Amerigon Incorporated (ARGN) Q2 2010 Earnings Call Transcript August 4, 2010 11:30 am ET Executives Jill Bertotti – Allen & Caron Dan Coker – President and CEO Barry Steele – CFO Analysts Brett Hoselton – KeyBanc Capital Markets Steve Dyer – Craig-Hallum Rick Hoss – Roth Capital Partners Tyson Bauer – Wealth Monitors Daniel Kornblatt – Witter Asset Management Presentation Operator
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On the call today from Amerigon we have Dan Coker, President and CEO; and Barry Steele, Chief Financial Officer. Management will provide a review of the results, after which there will be a question-and-answer period.I now like to turn the call over to Dan. Good morning, Dan. Dan Coker Good morning Jill and thank you to everyone for joining us again for another Amerigon conference call. I think everyone probably saw the release this morning. We had a pretty good quarter in the second quarter. It was the fourth record quarter in a row for Amerigon, and we’re very pleased with how the results turned out. We are going to follow the same basic format we’ve tried in the past few quarters, where we will give a very high level summary of overview of operations, and then we will open the floor for questions. So, at this moment I think we will turn over to Barry, our CFO, and he will review the highlights for the quarter. Barry Steele Thank you Dan. The second quarter of 2010 turned in results for product revenue of $28.8 million. This was a very significant increase from the prior year quarter, which was $10.7 million. That is $18.7 dollar increase or 169%. We also have shown increases from the prior quarter, the sequential prior quarter from Q1, which was where we had product revenues of $24.2 million, an increase of $4.6 million or 19%. The significant increases from the prior year are primarily driven by both volume in the marketplace, by volume in the automotive marketplace, as well as impact from the new models that were launched since the second quarter of the prior year. Just to know, the US production increased during the second quarter of 2010 versus the prior year second quarter by 73%, and also the Japanese and Korea market segment production increased by about 32%. So, a lot of our increases are coming from increased volume and the improvement in automotive production worldwide.
The increases from the prior quarter, the first quarter of 2010, are primarily due to new model launches that occurred during the first and second quarter. Gross margin, we have seen improvements here for the quarter. Our gross margin percentage for the second quarter of 2010 was 30.2%. That compares to 23.6% for the prior year, and 27.5% for the first quarter of 2010, improvements of 6.6% over the prior year, and 2.7% over the first quarter of 2010. This is driven by primarily improved cost mix, fixed cost coverage on the higher revenue level, as well as some reduced material costs, primarily for Tellurium, as compared to the prior year.Moving on, our research and development expenses also saw a pretty big increase for the quarter. In the second quarter of 2010, research and development net spending was $2.9 million that represented $1.3 million or 81% increase over the prior year second quarter, and a $1.1 million or 58.6% increase over the first quarter of 2010. Much of this increase is due to the purchase of the interests of ZT Plus, where we are bearing for the expenses for that research entity for the full quarter, which was only partial in the first quarter this year, and almost nothing for the prior year. Read the rest of this transcript for free on seekingalpha.com