Question-and-Answer Session
Operator
(Operator instructions) And your first question comes from the line of Ed Shenkan of Needham & Company. Please proceed.
Samir Harish – Needham & Company
Hi, guys. Thank you for taking the call. This is Samir Harish for Ed. I just wanted to follow up on something you mentioned during the presentation, the Excel-Tech gross margin improvements. Those numbers seem quite great. I’m just wondering if you could give us just a little bit of color as to where you’ve achieved some of those gross margin improvements. Where they from manufacturing consolidation, material acquisition costs, product redesign? Any color there would be helpful.
Jim Hawkins
Samir, I think it was a combination of two things, which probably contributed equally. One was a reduction in our manufacturing costs and product mix. As we said, we de-emphasize – and as we said earlier, we de-emphasized their supply products that had a very low margin. And their device and system sales have done very well this year. So that is leading to that improvement in the gross profit.
Samir Harish – Needham & Company
Okay. And just to follow up on Excel-Tech, can you give us an update on the R&D side, for example, the CPAP products?
Jim Hawkins
The CPAP product is one that, I believe we communicated recently, basically put on the shelf shortly after we acquired the company. And I think you’re probably referring to the home – there’s a home diagnostic test and a CPAP product. The CPAP product, I think, we put on the shelf immediately when we acquired the company. The home diagnostic product, we have – we’re sort of monitoring that whole market place to determine what the home market is going to be for diagnostic sleep test. But we don’t have any of that in our revenues guidance at all. We’re just sort of monitoring that situation.
Samir Harish – Needham & Company
Okay. And I understand you have some concerns going forward due to the credit market conditions today. Have you seen any impact from that on capital spending thus far, maybe just tell us how things are tracking October thus far?
Jim Hawkins
Yes. Well we certainly don’t comment on tracking in October. That should be in our guidance. And I think you can tell by our guidance, we feel very good about our business. We are being cautious. I think it’s just prudent as they’re a lot going on and we try to take that into consideration. But we feel it’s been a very strong year. And we’re going to have a very strong Q4.
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