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» Williams Controls, Inc. F3Q10 (Qtr End 06/30/10) Earnings Call Transcript
I will now turn the call over to our CEO, Pat Cavanagh, for his comments on the quarter.Pat Cavanagh Thanks Dennis. Good afternoon, everyone, and welcome to our fiscal third quarter investor conference call. Obviously it’s been a very interesting day in the market. This morning, we released our financial results for the third fiscal quarter of 2011. Our sales for the third fiscal quarter were $16.8 million, up 22% over the same quarter last year. Sales for the first nine months of fiscal 2011 increased $7 million or 18%, to $45.1 million from the comparable period last year. Net income in the third quarter was $1.5 million or $0.20 per diluted share compared to net income of $903,000, or $0.12 per diluted share for the corresponding quarter of fiscal 2010. Net income for the nine months ended June 30 th, 2011 was $2.4 million or $0.32 per diluted share compared to net income of $866,000 or $0.12 per diluted share for the same nine-month period ending in fiscal 2010. From a revenue standpoint compared to the first nine months of last year, our Asia Pacific sales were up 25%, our European sales were up 43%, and our North American sales were up 10%. Within Asia, China was up 13% and Indian sales were up a 140% from a small base, Japanese and Korean sales were also up as a result of new program wins last year. Sales in India in fiscal 2011 should easily exceed $1 million, up from full-year 2010 sales of $609,000. As of this month, we’re now in serial production for three major Indian OEMs from our new facility in Pune, India. While we remain optimistic for our growth prospects in China and India, these markets also remain highly competitive and very challenging. As it’s widely known the retail price of a new heavy truck in China or India is only a fraction of that of an equivalent truck in North America or Europe. The specifications for our products and many other components in the truck reflect the lower cost of these vehicles. While it has not been officially announced, we expect the Chinese Government will delay implementation of the new Euro 4 emission standards in China until mid 2012 from the beginning of 2012.
In China, our truck sales were down year-to-date compared to last year by 25% due to a truck inventory overhang and slower truck sales in that market. In Europe, truck sales for the first nine months were up 76% from the same period last year. And, in North America, our truck sales were up by 33% compared to last year. Our global off-highway sales were also up 16% from the record sales in this market last year.At this point, approximately 30% of our business is tied to the North American heavy truck market, so I thought I’d make a couple of comments about the outlook in this market. Calendar year-to-date through June, net Class 8 orders have totaled a 163,000 units compared to 70,000 units during the same period last year. The backlog at the end of June was over a 125,000 units and this backlog is a 142% higher than at the same time last year, and it’s at levels not seen since 2006. All of our North American customers are working hard to accelerate the build rates from the current levels. As I am sure you have heard in the truck OEM investor calls, shortages of certain components are impacting truck production. I wanted to ensure, assure our investors that our proactive approach to component sourcing combined with our lean manufacturing philosophy has resulted in the highest level of on-time deliveries to our customers in the company’s history. Current industry forecasts project an increase in daily build rates to 26% from now until the end of the calendar year. In the first six months of this year, a 114,000 Class 8 trucks were build. The forecasted production rate for the second half of the year is a 136,000 units. This would result in Class 8 total production for calendar year 2011 of nearly 250,000 units. Read the rest of this transcript for free on seekingalpha.com