Adept Technology, Inc. ( ADEP)

F1Q 2012 Earnings Conference Call

November 3, 2011 5:00 PM EST

Executives

Lisa Cummins – CFO

John Dulchinos – President and CEO

Analysts

Sam Bergman – Bayberry Asset Management

Presentation

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Adept Technology first quarter 2012 results conference call.

During today's presentation, all participants are in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions).

This conference is being recorded today, November 3 rd, 2011.

It is now my pleasure to introduce our host for today, Ms. Lisa Cummins, Chief Financial Officer. Please go ahead.

Lisa Cummins

Good afternoon, everyone, and thank you for joining us. As we begin today's call, let me remind you that during the course of this conference call, we may make certain remarks regarding Adept's expectations as to future events and future financial and operational performance, plans and prospects of the company, all of which are based on the company's position as of today, November 3 rd, 2011.

Any such forward-looking statements involve a number of risks and uncertainties and the company's actual results could differ materially from those expressed in any of these forward-looking statements for a variety of reasons, including the risks described in our press release and in our annual report on 10-K for the fiscal year ended June 30 th, 2011 as well as the risks described in the company's other SEC filings.

No one should assume that any forward-looking statements made by the company remain consistent with our expectations after the date that the forward-looking statements are made.

Certain financial information that we review on today's conference call is presented on a non-GAAP basis. The most directly comparable GAAP information and reconciliation between the non-GAAP and GAAP figures is provided in our fiscal first quarter 2012 press release, which has been furnished to the SEC on Form 8-K.

The press release and all financial, statistical or operational information referred to in this conference call including the GAAP reconciliation and explanations discussed above is available on the Investor Relations section of our website.

Following our introductory comments, we will open the call to take your questions.

I would now like to turn the call over to John Dulchinos for some opening remarks.

John Dulchinos

Thank you, Lisa, and good afternoon, everyone. The results of the first quarter were strong, particularly as we begin our normally slower seasonal period with revenues growing 14% over the same period last year and flat with the fourth quarter of 2011. The increase was driven by relative strength in our core markets such as automotive, industrial, solar, consumer goods, and electronics. If we exclude disk drive revenues, revenues are up 27% compared to the first quarter of last year. Additionally, we believe the more diversified revenue streams from our acquisitions MobileRobots and InMoTx, which were not meaningfully large in the period will enable further reduction in our historical seasonal cycles in the coming years.

During the quarter, we launched our program to be exclusive supplier of autonomous hospital robots based on our MT400 mobile robots platform, which we acquired from MobileRobots to Swisslog Healthcare solutions. These robots will be used in hospitals, labs, clinics to provide on-demand delivery systems that are uniquely suited to carryout monotonous tasks typically found in these environments, increasing efficiency and improving the quality of care within the healthcare system.

In addition, we are beginning to see commercial traction with our MT400 platform solution, which given its natural feature based autonomous navigation and mapping technology can extend well beyond healthcare facilities to production facilities, clean rooms, laboratories, warehouses, distribution centers and retail outlets. We’re actively engaged with large manufacturing customers in a variety of industries focusing on vertical applications for this technology. And expect as the year progresses, we will see additional commercial enterprise level mobile robots continuing to build.

Our expectations for InMoTx also remain strong. We have recently made some aggressive changes to the operational structure of that business, including the decision to close down the facility in Denmark and consolidate resources and expertise to our headquarters here in California. We anticipate this action will result in a net savings of approximately $400,000 per quarter, the impact of which will begin to occur in the third quarter, with a full impact in fiscal Q4.

Along with the consolidation of operations, we are also refocusing our strategy to target new customers and gain penetration into the extremely large natural food handling market. Previously, InMoTx was a technology company lacked the scale and product maturity and they were somewhat restricted to addressing very customized applications for individualized customers and end products, requiring a substantial investment per program.

To remain in line with this overall strategy to address broad and diverse markets with our technology, it is crucial that we are able to replicate device and meet multiple standards and products. As a result, we are being very selective with the programs we take on ensuring that we maximize our own investment while providing the highest possible ROI to any given customer. Our pipeline is somewhat smaller as are our near-term revenue expectations. However, we’re confident that this is the right move to leverage this unique and patented method to efficiently and identically handle natural and irregularly shaped products.

As we have stated in the past, natural products represents about one-third of the total food packaging market, and today there is not a viable method of handling these products. With such a large untapped opportunity and our unsurpassed technology, we need to be certain that we’re entering a market in a way that we can scale the business.

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