Pete DupreyPeter C. Duprey Thanks, John, and thanks everyone for joining our call. Let's start out on slide three. This morning, we reported second quarter results with reported revenue growing 43% over last year’s Q2 and EBITDA improving by $1 million. Overall the quarter was strong and both our Gearing and Service businesses demonstrated great progress against a year ago. I'll briefly review the highlights of each of the businesses. Gearing revenue was up 13%; 98% of that revenue went into industrial markets or to replace wind gearing already installed rather than for new wind turbines. We continue to see strong demand particularly in oil and mining sectors. EBITDA improved by $1.7 million over the same period last year. In our Services business, revenue was up 141%. As the installed fleet ages, we are seeing strong demand for our non-routine services on blades, drivetrain and the other major components. Our Tower business reported revenue of 51%, but much of the increase was associated with higher steel content versus fabrication only which we discussed in the past. Our small, but fast-growing Weldment business had orders increase of 172% in the first half of 2012 versus 2011. I’ll highlight some of the things that went well for the quarter and some of the things that we need to improve. The Gearing business successfully navigated through a significant downturn in gearing for frac where $3 million of orders were pushed out late in the fulfillment process. Services is showing good progress and growing and diversifying its business. During the quarter they made their first service calls on industrial gearing customers. We see nice opportunities to cross-sell customers on the gearbox and fabrication components. This provides greater value add for our customers which should create long-lasting relationships. Finally, you'll see in the disclosures in the 10-Q that we've made significant progress on the shareholders' suits. The derivative lawsuits were dismissed by the court and then the scope of the remaining suit has been limited. We believe the claims are without merit and we intend to vigorously defend the company against them.
Now Q2 was not without some opportunities for improvement. In Towers, we had four different Tower models going through our Manitowoc plant in Q2. Two of the models were new tower builds for us, which negatively impacted our productivity by more than $1 million. We continue to work through the issues and expect Q3 throughput and productivity to improve.On a positive note, the productivity in our Abilene Plant is up significantly from a year ago. In services we made good progress in reducing the EBITDA loss. however, we are not yet at breakeven. The renegotiation of the lease continued significant revenue growth and expansion of higher value-added product offerings will help us make progress in the back half of the year. Let’s move to slide four and talk about orders. Turing to the order flow for the quarter; Tower order flow was particularly light due to uncertainties surrounding the pending PTC expiration. We are quoting a number of projects in the U.S. for 2013, however, the level of activity, as expected is significantly down from a year ago. The order intake for the quarter included one small Tower order with delivery later in the year, with the remaining orders of $5.9 million relating to Weldments. In Gearing, our order flow was quite strong for the quarter excluding gears used in natural gas fracking. Natural gas fracking market orders were significantly depressed to near zero and orders that were already received were delayed. We believe that this is a short-term issue and demand for gearing used in oil production in both on and offshore remains strong. Had we not experienced the sudden hiatus in fracking gear orders, our order intake would have been up 13%. Services continues to show strong order growth both year-over-year and against the previous quarter. The graph on the right shows the backlog trend. Read the rest of this transcript for free on seekingalpha.com