Greetings, and welcome to the Graham Corporation’s Second Quarter Fiscal Year 2012 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Graham Corporation. Thank you, Ms. Pawlowski. You may begin. Deborah Pawlowski – Investor Relations: Thank you, Claudia, and good morning everyone. We appreciate your time here today with the Graham Corporation’s second quarter fiscal year 2012 conference call. On the call, I have with me Jim Lines, President and CEO and Jeff Glajch, Chief Financial Officer. Jim and Jeff will be reviewing the results of the quarter and also providing review of the company’s strategy and outlook. If you did not get that via e-mail, you can find on our website the slides that they will be using with the presentation and that the website is graham-mfg.com. As you may be aware, we may make some forward-looking statements during this discussion as well as during the Q&A. These statements apply to future events and are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what was stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as other documents filed by the company with the Securities and Exchange Commission. These documents can be found at the company’s website or at sec.gov. So with that, let me turn it over to Jim to begin the discussion. Jim? Jim Lines – President and Chief Executive Officer: Thank you, Debbie. Good morning, everyone. We appreciate your joining us for our second quarter earnings conference call. We had a very…

Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) Our first question is coming from the line of Chris McCampbell with Stifel Nicolaus. Please state your question. Chris McCampbell – Stifel Nicolaus: Great quarter guys.

Thanks Chris. Chris McCampbell – Stifel Nicolaus: Where would you say you are in the cycle now?

Chris, I would say we were into the recovery as a mentioned in the prepared remarks, but in the early stages and what that means and if we reflect back to the last cycle the recovery has and had been flow to it initially, it’s very hard to predict in the first couple of quarters, several quarters goings in the recovery, but if we look at it qualitatively around what’s in our pipeline, how the orders potentially orders are moving forward in our pipeline toward procurement and the size of the pipeline beginning to expand. A suggestion was that the worst part of the downturn is behind us and recovery is upon us. And from my view it’s just a matter of timing before the pipeline converts to orders. And we are prepared to execute on those better than I thought we executed the last cycle. Chris McCampbell – Stifel Nicolaus: And would you expect your backlog to begin to level out and maybe start working higher or how will that relate to where we’re in the cycle?

I think that’s a very good metric to look at which is where is our backlog? I just want to speak a little bit about the backlog decline. As Jeff said, we had a strong quarter $33 million, but one point I want to make is in the second quarter and third quarter of 2009, the company booked combined $80 million. At some point that gets, that has to be worked down and there will be some consumption of backlog where book-to-bill will be below one. We’re going through that right now. We were into $116 million business at that time. So consequently what you're seeing now is recurring. I think we are at a point now, where it’s going to begin the level. We’re hitting an inflection point and I think as we go forward, we begin to see backlog growth. Chris McCampbell – Stifel Nicolaus: Great, and I'll let some other folks ask question, but maybe still a little more color on the acquisition front in terms of, are you finding things maybe just a little too expensive out there or you just making sure you find the exact right set?

I think more of the latter. We’re making sure we find the right step. We’re not finding, the prices are too high at this point in time, but we want to make sure we find the right step as we did with Energy Steel. Chris McCampbell – Stifel Nicolaus: Yeah. It worked pretty well. Well thanks a lot guys. Congrats again.

Thank you.

Our next question is coming from the line of Joe Mondillo with Sidoti & Company. Please state your question. Joe Mondillo – Sidoti & Company: Good morning guys.

Good morning Joe. Joe Mondillo – Sidoti & Company: I was wondering if you could talk about what hit in the quarter that had such a high margin, was that part of the Navy orders. I’m not sure if you mentioned in your prepared remarks and also what kind of margins are you getting in your orders. Have you begun to see any improvement there or it sort of still sort of flattish, and what is pricing like these days?

Okay. A couple of things influenced the quarter. We will provide some granularity on that. I mentioned that we had won a couple of refining projects in the prepared remarks near the peak of the last cycle. Our second and our third and fourth quarters of fiscal 2009, when the projects was put on hold both were put on hold, and delayed for a couple of months several quarters and now began to run through revenues. So they had the pricing that was reflective of the environment at that point in time, which was a pricing environment superior to what we are seeing today. So we benefited from those orders pushing to backlog now. All over we also enjoyed in one of the projects the benefit of being able to lower our direct costs, because materials at the time when it was booked and materials when we actually bought, the items we’d use for fabrication were far or less with our direct costs, and that order came down by about 10% reflective of the higher margin that was realized in Q1 and Q2. So that's an event that really stays within Q1 and Q2. Also and I think this carries forward which is important, the level of our short cycle organic sales continues to expand compared to a year ago, that’s up about 30% and our margins are improving. So, we have the acceleration of the earnings that comes from improved volume and improved margins with that segment of our business. And as I said, I expect that to carry forward. To give a comparison on that if you look at the incremental revenue that came year-over-year from that segment of our business, not quite, but almost dollar-for-dollar of the delta revenue dropped to variable margin and that was an…

Sure. The powers – the two aspects of the power market that are currently important to us are renewable energy in the U.S. We are seeing a great deal of activity in our bid pipeline around those types of projects. And these are projects that have an ASP of $0.5 million to $1 million. And there are quite a few of those and we have won a number of those already, a great additional incremental work to our business. And we don’t see that abating right now. It looks to be fairly strong. The Nuclear segment to us that looks to only have upside from where Energy Steel was to where we think we can get to together and Graham and Energy Steel combined. And that has a component of new build associated with it and aspect related to life extension for the existing plants and just ongoing maintenance at the existing plants as well. We see only really significant potential upside there. Around petrochem our sales have been down as a percent of overall sales from the petrochem and chem markets. I would like to point you to bookings level from this market segment chem/petrochem has been about 20% of our bookings. So, while the sales are lower as a percentage wise, we are adding into our backlog from the chem/petrochem market. And the last time when we thought about the last recovery in the early 90s, chem/petrochem lead the way in advance of refining and it seems to be playing off that way again. Joe Mondillo – Sidoti & Company: Okay, great. I think that’s all I got for now. I’ll jump back in queue. Thanks a lot.

You’re welcome.

Our next question is coming from the line of Gabe Birdsall with Brasada Capital Management. Please state your question. Gabe Birdsall – Brasada Capital Management: Hey, guys thank you. Actually the previous two questions covered that for me. Thank you.

You’re welcome.

(Operator Instructions) Our next question is coming from the line of George Walsh with Gilford Securities. Please state your question. George Walsh – Gilford Securities: Jim, could you comment a bit. It’s very interesting that you are able to move forward with orders here, while there is a lot of headline risk going on between the Eurozone and changes in the price of oil, even what’s going on in nuclear. Just could you comment on you know your customers and how they’re moving ahead in the phase of some of those risks and it’s really how they feel about their projects and wanting to go ahead?

Sure, the conversations we are having with our customers. While they are worried in the immediate term next several quarters, there is some worry, but longer-term the demand continues to increase. We need to satisfy that demand and what’s great about the space we play in is the construction cycle for new capacity is three to four years to five years. So, an investment that needs to be made today to satisfy incremental demand four or five years out, doesn’t focus a whole lot around the sound bites that we all hear around the economy and the worry that’s in front of us as we read the paper and listen to the news. So, that we’re committed to the long-term fundamentals of the markets. What’s encouraging to us is we have a number of opportunities that we’re bidding right now that are from North America refining. And I would say we didn’t have those 12-18 months ago. But they’re coming through the pipeline now. They are for Feedstock diversification and rebounds to expand refining capacity in North America. There are a couple oil sands projects that are moving forward for upgrades, which is where our backend systems are used. It was a about a three-year pause in activity there, so that’s an encouraging sign. And here too these are projects that are several years to commercial operation of the new capacity or improvement, not so worried about what’s in front of them today. Around nuclear – to us that’s really exciting. As Jeff said, the acquisition of Energy Steel has been wonderful, it’s a great team, it’s a very important market that seems to have strong fundamentals to provide growth for us, not just on one front, but on multiple fronts. We believe there will be new utilities built in…

For the projects that we are working on, which at this stage are in the recovery going to argue for a moment are little smaller than the megaprojects that we would like to see moving forward. But those smaller projects are great. We like them a lot. And the multibillion dollar projects are $10 million or $15 million orders for us, those aren’t moving into the pipeline toward procurement just yet, but they will. George Walsh – Gilford Securities: Okay. Do you just have a growth rate for Energy Steel revenues year-over-year?

I’m sorry, what was the question? George Walsh – Gilford Securities: The growth rate of Energy Steel and it’s down year-over-year its revenue growth rate?

George, its revenue growth rate Energy Steel actually I had quite a good – particularly the first half of 2010, they had a couple of large orders that work their way through so, the growth rate is actually not that significant year-over-year, but it’s really due to timing of a couple of projects they had pre-acquisition. George Walsh – Gilford Securities: Okay.

I’m going to come out in a different way, when we look at Energy Steel as a business we brought in the mid to upper teens for revenue. We see a business that together with the Energy Steel team and the Graham team that $40 million to $50 million of run rate is not out of the question over the next several years, not this year, not next year. But we think there is that much demand that we are going to go after, we are going to do the right things. We are going to position our companies to win that business and I think it’s that strong. George Walsh – Gilford Securities: And do you see that being in the same way clearly domestic not holding internationally?

Internationally gives us opportunity and as I’ve said on the prior calls I believe that’s third in our priorities. We want to take care of our home market and go after the great opportunities that we see their again with investment in the existing plants and we believed there will be investment in new construction. We want to win their first, well; we develop our strategy to win internationally. George Walsh – Gilford Securities: Yeah, but that’s a nice healthy domestic market target. Okay, but that’s good. Thanks a lot Jim.

You are welcome, George.

Our next question is coming from the line of Joe Mondillo with Sidoti & Company. Please state your question. Joe Mondillo – Sidoti & Company: Hi, guys just a couple of follow-up questions. First on the short cycle business, how much does that make above your business and it seems like last call you would sort of think that you were thinking that may subside from the strong levels that you saw in the first quarter that obviously continued through the second quarter here. And you’re sort of thinking that continues. Could you just give a little more color on your thinking about piece of the business?

Sure. Prior to the acquisition of Energy Steel, the short cycle business was roughly one–third of our revenue mix. With the addition of Energy Steel, I would call it roughly 20% of our revenue mix. What’s great about our business model with respect to large projects as we have clear vision into the pipeline that suggests we know it’s coming 12, 18 months before it arrives is bookings. And we have visibility in our backlog of 12ish months. So we have about 24 to 30 months of visibility with our large project work. For the short cycle business, we don’t have that visibility. In terms of it doesn’t have the same long sales cycle as our larger work, so it’s hard to judge to direction of that in the near–term, but we do remain positive again because we are seeing order development improve and most importantly margins improve over comparable periods for the short cycle business again suggesting we are into the recovery and spending is being freed up. Joe Mondillo – Sidoti & Company: Okay, great. And then two other questions, first, I was wondering if you could talk a little bit about the nuclear business market. Have you started to hear anything in terms of rules and regulations, increased safety regarding what the regulators have been talking about, over the last six months is there anything sort of progress there that you may benefit from?

We believe so, we haven’t heard much from the utility yet, but the NRC report is clearly indicating that investments need to be made to improve safety around cooling of the equipment during extended power outage, we provide cooling equipment. And the metallurgical upgrades we think also is part of the life extension of the existing plants. And that will affect our product -- potential products supply as well. We thought it was going to be 12 to 18 months before we saw the effects of Fukushima coming to the supply chain, at this point I’m still feeling that way. Joe Mondillo – Sidoti & Company: Okay. Has there been any initiation from the NRC report or is it sort of still on the stalemate in terms of initiating regulation?

I think it’s going through a laborious process, which is the 12 to 18 months. Joe Mondillo – Sidoti & Company: Okay, okay. And then the last question I just wanted to ask about was are there any opportunities specifically, domestically but I know you also had some in India, but maybe even elsewhere within the fertilizer industry, there's a lot of capacity coming on line with that -- in that industry and I was wondering if there was any opportunities there?

That’s a market sector that’s keeping us extremely busy with bid work. In Asia, some in South America there’s a little bit North America, but in terms of our bidding pipeline there is a lot of work for fertilizer. And fertilizers, two aspects to it, there is an ammonia plant and a fertilizer plant, both plants require our products. There is a very specialized technology in the fertilizer plant, where only three companies in the world, Graham being one of them are the allowed suppliers. So, we like the fertilizer market and very actively pursuing those sales opportunities now. Although our Sales Managers is over with a licensor in Europe right now having conversations around upcoming projects and how we can position ourselves to take advantage of those opportunities as they come forward. Joe Mondillo – Sidoti & Company: It seems like just hearing from you guys over the last I don't know 9 to 12 months or so you've really started to begin being able to get some traction within overseas markets, is the U.S. market just much more competitive, because I know the nitrogen-based fertilizer, there is a lot of capacity coming on line, if it’s just a lot more competitive here on?

I don’t necessarily think that’s the case. One of the views we had as we went into the downturn and then around 2009 as we’re right in the heart of the downturn, we had felt recovery for Graham, absent of the addition of Energy Steel, would be led by the Asian, Middle East and South American markets first, followed by North American market based on how we saw recovery in the North American market materializing. It’s moving more slowly than the recoveries we’ve seen in the emerging markets. That’s what we projected, that’s how it’s playing out, that doesn't suggest in any way that the North American market is more competitive than the international market. It's just the way that the recovery we felt would play out and how it is playing out, but we are seeing some improvement of course, as we’ve said in the earlier remarks about the North American market becoming healthier those timing of the recovery to put it more succinctly Joe. Joe Mondillo – Sidoti & Company: All right, great thanks a lot.

Our next question is coming from George Walsh with Gilford Securities. Please state your question. George Walsh – Gilford Securities: Jim, when you have your section in the news release about sales by region. Is that, I guess particularly in line with the United States, is that final customer for the project or what is it?

The way we define our geographic sales mix is by end use location. George Walsh – Gilford Securities: Okay. Okay, good. So that’s final end customer, all right. Also, just any update, you have, there is a good balance sheet and just focused in terms of your little more specifically regarding your acquisition strategy?

George, this is Jeff. I think we’ve talked about in the last couple of calls, we certainly took our, I wanted to make sure we took the right amount of time to integrate Energy Steel before looking to the next potential acquisition. So we are relatively early in that process. We took a little bit of a pause for six or eight months post Energy Steel. So we’re really early in that process, so not a lot to report at this point. George Walsh – Gilford Securities: Okay, right. Thanks.

Thank you.

There are no further questions at this time. I’ll now turn the floor back over to Jim Lines for any closing remarks. Jim Lines – President and Chief Executive Officer: Thank you. We appreciate your time this morning and for your questions. Again, we felt we had a very solid quarter. The credit goes to the management team and all the employees of Graham for great execution and their focus on meeting our customer requirements, improving our businesses, reducing lead time, focus on quality and defect reduction. And it’s really taking hold and you’re seeing it in our financial results, coupled with an improvement in our markets. We look forward to updating you on the January call regarding our progress. Thanks again, have a good weekend.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and we thank you for your participation.