First Quarter Conference Call - Fiscal 2007
01 / 29 / 2007Highlights
(INTRODUCTION FOR CONFERENCE CALL)Aircraft Q1Aircraft MarginsSpace & Defense Q1Space and Defense MarginsIndustrial Q1Industrial MarginsComponents Group Q1Components MarginsMedical Devices Q1Summary of '07 GuidanceRecent Conference Calls
Our other major product lines in the Launch Vehicle and Missile business were pretty stable in this quarter. Even the Tactical Missile business got off to a very strong start. Our forecast, for the year, in Tactical Missiles was just under $14 million and the first quarter we shipped $6.7 million.
Given the strength in Tactical Missiles, in the first quarter, and the emergence of some new programs in that category, we're now increasing that forecast, for the year, by $5 million. There are small puts and takes in some of our other Space and Defense product lines that net out, so we're increasing our sales forecast for the year from $170 to $175 million, which will represent an 18% increase over fiscal '06.
Space and Defense Margins, in the quarter, were an unusually strong 12.3%. This is a reflection of strong sales volume and a very favorable product and program mix in the quarter. We had predicted margins, for the year, of around 9% and we expect that the balance of the year will tend toward that number. As a result, we're forecasting margins, for the year, of 9.5%, up from the 9% in our initial guidance.
Our Industrial Segment got a great start for '07. Sales were up 13% to $102 million. Our largest market, controls for plastics machinery, was up 7% to almost $16 million, largely the reflection of increased activity in Europe.
Test equipment is now our second largest market at about $12 million and it was up only slightly in the quarter. The Motion Simulator business was up 13% to $11 million. Metal forming continues to be a very fast-moving market. The quarterly increase was 45% to over $8 million. But in the quarter, the largest growth percentage was generated in gauge-control equipment for steel mills, an increase of 48% to almost $9 million. We had expected the demand in steel mills and turbine controls would be fairly stable over the course of this year. That is the case in turbine controls, but the steel mill business is remarkably strong and the emphasis continues to be in the Pacific, and more particularly China.
We had forecasted Industrial sales in a range from $412 to $432 million with a midpoint of $422. Looking at shipments and incoming orders in the first quarter, most of our product lines seem to be tracking to that forecast. There are two changes, though, that suggest that we need to adjust our range. In the test equipment business, we have learned of some delays and cancellations of major test equipment orders. Also, based on the order rate for the last couple of quarters, we're lowering our forecast of aftermarket sales by $4 million. The result is that we're revising our total Industrial forecast to a range from $401 million to $421 million. The midpoint of $411 million is down $11 million but it's still an 8% increase over fiscal '06.
Industrial margins of 13.2% were up nicely from last year's 12.8%. Our Industrial margins fluctuate somewhat quarter-to-quarter depending on the particular product mix in the quarter. Over the long-term, though, margins are improving as we move more towards supplying systems as opposed to selling components. As a result of the strong first quarter, we're increasing our margin forecast for the year to 12.8%, which will be a nice increase over last year's 11.8%.
Given the strength in Tactical Missiles, in the first quarter, and the emergence of some new programs in that category, we're now increasing that forecast, for the year, by $5 million. There are small puts and takes in some of our other Space and Defense product lines that net out, so we're increasing our sales forecast for the year from $170 to $175 million, which will represent an 18% increase over fiscal '06.
Space and Defense Margins
Space and Defense Margins, in the quarter, were an unusually strong 12.3%. This is a reflection of strong sales volume and a very favorable product and program mix in the quarter. We had predicted margins, for the year, of around 9% and we expect that the balance of the year will tend toward that number. As a result, we're forecasting margins, for the year, of 9.5%, up from the 9% in our initial guidance.
Industrial Q1
Our Industrial Segment got a great start for '07. Sales were up 13% to $102 million. Our largest market, controls for plastics machinery, was up 7% to almost $16 million, largely the reflection of increased activity in Europe.
Test equipment is now our second largest market at about $12 million and it was up only slightly in the quarter. The Motion Simulator business was up 13% to $11 million. Metal forming continues to be a very fast-moving market. The quarterly increase was 45% to over $8 million. But in the quarter, the largest growth percentage was generated in gauge-control equipment for steel mills, an increase of 48% to almost $9 million. We had expected the demand in steel mills and turbine controls would be fairly stable over the course of this year. That is the case in turbine controls, but the steel mill business is remarkably strong and the emphasis continues to be in the Pacific, and more particularly China.
We had forecasted Industrial sales in a range from $412 to $432 million with a midpoint of $422. Looking at shipments and incoming orders in the first quarter, most of our product lines seem to be tracking to that forecast. There are two changes, though, that suggest that we need to adjust our range. In the test equipment business, we have learned of some delays and cancellations of major test equipment orders. Also, based on the order rate for the last couple of quarters, we're lowering our forecast of aftermarket sales by $4 million. The result is that we're revising our total Industrial forecast to a range from $401 million to $421 million. The midpoint of $411 million is down $11 million but it's still an 8% increase over fiscal '06.
Industrial Margins
Industrial margins of 13.2% were up nicely from last year's 12.8%. Our Industrial margins fluctuate somewhat quarter-to-quarter depending on the particular product mix in the quarter. Over the long-term, though, margins are improving as we move more towards supplying systems as opposed to selling components. As a result of the strong first quarter, we're increasing our margin forecast for the year to 12.8%, which will be a nice increase over last year's 11.8%.
Components Group Q1
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