Good day, ladies and gentlemen, and welcome to the Broadwind Energy Fourth Quarter and Full Year 2012 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Joni Konstantelos, Director of Investor Relations. Please go ahead, Joni.

Thank you, good morning, and welcome to Broadwind Energy's Fourth Quarter and Full Year 2012 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 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-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 to everyone for joining our call. Let's start out on Slide 3. This morning we reported fourth quarter results. Sticking to our strategy, we successfully navigated through a difficult time with the Production Tax Credit expiration. Even during this time of business uncertainty, we recorded $69 million of new orders, mostly in our Tower business. The adjusted EBITDA for the fourth quarter was $700,000, a $1.6 million improvement compared to the same quarter in 2011. For the year, we achieved our goal of positive EBITDA for every quarter in 2012. Looking at other key financial metrics, our SG&A declined 24% from Q4 2011, and we continue to focus on costs. We made significant progress in paying down our line of credit by $16.6 million, which provides us sufficient capacity on our $20 million borrowing. Moving to our key markets, we've had a lot of favorable activity in the Wind energy market. PTC was passed early in 2013. We also received the final ruling on the U.S. International Trade Commission case against the importation of Chinese and Vietnamese towers. I'll talk about both of these points in more detail later in the call. Looking at the oil market, it remained strong for both on- and offshore. This dynamic is helping our Gearing and Weldment business. The natural gas market is soft, however, with the significant pickup in demand in the booming oil markets, we have navigated through the market challenges reasonably well. Turning to the graphs, they show significant progress that we've made over the last few years. Revenue is up 54% since 2010, even with significant regulatory headwinds. EBITDA has improved almost $15 million since 2010. There's still a lot of work to be done, but we are definitely going in the right direction, both financially…

Thank you, Pete, and good morning. Turning to the next slide, the abbreviated income statements. Due to do the relatively lower production volumes, primarily in our Towers business, we recorded a $200,000 gross profit on $44.9 million of sales, including $576,000 in restructuring costs. The fourth quarter gross margin, excluding restructuring, was 1.8%, unchanged from last year. This is lower than we had projected, due to incurring some penalties on late tower deliveries, and due to higher benefit expense and staffing inefficiencies at our tower plants during the uncertain production weeks leading up to year end. For the full year, our gross margin was 4%, excluding restructuring, which fell short of our 5% goal for the year. As Pete stated, raising gross margins is a priority and we expect to gain some meaningful traction in 2013 as we benefit from restructuring savings in Gearing and Services, and stable pricing and a smoother production flow in Towers. Control of our operating expenses continues to see a bright spot. We spent $5.9 million in Q4, in line with the $24 million run rate outlook. This included $259,000 of restructuring. For the year, operating expense, excluding restructuring, was reduced to 11.1% of sales. Our operating loss of $5.7 million was slightly better than the prior year, but included significantly higher noncash and restructuring costs. Therefore, our adjusted EBITDA, which excludes these items, rose by $1.6 million. We're not taxed affecting our losses, and through year end, had generated a $154 million tax loss carryforward. I'll comment later on our NOL preservation plan which we implemented earlier this month and which we are bringing to our share holders for approval at our annual meeting in May. Moving to Slide 11. Towers and Weldments recorded revenue of $25.6 million in the quarter, down 25% --…

[Operator Instructions] Your first question comes from the line of Sanjay Shrestha from Lazard Capital Markets.

I wanted to talk about the Slide 8, which you have here. So when we think about the industry expectations for 2013, the range of shipments is anywhere between 3 and 4 gigawatts. When I look at Slide 8, and if we start with the assumption that the industry capacity was 10 gigawatts in towers, and we take away the import, it looks like the total industrial capacity is going from 10 gigawatts to 5 gigawatts for 2013. And so that with you guys having 1.2 gigawatts of total capacity it's, as you commented, it's a pretty tight market, but what's happening in terms of the discussions you're having with your customers in terms of pricing, terms and what kind of changes are you seeing because of the tight market?

I think the market is still fairly dynamic. Yes, we've had, as this slide portrays, we've had some fairly significant reductions in capacity. I think the biggest was obviously the Chinese, because I think they represented a big chunk of the market, and I think somewhat disrupted pricing. You've got a number of dynamics that Trinity could re-purpose, depending on what happens with -- really, 2014, Trinity could re-purpose some of their facilities back to towers. So I think they will toggle back and forth between railcars and other items, as well as towers. We've also got a dynamic, that Vestas, who is the second or third largest wind player in the world, has the facility out in Pueblo, Colorado, they now are starting to do towers for third parties, not only for their own consumption. So I think there's a bit of a wildcard there. So I think we're very comfortable with where our facilities are, in Manitowoc, in Abilene. It seems to be where the hotspots are and so I think we're in the right places, and we'll see how everything else kind of transpires over -- I would say, the next 6 months, we'll have a better picture as to what 2014 is going to look like.

Okay. And my second question was on the Services business. Could you just sort of talk about -- what are some of the trends you are seeing in the Wind market and the potential outlook to get large multiyear service agreements in Wind? And then interesting to see the backlog here, with the large industrial powertrain order. Maybe help us understand the significance of this order and what are the type of customers you're pursuing here.

Sanjay, with respect to O&M, we kind of said we're not going to chase that market. We felt that pricing was a bit of a race to the bottom, and where we focus is in what I call non-routine maintenance. So a gearbox breaks or a blade needs to be repaired, so it is large repair services that are time sensitive, where we can deploy teams to go fix it. The other area that we're developing is upgrades to turbines or improvements to the turbines, and more value-added services rather than kind of going with the flock and going after O&M. We made that decision about 2 years ago as we saw that to be very competitive. And then what we want to do is diversify that business a little bit by being able to do other industrial work. So we picked up some gearbox work in Abilene. It starts to provide a base load of revenue and cover some fixed costs. And so, again, just like every one of our businesses, we want to see a mix of industrial work and wind energy work.

[Operator Instructions] Your next question comes from the line of Mark Spiegel with Stanphyl Capital.

Yes. You're making nice progress here. Also, the South Dakota sale is terrific because with $8 million net, I guess that brings your net debt down to something that's negligible. I mean, pro forma like $2 million based on 12/31, right?

That's right. Our working capital will go up because our revenue is growing, but it does provide a very important additional liquidity cushion.

Yes. No, that's terrific. So my first question is -- I think on the last call you said you expected to have $4 million to $5 million more of sort of incremental annual cost reductions that would take place by later this year. Now, Stephanie, you mentioned. I think $1.5 million incremental benefit in Gearing this year. So I guess my question is -- I mean, the bottom line question is how much of these reductions are built into that $9 million to $12 million of EBITDA guidance? And if you had all these reductions done today rather than by the end of the year, how much better would that number be? Does that question make sense?

Yes. So what we talked about, in terms of our restructuring objective, was a $5.5 million to $6 million a year savings. We got a little bit of that in 2012, because of closing our European office, for example. That was probably the only material -- we got a little bit of impact on the Abilene lease. But net, in 2012, we got maybe $600,000, $700,000 of that. In 2013, we'll get some of the initial benefit of Gears. I mentioned a number of a little less than $1 million. We'll get some of the savings on the corporate office. We'll get the annualized benefit of the Abilene sale, and assuming the Brandon transaction closes, we'll get several hundred thousand dollars from that. So net, in 2013, we'll get somewhere around $2.5 million. It's an incremental $1.8 million or so. The biggest savings is when we get the gearing plant consolidation complete. When we get the most efficiencies there, in terms of the line of sight in our production processes, and that consolidation, we're actively involved in that right now. It slowed down a little bit from last year, in the quarters when our liquidity was tight because of the tower production. But, basically, $2.5 million of it is going to be with us by the end of 2013, and we're still looking at a $6 million in total. So the balance should come through in 2014.

So because there's these moving parts here -- and I'm trying to put in my head a snapshot of what this company looks like once those reductions are done. I mean, would it be fair to say that if those reductions were done, you can snap your fingers and they're done today, that you be guiding for $5 million of additional EBITDA over this $9 million to $12 million number?

Well, the $9 million to $12 million has about $2.5 million in it. So it's the other $3.5 million you'd be adding on top of that.

Okay. So sort of on a pro forma basis you'd be running at $12.5 million to $15 million in terms of guidance if you can get all this done, like, instantly, is that a fair statement?

Right, that's fair.

And then next question. Where would nat gas have to get to for the Gearing business to pick up again, in terms of gas customers, in terms of nat gas pricing?

I think what we hear from the industry is around $5, 1 million BTU plus or minus $0.50.

So other than that, it's just going to stay where it is? I mean, even if it's $4, it's not going to help much, you're saying?

Well, yes. But we are trying to shift into other industries. So nat gas is down, but oil exploration is up. We are winning some businesses with some of the offshore players. So we're kind of following the shift like everybody else. There's a boom in natural gas. That kind of declined. And then there was a big shift towards oil, and we're following that along. And as long as oil stays where it is, there's an inordinate amount of activity right now.

Terrific. Where is CapEx going to be this year?

It should be about $6 million this year. $2 million of it is the restructuring at Brad Foote and the balance is distributed across our businesses.

So would it be fair to say that, let's call it maintenance CapEx for the company, is around $4 million?

That's correct. And that's pretty normal for us, manufacturing businesses, to be spending maybe 2% per annum of your revenue on capital. And that's part of the reason why our financials are somewhat distorted because our depreciation charge, instead of being at a normal investment run rate of 2% or so, is closer to 7%.

Right, right. Yes, and I'm aware of that. But you said that seems to run off by the end of 2014, and then you get sort of a more real picture. Is that a fair statement?

Yes. Yes, it does. It starts to be much more representative of kind of a normalcy for our business.

I also thought it was interesting that you said that the PTC extension is not going to affect you much this year, which means it's going to be a good Tower business even without that. So that's pretty interesting. Well, I guess this leads me to, really, a final question for maybe Pete. What are you hearing in terms of the chances, or is it too early to tell, that the industry getting a sort of 5 more year gradual phaseout extension? Are you hearing anything about that?

Yes, I think it's a little too early to tell. The American Wind Energy Association, I think, will -- is really following what's going on. If there's a tax extender bill or an energy bill, they're going to try to work with the Congress to get a longer-term extension, and with perhaps some sort of ramp down of the PTC to try to keep everybody happy. But I think Congress seems to be diverted to other issues right now.

And I would now like to turn the call over to Pete Duprey, CEO for closing remarks.

Yes, let me just recap 2012, because I think we've made significant improvement in the business, a $7.6 million increase in our EBITDA compared to Q3. We paid down our line of credit by $16.6 million. We certainly have a much better outlook in the Wind industry and see that we can have a runway of 2 to 3 years of activity looking forward. As we mentioned, we reduced our square footage by 260,000 square feet and that's not including Brandon. Our Services business generated positive EBITDA in the second half of the year. As Stephanie mentioned, we settled the Brasher shareholder suit, which is $3.9 million and covered by insurance. And that really removes a cloud over the company. That's been there about 2 years. The sale of the Brandon facility will lower our expenses and significantly improve our liquidity. And as we talked about on the call, the order book is filling up as a result of us averting the PTC cliff. So like I said during the call, we've still got a lot of work ahead of us, but I think we had a very good year, I think we're looking at a very good year in 2013. Thanks a lot for joining the call and I look forward to discussing the first quarter in a few months. Thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.