Williams Controls, Inc. ( WMCO) F1Q2011 Earnings Call Transcript February 3, 2011 4:15 pm ET Executives Dennis Bunday – CFO, EVP and Secretary Pat Cavanagh – President and CEO Analysts Paul Johnson – Nicusa Capital Juan Noble – Taglich Brothers Peter Nitz [ph] Michael Taglich – Taglich Brothers Presentation Operator
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I will now turn the call over to our CEO, Pat Cavanagh, for his comments on the quarter.Pat Cavanagh Thank you, Dennis. Good afternoon, everyone, and welcome to our fiscal first quarter investor conference call. This morning, we released our financial results for the first quarter of fiscal 2011. Our sales for the first fiscal quarter were $13.6 million, up 15.7% over the same quarter last year. This is typically the weakest quarter of the year, because there are fewer working days and scheduled customer shutdowns. Net income for the quarter was $644,000 or $0.09 per diluted share compared to $396,000 or $0.05 per diluted share last year. From a standpoint, sales were up 57% to European truck OEMs, improving over last year’s first fiscal quarter due to higher customer build rates this year and a low base last year due truck inventory overhang and weak market conditions. Asian sales increased 49% on increased volumes in both the truck and off-road segments in China and India. As we have talked about in the past, this growth is due to increased usage of emission compliant engines in these markets. NAFTA truck sales were up 10% from the same quarter last year. Current NAFTA industry forecast are for somewhere between 200,000 and 244,000 class 8 truck shipments in calendar year 2011, up from 154,000 units in calendar year 2010. December was the fourth month in a row of strong class 8 orders. Moreover, class 8 orders in both December and January are over 25,000 each month, which results in an annual order rate of 300,000 class 8 trucks. This could point to an upside in the industry forecast in 2011, if this continues, but it still unclear until we get through the first calendar quarter. Presently, forecast for NAFTA class 8 truck production in 2012 are in the 260,000 to 310,000 unit range.
Class 5 through class 7 NAFTA medium-duty truck production reached 116,000 units in calendar year 2010 and is expect to reach 125,000 units in calendar year 2011 and 168,000 units in 2012. We believe the recent increase in truck demand is driven by rising freight demand coupled with improving trucker profits, strengthening used truck prices, easing credit conditions and the record age of the North American fleet. I think combined with everyone else’s improving confidence in economy.Dennis Bunday, Mark Koenen, and I were in Pune, India in January to celebrate the grand opening of our new manufacturing plant. We will begin production in this quarter at that facility. In attendance at our celebration were executives from several of the major Indian truck OEMs along with a number of our suppliers. Indian sales in our first fiscal quarter were almost half of our total sales to India in all of fiscal 2010. We believe we will sell over $2 million to the Indian truck OEMs in fiscal 2011 from our plant in Pune. The (inaudible) countries now account for over 60% of the total over 6-ton world truck production. And they are expected by some forecasters to grow by more 50% by 2014. As you know, we’ve been aggressively positioning Williams early in these markets to take advantage of their growth and the penetration of more emission-friendly engines that will use our electronic throttle pedals. In calendar year 2010, there were an estimated 1.1 million trucks over 6 tons produced in China, 240,000 in India and 53,000 in Russia, compared to 300,000 in North America and 291,000 in Europe. These volumes are expected to grow in 2012 to 1.2 million in China, 312,000 in India, and 102,000 in Russia, while the North American market over 6 ton is expected to reach 493,000 and in Europe, it will grow to over 550,000. I will now turn the call over to Dennis to discuss our financial performance in the quarter. Read the rest of this transcript for free on seekingalpha.com