Metal forming is moving up as a very strong product line. Sales of $5.2 million in the quarter were up 57% from a year ago. Coincidentally, our sales in heavy industry (that’s mostly steel mill equipment) were also up by 56% to a total of $3.3 million. Sales were also up in material test, motion simulators, and material handling.

Our turbine business was down $1 million but, at $5.6 million, is actually running slightly ahead of our forecast for the year. In defense controls for military vehicles, business is down as anticipated, to about $6 million for the quarter.

Perhaps the best news is that our sales through distribution, $7.6 million, is up 40% from a year ago. This may be an indicator that there really is an industrial recovery underway. Similarly, our repair activity is up 19%.

All in all, we’re very pleased with the outcome of the quarter. In addition to solid shipments, our incoming order rate seems more than adequate and we’re expecting some exciting new orders for new products in the second quarter.

In terms of margins, our Industrial business has been a little below par for the last couple of years, but margin performance has been improving. For fiscal ’04, we’ve projected an improvement to somewhere between 8% and 9%, depending on sales levels. Our first quarter actual, at 8.5%, is right square in the middle of that range. So, it appears that we’re off to a solid start in the Industrial business and there are signs of improvement in many quarters.

Components Group Q1’04

This is our first quarterly report on the new Components Group. I’m very pleased to report that, for the first quarter, everything came out better than we had anticipated. Sales were $31.1 million. Adjusting for a shutdown over the holidays and, therefore, a 12-week quarter, this is a run rate annualized of about $132 million.

The really good news is that the cost structure that we experienced in the first quarter would suggest that we can achieve our earnings targets for the year at a level somewhere between $133 million and $135 million. We had been anticipating an upsurge in sales in the back half of the year which would have taken us to about $140 million. But there are some program dynamics which may bring sales in closer to $135 million. The latest quantities and schedules on the Guardian Program with Northrop Grumman (that’s the system that will protect aircraft from shoulder-mounted missiles) seem to be moving some of our anticipated revenue into ’05. In addition, sales of fiber-optic modems to the armies of Egypt and Thailand may be delayed. In the case of Egypt, a multi-year contract on which we had been shipping is complete, and the replacement contract is slow to get approved through the Foreign Military Sales Contract Office. The program with the Thai Army needs resolution of some hardware testing issues before that contract can be cleared through FMS. In both of these situations, the business is not lost, but it may shift from ’04 to ’05. But, as I said, based on first-quarter performance, it appears that we can achieve our financial targets at the slightly reduced sales level.

If we categorize the business of the Components Group along the lines of the Moog market breakdown, the quarter would have been about $15.2 million Aircraft, a little less than $3 million Space & Missiles, and the balance Industrial, about $13.3 million. Compared with the mix that we’d anticipated, this is a little heavier Aircraft, very light in Space & Missiles, and a little bit light in Industrial. So, as the year goes by, we’ll probably be refining our original breakdown estimates.

This business is going to be a little more challenging to describe than that in our other segments. The difference is that it’s a very large collection of relatively small orders. The largest single account is not an aerospace program. It’s medical equipment for one customer, Respironics. These are motors used in sleep apnea machines. Sales in that account were over $4 million in the quarter.