Good day, ladies and gentlemen, and welcome to the FuelCell Energy Reports Fourth Quarter 2013 Results Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Kurt Goddard, Investor Relations Vice President. Please go ahead.

Good morning, and welcome to the Fourth Quarter and Fiscal Year 2013 Earnings Call for FuelCell Energy. Yesterday evening, FuelCell Energy released financial results for the fourth 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 approximately 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 would like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. Please turn to Slide 4, Fourth Quarter 2013 Highlights. During the past year, we executed solidly on our strategic plans, achieving record quarterly revenues and expanded margins. For the fourth quarter of 2013, we posted a strong year-over-year revenue increase. Product sales were up 24%, service revenue was up 17% after excluding revenue from a new service agreement with POSCO Energy. While pleased with the revenue growth, our full year margin EBITDA performance was not as good. We expect significant improvement in 2014, as Mike will explain. We're executing our global installations. The 15-megawatt fuel cell park and the 59-megawatt fuel cell park in South Korea are on schedule. Deliveries of fuel cell kits to POSCO are also on schedule. In October, we delivered the first power plant built at our facility in Germany, and completed commissioning of the acclaimed Crown Estates project in London. During the fourth quarter, we maintained a 70-megawatt production run rate in our North American manufacturing facility. As discussed last quarter, total production capacity potential was increased to 100 megawatts. POSCO began construction on its manufacturing facility in South Korea that will ultimately be capable of up to 200 megawatts of annual production. Activity levels in our pipeline increased significantly in 2013. We are participating in a global trend towards utility scale projects, resulting in a broad and diversed opportunity landscape. Projects in our near-term pipeline are progressing towards closure. While the timing of orders is difficult to predict, the flexibility of our business model, current discussions and competitive position give us confidence in near-term order closure. I will discuss our results and outlook in more detail after Mike Bishop, our Chief Financial Officer, reviews our financial results. 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 reported total revenues for the fourth quarter of 2013 of $55.2 million, compared to $35.4 million in the same period last year. Product sales for the fourth quarter totaled $36.2 million compared to $29.1 million reported in the prior year. Revenue recognized from product shipments and EPC services at the Bridgeport fuel cell park drove the increase in revenue year-over-year as construction and installation activity continued during the fourth quarter. The Bridgeport project offset lower fuel cell kit shipments, as fuel cell kit shipments were accelerated during the fourth quarter of 2012 to meet the construction schedule of the 21-unit fuel cell park in South Korea. We expect to recognize the remaining product and EPC revenue from the Bridgeport project during the first quarter of 2014. Service and license revenues for the fourth quarter totaled $15.4 million, including approximately $13.7 million derived from service, and $1.6 million from license and royalty revenue. For the comparable prior year period, service revenue totaled $4.8 million. During the fourth quarter of 2013, we announced a revised Master Service Agreement with POSCO Energy, whereby POSCO assumes additional obligation for fuel cell power plants that they build in Asia. FuelCell Energy will continue to provide technical and operation support for each plant in the Asian fleet, while POSCO is assuming a greater field service role for Asian installations, as well as all future scheduled module exchanges. Due to the revision of service obligations under the agreement, we recognize revenue and corresponding expense in the fourth quarter of 2013 on a number of fuel cell modules operating in South Korea that had residual value remaining at the time the agreement was executed.…

Thank you, Mike. As I mentioned, during the fourth quarter, we maintained a 70-megawatt production run rate at our Torrington, Connecticut manufacturing facility consistent with the third quarter. Based on our projections of near term order flow, we plan to maintain the 70-megawatt rate while increasing revenue and margins as we enter 2014, and will increase our run rate as demand dictates. Maintaining this rate is advantageous. It helps us close new business by offering our customers faster execution on projects with short cycle times, and it contributes to lower project cost, mitigates risk and enhances product cost reductions. We expanded the Torrington facility annual manufacturing capacity by 11% to 100 megawatts, through a series of process and supply chain improvements that avoided the need to invest additional capital. As demonstrated during the previous production increases, our associates can smoothly increase production in response to further increases in demand. We announced the 14.9-megawatt Bridgeport fuel cell park order last December. Now, just 1 year later, this fuel cell park is on schedule and nearly fully operational. All 5 fuel cell power plants in the Organic Rankine Cycle turbine are generating power, acceptance of the project by Dominion, a project owner and a major U.S. utility is expected this month. Successful completion of this highly visible installation demonstrates the value of ultra-clean utility-scale fuel cell power for grid applications, but also the importance of selecting the right project team and partners. This project showcased our ability to develop, execute a broad and complicated project with numerous stakeholders and enable project financing. We have focused on building our capabilities to develop, construct and operate plants for our customers. The benefits are numerous. Our customers or project financiers gain by having a better value proposition with lower or no risk and high confidence…

[Operator Instructions] And our first question comes from the line of Les Sulewski with Sidoti & Company. Les Sulewski - Sidoti & Company, LLC: Can you provide a little bit more color on the revision of the servicing contract with POSCO? And then the effect of it this quarter, I see that you had a $10.2 million increase in the servicing revenue, and then it was a $10.1 million cost for that. Just give me a little bit more reasoning behind that, if you could.

Sure, Les, this is Mike Bishop. On the revised service -- Master Services Agreement with POSCO, this is really the result of the evolution of both businesses. The original service agreement with POSCO was put in place back in 2007 prior to POSCO anticipating a manufacturing facility in Korea. So now that they are going to have those capabilities, and they've built up their overall service capabilities, we're transitioning more of the underlying responsibilities to POSCO. So they will have responsibility for future module exchanges underlying the service agreements. So some of the responsibilities that we had transitioned to POSCO. We had assets on our balance sheet that they essentially have responsibility for now, and we got paid for transitioning those to POSCO. So it resulted in a onetime revenue benefit of $10.1 million at essentially cost, which came through the financial statements, and obviously, brought down the margin -- the overall margin percentage in the quarter. Les Sulewski - Sidoti & Company, LLC: Okay. And then in your guidance of $4 million to $6 million per quarter next year, is that including your past servicing agreements, as well as Bridgeport? And does that include POSCO, as well?

Yes. So just to be clear, the guidance for service and license revenue for 2014 is in the range of $4 million to $6 million per quarter and that does include the new Bridgeport contract, as well as our current responsibilities under the POSCO agreement and any incremental orders which we expect in the year. Les Sulewski - Sidoti & Company, LLC: Okay, great. Thank you. And you mentioned NRG briefly, but any updates that you can provide us with, any progress as of late?

Yes, I'll -- this is Chip. Yes, the -- we started that several months ago here with the kickoff. And I would say that we've been both getting involved in some projects that we have started, as well as getting some opportunities from their side. They have produced -- we've had a bunch of training. They have produced a bunch of documents to support that effort as well. And I can just tell you that we are actively pursuing several projects using that PPA model with their support, as we speak. So I would expect here we would have some success here in the near term with that.

Our next question comes from the line of Jeff Osborne with Stifel. Jeffrey D. Osborne - Stifel, Nicolaus & Co., Inc., Research Division: Just a couple of quick questions. Mike, I wanted to understand on the Korean services side, just going back to that for a second. Is there any revenue that you recognize this year that for service that you would not incur next year? So is there any shift of immediate service responsibilities or was this just kind of a true-up of future projects? I'm just trying to understand that $4 million to $6 million, that seemed a little bit lower than I was expecting given Bridgeport would be ramping up.

There was a shift in responsibility, Jeff. POSCO is taking on more of the total responsibility in Korea in essentially replacing stacks during the course of the service agreement. So originally, it was FuelCell's responsibility. We had stacks on our books, which, as I just described, transition to POSCO. So the overall -- on an individual site, the overall revenue by -- for FuelCell, maybe FuelCell Energy, may be lower going forward, but it's services that we can essentially do with our team in the U.S. and a limited number of folks on the ground. So really using our engineering resources and our service capabilities that we have here with some folks over there, high-margin business, we will touch every plant that's in Korea, but thought it made sense that since POSCO now has the manufacturing capability that they take on that responsibility. I would say as far as the $4 million to $6 million guidance into next year, again, that does include Bridgeport. It does include additional POSCO sites coming on online during the year. And as we execute new contracts, we expect to be at the higher end of that range towards the end of fiscal 2014. Jeffrey D. Osborne - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that makes sense. Maybe it would just be helpful to get a sense of how much POSCO revenue will be going away with the shift? Can you just comment what the POSCO services revenue was for this fiscal year that you will no longer be responsible for, so we can get a sense of scope?

As far as an exact number, Jeff, I don't have that number right in front of me. But I'd say it's probably in the range of 30% of quarterly revenue. Jeffrey D. Osborne - Stifel, Nicolaus & Co., Inc., Research Division: The services piece? Okay. And then on the slides on the business model highlights, is it a subtle shift of 70 to 80 megawatts of EBITDA breakeven? I think in the past, you typically had a point estimate of 80 at EBITDA and positive net income at 90. Now, you have a range shading to the lower end of that, which is definitely a positive. But was that intended or am I just reading too much into that?

No, that was intended, and it is a subtle shift. As we operate at the 70-megawatt run rate, we do see additional efficiencies at this run rate. And it is a target of the business to get to EBITDA positive at 70 megawatts, so we don't have to ramp again to achieve that. So it's in our plan this year, that's our absolute focus. The goal is obviously to add backlog above that run rate and ramp and have further margin expansion. But at this level, we would like to get EBITDA positive at a 70-megawatt run rate.

Jeff, if I can just add to what Mike said, we -- I think there's 2 benefits there besides, obviously, a lower level of achieving that EBITDA positive. I mean, we've worked hard at cost reduction in a lot of different areas -- in leverage in a lot of different areas in '13. We spent what I would call some investments in things like Europe and things, which I think will pay dividends. But obviously, we're seeing a mix change. So the combination of us continue to look for process improvements and cost reductions and leverage combined with the positive mix change is really why that change has occurred. So... Jeffrey D. Osborne - Stifel, Nicolaus & Co., Inc., Research Division: One last one for Mike, and then 2 quick ones for Chip. Mike, on the services mix -- so if roughly 30% of services is going away with the POSCO piece changing and then Bridgeport ramping up, how do we think about the margin trajectory both at the start of the year and through the year as that $4 million to $6 million per quarter plays out? Is the EPC service contract a higher-margin piece than what you were doing in Korea?

Yes, certainly service agreements that we've entered into, including Bridgeport, over the last couple of years are much higher margin than we had entered into in the past. It's using, obviously, the current technology, 5-year stacks and this higher-revenue profile. So we would expect, as these newer sites come online, margin percentage increasing certainly over what we had this year, and that's happening during the course of the fiscal year. Jeffrey D. Osborne - Stifel, Nicolaus & Co., Inc., Research Division: Okay, perfect. And then just for Chip, 2 questions. One is, if you could address POSCO outside of Korea. Think about 1 year ago, you talked about an IPP opportunity, or a focus of theirs, in particular in Southeast Asia, just wanted to get an update on that side of the coin. And then domestically, you've been highlighting a pipeline of kind of 30 to 35 megawatts here for the past quarter or 2. And just maybe talk about the dynamics and the market as to what the challenges are and getting pipeline converted over. Clearly, seeing a 500 to 600-megawatt pipeline evolving for you folks is fantastic to see. But I just want to get a sense of it. Is that the debt side of the coin or tax equity appetite or regulatory approvals? What are the kind of the key bottlenecks relative to maybe your prior expectations in getting that conversion done?

Okay, Jeff, on the POSCO thing, let me start out a little bit. I mean, they -- POSCO, and we've had some -- we have ongoing meetings with those guys but recently. I mean, they have very strong expectations on growth in Asia. I mean, very, very strong. So just -- and their putting resources to it. The market, frankly, in Korea has grown so fast and the demand is so high that it's probably slowed our efforts outside of Korea a bit. But back -- after the first of the year, we're going to get back at that. I mean, the markets obviously in Japan continue to be an opportunity for us. We have to do some things there in terms of policy and mobilizing some efforts, but we're in the process of doing that. We're committed to doing that. I just talked to those guys last month, and we have a plan to do that. Southeast Asia, again, is a great opportunity. Some of the things there just have gone a little bit slower than originally planned. But it is no question that -- we're not going to let the tremendous demand at home in South Korea stop the expansion throughout the rest of the region. It's just taking us a little bit longer than we perhaps thought. Relative to the pipeline we have, yes, I did mention, I think it was -- the first time was in Q3 call about this 30-megawatt target. And I think, as Mike said or I said, we've got a lot more opportunities on the plate to just get 30. Some things have taken a little bit longer. It's not so much financing, frankly, that has been the issue. I think Mike and the other guys have done a good job of attracting financing partners. It's really just about finishing up some development, some final negotiation and, in some cases, its regulatory approval. So I would say that it may have taken us a little bit longer, but it's not the financing aspect of this right now. And in fact, we've set up our production plan for next year so that we can still allow ourselves the ability to get those contracts and deliver those in 2014 tax equity environment, Jeff.

Our next question comes from the line of Adam Krop with Ardour Capital.

Most of my questions have been answered, but if we could talk a little bit about the balance sheet and your cash requirements for the first half of 2014. I see that inventory was up pretty significantly in the quarter. I guess, how should we think about inventory as you're ramping up volume and capacity in the first half? And then if you could just talk about your comfort level on your cash as you're trying to execute on the 30 megawatts of projects in the pipeline.

Good morning, Adam, this is Mike. As far as the balance sheet, so we ended the fiscal year with $77.7 million of total cash on the balance sheet, with an EBITDA use in the $5 million to $6 million range. We're comfortable with the cash balance. When you look at the accounts receivable that we have on our balance sheet, that is up from prior quarters and certainly the last fiscal year end. That's a function of some large milestone payments that come with the completion of the Bridgeport project. So as that project is completed here in the first quarter, we would expect to get -- to drive that number down and get cash inflows from that. On the inventory side, we did see a build over last year and the end of last quarter. And you will see some more builds going into -- going in the first quarter as we are making sure that we have the inventory available to execute on project deadlines in 2014. As Chip said, we're focused on closing 30 megawatts of projects in the first half of this year. Many of those projects do have delivery dates on the -- during 2014. So as those come through, inventory will come down as we continue -- as we execute on those and put plants in the field.

Okay, appreciate that. And in terms of the product revenue growth that you talked about in the outlook, can you talk a little bit about how we should think about the power -- the mix, the product mix between power plant versus kits? Is it going to remain in that 60 to -- 60-40 range, or how should I think about that for 2014?

Yes, sure, Adam. When -- just to be clear on the line that we're talking about on the P&L, we're talking about the product sales and revenues line on the P&L. We do expect growth on that line because we'll be operating at 70 megawatts for the full year. Recall, going into 2013, we started off at 50 plus, and we ramped during the year. So we'll get revenue growth from that. When you think about the mix from POSCO and complete power plants, deliveries to POSCO in the year will be in the 35 to 40-megawatt range. So the other half of revenue coming through will be from complete power plants in the U.S. So strong mix there, as well as module replacements for service agreement.

Okay, that helps a lot, appreciate that. And then in terms of the -- just a little bit -- if we could talk a little bit about the solid oxide development and the new products there, can you talk about the timeline for maybe when we might see some product revenues come out of that -- come out of the R&D there and what are some of the major steps that you have to take to get there? Is that more of a 2015 event or farther out?

This is Chip, let me take that. As I mentioned in the script here, we're targeting the commercialization of that in really 2 buckets. One is what I would call sub-megawatt stationary applications, the other one is called the specialty applications. Specialty applications, for example, are projects that we have, for example, with Boeing and some others along that line. So we will see from these projects, both of these 2, the ones I mentioned for the development part of those, we'll see some increase in that, which I think Mike referenced in the earnings call in '14. But the true commercialization of those things are at a 2016, 2017 kind of a timeframe. So I think on subsequent calls, I can give you folks a little more color on that. I would say that we are going to be working with partners around the world here to help us with that effort. So we can both minimize use of cash, as well as minimize time-to-market.

Our next question comes from the line of Rob Stone with Cowen and Company.

I wanted to go back to the service component for a minute. As you think about building service volume in the various markets, what are the factors that will drive increased margin potential there? Is it a function of more volume across your existing infrastructure, driving down stack replacement costs, pricing on new contracts? How should we think about the margin drivers for service?

Rob, good morning, it's Mike Bishop. So just going back to service, the -- we'll see margin drivers in a couple of different ways. So just to be clear, on that line on our P&L, it also includes royalty revenue from POSCO, which is essentially 100% margin. So as POSCO ramps up installations in the field, and the 60-megawatt project is an example, we get margin opportunities right there. Each plant that gets installed, we get 3% of net sales, so there's an increased opportunity right there. We are very focused in driving costs out of the individual service agreements as we do multimegawatt projects, the lends itself to cost reduction versus having a bunch of small projects around the U.S., around the world, having larger parks has inherent cost efficiencies. And I guess, the third thing is -- that I would mention is, there is additional revenue opportunity that -- at each site. Beyond servicing just the core power plant, there's ancillary equipment, such as cleanup gear and that type of thing, which the company has expertise in doing and can increase our revenue and margin opportunity there. So we're very focused on both growing that top line but, more importantly, generating margins off of our services.

Mike, of the $4 million to $6 million range that you're targeting for next year, how much might royalty contribute to that?

On a quarterly basis, right now, royalty is in the $1 million to $1.5 million range.

Okay, with respect to the trend in RFPs -- and it sounds like several times you alluded to the fact that you want to be prepared to execute on incremental volume, do you see kind of an acceleration in the sales cycle here, the timing from RFP to executing on contracts? And might you be able to actually build backlog in 2014?

Rob, this is Chip. Let me take that. The answer is yes. I would say this. If you go back a couple of years, we didn't have the demonstrated confidence to do some of these big projects that we have see in these RFPs, and as a result, we probably may not have even quoted them at that time. We've come a long way in that regard. So I think when you talk about cycle, we probably wouldn't even have looked at these. The sales cycle on some of these things is actually shorter because they're RFPs. But more important, the execution cycle we've shortened to, obviously, reduce cost and reduce risk in the projects. So I would say it fits well with our strategy of building bigger and bigger plants. And to Mike's point, you're much better off building a bigger plant in one place than having smaller plants in different places, and so I think it feeds into our strength. We just have to have the capability to do it, and I think we do. So as we get these projects, and we just -- and we're bidding them as we speak, assuming that we get awards for these things, they would certainly be added to the backlog for '15. Some of them -- most of them wouldn't be actually executed in '14, but more targeted for '15 and beyond.

Excellent. The final question for Mike, if I may. You talked about the operating leverage that you achieved on expenses this year, how should we think about where you may need to invest or where you can get further leverage in OpEx for the next year?

On the operating expense line, Rob, we're -- the level that we ended the fiscal year at around the $37 million range is the target going into next year. So we did increase that a little bit coming off of last year with adding Versa, adding the business in Germany. But at this level, we feel comfortable that we can operate at the range that we're currently at. And obviously, with revenue growth, you're getting additional leverage there.

At this time, I'd like to turn the call back over to management for closing remarks.

Well, I'd like to thank everybody for joining the call today, and wish everybody and their family a very happy holiday, and we'll talk to you on the next call. Take care.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a good day.