Good morning, afternoon, evening and welcome to the Broadwind Energy Q2 2016 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joni Konstantelos, Director of Investor Relations. Please, go ahead.

Thank you. Good morning and welcome to Broadwind Energy’s second quarter 2016 earnings conference call. With me today are Broadway’s President and CEO, Stephanie Kushner and Broadwind’s Vice President and Corporate Controller, Bob Rogowski. This morning’s earnings news release is available on our website at bwen.com. Second slide, please. 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-Q, 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 Stephanie Kushner.

Thanks, Joni and good morning. We made notable progress in the second quarter. We booked $176 million of new orders and we now have an important baseload in place for tower sales into 2019. We reported revenue of $43 million, which was on plan and consistent with our guidance. Our cost reduction efforts are on track. Through June 30, we have reduced fixed overhead and SG&A by $4 million and we expected to meet or exceed our $8 million commitment by year end. In the quarter, we generated $180,000 of operating income and $42,000 of net income from continuing operation. Our cash position remains strong and we repaid $2.4 million of long-term debt ahead of schedule, leaving only the $2.6 million subsidized loan outstanding. We also funded capital spending and some growth in working capital and ended the quarter with $11 million in cash assets. Six months ago, I laid out three near-term priorities. First, to double order intake, to-date, we have booked $215 million of new orders, more than double $94 million for the full year of 2015. And we are certainly not stopping. We announced – we have not announced an additional $25 million in new tower orders since June 30. Our second priority was to maintain consistent tower production. We have made tremendous progress here. Our Abilene plant, where we had significant production challenges last year, is currently producing above its design rate of 150 towers a year. After 6 months, we had produced 81 towers, equal to 83% of our full year production in Abilene last year. This strong performance has allowed us to get ahead of our current contract and will provide some planned cushion later in the year as we deploy new capital to permanently expand capacity to the plant. In Manitowoc, we had…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Mark Spiegel with Stanphyl Capital.

Hi, hey Stephanie, congratulations on the turnaround there. Glad to see it developing.

Thanks Mark.

The last thing you said was you expect $8 million to $10 million of full year EBITDA, what’s your assumption in that figure on gearing, are you assuming a $2 million EBITDA loss for gearing, because that’s the run rate from this quarter?

No, it should be less than that because of the mix of some of the shipments they have in the back half of the year. So it should be kind of maybe $1 million plus.

Okay. And how much upside is there in towers from like the current kind of EBITDA run rate, I mean because I think in the last call or when I once spoke to you, I think like this quarter we just had, you were kind of running pretty flat out, right, so – or is that wrong and where does it go from here or is that like the run rate for the next 4 years or whatever, until the PTC is gone?

Let me try and unpack the question a little bit. I think the $8 million to $10 million estimate encompasses some potential improvement or upside from towers in this back half of the year. We are working hard to improve our efficiencies, reduce our overhead, reduce our use of consumables improve the consistency of our welding and painting. And all those things are giving us – we are seeing results from all those. It’s always hard to gauge at what rates those results will continue. We also have – in 2017 we expect that we have some revenue growth from this expansion, that should give us an extra $15 million to $20 million kind of run rate for revenue.

Okay. Because you are sort of on a – even with this quarter, you are on an $8 million EBITDA run rate, right, so what you are really sort of talking about is $10 million, if you hit some of this upside, I guess is kind of what you are saying, right?

Right.

Okay. And then last question about CapEx, it was $1 million I think this quarter, so obviously annualizes to $4 million, I thought you had said something on last call about CapEx being more like $6 million this year because of the paint shop, so if you could what’s – a little color on that and what would you call sort of normalized CapEx once the paint shop is finished?

Well, I think our paint project, which – I think our capital investments in towers. It’s really a three-part program. The paint investment was to improve the efficiency of paint. I think most of that capital will be dispersed this year. We are also – we have also just committed to a $4 million expansion down in Abilene. One of the things that it does is that’s going to give them a second paint facility and also expand some of the room for their assembly work. And then really the third phase and we haven’t committed to that yet, would actually be bringing in robotics. So long story short, we think that with the initial completing of the paint investment and the initial parts of the expansion, that our second half CapEx is going to be in the $5 million to $6 million range. And then we will wrap that up next year and then we will see how we are feeling about the robotics investment.

So what would you – ex-robotics, if you don’t do the robotics investment, what’s like sort of normalized CapEx annually?

Yes. Generally, it should be in the kind of sustaining capital, if you will. It should be in the 2% to 2.5% range for the business.

2% to 2.5%, but that varies so much depending on the price of steel, I mean can you put an annual number on it, ballpark, is it $4 million, is it $3 million, I mean what’s the number?

It’s probably $4 million to $5 million.

Okay, terrific. Thank you very much. I appreciate it.

Sure.

Our next question is from James Ward with Macquarie. Mr. Ward.

Hi, James.

Hi, good morning. How are you?

Good morning.

Good, so couple of questions here, one on your target final tower production capacity, you have got a great backdrop for growth right now, obviously with the PTC visibility, the expansion in Abilene is fantastic, what would be your final, whether it’s robotics or otherwise, your final target tower production capacity if everything went your way?

Well – I think its 550 towers is probably the right number to use. It’s always difficult to determine what capacity – or what efficiency and productivity can provide. But at the end of the day, it takes a certain amount of time to dry paint. And as the guy who runs the business says, unless we can figure out how to dry paint faster, our throughput is probably going to be in that 500 to 550 tower range.

Fair enough. Okay. So, no, expansion in terms of other facilities or anything of that nature are being thought about?

No not at the moment.

Okay. And second question was on gearing, we have been hearing quite a bit of talk of repowerings, some developers looking to take advantage of PTC’s existing wind farms that are getting up there in age, have you been factoring in that pickup in repowerings and do you anticipate that, that might make a material change to gearing over the next couple of years and if so how should we think about it?

We are watching the impact of that repowering opportunity pretty closely. And I can’t say I fully understand, I think my assumption thus far has been when the repowering takes place, that it would likely involve a new gearbox as opposed to replacement. And most of the new gearboxes for wind are being manufactured either in Asia or in Europe.

Okay, perfect. That’s all I have. Thank you.

Alright. Thanks James.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Stephanie Kushner for any closing remarks. Ms. Kushner?

Thank you very much. Thank you for your attention. As you can tell, we feel very positive about where we are and the future and the industry just in general. So we appreciate your attention and look forward to speaking with you again next quarter. Thanks. Bye-bye.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.