Good morning, ladies and gents. My name is Tawanda, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball Electronics Fourth Quarter Fiscal 2018 Financial Results Conference Call. [Operator Instructions]. Today's call, August 2, 2018, will be recorded and may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Risk factors that may influence the outcome of forward-looking statements can be seen in Kimball's annual report on Form 10-K for the year ended June 30, 2017, and in today's release. The panel for today's call is Don Charron, Chairman of the Board of -- Chief Executive Officer; and Mike Sergesketter, Vice President and Chief Financial Officer of Kimball Electronics. I would now like to turn the call over to Don Charron. Mr. Charron, you may begin.

Thank you, Tawanda. Welcome, everyone, to our fourth quarter conference call. Our earnings release was issued yesterday afternoon on the results of our fourth quarter ended June 30, 2018. We have posted a financial summary presentation to accompany this conference call. The presentation can be found on our Investors Relation website, within the Events & Presentations tab. Or if you are listening via the webcast, you can find it in the Downloads tab on the webcast portal. I will begin by making a few remarks on the overall quarter, and then I will turn it over to Mike for the financial overview. After that, we will answer any questions that you may have. Our sales in the fourth quarter of fiscal year 2018 were down 3% sequentially from the previous quarter, up 15% when compared to the fourth quarter of fiscal year 2017. Very strong growth in our automotive and medical end market verticals helped us achieve the double-digit year-over-year growth for the fourth consecutive quarter and to exceed our longtime goal of $1 billion in annual sales in fiscal year 2018. As we stated last quarter, our compound annual growth rate, or CAGR, was approximately 8% over the previous three years, and our goal is to sustain this growth rate going forward on an organic and annual basis as we look to grow the company beyond $1 billion in annual sales. We are pleased to have improved our operating income margin by 60 basis points from the prior year quarter and 20 basis points sequentially when compared to the third quarter. The much anticipated progress in Romania came through in the fourth quarter, helping to drive the improved overall performance, and we look forward to their continued growth and positive contributions in fiscal year 2019. Partially offsetting the improved…

Thanks, Don. During my comments, I'll be referring to the slide deck Don mentioned, which can be found on our Investor Relations website within the Events & Presentations tab. Or if you're listening via webcast, you can find it in the Downloads tab on the webcast portal. As shown on Slide 3, our fourth quarter net sales were $276.8 million, which was a 15% increase compared to net sales of $241.3 million in the prior year fourth quarter. Favorable foreign currency fluctuations accounted for approximately 4% year-over-year growth. Our net sales mix by vertical market is depicted on Slide 4. Comparing our net sales by vertical, our automotive vertical was up 20% from a year ago, driven largely by new product introductions, including the continued ramp-up of programs in our Romania facility. We did see some softness in the industry during the quarter as our automotive vertical sales were down 16% sequentially compared to a record quarterly sales in our third quarter. Our medical vertical was up in the mid-20% range compared to the fourth quarter of last year from strong demand across the board from our largest existing medical programs. Sequentially, compared to the third quarter, our medical vertical sales were up by double digits. Our industrial vertical in Q4 was up by double digits from the prior year primarily as a result of increases in industrial pumps, smart metering and other existing programs, which more than offset the effects of the exit of other certain programs. And our public safety vertical was down 20% primarily as a result of lower overall demand and programs reaching end of life. However, when compared sequentially to the third quarter, we are encouraged that public safety was up double digits largely from an uptick in demand and a new product introduction. Our…

[Operator Instructions]. Our first question comes from the line of Chase Basta of AWH Capital.

You had pretty nice sequential and year-over-year growth in the medical vertical. Can you give us some additional color on what drove that and the outlook you're thinking for that vertical in 2019?

Yes, we really thought of the growth in multiple areas across the portfolio of business we have there, which is, I think, a really positive sign. And we continue to ramp programs, relatively new programs such as the programs that we picked up in our acquisition in Indianapolis a couple of years ago, which had a nice contributing factor to our overall growth, and so pretty widespread. We're pleased with it in some way. That's a little bit unexpected, stronger than I think we would have thought going in to the quarter and really for the full fiscal year. But we have good momentum, and the strength looks to be, as I said, widespread. So we're hoping that it can continue for us going into the new fiscal year.

Okay. And then there's a little bit of sequential softness in automotive segment you touched on. Is there an element of seasonality there? Or what kind of explains that?

Yes, I don't know the seasonality would explain all of that. That's really hard for us to get our heads around what really happened between Q3 and Q4. I mean, essentially, you have the same programs in production; so yes, seasonality. Maybe some softness in the market in some regions contributed to that. We've had this short supply and component shortage situation that's been impacting inventory levels, buffering levels throughout the supply chain. That also could have had some impact. I think when you look at the numbers, we had a hard time explaining why Q3 was so high. So the sequential drop is just as hard to explain, but it's essentially the same book of business in play in both quarters. So we'll see. We'll see how the rest of the calendar year shapes up. And as we go into fiscal year 2019, we expect it to remain pretty strong. Just given the programs, we still have in front of us to ramp, namely new programs. But the current programs that we've got in production will depend really on how the overall market does.

Okay. And then regarding the tariff discussion, can you talk a little bit more about your ability to pass on price to customers and just kind of help us understand the switch of conversations you're having in that regard?

Yes, that's a really good question and one that's, I'm sure, being answered by a lot of CEOs and CFOs nowadays in terms of how this ripple effect is going to be managed. The first thing I would say, it's going to be an aggravation for everyone in the value stream. And at the end of the day, I think the pass-through concept is going to have to be embraced by everyone, or it's going to create disruption and issues. We -- there's no way that we could absorb tariffs on parts that we buy from China that, let's say, come into our U.S. manufacturing plants. We don't have the ability to absorb those costs. So we definitely will have to pass them through to our customers. We've already started that dialogue, especially with several parts on List 2 that could impact us. So we've opened up the dialogue with our customers. We've given them specifics, at least what we know today. The list is never final until it's final. List 1 didn't get finalized to the very end after the hearing. So we'd expect the same for List 2. But at the end of the day, we have to pass it through. We've been talking to our customers about that, and it's probably going to end up being a pretty tough negotiation at the end of the day, as I said, an aggravation. But our plans are to pass it through, and we think we have all of the room, contractually, to pass it through that we need. So that's about the best I could describe that, Chase. I don't know if you have any follow-on questions to it.

No, that's helpful. And then on the GES acquisition, is there anything more you can tell us about that acquisition or impact on your fiscal 2019 numbers or anything like that?

Not at this time. I just reiterate what we talked about in our press release in terms of the cash allocation or the purchase price at $50 million. We're getting down to the final government approvals, and we hope to get something out to our investors. As soon as we can gain approvals we need to close the transaction and we'll be able to add more about what the impact will be to fiscal year '19 from the top line and most likely EPS range standpoint.

[Operator Instructions]. Our next question comes from the line of [indiscernible].

As we think about some of the new programs that we have ramping throughout fiscal '19, I'm interested in the component supply situation. Have we gotten any additional insights from our suppliers on when we might be able to expect this to kind of turn over and have this component-constrained environment that we're in kind of blip?

Yes, a really good question. First of all, on the new programs that we're ramping this year, we've actually been working for over a year on securing supply for those programs. And so we feel like we derisked that part of the ramp-up. I mean, it's tight. The supply is tight, but we believe that we've got the material lined up that we need to ramp those programs this summer into the fall time frame. Most of the component shortages and the manufacturer of those components are telling us -- give us an answer today that it sort of depends. It depends on the demand profile that we'll see in the second half of this calendar year. There's been reports of some softening in demand in some end markets that's making more material available. And so we -- it can improve definitely throughout the year if the demand truly softens. If it's just a blip, then we get back to some of the growth rates that we, as an industry and really the industry overall, has seen in the -- let's say, the first half of 2018. They're telling us that it could be the end of 2019 before they truly get capacitized to handle, let's say, the new run rate, especially the manufacturers of some component categories are really tight. For example, the multilayer ceramic capacitor guys are telling us that the short supply situation could last to the end of 2019 in certain demand profile scenarios. So we'll see. They're adding new capacity. They've been working hard to add that new capacity. There's new capacity coming on line, for example, in companies like Marada by the end of this year. So they -- in some cases, we'll see some catch-up towards the end of the year. The automotive supply is a tougher one in that it's -- the automotive components are an automotive grade. And so our -- some of our ramp-ups, for example, in the automotive space, we pay particular attention to because we depend on that capacity and not the overall capacity, which include commercial grade.

[Operator Instructions]. I'm showing no further questions at this time. I would now like to turn the call back over to Don for closing remarks.

Thank you, Tawanda. That brings us to the end of today's call. We appreciate your interest and look forward to speaking with you on our next call. Thank you, and have a great day.

At this time, listeners, you may simply hang up to disconnect from the call. Thank you, and have a nice day.