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Bucyrus International, Inc. Q1 2008 Earnings Call Transcript

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2008-04-25 15:31:06.0

Tags: Bucyrus International Inc.

Question-and-Answer Session

[Operator Instructions]. And the first question comes from the line of Charlie Brady form BMO Capital Markets. Please proceed.

Charles Brady - BMO Capital Markets U.S.

Hi, thanks. Morning guys. Tim, can you talk about on the drivers from the aftermarket sales within the underground segment, obviously, 40% in mix in the quarter, well above historical levels. Are we at kind of a higher sustainable level, may be not 40% but certainly above this historical 30% for DBT.

Timothy W. Sullivan - President, Chief Executive Officer and Director

Well, we hope so. I think as you know... I think you know, we have talked about this on previous call that we have moved the aftermarket group from DBT and embedded them in our South Milwaukee aftermarket group to make sure that all the practices and procedures and policies that we put in place in the aftermarket efforts on the surface segment can be into the underground segment. The 40% was high obviously because of the lower mix of OE for the quarter, but we fully intend to improve and increase our market share on spare parts in particular and hopefully start to grow the service at our business on the underground segments.

Charles Brady - BMO Capital Markets U.S.

Okay. Just want to clear on the purchase... advanced purchase of raw material at DBT which has impacted of some other sale, going forward into 2Q... starting with 2Q. Is that when we should expect that problem to go away?

Timothy W. Sullivan - President, Chief Executive Officer and Director

Yeah, we are on track now, I think what we really... we should have been buying steel back in September, October for Q1. We did do that a little late in a year, in November, December. So we are on track now and we are not going to see that again as we move forward.

Charles Brady - BMO Capital Markets U.S.

And one more and I'll get back in queue. Regarding the gross margin, are you getting any... I knew you talked a little bit about the productivity and your potential Milwaukee with the construction being completed. Did you get any of that in the quarter or... I am just trying to dig a... gross margin seem to be a little bit better than what we are looking for and are we at... is that sustainable going throughout the rest of the year?

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