Good morning. My name is Kyle, and I will be your conference operator today. At this time, I’d like to welcome everyone to the Rogers Corporation Fourth Quarter 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. Mr. Tryon, you may begin your conference.

Thank you, Kyle. Good morning, everyone, and thank you for joining us. The slides for today's call can be found on the Investor section of our Web site along with the news release that was issued yesterday. Turning to Slide 2, on the call today will be 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 point out to all our listeners 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 can be found in the Investors section of our Web site. I will now turn the call over to Bruce.

Thank you, Bill. Good morning, everyone. I’m pleased to report that Rogers achieved record fourth quarter sales to finish an outstanding year. We attribute our strong performance in 2014 to favorable tailwinds and our global growth markets as well as our focus on critical elements of Rogers’ profitable growth strategy. Three years ago, we began to transform Rogers by introducing initiatives to streamline the organization while increasing our investments in R&D, marketing and operational improvements. Throughout 2014, we saw those efforts pay off. In addition, we are particularly pleased with our recent acquisition of Arlon, which is a great fit with our stated M&A vision. Our approach is delivering profitable growth. We believe that the strength in our key megatrend markets will continue to drive strong revenue and profit performance into the future. Turning to Slide 4, I would like to remind you of our strategic roadmap for delivering consistent profitable growth. There are four critical elements to our strategy. We take a market-driven approach across the company. We are developing deeper partnerships with our customers through cooperative activities including innovation days and joint development projects. These efforts help us uncover customer needs and identify ways that Rogers can help our customers win in a competitive market. In addition, we continue to expand our outside-in focus, understanding and internalizing key market and industry trends and dynamics. We are accelerating our investment in technology innovation opening our new Rogers innovation center at Northeastern University in March of 2014. Now fully staffed and operational, the dedicated Rogers R&D team at the center is working with university researchers as well as Rogers’ divisional R&D teams to enable the development of solutions that solve market challenges. Also, in 2014, we completed a comprehensive refresh of our product development or stage gate process in order…

Thanks, Bruce. On Slide 10, as reported in the press release, we achieved earnings from continuing operations excluding special charges of $0.89 per diluted share and record fourth quarter net sales of 147.7 million, up 8.4% from the 2013 fourth quarter. We estimate sales were negatively impacted by the decline in the euro by approximately 3.7 million. Non-GAAP earnings from continuing operations exceeded guidance of $0.64 to $0.76 due to margin improvement as a result of operational efficiencies, favorable absorption, product mix, improved yields and lower commercial expenses. Growth in the fourth quarter was driven by Printed Circuit Materials, which grew 18.1% with strong demand for circuit materials in the wireless infrastructure market. Power Electronics was up 3.2% and we had a third consecutive quarter of growth in High Performance Foams recording a 4.4% increase in net sales. Gross margins came in at 39.5%, up 220 basis points from prior year gross margins of 37.3% driven by 100 basis points improvement from incremental volume and 120 basis points from operational efficiencies. On Slide 11, our S&A decreased this quarter from 22.1% to 21.3% of sales. S&A came in at 31.5 million for the fourth quarter of 2014. This amount includes 1.2 million of expense for the Rogers Work Smart business we discussed previously. The increase in S&A over the prior period is primarily due to increases in sales and marketing activities and other S&A related costs. Research and development expenses were 5.6 million or 3.8% in the fourth quarter of 2014 compared to the 4.8 million or 3.5% experienced in the fourth quarter of 2013. The higher percentage and gross spending is primarily related to the innovation center investment. On Slide 12, 2014 fourth quarter non-GAAP operating profit margin of 14.4% improved by 270 basis points compared to the non-GAAP…

Thank you, David. We’ll now go to Kyle for our Q&A portion of the call.

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

Good morning and thanks for taking the questions.

Hi, Dan.

Bruce, you alluded to this or started to talk about it, perhaps you can give a little bit more color on your outlook for 4G specifically for the next one to two years with the addition of Arlon, your leverage to wireless infrastructure has even increased a bit, the potential for upgrading retrofit in current base stations? And then beyond that, maybe is it too early to start thinking about the bridge to 5G and Rogers positioning there?

Great question, thanks, Dan. Let me just start off by saying we believe that going into 2015 and beyond that 4G/LTE build out will continue. So we look specifically at China where certainly in 2014, there was a significant build out of their 4G/LTE base stations, we’re seeing continued strength there. The China mobile folks are going to add about 300,000 base stations in 2015 and we also are seeing China Unicom and China Telecom moving forward more on their 4G/LTE build out as well. So, we see China continuing to build out not only base stations but antenna systems. And with the Arlon acquisition that gives us a much greater position on the antenna side of the market. So, we anticipate again a very good 2015 as we move forward if we look over in China. If we look over in India, India’s announced a 100,000 new base stations coming in for 4G/LTE. That again is just the beginning of their rollout there. We’ve also seen Vodafone in Europe and around the world increasing their investments in their infrastructure. So we see this continuing certainly for multiple years just on the 4G/LTE rollout and again, building on that with the antenna systems as well. If we also look towards other areas in PCM, the blind spot detection, I mentioned in my prepared remarks the significant growth trajectory that we’ll be seeing there over the next several years and that market is just really in its infancy. So, again, strength going forward in that area. So, I think then we start looking forward to the 5G situation. And I’m going to ask Bob Daigle to talk about the work that we’re doing there and how we see that rolling forward.

Dan, it’s Bob Daigle. So what we’re seeing with 5G is we’re – as we did with the 4G/LTE rollout, we got engaged very early on with the design community to make sure we won programs and we are winning programs in the small cell area and in what we think will be 5G. There’s obviously a lot of work that needs to do to establish the standards, so we think that a ways out. But again, as we’ve talked about, we see LTE in terms of the initial rollout of base stations probably in the third or fourth inning. We see a lot of incremental demand bridging between LTE and 5G just being expansion. As we’ve talked about, when they deploy the base stations, we get some content in the power amps and some cases the transit receiver. Now, the antennas and with Arlon a much bigger part of the antenna market, so we get that incremental business as they continue to expand capacity. And I think we’re going to start to see the small cell start to come into play and evolve into a bigger piece of the business. And then again, I think we’ve said this before, Dan, or at least the way I keep thinking about it. I keep going back to the bandwidth consumption out there and you look at the CISCO data where they’re still – I mean every projection I’ve seen and they’ve tended to be a bit conservative. CISCO is 80% plus compounded annual growth rate for data demand over the next five years. We still see that as being the key driver as consumers continue to consume bandwidth. That’s going to drive the need for continued infrastructure investments and capacity expansion.

Thanks, Bob, very helpful. And just a quick follow up. In terms of just looking at the Q4 energy efficient motor drives, a little bit of a pause, what caused that? And maybe what’s your outlook for 2015?

In that case, again our PES business has been negatively affected the most of all of our businesses by the foreign exchange by the euro. And so that impact was about $2.7 million on sales for PES in Q4. So that’s really what you see the effect – partially the effect on the variable frequency drives and overall in that business. But as we move forward, we see a lot of very strong opportunity in demand for the PES business again in the variable frequency drives, the x-by-wire and absent the euro situation, we would be looking at an 8% to 10% growth trajectory for that business in 2015. Again, as I mentioned in my remarks, the concern there is a little bit on the euro, where’s that going? If it goes to parity, I mean that’s another 15% reduction in that currency. That will have an effect on us. But in terms of the volume demand, we see volume demand being very strong as we’ve seen over the last couple of years in those sectors.

Very helpful. And Bruce, just a clarification and I’ll jump back in queue. You mentioned auto radar is 10% of PCM given a few other stats. Is that on a pro forma basis or is that pre-Arlon?

That is pre-Arlon.

Okay. Thank you. I’ll jump back in queue.

Your next question comes from the line of Avinash Kant from D A. Davidson. Your line is open.

Good morning, Bruce, David, Bob and Bill.

Hi, Avinash.

Good morning.

My first question was on some of the timeline, I know you talk about the improvements in operating margins and you’ve given a three-year timeline on the model. Where do you think you will get to by the end of this year given the Arlon acquisition just kind of took place?

One of the things – if you look at our history, right, and you look over the last couple of years, I think pretty much every quarter we’ve seen improvements in our gross margins. And part of that has to do with pricing but a lot of that has to do with our operational efficiencies and scrap reduction, throughput and so forth. As we look forward in 2015, we’re looking at still improvements there. Too early to tell what we’re going to get out of the Arlon folks but they have quite a robust lean manufacturing and Six Sigma systems. So we’re looking to leverage that into the rest of Rogers as we move forward. You might care, David, to comment on the margin.

Yes, we’ve seen good margin improvement through the year this year. The yield has been steadily improving and that is the gift that keeps on giving for us. So we would expect to continue to improve in those yield and our gross margin, Avinash.

So, David, the guidance that you had given for Q4 at the end of Q3 on that front, if you look at the gross margins and the operating margins for Q4, they came in much better than expected. Could you give us some of the – where the upside came from?

Well, again, it’s yield improvement. We are steadily improving our yield and you can see that was a very good, very strong quarter for us, wonderful quarter. It almost matched the phenomenal margins that we got with the big volume that we usually get seasonally in the third quarter. So we are very pleased with our progress on yield, as I said. Normally you wouldn’t go backwards on yields, so we are confident that we’ll continue to make improvements. We’ve done a lot to add people in the divisions in PCM and High Performance Foams to really focus on operational excellence and that’s beginning to pay off.

And also on the revenue front if I look at the guidance in March, excluding the Arlon, it looks like you’re guiding up a little. Would you say that’s better than seasonal and where is it coming from again? If you look at the segments, which segments do you think are outperforming seasonally in the March quarter compared to December?

Avinash, this is Bob Daigle. So again, the strength we see going into the first quarter is again in the Printed Circuit Materials area. And again, it’s not so much a seasonal as it is the market dynamics are very favorable for our circuit material business, wireless infrastructure, automotive radar. So, again, I think that’s our star.

Yes, just to comment, I think in Q1 in the PCM business, we have tempered a little bit of our numbers there. We are continuing to add capacity and in China this quarter in Q1, we had to take a shutdown to tie in our fourth press that went into Suzhou. And so what happened there is we had to increase lead times to our customers. So the demand is still there. We’ve had to push out some of the orders in order to make sure that we’ve got enough capacity online as we project forward to see the growth coming in the rest of 2015.

Okay. And then final question, of course we have looked at some of the numbers that came out from the pre-acquisition of Arlon in terms of operating margins and everything. Going forward as you kind of go forward with the acquisition, what kind of cost synergies do you think from this acquisition going forward?

So the strategic intent with Arlon is really around technology and market footprint and access to new markets and broader markets. We don’t see necessarily huge cost synergies. What we see are opportunities to move some of the Arlon products through a very extensive network that Rogers has particularly in Europe and Asia. So there could be some cost synergies back office and so forth, but we don’t see that as the major driver here. The major driver is really growth and access to new technology and our ability to route that out there through our capabilities globally and building on our relationships and the relationships that Arlon has with their customer base. So it’s really a growth play not a cost savings.

Perfect. Thank you so much.

[Operator Instructions]. Your next question comes from the line of Chris Butler from Sidoti. Your line is open.

Hi. Good morning, everyone.

Good morning, Chris.

Good morning.

Just staying with Arlon, can you give us an update on how their year ended with the final numbers? Were they close to where you were – where they were when you made the deal?

Arlon for the fourth quarter was under Handy & Harman and Handy & Harman will release that data on their timeline. I’m not sure, I think it’s sometime in February but it’s not released yet, so we can’t comment on any performance of Arlon in Q4.

And as you’re discussing your strategy, you’re talking about continual improvement. It sounds like you have a number of investments that are being made to upgrade R&D capability, new products. Do you have any cost savings investments that you’re planning for 2015 please?

So in cost savings, first, we have really intensified our focus on operational efficiency and effectiveness as well as supply chain. And so in the fourth quarter of last year of 2014, we hired a new Vice President of Supply Chain and Process Excellence, Gustavo Araujo and he brings to Rogers many years of experience and he is now driving on the procurement side focusing particularly now with the Arlon acquisition, working with our suppliers to make sure that we’re getting the best possible deals given our size and strength. And also on the process excellence side, we’ve added a number of process excellence engineers. With Arlon, we’re getting a number of very strong folks there that we are going to most likely deploy broadly at Rogers to drive projects. So, we have quite a robust approach here on the process excellence and driving cost savings at our manufacturing and in our supply chain.

I appreciate your time.

Thanks.

Your next question comes from the line of Daniel Moore from CJS Securities. Your line is open.

Thank you again. So maybe digging too deep in the weeds but Printed Circuit Materials in Q4 declined by about 6 million sequentially and revenue operating income declined by 7 million. Was there a mix issue or some other reason why profitability might have declined a little bit more than revenue on a sequential basis?

What we believe is that third quarter was certainly a peak in terms of demand and so as we moved into the fourth quarter, demand was just somewhat lower. And I think that’s really the affect that you’re seeing. It’s not necessarily any structural change in the marketplace or anything that we believe is happening that would cause us to be concerned from a move forward perspective.

Yes, and we’ve also been focused on adding new capacity. So it was all the effort to bringing on a new [indiscernible], for example.

Got it, very helpful. There must be some or I assume there’s a reasonable amount of customer overlap between Arlon and Rogers. Have you had time to gauge their reaction by the common customers that you do have regarding the acquisition?

I would say almost universally the response from our customer base and Arlon’s customer base has been very, very positive. I think the customers are very comfortable with Rogers and with our capabilities and particularly when we think about developing new products and innovation. Arlon was a very strong company in terms of production, manufacturing and bringing products to market. But I think what customers are seeing is the innovation capability that Rogers brings and our engineers around the world that sit with the designs engineers at the OEMs and really identify how we can solve their problems. So this is a very positive thing from the customer perspective particularly where Arlon had less coverage in Europe and in parts of Asia and that’s where we have quite a lot of strength, particularly in Asia.

Okay. I’d be remiss if I didn’t try, David. Do you have even a reasonably wider range of what we should be thinking about in terms of expected impact to purchase accounting and if not, when would you expect to have that updated?

We’ll definitely have that for the next quarter but it’s too early to say. We don’t even have really all the numbers yet.

And the accretion that you did give was for a partial quarter, correct, not for the full quarter?

Yes, that’s a very good point. We acquired Arlon on the 22nd of January, so it’s just over two months.

Okay, very good. Thank you again.

Thanks, Dan.

There are no further questions at this time. I’ll turn it back to Bruce for closing statements.

All right. Thank you, Kyle. In closing, we are extremely pleased with the year we had in 2014, which is a continuation of the success we’ve achieved since we began our transformational efforts nearly three years ago. We believe that market indicators point to additional growth in several of our key categories including wireless, telecommunication infrastructure, automotive safety sensors, consumer comfort and impact protection and energy efficient power applications. We will leverage key learnings from Arlon as we integrate our organizations and continue to focus on manufacturing, operational improvements. In addition, we will maintain rigor around improvements to our business systems and processes to help us efficiently and cost effectively scale the company as we grow. We believe that our four strategic elements; market-driven, technology innovation, synergistic M&A and operational excellence represent a solid go-forward plan and will lead to sustained growth in 2015 and beyond. Thank you for joining us on today’s call. Have a great day.