Adept Technology, Inc. (ADEP)
F4Q09 Earnings Call Transcript
September 2, 2009 5:00 pm ET
Lisa M. Cummins – Chief Financial Officer
John D. Dulchinos – President and Chief Executive Officer
John Nelson – State of Wisconsin Investment Board
Joey Nacurgie[ph] - State of Wisconsin Investment Board
Previous Statements by ADEP
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Lisa M. 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, September 2, 2009. 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, 2008, 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 2009 fourth quarter and year end 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 Web site. 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 D. Dulchinos
Good afternoon everyone. Before we go through the financial results in detail, I will provide you with a brief update on our business during our fourth quarter.
Revenues for the quarter increased on a sequential basis though remain substantially below previous levels. Despite continued weakness in the global economy, we are pleased that the modest growth we have experienced and believer we have seen the bottom of the downturn.
Orders for the quarter increased 30% over the March quarter with growth coming from the packaging and disc drive markets. In addition, we continued to see solid activity within the solar segment, though as we have said in the past, these wins will not translate into meaningful revenue growth until manufacturing spending increases.
The cost-cutting efforts that began in March are now in full effect. During the fourth quarter cash operating expenses declined by the full addition of $1.0 million we had set as our objective for ourselves, which represents a 16% sequential decrease.
For the full year, we reduced our fixed expense space by $1.4 million per quarter through a variety of restructuring activities and this has helped preserve the flexibility to continue to operate and invest for the future in this difficult economic period.
Given the relative strength we are beginning to see, and as the economy improves and revenues increase, we will continue to strategically invest to facilitate growth. However, we believe we will maintain the bulk of these cost savings going forward, improving margins and cash flow.
Lisa will go into more details on this, but I would like to make a few comments on the lower gross margin we are reporting today. While under [inaudible] continued to negatively impact margins, there were also some one-time write-downs of excess inventory which accounted for the majority of the decline. We expect to return to a more normalized gross margin as revenues improve throughout fiscal 2010.
Now let me go through our key markets in a little more detail. Our packaging business continues to be our strongest market as we are seeing continued demand for automated packaging solutions from the food handling and pharmaceutical industries, particularly in France. The recent global pandemic is a reminder of the importance of sanitary food handling and food manufacturers are intent on finding ways to protect their consumers, and ultimately their businesses.
Pharmaceutical companies also have increased motivation to avoid contamination and move towards automated packaging solutions as the demand for vaccines across the globe increases dramatically.
Sales of our Quattro robot remain strong, our ACE PackXpert software is now shipping with each Quattro, and continues to be a key differentiator for Adept, driving further design wins with packaging manufacturers.
The global packaging market represents an enormous opportunity for us and we are continuing to make strategic investments in order to secure a leading position in this large market.
This fall we have major marketing events planned in the U.S., Germany, and Japan, where we will be introducing a new food wade version of the Quattro robot. In addition, we have strengthened our presence in Japan, aligning with two large, established distribution partners. With these efforts, we expect to drive increased penetration into this market, the world's largest robotics market, and are confident that even with modest success we can generate a healthy growing revenue stream.