conference date: November 4, 2014 @ 2:00 PM Pacific Time
for quarter ending: September 30, 2014 (Q1 fiscal 2015)
But I did own ADEP starting 11/05/2012 and ending 2/10/2014.
Overview: Still having problems with getting revenue traction, but put a toe in the black.
Basic data (GAAP):
Revenue was $14.4 million, up 1% sequentially from $14.3 million and up 6% from $13.6 million year-earlier.
Net income was $82 thousand, up sequentially from negative $0.4 million and also up from negative $0.5 million in the year-earlier quarter.
Diluted Earnings Per Share (EPS) were $0.01 , up sequentially from negative $0.03 and down from negative $0.05 year-earlier.
Continued to invest in strategic initiatives, but still improved bottom line. Asia and Europe doing well, needs more work in U.S., where sales were down 20% y/y. Some mobile robot customer orders in the quarter could turn into substantial business going forward.
Historically fiscal Q1 tends to have lower revenues than the rest of the year.
Outside the U.S. sales increased y/y, and in each category: fixed, mobile, and service.
Service revenue was down 3% y/y.
Mobile revenue was about 10% of total sales.
During the quarter received large orders from Europe for material handling and industrial manufacturing robots, plus food and consumer electronics markets. In Asia orders were for packaging and assembly applications for food and explosive markets. In the U.S. there was some strength selling into the medical, defense, and food industries. There were mobile orders in the U.S. as well, some of which will ship in Q2.
Gross margin was 44.7%, up sequentially from 46.3% and 46.1% y/y, due to changes in region and product mixes.
Adjusted EBITDA was $0.6 million, up sequentially from $0.3 million and up from $0.5 million year-earlier.
Cash and equivalents balance ended at $4.8 million, down sequentially from $7.6 million. There is no debt, but a $10 million line of credit is available. Inventories grew to $11.2 million, up about $1 million sequentially.
Cost of revenue was $14.4 million. Gross margin $8.0 million. Operating expenses were $6.4 million, consisting of: research and development $1.5 million; selling, general and administrative $4.8 million; amortization $61 thousand. Leading to operating income of $84 thousand. Foreign currency gain $78 thousand. Interest and other income and expense was was $0.0 million. Income tax $80 thousand.
155 employees at end of quarter.
Believes Adept's annual revenue could approach $200 million within four to six years with 45% to 50% gross margins. Needs to make investments to do this, including a new ERP system.
Orders that pushed out from Q4? We don't quantify that.
Orders from Asia that were pushed out to next quarter? In the high-volume electronic space there are two markets where we are working on new designs that have not quite come to fruition because of end customer design. We are the preferred provider, could be in current quarter, it could be quite sizeable longer term. American pushouts, one is probably for a quarter, one for 2 quarters.
Operating expense and capital expense, timing? A priority is understanding the customers, which requires more sales people. We continue to invest in new product development, spending dollars carefully there. We are gracefully rebranding the business, which also requires marketing dollars. We are on plan with spending the dollars. At the same time we reduced some expenses from a year ago.
Progress in restructuring North American sales force? One of our data points is lost orders, so we see how we can improve. The opening of the Cincinnati facility allows us to showcase all our products and solutions. We are trying to keep a high profile with customers.
Mobile, types of applications showing end market demand? We target five market verticals. We are at the forefront of automotive, where we provide full traceability at a location. These car manufactures have been trying to solve the problem of moving around parts in their factories, and need our help. Our competitors can't quite do what we can do. We need to turn that interest into actual purchase orders.
Semiconductor mobile in 2015? With warehouse, logistics, manufacturing, and semiconductor verticals, my favorite markets are warehouse and logistics. There is a lot of market share available in those. Semiconductors, there are a limited number of locations, but we have done amazing things at GlobalFoundries. The same technology can help warehouse, manufacturing and logistics companies.
What would it take to get really large mobile orders in North America? It is happening, it is an inflection point, we need to get customers to understand the ROI to get fleet sales. One problem is tailoring solutions to company's unique requirements. Companies want to do a pilot program to prove the ROI works out.
The new product adds a secure box to the mobile robot to move high value cargo.
Larger load machines? We have a good understanding of payload requirements. The 60 kg current Lynx payload is a great solution, but we are looking at larger payload capacities.
New customers in semiconductors mentioned last quarter? They have evaluated and are taking it to the next step.
300 mm semiconductor would take some time, we would do it if a customer wanted it. But unlike 200 mm fabs, the 300 mm ones are more recent and had more automation built in, so they are less of an opportunity.
Help us understand the competition? In the industrial fixed robots we are not seeing new competition entering, but there is increased price competition. In mobile Swiss Log continues to be a customer, even though they have their own products. There are always new startups in mobile. We do it better, faster, and with higher value, proactive real-time getting to a goal. We have yet to see anyone bid against us like to like.
There is a lot of patent activity in the space. We have the IP portfolio we need.
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