Astec Industries Inc (ASTE) 2002 Q4 法說會逐字稿

Good morning ladies and gentlemen, and welcome to the Astec Industries fourth quarter and year-end conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero, on your telephone keypad. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dr. J. Don Brock, Chairman and Chief Executive Officer of Astec Industries. Thank you Dr. Brock. You may begin.

Thank you, Eleanor. Good morning, everyone. With me on the--I am in Morris, Minnesota, and with me is Bob Stafford, who is our Group Vice President of Aggregates, and then in Chattanooga, Tennessee, is McKamy Hall, our Chief Financial Officer, Al Guth, our Group Vice President of Administration, and Steve Anderson, who is our Assistant Secretary and Director of Investor Relations.

To start the call I'd like to ask Steve to just make a brief statement. Steve?

Thank you, Don. Before we begin I'm sure that all of you have had a chance to read and digest the press release that we issued at 7 o'clock this morning which gives you details on the fourth quarter and year-end. I do want to remind you that our discussion this morning will contain forward-looking statements relating 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. These 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 and could cause actual results to differ materially from those anticipated in the press release that we issued earlier today. These comments will--that we will make during the conference call are commentary and our answers to your questions are as well. Some of those factors that could influence our results are highlighted in today's press release and others are contained in our annual report, our filings with the SEC on both a quarterly and annual basis, including the 10-K filed yesterday. Naturally, we urge you to familiarize yourself with those risk factors before making investment decisions regarding Astec Industries, Inc.

At this point I'd like to turn the call back over to Don Brock. Don?

Thank you , Steve. What we'd like to do is briefly talk about the year 2002 and I'm going to ask McKamy to go through some results and then we'll talk about the outlook for the rest of 2003. Before McKamy gives us the financial results, I'd like to just mention really our four operating groups. The asphalt, the aggregate, mobile and underground groups basically make up our Company. We have 14 different divisions. If you look at each of the companies last year, we experienced a very tough economy, very competitive business The volume was, I guess--and overall we had a lack of volume in the business and as a result, the volume that was there was very competitive. The asphalt area was poor primarily due to construction projects related to our systems group, which I'll talk about a little later. The aggregate group again had a reasonable year, but not great. And our mobile group again performed--was our best performer of the three. In the underground end of it we continue to live in a depressed cycle, very depressed due to the telecom business, and was not helped a whole lot by the regular utility business or the pipeline business.

But with that I'd like to ask McKamy to kind of go through our financial results and cover some of the points related to the balance sheet of the Company. McKamy?

Thank, Don.

We are pleased to share with you that the company has received covenant waivers for 12, 31, 2002 and for three, 31, 2003. The covenants for the remainder of 2003 have been renegotiated based on current expectations. The company filed timely their 10-K yesterday. The company has generated $22 million from Astec financial sales of portfolios. The remaining portfolio sale should bring the escrow account to a level of approximately $30 million.

Our current creditors understand that some of the funds may be needed to assist the company through the second quarter and peak season to fund normal seasonal needs. The funds remaining in the escrow should be available to reduce current debt during a refinancing or further restructuring of our current debt.

During the first quarter, the company received and evaluated several refinancing proposals. The company is currently pursuing one source and good progress has been made toward execution of the refinancing. Auditors are onsite and appraisals are in process.

Now I'd like to share some of the financial numbers with you and then after this and after further comments from Don, I'll certainly be glad to answer any questions you have.

And I'm going to try to not bore you with reading a lot of the thing that are attached to the press release. I'll refer to some of those. But I'll try to share some things that will help you better understand the financials that we provided in the press release.

In the first quarter, I'm sorry, in the fourth quarter, the sales are up 27 percent or 22 point three million. International sales were at 18.2 million versus the prior year of 16.3 or an 11.5 percent increase. The part sales were up from 20.5 million to 23.9 million or a 16.6 percent increase in the fourth quarter.

Addressing sales for the year, our revenues are up from 455.8 million to 480.6 million, for an increase of five point four percent. The international sales decreased by 13.2 percent and this decline primarily occurred in Central America and Europe. The domestic sales increased from 364 million 428 in 2001 to 410 million 284 in 2002, or 36 million 856 thousand for a 10.1 percent increase.

Part sales were up from 93.5 million to 99.8 million, or six point seven percent. During the year the percentage of revenues by segment, in sort of a pie chart reporting format, would be asphalt at 34.5 percent of our total sales and the sales increased in that segment. Aggregate 41.5 percent of total sales, sales increased in that segment. Mobile, 15.0 percent and sales declined in that segment. Underground, eight point two percent and sales declined in that segment. Now sales by segment is in the sheet attached to the press release.

Consolidated gross profit for the quarter had a decline of four and a half million dollars. As we announced in our pre-release and further reiterated yesterday, this was a result of several factors, including: the underutilization of capacity, cost overruns on customized jobs, used equipment write-downs. For the year, we also had significant underutilization of capacity, competitive price pressures, which Don referred to a second ago, decreased sales volume, particularly in underground, cost overruns on systems projects and particularly in the construction and erection phase, and the used equipment write-downs that I referred to in the quarterly context.

In terms of the ranking of the segments by gross margin, that information is attached to your press release, so I will not repeat that. Only one comment relating to the rankings, as Don mentioned a while ago; the Asphalt Group -- and some people don't understand this -- but the Asphalt Group has basically done the construction and erection phase of the aggregate systems jobs, or the Astec Systems jobs. So, some of these losses or overruns that did occur did impact the gross margin of the Asphalt Group, so I just wanted you to be aware of that.

In the SG&A Engineering area, looking at the quarter, we were at 17.9 percent versus 25.2 percent. If you've had a chance to study the income statement, you should notice that the start-up and relocation expenses for the Louden Plant or the Trencor product lines, 3,277,000 are on a separate line. So, that is excluded from the SG&A cost, and it's spelled out because of its large expenditure.

On a year-to-date basis for the year of 2002, the SG&A Engineering was at 16.7 percent, compared to 17.4 percent. If you further analyze that -- and we have comments in our annual report -- we tell you that the bank fees were $750,000, and expenses were $706,000. If those two items were excluded from the 16.7 percent of SG&A for 2002, that would reduce the percentage to 14.7 percent, so you would be comparing the prior year of 17.4 to 14.7.

The income by segment is also attached to your press release, and I won't re-read that to you. Interest expenses for the quarter are at 2.6 versus 2.7 last year. For the year, we're at 10.5 versus 9.4, and that has been significantly impacted by interest surcharges to the tune of about $1.6 million in 2002. So, there would have definitely been a reduction there but for the interest surcharge increases.

The other income for the year of 2002 is at 2.7 versus 1.2, and this is primarily the result of the sale of Astec portfolios in 2002. Our net less for the quarter was 52 cents a share as opposed to 35 cents a share last year. Our net loss for the year is a 24 cents versus a profit of 10 cents last year. The sheet attached, also provides for you the changes in the segment growth profit, and I won't read all of those to you. The back log at December, was 60.7 million versus 70.1 million, or 9. million dollars less or 13 percent. I will share with you the back log by segment, I don't believe we have disclosed that anywhere. In the asphalt group at 2002, it was 26.6 million and that is a reduction of 15 percent.

The mobile asphalt paving was 2.5 million, was an increase of 113 percent. The aggregate and mining was a 24.4 million, with a reduction of 8 percent and the underground was at 7.2 with a reduction of 35 percent. On the balance sheet, the receivables are at 7.9 million, that is primarily accounted for by Astec financial receivables. As I mentioned earlier, we still do have approximately 8 million of that portfolio to be sold, so this will have an additional positive influence on that number.

Our days outstanding at 1231 were 35 versus 61 days for the prior year. Inventory was at a 120 million, 120.2 million versus 129 for the prior year. The debt was at a 133.9 million versus 129.7 million. As you are aware, those of you that follow the company closely, you know we are in a position with our current lenders where we do not want to make any reductions, permanent reductions in our debt levels, so we are carrying a lot of cash, that would otherwise be applied to reducing the debt. The IRB portion of that 133.9 million is 19.2 million. Our capital expenditures for 2003 were 19.3 million and that includes the acquisition of the John Deere building and property at Louden, Tennessee, which we had hoped to do a tax free swap on, which did not materialize and we'll discuss more later, so we ended up with capital expenditures of 19.3 million and with depreciation of 15.1, now that broken down a little farther here is actually 12.9 on PP&E and 2.2 million on Astec operating financial leases. So the 12.9 number is the number that we should keep in mind when comparing to the projections for 2003 and we are projecting that number at 13 million. We basically have, other than completing the lab and facility, which will be a relatively small amount of capital expenditures, we basically have our capital expenditures on hold and would definitely not expect those to exceed 5 million, but maybe not even not reach 5 million based on our current policy. That concludes my prepared remarks and I'll certainly be glad answer any questions later. Don?

Thank you McKamy, just a few other comments related to last year. We decided a couple of years ago to try to become a systems integrator in our aggregate business. And the asphalt business, we kind of grew into that market by building every piece of a complete asphalt plant facility from the plant itself to the heating equipment to the erection of the plant, the delivery of the plant, the startup, controls and the entire system where we could offer our customer a complete package. Others in the industry offer components and with probably one or two exceptions, there are only a couple that can offer the complete package that we do and really, if you look at everything, there's no one there that offers the depth that we have and the variety of product.

In our aggregate group with the seven different manufacturing companies, each of which had certain specialties, we really didn't have an integrator and so we formed an engineering group to do that, to basically pull components, crushers, conveyers, screens, other components from the different companies and to integrate them into a complete system. We believe that this strategy is correct; we believe that we intend to stay in this area, but we have had problems of misestimating and I take considerable credit in this area in the construction side of it. We utilized the asphalt construction crews to do that, which were somewhat unfamiliar with the equipment, and also it was larger projects than we had historically handled. As a result, last year this cost us about $3 million in earnings. One of these projects was approximately an $18 million project at the Atlanta Airport. Frankly, it was in equipment that's larger than any of us had built before. We tended to over-design it. As a result, it's functioning extremely well. On these systems, you're faced with pouring the concrete, erecting the equipment, delivering it to the site, getting it up, doing the electrical, doing the startup and then doing the shakedown. We were faced at the end of the year with some terrible weather. I had a lot of erection cost overruns that we didn't expect and while we think that this--bringing the products of all the companies, integrating them together, is a proper strategy, we are refocusing on outsourcing the construction and the erection of it and doing what we do best and we believe that this will continue to be a good business for us, or grow into a good business for us.

The second area that we have faced problems in is in our underground--two underground companies, American Augers and Trencor. The telecom business, as all of you know, just plummeted about two and a half years ago. Directional drill business is off approximately 90 percent from its peak. Fortunately, these two companies were in the larger end of the business and still the large end of it is not too bad. But the small end has been terrible. In an effort to fix these problems, we entered into a strategic alliance with about mid-year to build their small line of trenchers which are used primarily in--more in the utility business for water lines, sewer lines, gas lines. It's a higher volume, smaller end of the business.

The major two things that it brought with us was the availability of distribution, tying into to some of their purchasing. And we felt like that was a - would allow us to sell the small end of the Trencor and American Auger trenchers and directional drills that we were not doing very well with.

Concurrent with this, our first strategy was to move it into to our Grapevine Texas facility but we were offered the property and Grapevine has increased significantly. A new Opryland hotel is being built across the street from it. And a developer offered us $24 million for the property. Also concurrent with this, a large relatively new plant, approximately four years old, in Lowden, Tennessee about 70 miles from our home office became available. This was a plant that had been built by John Deere to manufacture their skid steer loaders. It was a state of the art plant for building small, high-volume products, and we acquired that plant and basically it was all to be cash neutral funded by the sale of the Trencor property, which we should have netted around $20 million for from after tax.

Unfortunately everything took place except the sale of the Trencor property. We mentioned this previous that the developer was unable to come up with his financing at the last moment. And as a result, this combination of all of this increased our debt approximately $20 million.

We have proceeded with moving the Case line into the Lowden, Tennessee plant. We have moved a significant part of Trencor. We slowed down the move of Trencor, obviously, when the building did not sale. And should complete that move by the end of the second quarter with Trencor, with the Trencor equipment as the business picks up in the particular area.

We are up to speed on the manufacturing of the Case products. Have built over 100 of the products now during the first quarter and are driving our costs down as we get more experience.

We believe that this was a - is and continues to be a good plan, but unfortunately the way it's turned out, our timing couldn't have been worse. It has basically increased our debt, as I mentioned, approximately $20 million.

Also, with the violation of the covenants, starting in the fourth quarter of 2001, and the increase in our interest rates, our finance company became uncompetitive. It also brought about additional leverage to the company and as mentioned previously, we chose to close the finance company in the fourth quarter of last year and will reduce our debt as we sell off the port, the last of the portfolio, approximately $30 million.

I should point out that there's a number of one time events that we're tangled up in here and one is the restructuring of our debt and being able to pay down the debt from this - from the proceeds of the sale of the portfolio, approximately $30 million. The sale of the Trencor property will pay down debt another $20 million. And also, as we mentioned last, at our last conference call, we have made a significant reduction in expenses. We started in the fourth quarter of last year and that work continues.

With the restructuring of our data, as McKamy mentioned; when that is complete, we will have significantly less debt and less interest, and should put the company back on sound footing from our balance sheet standpoint.

Going forward, the Underground Business we believe we'll have up to speed by mid-year. We certainly -- we have a number of prospects on the sale of the Trencor property, but it is not sold at this point.

In January of '04, we will pick up the Parts Business related to the case line, and so in '04, that will add about $12 million of additional parts to the $100 million in Parts Business that we have.

This year, as many of you know, the Appropriations Bill did not pass until the end of February. While there was continuing resolutions, there was continuing nervousness about what the level of the highway funding would be, and basically it ended up being the same as last year. But, due to the nervousness, the obligations during January and February were off 60 percent from last year. As a result, we found our customers to be reluctant to spend. Everybody seemed to be in kind of a wait and see attitude. Highway Departments of Transportation were reluctant to let jobs -- and we kind of saw the first quarter being slower than normal, but see that there's beginning to be a pickup for the second quarter. It seems like with the number of uncertainties, the cyclic part of the year seems to be moving out.

We continue to work with the other -- with our customers and other members of the industry to work on the new Authorization Bill, which will come up in September. It appears that the funding will be -- we believe it will be increased somewhat. There are speculations that it will be in the 35 to $60 billion range. I think 60 is optimistic, but I'd say it's gonna be from our existing level of 31 billion up to in the 40 billion range. The non-binding, which is certainly a non-binding budget resolution passed in the Senate yesterday was for 255 billion over six years, which averages about 42 billion a year. So, there's a lot of numbers being thrown away as far as what level that would be.

We continue to refocus on our core business. We believe we've got the strongest product lines in the business; we have the leading technology, we have the highest market share in about each of the segments that we participate in. We certainly have the best service, and we have a very strong balance sheet.

While last year was very tough, we did continue to develop products. In our Aggregate Group, we developed a new portable crushing plant that is high-production, in the 500 ton an hour range that can be installed in less than four hours. We've developed a new burner system, a new control system, and in the asphalt side of it, a number of new machines in our Roadtec Division, and are continuing to press product development in the Underground Division.

As I said, the last six months and all of last year, there's been a lot of uncertainties. We probably experienced the worst winter our customers did that we've seen in years with poor weather. The Venezuelan oil situation is certainly affected the asphalt side of the business since a lot of the liquid asphalt is, especially on the east coast, is generated from Venezuelan crude and with the disruption of the supply down there, it cost us back in prices, particularly on the east coast. Also, states have been short on funding, but we see with the existing highway bill that passed for this year, the appropriations and the new highway bill that states, we'll make sure that they come up with matching funds.

The Iraqi situation obviously affects the attitude of people for the wait and see, but we believe that as that passes, the optimism, we think everything is in place for the market to turn. As I said, while we expect the market to remain weak in 2003, we believe that we'll come out of the recession much stronger and a much better company and stronger market shares. We have the best names in the industry that we serve, the lowest operating costs and highest technology equipment, the best service, and most importantly, we have the most loyal customer base. With that, I'll stop and we'll be glad to take any questions that you have at this time. Eleanor, will you poll for questions?

Ladies and Gentlemen, at this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. To remove your question from the queue, you may press star, two. Now, for participants using speakerphone equipment, it may be necessary to pick up your handset before pressing the star keys. Again, press star, one to ask the question, and if you're speaker phones, please pick up your handset before pressing the star keys. Our first question comes from Arny Ursaner with CJS Securities, please state your question.

This is John Reilly for Arny Ursaner at CJS. Just like to review a couple of things that you said about the updating us on the sales of your trend core facility. Can you give us what you think of the timing and the size of the sale will likely be?

John, we probably were at the top of the market in the 24-25 million range where it was. We have done a number of surveys out there and some properties there are selling at that number and some are selling a little somewhat less than that number. Steve Anderson and I are going to Dallas tomorrow to meet with one developer. We have 2 or 3 people talking about it. We believe that we'll get it sold this year but to say for sure and when, that probably the ideal timing will be in a year from now when Opry Land Hotel opens up, but we would prefer not to wait that long. The amount that we get out of it is going to be, we believe, somewhere within the 20 percent of the range, I'd say.

Okay, still focusing on the facilities, can you give us a what you look for on the relocation startup prospectus for the rest of this year?

Okay, we ended up spending about 3.5 million dollars in the fourth quarter moving. Part of my hesitation in that is, there is part of the building at Trendcor, really heavy bay at Trendcor, that we can either move or not move that will affect some of that relocation expense and we're waiting to see what the buyer really wants when we sell it. But we--to answer your question, we don't see a lot more expense from this point forward. Ramping up at Louden has gone fairly well. During the first two months of the first equipment getting up to speed, obviously the man hours were higher than we expected, but they seemed to be leveling out in March and we have a good backlog of orders for the small trenchers. But my best ballpark would be another million, million and a half of additional expenses during this year.

And one last question and then I'll let some others get in. Could you just give us an update on what you're seeing in the competitive landscape? Have any of yours--any of your competitors fallen under even harder times?

Yes, we see--it's extremely competitive and I think the fortunate thing that we have is 75 to 80 percent of our business is repeat customers. The other thing that we're seeing is people who were not our customers are coming to us because they--we do have a reputation for taking care of our products, for giving good service, and these products that we build somewhat have umbilical cords for a long time. The control systems that are used on these plants require service and require backup and they require good parts. This equipment--as was mentioned earlier, we've got $100 million, or about 20 percent of our business is in parts. And so they get worried about being able to get parts and service and, as a result, we're seeing more customers that were not our classic customers coming to us this year than we've seen before.

Thank you.

Our next question comes from Michael Braig with AG Edwards. Pliease state your question.

Good morning. I wonder if I could ask a question on profit allocation. I think in the past you've said that when you sell an operating lease, that's the point at which the manufacturing profit is recognized?

That's correct.

Does that go into the All Other category, which I understand to include financed operation, or does the profit on manufacturing revert back to the actual sector in which it was built.

The sector in which it was built, Mike.

OK.

But it occurs, Mike, at the time that we sell the lease.

OK. I understand that. And a question on the used equipment inventory write-down. Was that concentrated in any one segment?

The inventory write-downs, Mike, would have been primarily in--primarily in the asphalt, mobile and some in the underground. We do a lot of--one of the things that we've tried to do is create an unfair advantage over our competition. As a result, in both the mobile and the asphalt group we've got used equipment departments and as a vehicle for creating sales, we do a lot of horse trading, or taking used equipment in trade. We--our used equipment inventories were high at the end of the year and we've brought those down pretty significant. That you'll see after the first quarter numbers are out.

We continue to take trades but what we saw with some of the trades that we take in early, late 2001 and 2002 as the market deteriorated, so did the value of those deteriorate and rather than sit there with them waiting for the market to come back, we chose to go ahead and take the lick and write them down to market.

OK.

All right. Listen to me, let me add just a little bit of clarification to what Don said. I don't want you to think we've got an overall problem there or a policy problem. There were no Asphalt write-downs. It was in Mobile and Underground.

All right. Then ...

That's a reflection of the market, as Don said.

I think, Mike, that I might point out, too, only Asphalt plant equipment particularly. Often times we take in an asphalt plant and we use the word piece meal it out. Sometimes the entire plant may have had new components added to it such as bag houses, hot storage bins, various things, and we can get more for the pieces than we get for the complete plant.

As we do that, we basically are very conservative. We take no profit into it. We've got all of the money out of it and the last piece was when we make the profit on.

OK. Understood. And then finally there was mention of an escrow. I don't recall that word being used previously. Can you define how that relates to your lending agreement, if indeed that is the tie?

McKamy, you want to ...

OK. Yes, Mike, in our original loan agreement, when we had a sale - well, the way the legal definition reads is that when we are doing something other than normal course of business, once we decided to close Astec Financial, then the legal agreement portrayed the sale of portfolios after that date to be other than normal course of business. So all of that money that has been raised from the sale of portfolios has been put into an escrow account with the banks.

We do not have access to that, but we have the right to ask the lenders to use that money. They are aware, as I said, that we may need to use some of that money through our peak season. That is our money, it will be available to reduce the debt during the refinancing or restructuring and that is - that should approximate about $30 million it's currently at about 22 million, but when we finished the portfolio, the last portfolio sale, it should approximate 30 million.

Does that sufficiently cover it, Mike?

Yes, I think I understand it. Thank you.

Our next question comes from Jack Kasprzak with BB&T Capital Markets. Please state your question.

Thanks. Good morning, everyone.

Hi, Jack.

Jack.

Couple of questions, first on SG&A, which was about 80 million for year, McKamy you mentioned a couple of items that totaled about a million and a half dollars I guess for one time in nature. So can we assume then that 78 and a half million is sort of same on same run rate of SG&A and if so would you think that that for '03 would, on a dollar basis, be up or down?

We would expect that based on the cuts that we have put in place at the end of the third quarter of 2002, and I guess that will 100 percent be in place by today. We would expect that to decline, and that's what our goal is.

Jack, our goal was to try to take that down to about 72, but we've been hit with some additional cost related to insurance. As you know, the insurance market is terrible, and so we've had increases in that area. But, we have made some pretty significant decreases.

I guess, Jack, the other thing I should say; that during the first quarter, and possibly some into the second, we will have some expenses relating to requirements of the current bank group that will have some impact on that. But, the ongoing normal expenses should decline.

OK. And the inventory write-down that's mentioned in the press release that Don and you were just talking about; can you quantify that, or have you quantified that?

Don, you want me to handle that one?

Yeah, go ahead.

That was $1,600,000.

So, I think you guys said earlier in your comments that the cost overruns and problems with some of the systems jobs you had in 2002 cost you three million in earnings.

Right.

I assume that's all inclusive.

OK, all the problems. And then you have a million six of an inventory write-down, and then you have almost three million from the relocation expenses.

That's more like 3.3 to 3.5, Jack.

All right. And obviously, the underutilization of capacity is probably difficult to quantify and is ongoing, so it wouldn't be -- it would be recurring, I guess, in this environment. But, you know, we add that up and you're at, you know, eight million dollars of non-recurring costs. Now, I know there are gonna be some offsets, like maybe another million related to the Trencor situation, but would you think that just from having some of these problems behind you and write-downs behind you that gross profit would bounce back, say, in the five to seven million dollar range, all else being equal?

I believe so. We should, once we get through our restructuring of our bank debt, have a pretty significant reduction there, too, Jack.

Any comment or guidance you can give on when that restructuring might be closed?

We plan for it to be done during the early part of the second quarter.

OK. OK. Thanks a lot.

Our next question comes from John Franzreb with Sidoti & Company. Please state your question.

Good morning, gentlemen.

Good morning, John.

You spent some time talking about the public sector and the financing that's going on. Can you kind of update us on what's going on in the private sector? It's a more profitable business for you. What's the outlook there?

The outlook there just strictly goes with the economy, John. And until this Iraq situation is settled and optimism picks up, I think everybody's kind of paralyzed in that area. Our customers are predominantly living on, you know, state and federal highway work, and that's pretty good. I talked with one of our largest customers, and he said that part of the business is OK. It's just the commercial side that's still slow. The other side that is fairly strong is the home building, which would be subdivisions and development there but large shopping centers, parking lots, things like that, development projects are almost non-existent right now. And it's going to wait on the general economy. I don't know any other way to put it.

And in regards to the agra side of the business, what are your customers like telling you? Some feedback on that side?

Both and Vulcan, I mean, you know their numbers as well as what their plans are as well as we do, but they seem to be really holding back on a lot of capital expenditures. Frankly, we see a little more of what I would call, there's been a lot of effort to, the larger companies to make acquisitions in both aggregate and asphalt. We see them in a digestion period of trying to digest what acquired. Most of our business today is to the privately owned companies and they're doing okay. If you really look in the asphalt and the aggregate side, the privately helped companies that didn't have a whole lot of debt or continuing to buy and spend money.

Okay, and lastly, how much revenue in the fourth quarter was actually directly related to the Atlanta project?

, I'm not sure I can answer that I can answer that one. My ball park would have been about 7-8 million dollars, but it was the bad end of it, it was the final construction of it.

Okay, thanks a lot.

Gentlemen, there are no further questions at this time. I'm sorry, we have one more question from Michael Braig with A.G. Edwards. Please state your questions.

Just to follow up on that last question, and to confirm that probable 7-8 million of revenues on the Atlanta airport project for the fourth quarter would have been contained at least partially or perhaps largely in the asphalt groups in that did the assembly?

That's correct Mike.

Okay, thank you.

Okay.

And we have two more questions. We have one from Jim with Century Management. Please state your questions?

Actually, my question has been answered, thank you.

Okay, we have one last question from Jack Kasprzak again, please state your question?

Thanks. McKamy, can you tell us what you think the effective tax rate in 2003 will be?

My right arm is saying 35-38. That all depends of the Jack.

Okay, thanks.

Gentlemen, thank you. I'd like to ask Steve to make a couple other comments and then we'll close for the day.

Thank you Don, we do appreciate in ASTEC. As the press release indicates, today's conference call has been recorded. A replay of the conference call will be available through midnight of Friday April the fourth. You can dial, 877-660-6853. And you can also get an archive web cast which will available for 90 days. The transcript will be available under the investor relations section on ASTEC Industries website as well. All that information is contained in your press release. And thank you for your anticipation and this is ASTEC in Chattanooga signing off.

Thank you gentlemen.

This concludes today's conference. Thank you for your participation.