Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Key Tronic Third Quarter of Fiscal 2013 Conference Call. In today’s presentation, all parties will be in listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is also being recorded today, Wednesday, April 30, 2013. I would now like to turn the conference over to our host Mr. Craig Gates. Please go ahead.

Good afternoon everyone. I am Craig Gates, President and Chief Executive Officer of Key Tronic. I would like to thank everyone for joining us today for our Investor conference call. Joining me here in our Spokane Valley headquarters is Ron Klawitter, our Chief Financial Officer. Today, we released our results for the third quarter of fiscal 2013. After strong year-over-year growth in the first half of fiscal 2013, our revenue in the third quarter was primarily impacted by the anticipated slowdown from large customer that was discussed in the second quarter. Although, we saw continued ramp up of our new programs those gradual increases did not yet offset the decreased demand from this one customer. Despite the dip in near-term revenue levels, we continue to overcome many challenges associated with new program ramps, product mix changes, and the addition of few facilities and people. We focused on optimizing product designs, production processes and supply chain, and made changes in our business processes to enable continued profitable growth. As a result, we continued to maintain strong operating efficiencies and further strengthen our balance sheet in the third quarter. Over the last four quarters, we paid off over $16 million of bank debt bringing the debt balance to zero and increased our cash balance by nearly $3 million. We also continued to diversify our future revenue base during the third quarter by winning new customer programs involving RFID, industrial power, LED lighting and commercial washroom equipment At the end of the third quarter of fiscal 2013, we were generating revenue from 177 separate programs and had 56 distinct customers, up from 155 programs and 42 customers a year ago. In the near-term, we maybe seeing softer demand for EMS worldwide as the PC market shrinks, and EMS customers still confront uncertain economic…

All right. Thanks, Craig. As always, I would like to remind you that during the course of this call, we might make projections or other forward-looking statements regarding future events of the company’s future financial performance. Please remember that such statements are only predictions. Actual events or results may differ materially. For more information, you may review the risk factors outlined in the documents the company has filed with the SEC, specifically our latest 10-K, quarterly 10-Qs and 8-Ks. Please note that on this call we will discuss historical, financial and other statistical information regarding our business and operations. Some of this information is included in today’s press release and a recorded version of this call will be available on our website. For the quarter ended March 30, 2013, we reported total revenue $84.3 million. This is compared to $95.5 million in the same period of fiscal 2012. For the first nine months of fiscal 2013, total revenue was $276.4 million. This is up 11% from the $249.7 million in the same period of fiscal 2012. Despite the fact that we have been moving many new programs into production, we have continued to maintain our strong gross margins. Our gross margin was approximately 9% in the third quarter of 2013, which is comparable to the same period of fiscal 2012. Our total operating expenses were $4.3 million in the third quarter of fiscal 2013. This is up about 6% in the third quarter of last fiscal year, reflecting that many of our new programs startups require the addition of technical and program management support. Nevertheless, our operating margin was 4.3% in the third quarter of 2013. This is down only modestly from the 4.8% in the same period of fiscal 2012. Despite our solid operating efficiencies, our lower revenue did…

All right, thanks, Ron. Moving into the fourth quarter of fiscal 2013, we continue to believe our fundamental strategy remains sound. As we’ve discussed before, there are three major competitive advantages behind our continued success. First, increasing cost in China are driving demand for more localized production, Mexico for North America end users and China for Asian end users. Among EMS providers, we standalone in the excellence and breath of our Mexican operations. As more previously outsource manufacturing business moves back from China, we stand to continue to benefit. Second, our unique organizational structure, which we have owned over 25 years of experience in running offshore operations bring significant advantages to OEMs. Our growing portfolio of customers increasingly want offshore cost savings that spear IP loss and not want to manage an offshore relationship spear offshore risk and inventory uncertainty and what the U.S. base engineering and prototyping capabilities. While we will sometimes be competing against our customers in our factories, we believe that beyond the level of cost and service we can provide from our Mexican facilities. We offer an exceptional level of experience with the process of competing with an in house model. Third, our size of responsiveness compared to our degree of vertical integration and engineering capabilities become even more attractive as the push for localized production intensifies. Well our growth has moved us into the Tier II category as an EMS provider, we continue to provide flexibility of Tier III provider and the capabilities of a Tier I provider. For these three competitive advantages powering us, we expect to continue to win market share while mix changes in our program portfolio and cost associated with ramping up new programs will continue to be a part of our business, we expect our sustained focus on controlling cost augmenting production processes and enhancing our design capabilities will continue to result in competitive advantage. Despite the continued macroeconomic uncertainty and a significant near-term refined – from one customer, we continue to see positive business momentum and are building an increasingly diversified customer base. We anticipate more of our new customer programs moving into production and our pipeline of new business opportunities is increasingly robust. Over the longer term EMS market is expected to see growth and we believe Key Tronic is increasingly well positioned to continue to capture market share and capitalize on emerging opportunities. This concludes the formal portion of our presentation Ron and I will be now pleased to answer any of your questions.

Good day ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). And our first question comes from the line of (Inaudible) with GT Investments. Please go ahead.

Hi, Craig and Ron, thanks for taking my call and congratulations on the solid quarter.

Thank you.

Yeah, first, I just wanted to ask as far as growing the top line goes and these new business opportunities you guys have, do they happen to be focused on a particular geography or industry because I’ve noticed that over the last couple of years it looks like you guys have a lot of good growth coming from Canada on the communication industries and I’m just wondering if you are actively targeting certain unpenetrated areas of the market or if it’s like you are riding the wave and take an opportunity [back in the year]?

We do not target one area of the market. We have a saying that’s kind of ingest but kind of serious. We tell people that as long as this is legal and more on we could take money out of it. We’d be happy to do it. What is unique about us is that a lot of our business is non-traditional contract manufacturing.

Okay.

So a lot of the work we do is not just stepping PCBs with components. A lot of the work are strange and unique products that haven’t been outsourced before and in fact we are the only people despite the customer in the world who end up making that product. So if you kind of search in for the a bit of the secret source its there we have this broad array of capabilities that allows us to get business that puts us outside of the typical commodity PCB board stuffing origins that most of our competitors have.

Okay, excellent. Thank you very much I appreciate it.

You bet.

Our next question comes from the line Bill Dezellem with Titan Capital Management. Please go ahead. Bill Dezellem – Titan Capital Management: Thank you. A group of questions. First of all, the four new programs that you won, what is the range of size of those programs?

$1 million to $15 million… Bill Dezellem – Titan Capital Management: $1 million to $15 million and last quarter, I believe that you introduced us to the fact that your perspective pipeline had some much larger opportunities than your customers are having all at once. And I think you may even said that the size could even approach being as large as your largest customer. What update do you have on those opportunities that you were in the hunt for the last quarter?

Those started out fast, but as of right now, there is slowdown. Bill Dezellem – Titan Capital Management: And slowdown is different from either lost or gone away?

That’s correct. Bill Dezellem – Titan Capital Management: And have you found any of those who have gone away for whatever reasons?

No. Bill Dezellem – Titan Capital Management: And this fast pace of a quarter-ago and a slower pace now, is that something that you would consider normal or is there something abnormal about what you’re experiencing with these?

In all cases, these are situations – no, it’s 66.67% of the cases. These are opportunities that rose because the current supplier was either a financial problem or had decided to kick the new customer – our potential new customer out due to size mismatches. So, those things when they first start and it puts the perspective customer in sense of extreme panic, and once they find the Key Tronic exists and is capable of meeting their needs, then it seems as if the process of negotiating and winning the business slows down towards a more normal rate. Bill Dezellem – Titan Capital Management: So it sounds like what you described last quarter would have been a fast and furious phase whereas what you are experiencing now is the more normal rate.

Yep, and the more normal rate, as you would recall, tend to be anywhere from 10 months to 18 months to actually get a deal closed in the factory. Bill Dezellem – Titan Capital Management: Right. Thank you. And while we’re talking about new business, the four that you listed in the press release one caught my attention and that was the commercial washroom equipment. The physical size of washroom equipment seems larger than what you have historically done. Is that accurate or are you – is there something that’s special within this that you’re doing that that makes it right up your alley?

Well, in this case it’s not larger than what we normally do. It’s size of a breadbasket and it’s a situation where we were hired to do the design from mechanical component and then as time has gone by we’ve been asked to move up the food chain and do more and more of the product. Bill Dezellem – Titan Capital Management: And are you at full box built to this point or did the breadbasket equivalent go into a larger piece of equipment or a larger system?

The breadbasket equipment that we’re building goes into a piece of a slightly larger equipment. Bill Dezellem – Titan Capital Management: And so, there is an potential in opportunity to win a little bit more business here if you continue up the food chain. Is that a correct interpretation or it’s really getting the metal bending from this point forward?

No there is an opportunity to move up the food chain. Bill Dezellem – Titan Capital Management: Great. That’s helpful. I’ll step back in the queue.

(Operator Instructions) And our next question comes from the line of Nick Getaz. Please go ahead. Nick Getaz – Franklin Advisory Services LLC: Hey, guys. A couple other questions here. I know last quarter, the past couple of quarter, you’ve had some material cost impact in the margin. Did you guys see any of that this quarter at all and looking forward is modeling out, is it kind of the situation where margins are just going to keep growing with sales as utilization gets better?

So the materially impact, we don’t see any big increases in our material cost going forward. So that looks to be pretty stable and I’ll let Ron talk to the margin modeling.

Yeah. So our material margin was actually a little bit this quarter. the largest customer that we talked about that had a decline in sales has a higher material content and obviously with that, a high volume. so it’s a lower margin for us. so that’s why it didn’t hurt us so much at the gross margin line, they are dropping revenue. Going forward, the way I’d build models are – suggest people to build models to look at us is, increases in revenue, generally bring about 15% to 20% incremental margins from increases in revenue. So, yes, as revenue grows, our margins should improve, because as you keep adding additional 15% to 20% incremental margins to our base of around 9% gross margin, you’ve got to see some benefits or some improvement. Obviously, the larger we get, the less impact that has on it, but it will have the effective given as better absorption and higher overall gross margins as revenue goes up. Nick Getaz – Franklin Advisory Services LLC: All right, great. and then one other question, I know that you had those two other big customers that we’re shifting their mix of in-house versus outsourced, are you seeing any acceleration in that core proportion or is that pretty much done with and in line with what was happening in the second quarter?

That’s done and we don’t see any more of that in our current customer base on the horizon. Nick Getaz – Franklin Advisory Services LLC: All right excellent, thank you.

Yep

(Operator Instructions) And there actually are no more questions at this time.

Okay, thank you again for participating in today’s conference call. Ron and I look forward to speaking with you in the next quarter. Thanks and have a good day.