Perceptron, Inc. (PRCP)

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Perceptron, Inc. (PRCP)

F2Q13 Earnings Call

February 13, 2013 10:00 AM ET


Harry Rittenour – President and CEO

Jack Lowry – VP and CFO


Manish Maheshwari – THB

Eileen Segall – Tildenrow Partners



Good morning, ladies and gentlemen, and welcome to the Perceptron Incorporated Second Quarter Results for Fiscal Year 2013. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. There will be a digital rebroadcast of this call available beginning at 2:00 P.M. today. The rebroadcast can be accessed by dialing 888-203-1112 or 719-457-0820 with the passcode of 9644929.

At the request of the company, we will open the conference up for questions and answers after the presentation. (Operator Instructions) I will now turn the conference over to Mr. Harry Rittenour, President and Chief Executive Officer of Perceptron Incorporated. Please go ahead, sir.

Harry Rittenour

Thank you. Good morning and thank you for joining us. With me today are Jack Lowry, our CFO; Sylvia Smith, Controller; Mark Hoefing, Senior Vice President; and Heribert Viehweber, Vice President of Operations and Quality. A copy of our press release outlining the results for the second quarter of our FY 2013 was distributed through Marketwire yesterday. If you do not have access to it, please call Jack after this conference call and he will provide you with a copy.

In accordance with SEC rules, we want to inform you that a number of the matters we discuss today may constitute forward-looking statements as defined by SEC regulations including those concerning the company’s future results and the company’s product development efforts, among others. Actual results may differ materially from those we discuss today and involve a number of uncertainties that are detailed in the press release announcing the operating results for the second quarter of FY 2013.

Jack will now provide an overview of our second quarter and year-to-date results. Jack?

Jack Lowry

Thanks, Harry, and good morning everyone. Speaking first on an overall basis, as I indicated in our press release, we’ve experienced a very different quarterly sales pattern in the first two quarters of this year compared to fiscal 2012. And we expect to experience a different pattern of sales in the third and fourth quarters this year as well.

In fiscal 2012, our first quarter sales were very soft followed by a very strong second and third quarter sales and then followed by fairly soft fourth quarter sales. This year, we’ve seen modest, but improving sales in the first two quarters and anticipate strengthening sales in each of the third and the fourth quarters on a sequential basis.

The shift in sales patterns from year-to-year is to be expected to some extent in our business, but what I think is significant, though, is that despite these very different quarterly sales patterns, our year-to-date financial results in fiscal 2013 are very comparable to the first six months of fiscal 2012.

Our year-to-date sales are flat compared with last year. While our gross margin is up at 42.5% compared to 40.8% last year. Income from continuing operations is down by $114,000 or approximately 12% from last year. The drop in income from continuing operations this year is due in part to our decision to increase our investment in engineering R&D for Helix over last year’s levels, and because foreign exchange rates for the euro throughout the first six months this year were below the exchange rates from last year.

For the second quarter, our net sales were $13.2 million, while net income of $184,000 or $0.02 per diluted share. In the second quarter of fiscal 2012, we had net sales of $16.2 million and net income of $1.7 million or $0.20 per diluted share. In the second quarter last year, we recorded a loss from discontinued operations, net of taxes, of $375,000 or $0.05 per diluted share, principally related to the commercial products business unit, also known as CBU, that we sold in August of 2012. Our sales were approximately 19% below the second quarter of last year due principally to the strength of the quarter last year. The decrease occurred in the Americas and Asia where sales in the second quarter of fiscal 2012 were particularly strong.

Bookings in the quarter were approximately $12.1 million or 27% lower than the $16.6 million booked in the second quarter last year. We had a $2.9 million increase in bookings in Europe and Asia this year that was offset by a $7.4 million reduction in bookings in the Americas. Bookings were soft in the Americas in the second quarter this year, while they were very strong in the second quarter last year at $11 million due to several orders we received for light truck projects in the United States.

Our softer sales and bookings in the Americas and stronger sales and bookings in Europe this year are running counter to what one may expect based on the reports we see in the media of a stronger U.S. automotive market and a soft market in Europe. Our automated systems orders are driven

primarily by automotive OEM tooling purchases to produce either new or updated models and are not directly dependent on the total sales of automotive – automobiles in any market or region.

Sub-tooling purchase order we received related to a new model may lead the introduction of the new model by one to two years. The size of the orders we received may also vary pretty widely depending on several variables, such as planned production volumes, the number of models produced on the line, and the number of plants that will produce the new model. Each OEM has their own cycle for refreshing models and introducing new models, which they need to do somewhat independent of the strength of the market for new cars.

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