Analyst Conference Summary

robotics

conference date: May 13, 2013 @ 1:00 PM Pacific Time .
for quarter ending: March 30, 2013 (Q3 fiscal 2013)

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

Overview: Some glimmers of hope.

Basic data (GAAP):

Revenue was $10.9 million, up 1% sequentially from $10.8 million, but down 38% from $17.5 million in the year-earlier quarter.

Net income was negative $1.8 million, up sequentially from negative $5.2 million, but slightly down from negative $1.5 million in the year-earlier quarter.

Diluted Earnings Per Share (EPS) were negative $0.17, up sequentially from negative $0.49, but down from negative $0.16 year-earlier.

Guidance:

Not given.

Conference Highlights:

Orders began to pick up. Gross margin rose to 42.7%, up sequentially and y/y, as restructuring resulted in lower costs.

The Lynx autonomous mobile robot platform continued to generate orders in the semiconductor space and its first orders in the logistics space. The first logistics customer is a large industrial company located in the Midwest of the U.S.

Demand in Europe remained weak, but won new business in Asia and North America.

Released product improvements in the quarter focused on ease of use and connectivity.

Continues to work on reducing costs, which should reduce cash-flow break even point to $13 million per quarter. Preserving key engineering assets.

Current objectives are for customer needs to inform product road map, expand worldwide sales team, and preserver and generate cash. Believes new product releases in Q4 (June quarter) will drive sales. Launch of Linx mobile robots and revival of food packaging robots are priorities.

Adept received $1.0 million additional orders in the semiconductor space and a $1.1 million initial order through an Asian-based systems integrator partner, King Explorer. But neither the U.S. nor the Asian market has returned to historic levels. Europe provided 60% of revenue, so it is the main concern.

Service revenue increased 3% sequentially.

Adjusted EBITDA was negative $1.1 million, improved sequentially from negative $2.4 million.

Cash and equivalents balance ended at $6.7 million, down sequentially from $6.9 million, with no debt, but $7.7 million in redeemable convertible preferred stock.

Cost of revenue was $6.3 million. Gross margin $4.7 million. Operating expenses were $6.6 million, consisting of: research and development $1.8 million; selling, general and administrative $4.5 million; restructuring $0.1 million; amortization $0.1 million. Leading to an operating profit of negative $1.9 million. Interest and other income was $0.2 million. Income tax provision $0.1 million.

Stock compensation expense was $88 thousand in the quarter.

Q&A:

Product cost reduction color? As part of a classic stabilization and growth program we are looking at supply chain and product design. We are not yet predicting where margins will go.

Linx logistics purchase order? A fortune 500 company, for a single application, with the possibility of other applications in the future.

Semiconductor handling custom? Yes, it is the same customer announced in January, it is the same 22 robots.

There is additional room to reduce costs.

Linx sales initiative? We have a plan to get in front of 200 mm fabs, of which there are 54. We are planning to visit all of them, in priority order.

Is the focus still on overseas sales? Yes. Each of the three major markets, Europe, U.S., and Asia, have their own characteristics and key drivers.

Break even point timing? Won't talk about timing, but it is doable. First we will do it with our industrial products. The mobile products will come next. In Europe we will broaden the footprint in Germany and France. We will also be more aggressive in Asia, and grow the sales team in the U.S.

Earthbound Farm contract? We have completed that work. We will do work with them in the future. We are now quoting softpick and quatro to larger potential customers in the midwest. We are also looking for partners. We will own our IP and will grow organically.

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