Jack Monti - Director of Investor Relations Bruce Hoechner - President and Chief Executive Officer Janice Stipp - Senior Vice President, Finance and Chief Financial Officer Robert Daigle - Senior Vice President and Chief Technology Officer

Craig Ellis - B. Riley & Co., LLC Daniel Moore - CJS Securities Joan Tong - Sidoti & Company, LLC Sean Hannan - Needham & Company, LLC

Good morning. My name is Dan, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2017 Second Quarter 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] Thank you. I would now like to turn the conference over to Mr. Jack Monti, Director, Investor Relations, please go ahead.

Thanks, Dan. And thanks so much everyone for joining Rogers' second quarter 2017 earnings call. To follow along with the slide presentation, please see the Investors section of our website. Turning to Slide 2, we have a disclosure on forward-looking statements. During the call, we’ll be making certain forward-looking statements subject to a number of risks and uncertainties, which may cause actual results to differ materially versus today's outlook. In addition, some of the financial metrics discussed will be on a non-GAAP basis, which management believes better reflects the underlying core operating performance of the business. Turning to Slide 3, it’s my pleasure to introduce Roger's Management team. Bruce Hoechner, President and CEO, is joined by Janice Stipp, SVP and CFO, and Bob Daigle, SVP and CTO. I will now turn the call over to Bruce.

Thanks, Jack. Good morning, everyone, and thank you for joining us on today's call. Please turn to Slide 4. I'm very pleased to report that in Q2 2017, Rogers achieved another quarter of exceptional net sales and earnings. Net sales were $201 million, an increase of 28% over Q2 2016 or 30% in constant currency. This robust performance was driven by double-digit organic growth in each of our three business units. In addition, our recently acquired businesses continue to deliver beyond our high expectations. Topline performance combined with our continued focus on operational improvements resulted in an outstanding profit increase. We achieved in all time record gross margin of 40%, up 180 basis points over Q2 2016. Adjusted EBITDA was $47 million, up 60% versus Q2 2016 and adjusted EPS was $1.33 up 51% over Q2 2016. During the past several years Rogers has intentionally transformed into a more diverse company by expanding our portfolio through new product innovation, driving geographic penetration and executing on prudent acquisitions. This diversification has helped us perform consistently and deliver steady growth. A good example of this is in the ACS business. As the telecom market moves towards 4.5G and 5G technologies which is moderated the 4G/LTE build-out. ACS has been able to maintain growth by taking advantage of other market opportunities such as automotive safety and aerospace and defense. With our strong position in these and other exciting markets as well as a passionate focus on operational efficiency. We believe our profitable growth opportunities remain compelling. Please turn to Slide 5. I would like to begin by reemphasizing the importance of our blueprint for success. Across the enterprise our commitment to the four pillars of Roger's growth strategy as enabled us to achieve substantial, sustainable results and impressive shareholder returns. Our market driven focus is helping us advance our position in the markets we serve. One example is our emphasis on developing next generation technology to meet growing demand for wireless data where the proliferation of video and social media is driving a compound annual growth rate of wireless data consumption of 51% over the next three years. In e-Mobility which is a key growth engine for our PES business, consumer demand and a global push to reduce CO2 emissions are contributing to a compound annual growth rate of 26% through 2022 for EV, HEV production. We are making additional investments to build upon our innovation leadership adding a third innovation center in Chandler, Arizona which will focus on antenna systems to enhance 4.5G and 5G performance and other promising technologies. We continue to expand the number and depth of our relationships with technology partners and universities in order to access and develop new technology platforms that have promising commercial applications. We are very pleased with our success and synergistic M&A. The integrations of the Wall and Diversified Silicone Products or DSP are going exceptionally well and the operations are running smoothly. A recent example of Roger's ability to capture additional value from our acquisitions is our team's success in accelerating the commercialization of a new to Wall Technology a flexible, flat cable harness used in clean room automation. Utilizing Roger's operations and engineering network allowed us to accelerate products scale up to support rapidly developing customer demand. In addition, by leveraging Rogers global reached we believe we will be able to expand sales opportunities for DeWAL and DSP product offerings globally. These are a great example of how we are maximizing synergies with our acquired companies. Our focus on operational excellence is enabling our topline results to flow through to the bottom line particularly in our PES business unit, where Q2 2017 operating margin was 10.8%, up from 3.9% in Q2 2016. A number of initiatives are contributing to this improvement in PES including efforts to convert to a more flexible manufacturing cost model. At the bottom of this slide, we have included our target of achieving top quartile operating profit growth when compared to our peer group. We believe this is a good indicator of our success combining top and bottom line growth to deliver leading shareholder returns. Turning to Slide 6, we hold significant market positions in our two key growth areas of advanced mobility and advanced connectivity, which are aligned with our technology portfolio, marketing initiatives, and new product pipeline. Roughly half of our revenue comes from applications in these markets. Based on our close collaboration with our customers and extensive understanding of our markets, we believe that we are well positioned for success in these emerging opportunities where application challenges require ongoing innovation an area of strength at Rogers. As we get further along in the 4G lifecycle, we are seeing 4.5G and 5G design evaluations accelerate and Rogers is achieving meaningful design wins. We have earned our market position here having been on the forefront of each new wireless generation where our technologies and products have demonstrated world class performance. Turning to Slide 7. As I mentioned, we are extremely pleased with the smooth integration and subsequent performance of both DeWAL and DSP. We continue to actively identify and pursuit synergistic acquisitions as we further strengthen our capabilities and expertise. Our targets are companies that play at the top of the pyramid with market and technology leadership, highly engineered applications, differentiated offerings and an attractive financial profile. Please turn to Slide 8. ACS achieved second quarter net sales of $74 million and 11% increase over Q2 2016. Growth in applications for automotive Advanced Driver Assistance Systems or ADAS and aerospace and defense were partially offset by lower demand for wireless 4G/LTE applications. As we look ahead, we see strong indicators that 5G is gaining traction with the deployment of fixed wireless access. Several major operators are pursuing plans to put high-speed Internet into the home to compete with existing cable and fiber-to-home applications often referred to as The Last Mile. Our customers look to Rogers for our diverse portfolio of high reliability and high performance solutions that solve their challenges and enable them to compete in these rapidly evolving markets. We are also well positioned to meet the needs of advanced automotive safety systems as they expand into mass market models. ACS holds a leading market position here with a portfolio that spans the full range of customer requirements for short, mid, and long range radar sensors. Please turn to Slide 9. In Q2, the EMS team achieved all time record quarterly sales of $78 million, a 70% increase over Q2 2016. Our recent acquisitions contributed $22 million of sales revenue to EMS. On an organic basis, EMS net sales increased $10 million or 21% over Q2 2016 due to higher demand across all major markets including general industrial, portable electronics, automotive and mass transit. The EMS focus on geographic expansion and market penetration is paying off with healthy demand for general industrial applications across all regions. These results along with consumer confidence and optimism among our preferred converters lead us to believe that we will see continued strength in the industrial sector. In portable electronics, we have benefited from a large increase in back pad wins and we are well positioned in the market to grow our share in this segment. Our automotive sector is also growing with greater adoption of our sealing and vibration management solutions across a number of leading EV, HEV, OEM's and further penetration of our unique water resistant PORON foam material into automotive sealing applications. Looking ahead in EMS, we will continue to actively seek acquisitions of companies that operate at the top of the pyramid, extend our market reach and expand our technical capabilities to provide a broader set of solutions to our customers. Please turn to Slide 10. PES achieved strong Q2 net sales of $44 million, a 14% increase over to 2016. This growth was driven by broad-based demand across all markets, including electric and hybrid electric vehicles, laser diode coolers, renewable energy and variable frequency motor drives. We continue to see impressive growth in the e-Mobility market, where consumer demand for high performance electric vehicles and government mandates are driving an increase in EV, HEV sales, working directly with a number of the world's top OEM and Tier 1 manufacturers, PES is strongly positioned to solve our customers toughest material challenges. Another key focus area for PES is profitability improvement through operational excellence initiatives. Our project to consolidate the Belgium locations is on track with the office move complete and the production relocation scheduled to be completed in the second half of 2018. In addition we are implementing more automation in our plants to improve quality and throughput to further increase PES operating margins. Turning to Slide 11, looking at the macroeconomic conditions, we are very encouraged by the positive growth outlook in many of our key markets. We are closely monitoring economic indicators such as GDP growth as well as geopolitical tensions that could impact current business confidence. We believe that our increased market and customer diversification achieved in recent years positions us well to deliver consistently strong performance. In summary, we are extremely pleased with our performance in Q2 and through the first half of 2017. We are confident in our ability to continue to deliver strong shareholder returns. I will now turn the call over to Janice, who will report on our Q2 results in greater detail as well as additional financial highlights. Janice?

Thank you Bruce and good morning everyone. Our Q2 results were outstanding with another quarter of robust sales growth, margin expansion and earnings growth. Our strong sales included acquisitions, demonstrate our success in developing our portfolio of market relevant products that provides solution to our customer needs. As you'll see in the presentation today, the momentum we experience in Q1 continues in the second quarter of 2017. Now if you turn to Slide 13, I’ll review of our second quarter results in more details followed by the third quarter guidance forecast. Q2 2017 revenue as previously noted was $201 million, which exceeded both our guidance in Q2 2016. Our growth was primarily the result of strong volumes across all our business units and recent acquisitions. Adjusted operating margin was up 560 basis points from 13.5% in Q1 2016 and 19.1% in Q2 2017, a significant increase primarily due to higher volume, favorable performance, acquisition profits and synergies partially offset by SG&A and R&D investment. Adjusting operating income was $38.4 million in Q2 2017 improving $17.1 million versus $21.3 million last year. Adjusted EBITDA of $46.5 million, improved $17.5 million or approximately 60.3% compared to the second quarter of 2016. Net income of $20.9 million in the second quarter of 2017 was up $15.5 million versus the prior year or 700 basis points as a percent of revenue. Second quarter 2017 adjusted earnings per share of $1.33 exceeded our 2016 second quarter by $0.45 was above the high-end of our guidance and was $61.1% higher than Q2 2016. Please turn now to Slide 14 for the review of our quarterly revenue. Our revenue was up 27.9% on a year-over-year basis. The second quarter effective currency exchanges rate unfavorably impacted revenue by 2.4% or $3.8 million primarily due to euro and renminbi devaluations. Adjusted for FX, our organic revenue was up $25.7 million or 16.3%. The ecosystem revenues were $22 million added 14.0% to the revenue growth. More specifically EMS our broad trends across the market increase sales of all region. The growth was driven by the acquisition and higher demand and general industrial, portable electronics, automotive and mass transit applications. PES is strong revenue from this market including growth and laser diode coolers, renewable energy application, variable frequency drives in CD and ACB. Lastly, ACS has strong growth in high frequency circuit materials for ADAS and increase sales in aerospace/defense, partially offset by weaker demand and 4G/LTE wireless infrastructure. Looking at our Q1 2017 adjusted operating income on Slide 15, second quarter result increased 550 basis points or $17.1 million compared to 2016 second quarter. This was primarily due to favorable volume and performance driven by increased capacity utilization, operational process enhancement and automation, conversion of fixed cost structure to variable where possible and synergies from the recent acquisition. This income was partially offset by the $3.1 million increase in SG&A due to the acquisitions and higher incentive compensation and slightly higher R&D investment. Now let's look at our adjusted EBITDA on Slide 16. Adjusted EBITDA at $46.5 million increased $17.5 million in Q2 2017, as compared to second quarter of 2016 and improved as a percent of revenue to 23.1%. This increase was driven primarily by the same reasons just noted during our discussion of adjusted operating income such as stable volume, and stable performance. Partially offsetting this was a $2.9 million increase in SG&A due to higher incentive compensation and increased SG&A due to the acquisition. Turning to Slide 17, we exceeded the top end of our Q2 2017 guidance range for adjusted earnings per share, as well as exceeded our Q2 2016 adjusted earnings per share by 51.1% or $0.45 resulting in $1.33 in adjusted earnings per share for Q2 2017. As the slide depicts 45% increase was primarily due to $0.82 of favorable volume in other, $0.02 favorable performance, offset by 13% unfavorable SG&A bonus incentives and prior SG&A expenses, $0.04 unfavorable miscellaneous income and expense and $0.22 unfavorable due to changes and effective tax rate, primarily due to the 2016 reversal of uncertain tax positions was Q2 tax rate of 33.9%. If you turn to Slide 18, you’ll see our Q1 2017 segment revenue. ACS, EMS, and PES segment revenues increased by 10.6%, 69.5%, and 14.4%, or $7.1 million, $31.8 million, and $5.5 million respectively. More specifically, in Q2 of 2017, our ACS segment revenue increased mainly a result of increased demand in high frequency circuit materials for ADAS and aerospace/defense. These gains were partially offset by lower demand and wireless 4G/LTE infrastructure. The EMS segment revenue improved 69.5% in 2017 second quarter. Organic sales increased $9.8 million or 21.4% due to higher demand for general industrial, portable electronics, automotive, and mass transit application. In addition, the recent acquisition contributed $22 million. Finally, our PES segment was our second fastest organically growing segment, with 14.4% growth in revenues, principally our due to the laser diode coolers, renewable energy, variable frequency motor drives in CD and ACB. Looking at Slide 19, you’ll see our segment adjusted operating income. First, ACS adjusted operating income was $14.5 million, up $2.9 million from Q2 2016 or 220 basis points as a percent of profit. This was primarily due to favorable impact of volume and mix, favorable performance due to productivity improvements focused on cost containment efforts, operational enhancement and automation These favorable impact have been partially offset by unfavorable tax on commodity purchases, slightly higher price due to increased volume, SG&A primarily incentive compensation and R&D investments. Next, EMS adjusted operating income was $17.3 million, up $11.2 million from Q2 2016. This increase was primarily due to favorable impact of acquisitions and volume increases in the portable electronics, general industrial, automotive, and mass transit applications. Favorable performance is a result of operational excellence initiatives and acquisition synergies, converting fixed cost structure to variable and favorable capacity utilization partially offsetting these positives or higher corporate allocation due to the acquisition and increased SG&A primarily incentive compensation. Lastly, PES adjusted operating income was $4.8 million, up $3.3 million from Q2 2016. This increase was mainly due to favorable volume across this market improved productivity as a result of operational excellence initiatives as well as leveraging our Eastern European footprint and partially offsetting these favorable items are FX, and slightly higher SG&A primarily incentive compensation and R&D investment. Turning to Slide 20, you can see we entered the quarter with a cash position of $177.3 million. Rogers continues to generate solid operating cash flow of $64.5 million in the first two quarters which represents an increase of $13.2 million versus the same period last year. The increase in cash flow is largely driven by the entire 2017 net income partially offset by the use of working capital with higher accounts receivable and higher inventories driven by the sales growth, although, our working capital metrics have improved. We have strong adjusted EBITDA of $100.8 million year-to-date, which funded our strategic priorities including the acquisition of DSP as well as the debt paydown of $50 million in the second quarter. Year-to-date cash conversion is approximately 65% due to the working capital requirements and funded growth in the first quarter with the second quarter cash conversion approximately 89%. Year-to-date taxes are $17.6 million less that we invested $9.7 million from capital expenditures during the first six months of the year or 2.4% of revenue. Taking a looking at our Q3 2017 guidance on Slide 21, revenues are estimated to be in the range of $193 million to $203 million, with earnings in the range of $1.14 to $1.24 per diluted share. On an adjusted basis, the guide earnings in the range of $1.20 to $1.30 per diluted share. At the mid-point, our Q3 2017 revenue guidance represents a year-over-year increase of 19.8% compared to Q3 2016. This revenue guidance includes anticipated unfavorable currency fluctuations of 1.3% or $2.2 million. On a sequential basis, the mid-point of our guidance range is approximately $3.5 million lower second quarter revenue due to the 4G/LTE wireless infrastructure and timing of certain high reliability quarter. Guidance for earnings per share has a mid-point of $1.19 per diluted share which includes $0.11 with sale of our Belgium facility footprint optimization, and in total reflects an increase of $0.31 per diluted share compared to earnings of $0.88 in Q3 2016. On an adjusted basis, earnings per share guidance has a midpoint of $1.25 per diluted share which is $0.30 or 31.5% increase from $0.95 in Q3 2016. This year-over-year increase is primarily due to higher volume, acquisition profits and synergies, improved operational performance, partially offset by higher commodity prices and SG&A. For the full-year 2017, Rogers expects capital expenditure to be in a range of $30 million to $35 million and the effective tax rate to be approximately 32% to 33%. While our Q3 guidance have slightly lower demand compared to Q3 2017. The Q3, 2017 guidance is anticipated increase adjusted earnings per share to over 30% versus Q3 2016 with revenue growth at approximately 20% on reported basis and roughly 21% on an FX adjusted basis. In summary, Rogers has a competitive product portfolio of diversified customer base, leaner cost structure and a business model that drive revenue earnings and cash flow growth. I will now turn the call over to Bruce.

Thanks Janice. This concludes our prepared remarks. We’ll now open the line for Q&A. Dan?

[Operator Instructions] Our first question comes from the line of Craig Ellis with B. Riley. Please go ahead.

Thank you for taking the question and congratulations on the very strong execution in the quarter and in the outlook. Bruce, I wanted to follow-up on point you made regarding engagements with 5G infrastructure given that the companies strong participation in prior next-gen wireless transition? Can you help us walk through the milestones from where you are now to volume ramp of materials associated with the 5G rollout which from some of our other companies we're hearing is pulling in from what had been a 2020 expectation to now more about 2019 one expectation?

Yes, first of all, I think I mentioned in my – I know I've mentioned my prepared notes that, we're seeing a lot more activity in design and activity on 4.5G and 5G. And we've heard and seen in the press, there's trials going on for fixed based wireless access in the U.S. by two of the major carriers, and we understand that things are moving along there. We're seeing the same thing or hearing the same thing that that I think you referred to that the pull in of 5G originally scheduled for about 2020. We're anticipating to see some applications coming in 2018. In the meantime, we're also expecting 4.5G applications to be put into production at least some of them towards the end of this year. I think the other thing that's very encouraging on the telecom front is the Narrowband Internet of Things. Second build out that was announced in China. They went through in the first quarter with the first build out of it and now we're seeing that that announcement coming out. So we anticipate by the end of the year early 2018 to see some of that build out in China happening. So I think that's part of it. I'll ask Bob if there's any other…

Just a couple of things Craig, I think one of the key drivers for the acceleration if you would have asked people 18 months, 24 months ago, the projections online chip that’s were going to be available for 5G were out there around 2020 and as we all thought early this year chips that are now available. The other thing that I think has moved more quickly than people had originally anticipated is establishing the standards. I think that's been pulled in. So there's a lot of activity going on in terms of our position. We're very optimistic about our position with customers. We believe we have the right products, the right technology to establish a position in the market similar to where we've been with 4G/LTE, but potentially with some upside in content because the complexity. You're going to see I mean 5G in order and achieved the data rate they're looking for in the bandwidth up at higher frequencies, which plays to our strength, the complexity associated with the higher data rates, also played very much to our strength. So again we're optimistic about the outlook of 5G. Also I think it's interesting to note that what's being caused called next wireless to last mile is really a new application area in a wireless broadband area. So I think that that's an additional upside in terms of infrastructure, in terms of doing not competing with the cable guys, but last mile connection. And then as Bruce already mentioned, the whole investment in Narrowband Internet of Things that's beginning to kickoff with one pace – the belief right now there's going to be another way of China coming in late this year or early next year. I think are all very encouraging for the industry.

Yes, just one final comment on the ACS business in general and with let’s say that the wall – the apparent wall here in telecom build out, we're seeing in other parts of the ACS business significant growth right in ADAS we saw north of 50% growth year-on-year. If you listen to the Tier 1 suppliers of radar systems to automobiles, a lot of projections that are 50%, 60% growth year-on-year. So we're very optimistic there and basically what we're seeing is this diversification of the ACS business is allowing us to weather that a little bit of wall here between 4G, 4.5G and 5G on the telecoms space and we're filling that up with ADAS as well as very strong aerospace and defense sales. So overall again our diversification objectives are being met and we're seeing it play out here.

I appreciate those points and Bruce following up on that ADAS point, the Company has had a very positive outlook for ADAS over the next three to four years and I think that that view is being validated, but with 50% year-on-year growth now is the size of the market as we look out to the 2020 timeframe becoming larger than the Company had previously expected or are you just seeing that the market may be moving more rapidly to the penetration level that's somewhat unchanged.

Yes, our view is it's a penetration level it's a question of how fast the adoption of the technology is moving. Particularly in the mid and more compact and smaller lower priced automobiles and that's becoming a much more standard option on automobiles in general. So it's basically just been acceleration of the penetration of the applications and as we continue to see the movement towards autonomous that will - that's another level of application and additional materials that we should see moving forward. So this is got a long, long road ahead of us very positive for us.

Thank you and then I’ll ask the margin related question maybe combine two into one and then hand it over to others. Very strong gross margin performance in the quarter 40% at the target level and operating margins across all segments moved very strongly on a year-on-year basis are in - and are in the double-digits. As we look at the current margin structure of the business? Can you talk about the sustainability in your view of those margins and are there any headwinds that we should be aware of that are coming because it certainly seems that from a Company specific standpoint whether the initiatives in Belgium or shared services initiatives. There are a number of levers to at least sustain what we're seeing? Thank you very much.

Sure. I'm going to ask Janice to comment on that.

Yes. I mean we did meet our target this quarter that we're very proud of us that we’ve achieved very hard to achieve that in many different disciplines. One of them is are slicing the other is operational excellence. So we're very proud of that. We do think that we will be able to sustain it we do see copper prices increasing although we do have reserve supplies to offset those, but obviously it only offset for certain period of time. So we have operational excellence programs that are in place as they talked about the Belgium consolidated in 2000 facilities in Europe. We have synergies to be take in place still continue all of the acquisitions. So we anticipate that will be able to sustain it in a long run even with funds moving up and down a little bit our target is one that we think that is very sustainable in the future.

Thank you very much and good luck.

Thank you.

Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Good morning, Bruce, Janice, Bob. Congrats on your exceptional quarter particularly on the margin front. The couple quick housekeeping wireless telecom what percentage of ACS revenue that represent in the quarter and what was the rate of decline and maybe just kind of outlook for the next quarter or two?

Okay. So the power of antenna component was 39% of ACS in Q2.

Got it. and I know it was down a little bit did you have anything more specific there in terms of the growth rate.

Well, it was down it both in power amp in antenna side and that we see part of that is some of the build-out that we saw in Q1 for IoT and NB-IoT was finished completed and we continue to anticipate sort of a lower level of build-out until some of these other things come along. So that we've been talking about 4.5G for example.

Got it, very helpful. Speaks to diversification certainly. And then following up on the margins maybe just looking at one or two segments specifically. EMS adjusted operating margins above 20%. Janice maybe you already touched on this or maybe you've already answered it but talk about how much these recent acquisitions contributed and how much for improvement we have in that business and kind of wanted to focus specifically on the PES side as well similar questions.

Well, EMS obviously the sales were up $22 million of the revenue. So that actually increased our operating profit. We don’t give a lot of detail on segment reporting or product reporting or say more than segment reporting. But obviously the synergies in the performance did play a role in EMS savings. The operating income up to $17.3, $11 million increase from last year. Also the organic growth up them quite a bit obviously the utilization of facilities in the throughput helps down because it had higher sales year-over-year outcome.

And maybe any areas not specifically in terms of margins but any areas where you're running up against capacity it might need to add a little bit?

In the EMS, we have sufficient capacity at this point in time for the foreseeable future.

Got it. And then maybe just shifting gears and I hand it over to Bruce on the M&A front. Any specific applications, areas, technologies that you'd like to bring into the fold and that you're going after or is the approach is kind of more simply opportunistic at this stage? And thoughts on the pipeline and prospects for completing additional deals either between now and year-end or early 2018 just any update there would be great.

Sure. So as you know this is core part of our strategy. We have a very active activities on the M&A side. We mentioned and we've continued to mention on the – within EMS, we continue to look for complementary technologies that would add to our capabilities and utilize our network. So in that space we continue very specifically to look at some opportunities there. More broadly we're looking at adjacencies and technologies related to our other two businesses as well. So across the board, we are always looking for top of the pyramid types of businesses, strong customer relationships, technology leadership. Those kinds of attributes, of course, a very strong financial profile. So in terms of commentary on between now and year-end and so forth. There's just lots of work going on and as we all know sometimes things happen quickly, sometimes it takes a bit longer, but I can assure you we are still very active out there.

Got it. Again, congrats and play your commercial look forward to see you on 17th in New York.

Great.

[Operator Instructions] Your next question comes from the line of Joan Tong with Sidoti. Please go ahead.

Good morning. A couple of questions; first off, I want to ask you about the portable electronics that particular business and you mentioned that the back pad applications and you have some business wins there. I want to ask you about the penetration of your – of that part within the smartphone OEM, at this point how much you have there in terms of penetration and what is your opportunity going forward?

So we've done quite well in the last, I'd say a year or so in the penetration of the back pads and LCD displays and that drove a lot of the growth in Q2 in the portable electronics segment for EMS. As we move forward, we still see opportunity in LCD and the LCD designs and technology will be with us for quite a while, so we will continue to see we believe wins there and growth in that sector. On the OLED side of the house, I think we've mentioned before we've had a few wins in smaller, local Asian phone manufacturers. We are still working on a number of other opportunities. None of those opportunities are baked into any of our projections or guidance in Q3, but we again see opportunities there. But also when working with some of these larger equipment, portable electronics equipment manufacturers there's a veil of secrecy, so we don't always know what's happening until it almost is actually upon us. So that's overall our view of the portable electronics opportunity is still very strong and we see still opportunities out there. In any event, in any of the applications moving forward whether they are OLED or LCD screens, we have a lot of applications in the smaller parts with our phones whether it's on the microphones, cameras, buttons and so forth. So every unit that gets sold always has – almost 95% of the time we'll have something from Rogers in it.

Okay. Got it. Thank you. And then regarding the general industrial business within EMS, obviously, you call that out, it’s pretty strong during the quarter and I believe that part of it is driven by the macro conditions, it's getting better and definitely you have seen some improvement year-over-year. How should we think about going forward? Is this sort of like a peaky type of number then also I don't want to downplay like your progress that you’ve made in the – some of the investment that you put in that business, especially in Europe that you called out a year or two years ago things like that pretty successful there. So if you can give us the sense of like what – who do you divide of what company specific versus macro and what is your view going forward at least in a near-term?

So some of the growth that we've seen in general industrial has been just a macro growth in the economy, right, so a lot more industrial activity, a lot more consumption of capital goods that are related to our materials. But a portion – and of course it's always hard to judge, but a portion of the growth is also new applications that we've been working on over the last number of years that have come to fruition and those new applications not only in North America, but in Europe and also in Asia. Now we've had a concerted effort to transfer our knowledge and understanding of applications to both of those regions both Europe and Asia and we're seeing very good pick up. So part of it is a real penetration play, every application we get is upside and then you have the overlay of the macroeconomic just drive forward and the economic growth. So it's a bit hard for us to parse it out. But I can assure you that that on the penetration side, we're making some very, very good progress there.

Okay, and then finally on the two acquisitions you made DeWAL as well as DSP, it’s – the operations obviously you have been operating that for two or three quarters already and it seems like they're good out performance. You mention there are some new business win there that driving upside in the past few quarters and looking out in terms of leveraging the Roger global platform to drive more opportunities. Can you give us a little bit more specific anything that actually working on? Can you quantify it a little bit better, anything would be helpful in terms of additional color?

Yes, so a lot of the opportunity that we see moving out of North America, both of the businesses were centered in North America much of their sales were North American. What we've done is we've done a significant amount of training of our sales teams and technical teams in both Europe and Asia to be able to market and sell these products more globally. We're also investigating our capabilities to do some manufacturing in Asia specifically in one of our existing facilities on the DeWAL side. So there's activities ongoing that that really spread the capabilities out from North America and we think that's that will drive some nice growth for us. There's real opportunities pacifically in Asia in the DeWAL business that we see.

Okay, all right. Thank you, guys.

Thank you.

Your next question comes from the line of Sean Hannan with Needham & Company. Please go ahead.

Yes, thanks for taking my question here folks. Good morning and also congratulations on the nice execution here. First question I have is kind of multipart around the ACS business. To further – in the earlier comment, I think it may have come from Bruce a little bit earlier. Can you characterize the penetration today in ADAS sense you’ve noted that this uptick has been a bit stronger? Can you perhaps put some thoughts or numbers around that for where we see that as penetration within the marketplace? So that would be the first part. And then to further the ADAS piece of the conversation, can you also remind us folks of the high share position you have for the materials going into those applications? And then competitively what you might be hearing from customers or even observing anything from your peers that might challenge that position in upcoming quarters or even years? Thanks.

Okay, Sean to answer your first part of the question around the penetration in automotive the radar systems, we're looking at round 15% to 20% probably moving towards 20% right now in terms of market penetration. So that's probably accelerated from where we thought we would have been. We were probably thinking entering the year we would be in 12% to 15% penetration, so 20% is quite an uptick for us. Again, that's just a judgment call based on some of the numbers that we see. In terms of how we're positioned in the market with our technology and versus alternative technologies and so forth, I'm going to ask Bob Daigle to comment on that.

Yes. Sean, I think as you know we've carved out a very nice position for ourselves in the total ADAS area. And the roots of that go back to our leadership position, frankly, in the radar systems that we’re in the defense and aerospace, and we've been able to combine our capability in that world with what we've done in the wireless area, where we have products that can be converted very cost effectively in high volume into circuits for the system. And we've positioned ourselves very well to be – to basically be in the broad array of the sensors. Part of what you're seeing in terms of the penetration story, there's really two pieces to this. There is the fact that more vehicle platforms are being introduced where they have these Advanced Driver Assistance Systems, but you're also seeing more sensors per vehicle in the deployment. It wasn't that long ago where – when you talked ADAS, it was primarily blind spot detection. Now you're seeing adaptive cruise control. You're seeing transfer vehicle detection will be back out of a parking spot and you're looking sideways. And then you start getting – I think Bruce alluded to this earlier, we're in the world of autonomous, where if you look at the vehicle that, say, Audi Q7, I that they drove to the Auto Show last year which basically had seven radar sensors on it to provide the long camera et cetera for autonomous functionality. So again, I think this is a wonder – this is a great evolution of technology. I think some of the things that are probably changed over the past couple years it's become increasingly apparent to us anyway, and I think the industry that these things are moving more and more towards being standard features on vehicles, very much like we had analog brake technology evolve airbag those kinds of things and safety devices. I think the belief now is we're kind of going down that path with ADAS, which is obviously very exciting for us, being in position we’re in.

Just another comment maybe on how we've positioned ourselves in the market? Our level of service and support to our customers is outstanding in the sense that we provide a lot of testing, a lot of evaluation and so forth and design assistance that I think is very difficult for others to match and we're recognized in terms of the high frequency capabilities of our materials and our capabilities to test and evaluate as real leaders here. So it's a multiple layer of competitive advantages that Rogers brings to the table here.

Okay that's helpful, but when you look at perhaps on paper there, maybe more and more materials competitors that are coming to market with products that could again on paper be – of use within these types of applications and so just trying to drill into whether there's anything that's really raising your eyebrow that could ultimately create an impact to that high share position you have, any thoughts around that? The sense of this for where you stand today coming quarters or kind of the near years?

Well, certainly from a supplier perspective to the industry and we’re supplying broadly across all of the folks who are manufacturing these sensors. I think what you might be hearing are referring to be things like LIDAR, optical and those kinds of technologies. What we're seeing is that they are coexisting technologies. They provide different capabilities and there are some benefits certainly some very clear benefits to radar systems in terms of ability to see in all kinds of weather and – through significant dirt and what have you. So there's a lot of benefit to radar, but it's also used in conjunction with some of these other technologies. So while it might seem like competitive materials, they're not necessarily competitive.

Okay, I'll follow-up offline. That's very helpful. Last question here, within the PES business, now you've been really waiting for a lot more revenue volume to come through within that segment that's been kicking in the last two quarters now, I think one of the material factors is being able to benefit from some of the up trends related to EVs, HEVs and where your positions. Can you perhaps provide a little bit of thought around what inning you're would say you're in terms of generating the revenues that you ultimately see materializing for what your designed into, the programs you're supporting? How early are we within this momentum?

I'm going to have Bob comment on that.

So I think Sean, I characterize that this all electric vehicle industry is in inning one of the game. I mean if you look at the relative volumes, you're talking about it’s almost some people would say in significant part of the market today in terms of volumes in electric vehicles. But as you’ve noted for Rogers, playing at the high end and kind of being an enabler and some of the emerging technology areas. It's moved the needle for us, but as a broad industry – from a broad industry perspective, I think this is very early and again I think you're seeing there's been a series of announcements recently, I think the last one the UK is going to ban gasoline was at [2040] or something. So you're seeing some interesting – yes, you'll see what actually happened. But interesting trends in the industry, which favor electric vehicle. And I can characterize it and at least I think about it in two camps. I think of it as you've got the high performance electric vehicle, which is really targeted the luxury car market more performance based and then you have the environmentally driven part of the market, which places like China where dealing with their quality issues, electric vehicles are clearly key part of that roadmap. And unfortunately for us, we are playing in both worlds. We're part of that supply chain obviously in the high-end luxury vehicle market and we're also in the supply chain for the more mainstream vehicles that are targeting better air quality. But again I think there's a lot of runway for us and we're obviously very active with a broad range of customers in terms of what's coming.

Great, thanks so much folks.

Thank you.

Thanks. End of Q&A

At this time, there are no further questions in the queue. I would like to turn the call back to Bruce Hoechner, CEO.

All right, thanks Dan. Thank you everyone for joining the call today. We're very proud of our performance through the first half of 2017 and certainly are looking forward to another strong quarter as we move through Q3. So thanks again have a great day.

Thank you everyone for attending. This will conclude today's call and you may now disconnect.