Welcome to the Raven Industries second quarter 2009 earnings conference call. (Operator Instructions) Now at this time it’s my pleasure to turn the conference over to Leslie Loyet of the Financial Relations Board.

I’d like to thank everyone for joining us today. Earlier in the day we sent out a press release outlining the results for second quarter of fiscal 2009. If anyone has not received the release, please either call Hon Hoy of Financial Relations Board at 312-640-6688 and she will send you a copy or feel free to visit Raven’s website at www.ravenind.com to retrieve a copy. Joining us today from management of Raven Industries we have Ron Moquist, President and Chief Executive Officer, Tom Iacarella, Vice President and Chief Financial Officer, and Dan Rykhus, Executive Vice President and Flow Controls Division Manager. Management will provide an overview of the quarter and then we’ll open up the call to your questions. Before we begin we’d like to remind participants that the information contained in this call is current only as of the date of this call August 19, 2008 and the company assumes no obligation to update any statements including forward-looking statements made during this call. Statements made by the company that are not historical facts are forward-looking statements that are subject to the Safe Harbor disclaimer in today’s press release. At this point I’d like to turn the call over to Ron.

Hello again everybody and thanks for joining us today as we highlight our second quarter results and hopefully give you some insight as to our prospects for the second half of the year and beyond. As I’m sure you’ve already read in our second quarter report we came in pretty much as projected with sales up 24% and earnings up 17%. I said during our first quarter conference call three months ago that we wouldn’t see 27% growth as we did in the first quarter but that the second quarter would be solid. I think 17% hits that target of being a solid quarter. 17% growth is for us never boring but when the numbers come in pretty much as planned it seems like we’re more or less repeating what we said the previous quarter. And that doesn’t mean we can’t do better in some of our operations especially in engineered films and electronic systems because we can. It’s just that there weren’t any major surprises and of course we always like that. The second quarter is almost always our smallest quarter of the year as you know in terms of sales and earnings dollars but it was still a record second quarter and that’s our 30th consecutive quarter of year-over-year record growth starting with the first quarter of 2001. Our flow control division which sells precision solutions for agriculture again led the way in the second quarter. Sales were up 93%. Operating income went from $2.6 million to $7.1 million. So for the first half of the year the income has more than doubled going from $9.7 million to $20.6 million which is really more than we did all of last year in flow control, so they just had a tremendous first half of the year. The trends in…

(Operator Instructions) Our first question comes from Jeff Evanson - Dougherty & Company LLC. Jeff Evanson - Dougherty & Company LLC: Obviously flow controls just an outstanding performance there. I guess I’d like to get a sense for how much you felt promotions positively impacted the quarter. Some might suggest those may have put inventory into the channel. If you could discuss your thoughts about channel inventory, that’d be great.

We did address some capacity concerns in the second quarter by encouraging our resellers to bring in some inventory and we were satisfied with the level of participation that our resellers gave us in those programs. But you’ve got to remember that over the last few years the amount of actual inventory consumption in the summer has been going up dramatically. And one of the reasons for that is anhydrous ammonia system usage in the summer months. So if we had to say you’ve got to look at the amount of sales that came in to the second quarter versus what you think was going to be consumed anyway, I’d say there’s the potential for around a couple million dollars of additional sales in the second quarter that we may not have seen in the second quarter without a promotional program. Jeff Evanson - Dougherty & Company LLC: But you are seeing general demand going up anyhow?

Oh yes. And Jeff what was really more critical than moving sales into the second quarter wasn’t really the point. It was how do we optimize our factory because we’ve got demand that’s more or less at the ragged edge of our capacity right now and boy it’s hard to turn down orders. So what we’re trying to do is figure out how we can optimize the factory capacity, and that was one way of doing it to do as much as we could in the second quarter and just keep everybody working hard and keep producing as much as we could. Jeff Evanson - Dougherty & Company LLC: Sure. I understand. It’s a load balancing issue. I guess one thing that maybe puzzled me then, and maybe I’m comparing apples to oranges, is I did see that your intercompany sales elimination was actually down 75% sequentially while your flow control sales were down only 35% sequentially. Does that tie into this equation or am I mixing metrics here?

First of all there are some other intercompany sales in last year’s numbers between I think particularly films and Aerostar, some things that they supply over there. So looking at it quarter by quarter is not a direct correlation. Also there were some credits that I think were issued on an intercompany basis as well between the two organizations in the quarter. Jeff Evanson - Dougherty & Company LLC: So it’s more complicated than how I’m looking at it?

Yes. There are a lot of things going in that number, and I would say the biggest factor though is related to the fact that there are other divisional transfers going on there besides the transfers between ESD and flow controls.

That’s a category that we just plugged in there. I noticed Jeff in the last I think two quarters eliminations because electronics systems is producing more and more for flow controls and engineered films is producing films for Aerostar, so it was becoming a problem as to how we present the data. So we came up with that elimination. Jeff Evanson - Dougherty & Company LLC: Ron, I like your data driven optimization road map. When do you think we’ll see some new products related to more of the data side of the business that you’ve laid out?

Ron did nicely lay out our vision for the product line as it matures going forward. You’re going to start to see some existing products be introduced or upgrades be introduced this fall - October or November timeframe - and product lines such as the Invisio Pro and the Viper Pro will start to have more robust functionality in the way of wireless data transmission, some additional features and applications that we’ll be able to run on the Invisio Pro as well as the Viper Pro, so you’ll start to get a sense of it as early as this fall. But really the vision that Ron cast is really a multi-year starting this fall and going forward for the next three to four years. We’ll fill out the product line around that vision. Jeff Evanson - Dougherty & Company LLC: Could flow controls be a $150 million business in the next year or two? And is manufacturing capacity your biggest constraint there?

You can do the numbers Jeff to sort of forecast where we’ll end this year. I’m not going to give you specific guidance on that but we do see strong continuing demand for existing product lines. I don’t think that the percentage level of demand that it’s been at for the last couple quarters will carry on for the next 18 to 24 months but it’s going to certainly be stronger demand than what we’ve seen historically in the past in this division. So if you get that far, then you look at what can we do on top of that. So can it be a $150 million division? I think it can. I think it can in the two to three year timeframe. The reason I believe that is the fundamentals are there. We’re laying the groundwork with our international expansion initiative. The product line expansions that we have in mind would support that level of sales and so we feel pretty bullish on the opportunities for flow controls. Now the second part of your question was capacity. The capacity issue we’ve been addressing starting last fall. And from a production standpoint we’ve added about 50% additional floor space allocated throughout the corporation at flow controls over the last three or four months and we’ve added additional production employees at probably about the same rate. Now we’re continuing to make investments in flow controls ability and capacity to produce products in our shipping, in our cable manufacturing, and various other manufacturing areas but we’re also employing a more aggressive outsourcing strategy on certain product lines where we feel like we can control quality and costs and free up some of our existing capacity by going off site. That’s just the production part of the equation. There’s a lot more to it in our business. We’re also expanding capacity in our service department and our regional service capacity. We’re obviously investing in R&D. And in addition to that we’re partnering with other companies in our industry where they bring expertise that isn’t where our expertise lies. So I feel confident that we’re doing all the right things to make our business $150 million business at some point in the next three years. Jeff Evanson - Dougherty & Company LLC: Could you talk about how much international sales you did in flow controls, how much that grew, and how much sales were not age related and how much that grew in the quarter?

We can give you some year to date numbers. I think our press release indicates that our international sales in flow controls have exceeded 20% of our total sales for flow controls for the year to date. Our sales have increased over 100% on the international shipments. So they’ve exceeded our divisional growth rate and that’s part of our plan. So that’s positive news. Our non-age business has actually declined for the past year. So we’re evaluating what our options are there. We have made some transitions internally with some of those product lines that we’ve talked about in the past and we’re continuing to look at the opportunities in the non-age portion of flow controls. Jeff Evanson - Dougherty & Company LLC: And one question on engineered films. What’s your capacity utilization and I guess the second part is, how many pounds of resin did you process this quarter?

I’m going to say that we processed probably 15 million to 17 million pounds, somewhere in that range. We’re probably at 85% capacity. We’ve got a ways to go but again we have to start thinking about capacity planning now. We can’t think about it when we run out of capacity so we’re already looking at the future and deciding what we need because if we were to decide to expand it would be probably a year to a year and a half before we would bring it on stream. So those things are being looked at right now but I think for the near future we’re in pretty good shape and our capacity is in pretty good shape.

Our next question is from Michael Cox - Piper Jaffray.

On the film side of the business in the 12% growth, could you possibly provide us a breakdown between volume growth versus pricing or average selling price increases?

Yes. I alluded to that a little bit by saying that pounds processed was up so I wanted to indicate that it wasn’t just pricing. I’m going to estimate -

Ron, it was less than half of the overall growth.

That’s exactly what I was going to say. Pricing is slightly less than half of the total.

On the electronics systems consolidation effort, will there be costs associated with this facility closure that will hit here in the current quarter? And then following up on that, what do you view as the longer term margin profile of this business? You said 10% is likely not the right number but what could that look like down the road?

The space that we’re freeing up is being taken over by flow controls which is kind of nice because they needed the space and electronics needed to consolidate so that worked out very nicely. If there are any production workers or engineers that are available, I’m not sure there are at this point, again flow controls would gladly take those folks because they’re out hiring very aggressively at this point. The question about margins, as you know electronics systems and electronics manufacturing services in general have never been a high margin business if you look at the big competitors out there, Flextronics and Sanmina and folks like that, their margins are very skimpy. We’ve been able to generate a higher margin business because of the business model that we have which is low volume, high mix with high levels of engineering and customer support. Even so that’s a business that I think if you optimize you might be able to get into the 5% to 10% after-tax range, probably on the lower end of that. Again if I didn’t believe strongly that the manufacturing expertise and the technology that they bring with them and the importance that is to flow controls and the rest of the company, if I didn’t believe that was important I might look at it a little differently. But that technology is critical to our future and that’s something that I don’t want to give up plus I think they can be successful and I think they’ve got a business model that allows them to be successful. But do they have the potential to generate margins at the same level of our other three operations? Probably not. But they still have the ability to get a good return on investment and that’s something we look at very closely. And I still feel comfortable that they’ll exceed their cost of capital.

On the margin side in the films segment, you mentioned in your prepared remarks seeing a recovery there in your fiscal 2010. What type of assumptions are imbedded in that from a margin recovery standpoint?

Well there will be several pieces to that. One will be some new products that we’ll be selling that differentiate us from the products that our competition is out there price cutting on. The second is an assumption that not this year but next year we will start seeing a flattening if not a decrease in resin prices. We do believe we can raise prices over time. It’s just not possible to do it on a dollar for dollar basis. As raw materials increase we’re just not capable of passing that on immediately, but we continue to probe the market and continue to go for price increases where we can. And then if construction and I’m not convinced that construction is coming back next year so I’m not relying heavily on that, but anything extra we got out of construction would be a bonus to us. Anything we got out of disaster film would be a bonus to us. But mainly price increases, some resin price decreases, and then the new products that we have coming out and that we do have out and are just starting to get traction in the market place.

On the flow controls, the significant strength in the international markets and may be a question for Dan, but are there specific international markets or regions that are performing better than others or how are you tackling some of these markets now?

Our areas of emphasis outside the US are Canada, South America and primarily there it’s Argentina and Brazil, Europe and also Australia. In each of those markets we started to really emphasize our sales promotion and service infrastructure a couple of years ago. And we’ve been at it for a long time in each of those markets but we really made a commitment to ramping up our sales and service functions for those areas and they’re all responding nicely. South America is up over 100%. Europe is up substantially more than that. Australia has quadrupled and going strong. So we’ve got different models in some of these regions. In Canada we have our own Raven office up there with Raven employees that set up dealers to support that area and develop OEM relationships. In South America we currently rely on master distributors and have a few direct OEM relationships. In Europe again we have our own Raven Europe office with their own personnel there developing dealers and OEM new customers for us. And then in Australia we’re just in the process right now, we have been in the past dealing direct with the OEM and a variety of dealers down there and we’re going to complement that effort by having a local function in Australia. And we’re starting that process right now. It’ll be functional by the start of the calendar year.

My last question is just on the competitive environment in the flow controls segment. Any changes there in terms of new product entrants from your competitors or pricing dynamic they’re considering? The strong growth that you and others are putting up in this space, is it attracting more competition or more pricing?

On the pricing side we’re not seeing anything detrimental right now. We’re just not seeing any erosion there. All of us are experiencing cost increases so we’re actually seeing some price increases on certain product lines and we went ahead and had an aggressive price increase installed August 1 this year. As far as competition goes Trimble, Deere, and others to a lesser extent continue to be our primary competitors and you can see their results as well as ours. They’re doing well. Do I think the fundamentals in agriculture are sort of changing like Ron alluded to attracting more competition in the future? Sure. I think that’s something that we are concerned about and we’re aware of and our challenge is to continue to develop products that are a step ahead and to leverage the experience that we’ve had in the Ag market for all these years.

Our next question comes from [John Rankin - Bronco Management]. [John Rankin - Bronco Management]: The price per share on your share buy-back purchases?

Are you looking for an average for the $5.2 million that we spent? [John Rankin - Bronco Management]: Yes, average.

$32.15 is what it averages out to.

And there are no further questions.