Varian Inc. F2Q08 (Qtr. End 03/31/08) Earnings Call Transcript

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2008-05-20 13:37:07.0

Tags: Varian Inc.

Question-and-Answer Session

Thank you. [Operator Instructions]. We'll go first to Peter Lawson, with Thomas Weisel Partners.

Peter Lawson, PhD - Thomas Weisel Partners

Ed, in the vacuum business, what helped margins and then conversely in the instrumentation segment, what instruments hurt the margins for the quarter?

G. Edward McClammy - Senior Vice President, Chief Financial Officer and Treasurer

Yes, on the vacuum side, it had more to do with volume leverage, that business is very sensitive, their margins are very sensitive to the volume. So that was the number one driver there. A little bit product mix, but primarily the volume leverage. In scientific instruments, it didn't have as much to do with that product mix. In fact, as Garry said, product mix actually helped us both in the total company, and also had some positive effect within scientific instruments. The main thing that caused the scientific instruments margins to be down, as I had mentioned in my prepared comments, related to the activities related to all the new product introductions that Gary talked about. So, as you noticed our R&D expense was somewhat higher. That was all in scientific instruments, so to support those new products. And there was also some additional selling and marketing activities related to those new product introductions. And then the final thing that Garry and I both mentioned that impacted scientific instruments margin is just the continuing weakening of the dollar, and again we don't think it has any impact on the reported EBIT dollars. But is tail wind to the revenues and a headwind to the operating margins.

Peter Lawson, PhD - Thomas Weisel Partners

When do you the think you get through the new instrument introduction, kind of tail wind on the scientific instrument segment?

G. Edward McClammy - Senior Vice President, Chief Financial Officer and Treasurer

Yes.

Garry W. Rogerson, Ph.D. - President and Chief Executive Officer, Director

On the new products, as I mentioned, I picked on most of them there. So, they are all beginning to ship; the new LC is shipping, the new GC is shipping. The new infrared is shipping. So, those three product lines are shipping, or about to ship. They'll ship this quarter. And we do expect to get margin improvement from those product lines, no question.

Peter Lawson, PhD - Thomas Weisel Partners

And what was the backlog like for the quarter?

Garry W. Rogerson, Ph.D. - President and Chief Executive Officer, Director

 

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