Greetings, and welcome to the Astec Industries Second Quarter 2015 Earnings Call. At this time all participants are in a 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. Thank you sir, you may begin.

All right. Thank you, Adam. Good morning and welcome to the Astec Industries' conference call for the second quarter that ended June 30, 2015. As Adam mentioned, my name is Steve Anderson. I'm the Vice President of Administration and Director of Investor Relations for the company. Also on today's call are Benjamin Brock, our President and Chief Executive Officer; Rick Dorris, Executive Vice President and Chief Operating Officer; and David Silvious, our Chief Financial Officer. In just a moment, I’ll turn the call over to David who will summarize our financial results and then to Ben who will review our business activity during the second quarter. Before we begin, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company, and 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 and assumptions. With this point, I will turn the call over to David to summarize our financial results for the second quarter.

All right. Thanks, Steve and good morning everyone. Thanks for joining us on this call this morning. Net sales for the quarter were $268 million compared to $277.3 million in the second quarter of ’14. That is a 3.4% decrease or a $9.3 million decrease. International sales for the second quarter of ’15 were $73.4 million compared to $92.6 million in international sales for the second quarter of ‘14, the decrease of 20.7% or $19.2 million decrease. International sales represented 27.4% of Q2 ’15 sales compared to 33.4% of Q2, 2014 sales. The decrease in international sales in the second quarter of ’15 compared to the same period last year occurred primarily in Russia, in South East Asia, in China and in South America and these decreases were offset by increases in international sales in Europe, in Canada and in India. For the quarter international sales decreased in the infrastructure group and the aggregate and mining group and slightly increased in the energy group. Domestic sales for the second quarter of ’15 were $194.6 million compared to $184.7 million in the second quarter of ‘14, an increase of 5.4%, or $9.9 million increase. Domestic sales represented 72.6% of Q2 ‘15 sales compared to 66.6% of Q2 ‘14 sales. Part sales for the second quarter of ‘15 were $67.4 million. That compares to $60.2 million for the second quarter of ’14. That’s a 12% increase of a $7.2 million increase. Part sales again represented 25.2% of Q2, 2015 sales compared to 21.7% of Q2, 2014 sales. Parts sales increased in all groups for the quarter. On a year-to-date basis sales were $556.8 million compared to $515.9 million in the first half of ’14. That’s an increase of 7.9% or $40.9 million increase in revenues. International sales for the first half were…

Thank you, David. Ben will now provide some comments regarding the second quarter of this year’s operations. I’ll turn it over to Ben now.

Thank you, Steve. Thanks to everybody for being on the call this morning. As we mentioned in our earnings release this morning, we were disappointed with our second quarter results. We were pleased with our year-to-date earnings per share which were up 12% versus last year. However earnings per share in the second quarter were $0.51 per share versus $0.63 per share in the second quarter of 2014 with a decrease of 19%. Our year-to-date earnings per share were $1.16 versus $1.04 last year for an increase of 12%. Year-to-date EBITDA was $55.1 million versus $47.7 million for an increase of 15.5%. Our backlog at June 30 was $229.5 million, which is down 13.1% versus last year. Domestic backlog was up 9% year-over-year and international backlog was down 46% versus last year. International backlog was down primarily due to the strengthening of the U.S. dollar and the global mining slowdown. Regarding international sales, we are pleased to report an increase in quoting activity in our international sales groups and the addition in multiple orders since July 1 at our Astec new Brazil subsidiary for our large aggregate processing project and for two hot-mix asphalt plants. The encouraging news for us remains that as we mentioned on last quarter’s call, we continue to hear from our infrastructure customers in the United States that they are experiencing good business levels and they have backlogs of work to do, particularly on the product side. This has been good for our infrastructure business this year with the exception of the 45 days following the latest extension of the federal highway bill in the United States which slowed the ordering of equipment. While it will take a long time for the highway bill to bring sustained growth in large CapEx spending bar infrastructure group customers,…

Thank you, Ben. Adam, if you would poll for questions. I know we already have some people in the queue, so we’ll open that up to the analysts here just momentarily.

[Operator Instructions] Our first question comes from the line of Schon Williams with BB&T Capital Markets. Please go ahead with your question.

Hi, good morning gentlemen.

Good morning.

I was wondering if we could maybe zero in the agg amounting business, maybe a bit weaker than I would have expected this quarter. I mean it’s actually fairly unusual for Q2 to back up from Q1 in terms of sales and then I wonder if you could just maybe elaborate a little bit more about what specific end markets or minerals, you are seeing kind of – where are we seeing the weakness, maybe geographically. Just a little bit more detail maybe to help us kind of hone in on where the weakness is coming from. And then also maybe you talk a little bit about your expectations for Q3. Seasonally Q3 tends to be weaker in that segment as well, so should we expect that to kind of follow normal historical patterns. Thank you.

Thanks Schon. This is Ben. I think most of what we’re seeing in there are larger customers on the aggregate side are doing fine. Our customers on the onsite crushing, we’ve had a very wet beginning to the season and what we’re seeing I think is a slowdown a little bit there and it’s just got everybody – their backlogs are good, they’ve got the work, but it’s just really slowed down a little bit. I was with a lot of customers in the last 90 days, 42 customers and there are very few of them that had worked a complete full week this year. One fellow in Chicago, he only worked one five day week this season and that was at the end of June. So I think that’s where we are seeing the slowdown there. I do think we’ll see a historical third quarter slowdown, particularly since they’ll be working through their backlogs and then I think we’ll see it start to pick up on the order side, you know first week of September.

Okay, thanks. And then if I could maybe just turn in on some of the big SG&A costs. It sounds like you’ve got some computing and consulting. Can you just give a little bit more detail? Am I understanding that’s a ERP implementation, just maybe a kind of a status update on where we are with that project, what inning are we in and then maybe also elaborate a little bit on some of the R&D costs. Should we expect those types of levels over the next couple of quarters and then when does that turn into kind of new product introductions that we should be kind of having an eye out for. Thanks.

True. This is David, Schon. On the computer side, we are later in the game on the major ERP implementation that we are doing right now. We have them in various stages. We have one in South Africa that’s very, very late in the game. It’s actually implemented; you got to clean up after the game I guess. We’re doing one here in the states that we’re very late in the game on and we have one of two they are investigating what they want to do and so that’s where we all know. We think we’ve incurred most of the costs on the one here in the states, the vast majority of that, so I don’t expect much more costs to come through on that, certainly not to the extent that we’ve experience thus fall. On the R&D, I’m sorry, Ben do you want to say sometime about computers?

Yes, I would just say as far as I mean what inning they are in, I mean on the big ones where Roadtec is going three to one right now and I would say that they are in about the seventh inning stretch. They are coming along – came out of the gate pretty slow, but that had an order system for a long time, the legacy system. They having to change a little bit how they operate and that’s going to help them long time. They needed to do some of those changes, so its cost us a little more than we wanted, but at the end of the day, in the long run its going to be great for Roadtec.

Would it be fair to say that you’ll be complete in 2015 though?

Yes, they’ll go live in ’16. They are not drinking from a water hose; they are taking it slow because it’s a dramatic change. So I don’t think you’ll see the numbers that you – I mean, I know we won’t see the numbers we’ve seen so far. They are in good shape. They are doing a lot of testing.

Okay, that is helpful, and then on the new products.

Yes, on the R&D side I would expect to see expenditures continue. I mean we – as Ben said, we are targeting certain markets with new products, we’re developing those products over time and that’s part of our DNA and so I would expect to see that run rate continue on R&D and that’s why I’ve jacked up the SGA&E slightly to where we have.

Okay, and would we see any of that materialize this year in terms of new product introductions?

I think we will. For competitive purposes I’d rather not announce those on call, but I do think we’ll see some in the fourth quarter.

Okay, thanks guys. I’ll get back in the queue here.

Thanks.

Thank you. Our next question comes from the line of Mig Dobre with Robert W. Baird. Please go ahead with your question.

Good morning guys. This is Joe Grabowski sitting in for Mig this morning. If we could start in the energy segment, I know you touched on it a little bit, but the orders were pretty soft in the quarter. We’re just wondering maybe if you could just remind us, how many of the pieces in energy are impacted by lower crude prices and did that impact the orders in the quarter or are there other factors?

Heatec and GEFCO would be the main companies impacted by the lower oil prices. Mainly at GEFCO where we built oil drilling rigs and pumper trailers.

Okay, and again is that sort of why the orders were soft in the quarter or what’s the kind of upside of those two businesses?

No, that’s the main. The bulk of it was at GEFCO, we’ve done some orders that was at GEFCO.

And Joe, so you know that’s Rick Dorris our COO answering that question.

Okay, thanks.

The energy group is in his group.

Okay. And if crude prices kind of stay around these levels, do you expect the rate of orders to continue like that or…?

Yes, I don’t expect the orders on those products to improve much until oil prices start to come back up.

Okay, thanks. And then maybe moving onto the highway bill, I believe the headline that I saw was that the McConnell-Boxer Funding proposal that they had would kindly get them a three year highway bill. You guys talk a lot about a long term highway bill. Is three years long enough to provide visibility for your customers to increase their capital spending.

Joe, this is Ben. That will be the longest bill we’ve had in about 10 years. It would help. One of the things that our ad said, it was a six year bill with three years worth of funding in it and that was kind of the rest of the funding and that would help a lot of our customers, how they feel and actually I’ve been with all our customers and they are doing better than last year for sure and the feelings are pretty good. The midyear asphalt association meeting was out in Colorado in the last few weeks. The general feeling there was good coming out of there. I think we have a three year bill that’s helped us quite a bit.

Okay. And maybe one more from me on Wood Pellet Plants; it sounds like the second order is pretty imminent, but you also mentioned that the coating activity was up in Q2. Could you maybe elaborate on that a little more and would there be a chance to maybe get a third major order by year end?

Yes, but I don’t think it will be as big as the one that I’m talking about in the comments, but I do think there is a very good chance at a smaller plant.

Okay, great. I’ll jump back in queue. Thanks very much.

Thank you.

Thank you. Our next question comes from the line of Nick Coppola, with Thompson Research Group. Please go ahead with your question.

Hey, good morning. So looking at the year over year decline in backlog in both the infrastructure, aggregate and mining groups, is that decline entirely driven by international markets and I’m trying to think about how that kind of performance syncs up with flattish public funding and stronger demand for private work domestically?

Yes, it does. It ties directly to international. Those groups were – the decline and backlog in both of those groups was directly as a result of the international backlog and we believe as we’ve seen in most cases in the market, in announcements of other companies and just what we’ve heard from customers, a lot of it, the vast majority of it is tied to the currency and the decline in those markets overseas; they just cannot, they cannot buy the products right now at the going rates.

Okay, that makes sense. And then just want to follow up on the SGA&E question from earlier. As we head into ’16 are you expecting to get back to that $41 million type run rate or is the kind of the R&D you’re talking about going to continue to trend out and maybe lead to a little bit higher number going forward.

Yes, I think we’re going to – we’re working hard on SGA&E and as we close out some of these ERP implementations in computer costs as we try to manage this healthcare a little better, as we drive down those SGA&E costs. I would like to see it and I think our hope – the entire management team needs to see it head back towards $41 million. Will we get there? That’s hard to say. A lot of these things are unpredictable, especially things like healthcare and you get a big case or two coming through during the quarter and it can spike, but we would love to see it hit south and back towards $41 million.

Okay, and then last question from me…

Nick, hi Nick, this is Ben. I would say, to add to David’s comment, $41 million is our target range where I’d love to see it go up as if we’ve got a bunch of sales and we’re paying more commissions, but I think we’ll definitely have one or two companies come ask us in the fall about ERP2, so we may have one or two that we approve that might keep us in the $42.5 million range like David mentioned, just to give you a little more information on it.

Okay, it’s certainly helpful. Okay, and then last question on part sales up about 12% year-over-year, I guess a bright spot in the quarter there. Could you talk a little bit about where you’re seeing part sales and I’m wondering how much of that is maybe driven by a break fix type mentality or if there’s anything else that I’m missing?

Nick, this is Ben. I think there’s a little bit of break fix mentality, still especially with the two month extension announced, but the other thing I would say is the only things we start to measure is the percentage of our part sales that are on competitive equipment, on other makes of equipment and we are making headway on that.

Okay, thanks for taking my questions.

Thank you.

Thank you. Our next question comes from the line of Jason Ursaner with CJS Securities. Please go ahead with your question.

Good morning.

Good morning.

You mentioned in the prepared remarks your optimism on the federal highway bill getting past sometime this year. So I guess just the first question, with 10 days left it sounds like you’re kind of under the assumption nothing gets completed by the end of July and we’re sort of differing out towards later in the year.

Yes Jason, this is Ben. It’s such a fluid deal out there. I was in DC twice in the last 90 days and I know that I need to do it, it’s how to pay for it and I think it will be interesting to see what McConnell-Boxer, they announced, what they talked about in the last, I guess 24 hours, what they might announce. I just think that – I don’t want to use the word dysfunctional. I just, I don’t know if I can get anything other than an extension by July 31, so that’s why the comment on by the end of the year, because I do have been out there and seen a lot of different people. I really do get the sense that there will be a highway bill by the end of the year at the latest. Not to say that they don’t work a magic deal over the next 10 days and we don’t have a longer term bill, but I think it’s just very fluid right now in Washington.

Okay, and in terms of funding levels, you’ve talked about increased levels in the past. There are kind of two big plans being talked about. One is a more traditional; I think it’s a $275 billion, six year bill. You mentioned that those issues were kind funded, but is that kind of what you’re talking about in terms of level versus where we are now or do you need something more substantial.

I think talking to everybody and again where the wind blows up there the things change, but to me generally the consensus is a $48 billion to $53 billion per year, what they’d like to have for a bill, where they’ve been in the $41 billion per year range and I think it’s paying to – making up the difference in finding all the – they always call the paid for and I think that’s what they are trying to get done and they talk about repatriation, they talk about, there is one proposal when we were up there, we were the only ones that generated a $0.11 a gallon gas tax within $133 write off for people that made $75,000 a year or less. There were a lot of proposals floating around when I was up there and that was in late June or middle of June really. So I think everybody wants to do it, but they evolve. All the republicans have signed off saying that they won’t raise gas taxes as long as they are up there breathing, and so they are trying to figure out a way to get the money in place to fund it and I think eventually they will get there.

And the really big proposal though, I know the Anthony Foxx and Joban [ph], they are kind of championing to grow America1 and that’s a bigger bill, just no political appetite for something that large.

Well, I’ll tell you, just being up there, nobody talks about that one very much. In fact the last trip I didn’t hear anybody talk about that, but we are on the hill. But I did gather one group meeting. There’s a lot of people, so it wasn’t just me, but there was one with the White House staff and they obviously would like a bigger bill.

And the Wood Pellet System, just for the Hazlehurst plant, can you remind people what the terms are for the customer loan there and just how that gets treated from an accounting perspective?

Yes, hey Jason, this is David. The terms on that are that it runs through June 2016 and obviously we’re working closely with them on the plant and we’ve got our folks down there and they’ve been down there since the beginning. So as the customer Hazlehurst is financed by their ultimate banking partners, then they’ll take us out. They have to by June of ’16, but they will take us out and that point is when we’ll recognize the revenue. We’re financing that for them as a reminder to everyone who are financing that for them, because it is unit number one, but it’s also a marketing tool for us to show other customers and it’s an impressive sight.

Okay, and following-up on the question about quoting activity, there’s been a lot written recently about the utility pellet market actually slowing down a fair amount. Coal and natural gas prices are down, the conversion to biomass is a bit less economical and the UK government just kind of retroactively changed some of their view on the carving credits. How do you see that kind of balancing with what you’re seeing here on the quoting activity since a lot of the product ends up in Europe and is that impacting the timing on the large order at all?

The answer on the large order is no, it does not impact it. When they announced that, their assumption is that there was a lot of those subsidies that they had in place. They were helping companies outside of the UK and they really kind of backed off on that according to our customers. But even if that was in full, it doesn’t affect the ones that we are taking to right now. There is enough need for pellets in that market right that they are needing these supply contracts. So in the long term, absolutely probably it would be a concern for us, but in the short term it’s not for the projects that I mentioned on the call.

Okay I appreciate it. Thanks guys.

Thanks.

Thank you. Our next question comes from the line of Ted Grace of Susquehanna. Please go ahead with your question.

Good morning guys.

Good morning.

Ben, I wanted to come back to one of your final prepared comments when you said that there is a focus on gross margins and if we look at Astec over the last five or 10 years, gross margins have been remarkably stable, kind of a 22.7% with a very, very minor standard deviation. They haven’t gotten better, they haven’t gotten worst. But over the last five or 10 years if you look at US corporate projects and margins they have increased pretty dramatically. There’s been a lot written about this. You guys haven’t shown that same dynamic and so I’m just wondering whether you or Rick could talk about really how you aim to get there. I know that GEFCO was kind of one step, now that’s end market drive so that is structural in some regards but also cyclical. But in terms of the structural opportunities, you guys have to really start improving that gross margin that’s really been stable, but not improved at all in 10 years. Can you just walk us through what that opportunity set looks like.

It’s actually a multi department answer. One of the things that – I mean the first place it would start as if we could get a better market place for as the US dollar being strong and then you got a highway bill often and old business being where it is and mining been off. We got some pretty good headwinds. Our sales guys did a great job. Our market shares are really holding and actually in a lot of cases they are up. So I think if we could get more market, we have a little more pricing power that we really don’t have where we are right now and I think that’s step one. Step two is in manufacturing and in offices. With our lien effort we are ranking our divisions on that. We’ve got a lot of different categories that they are ranked on and its common across all division and we are getting better that. And to a certain extent I think that’s helped us maintain our growing market share in some places as we’ve gotten more efficient in the shops. We use some of that ability to price to keep the volume. So I think if we can get more pricing power, you are going to see that come through. Because just – I go through all our plants, we are getting better. So I think if we get more pricing power we are going to be pretty good shape coming out of it. And then I think the last part of that is in the part sales side where you see is slowing increasing our competitive part sales and getting more percentage of our sales of parts on our equipment; that’s showing up. So I think we got a great opportunity in the long run to get that up, whereas as you kind of like to say Ben flat for quite some time. But we’ve been a challenging market for quite some time and I’m pretty proud of our guys for keeping us where we are getting the market shares up and we are in a traditional third quarter I think where we are going to be in a little bit of a dog fight, in fact we are going to be better than we were last year in the third, because we have a little watermark there, but I think we are in position to get the margin up, coming up here in the next few quarters.

Maybe asked differently, if we were to rewind five years ago, to when your sales inflected, you know your sales were up 35%, 40% kind of 2010 to 2015. Would you have guessed that your gross margin would be at that level? I mean I recognize the headwinds in energy and mining and the impact of the dollar, but just in terms of like you’re internal like, I guess assessment of your margin results. I mean assuming the answer is you’re below where you would have thought you’d be given that 37% improvement in sales in five years. Is that a fair way to …

Well I think maybe and maybe not, because in that there has been a lot of R&D and the first few iterations of anything that we sell are lower margin and you take Roadtec for an example over that time period, just about every single project that they have is brand through tier 4 and that holds through to Peterson, that holds through to our track model crushing and screening equipment. We got the pellet plants that we built at Astec, the concrete plants and then we had a lot of new product innovations that kind of slows down your margin. So I would say that my answer would be, we have more volume, we are not having more gross margin, but the segment looking back behind it with the R&D that we have done, you can kind of say well we’ve done pretty good considering all our R&D that we’ve done.

Okay, fair enough. The second question, [inaudible] by you a quarter ago it sounded like the M&A prospect list was improved sequentially. Just want to know if there is any update there on how the M&A environment feels when you guys are looking at the targets.

I would say it feels better this quarter than last quarter.

So improved sequentially 2Q versus 1Q and 1Q versus this quarter.

Yes.

All right. Any characterization of big deals, small deals in the context of what you guys typically do, multiples U.S. versus international?

Well you know, that’s a – I would say I don’t have a answer to that, other than yes to all of them. We have some bigger ones and some smaller ones and multiple wise we are not going to get for in the range we’ve done in the past.

Okay. All right, well best of luck this quarter guys.

Okay, thanks.

Thank you. Our next question comes from the line of William Bremer with Maxim Group. Please go ahead with your question.

Good morning gentlemen.

Good morning.

You know taking a positive from this quarter; I was quite impressed with the gross margins, specifically in the infrastructure and the aggregates. And my question is, is what you are booking now is it at those margins or better. How do I look at pricing specifically in those two segments?

I would say that we are booking about the same level, right now.

Okay, so, it’s really about utilization that’s affecting the operating income right now, but the selling price is solid.

I would say that yes, we are okay in the selling price. I think we could do better with a stronger market.

Okay. And that is all I have, I appreciate it. Thank you.

Thank you.

Thank you. Our next question comes from the line of Todd Vencil with Sterne Agee. Please go ahead with your question.

Thanks, good morning guys.

Good morning.

Good morning.

You guys mentioned, there has been a lot of talk about the federal highway bill and rightly so you guys mentioned in the press release, you’ve seen [inaudible] highway projects to their own new funding mechanisms start to show up in the form of new project proposals. Can you talk about that, talk about what some of those state funding mechanisms are, where they are showing up, what kind of impact they are having?

Sure Todd, this is Ben. In South Dakota there was gas tax increase, it was about I think $0.10 a gallon. Pennsylvania has done funding increases through their taxes. Virginia went to a sales tax setup. So that’s a few of the examples and we’ve just seen our customers having more work in those areas. Now as a result we can navigate slow in Virginia. The economy wasn’t doing as well and then it kind of came back and so now things are a little better there. But you know strong states, I mean there is several strong states right now and I was with a customer yesterday that from Kentucky and they got pretty good levels of work right now. So there is good activity for our customers right now.

So first of all for the state of Virginia, let me apologize for being slow about that. But beyond that, I mean at what point can these sort of state initiatives and states taking their destiny in their own hands really make up for the fact for your customers of a lack of federal visibility or can it at all?

Todd, I think we are probably a couple of highway bill cycles away from something like that and where the state bills take over for the federal funds. I mean the private side is helping them too, so there is two sides of that equation. We have about 50% of the hot mix coming from the private side work on average, now this is in an average year and then 50% coming from government, and you are just talking hot mix tons there and that’s just a rule of thumb. Sometimes that is true or not but that’s kind of rule of thumb. But the government work represents 90% of the hope still today, because if it’s a three, four, five, six, bill that just gives them the comfort level to go with the large CapEx expenditure like an asphalt plant or big crushing plant.

That does make sense.

I just don’t see the states taking over to the level that the federal coverage would provide them. If they had a good federal bill, I would give them the mental feeling and the coverage to pull the trigger on the big projects.

All right, that’s useful thanks. And then switching gears to just the financial side, obviously stronger dollar as well as sort of weaker international mining conditions are going to impact your results. But to what extent did just straight translation per unit in the quarter if at all of foreign currency to dollars.

Yes, and we did that measure, and for the quarter it’s about $4.5 million on the revenue line.

Okay. Do you have a similar number for the backlog?

For the backlog it hurt us about $4 million as well.

Got it. Thank you for that. And just you may have mentioned this, but just to sort of frame it up you talked about the lien journey for a while. I know that’s a big part of a lot of things you guys are trying to do. Where do you feel like you stand on that and where does that go from here?

I think if remembering that we were slow to that, pretty slow. I mean the last few years is when we really started to focus on it. If a score of 100 it would be the end of the journey, which I don’t know if we are ever at the end of the lien journey based on where we are today. But if the 100 was that, I still think we are not – I don’t know I guess half way to 60%. I mean we’ve got a lot still that we can do to improve our factories and our office operations. It’s just in the factory so. So that’s just without having done a lot of, that’s a gut feel from being in the plants and talking with our guys and looking at our rankings and the things we are working on.

If you were at a 100 today you think you’d be at 25% gross margins or higher or lower.

I think we would be in the 25% plus range.

Got it, okay thanks a lot.

Thank you.

Thank you. Our next question comes from the line of Morris Ajzenman with Griffin Securities. Please go ahead with your question.

Hey guys. Can you run through your groups and just give us examples where you feel you have either lost market share or gained market share in any one category over the past handful of years again.

Morris, this is Ben, we’ve got over 220 product lines but by group I would tell you that we have in the most cases held on to market share and a few cases we have gained market and where we have slight market share, loss would be in the, probably in the highway pavers but not that much. We’ve gained enough that was – we’ve lost a little but we haven’t really lost a lot and part of that is there has been a lot of rent to own in the last selling season, but again Roadtec’s doing pretty well through the first half so it’s hard to get too critical on low-tech on that. But if there was one place where I would say we had lost any and it wouldn’t be much that would probably be where it is. Everywhere else we’ve done a fine job all along the market share.

Thanks.

Thank you. Our next question comes from the line of Brian Rafn with Morgan Dempsey Capital Management. Please go ahead with your questions.

Good morning guys.

Good morning.

Good morning.

Let me ask you a question for Ben. We’ve been beating this highway bill to death and I’ll beat it a little more. If you follow the ASC, the Society of Civil Engineers infrastructure report cards, I think the last one was 2013. I’ve been watching them for decades and I actually see some categories now in infrastructure that are rated F, and when you go up to Washington Ben, do you get a sense of that they understand the gravity. I mean we used to be able to put guys into space and build navy ships and now we can’t even pass budgets.

It’s frustrating, walking around up there to be honest. I would say that there are those that get it and understand it, but you know sometimes you try to hold your patience, but one of the meeting I just – I said – well, I shouldn’t say what I said to them, but I just said it’s easy to sit here in DC where you fix the roads for the tourist and I know what district they are from and how good the contractor was in that district. And I said it’s easy to fly back and forth in between those areas where you got great, great contractor and great roads and then back to DC I said, but I’ve been to 16 states in the first half of the year and I could tell you it’s falling apart and I just don’t know that they get that. Now I do think that the majority of them understand they need to do something. I do think they’ve got the messages. I think our associations have done a great job of giving them those states Brian, I really do. I think most of them get it. That was a one off and I’m sorry I was emotional about that, but they, I do think they know and they need to do it.

Okay, all right, fair enough. You talked a little bit about some of the regional. Here is Wisconsin we rebuilt four interchanges out of Milwaukee. You can’t drive five miles, I’ll bet you’ll get a detour sign. There are some states like Texas, Wisconsin, Indiana that through private, public partnerships in that have had some pretty strong state DOT activity and I’m wondering if ex the gas tax stuff that you talked about in Virginia, Pennsylvania, South Dakota lately have you seen regional strength with road builders buying from states over the past few years that may have had stronger state DOT funding that say other states.

Yes I would say that Texas would be one of those states, Florida would be one of those states. Oklahoma has been okay for some of our customers. So those would be the ones that would come to mind just talking here on the phone.

Okay. Okay, you talked a little bit about kind of the wood pellet plants. When you are looking at down the road, two, three, four years exploratory conversations, potential quoting; how many customers? Would you be having dozens on conversations or what’s kind of the scale of the level of interest being a new venture for you guys?

At this point I would say it is not dozens, but dozen, 12 to 15 right now.

Okay, all right. Let me ask if you looked across all of your subsidiaries, what would you get a sense of kind of your capacity utilization rates and if and when it will turn, things will turn around, where you go from absorption issues to issues of overtime and you don’t have enough. What might be your work line sales revenue capacity with all the operating assets you have deployed today?

It depends of where that business comes into Brian, by division, but I would say probably in the $1.5 billion to $1.7 billion range. We could handle a lot of work up to that. That being said, I’d tell you our utilization would sound better than that right now, but we are not working three shifts in every place, so maybe we could add shifts and add people, and our ability to get people is fairly good in most locations. We have some where the unemployment is still really low. But by and large I think we could get good people to be able to go up, in the 1.5 range pretty quickly.

Yes, okay. Well let’s go to worst case scenario, and say that we stumbled through and we don’t get a highway bill this year. At what point do you see either with a big national road builders or the regional’s, where you are seeing where you are seeing things just break down and at some point they are going to have to start looking at actually making some purchases or do you not see the purchases and it just shows up in more increasing and accelerating part sales.

Brian, I think we might have seen a little bit of that through the buying season this year, because it was a little more, just a little more stable. Weren’t much but you – but it feels a little more stable and there is people still looking on the plant side right now. So I would think we might be seeing that on a small scale right now, because the plants have been running a little more in the last years, so I think we maybe seeing that just a little bit. I don’t know that that wouldn’t be a end of ’16, the ’16, ’17 type buying season event more than a this year event.

Yes okay. And then final, if you look across the entire Astec company, where is your ERP system rollout? Do you still have other subsidiaries that still are yet to install that or is it finished within a the next couple of years?

I think we’ll always probably have, I think that larger divisions, let me backup, the larger divisions by and large are pretty close to all having new systems that will be good for a decade or more and then some of the smaller divisions may do them, but they will be much smaller in price too, because there’s less users. So we are also having everybody chose two or two systems so we are getting more continuity across the board and we are getting better putting them in and that helps us, we are getting more best practices, sharing. So I think we are going to be seeing that come down probably after next year pretty significantly.

Okay, and then on the energy side, the oil rig construction or the pumper trucks, how much surplus equipment, used equipment is floating around where you’d have to see a sustained increase for months or quarters or years relative to holding spot prices higher in oil and gas or would you see that kind of recover fairly quickly.

This is Rick Dorris. There is defiantly some surplus equipment available right now, reinvent pumpers, it would probably take several months of sustained increases in the prices to try to use up some of that inventory but after that I think we’d have good change of selling some new equipment in those areas.

Right, thanks guys. I appreciate it.

Thank you.

Thank you.

Thank you. Ladies and gentlemen if there are no further questions at this time. I would like to turn the floor back over to management to closing comments. End of Q&A

Thank you, Adam. We appreciate everyone's participation on our second quarter conference call. 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 able through August 4, 2015 and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries' website within the next seven days. All of that information is contained in the news release that was sent out earlier today. So this concludes our call. Thank you all. Have a good week.

Thank you ladies and gentlemen. This does conclude our teleconference for today. You may now disconnect your line at this time. Thank you for your participation and have a wonderful day.