RSTI

Rofin-Sinar Technologies, Inc. (RSTI)

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Rofin-Sinar Technologies, Inc. (RSTI)

F1Q09 (Qtr End 12/31/08) Earnings Call

February 05, 2009 11:00 AM ET

Executives

Günther Braun - President and Chief Executive Officer

Ingrid Mittelstädt - Chief Financial Officer, Executive Vice President - Finance and Administration and Treasurer

Analysts

John Harmon - Needham & Company

Charles Murphy - Sidoti & Company

Antonio Antezano - Macquarie Research Equities

Tobias Loskamp - Kepler Capital Markets

Stephen Bauer - BHF-BANK

Greg Halter - Soleil - Great Lakes Review

Mark Douglas - Longbow Research

Eggert Kuls - M.M. Warburg Bank

Thomas Wybierek - Nord Landesbank

Presentation

Operator

Welcome to Rofin-Sinar's 2009 First Quarter 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 and good morning or good afternoon to everyone. I'm here in Plymouth, in Michigan; together with Ingrid, our CFO. I hope you all got the press release containing our first quarter 2009 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 regulation of SEC, we will also include a summary of our own financial estimates for our next quarter, but not for 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 investigation and research and not place undue reliance on our estimates.

Safe Harbor Statement: Our discussion may include predictions, estimates or other information that may be considered forward-looking. While these forward-looking statements represent our best current judgment 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.

So, before I comment on the business environment we would like to do first the standard review of our performance in the quarter, ended December 31, 2008. As you have seen from our press release, we reached sales in the first quarter of 107 million, which is 27.7 million or 21% lower than any comparable quarter in fiscal 2008.

The strengthening of the U.S. dollar exchange rate decreased sales by approximately 7% or 7.8 million. So that's different to the fiscal year 2008, where we had usually a positive impact. Net income was 7.6 million or approximately 7% of net sales, is 55% lower compared to last year first quarter.

We know that the numbers are not the best, but quite satisfying, given the internal structure changes we have made in reaction to the current market conditions. Given the decline in sales of approximately 47 million from 154 million in our fourth quarter ending September 30, last year to 107 million in the first quarter, I think 7.6 million net income or 7% profitability is still very good.

The macro economic environment, which we currently face is very challenging. The financial crisis has led to significant reductions in financing for companies. Many of our industry we serve are affected and there are only few industries, which are relatively stable.

Sales in our Macro and Marking business were less impacted by the downturn, since some industries are less cyclical and solar cell business was still healthy at the beginning of the quarter.

Net sales decreased 14% over the comparable quarter to 54.6 million and was 51% of total sales. Sales of our macro business was significantly below the previous quarters. Business decreased by approximately 32% to 41.4 million, or 39% of total sales. The only exception was our low power CO2 laser business, which was on last quarter level. So also something positive.

Our component business, and you know, consists of laser diodes, active passive fibers, power supply, fiber optics increased slightly and reached 11 million, representing 10% of quarterly sales and that's thanks to last years acquisition of Nufern.

Geographical spilt; sales to Asian countries decreased by 40% to 19% of quarterly sales and reached 19.8 million. Basically all of the industries we serve were down.

The strongest sales contributor were of course, again Taiwan... or China, Taiwan, Malaysia, Korea, Japan, but on a low level. North America, as expected contributed only 18.6 million or 17% of quarterly sales. But this should not be a surprise to you, reading newspapers everyday.

Europe was responsible for the remaining 64% of quarterly sales. Sales decreased only 8% to 68.6 million compared to last year's first quarter. And I mentioned already currency fluctuations, which impacted negatively the numbers in Europe and Asia.

Our spare parts and service business decreased by approximately 26% and accounted for approximately 25% of net sales for the quarter.

Now coming to the breakdown of our quarterly laser sales by industry and of course the absolute numbers are lower compared to last year. But automotive was still on the 11% level compared to 12% in '08 first quarter; machine tool was 31% compared to 37% in '08; semi electronics was 32% versus 25% in the third quarter '08. And as I said already thanks to solar, the first half of the first quarter was pretty stable and good. Others were on the 26% level and again...

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