Analyst Conference Summary


Adept Technology

conference date: February 6, 2014 @ 2:00 PM Pacific Time
for quarter ending: December 28, 2013 (Q2 fiscal 2014)

(at the time this is written)
Forward-looking statements

Overview: Continues to ramp revenues; in the black.

Basic data (GAAP):

Revenue was $14.6 million, up 7% sequentially from $13.6 million and up 35% from $10.8 million year-earlier.

Net income was $0.1 million, up sequentially from negative $0.5 million and well up from negative $5.3 million in the year-earlier quarter.

Diluted Earnings Per Share (EPS) were $0.01, up sequentially from negative $0.05 and well up from negative $0.50 year-earlier.


Company policy is not to give specific guidance.

Conference Highlights:

Continued to make progress on turnaround plans. Increased margins while investing for growth. The number one objective is to grow earnings per share.

Revenue in Europe was nearly flat in Europe y/y, but Asia nearly doubled and progress was made outside of core areas.

Service revenue was up 23% y/y. We are helping customers with advanced service programs.

Adept is releasing new products every quarter, and released 4 in the quarter. EPLC for industry standard interfaces was introduced across lines. ACE software for automation control had a new version release. STC 4200 transporter updated version for pod transfers in semiconductor clean rooms was released. Also introduced patented soft-grippers for the food space.

Mobile business for semiconductor, small flexible manufacturing, warehouse, and medical expanding and is expected to continue to expand. We are in strategic level discussions with customers in all of these markets.

The fixed robot business is around food handling, packaging, and small flexible manufacturing for loads of 7.5 pounds and below. New wins included Pepsico and another food packaging win, and a win in the automotive space.

Gross margin 46.9%, up sequentially from 46.1%. Operating expenses were significantly lower y/y.

Adjusted EBITDA was $1.1 million, up sequentially from $0.5 million, and well up from a loss of $2.4 million year-earlier.

Cash and equivalents balance ended at $5.3 million, down sequentially from $6.5 million. There is no debt, but an $8 million line of credit is available. $1.4 million cash was used in operating activities, while $0.4 was provided by stock plans. Deferred revenue was $0.5 million.

Cost of revenue was $7.75 million. Gross margin $6.8 million. Operating expenses were $6.7 million, consisting of: research and development $1.9 million; selling, general and administrative $4.8 million; amortization $61 thousand. Leading to an operating profit of $0.15 million. Foreign currency gain $0.15 million. Interest and other income and expense was was $0.0 million. Income tax $0.1 million. Redeemable convertible preferred stock accretion and allocated dividends expense $0.1 million.


End market mix in quarter? 15% to 18% of revenue was pure mobile, mainly for semiconductor and warehousing. The fixed robot revenue growth was driven by high-volume electronics and small flexible manufacturing across geographies. Service was about 22% of revenue.

Growth by region in 2014? Asia should be strong for electronics manufacturing. In Q2 the orders were repeat orders from key customers. In N. America we have made good partnerships with integrators and that is about to bear fruit. The Food Safety Administration Act passage should help us. In Europe we are doing well in Germany. In the long run we are expecting more sales in Italy and France.

Solar cell manufacturers? Some accounts still have backlog to burn off. We don't think that will be a material business in the next 2 quarters.

Mobile customer trials today? The semiconductor space, 200 mm fabs, we are in conversation with 18 of 22 fabs. In warehouse and logistics we are reading new product ideas for the space while selling into some of the biggest names in this space. We have a compelling product that is highly flexible. We are also selling into the airline vertical for food tray handling. There is also the small flexible manufacturing space, where some of our fixed robot customers are trying the mobile products.

Fixed food opportunity going forward? Our strategy is to address the needs of the customers, including software and grippers. We have penetration plans for the various tiers. We are doing business with big food names through an integrator. We believe the market is there and we need to drive into it.

Sales team in just food? One team does fixed and food, the other does mobile. We are also selling food handling robots into Europe and we have a strategy for China.

With large accounts we design for the long term. They typically take two to three robots so they can understand how they interact with one another. We typically get some requests for design changes, and for follow-on orders.

Growth vs. bottom line? Our focus is bottom line. It is the right question, but we find the cash for what we need including sales people and product development.

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Copyright 2014 William P. Meyers