Q3 net sales were $202 million.
Gross margin was 37.4%, earnings were $0.37 per share and adjusted earnings were $1.45 per share.
The higher gross margin and effective management of expenditures and working capital resulted in strong free cash flow of $48 million.
The long-term outlook for the EV/HEV market continues to be robust with industry experts projecting a compound annual growth rate of approximately 35% over the next five years.
Over the next five years, this market is expected to grow at a CAGR of between 15% and 20%.
Third-party estimates point to modest growth in the total smartphone market over the next five years with a CAGR of about 4%.
However, the 5G portion of that market is expected to grow at a much faster 35% CAGR.
The higher content ranges from 10% to 15% in mid-range devices up to 30% more content for certain premium products.
Battery compression pads for plug-in HEVs and EVs are the largest opportunity in this market, where content can be greater than $30 per vehicle.
As a reference point, the contact opportunity for our substrates ranges from $5 in a 48-volt mild hybrid to around $40 in a full electric vehicle.
Some of the guiding principles of our system include establishing a proactive safety culture with 100% employee engagement, driving operational excellence through a lean manufacturing culture that embraces continuous improvement, and optimizing our global manufacturing footprint to maximize capital utilization while best serving our global customer base.
We delivered GAAP earnings per share of $0.37 per fully diluted share which was above the midpoint of our guidance range.
In the third quarter, we recorded restructuring and impairment charges of $9.4 million related to manufacturing footprint optimization plans involving certain Europe and Asia locations mentioned earlier.
Additional restructuring charges of between $2.5 million and $4.5 million are expected in the fourth quarter.
In addition, consistent with our communication last quarter, we incurred $11.7 million of expense in Q3 from the acceleration of our amortization of intangible assets from the DSP acquisition.
Neither the restructuring charges nor the accelerated amortization were included in our adjusted fully diluted earnings per share for Q3 of $1.45.
Our Q3 revenues of $201.9 million increased $10.7 million or 6% compared to the second quarter of 2020.
EMS revenues increased 21% to $86.4 million.
PES revenues increased 6% to $47.9 million while ACS revenues decreased 10% to $63.7 million sequentially.
Currency exchange rates favorably impacted third quarter revenues by approximately 1% compared to the second quarter.
The sequential EMS revenue increase resulted primarily from significantly higher portable electronic application revenues which grew 72% sequentially and accounted for over 35% of the segment revenues.
In addition, revenues from EV, HEV battery pad applications grew 77% sequentially as the adoption of our materials into new design wins with battery makers for significant OEMs continue to demonstrate the application advantage of our PORON product.
Revenues for general industrial applications, which comprise over 35% of the segment revenues, declined 2% sequentially.
The increase in the PES revenues compared to Q2 was driven by a 20% increase in EV/HEV application revenues, which account for just under 30% of the segment revenues.
In addition, traditional automotive revenues for x-by-wire applications grew 60% sequentially and-resulting from the automotive recovery that commenced in Q2.
The industrial variable frequency drive business, which accounts for close to 25% of the segment revenues, declined 6% compared to Q2, an indication of the continued weakness in the general industrial market.
ACS revenues decreased sequentially, primarily due to a 42% decline in our wireless infrastructure revenues-which comprise approximately 23% of the segment revenues.
Aerospace and defense revenues, which now account for over 40% of the segment total, grew 11% sequentially from existing and new programs in the defense market.
ADAS revenues grew 42% sequentially as the automotive market commenced the recovery in the second quarter and our customers worked through their inventories early in the third quarter.
Our gross margin for the third quarter was $75.5 million or 37.4% of revenues, an increase of 80 basis points over the second quarter.
The gross margin for Q3 2020 was 180 basis points higher than Q3 2019 gross margin of 35.6% on approximately $20 million less revenues.
At the same revenue level and the same product profile as Q3 2019, our Q3 2020 gross margin would have approximated 39%.
Also on slide 11, we detail the changes to adjusted net income for Q3 of $27.1 million compared to adjusted net income for Q2 of $21.1 million.
The adjusted operating income for Q3 of $35 million and 17.3% of revenues was 190 basis points higher than Q2's adjusted operating income.
Adjusted operating expenses for Q3 of $40.5 million or 20.1% of revenues were approximately flat compared to Q2's expenses demonstrating good spending discipline on increasing revenues.
We terminated our interest rate swap agreement late in the third quarter, which resulted in recording additional interest expense of $2.4 million in Q3.
Rogers effective tax rate for the third quarter decreased to 8.1% as a result of reducing evaluation allowance on R&D credits in the quarter.
-We now expect our effective tax rate for 2020 will be approximately 23% to 24% with our long-term rate projected to be in the range of 20% to 22%.
In the third quarter, the company generated strong free cash flow of $47.9 million and ended the quarter with a cash position of $186.1 million.
In the quarter, we generated $58.7 million from operating activities, including a $22.2 million reduction in working capital and repaid $163 million on our credit facility.
We ended the third quarter with an outstanding balance on our credit facility of $60 millionand a net cash position defined as cash and equivalents in excess of the amount owed under our credit facility of $126.1 million.
In Q3, the company spent $10.8 million on capital expenditures.
We spent $28.9 million year-to-date through September.
And for 2020, expect to be at the low end of our communicated $40 million to $45 million range.
As a result, Q4 revenues are estimated to be in the range of $195 million to $210 million.
Therefore, we guide gross margin in the range of 37% to 38%.
We guide GAAP Q4 earnings in the range of $0.50 to $0.70 per fully diluted share.
On an adjusted basis, we guide fully diluted earnings in the range of $1.30 to $1.50 per share for the fourth quarter.

Summary:
Gross margin was 37.4%, earnings were $0.37 per share and adjusted earnings were $1.45 per share.
We delivered GAAP earnings per share of $0.37 per fully diluted share which was above the midpoint of our guidance range.
Neither the restructuring charges nor the accelerated amortization were included in our adjusted fully diluted earnings per share for Q3 of $1.45.
Our Q3 revenues of $201.9 million increased $10.7 million or 6% compared to the second quarter of 2020.
As a result, Q4 revenues are estimated to be in the range of $195 million to $210 million.
We guide GAAP Q4 earnings in the range of $0.50 to $0.70 per fully diluted share.
On an adjusted basis, we guide fully diluted earnings in the range of $1.30 to $1.50 per share for the fourth quarter.