Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Curt Woodworth - JP Morgan.
Curt Woodworth - JP Morgan
Can you talk a little bit deeper dive into the Industrial segment for fiscal 2009? Maybe what you’re seeing for Enerpac and what you’re thinking you’re going to see for Hydratight?
Do you think you can get margin expansion in that segment looking out in 2009, even though you’ve had some mix issues. I know Hydratight is a little bit lower margin; it’s probably going to grow faster. And then you also mentioned that you had some incremental costs, I think for product development and things like that this year. So, looking at your incremental margins, would you expect them to potentially be higher in 2009?
Bob Arzbaecher
But I think you are correct that when we look at 2009, our expectation would be Hydratight would grow faster core growth than Enerpac. And this quarter, they were equal, but I think our belief is, as you look forward for the next 12 months, 18 months, Hydratight would be faster. So, I think that guidance is correct.
When you talk about margins, I’d make a couple of comments. One is I don’t think we’re at a point that we want to talk about the granularity between the two businesses. They really are a single segment and that’s the way we report it with the SEC, etc.
In terms of can we grow the margin range, what I would tell you is that this segment really operates at a very high level. And our view is 200 basis points plus or minus 30% at the EBITDA range is within the circle of acceptable behavior for us. I think we saw that this quarter, where it was done a little bit from the prior year. We don’t view that negatively at all. It’s just a business that does have certain orders that are a little higher, certain mixes of businesses.
So, would I expect that we can grow it? We always are moving for continuous improvement. But if I stayed in that 28% to 32% EBITDA range for this segment, knowing that it will bounce a little bit quarter-to-quarter, I’d be happy for the year.
Andy Lampereur
The other item I would comment on, Curt, regarding margins is that we are really starting to plow more of the improvement that we’re seeing in profitability in these businesses right back into the businesses. An example is geographic expansion within Hydratight. We have moved into Norway in the last 90 or 120 days. There are those other geographic areas we will be moving into.
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