Greetings and welcome to the Brush Engineered Materials, Inc. first quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Hasychak, Vice President, Treasurer and Secretary for Brush Engineered Materials, Inc. Thank you. Mr. Hasychak, you may now begin.

Good morning. With me today is Dick Hipple, Chairman, President and CEO; John Grampa, Senior Vice President, Finance and Chief Financial Officer; and Jim Marrotte, Vice President and Corporate Controller. Our format for today’s conference call is as follows. John Grampa will comment on the first quarter 2010 results and the outlook and Dick Hipple will give a market update. Thereafter, we will open up the teleconference call for questions. A recorded playback of this call will be available until May 14th by dialling area code 877-660-6853, account number 286 and conference ID 349171. The call will also be archived on the company’s Web site beminc.com. To access the replay, click on Events and Presentations on the investor page. Any forward-looking statements made in this announcement including those in the outlook section and during the question-and-answer portion are based on our current expectations. The company’s actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release issued this morning. And now I’ll turn it over to John Grampa for comments.

Thank you, Mike. Good morning everyone. Thanks for taking the time to join us today. Today’s agenda is unchanged from that of past calls. I’ll review the key financial points for the quarter and then comment on the outlook. Following my comments, Dick will review the state of the markets. Following Dick’s market update, we’ll open the call for your questions. For those who have not had a chance to review the press release in any detail, I’ll start by reiterating the numbers. I’ll cover the factors affecting the reported growth, isolating the effect of organic growth, metal prices, the acquisition that closed in the fourth quarter of 2009 and the second acquisition which closed early in the first quarter of 2010. I’ll also review the charges taken in the quarter, which as you know were previously announced. I’ll follow that up with a review of the balance sheet, then a review of how the acquisitions affected reported margins and sales, and finally I’ll review the outlook for the second quarter and the year. Let’s begin with a summary of the press release. Sales for the quarter were more than double that of the first quarter of the prior year, an increase of 118%, reaching $295 million level which is a company record. Reported net income for the quarter on a GAAP basis was much improved and at $0.33 a share. As we had previously announced, the EPS for the quarter was negatively affected by charges totalling $0.12 a share. Excluding these items, the operating run rate for the quarter was $0.45 a share. In the release, we also increased our guidance on the outlook for the year from that provided just a few weeks ago. Due to stronger margins and a continuing improvement in order entry levels, we raised…

Thank you, John. We were quite pleased with our results in the first quarter which really brought to light the leverage the company has created through the 2009 downturn. We experienced a modest but steady increase in market strength moving through the second half of 2009, which then began to accelerate in the first quarter of 2010. The market strength has remained robust through the second quarter. The main driver for us is the wireless and consumer electronics market that appears to have returned to the 2008 levels. The plethora of the smart products by the device makers is being well received by global consumers. This demand continues to also drive the need for more global infrastructure spending to support the growth of the data flow. So for the near future, this market should remain solid. One of our key markets that actually fell in demand during the second half of last year was the defense market. The defense market has now regained its footing and has provided solid bookings for the first half of 2010. This market is a tough one to read looking forward as budgetary cycles and commitments to new programs are more erratic than in the past. So we will be watching this one closely to see what unfolds in the second half. Overall, however, we are well positioned in this market as many of our applications are focused on intelligence gathering or guidance systems integral to optic devices which should be an area of long-term growth. The oil and gas market has also rebounded quite nicely with the increase in drilling activities as oil prices have risen above $75 a barrel. There is a tale of two cities, however, as natural gas prices are still relatively low and oil prices have risen quite strongly. So…

Thank you. (Operator instructions) Thank you. Our first question is coming from Avanish Kant of D.A. Davidson & Company. Avinash Kant – D.A. Davidson & Co.: Good morning, Dick and John.

Morning.

Morning. Avinash Kant – D.A. Davidson & Co.: One clarification, first. When you talk about the full-year EPS guidance of $1.45 to $1.75, you include the $0.12 charge in that?

Yes, we do. That’s a GAAP number. Avinash Kant – D.A. Davidson & Co.: Okay, so basically excluding, that it will be $1.57 to $1.87, right?

That’s right. We’ve included – we've forecasted a GAAP number. Avinash Kant – D.A. Davidson & Co.: Right. Okay, and the upward revision to EPS that you're talking about, roughly $0.30 to $0.35, you had given us some idea about how much of the earnings could be coming from the acquisition in the current period. You said it would be $0.20. Could you give us some idea in terms of – of the upside that you have right now, how much is coming from acquisition and how much is organic?

The upside to what range? Let me make sure I understand your question. Avinash Kant – D.A. Davidson & Co.: So basically the $0.20 number that you had talked about –

Are you saying is there upside to the $0.20 number? Is that what you’re asking? Avinash Kant – D.A. Davidson & Co.: Yes, where would that get at?

Yes there is but I that’s – I mean it’s not significant relative to the total. It’s less than $0.05, it’s not significant relative to the total. Avinash Kant – D.A. Davidson & Co.: Okay, okay. What should we think of tax rate going forward? What's a good number to model?

A good number to use would be 34% to 35% of sales. Avinash Kant – D.A. Davidson & Co.: Do you have some estimate about capital spending for the year?

Capital spending will be – there’s no change to the estimate. Capital spending will be significantly less than depreciation and likely in the range of $20 million to $25 million. Avinash Kant – D.A. Davidson & Co.: $20 million to $25 million, right. Now, I think Dick commented about the inventory restocking, and I was trying to ask do you see that's what is happening or you suspect that could be happening?

Suspect. Again because you’re really – it’s a tough market to read. You can read a lot of things that say inventories are still lean, inventories aren’t building. I’m from Missouri. Avinash Kant – D.A. Davidson & Co.: Okay. One more question, and I'll leave you after that is that, you updated your guidance in early April, and your updated guidance on the revenue front was coming to be roughly $300 million to $310 million; you came in at $295 million. I know it's not that big a difference, but still, what led to the slight decline that you saw from the range that you had guided to?

Once of the difficulties that we always have in forecasting revenue is recognizing just exactly what is customer supplied metal and our own supplied metal as well as what that metal mix would be in the short term. Although we published the number right at the end of the quarter, we had a significant amount of volumes that went out in the last week and half or two weeks of the quarter that was customer supplied metal. Avinash Kant – D.A. Davidson & Co.:

Thank you. Our next question is coming from Anthony Sorrentino of Sorrentino Metals. Anthony Sorrentino – Sorrentino Metals: Good morning everyone.

Good morning. Anthony Sorrentino – Sorrentino Metals: Would your priorities for cash flow mainly be reducing long-term debt and considering other tuck-in acquisitions?

That’s correct. Our cash flow priorities have not changed. Anthony Sorrentino – Sorrentino Metals: Right. Okay. I believe you have remaining stock buyback authorization of 700,000 shares. Would there be any consideration of repurchases mainly to offset the impact of stock-based compensation?

Our priorities, again, are, as you pointed out, augmentations in the business and our own internal capital needs. Beyond that, we will address as we see the years unfold, the monthly years unfold, whether there’s any other use of cash that would be in the best interest of the company and its shareholders. Anthony Sorrentino – Sorrentino Metals:

Thank you very much.

Thank you.

Thank you. Our next question is coming from Rob Young of Wm Smith & Company. Rob Young – Wm Smith & Co.: Hi guys, good morning.

Morning. Rob Young – Wm Smith & Co.: Congratulations on the quarter.

Thank you. Rob Young – Wm Smith & Co.: The first question I have is just related to kind of the uptick in demand from your last kind of cyclical downturn that you experienced, which I believe was in 2001. If you could kind of compare what you saw back then, and I know that you are in different markets, and from a geographic standpoint as well, but if you could kind of just compare briefly the ramp in demand in the Q1 period with the ramp in demand that you're experiencing now. How long did this inventory build last and when did core demand really start to pick up where you were actually able to really see it from a guidance standpoint?

Well, I’ll talk to that just generically. Obviously we have not gone back and done the due diligence of recession to recession from that kind of a detailed analysis but I can say that this uptick appears to be more rapid. We’ve looked at some general numbers on the recovery speed, this one seems to be faster. The last downturn was a little different from the standpoint it hit, at least us, primarily in the telecom market area, telecom and wireless area. This one was far more widespread because this hit all major sectors simultaneously. So the downturn this time was more severe than it was last time, across all markets; and so that, we’re seeing in the telecom market a faster recovery this time, but also being bolstered simultaneously in many other markets that seem to be recovering also simultaneously. So overall, the bottom line is I would say this is a faster turn up than the last time. Rob Young – Wm Smith & Co.: Okay, perfect, perfect. Thanks. And I understand that from a telecom and computer basis, it's – waiting on your revenue is a little bit different than the defense and oil and gas.

Right. Rob Young – Wm Smith & Co.: But can you break out a little bit on what your expectations are? You mentioned that you are seeing some improvement in demand from a defense and oil and gas standpoint. Can you kind of relate that just overall growth to a consumer electronics standpoint? Is that – I would imagine it's lower, but is it –

Yes, we’re seeing the strongest uplift in the consumer electronics and telecom area and we’re seeing – and that’s quite strong. And then to a lesser degree we’re seeing an uplift in the oil and gas, aerospace, heavy mining equipment, and defense. I mean we have – what’s nice about the company at this point in time, we do have a very nice broad footprint of markets that are what I like to call greater than GDP type markets in general and they’re all kind of responding nicely but the strongest is the wireless and the infrastructure side. Rob Young – Wm Smith & Co.: Okay. Perfect. And then, I'm not sure, did you guys break out the level that volume is expecting to contribute to the uptick in operating profit at all?

Well, in the earlier part of the conference I referenced the breakdown in the sales growth of both sequentially to the fourth quarter and the prior year. The prior year’s first quarter that came from metal price, the acquisitions and then the organic growth which to your point would be volume. Metal prices are about $19 million of the growth versus the prior year. The acquisitions are about $60 million versus the prior year and organic growth is about 60% over the prior year or $80 million. Rob Young – Wm Smith & Co.: Right.

Sequentially to the fourth quarter, sales were up 37% or about $80 million, $3 million of that was metal price, $54 million of that was from the acquisitions and $23 million was organic growth. Rob Young – Wm Smith & Co.: Okay, okay. And then, lastly, on a – from a working capital basis, it looks like you had a reasonably good uptick. Is that more from a seasonality standpoint or are you kind of just preparing for the future growth?

No, no it’s not seasonal, it actually – relationship wise inventory turns were actually faster. Receivable days outstanding actually dropped. What you’re seeing in dollar terms is the result of the growth from the business, that receivable number [ph] is directly related to the growth in the business as is the inventory in the pipeline to support that growth. Rob Young – Wm Smith & Co.: Got you. Okay. That's all I have, and congratulations.

Thank you.

Thank you. Our next question is coming from Michael Roomberg of Jefferies & Company. Michael Roomberg – Jefferies & Company: Hi, good morning guys how are you?

Good morning. Michael Roomberg – Jefferies & Company: I just had a bigger picture question on Academy. I was just wondering if you could reset us on some of the synergies that you hope to accomplish in the business or some of the value that you hope to accrue that could not have been extracted from the business on a standalone basis.

Well, the Academy business is, again, a great example of augmentation. When you take a look at the core Williams business in our precious metal area, the biggest horse we ride is the gold-based materials and to a lesser degree platinum and palladium. So Academy is a large player in the silver-based and secondarily in the gold area but primarily silver-based, so we’re able to expand our participation in the precious metal areas on silver. So we have – that’s a really nice broad platform now that we’ve expanded our footprint in the precious metal areas into the silver, and Academy brings some new markets that we don’t normally participate in through Williams. So we’ve grown our markets. We’ve grown our technology. They have some technology that we don’t have in the Williams portfolio. Then also we have some operating synergies that are brought about because if they’re doing some gold operation with some consolidation, we can do there for operating efficiencies. They have some capabilities that Williams didn’t have prior to this in the refining area. There were some things we were sending outside, now we keep it in house and we can consolidate some operating issues that help on the working capital lead times. So it’s really a – really nice match in a growth aspect of all attributes and markets, technology and operating synergies with Williams. Michael Roomberg – Jefferies & Company: Okay. That's great. And then, you did provide some kind of directional data points on order entries for each of the businesses. I know that you do report the backlog at the end of the fourth quarter. I'm wondering if you could quantify the change in the backlog for each of the segments as you have exited the first quarter.

We don’t have it readily available here but our book to bill in the first quarter was the highest in probably 2.5 years. Book to bill was about 1.13 to 1.00. Michael Roomberg – Jefferies & Company: Okay. That's great. Thank you very much.

Thank you. (Operator instructions) Our next question is coming from Phil Gibbs of KeyBanc Capital Markets. Phil Gibbs – KeyBanc Capital Markets: Dick, John, Mike, good morning.

Morning. Phil Gibbs – KeyBanc Capital Markets: The – really impressed to see alloys get back in the black. That was great. Was that the main differentiator between your last outlook and some of your margin – margin improvement that you cited as driving the earnings in the quarter?

Well, it was certainly a factor but it was not the main differentiator. Margins were stronger and order entry stronger in each of those segments. Phil Gibbs – KeyBanc Capital Markets: Can you talk about some of your higher-margin products and how those are trending relative to last couple of quarters? Would you believe mix getting stronger here going forward?

Certainly. As you will know and Dick can expand on my comment, but the infrastructure, telecommunications and computer, the consumer electronic side generally are higher margin. Some of our higher-margin products and mix have a tendency to shift there toward that, giving the growth that started in the quarter in that segment. Phil Gibbs – KeyBanc Capital Markets: Perfect. And then, for Dick, I know Brush historically has a lot of exposure to Europe. I just had a question on how customers are responding to some of the debt concerns. Do you believe that they have relatively less access to capital? Do you see that as a problem? I think it's just kind of an overriding macro factor right now that I just wanted to –

Yes, I think it’s kind of early in the flight for all of us to recognize what are some of the collateral damages that may be unfolding from this debt situation. At this time, we haven’t seen an impact but that certainly doesn’t mean three months to four months from now there could be some impact. So currently it’s not an issue but, again, none of us knows what this collateral damage may unfold to, whether it’s kind of just bumps along or whether it takes a nasty turn. So obviously Europe is an area we have to have a careful eye on. And with regards to our international business when you think about the portfolio between Europe, Asia and the United States on an international basis, we’re more heavily oriented on our mix in Asia than we are in Europe. Phil Gibbs – KeyBanc Capital Markets: Perfect. Thanks, guys, and tremendous progress in the quarter.

Appreciate it.

Thank you. Our next question is coming from Avanish Kant of D.A. Davidson & Company. Avinash Kant – D.A. Davidson & Co.: Thanks for taking my question. Once again, John, I may have not understood the capital spending number for the quarter. Could you give that too?

For the quarter? Avinash Kant – D.A. Davidson & Co.: For the quarter, yes.

The number I was quoting was the number for the year. Right, but the number for the quarter is in the – Avinash Kant – D.A. Davidson & Co.: It looks like –

Go ahead. Avinash Kant – D.A. Davidson & Co.: It looks like the run rate is much higher, and the current quarter was higher than the annual number that we talked about, if it's going to be $20 million to $25 million. That's what you said for the year, right?

Yes, this is Jim Marrotte. The number that you see on the cash flow statement of $13.3 million, that includes about $10 million for the Pebble Plant facility; the majority of those dollars are being reimbursed by the government under our contract with them. The number that John quoted earlier would be the net number to the company on all our other spending. Avinash Kant – D.A. Davidson & Co.: That's what I was thinking. We have $13.3 million – okay, so $10 million is coming from the government off this one, right?

Right. So it’s a $3 million of spending level. Avinash Kant – D.A. Davidson & Co.: That's why I was not able to reconcile that.

Okay. Avinash Kant – D.A. Davidson & Co.: Okay. A few other questions. Maybe, John, if you can give us the charges that you took during the quarter, the $0.12 charge, is it all in the SG&A line or is some in the other item? Could you break it out?

No it’s not all in the SG&A line. The $0.07 healthcare related item is actually in the tax rate. Avinash Kant – D.A. Davidson & Co.: So, the effect is in the tax.

Right, that’s in the tax rate. The other $0.05 I’ll let Jim speak to, it’s probably, go ahead Jim.

There’s about $0.5 million in the other net line. And the majority of that balance –

The majority of the balance is SG&A. Avinash Kant – D.A. Davidson & Co.: So the $0.5 million in the other net line, that's pretax, right?

Yes. So that’s, call it $0.02.

Yes, you’ve got $0.07 after tax and $0.02. Avinash Kant – D.A. Davidson & Co.: So basically $0.02 in the other net line, $0.03 in the SG&A, and the $0.07 in the tax rate?

Yes.

Yes. Avinash Kant – D.A. Davidson & Co.: Okay. And two other questions, more business-related. Into the disk drive market, where are you in terms of trying to gain some market share or how are things progressing there?

For the disk drive? Well, we participate in that market in three areas; the disk drive AMRs, the TMI division, and then in Williams we participate in it with the head market and then the media market. And as you know, we have stumbled in that media market. Now the media market itself is growing very, very strongly right now but we haven’t had a lot of growth on the media side. So anyway, that’s not a key reason that you’re seeing growth right now. Avinash Kant – D.A. Davidson & Co.: Right. And also, there's a lot of buzz around Boeing 787 program, and I know you have a lot of materials that could be going in there. Could you give us some idea about how much of an opportunity do you have in each one of these 787 planes? What's the total sellthrough for BW in one 787?

We don’t give out specific volumes per application. Avinash Kant – D.A. Davidson & Co.: No, but I'm talking the dollar amount.

Well, that’s the same thing. If I told you dollar amount per plane, you’d just make the calculations as they build planes. So we don’t do that but the aerospace market in general, we define about what that is for the company and we expect to have that market grow faster than – we’ll grow faster than the market because of our application intensity going into the new planes, we’ll be going up. So, I would look at it more from a macro level versus us revealing exactly how much we have in a plane. So take a look at that sector of our market and then assume we’ll probably go a bit faster than that because of our application intensities going in the new models. Avinash Kant – D.A. Davidson & Co.: Okay. So basically, as you see the ramp, you will see that portion of your business grow faster than the rest of the businesses, right?

Yes, and that’s actually a similar story in the oil and gas area too, because we have our application intensities going up there also. Avinash Kant – D.A. Davidson & Co.: Okay, okay. Perfect. Thank you so much.

Thank you. There are no further questions at this time. I would like to hand the floor back over to management for any closing comments.

This is Mike Hasychak. We would like to thank all of you for participating on the call this afternoon. I’ll be around this afternoon to answer any remainder questions. My direct dial number is 216-383-6823. Thank you.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you all for your participation.