Question-and-Answer Session
Operator
Thank you so much. (Operator Instructions)
First question is coming from Joel Tiss with Lehman Brothers.
Joel Tiss - Lehman Brothers
Good morning. How are you doing?
James O'Leary
Hi, Joel. How are you?
Joel Tiss - Lehman Brothers
Alright. I wonder if you could give us a little bit more flavor of the change in the military business. I mean, you mentioned tough comps, but can you just give us a little bit of flavor of what the trends are, so that we can start to frame out 2008 as well.
James O'Leary
That is a very good question. I am glad you asked. The tough comps are largely due to extremely favorable absorption we had last year in the third quarter. One of our facilities in Sumter was up and running on all cylinders during what is usually a somewhat slower quarter.
As far as the trends in the business, I think it’s worth noting that our backlog in the military business is up today as compared to last year. But, some unexpected orders were booked and shipped particularly in the third quarter really benefit us with respect to absorption. But year-over-year our backlog is up in our military segment and replacement programs, particularly MRAP are coming on now.
So, we view this as more as an absorption and a timing issue, not a commentary on the health of the military business. Again, still strong, up year-over-year, and we feel very good about our position there.
Joel Tiss - Lehman Brothers
Okay. And as the follow-up question, I'm going to try to glue two together here .Can you explain a little bit more for us your changing your strategy for lower pricing to be able to get more volume? And related to that, can you also give us a sense if this growth in backlog is coming part and parcel with the lower pricing, like is the backlog going to be as profitable as the current business you have today, less or more that's what I'm trying to get at? Thank you.
James O'Leary
Well, there is absolutely nothing in this quarter that reflects a strategy of lower pricing. I think what we have said is in certain segments, and as we expand internationally, we may be willing to accept somewhat lower margin. But, that is not reflected in this quarter. There is no lower pricing. The only issue that I think stems from lower pricing per se, is a mix issue.
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