Good day, ladies and gentlemen. Thank you for standing by. And welcome to the Twin Disc Incorporated Fourth Quarter Fiscal 2013 Financial Results Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator Instructions) I would now like to turn the call over to Mr. Stan Berger. Go ahead, sir.

Thank you, Gel. On behalf of the management of Twin Disc, we are extremely pleased that you have taken the time to participate in our call and thank you for joining us to discuss the company’s fiscal 2013 fourth quarter and full year financial results and business outlook. Before I introduce management, I would like to remind everyone that certain statements made during the course of this conference call, especially those that state management’s intentions, hopes, beliefs, expectations or predictions for the future, are forward-looking statements. It is important to remember that the company’s actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company’s annual report on Form 10-K, copies of which may be obtained by contacting either the company or the SEC. By now, you should have received a copy of the news release, which was issued this morning before the market opened. If you have not received a copy, please call Annette Mianecki at 262-638-4000 and she will send the copy to you. Hosting the call today are Michael Batten, Twin Disc Chairman and Chief Executive Officer; John Batten, President and Chief Operating Officer; and Chris Eperjesy, the company’s Vice President of Finance, Chief Financial Officer and Treasurer. At this time, I will turn the call over to Michael Batten. Mike?

Thank you, Stan, and good day, everyone. Welcome to our fiscal 2013 fourth quarter conference call. As usual, I will begin with a short summary statement and then John, Chris and I will be happy to take your question. First, I would like to cover a few of the highlights of the quarter and fiscal year. It was a year of transition. As predicted and primarily due to continuing weakness in the North American oil and gas market, our financial results have had a hard time keeping pace with the record sales and earnings reported last year, but they are in line with our expectation. Partially offsetting these results, our sales to China have grown substantially to the point that it now ranks as our second largest market outside of United States. Also indicative of our emerging market strategy, we announced the opening of a new manufacturing facility in India and our balance sheet remains strong and we continue to generate strong cash flow. And finally, our six-month backlog is showing signs of improvement. Sales for the 2013 fourth fiscal quarter were $75.9 million, down from $96.1 million for the same period a year ago. For the fiscal year 2013, sales were $285.3 million compared to a record $355.9 million for fiscal year 2012. The decline in revenues was primarily result of lower demand from the North American oil and gas sector, as well as softness in sales to our European customers. Partially offsetting the decline in sales was higher demand from the North American and Asian commercial marine market, as well as steady strong levels of demand from the China pressure pumping market. Meanwhile, demand from the mega yacht market remained at historic lows throughout the fiscal year, but demand remained steady for equipment use in our air force…

Thank you, sir. (Operator Instructions) And our first question comes from the line of Peter Lisnic with Robert W. Baird. Go ahead sir.

Hi. This is Josh Chan filling in for Peter. Good morning Mike, John and Chris.

Hi Josh.

Hi Josh.

Hi. Good morning. Just first question on your comment about the North American oil and gas market, how it could potentially improve in the second half of ‘14, just wondering how you are formulating that due in timing, was it based on discussions with customers. Have you actually received orders, just some color on how you’re thinking about the timing of the recovery there?

Well, a couple of things that we’ve talked to some of our key customers. There is no commitment to that point of coming back but if we look at the last GAAP extending upon the customer 18 months to 24 months, that would indicate the recovery sometime in the first half of calendar 2014. But, we’re also having to -- starting to have more dialogue on what lead times are and things like that. So nothing has hit the backlog yet obviously, but that would be our indication of when the first signs of some new construction would occur. And again just to echo on the comments for Mike, not necessary anticipating the rapid rise on construction that we saw two years ago. But I am confident that we’ll start to see some new construction in calendar 2014.

Okay. And what would be the lead time at least initially if demands starts to recover on the new constructions site?

We’re well under six month for both the 8,500 and the 7,500, probably right now in the range of four to six months, don’t know how long that lead time would last…

Right.

Depending upon how many orders come in but we certainly can react within six months.

Okay. Great. And then moving on to China, just based on the mix of products there, would it be safe to conclude that maybe oil and gas more than half when you sell there just trying to get a sense of what kind of product you’ve shown there with demand?

No. Still the largest segment for us in China is commercial marine.

Okay. And then on gross margin, you have been negatively impacted by both volume and mix in the recent quarters. So as we look into the next year, have we come to the point where mix is no longer a drag or an issue and maybe volume becomes the primary driver of gross margin for at least the near term. Is that the right way to look at it?

Well, I guess way to answer that Josh if mix doesn’t change, correct, so another way we don’t start to see recovery of North American oil and gas that correct volume would be the primary driver.

Okay. But there is no necessarily negative comparison of North American oil and gas remaining, I guess?

There may have been some shift in the first quarter of last year, but it wouldn’t be significant.

Okay. Great. Okay. Thank you for your time and congrats Mike on your upcoming retirement and John your promotion.

Thank you, Josh.

Thank you, Josh.

And our next question comes from the line of Peter van Roden with Spitfire Capital. Go ahead please.

Hey guys.

Good morning Peter.

Good morning Peter.

Just a quick question on the pressure pumping side, how much of your demand and I know there is not really a normal year but let’s the shut for the high end in normal year will come from replacement demand versus new machines?

I would say your comment is right. It’s hard to find a normal year. The vast majority has been for new construction. So I mean you can have any, I would say the replacement on existing rate maybe -- ranges from 5% to 20% given the year. So really, is no -- there is no real good trend there.

Okay. And do you expect that to sort of tick up as these…

I expect, going forward I think the trend might be higher that there will be higher percentage of replacement as opposed to complete new rig construction.

Yeah. Okay. And then just in terms of trying to size the opportunity or the driven up trading for the whole company, if all of your segment sort of go in at a normal pace. What is -- what would be kind of max capacity, max revenue that you guys think you could do?

Everything were going max, with the addition of India, I mean we’re certainly over 500 million.

Okay. That’s helpful. And then just one quick question and I know if you guys could answer this but who is making the transmission for the new Haliburton Aspartame unit.

I believe that is Allison.

All right guys. That’s all I have and congratulation on a good quarter.

Thank you.

Thanks Peter.

(Operator Instruction) And gentlemen, it appears we have no questions at this time. I will turn it back to management at this time.

Okay. Thank you Gel. I would like to thank you again for joining our conference call today. And we appreciate your continuing interest in Twin Disc. We hope that we’ve answered all of your questions and if not, and you’ve got follow on please feel free to call Chris, John or myself. We look forward to speaking with you again in October, following the close of our first quarter. Gel, I will turn it now back to you to terminate the call.

Thank you, sir. Ladies and gentlemen, this does conclude the Twin Disc Incorporated fourth quarter fiscal 2013 financial results conference call. Thank you for your participation. You many now disconnect.