Williams Controls, Inc. (WMCO) F4Q10 (Qtr End 09/30/2010) Earnings Call December 15, 2010 10:30 am ET Executive s Dennis Bunday - CFO Pat Cavanagh - CEO Analyst s John Nobile - Taglich Brothers Inc. Michael Taglich - Taglich Bros, Inc. Presentation Operator
We enjoyed the fifth consecutive quarter of increased sales. From our low point in the third quarter of fiscal 2009, we've seen a recovery of our worldwide markets, the results of increased penetration in the off-road market and improvement in the emerging markets.In our fourth quarter, our sales were $14.1 million, an increase of 34% over last year's fourth quarter sales of $10.5 million and up 3% from the year's third quarter. Net income for the fourth quarter was $0.07 per diluted share. For the fiscal year our sales were up 35%, as we ended the year at $52.3 million, higher than last year's $38.8 million. For the fiscal year, our earnings were $0.19 per diluted share compared to $0.27 per diluted share loss last year. During the fiscal year, our earnings were negatively impacted by the development cost for a record number of new customer programs that will reach production in the next several years, an accelerated startup of our Indian facility, high premium freight charges as a result of a rampant production ramp up by our customers combined with supplier capacity issues and a settlement of a warranty and legal issue. Dennis will go into detail on these items later in the call. We continue to enjoy positive sales trends that were established earlier in the year. These include significant sales improvements from new products and new program introductions for the off-road and military applications. Stand-alone sensors, electronic hand controls and continued increases in penetration of electronic controls in India and China. While we don't breakout revenues in individual markets, I want to share with you some relevant comparisons and market projections. In the fiscal year we won new incremental business that will contribute almost $8 million annually in full production. In addition, approximately 4 million of our sales increase in fiscal 2010 came from new products and programs.
Our established market saw a recovery almost across the board. The European truck market was up 80% for the year. Sales in Korea showed 60% improvement this year and our off-road sales increased 57% over fiscal 2009 to a record off-road sales for Williams Controls. Also in the fourth quarter we awarded a new pedal program from a leading agricultural OEM and we signed an LOI with the major Indian truck manufacturer for our new light commercial vehicle pedal.Our NAFTA truck OEM sales also showed solid results with the 21% recovery from fiscal 2009, with rising freight volumes, improved trucker profitability and the average age of class A trucks approaching seven years. The consensus points to a continued recovery of NAFTA truck bills in 2011. Although, the estimates as to the magnitude of this recovery very widely, current industry projections for calendar year 2011 are between 180 to 230 class A trucks, up from approximately 150,000 units this year. Projections for calendar year '12 and '13 are over 300,000 class A trucks, basically double of what we saw this year. We also believe calendar year '12 and '13 will show increased penetration in the emerging markets of China and India, where we are well positioned. Our sales in India in fiscal year 2010 almost doubled over the previous year. We saw this dynamic coming some time ago, and Dennis and I will be traveling to India in January, along with one of our board members to commemorate the opening of our new Pune factory, as we begin production for some of the industries leading OEMs. We also plan to use our Indian facility to leverage our worldwide engineering and software capability. In fact one of our first hires in engineering is spending time in Portland this week, familiarizing himself with our capabilities. This facility will be key to our continued growth in the Indian market. Read the rest of this transcript for free on seekingalpha.com