Rogers (ROG) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, February 17, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Ali El-Haj
• Senior Vice President and Chief Financial Officer — Laura Russell

TAKEAWAYS

• Revenue -- $202 million for the quarter, representing a 5% increase.
• Adjusted EPS -- $0.89, nearly double the prior-year period.
• Adjusted EBITDA Margin -- 17.1%, up 500 basis points from 2024.
• AES Segment Q4 Revenue -- Increased 14.6%, driven by EV/HEV, ADAS, renewable energy, and industrial markets.
• EMS Segment Q4 Revenue -- Declined 6.7% primarily due to lower EV/HEV sales in challenging demand regions; partially offset by higher industrial sales.
• Industrial Segment Sales -- Accounted for 27% of total revenue, rising at a high-single-digit rate from market recovery and traditional customer growth.
• Aerospace & Defense Segment -- 16% of revenue; slightly declined in Q4 but grew at a high-single-digit rate for the full year due to defense and commercial aerospace demand.
• EV/HEV Segment -- 14% of revenue; Q4 and full-year sales declined in both AES and EMS units, with regional EV weakness cited.
• ADAS Segment -- Q4 and full-year ADAS sales rose at a double-digit rate from adoption and increased vehicle autonomy.
• Free Cash Flow -- $71 million generated for the year, attributed to cost containment and working capital management.
• Share Repurchases -- $14.3 million in Q4 and $52 million for the full year, with $52 million authorization still available.
• Net Cash -- Ended the year at $197 million, increasing by $29.2 million from Q3.
• Operating Expense Reductions -- 8% reduction year over year; $25 million cost improvements realized in 2025, with an incremental $7 million to be realized in 2026 and an additional $13 million expected from the Germany restructuring.
• Capital Expenditures -- $4.7 million in Q4, $30 million for the year, at the low end of guidance; 2026 capex guided for $30 million to $40 million, comparable to 2025.
• Q1 2026 Sales Guidance -- $193 million to $208 million; midpoint implies 5% year-over-year growth.
• Q1 Gross Margin Guidance -- 30.5% to 32.5%, representing 160 basis points year-over-year improvement at midpoint.
• Q1 Adjusted Operating Expense Guidance -- Expected to decrease over 5% from 2025, rising slightly from Q4 due to compensation resets.
• Q1 Adjusted EBITDA Guidance -- $27 million to $35 million, equating to a 15.5% margin at midpoint, up 530 basis points versus Q1 2025.
• Q1 Adjusted EPS Guidance -- $0.45 to $0.85; midpoint of $0.65 versus $0.27 a year ago; excludes restructuring charges from Germany.
• Restructuring Charge Progress -- $5.4 million incurred in 2025 toward $12 million to $20 million total estimate, mainly for Germany restructuring with $13 million in projected annual run-rate savings.
• Non-GAAP Tax Rate -- Forecasted at approximately 32% due to unrecognized loss jurisdictions.
• New Market Entry -- Initial design wins secured in data centers for the EMS business; further opportunities actively pursued leveraging thermal management and signal integrity technologies.

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RISKS

• Ali El-Haj said, "we see some softening still remain and uncertain on the automotive side, on the EV side," and "Q1, Q2 in 2026, we expect to see some uncertainty here due to macroeconomics in general in those two sectors, the auto sector, specifically the EV, and the portable electronics."
• The ceramic China facility is ramping more slowly than planned, with Ali El-Haj stating, "it is moving. I think the customers are still there and they are interested in buying from the China facility and move some of the products or source the China facility. What we are trying to do here is balance between aggressively going after the market and therefore, you know, we do not have to pay the price again, let us put it this way. So we are trying to be diligent and be careful about not participating in a price erosion type for the market. We still anticipate the plans to be there. So our plans have not changed. It just shifted from a time perspective. So we still see growth in that facility in Q2, Q3, Q4. But again, really slower than we expected it. We expected to see a better situation than we are in in Q1, but we are not there yet."
• EMS Q4 sales declined 6.7% due to regional EV/HEV demand challenges, impacting segment performance.
• Structurally higher non-GAAP tax rate of approximately 32% projected for 2026, largely driven by limitations in loss jurisdictions.

SUMMARY

Rogers Corporation (NYSE:ROG) delivered revenue growth, significant margin expansion, and robust free cash flow, exceeding guidance high ends for sales and adjusted profitability metrics. Executives emphasized operational restructuring, cost reductions, and disciplined capital deployment, including active share repurchases and a strong net cash position, while outlining continued margin leverage and constrained expenses for 2026. The company highlighted new EMS data center design wins and ongoing product innovation as key growth priorities, with further operational gains expected from the Germany ceramic restructuring and additional cost reductions yet to be fully realized.

• The sales outlook for Q1 prioritizes industrial segment expansion, with management projecting at least mid-single-digit growth, but acknowledges near-term uncertainty in EV/HEV and portable electronics due to market and macroeconomic factors.
• Design win momentum in data centers and new technology platforms in both battery and renewable energy markets may enable ROG to diversify revenue streams and accelerate growth, with revenue contribution from these initiatives anticipated in late 2026 or 2027.
• The company anticipates resuming capital return to shareholders in 2026, but signals that future share repurchases will be balanced alongside increased M&A ambitions and ongoing investment in global manufacturing capacity.
• Management asserts its global manufacturing footprint provides resilience against tariff- or trade-related supply risk, with capabilities to meet localized demand in Asia, North America, and Europe.

INDUSTRY GLOSSARY

• ADAS: Advanced Driver-Assistance Systems, vehicle technologies designed to automate, adapt, and enhance vehicle systems for safety and improved driving.
• EV/HEV: Electric Vehicles/Hybrid Electric Vehicles, automotive market segments emphasizing electrified propulsion technologies.

Full Conference Call Transcript

Ali El-Haj: Q4 sales of $202 million approached the high end of the guidance. Adjusted EPS of $0.89 per share and adjusted EBITDA margins of 17.1% both exceeded the top end of guidance. Compared to 2024, sales improved 5% and adjusted EBITDA margins increased 500 basis points. We also generated significant free cash flow in the fourth quarter and continued to return capital to shareholders with $14 million in share repurchases. A stronger finish to 2025 resulted from gradual end-market improvements and implementing critical structural changes. With a simplified operating model and a leaner cost profile, Rogers Corporation is in a stronger position entering the new year.

In 2026, the priority will remain on improving Rogers Corporation’s growth outlook and continuing to drive profitability initiatives. The organization has a clear understanding of the critical objectives for this year and we have the right team and capabilities to deliver. Our Q1 guidance incorporates significant year-over-year improvements with sales growth of 5% and a 530 basis point increase in adjusted EBITDA margins. Laura will cover both the fourth quarter results and Q1 outlook in greater detail. Slide five, total sales increased by 5% versus 2024 led by higher industrial, ADAS, and renewable energy end markets. Industrial sales remain our largest segment and ended the year at 27% of total revenue.

Q4 industrial sales increased at a high-single-digit rate year over year driven by market recovery and winning additional business from traditional customers. For the full year, sales improved at a mid-single-digit rate. Aerospace and defense sales were 16% of revenue. Despite a slight decline in Q4 compared to the same period last year, for the full year, the segment grew at a high-single-digit rate. The growth for the year was driven by both strong defense and commercial aerospace demands. EV/HEV sales remained at 14% of revenue. Q4 sales were lower year over year as the decline in EMS sales more than offset growth in the AES segment.

The decrease in EMS sales resulted from a higher concentration of customers in regions where EV demand has been challenging. Total full-year sales ended well below the prior year with declines in both business units. We are continuing our efforts to grow in this market with our ceramic China expansion and the ongoing strategy to adapt to changes in the EV battery market and technology. ADAS sales increased year over year and for the full year grew at a double-digit rate. Sales continue to benefit from increasing adoption of ADAS solutions and higher levels of vehicle autonomy.

Lastly, portable electronics sales were lower both in Q4 year over year and for the full year primarily as a result of a product in the AES business reaching end of life. Turning to Slide six, we are already seeing results from the structural and organizational changes implemented during 2025 with enhanced customer relationships and improved service levels. We have revised our KPI targets and objectives to ensure organizational alignment and focus on growth and customer service. These changes have brought on an increased intensity in new product development efforts and will accelerate new product introductions enabling design wins. We are confident that our talented team will continue to drive significant improvements in innovation and growth.

In addition, we are seeing the results of actions taken to improve profitability. We realized $25 million in cost and operating expenses improvement in 2025 with another $20 million of annualized savings expected to be complete by 2026. This included an 8% reduction in full-year operating expenses compared to the prior year. Lastly, through cost containment efforts and working capital we generated $71 million of free cash flow, repurchased shares totaling $52 million, and ended the year with $197 million of net cash. Next on Slide seven and turning our attention to 2026. Returning to top-line growth is Rogers Corporation’s highest priority this year.

To achieve this objective, we remain committed to fully leveraging our global footprint to increase our competitiveness and grow share in all regions. With our customer-centric organization, we are intensely focused on securing design wins to drive growth and further diversify our end markets. Our design win efforts are targeting both new and existing market segments. We have identified data centers as a significant potential new market for Rogers Corporation and secured some initial design wins in the EMS business during the fourth quarter. While these wins are an important start, we are pursuing much larger opportunities by leveraging our strengths in thermal management and signal integrity technologies.

We believe that our technical solutions in these areas are unique and provide compelling value for our customers. We expect at least one of these design award decisions to be made later this year. Prioritizing and accelerating the pace of new product introductions in new and adjacent markets will be a critical enabler for our growth. Improving profitability will remain a key objective in 2026 with the restructuring of the ceramic Germany operations on track. We plan to keep 2026 adjusted operating expenses in line with 2025. As we execute on these priorities, we expect to grow full-year adjusted EBITDA compared to 2025.

Lastly, we will maintain a disciplined capital allocation strategy as we focus on improving returns to our shareholders. Capital expenditures are expected to be comparable to 2025 as we continue to invest in our facilities and operating structure. M&A will be an area of increased emphasis in 2026 with any potential targets requiring the right strategic fit and financial profile. The level of share repurchase activity will be subject to these other investment priorities. I will now turn it over to Laura Russell to discuss our Q4 financial performance and Q1 2026 outlook. Thank you, Ali. Starting with Slide eight, I will begin with a summary of our fourth quarter financials.

Laura Russell: Q4 sales and gross margin were near the high end of our guidance for the quarter and adjusted earnings exceeded the top end of our range. Fourth quarter sales increased 5% compared to the prior-year period. AES Q4 revenues increased by 14.6% versus Q4 2024 from higher sales in the EV/HEV, ADAS, renewable energy, and industrial markets. EMS sales declined by 6.7% over the same period due to lower EV/HEV sales, which were concentrated in regions experiencing demand challenges. The decline was partially offset by higher industrial sales. Adjusted earnings per share of $0.89 in Q4 were nearly double the prior-year period due to higher sales and significant improvements in operating expenses.

Turning to Slide nine, Q4 adjusted EBITDA was $34.4 million compared to $23.3 million in Q4 2024. Adjusted EBITDA margin of 17.1% improved 500 basis points year over year.

Ali El-Haj: The improvement in EBITDA was a result of higher sales,

Laura Russell: improved product mix, and the benefits realized from our profitability improvement initiatives over the past year. In particular, adjusted operating expense excluding stock-based compensation decreased by $6.3 million over this timeframe. Offsetting these improvements was a $1.7 million increase in underutilization costs which is primarily related to the start of production for our ceramic China facility. Continuing to Slide 10, I will discuss cash utilization for the quarter. Cash at the end of Q4 was $197 million, an increase of $29.2 million from the end of the third quarter. Cash provided by operations was $46.9 million, an increase from the prior quarter due to improved working capital management, particularly from a continued focus on managing inventories.

Uses of cash in the quarter included share repurchases of $14.3 million and capital expenditures of $4.7 million. For the full year, capital expenditures were $30 million and at the low end of our guided range. As Ali discussed, we expect 2026 capital expenditures to be in a comparable range to last year. We are guiding $30 million to $40 million for the full year 2026. Return of capital to shareholders will continue in 2026 with the level of buyback subject to other capital needs, including potential M&A transactions. Following our purchases in Q4, we have approximately $52 million remaining on our existing share repurchase program. Next on Slide 11, I will review guidance for the first quarter.

Overall, we anticipate significant year-over-year improvement in Q1 2026 sales, margin, and profitability underscoring the impact of last year’s initiatives. Beginning with sales, we expect Q1 revenues to be between $193 million and $208 million. The midpoint of the range is a 5% increase in sales year over year. The guidance reflects similar market conditions to the fourth quarter with expected year-over-year improvement mainly in industrial sales. We are guiding gross margin in the range of 30.5% to 32.5%. The midpoint of the range is 160 basis points higher than the prior year due to higher volumes and cost structure improvements.

We expect adjusted operating expenses to decrease more than 5% compared to 2025 and increase slightly from fourth-quarter levels primarily as certain compensation costs reset in the new fiscal year. Adjusted EBITDA is anticipated to range from $27 million to $35 million. This equates to 15.5% EBITDA margin at the midpoint of the range which would be 530 basis points improvement versus the first quarter 2025. Adjusted EPS is forecasted to range from $0.45 to $0.85; the $0.65 midpoint compares to adjusted EPS of $0.27 in 2025. Excluded from adjusted EPS are restructuring costs related to the economic actions in Germany.

In 2025, we incurred $5.4 million of associated restructuring charges relative to our total estimated range of $12 million to $20 million. The remaining restructuring costs associated with this action will be incurred from Q1 to 2026. The program is still anticipated to deliver $13 million of annual run-rate savings. Lastly, we project our non-GAAP full-year tax rate to be approximately 32%. The higher expected tax rate is mainly due to certain loss jurisdictions where no tax benefits can be realized. I will now turn the call back over to Ali. Thanks, Laura. In summary,

Ali El-Haj: we had another quarter of solid execution. We delivered Q4 results that were above the midpoint of guidance for the quarter and generated significant free cash flow. We enter 2026 with a clear objective to achieve top-line growth, further improve profitability, and deploy capital effectively. That concludes our prepared remarks. I will now turn the call back to the operator for questions.

Operator: Thank you. We will now open for questions. Our first question today is coming from Daniel Joseph Moore from CJS Securities. Your line is now live.

Daniel Joseph Moore: Thank you. Good afternoon, Ali. Good afternoon, Laura. Congrats on a solid end to the year. Maybe start with the guidance. Q1 pointing to mid-single-digit growth. I think you said that is more of the same versus trends in Q4, improvement in industrial. Just your outlook near term for ADAS, any improvement in renewables and or defense? And I know you do not give full-year guide, but is mid-single-digit growth kind of the reasonable thought process for the near to mid term?

Ali El-Haj: Yes. Thanks for the question. Again, our expectation for Q1, we still see a stronger and continued growth in the industrial sector of the business. However, we see some softening still remain and uncertain on the automotive side, on the EV side. As you know, portable electronics tend to be softer. And as I mentioned prior to this, Q1, Q2 in 2026, we expect to see some uncertainty here due to macroeconomics in general in those two sectors, the auto sector, specifically the EV, and the portable electronics. But other than that, everything else, we really see some growth from high single digits to mid single digits in Q1.

Daniel Joseph Moore: Got it. Very helpful, Ali. And then as a follow-up, you talked about data centers. Just elaborate on key applications there, presumably managing heat, and you mentioned, I think, one new opportunity potentially in 2026. Can you give a little bit more color there? That would be really helpful. Thank you.

Ali El-Haj: Yes. As mentioned in the earlier remarks, this became our focus over the last, I would say, two to three quarters, and we are going to continue this effort. We believe we have a very strong opportunity coming up in the thermal management side. Also in the signal integrity technology we are working on some there. Both of these we really see strong momentum. We are working with brand-name OEMs. We cannot unfortunately give you more details on this except to say larger brand-name OEMs actively qualifying these technologies. We anticipate to be able to share more information and more details hopefully later on in 2026, with revenue impact sometimes in 2027, maybe even late 2026.

I think the other thing we could add to that,

Laura Russell: Dan, is there is some smaller revenues for other applications in that segment and in that space. I think Ali may have previously mentioned that we are able to capture the design more on the EMS side from a technology perspective that sells directly into data centers from an application perspective.

Ali El-Haj: Yes, that is actually growing nicely. Revenue-wise, it is still smaller pieces of the pie. But again, I think it is not as much the impact as that newer technologies will be a lot more significant than the current business in this industry. Helpful. And I will follow up and circle back with the follow-ups.

Operator: Thank you. Next question is coming from Craig Andrew Ellis from B. Riley Securities. Your line is now live.

Craig Andrew Ellis: Yes. Thanks for taking the question, and Ali and Laura, congratulations on getting nice COGS and cost and working capital execution in the business. Nice to see. I wanted to follow up with some of Daniel’s questions regarding your number one priority for this year, Ali, improving multiyear growth. So data center makes a lot of sense given the capabilities the company has and the way voltages are rocketing higher there. And so it would seem that you would have a lot you could do. My question is broader than data center and looking at what your ambitions are beyond that sleeve of industrial with the portfolio this year.

Could you just talk about any specific initiatives that have been in play the last few quarters that you would expect to convert either to new design wins this year or new opportunities this year? And beyond data center, when would we see the revenue benefit of those initiatives?

Ali El-Haj: Well, that is a lovely question for long, but we will try to answer it as much as we can to that extent of our ability here. I think the growth target is really across the board for all business segments. It is not just data center or one technology versus the other. We have initiated here certain targets, certain opportunities in certain end markets where we are going after both in the EMS and the AES side of our businesses. We have some wins in the existing customers, so we have expanded some market share there, especially on the EMS side.

Some of the businesses with the current technologies will grow as the end markets continue to grow, whether it is automotive, in the ADAS sector, for example, the adoption of some of our applications will continue to grow that business.

Laura Russell: But we also

Ali El-Haj: started sometime last year development in newer technologies that is really not a me-too type product for applications like the newer battery technology for EV and renewables, which will help us generate not just additional revenue, but really penetrating the market in applications where we are not there today. That will help us grow that business at a double-digit rate type. So on the automotive side, we are also trying to directly engage with OEMs. So we are designing ourselves in with some of these products directly with OEMs. Obviously, we are working with our partners, the PCSs, the converters, some of the module makers to make sure we are designed in conjunction with them.

We think this type of approach to the market is going to help us expand and grow the top line at a lot faster rate than we have done in the past.

Craig Andrew Ellis: That sounds good. My follow-up question was on another 2026 priority, and the ambition for profitability improvement. And the question is, with significant momentum in this area given what I think was $30 million in initiatives that is largely been executed and then the $13 million, I believe, of ceramic-related initiatives in 2026 with, I think, that starting to benefit gross margin in the back half of the year. Are there new additional initiatives that you are planning for 2026 or is it executing on those two objectives and realizing and holding those gains? Thank you.

Laura Russell: So let me start with that, Craig. So you are largely correct, Craig, in saying the initiatives we have already announced are already in flight and much of those savings are already seeing the fall through to the P&L. Where we are not fully concluded is, as you correctly stated, with the ceramic restructuring activity and specific to the operations in Germany as we respond to the demands that we are seeing for that business. We will see the benefit of that in 2026.

And as I said in my prepared comments, the benefits we still anticipate to be in the range of $13 million annually and the cost of that program still forecast in the range of what we committed as part of the restructuring. Now what I would say is, if I think about the business and the opportunity to optimize our financial performance, we have undertaken substantial restructuring to position ourselves positively.

But really, what is going to drive a substantial transition and shift is what Ali is talking about with regards to our top-line expansions and the innovation and the technologies that are really going to allow us to differentiate ourselves from a market perspective and continue to command pricing in accordance to that. But what will complement that will be our continued management of the business which is supported by the operating structure that has been implemented and the monthly reviews to ensure that we are very nimble in responding to current demands, capacity requirements, and then basing in accordance to that.

I think just finally to round that out, we did mention the restructuring, the impact that had on our operating expense. You saw that dropped from about $210 million in 2024 to $193–$194 million in 2025. That restructuring we are largely through, but we will continue to monitor our levels of investment in accordance with the opportunities as we see them present themselves.

Craig Andrew Ellis: That is really helpful, Laura. And if I can sneak in one related follow-up. Ali, is there anything you can share with us on how significantly you will be able to load up the new ceramic facility in China? It gets going in the back half of the year?

Ali El-Haj: Yes. I mean, Craig, we are still to be disappointed that it is going slower than we expected it to. But it is moving. I think the customers are still there and they are interested in buying from the China facility and move some of the products or source the China facility. What we are trying to do here is balance between aggressively going after the market and therefore, you know, we do not have to pay the price again, let us put it this way. So we are trying to be diligent and be careful about not participating in a price erosion type for the market. We still anticipate the plans to be there.

So our plans have not changed. It just shifted from a time perspective. So we still see growth in that facility in Q2, Q3, Q4. But again, really slower than we expected it. We expected to see a better situation than we are in Q1, but we are not there yet.

Craig Andrew Ellis: Understand. Thanks, Ali. Thanks, Laura. Good luck.

Laura Russell: Thank you.

Operator: Our next question is coming from David Silver from Freedom Capital Markets. Your line is now live.

David Silver: Yes. Thank you. I am going to go back, and I am hoping you can just level set me on the pace and the total of the cost savings. So my belief was, I guess, at the end of this year, you were expecting a run rate of $32 million and then there was the $13 million additional that was cited related to Germany. And then I believe you are using a number of $30 million and I am just trying to kind of separate what was mentioned last quarter versus what might be additional as of December 31? Thank you.

Laura Russell: No problem. Let me start, David, and see if I can address your question. So you are right insofar as saying $25 million was the run rate for the initiatives that we had announced previously. What you are also right in saying is the full-year benefit of those initiatives is $32 million, but the difference between that $25 million and the $32 million is the full-year benefit, some of which we have not yet seen realized in 2025. So I have got an incremental $7 million that will hit the P&L in 2026 from those initiatives that delivered $25 million of savings in 2025.

In addition to that, the economics restructuring in Germany that we announced in the middle of last year and has not yet delivered savings to the P&L. We are in the middle of that process. And as a result of that, we will not see the savings materialize into the financials for that until 2026. So that $13 million was not yet seen. In addition, we have got another $7 million that has yet to hit the P&L. But $25 million is there, and I would share with you that about 70% of the $25 million we did realize in 2025.

The savings for that is in the expense category with the residual being in our gross margin and our COGS.

David Silver: Okay. Thank you for that detail. Much appreciated. So then my next question, which one did I want to ask here? Sorry. I wanted to go back to the press release and in particular, Ali, you are quoted as saying you have an enhanced innovation strategy. So you have talked quite a bit about different business opportunities in qualification processes. But I am just kind of scratching my head and I am wondering when you say an enhanced innovation strategy, does that refer to an enlarged selling effort? Does that refer to increased R&D? I mean, what qualitatively is included in your comment about an enhanced innovation strategy in service of improving long-term growth prospects? Thank you.

Ali El-Haj: I think it is both. It is really enhancing our process, but more importantly, we have identified and the team is working on three distinct different projects that will be differentiated from what the market today has, what is available on the market today, and those products we believe are unique that will solve problems that exist today and for future issues that are facing, whether it is in data center applications or in communication applications or EV battery applications, the new technologies. So we have identified those areas, and we are developing products as we speak. Some of these products are in qualification process, as mentioned. For these applications, these applications, as you know, they are very high-growth applications.

So for us today, in some cases, we are not really participating there in any material type way. We think those will be differentiators to the business going forward and will allow us to have the growth rate that we want to do within Rogers Corporation. That is what I meant by enhanced. It is very specific, targeted for certain applications and also differentiating. It is not a me-too type technology, type product, and within our capabilities and our expertise.

David Silver: Okay. Thank you for that. And then last one for me. This is kind of a question related to tariffs, I guess, but more second or third order effects. So in other words, last April, your company had to respond in short order to one wave of tariff announcements. This time, it is seemingly from our administration here, it is more targeted. But on the other hand, we are also hearing stories about offshore partners deciding to trade with each other as opposed to maybe U.S.-based suppliers that might encounter some incremental difficulties.

From your perspective, has there been any signs that your key OEM customers in offshore locations or headquartered in offshore locations, is there any change in the way you are doing business with them? Or are they diversifying away and or adding non-U.S.-based suppliers in certain cases? In other words, how is the environment for doing business now with the lingering or more targeted tariff-related announcements? How does that affect your day-to-day strategies and your ability to pursue new business?

Ali El-Haj: I think that the fact that Rogers Corporation is a global company and having manufacturing facilities globally really kind of neutralizes that issue completely. So we are able to respond to our customers, whether they are in Asia or North America or Europe, because we are locally manufacturing all their needs, or in most cases all their needs. We have seen some OEMs who are trying to shift again to buy locally. And for us actually it has been a benefit and we anticipate that to continue to be beneficial for us because we will be able to respond to these needs again. Because of the way we are today.

We have got the global capabilities, local capabilities on a global basis. So we can supply Asia from Asia, we can supply North America from North America, and in Europe we can supply most of the products from within Europe. And we are looking to enhance our capability in additional manufacturing in the European continent within the next twelve months or so. Very good. Thank you very much.

Operator: Thank you. Ladies and gentlemen, we have reached the end of our question and answer session. That does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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