Williams Controls, Inc. ( WMCO) F2Q2011 Earnings Call Transcript May 9, 2011 4:15 pm ET Executives Dennis Bunday – CFO Pat Cavanagh – CEO Analysts John Nobile – Taglich Brothers Paul Johnson – Nicusa Capital Michael Taglich – Taglich Brothers Scott Mackey – AAD Capital 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 second quarter investor conference call. This morning, as you know, we released our financial results for the second quarter of fiscal 2011. The sales for the second fiscal quarter were $14.8 million, up 16.9% over the same quarter last year. Sales for the first six months of fiscal 2011 increased (inaudible) or 16.3%, to 28.3 million from the comparable period last year. Our net income in the second quarter was 224,000, or $0.03 per diluted share compared to a net loss of 432,000, or $0.06 per diluted share in the corresponding quarter of fiscal 2010. Net income for the six months ended March 31, 2011 was $868,000 or $0.12 per diluted share compared to a net loss of $37,000 or $0.01 per diluted share for the same six month period ended in 2010. The results for both the quarter and six-month periods were impacted by one-time expenses for banking and legal expenses related to an acquisition that was terminated in due diligence, resolution of a long-standing legal issue related to a former employee and India start-up costs. Dennis is going to discuss these in detail later in our call. From a revenue standpoint compared to the first six months of later year, our Asian sales were up 23%, our European sales were up 43%, and our North American sales were up 7%. Within Asia, China was up 15% and India sales were up 240% from a small base, but we believe sales there will exceed $1 million this fiscal year in India. In Europe, truck sales were up 79% from the same period last year. And, in North America, our truck sales were also up by 24%, while our service business is down slightly between the six-month periods. Our global off-highway sales were also up 12% from a record year last year. Military sales, however, were down 50% compared to last year with the completion of a couple of key programs. Going forward, we’ve been selected for a new program, but the ramp-up will be later in this year.
With over 25% of our business tied to the North American heavy truck market, I thought it would be helpful to make some comments about the outlook in this market. The last three years, I’ve been talking about the weakness in this segment of our business, its impact on Williams and when is it expected to recover. With an improving freight picture, easier credit, higher used truck prices, an aging fleet and an improving economy, fleets have the confidence to place orders for new trucks to modernize their fleets.At this point, we believe the recovery in the North American market is well under way. Net truck orders in March totalled 28,900 units and it was the fifth straight month of a strong quartering pattern. The backlog at the end of March was over a 100,000 units and this backlog is a 150% higher than at the same time last year. It is at levels not seen since 2006. In addition, early indications for April show orders at over 35,000 units, which will add to this backlog of trucks. All of our North American customers are working very hard to accelerate the build rate from the current levels, but this process takes time and there are some reported component shortages that are slowing down this ramp up. We’re seeing improved volumes this quarter over the last two quarters, but I expect the second-half of this calendar year will show marked improvements over the first-half build rates. You might know that slightly under 50,000 trucks were built in the first calendar quarter of this year and, the yearly projections are for the build of 230,000 to 250,000 units. This is up from a 154,000 units in calendar year 2010. In calendar year 2012, the industry is projected to build between 290,000 and 310,000 units. Read the rest of this transcript for free on seekingalpha.com