Replies to post #272 on Underground Solutions Inc. (fka UGSI)

[Pro-Life]

April 20, 2010 Dear UGSI Shareholder,

I’m a bit late sending this quarter’s shareholder letter because, quite frankly, we have been incredibly busy. At the risk of sounding like a broken record – which in this case is a good thing - Underground Solutions achieved record first quarter bookings and revenue as we began 2010. You may remember that last year we also had a strong first quarter, breaking the trend of slow starts to the fiscal year. We are pleased that we seem to be establishing a new trend, as this year’s first three months saw bookings and revenue increase 60+% and 14%, respectively, over the same quarter in 2009. We booked more business in this year’s first quarter than we did in all of 2006. Needless to say, strong bookings growth presages strong revenue growth.

The business continues to experience growth across all regions – we are even executing our first project in Alaska – and in both the municipal and industrial markets. While the overall weakness in the pipe industry continued during the first quarter, exacerbated by raw material supply shortages, Underground Solutions was able to use these shortages to our advantage by leveraging our inventory position to gain additional sales.

Although much of the country was impacted by poor weather in the first quarter, we used the time productively to meet with utilities and engineering firms to properly set up projects that will bid in the latter part of the year. Additionally, as indicated in my 2009 year-end letter, we are assessing our opportunities in various international markets. To that end, by the end of April we will have made marketing presentations to industry participants in Saudi Arabia, France, and Poland.

We feel fortunate to have achieved the growth we have, but the organization is certainly stretched as a result. We hire about three new employees per quarter, but we have encountered surprising difficulty in finding highly motivated technical personnel with relevant experience. We have grown so fast, that we actually ran out of credit capacity on our corporate American Express account during the heart of the financial crisis. We managed, however, to work through that crunch and American Express recently doubled our credit line. That is good news for two reasons: It is evidence of our continued strong creditworthiness – even in the face of tight credit conditions – and maybe it is a sign that credit is beginning to loosen and our economy is really recovering. A stronger economy will only boost our already outstanding performance.

The year is shaping up to be another very busy one and we remain optimistic about our prospects.

Thanks for your continued support.

Sincerely,

Andy Seidel
Chairman and Chief Executive Officer