Adept Technology, Inc. (ADEP)

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Adept Technology (ADEP)

F2Q10 (Qtr End 12/26/09) Earnings Call

February 03, 2010 05:00 am ET


Lisa Cummins - VP Finance & CFO

John Dulchinos - President & CEO


Gerard Cohen

John Nelson



Good day ladies and gentlemen, thank you for standing by. Welcome to the Adept Technology report second quarter 2010 results conference call. During today’s presentation all parties will be in a listen-only mode.

Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded today Wednesday, February 3, 2010.

I'd now like to turn the conference over to Lisa Cummins, Chief Financial Officer. Please go ahead ma'am.

Lisa Cummins

Good afternoon everyone and thank you for joining us. As we begin today’s call, let me remind you that during the coarse of this conference call, we may make certain remarks regarding our depth 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, February 3rd, 2010.

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 30th, 2009, 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 second quarter 2010 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. Before we go to the financial results in detail, I'll provide you with a brief update on our business. Revenue declined in the second fiscal quarter driven by normal seasonal trend, but also impacted by a heavy back-end loaded order pattern among customers and a weakened supply chain that pushed deliveries out of the quarter.

We work with our suppliers to alleviate this constraint and are confident that this issue is largely behind us as we enter our fiscal third quarter. Over the real story of our second quarter is the improved visibility that is developing in our business. The order bookings in Q2, were the highest we have seen since the June 2008 quarter, although a substantial portion of this came in to late to be shipped or recognized in the quarter. Consequently our beginning backlog increased nearly $4 million from the previous quarter to the highest level since the June 2008 quarter.

Most encouraging was the fact that majority of these late bookings came from the disk drive market which indicate that this industry might as long last becoming out of its down cycle. As you know, we have stayed close to this market during a downturn locking up important design wins throughout the manufacturing process. Over the past six months we have begun to reap the benefits of this investments securing significant orders from some of the market leaders they will be fulfilled in the second half of our fiscal year.

The need for disk storage is forecast to grow at nearly a 10% compounded annual growth rate for the next several years. This compounded with a very modest capital investment strategy over the past few years have left the industry short of capacity. Adept with our advance technology and our strong design wins is poised to benefit from this investment cycle and expansion.

Back to the close of the quarter we announced that we received a $3.2 million order for high precision robots from a major international manufacture of test automation equipment out of Asia. This order is expect to be fulfilled and recognized as revenue in our third quarter.

Other positive sign in Q2 came from our services business which grew modestly and what a typically seasonally lighter revenue period. Indicating the customers are beginning to reinvest in their already installed systems for the first time in several quarters. Factory and equipment utilization are one of the leading indicators in our business. We enter Q3 with good visibility in to our near term sales and some strong signals that our customers are regaining confidence in their businesses and preparing to ramp for increase in manufacturing activity.

Our packing business continues to be a significant revenue generator for Adept. Orders for our Quattro robot were down in Q2 compared with what was a very strong Q1 reflecting some variability in the timing and size (inaudible) in this market. However orders Quattro robust in the first four weeks of Q3 have already exceeded our Q2 results with a number of programs in Europe they are starting to play out.

During the second quarter, we launched the Adept Quattro s650HS our newest Quattro robot and the first high speed parallel robot to be accepted by the USDA for meat and poultry packaging. The Quattro s650HS is designed to give food packagers the highest possible speed for raw food handling while complying with cleanliness and hygienic standards.

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