Question-and-Answer Session
Operator
(Operator Instructions)
We will take our first question from Curtis Woodworth with JP Morgan.
Curtis Woodworth – J.P. Morgan
Eric, it sounds like the guidance in the utility is pretty much under operating budget for ’08 and it seems that they have pretty specific spending plans in place right now. I mean, because basically what happened relative to where you were last quarter is that your customer base just kind of said they are going to want less cruise in what you initially had anticipated?
Eric Pike
It is basically just the way Kirk we have discussed in the past of how we received our work. It tends to come out from the utility based on what they see in their workplan or a very near term basis to us and they are not projecting as much work as they try to pull back and they see as we have mentioned before, some of it is related to housing, some of it is timing in turn with their budgets.
So I guess, in a macro sense, yes, they are not needing additional crews that they might normally at this stage in a year that did not have as many economic challenges.
Curtis Woodworth – J.P. Morgan
So, when you say pulled back, does that mean that they are taking crews off system or do you feel like spending during this year is going to be kind of status quo flat? I just want to get a sense for kind of what you think the market is going to look like this year?
Eric Pike
I mean, I think we are trying to give you some guidance around that and that we believe it is going to be down from what we originally projected. That is going to involve some crews that will come off we believe certainly that we are related directly to the housing.
Curtis Woodworth – J.P. Morgan
So, you do think the spending on distribution at least for the customer base you serve looks like right now it will be down relative to last year?
Eric Pike
Yes.
Curtis Woodworth – J.P. Morgan
And then, I guess, in terms of looking longer term, in terms of the gross margins for the company, if the utilities are pulling back, does that make it more difficult to get priced than could you see price pressure and it seems like if anything, we are hearing that overall demand is relatively good for these services and if anything there could be a tight market 12 months from now. Can you just comment on what you see currently going on with the price and maybe expectations for how this is going to affect gross margins going forward?
- To read the full transcript on Seeking Alpha, click here »
