Greetings. And welcome to the Graham Corporation Third Quarter Fiscal Year 2012 Quarterly Results Conference Call. At this time, all participants are in a listen-only mode. A brief 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 now begin.

Thank you, [Shea], and good morning, everyone. We appreciate your time here today with the Graham Corporation’s third 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 provide a review of the company’s strategic -- strategy and outlook. Many of you -- you should have the website -- on the website there are slides that accompany the conversation today. If you don’t have them you can find them on the company’s website at 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?

Thank you, Debbie. Good morning, everyone. And we appreciate your time today. Please turn your attention to slide four. I feel we had a solid quarter with revenue expanding year-on-year 27% to $24.3 million. Organic sales are up 13%, Energy Steel represented 14% of total sales. An indicator to the market direction for us, one of them is our organic short cycle sales and we’ve seen that segment of our business improving year-on-year, it’s up 25% in revenue, while a lot of this is providing expanded margin due to price strategies we implemented earlier in the year. The power market in whole that expanded about $2 million year-on-year. Petrochemical market, we’re continuing to see good activity there, primarily on the order intake side. Sales to the refining market were flat in the quarter. Our geographic sales mix was 57% domestic, 43% international. Please turn to the slide five. Margin was in line with expectation for the third quarter. Gross margin came in at 27% and a 13% EBITDA margin. Organic production volume, as measured in total labor hours, was up 15%. Tier 2, we believe this is an indication that our markets are improving, as one of our leading indicators to the direction are markets are moving in. We’re also nearing the end of producing a couple of large Middle Eastern refining projects and that did have an effect on sequential gross margin. Please turn to slide six. Our strategy to diversify has had a positive impact. Our second quarter was a clear indication of what this can mean. As our traditional refining and petrochemical markets gain momentum, coupled with growth from power generation markets along with our work for the U.S. Navy. We anticipate stronger growth this coming expansion cycle than we enjoyed the last cycle. We also feel…

Thank you, Jim, and good morning, everyone. As Jim mentioned, we had a good third quarter. Q3 sales were $24.3 million, up 27% from last year. Half of that growth was organic and half of that growth was Energy Steel and just to clarify we purchased Energy Steel late in the quarter -- third quarter of last year, so comparable results for last year have very limited amount of Energy Steel in them in the third quarter. Sales in the quarter were 57% domestic and 43% international. When you compare that with last year, last year had 36% domestic sales and 64% international. If you look at Graham’s historical commercial markets, they do continue to be tilted toward the international arena, whereas as Energy Steel is almost exclusively domestic and the U.S. Navy related work of course is also 100% domestic. Therefore, looking forward we think a 50/50 mix is probably in the right range. EBITDA margin is up slightly to 13%, compared with 12% last year, of that 12% and I will speak to this not only on the EBITDA but on other earnings related issues, that 12% backs out the acquisition-related costs that we encouraged in the third quarter of last year. So the comparables will be slightly different then was reported, but we want it -- from an intellectual integrity standpoint we want to make sure you are looking at apples-and-apples, so, again, 13% versus 12% last year. Earnings per share were $1.6 million in the third quarter, up from $1.3 million or $0.13 a share last year. For the first nine months of fiscal 2012 sales were $82.9 million, up from $48.3 million last year, organic growth was 44% or $20.9 million increase and Energy Steel contributed an increase of $13.8 million. EBITDA in the first…

Thank you. (Operator Instructions) Our first question comes from Tien San Lucas from Brasada Capital Management. Gabe Birdsall – Brasada Capital Management: Hi. It’s actually Gabe for Tien. How are you?

Pretty well. How are you? Gabe Birdsall – Brasada Capital Management: Real good. Thank you for your time. Just a few questions. Can you help us understand the size of the orders that were pushed out this quarter?

Sure. That was between $5 million and $10 million, and that was across three or four projects. Gabe Birdsall – Brasada Capital Management: Excellent. Thank you. Another question I had is regarding the cash, is the 100% of that available or is any of that include advanced payments from customers?

No. 100% of that is available. The advanced payments which had spiked about two years ago have been consistently coming down now at a more normalized level. Gabe Birdsall – Brasada Capital Management: Excellent. And is there anything that’s particular in the third quarter that’s seasonal from a cost standpoint, can you remind us there?

No. Nothing in particular, no. Gabe Birdsall – Brasada Capital Management: Okay. And then last question on the backlog. Can you just remind us on slide 17, you have the Navy project that was booked in 2009? You expect 50% of that to be remaining and set right at the end of fiscal ‘12, the size of the original Navy contract?

Well, at the end of fiscal ‘12, there will be normally two-thirds of that project left.

And the original size was greater than $25 million. Gabe Birdsall – Brasada Capital Management: Excellent. Any comments for us, as we look out to fiscal ‘13?

I think the important takeaway that that I would like to share, as I said in the earlier remarks is, the earlier stages of recovery, it’s difficult to predict the timing of orders. But what we can state with strong conviction is, our pipeline is extraordinarily strong and it’s more diverse than it was the last cycle. So we’re very encouraged by that. And as we also look at some fundamental leading indicators of what actually has transpired over the last 12 months, we’re seeing order development improve for our larger orders. It’s up about 18% trailing 12 months versus the prior trailing 12 months. Particularly, importantly and indicative of the environment is the gross margin is superior in the trailing 12 months to the prior trailing 12 months. So we are seeing order development improve as, as is margin, so that’s a sign that things are getting better. Also on the short cycle order slide, trailing 12 months we’re seeing that up about 13% to 15% and as well having margin expansion. So those are clear signs that we think the worst is behind us and the markets are just slow in their recovery, but our bidding activity is not slow. Growth of bidding activity is slow in 2003 and 2004 when we saw the wave in growth coming. And so we’re really excited and if I were to pass on a comment from our sales management side, its get ready. Gabe Birdsall – Brasada Capital Management: We appreciate that color. And then I have one more question I could just throw it in there please. Your comments on the petrochemical cycle, you said you haven’t seen any projects like this in over a decade. So safe to assume this would be new, this cycle relative to your last one.

The comments, the context of that comment related to the USA. Globally, the market was in the early stages of recovery similar to the last recover. But what’s different this time and beneficial to us is we’re expecting to see a stronger investment in the U.S. this coming cycle than we saw the cycle, because of the present natural gas. And just anecdotally, we have secured a couple of orders now for investing in additional ethylene capacity for U.S. petrochem plants and there is a number of those that are under consideration. So that’s very encouraging to us because the ethylene plant to us is the surrogate for the overall health of the petrochemical market and as we see investments being made there, primarily drive our surface condenser product line, but downstream at the ethylene plant would, ethylene is a feedstock to the rest of the petrochemical industry, that drives demand for all of our products, all of our traditional products, condensers, ejectors, docking systems, heat transfer products. So we’re very excited about what we’re seeing there and we just need to allow some time for that to play out but we have secured a few orders already. Gabe Birdsall – Brasada Capital Management: Thank you very much for the color. Great job, guys. Thank you.

Welcome, Gabe.

Thanks, Gabe.

Thank you. Our next question comes from Mark Tobin from Roth Capital Partners. Mark Tobin from – Capital Partners: Hi, Jim, Jeff. Thanks for taking my questions. First on SG&A, I assume the $500,000 in transaction cost was included in that -- in backing that out it ticked down quite a bit sequentially. And then your guidance assumes that it does, I guess climb back up in Q4. Can you give us a feel for what the dynamics I guess on that line?

Sure. Mark, this is Jeff. First off, the backing out of the $500,000 was in the third quarter of last year. So that’s when we were giving.

2011, fiscal 2011.

Yeah. For fiscal 2011. So, if you look at the second quarter and the third quarter of this year, we did actually see the SG&A drop a little bit in the third quarter and that’s really just some timing nothing out of the ordinary. And in the fourth quarter, if you look at our guidance, it would drop up a little bit and part of that is as we’re looking to add resources to prepare for the market expansion, that’s where we’re seeing some of those costs coming in the fourth quarter. Mark Tobin from – Capital Partners: Okay. Understood. My mistake on that. And I guess you talked about the pipeline looking rosy. Can you give us some insight into on the productive as far as the things you’re doing from a production capacity standpoint to prepare yourselves for this rebound?

Sure. That’s a great question. We took advantage of this downturn to continue to invest in our business. Our capital plan still is targeted on capacity and throughput improvement focusing on productivity. Ideally, our strategies remain to get more out of our roofline, not having go spend our roofline to fulfill our growth and growth objectives. So, we’ve been having targeted investment in welding equipment, machining equipment to reduce lead time and improve throughput, and that’s been paying off, and that’s been an ongoing program for the last four or five years. With respect to our contract execution, we’ve been focusing on process improvement, again, to get that lead time reduction and also to drive areas out of the process. That’s an ongoing activity but that’s paying off as well. And the IT solutions to create scale and create capacity have provided some benefit as well. So we’ve been focusing on a number of fronts to help our employees be more successful and more productive in the work that they’re doing and that’s had a big impact on our business. And if we think about our company, just to give a comparison, in 2004 and 2005 we are about a $40 million company, the organic piece, in 2009 organically we were a $100 million with the same roof line. And if I think of where we are today in our productive capacity, I would state that that’s more like $135 million to $150 million as we go into the next cycle. So, I think we’ve done a lot to address productivity and capacity here at Graham. And then in addition to that, we’ve added diversity through focusing on the navy and our attention to the power sector with the addition of our team in Lapeer, it’s a great story. Mark Tobin from – Capital Partners: That’s helpful. Thank you very much. I appreciate it.

Thank you. (Operator Instructions) Our next question comes from Joe Mondillo from Sidoti & Company. Joe Mondillo – Sidoti & Company: Good morning, everyone.

Good morning, Joe.

Hi, Joe. Joe Mondillo – Sidoti & Company: My first question, just sort of trying to get a better feel what’s going on. So, last four quarters have been sort of flattish on the sales and orders basis. But it seems like compared to three months ago that you guys are feeling a little more positive on the cycle on the business. So with orders and sales sort of flattish still sort of what are you seeing differently that makes you little more optimistic and I know you’ve said that the timing is tough, when does this sort of come into play in terms of heading the P&L or heading your business?

Well. The leading indicator there, Joe, is going to be bookings, and quarterly order rates and backlog expansion. What we can only remark to you is qualitatively and quantitatively the size and diversity of our potential bookings pipeline continues to look very good to us. We feel this is simply a matter of timing. What’s really important is the discipline that we have to exercise in order selection. What would be wrong is to become too anxious and too nervous to move too quickly to full backlog when we could fill it with backlogs that would undervalue our productive capacity. So, we’re making, I believe the right decisions on order selection and our margin appetite, while we give the bookings pipeline a chance to move forward to procurement. We think as the next couple of quarters, I’m not calling it Q4, but it’s going to happen. We saw it happen in 2004, 2005. The longer the downturn is with underlying demand still expanding, which is happening. The wave of work will be that much higher. So we’re really excited and we’re making investments to-date before demand comes to be ready. Joe Mondillo – Sidoti & Company: In terms of the actual projects on the world that you guys track and eventually hope to bid on or are bidding on right now, how is that sort of timing when you look at all these projects around the world over the last couple of quarters, are you seeing any significant increase in products?

To a degree certainly and we’re also seeing which is more important we’re seeing the projects move through their ordinary sales stage from concept to feed, which is a more detailed engineering analysis from feed to EPC bid, and then from EPC bid to contractor award and former acquisitions to purchase. So we’re seeing things move directionally to the right to our procurement. Those are notes that we want to see and that’s what we’re seeing happening. So while we’re seeing movement around the sales cycle which is great and we’re also seeing additional projects come into the pipeline which is also very important. Joe Mondillo – Sidoti & Company: Okay. And then I guess more in particular, in terms of your oil refining business is actually down year-over-year with a little on to me I guess, if you could talk about that? And then also oil drilling in the U.S. is as strong as it’s been in 20 years in terms of drilling? Do you foresee any opportunities there within the U.S. refining business or is it just there is oil reserves within the U.S. with such a small percentage of overall U.S. demand that you’re not going to see a huge significant upturn there?

We’re anticipating to see a very nice upturn there. We’re not expecting it necessarily to be as strong as it was the last cycle. And we have to bear in mind there was a huge investment in North American refining capacity the last cycle which is coming on stream now. So the market is absorbing that, there is a little of bit excess capacity. But bearing in mind that, new refining capacity whether it would be a retrofit or revamp or an expansion at an existing site those construction cycles are two or three years. So what they would start up today -- start working on today comes on stream in calendar ‘15. So we are seeing that activity now with some of the independent refiners in the U.S., some of the large integrated refiners are looking at expansion projects and equally importantly we are seeing again workup in the oil sands that we haven’t seen in three years. Joe Mondillo – Sidoti & Company: Okay. And then, last question in terms of pricing, what is your backlog in terms of the orders that you are receiving today. What does that margin look like compared to the margin that you are realizing on the P&L right now? Thank you.

Consistent with the last call that we had in October, if we reflect it on Q1 and Q2 sales, sales converted -- backlog converted to the sales in those two quarters had superior margins on the average of the backlog. But we were winning new work that was also above the average margin of the backlog. So we have Q3 and Q4 to contend with. But we are adding to our backlog business that’s on a superior margin to the average of the backlog. So we have to get through the trough. We have to deal with the backlog that was one, 12, 15 months ago. But what we are doing to address that margin headwind, again we are focused on productivity, we are focused on error reduction. We have very aggressive strategies to control our costs and actually improve margin after the order and we’ve been realizing that margin improvement after the order through the steps that we have been taking. So, I didn’t want to sound as though we are held hostage to the margin that we booked, we’re actually taking action to improve that and we’ve been realizing the benefit there. But to answer your question, what we’re winning new business on average is at a higher margin than we average of the backlog. Joe Mondillo – Sidoti & Company: Okay. So in terms of the back log compared to, right now you realize 27% gross margin in this past quarter, I imagine that’s from bookings from a year ago. Is your backlog and the orders that you’re winning today much considerably higher than 300 basis points or more or higher than that.

I’m not going to comment quantitatively I can say directionally its better. Joe Mondillo – Sidoti & Company: Okay. All right. Thank you.

You’re welcome.

Thank you. Our next question comes from George Walsh from Gilford Securities. George Walsh – Gilford Securities: All right. Jim, is there any comments on the or any issues with the integration of Energy Steel or is that pretty much done and how are those margins out of that division comparing to your overall margins?

As we anticipate, well, there’s two questions there. The simulation of Energy Steel the team in Lapeer into our and our team is going extraordinarily well. A part of our due diligence was to assess the culture, assess the management team, assess the operating practices to feel confident that it could simulate into our business well and there has – has not been any appreciable surprises or nothing that we didn’t anticipate. So from that standpoint, it’s got extraordinarily well. I’m extremely pleased with that and the credit goes to the Lapeer team and to our managers that have overseen the simulation of Energy Steel into our team. Great job. With respect to the margin, their business quite honestly, while gross margin and SG&A can be a little different. The operating margin is fairly similar to our overall business. It blends in quite well and it’s not appreciably different. George Walsh – Gilford Securities: Okay. Is the SG&A, are there things that you’re still integrating some of that overhead with SG&A or anything else?

With respect to our strategies to capitalize more fully on the power market we will be making investments that will both hit COGS and SG&A to capitalize on what we see as a strong growth opportunity at that company, in that market. George Walsh – Gilford Securities: Okay.

Nothing dramatically different but there will be some investments that hit COGS and hit SG&A. George Walsh – Gilford Securities: Okay. And as you go forward and you talked about which is a great story, the increase to the capacity there, you mentioned that $135 million. With this cycle, could you just review again, I think you’ve done it before, but your perception of how margins would change as you come to the better parts in this cycle?

Sure. I think a real great quarter to look at was Q2. Q2 was about $33 million of revenue, 38% gross margin. It had the diversity we were looking for. Power was a very good percentage of our overall sales that quarter and a good component from Navy, nice revenue from refining also reflective of because it was a delayed conversion of backlog to revenue, pricing that was similar to the last peak. So that was indicative of where we thought margins will get to. We’ve indicated many times that while we eclipsed 40% gross margin last cycle, we’re going to work real hard to do that again. We feel upper 30s similar to Q2 is an expectation for the next peak. We’re not dismissing that we won’t go above 40% and we know how to do that. But we think realistically and sustainably into the next growth cycle as we hit full striving recovery that’s what we’re expecting and that’s what you should expect. George Walsh – Gilford Securities: Okay. And obviously that, you’re including the Energy Steel in its full integration, et cetera?

George, this is Jeff. Just a quick follow-on from what Jim said. If you look at the second quarter and certainly don’t want to extrapolate anything, but I think if you just looked at it on the surface instead, if you took that quarter and made a full year out of it during the full recovery, what does that quarter look like. We don’t have revenue for the historic Graham business annualize about $105 million, revenue for Energy Steel annualize at just about $30 million, so you’re kind of in the mid 130s from a revenue standpoint, again gross margin of 38%, EBITDA margins in the mid 20s, that’s we -- as Jim said, that’s what we believe in the middle of a full recovery, we can look like at that size. And also, as Jim said, we have capacity of $135 million to $150 million that’s in the base business that does not include Energy Steel, on top of that we believe we have great deal of available capacity of Energy Steel. So the $135 million well certainly a nice target, but it’s certainly not the peak we’re looking for. George Walsh – Gilford Securities: Yeah. What is the capacity of Energy Steel? Is there general number you have with that?

We believe it’s more than double and if you look at where we’re at right now. We’re running at the annualized rate in the high teens. We believe it’s more than double what it’s at right now. So, we think $40 plus million is certainly not out of the question. And where we need to add some resources people wise to get there absolutely, but do we -- and it’s really just giving us more capabilities in both the front office, as well as in the manufacturing facility, but the facility itself has a lot of run rate. George Walsh – Gilford Securities: Okay. That’s great. Well, that’s a great picture. Thank you very much.

Thanks George.

Thanks George.

Thank you. (Operator Instructions) Our next question is a follow-up from Joe Mondillo. Joe Mondillo – Sidoti & Company: Hey, guys. I just have a one quick follow-up question. I was just wondering, I don’t have the numbers in front of me, but if you could comment how the Energy Steel sales have been flooding over the last couple of quarters, and if you could sort of give your sort of updated outlook on the nuclear market overall in the U.S.?

Sure. Joe, if you look at Energy Steel, they are, as we are a bit lumpy. They have quarters of -- if you would look at the calendar year, so the fourth quarter of last fiscal year was around $5 million. First quarter this fiscal year the second -- the quarter that ended in June was around $4 million. The next quarter, the quarter ended September was a little more than $7 million and this quarter was around $3.5 million. So there is some lumpiness in there really due to timing of projects and how things flow through the facility, through the business. We will kind of look at that business and again, on an annualized basis, we’ve been running up in the upper teens. With regard to the nuclear market itself, obviously the win in Westinghouse we were very pleased of our about the facilities down in Georgia and in South Carolina. That was a big project for them, a big win for them and there is some more opportunities we believe to support those new facilities. So on the new facility side, at the new reactor side, there is definitely opportunities. And then in their historic business, which has been supporting the existing plans we continue to see very good opportunities there. We think we’ve enhanced their capacities to go after some opportunities that might have been more challenging for them in the past. And so we think that the addressable market at their historic business, which is the existing plants has improved and then on top of that there is some new build opportunities. So we’re very encouraged about what we see at Energy Steel both currently, as well as in the opportunities going forward. Joe Mondillo – Sidoti & Company: Okay. Following the sort of the Japanese crisis, there were sort of talks with the NRC that increased safety regulation was going to occur when they came out with a bunch of stuff that they were talking about and that could benefit. Have you guys heard anything further from that? Has anything sort of come about from that and?

Sure. Nothing that we could point to directly and if we reflect that to 9/11 we thought it would take 12 to 18 months like it did last time before it got into the supply chain. So the NRC has drafted certain regulations or recommendations for what utility should be looking at. Some of it involves heat transfer which is, excuse me, what we’re involved in and other controls. So we’re expecting to see some of that flow into the supply chain in the coming quarters, but I can’t point to anything specifically. Joe Mondillo – Sidoti & Company: Okay. All right. Thank you.

You’re welcome.

Thank you. At this time, we have no further questions. I’d like to turn the call back over to our speakers for any closing comments.

We appreciate your time this morning and we look forward to updating you during the June conference call, end of the year conference call. Thank you.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.