Analyst Conference Summary


Adept Technology

conference date: May 8, 2014 @ 2:00 PM Pacific Time
for quarter ending: March 29, 2014 (Q3 fiscal 2014)

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

Overview: Continued improvement in revenues & made it to GAAP break-even.

Basic data (GAAP):

Revenue was $15.1 million, up 3% sequentially from $14.6 million and up 38% from $10.9 million year-earlier.

Net income was $0.0 million, down sequentially from $0.1 million but up from negative $1.9 million in the year-earlier quarter.

Diluted Earnings Per Share (EPS) were $0.00, down sequentially from $0.01 but up from negative $0.17 year-earlier.


Company policy is not to give specific guidance.

Conference Highlights:

Progress in the quarter while continuing to invest in verticals including warehousing, logistics, small flexible manufacturing, semiconductor, and food handling. Order activity was strong in all markets.

Mobile business for semiconductor, small flexible manufacturing, warehouse, and medical had strong orders in the quarter.

The fixed robot business is around food handling, packaging, and small flexible manufacturing for loads of 7.5 pounds and below. Received several new orders in the quarter.

Received a follow-on order in the quarter in the Asian consumer electronics space.

New products released in the quarter including an HMI 7" touchscreen wireless peripheral for remote calling and automatic door operation for the mobile Lynx product. A new Quattro robot was released.

Gross margin 45.7%, down sequentially from 46.9%, but up 0.3 from year earlier.

Adjusted EBITDA was $1.2 million, up sequentially from $1.1 and reversing negative $1.1 million year-earlier.

Cash and equivalents balance ended at $6.6 million, up sequentially from $5.3 million. There is no debt, but an $8 million line of credit is available. Cash improved mainly from stock plans. All remaining convertible preferred stock was converted into 1.7 million shares of common stock.

Cost of revenue was $8.2 million. Gross margin $6.9 million. Operating expenses were $6.6 million, consisting of: research and development $1.8 million; selling, general and administrative $4.8 million; amortization $61 thousand. Leading to an operating profit of $0.27 million. Foreign currency gain $0.1 million. Interest and other income and expense was was $0.0 million. Income tax $0.15 million. Redeemable convertible preferred stock accretion and allocated dividends expense $0.28 million.

Service revenue grew 17% y/y.

Growth was across geographies, including Europe, but was particularly strong in Asia.


Markets by geography? In north America the momentum was good in food and small flexible manufacturing. Were are also selling mobile now. In Asia we are selling through major integrator channels and investing in China. Europe is our most mature market driven by high-volume electronics and a little bit of food. All continents are selling our mobile products now.

Current customer trials? We are having discussions with some big names. They may want modifications to products. Warehouse and logistics are important target areas.

Mix of product revenue mobile v. fixed in the quarter? Fixed grew equally by region and beat goals. Mix of mobile was flat sequentially, but we expect mobile to expand going forward.

Warehouse technology now that Kiva is with Amazon? We know who the customers are and are talking to them. Their solution was a grid system. We have an autonomous system, no grid needed. We believe we offer what people really want.

We have mobile robots in the field in full-scale production environments. They are in a variety of markets and are performing well. We have 39 robots at GlobalFoundries at one fab, in one bay.

The U.S. government is pushing food handlers to automate. We have a consultant to help us break into food customers. We are getting wins in this space, but it is through integrators. These mid-level companies are not as automated as we thought they would be. We need to show them how to save money and increase productivity. We have been selling Quattro into the food market, now we are going after mobile too.

Mobile as a % of revenue? 16% in Q3.

Other chip manufacturers besides GlobalFoundries? We have not announced other semiconductor business, but stay tuned for announcements. We are not happy with our mobile revenue; we need to do a lot more. The sales cycle is long. We are not going from 200 mm to 300 mm wafer handling until we get pulled there. To generate good earnings we need to develop volume in the 200 mm space.

How does op ex relate to increased revenue going forward? The competition looks different by region and market. We work on improving gross margins. We look to reduce costs of products and add value added products with good margins. We would think that over the long term operating expenses would not grow as fast as revenue.

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Copyright 2014 William P. Meyers