Williams Controls Inc. (WMCO) F3Q2012 Results Earnings Call August 8, 2012 4:15 PM ET Executives Dennis Bunday – Chief Financial Officer Pat Cavanagh – Chief Executive Officer Analysts Matthew Berry – Lane Five Capital Management John Nobile – 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 2012 third quarter investor conference call. I’m glad so many of you could join us today. I think we have a record number of participants today. This morning we released our financial results for our fiscal third quarter that ended June 30, 2012. Sales for the quarter were $16.4 million, down 2.3% from $16.8 million reported in the comparable period last year, and down 2.7% from the second quarter of fiscal 2012. Even though sales were down 2.7% from the second quarter net income remained relatively level at $845,000. For the nine-month period sales increased $3.6 million or 8% to $48.7 million from the comparable nine-month period last year. Net income for the nine-month period was $2.8 million, up 16%, compared to $2.4 million in the comparable period last year, but it was impacted by India startup costs and higher material cost that Dennis is discussing further in his portion of the presentation. NAFTA was the primary driver of sales in the quarter, up 5% from the comparable quarter last year and 19% year-to-date. Sales in the NAFTA region were led by our commercial truck customers, which were up 13% for the quarter and 36% year-to-date compared to last year. OEM truck sales were down slightly quarter-over-quarter, however. NAFTA Class 8 production in the first half of the calendar reached 150,000 units. But based on recent weakness in new orders, the falling order backlog and higher inventory levels, production is projected to be lower in the second half of this calendar year. Current NAFTA truck production in 2012 is projected to reach 270,000 units, which is up from last year’s 255,000 trucks.
We believe, however, the near-term economic uncertainty will end later this year after the election and that will result in NAFTA Class 8 production to be similar -- at similar levels in 2013 and ’14. We also expect the Class 4 to 7 productions will be slightly higher in 2013 and ’14 due to improving construction trends in aging equipment.India sales from our new manufacturing facility in Pune are up 41% fiscal year-to-date at $1.1 million and up 43% when compared to the same quarter last year. Sequentially, quarter-over-quarter we saw 34% drop in sales to 361,000, probably due to comparison with the strong second quarter and a couple of customer shutdowns in this quarter as a result of weak truck orders. We’ve been able to implement price increases in India due to the rising material costs and we are moving forward with our local sourcing and sensor product, and as a matter of fact, we started sensor product this month in India. We expect to complete all of our local sourcing by year end and we are confidence that our startup cost in India will not be drag on our earnings in Calendar 2013. Our China sales in the third quarter were up 8% sequentially at $728,000. But we are still down year-to-date due to weak commercial truck and off-highway equipment markets. In the first six months of the year, China heavy trucks sales declined by 32% from 2011 to 371,000 vehicles. It should be noted that the top five heavy truck makers in China now have 82% market share and they all had varying degrees of sales decreases from last year. As you know China’s stimulus policy boosted the commercial truck market in 2009 and ’10, and the commercial vehicle OEMs are hoping that government -- the government will take measures in the second half of this year to boost infrastructure investment and increase truck and off-highway equipment sales, which would be an addition to the newly released trading subsidies from scrapping vehicles. Read the rest of this transcript for free on seekingalpha.com