Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Theodor Kundtz – Needham & Company.
Theodor Kundtz – Needham & Company
Could you talk a little bit about maybe what you’re seeing now in the order trends currently? Would you expect Q3 to have another positive book-to-bill ratio or can you tell that at this point?
Richard A. Southworth
It’s probably too early to tell but the trends continue certainly to be at the levels they were at, better than the average levels of last year.
Theodor Kundtz – Needham & Company
Which was what, if you could remind us? I’m not sure what that was.
Richard A. Southworth
I think the average last year was about $35 million a quarter.
Theodor Kundtz – Needham & Company
So you’re hoping to book something at or a little better than that? That’s kind of what your current sense is?
Richard A. Southworth
Yes.
Theodor Kundtz – Needham & Company
On the gross margin, Jack, you did certainly allude to it and you talked about the volume oriented thing here and what would take to kind of get these margins back into the higher 20% range, back into the 27%, 28% range? What kind of level of business would you need to do to get margins up to 28%?
John P. Freeman
Right now our model would indicate around $37 million per quarter. With the infrastructure we have in place and the production capacity that we maintain our incremental margins we think would be very, very strong for any additional revenue and so I think it would only take us to get back to say $37 million or so per quarter to get to that 28% gross margin level.
Theodor Kundtz – Needham & Company
From indication you sounded like the fourth quarter could be certainly stronger than the third given what you see now and in some of these orders it sounded like more related to the out quarters than the current one we’re in. Is that a fair statement? Do you think fourth quarter will be a stronger quarter given what you know now?
John P. Freeman
Yes, when we take a look at what our existing shippable backlog is already for the fourth quarter and compare that to historically what projecting out what our backlog would be at this point in time for projecting out to a fourth quarter we’re currently at the existing backlog is certainly much stronger than historical levels. So at this point we would think that that’s a precursor to a very good fourth quarter for us.
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