Question-and-Answer Session
Operator
(Operator Instructions)Your first question comes from Sid Parakh - McAdams Wright and Ragen.
Sid Parakh – McAdams Wright Ragen
I heard you talk about you’re seeing weakness in North America, but if you look at Q4 numbers it seems like you grew 17% year over year. Can you help me reconcile what you’re seeing and how the numbers are coming up?
Douglas P. Fletcher
Yes, as you’re correctly stating, North American system sales continued very strong through the end of the fiscal year and into the fourth quarter. As we rounded the corner and came into first quarter this year is when they started to pull back some. As I said, our customers are still using waterjets.
It looks like they have good business because we’re seeing some growth in our parts business, which when they use our machines they have to continue to buy the consumable parts. It’s just that it appears that our customers may be reading some of the same headlines that everybody else is and they’re just a little bit nervous to make additional capital investments at the rate that they were doing through the full previous fiscal year.
Sid Parakh – McAdams Wright Ragen
Would you say there was any seasonal impact that benefitted Q4 or would you say that was really, no seasonal impact there?
Douglas P. Fletcher
No seasonal impact.
Sid Parakh – McAdams Wright Ragen
Can you maybe talk about strength in the other international businesses, Europe and South America, and what segments of the market are you seeing that strength in?
Douglas P. Fletcher
It’s pretty broad spread. The segments of the market, start geographically, as I mentioned earlier, we are seeing good growth in Latin America as well as in Europe. We are able to see that growth across a pretty wide variety of end user markets. I wouldn’t point out one that’s up or one that’s down in those markets other than the fact that some of the stone applications globally tend to be a little bit softer right now and the metal working tends to be a little bit stronger.
Sid Parakh – McAdams Wright Ragen
On the margin front, are you seeing more pressure on the component cost side or is that something that you think is baked into the model?
Douglas P. Fletcher
It’s all baked into the model, but we are, it’s the world we live in. There is continuing pressure on commodities. We’ve worked that in. We’ve got a global supply team that is working well and putting in contracts that give us a pretty good deal of foresight into our cost structure.
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