Ladies and gentlemen, thank you for standing by and welcome to the Gentherm Incorporated 2012 Third Quarter and 9-Months Results Conference Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. [Operator Instructions] This conference is being recorded today November 1st of 2012. And I would now like to turn the conference over to Jill Bertotti of Allen & Caron. Please go ahead.

Good morning, everyone, and thank you for joining us today for the Gentherm Incorporated 2012 Third Quarter and 9-Month Results Conference Call. Before we start this morning’s call there are a few items I would like to cover with you. First, in addition to disseminating through peer newswire this morning’s news release announcing Gentherm’s results, an email copy of the release was also sent to a number of conference call participants. If any of you need a copy of the news release, you may download a copy from either the Gentherm website at www.gentherm.com, or the Allen & Caron website at www.allencaron.com. Additionally, a replay of this conference call will be available via a link provided on the events page of the Investor Section at Gentherm’s website. Finally, I’ve also been asked to make the following statements. Certain matters discussed on this conference call are forward-looking statements that involve risks and uncertainties and actual results may be different. Important factors that could cause the company’s actual results to differ materially from its expectations on this call are risks that sales may not significantly increase; additional financing, if necessary may not be available; new competitors may arise; and adverse conditions in the automotive industry may negatively affect its results. The liquidity and trading price of its common stock may be negatively affected by these and other factors. Please also refer to Gentherm’s Securities and Exchange Commission filings and reports, including but not limited to its Form 10-Q for the period ending September 30, 2012 and its Form 10-K for the year ended December 31, 2011. On the call today from Gentherm we have Dan Coker, President and Chief Executive Officer; Barry Steele, Chief Financial Officer and Bud Marx Chairman. Management will provide a review of the results, after which there will be a question-and-answer period. I would now like to turn the call over to you, Dan. Good morning, Dan.

Good morning, Jill and thanks to everyone for joining us, we’d like to start off of course this morning with our thoughts directed toward all the folks on the East Coast who have suffered through a catastrophe in weather and we hope that everything is going well for the recovery. Amerigon and W.E.T. have, both had very good quarterly results in our Gentherm combined results are very good as well, we broke a $140 million for the quarter which was good for us and we’ve also broken $400 million for the year-to-date numbers. So we’re very pleased with our progress as we continue to move forward, working together with our presidents of W.E.T. we’ve been able to do some pretty significant things for the quarter and we think that’s looking good for the rest of the year. Sticking with our format we’re going to ask Barry to give us some specific details of the review of the third quarter results and then we’ll open the floor for some questions. Mr. Steele?

Thank you, Dan. Hello everyone, the third quarter 2012 represented the fifth quarter where the results of W.E.T. are included for a full period, and therefore the first quarter in which a prior year comparison include the full period for W.E.T. Our product revenues for the third quarter 2012 are $141.1 million which Dan mentioned, which represented an increase of $15.4 million or 12.3% over the third quarter result for 2011. The increase is due to higher revenues at Gentherm up $3.4 and higher revenues of W.E.T. totaling $12 million. Higher revenues for Gentherm are primarily attributable to new product launches as the third quarter 2011 and higher production volumes at our customers, offset lower - offset by, excuse me that’s a long comment, but higher production volume and higher program launches that’s for the last year. Our W.E.T. benefited from strong orders from its North American customers and steady to slightly higher revenues in Europe and Asia, it’s important to note that Europe has seems some declines although for our results we have actually seen some increases at W.E.T. However, due to the weakening of the European Euro, W.E.T.’s euro denominated revenue was lower when translated into U.S. dollars by approximately $5 million when compared to the prior year third quarter. Our gross margin for the third quarter was 26.1% this represented an increase of 1.6% over the prior year third quarter, this was a result of the improved revenue and fixed cost coverage and favorable product mix. Our operating expenses were $36.8 million during the third quarter 2012 representing an increase of $1.5 million or 6% over the prior year third quarter. This increase is primarily due to the cost associated with our program to implant the requirements at Sarbanes-Oxley of W.E.T., higher legal expenses associated with our…

All right, thank you very much Barry. Operator, I think we were prepared to go ahead and open the phones for questions from the listeners. Thank you.

Thank you. [Operator Instructions] And our first question comes from the line of Michael Lew from Needham & Company.

Couple of questions, you mentioned higher volumes as one of the primary drivers for the sequential gross margin increases at W.E.T. and Gentherm, are you expecting to see a similar trend in the fourth quarter W.E.T. in terms of volume growth?

Year-over-year I think that’s probably a correct statement. On the Gentherm side we probably have a little bit of headwind because the fourth quarter last year was a very good quarter for Gentherm. So I think we do expect a little higher volumes, there will be probably some decreases in Europe specifically offset by benefits from North America.

Okay. And also wanted to - could you also comment on some of the new initiatives that you’ve highlighted with this particularly on the bedding part in United Arab Emirates, I mean how much developments work is entailed and when will the product be commercially available?

This is Dan Coker, the program that we’ve launched into with one—a partner in the Arab States is a early stage development project. We’ve identified a very good partner we believe, we are adapting much of what we’ve already learned with our North American based betting project and there is a very keen interest in this extremely warn climate for products that could provide tooling in the bedding and sweeping area. So we haven’t really given any indications to when the product will be available in the market but we’re beginning the process now.

But then this technology is probably been developed by your leveraging and existing technology platform, would you say this is one that’s more, well it’s early but it shouldn’t take as long like you said you get at the market it’d be more like, third inning type of-- is where you’d categorize it right now?

Yes, I’d say, we’re moving along in the ball game here. We are adapting things that have already been experimented and although we’re still suffering here in Detroit for any analogy that relates to baseball.

Okay, I thought it’d be the series that’s still be going on.

We were hoping.

And so as I, also with regards to the climate controlled office chairs in Japan, when would that be introduced in the U.S., and also do you have a price on that right now in Japan that you’ve been offered for?

Yes, actually I do not have the price that the chair is being offered for, it is a development with a partner who is a Japanese firm and there are no current plans to market that here in the U.S. It will be marketed in the Asian markets but we have no specific plans about announcing the availability of the heated and cooled office chair for the U.S. at this time.

Okay. And then one final question, what were the mattress sales and cup holder sales for the quarter?

Actually Barry is going to jump on that and tell us exactly on that.

Yes, mattresses were around $500,000.

It was around $0.5 million for mattresses and I don’t really have the…

Cup holders were probably $1.5 million to $2 million. I don’t have that right here.

$1.5 million to $ 2million, okay, great thanks.

Thank you. And our next question comes from the line of Steven Dyer from Craig-Hallum. Please go ahead.

Any color Dan you can flavor, I guess just on Europe. It’s obviously far from ideal. What are you guys seeing or how do you sort of see that playing out kind of as you go into next year?

There is still a lot of uncertainty in the European theater in general. The German market is our primary home market for the W.E.T. operations. They are beginning to see some cooling even in the German market. When we look forward, we hope we’re getting close to the bottom. There have been some, I’d say, generally neutral noise about the economies in Europe these days, but we haven’t really got any indications from orders that things are picking up there. Things seem to be still slowing down. However, our operations there have done very well. Our European operations are being quite successful and they’ve been able to show even improved results in the third quarter. We’re hoping to hold our own in the fourth quarter and we’re hoping sometime in the early 2013 that things will start getting better, but in the immediate short-term things are not getting any better in Europe.

Okay. And then with respect gross margins, nice bump in the quarter. Is this a decent level to think about on this kind of a revenue level going forward or was there anything either tailwind or headwind that caused that number?

I would say that were probably at the higher end of our, what we view at a normal range that may come down a little bit in the fourth quarter. But certainly there is benefits from the higher revenue level, so maybe the bottom end of our range our normal range has increased a little bit.

Yes, I think that we’re generally satisfied with the progress we’ve been making it both units as we move forward. And you’ll see ups and downs as we go forward, but generally speaking, we’re making progress on both sides at our margin level.

Okay. And then I got the $500,000 in the quarter on the potential acquisition. Could you give the number that was spent on getting W.E.T. SarbOx compliant?

I think we’re mentioning in the 10-Q but it was in that $500,000 order magnitude.

So is it fair to say then you have about $1 million of one-time expenses in the operating line in the quarter?

I think that’s true, you have to look at the different things differently I would say. But the Sarbanes-Oxley expenses will go down a little bit in Q4 and taper off quite a bit more in the first quarter. So I wouldn’t call one-time for the quarter specifically. Obviously the acquisition potential is something that you won’t see in the fourth quarter, and then the legal expenses associated with the DPLTA probably will tick up a little bit in the fourth quarter because we have some activities in quarter during the fourth quarter and then will be go up and down in different quarters going forward until that is resolved.

Okay. Anything new to report there or not really?

As Barry reported, there is some core activities happening in Munich in the fourth quarter and we hope to express our case again in front of the appeals court to try to get some progress in our pursuit of the DLPTA. But there is no activity other than fact that we’re having increased frequency of activity in the court instead of preparing briefs then filing. Now we’re actually going to be doing some oral arguments. We expect to probably have some word-- results of those court hearings early in the first quarter of 2013.

Got you, okay. And then last question, just operating expenses in general, how should we view those next year? Is this a pretty stable level or is there still some gains you can make there from productivity or headcount standpoint?

I believe there are gains to be made. We plan out specific things that have different characteristics as you go through time. We would - if we take those that would probably are at more of a normal, you can see a normal rate here. Keep in mind also that not all of our P&L is in one currency, it’s in different currencies and so those can have somewhat of a effect on our P&L going forward. But again if you peel back, the Sarbanes-Oxley cost, the legal cost and the charge that you talked about, I think we see somewhat of a normal rate.

Okay. I guess I do have one more. With respect to the acquisition that didn’t work out in the quarter mission, and I don’t imagine you’ll be able to comment specifically on that. But more generally what is your thought on acquisitions and sort of how do you view that going forward given that you’re still sort of entangled in this W.E.T. acquisition.

Well we consider being entangled of the W.E.T. acquisition. I think it’s a normal process for us, so we’re not really encumbered by it, it is a mild distraction, but it doesn’t really keep us from looking around how we want to build our business in the long-term. So we do keep our eyes open for opportunity. We saw an opportunity that we thought that would be a strategic fit. We did a little work on it and we decided that at this point in time that that was not a good fit and so we decided to move on. So but we are keeping our eyes open and there are still some things we’d like to add to the structures as we go forward. And we did take a good hard look at what we thought was a very good opportunity. We still think it’s a good opportunity but the strategic fit just doesn’t match with the timing right now.

And our next question comes from the line of Mark Tobin from Roth Capital Partners.

I wanted to follow-up on the Asian market in particular where we’re seeing from some of the Japanese OEMs, they’re saying that they’re being impacted by the dispute over the islands with China. What are you seeing in the Asian markets now and how do you see that playing out over the next year or so?

Well we don’t like to dwell in politics, but there are some disputes between the Japanese and the Chinese Mainland and it’s not just about a few island, there is a bunch of things that they’re arguing about. That has impacted some of these companies, the Japanese auto company sales in China but the sales in Japan are recovering nicely and their exports to the rest of the world are still doing very well. I don’t think it’s going to put a dramatic impact on our revenues as Gentherm in any of our locations but I do think it’s something that the politicians are going to have to resolve, not business people. So I don’t think it’s going to really have any direct impact on our revenues.

Okay. That’s helpful. And following-up on the court process, what are the potential outcomes when you go into the court next month? What are the different scenarios that you see playing out from that process?

Well the opportunity is in the results. We expect to see of course are Gentherm wins on appeal and we move forward in a process to implement the DLTPA. But we are of course at the whim of the courts and the German courts have good solid laws. We have abided by all of the laws and rules and regulations of the German court system and we fully expect that we will prevail over time. This is an appeals process and we still have further options available to us if we do get a result that we are not looking for, we’ll continue to pursue the DLTPA until it is approved and installed.

And how is the cooperation agreement process? How is that going and are some of those agreements being implemented now?

Yes that’s correct, the German legal system does allow for companies in situations like ours to work together. We do have a group of cooperation agreements already negotiated in place to allow us to cooperate particularly on some very key programs that we feel that the strengths of W.E.T. and the old Amerigon fit very nicely and we'll progress the business forward to the future. So that is very helpful for us, it's not the ultimate answer but it is very helpful.

[Operator Instructions] And our next question comes from the line of Adam Brooks from Sidoti & Company.

Just a few quick questions here. Even strip out the impacts from that historical Amerigon platform and the current impact W.E.T.’s growth was pretty strong in the quarter above what it seems like our market growth was. Can you speak a little bit about what drove that?

Yes they had a - we have a very good North American, very robust North American business and the W.E.T. business in China is doing exceptionally well.

Okay. And then did you have any impact on the strikes in Korea?

We don’t have any direct impacts on our business, no.

And we have a follow-up question from the line of Steve Dyer of Craig-Hallum.

Yes, just one follow-up. Does the transition from the T-900 to the K2XX impact you in any meaningful way from a quarterly basis or is it going to be pretty minimal?

I don’t think you will see any direct impact on our operations and the transition. We have the business and we’ve planned to retain the business.

Okay. And then with respect to W.E.T won the Lambda business, is that still theirs or I guess kind of yours as well going forward?

Our understanding is.

[Operator Instructions] And we have a question from the line of Ailon Grushkin from Nano Capital Funds.

Have you guys taken advantage of the extraordinarily low Tellurium prices and built up some inventory by any chance, because I saw you have a fair amount of raw material on the balance sheet.

We have enjoyed the recent rundown of prices in Tellurium in the global markets and we do try to cover ourselves as broadly as possible. We don’t actually take any direct contracts of Tellurium on our books, but we try to push our commitments out as far as we can when prices reach these levels.

Okay, great. In terms of the heating and cooling cup holder market, where do you see that going? Like I saw there was one competitor that we found was in like the Audi vehicle.

Yes.

I’m trying to figure out, are you making any progress I guess expanding beyond Chrysler at this point?

I think we’re making some progress. We have several - lot of programs in that, what I would call a predevelopment stage right now. There are a couple of competitors out in the world, specifically the guy who does the Audi programs, a very good company. We think we have advantages over their designs and we are now after having won our first few programs at Chrysler, we are working very hard to try to push the concept of the heat and cool cup holder in addition to heat and cool storage areas for cars worldwide.

Okay, great. And how about the heating and cooling, I mean the heated steering wheels, is that market still growing?

That market is actually doing very well. It’s something that unless you lived in the cold climates, you don’t truly appreciate. But it’s something that we think is that got a lot of upside potential.

Okay. And lastly in terms of the heating and cooling office chairs, how does that work? Are you going to be collecting a royalty from that or you’re going to actually be manufacturing the units and selling it to them?

It’s our goal to be a manufacturer. So we don’t really want to get into a licensing program in that particular arena and we’ll be supplying the basic core and guts to the system and they adapted for their trip.

Thank you. And we have a follow-up question from the line of Adam Brooks from Sidoti & Company. Please go ahead.

Yes. Just once again update maybe on the CapEx expectations for this year and maybe if you could speak a little bit as far as next year as well.

Sure. In this quarter we’re about 8 million. I think we will be a little bit less in the fourth quarter as we tail off the expansion in China. Next year, we’ll have other expansion opportunities that we’ll be pursuing. So the next couple of years are probably in the 20 million to 25 million range for CapEx.

Thank you. And at this time there are no further questions in the queue. I would like to turn the conference back over to management for closing comments.

All right, thank you and we very much thank everyone for joining us in our review of our third quarter results. We feel like the results were fairly positive and we think that we’re going to have a good fourth quarter finishing up 2012 on a positive note. These are - unfortunately for us in many areas of the globe tough times. Our businesses have been lucky to be able to get into favorable positions and our business continues to grow and expand. And our team at Gentherm are very much aware that this is a result of hard work and a little bit of luck. We are also in a state where in the U.S. right now there is some pretty serious disasters that have occurred on the upper East Coast and again our thoughts and prayers are with the folks who’ve been impacted by that. And we encourage everybody to get out and vote next week. There are some big decision to be made and we look forward to some stability after those decisions are made. Again, join us again in about 90 days and we’ll hopefully will be talking about a good fourth quarter for Gentherm. Thank you everyone. Bye-bye.

And, ladies and gentlemen, this does conclude our conference for today. And we thank you all for your participation. And at this time you may now disconnect.