Well, good day, ladies and gentlemen. Welcome to the Alamo Group’s Second Quarter 2014 Earnings Conference Call. During today’s presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, August, 7, 2014. I will now turn the conference over to Mr. Bob George, Vice President of Alamo Group. Please go ahead, Mr. George.

Thank you, and good morning. By now you should have received the copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at (212) 827-3746 and we will send you a release and make sure you’re on our company’s distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing (1888) 203-1112 with the passcode 1399099. Additionally, the call is being webcast on the company’s website at www.alamo-group.com and a replay will be available for 60 days. On the line with me today are Ronald Robinson, Chief Executive Officer and President; Dan Malone, Executive Vice President and Chief Financial Officer; and Richard Wehrle, Vice President and Corporate Controller. Management will make some opening remarks and then we will open up the line for your questions. Before turning the call over to Ron, I’d like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company’s actual results in future periods to differ materially from forecasted results, among those factors which could cause actual results to differ materially are the following, market demand, competition, weather, seasonality, currency-related issues, and other risk factors listed from time-to-time in the company’s SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I’d also like to advise you the company will file its 10-Q on this Friday. I would now like to introduce Ron. Ron, please go ahead.

Thank you, Bob, and thank all of you for joining us today. Dan Malone, our CFO will begin our call with a review of our financial results for the second quarter of 2014. And then I’ll provide a little more detail on the performance and outlook of our Industrial and Agricultural Divisions, as well as our European operations. Following our remarks, we are glad to entertain any questions you may have. Dan, please go ahead.

Thank you, Ron. We have a lot to cover, so my prepared comments are focused just on the second quarter results. As we discussed in the earnings release, our second quarter 2014 results included a completion of recent acquisitions, both significantly the acquisition of Specialized (Technical Difficulty) and to a lesser extent, the acquisition of Kellands in the UK as well as Fieldquip and Superior in Australia. Alamo Group’s second quarter 2014 net sales were records for the quarter both with and about the effect of these acquisitions. Net sales of $206.3 million compared to net sales of $178.1 million in the same quarter last year, an increase of 16%. Excluding acquisitions, second quarter 2014 sales were $182.7 million, an increase of 3% over prior year. Net income for the quarter was $9.2 million or $0.75 per diluted share, compared to $11.8 million or $0.97 per diluted share in the second quarter of 2013. Excluding the effect of the transaction cost incurred to complete the acquisitions, as well as an increase in stock option expense caused by accelerated vesting of options for certain retirement eligible employees. Net income would have been $10.6 million or $0.87 per diluted share. Despite the fact that our second quarter included just over four weeks of production in shipments from the Specialized business units, the operating results of all acquired companies, net of related interest expense and income taxes attributed $1.4 million to the quarter’s net income or $0.12 per diluted share. In Alamo’s Industrial Division, second quarter sales of $105.1 million represent a 35% increase compared to the prior year second quarter. Excluding acquisitions, our second quarter revenues in this division were $86.1 million, an increase of 11% over second quarter of 2013. Agricultural Division sales were $52.6 million in the second quarter down…

Thank you, Dan. With that – as Dan pointed out that I think for us, the second quarter was a very busy quarter. We had a lot going on. And certainly in some ways the results were not as good as we would have liked, I think they were a number of things that any one or two we could have handled that I think there were a few too many in the second quarter though, certainly the timing and delays concerning the Specialized acquisition we thought it would have been earlier in the quarter, it came later in the quarter. So, there was less than in fact, less than half a quarter involved from contribution from them. We certainly – we had a little bit higher level of transaction-related expense for us. One of the contributors that is usually we do not have brokers involved in any of our deals but we had one in this particular case and that was – so that increased the fees a little above average for us. As Dan pointed out there was stock-based compensation that was - the expense on that was higher due to accelerated vesting of some options and I got to say I am – was probably the biggest contributor to that. I turn 62 this year so all of my options not only the current ones but past ones had to be fully expensed due to age and there are few other people that fell into that, but I was the biggest contributor and I promise I won’t turn 62 again next year. The – even some things like I know we’ve had some unfavorable experience on healthcare cost seem to be above our historical run rate due to some bad claims experience in the short run. And…

Thank you, Mr. George. (Operator Instructions) We’ll go to Robert Kosowsky with Sidoti.

Good morning, guys. How are you doing?

Hi, Rob.

Hi, Rob.

Hi, just, I guess diving into the Agricultural segment first. I was just wondering like the cadence of sales and kind of how this has been evolving over the past six, nine months, because this seems like the pre-season was pretty solid, and then did in-season sales just fall of the cliff. You had that down 8% this quarter down 10% quarter, and then how do you see the back half of the year playing out in the next pre-season given that you did see corn fall pretty dramatically over the past month or so?

As indicated earlier I mean I think that Ag market in general it’s started falling off sort of mid last year and you saw things like the big ticket items like big combines and all, their sales were decreasing even in the second half of last year and certainly in the first half of this year. We held up a little bit better than that and thought we would, but we noticed even earlier in this year we were living too much hand about with not enough backlog. The pre-season started off okay, but as you said sort of the in-season orders did not hold up as strong as we would have liked. Certainly the – I think inventory at dealers was a little higher in the first half of this year and that further contributed to the shortfall in sales in Ag in the first half of the year. So, I think little more headwinds and we were living a little more hand to mouth. It’s interesting our dealers kind of reassured us that they thought this year was still going to be okay, but certainly in the second quarter it started off a little slow, but last year started off a little slow. And then I think and again it picked up a little in May, but then last year picked up nicely in June, this year it did not. And so that was sort of – not only was the quarter soft, but it was sort of late in the quarter for us, that, that was the – that was the softest. So, but as said I mean it looks like inventories are coming down at dealers of our type of equipment. It looks like as I said we’ve started our out of season selling programs in…

Okay. That’s still we’re having. Do you still get about where your cost structure is now given – you need to take further cost out or be able to right-size it down kind of..

No, I think our call structures – I mean that’s something you always adjust and are always looking at, but actually – but I think that’s in general in pretty good shape like I say little volume helps the absorption. But we did take some cost out, which we probably should have taken out like earlier in the second quarter than later in the second quarter. But we’ve done it and that’s something we’re always adjusting.

Okay. And then otherwise, kind of broader cycle question on the Industrial side. Municipal spending has been – starting to come back, you’ve very good demand growth there from an organic standpoint. I’m just wondering how you view – if there is still pent-up demand and fleets need to refresh some of their equipment or me spending – you’d characterize maybe aggressively or kind of okay. I’m just kind of get the sense for the macro growth outlook over the next six quarters maybe eight quarters or so?

I think it’s still pretty reasonable. I think that the equipment today in the field is still older than it was five or six years ago. And the average age of the equipment I think the – there’s still a lot of infrastructure that is being underserved and under-maintained and I think that so we believe that yeah with an aging equipment fleet and underserved infrastructure that the demand for our type of products should be – should hold fairly nicely. Certainly the addition of some of the broader ranges not removal products, with the Specialized acquisition I think it’s also – last winter was a pretty heavy one and we believe that’s going to help contribute to our sales for this coming winter. And lastly I mean I think we are actually making a even more headways in getting into some more, few more Industrial applications, non-governmental applications for some of our industrial equipment. Like the Super Product acquisition with specialized I think is – they’ve done really well in that sector. And so we think our Industrial Division, the outlook for growth is favorable for the next – not for the rest of this year, but for the next several years.

Okay, that’s helpful. And then otherwise as you get disclosure on the Specialized acquisition. I’m just wondering was there anything in 2013, is that like at least the data we have that was in flair or kind of anything that was really pull forward demand, that are coming years these numbers and have a good idea that represent..

The comparable to the first half of 2013, first half of 2013 was a pretty clean nothing particularly that these are adjusting our anything out of the unusual. Like I said even a few things like healthcare cost first half of this year were well above healthcare cost first half of last year. I mean I think I was just kind of look to the draw in a few cases, but like I say nothing unusual from last year.

Okay. Thanks very much, and good luck.

Thank you very much.

We’ll move next to Brent Rystrom with Feltl and Company.

Good morning, Brent.

This is actually Shannon (ph) for Brent today. Just one quick question, do you see growth in your Q3 and Q4 EPS or are we thinking slighter comparison?

I mean we don’t give out the earnings guidance or forecast on that. Like I said I think the second quarter was certainly off a little bit for some – little – few more unusual headwinds than we would normally have and we think we are back on sort of our expectations in the second half of the year, but like I said we don’t give specific growth guidance or targets on that.

Okay. Thank you so much for taking my question.

Thank you.

(Operator Instructions) We’ll move on to Mike (inaudible) with Global Hunter and Securities.

Good morning.

Good morning.

Good morning.

So, just wanted to quickly ask you about the FX benefits you saw in Europe. Is that basically the entire organic non-acquisition growth you saw in the quarter and what was the effect on overall organic growth as well?

Yes. Certainly the foreign exchange was the majority of the growth in Europe. But in sales in the second quarter so I mean but they did actually have some organic growth but it was like just a percent or two. The majority of the growth there was foreign exchange. That kind of not true when you break it down a little bit further. I mean actually our UK operations had much better results than our French operations did, manufacturing operations and so like I said the UK had some real growth. And I think but certainly currencies contributed to it. And – but their backlogs – our backlogs in Europe grew nicely in the second quarter as well. So, I mean we – and that was real growth not just currency.

Okay, great. Also in Europe, can you maybe kind of break down for us perhaps listed better Industrial Ag?

It was pretty even between the two I mean I think in UK probably Ag was a little bit more I know in our French operations I know our Industrial products did better than our Ag products, so but in the overall mix it was pretty even between Ag and Industrial.

Great. And then just switching over to Specialized, now that’s kind of things in your portfolio for – if you listen out you month even – has anything that caused you not to kind of see behind the curtain here and anything doing better, always next quarter as far as margin grows, as far as corporate structure grows, people and so forth?

No, no, I don’t think we’ve seen any particular surprises positive or negative I mean I think we in our due diligence we kind of thought we knew what we were getting. And there’s always a lot of issues and like I said I mean we are in the process of changing them over on to our systems in this kind of stuff, but like I said they are good people and good capabilities and who are being very receptive to the changes that are being made and like I said we know there is always transition issues to deal with. But no particular surprises we think there, earnings and margins and sales and inventory and backlog are all pretty well what we thought. I think there, they are running well in line with our expectations. Now like I say the timing was a little disappointing in the second quarter, it took longer to get approvals under the – in our treasury view and that’s what – that’s the main thing that cause the delays in the closing. But other than the timing which was a bit of a disappointment, no other surprises.

Great. And one more from me. Do you have any thoughts now you think in your portfolio and because this been an overall outlook, when you might have the free cash flow to start pending down some of this, as you are going forward, is there a timing sort, which you have in mind?

Well certainly the second half of the year usually our cash generation seasonally is – our cash generation is higher in the second half of the year than in the first half of the year. And we see no – we believe that will be the case and that will start making head – good hits start into paying down debt this year and as – I think our profile in general and certainly I think Specialized doesn’t change that profile and in fact they add to it, but I mean the company is a good generator of cash and that we believe will make good short of any new acquisitions, the company will make steady progress on paying down that debt for the second half of this year and nicely next year as well.

Superb, great. Thanks so much. I’ll pass it along.

Thank you.

We’ll hear again from Robert Kosowsky (Sidoti).

Just two other follow-up cash flow questions. One is, do you expect lot of moving parts of the acquisition, but would you expect working capital to be a source or use of cash this year, and also any CapEx guidance now that you have this new business in here?

Certainly yes. We expect the new acquisition to be a source of cash this year and on CapEx there’s certainly a little that they will – they will add to it, but this year sort of nothing out of the ordinary, they are a little capacity constrained right now and so over the next few years we got to look at ways to expanding that whether we do an expansion or use one of our other facilities I mean we probably do a little bit of rationalization between facilities between ours and them to figure out where we have capacity and where we need capacity. Because like I said they’ve actually grown nicely over the few years and have some areas of capacity constraint which we need to deal with. But other than that may probably short term increase in CapEx. But no like we still think CapEx should have grown below depreciation on average even with them and no real surprises there, pretty well in line with the rest of our businesses.

Okay. And then also just with the inventory increase in Ag this quarter you still think it will be a little work that down, so that for at least the legacy Alamo Groups you’ll have capital source of cash?

Yes.

Yes, yes. Everybody says yes and I think there’s a lot of people working on that issue right now. But yes I think that like I say I think there’s – we need to get our inventory down in total in Ag and in some other areas. So, we feel good that will be a contributor to the company’s cash for the rest of the year.

Okay. Thank you very much.

You are welcome.

Thank you, Rob.

Thanks, Rob.

And there are no further questions Mr. George. I will turn the conference back to you for closing or additional remarks.

Ron.

Sure. Yes. That’s really all we have today. I want to thank everyone for joining us. We look forward to speaking with you on our third quarter conference call and like I say appreciate everybody’s attention and support.

And again ladies and gentlemen, that does conclude our conference for today. We thank you all for your participation.