Industrial Q3’04

Industrial sales of $81 million were up 17%, or $12 million from a year ago. Of this growth, 67% was real growth and only 1/3 was related to currency effects.

During the quarter, we saw sales increases on every major industrial category. Plastics, our largest product line, increased 6% in the quarter, and this product line has stabilized at close to $17 million quarter after quarter. Metal forming, which includes large presses for the automobile industry, saw a dramatic percentage increase in the quarter, 23%, to a quarterly total of just over $6 million. Turbine controls were up, also, as well as motion simulators and material handling.

Distribution, which is probably the closest reflection that we have in our business of the general health of industrial hydraulics, saw an increase of 27% in the quarter, to a new total of $8.3 million. In addition, our aftermarket revenues increased by 15% to nearly $9 million. So, all in all, it was a very rewarding quarter for our industrial business.

Since so much of our industrial business is done in Europe, and some of the major European countries slow their industrial activity substantially in August, we normally project a slight decline in some of our Industrial product lines in our fourth quarter. In addition, for the fourth quarter of this year, we know that we will have lower delivery requirements for our defense controls, our industrial equipment used on military vehicles. As a result of these two factors, we’re projecting industrial sales of over $76 million in the fourth quarter which would bring us to a year-end total of $308.5 million, which is about $1 million higher than our forecast of 90 days ago.

Industrial margins for the quarter were 9.9%, up from 6.7% a year ago. On a year-to-date basis, our industrial margins are 9.6% and we would hope to be close to that even at the reduced volume in the fourth quarter. So, we’re expecting to finish the year with industrial margins of 9.5%.

In fiscal ’05 our Industrial business will continue its steady progress. Overall, we’re predicting a 9% sales increase to $337 million. We expect the increase, once again, will occur in every major product line. Our forecast is predicated on the currency exchange rates that exist today but, recognizing that a swing in major foreign exchange rates of 5% one way or the other is certainly not out of the question, we feel it’s prudent to express our projection as a sales range from $327 million to $347 million,. We’re hopeful that on this improved volume we’ll also see some improvement in margins for our Industrial segment and we’re currently forecasting 10% for the fiscal ’05 year.

Components Q3’04

This is now the third quarter for the Components Group as part of the Moog Company. Sales of $33.1 million were almost identical to the previous quarter, and on track to make our $130 million forecast for the year. This quarter, sales were split almost evenly aerospace and industrial. Military and commercial aircraft revenues totalled $14.5 million and space $2.2 million. The industrial total was $16.4 million. Over 40% of the industrial sales were in medical equipment, and Respironics, at $5.0 million, was the largest single account. Respironics uses our motors to power a small blower which provides air flow in sleep apnea machines. In addition, in this quarter, our shipment rate increased on slip rings, both electric and fiber optic, for use in CAT scan machines. This equipment is shipped to Philips, Hitachi and a Chinese manufacturer named Neusoft.

The sales breakdown by product is consistent with previous quarters. The sale of slip rings is 45% of the revenue, 38% is motors and the balance, or 17%, is electromechanical instrumentation, actuators and fiber optic devices.