Welcome to the Q4 2013 Broadwind Energy, Inc. Earnings Conference Call. My name is Adrian and I will be your operator for today's call. (Operator Instructions) I'll now turn the call over to Joni Konstantelos. Joni Konstantelos, you may begin.

Thank you. Good morning, and welcome to Broadwind Energy's Fourth Quarter 2013 Earnings Conference Call. With me today are Broadwind's President and CEO, Peter Duprey; and Broadwind's Executive Vice President and CFO, Stephanie Kushner. This morning's earnings news release is available on our website at www.bwen.com. Before we begin today, I would like to caution you that this call will include some forward-looking statements regarding our plans and market outlook and also will reference some non-GAAP financial measures. Actual results may differ materially from these forward-looking statements. Please refer to our SEC filings and consider the incorporated risks and uncertainties disclosed there, including our Form 8-K and the attached news release filed with the SEC this morning and our Form 10-K which will be filed later today. We assume no obligation to update any forward-looking statements or information. Having said that, I will turn the call over to our President and CEO, Pete Duprey.

Thanks, Joni, and thanks everyone for joining the call. This morning we reported our fourth quarter and full year 2013 results. We showed strong improvement, both for the quarter and for the year in terms of margin improvement, EBITDA generation and working capital management. During Q4 we added over $200 million in new orders and ended the year with a record backlog of $311 million. Our Q4 revenue was in line with our outlook and up significantly from Q4 2012. Gross margins excluding restructuring improved 600 basis points from Q4 2012. EBITDA was up sharply from the prior fourth quarter. Our cash totaled $26 million in our line, was undrawn. We navigated very well through the turmoil of the wind energy market in 2013. Over 13 gigawatts of wind turbines were installed in 2012, a record high. However, wind installations in 2013 were at a 10-year low with only 1 gigawatt of installations. Fortunately, we were aligned with turbine OEMs who anticipated the demand for wind turbines in 2014 and '15 and the started locking up the supply chain in advance. The industry continues to work on improving turbine technology to enhance the energy capture and driving out cost to achieve better grid parity with fossil fuels. Looking at our other major markets. We are seeing an increased activity in the upstream market for pressure pumping gearing and replacement gearing on drill rigs. More natural gas is being exported to Mexico and there could be a strong opportunity to export gas to Europe if political tension increase, which should support a higher natural gas price. On the next slide, I wanted to reflect back after three years of being on the job. 2013 was a pivotal year for Broadwind and I am very pleased with our accomplishments. In 2011, we…

Thanks, Pete. So I am referring to Slide 10. On $56.4 million of revenue our fourth quarter gross profit margin of 7.8% represented a four-fold increase from last year's Q4. All due to better tower segment results. Now our fourth and first quarters are typically weaker than the others, mainly for services in towers due to the effects of challenging weather and fewer workdays. So this improvement is very encouraging. This bought the full year gross margin excluding restructuring to 8%, double the 2012 figure. Q4 SG&A expense of $5.7 million was up $700,000 from the prior year due to higher incentive compensation, severance and professional services expenses. Excluding restructuring, SG&A as a percent of sales was 10.3% of the quarter, bringing the year-to-date figure to 11.3%. With a 20% to 25% increase in sales in 2014, we expect to reduce SG&A to the 9% to 10% of sales range this year. Our adjusted EBITDA was $2.8 million, in line with our guidance and sharply better than the weak Q4 of 2012. The EPS loss of $0.26 was worse than our guidance because of $1.7 million earlier than planned write-down of the gearing plant which we are vacating and which we have on the market to sell. This charge mainly represents an acceleration of timing of restructuring expense. On the next slide, towers delivered another outstanding quarter particularly compared with Q4 of 2012. We sold 111 towers during the quarter, 60% more than last year's quarter which was weak because of the PTC uncertainty faced by the industry as 2012 was closing out. During the 2013 quarter we again produced only three section towers versus last year when we were producing a mix of tower sizes. Therefore, while our tower count was up more than 60% year-over-year, our section count…

(Operator Instructions) And we have Katja Jancic from Sidoti and Company on line with a question. Please go ahead.

You mentioned that the restructuring charges will be about $1 million in the first half of the year. Can you be more specific? Will we see those mostly in the first quarter or is it going to be spread out more?

I think it's probably -- gosh, I am not sure but I am going to say probably two-thirds in the first quarter and a third in the second.

Okay. Now regarding the gearing segment. I know it's been underperforming and I know you are working on improving it. But let's say, what is the growth that we could really expect going forward and let's say , two, three years, what are you looking at?

I think, Katja, first we need to kind of fix some of the processes. So I think for 2014, we will see some modest growth, maybe 5% topline growth in gearing. And then that should accelerate in 2015 and 2016. We are still seeing some weakness in the mining and natural gas market although in natural gas we are seeing some improvement. So I think our, kind of base case forecast for 2014 doesn’t show a significant amount of growth in gearing. But, again, we think, you know we have capacity through our capital on equipment for over $100 million and today it's in the mid-40s. So there is still a lot of potential in gearing.

And how is the industry? Is the industry -- are there any changes in the industry that could either hinder or boost the segment?

I think the energy revolution that’s going on in the U.S. is really the big upside for the gearing sector. If you look at, on the Texas Gulf Coast, there is about $110 billion worth of infrastructure going in around liquefaction terminals, upgrades to refining capacity, and that plays right into our wheelhouse around our gearing and our fabrication business. And then if you see a rebound in natural gas, you are going to see more rigs being deployed as more drilling and fracking is going on in the natural gas market which really kind of shut down about 18 months gas when natural gas got to be about 3.50.

Now regarding the PTC credit. Are there any updates? Does it look like it's going to get extended or what's with that?

I think the feeling from the American Wind Energy Association is that our best shot likely lame duck session after the election. And I think their feeling is, there has always been bipartisan support. We did get the credit passed in January of 2013 when there was quite a bit of dysfunction in Washington. So I think if we can come up with a deal perhaps that a scaling down of the credit over time to bring enough Republicans over to support it, maybe they compromise there. I think we are still fairly confident that we can get some legislation through to extend the credit and really give us an extra three years of runway to improve the turbine technology so that we can compete with fossil fuels on a longer-term basis without incentives. That’s really our goal, is to be able to compete without incentives and then we can manage our own destiny.

Now let's say in the worst-case scenario that the tax credit is not extended. What would be the plan? How would you react to that because that would cause quite a damage to the tower industry, I am guessing.

Well, actually we don’t think it is as catastrophic as some people think. And the reason is, you have got 29 states out there with renewable portfolio standards. I think we feel that the levelized cost of electricity for wind turbine is close enough to fossil generation and it has no carbon risk. So it's close enough that PUC, public utility commissions are approving utilities to rate based wind assets. And we are seeing a lot of utilities wanting to own wind assets. MidAmerican, American Electric Power, PacifiCorp, Duke Energy. So I think we are close enough where if they want to grow, they can't really build a coal plant because they really don’t know what carbon legislation is going to be. It's fairly easy to rate base and build a wind plant and if they want to grow or they have load demands that they need to fulfill, wind is a reasonable option at this point. So we have looked at some scenarios. On the low end maybe it's 3 to 4 gigawatts, on the high end it's maybe 6 to 7. So I think there is some base load demand there for wind even without the credit. The other point I will make is, with the EPA regulations coming down, it's likely that there is 60 gigawatts to 70 gigawatts of coal that will be retired over the next seven years. And that will get replaced with some wind. Most of it will be natural gas but wind will garner a portion of the replacement of those retired coal plants. So I think that too will help the wind situation in the short term.

Just one more question. What is your expected capital expenditure for 2014?

We have about $1 million left on our restructuring and then there will be about another $5 million on top of that. So about $6 million.

And we have [Mike Cusum] (ph) of GF Capital Management online with a question. Please go ahead.

First, on the towers business as far as the first quarter margin guidance is concerned. I think you said around 11%. What would that number look like excluding the accounting restatement cost? What's kind of pressuring that number sequentially is the question?

The accounting restatement cost is about 1%. So it would be 12% without that.

Okay. And then what about steel costs or any other raw material costs that we should think about for the balance of the year in that business.

Yes. We don’t really take pricing risk on steel costs. We pretty much negotiate the steel purchase at the same time we are negotiating the sale of the tower. So we tend to look at that as being kind of a risk free element.

Okay. So outside of the restatement cost kind of on a go forward basis, it wouldn’t be unreasonable to think that business could operate at kind of a 12% to 13% level.

I would probably be more comfortable with 12% than 13% but...

Right.

I mean we are doing some investing in that business to grow and kind of nurture this weldment fabrication business because we think that is going to be an important growth platform beyond 2014.

Right. And obviously orders will start to tail off this year. Can you kind of frame what orders will look like in the towers business over the next few quarters? What the opportunities are out there still?

So there is about 5 gigawatts or 6 gigawatts of -- so if you look at the forecast for '14 through '16, it's about 16 gigawatts. There is approximately 11 gigawatts of orders that have been placed. So there is still 5 or 6 gigawatts of orders still kicking around. We still have approximately half of our volume for '15, so we still feel pretty confident. I would say by the end of the third quarter of '14 we would fill up the remainder of the volume in '15 and maybe get some tower orders starting in '16.

And remind me, 5 gigawatts translates into how many towers?

Divide by 2.

2500.

Okay. So the bookings in the first quarter will still see a fairly material number, it's not like they have dropped off a cliff.

Right. I think the orders are always kind of lumpy, so we can't really predict exactly what quarter -- it could slip into Q2, but we do think that there is enough demand out there of projects that are still kind of coming together to, that we can fill up in '15.

Okay. Great. And then onto the gearing business. What will the cost savings be from the 20% workforce reduction?

Yes. So $2 million to $2.5 million.

Okay. That’s a big number. All right. And then just thinking about that business, I think you indicated perhaps 5% growth this year. So what percentage, kind of on a quarterly basis, of the business comes from the backlog versus kinds of turns business?

So the backlog -- so essentially we have got six months worth of sales in backlog.

It typically all goes to backlog. I mean it's a custom product.

Okay.

So we are not selling any gears kind of off the shelf.

Okay. And then just the -- I think you will do this replacement on this wind side and the gearing business. What does that business look like for this year to you?

So there is two places where we tend to sell the replacement gearing. One is into the installed base of [Clipper] (ph) turbines, and then the other is through our services business when we are rebuilding either the very small kilowatt turbines or even some of the larger ones. And the combination of those is typically run like 25% or so of our sales. Maybe think $8 million to $10 million.

Okay. And then on the services business, given you are expecting 20% revenue growth. Off of the fourth quarter run rate, you must anticipate a pretty strong ramp by the second and third quarters. So I guess my question on that business is, how much visibility do you have into that ramp?

Again, it's a fairly short cycle business. You know I think where we are going to start to see the ramp is on commissioning support on projects. So we will deploy some of our service tax to support either an OEM or an owner-operator in commissioning new turbines. And then I think on the blade side, we expect to see an uptick there, probably because I think some people in 2013 sort of delayed some maintenance both on blades and on gearing where they could. So I think the first quarter is pretty low because of the weather but we are anticipating a lot of commissioning support and then fixing maybe some deferred issues from last year.

Our [coaling] (ph) activity is up.

Yes, [coaling] is up fairly dramatically.

Okay, great. One last question, if I may. What's the acquisition pipeline look like and then remind me, you have a very large federal NOL at this point too, right?

Yes, NOL is about $167 million. So when we look at acquisitions, obviously, I would like to be able to accelerate the use of that NOL. And really what we are looking at are some fairly small, maybe $15 million to $25 million bolt-on opportunities. But I don’t think there is anything that’s imminent.

(Operator Instructions) We have no further questions and I will turn the call over to Pete Duprey. Please go ahead.

Okay. I think 2013 was a great year. I think we certainly improved the performance of the business in line with our planned transformation. I think as we look at 2014, we are set up to have another strong year and I think it will be another major step forward. I think wind energy is in a good and strong position right now and we are focused on certainly fixing the gearing business and the services business and then planting some seeds in our fabrication business. We are very focused on showing tangible progress in these businesses and I actually look forward to these calls and reporting the progress we are making in 2014. And I do think it is going to be a very good year. So thanks for joining the call and we will talk to you next quarter.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.