Welcome to The Babcock & Wilcox Company second quarter 2012 earnings conference call. At this time all participants are in a listen only mode. Following the company’s prepared remarks we will conduct a question and answer session and instructions will be given at that time. I would now like to turn the call over to our host Mr. Michael Dickerson, B&W’s Vice President and Investor Relations Officer.

Thank you Janetta and good morning everyone. Welcome to The Babcock & Wilcox Company second quarter 2012 earnings conference call. I’m Mike Dickerson, Vice President and Investor Relations Officer at B&W. Joining me this morning are Jim Ferland, B&W’s President and Chief Executive Officer, Tony Colatrella, our Chief Financial Officer, and Mary Pat Salomone, Chief Operating Officer who is joining us remotely this morning. Many of you have already seen a copy of our press release issued last night. For those of you have not, it is available on our website at www.babcock.com. During this call certain statements we make will be forward looking. I want to call your attention to our Safe Harbor provision for forward looking statements that can be found at the end of our press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward looking statements. Our annual report on Form 10-K and quarterly reports on 10-Q on file with the SEC provide further detail about the risk factors related to our business. Additionally, I want to remind you that except as required by law, B&W undertakes no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Also on today’s call the company may provide non-GAAP information regarding certain of its historical results to supplement the results provided in accordance with GAAP and it should not be considered superior to or as a substitute for the comparable GAAP measures. B&W believes the non-GAAP measures provide meaningful insight into the company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them and understanding B&W ongoing operations. A reconciliation of these non-GAAP measures can be found in our second quarter earnings release issued last night and in our company overview presentation posted on the investor relations’ section of our website at www.babcock.com. With that, I would now like to turn the call over to Jim.

Thanks Mike. Good morning everyone. I’m pleased to be able to report another strong quarter for the company. Our business units continued to perform well and in line with our overall expectations. Consolidated revenue of $852 million increased by 13% compared to the prior year’s second quarter as expected this growth is being driven by our power generation segment and more specifically by the acceleration of environmental control equipment and new build steam generation systems. After market services are also higher compared to the prior second quarter. We’ve been buying environmental services. It is worth pointing out, that this is the seventh quarter in a row of consolidated revenue growth for the company. Bookings in the second quarter was strong as well, up 28% from the prior year period. In the second quarter the nuclear operations group reported bookings of close to $200 million related to a number of separate contracts for the design and manufacture of naval nuclear reactor components as well as certain material recovery activities. Power generation segment bookings in the period were also up on a quarter-over-quarter basis and included another strong quarter of environmental bookings at $176 million an increase of 72% compared to prior year’s second quarter. The company was able to generate $0.54 in consolidated earnings per share including the successful settlement and recovery of some cost incurred last year on the nuclear energy segment, condenser replacement project. Safety continues to be an area of emphasis and success worldwide the company continues to achieve its targeted safety metrics and to exceed industry standards. In particular, I want to call out B&W Pantex which surpassed 5 million safe hours in June. This is an extraordinary performance at a key government site. Now, let me address a few specific items I called out last quarter.…

Thanks Jim. Jim mentioned the consolidated performance for the quarter. So, let me start by walking you through the segment results. Revenues in the power generation segment of $497 million for the second quarter of 2012 increased $108.4 million or 27.9% compared to $388.6 million we reported in the second quarter of 2011. This result was principally due to increased new build environmental projects as well as biomass and waste energy new build power generation boilers and auxiliary systems. Revenues in our aftermarket parts and service business increased 4% compared to the second quarter of 2011 and increased 12.8% sequentially compared to the first quarter of 2012. Revenues from new build environmental systems increased 111.4% in the second quarter of 2012 compared to 2011 while new build steam generation systems primarily from the renewable market, increased 45%. Operating income in the power generation segment including the equity income of our global joint ventures was $46.5 million in the second quarter of 2012, an increase of $18.4 million or 65.5% compared to second quarter of 2011. The year-over-year increase in operating income was primarily due to stronger new build environmental and steam generation revenues partially offset by an expected reduction in equity income contributions from the company’s joint ventures in China and start up costs related to our new Indian joint venture. Bookings in the second quarter in the power generation segment were $374.8 million, an increase of 11.4% compared to the second quarter of 2011. Environmental bookings during the second quarter were $176.8 million, an increase of 72.3% compared to the second quarter of 2011 continuing a positive year-over-year trend in the environmental equipment and systems market that started in mid 2011. Our nuclear operations segment reported revenues of $265.4 million in the quarter, a sequential increase of 6.1% from…

Thanks Tony. The company continues to await the outcome of the Department of Energy’s small modular reactor cost share program, while at the same time evaluating potential outcomes in the impact it will have on our spending profile in the coming period. We are hopeful that we’ll hear positive news in the very near term. We are also awaiting the outcome of the rebid of the Pantex Y-12 contract. The NNSA has stated that an award will be made no earlier than September and could be well after the November elections. The company is the lead contractor on both of these sites and is operating under contract extensions today. Lastly, I want to assure you that we’re making meaningful progress on the initiatives I described earlier, namely a review of our capital structure and the potential return of capital to shareholders, changes to our pension plans, as well as our global competitiveness initiative. As we move through the balance of this year, we will integrate these important initiatives into our strategic planning process, and I expect it will have more definition around all of these items in the coming months. That concludes our prepared remarks. I will now turn the call back over to the operator who will assist us in taking your questions.

(Operator Instructions) Your first question comes from the line of Martin Malloy with Johnson Rice. Please proceed. Martin Malloy – Johnson Rice: Congratulations on a strong quarter.

Thanks, Martin. Martin Malloy – Johnson Rice: Could you maybe give us an update in terms of recent conversations and interactions you have been having with the utility customers on the environmental control side, and what you are hearing in terms of their pace of rolling out these projects?

Yes, Marty, we will do. Just a couple of comments on PGG and overall bookings. As we indicated in the past, it does continue to be a little bit lumpy, but we feel very good about that overall business and where it’s going. Timing of the bookings have been impacted a little bit, for example, by Casper. We can see it both in utility decision-making on existing proposals and in the number of new proposals that are coming out. That said, outstanding bids are at $3.4 billion, which is very much at the high end of the average for the last couple of years. So, net-net, this environmental upgrade cycle remains intact. It will continue to be a strong upside for the company in the next two, three, four years, but the timing is going to vary a little bit as the utilities take into account their unique circumstances and pace their decision-making. Martin Malloy – Johnson Rice: Okay. And then, could you also maybe give us an update on your new joint venture plan in India and progress there in bookings?

Yes, the progress on the building the factory itself, we remain on track and just recent reports actually are that the facility is essentially complete, very high-end equipment, and we have a workforce with our joint venture partner in India that is prepared to get to work. That said, we continue to chase bookings in India and don’t have anything to report today on that front. Obviously, it’s a priority for the company.

There are a number of bids.

Yes, there are a number of bids outstanding right now that we are actively working on. Martin Malloy – Johnson Rice: Okay. Thank you.

Your next question comes from the line of Rob Norfleet with BB&T Capital Markets. Please proceed. Rob Norfleet – BB&T Capital Markets: Good morning and congratulations on a nice quarter.

Thank you. Rob Norfleet – BB&T Capital Markets: Just real quick, in terms of the Power Gen business, the margins in the quarter were strong, little north of 9%. That said, you did cite that closeouts aided margins in the quarter. Can you kind of discuss how much of that margin enhancement was due to closeouts, and in addition to that, can you actually discuss what you are seeing in terms of the competitive nature of the market? Obviously pricing looks like it’s still competitive as customers are trying to fill backlog, and how has that impacted your win rate?

I will take a stab at that. This is Tony Colatrella. First of all, the margins in the quarter were not necessarily anymore impacted by closeouts than in other quarter, just to be clear. Every quarter, we go through a process of evaluating and re-estimating where appropriate the contracts based on where we are in terms of completion, how cost attracting. So, I wouldn’t read too much into that. I would say that in terms of the competitive market, the market is very competitive. I think we have indicated that in the past quarters, but we also think we have a very competitive offering and a compelling value proposition, because we can offer the customer a wide variety of technologies that suit virtually any environmental requirements. So, I think we are well positioned, the market is competitive, we continue to try to be very prudent in our bidding and to provide a good value proposition, but not necessarily trying to be a low-cost provider in our cases. Rob Norfleet – BB&T Capital Markets: Okay. That’s helpful. And then last question to Jim. In terms of mPower, this quarter, can I know, this quarter, you have all decided the accelerated spin in R&D this year. First quarter was up $11 million. Outside of the DOE grant, can you discuss other options that you have looked at to potentially reduce this R&D spend, whether it’s bringing in additional partners like Bechtel to do various aspects of the actual production phase or any associated alliance you have with the MoUs you signed with the existing utilities that you have?

Sure, thing. On mPower, primary focus for us today, of course is, and it relates to finding is to go ahead and win the DOE award. That’s outstanding. We continue to feel we are in a good position for that and would hope to see a decision coming out of the federal government in the next couple of months. As I stated before, we are taking a look at what’s the overall business model look like for mPower with not only trying to look one or two years into the future, which is primarily about licensing and design, but looking many years into the future, all the way through the ultimate delivery of the end product into the marketplace. When we do that, we are trying to balance how much of that company do we want to own ourselves versus the funding requirements to get the design and licensing done on mPower. So, there are multiple different ways for us to go about that. You mentioned a couple of them already. We could potentially look to some outside partners that bring either technology or some expertise that we don’t have on the mPower side. We can also look to various customer arrangements to help with that, and I would say that we are in discussions on all of those fronts today in conjunction with our strategic thinking as to exactly what do we want this business model to look like for the company one to two years in the future. So, those discussions continue. As something gets concrete, we will let everybody know what the plans are, but it certainly has the focus of both the leadership at the company and the Board. Rob Norfleet – BB&T Capital Markets: That’s helpful. Thank you.

Your next question comes from the line of Jamie Cook with Credit Suisse. Please proceed. Jamie Cook – Credit Suisse: Hi. Good morning and congratulations on a good quarter. Two quick follow-up questions. One, with regards to R&D – or the spend, I am sorry – the spend related to the mPower, given the run rate we have in the first half of the year, and the back half of the year is, you know, you are targeting $80 million to $100 million. Should we now assume the higher end is more likely just given the run rate? And then I guess my second question, I know you guys didn’t give official guidance, but you did give some context with how to think about 2013. Jim or Tony, in your mind, has anything changed that you still, that would suggest that you wouldn’t be able to hit the target you guys sort of put out there, with mission stuff being a little relatively lumpy, right, and you had a good past two quarters with that or with spend I guess in other areas and Pantex potentially getting pushed out? Thanks.

Hi Jamie, thanks. I will take the mPower and then, I will let Tony address your second question. On mPower, I think your assumption is correct. If you take a look at the run rate and you take a look at the projected spending through the end of the year, we will probably be on the high end of that range. And when we take a look at mPower, what we are trying to balance is the spend rate on R&D versus the scheduled risk with the next big milestone being submitting the license application to the NRC. Obviously the more we spend, the better we feel about schedule and vice versa. So, that’s what we are trying to balance on that front. We will have essentially the same discussion when and if we win the DOE FOA funding. Once we win that funding and we work with the deal and we get a better understanding of how large or small that might be and the timing, we will also be looking to make decisions about balancing spending versus risk, incorporating that DOE money, and that’s something that we will be actively working on for the next few months. Jamie Cook – Credit Suisse: Okay, great. And then, Tony, on the 2012 NOG guidance outlook, whatever you want to call it, but your thoughts?

For 2012, I would say there is no significant change really, and the limited guidance we have provided for 2013 or at least the inference of what that guidance might be, I would also say there is really no reason to change – there is no change in our thinking right now. That said, we are really in the early stages of beginning our planning process. Just to give you some perspective, we first go through and try to look at our long-range plan, our strategic plan and obviously there is a lot of puts and takes that we discussed there with respect to how and when we invest and where. And once we finish that, we then roll immediately into our annual planning process. So, at this point, Jamie, there is really no change. We feel good about directionally where we are heading this year, and obviously when it’s appropriate, we will give you more guidance on 2013. Jamie Cook – Credit Suisse: Okay. Thanks.

Your next question comes from the line of Andy Kaplowitz with Barclays. Please proceed. Andy Kaplowitz – Barclays: Good morning, guys. Nice quarter.

Thanks, Andy. Andy Kaplowitz – Barclays: Jim, if I could ask you about the nuclear energy business, I think you have talked about sort of making sure that, that business is de-risked as we go forward, given what happened last year. And the revenue run rate is down a little bit, and the margins are down in that business because the revenue is down. So, is this sort of what we should look at – is this what’s it going to look like going forward sort of this level of revenue and this level of profitability?

Thanks Andy. Commercial nuclear business, when we look at that, when I look at that, and I think about it, today that commercial nuclear business is primarily a business centered in Canada, doing work for Canadian customers. And that really provides the foundation for the revenue and the margins in that business today, and we remain in a strong competitive position in Canada and should be able to hold our own up there. The growth opportunity is obviously expansion into the U.S. and potentially into Europe, but initial focus will be here in the U.S. And when we do that, we are trying to balance increasing revenue and margin against risk, exactly as you stated, probably with a little bit different list profile than we took on the Colombia condenser project. That said, I think there is growth opportunity in commercial nuclear as we look to expand and leverage the technical capabilities and the manufacturing expertise we have in Canada into the states. It’s probably not going to be very large in the next couple of years. It’s going to take us a little bit of time to grow into that business. As we grow into it though, I can assure you that we will be very focused on managing risk and not getting in front of ourselves. Andy Kaplowitz – Barclays: Okay. That’s helpful, Jim. Maybe you can talk about the health of our coal aftermarket business? In the quarter, it looks good. On the margins, obviously it looks good in the quarter, obviously there has been concern with power generation being weak and natural gas prices being well. So, maybe you can talk about what you have seen? I know you have said that it’s not that sensitive, that’s going on, but maybe you can just give us an update.

Right, so as we said, aftermarket services are up quarter-over-quarter. You mentioned a couple of things that could be trying to slow that business down a little bit. On the other hand, the weather has been awfully warm across the U.S. for the last three or four months, and that’s driven increased usage in some coal units, which should manifest itself in some potential service opportunities downstream from ware parts and aftermarket perspective. To give you a little bit of a comparison, if you take a look quarter-over-quarter at the small replacement parts business inside PGG, it was down quarter-over-quarter, but a little bit less than $1 million. So, it reinforces the idea that certainly we are impacted as these coal units run a little bit less or some percentages come offline, and it impacts us, but not in a large way. Andy Kaplowitz – Barclays: Okay. And just one other quick question. We saw in the Q something about a security issue at Y-12, I mean, it doesn’t seem like that much of an issue, but any interruption there in your business or in fees or anything like that?

Right. So, there was a security incident little over a week ago at Y-12, and just to give – put a little bit of context around that, we have the M&O contract at the Y-12 site. A third-party was in charge of security forces under a separate contract. Obviously, we are working closely with the government to understand the incident. One of the first actions we took as a company to reassign General Rod Johnson, who is a B&W employee, overseeing security at our Pantex site. And we brought him into Y-12 to oversee the investigation and the corrective actions that are going to have to take place on that site. So, still upfront and obviously has our focus as any of our government contracts, especially when they involve the safety and security of the facilities. But we have the right people working on it. If anything else emerges going forward we will let you know. Andy Kaplowitz – Barclays: Thank Jim, nice quarter.

Your next question comes from the line of Scott Levine with JP Morgan. Please proceed. Scott Levine – JP Morgan: Hi, good morning, guys.

Good morning. Scott Levine – JP Morgan: Your power business kind of used to be growth driver and the growth again in this quarter, very impressive. The environmental bookings down a little bit from last the couple of quarters but as you have indicated the business is inherently lumpy there. What should we expect for the balance of the year there? And/or, you mentioned CSAPR as a potential modest factor, when we get resolution there, would you expect that to alleviate certainly on the power utilities or is that a much lesser factor than say the natural or other factors influencing utility spending behaviors? A little bit more color there?

Let me see what I can do on that front. CSAPR has an impact on the utility decision making and I don’t know if we are going to get clarity on that when the court ruling comes out in the next few weeks or couple of months. I think that’s just one of many factors that the utilities lag when they are trying to make environmental adjustment decisions. Clearly there is a push toward increased regulation and the utilities recognize that whether it MATS or CSAPR or any of the other various rules that are being propagated out there. As we’ve said before, utilities, we can make some broad statements but each utility has a unique set of criteria that they used to make decisions about how they are going to invest and when they are going to invest in their coal plants. We do expect to see it move up and down. Feel good about bookings second half of the year, but it’s going to continue to be lumpy. I am not sure if I provided a whole bunch of clarity on that for you but you should walk away with. We feel very good about the business. We feel good about the technology we provide and the number of bids that are outstanding overall, but it’s going to be up and down as this business grows and takes bookings. Scott Levine – JP Morgan: Now, that’s helpful. Thanks, Jim. Maybe a follow-up, broader policy question. You mentioned the news with regard to the sub program and the addition of the Virginia Class potentially for fiscal ‘13. What ramifications do you see of the upcoming election on your business and do you see much different depending on the outcome in general and where might we see some sensitivities as we roll into 2013?

Obviously, two big government businesses for us. One with NOG and one on the technical services side. I don’t see a big impact on the businesses one way or another as a result of the November elections. If you take a look at where we’re placed in the market, particularly on the NOG side, where we provide these long leads, high-tech components to submarines and carriers, we feel pretty good about our position on that front. Although you can never say there is no risk. I think there is minimal risk to the funding on the NOG side going forward. Same on the TSG side, perhaps as the federal government makes some decisions about taxation and spending levels going forward it could have a small impact on the various sites we run, but if you look at all the sites were on, they have critical missions and they need to remain operational and we’re going to continue to do good work for the government on that front and that continues to be a good business for us going forward. Scott Levine – JP Morgan: Got it. Thanks, nice quarter.

Thanks.

Your next question comes from the line of Steven Fisher with UBS. Please proceed.

Hi, good morning. Nice quarter.

Thank you.

Just a question about the cost review that you mentioned, is it your sense that you have some underperforming entities that need restructuring and then what generally do you expect that that you are going to find from this review?

I am not sure if we have underperforming entities as much as I can see some opportunity inside the business to either take out overhead costs, or perhaps to improve margin across the board. We wouldn’t undertake it and take to executives out of their current jobs and put it on if we didn’t think we had some significant and material opportunity there. That said, the first step in the process is for the internal team with a little bit of help from some consultants to take a look at what are the opportunities and how large are they, and then we will get into which of those do we think we might be able to capture and which not. As we get our arms around the size of this and exactly what this effort looks like we will be sure to communicate that going forward but we wouldn’t undertake it if we didn’t think something was there.

Okay. And then just to follow up on the Virginia class. What and when are the next big decision points for the government as it relates to that program and what expectations do you have?

Right. On the Virginia class -- essentially what we are talking about here it’s really a timing issue of the procurement on a single sub and whether it’s going to take place in fiscal year ‘14 or out towards fiscal year ‘18. So, we are moving one component or one set of components back and forth. On that front, on both the House and the Senate side, all four subcommittees both the authorizers and the appropriators have reviewed it and have added the money back in to move that Virginia class back into ‘14. So, the next steps on that front is it needs to be incorporated, we need a defense budget and then the President needs to sign that budget. Those are the next milestones that we are watching. But we feel pretty good about it having (inaudible) support both on the House and Senate side. Steven Fisher – UBS: Okay. Great, thank you.

Your next question comes from the line of Will Gabrielski with Lazard. Please proceed.

Thanks, good morning.

Good morning.

Can you talk about the FirstEnergy agreement with respect to mPower and what that entails from both sides and what should we be looking for as milestones into that relationship?

Sure. The FirstEnergy agreement on mPower, it’s an important steps for us. We had a previous relationship in place with TVA, on mPower, TVA step forward upfront. We have been in multiple discussions with various utility entities both inside the U.S. and outside over the last few months. Essentially the agreement with FirstEnergy is they take a look at mPower technology, they liked it. They think there could be a potential use for that technology when they look at their long-term planning profile for generation going forward. That’s basically what the agreement is built around, is going ahead, doing the studies and the background research that need to take place over the next couple of years to see if an mPower type small modular reactor makes sense for FirstEnergy. So, it certainly doesn’t represent a contract but it’s a step in the right direction and we feel pretty good now about having two very large, well-regarded U.S. utilities backing mPower.

Okay. That’s helpful. And then in your core coal business it looks like there was an update to your slideshow back in June and clearly it sounds like you are targeting maybe the international market a little more aggressively. Can you talk about any progress there, what that entails, and what our expectations should be?

Sure. We have a very strong business in the U.S. and it’s actually going to be the growth platform for PGG. In the next couple of years, we have talked quite a bit about environmental services. We are pretty strong in Asia with the joint venture in China and we just announced about $300 million contract for that China JV in Vietnam. So that’s a nice step for us providing building components in China that we are going to put in place outside China. We mentioned already today the India manufacturing facility being just about ready to come online and the fact that were chasing multiple contract opportunities over there. We do continue to look for opportunities in Europe. We do have a presence in some markets in Europe and actually a strong presence with some of our technologies in Europe and we will continue to look to build that going forward. If you just think about Europe and the U.S. markets, those are primarily – we are looking for opportunities to do service work on existing plants and to do environmental upgrade work. When you take a look at the Asian markets and the Indian markets, we are primarily looking at opportunities there to do new build coal. At least on the short run that could change going forward and we could be doing environmental upgrades there as well, at some point. So that’s our approach. We feel pretty good about the PGG business, both growth opportunities in the U.S. and overseas.

Okay. That’s really helpful. But, Latin America, also I assume it’s on the list?

Yes, absolutely. We think there is opportunities in Latin America as well and we are chasing a handful of opportunities on the bidding side there.

Okay. Can you just help me understand if you are successful and are awarded one of the two DOE grants for mPower. How would you account for that on the P&L? How would that flow through? Would it hit in one quarter, would it not hit the P&L?

No, it would – I will let Tony step in as needed on this one. It would come in over time, quarterly-by-quarterly basis. It’s a matching funds program, so we have to spend money in order to pick up the matching funds from the DOE. To a large extent, it simply offsets what we would otherwise spend. Now that said before you immediately take all that money to the bottom line, as I mentioned before, we are balancing internally the amount of spend that we need in order to meet the milestone schedules that we have out there and the DOE program will factor into that spending profile.

Okay. That’s helpful. I don’t know if you want to take this question on, but one of your environmental competitors was recently acquired or announced to be acquired by another company in the industry. Any thoughts around how that might impact the competitive landscape, particularly on the construction side of some of these larger environmental awards?

I am not sure it has an impact necessarily for us on that front. As Tony said before, we think we are at a pretty strong position both from a technology and a construction standpoint on the PGG coal business and I don’t think that that acquisition really changes the playing field at all.

Okay. That’s very helpful. Thank you.

Your next question comes from the line of Tahira Afzal with KeyBanc. Please proceed.

Good morning and congratulations on the good quarter.

Thank you.

First question is in regards to your environmental outlook. We have seen several utilities announce their plans and really update their plans on the environmental side this quarter, several -- including large ones like Southern and FirstEnergy have brought their spending levels down. So I guess my first question is, as you look at the addressable market, you have always talked about in terms of opportunities set for BWC, has there been any incremental change to that or were your assumptions fairly conservative versus some of the utilities out there to begin with?

Yes, I think our assumptions hold. What’s taking place in the market is pretty much what we have laid out from a strategic perspective. So we continue to follow the utility-by-utility decisions, but it is essentially in line with what we’ve been expecting.

Okay, great. Just a follow-up to that -- clearly it makes sense that CSAPR and some of the fluidity around the rules has probably created a bit of a timing issue, but as we look into the second half of this year, do you still expect environmental spending in general to ramp up for you folks on the bookings front?

Yes. As we said, overall outstanding bids are at 3.4 billion, which is not quite as high as it was last quarter but it is very much a high mark if you take a look at the average over the last couple of years. So, we continue to see the number of bookings increasing going forward, it is just projecting the timing and that’s difficult for us.

Okay, great. On the maintenance spending of coal power plants, we’ve had a couple of large utilities such as AEP really indicates that environmental plants on some of the larger plants out there like Sandy Hook, et cetera, are being put on hold. And they are reviewing whether they want to really continue with scrubbing or retiring. I know in your earlier assumptions and commentary you had indicated that assuming that the smaller plants would be really targeted for retirement. Any thought at this point on maybe some of the larger plants being considered for retirement?

No, I don’t think so. I think overall the market is acting as we would expect it to. Again, plant-by-plant decisions are pretty unique to each utility, it’s a little bit hard to predict on a plant-by-plant basis. In general, we expect to see the smaller plants under more financial pressure and the larger plants being in a better position. Again, it depends on a plant-by-plant basis for each utility. But net-net we think the market is in about the same place today as we expected it to be.

Yes, super. Last question is of course on my favorite mPower as well. First of all, congratulations on FirstEnergy. I know it is just an MoU but clearly a pretty big signaling event in a sense. As you look at some of the traditional nukes that have now started to ramp up in construction in the U.S., it seems like they are facing some issues, for example, Vogtle is facing some cost issues on the rebar side and they might have to eventually go and redesign it. Essentially, it means that that cost increase is coming on some these first plants to be built and essentially in the U.S. Could you talk about what the implications for some of the modular designs are? Does this sort of, in general create a sentiment of cautiousness on costs around nuclear in general, or does this sort of propel the case for mPower even more?

I think everybody is always going to be cautious on schedule and budget on the commercial nuclear side. And (inaudible) on how the initial construction goes in the States. That said, the modular technology that we have with mPower, I think provides us some advantages especially if you take a look at the percentage of the components that are going to be manufactured offsite as opposed to onsite. I think it puts us in a little bit better position to control the costs in schedule. So, again we [ph]wish talking about success to all the new build opportunities that are going on today, but I think mPower is well positioned from a conceptual standpoint to be able to make a story to the market place about holding budget and schedule in the future.

Thank you very much.

Thank you.

Your next question comes from the line of Brian Konigsberg with Vertical Research, please proceed.

Yes hi, good morning.

Good morning.

Kind of following up on Tahira’s question in regards to utilities. We did see Exelon basically go bankrupt on Homer City, their plant because it was actually just too expensive to retrofit and I guess there was some concern there’s going to be sale of some coal plants in the future that could result in the markdown of coal plants in the U.S. as well, which could impair some utilities’ ability to gain credit for retrofit activities. I am just curious, have you seen any of that, is that a concern of yours going forward that could impair the market that you’re addressing as far environmental equipment?

We continue to watch it on a plant by plant basis. Net-net we don’t think that the impacts on that front are going to materially change our assumptions about the size of the addressable market for us in the future. But we’ll obviously continue to watch.

Okay. And just curious with mPower, so that’s moving along, I’m just curious. As far as international opportunities, do you anticipate there could be a market that you could sell into prior to it being implemented in United Sates?

Yeah a couple of comments of that front on mPower internationally what is, when we take a look the size of the addressable markets over the next 10 to 20 years, the real opportunity is overseas, primarily in Asia, simply because they are going to be doing the majority of the new power plant building, just because of the rate at which their economies are growing. So obviously we are paying a lot of attention to make and ensure we have a market presence and the ability to deliver our product into those markets. I could see the initial opportunities being overseas, as opposed to in the U.S, that’s what happened for example, on the units that are being built in China today. And I could easily see that repeating on the mPower front, and we’d be prepared if that’s where the market merges will be prepared to go there.

Thank you very much.

Juanita, we’re going to take one last caller.

Our last question comes from the line of Randy Bhatia with Capital One Southcoast, please proceed.

Good morning guys, thanks for squeezing me in here at the end. If I could, I guess we’re getting close to this $500 million a quarter, $2 billion a year clip in PGG that I guess has been referred to in the past as the point at which margins begin to accelerate. Question here is, are you seeing anything out there that could prevent or delay that from being achieved here over the next couple of quarters, and then how quickly can the margins ramp based on what you’ve currently have in backlog an d what your near-term prospects are?

Well I would say that clearly as volume grows, we do expect to get more leverage from the underlying cost structure of the business. I think it’s also fair to say though, and we have said this I think on more than one occasion that some of what we have benefited from in the last two years has been strong closeout performance on contracts that were booked, kind of at the height of the last cycle, Randy. So what I think you have to say is, we do believe there's leverage to be had, we do think that we're well positioned to take advantage of the market as it grows. We also think that, frankly in this business, a 9% operating margin which is where we are right now is pretty healthy and it's certainly well above the mean of the range that we've consistently said which 7% to 10% so. The long answer to your question is, we do see opportunities, we’re not forecasting an immediate ramp up in operating margins and quite frankly our current run rate in sales of $2 billion is at the low-end of what we experienced in the last environmental cycle. So I think as we start to see revenues jump from $2 billion to $2.3 billion, $2.5 billion and given things I just indicated, we should be able to hold or improve upon on the margins.

Okay, great. And if I could just circle back on mPower, I guess in your Analyst Day in New York, and I think it was November. You guys had given a forecast of kind of here’s what we’re thinking about in terms of time frame on first revenue, first cash flow, etc. from mPower. Is there any update to that from last year and how would the DOE funding potentially alter that timeline?

As far as timeline and DOE funding, I’m not sure the DOE funding materially alters the timeline, we have a schedule laid out and an amount of work to do, to get there. The DOE funding might help offset a little bit of our cost over the next few years to get there. And off the top of my head I don't know exactly what we said in November, as far as the timeline goes. But again we’re targeting 2021, 2022 for first unit online and we’d expect the revenue to ramp up a few years in advance of that. I think we will have a much better idea of exactly what that revenue profile could and should look like over the next couple of years. It's relatively difficult to predict with any accuracy today.

Okay. And then just one last housekeeping question, you mentioned $3.4 billion in bids out, did you give the environmental piece of that? In previous quarters you guys have given, I think last quarter is $4 billion in total bids out, but $2 billion was environmental.

Yeah, last quarter I think it was around $4 billion in total. It was around $2 billion in environmental and I think we said its $3.4 billion in total today, couple of big projects coming out of there that hit the market one in environmental, so I think that puts it somewhere around the $1.5 billion mark, which is sort of at the high end of where it's been in the last four to six quarters, Q1 aside.

Alright guys, congratulations on the quarter, thanks a lot.

Thank you.

And this concludes the Q&A session for today's call. I would now like to turn the call back over to Mr. Michael Dickerson for any closing remarks.

Thanks Juanita. And, I will be available over the next couple of weeks to continue to help through your analysis and understanding in the company, while at the same time transitioning responsibilities for IR to our Treasurer, Jenny Apker. So thank you for joining us this morning. That concludes our conference call. A replay of this call should be available later on today. Thanks everybody.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation, you may now disconnect. Have a great day.