Good morning, and welcome to the Broadwind Energy Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only. [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, Steven. Good morning, and welcome to Broadwind Energy second quarter 2018 earnings conference call. With me today are Broadwind President and CEO, Stephanie Kushner; and Broadwind Chief Operating Officer and President of Broadwind Towers, Eric Blashford; and Broadwind Vice President and CFO, Jason Bonfigt. This morning's earnings new release is available on our website at bwen.com. 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 10-Q and Form 8-K and the attached news release filed with the SEC this morning. We assume no obligation to update any forward-looking statements or information. Having said that, I will turn the call over to the Stephanie Kushner.

Thank you, Joni, and good morning. We made good progress in Q2, as we indicated in our guidance last quarter our revenue rose sequentially more than 20% to $37 million and we generated positive EBITDA of $2.1 million, including the benefit for movers in the earn out reserve for Red Wolf. We've turned the corner, we are once again generating cash. Outside of gas turbines our core end markets remain strong, wind installations are growing and both oil and gas and mining equipment demand are strong. Tariffs and trade policies are challenging, we're seeing sharp increases in domestic steel prices and we're working hard to avoid being squeezed between our customers and our suppliers. I'm very excited about our progress with customer diversification. We're on track with our target of $40 million in orders from new customers this year and the sales activity is accelerating. I'm expecting that we will meet or exceed our full year target. Our liquidity situation is firmed. Our line of credit balance was unchanged during the quarter and we were in compliance with all debt covenants. Following quarter end the $2.6 million new market tax credit loan was forgiven and we will recognize a gain on that in Q3. On the next slide in the first half we booked $47 million of new orders, down 19% from last year which started out with very strong tower demand. Although we're down comparatively at the half year point the comparisons in the second half of the year will be much easier and I believe we will end 2018 showing some encouraging full year growth. Gearing orders moderated during the second quarter after customers rushed bookings in Q1 to secure 2018 production slot. Third quarter has started off strong and we are now building our order book for…

Thanks Stephanie and good morning. Orders for the quarter were $9.5 million, a 21% improvement over Q1 and substantially above and unusually low Q2 2017. The order improvement is encouraging, because it comes from both our wind tower and heavy fabrications product lines. Our heavy fabrication business, which operates in mining, construction and other industrial markets utilize a similar manufacturing processes and competencies as those used in our towers business. Our opportunities within the market served continue to expand. We are considering strategic investments to support further growth and diversification. We sold 201 tower sections during the quarter, up 41% sequentially from 143 sections sold in Q1, but down 24% from 264 sold in the prior year. As a result Q2 sales were $24 million versus $16.8 million in Q1 and EBITDA was $2.2 million, which was a $2.3 million improved sequential improvement after a near breakeven Q1. Our 2018 priorities remain consistent with the previous call. As we've discussed, the pricing pressure resulting from the PTC exploration and new PPA continues. We continue to have resources focused on offsetting this pressure, through process improvements, and our teams made nice progress in Q2. We have discipline systems by which we introduce new tower designs into our plant to shorten manufacturing learning curve and optimized productivity on smaller tower runs as required. So far in 2018, we've produced four different tower designs meeting all customer quality and delivery requirements. We're excited about the fabrication business and are focus on driven profitable growth and improving our capabilities. Efforts include improving our scheduling system to optimize and expand our throughput to accommodate the growing demand. A large horizontal machining center, which went online in Q1 has generated the expected market interest and is performing well. The combination of this machine, which is the…

Thanks, Eric. Consolidated sales were in-line with our guidance at $36.8 million in the current quarter, a $6.8 million sequential improvement over Q1 and following a challenging Q4 wind [ph] production at our tower plants were at historical lows. Q2 is the second consecutive quarter of sales growth, primarily driven by elevated demand from our primary tower customer. Gross margins improved to 6% from breakeven in our first quarter, due mostly to the volume recovery and productivity improvements in our tower business. Year-over-year gross margins were 290 basis points lower, driven primarily by 24% reduction in tower section sold and mix of tower production. Partially offsetting these factors were reduction of overheads and the continued attention on productivity. We're focused on further productivity improvements to remain competitive and help offset mix and pricing pressures in a challenging tower environment. Operating expenses were $8 million for the quarter versus the prior year of $4.4 million. And the current quarter includes a $5 million non-cash goodwill impairment associated with the Red Wolf acquisition. Partially offset by the release of a $1.1 million reserve for the final earn out estimated liability. Excluding these one-time items, we achieved a 6.5% reduction versus the prior quarter and our first quarter. Although gap requires testing of goodwill on an annual basis, we determine that the combination of the release of the earn out reserve and continued near-term weakness with our primary natural gas turbine customer warranted a reevaluation of the carrying value of Red Wolf. Red Wolf's primary customer has announced significant reductions in their order intake over the past year and well below the historical run rates in previous guidance, which we contemplated in our original valuation. The shorter term weakness coupled with at 19% embedded discount rate required us to impair 100% of the…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Chris Morgan with Macquarie. Please go ahead.

Hi, this is actually Angie Storozynski from Macquarie.

Hi, Angie.

Hi, how are you? So just a couple of questions, so just so I understand it in the past you guys rarely purchased steel right that was typically being provided by your customer. So this is a change in your approach here just to entice your customers to use you to actually manufacture towers. And also given that the price spike in U.S. steel has already happened how can you lock in attractive prices for steel, are you trying to source it from abroad?

So Angie, so the first part of your question, no we have in almost every instance we have been the ones buying the steel. We have maybe in our early days we had some cases where our customer was specifically supplying the steel, but we haven't done that for some time period. In terms of buying in advance, we're not sure exactly what model of tower that the steel that we've placed orders for is going into. But we know - but we will know in time to be able to utilize it. And then in terms of timing I think like most other manufacturers I think across the U.S. I think this is something is maybe not broadly, but most folks had steel material contracts in place for a certain amount of time. And I think for the most part those are starting to expire and that's probably why there's more noise in the market right now for companies like ourselves who are using - who are having to buy a lot of steel fabricated. But the steel we're buying is domestic steel in this case.

So my second question on the gas turbines and equipment and maintenance, so I understand that there is some slowdown in new build activities for gas side plants, but how about maintenance of existing assets. It seems like gas plants are running more and as such there should be more of a need for either major maintenance, like seasonal maintenance is that not what you guys are dealing with as well?

I think that our customer was more focused on the kind of these big upgrades, and I think there is less activity in those. I think you're right about the kind of ongoing maintenance and we are - it's one of the areas where we're focused on kind of expanding our customer base to get into to the sell to the guys who are doing what I would call the more routine maintenance on the gas turbine. But that has not been a focus area for us in the past for our largest customer.

Okay. And just going coming back I'm sorry to the other question about imported towers. So is there - I mean, do you have a sense what the price point is that when you incorporate transportation costs you would actually need to offer those towers at in order to encourage domestic construction of towers. I mean, would that allow you to actually earn the positive return from at least an EBITDA perspective. I mean, so even placing in that somewhat lower cost of steel that you have from long-term contracts is this enough to offset the all-in cost appeal of those imported towers?

It's not cut and drive. So it depends where the wind farm is going in. So the wind farm is very close to the coast for example and we have this $350 a ton price differential, it's much more challenging. So the further the wind farm is interior in the U.S. and frankly the closer it is to our plants the more that decision swings in our favor. So it's a dynamic situation a lot of it depends on the location, probably the other thing that matters too it is the cost of transport from overseas, which also varies depending on fuel prices and ship loading. So, there are lots of variables, but we are trying to work it to convert those variables in our favor. As we reasonably can.

And the last question, I probably should know it myself, but what is the lead time, for instance if I have wind farms with starting commercial operations at the end of 2019 when would they procure towers.

Angie, this is Eric Blash, that depends, but it can be up to six months in advance, it can be as narrow as may be four months in advance 20-25 weeks and a lot of that has to do with material lead times.

Okay, great, Thank you.

Thanks.

[Operator Instructions] And showing no further questions, this concludes our question-and-answer session. I'd like to turn the conference back over to Stephanie Kushner for any closing remarks.

Thanks very much for letting us update us on our progress and for your interest. And we look forward to speaking to you again next quarter. Thank you.

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