RSTI

Rofin-Sinar Technologies, Inc. (RSTI)

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Rofin-Sinar Technologies, Inc. (RSTI)

Q1 2013 Earnings Conference Call

February 7, 2013 11:00 a.m. ET

Executives

Günther Braun – CEO

Ingrid Mittelstädt – CFO

Analysts

Patrick Newton – Stifel Nicolaus

Mark Douglass – Longbow Research

Mark Miller – Noble Financial Capital Markets

Jiwon Lee – Sidoti & Company

Jagadish Iyer – Piper Jaffray

Presentation

Operator

Greetings and welcome to Rofin-Sinar’s first quarter 2013 results conference call. Today’s call is hosted by Mr. Günther Braun, Chief Executive Officer, and Ms. Ingrid Mittelstädt, Chief Financial Officer. Following management’s comments you will have the opportunity to ask questions. Please go ahead.

Günther Braun

Thank you. Good morning or good afternoon to everyone. I’m here in Plymouth, Michigan, together with Ingrid, Ingrid Mittelstädt, our CFO. I hope you all got the press release containing our first fiscal quarter 2013 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 at this conference call.

Safe Harbor statement, our discussions may include predictions, estimates for other information that may be considered forward-looking. While these 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. The company disclaims any obligation to update any forward-looking statements.

Now let me start. Short overview, our 50 year commence was a very solid first quarter. This net sales order entry net income figures that exceeded our forecast. North American, Europe market continued to deliver sales at last fiscal year’s first quarter levels while sales to the Asian markets were our third highest ever. We have experienced robust demand from the Machine Tool, Automotive and Medical Device Industries. Once again consumer electronic industry including the EMS industry contributed increased revenues whereas the semiconductor industry as expected was hushed.

Now let me move to the standard review. Let me start here. As you have seen from our press release we reached sales in the first quarter of $142.2 million which is $10.7 million or 8% higher than in the comparable quarter in fiscal 2012 and approximately 4% lower compared to our first quarter fiscal year 2012. And one comment towards the end of the quarter we were able to recognize revenues from a major solar project in the mid single-digit million dollar range where inventory was already at customer side and this helped us, of course, to achieve this number.

The strengthening of the U.S. dollar exchange rate, by the way it decreased sales by approximately 1.1 million or $1.6 million. Sales in our Micro/Marking business mainly reflect a very solid solar business. Of course, the slow Semi business, good Medical Device and an outstanding Electronic business in comparison with last year first quarter. Net sales increased by 6% to $77 million and represent 54% of total sales. Sales in our Macro business increased 4% comparing to the first quarter in which $48.4 million. Macro business contributed 34% of quarterly sales. Major impact came from the Machine Tool industry, roughly $1.6 million more than last year and Automotive business while we still maintained a solid share in Welding business to key suppliers.

Our Component business increased 33% and reached $16.8 million representing 12% of quarterly fills and again it was strong quarter for our laser, laser diode business and fiber related components. So later on you will see in the order entry it’s even more encouraging.

Now coming back to the breakdown of our quarterly laser sales by industry, Automotive represented 8% versus 5% last year. Of course, outlook a little bit questionable due to Europe. Machine Tool 30%, same level than last year’s first quarter. Semiconductor, Electronics industry including solar cells, 33% versus 35% last year and Other 29% versus 30% last year.

During the first quarter we shipped a total of 1,392 lasers versus 1,065 lasers, approximately 31% more compared to last year first quarter. 438 units were from Macro application. Higher volume of lower power CO2 lasers and of course, fiber lasers, a higher volume, and 954 lasers versus 698 units from Marking and Micro applications. Higher number of units, of course, but with lower ASPs.

Now let me hand it back to or over to Ingrid, who will further comment on the financial.

Ingrid Mittelstädt

Thanks, Günter. Good morning and good afternoon to everyone. Our quarterly revenues of $142.2 million were above our expectations even under the impact of the strong U.S. dollar that reduced our quarterly sales by approximately $1.6 million. Compared to the first quarter of last fiscal year gross profit changed immaterially from 35.7% to 35.3% in the reporting quarter and this is mainly due to a different product mix.

SG&A, including intangibles, amortization for the quarter represented 18.2% of net sales in the first quarter of fiscal year 2013 compared to 19.2% in the corresponding prior year quarter. In absolute figures, SG&A increased by 0.5 million to $25.2 million for the quarter and this increase in SG&A expenses is mainly a result of increased commissions and allowance was also accounts related to the higher level of business.

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