Good day, ladies and gentlemen, and welcome to FuelCell Energy Third Quarter 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to hand the conference over to Mr. Kurt Goddard, Vice President of Investor Relations. Sir, you may begin.

Good morning, and welcome to the third quarter 2013 earnings call for FuelCell Energy. Yesterday evening, FuelCell Energy released financial results for the third quarter of 2013. 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 2 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 Fuel Cell 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'd like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. Please turn to Slide 4, 3rd Quarter 2013 Highlights. For the third quarter, FuelCell Energy made a solid progress generating record revenues and expanding margins. During the third quarter, our U.S. manufacturing facility produced at an annual production level of 70 megawatts, maintaining a recent 25% of production increase. We just announced an agreement with NRG for the sale of ultra-clean, efficient and reliable fuel cell power plants. We are pleased to be associated with NRG, the largest independent power producer in North America. The company owns approximately 46,000 megawatts of power generation and serves over 2 million retail customers. This agreement leverages our sales and marketing resources and provides customers with a power purchase agreement financing option. The PPA option is expected to be well received by customers, that like the pay-as-you-go model, and particularly by customers such as municipalities universities that cannot monetize the U.S. federal tax credits. Construction of the 14.9-megawatt Bridgeport fuel cell park in Connecticut and the 59-megawatt fuel cell park in South Korea, are both proceeding to plan. These projects are creating global interest, leading to discussions with prospective customers. We are experiencing strong activity levels in our global sales pipeline and benefiting from the growing awareness of the value of ultra-clean distributed generation fuel cell power. This gives us confidence in near-term order flow to support production levels. I will discuss our results and outlook in more detail after Mike Bishop, our Chief Financial Officer, reviews our financial results for the quarter. Mike?

Thank you, Chip. Good morning, and thank you for joining our call today. Please turn to Slide 5 titled Quarterly Financial Highlights. FuelCell Energy recorded record total revenues for the third quarter of 2013 of $53.7 million compared to $29.7 million in the same period last year. Both revenue and margins benefited from shipments to the Bridgeport fuel cell park. Product sales for the third quarter totaled $45.4 million compared to $21 million reported in the prior year. Revenue from product shipments and EPC services at Bridgeport fuel cell park was the primary driver for the year-over-year revenue increase as significant construction and installation activity was completed in the quarter. This project accounted for approximately $28 million of revenue during the third quarter of 2013. We have approximately $17 million of backlog remaining on this project, which will be recognized as the remaining installation and startup activities are completed between now and the end of the calendar year. Service and license revenues for the third quarter of 2013 totaled $3.7 million, including approximately $3 million derived from service and $800,000 from license and royalty revenue. For the comparable prior year period, service revenue totaled $6.5 million. The general trend for service revenue is increasing with a growing installed base. However, revenue from scheduled module exchanges is recognized at the time of the exchange, and there are no comparable activities during the third quarter of 2013, explaining the decrease compared to the prior year. When the Bridgeport project becomes fully operational, the associated service revenue will begin to be recognized and will result in an increase in quarterly service revenue. Advanced Technology contract revenues were $4.6 million for the third quarter of 2013 compared to $2.1 million for the prior year quarter, with the growth primarily reflecting the consolidation of Versa…

Thank you, Mike. Please turn to Slide 8, Operations Execution. To execute on backlog, during the second quarter, our team increased production volume at our North American manufacturing facility in Torrington, Connecticut to the present 70-megawatt annual production rate. As I mentioned earlier, we maintained the 70-megawatt production rate throughout the entire third quarter. This is consistent with our current production planning. Based on committed production volume and projected order flow from our pipeline, we anticipate continuing to produce at 70 megawatts and will increase production further as backlog and lead times support. Our team executed seamlessly on the 25% increase to 70 megawatts, and we are confident that we can smoothly ramp further as order volume supports. Margins will continue to expand as volume grows, contributing directly to profitability in a number of ways. Growing volume generates higher margins through greater supply chain leverage and improved absorption of fixed overhead. A product mix containing a higher percentage of complete power plants versus fuel cell kits also contributes to higher margins, which we demonstrated this past quarter. Based on process improvements, cycle time reductions and improved production flow, we increased our North American annual capacity of our Torrington facility to 100 megawatts from the previously stated capacity of 90 megawatts. This increase in capacity was accomplished without any material capital investments. Our expanded partnership and agreements with POSCO will add a further 200 megawatts of annual production and capacity in Asia, 100 megawatts of which will be online in 2015. Through industrial engineering, the production capacity has been increased to 100 megawatts from the 70 megawatts previously stated using production equipment from the original plan. This global capacity increase supports our further revenue growth and revenue mix enhancement without capital outlay by FuelCell Energy. As you can see, infrastructure plans…

[Operator Instructions] Our first question comes from Sanjay Shrestha from Lazard Capital.

This is Jess Morrison in for Sanjay. I have 2 questions here. First, with the energy agreement, how do you see this impacting your future negotiations now that you have NRG as a customer? And second, can you give us any more color on the volumes we should expect from the partnership?

This is Chip. Let me take a shot. Mike might have something to add to that. This is somewhat of a unique approach that we're, I think, taking with NRG. When we look at these projects, there's kind of 3 value propositions here. One is the customer. Particularly if it's a power purchase agreement, there's something in it for them. There's obviously something in it for NRG in this case, and there's obviously something in it for us. We actually established an operating model that really kind of puts that whole question, I think, that you asked to rest here. So the structure that we put together basically allows us -- allows them to achieve the return they're looking for and allows us to deliver the value proposition to the customer level and for ours. So I don't see it as a competition. In fact, what we've done is we've actually kind of shared customers that we were either working on before, or trying to penetrate into, and vice versa. So that's really not the issue. The issue is closing the projects, and from the early discussions we've had with those guys, I think that both teams are very focused and pretty pleased with where we are. I don't know, Mike, if you want to add anything on the structure, but...

No, I think you covered it there, Chip. And Jeff, this is Mike. As far as order potential, we're working with NRG in the markets that we're already active in, so we have pipeline that has been very well developed. And as Chip said, this provides us another tool in the toolbox to go to those customers with a PPA option, with a solid partner such as NRG to potentially put fuel cell CHP projects on-site. So we're really excited about the partnership and do expect near-term order activity as a result of it.

Our next question comes from Les Sulewski from Sidoti & Company. Les Sulewski - Sidoti & Company, LLC: Just a few quick ones. First, other than Connecticut, I noticed you mentioned New Jersey as well and California. Have you seen any other activities from states kind of passing a mandate for renewable energy?

Yes, Les. This is Chip. Let me take that. I mean, the majority of states in the U.S. have objectives for Renewable Portfolio Standards. The question is, are they really doing it? And how are they doing it? So for us, in 6 states in the nation, fuel cells on natural gas are considered Class 1 renewables, and then of course, on biogas, they're renewables everywhere. But I think, perhaps, the question is what states are actively pursuing their objectives? And I would say it's clear that Connecticut is. It's clear that New Jersey is emerging as one. It's clear that California always has been. But we are seeing other states, particularly the Northeast, that both are trying to put together programs or deal with infrastructure shortages or things from Hurricane Sandy and things like that. So I would say that the activity is expanding in states in the east. And there's just also, just generally, you have utility companies making investments like Bridgeport -- or Dominion did in the Bridgeport project in a variety of locations for different other reasons. So I would say that the environment right now for what we do is probably as buoyant as it's ever been, which is baseload cleaner renewable energy. So we match it up, as I mentioned, with solar. That's kind of nice, too. We're doing several projects or talking to people about matching up with the solar array, which also is a Class 1 renewable in many of these states as well. So I think that I'm quite happy right now with the level of activity. And right now, we just have to match up with the closure rates of the projects to the production that we can produce because many of these projects today are financed, particularly the U.S., with tax equity. And you have to make sure that we get those delivered and started up and commissioned at the right time and align with their expectations as well. Les Sulewski - Sidoti & Company, LLC: Right, now [indiscernible] wants to actually follow up on that with the CT DEEP program. Did they provide any dates on the closings and selection process, or is that a little too early to tell on that?

No, they have put -- I mean, we would expect that they would conclude their analysis is what they're doing right now. Everybody submitted their bids in August, and they're looking at all the different proposals and trying to decide. There's a criteria that they have. It's not all lowest price. So it's based on other factors, is it a portfolio approach, et cetera, et cetera. But I would expect within 30 days is what they've led us to believe that they will decide on which projects they're moving forward with. But that's always subject to change. I guess they run the processes through RFP, but that's what they've led us to believe.

Our next question comes from Ajay Kejriwal from FBR. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: Congratulations with the agreement with NRG. And to me, it looks like associating with a respected name like NRG will definitely add credibility. So maybe just talk a little bit about tax equity. Does the agreement also address the tax equity part of the project cost for the customer?

Sure. Ajay, this is Mike. Let me take that one. Yes, with NRG, the agreement allows for NRG to basically buy the power plants from FuelCell Energy. They'd be the owner, and then provide the PPA to the end customer. So NRG would essentially bring us all the financing, which would include tax equity into that equation. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: Got it. And Chip, where would you expect the biggest impact from this agreement near term? Would it be on your existing pipeline of projects, say, in Connecticut? Or would you expect this to be realized more over a period of time and help you broaden your pipeline beyond what you have currently?

Ajay, this is Chip. I'll take that one. I think it's going to have a significant impact on California. But we also have projects that we literally have identified both in the East as well. So I think it's -- the point -- the question is, you raised the right question, could you monetize the tax credit. The answer is, of course, yes. But given the structure that we've developed with NRG, we also can be competitive. So bringing the financing at a competitive cost of capital, et cetera, et cetera, allows us to move forward with some of these things, frankly, that were hung up. So I think it will have national impact for us. They have a retail business, Ajay, as well as their own wholesale-type plants, and we're working with them on both levels. So far, so good. We're pretty pleased with the interest level, and we're working to close business with them as quickly as possible. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: Got it. And then maybe shifting gears, Chip, you mentioned you want to close 30 megawatts near term, and I know the limitation of what you can say. But how should we think about -- say, in fiscal '14, assuming you close these projects near term, would your production level be close to 80 megawatts, ahead of 80 megawatts? Just some color around production for next year.

Ajay, this is Chip. We don't give out guidance during the year for the year -- the following year, but we do that in December. But I'll just give you a little bit of, perhaps, what might be kind of directionally correct. I mean, as we are, right now, 70 megawatts, we're cruising along on that. What Tony and the team has been able to do is flex pretty quickly. We also will have next year kind of a mix change, a favorable mix change, which we get these orders, will have a higher percentage of power plants again, which we kind of saw the leverage on the model when we do that with Bridgeport. So I think the combination of staying at 70, perhaps, flexing more, but more importantly, the mix is the thing that's going to kind of keep us growing in 2014. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: Got it. And maybe one last from me before I pass it on. So did I hear correct that EBIDTA breakeven is now 80 megawatts? I thought in the past, you had said 80 to 90, so it's a good production. Sounds like production efficiencies are kicking in.

Yes, Ajay, it's Mike. Yes, that's been our guidance in the past, and we see ourselves at the lower end of that guidance based on what we expect for future order flow in the marketplace being complete power plants, as Chip mentioned, and getting additional leverage in the factory, as well as adding incremental service and other revenue.

Our next question comes from Adam Krop from Ardour Capital.

First question is on the product backlog, if you could maybe provide a little bit of color around the geographic breakdown there. Is that the typical kind of 75-25 South Korea-U.S.? Just curious if you're seeing any other new markets come into the backlog in maybe Europe or Asia?

Sure, Adam, this is Mike. The business model really calls for 1/3-1/3-1/3 from Asia, Europe and the U.S. We've been heavily weighted towards Asia with the tremendous activity that POSCO has had going on in Asia, so that has made up a large percentage of our backlog. And we would expect U.S. to start to take up a bigger percentage of that backlog and then Europe next. But the business model goal is obviously kind of keep the same level of activity in Asia and add in U.S. and Europe on top of that. When you look at our backlog today, we have about 123 megawatts of production backlog. About 113 of that is for POSCO kits going to POSCO to serve the Korean and Asian market. Beyond POSCO, the lion's share is U.S. related to finishing up the Bridgeport fuel cell park and some other installations in the U.S. And we have about 1 megawatt in Europe right now.

Okay, that's good. And then on the -- when I look at the implied backlog on the product backlog -- or the implied ASP on the product backlog, it looks like it's coming down over the last few quarters. Is that simply a mix issue? Or are there any other issues in there, kind of moving parts in there? And if you can comment on any pricing strategy in the near term, that would help me.

Sure, Adam, this is Mike. As far as ASP, it's a little bit challenging to calculate it off of quarterly financials in that we are doing percentage of completion revenue recognition. And one thing you do have to keep in mind is that the kits is really only less than half of the overall sale of a power plant. So while POSCO is a large component of our revenue and average sales price in that they're just buying kits from us, that will drive down the ASP. I would say that we have significantly increased the revenue from complete power plants with the Bridgeport project and other activity in the U.S., which has driven, obviously, incremental margin. And we've added onto that. Bridgeport is more than just a product sale. A large percentage of that project is also EPC services, as Chip talked about in his prepared remarks. So that is coming through incrementally as we're performing construction services at the site as well. So we're very pleased with the revenue mix that we have now and certainly expect to continue to add complete power plant and additional services like EPC and ancillary services at existing customer sites here into the future.

Adam, this is Chip. I just want to drill down on what Mike said and just kind of give you a little bit of forward thought here. I said 30 megawatts of closure, is what Ajay was asking me about. I mean, that would be primarily domestic business. So as Mike said, those domestic orders, a lot of that would be turnkey-type projects, so what you referred to as ASP would go up substantially. And of course, that would also, if you looked at our backlog then, it would change dramatically, that mix we just talked about. And the other thing I would say is that our model is changing somewhat as well. I mean, if you look at the improvements in the balance sheet we made, if you look at the access to financing, the NRG agreement, what this really says is we're in closure mode at the moment, right, in terms of order closure. And we're also seeing -- and part of our model here is to reduce the time to build the project from contract because that minimizes the cost of construction debt. So our business model is to have, as you will, a rapid response once we have order closure. When you bring the financing, you get the order closure. So that's kind of a little bit of change in the model in the past, which was, as Mike said, a lot of kits, which were longer lead time or are bigger backlog. So we expect the backlog turnover to change as we go forward.

That's very helpful. And then just one housekeeping follow-up on one of the previous questions. In terms of capacity next year, it sounds like you'll get to that 100-megawatt number here in the North America. What should I assume for CapEx on that? I mean, it sounds like it's going to be sort of a similar run rate to this year. Is that correct?

Yes, Adam, this is Mike. Yes, CapEx, you would assume, is similar to this year. It's really some process improvements, some additional efficiencies in the factories, some automation and then a fair amount of maintenance capital.

I'm showing no further questions at this time. I'd like to hand the conference back over to management for any closing remarks.

Well, I'd like to thank everybody for their questions and attending on the call today, and we look forward to seeing you on the next conference call. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.