Good afternoon. My name is Kyle and I will be your conference operator today. At this time, I would like to welcome everyone to the GSI Group 2015 Q4 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. Robert Buckley, Chief Financial Officer. Sir, you may begin your conference.

Thank you, Kyle. Good afternoon and welcome to GSI Group’s fourth quarter 2015 earnings conference call. I am Robert Buckley, Chief Financial Officer of GSI Group. Before we begin, we need to remind everyone of the Safe Harbor for forward-looking statements that we have outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. We may make some comments today both in our prepared remarks and in responses to your questions that may include forward-looking statements. Those involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of today. We disclaim any obligation to update forward-looking statements in the future even if our estimates change. So, you should not rely on any of today’s forward-looking statements as representing our views as of any date after today. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the financial tables included in our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we will provide reconciliations promptly on the Investor Relations section of our website. I am now pleased to introduce Chief Executive Officer of GSI Group, John Roush.

Thank you, Robert. Good afternoon, everybody and welcome to our call. I am pleased to report that GSI delivered a solid Q4, which in turn enabled us to achieve all of our major objectives for 2015. And I am referring to both our major financial goals as well as the strategic progress of the company during the year. So for the full year, we had adjusted revenue of $368 million, adjusted EPS of $0.93, and adjusted EBITDA of $61 million. We completed three acquisitions and one divestiture during the year that improved our technology portfolio and our market position. We also launched a number of new products and won numerous programs that will strengthen us in the coming years. We also made significant progress on the organizational front and we are a more talented and capable company than at any point in the past. All these factors lead me to be optimistic about the prospects for the company in the coming years. In fact, we see a company and a set of opportunities that are so distinctly different from the past that we are re-branding the company as Novanta. I will make some more comments on the new name in a few minutes. From a Q4 perspective, I will provide a few highlights and as usual, Robert will go into more detail in his section. In the fourth quarter, we had sales of $90.2 million, up 3% on an adjusted basis. Adjusted EPS was $0.29 in the quarter and adjusted EBITDA was $14.4 million. All these figures were consistent with our own expectations and enabled us to achieve all of our full year goals. Q4 book-to-bill was 1.0, with all of our reporting segments very close to 1. Our full year book-to-bill ratio was 1.01. As we have indicated in…

Good afternoon, everyone. I am now going to provide you with the summary of our financial results and give you an update to our financial outlook. Highlighting our major accomplishments for the year, GSI Group reported adjusted revenue growth of 7% for the year, adjusted EBITDA growth of 8% year-over-year and adjusted EPS grew 15%. We closed on a total of three acquisitions in 2015, totaling $26 million of cash outlays, acquiring three strong technology companies that both did nicely into our existing businesses. We also sold our last major non-core business marking the end of our significant divestiture activities, while bringing in nearly $30 million from the sale. And we exited the fourth quarter with our medical end markets sales turning the corner and experiencing mid single-digit growth year-over-year in the quarter. In the fourth quarter, sales were within our guidance range despite the weakness in the industrial manufacturing capital spending markets. Those markets did weaken further in the fourth quarter from the third quarter. Adjusted EBITDA came in above our initial guidance and adjusted EPS came in much higher than anticipated, thanks to the stronger profitability and to the reestablishment of the U.S. R&D tax credit. GAAP revenue was $90.2 million, down 4% from $94 million in the fourth quarter of 2014 due to the divestiture of the JK Laser’s business earlier this year. However, adjusted revenue growth in the quarter, which excluded the JK Laser’s revenues for both years, was up 3% to $90.2 million from $87.9 million. Our organic revenue growth, which excludes acquisitions, divestitures and the impact of foreign exchange, was down 1%. From a segment perspective, our Laser Products adjusted revenue was down 1% year-over-year, filling the full brunt of the downturn in the industrial manufacturing capital spending environment. Our Precision Motion adjusted revenue…

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

Hi, good afternoon.

Hi, Lee.

So Robert, just starting with the Dome product line that you plan to wind down, what was the revenue from that product line in 2015 and is the winding down of that product line included in the revenue guidance range that you provided?

Yes. We are going to be – it’s about $9 million worth of revenue in 2015. The first quarter is the last quarter that we will be shipping product out. We will try to reduce as much of the inventories as we can in the first quarter and shut it down and all will be responsible for service work thereafter. But that is factored into that guidance range already.

Okay. And then can you provide the total revenue contribution from the three acquisitions completed during 2015. And then possibly, give us the pro forma revenue as if they were acquired January 1?

I will have to get back to you on some of that, but what I would say is that the acquisitions helps to offset, but the ones at least we completed more recently help to offset that radiology shutdown.

Okay. And then just moving to gross margins, particularly in laser products and precision motion, there was a pretty decent sequential decline, is there anything in there other than just mix of products shipped that is more structural that we need to be concerned about?

No, we actually expect that to actually come back a little bit into the first quarter and then a little more strongly in the second quarter. There was a big portion of that was related to foreign exchange. And so that should not repeat as we get to the first quarter.

Okay. And I guess lastly and I’ll hop back in queue. What are some of the increased investment areas for 2016 that are expected to be funded by the savings you are going to see on the productivity side?

More resources in China and international territories, I think building up the sales channels and some R&D capability in those markets. That’s definitely one. I mean regardless of what’s happening macro-wise in China and it isn’t great right now, but we are way under-penetrated, there is just a ton of opportunity.

Yes. The other thing I would mention is that we did give guidance that our R&D expense is going to go from 8% to 9% of revenue. And so now there is an impact of doing that and we think it’s got the proper payback associated with it.

Okay, terrific. I will hop back in queue. Thanks guys.

Thanks.

[Operator Instructions] There are no further questions at this time.

Okay. Well, if we don’t have other questions, I will go ahead and wrap up. As we move forward in 2016, we see positive outlook for the company. We made tremendous progress as an organization. We are in a better position to drive forward with our strategy and ultimately control our destiny. We position the company in better end markets and applications and we are seeing the benefit of that now. Our strength in the medical applications is helping to offset the industrial headwinds we have seen. We have a number of new product launches occurring this year as well as the strong funnel design wins we expect to close in the near future. Our acquisition pipeline is also very promising, both in medical and industrial areas. We hope to be able to close some attractive deals this year. And all of this gives us confidence in our overall growth strategy and we expect to make further progress this year on our strategy. We are also excited about the new branding of the company as Novanta. And we look forward to giving you further updates on that topic in the coming months. I appreciate all of your interest in the company and your participation in today’s call. And I look forward to joining you in early May on our first quarter earnings call. Thank you very much. The call is now adjourned.

This concludes today’s conference call. You may now disconnect.