Good day, ladies and gentlemen. Welcome to FuelCell Energy Reports Third Quarter 2012 Results. [Operator Instructions] Later we will conduct a question and answer session with instructions following at that time. [Operator Instructions] And as a reminder, this conference is being recorded. Now I'll turn the conference over to Kurt Goddard, Vice President of Investor Relations. Please begin.

Good morning, and welcome to the third quarter 2012 earnings call for FuelCell Energy. Delivering remarks today will be Chip Bottone, President and Chief Executive Officer; and Mike Bishop, Senior Vice President and Chief Financial Officer. The earnings release, as well as an accompanying slide presentation, is posted on our website at www.fuelcellenergy.com, and a replay of this call will be posted 2 hours after its conclusion. The telephone numbers for the replay are listed in the press release. Once again, for those of you listening to this call via the dial-in phone number rather than via the Internet, management will be referencing a Q3 2012 slide presentation that is available on the Investor Relations section of our website at www.fuelcellenergy.com. Before proceeding with the call, I would like to remind everyone that this call is being recorded, and that the discussion today will contain forward-looking statements, including the company's plans and expectations for the continuing development and commercialization of our fuel cell technology. I would like to direct listeners to read the company's cautionary statement on forward-looking information and other risk factors in our filings with the U.S. Securities and Exchange Commission. Now I'd like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. I ask you to please turn to Slide 4 titled Third Quarter 2012 Highlights. Our expansion into Europe is progressing well and according to plan. During the third quarter, we completed the acquisition of select fuel cell assets at no cost to us and concluded our joint venture with Fraunhofer IKTS. This new partnership is already paying dividends for us. Within just a few months of announcing our partnership, we received an order for our first fuel cell power plant that will be installed in the Federal Ministry's new state-of-the-art office complex in Berlin. An ideal first customer for this market, the German governor -- government is a strong proponent of clean distributed generation. It will be difficult for me to overstate how well this illustrates Fraunhofer's extensive influence and their potential to help us develop this market. While our third quarter financial results were below our expectations with lower sales and margin than desired, our near-term global sales pipeline is strong to support the increasing production levels, resulting in a return to growing positive gross margin as we progressed to profitability. As announced last month, I will explain more fully later in the call discussions with POSCO Energy are progressing, and we expect to finalize agreements pertaining to the 120-megawatt order and cell licensing agreement during 2012. Essentially, given the importance of this decision and the scale of our effort to develop it, planning and discussions have simply taken longer than estimated. We have returned to a 56-megawatt run rate, which will enable product margin expansion. Our technology is versatile, and I will discuss new programs, potential commercialization opportunities arising from our advanced technology initiatives. We continue to deepen existing relationships and develop new relationships with local, state and federal legislators as we share the attributes of our power plants and job creation potential of our business model. I will discuss our performance and activity in more detail after Mike Bishop, our Chief Financial Officer, reviews our financial results for the quarter. Mike?

Thank you, Chip. Good morning, and thank you for joining our call today. Please turn to Slide 5 titled Financial Highlights. FuelCell Energy reported total revenues for the third quarter of 2012 of $29.7 million compared to $31.2 million in the same period last year. Product sales and revenues for the third quarter totaled $27.6 million compared to $29.4 million reported in the prior year. Research and development contract revenue was $2.1 million for the third quarter of 2012 compared to $1.8 million for the prior year quarter. For the third quarter of 2012, our gross loss of $2.7 million was realized compared to a gross profit of $100,000 for the prior year quarter. Annualized production volume in the third quarter of 2012 was approximately 45 megawatts compared to 56 megawatts in the prior year period. The company expects to generate profits at a rate of 50 to 55 megawatts. Thus, the reduced run rate in the quarter combined with a mix heavily weighted towards kits sales drove negative gross margin. In addition, a $1.1 million inventory obsolescence charge was taken in the third quarter of 2012 for some early generation sub-megawatt balance-of-plant parts. Total operating expenses were $7.8 million for the third quarter of 2012 compared to $7.5 million in the prior year. Although operating expenses are down sequentially from $8 million in the second quarter of 2012, G&A expenses are up over the prior year as a result of higher business development activity and the addition of our business entity in Germany. Net loss to common shareholders for the third quarter was $10.7 million or $0.06 per basic and diluted share compared to $8.6 million or $0.07 per basic and diluted share in the third quarter of 2011. Lower production volume in the third quarter of 2012 compared…

Thank you, Mike. Please turn to Slide 7, European Market Update. In June, we announced in FuelCell Energy Solutions, our German sales manufacturing service business, had completed the acquisition of select fuel cell assets of a former partner, including component inventory and manufacturing equipment at no cost. We also announced a completion of our joint venture with Fraunhofer IKTS, a well-recognized applied research organization with global operations. The successful and timely completion of these transactions provides us with a solid foundation for future growth in Europe. The variable cost strategy we're employing in Europe gives us the option to expand local operations as demand warrants. As our backlog grows, we will expand proportionately. FuelCell Energy Solutions assets in Germany included facility in Ottobrunn for local assembly that can progress to component manufacturing as demand warrants, plus our commercial organization who closed their first sale in August for installation in the new Federal Ministry of Education and Research office complex in Berlin. Located near the parliamentary building and the offices of the German chancellor, this high visibility, state-of-the-art complex will serve as an attractive, prominent showcase for our technology in the heart of Europe. We are pleased with our progress in Europe. We announced the relationship with Fraunhofer in February this year and then new creation of FuelCell Energy Solutions in May. We concluded the asset acquisition in June and secured the Berlin office complex order in August. Our market development plans call for obtaining key high visibility installations and then progress to higher value megawatt-class installations. We are working closely with Fraunhofer to ensure regulatory authorities at both the national and provincial level, appreciate the attributes of clean distributed generation fuel cells. Based on our recent discussions with prospective customers and government officials, I'm optimistic about our European order pipeline.…

[Operator Instructions] Our first question is from Sanjay Shrestha of Lazard.

First question here. So when we think about the substantially completed plants, right, of $9.9 million, that's the culprit here, I guess, from a cash flow standpoint, and I apologize if you already commented, I joined a bit late. But when do we expect that to turn into a revenue?

Sanjay, it's Mike. Yes, that $10 million of completed power plants, that's 2 1.4-megawatt power plants. We're in active discussions on several sites for that site's power plants -- for that site power plant. So it would happen over the next couple of quarters. I would say beyond that, if you look in work in process, there's also considerable components that can be assembled into modules for either 1.4-megawatt or 2.8-megawatt size power plants. We talked about the Bridgeport projects. We could use some of that inventory for that as well.

Okay. Got it. So on that Bridgeport opportunity, right, so it's good to see that Connecticut is finally moving forward, but how do we think about sort of the -- a revenue that would flow through the P&L as related to this particular project? Is there anything else that still needs to happen before you guys can really move forward with that in full force?

Sure. Sanjay, this is Mike again. So just a little bit more background on the project. When you take the total size of the power plant, it's 5 DFC3000s, plus an ORC, plus site construction activities. It's about a $70 million project. The lion's share of these costs will be incurred in 2013 as plants are built and the site is constructed. We're in active discussions right now to finance the project. There's no real financing contingencies that are out there. We talked about the 2 big contingencies that we needed to clean up in the third quarter, which was extending the sunset date of the EPA that now goes into 2014. So no schedule risk, as well as finalizing the interconnect plants with the utility. And so we're continuing with development activities and protecting the schedule and expect to achieve financing on the project.

Got it. One final question then for me, guys. So in terms of the 120-megawatt incremental order, so you guys did put out that press release about how you feel like you're getting closer in terms of really finalizing that. So what is the next event here that we will probably hear as it relates to, okay, so here we have this incremental order risk for you guys and here's what the licensing agreement looks like and how far away before we actually finally sign in that dotted line?

Sanjay, this is Chip. In my comments, I did reference kind of 3 decisions that we're trying to finalize. One is how big to make a plant. We'll be in multiples of 70 megawatts or so, it could be 140, and that's really a function of the deployment strategy and the volume that they want to try to -- that we want to try to get in the Asian market in total. So we're kind of working through that. We're trying to figure out the degree of automation. Frankly, we're trying to implement all of the future improvements we can make that we don't have at Torrington at the moment. That order design estimation, things like that, that's taking a little more time. So it's our intention here. We said, the end of 2012, I'm very confident we'll get it done certainly in that timeframe. The order itself would dovetail with the firm production we already have through 2013. So even if we do that, that will fit nicely into the backlog, and we won't miss a beat. So that's kind of our schedule.

Our next question is from Ajay Kejriwal of FBR. Jacob W. Hughes - FBR Capital Markets & Co., Research Division: This is Jacob Hughes. I'm filling in for Ajay. You guys had a nice win in Connecticut on this 1.4-megawatt order. What's the timeline on that and any visibility on future orders in Connecticut or New Jersey?

Yes, this is Chip. I'll take that. I think the plant you're referring to was an existing installation. The opportunities we have are with the 2 programs, the LREC program and the connections program. On the LREC program, the way it works is they basically say, "Okay, you're awarded this project." We were awarded 2 1.4-megawatt projects. Now that has to be -- you have to submit some bonds and things like that. So we're in the process of doing that. That will get worked out over the next 60 days, those confirmations. There was also some others that were on the waitlist, if you will, for -- but under consideration. On the second and bigger one with the connections program, that's multiple 2.8 projects, and that right now is to be finalized. The way this works is the PURA, who really manages that side of things under the Department of Energy & Environmental, has to go through some final approvals for that. And if those are favorable, which we certainly have indications to believe that, that will be something that probably takes place over the next 3 months to those things to come to fruition. As far as New Jersey, in the fall here, there will be some -- there's a program obviously similar to what they have in Connecticut here for New Jersey, and that will be open for bidding process here later in the fall. And we'd expect to know the outcome of that probably by the end of the calendar year. So there's a lot going on in addition to the Bridgeport project that Ajay -- or Mike mentioned earlier. Jacob W. Hughes - FBR Capital Markets & Co., Research Division: Okay, great. And then just had a follow-up question on the Bridgeport project. I know you talked that you're in active discussions to get financing. I mean, what could you comment [ph] and say that you would break ground then in 2012? I mean, have you received investor commitments or where is that?

Yes, this is Chip again. Let me add some color. I know this project's been talked about for a long time, but frankly, it's never been developed as far as it has that we've been working on as Mike was talking about. I mean, we've got everything in place, commitments from different people. Our balance sheet is enhanced, et cetera, et cetera. So I mean, I would put it very confident. Where we are right now is seeking 2 different paths to secure the -- primarily, the tax equity portion of this, then follow it up with the construction financing portion, kind of in that order. So we have to commit things in 2012. I think the feedback we're getting is very, very positive from various people that can provide that financing. We just have to close it and get the project going. Jacob W. Hughes - FBR Capital Markets & Co., Research Division: Okay, great. And then I just had 1 final question on POSCO. I mean, it looks like you're making progress on that agreement. What is the opportunity for additional licensing agreements outside of Korea? I mean, you just talked about improving conditions in Japan and in Southeast Asia. Is there an opportunity there as well?

As part of the agreement with POSCO, that would cover certain portions of Asia itself. That's carved in -- when I mentioned earlier about some of the deployment plans and things like that, those are some of the things we're going through right now. I can't comment on the details of that, but some of those territories you make reference to would be handled by POSCO under this agreement. From a license perspective, obviously, there's upfront license payment, and then there's a trailing license payment based on volume. That's the plan for Asia in general. And then obviously, we have FuelCell Energy Solutions in Europe based out of Germany, which is a subsidiary of FCE, and we'll pursue the markets through that entity there. And then obviously, in the U.S., we have FuelCell Energy, which we basically have adopted a direct model from a go-to-market perspective.

Our next question is from Walter Nasdeo of Ardour Capital.

I'd like to just really talk about the developments in Europe. I think that's a pretty big deal. As you look at kind of over the next 18 to 24 months and the ramp-up, are you looking at -- obviously, Germany is kind of the jumping off point into other countries, but what is your expectation for kind of penetration in Germany itself over the next, say, 2 years or so?

Walter, this is Chip. Let me take that one. There's kind of 2 -- if I just kind of -- the plans we have for FCES are really European-based. As you probably saw from my comments, I mean, those projects were working with Abengoa, for example, that might be driven through FCES. But specifically to Germany, let me comment there. There's utility opportunities, as I mentioned, regarding some of the meetings we've had with E.ON, I've personally met with those folks, as well as just non-utility-type customers, which have a tendency to be on the other side of the meter. The -- I've been encouraged by the response we've gotten thus far frankly, not just in Germany but broadly speaking, and it would be my expectation that we, in fairly short order, close more -- some further sub-megawatt units for reference sites and specific markets. And we're right now pursuing, I've got the organization pursuing megawatt-class projects as well, and that's really where we're going through. So in the short term, I'd say we're going to fill up our factory there in Ottobrunn, which is just outside of Munich, with sub-megawatt product and localize the rest of the content as we move to the megawatt scale, which frankly adds a lot -- a better economy both from a user perspective and from our perspective. So the government is very supportive. In fact, we have a meeting there next week with the senior officials and things like that. I've spent a lot of time there myself, and my sense is that we've overcome some of the challenges of some of the previous work the people have done. And I think it's a very positive future for us, and we just have to execute, just do what we say we're going to do and using the model that we have, Walter, which is a direct model, not only in the plants but operating the plants, which is not a model, frankly, they've seen before.

Okay, great. And then if I could just go back to my recurring question on a pretty regular quarterly basis. Referring to capacity, what are you looking for -- obviously, you've gotten back up to the 50, yes, a little over 50-megawatt capacity run rate again. What are we looking at as far as getting to that 80-, say, 100-megawatt capacity? What are we looking at as far as capital expenditure? And has that changed or are you still pretty comfortable with where we've been in the past?

Walter, it's Mike. Our Torrington facility has 90 megawatts of capacity today. We have -- as we go into 2013, looking at our capital plans, we'll have some modest capital to add for maintenance and some automation but not a significant number, probably a little bit north of where we're landing this year for capital spending, in the $3 million to $5 million range. But that factory is fitted out, and we have the capability to ramp to 90 megawatts next year. Beyond that, POSCO, as you know, as part of this new agreement, is planning on manufacturing a factory in Asia that -- as Chip said, that will add 70 to 140 megawatts of capacity in Asia. So between the 2 factories, you have the capability to do up to 240 megawatts here in the next several years. So the capital required in Asia is on POSCO's balance sheet, and we're comfortable with those capacity plans based on our pipeline today.

Okay, great. And then just one final thing, referencing back to Asia again. Have you -- are you seeing any more kind of future seeding of other countries outside of Korea, kind of as POSCO using them as a jumping off point into other countries?

Yes, Walter, this is Chip. Yes, we have. There's a model, really. This whole deployment thing is really starts with the need. We -- and I think we -- I mentioned in my notes, the one specifically where folks are right now is Japan and Southeast Asia, within Southeast Asia, specifically Indonesia. So I mean, POSCO is pretty busy at home, as you can kind of tell from the activity that we've been talking about. But we're forging ahead with trying to do some seed installations and things like that. We have the one in Indonesia already that's going in, and the next big one for us to try to tackle is Japan. Now we've had some past results there, and they obviously have some challenges. So we're actually pretty well-focused on -- Japan, I think, is the next one to come up with a real credible deployment strategy.

This ends the Q&A portion of today's call. I'd like to turn the call over to Mr. Bottone for any closing remarks.

Thank you, Tyrone. I'd like to thank everybody for joining the call today and invite you to our fourth quarter call, which will take place early December. So again, thank you for your time, and have a great day. Take care.

Ladies and gentlemen, thank you for your participation in today's conference. This includes the program. You may now disconnect. Have a wonderful day.