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Operator: Good afternoon. My name is Diego and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation Q4 2022 Year End Earnings Conference Call. I will now turn the call over to your host, Mr. Steve Haymore, Director of Investor Relations. Mr. Haymore, you may begin.

Steve Haymore: Good afternoon everyone and welcome to the Rogers Corporation fourth quarter and full year 2022 earnings conference call. The slides for today’s call can be found on the Investors section of our website along with the news release that was issued today. Please turn to Slide 2. 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 many uncertainties 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 statements.

Also the discussions during this conference call may include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. A 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. Turning to Slide 3, with me today is Colin Gouveia, President and CEO, and Ram Mayampurath, Senior Vice President and CFO. I will now turn the call over to Colin.

Colin Gouveia: Thanks, Steve, and good afternoon everyone, thank you for joining us. I’m pleased to be here today on my first earnings call as the President and CEO of Rogers. Rogers is a special company and there are several things that make me excited to serve as CEO. First, we have incredible people with a deep bench of talent throughout the organization. This team impresses me daily with their dedication to our business, our customers and to their teams. Second, we have an effective strategy in place that will enable us to expand and grow our market-leading positions by focusing on high growth end segments and leveraging our strong track record of innovation. And lastly, we are intently focused on improving our financial and operational performance with a clear plan to deliver long-term value for our shareholders, employees, customers and other stakeholders.

Before I touch on the quarterly results, I’d like to walk through some of our near-term key priorities on Slide 5. Number one is improving our profitability and driving operational excellence across the organization. We started by taking a hard look at our performance to ensure that our operations are optimized to reflect current business priorities and market conditions. In December, we shared publicly our ongoing targeted programs to improve operations and two weeks ago announced additional significant actions to improve our cost structure, streamline our portfolio and drive operating margin improvement. These necessary changes to improve profitability are currently underway, and I’ll discuss these efforts in more detail shortly. Additionally, we are focused on bolstering our team with strategic operators and individuals, who bring deep industry knowledge and experience to help us grow the business.

This concludes the appointment of Larry Schmid as our Senior Vice President of Global Operations, who will be instrumental in implementing our ongoing operational excellence initiatives. Larry brings more than 30 years of senior leadership experience in global operations and supply chain management at companies such as Dow and Rohm and Haas. We have put significant effort into improving our processes and investing in better tools to support rapid decision making. Larry will help drive this work forward and ensure we have the right people to execute these initiatives. While improving profitability is our top priority, I want to be clear that we are taking a balanced approach with our investments to enable us to capitalize on the exciting opportunities we have ahead, and to be well-positioned to support our customers when the market recovers.

Lastly, related to Monday’s press release with Starboard Value, we are pleased that we could reach a constructive agreement. I look forward to working with our Board to continue executing against our strategic plan to capture the exciting opportunities ahead of us. Turning to Slide 6. I’ll review in more detail the specific actions we’re taking to improve profitability. First, we conducted a detailed review of our corporate direct and indirect manufacturing organizations and implemented actions, which have resulted in a reduction of 7% of Rogers global workforce. Reducing our headcount is not something we take lightly and we did our best to treat all our people with respect and dignity they deserve. However, adjusting our organization to align to the current environment is a necessity and required us to make some difficult choices.

Second, we have undertaken a series of actions to improve our product portfolio and drive operational improvements across our manufacturing facilities. This includes divesting the non-core low margin Griswold natural rubber product line in the EMS business, which will improve our gross margin mix. In addition, we have implemented process changes to improve manufacturing yields, scrap rates and productivity at factories in both our AES and EMS business units. Third, we are further optimizing our laminate circuit materials manufacturing footprint in AES. This includes exiting our Price Road facility in Arizona and taking other actions to reduce the global cost structure. On an annualized basis, total manufacturing cost savings are expected to be roughly $25 million, net of inflation.

As these actions begin to take hold in the coming quarters, we are targeting to achieve a gross margin of 34% in the second quarter of 2023 with an additional improvement to approximately 35% as we enter the second half of the year. We will not stop at 35%, as reaching historical levels of profitability is our clear goal. We will outline more about the timing and plans for our gross margin progression to reach 40% at our Investor Day in March. In addition to the improvements in gross margin, we are also managing operating expenses. On top of the reduction in corporate headcount, we are also decreasing professional service fees and discretionary spending. These actions will largely offset the impact of inflation on 2023 operating expenses. Now turning to our quarterly performance on Slide 7.

As expected, the macro environment remained challenging in Q4, which adversely impacted our topline results. While our sales fell more than 9% compared to the prior quarter, we saw continued growth in certain key markets. Our EV sales increased at a double-digit rate versus the prior quarter and full year EV sales increased 35% versus 2021. ADAS sales rebounded from the market disruptions in the third quarter and grew at a double-digit pace sequentially. Our position in these important end markets remained strong and continues to grow as we leverage our technical expertise to meet customer needs and solve critical challenges. We also had good growth in clean energy sales led by our power interconnect business. Turning to our other markets, the key headwind in Q4 was a significant decline in portable electronics sales, as our customers experienced a major production shutdowns due to COVID-related impacts in China.

As restrictions have recently lifted, the disruptions to our customers have ceased. However, in this segment, Q1 is typically the weakest quarter from a seasonality standpoint. We are closely watching demand signals from our OEM customers and are well positioned to supply when end market consumer demand returns. In other segments, we experienced softening demand in our EMS industrial business due to the current macroeconomic environment. Although, the quarter was challenging, we are focused on managing what is within our control. We are executing on our cost reduction initiatives and we expect to see the benefits in the coming quarters as previously outlined. An important pillar of Rogers strategy is aligning our organization with key market trends, and we have long history of successfully implementing this strategy.

From the early stages of many end markets, we have leveraged our deep customer relationships to solve unmet needs with our applications expertise and innovative solutions. These capabilities are part of our DNA and are critical to support our growth. On Slide 8, I’ll highlight some of the exciting opportunities across our portfolio and how we think about the growth potential. The electric vehicle market represents the strongest growth opportunity for our business and now comprises more than 20% of sales. We continue to see strong traction for our products, including our ceramic substrates, battery compression pads and power interconnects, which are critical to boosting vehicle performance and reliability. One example of our progress is a recent design win where our ceramic substrate technology was selected to be utilized in an inverter design for a major automotive OEM.

This multi-year award will begin generating revenue in 2023. While we continue to be excited about the EV potential, we have other strong growth opportunities including ADAS, Aerospace and Defense, 5G Smartphones and Renewable Energy. Together, these markets comprise more than 25% of our portfolio and we expect that these segments will have similar growth profiles to each other. In the ADAS market, demand for advanced safety features continues to increase and with our history of innovation and reputation for reliability, we are positioned to capture the growth in this market. We expect Aerospace and Defense to remain a continued growth opportunity due to our high reliability, high performance laminates circuit solutions that are essential to critical radar and missile systems.

One example that highlights our technology and applications expertise is a design win with a leading prime contractor where our solutions were selected to help enable broadband communications in a next generation satellite system. In advanced 5G Smartphones, despite the recent production and demand disruptions, we remain well positioned with higher content per phone versus past generations due to our high performance elastomeric materials. Finally, in renewable energy, our power substrate and power interconnect solutions help improve energy conversion efficiently in solar and wind power. Our traction continues in this market as our ceramic substrate technology was recently selected by a global OEM to be used in power modules for renewable energy applications over a multiyear horizon.

Our core markets, comprised primarily of sales into our industrial segment are the third component of our market portfolio. These markets provide solid growth, high margins and cash generation. We look forward to sharing more about the longer term opportunity across our markets at our Investor Day at the end of March. I want to close by reiterating my excitement about Rogers and are taking on the CEO role at this moment in our history. While the environment remains dynamic, we are focused on the elements of the business that we can control, which includes making strong progress on our strategy, having clear priorities in place to improve our operations and sharpening our execution to support our customers. These actions together with the optimistic projections in our key markets give us great confidence in our ability to deliver future growth and long-term value for our shareholders.

With that, I’ll turn it over to Ram, who will discuss more about our financial performance.

Ram Mayampurath: Thank you, Colin, and good afternoon everyone. Let me start by reiterating our commitment to drive margin and profitability improvements. We are watching our costs carefully and we are implementing actions to improve our overall cost structure. These actions will result in meaningful improvements for margins in the coming quarters and position us well to further advance our profitability as markets recover. I will start by reviewing our full year and fourth quarter 2022 performance before discussing the outlook for the first quarter of 2023. Turning to Slide 10, net sales for 2022 increased by 4% to $971 million, led by a strong 35% year-over-year growth in the EV markets, good growth in industrial market sales and the Silicone Engineering acquisition.

However, continued global disruptions and macroeconomic challenges impacted growth in 2022. In addition to that, sales for the year was also impacted by unfavorable foreign currency impact of $37 million. Gross margin of 33.1% declined 430 basis points from the prior year due to a combination of market challenges and operational issues that we detailed in our December Investor call. As Colin discussed, we have outlined a number of actions to improve gross margin with a path to 35% in the second half of this year, assuming sales continue at expected Q1, 2023 levels. Our efforts to improve margins and profitability will not stop there and we will outline more about our path to historical levels of profitability at our upcoming Investor Day, In 2022 we achieved EPS of $6.15, which included a one-time benefit from the receipt of the termination fee, partially offset by non-cash impairment charges from additional actions taken to exit Price Road and divestiture of our Griswold rubber product line.

Adjusted earnings per share were $4.91. Next, I will discuss results for the fourth quarter beginning on Slide 11. Q4 revenue declined due to persistent macroeconomic headwinds and the COVID situation in China. Q4 sales of $224 million decreased 9.5% from the prior quarter from lower volumes of $19 million and foreign currency impact of more than $4 million. EV, ADAS and clean energy sales all grew at a double-digit rate in Q4, but were more than offset by declines in other markets. Much of the decline occurred in our EMS business unit, where sales were 15.6% lower quarter-over-quarter as anticipated demand for our portable electronics products were much lower due to the impacts of COVID-related disruptions in China. In addition, industrial sales declined as demand was softer due to challenging macroeconomic environment.

AES sales declined by 4%. Contributing to the decline was unfavorable FX of 2% and lower volume in Aerospace Defense and Mass Transit. This was partially offset by higher EV and ADAS demand. Turning to Slide 12. Q4 margins percentage of 31.8% was approximately flat versus Q3. However, gross profit declined by $7 million from Q3 due to lower volume. In Q4, macroeconomic headwinds, in particular COVID-related disruptions in China impacted higher margin products within our EMS business. This had an unfavorable impact to gross margin of approximately $9 million. The impact of lower volume and mix was partially offset by lower manufacturing spend, yield improvements and lower logistics costs. As communicated in our December call, we have initiated several cost reduction and productivity improvement actions in Q4, the benefit from these actions will be fully realized in the first half of 2023.

On Slide 13, I’ll next discuss changes in operating income versus the prior quarter. In total, Q4 operating profit increased $64 million versus prior quarter. This was primarily due to the receipt of $142 million termination fee net of expenses, which was recorded in other operating income. Partially offsetting this increase was $65 million of restructuring and impairment charges, primarily related to the sale of the Griswold natural rubber business and the exit of the Price Road facility. The remaining changes in operating profit resulted from lower gross profit, an increase in severance costs and professional services fees. On an adjusted basis, operating income decreased approximately $6 million to $20.7 million. Adjusted operating expenses were $1 million lower versus prior quarter, which was more than offset by the decline in gross profit as explained previously.

Continuing to Slide 14, ending cash at December 31 was approximately $236 million, a slight increase from the $232.3 million at the end of 2021. Ending cash includes the receipt of the termination fee in the fourth quarter, which as mentioned was approximately $142 million net of transaction-related fees. We paid down $75 million of our revolving credit facility in Q4 and the net borrowings for the full year were $25 million. Capital expenditures were $30 million in the fourth quarter and $117 million year-to-date with investments mostly targeted at building new capacity and capabilities to capitalize on the growth opportunities in the EV space. The increase in working capital of $91 million for the full year was mostly due to the higher inventory in the first half of the year to restock raw materials to target levels.

Cash taxes paid were $41 million in Q4, $61 million for the full year. This includes taxes paid related to the termination fee received. Lastly, as we mentioned in our December call, we repurchased $25 million of stock in the fourth quarter. Next on Slide 15, before discussing the details around the guidance for Q1, 2023, I would like to once again highlight three points. Number one, continuing macroeconomic uncertainty. We are closely watching headwinds from the economic situation and inflationary conditions around the globe and the impact of recent changes to COVID policies in China. Number two, as Colin indicated in his remarks, we are committed to driving productivity and cost improvements to increase profitability in 2023. And number three, we will continue to make the investments necessary to support our long-term growth strategy, including the right capital allocation decisions.

We will focus on maximizing throughput of existing production lines before investing in new capacity. With that context in mind, let me discuss the specific guidance ranges. First, net sales are expected to be in the range of $230 million to $240 million with gross margin between 31.5% and 32.5%. Earnings per share is expected to be in the range of a loss of $0.10 to positive $0.10 and our adjusted EPS range is between $0.65 and $0.85. We expect approximately $15 million of discrete items in Q1, comprised of severance related to recent actions announced, certain non-recurring advisory fees and other one-time items. For the full year 2023, we expect capital expenditures to range between 65 and $75 million. Approximately, 50% of our investments will continue to be for capacity expansion.

We expect our full year tax rate to be around 23%. We remain fully committed to our proven strategy, our strong technology and leading solutions that address the needs of our customers. As we execute our recovery plan and growth strategy, we are focused on achieving 34% gross margin in Q2 and making additional improvements in the second half of the year. I will now turn the call back to the operator for questions.

Operator: Our first question comes from Daniel Moore with CJS Securities.

Daniel Moore: I’ll start with a modeling question or two. Just revenue is expected to improve sequentially a little bit in Q1, gross margin relatively flat, yet EPS guide is lower on an adjusted basis. Just talk about the primary deltas there. It’s mostly G&A, I mean you’ve got significant cost reduction actions in place, but on an adjusted basis, what sort of the bridge from Q4 to Q1?

Ram Mayampurath: So on the top line, we do see an increase from Q4 to Q1. Q4 was abnormally low compared to the first three quarters of 2022. Although, we see an increase in top line, it’s not the right mix yet. We don’t see the higher margin products come through. We are carefully watching how the portable electronics story in China will play through post the recent decisions made there on COVID policies, but we are carefully watching that we’re not forecasting much of that mix to come through in Q1. In addition to that, most of the cost reduction actions we have taken will give us benefit more in the Q2 timeframe. That’s why we are committing to a 240 basis points improvement back in December. Like we said from where we were in Q3 and Q4 to where we think we’ll be in Q2.

So most of that benefit from the cost reduction, we expect to show up in Q2. And the biggest swing in the EPS was related to our tax rate. We are back to more of a normal tax structure of about 23%. We were down to a much lower rate in Q4 due to some one-time activities we’ve been chasing, which finally came through. So the tax rate in Q4 was much lower than our normal rates, which caused a big swing in the EPS.

Daniel Moore: Talk more from a macro perspective, you mentioned lower portable electronics as well as industrial demand. Obviously, portable electronics impacted by COVID disruptions. How much was the COVID disruptions and typical seasonality and supply chain, and are you seeing continued weakness into kind of Q1, any indication of light at the end of the tunnel on portable electronics and what’s kind of the near-term outlook on industrial?

Colin Gouveia: So for portable electronics, typically the way it works is the third and fourth quarter are much stronger than the first and second quarter, driven by the holiday season and Chinese New Year, and that’s how it’s typically been. So we didn’t have that type of production available in China, the second half of the year, because many of the factories were shut down due to COVID and so that again led to our decline. We’re watching carefully what’s happening now and we’re ready to produce and the supply chain woes that plagued us in the prior year have cleared up, both for us and our customers, and we’re really just paying attention to end market demand and if it returns, we can supply. Looking ahead, we do see portable electronics stabilizing and returning a bit to normal in the second half of the year.

When you look at overall at the handsets sold, that was actually a significant decline 2021 to 2022, more than 10%. So we see that rebounding a bit and we’re in great position to supply, not just for overall handsets, but especially for 5G models, which use higher content and we have a greater share there than the regular model. So we are looking for a rebound in the second half of the year in portable electronics.

Daniel Moore: Historically, your visibility to supply chains and inventory levels has been somewhat challenging. Maybe just looking across EV, ADAS and some of the other higher growth markets, what’s your sense for where we are in terms of customer inventories right now? Is it continued destocking or when production rates start to kick higher, do you expect to see that your demand accelerate in lockstep?

Colin Gouveia: Maybe I’ll start and Ram might add a comment. So in terms of inventories, we did have challenges, which we have mentioned around the ADAS inventory. At the end of last year, there was slowdown in production due to shortages of key raw materials to make automobiles, ADAS inventory built-up a bit, but we think we’ve worked through that. And so we see the ADAS market returning more to its normal growth pattern for this year going forward. In terms of overall supply chain, yes, there were a lot of challenges for everybody, Rogers included, but we’ve made some great strides in terms of stabilizing things. We’ve made some really good improvements in terms of supply planning and demand planning processes. And in terms of the internal way we do things, the addition of our new Ops leader Larry Schmid is already making a big difference.

So that we believe those issues will be in the rear view mirror. Ram, I don’t know if you have anything else to say in terms of inventories?

Ram Mayampurath: No, I think you covered it.

Daniel Moore: Within EV, obviously you have a great deal of exposure as you mentioned, across silicon nitride substrates, battery compression pads, power interconnects. You mentioned the new customer win or design win of silicon nitride. Where do see you’re gaining the most headway in terms of new customer growth among those and where do you expect to see the fast acceleration as EV adoption accelerates and supply chain of these over the next 12 months to 36 months?

Colin Gouveia: I would say at this point, we’re having quite good success across the board. We feel like within the Rogers portfolio, pretty much every one of our business units has really differentiated technology that goes into different parts of EV/HEV vehicles, and we’re also well-positioned from a global perspective. We have manufacturing in the major three regions, North America, Europe and Asia and a really strong sales engineering team calling directly on OEMs and their engineering counterparts there, and solid and very supportive TS&D folks scheduled in the same areas. So I would say that when we look across that portfolio, we grew very well last year. The market grew in the roughly 30% range and we were higher than that for all of the year.

So we’re not really guiding that we can grow faster than the market, but that’s our aspiration. And I think because of our manufacturing footprint and the technical and sales engineers teams we have in place, we can be successful in all regions, with many different types of OEMs. We feel like we’re really in a good position here.

Daniel Moore: All right, I’ll jump back with any follow ups and look forward to hearing more at the Analyst Day later next month.

Operator: Our next question comes from Craig Ellis with B. Riley Securities.

Craig Ellis: I’ll start with just a couple of clarifications of some of the prior. So I just wanted to be clear with EMS, where revenues were down $18 million quarter-on-quarter. That was primarily the China impact in personal electronics and there was a little bit of industrial, any way to break out the relative contribution of those two, guys?

Colin Gouveia: That’s correct, Craig. Majority of that was related to portable electronics.

Craig Ellis: Yes. So maybe 75%, 80% round?

Colin Gouveia: Closer to 75%, yes.

Craig Ellis: And then it sounds like Colin, your sense from your partners is a bit personal like chronic supply chain has cleaned up. Is that what you meant to convey. We’re hearing that from some of our semiconductor companies. It’s been in a tough position for the last almost 18 months, but we’re getting the sense that it’s bottoming out, that’s what you’re hearing with your materials for 5G?

Colin Gouveia: We’re seeing that, exactly and it’s two things. It’s more upstream components being made available, but primarily driven by the change in COVID policy in China. So because of the zero COVID policy, that led to a lot of factories being shut down in Q3 and Q4 last year for long periods of time. So even though the backlogs were strong, our downstream customers, the ODMs could not produce because of the policy. That policy was changed completely pretty much. There is no more COVID policy in China. Everything is open. And so we see things returning to normal now and don’t see that as a headwind going forward for the rest of this year.

Craig Ellis: And one of the things that we we’re hearing is that they’re just been a buildup of finished product inventory in the China smartphone supply chain and so your sense is that that finished inventory has cleared out?

Colin Gouveia: In terms of end market, there’s pockets in our opinion, it’s still probably need to be destocked a bit. And so, probably that needs to happen over, what I would say the first half of the year. But as we think about things and the second half progresses, we assume things will stabilize with inventories. And there’ll be a normalization of those inventory levels and return to — there’ll be demand for the new generation of products and we see growth as compared to what happened towards last year.

Craig Ellis: And then the next clarification is just on the gross margin guide. So Ram, it sounds like what you’re saying is we’re going to have materially better volume and back near fourth quarter or third quarter levels in the fourth quarter. We’ve got the start-up costs and efficiency, but it sounds like for COGS that really benefits 2Q rather than 1Q. And then we’ve got some mix that isn’t really advantageous. And so while we’ve got a significantly higher revenue number quarter-on-quarter, it’s just not the right mix to get gross margins up significantly, even though it is making nice progress against the targets you laid out in December, is that right?

Ram Mayampurath: That is correct. We are guiding to $230 million to $240 million. We finished closer to $250 million. I think $248 million in Q3, but you captured it well. It’s got to do with the mix and the timing of the cost reduction actions hitting our P&L.

Craig Ellis: And from December we expected that the path to 34% gross margins was 160 basis points, capacity management net 80 basis points from manufacturing yields. Is that still how we got to the 34% or are you seeing things play out a little bit differently than that, and if so how?

Ram Mayampurath: It is very similar. So the 160 basis points is related to mostly cost corrections and the 80 basis points improvement is mostly related to productivity improvements, if you may, efficiency improving yield and operational efficiencies. That has not changed a whole lot. We are still targeting a net improvement of 240 basis points after we account for inflation and some investments we need to make in the business.

Craig Ellis: And then I wanted to follow up on the point on CapEx from the press release, because $70 million this year is a very substantial decrease from 2021, down about $47 million year-on-year. Colin, you had talked about trying to be more efficient in optimizing facilities, is that really what we’re seeing there? Is there a significant move in that direction or how do we interpret the year-on-year decrease in CapEx?

Colin Gouveia: I think that’s the main reason, so we have been working on productivity improvements since probably middle of last year, at least nine months and we’re starting to see some real dividends in terms of unlocking free capacity and getting much better throughput in some of our key plants that have been I would say at capacity. So this work has really led to debottlenecking in several different areas, which lets us be more prudent in terms of how we deploy capital and we can push CapEx out a bit longer and into the next year or so because of the work we’ve done from a productivity standpoint.

Craig Ellis: And then just tying that into some bigger picture items that were announced within the last couple of weeks. So clearly the Company’s focus there, it’s nice to see, but you also identified two other things, talked about them a little bit today. The optimization for staff both in manufacturing at the corporate level and then the Griswold rubber business carve-out. Can you just talk a little bit Colin about your view for how much further potential there is on things like either optimization or automation to become a more efficient producer? And then how much room is there to really comb through the portfolio and call-out some things that may not be at that high margin level that you want to drive the business back to?

Colin Gouveia: Sure. I would say that we’re always taking a hard look at our portfolio and what fits strategically and what doesn’t. So rubber was one example of — acquiring that Griswold business was actually quite good for us because it was two pieces, it came with a polyurethane line, which gave us really needed capacity at the time and also entree into a few different end markets with slightly different urethane foam technology. So that piece of the acquisition was very beneficial to the Company. The rubber line we realized is more of a slow growth, lower margin, not quite a Rogers business. And so we made the decision to exit that. We’re looking elsewhere, but at this moment, we feel very comfortable with our portfolio and very satisfied with how we’re set to grow in the future.

And then we did make some tough decisions in terms of taking out costs in certain areas, just to get aligned with the current macro environment. Of course, we also have kept an eye on growth. In some cases, we’ve actually added headcount where we needed it to support our strong backlogs into certain end markets like for example, EV/HEV. So we’re trying to balance this cost out with the fact that we are a growth company with good innovation, and I think, with really good long-term future. But you do have to sort of manage things for the short-term and the long-term. So what I would say is, there’s always some options we can look at, right. If things develop further, we’re a nimble company. We’re very flat and structures, we can make quick decisions.

I think at this moment, we’ve done what’s appropriate for our current situation, but of course, we’re always paying attention in terms of what we should do next.

Operator: There appears to be no additional request for questions at this time. One moment. We do have one just popped in from Daniel Moore, CJS Securities.

Daniel Moore: Obviously you talked about CapEx, but additional capital allocation priorities near-term, given obviously very strong balance sheet, enhanced by the breakup fee, buybacks holding firepower for M&A. How are you thinking about re-deploying capital and the continued cash flow as we move forward?

Ram Mayampurath: So the capital structure has not really changed for us. The allocation strategy remains the same. We will fund organic growth, our CapEx now is probably 7% to 8% of our revenue, that will be our primary focus. We do want to continue to repay debt and keep our balance sheet as flexible as possible for any kind of inorganic opportunities. Our balance sheet remains very strong, but we will continue to repay the debt that we have and then look at opportunistic share buyback at the right time, that continues to be our priorities, no change there.

Daniel Moore: And just a housekeeping the divestments from Griswold, about $18 million of run rate revenue. The other streamlining actions, any additional revenue impact we should be thinking about as we model 2023?

Ram Mayampurath: No, nothing for ’23 yet. Nothing yet to model.

Operator: Next question comes from Craig Ellis with B. Riley Securities.

Craig Ellis: I just wanted to follow up on a couple of the product groups. So first just starting off with Aerospace and Defense. Can you just provide a little bit more color in terms of what you’re seeing there in that market and any sense for whether as you navigated through 2022, where I think we had a couple of, quarters where we might have been either cyclically or supply chain pressured, whether any of those headwinds are still out there?

Colin Gouveia: What I would say, Craig, is that the Aerospace market in particular was very tough during COVID, when price dropped precipitously and there was no one flying. We’ve seen quite a strong bounce back since then and we also see a bigger increase in international flights. And what that does is, it drives our business around maintenance, repair and overhaul and that has come along quite nicely this past year and we see that being strong again for the coming year, and probably will continue strong. But it was not good several years ago due to the COVID slowdown. And then on the defense side, that is a key end segment for us and really we participate with a lot of different products, but in particular our RF solutions business, our laminates in terms of radar and other high-frequency circuits used in satellites and defense are still the go-to product because of our toughness and durability and reliability and that business has been going quite well for us.

Defense spending continues to increase and so those are growth markets for us. We consider them a high growth area for us and we’ll give you more details on that more context later in the year or actually in March at our Investor Day. We’ve got some good content to give you there.

Craig Ellis: It’s real nice to get the split up between the commercial portion and the defense portion, I appreciate that Colin. One other question related to the end markets. It’s less of a focus than it was years ago, but anything notable on the infrastructure side of 5G, either just sequentially with demand or any programs that you see out there that could be meaningful as we look ahead to 2023?

Colin Gouveia: The wireless infrastructure for us is, as we’ve said, about 6% and we view that as a maintain market. The build outs in terms of base stations, looking at the forward projections from some external agencies, who publish these indices looks relatively modest, flat more or less. And so we have good relationships with some of the key OEMs and it should remain in that single-digit range for us. It’s a flat, I would say business for us going forward.

Operator: Thank you. There are no further questions at this time. I’ll hand the floor back to management for closing remarks.

Colin Gouveia: Just want to say thanks everyone for joining. We’re beginning our journey in terms of the rolling restart to get us to our targets of 40, 20 and 20. And I really look forward to seeing everyone at Investor Day at the end of the month in March in New York City. Thanks for joining everyone.

Operator: Thank you, this concludes today’s conference. All parties may disconnect. Have a good day.