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Rofin-Sinar Technologies (RSTI)
F1Q2014 Earnings Conference Call
February 06, 2014 11:00 AM ET
Günther Braun - Chief Executive Officer
Ingrid Mittelstädt - Chief Financial Officer
Patrick Newton - Stifel
Shawn Lockman - Piper Jaffray
Mark Douglas - Longbow Research
Mark Miller - Noble Financial Capital Markets
Jiwon Lee - Sidoti & Company
Previous Statements by RSTI
» Rofin-Sinar Technologies' CEO Discusses F4Q2013 Results - Earnings Call Transcript
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» Rofin-Sinar Technologies' CEO Discusses F2Q 2013 Results - Earnings Call Transcript
Following management’s comments, you will have the opportunity to ask questions. Please go ahead.
Thank you. Good morning or good afternoon to everyone. I’m here in Plymouth, Michigan and by the way it’s pretty cold outside and a lot of snow together with Ingrid, Ingrid Mittelstädt, our CFO. I hope you all got the press release containing our first quarter 2014 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, Safe Harbor statement. Our discussions may include predictions, estimates, or 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 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 with our standard review. I think you have seen that our fiscal year began within our guided range, net sales came in at lower end but net income reached the high end of our guidance due to a better gross margin and Ingrid will talk later on, on that I think the quarterly highlight was order entry which increased our ending backlog by $19.4 million quarter-on-quarter to $137.4 million.
As you have seen from our press release, we reached sales in the first quarter of $121.2 million which is $21 million or 15% lower than in the comparable quarter in fiscal 2013. The relatively low beginning backlog this $118 million indicated already a challenging quarter and together with the Christmas shutdowns of course and less book and bill business within the quarter sales came in at the lower end of our guidance.
We had experienced robust sales from the machine tool industry for our CO2 and fiber laser product. So sales to the automotive, electronics and solar industry softened.
So, let's go the sales in our micro and marking business. This mainly reflect almost now solar business, a very slow consumer electronics business, I have to say an acceptable semiconductor business, because of front end business, front end application. And last but not least the decent flexible packaging business. So, net sales decreased by 27% or $21 million to $56 million or 46% of total sales and basically electronics and solar were the 27% of decrease in sales.
Then sales in our Micro business increased 1% comparing to the first quarter and reached $49.1 million. Micro business contributed 41% to quarterly sales main driver was the machine tool industry with less units of high power CO2 lasers but offset by more units of lower power CO2 lasers and more units of high power fiber lasers. Automotive business was below last year first quarter due to less welding business at automotive sub-suppliers.
Our component business decreased 4% to $16.1 million representing 13% of quarterly sales. Main contributors were lasers diodes and products from LUFRAN and Optoscan fiber related products.
Now coming to the breakdown of our quarterly laser sales by industry, automotive was 7% compared to 8% in 2013, mentioned already less welding in metal but also in plastic. Machine tool was 40% compared to 30% in 2013, slower high power CO2, higher low power numbers and good fiber laser numbers. Semiconductor electronics was 18% versus 33% in 2013. Mentioned already almost no solar business, slower electronics and reasonable semiconductor business. And other delivered 35% compared to 29% in 2013 and there are good highlights in our flexible packaging and (inaudible) was good.
During the first quarter we shipped the total of 1,011 versus 1,392 lasers last year approximately 27% or 381 lasers less compared for last year’s first quarter. 487 versus 438 units were from macro applications. And 524 versus 954 units from marking and micro applications. And maybe you remember last year first quarter we had multiple orders for consumer electronic application and this was missing the first quarter.
Now let me hand it over to Ingrid who go further comments on the financials.
Thanks, Günther. Good morning and good afternoon to everyone. Even with revenues at the lower end of our guidance we were able to achieve gross profit margin of 34.1% that is higher than forecasted because of the more favorable product mix and deferred slight reduction of direct manufacturing cost of high power fiberlasers, as a result of the introduction of 200 watt pumping modules and Günther will give you more information about this topic later during the call.
Compared to the first quarter of last fiscal year gross profit decreased to 34.1% from 35.3% mainly due to unfavorable product mix and lower service and spare parts revenue additionally higher fixed costs related to the manufacturing and qualification of new components for our high power fiber lasers were incurred. Finally we may also recall that in Q1, 2013 we were able to recognize the revenue of a material solar project in China that help us to better absorb our fixed cost.