Good day, everyone and welcome to the American Electric Technologies Fourth Quarter 2014 Results Conference Call. As a reminder, today's conference is being recorded. This press release contains forward-looking statements, as defined in Section 27A of the Securities Exchange Act of 1934, concerning anticipated future demand for our products and other future plans and objectives. While the Company believes that such forward-looking statements are based on reasonable assumptions, there could be no assurance that such future revenues, profits, plans and objectives will be achieved on the schedule or in the amounts indicated. Investors are cautioned that these forward-looking statements are not guarantees of future performance. Actual events or the results may differ from the Company’s expectations, and are subject to various risks and uncertainties, including those listed in Item 1A of Form 10-K filed with the Securities and Exchange Commission on March 28, 2014. The Company assumes no obligation to publicly update or revise its forward-looking statements, even if experience or future events make it clear that any of the projected results expressed or implied herein will not be realized. At this time, I would like to turn the conference over to Mr. Charles Dauber, President and CEO for AETI, please go ahead, sir.

Thank you. Good morning everyone. I'd like to welcome you all to American Electric Technologies' fourth quarter 2014 earnings call. Joining me today is our Senior Vice President and Chief Financial Officer, Andy Puhala. For our call today, I'm going to start with a review of our fourth quarter results then I'll turn the call over to Andy for a more detailed financial review. I'll then come back and walk you through more detail about our business and how our markets look so far in 2015. After that, we'll move to a question-and-answer session coordinated by the moderator. In Q4, the Company reported revenues of 13.7 million down from the 16.5 million from Q4 last year and down slightly from 14.3 million in Q3 of this year. The revenue decline was primarily related to two customer initiated projects delays related to the drop in the price of oil, one land drilling project and one large oil related land production PDC project. For the quarter, the Company reported a net loss attributed to common shareholders of 2.1 million, which was flat versus Q3, but down from a $600,000 profit in Q4 last year. The loss was primarily related to a breakeven gross margin for the Company for the quarter which was driven by a negative 2% gross margin for our Technical Products and Services segment. If you remember from our third quarter earnings call, I discussed that the Company has been experiencing significant cost overruns due to both several new product introductions and a significant increase in the number of large power distribution center or PDC as we call them projects for the midstream and downstream oil and gas markets. As expected the fourth quarter was negatively impacted by the low margins from those projects that completed and shifted in Q4. The quarter was also impacted by some additional warranty costs, some employee severance costs that I'll discuss later and some other minor project close out costs. Even though those projects that I discussed with you in last quarter's call continued to impact us in the quarter, the good news is that that all those projects shifted in the quarter and will not impact us further in 2015. As we head further into 2015, although there is always more work to do, we believe our COO and team have gotten us through these challenges related to our new product introductions in our power distribution center manufacturing and feel confident in our ability to manufacture those projects on budget and deliver them on schedule going forward. With that, I'll now turn the call over to Andy to review our financial details and I'll come back in a few minutes. Andy?

Thanks Charles. As Charles mentioned, Q4 was a big quote one for the company with the cost overruns we experienced in Q3 on large multi-quarter Arc Resistant projects and large power distribution centers spilling into Q4 since most of our revenues and profits are recognized using the percentage of completion method of accounting. The lower revenues of $13.7 million due primarily to customer delayed projects combined with these cost overruns, additional warranty costs and some severance costs and translated into a breakeven gross margin in the quarter. Income from consolidated continuing operations was a loss of $2.4 million in the quarter. Moving to our joint ventures, BOMAY's equity income for the quarter before expenses was 261,000. A strong quarter given the typical seasonality we see with BOMAY's operations. MIEFE our Singapore JV had a disappointing fourth quarter and was essentially breakeven. Our share of net equity income from our joint ventures after foreign management expenses was $150,000. Net income attributable to the common stockholders was a loss of $2.1 million or $0.25 per fully diluted shares. Moving to the balance sheet and cash flow we ended Q4 with 3.6 million of cash on-hand and 4 million of debt drawn on our revolving credit facility. A combination of higher working capital requirements on larger longer duration projects and the project cost overruns in Q3 and Q4 contributed to the need to drawdown on our facility. Since quarter-end our net working capital has improved on strong collections as our planned expansion was completed in 2014 our CapEx should also revert to more customary amounts and we don’t anticipate the need for additional borrowing at this time. Our normal BOMAY dividend of approximately $800,000 to $1 million should also be received in the second quarter. We finished the year with 26.5 million of backlog second only to Q3’s record backlog of $28 million. With that I'll turn it back to Charles for some additional color on the business.

Thanks Andy. Now that we've gone through our key financial results for the quarter I want to share with you all more of my thoughts about our business and where we sit in our markets so far in 2015. As I said earlier we continue to make strong progress on becoming a market leader for our target energy industry sectors. We feel comfortable we have worked through our growing things and now have the strong competitive position in those key markets. Let's start with the oil and gas market sector. In Q4 our oil and gas related business continues to be our primary revenue driver representing 65% of $8.9 million of our revenue. For the full year oil and gas related business represented 72% of revenue versus 69% last year. As the majority of the challenges related to the new product introductions and the ramp in our PDC business that I discussed earlier were related to oil and gas this sector gross margins were negative 1% for the quarter. Oil and gas related backlog for the quarter was up 7% to 25 million from the end of Q3 and is up over 66% from Q4 last year. This is a record backlog for us in the sector and the vast majority of this is in natural gas related projects not oil related projects. We have started to see some oil relate project backlog getting postponed but our overall oil and gas backlog remains very strong which I think is reflective of the strong progress we've made in this market. Briefly touching on our wholly-owned M&I Electric Brazil subsidiary which is all oil and gas focused. M&I Electric Brazil grew revenues in the second quarter of operation to over $600,000 which is reflective of its strong growth we are expecting from…

Thank you. [Operator Instructions] And we'll go to our first caller.

Charles, hi it's Greg Ayers from Singular Research. I was wondering, if you could discuss the spread of revenues between the upstream, midstream and downstream sectors of the energy market within your energy-related revenues as reported it?

This is probably not the -- by the 1% increment, but I can give you a sort of general number for the items of your trailing 12 months. Our revenues for trailing 12 months, about 20% to 25% of that revenue was upstream. About 60% of that business was midstream and downstream. And let's say the last 15% to 20% was of power generation and marine and industrial.

And as you look at your backlog, would the backlog be similar or would the upstream portion of the backlog be significantly less than that 20% to 25% of your backlog revenues?

I would have said that the percentages are probably relatively close it tends to go up and down on a quarter-by-quarter basis. I would have said just thinking about the backlog that the midstream and downstream is probably a little bit higher than 60% as it relates to the power gen, marine and industrial or maybe that's 70% something like that and maybe the upstream stuff is 20% and so whatever that leaves me with at the end of as everything else, but in general it sort of follows it. If I look at sort of new bookings right as we continue forward but the new bookings are primarily in the non-upstream related markets, although we still opportunities there and we're chasing just as an overall the bookings have been primarily midstream, downstream, power gen and marine and industrial sectors.

And the PDC projects which were delayed and now completed you have followed those delayed projects out of your backlog I understand that, but can you quantify how much revenue in the quarter was recognized on those delayed projects?

I'm looking to Andy in case we have those numbers off the top of our head or not?

Yes Greg I mean I don’t have the detail of those specific projects at hand, but those were pretty large multimillion projects so it’s a significant part of our revenue in the quarter.

So I would say a significant part of our technical products revenue and part of our -- and I think that's really if you go look at the gross margins and the TP in that segment which is primarily the products those projects were the primary driver for that terrible gross margin, all right.

And so that won't be there in the first quarter so we could expect…

Exactly.

More traditional margins in the first quarter?

Exactly, exactly.

Your annualized cost cuts the $3 million of savings. Is that spread between what we'd call the SG&A line and your operating cost of goods sold? What you call the fixed part of your cost of goods sold that's a fair way to refer to it?

Yes Greg, it's a combination. It really is across the entire company. There's both direct labor and indirect labor, but it's almost entirely people driven. So there are some other initiatives, but the vast majority of that's related to taking people out of the system.

Simultaneously you mentioned the sales team that you've assembled to address the opportunity is now in place, so essentially that's not where the cuts are coming from I'm taking it then?

No, no it's not where the cuts are coming from. That's not, no, right yes.

That's a correct assumption, okay. And you are seeing traction on penetrating the larger E&C companies?

Yes, yes so this has been -- we have talked about this before but M&I has been in business that’s the brand name we operate under in the oil and gas markets. We've been in this market for 60 plus year primarily as a supplier to the smaller customers. But as we grew our company as we grew our products as we grew our capabilities the plant the product the PDCs. And in parallel we grew the sales team the idea was is that we thought we could be a true competitive player in this market for these much larger projects. And that’s as we've talked about previously that’s where you look at our projects use to be we'd get excited about the $600,000 to $800,000 projects. Now we get excited about the $3 million, $4 million, $5 million projects and we bid things that are well above that. So same number of sales people to go get these larger projects same sales effort you just get an awful lot more revenue and margin dollars per hour of sales time.

So you are continuing on addressing those larger sized projects?

Yes we feel good about that.

Extra but keep bidding, understood. Can you describe the bidding environment in anyway right is there some color you could give us on that?

Yes I think these things sort of tend to come in waves every two weeks that’s sort of get hot then it cools down. There is no line of reason to that but in general we've starting seeing more bidding opportunities in the new build land drilling business in the last couple of weeks or so. The bidding opportunities in the mid stream and downstream and have remained relatively strong I would say there is probably some margin compression from a price competiveness going on. It is just even if it's in a natural gas related project there is just still tenseness in this Houston market in general right. And so I think there is probably some margin compression going on. But I think bidding is actually still good there are still projects going forward people are still feeling good in the power gen market no change lots of bids we’re feeling good about that market and that’s really not tied at all to the price out of that oil.

That’s interesting not tied to the price of oil.

That’s what I talked about earlier is, is that. Now part of the strategy is this diversification and so we don’t cut the numbers exactly this way from a reporting perspective of what part of our business is tied to the price of the barrel of oil. But you can assume that from last year revenue a greater portion was tied to it. As we built up the mid stream and downstream part of our business related natural gas, that percentage dropped as the natural gas has a completely different supply and demand curve and impact on the market. So what's happening with the price of a barrel of oil is not directly impacting the natural gas related projects which is the majority of our backlog today.

That’s the majority of the backlog that’s a good point.

Yes oil and gas are not connected as it relates to us in a lot of these projects.

Good to know. You said just earlier one I was asking about the bidding environment that just might there has been some more new build land drilling opportunities for work that is the main part of -- it sounds contradictory to what you'd expect?

Right, just to be frank we are at a weird time right this is. We're talking about what this call is, as this is our Q4 2014 results and we're in the middle of March and our two weeks or now we've done with Q1. So I'm trying to just let you know what's going on in the markets. As I can tell you the financials for Q4 and what's going on in the markets right now? For the first two months of this year we saw very little new build land drilling re-quote opportunities at all. I would say starting in sort of December just when the price of oil dropped so did bidding opportunities for new rigs. But in the last couple of weeks we've started seeing more again not necessarily in the U.S. but actually and U.S. companies are doing projects in South America or in the Middle East or places like that and where they absolutely still have to keep reducing because that’s the revenue they need to keep their countries going. So I can’t it's too early to call the trend we still forecast the new build market will be down significantly in 2015. But it doesn’t mean we won’t get projects here or there.

And as you have mentioned in your prepared comments you're focused on the rehabilitation of older rigs?

Yes, there is a nice dynamic in the drilling market which is there is still contracts out there for the drilling contractors to go after. They don’t want to build they don’t have the money or the ability to go build the new drilling rig. So whether it's land or offshore they look at their existing fleet and they will try to figure out what’s the right amount of money they can spend against the new capabilities to go after that particular contract. But we can then with our engineering and our custom products, and our services and our construction and we can do a turnkey project for these guys and that’s for us a nice business, nice margin and helps the customer out, plus it is just another thing that we have and we’ve been doing for a long time. You just don’t hear about those much because of the new builds big projects are sort of sexy. So these are good projects, good margin and we think that will be part of offsetting the new capital project decline in 2015.

Sure, on BOMAY, you indicated that you thought 2015 would be flat to down in general, so although you received your traditional size dividend. Does that imply since you think really know what they are going to do for the year that they have already set their budget for 2015?

No, not necessarily, I mean our view is that China market is going to be down broadly, right. GDP growth is going to be down, China macroeconomic environment is clearly down and so we just believe there is going to be an overall less enthusiastic China National Petroleum budgets for this year, I am on my way to Asia tomorrow. And so the budgets for…

So the budget is not set?

Not set, yes but I am just anticipating.

Yes it is understood and I guess it's always hard to read until they tell you over there, you said there was other opportunities in China besides your traditional land drilling, can you amplify that?

Yes, so remember our partner is China National Petroleum Company which is 70% of the Chinese oil and gas market. The joint venture was originally established around land drilling and now we’ve taken and extended that and we’re working on projects with them and trying to pursue projects in the offshore drilling and now we’re trying to extend that even further and figure out how do we go after the Chinese pipeline opportunities and even the Chinese are refining in petro chem opportunities. And whether it's with this entity, or with a different entity, or with some other structure none of that’s known at this point. But they know that we have these capabilities, the powers that we are happy that their current partner has these capabilities as doing these projects in U.S. and that’s part of why we’re there is to help continue to expand our business there, beyond just the land drilling market into the other level of midstream and downstream type applications that we do in the U.S.

In Brazil, I’ve been reading a lot of negativity on the Brazilian economy of late and the prospects for the really the oil and gas sector there are also, is any of that translating into how this effects your results there and your expectations for growing your business there the wholly-owned subsidiary now?

So, I was just in Brazil a few weeks ago. There is an awful lot of challenges in the Brazil, oil and gas market has. But there is political issues around Petrobras, there is political issues in Brazil at the macroeconomic level. But that’s actually I think going to end up being an opportunity for us, where as other companies pull out, we feel like the team that we’ve got and our capabilities actually give us an awful lot of growth opportunities. We don’t have to go do $100 million in Brazil, to consider it a successful year, if we can get that business in Brazil anywhere close to what the joint venture was doing which was about 8 million a year, that’s a huge growth thing for our company because that subsidiary is not a joint venture, it's now integrated in with our P&L as a wholly owned operation. So we get Brazil to do, four, five, seven, whatever it is million a year next 12 months, that’s a significant accelerator to the company’s overall top-line and bottom-line for the year. So even given those macroeconomic things, there is still plenty of business, plenty of work that needs to be done and plenty interested customers that are confident in our capabilities, because we already served them under the different entity so.

And we’ll go to our next caller.

This is Bill Dezellem with Tieton Capital Management. A couple of additional questions, first of all what -- speaking of Brazil are you finding that the low oil price what impact is that having there?

So first a number of international drilling contractors have pulled out of the market based on that lower oil price, so people like Transocean and Diamond have cut their fleets in Brazil by 50% and have moved them out of the market. They've also cut their staff by at least 50% and so back to what I just said a second ago to Greg, that's actually creating opportunity for us because they don’t have the resources to keep their existing rigs maintain them and service them working for those contracts that they have. So remember, Brazil for us is not a new products business. Brazil for us is services and construction only, so we're not dependent on new builds, we're just as happy. In fact we're happy we are in Brazil just maintaining their drilling rigs, maintaining their oil and gas infrastructure, helping them on special projects, upgrading and that's how we plan to build the business in Brazil. So they still have to maintain their fleets, there's just not going to be any new project bids in Brazil in the foreseeable future based on the oil prices.

So if I take your comments to an extreme the lower oil prices and rigs moving out but specifically the staff cuts that's actually ultimately ends up being a positive for you I mean it sounds counterintuitive but is that correct?

That's the feedback I got from the customer visits when I was there two weeks ago, I think they need help. We are a proven supplier. We can really help them get through this period. So and again, we don’t need to grow to $20 million to be successful. For us, we're going to grow from nothing from a consolidated result last year to whatever we do this year and profitably that's a big win for us in 2015.

And does this actually increase the -- your expectation for revenues in Brazil relative to what you would have had say three months ago?

I'm trying to remember what my revenue expectation was three months ago. I would say they are probably equal, right. I think three months ago and we have talked right I would have said look the Brazil joint venture that we were in that we exited last year was doing $8 million a year in construction and services and our goal is to get back to that level as soon as possible and then go beyond that, right again all in product -- I'm sorry, all in construction and services. So I don’t know but I'm any more bullish. I just think that my concerns about the rigs moving out based on the price of oil are somewhat offset by the personal discussions I had with customers around increased opportunities directly, the level of bidding we're doing down there, the whole thing. It's going to be lumpy along the way, there's no question in my mind. Brazil is going to be up and down and projects are going to come in, but we're bullish about Brazil now.

Let me shift back to sales people. How are you thinking about adding additional sales people in this environment today?

So what now what I would tell you is we're up full strength in the U.S. team for the new capital projects in the upstream, midstream, downstream, oil and gas and in the power generation and marine and industrial markets. I think we're at where we need to be, we now just need to drive salesforce productivity and they just need to close orders. Thinking about adding new sales people, the only area we've really looked at right now around that is more around the services right and increasing our focus on services in North America because we think we have opportunities to increase our services portion of our business to complement the products portion of our business. As of now I think we're okay in the U.S. for sales for the foreseeable future.

And then would you please talk a little bit about the restructuring that you did and how got you 100,000 of cost tied into $3 million of cost savings?

Yes, Bill this is Andy, so we reduced headcount about 30 employees and about 20 contracts. Most of the employees were short service employees. So the severance was not as great as you might have expected. And then of course with contractors there is no severance obligation. So that’s why those numbers may see a little bit out of whack as to what you might expect.

And what parts of the organization did those headcount reductions come from?

Across the organization both direct and indirect employees, so some SG&A, some indirect manufacturing and also some direct labor to reflect our runaway expectations.

And we’ll go to our next caller.

Most of our questions have been answered, wanted to ask just a couple of more specific questions the subsidiary in Brazil the tremendously dropping Brazilian real currency, does that help or hurt us?

Yes we have had some -- good question yes we did experience some FX losses in the fourth quarter which hurt us. I think that most of our work down there is denominated in reals but our cost structure in reals as well. So we have a bit of natural hedge there but obviously translating that into dollars that lower exchange rate or that unfavorable exchange rate vis-à-vis the dollar is going to hurt us in the short-term.

Because you had mentioned in the past that all your expertise lies in the U.S and my reading is correctly that you do have manufacturing capabilities in construction costs and what have you in real as well in the Brazil, because at one time you said while we build everything in here and ship it there?

Okay so there is like three different topics all in that same thing. So the first thing is that, the product capabilities that we have are in the U.S. and in Singapore and in China not in Brazil. But all the work that we're doing in Brazil is all construction and services and that capability is the exact same personnel that we had in the joint venture that was part of our company for the last three years. So we actually have the right capability in the market for the scope of their operation. Okay, so that’s point number one. Now I'll let Andy talked about the other two points talked about in terms of what is that mean from a currency perspective.

George as Charles mentioned our Brazilian operation locally is around construction and services. And so you got Brazil real denominated revenues and then you have also the real pause down they're all personnel cost labor and that’s all local Brazilian labor in reals as well.

Okay so you are definitely somewhat hedged there?

To some extent, yes.

Okay then overall the oil prices have dropped 60 some percent and natural gas prices are at near lows. Many-many companies, public and private have had tough time you seem to weather the storm quite well here. Is there any possibility to scoop up maybe some long demanded or looked after competitors and/or expand the operations currently taken advantage of the low asset values. I would say in general that you want a pretty tight chip you've got a very good balance sheet are there any opportunities for M&A for you?

Yes I think when you were hitting some of the nails on the head. I think we're in a good position because it's a very unusual from our competitors to have companies that go across the upstream, midstream and downstream parts of oil and gas and go into power generation in the marine and industrial. So although we're focused on the energy industry we've diversification in there, there are certainly competitors that all they do is land drilling power shift for control systems that’s literally 100% of their business and those guys are going to be hurting badly. So we are lucky because we got this balance between our businesses, which means that there are opportunities to do interesting things at this point in the market such as acquisitions. I would tell you the very first place we’re looking is actually to pick up good people, right. So, we’re always on the lookout for good engineers, but we cannot work on not just drilling projects, but on the rest of our projects, project managers, other people like that to help focus on the business as we bring it in, that’s number one. Number two is, there absolutely are M&A opportunities for us, we’ve seen them, we saw them last year, we’re still seeing them now, we’re very conservative in terms of our Company’s approach to acquisitions. Not only do we have to be significantly strategic that’s got to be quite accretive and we think going forward there is nothing necessarily to talk about specifically right now, but we think that there is opportunities for us to leverage the company and look for some interesting opportunities as we -- as the markets continue to react to the price of oil for the rest of this year.

So that you are positioned even stronger when prices rebound?

We need to be able to weather whatever the storm is and build the company successfully for the long-term and so we made the infrastructure down in place, as oil recovers people ask me all the time when do I think oil is going to recover. This is sort of the part over discussion in Houston. There is tended to people together and this is not the conversation other than football. But in the off season this is the conversation, I think we think oil is going to be down through the end of the year. So that sort of as far as we can see right now.

And you're positioned to when this sort of for the end of the year?

Again I think that as a percentage of our business. We had already been investing in the R&D in the product development and the PDC all around the natural gas base midstream and downstream anyways. So this is all, it's not that I want it, but look we have to make our business successful and dependent of the price of the barrel of oil.

And one last question if I may, the Singapore joint venture last year you had mentioned that the your partner was acquired by a large French company multinational billion dollar outfit, where do your negotiations go there towards playing that up to some more substantial amounts?

We’ve got our -- I am on my way to Hong Kong tomorrow, we’ve got a Board Meeting on Monday morning to talk about this exact topic. We’re not happy with the size of the entity, I know Sonepar, Sonepar I think it's a $12 billion or $16 billion company. So this is a $5 million, $7 million, $8 million entity it's just too small. We’ve got to grow up, we’ve got to drive revenue we’ve got to drive profitability. I am confident that between us and Sonepar we can make that happen going forward.

And we’ll go to our next caller.

Hi Charles, this is Greg Ayers again. Just a follow-up question really on the balance sheet and on the big picture scenario, are there any scenarios in your planning under which you feel you would need to raise capital in order to weather the storm of this downtrend in energy prices how do you see that outlook? And you mentioned the cash flow was good on the receivables side, were you able to pay back down the line of credit in the first quarter already?

Greg this is Andy, I guess a couple of questions in there, we in terms of the line, the line remains a $4 million draw so there has been no change. In terms of looking forward based on our forecast and our plans we don’t anticipate dipping into that revolver at this point. The only thing I think that would require us to go out and raise either some debt or equity financing would be one of the M&A opportunities that Charles talked about earlier. But other than that we think we can manage through it our projects generally tend to fund themselves pretty well in terms of the progress payments as we build these large longer term projects.

Greg, I would just add that we’re very conservative in terms of credit limits. We’re very aggressive in terms of payment terms. Andy already talked about we're completely on top of the cash collection, so we're just managing the cash very-very tightly.

And we have no questions holding at this time.

Okay guys, I look forward to talking to you all again after the Q1 results hopefully very soon. Thank you, Aaron. We'll talk to you guys later.