Good day and welcome to the Broadwind Energy Fourth Quarter and Full Year 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 and Corporate Communications. Please go ahead.

Thank you. Good morning and welcome to Broadwind Energy’s fourth quarter and full year 2016 earnings conference call. With me today are Broadwind’s President and CEO, Stephanie Kushner; and Broadwind’s Vice President and Corporate Controller, Jason Bonfigt. This morning’s earnings news release is available on our website at bwen.com. Before you 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 we 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 Stephanie Kushner.

Thanks, Joni. Thanks and good morning. We achieved some significant milestones in 2016. First and foremost, through the hard work of all of our team, we delivered our first profitable year. I am very proud of the successful hard work that got us there, solid management practices at all levels of the organization. Good customer service, attention to detail and diligent cost management. We booked orders totaling $275 million, nearly triple 2015 including a wind tower backlog that provides a baseload into 2019. We raised our gross profit margin to 10%, our first full year double-digit gross margin. We reduced our manufacturing overhead and operating expenses by more than $9 million year-over-year and we generated $11 million of free cash flow, which allowed us to repay some debt and closed the year with $22 million in cash assets in the bank, much of which was used to fund the growth and diversification by the recent acquisition of Red Wolf Company. When we started the year, I set out three urgent business priorities and we delivered on all three. First, to double our order intake, we actually did better, including that multiyear tower order with one key customer. Second was to stabilize and maintain consistent tower production at both tower plants. A year ago, we were recovering from severe production challenges in our Abilene plant associated with our efforts to scale up the plant and introduce the new tower model at the same time. We learned from our mistakes. We have institutionalized a robust APQP discipline around new product launches. We have invested capital to improve our operating performance and flexibility and we have introduced a number of best practices to support improved training, quality management, production flow and supply chain management. By mid-2016, we were operating at our desired capacity…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Chris [indiscernible] of Cowen and Company. Please go ahead.

Hey, guys. Thanks for taking the call. My first question is related to the gearing segment, would you be able to provide any color on the pace of recovery within the different end markets, just wanted to get a sense of what you guys were thinking about markets between oil and gas, mining and kind of refurbished wind gears?

Yes. So I will start with wind gearing. That was roughly half of our revenue in 2016 and that market looks like it’s staying about the same. I would say we see more – we do see more refurbishment of gears, so kind of regrinds and polishing than replacement gears and the revenue on those is lower, so that kind of keeping the growth from being very impressive right now. But yes, it will continue to be an important and solid part of our business there. The mining, I would say the coating activity is up materially on oil and gas. I think it’s too soon for us to count on that being a big addition in 2017, although each day, we are getting a little bit more encouraged. At its peak, oil and gas, well, I think in 2014, oil and gas accounted for $20 million of orders for us and last year I think it was under $1 million. So you can see, we can have a pretty dramatic impressive percentage increase without necessarily moving the dial, but there is certainly a lot of room for that to grow and come back. I think some of that’s probably moved overseas just because of where oil prices are in time, but I still think there is some good opportunity for us out there. Mining was – it continues to be down, but we are seeing again a little more mining activity. I would say, it’s maybe the coating increase is maybe not as significant right now as it is in oil and gas, but I think that’s definitely on an upward trajectory.

Got it. That’s helpful. And then my next question was related to the Red Wolf acquisition. Would you be able to discuss the OpEx run-rate and any cash or CapEx needs that the new team there requires or what kind of sale synergies we could expect?

We are still mapping their income statement to our income statement. So, it’s hard to say about the operating expenses. We think – we have said that, that segment would be giving us something like $30 million of revenue and $4 million to $5 million with EBITDA and there is a little – we are carrying into that maybe a very small loss from our CNG business. So for the most part, that will be Red Wolf. In terms of capital, it’s fairly light. Probably right now, we are looking at a capital spending. We are upgrading some IT systems and making a few investments there, but it’s still south of $0.5 million. And I think it’s probably premature to start talking about revenue synergies, so just give us a little more time to work on that, if you would, Chris.

Sure. No problem. And then lastly, could you provide a bit more info on kind of the CapEx for the Abilene tower in the first half? Is kind of that CapEx run-rate that you guys have discussed mostly in the first half and then kind of the lighter second half? Could you just provide it?

Yes, yes. It will be loaded more towards the first half. I think the overall number for the year is going to be in the $6 million to $7 million range. Again, I don’t really – I am going to guess that $4 million to $5 million of that’s in the first half.

Perfect. Thanks so much for taking the questions there. I will hop back in the queue.

Thank you. Thanks for your interest.

[Operator Instructions] Our next question will come from Angie Storozynski from Macquarie. Please go ahead.

Thank you. So, just going back to the acquisition, it looks pretty good, right. So based on what you just quoted as EBITDA of the business, I mean the acquisition was down at around 4x EBITDA. Is this – I mean should we just basically assume that every time you accumulate more cash in the balance sheets, you will try to have similar bolt-on acquisitions?

Well, as I said, we are trying to move from say $180 million to $360 million. I said, half of it roughly would be through acquisitions. So, this is obviously the first big piece of that. So, it’s maybe a third of it.

Okay, okay. And can you just maybe help us with the decision-making process about how much you pay for these assets? I mean, is there – are you looking at free cash flow, are you looking at EBITDA multiples? I mean, is it just basically the seller quotes the price and you either take it or not?

We probably have looked at a dozen opportunities before making the decision to pursue Red Wolf aggressively. And we are looking for something a business that we can understand and we had some very nice connections here, because we have got a board member who understands that gas driven business and we actually – our Head of Business Development worked in that business. So, we wanted to be a business that we understand. We wanted to have some connection to our other businesses, I am thinking it’s right – we have a grid of acquisitions parameters. We have a big fat NOL. We would sure like it to be immediately accretive and allow us to start beginning to chip away at that. We are looking for a business that’s well-run. Sometimes when you look at kind of – in the hunting ground where we are, we are looking at some pretty small businesses and sometimes it’s privately – it’s been privately held for a long time and then the business practices, there will be a pretty big leap to get alignment with public company requirements. So, we have shied away from some of those. Red Wolf is well-managed. The management team has come out of successful public companies. So, that has been one of the other pluses. So, it’s a mixed bag, I guess at the end of the day. And this one cleared the radar screen and we were able to get it that what we would like to see, we would like to see the business be successful and have a earn-out paid over the next couple of years and then be able to grow that into some other areas.

Now, can you say as the main customer of Red Wolf as the same OEM that you have framework agreement on the wind turbine side?

Sorry. I probably– reducing our customer concentration was – is also one of our key acquisition criteria for now.

Okay, that’s all I have. Thank you.

Thanks, Angie.

Ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Stephanie Kushner for any closing remarks. Well, pardon me, we do have someone who has entered the queue. We have a question from Keith Rosenbloom of Cruiser Capital. Please go ahead with your question.

Thanks so much. Stephanie, great job here on controlling costs and increasing margins, it looks really fantastic.

Thanks, Keith.

I wanted to make sure I was understanding some of the metrics correctly you called out what level of CapEx for the year?

It will be in the $6 million to $7 million range, because we are completing the – that Abilene expansion. And then I think it will revert back to the sort of 2% to 2.5% of revenue.

Okay. And the share count looks like it went up maybe because of options getting included, but is the total share count now $15.2 million?

I was thinking $15.1 million.

$15.1 million. Okay, so at today’s price, roughly you have an $80 million market cap. Your – at your midpoint on your EBITDA, you are doing $15 million plus the CapEx, that’s about – that’s over $8 million of free cash flow. So that puts your free cash flow yield today at over 10% for the company. I just make sure my math is correct.

It sounds right to me.

Yes. And the debt, the company is essentially debt-free now, right, because the $2.6 million is not a corporate obligation after next year, is that right?

That’s correct.

Got it, okay. The margin profile of the business seems to be doing well. On your guide – on your goals for this year, you said that you needed to – you wanted to sellout all the slots for ‘17. Does your guidance at $14 million to $16 million of EBITDA, does that assume that you do sell out all the slots or would you get there if your backlog was where it is about today?

I would say to hit the $16 million, probably not at the $14 million range, I think that’s a number that we can deliver to.

Even if you don’t do anything else from here?

Well, we are – no, I wouldn’t say that. We are in some advanced discussions. So, I would say the $14 million assumes we don’t get everything completely sold out in both plants.

Got it. Okay. Well, keep up the great work. This looks like they have really cheap security, so you guys are doing…

Nothing [ph].

Thank you.

Alright, very good. Take care.

[Operator Instructions] And having no further questions, this will conclude our Q&A session. I would like to turn the conference back over to Stephanie Kushner for any closing remarks.

Thank you very much. It’s great to have a solid year behind us and we look forward to spending our time working now on 2017, so thanks for your interest and we will talk to you next quarter.

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