Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Twin Disc Third Quarter Fiscal 2014 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 conference over to Stan Berger of SM Berger. Please go ahead, sir.

Thank you, Angel. 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 2014 third quarter and nine month 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 the copy of the news release, which was issued this morning before the market opened. If you have not received the copy, please call Annette Mianecki, at 262-638-4000 and she will send the copy to you. Hosting the call today are John Batten, Twin Disc’s Chief Executive Officer, 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 John Batten. John?

Thank you, Stan and good afternoon everyone. Welcome to our fiscal 2014 third quarter conference call. As usual, we will begin with the short summary statement and then Chris and I will be happy to take your questions. Looking at our third quarter results, sales for the 2014 fiscal third quarter were $60.7 million, down 11% from $68.2 million for the same period a year ago. The lower level of shipments in our North American and European markets primarily drove the decline in sales. As we mentioned in the press release, and while hard to quantify, some of the slowness in our industrial and aftermarket sales during the quarter can be attributed to the difficult winter conditions in parts of the U.S. and Canada. However, we also feel that any delayed orders will be made up in the next couple of quarters. On a more positive note, we continued to ship at record level sales into Asia as demand for our pressure pumping transmissions and commercial marine transmissions throughout the region remained at robust levels in the quarter. Turning to our broader product markets, global sales for our industrial, marine and transmission products were all down in the quarter versus last year, but only our transmission products saw a sequential decline when compared to the second quarter. This shortfall was primarily due to a lower level of demand for our legacy transmission and power transmission systems in the quarter. Shipments for both our marine and transmission products saw improving trends throughout the quarter. We mentioned during the last conference call that we have seen a drop in industrial demand during the last calendar quarter for 2013. I am happy to report that even with some of the effects from [resurgence] where our shipments of industrial products did improve sequentially versus…

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And your first question comes from the line Josh Chan from Baird. Please go ahead. Mr. Chan, your line is live.

Hi. Good morning, John and Chris.

Good morning, Josh.

Hi. Just a question about the oil and gas potential improvement there. Could you talk a little bit more about what exactly you saw improving, I mean obviously, you’ve got some new orders, are you seeing service parts improving, are you seeing customers talking to you about shipments further down the line as well?

Josh, it’s all of the above. But finally, I think people are starting to address some of the rigs that need rebuilding. And so I think it’s a balance of building new rigs or they replacing components on existing rate. But definitely as far as the quarter, the strongest quarter in a long, long time for new unit holders for North America.

Okay. And then if we think about sort of the pace or timing of this recovery. You said that you’ll ship some units by the end of your fiscal year. But when do you think, we might see sort of a noticeable uptick in terms of revenue or margin, would it be maybe in to calendar year ‘15?

Well, no, I think you’ll see and we are -- our lead times for oil and gas transmissions are under -- well just about three months, so we can fill in the quarter. So all of the orders that we received, the majority of those are going in the fourth quarter. And there will be stone spillover of course into the first quarter. So, the impact on the new orders will be in the next two quarters as far as the margin.

Okay. That’s great to hear.

And again I hesitate, this is -- it’s the first where I would say a blip for us that there is increased activity. And I am hopeful that the trends have been positive in this quarter as well, but let’s see how the quarter finishes.

Yes that makes sense. And if I can ask about some of the non-oil and gas markets, I mean your backlog total is up slightly and oil and gas is part of that and if you had some disruption in the quarter that you can’t ship too much orders, would it imply that the non-oil and gas orders have been kind of soft in the quarter?

It’s a balanced. Our marine backlog for the offshore vessels and the large workforce is very good. The weakness in marine is reflected more in the lower horsepower range, which has been either smaller workforce, more efficient go for Pleasure craft that was kind of the weakness. But the industrial, given the kind of the slowdown at the end of 2013 calendar year, industrial I would say picked up and improved. So really it is one area that was weaker at the end of the quarter and started with the marine, but it’s driven by our large transmission, it’s more driven by lower horsepower.

And what’s your view on how that market might develop the smaller marine market?

I honestly do believe it’s starting to improve, certainly with the trends at the end of the quarter, but not enough to make up the trends that were happening at the beginning of the quarter.

Okay, great. That makes sense. And thanks for your time and I’ll hop back in the queue.

Okay. Thanks Josh. Operator?

Hello. Angel?

Stan, I think we got disconnected.

Oh no.

Let’s just wait.

We can’t get, we couldn’t.

Stan, Chris thinks actually they may be able to hear us, but we can’t hear them.

It’s something wrong with the line then.

Let’s hold on a sec.

Yes. Chris is correct. Let me run over the other office and call them. I’ll be right back.

Okay.

I think investors can still hear us. So, this is John and Chris. We’re just trying to figure out why we can’t hear you or the operator, so please just hold on a second.

We apologize. Your operator is having some technical difficulties; everyone can still hear you though. And your next question will come from the line of Walter Liptak of Global Hunter. Please go ahead.

Walt?

Mr. Liptak maybe on mute, but your line is open.

Okay. Let’s try Doug Dyer of Heartland Advisors.

Perfect. Thank you.

Good morning. Can you guys hear me?

Yes. Can you hear us?

Hey, all right, all right.

All right, sorry about that.

We’ve been able to hear you all time.

Okay.

Listening to some of the pressure pumping providers with their conference calls last week, they are ordering new equipment and they are taking delivery or it seems like they are taking delivery late this calendar year and particularly next year. Is that a function -- are they able to control when they take those deliveries or is it your capacity to other equipment providers, do they have to wait that long, six months to get it out?

I think you see each one, each situation is different. I’m sure that a lot of it’s going to be the anticipation of getting their orders and to make sure they get the equipment in the timeframe that they need. So, I’m guessing that when they’re placing orders for is slightly longer than the lead time. And I’m sure they’re allowing for a little bit of I would say drift in the delivery schedule. But a lot of that, trying to coordinate the schedules, engine transmissions and pumps and getting inline to build the way. So, I think a lot of what they’re going to have to do is reassemble crews, add some of the rig manufacturers to get back into production. So, I mean as I said, I’m hopeful that this is the first blip in the turnaround, but for a trend line I’d like to see kind of two quarters in a row.

Okay. And if I recall correctly you did have some inventory on hand to build several transmissions. Are you currently ordering more parts for future use?

Yes, absolutely.

Okay. And can you give us any guidance as to the number of units that you can produce with current inventory and how many units you’re ordering for?

It’s not exactly balanced, but if we go back to our peak production, we probably have somewhere in the neighborhood of two to three months of inventory as far as the units that we’ve -- we obviously have to bring in some parts to finish, but that kind of gives you a ballpark of where we are.

All right, thank you very much.

(Operator Instructions)

Angel, this is Chris. Why don’t we give a little bit of time just because we got disconnected from some people?

Absolutely. No problem and my apologies, sir.

No problem.

And we do have a question from Josh Chan from Baird. Please go ahead.

Hi, just a follow-up. I think in the press release you talked about 4Q being sequentially better than 3Q, but I was just wondering if you have any more color around that. Is it possible that with all the improvement that 4Q becomes the best quarter of the year?

That is certainly our goal is to have the best quarter of the year. So, I think that’s possible for sure.

Great, thank you.

(Operator Instructions) And we have no further questions at this time.

Okay. Thank you for joining our conference call today. We appreciate your continuing interest in Twin Disc and hope that we’ve answered all of your questions. If not, please feel free to call Chris and myself. We look forward to speaking with you again in August following the [close] of our fourth quarter. Angel, now I’ll turn the call back to you.

Thank you very much, gentlemen. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating and please disconnect your lines.