Adept Technology, Inc. (ADEP)

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Adept Technology, Inc. (ADEP)

F3Q10 (Qtr End 03/27/10) Earnings Call Transcript

April 28, 2010 5:00 pm ET


Lisa Cummins – VP, Finance & CFO

John Dulchinos – President & CEO


Chris Thomson – MindShare Capital



Good day, ladies and gentlemen; thank you for standing by. Welcome to the Adept Technology third quarter fiscal year 2010 conference call. During today’s presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today, Wednesday, April 28, 2010.

I'd now like to turn the conference over to Chief Financial Officer, Ms. Lisa Cummins. Please go ahead ma'am.

Lisa Cummins

Good afternoon everyone and thank you for joining us. As we begin today’s call, let me remind you that during the course of this conference call, we may make certain remarks regarding Adept's expectations as to future events and future financial and operational performance, plans and prospects of the company, all of which are based on the company’s position as of today, April 28, 2010.

Any such forward-looking statements involve a number of risks and uncertainties, and the company’s actual results could differ materially from those expressed in any of these forward-looking statements for a variety of reasons, including the risks described in our press release and in our Annual Report on 10-K for the fiscal year ended June 30, 2009, as well as the risks described in the company’s other SEC filings. No one should assume that any forward-looking statements made by the company remain consistent with our expectations after the date that the forward-looking statements are made.

Certain financial information that we review on today’s conference call is presented on a non-GAAP basis. The most directly comparable GAAP information and reconciliation between the non-GAAP and GAAP figures is provided in our fiscal third quarter 2010 press release, which has been furnished to the SEC on Form 8-K. The press release and all financial, statistical or operational information referred to in this conference call, including the GAAP reconciliation and explanations discussed above, is available on the Investor Relations section of our website. Following our introductory comments, we will open the call to take your questions.

I would now like to turn the call over to John Dulchinos for some opening remarks.

John Dulchinos

Thank you, Lisa, and good afternoon everyone. Before we go through financial results in detail, I'll provide you with a brief update on our business.

First, we are pleased to report that we returned to profitability during the third quarter which is a huge milestone for Adept, and one we've been working towards throughout the economic downturn. While Q3 is seasonally one of our strongest periods, our solid execution is gaining new design wins over the past several quarters as well as our success in creating much improved financial model has enabled us to reach this key objective even earlier than we anticipated.

Revenues were strong during the quarter, growing 55% sequentially and 86% over the same period of a year ago. As indicated in our second quarter conference call, in recent months we have received significant orders from the disk drive market which is beginning to reinvest in capacity after several quarters of pull back. During the recent industry downcycle, we stayed closed to this market and successfully locked up imp design wins throughout the manufacturing process.

We began to reap the benefits of this investment and are now winning and fulfilling significant orders from some of the market's top manufacturers. For example, over the past six weeks, we amassed orders of 4.1 million and 2.9 million for our high-precision robots from our customers in this market. Revenue from these orders will be recognized over the balance of calendar 2010 and is further evidence of the strong position we have maintained in this market.

While the disk drive market is often characterized for its major up and down cycles, according to (inaudible) the need for discharge is currently forecasted to grow at 10% compounded annual growth rate over the next several years. This combined with a very modest capital investment strategy over the past few years has upped the industry's shorter capacity. Adept is currently entrenched in this growing market and with our advanced technology that is uniquely able to address both cleanroom handling and assembly, we are poised to continue to benefit from the emerging cycle of investment and expansion.

We also had a strong quarter in packaging, with sales in the second up 144% sequentially and double what they were a year ago. Orders for our Quattro robot was as strong as we have seen. Coming from our growing base of food and cosmetic customers in France, food packaging customers and applications in the US and increasing packaging customers in Asia indicating that growth is beginning to build outside our initial geographic base.

As we announced in our January call, during the second quarter, we launched the Adept Quattro s650HS, our newest Quattro robot and the only high-speed parallel robot to be accepted by the USDA for meat and poultry packaging. We are pleased now to announce that we began shipping our product during Q3 and in fact sold out our production capacity for the quarter. Our Quattro robots are a high-margin product for Adept and we anticipate at least slightly stronger shipment in the fourth quarter.

We also saw March pick up in our Solar business in the third quarter, which could indicate (inaudible) investment out of India, China and Taiwan, the largest markets in this industry and where we have majority of our design wins today. The orders came from existing customers that are starting to place follow-on orders. But we don't see any – we don't see substantial near-term momentum in this market. We are well positioned to benefit in fiscal 2011 and beyond as the industry begins to invest in capacity at a more aggressive rate.

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