Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Form 10-Q") contains or incorporates by reference various forward-looking statements that express a belief, expectation or intention or are otherwise not statements of historical fact. Forward-looking statements generally use forward-looking words, such as "may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "continue," "potential," "plan," "forecast" and other words that convey the uncertainty of future events or outcomes. Forward-looking statements include information concerning possible or assumed future results of our operations, including the following:

• business strategies;

• operating and growth initiatives and opportunities;

• competitive position;

• market outlook and trends in our industry;

• contract backlog and related amounts to be recognized as revenue;

• expected financial condition;

• future cash flows;

• financing plans;

• expected results of operations;

• future capital and other expenditures;

• availability of raw materials and inventories;

• plans and objectives of management;

• future exposure to currency devaluations or exchange rate fluctuations;

• future income tax payments and utilization of net operating losses and foreign tax credit carryforwards;

• future compliance with orders and agreements with regulatory agencies;

• the effectiveness of our disclosure controls and procedures;

• expected outcomes of legal or regulatory proceedings and their expected effects on our results of operations; and

• any other statements regarding future growth, future cash needs, future operations, business plans and future financial results.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, including unpredictable or unanticipated factors that we have not discussed in this Form 10-Q. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You should consider the areas of risk and uncertainty described above, as well as those discussed in our Annual Report on Form 10-K (the "Form 10-K"), filed with the Securities and Exchange Commission ("SEC") on March 14, 2012, titled "Risk Factors" and those discussed under "Item 1A-Risk Factors" in this Quarterly Report on Form 10-Q. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise and we caution you not to rely upon them unduly.

The following discussion provides an analysis of the results of operations for each of our business segments, an overview of our liquidity and capital resources and other items related to our business. This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Form 10-Q and our audited consolidated financial statements and notes thereto included in the Form 10-K.

Overview

We are a comprehensive provider of power generation equipment and modification and maintenance services for customers in the domestic and international energy, power infrastructure and service industries. We operate through two business segments, which we refer to as our Products Division and our Services Division.

• Through our Products Division, we design, engineer and manufacture a comprehensive range of gas turbine auxiliary equipment and control houses primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial, energy and power-related applications.

• Through our Services Division, we provide on-site specialty modification and maintenance, outage management and facility upgrade services for nuclear power plants and specialty maintenance and other industrial services to fossil-fuel and hydroelectric power plants and other industrial operations in the United States ("U.S.").

For information about our segments, see Note 12 to our condensed consolidated financial statements included in this Form 10-Q.

In both our segments, our operations are based on discrete projects subject to contract awards of varying scopes and values. Business volume fluctuates due to many factors, including the mix of work and project schedules, which are dependent on the level and timing of customer releases of new projects. Significant fluctuations may occur from period to period in revenue, gross profit and operating results and are discussed below.

2012 Acquisitions

On July 30, 2012, we acquired Koontz-Wagner Custom Controls Holdings LLC ("Koontz-Wagner"), a leading manufacturer and integrator of engineered packaged control house solutions for the energy, oil & gas, and electrical industries. The aggregate acquisition price consisted of $32.4 million in cash, of which $31.6 million was paid in the third quarter 2012 and $0.8 million was paid in the fourth quarter 2012. On September 5, 2012, we acquired TOG Holdings, Inc., together with its subsidiary, TOG Manufacturing Corporation ("TOG"), a precision machined metal and alloy parts provider to original equipment manufacturers for the steam and natural gas turbine power generation market. We paid $12.6 million and expect to receive $0.3 million in the fourth quarter of 2012 attributable to a working capital adjustment. Additionally, the TOG net assets acquired included $0.1 million of cash.

The addition of Koontz-Wagner's engineered packaged control house solutions will expand our products portfolio to our current customers, and supports the global expansion into adjacent infrastructure products and services. The acquisition of TOG compliments our Consolidated Fabricators parts product line and establishes a growth platform for aftermarket energy parts sales and also expands our products portfolio to serve the steam turbine segment. The repair and replacement parts business provides a relatively stable revenue stream.

We funded the purchase price of the Koontz-Wagner acquisition and the TOG acquisition (together, the "2012 Acquisitions") with cash on hand. The financial results of the 2012 Acquisitions have been included in our Products Division as of their respective acquisition dates.

Dividend and Stock Repurchases

In May 2012, our Board of Directors approved a dividend policy pursuant to which it plans to make, subject to subsequent declaration, quarterly dividends. The dividends declared during each of the second and third quarters of 2012 were $0.09 per share and dividends paid totaled $1.5 million in each of the second and third quarters of 2012.

Additionally, in May 2012, our Board of Directors authorized a program to repurchase up to two million shares of our common stock. During the nine months ended September 30, 2012, we repurchased 35,801 shares of common stock for $0.7 million under the repurchase program.

New Credit Facility

On February 21, 2012, we extinguished our previous $150 million Credit Facility ("Previous Credit Facility") and entered into a new $100 million Credit Facility ("New Credit Facility"). The New Credit Facility allows for borrowings up to $100 million, with an accordion feature for up to $50 million of additional borrowing capacity. The facility has a letter of credit sublimit of $75 million and provides access to multi-currency funds. The New Credit Facility has a maturity date of February 21, 2017.

Sale of Deltak Assets

On August 31, 2011, we sold substantially all of the operating assets of our Deltak LLC ("Deltak") business unit, which was part of our Products Division, for $31.0 million in cash, less a $4.9 million working capital adjustment. We have reclassified the historical results of operations of our Deltak business unit to discontinued operations for all periods presented. Unless noted otherwise, the discussion and analysis that follows relates to our continuing operations only.

Business Outlook

Products:

Year-to-date operating results for our Products Division reflect higher shipment volumes compared to the prior year period primarily due to increased activity in the Middle East and the U.S. and incremental results associated with the 2012 Acquisitions. Proposal and bid activity for near-term original equipment manufacturer ("OEM") projects declined during the third quarter of 2012 and indicated potential uncertainties in the market for product deliveries in the second half of 2013.

Our overall long-term outlook remains positive as demand increases for global power generation capacity additions, but has been affected by short-term headwinds resulting from continued macro-economic uncertainties and a slowing recovery in certain geographic markets. Natural gas power generation remains a less expensive and a lower emission alternative to coal-fired power generation, and we are in a strong position to take advantage of this once a sustainable recovery takes hold. Gross margins realized during the nine months ended September 30, 2012 were weaker than in 2011, primarily due to additional costs incurred for customer requirements on discrete projects that shipped in the third quarter. The higher costs are expected to be limited to these discrete projects.

In the third quarter of 2012, we also expanded our OEM offerings with the acquisition of Koontz-Wagner and our repair and replacement parts product line with the acquisition of TOG.

Services:

Within our Services Division, year-to-date revenue is lower primarily due to a reduction in refueling outage work at nuclear power plants in the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 and the expiration of a contract during 2011. The impact of the year-over-year revenue declines has been partially offset by increased scope related to our participation on new build and re-start nuclear project sites in the U.S. Also, capital spending constraints and deferred maintenance requirements in response to lower electricity demand and a mild 2011 winter have negatively impacted revenue as some of our customers have reduced the scope of elective maintenance projects. Although we believe we have maintained market share during this period, we continue to see full scope engineering, procurement and construction firms and other niche companies seeking to expand into nuclear modification and maintenance services.

The U.S. Nuclear Regulatory Commission ("NRC") has issued preliminary guidance related to certain modifications on the U.S. nuclear fleet, but the timing and scope of such modifications remain uncertain as U.S. utilities evaluate how these preliminary guidelines will apply to their nuclear sites. We do not anticipate earnings in 2012 from contract opportunities that may result from this guidance, but do anticipate some projects to materialize by the second half of 2013. Our margins realized during the nine months ended September 30, 2012 have improved from 2011 due to operational execution and efficient project management on capital projects.

Backlog:

Our backlog consists of firm orders or blanket authorizations from our customers. Backlog may vary significantly from reporting period to reporting period due to the timing of customer commitments. The time between receipt of an order and actual completion, or delivery, of our products varies from a few weeks, in the case of inventoried precision parts, to a year or more, in the case of custom designed gas turbine auxiliary and control house equipment and other major plant components. We add a booking to our backlog for Products Division orders when we receive a purchase order or other written contractual commitment from a customer. The maintenance services we provide through our Services Division are typically carried out under long-term contracts spanning several years. Upon signing a multi-year maintenance contract with a customer for services, we add to our backlog only the first twelve months of work that we expect to perform under the contract. Additional work that is not identified under the original contract is added to our backlog when we reach an agreement with the customer as to the scope and pricing of

that additional work. Capital project awards are typically defined in terms of scope and pricing at the time of contractual commitment from the customer. Upon receipt of a customer commitment, capital project bookings are added to our backlog at full contract value regardless of the time frame anticipated to complete the project. Capital project bookings are removed from our backlog as work is performed and revenue is recognized, or until cancellation.

Backlog is not a measure defined by generally accepted accounting principles in the U.S., and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. Backlog may not be indicative of future operating results and projects in our backlog may be cancelled, modified or otherwise altered by our customers.

The following table shows our backlog, by division, as of the end of each of the last five quarters ($ in thousands):

                                  September 30,      June 30,      March 31,       December 31,       September 30,
                                      2012             2012           2012             2011               2011
Products Backlog                 $       152,385     $ 136,058     $  135,355     $      130,614     $       126,198
Services Backlog                         301,916       266,451        199,412            213,433             213,647

Total                            $       454,301     $ 402,509     $  334,767     $      344,047     $       339,845

Our Products Division backlog as of September 30, 2012 increased by $16.3 million from June 30, 2012 and increased by $26.2 million from September 30, 2011. We acquired approximately $24.0 million of this backlog through our 2012 Acquisitions. Excluding the 2012 Acquisitions, Products Division backlog decreased by $7.6 million from June 30, 2012. This decrease was primarily driven by quarterly shipments outpacing new orders. While we remain optimistic about future prospects for new natural gas-fired generation projects, quote and booking activity remains slower than the first half of 2012. Bookings for the quarter were heavily concentrated on projects destined for U.S. and Middle East projects. The Middle East remains active and bookings destined for U.S. projects increased during the third quarter of 2012. Booking from projects destined for Asia have returned to 2011 levels during the third quarter of 2012. Excluding the effects of the 2012 Acquisitions, the ratio of orders booked to orders shipped was 0.8-to-1 during the three months ended September 30, 2012 and 1.0-to-1 during the nine months ended September 30, 2012.

Our Services Division backlog as of September 30, 2012 increased by $35.5 million from June 30, 2012 and $88.3 million from September 30, 2011. The increase in backlog from June 30, 2012 was primarily due to scope expansion on multi-year new build and re-start nuclear project sites. The build in backlog from new project bookings more than offset the impact of lower backlog from our core maintenance and modification services due to customer budget constraints. Of the $301.9 million in backlog as of September 30, 2012, we expect an estimated $40.4 million to convert to revenue beyond 2013. The ratio of project awards added to backlog to services rendered was 1.6-to-1 during the three months ended September 30, 2012 and 1.5-to-1 during the nine months ended September 30, 2012.

Results of Operations

Our summary financial results during the three and nine months ended
September 30, 2012 and 2011 were as follows ($ in thousands):



                                         Three Months Ended                                         Nine Months Ended
                                            September 30,                  Variance                   September 30,                   Variance
                                         2012           2011            $             %            2012           2011             $             %
Products revenue                       $  47,995      $ 36,700      $  11,295          30.8 %    $ 113,681      $ 111,641      $   2,040           1.8 %
Services revenue                          63,501        62,526            975           1.6 %      196,955        230,196        (33,241 )       -14.4 %

Total revenue                            111,496        99,226         12,270          12.4 %      310,636        341,837        (31,201 )        -9.1 %
Cost of products revenue                  39,196        27,472         11,724          42.7 %       90,642         87,650          2,992           3.4 %
Cost of services revenue                  54,171        52,549          1,622           3.1 %      168,381        199,862        (31,481 )       -15.8 %

Cost of revenue                           93,367        80,021         13,346          16.7 %      259,023        287,512        (28,489 )        -9.9 %
Gross profit                              18,129        19,205         (1,076 )        -5.6 %       51,613         54,325         (2,712 )        -5.0 %
Gross profit percentage                     16.3 %        19.4 %                                      16.6 %         15.9 %
Selling and administrative expenses       15,604        11,493          4,111          35.8 %       44,340         36,063          8,277          23.0 %
Reorganization expense                        -             20            (20 )      -100.0 %           -              15            (15 )      -100.0 %

Operating income                           2,525         7,692         (5,167 )       -67.2 %        7,273         18,247        (10,974 )       -60.1 %
Interest expense, net                         94           270           (176 )       -65.2 %        1,365            844            521          61.7 %
Other expense (income), net                  169          (121 )          290        -239.7 %          162           (183 )          345        -188.5 %

Income from continuing operations
before income tax                          2,262         7,543         (5,281 )       -70.0 %        5,746         17,586        (11,840 )       -67.3 %
Income tax expense (benefit)                 954           887             67           7.6 %        2,583        (38,098 )       40,681        -106.8 %

Income from continuing operations          1,308         6,656         (5,348 )       -80.3 %        3,163         55,684        (52,521 )       -94.3 %

Discontinued operations:
Income from discontinued operations,
net of tax                                   238           485           (247 )       -50.9 %          111          1,980         (1,869 )       -94.4 %
Gain on disposal, net of tax                  -         11,326        (11,326 )      -100.0 %           -          11,326        (11,326 )      -100.0 %

Income from discontinued operations          238        11,811        (11,573 )       -98.0 %          111         13,306        (13,195 )       -99.2 %

Net income                             $   1,546      $ 18,467      $ (16,921 )       -91.6 %    $   3,274      $  68,990      $ (65,716 )       -95.3 %

Revenue



                                      Three Months Ended                                    Nine Months Ended
($ in thousands)                         September 30,               Variance                 September 30,                 Variance
                                       2012          2011          $           %           2012          2011            $             %
Products revenue                    $   47,995     $ 36,700     $ 11,295       30.8 %    $ 113,681     $ 111,641     $   2,040          1.8 %
Services revenue                        63,501       62,526          975        1.6 %      196,955       230,196       (33,241 )      -14.4 %

Total                               $  111,496     $ 99,226     $ 12,270       12.4 %    $ 310,636     $ 341,837     $ (31,201 )       -9.1 %

Products Revenue.

The composition of our Products Division revenue varies from period to period
based on our product mix, the strength of various geographic markets we serve
and our ability to address those markets. The geographic dispersion of where
products were shipped during the three and nine months ended September 30, 2012
and 2011 was as follows ($ in thousands):



                                 Three Months Ended                                      Nine Months Ended
                                    September 30,                Variance                  September 30,                Variance
                                  2012          2011          $             %           2012          2011           $             %
United States                  $   14,598     $  8,619     $  5,979         69.4 %    $  31,417     $  25,670     $  5,747         22.4 %
Canada                                958           91          867        952.7 %        2,397         5,766       (3,369 )      -58.4 %
Europe                              3,111        1,587        1,524         96.0 %        7,086         5,085        2,001         39.4 %
Mexico                                611           64          547        854.7 %        4,357         3,611          746         20.7 %
Asia                                3,451        7,525       (4,074 )      -54.1 %        6,935        13,647       (6,712 )      -49.2 %
Middle East                        22,673       11,866       10,807         91.1 %       52,272        43,612        8,660         19.9 %
South America                         819          550          269         48.9 %        6,559         7,560       (1,001 )      -13.2 %
Other                               1,774        6,398       (4,624 )      -72.3 %        2,658         6,690       (4,032 )      -60.3 %

Total                          $   47,995     $ 36,700     $ 11,295         30.8 %    $ 113,681     $ 111,641     $  2,040          1.8 %

The $11.3 million or 30.8% increase in Products Division revenue during the three months ended September 30, 2012, compared to the corresponding period in 2011, was primarily due to shipping of customer delayed shipments from the second quarter and incremental revenue of $5.0 million associated with the 2012 Acquisitions as compared to the three months ended September 30, 2011. During the three months ended September 30, 2012, $15.6 million of the $16.9 million of project shipments delayed in the second quarter of 2012 were shipped in the third quarter of 2012. Including the 2012 Acquisitions, project delivery dates that were delayed as of September 30, 2012 totaled approximately $12.2 million.

Project delivery dates often change after a project is added to our backlog due to project site logistics or customer driven change orders among other reasons including transportation logistics. Our revenue during the three months ended September 30, 2012 was concentrated in the Middle East as our backlog was concentrated with orders destined for Middle East projects as of June 30, 2012.

The $2.0 million or 1.8% increase in Products Division revenue during the nine months ended September 30, 2012, compared to the corresponding period in 2011, was primarily due to incremental revenue of $5.0 million associated with the 2012 Acquisitions as compared to the nine months ended September 30, 2011. Negatively impacting current year revenue were delays in shipments of projects. Including the 2012 Acquisitions, project delivery dates that were delayed as of September 30, 2012 totaled approximately $12.2 million.

Services Revenue.

The composition of our Services Division revenue varies from period to period based on contract mix (cost plus versus fixed price and capital versus maintenance) and the number and scope of outages under our evergreen maintenance contracts.

The increase in Services Division revenue of $1.0 million or 1.6% during the three months ended September 30, 2012, compared to the corresponding period in 2011, resulted primarily from $13.5 million from new capital project work and $3.4 million from construction support work at new build and re-start nuclear reactor sites. This increase was largely offset by a reduction of $15.9 million due to the deferral of maintenance services and capital budget reductions by existing customers in response to lower electricity demand.

The decrease in Services Division revenue of $33.2 million or 14.4% during the nine months ended September 30, 2012, compared to the corresponding period in 2011, resulted from an approximate $17.3 million in net revenue reduction from outage work in the nine months ended September 30, 2011 as compared to the same period in 2011. The decline in outage work is primarily related to decreases in scope due to customer spending constraints. In addition, $27.5 million of the lower revenue was attributable to work performed in the prior year under a contract that has since expired. The impact of these volume reductions was partially offset by approximately $13.8 million from construction support work at new build and re-start nuclear reactor sites.

Gross Profit / Margin %



                                           Three Months Ended                                     Nine Months Ended
($ in thousands)                              September 30,                 Variance                September 30,                 Variance
                                           2012           2011           $            %           2012          2011           $            %
Gross Profit - Products                  $   8,799      $  9,228      $   (429 )      -4.6 %    $ 23,039      $ 23,991      $   (952 )      -4.0 %
Gross Margin %                                18.3 %        25.1 %                                  20.3 %        21.5 %
Gross Profit - Services                  $   9,330      $  9,977      $   (647 )      -6.5 %    $ 28,574      $ 30,334      $ (1,760 )      -5.8 %
Gross Margin %                                14.7 %        16.0 %                                  14.5 %        13.2 %

Total Gross Profit                       $  18,129      $ 19,205      $ (1,076 )      -5.6 %    $ 51,613      $ 54,325      $ (2,712 )      -5.0 %

Gross Margin %                                16.3 %        19.4 %                                  16.6 %        15.9 %

Products.

The decrease in Products Division gross profit during the three months ended September 30, 2012 of $0.4 million compared to the corresponding periods in . . .