Good morning. My name is Phoenix, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation first-quarter 2015 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Bill Tryon, Director of Investor & Public Relations. You may begin your conference.

Thank you, Phoenix. Good morning, everyone, and welcome to the Rogers Corporation first quarter 2015 earnings conference call. The slides for today's call can be found on the Investor section of our Web site along with the news release that was issued yesterday. Turning to Slide 2, with me here today is Bruce Hoechner, President and CEO; David Mathieson, Vice President-Finance and CFO; and Bob Daigle, Senior Vice President and CTO. Please turn to Slide 3. Before we begin, I would like to note that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and should be considered as subject to the many uncertainness that exist in Rogers' operations and environment. These uncertainties include economic conditions, market demands and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statement. Also, the discussions during this conference call may include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today's call, which can be found in the Investors section of our Web site. I will now turn the call over to Bruce.

Thanks, Bill. Good morning, everyone. In Q1 2015 Rogers completed its acquisition of Arlon LLC and excellent addition to our portfolio hosted by this acquisition Rogers achieved substantial growth in earnings excluding the street acquisition related charges delivering 0.94 per diluted share and increase of 19% versus Q1 of 2014. In addition we delivered all time record net sales of 165.1 million up 12.6% over Q1 2014. We attribute this success to our effective execution of the four vital elements of our growth strategy achieving a market driven mindset within our company delivering industry leading technology innovation effectively identifying and integrating synergistic acquisitions and enhancing our operational excellence capabilities. We believe this approach in addition to our strong customer focus engaged employees and the positive outlook in a number of our core markets will enable us to continue to driven robust revenue and profit performance into the future. Turning to Slide 4. I'd like to review our strategy in greater depth and share updates on our progress towards our growth targets. We take a market driven approach across our company where the term outside in has become part of our daily lexicon. For example we continually evaluate attractive growth opportunities in the market as we stated in Q4 2014 earnings call we are directing increased attention to safety and protection as a key megatrend focus for Rogers due to the growth we have experienced in worldwide demand for innovative solutions for consumer safety and protection. I will discuss more about our megatrend changes later in the call. Since 2012 we have increased our investment in technology innovation we introduce 6 new products in 2014 and the team at Rogers’ innovation center and divisional R&D are continuing to build a strong pipeline of opportunities. Our technology innovation is focused on next…

Thanks, Bruce. Coming to Slide 11, in the first quarter of 2015 we achieved net sales of $165.1 million, up 12.6% compared to the first quarter of 2014. Net sales were slightly below the bottom of our guidance, primarily due to softness in the portable electronics market. Earnings exceeded guidance due to the benefits of operational excellence initiatives, favorable absorption and strong cost control. Turning to Slide 12, organic growth in the quarter was 3.2%. We estimate an unfavorable currency impact of 4.3%. The acquisition of Arlon on January 22, 2015 contributed $20.2 million, or 13.8% of additional revenues in the quarter. On Slide 13, we have introduced a waterfall chart to help explain the changes to EPS from the first quarter of 2014 to this quarter in 2015. Starting with $0.78 of EPS last year, this is increased by a gross margin improvement of $0.12 due to the continuation of our efforts in operational excellence plus favorable absorption, partially offset by $0.05 in commercial expenses as we have increased investments in both our sales efforts and R&D capability. We further offset another $0.05 with a combination of a slightly higher tax rate, where Arlon, due to the higher proportion of income in the USA, brings our tax rate up and to share count dilution. Arlon added $0.17 to EPS, which is from a partial quarter starting on the 22nd January. Taking away from the $0.17 is $0.04 of recurring purchase accounting costs, which is also a partial quarter. This results in a subtotal of $0.94, which is the non-GAAP earnings from these adjustments, after which we deduct a non-recurring purchase accounting of $0.06 and the $0.16 of integration cost to arrive at our GAAP EPS of $0.72 for the quarter. On Slide 14, consolidated non-GAAP gross margin of 38.8%…

This concludes the prepared portion of our call. We will now open up the line for questions-and-answers.

[Operator Instructions] Your first question comes from Daniel Moore from CJS Securities. Your line is now open.

Bruce, in the prepared remarks, obviously you talked about China and the 4G base station opportunity and the strength that you are continuing to see. We have heard mixed things over the last couple of months. Maybe just give us a little bit more detail. The 800,000 base stations that the top three are adding in 2015, how does that compare to 2014? And a little bit more color outside North America and Europe and then India would be great.

Good. Well, first of all, the 800,000 compares very favorably with what was built last year, 2014, in China. The interesting thing is, at this point in the year to have the clarity from the three carriers about their building plans is different than last year. If you recall, last year it was very unclear in the first half of the year what really was going to happen. So this is good news for us. We think that we have such clarity and people have announced their intentions, at least in China, on the base stations. The other thing that we've seen, moving outside of China, has we see in Japan, we see Europe, we see India a total of about 200,000 to 220,000 base stations have been announced across the world when we look at that, with the bigger areas being in India, Japan and Europe. So that is also boding well for the future as we see the build-out in 2015. I think the other thing that we need to also focus on, and this is a little bit more broad beyond 4G LTE but we also see the back calls, the demand for our materials in back call as well as small cell repeaters. So that's another area that we will see some continued growth there. And then, more broadly, when we look at the radar, automotive radar, that growth continues to be very, very strong. And we are talking 30% growth over the next years through 2020. So that's going to continue to drive PCM growth in sales as well. So as we look ahead, perhaps it looks a little bit light in the first quarter. We think for PCM this should be another strong year.

Maybe switching gears to the cost side, if you adjust for the non-recurring or the integration, selling and administration of about $32 million, it was actually quite a bit below our estimates or models. If you normalize that for a full quarter of Arlon, is that level sustainable? Or should we expect some investment in spending to pick up as we go through the year?

Yes. I think I mentioned in my script that we were kind of light in cost for the first quarter. So we would expect selling more in the second quarter. We got off to a slow start in some of our programs like work smart, for example. So we had an unusually low quarter, I would say.

Any color as to what the Q2 number might look like embedded in that guidance and if that would be more of a cleaner run rate?

Yes. I think certainly selling more is I wouldn't like to give the exact number. But we expect our SG&A to go up.

Okay. We can back into it. Maybe one bigger-picture question obviously, even after Arlon, still in a net cash position. By our estimates, you will generate 60 million or 70 million in free cash this year. So maybe just update us on your appetite for additional acquisitions in the near-term and other uses of capital over the next 12 months.

Again, our stated strategy from an acquisition perspective is to look for properties, firms, that are close in to our three major businesses. And so we continue to evaluate and look at our target list and continue discussions. So that's something that we would anticipate. Of course, we’re patient. And as you know, with Arlon, we were probably talking with them for two years and got to the point that we did get the 7.3 EBITDA multiple, which we were very pleased with. So, we continue to evaluate opportunities and continue to talk with people. So that's a clear use of our cash. I think the other areas of use for cash -- certainly, investing in our plants and in our required capacity because, as we’ve grown, obviously we need to add capabilities. So, we will use our cash there as well. And then the third thing is we’re always evaluating with the Board what options we have on share buyback and so forth.

[Operator Instructions] Your next question comes from Christopher Butler of Sidoti & Company. Your line is now open.

I was hoping that you might give us an update on Arlon, how that business particularly performed in the quarter and anything new that you've come up with now that you've actually had it under your full care for a few months?

Thanks, Chris. Again, the Arlon acquisition from our perspective is all about growth and extending our product portfolio, our capabilities to penetrate new applications, new markets and giving us some additional technology. Bob has been leading the integration and the acquisition, so I'm going to ask Bob Daigle to comment more broadly on what we've seen since we now have them under our roof.

So, Chris, again, when we bought Arlon, the strategic reasons were really to try to get a much stronger presence in the 4G LTE antenna space. And in particular, again, if we look out over the next few years we believe it's going to be a very -- the antenna space is going to be very strong. And that's going to be driven by the fact that, in order to support the high growth rates for data consumption, I think the last report out of Cisco, they projected 2014 to 2019 that the compounded annual growth rate for data -- wireless data is north of 55%, up around 57%. So, we think fundamentally there is going to be a need for much more bandwidth that's going to get allocated for wireless. And there is many bands out there. And as you move to multi-band LTE, you need better antenna performance, which will drive demand for these circuit materials. So, we’re very pleased, frankly. No bad surprises at all, frankly, around what we acquired there in the circuit materials area. And if anything a little bit of upside in that we really weren't looking too closely around the thermal management circuit materials. But there is a couple of things that were being manufactured by Arlon which our sales organization is pretty excited about in terms of added growth. There is also some nice opportunities, we believe in terms of looking at some of the resident filler capabilities that we think are going to be synergistic between the two companies. So the R&D teams are working very closely together right now. And I think we're going to end up with some nice new products as a result of combining the organizations. On the silicon side again very, very strong business. We were excited about adding new capabilities to Rogers. We've got a nice portfolio of products, nice portfolio of capabilities that we’re integrating into Rogers. We’ve got our -- we had a much stronger global commercial footprint that we now have the sales organization engaged in trying to further accelerate sales revenue based on those products. That's looking very encouraging. Roughly speaking, Bruce talked about the safety and protection megatrend. Roughly half of the -- or approaching half of the silicon products that are -- we acquired in the Arlon acquisition are in the safety protection area -- food safety, aviation safety, process and industrial safety applications. So all-in-all, the integration is going very well. We are seeing, frankly, more upside in this than we believe there was going in. So we’re very encouraged.

And if we’re looking at the actual results exceeding your guidance and what you're expecting, is that just a by-product of lower SG&A, like with the legacy Rogers business? Or was there something else that surprised you in the quarter?

Yes, I think -- well, we ended up -- I think, if you look at what we had embedded in our guidance in terms of revenue range and then the earnings that would be driven off that revenue, we ended up at the top end of our revenue guidance. And the operating performance was pretty much in line with being on the top end of the revenue range. So I think we pretty much hit what we expected to for margins.

Just an added comment on that when you have any acquisitions, one of the first things you want to make sure you are doing is protecting your top line. And we've done, I think, extremely well on the top line with Arlon. As Bob mentioned, the integration has gone very well. The quality of the people that we've inherited here from Arlon is very good. We are very pleased overall with the whole thing.

Your next question comes from Daniel Moore from CJS Securities. Your line is now open.

Again Bruce, I think you touched on this in your prepared remarks as well. But the supply chain issues that impacted mobile Internet devices in Q1 I assume you expect to see some of that spill into Q2. And I think I just wanted to clarify. First, is it related mainly to tablets? And second, do you expect that to alleviate or abate in the back half of the year?

Okay, so there is two issues with mobile Internet devices, and we will separate them out. One was in the Wi-Fi antenna systems using our circuit materials for PCM. And that issue was specific to one OEM where they had excess inventory. We expect we fully expect that business to recover and to achieve through the year what we initially thought would be in our plans for the year. So that's just a question of getting things right in their shop. The other issue on mobile Internet devices specifically to smart phones was in China, where the Chinese OEMs of smart phones saw a volume decline about 30% year on year. And that had a direct effect on our HPF business in terms of gasketing and so forth that's used in those applications. So, again, the issue there was that there were no really substantial new rollouts of new phones in Q1. We anticipate certainly in Q3, which is the big quarter for rollouts for mobile Internet devices for that to be recovered. So we are optimistic about that. Also, we are seeing some nice, very nice interest in HPF in our back pad Ripple Pad. And so we see that that's a new product that was introduced last year has started to take off. And that's protecting the screen from having the ripples when you put your fingers on it. And so a number of OEMs have designed us in, and so we are waiting for that to happen as well.

And just a sort of a longer-term you've had this long-term 40% margin goal for a while, in a pretty short period down from the low 30s, and now you are approaching that. With Arlon in the mix, do you see additional upside to that goal, or do you think that's a fairly optimal level, given the current mix of businesses longer term?

We have a significant effort ongoing in the Company for process improvement, process excellence. And so we will continue down that path. And I would expect us to make improvements in the yields and so forth, which would have a direct effect on gross margin. The Arlon financials are similar to Rogers' overall. So they are not pulling us down on that in any substantial way. We will continue to evaluate those targets. It's a good thing to reach your targets and then reassess. We also I think the other thing I will point out is that our operating profit at 15%, which is our three-year target, we have achieved or we are achieving. And so we will step back and see, as we evaluate our capabilities, if we want to readjust that going forward.

Lastly, just a clarification when you talk about the three-year growth goals of 10% organic and 15% with acquisitions, does that include 2014? Or is that still a forward-looking from this point?

It does include 2014. And we put those targets out, I believe, at the end of 2013. So we continue to believe in our growth capability. Obviously, this quarter we had the headwinds of currency, a little bit slower in HPF than anticipated. But when we look at our markets, and we can call it themegatrend markets, the tailwinds continue to be very strong across all three of the majors. And so we are very encouraged, and we have conviction in our 10% and 15% growth targets.

There are no further questions over the phone at this time. I will turn the call back over to Bruce for closing comments.

Thank you, Phoenix. In closing, we are pleased with our all-time record sales and strong profit performance in Q1 2015. The Arlon acquisition continues to exceed our expectations, and the integration is moving ahead smoothly. We will continue to capitalize on the many benefits associated with the acquisition of Arlon. As our teams engage more closely, we anticipate opportunities to expand our market reach, broaden our portfolio and deepen customer relationships. In addition, we will work to combine the best of both organizations in the area of operational excellence, maintaining our rigor around improving our business systems and processes to help us effectively and -- cost effectively and efficiently scale the company as we grow. We’ve continued to make meaningful progress in operational improvement initiatives and we have expanded capacity to keep pace with expected demand increases in the second half of the year. Our results demonstrate that our transformational journey, started more than three years ago, continues to pay-off. We believe that we are focused on the right global growth markets where indicators point to long-term growth. The addition of safety and protection to our strategic megatrends will provide a holistic view of application opportunities that are critical to consumer and workplace safety. Together with growth in automotive advanced driver assistance systems, we expect to see strong demand for applications in this new megatrend category. And finally, we are effectively executing on the four strategic elements of our growth strategy; being market driven; technology innovation; synergistic M&A and operational excellence as demonstrated by our strong results. Thank you for joining us today on the call. Have a great day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.