8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report

(Date of earliest event reported): October 25, 2010

INSITUFORM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-10786	13-3032158
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

17988 Edison Avenue, Chesterfield, Missouri	63005
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number,

including area code                                     (636) 530-8000                                           

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.               Results of Operations and Financial Condition.

Insituform Technologies, Inc. (the “Company”) issued an earnings release on October 25, 2010, to announce its financial results for the quarter ended September 30, 2010.  A copy of the October 25, 2010 earnings release is furnished herewith as Exhibit 99.1.  On October 26, 2010, the Company held a conference call in connection with its October 25, 2010 earnings release.  A transcript of the conference call is furnished herewith as Exhibit 99.2.

The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01.	Financial Statements and Exhibits.
	(d)	The following exhibits are filed as part of this report:

Exhibit Number	Description
99.1	Earnings Release of Insituform Technologies, Inc., dated October 25, 2010, filed herewith.
99.2	Transcript of Insituform Technologies, Inc.’s October 26, 2010 conference call, filed herewith.

*           *           *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 INSITUFORM TECHNOLOGIES, INC.

 By:    /s/ David F. Morris

 David F. Morris

 Senior Vice President, General Counsel

 and Chief Administrative Officer

Date:  October 28, 2010.

INDEX TO EXHIBITS

These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

Exhibit	Description
99.1	Earnings Release of Insituform Technologies, Inc., dated October 25, 2010.
99.2	Transcript of Insituform Technologies, Inc.’s October 26, 2010 conference call.

EX-99.1

Exhibit 99.1

INSITUFORM TECHNOLOGIES, INC. REPORTS RECORD THIRD QUARTER 2010 RESULTS:

·   Income from continuing operations was $18.8 million, a 59.6 percent increase from third quarter 2009 of $11.8 million

· Income from continuing operations on a per diluted share basis was $0.48 compared to $0.30 in the third quarter of 2009

·   Third quarter net income of $18.8 million ($0.48 per diluted share) versus $9.1 million ($0.23 per diluted share) a year ago, representing a 105.6 percent improvement

·   Third quarter revenues grew by $37.7 million, or 18.7 percent, from third quarter 2009

·   Consolidated contract backlog remains strong at $454.6 million

·   Full-year range of expectation between $1.50 - $1.55 per diluted share, on anticipated strong fourth quarter results in all business segments

St. Louis, MO – October 25, 2010 – Insituform Technologies, Inc. (Nasdaq Global Select Market: INSU) today reported third quarter income from continuing operations of $18.8 million ($0.48 per diluted share), representing a 59.6 percent increase from the third quarter of 2009, when income from continuing operations was $11.8 million ($0.30 per diluted share).

For the first nine months of 2010, income from continuing operations was $43.1 million, or $1.10 per diluted share, compared to $18.4 million, or $0.50 per diluted share, in the first nine months of 2009.  Excluding $6.6 million ($4.5 million, net of tax) of acquisition-related expenses associated with the acquisitions of The Bayou Companies and Corrpro Companies, income from continuing operations for the first nine months of 2009 would have been approximately $22.9 million, or $0.62 per diluted share (non-GAAP).

Joe Burgess, President and Chief Executive Officer, commented, “This quarter’s results represent the strongest in our Company’s history.  Our bottom-line grew by almost 60 percent from the same period last year, and our operating margin exceeded 11 percent for the quarter, the best in many years.  We saw operating income growth across all of our segments, with the exception of Water Rehabilitation, which experienced a modest decline.  Our Energy and Mining segment led the way with spectacular performance in each of its business lines – linings, coatings and cathodic protection.  While we experienced a slight decline in backlog this quarter, we are continuing to see robust market conditions on a global basis in each of our market segments.  With these strong results and our expectations for a solid fourth quarter, we are confident we will achieve our full year guidance of $1.50 to $1.55 in earnings per share.”

1

“While operating income improved in North American Sewer Rehabilitation by more than 16 percent this quarter, the overall performance in this segment was disappointing.  We continued to experience project execution issues that have negatively impacted the business’ gross margin in recent quarters.  Since 2009, we have been taking measures to improve our execution quality by upgrading project management talent and making process improvements, but we have more progress to make.  The market conditions continue to be strong and this quarter’s margin performance is not indicative of trends in the marketplace. We have increased crew capacity by more than 8 percent from last year at this time, leading to a 15 percent growth in revenue on a last 12 month basis.  Our bid table for the upcom ing quarter is strong, and we expect to see backlog increases as we head into 2011 and a return to 2009 gross margin levels.”

“Our European Sewer Rehabilitation segment performed well, despite weaker market conditions that have continued to persist in many European countries.  Despite a 31 percent decline in revenue, we delivered a 24 percent improvement to operating income, on better project performance and lower operating expenses.  Our recent restructuring efforts are beginning to pay dividends, and we expect this segment of our business to continue to deliver improved results.  Notwithstanding weak economic conditions, we are seeing improved bidding opportunities in our key markets, including the United Kingdom, the Netherlands and Germany.”

“Performance in our Asia-Pacific Sewer Rehabilitation operation improved during the third quarter, on the strength of our Australian and Singaporean businesses, which have ramped up operating capabilities in 2010.  Our Indian operation continued to see project release delays, due to excessive weather conditions and the Commonwealth Games, which recently concluded.  We believe that the Indian market will begin releasing projects in the coming months.  Each of our operations in Australia, Hong Kong and Singapore have strong backlog and will continue to increase production in the coming quarters.  We are also seeing significant prospects for additional work in these markets, along with other growing areas, such as Malaysia, the Philippines, and China.”

“We continued to make strides in our overall development of the InsituMain™ product line for our Water Rehabilitation segment during the third quarter.  While our third quarter order intake was low, our visibility to new projects continues to be strong. We remain confident that 2011 will yield positive operating results for this segment.”

“Our Energy and Mining segment had its best quarterly operating performance in history, with the Bayou and Corrpro acquisitions delivering more than 20 percent accretion to earnings per share in the third quarter.  Each of the Bayou coating facilities had strong production during the quarter due to large projects, and experienced much improved margins.  Bayou’s ancillary welding and specialty coatings businesses also delivered stronger profitability and continued to experience favorable market conditions.  Once again, Corrpro and United Pipeline Systems contributed strongly to the bottom-line with year over year improved margins throughout each of their geographic operations.  Each of these businesses is on pace for record revenue and operating income for the full year.  Contra ct backlog in our Energy and Mining segment was fairly flat with last quarter, while revenue has grown significantly.  Market conditions continue to be strong on a global basis for this business unit.”

2

Consolidated revenues in the third quarter of 2010 were $239.6 million, an 18.7 percent increase over the third quarter of 2009.  The increase was driven primarily by our Energy and Mining segment, which increased $33.1 million, or 47.5 percent, from the third quarter of 2009. Within our Energy and Mining segment, we experienced revenue increases across all our businesses, particularly within our coating services operations. Revenues in our North American Sewer Rehabilitation segment increased by $12.5 million, or 13.2 percent, compared to the third quarter of 2009, as a result of higher crew capacity deployed in response to recent backlog growth.  Third-party product sales in our North American Sewer Rehabilitation segment were at an all-time quarterly high of $4.9 million, compared to $2.9 million in the third quarte r of 2009.  Revenues in our Asia-Pacific Sewer Rehabilitation segment decreased by $0.8 million, or 8.4 percent, primarily as a result of lower revenues in India and Hong Kong due to project release delays.  Our European Sewer Rehabilitation segment experienced a $7.2 million, or 31.2 percent, decrease in revenue, primarily reflective of lower revenues in France due to weaker backlog and the Netherlands due to timing delays of project releases.  Our Water Rehabilitation revenues increased by $0.2 million, or 3.6 percent, for the third quarter of 2010 compared to the prior year quarter.

Consolidated gross profit for the third quarter of 2010 totaled $61.4 million, an increase of $8.3 million, or 15.6 percent, from the same period in 2009.  Gross profit as a percent of revenue was 25.6 percent, compared to 26.3 percent in the third quarter of 2009, representing a small decrease, due primarily to lower margins in our North American Sewer Rehabilitation segment.  The overall increase in gross profit within our Energy and Mining segment was primarily due to strong performance across all business lines within the segment. Our Energy and Mining segment’s gross profit increased by $9.6 million, or 48.1 percent, in the third quarter of 2010 compared to the prior year quarter.  Gross profit in North American Sewer Rehabilitation decreased by $0.1 million, or 0.3 percent, while gross profit marg ins were lower principally due to project execution issues.  Our European Sewer Rehabilitation segment experienced a decrease in gross profit quarter over quarter, due to the decline in revenues and lower performance in France and the Netherlands, while gross profit margins improved to 30.3 percent, compared to 26.8 percent in the third quarter of 2009. Gross profit in our Asia-Pacific Sewer Rehabilitation segment increased substantially as a result of increases in our Australian and Singaporean businesses.  Gross profit in our Water Rehabilitation segment decreased by $0.2 million in the third quarter of 2010 compared to the third quarter of 2009, due primarily to weak project execution in the United States and Asia.

Consolidated operating expenses for the third quarter of 2010 decreased $0.9 million, or 2.3 percent, from $37.0 million in the same period of 2009.  The decrease was primarily due to continued cost savings in our North American Sewer Rehabilitation and European Sewer Rehabilitation segments.  Our Asia-Pacific Sewer Rehabilitation segment recorded an increase in operating expenses due to additional project management and operational support in connection with growth in the business.  The increase in operating expense in our Energy and Mining segment was due to the inclusion of operating expenses from Bayou Perma-Pipe Canada, our Canadian pipe coating joint venture (“Bayou-Canada”), and Bayou Delta Double Jointing, our specialty welding joint venture (“DDJ”), which were not included in the third quarter of 2009.  Operating expenses as a percentage of revenue decreased to 15.1 percent for the third quarter of 2010 from 18.3 percent in the prior year quarter.

3

Consolidated operating income in the third quarter of 2010 increased $9.3 million, or 52.3 percent, from $17.7 million in the same period of 2009.

Third quarter net income was $18.8 million, or $0.48 per diluted share.  This compares to $9.1 million, or $0.23 per diluted share, for the third quarter of 2009, a 105.6 percent increase.

For the first nine months of 2010, consolidated revenues increased $155.9 million, or 30.4 percent, to $669.0 million compared to the prior year period.  Gross profit increased $37.6 million, or 28.5 percent, to $169.3 million compared to the same period of 2009.  The primary factors driving improved performance in the third quarter were also responsible for increased profitability during the nine months ended September 30, 2010, in addition to the inclusion of three full quarters of activity from Bayou and Corrpro.  Operating expenses increased $15.0 million, or 15.9 percent, to $108.8 million compared to the same period of 2009.  In 2009, operating expenses included $6.6 million of acquisition-related expenses from the acquisitions of Bayou and Corrpro, but did not include expenses for the periods prior to their respective acquisition dates.  Operating expenses grew in our Asia-Pacific Sewer Rehabilitation and Energy and Mining segments due to significant business growth. The increase in operating expenses in our Energy and Mining segment was attributable to the inclusion of operating expenses for Bayou and Corrpro for the entire nine-month period in 2010 and the inclusion of operating expenses for Bayou-Canada and DDJ, which were not included in the results of the nine-month period ended September 30, 2009.

For the first nine months of 2010, net income was $43.0 million, or $1.09 per diluted share, compared to $14.5 million, or $0.40 per diluted share, in the first nine months of 2009.

Total contract backlog was $454.6 million at September 30, 2010, representing a $13.1 million, or 2.8 percent, decrease from September 30, 2009.

Contract backlog in our North American Sewer Rehabilitation segment was $185.1 million at September 30, 2010, representing a $1.3 million, or 0.7 percent, increase from September 30, 2009. The increase from September 30, 2009 was principally a result of growth in the market over the last year, partially due to federal stimulus funding.  The market opportunities in the upcoming quarters remain strong, despite lack of stimulus funding.

Contract backlog in our European Sewer Rehabilitation segment was $26.0 million at September 30, 2010 compared to $40.7 million at September 30, 2009.  The decrease in backlog from September 30, 2009 was principally due to market weakness in France and the United Kingdom, coupled with our exit from the Polish, Romanian and Belgium contracting markets.  We are beginning to see an increase in bidding opportunities in the United Kingdom, and our strongest market, the Netherlands, remains robust.

Contract backlog in our Asia-Pacific Sewer Rehabilitation segment was $81.3 million at September 30, 2010, representing a $3.2 million, or 3.7 percent, decrease from September 30, 2009. The decrease was due to a backlog decline in India, partially offset by backlog increases in Hong Kong and Australia and the inclusion of Singapore backlog following our acquisition of the Singaporean company in January 2010.  Bidding in India has commenced once again, but no significant orders were signed during the third quarter of 2010.  Market conditions continue to be strong in Australia, Hong Kong and Singapore, and we are pursuing strategic opportunities in several markets, including Malaysia, the Philippines and China.

4

Water Rehabilitation contract backlog was $5.9 million at September 30, 2010, compared to $7.5 million at September 30, 2009. We have completed a number of small- and medium-diameter projects and continue to validate our large diameter capability for this market.

Energy and Mining contract backlog at September 30, 2010 was $156.3 million, representing a $5.1 million, or 3.4 percent, increase from September 30, 2009. The increase from September 30, 2009 was due to growth within our industrial liner business, partially offset by declines within our pipe coating businesses.  At this time, we are seeing short-term lulls in availability of large diameter pipe coating projects.  However, we are experiencing sustained market opportunities on a global basis and we expect to see continued positive growth trends for the foreseeable future due to stronger oil, gas and mining commodity markets.

Unrestricted cash increased in the third quarter of 2010 to $98.2 million from $90.1 million at June 30, 2010, primarily as a result of growth in earnings, while growth in working capital resulting from the significant increase in revenues has constrained cash flow.  Unrestricted cash decreased from December 31, 2009 of $106.1 million, due primarily to growth in working capital caused by increased revenue.  However, unrestricted cash increased from September 30, 2009 of $90.7 million, as a result of growth in earnings, partially offset by increased working capital.

Insituform Technologies, Inc. is a worldwide leader in global pipeline protection.  Insituform provides proprietary technologies and services for rehabilitating sewer, water and energy and mining piping systems and the corrosion protection of industrial pipelines.  More information about Insituform can be found on its internet site at www.insituform.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.  The Company makes forward-looking statements in this news release that represent the Company’s beliefs or expectations about future events or financial performance.  These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates or projections and are not guarantees of future events or results.  When used in this document, the words “anticipate,” “estimate,” “believe,” “plan,” “intend, “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifyin g such statements.  Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on March 1, 2010.  In light of these risks, uncertainties and assumptions, the forward-looking events may not occur.  In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected.  Except as required by law, we do not assume a duty to update forward-looking statements, whether as a result of new information, future events or otherwise.  Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission.  Please use caution and do not place reliance on forward-looking statements.  All f orward-looking statements made by the Company in this news release are qualified by these cautionary statements.

5

Regulation G Statement

Insituform has presented certain information in this release excluding certain items that impacted income and diluted earnings per share. The (non-GAAP) earnings per share exclude one or more of the following: the earnings impact of the exclusion of acquisition-related expenses, or the exclusion of Bayou and Corrpro financial information.   Insituform management uses such non-GAAP information internally to evaluate financial performance for its operations, as the Company believes it allows the Company to more accurately compare the Company’s ongoing performance across periods.

Insituform®, the Insituform® logo, InsituMain™, United Pipeline Systems®, Bayou Companies™ and Corrpro® are the registered and unregistered trademarks of Insituform Technologies, Inc. and its affiliates.

CONTACT:	Insituform Technologies, Inc.
	David A. Martin, Senior Vice President and Chief Financial Officer (636) 530-8000

6

INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
	2010			2009			2010			2009
Revenues	$	239,585		$	201,852		$	668,959		$	513,060
Cost of revenues		178,166			148,730			499,661			381,349
Gross profit		61,419			53,122			169,298			131,711
Acquisition-related expenses		(1,700	)		(1,600	)		(1,700	)		6,619
Operating expenses		36,164			37,018			108,790			93,839
Operating income		26,955			17,704			62,208			31,253
Other income (expense):
Interest income		73			120			240			304
Interest expense		(1,940	)		(2,327	)		(6,204	)		(5,804	)
Other		71			363			44			655
Total other expense		(1,796	)		(1,844	)		(5,920	)		(4,845	)
Income before taxes on income		25,159			15,860			56,288			26,408
Taxes on income		7,934			4,939			17,618			7,684
Income before equity in earnings of affiliated companies		17,225			10,921			38,670			18,724
Equity in earnings of affiliated companies, net of tax		2,792			1,011			5,470			704
Income before discontinued operations		20,017			11,932			44,140			19,428
Loss from discontinued operations, net of tax		(16	)		(2,646	)		(93	)		(3,936	)
Net income		20,001			9,286			44,047			15,492
Less:  net income attributable to noncontrolling interests		(1,191	)		(139	)		(999	)		(1,003	)
Net income attributable to common stockholders	$	18,810		$	9,147		$	43,048		$	14,489
Earnings per share attributable to common stockholders:
Basic:
Income from continuing operations	$	0.48		$	0.31		$	1.11		$	0.50
Loss from discontinued operations		(0.00	)		(0.07	)		(0.01	)		(0.10	)
Net income	$	0.48			0.24		$	1.10			0.40
Diluted:
Income from continuing operations	$	0.48		$	0.30		$	1.10		$	0.50
Loss from discontinued operations		(0.00	)		(0.07	)		(0.01	)		(0.10	)
Net income	$	0.48		$	0.23		$	1.09		$	0.40
Weighted average number of shares:
Basic		39,060,076			38,482,480			39,032,698			36,665,437
Diluted		39,419,038			39,026,072			39,387,915			37,095,714

7

INSITUFORM TECHNOLOGIES. INC.

STATEMENT OF OPERATIONS RECONCILIATION

(Unaudited) (Non-GAAP)

(in thousands, except share and per share information)

	Nine Months Ended September 30, 2009
	Consolidated Results			Acquisition -related  expenses			Results Excluding Acquisition-related expenses			Post- Acquisition Bayou and Corrpro Results			Results Excluding Acquisition-related expenses and Bayou and Corrpro Results
Revenues	$	513,060		$	–		$	513,060		$	131,090		$	381,970
Cost of revenues		381,349			–			381,349			97,165			284,184
Gross profit		131,711			–			131,711			33,925			97,786
Operating expenses		100,458			(6,619	)		93,839			28,502			65,337
Operating income		31,253			6,619			37,872			5,423			32,449
Other income (expense):
Interest income		304			–			304			3			301
Interest expense		(5,804	)		–			(5,804	)		(28	)		(5,776	)
Other		655			–			655			595			60
Total other income (expense)		(4,845	)		–			(4,845	)		570			(5,415	)
Income before taxes on income		26,408			6,619			33,027			5,993			27,034
Taxes on income		7,684			2,160			9,844			2,201			7,643
Income before equity in earnings of affiliated companies		18,724			4,459			23,183			3,792			19,391
Equity in earnings of affiliated companies		704			–			704			155			549
Income from continuing operations		19,428			4,459			23,887			3,947			19,940
Loss from discontinued operations, net of tax		(3,936	)		–			(3,936	)		–			(3,936	)
Net income		15,492			4,459			19,951			3,947			16,004
Less: net income attributable to noncontrolling interests		(1,003	)		–			(1,003	)		–			(1,003	)
Net income attributable to common stockholders	$	14,489		$	4,459		$	18,948		$	3,947		$	15,001
Earnings per share attributable to common stockholders:
Basic:
Income from continuing operations	$	0.50					$	0.62					$	0.68
Loss from discontinued operations		(0.10	)					(0.10	)					(0.14	)
Net income		0.40						0.52					$	0.54
Diluted:
Income from continuing operations	$	0.50					$	0.62					$	0.67
Loss from discontinued operations		(0.10	)					(0.10	)					(0.14	)
Net income	$	0.40					$	0.52					$	0.53
Weighted average number of shares:
Basic		36,665,437						36,665,437						27,975,582
Diluted		37,095,714						37,095,714						28,405,859

8

INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

SEGMENT DATA

(Unaudited)

(In thousands)

	Three Months Ended     September 30,						Nine Months Ended     September 30,
	2010			2009			2010			2009
Revenues:
North American Sewer Rehabilitation	$	107,347		$	94,858		$	296,051		$	259,049
European Sewer Rehabilitation		15,929			23,152			51,562			62,067
Asia-Pacific Sewer Rehabilitation		8,983			9,811			32,606			22,154
Water Rehabilitation		4,445			4,289			11,770			8,740
Energy and Mining		102,881			69,742			276,970			161,050
Total revenues	$	239,585		$	201,852		$	668,959		$	513,060
Gross profit (loss):
North American Sewer Rehabilitation	$	24,019		$	24,082		$	68,276		$	64,915
European Sewer Rehabilitation		4,831			6,212			14,081			16,354
Asia-Pacific Sewer Rehabilitation		2,973			2,614			7,665			6,382
Water Rehabilitation		(10	)		220			808			(35	)
Energy and Mining		29,606			19,994			78,468			44,095
Total gross profit	$	61,419		$	53,122		$	169,298		$	131,711
Operating income (loss):
North American Sewer Rehabilitation	$	12,006		$	10,322		$	29,360		$	25,844
European Sewer Rehabilitation		1,363			1,095			2,595			2,120
Asia-Pacific Sewer Rehabilitation		690			613			461			2,407
Water Rehabilitation		(497	)		(334	)		(685	)		(2,371	)
Energy and Mining(1) (2)		13,393			6,008			30,477			3,253
Total operating income	$	26,955		$	17,704		$	62,208		$	31,253

        _________________

(1)   $6.6 million of acquisition and severance costs were included in the operating results of the Energy and Mining segment for the nine months ended September 30, 2009.

(2)   Bayou and Corrpro contributed $5.4 million of operating income to this segment in the nine-month period ended September 30, 2009 during the 222-day period following the Company’s acquisition of Bayou on February 20, 2009 and during the 183-day period following the Company’s acquisition of Corrpro on March 31, 2009.

9

INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONTRACT BACKLOG

(Unaudited)

(In millions)

Backlog	September 30,    2010		June 30,      2010		March 31,      2010		December 31,       2009		September 30,      2009
North American Sewer Rehabilitation	$	185.1	$	206.6	$	208.6	$	180.9	$	183.8
European Sewer Rehabilitation		26.0		22.7		24.7		37.2		40.7
Asia-Pacific Sewer Rehabilitation		81.3		76.0		73.3		57.4		84.5
Water Rehabilitation		5.9		8.8		2.9		7.7		7.5
Energy and Mining		156.3		161.1		187.6		180.2		151.2
Total	$	454.6	$	475.2	$	497.1	$	463.4	$	467.7

(1)   Contract backlog is our expectation of revenues to be generated from received, signed and uncompleted contracts, the cancellation of which is not anticipated at the time of reporting. Contract backlog excludes any term contract amounts for which there is not specific and determinable work released and projects where we have been advised that we are the low bidder, but have not formally been awarded the contract.

10

INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share amounts)

	September 30, 2010		December 31, 2009
Assets
Current assets
Cash and cash equivalents	$	98,230	$	106,064
Restricted cash		657		1,339
Receivables, net		179,191		147,835
Retainage		25,690		22,656
Costs and estimated earnings in excess of billings		73,157		64,821
Inventories		40,925		32,125
Prepaid expenses and other assets		30,463		27,604
Current assets of discontinued operations		1,189		1,189
Total current assets		449,502		403,633
Property, plant and equipment, less accumulated depreciation		159,338		148,435
Other assets
Goodwill		182,141		180,506
Identified intangible assets, less accumulated amortization		74,453		78,311
Investments in affiliated companies		25,763		27,581
Deferred income tax assets		10,271		11,203
Other assets		5,711		8,827
Total other assets		298,339		306,428
Non-current assets of discontinued operations		4,040		4,283
Total Assets	$	911,219	$	862,779
Liabilities and Equity
Current liabilities
Accounts payable and accrued expenses	$	157,128	$	146,702
Billings in excess of costs and estimated earnings		12,032		12,697
Current maturities of long-term debt, line of credit and notes payable		11,608		12,742
Current liabilities of discontinued operations		311		339
Total current liabilities		181,079		172,480
Long-term debt, less current maturities		94,087		101,500
Deferred income tax liabilities		33,316		31,449
Other liabilities		9,388		12,849
Non-current liabilities of discontinued operations		1,727		979
Total liabilities		319,597		319,257
Stockholders’ equity
Preferred stock, undesignated, $.10 par – shares authorized 2,000,000; none outstanding		–		–
Common stock, $.01 par – shares authorized 125,000,000 and 60,000,000; shares issued and outstanding 39,234,350 and 38,933,944		392		389
Additional paid-in capital		249,974		242,563
Retained earnings		329,835		286,787
Accumulated other comprehensive income		3,481		8,313
Total stockholders’ equity before noncontrolling interests		583,682		538,052
Noncontrolling interests		7,940		5,470
Total equity		591,622		543,522
Total Liabilities and Equity	$	911,219	$	862,779

11

INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	For the Nine Months    Ended September 30,
	2010			2009
Cash flows from operating activities:
Net income	$	44,047		$	15,492
Loss from discontinued operations		93			3,936
Income from continuing operations		44,140			19,428
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization		22,971			19,966
(Gain) loss on sale of fixed assets		19			(171	)
Equity-based compensation expense		5,227			3,603
Deferred income taxes		2,329			641
Dividend received, net of loss from equity in earnings of affiliated companies		940			1,777
Reversal of earnout		(1,700	)		(1,600	)
Other		(889	)		451
Changes in operating assets and liabilities:
Restricted cash		623			(121	)
Receivables net, retainage and costs and estimated earnings in excess of billings		(41,455	)		(11,707	)
Inventories		(8,472	)		403
Prepaid expenses and other assets		(2,098	)		9,636
Accounts payable and accrued expenses		7,017			(8,889	)
Net cash provided by operating activities of continuing operations		28,652			33,417
Net cash provided by (used in) operating activities of discontinued operations		(441	)		1,632
Net cash provided by operating activities		28,211			35,049
Cash flows from investing activities:
Capital expenditures		(28,630	)		(15,833	)
Proceeds from sale of fixed assets		381			916
Proceeds from net foreign investment hedges		–			6,818
Patent expenditures		(1,176	)		(1,948	)
Purchase of Singapore licensee		(1,257	)		–
Purchase of Insituform-Hong Kong and Insituform-Australia		–			(278	)
Purchase of Bayou and Corrpro, net of cash acquired		–			(209,714	)
Net cash used in investing activities of continuing operations		(30,682	)		(220,039	)
Net cash provided by investing activities of discontinued operations		–			750
Net cash used in investing activities		(30,682	)		(219,289	)
Cash flows from financing activities:
Proceeds from issuance of common stock, including tax benefit of stock option exercises		2,162			128,204
Proceeds from notes payable		597			–
Principal payments on notes payable		(1,808	)		(2,438	)
Investments from noncontrolling interests		1,681			–
Distribution to noncontrolling interests		(398	)		–
Dividend paid to non-controlling interest		–			(959	)
Principal payments on long-term debt		(7,500	)		(5,000	)
Proceeds from long-term debt		–			50,000
Net cash provided by (used in) financing activities		(5,266	)		169,807
Effect of exchange rate changes on cash		(97	)		5,775
Net decrease in cash and cash equivalents for the period		(7,834	)		(8,658	)
Cash and cash equivalents, beginning of period		106,064			99,321
Cash and cash equivalents, end of period	$	98,230		$	90,663

12

EX-99.2

Exhibit 99.2

Insituform Technologies Inc.

Moderator:   Joe Burgess

October 26, 2010

8:30 a.m. CT

Operator:	Good day, ladies and gentlemen, and welcome to the Insituform third-quarter 2010 earnings conference call.  At this time, all participants are in a listen-only mode.  Later, we will conduct a question and answer session and instructions will follow at that time.  If anyone should require assistance during the program, please press star then zero on your touch tone telephone.  As a reminder, this program is being recorded.
	Any financial or statistical information presented during this call, including any non-GAAP measures, the most directly-comparable GAAP measures, and reconciliation to GAAP results, will be available on our website, Insituform.com.
	During this conference call, we'll make forward-looking statements, which are inherently subject to risks and uncertainties.  Our results could differ materially from those currently anticipated due to a number of factors described in our SEC filings and throughout this conference call.  We do not assume the duty of updating forward-looking statements.  Please use caution and do not rely on such statements.
	Now, I'll turn the call over to Insituform's President and CEO, Joe Burgess.  Please go ahead, sir.
Joe Burgess:	Good morning and thank you for participating on Insituform's call for third-quarter 2010 results.  Joining me on today's call are David Martin, Senior Vice President and Chief Financial Officer; David Morris, Senior Vice President and General Counsel; and Chuck Voltz, Senior Vice President, North American Rehabilitation.
	As has been our convention, I'll make a few remarks discussing the quarter and year-to-date performance, as well as update you on relevant market information impacting our business units.  We will then try to spend the balance of the time available responding to your questions.
	So, let me start with the highlights.  Earnings per share from continuing operations of 48 cents a share, representing a 60 percent improvement over 2009, net income of $18.8 million, representing a 106 percent improvement over 2009.  Revenue increased by almost $38 million to just under $240 million, up 19 percent from last year.  Energy and Mining, up 47 percent, and North American Sewer Rehabilitation, up 13 percent, led the growth.
	Backlog of $454 million was down 2 percent year over year and 4 percent sequentially from the second quarter.  The bid table continues to be robust, however, across all markets, with the exception of India and parts of Europe.  Energy and Mining continued on a pace to produce earnings that are greater than 20 percent accretive.  All three business units performed well, driving operating income $10 million higher than 2009 performance.
	Overall, a solid quarter that is reflective of the higher earnings potential of the business.  However, performance in several areas remained suboptimal, and as such, we believe we can drive improved performance in the near term.
	Turning to the business units, North American Sewer Rehabilitation improved operating income for the quarter by $1.7 million, or just over 16 percent.  Year to date, operating income has increased by $3.5 million, or just under 14 percent.
	Unfortunately, gross margin performance of 22.4 percent for the third quarter and 23.1 percent year to date is approximately 10 percent below last year's performance and has left operating margins essentially flat, despite the solid revenue growth.  Obviously, we've spent considerable time studying this performance and can only conclude that our execution has been suboptimal.
	As we've reported throughout the year, we have taken some write-downs related to legacy project issues, primarily in Hawaii.  However, what we call our cost of quality has increased significantly during 2Q and 3Q, and that has driven gross margins lower.
	The cost of quality issues have driven NAR – have driven down NAR margins by 230 basis points year to date.  Eliminating these execution errors will return NAR margins to the expected mid-20s level.
	What's different from 2009 to 2010?  We've identified several areas that are contributing to the challenge of optimizing our North American business.  The first is sheer volume.  Since the end of 2008, we've added eight install crews for a total of 72, which represents a 16 percent increase.
	Additionally for 2010, despite our best efforts, average order size has declined 21 percent to $330,000.  This decline in order size has added an additional 260 projects to our network, further straining our project management organization.
	I think the second issue overall is people.  As I've spoken previously, we've been working hard to upgrade the talent in our project management and engineering organizations.  More than 30 percent of the organization is essentially new, less than two years in grade.  So it is fair to say that we are experiencing some growing pains in the organization after not growing for many years.
	However, we believe that we have the right training, monitoring, and commercial management processes in place to improve for the fourth quarter going forward.
	Setting the gross margins aside, it is still a fact that this is the most – this is – we are on pace to have the most profitable year in NAR's 40-year history.  Crew levels are high.  Crew utilization has improved from 6,400 linear feet a month in 2008 to 7,380 linear feet a month year to date in 2010.  This 15 percent increase has allowed us to expand our average revenue per crew metric by 9 percent since 2008, despite negative trends in diameter mix relationships.
	Our manufacturing and logistics platform continues to excel.  Year-to-date operating margins are at 40 percent.  And we continue to grow our third-party tube sale business and expect to achieve $3 million in operating profits during 2010.
	Backlog remains historically high at $185 million.  While this level is essentially flat with 2009 levels, recall that we have added 16 percent install capacity during this timeframe, meaning that acquisitions are keeping pace with our growing revenue appetite.
	So while we are mildly disappointed with the mix of legacy and current execution issues and their impacts on margins, we believe these issues are being corrected and that NAR is positioned to continue its profitable growth.
	Our European Sewer Rehabilitation business continues to struggle with lower revenues due to across-the-board sluggishness in the European economies.  Additionally, we have very little activity in Eastern Europe, which has traditionally driven tube market and higher profitability at our German wet out facilities.
	Given this revenue picture, the business has done well to improve upon 2009 results by $268,000 for the third quarter and $476,000 for the full year at the operating income level, this despite a year-over-year 17 percent drop in revenue.
	We are seeing the full benefit of the operating cost reductions that we implemented at the end of 2009.  We are starting to see some increased bid activity in the UK and maintain a strong market position in Holland.  German backlog is also strong.  We have implemented a glass line at our manufacturing facility and are currently testing this product in Germany, where glass liners have gained increasing share versus felt liners.  We should be in position to compete in this market in 2011 and we continue to expect Europe to meet our profit expectations for the year.
	In Asia, we continue, unfortunately, to wait on India.  Financial performance was modestly improved on lower revenue.  Year-to-date operating earnings, of course, are significantly lower year over year due to the large Indian project write-down in the first-quarter.
	I'll speak about India in a moment, but I want to note that our business units in Hong Kong, Singapore, and Australia have had very strong years.  Overall backlog in Asia is essentially flat with 2009, even though we have booked little work in India while working down our large projects.  Significant orders in all of the other three markets have offset the drawdown in India.
	Additionally, margin performance in these and our tube business have been very respectable.  Gross margins for these units, excluding India, are 36.5 percent year to date.  All of these businesses are on track to produce strong fourth quarter results as well.
	So, let's spend a moment on India.  Financial performance was essentially breakeven for the quarter as we continue to work to complete our initial orders.  I believe that our execution capability, developed jointly with our partner SPML, is ready and capable to tackle this market.
	But in short, we continue to be frustrated by the inability of the Indian municipal sector to release projects.  As I've mentioned before, we've taken the deliberate step of working to create trenchless-specific bids that tighten technical and commercial parameters relative to the open tender projects awarded to us in late 2007 and early 2008.  While this will certainly help us avoid the issues we faced during the first quarter, it also is creating these – these more rigorous procurements have seemingly paralyzed our client in Delhi as they struggle with maintaining fairness for these more complex projects.
	Having spent last week in Delhi, I believe that we are making progress, however.  The recently completed Commonwealth Games should certainly allow for the government to return to a more normal pace and hopefully put these projects into the market shortly.  And as I mentioned at our last quarter's call, we currently have line of sight towards projects totaling $70 million to $75 million in the marketplace and believe that we are well positioned to capture this work when it is released.
	i-Blue® failed to build on its backlog success in the second quarter, but continued to build its operating resume with successful installations.  We completed projects in Illinois and Canada in September, and have a good order book for the fourth quarter.
	While we expect to finish the year around $16 million to $17 million in revenues and with a modest operating loss for the year against original targets of $30 million and modest profits, we have made great strides in advancing our operating capability and market acceptance of the product.  We also have a much better understanding of the broader market needs and we will be factoring that into our future growth strategies for this segment.
	Our Energy and Mining segment had a very successful quarter, contributing $11.7 million in operating income, as all operating units performed well during the quarter.  Year to date, this segment has contributed $28.8 million in operating income, a 190 percent improvement over last year.
	UPS continues on pace for a record 2010.  Continued strong performances in North America and South America have offset some work release delays in Mexico and Australia.  The business units should close the year strong and, with a near-record backlog position, should be able to accelerate growth in 2011.
	Corrpro continues to be the steady Eddie of the group, growing revenue and maintaining margin and backlog in their markets.  While they rarely get an opportunity to capture big awards and announcements, the business continues to build share in North America.
	We have turned our focus on expanding the Corrpro footprint into the Middle East and Asia.  Corrpro recently had a key cathodic protection contract extension in Kuwait, which will help support our expansion plans.
	Bayou continues to enjoy a strong year.  Third-quarter operating income was over $5 million higher than the previous year.  The business unit continues to benefit from strong performance in its New Iberia coating operations and near sold-out conditions at our Baton Rouge coating joint venture.  These conditions will continue into the fourth quarter.
	Canadian coating operations had a strong quarter, and we expect to exceed our first-year expectations for that business.  We're also bidding our first installation projects, and hope to augment our coating revenues in the near future.  We also continue to see strong profits from the double-joint welding investments that we made earlier in the year.
	Markets, on balance, remain strong, although continued uncertainty in the Gulf of Mexico as offshore drilling regulations remain uncertain could cloud pipeline spend for 2011.  This is somewhat offset by the strong investment profile in the Canadian oil sands.  We expect to grow significantly as this key production area builds out.  And we'll be looking to expand our service profile in this important market.
	We're happy with our results for the quarter as, despite some performance and market issues, we were able to deliver solid financial results.  We believe our business is positioned for a strong fourth quarter, and so we confirm our guidance of $1.50 to $1.55 per share for 2010.
	Thank you for your time and continued interest in Insituform, and we'll be happy to take your questions.
Operator:	Ladies and gentlemen, if you have a question at this time, please press star then one on your touch tone telephone.  If your question has been answered and you would like to remove yourself from the queue, please press the pound key.  Our first question comes from the line of Arnie Ursaner, CJS Securities.
Arnie Ursaner:	It's Arnie Ursaner from CJS Securities.  My question relates to your North American sewer rehab segment.  While revenues were fairly close to my view, your margin was materially below our view, plus materially below last year.  You highlighted a couple of execution issues and a why.  Could you expand a little bit on what those factors are and what actions you're taking to fix it?
Joe Burgess:	Well, we talked about this a little bit in the second quarter.  I'd say roughly half of the issues are what we'd call legacy items, projects that were bid in either early to mid sometime in 2008, maybe early 2009.
	These were projects that were just submit as bid, most of it in Hawaii, most of it not understanding at the time either the bypass requirements or other requirements that the client had, which basically extended the schedules on those jobs and added costs to the jobs.
	So we took some pretty substantial write-offs early in the year that dampened our margins.  More recently, we've had some recent projects where, for a variety of reasons, we've either had some tube failures that could be either a premature exotherm, a variety of reasons, wrong tube for the job despite past calculations, et cetera, and as I addressed, that's a mix of having a substantial amount of new crews in the field, some turnover in our project management organization, and those types of issues.
Arnie Ursaner:	Second question, if I could, relates to your European sewer rehab margins.  Revenues there were, again, quite a bit less than we were looking for, but yet margins were much better.  Did you have any contracts that came to a wrap-up where you had some one-time positive benefits that affected margin?
Joe Burgess:	No, not really.  I guess if I – just to expand on the issue in the U.S., one of the points that we do want to make is we do not see – and I guess one of the reasons we're talking about our own execution errors is we don't see price drivers in the market that should not allow NAR to return to the 25 percent, 26 percent margin percentage that we saw last year.
	On the European business, there's nothing specific there.  I think the business has done a really good job of cleaning out some bad performance early in the year in France.  Revenues have been down, as I've suggested, but the work is – work in the UK has been at very high margin.  Our business in Holland, which has traditionally been a high-margin business for us, has continued to sustain those margins.  Our business in Spain has worked – has also worked at pretty good margins.
	There's just been not nearly the project activity, with the exception of Germany.  The German market, which I think traced – trails the – or matches the economic condition in Europe, has been pretty robust.
Operator:	Thank you.  Our next question comes from the line of Jonathan Ellis, Bank of America.  Your question please?
Jonathan Ellis:	Just returning to North America, Joe, can you give us a sense at this point, the percentage of revenue coming from – still coming from legacy projects that have not – where there haven't been any write-downs yet?
Joe Burgess:	I think we found the bottom there early in the third quarter.  David, you might have a different view, but I know we are finished in Hawaii.
David Martin:	Hawaii is complete.
Joe Burgess:	So, I think – I guess I'm saying with Hawaii being complete, I believe we're finished with that.  Chuck Voltz is on the line.  If he knows of something else, he can speak.
Chuck Voltz:	Joe, that's exactly right.  Nothing more to offer on that end.
Jonathan Ellis:	So just to be clear, then, that going forward to the extent that there is any continued margin drag, that would be more tied, Joe, to the other issues that you discussed in terms of newer people in the field, tube failures, not really write-downs on legacy projects?
Joe Burgess:	That's correct.
Jonathan Ellis:	Did resin and fuel costs play a role at all this quarter?  Was that a factor at all in the margin drag?
Joe Burgess:	You know, Jonathan, resin and fuel cost is certainly up year over year.  David can certainly color that for you, but when we look at the pricing and the pricing that we were able to achieve on bids that we win, we think that the – we think that we've been successful in capturing those price increases.
	And so, that's really why we're not kind of putting that out there as reasons for the margins – for the margin issues because we don't think that's driving  the margin to hurt us.  We think we've been pretty successful in pushing that through in our pricing to our clients, and I guess the other thing I'd add is the market itself seems to be doing that as well.  Just meaning that we don't seem to see – we don't think our competitors are of a mind to swallow those commodity price increases either.  So, that's why it's not on our list.
Jonathan Ellis:	That's helpful.  Just turning your attention quickly to the energy business, you talked a little bit about, I think referenced in the press release, a lull in some large-diameter projects.  Can you give us some sense as to how – is that expected to be a lull that extends through the holiday season and doesn't pick up again until the first quarter of next year?  And then, also, just a rough sense, if you can, on the margin difference between larger-diameter and smaller-diameter projects.
Joe Burgess:	The lull that we potentially see in larger-diameter projects is really a 2011 issue.  Bayou New Iberia certainly has a good order book for the fourth quarter, and we feel very good about capturing some larger-diameter work that will fill us out for the first part of next year.  After that, there are some projects on the books that we would certainly like to see them a little bit firmed up in the onshore large diameter.
	Of course, the small-diameter market is smaller, and we see increased bid activity there, but it brings neither the volume nor the margins there.  So, but we don't think that that impacts 4Q or early 2011.  It's really a later in 2011 issue.
	Of course, the tandem issue with that is Bayou has traditionally been a very strong participant in the offshore market, which has kind of dried up really since late 2006, early 2007.  It was expected to return later this year, but certainly have a pretty robust capital spend in 2011, and much of that has been delayed while the industry evaluates the impacts of the new offshore drilling regulations.
Jonathan Ellis:	OK.  I guess the – question, sort of on a follow-on, would be if we look at the energy and mining business in the quarter, revenue was up but yet gross margins were flat, quarter over quarter.  And I'm just trying to get a sense, was there something that created a drag in the third quarter from a margin perspective in the energy and mining business that could possibly flow through to future quarters?
Joe Burgess:	Were there any significant events?  No.  There is nothing out there.  Corrpro margins were kind of as they were expected.
	You know, UPS margins, I think, were good.  They probably could've been a little better.  I referenced we had some work release delays on the Poza Rica contract in Mexico that suppressed our margins down there, based on – just based on some issues with Pemex.  And we've had some delays on offshore projects, particularly of Sino Iron in Australia.
	You can kind of – if you do some investigation on that project, there is a rapidly developing argument between the general contractors, and we are a sub to them, with some of the GCs being suspended off-site by the owner.  So, we were expecting some delays on that project, although we're three, four months into our nine-month contract.  So once that gets sorted out, we think we'll be able to finish it in short order.
	But anyway, the near-term effect of that in the third quarter is a little more fixed cost, spending on those jobs.  But nothing either tremendously substantial or long term in nature in our view.
Jonathan Ellis:	Then just turning your attention quickly to the European business, Joe, you said profit – you should be able to meet your profit expectations for Europe in 2010.  Could you just share with us what that expectation is?
Joe Burgess:	It was significantly up in the fourth quarter.  David, you might – can you color that for him?
David Martin:	In terms of the profitability improvements?
Joe Burgess:	Yes.
David Martin:	We certainly think that European rehab revenues are going to be up close to 20 percent greater than what we saw this quarter, with good margins.  And so, you can do the math on that in terms of what operating profitability permits you to see.
Jonathan Ellis:	OK.  Then just in Asia, quickly, based on what you know today, do you still expect $70 million of revenue for the year or is that being scaled back because of the project release issues in India and Hong Kong?
Joe Burgess:	Yes, I think we're going to end up in the – probably in the high 50s for the year.  Just because we're not seeing the work releases in India, and if it happened tomorrow, we'd have to – we'd have to bid it, get selected, argue with half of Delhi, and then get started on the work.  So, it's pushing the revenue that we had really expected in the back half of the year really starting to ramp up in 2011.
Jonathan Ellis:	Can you just remind us; you referenced $70 million to $75 million of revenue opportunities in India?  Is that actually what you have won or is that what you're bidding on?
Joe Burgess:	That's what we're bidding on.  But they are projects that we've been heavily involved in the design and the scoping of, so we feel pretty good about our prospects.
Jonathan Ellis:	Then just my final question …
Joe Burgess:	I should add that almost 30 of that is represented by the projects that we had canceled that were previously awarded and are going to be rebid.
Jonathan Ellis:	And then just my final question, on these – based on the rebids that you just referenced, would you anticipate that gross margins in the Indian projects, once they get ramped up, would be materially, you know, different than the 36.5 percent gross margin you referenced for the other countries in the third quarter ex-India?
Joe Burgess:	They won't be that high.  Our – we certainly would hope that those – I think you're talking about NAR-type margin.
Jonathan Ellis:	Yes, OK.  Thank guys.
Operator:	Thank you, our next question comes from the line of Eric Stine from Northland Securities.  Your question please?
Eric Stine:	Hi everyone.  Thanks for taking the questions.  I was wondering if we could first, just bookkeeping, could you just give us revenues and gross profit for Bayou and Corrpro?
David Martin:	This is David.  For the fourth – for the third quarter, Corrpro, $54 million with gross profit of $17 million, and then Bayou, almost $30 million – $29.7 million with $7.9 million of gross profit.
Eric Stine:	OK, and then can – just a little color on the gain that you had in the quarter.  Was that similar to last year just related to the Bayou earnout provision?
David Martin:	Yes, similarly to last year, there were EBITDA targets that were set up when we originally bought the Company, and – based on status quo business when we bought it, and as a result of evaluating their overall achievement for the year, we determined it wasn't achievable this year and reversed it accordingly.
Eric Stine:	And maybe just turning to North American sewer, it sounds like you're through the legacy issues, project issues, now you're into kind of the growing pain issues.  Any thoughts on the kind of a target or the way you think about timing getting back to the mid-20s for margins?
Joe Burgess:	Yes, I think you'll – I mean, I think we'll see that start to go in a positive direction in the fourth quarter.  Again, Chuck Voltz is on the phone, so he can speak up if he disagrees.  But we certainly expect it to go in a positive direction in the fourth quarter.  The first quarter is always a lower volume month, just from weather.  So, that's typically not the best quarter from a gross margin standpoint.  But then, we are very positive about where that margin will go from there.
Eric Stine:	But you're thinking of it as kind of a mid- to late 2011?
Joe Burgess:	No, I think you're going to see – I think we'll see positive improvement in Q4 and I would certainly think we'll see positive improvement in Q1 over what we did this year.  And then, hopefully by the second quarter and the third quarter of next year, which are traditionally higher volume, higher margin months, we'll be back on track.
	As you guys have pointed out, and as we've answered, the – these legacy issues are behind us.  So it's really on our ability to do – to get this project management organization running the way we want it to.
Eric Stine:	OK, that's helpful.  Then just turning to Asia-Pacific, you've touched on India and the issues there, and your release talked about some project timing issues in Hong Kong.  Just any color on that.  And then, also, just the additional opportunities you see in China, Malaysia, and the Philippines.
Joe Burgess:	I talked about some timing issues related to UPS in Australia.  But we have not had any timing issues in Hong Kong that I'm …
David Martin:	Just on the water project.  We've only had a little bit of delay on water project …
Joe Burgess:	Not really impacting our overall ability to perform.
	In terms of the markets, Hong Kong is Hong Kong.  They basically release – they go basin to basin and do two and three programs.  We won and announced a substantial award within; I forget what it's called, basin D or something like that.  And so, we'll be executing – have started that work and we'll be executing on that for the balance of 2010 and 2011.
	Singapore is in the throes of a $300 million program that they really launched in late or mid-2009.  We've won a mix of work where we act as a direct contractor.  We've also won quite a bit of work where we are a sub to a GC, just doing the CIPP work, and of course we're selling a significant amount of tube in there.
	And so we've built our backlog nicely, as I said in my prepared remarks.  The combination of awards in Hong Kong and Singapore, and continuing to grow our business in Australia, has really made up for the fact that we have not – we've only picked up very small awards in India throughout the year.
	In Australia, we continue to work on our main project in Sydney.  We've been active in bids around Sydney, have – feel like we'll be successful near term in capturing work in Brisbane, and been active bidding projects in Melbourne as well.
	And again, have been growing the backlog, and when you – the blended return, as I've stated, on those three markets, when you back out India, is very attractive.  And the issue is – we've discussed this before, though, is to get to kind of the growth that we want overall in that geography, we need to get a – we need to get a consistent bid table in India.
Eric Stine:	OK.  But as far as the – I think you said – did you say high 50s for Asia-Pacific for the year?
Joe Burgess:	Yes.
Eric Stine:	OK, I mean, but your confidence there – I mean, you've got pretty good visibility into projects, and that's based on projects, such as the one in Australia, that you're working on now?
Joe Burgess:	Yes, we don't have to win any more work to do that …
Eric Stine:	Just one last question.  Just CapEx, can you update us on the plan for the year?  I think previously you've said 30, and I think you're pretty close to that through nine months.
David Martin:	Yes, the Q4 CapEx will be a little bit lighter than what we saw in Q3.  Expect it to be around six.  So, we will probably be between $34 million and $35 million for the year.
Eric Stine:	OK.  Thanks guys.
Operator:	Thank you.  Our next question comes from the line of Jeff Beach from Stifel Nicolaus.  Your question please?
Jeff Beach:	Good Morning Joe.  Could you give us an update on the stimulus work, whether there is still business out there that's being bid?  And then, on the number of programs that have been initiated in communities, do you see a large percentage of these programs continuing past the stimulus funds and can you give us any quantification of that?
Joe Burgess:	We really don't – we think the stimulus is finished.  I think I said – as I said last month, early on we felt like that would be a bigger event than it turned out to be for us.  It had a lot of momentum and a significant amount of projects really starting from maybe late spring of 2009 through the balance and early part of this year.  It looks like about $115 million, $120 million event to us, all in.
	We early on in the stimulus had visibility at about $175 million, $180 million, but for a variety of reasons projects dropped off, communities decided not to implement them, or they didn't get approved for whatever reason.
	Now, as I've said before, we didn't chase every stimulus project that was out there.  Trying to look at – we were trying to look at opportunities for the stimulus that were using the stimulus where we felt like those dollars would be incorporated into rate systems such that they would sustain and continue to spend capital.  We'll have to see if overall that's the case.
	We feel like the market overall, though, is still pretty robust.  So, while certainly some of our accelerated growth this year, the top line for NAR is stimulus related, as it was last year, we think the market will continue – it looks to us like the market will continue to grow into 2011.
Jeff Beach:	On the water side, where I think you've had a number of pilot projects out there through some or maybe much of 2010, what's your best idea of why project awards are being delayed?
Joe Burgess:	My sense of it is that's kind of where we're seeing reduced municipal spending.  We've had a couple of project awards – Chuck could give you some details on these – that were awarded that have been canceled.
	We are seeing project delays.  We are seeing project delays across a number of communities.  We had targeted some pretty significant work in the Southwest that seemed stalled at the municipal level.  So, while – when we can get in and get a pilot, when we can bid the work and execute the project, the – there's been very, very broad acceptance and enthusiasm for the project, but there just are not nearly the number of projects being let.  Chuck, can you add any color to that?
Chuck Voltz:	I guess, Joe, we've seen a lot of activity up in Canada, particularly in Quebec and over in Edmonton, projects in Illinois, down in Florida, Texas, California, Arizona, so we're seeing those kind of opportunities, as you stated there, but some of the projects that we currently have in backlog are being pushed due to clients having other priorities or the general contractors are not ready for us to activate on those projects right now.
Joe Burgess:	The other thing we're seeing in the market, and I kind of addressed this when talking about NAR is people – clients tend to be wanting to take smaller bites at projects.
	We had a fair amount of success in 2009 and late 2008 in bundling projects together to get to larger scopes, and that's been a struggle in 2010.  And the only real reason we can attribute to it is these budgetary concerns where people – where communities maybe don't want to bite off $2 million.  They want to do $350,000 worth of work.  And there seems to be that dynamic in the marketplace, which certainly adds to our transaction volume.
Jeff Beach:	Thank you.  The last question, you talked a little bit about the outlook for Bayou and Corrpro.  Can you talk about the outlook going into 2011 at UPS?
Joe Burgess:	Very, very strong.  UPS has been probably over $50 million in backlog for the last three quarters, I want to say, and the Canadian market looks good.  The U.S. market has been good.  South American market in Chile and Argentina has been very strong, started to work our first few projects in Brazil during 2010.
	I talked about the Australian project, which is delayed.  But we – it looks like it's going to see some delays, but that's going to be an attractive project for us, and we think there is follow-on work there.
	And UPS is starting to punch through in the Middle East.  They had a couple of project awards this year that we think we'll be able to expand in 2010.  Finally, we think making some progress with Saudi Aramco to get Tite Liner® more extensively specked into capital investments over there, and there are some other large projects in that part of the world that I think will allow them to accelerate their growth in 2011 to achieve another record year for that business.
Jeff Beach:	And just finally here, on the delays in Australia, do you have a sense, a guess, as to when your UPS projects might move ahead in Australia?
Joe Burgess:	My guess, looking at the rhetoric that's flying around between the people up the food chain in terms of contractors, is that that project will probably be stalled through the end of the year, and it will probably take it until the first quarter of next year.
	Although in terms of where we thought UPS would end up for the year, again, they've got more than enough work.  So, the crew capacity that we had devoted to Australia will simply be devoted to other work.
Jeff Beach:	Thank you.
Joe Burgess:	Thank you.
Operator:	Thank you.  Our next question comes from the line of John Quealy from Canaccord.  Your question please?
Mark Segal:	Good morning, it's Mark Segal for John.  Was just wondering if you could talk a bit about visibility in NAR?  And can you give any color as to how you feel the business is optimized on a go-forward basis from a crew quality and utilization standpoint, particularly given expectations for some strength in the bid environment in Q4?
Joe Burgess:	I tried to give you a sense of that in some of my remarks.  The crew efficiency and the revenue per crew has actually expanded.  It expanded nicely in NAR, even in the face of kind of continued significant levels of small diameter, which tends to be bid at lower pricing and drives those revenue figures down.
	So the crew productivity, crew utilization, crew profitability per crew is not the metrics that's an issue here.  These are largely either execution, again, where, as I said, we've had some instances where we've – just exothermed a tube or – we talked about the legacy issues or logistics issues, getting tube there, or misestimating jobs or not getting change orders documented such that we can recapture the cost.
	But it's not issues around our productivity of getting a tube in the ground once we get the conditions set in the field.  And that's why, frankly, we believe that they will be fixed in short order because it's not a function of us being unable to perform the work.
Mark Segal:	And then, just on the energy and mining side, can you tell us what the quarterly contribution was from the large projects at Bayou?
Joe Burgess:	I don't think we have them broken down by – we don't have them broken down by project.  We can certainly – I don't know if we have it here, but we can certainly look at some of the subsidiary businesses and give you those contribution figures.
Mark Segal:	And then, perhaps just backlog level at Bayou and Corrpro?
David Martin:	Corrpro backlog at the end of the quarter was $62.8 million.  Bayou, $40.6 million.
Mark Segal:	Sorry, Bayou – you broke up.  Forty point?
David Martin:	Forty-point-six million dollars.
Mark Segal:	Great.  Thanks a lot.
Joe Burgess:	UPS is $52.9 million, just to round out …
Mark Segal:	OK.
Operator:	Thank you.  Our next question comes from the line of Ryan Connors from Janney Montgomery.  Your question please?
Ryan Connors:	Great, thank you.  A couple of questions this morning.  First on the – just going back to the energy and mining side; obviously, the results there have been phenomenal, and you sound very constructive on the outlook as well, and you're talking about a record year this year, maybe another record year next year in some of those business lines.  What about capacity there?  Is that – will those businesses or one or more of them start to run up against their capacity?  And if so, would there be plans to expand capacity there?
Joe Burgess:	It really depends, Ryan, on what happens.  It's kind of like – in terms of what they're doing.
	If the Gulf of Mexico investment returns pretty quickly, you would see us expand probably into some insulation product lines.  And that would probably – we'd have to do that pretty quickly so that we could be positioned to take advantage of that offshore stuff.  The offshore stuff tends to be smaller diameter because you can't do large diameters under water just because of pressures, and so we had plenty capacity just on the basic coating side.
	Where we tend to get capacity limited in, particularly in New Iberia, is when we get a lot of large-diameter work mainly onshore.  So …
Ryan Connors:	OK, so it sounds like, based on your current outlook, you don't see capacity as a limiting factor, at least in the near term, in terms of your ability to participate in the upside and the end market.
Joe Burgess:	I do not.  Then I …
Ryan Connors:	And then a related question, just on business continues to draw pretty good cash.  The cash is, I guess, what, about $100 million here.  I mean, what are the priorities?  Obviously, you've established a pretty good track record here on the acquisitions.  Would that continue to be the focus or would there be other priorities for the cash?
Joe Burgess:	Priorities for the cash would be oriented towards growth.
Ryan Connors:	Growth via acquisitions or growth via internal reinvestment, or a combination?
Joe Burgess:	Both.  As I said, I think we did a bit of that this year.  Early in the year, we – earlier in the year, we – or was it late 2009, we bought the coating facilities in Canada, and that's turned into a nice piece of business for us.
	I guess we plan to do about $23 million topline with nice margins.  We plan for that to grow nicely in 2011, so that was kind of an internal move.  But we are constantly looking for opportunities to expand our profile in water, to expand our profile in the linings business which are – which we believe are high-value add segments within our markets.
Ryan Connors:	Great that’s helpful.  Thanks for your time this morning.
Operator:	Thank you.  This does conclude the question-and-answer session of today's program.  I'd like to turn the program back to Mr. Burgess for any further remarks.
Joe Burgess:	Well, I'll just thank you for taking the time and thank you for your interest, and we appreciate the questions.
	Again, we feel like it was a pretty solid quarter.  We know that we've got work to do, both to certainly get – to squeeze some margin points on NAR back to where we saw it last summer, and we're certainly focused on that, hard.  Very pleased with E&M, and certainly the prospects for that business as we go forward.  And generally think that our other business segments will continue to improve as we go forward.
	So we expect our earnings trajectory to kind of continue on the pace that it's at.  But again, appreciate your time, and we'll be around for anybody that has a follow-up.  Thank you.
Operator:	Thank you, ladies and gentlemen, for your participation in today's conference.  This does conclude the program.  You may now disconnect.  Good day.

END