Greetings, ladies and gentlemen, and welcome to the Astec Industries second quarter 2008 results. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Steve Anderson with Astec Industries. Thank you, sir. You may begin.

Thank you, Ryan. Good morning and welcome to the Astec Industries conference call for the second quarter of 2008. As Ryan mentioned, my name is Steve Anderson, I am the Director of Investor Relations and Corporate Secretary. Also on today's call are Dr. J. Don Brock, our Chairman and Chief Executive Officer, and McKamy Hall, Vice President and Chief Financial Officer. Don is in Idaho today and traveling on business, so he is dialed-in remotely. In just a moment, I will turn the call over to McKamy to summarize our financial results, and then to Don to discuss our operations and business environment. In the way of disclosure this morning, I will note that our call may contain forward-looking statements that relate to the future performance of the company. These statements are intended to qualify for the Safe Harbor liability, established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions and other factors, some of which are beyond the company's control. Some of those factors that could influence our results are highlighted in today's financial news release and others are contained in our annual report and our quarterly and annual filings with the SEC. As usual, we urge you to familiarize yourself with those factors. At this point, I will turn the call over to McKamy to summarize our financial results. McKamy?

Thanks, Steve. We appreciate each of you joining us this morning. We are pleased to report to you on the most profitable second quarter in the company's history. The company generated a 14.1% improvement in net income and we look forward to continuing 2008 with a backlog of $264.6 million and reaching our sales goal of $1 billion for 2008. This morning, we will discuss the quarter. We were at $277.7 million in sales versus $226.4 million or an increase of 22.7%. International sales were $93 million versus $69 million for the same quarter last year for an increase of 33.2% or $23.2 million. International sales composed 33.5% of the second quarter sales. These increases occurred in Canada, Europe, South America, Africa, Asia and Central America. Domestic sales for Q2, 2008 were $184.7 million or 66.5% of total sales versus the $156.6 million or 69.2% of total sales for Q2, 2007 for a 17.9% increase in sales volume domestically. Part sales for Q2 are $50.5 million versus 2007 of $45.0 million or a 12.2% increase. All segments in the part sales section had increases. Sales in total increased in all segments as well, and those are attached to your press release for your convenience and reference. Consolidated gross profit for Q2 is at $66.3 million versus $58.9 million for the prior year, an increase of $7.4 million or 12.6%. The gross profit percentage actually decreased 210 basis points for the quarter to 23.9% from 26%. That decrease was in all segments. Maintaining the margin, and Don will have more to comment on this later, but maintaining the margin is our greatest challenge right now. We have had multiple price increases. Some companies we are continuing to realize good benefits from our focus groups. We are continuing the production initiatives and…

Thank you, McKamy. Dr. Don Brock will now discuss Astec's business operation for the second quarter. Don?

Thank you, Steve. We had a very good quarter. In my opinion, our revenues were up as McKamy said, 22%. Our income was up 14%. Earnings per share were up from a record last year of $0.83 to $0.93 this year. Our backlog for the quarter, at the end of the quarter was $265 million, which was up 12.4%. International sales over the six months were up from $119 million to $185 million or 55% increase. Domestic sales were up 10% over the six months period. Our part sales were up from $88 million to $103 million or 17%, again over the six months period. The bad news is that our gross margins decreased from another 26%, down to 23.9% or 210 basis points for the quarter. Year-to-date they decreased from 25.6% to 24.5%. During the first six months, I guess in my career I have never seen inflation like it has been. Steel was up about 80%. Other component prices are up from 4% to 20% depending on what the component is. We have increased our prices to try to stay with these price increases, but unfortunately with our backlogs, our price increases are behind our cost increases. We continue to grow in the oil and gas, wood energy business and International sales. The extreme rise in oil prices have forced states to really get more aggressive on increasing the usage of recycling, in conjunction with our warm mix system, which we can use without change in grades of asphalt, and increase the amount of recycle up to 50%. This is very achievable today. We are beginning to see many of the states loosen, I use the word "loosen" very loosely because we see them as being more interested in going to a higher rate of recycling. There has…

Ryan, if you would poll for questions, we would be glad to answer those.

Yes. Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Arnold Ursaner with CJS Securities.

Don, good morning.

Good morning Arnie.

Don, a quick question to ask you. The price increases in steel is certainly not new. You have been talking about that a well over six months. It would seem to me that you were trying very hard to either put in surcharges at least some other actions to fully recover your steel cost. Why are you having that much difficulty doing that?

Some of the companies we’ve put in surcharges and been able to get on, if it is a long delivery. Unfortunately a lot of our equipment is probably build and shipped and some of it we are too close when we are going to ship and there is pushback from the customers on doing that. Actually, I wonder what I am paying forward because it is critical and a cost to this project. So, we back to your question, we’ve been able to get it in some products, but not in all level.

Okay.

The key thing, Arnie, that hits me, I think that we are all right. If these down increases, part of my expression would just plateau; steel company’s just continue to push the prices going up and we really have trouble understanding the need from where they are today, but we’ve bald a lot of head to say it makes you difficult. Some of the companies probably have steel through September. Some have steel and for certain have components out through the end of the year. So, some of the increases have not hit yet, and when I give you some of these numbers, it is based on the current process that we see coming. All of these have not flowed in to our cost at this point.

You have locked in very attractive steel prices certainly through June. Are you able or you are trying to lock in steel increases that will essentially cover the backlog you have in there?

That is what we are trying to do. Those are at different levels along with 80% increase. We started when the street paid around $0.40, $0.42 for the first of the year. We are seeing it in the $0.75 to $0.80 depending on which part of the country it is, and so we’ve got some reviews. We have used up probably $0.42. Maybe not all others, but we’ve got some in the high 40s, some in the mid 50s and all the way up. Arnie, does that answer your question?

Okay. So, as a final question to try to summarize the conclusion based on the backlog you have and how the cost increases in steel, manufacturing efficiencies. I know you do not give formal guidance, however, would you care to comment on what gross margin you think you can obtain for the balance of the year and perhaps into next year? What gross margin should we be thinking about?

Arnie, it will range from 20 to 24 in that range. The thing that makes that a little difficult to answer is, as our price increases catch-up we will be back in the 24 range. I have struggled more with this call than any I have ever had to try to figure out. Our price increases are behind our component increases and if the prices increases were plateau and stop then we will climb backup in that 24 to 25 range. This still take going out for a period of time for that to happen.

Don, thank you very much. I am looking forward to seeing you in August at our conference.

Okay. Thank you, Arnie.

Our next question comes from the line of Jack Kasprzak with BB&T. Jack Kasprzak - BB&T: Thanks. Good morning everyone.

Good morning, Jack.

Good morning, Jack. Jack Kasprzak - BB&T: All right. Don, on your last comment, you said the period of time for the price increases to catch-up. Is that that a six month period of time? Would you say that will be a reasonable guess?

Jack, if the cost increases the pricing of steel and these other components, basically plateaued right now. I would say mid fourth quarter we would be back in shape. However, we are still seeing, in August, steel price increases now. We’ve not seen any softening at this point. I thought it would start to soften in June and now, I think maybe in September, fourth quarter, with the automobile manufacturing going down like it is. You would think there would be a real softening but we haven't seen that. The steel companies still are very aggressive. Jack Kasprzak - BB&T: By the way of review, I know you have given this number on previous calls going back in time but what is steel as a percentage of costs?

At the first of the year it was about 12% of our cost. Where it is right now, it has gone up to more like 18. Jack Kasprzak - BB&T: Okay. I wanted to ask too on the subject of state budgets. There has been a lot of press in the first part of this year about weakening state budgets and your sales in the US have held up very well. However, as we entered the back half of '08 and most states are into a new fiscal year, what would you say? How do you characterize the outlook on the state budget side? You think there is perhaps some more weakness to come based upon the new budgeting cycle taking hold?

Jack, I think there is going to be more weakening at the National Stone Association. I was speaking to their Board of Directors in the morning and we see there the aggregate industry is down 30 to 40% over two years. The thing that is really helping us is this new warm-mix process. We built the first ones in June of last year. We sold in a excess of 120 of them and we can sell more than we can build right now. That process eliminates the smoke and the smell and eliminates the drying cost. It is very green. The environmentalist love it. We can increase the amount of recycle up to 50% without change in the grade of liquid asphalt. All of that said, this is forcing our customers even in a down market to upgrade their facilities to Double Barrels and plants like that, that will do more higher percentage of recycling. In the last few weeks I have spoke to five different highway departments. They have called us, instead of us calling them. Now with the price of liquid asphalt going up and they are all more interested in doing more milling that generates more recycle and allowing the higher increases in RAP. So this is really helping the sales of the Astec products and Roadtec. Also to go through the higher percentage as a recycle, you have to take the material back apart and reprocess it, get it back to the size as the original aggregates and then recombine it. That also helps the sale in some of our crushing division. So in what I call a very weak market, domestically we are continuing to see a lot of product sales just due to this change in technology. Everybody is looking at how do I drive my cost down. Jack Kasprzak - BB&T: Okay. Great. Thank you very much

Our next question comes from the line of Robert McCarthy with Robert W. Baird.

Good morning Robert

Good morning, gentlemen, can you hear me okay?

Yes Sir

Okay, I want to ask you about your operating expenses or your SG&A expenses, because the number in the quarter was, well startlingly good, after the number that you put up in the first quarter. It creates the impression, if you will, with a significant decline compared to the first quarter, in a quarter where revenue went up sequentially, that there might have been some unusual expenses in that first quarter number?

Rob we had $3.6 million, $3.8 million in the context of the first quarter.

Okay.

It all went in the first quarter.

All right. So if I take that out I will still have a sequential decline in the second quarter, compared to the first quarter. Anything unusual there, Don, have you initiated some specific cost cutting or cost containment programs internally?

We’ve Rob, obviously this turbulent economy makes you a pucker a little bit and we basically just try to control expenses. In fact, many of our company's have set up focus groups just on SG&A expenses to really relocate everything.

Okay. Can we get a conformation, McKamy on your outlook for the effective tax rate for the full year and I just want make sure that I interpreted your remarks correctly, Don, about the full year revenue outlook. I hear you saying that you think now that you probably will exceed $1 billion in revenue?

Well Rob, to be truthful, part of that is increases in prices.

Of course.

I think our component, probably our unit machines are going to be about like we were projected them earlier, but as these price increases flow in, inflations are great to see.

Sure and Mckamy.

Up 36.5?

36.5, which is what you would have been saying before right?

Right.

Okay. I will let somebody else talk. I will be back in line.

Our next question comes from the line of Michael Cox with Piper Jaffray.

Hi, good morning.

Good morning, Michael.

I just had a few question. In terms of price increasing, I am curious. Up there certain segments within your business, whether a subsidiary company level or some at the consolidate level, that you are having, perhaps more difficulty implementing price increases or is it pretty consistent across each?

Michael, domestically its more difficult than International because of the weak dollar. So, the big effect internationally that we are having is really increases in freight cost, but the dollar is so weak, it certainly helps international sales a lot. Domestically we are selling a lot in. Let us talk in the asphalt side of it. We are selling quite a few plants, but a lot of component, just partial plants, and the economic benefit with the cost of oil going up so much is, if being reduced the drying costs and increased the amount of recycle, which in decreases the material cost. There is nothing that huge that pushes back in that area. Other areas, I will say more in the crushing equipments, some of those areas we are seeing more push back. However, I think everybody, all of our customers, they also bought steel for their jobs and they realize what that is going on and give less resistance in a time of rapid steel increases in areas in when reduced, other component increases.

Okay. That is helpful. In terms of the current backlog that you reported at the end of the second quarter, would it be fair to say that the backlog at the end of Q2 versus the end of Q1 would incorporate some of these price increases, or is it really something that will be going into effect into more and so in the back half of the year?

Generally we’ve had from two to three price increases since November of last year, and I would say most of the backlog has got at least one of them, and good portion got two if it, and some of it has got all three of them. However, I cannot give a precise number.

Okay. That is helpful. In terms of inventory levels, which have been up year-over-year, and you called out, perhaps some pre-buy activity to hedge steel cost. Should we expect that the inventory levels maybe on year-over-year change basis to such moderate as the year unfolds did you gone through some of that steel?

It will in the steel, but we are also planning on keeping of our more finished components and because of them, when people get jobs, they want to buy, they want to quickly, and particularly in track mounted crushers and some of the Roadtec equipment have not been very aggressive even trying to get down the reduced inventory, because they can make a lot of quick sales and quick shipments. So, with our cash position, we had been real aggressive in that area this fall.

Okay. My last question in terms of demand, there has been a lot of concern around Europe and economic conditions and particularly Western Europe. Are you are seeing that side of your International business?

Europe is obviously softening, where our business is coming from is pretty simple. It’s where there are minerals and where there is oil. The two are where the commodity prices are so high on many mining operations today and as a result of that, that is where the bulk of our business is coming either in the mining or the oil area. There we do not see a slowdown at this point.

Okay. Thank you very much.

Thank you.

Our next question comes from the line of Rich Wesolowski with Sidoti & Company. Rich Wesolowski - Sidoti & Company: Thanks. Good morning.

Good morning, Rich. Rich Wesolowski - Sidoti & Company: Don, earlier in the call where you estimated that the company can get back to that 24%, 25% gross margin range by mid 4Q. If steel costs plateaued, did you mean if the spot price stayed where it is today or is the forecast that you held throughout the year, held over the timeframe?

I am saying that it stayed where it is today. That is the thing. I have felt like the steel companies were going to back off a little bit, but we’ve not seen it. In fact, Nucor announced a $0.05 a pound increase for August and we haven't bought any at that level, but they continue to push it up, and I think you are going to have to see a weakening in demand internationally before you see these guys back down a little bit. Rich Wesolowski - Sidoti & Company: Okay. Second, if you look back on the gross margin within last 10 years or so, you basically round trip from the mid 20s to the mid teens, and now back to 24% or so, if the margins do begin to come down with the cost inflation and with the economy, can you review what is different about our tech now that would suggest that even a pessimistic case would put your margins in the out years above that mid-teens level?

I think, the two things that are quite different are our international sales are a substantial larger percentage of our business, and we are selling geographically in more areas of the world. That is number one. Number two, our product mix is a quite different thing. The oil and gas business is probably getting above 20% of our business now. Mining is 8% to 10% of our business. We expect both of those to grow, probably oil and gas to 40% and mining to 20% over the next few years. So, we are applying our products in a wider range of industries, but hopefully they are countercyclic to each other. Rich Wesolowski - Sidoti & Company: Okay. On the last call you had mentioned that, or almost inferred that you like backlog to come down because of the risk of losing orders, and here we have a surprisingly strong flat June backlog sequentially. Are you aiming to bring that down even more so than we would expect in the back half of the year?

Well we were worried a little bit about too much backlog as particularly in the Roadtec products and some of those areas of mobile equipment, like a track-mounted crusher. When they decided to buy they wanted more. We’ve also during the year and last year lost orders in Asphalt plants, because we just could not deliver. It is surprising, many of our customers are in a financially much stronger position and we are getting fairly substantial orders for first quarter next year for Asphalt plants from quite a few of our customers right now that are generally private companies that are well financed. So let me put it this way, I am less uncomfortable than I was in March because, the second area is, most of the jobs that we’ve had are laid in the first six months, and if I get a big job and I need a plant, if you are not able to deliver pretty quickly, you will loose the order. Now, most of its more long range planning for next year. Rich Wesolowski - Sidoti & Company: That is helpful. Is that the earliest you can deliver an Asphalt plants, if ordered today is 1Q?

Yes, we would be back in the first quarter. Rich Wesolowski - Sidoti & Company: Okay. Then finally, how many vertical rigs have you delivered so far? How many more are on order?

Probably 10/10 something like that. Rich Wesolowski - Sidoti & Company: Great. Thank you again.

Our next question comes from the line of Robert McCarthy with Robert W. Baird.

Your International business is running a little bit over a third of sales right now. Can you give us any visibility into your backlog? Does it have a comparable distribution of customers or has it become more international?

It is probably 50/50 now Rob. I expect to end the year about at 40% International.

Okay.

Generally that is the back half. It’s wintertime in Australia now, so we are at the opposite side of the hemisphere. You do not find the buying cycle opposite.

Can I assume that it is easier for you to put through pricing changes after you booked the order for an international customer than it is for US customer?

No, not necessarily. I think they are both very similar in that. If we book the order, they expect that to be the number.

They expect that to be the price?

Yes. They do a lot of fixed cost work. And that's why, I don't want it. The other question that was asked a while ago by Rich, the backlog, if it gets much beyond this, you do get a little uncomfortable. The gut feeling is while we may see some more increases, its going to get real nasty in the whole country if they keep increasing inflation keeps growing like it is and I just do not expect that. Personally I think we are getting close to a plateau.

I hope you are right, Don. Thank you.

I hope, so too.

Our next question comes from the line of [Scott Mac] with aAD Capital Management.

Good morning. Thanks for taking my call.

Yes, sure Scott.

Hey, I appreciate the transparency on the cost of goods sold. I was hoping just to finish. I think you mentioned that steel was running at 18% to cost of sale.

Right.

How much would components be of cost of sale?

Typically, in our sales price there is not cost of sales. In our sales price, the steel cost plus the components will be about 50%, 50% to 52%, so and our cost of sales about 75%. So, the difference in the 52% and the 75% is on manufacturing.

Okay. So is 18% of sales or….

That is sales, yes.

Okay.

I may have answered that wrong for Jack awhile ago. It is 18% of sale.

And then, again, the strong backlog number and the implied order growth, I was curious if you could give us a little commentary about the trends through the quarter. I know that if I remember the number correctly maybe about $40 million maybe followed on from ConExpo? Then also curious, if as you announce price increases, if customers are given an opportunity to buy ahead of those price increases if that had an impact in the quarter as well?

Probably yes in both of those cases of the April sales were very strong. May, we had increases and but I do not know, its June was very strong. So, it has been, as I look at it, pretty darn flat all the way through. It is about the same the last of June and in fact early July; we’ve had pretty strong backlogs. More of it though Scot got is more international. We got some substantial international orders that have come in early July.

Then, trying to think of a better way to ask this. I am just curious, in your backlog or maybe in the implied order number for the quarter, how is that price relative to volume?

If we could take into account everything we see that is coming that we already know which increases, we probably should have increased our process and strictly on price increasing, probably 16% to 17%. We probably average 13 to 14. I would say that number one the 16% to 17% had flowed in because we bought ahead. Number two, that we are probably at up to 13% to 14% increases, we probably got 8% or 9% of them. 8 or 9%. So that makes it all the more difficult, let us say it is some steel we brought out through the end of the year. It is not at the full blown price increase in some components brought ahead.

Okay. So if I look at the backlog up, about 12.5% year-over-year in June and then maybe I would be thinking about something in the 8% to 9% range been price and the balance been volume.

That is probably, close to right, yes.

Thank you very much for your time.

Seeing as there are no further questions, I would like to turn the call back to management, for any concluding remarks.

Okay, thank you Ryan. We appreciate your participation on our second quarter conference call and thank you for your interest in Astec. As our news release indicates today's conference call has been recorded. A replay of the conference call will be available through July 28 and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relation section of the Astec Industries web site within the next seven days. All of that information is contained in the news release that was sent out earlier today. Since there are no further questions, this will conclude our call. Thank you.