q3 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 would now like to hand the floor to Robert Buckley, Chief Financial Officer. Thank you, Mr. Buckley, please go ahead.

Thank you. Good afternoon and welcome everyone. Before we begin, we need to remind everyone on the Safe Harbor for forward-looking statements that we've outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. We may make some comments today both in our prepared remarks and our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of today. And we disclaim any obligation to update forward-looking statements in the future even if our estimates change. So you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During the call, we'll also be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the financial tables included in our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we'll provide reconciliations promptly on the Investor Relations section of our website. And I'm pleased to introduce Chief Executive Officer of GSI Group, John Roush.

Thank you, Robert. Welcome everyone and thank you for joining our call. We delivered strong third quarter with solid growth in revenue and very strong execution across the whole company. As a result, we were able to expand operating margins while exceeding our own expectations with respect to profitability and operating cash flow. I'll briefly cover the financial highlights and Robert will go into more detail in his section. Q3 revenue came in at $92.3 million which is within our guidance range and represents 4% organic growth and 4% on an adjusted basis. Our book-to-build ratio in Q3 was 1.0 and is that 1.02% on a year-to-date basis through Q3. Adjusted EPS was $0.24 in the quarter and adjusted EBITDA was $16.1 million. Both figures are above our own guidance range and consensus. Operating cash flow was $10.9 million and our net debt at quarter end was down to approximately $29 million. To provide context on Q3, on the revenue side we were pleased to come in at $92.3 million, given the weaker market conditions we saw on the industrial side of the business after China devalued their currency in August. Frankly we had expected revenue to be slightly higher when we initiate our guidance – when we issued our guidance but we'd expect to keep it very well across GSI, supported customer deliveries and in the end, we do not lead demand on the table in the quarter. The medical side of our business largely held the line through the quarter and ended up where we had expected. In fact, we're extremely pleased that the JADAK business had record orders and a 1.35% book-to-build ratio in the quarter, which positions them for nice growth in Q4. The order strength occurred in both the core JADAK data collection products as…

Thank you. I'm going to provide you with the financial summary of our third quarter results, highlight a few areas and give you an update to our financial outlook. We started the third quarter up strong which put us in a great position to neither exceed guidance despite a fairly meaningful slowdown in the broader industrial capital spending environment in the last week of August and into September. In addition as John noted earlier, the third quarter March period where many of our key medical applications return to growth and demonstrated at the medical capital spending cycles or unrelated to the industrial capital spending cycles. These unique mix of revenue on the back of our continuous improvement business system gives us confidence and a strong foundation to deliver a consistent and predictable profit growth, while deploying capital through an acquisition focused strategy to accelerate our strategic vision. GAAP revenue was $92.3 million down 3% from $94.7 million in the third quarter of 2014 due to the divestiture of the JK Laser business earlier in the year. However, adjusted revenue growth in the quarter which excludes the JK revenues for both periods was up 4% to $92.3 million from $88.8 million. Our organic revenue growth which excludes acquisitions, divestitures and the impact of foreign exchange was up 4%. From the segment perspective, our laser product adjusted revenue was up 4% year-over-year despite a fairly significant impact from foreign exchange. Our Precision Motion adjusted revenue was up 23% year-over-year, despite a roughly $2 million decline in our PCB spindle products year-over-year. And our Vision Technologies adjusted revenue was down 5%, but is now reaching a turning point in terms of its demand at the medical capital equipment market has finally stabilized. Overall, sales into industrial – advanced industrial markets which represents 60%…

Thank you. [Operator Instructions] And your first question comes from the line of Lee Jagoda of CJS.

Hi, Lee.

So John, can you talk a little bit about the product offerings you plan to introduce at the various trade shows during Q4? And maybe contrast and compare those with ones you introduced last year and if you could even go a little further and provide a progress report on the products you introduced last year and how they sold into the OEMs?

Yeah, well I mean that’s kind of covering a lot of ground. So, the first one that I highlight is within the Precision Motion business, we have a couple of new optical encoder offerings that are really – I mean it's trade shows, but really it's just working with your launched customers, there is a whole [indiscernible]. And two different encoders that really open up the motion portion, one that helps us operate in more let's say a severe environment, non-clean environments, a lot of optical encoder struggle with the contamination some of the industrial settings. So we now have an encoder that gets around that and we think it's going to make a big impact for us. The second one is a more miniaturized, lot of the robotics applications you're trying to manage the motion control in the tight space in the joints on the robots. And we lead the way in the encoder space with having low profile and miniaturize encoders and we've taken that to the next level. So both of those products are reaching the market sort of Q4, Q1. They're in the hands of customers now in test and in designing effort. So that’s going to make a big impact for us in the motion business, and we did not have that a year ago. We really didn’t have significant launch with new products in motion. So, I think that’s the first thing I would say. When you go into the medical space, a number of things happening in the NDS and also on the JADAK business on the RFID side. It's not so much any new product for RFID, it's really just the breath of customers that are now working to adopt RFID. We've had the offering and so we've seeded that into a number of OEMs and you'll see more and more of the medical equipment launching RFID as a future of the equipment and it should really been used to do a lot of things but to track what's happening with parts of the system [indiscernible] consumables or surgical tools that are using the equipment and they're tracking that through RFID, so that’s one. And then in the NDS business, you're seeing a lot of different launches, they were probably the most critical one, it's a 27 inch radiant ultra. It's a very bright and higher resolution surgical display at the 27 inch size and it uses gorilla glass, it's a scratch proof, easy to clean, very robust display and it's a brighter and better display than anything on the market. And you're seeing a lot of interest in that. So we didn’t have that last year, we had a number of other launches, some of which are actually radiology products and they did contribute a bit this year, and we think that the products we have this year are going to make a more significant impact.

Let me add to that a little bit, U.S. coming up with a large trade show conference that we're having in Europe. We are planning on launching some new technology focused around the integrated operating room, specifically you'll see us launch with some new Wi-Fi enabled technology, ultra wide band Wi-Fi that’s called zero wire that will be marketed both on an embedded solution as well as a product that will be standalone. We're also be looking at a 4K display that comes out into the market and then different form factors around the new displays as John mentioned earlier. We have new connectivity devices as well as new informatics that were also launching, that really enable our OEM to start integrating and operating them in a very proprietary way. So, NDS business in particular is going to have a number of big launches and do have products to showcase in that trade show.

That’s all very helpful. Switching gears to the commentary around some of the deterioration in the industrial end markets or the advanced industrial end markets. I guess two questions there, one, how were October trends looking? And two, just to be clear, is it really just the end market or at all are we losing share, maintaining share where do we stand there?

Well, I mean you're seeing this primarily in two places as we mentioned this. It's in the laser businesses and it's not all the applications, it's more in the industrial side of laser and then it's in the western business. And in neither case that we track any cases where a customer is actually dropped us, it's just the volumes and the timing of orders in the ongoing programs. And I would say that when the October trend is still early days there, but I mean that’s factored into the way we guided it, so but still a couple of months on making the trend up or down that’s how we've got a $5 million range on the thing, there is room for it to kind of go in either direction and we tracked – we clearly look at order in shipment trends and then we'll revisit that. We think we've got it dived in the right way based on the way we seem to date.

Okay, great. And then Robert, one more and I'll hop back in queue. Any changes in your expectations for free cash flow for the full year given the order and capital movement in the quarter?

No, I was hoping to make up for some of the performance in working capital in the fourth quarter and I think things are around that trajectory. We got really what I would say is third quarter while it was good from an operating cash flow it should have been a lot better, but we got lots with receivables and we're held up frankly because of the sales linearity, so products went around later and so we can collect it within the quarter. And there are some higher inventory levels that will bleed down pretty dramatically in the fourth quarter and get it to the right levels. And solution make up [indiscernible], we have our operating cash flow back on the original [indiscernible] with patient.

Great. Thanks very much.

Yeah.

Thanks, Lee.

Thank you. [Operator Instructions] At this time, there are no further questions. I'll turn the floor for closing remarks.

Thank you, operator. And so I'll conclude today's call by saying we're pleased with the resiliency we showed with the company in Q3. As I said, we have very strong execution across the company and we had enough of our revenue base moving in the right direction to deliver organic growth, despite a challenging market on the industrial side of the business. We feel very good about our leadership team and our talent base that we build across the company. We're convinced we have the right strategies and initiatives in place to sustain profitable growth. As I said in our last call, our talent, portfolio of technology and strategic capabilities are all better than they were a year ago and I think that continues to be true. We clearly did see a bit of downward shift in the macro environment for advanced industry of technologies, particularly those tied to end user demand in China. The good news is we see a more positive near term vector in medical applications and that helps to stabilize our revenue base. Our strong execution capabilities as well as our productivity and restructuring programs give us a confidence we can drive improved profitability, even in the phase of the somewhat lower demand growth environment. Our balance sheet and our cash generation are strong and that gives us the flexibility to further improve the company through acquisition. All we're at set this up well to finish our 2015, with full year performance we'll be proud of in terms of revenue, organic growth, profitability, cash position and the ultimate strategic positioning of the company for the future. We're very proud of what we accomplish here at GSI over the last several years. We've taken a company that had numerous challenges and limitation. We fundamentally transform the talent…

Thank you for your participation in today's GSI Group 2015 Q3 earnings conference call. You may now disconnect.