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Adept Technology Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 12, 2009 04:07PM

Adept Technology Inc. (ADEP) filed Quarterly Report for the period ended 2009-03-28. Adept Technology Inc. designs manufactures and markets robotic systems motion control and machine vision technology for global markets including automotive consumer electronics consumer goods disk drive food industrial tooling medical devices and pharmaceutical. Adept robots controllers and software are used for small parts assembly material handling and packaging. Adept intelligent automation product lines include industrial robots configurable linear modules machine controllers for robot mechanisms and other flexible automation equipment machine vision and systems and applications software. Adept Technology Inc. has a market cap of $26.8 million; its shares were traded at around $3.25 with and P/S ratio of 0.4.

Highlight of Business Operations:

In response to economic uncertainty and the more cautious outlook of our customers, we implemented a comprehensive restructuring program as part of an overall initiative to focus on generating cash flow while maintaining investment in our target markets. Beginning in the second quarter of 2009, we implemented restructuring actions that included the phase out of discontinued remanufactured robots in our services business and an associated write off of inventory; a reduction in headcount of approximately 9%; the consolidation of facilities and certain operating functions; and additional outsourcing of non-core activities. These restructuring actions were substantially completed during the second quarter of fiscal 2009, and resulted in a reduction of approximately $750,000 in our quarterly operating expense run rate in the third quarter of fiscal 2009 and going forward. Additionally, at the beginning of the third quarter of fiscal 2009, we implemented salary reductions, including a reduction of 20% for our CEO and 10% for our other executive officers. At the end of third quarter of fiscal 2009, we implemented a second phase of restructuring, which included additional pay reductions of 20% of the then current salary for our CEO and 10% for our other executive officers, an additional reduction in work force and additional tiered pay reductions for our employees in the U.S. and Singapore, and a work share program in Europe, which we expect will result in additional cost savings of up to $1.0 million per quarter. The reduction of work force was effective at end of third quarter with the pay reductions effective beginning in the fourth quarter. We expect that the benefit of these additional actions will be mostly recognized in the fourth quarter of fiscal 2009 with the exception of the Europe work share program, which will be completed by the first quarter of fiscal 2010.

Robotics segment revenues, which result from the sale of our intelligent robotics systems, vision-guidance technology and/or third party robot mechanisms, were $5.9 million for the three months ended March 28, 2009, down 54% from $13.0 million for the three months ended March 29, 2008. For the nine months ended March 28, 2009, Robotics revenues were $25.3 million, a decrease of 26% from $34.1 million for the nine months ended March 29, 2008. Lower robotics revenues in both periods were primarily the result of weaker demand from the automotive/industrial market in Germany, which has been historically stable for Adept, and from the disk drive market in Asia and the U.S. Demand from the worldwide solar market also remained weak in the third quarter while demand from Adept’s customers in the packaging market in France and the U.S. remained relatively stable.

Services and Support revenues, which result from the sale of robotics services and support as well as remanufactured robot systems, were $1.8 million for the three months ended March 28, 2009, down 44% from $3.1 million for the three months ended March 29, 2008. Services and support revenues were $7.7 million for the nine months ended March 28, 2009, a decrease of 24% from $10.1 million for the nine months ended March 29, 2008. The decrease in both periods was primarily due to lower demand for remanufactured robotics from the automotive market in Germany and from the disk drive and consumer electronics manufacturers in the U.S.

Total international sales were $5.1 million in the three months ended March 28, 2009, down 59% compared to $12.5 million in the three months ended March 29, 2008. For the nine months ended March 28, 2009, total international sales were $22.0 million, down 29% from $31.1 million in the nine months ended March 29, 2008. The decrease in both periods was driven by lower sales in the second and third quarters of fiscal 2009 from the automotive/industrial markets in Germany, the disk drive market in Asia and the European solar market, reflecting a slowdown in customer manufacturing and capital investment as a result of the recession reducing orders. Conversely, demand from the packaging market in France has remained relatively stable throughout fiscal 2009. Higher Asian revenue in the nine months ended March 28, 2009 compared with the previous year was the result of a large order for new robotic systems for the disk drive industry which we received in the first quarter of fiscal 2009. Based on current economic trends, we do not expect to receive similar orders from the disk drive industry for the foreseeable future.

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