Good day, ladies and gentlemen, and welcome to the FuelCell Energy Fourth Quarter 2016 Results Conference Call. At this time all phone participants are in a listen-only mode. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today’s conference may be recorded. I’d now like to introduce your host for today’s conference, Mr. Kurt Goddard, Vice President, Investor Relations. Sir, please go ahead.

Good morning and welcome to the fourth quarter 2016 earnings call for FuelCell Energy. This morning, FuelCell Energy released financial results for the fourth quarter of 2016. The earnings release as well as a presentation that will be referenced during this earnings call is available on the Investor Relations section of the company website at www.fuelcellenergy.com. A replay of this call will be available approximately two hours after its conclusion on the company website. 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 FuelCell 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. Delivering remarks today will be Chip Bottone, President and Chief Executive Officer; and Mike Bishop, Senior Vice President and Chief Financial Officer. Now, I would like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. Please turn to Slide four, 2016 progress. 2016 was a year of both progress and challenge. Most importantly, we continued executing on our strategic initiatives and near-term deliverables, which I would like to briefly highlight, by a broadening reach into the supply, recovery, and storage of energy. Ten new projects totaling 41 megawatts of ultra-clean and reliable distributed generation power plants were commissioned globally, expanding our installed base and contributing to future services revenue. We have put several of these projects on our balance sheet to optimize margin and recurring revenue. Our showcase installation of the world’s most efficient and competitive distributed generation facility, our DFC4000 fuel cell plant, is fully approved and under construction, with operation expected in the summer. One of our newly commissioned power plants became the very first utility owned, megawatt-class fuel cell installation in Europe. And I was joined by senior executives from the utility E.ON as well as German government officials at the dedication event. We are expanding our relationship and expect to expand our project portfolio with them. Thanks to sensible and adaptive policy developments, particularly in California and New York, we are seeing enhanced project economics which translates to expanding market opportunity for megawatt-scale fuel cell projects. In 2016, we executed a joint development agreement with ExxonMobil for our fuel cell carbon capture solution. The ExxonMobil team is very engaged, and we are making great progress. Activity in 2017 will further accelerate. We are particularly pleased to be working with Southern Company for our first carbon capture project. They are one of the leading utilities and have demonstrated a leadership position with carbon capture. As stated, the carbon capture opportunity is global. Additionally, we are performing engineering studies under another contract to evaluate potential…

Thank you, Chip. Good morning and thank you for joining our call today. Please turn to Slide 5, titled financial summary. FuelCell Energy reported total revenues for the fourth quarter of 2016 of $24.5 million compared to $51.5 million for the prior year period, reflecting our transition to selectively retaining projects on balance sheet, and lower sales to POSCO energy. POSCO now manufactures locally in Korea under license and royalty agreements. As I will discuss on the next slide, retaining projects generates recurring energy revenue over the term of the power purchase agreement, or PPA, which is typically 20 years as opposed to a one-time product sale. We retain the 5.6 megawatt Pfizer project and 1.4 million megawatt Riverside California project, both reached commercial operations, or COD, late in the fourth quarter of 2016. In Q4 2016, a gross loss of $500,000 was incurred compared to a gross profit of $3.1 million in the same period last year. Lower product sales negatively impacted margins as well as nonrecurring service costs. Operating expenses totaled $11.3 million for the fourth quarter of 2016 compared to $11 million for the prior year period. Net loss to common shareholders for the fourth quarter was $13.7, or $0.41, per basic and diluted share which compares to $9.7 million or $0.38 per basic and diluted share in the fourth quarter of 2015. Cash, restricted cash, and project finance availability totaled $156 million at October 31, 2016. Backlog totaled $432 million at the end of the current period, as illustrated on the chart on the bottom left of the slide. At the end of the quarter, service backlog, which includes power purchase agreements, totaled $347 million and includes 94 megawatts of future fuel cell module production. While the majority of this production is in future years, it…

Thank you, Mike. Please turn to Slide 7 key 2007 initiatives. I would like to discuss four key strategic initiatives that address our near-term goals and continue positioning FuelCell Energy for long-term growth. We have a multibillion-dollar activity pipeline, including revenue from services. Individual projects have multiple paths to closure. Project development and subsequent closure is a continuous process. Our business model aligns with this approach and is unique to FuelCell Energy. This model can and will lead to continuous profitability and growth. Included in this project pipeline are Connecticut projects, such as the Beacon Falls Energy Park that continues to move forward. In December, the Connecticut Department of Energy and Environmental Protection issued its air permit for the construction and operation of the park. This was the last major step in the permitting of the park. In addition to the Beacon Falls Energy Park, we are advancing other fuel cell projects in Connecticut totaling over 50 megawatts. These projects make sense both economically and environmentally for multiple stakeholders, including the state’s ratepayers in the municipalities where they are sited. We feel the state needs to evaluate energy projects more comprehensively to incorporate energy, economic, and environmental policy. Domestically manufactured fuel cells that minimize or avoid transmission deserve to be part of the power generation portfolio as the economics makes sense and the overall value is so compelling. We are communicating these facts and are encouraged by recent comments from state officials that Connecticut will focus future processes on reliable base load power generation, which is affordable and provides a variety of economic development benefits. Large power installations are inherently complex, and therefore can take time to develop. Dominion’s Bridgeport Fuel Cell Park, for example, took several years to close. In spite of the number of delays, we were able…

[Operator Instructions] Our first question comes from the line of Carter Driscoll with FBR Capital. Your line now open.

Good morning Chip, Mike, Kurt.

Hi, Carter.

How are you doing? First question is – so obviously, disappointing results from the bid for Beacon Falls in the 2-to-20 DEEPs. And obviously you guys have taken a proactive approach in trying to help, let’s say, highlight the other aspects of the RFPs that maybe were ignored. Could you talk about maybe just the – why they focus so heavily would be my intention on cost in this particular – and those particular to RFPs. And what you can help do – what you can help kind of educate them or refocus them on this process to how are the other positive aspects of fuel cell power generation going forward. Since, like you said, you have a structural cost disadvantage without the IDC, at least as it currently is today. And then I have a couple follow-ups. Thank you.

Mike might have something. I will start that off, Carter, and then Mike may jump in here. I would say this, I can’t comment specifically about having evaluated things, but I would say this that there is a bit of a false narrative about competitiveness. So basically what we are doing is kind of looking at what the needs of the state are, and what we can deliver, and matching that up in a positive way. As I said in my remarks, these projects will happen, and it’s just – sometimes it takes a few different things. I would point out that if not selected in one process doesn’t mean there would not be other opportunities to close these. But I think people make certain decisions, right or wrong, Carter, at certain times. And it’s our job to go out and make sure that they are properly evaluated in long run. And we intend to do that, and we will be successful when we do it. Mike, anything to add? Mike

And Carter, I would just add to that they have not publicly released the other bids, so we really can’t comment on an apples-to-apples comparison. Chip highlighted the Dominion Bridgeport project. We know that the LCOE that we bid on these new projects was less than that. We know we deliver a competitive LCOE in the markets that we are in. We fully expect these projects to move forward; actively working with the developers on Beacon Falls, and continue development on the other projects that we have created here in the space.

Okay. That’s fair. Maybe I realize you guys are – have chosen not to provide guidance. Is there any color you can give on in terms of the number of projects you are evaluating, in terms of trying to retain on balance sheet versus asset sales? Just try to help us frame, at least, different buckets we are looking to put in the revenue side.

Sure, Carter. What I would say is, as I said in my remarks, we will selectively retain assets. For example, we announced Tulare, a 2.8 megawatt project at Tulare; twenty-year PPA. That fits the profile of the types of projects that we have been retaining. So I would expect that that is an example of a project that we would retain. We said, on the Beacon Falls project, we are not the developer for that. So that type of project we would sell directly to the developers. So it will be a mix. But given the timing, we have not released revenue guidance for this year.

Any comments you can make on either PPA pressure or length, in terms of compression? It doesn’t seem like that seems to be affecting you currently.

Carter, this is Chip. Yeah, you know, we don’t – it depends on what is in a price, right? I mean, what is included in it? What is your escalation factor you put on it, and things like that. But really, Carter, within projects that we bid, we can create proper economic value and return for the investor, as Mike said, if we chose to go that route. And obviously benefits for us. I don’t want to get into specifics, given that we are a public company, but that is really not the issue. To just add to what Mike said is look when we can close the right projects that make sense for everybody here, we can provide the necessary financing. I think we’ve done a great job, Mike and his team, over the last several years, in fact, to bring the financing to make these projects go. So our task right now is to get a large number of projects, which we are – we have a large pipeline of things to work on, but get those down to which ones we can close, and then we will go get the financing. So I think our variable model and flexibility and be able to, frankly, turn up production as we need to is very helpful when you are working in that environment.

Okay. Last question for me. Just are there specific deliverables at the Southern pilot project that you can share with us in 2017, and/or how do you anticipate, assuming you would hit those deliverables, how you might be able to turn it into kind of first PO for this new technology application?

Yes, so specifically to Southern Company, everything has been kicked off. We are working, we are doing engineering, all the kind of things you would expect to do when you are trying to locate something at site with an existing power plant. So I think 2017, we’re going to have further progress in engineering and site construction, things like that. But I would say that, as I mentioned in my comments, we also have discussions underway with other people, both contracted and potentially proposals that wouldn’t necessarily – it could be in an expedited way because the engineering you do on these plants, other than the site-specific things, in some cases, are one-off. So we could actually see ourselves with other projects, Carter, to execute without having that one actually complete. So I would say right now that we are working with Southern Company and obviously Exxon on that project, and the Department of Energy, to do a lot of different things, but so far, so good.

Okay. I appreciate all the commentary. I’ll get back in queue. Thank you, gentlemen.

Thank you.

Our next question comes from Craig Irwin with ROTH Capital Partners. Your line is now open.

Good morning and thank you for taking my questions. First one really is a [indiscernible]. If you could update us what POSCO was as a percentage of revenue, both in the fourth quarter and full-year 2016?

Hey, Craig, why don’t you come back to that question? You have another one? Mike is tracking that down right now to give you the answer.

Great, thank you. And then the next one, when we analyze your bookings and backlog, looks like there was a $59.4 million net booking in services. Now when I go through your press releases, I don’t see anything that would suggest a booking that material. Is this POSCO? Is this a re-up on some other large projects? Could you maybe discuss how this breaks down and what the major components are for your services booking in the quarter?

Yes, sure, Craig. Let me take that one. So when you look at our service backlog today, it is about $347 million. A big component of that is power purchase agreement. So as we have retained our power purchase agreements that number has continued to go up. As I said in my remarks we have about $130 million of future committed revenue from power purchase agreements. So that’s where you’re seeing the increase in service. And to your point, some re-ups, as we go, some of our older agreements were five years, and we extend those over time.

So just to clarify, is the major component of this $59.4 million net increase in services backlog in the quarter, is this mostly with company retained PPAs on the fuel cell energy balance sheet?

Yes, that would be the lion’s share of it. That’s correct.

Okay, okay. The next question, if I may. You’ve got, what, just under 10 megawatts at the close of the fiscal quarter of those projects on the balance sheet. More than $45 million reflected on the balance sheet, and it cost around $4,800 a kilowatt. Just the simple math suggests this is about a $1 million a year revenue opportunity for you. So I know that it will be very, very high gross margin, maybe 80%, maybe higher. But can you just walk us through why you think this is a good use of FuelCell Energy’s cash at this moment? And can you maybe discuss whether or not you would be able to get specific project leverage against these individual projects that would push up the returns closer to the mid single digits?

Yes, sure. As I said in my remarks, Craig, when we look at the portfolio today, on an annualized basis, it’s about $7 million-plus of revenue I would say there is some incremental revenue opportunities from our current portfolio. But to your point, when you look at the operating margins, EBITDA, and cash flow contributions, very strong. We expect operating margins in the range of 20% to 25% for this portfolio, over time; EBITDA contributions north of 50%. After you take away debt and lease payments, cash flow available for distribution back to the Company is in the 20% to 25% range of revenue. So it’s kicking off very strong cash, over time, back to the company. So that all goes into our math as we are thinking about future business model and lowering EBITDA; breakeven targets as we go forward. By retaining these, we are bringing incremental revenue and cash flow to the Company over time.

Great. And just to be crystal clear, your $7 million number, does that include both renewable energy credits and other credits that you are able to procure for those projects, and then the services associated with those plants? Or is that strictly a power number?

That is an all-in energy number that we would expect to recognize revenue on in 2017.

Okay.

Every contracts is a little different, sometimes you get the rec, sometimes you don’t. But Mike’s answer is that is an-all in number, yes.

Okay. That last question, if I may, really a big-picture question, and I guess this one is really for Chip. Chip, when we look at the equity, it is trading at roughly 0.5x cash, maybe a little bit less, at this point. That’s a pretty significant market signal. So when we step back, the Company’s optimism around the New England Clean Energy RFP and then the Connecticut 2-to-20 program was very, very high. This is your home state. But you were rejected on these very significant projects in your home state. Why not make a much more significant reduction in cash consumption at this point, and refocus efforts back on cost reduction? And can you share with us any cost reduction targets that you plan to achieve over the next year or two years, $4,800 a kilowatt, very high. And our read is that you need to bring that down by 30% plus to be much more competitive in the projects that you are bidding for. If you could respond to that, we would appreciate it.

There’s a lot there. I will try to remember what all the questions were. I guess the first one, Craig, was the question around, what do we think about the Connecticut outcome? And I think I went through that in detail. We weren’t selected at this time and I will just kind of leave it at that. I don’t call it a rejection at all. But again, I can’t go into the details there. I think your next question might have been the extent of the reductions we took. Look, they are very significant. It was 17% of the workforce, if you looked at it. But we also have to make sure that we maintain the ability to continue to grow the Company in the future. So we did not make, although those were significant on their own, we were not going to make decisions to in any way hurt the Company. That’s because of all the opportunities, as I mentioned, we have in front of us. The last question was on the number of $4800 a kilowatt. I can’t validate that number, but what I would say is, there is danger. We see it time and time again with looking at things on that basis. Because as we have showed in previous conversations or earnings calls, if you actually look at what does it cost to produce power and what is that number, what you find is that the actual capital, given the nature of our projects, our fuel cell projects, okay, represents the cost, only represents about 25% of that model. So as you saw from all of the comments I had today, we are focusing on the other 75%. Not to say we are not focusing on cost; that’s true. But we are also greatly focusing on the other elements of that as well. And the result of all that activity is that we do have a levelized cost of electricity that is competitive. We do have a business that does not rely on getting the investment tax credit, and so on and so forth. So we can always do better, but we have to make sure that we balance the appropriate actions rather than some inappropriate actions. That’s how I would answer that question.

So if I could just touch on that, so the last part of the question was what we’re hearing is that your product needs to come down in price. Everybody understands the capital cost versus operating cost issue. What I am hearing from people in the utility industry, from utility regulators, is that capital cost needs to come down fairly significantly. And I wanted to see how developed your – if you could comment about how developed your roadmap is to take out cost. And if you could share some basic mile markers that we should look for over the next couple years to see that fuel cell is executing there.

So Craig, again, I will come back to – we are very – that’s our business is to be in contact with these customers. So I think we understand what the economics are in any of these kind of projects. Relative to milestones, I pointed out a couple in my remarks. The first is that we have the most efficient product the world has ever seen. That will come online here in the middle – in the summer. So that’s a significant milestone. There are other internal milestones that we work on, such as extending the life of the current stacks to beyond five years. We are working on that and have that in play, as well as just normal supply chain things and overhead expenses that we already addressed in there, as well. So I feel very good that – you have to understand how these things are sold and what the economics are, because it’s very different; as I mentioned, some regulatory issues as well. When you change those regulatory issues and you allow some other things you actually get some benefits. Those are not incentives. Those are just regulatory matters. So we continue to work on all sides of this equation to make ourselves more competitive. But the pipeline that we have today, which is a multibillion-dollar pipeline, big projects and smaller ones, we have the wherewithal to close a significant amount of those projects with the cost structure that we have today.

Great. Well, we look forward to seeing the announcement of those projects. Thank you.

And, Craig, just to circle back to your question on the percentage of POSCO in the quarter, POSCO was up 32% of total revenues. And for the year, POSCO is about 48% total revenue.

Thank you very much.

No problem.

Thank you, Craig.

Our next question comes from Eric Stine with Craig-Hallum. Your line is now open.

Good morning, everyone.

Good morning, Eric.

A lot of questions – a lot of my questions already asked here, but maybe just circling back to the small resource RFP. And I understand that it hasn’t been made public so you don’t know exactly where the pricing was, but obviously that was a spot where you were a little bit higher on price. In light of that, when we think about those 50 megawatts that you have talked about in Connecticut, I mean is that something – maybe talk about your confidence. Is that something that you think is really largely dependent on a new RFP for that? Or is that something that you do believe you can move forward, whether it’s on your own or securing an offtake agreement? Just talk about that. When you think of those 50 megawatts, what’s the path forward?

Sure. Good morning, Eric. I will start off on that one. So we provided an example today of one of those projects that we are moving forward on. That’s the Danbury project. We are in construction. The operating economics of that are such that without the long-term PPA from the State of Connecticut, we – there’s still good operating profile – that project. So it’s important for us for that project to continue to move forward. We would expect that to be – to get a long-term power purchase agreement, or other agreements to monetize those revenue streams. As far as the price issue, I will take that one more time. Again, we haven’t seen the results of the actual bids that were selected. We have seen examples, unredacted examples, where price was higher than what we know we bid. So I think we’ll have to do a full evaluation of how the process works out. It could be that because fuel cells have a very high capacity factor, the dollar value of the contract per megawatt is higher than a solar contract, but it doesn’t mean that the pricing per kilowatt is higher. So again, haven’t seen that evaluation yet. We feel we are very competitive on pricing. We know that we are less than – and a meaningful percentage less – than fuel cell projects already operating in the State of Connecticut. So we would like to see an apples-to-apples comparison, and we will have further comments in the future.

Okay.

Eric, just add to what Mike said, the key thing here is that we do have competitive pricing that we can provide in any of these proposals. But to answer your question, whether you get selected on that basis, which you really need to do, because you need to secure some contracted revenue. And for us, with the size of the plants we build and where we build them, and so on and so forth, it varies a little bit, place to place. But there are multiple ways to gain current contracted revenue. And it doesn’t have to be at above-market prices at all. So when you kind of put together the fact that you might have a price per power, maybe you have some recs, maybe you have capacity payments, we’re at a point now competitively where if you kind of stack those things up, whether they are fully contracted or maybe you just have certain aspects of those contacted, we have projects that make a lot of sense. So – but that is because we’ve done a lot of things. We’ve worked on the efficiency levels. We’ve worked on the costs. We have worked – Mike and his team have worked – they are doing a tremendous job on the financing. So with or without the ITC, we feel good about being able to have projects that can get done because they can stand on their own merits.

Got it. Maybe just I mean quick – don’t want to beat a dead horse here – but just quick turn into Beacon Falls. I mean is that obviously – you are still moving forward on that project, progressing; the key piece is financing. But is that I mean offtake agreements and financing, is that a project that – is there the potential to make that a smaller project to ease it moving forward? Or is it something at 63 megawatts? That’s the form that you are looking to move forward on.

Yes, so there’s some uniqueness to that particular project. And as we’ve said in the comments, all the approvals have basically been done now. And working with a local company called O&G Industries, they continue to spend money in any of those details. But that project is very attractive for lots of reasons. Besides its competitiveness, it pays significant taxes to the local entities and things like that. So, no, that’s going to stay as a 63 megawatt project. Because all the interconnection, the permits and things, Eric, had been done that way.

Okay.

And, secondly, it just makes sense economically to do that size project at that particular site.

Got it, okay. So last one for me. Just last call, you called out three megawatt-scale projects in final negotiations. I assume one of those was the Tulare project. Just wondering, the other two, since you’re not calling them – didn’t call them out by name, the other two, have they already been – I mean are these some of the projects that have now moved forward? Or do you have those two that are still in that negotiation phase?

Eric, can you refresh my – I don’t – what was the statement you were referring to?

Yes, just – and on the last call, you had called out that you had three megawatt-scale projects where you were in final stages of negotiations. And I think one of those was the 2.8 megawatt Tulare project. But then I’m – it’s just referring to the other two. Because those were ones that you had not called out by name, are those other two ones that you have since announced? Or are those other two still in that negotiation phase?

Yes, it’s – okay; you’re right. Kurt was just reminding me. I couldn’t remember the last call. But yes, the one was Tulare, as you mentioned. And the other – there’s more than two, but the others are in final negotiation. Yes, yes.

Okay. All right, thank you very much.

Okay.

Next question comes from Jeff Osborne with Cowen and Company. Your line is now open.

Hey, good morning. And I had another one on Beacon Falls, as well. But I know Bridgeport kind of died and came back to life several times, and it sounds like you feel confident that Beacon Falls can do that as well. Is there any programs in particular that you would encourage us to monitor in 2017 that you would be bidding that on? Or is it – are you looking more at a merchant basis for the 63 megawatts?

Jeff, this is Chip. Good morning. Happy New Year. Are you referring specifically to Beacon Falls or other opportunities Jeff?

Specifically to the Beacon Falls program, I didn’t know if there is any RFPs that you would encourage us to monitor that you now can pivot to. Or would you consider doing a merchant basis for that if you could get financing?

Yes. So specifically to Beacon Falls, I mean you could potentially think about another RFP, or you could think about just us finding solutions for contracted revenue either way Jeff. I don’t – I can’t really say too much about that. But I mean there is obviously – outside of Beacon Falls, there is obviously the active RFP in New York, but I put the dates around that. But short of watching for another RFP come out, that would be fine. But as I mentioned, and Mike mentioned, there’s multiple ways to get these kind of contracts – to get the contracted revenue that we need to move forward with these projects.

Got it. That’s helpful. And then maybe just following up on one of Craig’s points that I think he was trying to get at is on the cost per kilowatt hour side, can you either talk about what reductions you saw with the DFC3000 in 2016? Or more importantly, as we look to the 4000, what percent reduction that is anticipated to have with the higher capacity factor and efficiency levels.

So just compare, I mean we did see cost reductions. Obviously we don’t specifically talk about those. But as you know, we have, over time, reduced the cost from the old days some 70%. We continue to work those primarily through the supply chain that we have established over time. Relative to the DFC3000, the way you look at that is – and I want to make sure that we don’t get so fixated on costs because that’s – like I said, it is becoming less and less a part of the equation. But relative to the cost, yes, the cost per kilowatt would be better than the 3000, because you’ve got basically a higher output on the unit. But more importantly on that, it is a 20% improvement in electrical efficiency alone. Forget the thermal piece, because it would be about the same. But that 20% reduction – and if you take a pie chart of our total costs, the actually operating costs are like 45%. So we took a good chunk out of the most significant piece of the pie chart. So that’s how you kind of add to your competitiveness, I would say, is not just focusing on the cost, but focusing on the idea of operating expense. Of course, then we talked about the seven-year stack and things like that that will also affect other – that is the – not the operating expense, but the service cost aspect of that. And the cost of capital is to balance. And that is – we operating at a pretty low number on cost of capital. We are able to attract financing to these projects under all these different configurations that Mike was referring to. So I feel good where we are, and where we’re going, on competitiveness.

That is great to hear. The last one I had – I assume the answer to this is no, but I just want to double check. Are there any RFPs that you have bid on in calendar 2016 or earlier that haven’t been decided, and with the assumption that the ITC would be in place in 2017? So what I’m getting at is if you were awarded something in 2017, would the economics of the project potentially be upside down? But you are contracted or committed to moving forward with the project at lower economics from a return perspective.

So just a clarification: so when we typically talk about RFPs, they might be – they are generally large, right. I mean the vast majority of our projects that could be – 5 megawatts, 10 megawatts, whatever it might be – don’t necessarily follow an RFP. So from that respect, Jeff, there is nothing that is – that you are not aware of. It’s out there, because the other ones are just purely negotiated. There’s a lot of those out there. But if they are strictly RFPs, I think you are on the ones that are out there. What I would say – that hopefully picked up – some people picked up from this. Kind of the new news is that we obviously need to compete against what some people would argue is a – not a fair playing field, but we move on from that. With or without the ITC, we can move all of these projects forward. That is a big statement, but it’s true. And the reason that we can do that is because we have focused on all these operating costs, because we have long-term contracts, because the high availability of these projects generates a significant amount of cash. So, look, we are not going to say that it wouldn’t be more helpful on the ITC. That would not impact or get closure. What that would do is we might have some more immediate short-term cash flows than longer-term cash flows. But it’s not an issue of being competitive or not, or being an obstacle to getting projects done. So that’s kind of new news. Now the issue for us on the ITC, as I mentioned in my comments, is really one of fairness more than anything else, right. That’s a broader issue. But, no, the – we’re going to try to make sure that we get compensated in some way for that. Whether it is an ITC, whether it is something else, whether it is 30%, whether it’s something else, we don’t really know. But the issue is really about a fairness issue that things evaluated properly, but has nothing to do with the competitiveness.

Got it. That’s helpful. And just one real quick one for Mike. I know you’re not giving guidance. But just as you think about the solid oxide and advanced technology funding that you are getting from the Department of Energy, how should we be thinking about that piece of revenue and the potential risk to that just as we try to model out the year? Should we assume that that is fully appropriated and allocated in the budget, and that should be flattish this year? Is there some risk to that, in your eyes?

Sure. So there – the one piece of revenue guidance that I tried to communicate was that we do expect incremental revenue from our advanced technology contracts in 2017. Everything that we are looking at in 2017 is contracted and committed. And as you know, with private industry, ExxonMobil being an example, a larger portion of our backlog – less reliant on DOE and government funding. But we do expect incremental revenue in that part of the business, given the size of the current backlog.

Thanks so much, guys. Appreciate it.

No problem. Thank you, Jeff.

Thank you, Jeff.

And that concludes today’s question-and-answer session. I would like to turn the call back to Mr. Bottone for closing remarks.

Well, thank you, everybody, for joining today. And just based on the questions that came up, I guess there would be a couple takeaways from our part is that we are continuing to do what we believe are the right things for the business, even in a case of some adjustments to the Company based on just timing of events. But rest assured that we do have competitive offering to win large RFPs. We do have other extreme amount of activity in place that is not RFP-related that we will close. And then, finally, this idea that the ITC would somehow – if it would affect the business. Look, we are – be optimistic as anybody to try to get that ITC, for sure. But the business moves on, and the cash flows from this thing are very attractive to us, even without ITC. So just to reiterate those thoughts. But in any event, again, thank you very much for joining. Happy New Year to everybody. And we look forward to your attendance on the first quarter 2017 call. Have a great day and thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program and you may now disconnect. Everyone have a great day.