RSTI

Rofin-Sinar Technologies, Inc. (RSTI)

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Rofin-Sinar Technologies Inc. (RSTI)

F4Q08 (Qtr End 09/30/08) Earnings Call Transcript

November 6, 2008, 11:00 am ET

Executives

Gunther Braun – CEO

Ingrid Mittelstadt – CFO

Analysts

Antonio Antezano – Macquarie Equities

Charles Murphy – Sidoti & Company

John Harmon – Needham and Co.

Tobias Loskamp – Kepler Markets

Steven Kowel [ph] – BHS Bank [ph]

Greg Halter – Great Lakes Review

Presentation

Operator

Welcome to Rofin-Sinar's 2008 fourth quarter results conference call. Today's call is hosted by Mr. Gunther Braun, Chief Executive Officer and Ms. Ingrid Mittelstadt, Chief Financial Officer. Following management's comments, you will have the opportunity to ask questions. Please go ahead.

Gunther Braun

Thank you and good morning or good afternoon to everyone. I am here in Plymouth in Michigan together with Ingrid, Ingrid Mittelstadt our CFO. I hope you all got the press release containing our fourth quarter and fiscal year ’08 results. We will give you some comments about our business and performance and then we will open it up for questions.

Now before we start, I would like to make the usual statement about the information you are getting in this conference call.

Based on the fair disclosure regulations of the SEC, we will also include a summary of our own financial estimates for our next quarter and the fiscal year 2009. This guidance is only an estimate and is of course subject to all the risks and uncertainties as summarized in our Safe Harbor statement which I will read to you shortly.

I would like to encourage you to perform your own market investigations and research and not to place undue reliance on our estimates.

Safe Harbor statement, our discussions may include predictions, estimates or other information that may be considered forward-looking. While forward-looking statements represent our best current judgments on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially.

Throughout our discussions we will attempt to discuss important factors relating to our business that may affect our predictions. You may also want to review our last 10-Q and 10-K filings for a more complete disclosure of financial risks.

Okay, then let's start with the normal way how we do our conference call. Let us start with the first 12 months results.

In the last 12 months, we shipped laser systems, including service parts and components for a total of $575.3 million, which results in an increase of 20% or $95.6 million compared to fiscal year 2007.

Organically, we have grown 11% of $50.6 million. The difference in US dollar exchange rate increased sales by approximately 9% or $45 million when compared with average change rate in fiscal year ’07. Later we will discuss the exchange rate fluctuations, which will heavily impact the earnings guidance for fiscal year ’09 and Ingrid will talk more about that.

Net income in the 12 month period amounted to a record $63.8 million and represents an increase of 16% from the comparable period in fiscal year 2007. 12-month net income profitability was 11 % of sales. I think is very good, given our second quarter results, and I am quite sure you remember.

The 12-month sales allocation between macro, micro and marking, and components was 41%, 49%, and 10%.

The geographical split between Europe, US, and Asia, Europe was 51% versus 55% last fiscal year; US North America was 25% versus 23% last year; and Asia 24% versus 22% last year.

And again the driving geographical market behind our sales growth in the 12-month period was the Asian market, which increased by approximately 32% to $138.8 million. Semiconductor and electronics industry were the main reason but also supported by still reasonable shipments for our lasers to the machine tool industry.

The European markets increased by approximately 12% to $294.5 million, supported early this year mainly by the machine tool industry, and over the last quarter of course, automotive and solar cell industry, and of course, in addition component business was nice too.

The North American business increased by 26% to $132 million due to the additional sales we got from our recent acquisition, which represents approximately 9% of the increase. The other 17%, I would say half, it can be more or less attributed to the solar and semiconductor industry, and the other half is across the industries.

And we are very happy with the results achieved in North America given the overall economic climate here.

Now the breakdown of the 12 months laser sales by industry which is as follows. Automotive sub-suppliers was a healthy 11% compared to 8% in 2Q '07; the machine tools reached 33%. It is down. Last year it was 36%. Semi and electronics, PV, photovoltaic 27% versus 23% in ‘07; and others were 29% versus 33% in ’07.

Now I would like to come to the fourth quarter results and as you have seen from our press release, we had a very strong quarter with a new record in sales with $154.3 million, which is $23.8 million or 18% higher than in the comparable quarter in fiscal year 2007.

The change in dollar exchange rate mainly compared with the Euro had the effect of increasing our sales by $7.6 million. So it is less than in the previous quarter or approximately 6%. I think this is in line with some of our competitors, which had similar global sales distribution. As a result, the organic growth rate for the fourth quarter was a remarkable 12%.

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