Adept Technology, Inc. (ADEP)
F4Q2010 Earnings Call Transcript
August 26, 2010 5:00 pm ET
Lisa Cummins – VP, Finance & CFO
John Dulchinos – President & CEO
John Nelson – State of Wisconsin Investment Board
Chris Thomson – MindShare Capital
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Good afternoon, ladies and gentlemen; thank you for standing by. Welcome to the Adept Technology fourth quarter and fiscal 2010 year-end financial results conference call. During today’s presentation, all parties will be in a listen-only mode.
Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded Thursday, August 26, 2010.
I will [ph] turn the conference over to Lisa Cummins, Chief Financial Officer. Please go ahead.
Good afternoon everyone and thank you for joining us. As we begin today’s call, let me remind you that during the course of this conference call, we may make certain remarks regarding Adept's expectations as to future events and future financial and operational performance, plans and prospects of the company, all of which are based on the company’s position as of today, August 26, 2010.
Any such forward-looking statements involve a number of risks and uncertainties, and the company’s actual results could differ materially from those expressed in any of these forward-looking statements for a variety of reasons, including the risks described in our press release and in our Annual Report on 10-K for the fiscal year ended June 30, 2009, as well as the risks described in the company’s other SEC filings. No one should assume that any forward-looking statements made by the company remain consistent with our expectations after the date that the forward-looking statements are made.
Certain financial information that we review on today’s conference call is presented on a non-GAAP basis. The most directly comparable GAAP information and reconciliation between the non-GAAP and GAAP figures is provided in our fiscal fourth quarter 2010 press release, which has been furnished to the SEC on Form 8-K. The press release and all financial, statistical or operational information referred to in this conference call, including the GAAP reconciliation and explanations discussed above, is available on the Investor Relations section of our website. Following our introductory comments, we will open the call to take your questions.
I would now like to turn the call over to John Dulchinos for some opening remarks.
Thank you, Lisa, and good afternoon everyone. Fiscal 2010 was a year of solid execution in which we achieved several key operational and strategic objectives. First we returned to profitability on a non-GAAP basis, and are generating positive operating cash flows. This is partly the result of a major restructuring initiative that we undertook at the onset of the global economic downturn, which resulted in an 18% reduction in annualized operating expenses and a more focused and streamlined organization.
The second half of the equation is our success in the market, gaining new design wins over the past several quarters, which has enabled us to return to quarterly revenues to pre-recession levels, and to increase our share in the global robotics market. The net effect of these achievements is a vastly improved financial model and momentum in both the model and our sales as we begin fiscal year 2011.
Revenues were strong in the fourth quarter growing 15% sequentially and 92% year-over-year. Growth was driven primarily by continued strength from our disk drive market, which is beginning to reinvest in capacity after several quarters of pullback. During the recent industry downturn, we stayed close to this market and successfully locked up important design wins throughout the manufacturing process. We have reaped the benefits of this investment by winning and fulfilling significant orders from some of the tough market’s top manufacturers during the year, and this continued in the fourth quarter.
While we expect to see some continued design wins in this market, we believe the disk drive business will decrease as a percentage of our revenues as we ramp up in our other verticals. We also have a strong quarter in packaging with orders for our Quattro robot remaining steady with near record orders last quarter. We continued to see strength coming from our growing base of food and consumer goods customers in France, and we’re also seeing our customer base in Asia continue to expand, resulting in new orders and indicating that growth is building beyond our historical geographies. And as we exited the quarter, there were indicators of increased activity in Germany, where we have a growing number of automotive and consumer products customers. We expect to see more activity here in the next few quarters.
We continue to see modest signs of growth in our solar business in the fourth quarter fuelled by follow-on orders from recent design wins in Asia. While we don’t see substantial near-term momentum in this market, our revenues are approaching pre-recession levels and we’re well positioned to benefit as the industry accelerates its investment and capacity in fiscal year 2011 and beyond.
In addition to our strong operating results, and equally significant is our recent acquisition of MobileRobots Inc. we believe this acquisition is strategically and financially a major turning point for Adept, as it not only broadens our available target market, but strengthens our ability to address and compete in our existing markets. MobileRobots provides industry-leading autonomous mobile robot solutions and software for automated guided vehicles.
In layman terms, this means that robots are able to navigate an unstructured environment, as opposed to our industry’s traditional repetitive applications that require expensive conveyors to transport products throughout the facility. Our robotic systems have improved over the past decade with increased capabilities such as our own intelligent vision guided robotic solutions that perform feature based assembly and part inspection. The robotics market is poised for explosive growth as robot capabilities expand beyond fixed industrial applications into variable environment applications.