Transcript Call Date 11/09/2012
Operator: Greetings, and welcome to the Global Power Equipment Third Quarter 2012 Financial 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. As a reminder this conference is being recorded.
It is now my pleasure to introduce your host Ms. Deborah Pawlowski, Investor Relations for Global Power. Thank you, Ms. Pawlowski. You may now begin.
Deborah Pawlowski - IR: Thank you, Christian, and good morning, everyone. We certainly appreciate your time and interest in Global Power's. On the call today are Luis Manuel Ramirez, President and CEO; and David Willis, Chief Financial Officer. Luis and David will be reviewing the results of the quarter and provide a review of the Company's strategy and outlook. There are slides that will accompany our discussion and they can be found along with the earnings release within the Investor Relations section of the Company's website at www.globalpower.com if you don't already have them.
The Safe Harbor statement is noted in full on Slide 2. As you may be aware, we may make some forward-looking statements during this discussion as well as during the following question-and-answer session. These statements apply to future events and are subject to risks and uncertainties as well as other factors which could cause actual results to differ materially from what is 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.
If you would turn to Slide 3, you will find the order of our discussion today. First Luis will cover his observations and initial actions taken in his first 100 days with Global Power. Then we will provide an overview of the quarter and year-to-date period. David will then delve into the financial results and our 2012 guidance as well as some 2013 outlook and Luis will close with a review of our record backlog and our strategy for growth.
So turning to Slide 4, I'll introduce Luis. Luis?
Luis Manuel Ramirez - President and CEO: Thank you, Deborah, and good morning to everyone. As I mentioned during our last call I came to Global Power because of my excitement and really great impression of the business and what the business was doing in the natural gas space. Over the course of the last 100 days I've been able to do my own assessment of the overall business and I've come to some conclusions. The first one I would say is that despite that the market uncertainty we seem to have a very good product business around strong brands and quality. I'd say that the product business is well received by customers.
All of the interviews and discussions I've had with customers have been very positive and the overall market position of the business is also strong with a deep penetration to the customer base that they have today and a lot of global expansion, over the last few years, as those customers have gone globally with power generation projects.
Transcript Call Date 11/09/2012
Operator:
Operator: Joe Bess, ROTH Capital.
Joe Bess - ROTH Capital Partners, LLC: I was hoping if I could get a little more color behind guesses organic book-to-bill for your Products division? Was it – it is 0.8 right for the quarter?
Luis Manuel Ramirez - President and CEO: That's right on the organic side.
Joe Bess - ROTH Capital Partners, LLC: So then you received approximately $30 million or so in orders for your – for the acquisitions for TOG as well as Koontz-Wagner?
Luis Manuel Ramirez - President and CEO: $24 million of backlog was acquired on the closing of both of those acquisitions Joe.
Joe Bess - ROTH Capital Partners, LLC: Can we get a little bit more color behind what you guys are really seeing from your customers in the Braden side of the business. What's really keeping them from kind of releasing more orders right now considering of a book-to-bill of 0.8?
Luis Manuel Ramirez - President and CEO: Well certainly we are seeing for this year that we have the backlog to deliver the rest of the year as we have talked about. I think if you think about next year we see customers in the Middle East still doing a lot of work. We see a lot of activity happening – proposal activity in Algeria and continued proposal activity in the Middle East countries where we've been playing the last couple of years. We actually saw the Braden bookings go up this quarter in the U.S. As you know there had been a lot of activity anticipated here on some newbuilds that were happening in the next couple of years. Those have happened and we've seen some great volume on the bookings side and I would say the majority of the new bookings in the quarter really occurred in the U.S. market. So, we're anticipating that trend to kind of stabilize into next year. I think if you look at next year, I think a lot of our concerns right now are around the uncertainty that with Europe and what we're seeing with the fiscal cliff discussions that are happening right now in North America that a lot of customers have held off on doing a lot of new proposals for the next few weeks until they kind of understand what the landscape is. I would say two or three things that are driving that landscape have to do with the changes in regulation now that we know post the U.S. elections what we think that's going to be, which I think will be helpful to our natural gas story going forward, so the tax situation and other things that will drive investment. So, I think overall though the proposal activity that we saw in the third quarter was very positive and we continue to measure that and really monitor that very closely to see how that can turn differently in the next few months.
Joe Bess - ROTH Capital Partners, LLC: I was hoping, could we get a little bit more color behind the discrete costs that fell into the quarter and what happened with those projects or is that something that you can't really disclose?
Luis Manuel Ramirez - President and CEO: Well, we won't disclose. They were discrete – incremental costs on three project shipments in the quarter. So, they shipped. It's still positive margin, but not as higher margin as what we had booked. So, it was some quality rework issues on three discrete projects, which had some level of impact on the quarter. We also had some unfavorable mix in the third quarter as compared to prior quarters. So, that's really I think as much as we want to say on that Joe.
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