RSTI

Rofin-Sinar Technologies, Inc. (RSTI)

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Rofin-Sinar Technologies, Inc. (RSTI)

F3Q13 Earnings Call

August 1, 2013 11:00 AM ET

Executives

Günther Braun – Chief Executive Officer

Ingrid Mittelstädt – Chief Financial Officer

Analysts

Mark Douglas – Longbow Research

Patrick Newton – Stifel

Mark Miller – Noble Financial

Jagadish Iyer – Piper Jaffray

Jiwan Lee – Sidoti & Company

Presentation

Operator

Welcome to Rofin-Sinar’s Third 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 am here in Plymouth, Michigan, together with Ingrid, Ingrid Mittelstädt our CFO. I hope you all got the press release containing our third 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 statements about the information you are getting in this conference call.

Safe Harbor statements. Our discussions may include predictions, estimates or other information that maybe 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 discussion, 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.

Okay then, let’s start. We are pleased to report, solid financial results which are above our guidance. We experienced a strong quarter in sales to the machine tools and electronics industry, mainly triggered by China also sales to the semiconductor industry improved significantly on a sequential base.

Order entry in Europe was slower than expected whereas North American and Asian orders marked our best quarter during this fiscal year. So this is the somewhat condensed summary of the quarter, but let me continue now with our standard review of third quarter ended June 30, 2013.

As you have seen from our press release, we reached sales in third quarter of $139.1 million, which is $7.4 million or approximately 6% higher than in the comparable quarter in Q3 2012. It was again an interesting quarter, because the larger portion of the turnover was recognized towards the end of the quarter which helped to over achieve of analyst forecast.

Sales in our Micro Marking business mainly reflect the reasonable semi business, semiconductor business and slow solar and medical device business and improved smartcard business and a remarkable electronics business in comparison to last year’s third quarter.

Net sales increased by 1% to $62.6 million or 45% of total sales. Sales in our Macro business increased 8% compared to the third quarter 2012 and reached $37.1 million. Macro business contributed 41% to quarterly sales. The major change came from the increase in business to the machine tool industry, more than $6 million more and military business in the range of $1.7 million more, whereas automotive business declined by roughly $2 million.

And just a side note here, high power CO2 laser increased unit-wise 16% CO2 laser below 1 kilowatt 44%, and finally high power fiber laser 139% compared to last year’s third quarter talking about units. Our components business increased 15% and reached $19.4 million, representing 14% of quarterly sales. Again a good quarter for laser diodes from dealers and fiber related components from – but also beam delivery products from Optic contributed nicely.

Now coming to the breakdown of our quarterly sales by industry. Automotive last year was 11%, this year, third quarter 7%. Machine tool last year 37%, this year 41%. Semiconductor electronics, last year 24%, this year 28% and others last year 28% and this year 24% or I have to say that medical device was slower than in previous years.

During the third quarter, we shipped a total of 1364 lasers versus 1068 lasers, that’s approximately 28% or 296 lasers more compared to last year’s first quarter. And we shipped 627 versus 437 units for Macro applications and Marking and Micro applications was 737 versus 631 lasers.

Now let me hand it over to Ingrid who will further comment on the financials.

Ingrid Mittelstädt

Thanks Günther. Good morning and good afternoon to everyone. As Günther already mentioned, during the third quarter we achieved revenues of $139.1 million that represents an increase of 7.4% or 5.7% compared to the third quarter of fiscal year 2012 and were at the end higher than our expectations.

Exchange rate fluctuations positively impacted our quarterly sales by approximately $0.7 million Compared to the third quarter of last fiscal year our gross profit decreased from 37.5% of total sales to 35.5% in the reporting quarter mainly due to an unfavorable product mix $2.4 million lower service and spare parts business and higher fixed cost related to our fiber laser activities.

SG&A including intangibles, amortization represented 19.5% of net sales in the third quarter 2013 compared to 19.6% in the corresponding last fiscal year. In absolute figures, SG&A decreased by $1.2 million to $26.5 million and the increase in SG&A expenses is mainly a result of higher exhibition expenses related to the Laser Show we had in Munich, as well as an increase in the allowance for doubtful accounts and commissions. These points resulting from the higher level of revenue in the quarter.

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