Third Quarter Conference Call -- Fiscal 2008
07 / 25 / 2008Highlights
Recent Conference Calls
Every year that we've owned the companies that make up our Components Group, the results have exceeded our sales forecast. We're now predicting that fiscal '08 will be 19% above '07. If we take out the effect of the recent acquisitions, the sales growth is still 15%. This year we're starting '09 with a growth projection of 11%. We're projecting a $14 million increase in the aircraft business, which will be primarily driven by the Guardian System. That system and some other products will more than offset the fact that some of our commercial avionics products are at the end of their life. We're predicting continued growth in the space and defense market and in the marine market. Every year, we suggest that the marine market may have topped out and this year it's up over 40% to $43 million. For FY'09, we're projecting a 16% increase to $50 million. We're also forecasting continued sales growth of our industrial products, once again, primarily the result of the recent acquisitions. So, in total, we're forecasting $374 million in sales. We're reluctant to forecast the continuation of the current, very high level of margins. We have a budget that suggests a slight moderation to 16.5%.
Medical Devices Q3'08
In quarter three, the Medical Devices Segment got back on track. Sales of $27.6 million were up from less than $23 million in the second quarter and we're up by 27% compared to a year ago. Last year's third quarter was the first period in which we owned all the businesses that today make up our Medical Devices Segment.
Operating profit in this quarter of $3 million was over three times what we made a year ago.
Pump sales at $8.6 million were up slightly from a year ago. The ZEVEX enteral feeding pump is providing the growth and it's now 63% of total pump sales.
Sales of administration sets are also a major growth driver. Sales in the quarter of $9.2 million were up 42% from a year ago. This, of course, is the pattern that we expect in this business. As time goes by and we deliver more pumps every quarter, the installed base increases and there's increased consumption of administration sets. Growth in this quarter, though, was unusually high. You may recall that last quarter we had some set deliveries held up waiting B. Braun approval of a new set supplier so that those sales slipped into this quarter.
Sales of sensors and hand pieces are becoming an important part of our Medical Devices picture. Sales in the quarter of $5.9 million were up $2.5 million, or 74% from a year ago. The growth drivers are ultrasonic hand pieces used in cataract surgery. Both AMO and Bausch Lomb have embraced our product and they are the primary consumers of hand pieces in cataract surgery.
After the sobering experience we had in quarter two, we had revised downward our expectations for Q3 and Q4. We would have been happy with quarters that were $24 million in sales and $2 million in operating profit. Q3 came in much better than that. Based on what we know about quarter four, we're now hoping for a result almost as good as quarter three. If that occurs, then the totals for fiscal '08 will be sales of $103 million and $9.5 million in operating profit, or 9.2% of sales. That would be a marked improvement compared to the 8.2% operating profit we were projecting only 90 days ago.
Medical Devices Forecast for '09
We're expecting that fiscal '09 will be a year of continued development in our Medical Devices Segment. We're anticipating the introduction of some important new products and the development of some new customer relationships. We're forecasting a 15% growth in sales to $118 million. Most of the growth will be in the sale of administration sets made possible by the increase in our installed base of both IV and enteral feeding pumps.
The introduction of new IV pump products will generate a 21% increase in IV pump sales. However, our unit volume in enteral pumps was unusually high in '08 because our European customer, Numico, was replacing their installed base with our pump. That's pretty much complete. We also had a 5,000 pump order from Abbott that won't repeat. So, we expect a reduction in volume in enteral pumps in '09 and that will result in stable pump sales at $38 million.
Medical Devices Q3'08
In quarter three, the Medical Devices Segment got back on track. Sales of $27.6 million were up from less than $23 million in the second quarter and we're up by 27% compared to a year ago. Last year's third quarter was the first period in which we owned all the businesses that today make up our Medical Devices Segment.
Operating profit in this quarter of $3 million was over three times what we made a year ago.
Pump sales at $8.6 million were up slightly from a year ago. The ZEVEX enteral feeding pump is providing the growth and it's now 63% of total pump sales.
Sales of administration sets are also a major growth driver. Sales in the quarter of $9.2 million were up 42% from a year ago. This, of course, is the pattern that we expect in this business. As time goes by and we deliver more pumps every quarter, the installed base increases and there's increased consumption of administration sets. Growth in this quarter, though, was unusually high. You may recall that last quarter we had some set deliveries held up waiting B. Braun approval of a new set supplier so that those sales slipped into this quarter.
Sales of sensors and hand pieces are becoming an important part of our Medical Devices picture. Sales in the quarter of $5.9 million were up $2.5 million, or 74% from a year ago. The growth drivers are ultrasonic hand pieces used in cataract surgery. Both AMO and Bausch Lomb have embraced our product and they are the primary consumers of hand pieces in cataract surgery.
After the sobering experience we had in quarter two, we had revised downward our expectations for Q3 and Q4. We would have been happy with quarters that were $24 million in sales and $2 million in operating profit. Q3 came in much better than that. Based on what we know about quarter four, we're now hoping for a result almost as good as quarter three. If that occurs, then the totals for fiscal '08 will be sales of $103 million and $9.5 million in operating profit, or 9.2% of sales. That would be a marked improvement compared to the 8.2% operating profit we were projecting only 90 days ago.
Medical Devices Forecast for '09
We're expecting that fiscal '09 will be a year of continued development in our Medical Devices Segment. We're anticipating the introduction of some important new products and the development of some new customer relationships. We're forecasting a 15% growth in sales to $118 million. Most of the growth will be in the sale of administration sets made possible by the increase in our installed base of both IV and enteral feeding pumps.
The introduction of new IV pump products will generate a 21% increase in IV pump sales. However, our unit volume in enteral pumps was unusually high in '08 because our European customer, Numico, was replacing their installed base with our pump. That's pretty much complete. We also had a 5,000 pump order from Abbott that won't repeat. So, we expect a reduction in volume in enteral pumps in '09 and that will result in stable pump sales at $38 million.
© Moog Inc.
