Good day ladies gentlemen and welcome to the Quarter One 2013 Allied Motion Technologies Earnings Conference Call. My name is Matthew and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. (Operator Instructions) I will now like to turn the call over to Sue Chiarmonte, Vice President, Secretary and Treasurer. Please proceed, ma’am.

Thank you, Matthew. Welcome to Allied Motion’s conference call to discuss the quarter ended March 31, 2013. We appreciate your joining us for this call today. We distributed press release earlier this morning and a copy is available on our websites at www.alliedmotion.com. Today’s call is being broadcast live on the Internet and will be available for replay immediately after the call for 90 days. To access Internet broadcast and the replay, go to the company’s website the investor relations page and click on the webcast icon. As a reminder, please note that the Safe Harbor statements including in our press release also apply to all comments made on this conference call. I will now turn the call over Dick Warzala, President and CEO of Allied Motion Technologies.

Thank you, Sue, and welcome everyone to our first quarter 2013 conference call. Here is the plan for today’s call. I will begin with a brief review of the results for the first quarter and then discuss some of the key items that impacted those results. I will then turn the call over Rob Maida, our CFO, who will provide a detailed financial review of the quarter. Next I will then look out into 2013 and (inaudible) provide you with some insight to absolute significant activities and opportunities for the future. After that I will provide a brief summary before opening the mics for questions. Before we start, I want to thank Joe Bagan for his service on the Allied Motion Board of Directors and wish him well as he pursues his new business ventures. I would also like to provide a special acknowledgment to Del Hock, who retired from the Allied Motion’s Board after our Board of Directors meeting yesterday. Del served in just about every capacity possible during his 16 plus years on the Allied Board and his professionalism, wisdom and insight will definitely be missed. Now on behalf of the entire company and our shareholders, we would like to thank you for your valuable contributions during your long tenure on the Allied Motion’s Board. Let’s begin with an overview of the results for the first quarter of 2013. Sales in the quarter decreased to $25.1 million from $26.8 million in the first quarter of 2012. While sales were down on a like quarter comparison, sales did increase in the prior quarter, reversing the trend of a sales decrease over the last four quarters throughout 2012. Net income for the quarter decreased to $0.11 per diluted share compared to $0.14 per diluted share in quarter one of 2012.…

Thank you, Dick and good morning. As is reflected in our press release that we put out this morning, the company achieved net income of $960,000 or $0.11 per diluted share for the first quarter ended March 31, 2013, compared to net income of $1.158 million or $0.14 per diluted share for the same period last year. Revenues for the quarter were $25.1 million compared to $26.8 million for the same period last year. This is a decrease of 6.3% with 7.3% of the decrease due to lower sales volume offset by 1% due to the dollar weakening against the euro and Swedish krona. : To ensure an accurate comparison, we will also present bookings and backlog throughout 2013 in the same manner as prior year. Bookings for the quarter ended March 31, 2013 were $25.3 million compared to last year’s bookings of $23.0 million using our prior methodology and $21.0 million using our new methodology. Backlog as of March 31, 2013 was $28.0 million using the new methodology and was $31.4 million using the prior methodology, all compared to $40.9 million as of March 31, 2012. Our gross profit margins were up in the quarter with 30% this year compared to 28% the same quarter last year. The increase in margin primarily reflects sales mix and a one time charge of $238,000 recorded in Q1 2012 because of the estimated cost of replacing products in the field due to an incorrect component used by our one of our suppliers. Total selling, general and administrative expenses were 2.8% higher or $167,000 higher for the quarter as compared to the same period last year. This increase is largely due to higher compensation expense resulting primarily the hiring of additional engineering personnel, partially offset by lower incentive compensation. Depreciation and amortization expense…

Thank you, Rob. I will now expand on our press release, provide an outlook for 2013 and discuss some of the key activities and actions that we will focus on to drive growth for the company in the future. As stated in our press release, sales in the first quarter of 2013 were down 6.3% compared to the first quarter of 2012 with sales in Europe flat and sales in the U.S. down a 11.6%. Sales in the quarter were up in industrial and aerospace and defense and were down in medical, vehicle and electronics compared to the same quarter last year. On the positive side, the quarter-to-quarter downward sales trend we experienced throughout 2012 was reversed in the first quarter of this year with sales increasing 4.9% in the first quarter of 2013 compared to the fourth quarter of 2012. I further commented that during the remainder of 2013, we will continue to closely monitor our served markets as we expect them to stabilize and provide growth as we move through the year. Our balance sheet is strong, which puts us in a good position to execute our growth strategy in the future. To further support our growth, our platform product development efforts continually create new opportunities for our company by designing innovative motion solutions that change the game and meet the current and emerging needs of customers in our served market segments. An important takeaway from the press release is that while sales are down in quarter one of 2013 compared to quarter one of 2012, the quarter-by-quarter downward trend in sales has been stopped as we did exit the growth in quarter one of 2013 over quarter four 2012. We further expressed that our markets have stabilized and we’ll provide growth as we move through the year.…

Thank you. (Operator Instructions)

While people are waiting for their questions here operator, we did have some questions that came in to us in the office over the internet. And what I’ll do is I’ll start with those and if anything else comes up from there then we will proceed to those. So to start with the first question said in the press release it mentions that your strong balance sheet puts Allied in a good position to support future growth. As part of that growth, can we expect an acquisition in the near-future? Good question. As mentioned last quarter, we continue to work on acquisitions and I guess to elaborate a little bit further here, we will do an acquisition if the conditions are right meaning that it must be aligned strategically and that the terms of the deal must make sense for us as a company. And we are very confident about our internal growth capabilities and therefore, we are not required to just go out and do an acquisition for the sake of increasing the top line. It’s got to make good sense, financial sense and if it does, we will aggressively pursue it as part of our overall growth strategy. So we are working on some acquisitions and if it’s right, we will complete it. If it’s not right, we will move on. Second question that we had was regarding, let’s see – IT system implementations, so please provide an update on your new IT system implementation including the cost impact on the operating results. What I would like to do is turn this over to Rob, so he can respond to this.

Okay, thanks, Dick. I think I’ve touched on this in a little earlier, but that with regard to our implementation, to reiterate, we went live with our first implementation in late 2012. And we’re expecting two additional implementations in 2013. I think, as I mentioned, one in Europe and one North America. As a brief update, we certainly continue to work through what we would consider small and normal post implantation issues such as report generation and so on. And with regard to the cost incurred during Q1, I will reiterate it, I think the total cost that I reported last quarter, cost incurred for the implementation have been about $1.5 million and that would split between licensing fees and implementation fees approximately $250,000 and $1.15 million respectively. As far as cost in Q1, we did capitalize an amount equal to about $52,000 and the expense recognized in this quarter’s 10-Q was approximately $110,000, still between amortization and period expenses such as hosting and report writing expenses. That’s pretty much a summary of where we stand with our ERP implementation.

Operator, before we go back, we do have another question here. but let’s see if there’s any questions from the mic.

Okay. We do have a question here and it comes from the line of Jeff Geygan from Milwaukee Private Wealth Management. Please proceed. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: Good morning gentlemen.

Good morning, Jeff. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: In your comments about long-term strategy, you indicate that investment in people is the most important part of your long-term strategy. Can you let us know how effective you’ve been in implementing that strategy over the last couple of quarter and/or on a forward basis, what do you have in the pipeline with respect to people?

Okay. Sure, we’re happy to do that. The people, when we look at what resources would we like to hire as a company, we follow our strategy. Our strategy is a formalized process that we’ve gone through and continue to update. And that states that since we are a technology/know-how company in order to succeed with that strategy that you need to add the critical resources in the areas of engineering; that’s design engineering, applied engineering, sales engineering, production engineering and so on. So the emphasis is engineering, engineering, engineering. That doesn’t mean the other resources aren’t critical to our success. They’re all critical to our success, but a technology/know-how company clearly must have the areas of excellence that I just talked about engineering that are better than our competition, and that’s really how we focus. So in the last couple of quarters, we have gone out and we’ve added a couple of individuals and we do it – I hate to say opportunistically, but if some one does come to us and they have the right background that we feel can enhance our capability in the future, we’ll certainly look at it. But more importantly, we define our products, product platforms that we talked about in the strategic markets that we are going after, and we define characteristics of that type of individual that can really help us in that regard. In the last couple of quarters, we have added some people in those critical areas. So we do walk the talk and we continue to not just bring people in, but provide them the tools that they need, we’re talking about design tools, software tools so forth, simulation tools, that equipment that’s required to make sure that we can design and develop the best products in the marketplace. (Inaudible) question, Jeff? Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: Yeah, in a way, but can you qualify the skill set of these individuals bring to the company and how should we think about the monetization of those skills over time?

When you say qualify the skill set, typically from – let’s talk about design engineering. We would look for people who have magnetics experience, motor design experience and electronics development whether it’s power electronics or control and software development. So if you think about how Allied Motion has evolved here and that this evolution has occurred by following our strategy, we were a motor company. We had several companies that made motors. We looked at it and said the motion market and our customers could best be served if we can provide more complete solutions. So we invested internally and went out and hired experienced electronics and that electronics, both power and control software and motion theory basically to help develop internally the product line that could then link everything together. So I think qualitatively that’s really what’s occurred and the full benefit to that has not been realized yet. And if you look at the other areas that we bring to the solution set, gearing and electronic feedback encoders, we again, have gone out and hired resources. So we’ve mentioned in – that we are looking at solutions to provide more value to our customers and improve our margins and that in fact has what happened, the new opportunities coming into the company. As we view them and mature the solution centers, they are there to link together all the technologies and what we see with that as you bring more value, the sales price of the – the unit sales price goes up, but also we are able to increase our gross margin and that is the plan. We’re not abandoning our component technologies. As matter of fact, they’re expected to continue to improve and find new ways to become better in higher performance that are most cost effective. But then we do the investment in the evolution has been to put – bring it all together and I’ll sell it as a solution. So I hope that answers your questions. And the impact it will have on us is more value in each sale, higher unit price and higher overall gross margins for the company. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: Yeah, Dick, actually that makes great sense, and can you provide any color with respect to the evolution of the company and what that might look like quantitatively at a gross margin level at some point in the future when you feel that you’re achieving what the company is capable of with these human assets?

Sure. When we take our pricing model internally is pretty straightforward. We look at it on a variable cost basis and only because gross margins as you know could be impacted heavily by volume and you have those fixed costs in the fixed overhead areas, fixed manufacturing overhead areas that can impact that gross margin. So volume was up, it looks better; volume goes down and looks worse. So we do all of our pricing based upon a variable cost model and if I can tell you that and again, we don’t normally break out individual operations and we haven’t done that in the past, so much has been something significant that that we felt was important to report. But our quotations on the projects that we’re working under the pipeline, and I mentioned the pipeline, I really hadn’t quantified that, but I can tell you that it’s an excess of our annual sales. And weighed average, we wait those on incoming basis, the weighted average of our success and also our margin improvement. And we expect to see a continual improvement as we bring more value in the systems to – I would tell you that in the next two to three years, looking at a 5% to 6% percentage point improvement in gross margin is not unrealistic. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: All right, thanks and just two quick follow-ups. Have you disclosed your CapEx for China?

No, we have not. Well, we have to sort of extend – as we talked about our CapEx on a quarter-by-quarter basis and I would tell you that and it’s not a secret, but when we finish the first production line here, our investment in that line will be about $1 million of new equipment and there’s other equipment that we have, that we put in service that’s utilized else where in the company. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: And with regard to new opportunity pipeline in China, what markets do you intend to serve?

Well, it’s interesting that the markets that we currently serve, our customers, they then have set up operations in China, particularly in the vehicle markets, the off-road truck, construction equipment and agricultural equipment market. So that’s one of our first emphases there. And also I think it’s important to note that why we’re excited about the opportunity is that our current customers enjoy approximately 15% of the China market, which means there’s 85% is still out there for us that’s not been in service by our current customers and we’re quite excited about that. Another market that we service in China already and servicing it by shipping products from North America and Europe is medical and we see that as a fast growing market in China. They are investing a ton of engineering and equipment and we see that as a great opportunity for us in the future too. Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: Great and final question, what is the cost benefit of moving your corporate to mingle with (inaudible)?

Nothing this quarter, nothing next quarter. Actually that cost to us but there is an overall stating in that – the team that’s coming together and I would day if you take a look at it from a soft side, it’s that we work aside by the team. We have people working on a different location and we think we did a fairly good job of managing that. But as we move forward I the future, our plans are, we talked about infrastructure development and improvement and we think that’s what a real opportunity is. – : : Jeff R. Geygan – Milwaukee Private Wealth Management, Inc.: All right, I appreciate your time. Thank you and good luck.

Thank you, Jeff.

Thanks for your question. You have no more questions on the audio.

And we have one last question that is coming to us here and I’ll take that one and it’s what is your outlook for the motion market in the future? We did talk about that a little bit in the press release and through the conference call here and we mentioned that we feel that the markets have stabilized and we are encouraged that we have seen the turnaround from four consecutive down quarters in revenues to now an increase in revenues. And I will say to you that we don’t expect dramatic growth from the base business. We expect modest growth from the base business for the remainder of the year. Our side is going to be enhanced by this pipeline we talked about in converting those into businesses as we move through the year. And typically, what we see is that as the market becomes unsure, our customers, their projects are delayed and a typical gestation period for start to end of new projects to be anywhere from one to two three years. And when markets are down, they have a tendency to slow down and when things start to look more positive, all of sudden they get very aggressive and are looking for you to respond quickly. So we’re all positioned to do that. We have seen some encouraging signs there. We are – a number of items that we’re work on are starting to transitioning into growth opportunities this year and that’s where we see that we will increase our market share as well as build up a modest increase, a very modest increase in the base business in the future. So that’s it for the questions that were e-mailed to us and if there are we’ll go back to the mic and see if there’s any other questions now.

You have no more questions.

Okay, operator. Then, we’d like to thank everyone. We’ll end the call here, we’d like to thank everyone for attending and we look forward to talking to you next quarter. Thank you.