PWPS POST-ACQUISITION PLANS

Peter Christman, President and CEO of PW Power Systems, Inc. (PWPS), discussed the Mitsubishi Heavy Industries (MHI) deal, what to expect with the various PWPS products and where the company is heading, including the latest news on the FT4000 SWIFTPAC aeroderivative.

I did not notice the FT4 on your new website. What happened to it?

The FT4 product will continue to be supported through our majority owned jointventure with the Wood Group. We have a world-class, full-service, overhaul and repair depot in Bloomfield, Connecticut which supports the requirements of the FT4 fleet. The FT4 fleet remains active and we expect to support this product through its lifecycle.

Where is PWPS heading with the 25 MW FT8 MOBILEPAC?

The FT8 MOBILEPAC product is an operationally responsive unit that can be deployed anywhere on short notice. We will be delivering our 100th unit in the very near future and expect the market will continue to embrace its transportable design features. More and more electric utilities around the world are increasing their reliance on intermittent renewable energy resources. Having the flexibility to quickly deploy generation assets to satisfy short to mid-term requirements will continue to drive demand for the FT8 MOBILEPAC.

What is the status of the 30 to 60 MW FT8 SWIFTPAC?

Our fleet of FT8s now exceeds 500 units and we expect customers to continue to need quick start, responsive, flexible generation inherent in the FT8 SWIFTPAC design. The dual engine configuration provides electric utilities operational flexibility including synchronous condenser operation. We will continue to aggressively market the FT8 SWIFTPAC as it is complementary to the new FT4000 product under development.

What other turbomachinery products can you discuss?

In addition to the purchase of PWPS, MHI also purchased our 51% ownership of Turboden, a supplier of Organic Rankine Cycle (ORC) equipment based in Brescia, Italy. Turboden offers superior technology in the ORC space and is complementary to MHI’s geothermal business where it is a global leader. We expect to derive significant benefit from MHI’s global sales and EPC network in growing the Turboden business. Today, Turboden is strong in Europe and we expect ORC applications in geothermal, waste heat and biomass to expand outside of Europe as economies look to capture the benefits of renewable energy.

What are the plans and expected timelines for the PW4000 fan engine?

The FT4000 is the centerpiece of the acquisition of PWPS. The FT4000 engine, powered by the Pratt & Whitney PW4000 derivative gas generator, has 26 million hours on more than 850 engines for the Airbus A330 and Boeing 777. This engine is ideally suited for our electric utility and independent power producer customers. Designed for simple cycle, combined cycle or cogeneration and available in 60 and 120 MW power blocks, the FT4000 SWIFTPAC will provide the highest power output of any aeroderivative gas turbine generator package available in the market. The FT4000 product is in full scale development and we will be conducting development testing in 2014 with commercial applications commencing in 2015. We just entered into our first contract for the sale of an FT4000 SWIFTPAC to a business unit of Exelon Generation. The scope of the contract consists of the turnkey supply of the FT4000 SWIFTPAC unit for a power plant in Harford County, Maryland, including balance of plant equipment, installation, and commissioning services. The FT8 MOBILEPAC, FT8 SWIFTPAC, and FT4000 SWIFTPAC together enable PWPS/MHI to provide a full range of gas turbines for peak load, intermittent operation and base load applications worldwide.

What synergies have already been isolated between MHI and PWPS in terms of technology transfer?

The products and services of PWPS are all complementary to those currently offered by MHI. The acquisition allows MHI to offer a complete line of gas turbines including both aeroderivative and heavy frame type units. This allows us to be a one stop shop for a power producer’s requirements. Additionally, the acquisition allows PWPS to take advantage of the MHI global network for supply chain, EPC services and sales. We also expect the combination will enable us to compete more effectively in the oil & gas markets. These synergies offer great opportunity for the PWPS business and we look forward to participating in MHI’s growth objectives.