Perceptron, Inc. F1Q09 (Qtr End 09/30/08) Earnings Call Transcript

Nov.11.08 | About: Perceptron, Inc. (PRCP)

Perceptron, Inc. (NASDAQ:PRCP)

F1Q09 (Qtr End 09/30/08) Earnings Call Transcript

November 11, 2008, 10:00 am ET

Executives

Harry Rittenour – President and CEO

Jack Lowry – VP, Finance & CFO

Mark Hoefing – SVP, Industrial Business Unit

Sylvia Smith – Controller

Analysts

Alex Gavial [ph] – Barrington Research

Alice Leaves [ph] – Hill Fund [ph]

Operator

Good morning, ladies and gentlemen and welcome to the Perceptron announces first quarter results for fiscal year 2009. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. There will be a digital rebroadcast of this call available beginning at 1 PM Central Time today. The rebroadcast can be accessed by dialing 888-203-1112 or 719-457-0820 with the passcode of 7794613.

At the request of the company, we will open the conference up for questions after the presentation. (Operator instructions)

I will now turn the conference over to Mr. Harry Rittenour, President and Chief Executive Officer of Perceptron. Please go ahead, sir.

Harry Rittenour

Good morning and thank you for joining us today. With me are Jack Lowry, our CFO; Sylvia Smith, Controller; Mark Hoefing, Senior Vice President for the Industrial Business Unit; Paul Eckhoff, Senior Vice President for the Commercial Products Business Unit; and Herbert Feveber, our Vice President for Operations and Quality.

A copy of our press release, outlining the results of the first quarter of our fiscal year 2009 was distributed through Marketwire yesterday. If you do not have access to it, please call Jack after this conference call at 734-414-4816 and it will be faxed out to you.

In accordance with SEC rules, we want to inform you that a number of the matters we discuss today may constitute forward-looking statements as defined by the SEC, including those concerning the company's future results and the company's product development efforts among others. Actual results may differ materially from those we discuss today and involve a number of uncertainties that are detailed in the press release announcing the operating results for the first quarter of FY 2009.

To begin, Jack will give you an overview of our first quarter results. Jack?

Jack Lowry

Thanks Harry, and good morning everyone. Yesterday, as Harry said, we announced net sales of $19.3 million and a net loss of $32,000 or $0.00 per share for the first quarter of our fiscal year 2009 that ended on September 30, 2008. That compares to sales of $17.7 million and net income of $447,000 or $0.05 per diluted share for the quarter ended September 30, 2007.

By now, I trust you have had a chance to review our press release or our Form 10-Q that we filed yesterday. I will try to briefly touch on the financial results in our filings and some supporting information behind the numbers. As most of you know, we report our financial results in two segments; Automated Systems and Technology Products.

The Automated Systems segment includes new installations of our four Auto-X products known as AutoGauge, AutoGuide, AutoScan and AutoFit; as well as systems upgrades and additions, service and repair work, training and spare parts. Technology Products segment includes our line of commercial products and our technology component products WheelWorks, ScanWorks, and force [ph] products that we sell to value-added resellers and OEMs for incorporation into their products.

Our overall sales increased by 9% over the first quarter of fiscal year 2008. There was a 4.9% increase in Automated Systems sales, and that was primarily due to an increase in European sales and a small increase in Asian sales for the quarter, and they were partially offset by a decline in North American sales. The Technology Products segment sales increased 12.5% compared to the first quarter last year. That increase was due to growth in our commercial products and was partially offset by a decline in technology component product sales, primarily WheelWorks.

On a geographic regional basis, sales in the Americas were up due to higher sales of Technology Products, primarily the commercial products line; and that offset lower Automated Systems sales of approximately $800,000 in the Americas. We had increased sales in Europe that primarily was from Automated Systems sales with Technology Products contributing to the increase to a lesser degree. Increased Automated Systems sales in Asia were partially offset by lower Technology Products sales.

Turning to bookings, on an overall basis, we increased our new order bookings by 16.6% over the same quarter last year. There was a 16% decrease in Automated Systems bookings, principally from lower bookings in North America and Asia, and they were partially offset by an increase in European bookings. The $4.8 million increase in Technology Products, which was up 84%, was due to increases in commercial product orders. This was also the primary cause of the increase in bookings in the Americas. The decrease in Asia bookings was primarily related to Automated Systems and to a lesser extent, lower Technology Products bookings. And as you know, and we have indicated before, our level of new order bookings, particularly in Automated Systems tends to fluctuate from quarter to quarter.

Our September 30, 2008 backlog increased by 16.2% over the backlog on September 30, 2007. The $26.5 million in our backlog this past quarter is the second highest quarter ending backlog we have had in the past six years. During that time, our backlog has ranged from a low of $13.5 million at September 30, 2004 to a high of $26.6 million at March 31, 2007. The backlog for Automated Systems increased to $18.7 million at the end of this quarter from $16.8 million at the end of the first quarter last year. The increase was principally due to new systems and system upgrade orders. Backlog of technology products was $7.8 million and that compares to $6 million at the same time last year. Commercial products drove the increase, and that was partially offset by a decrease in our WheelWorks backlog.

Our gross profit margin percentage this quarter was 35.3% compared to 39.1% last year. The decline in gross profit between the periods occurred in Automated Systems and was primarily due to three factors – the first was increased costs for added personnel in Asia in anticipation of higher Automated Systems sales during the remainder of this fiscal year; second, from lower sales in North America with relatively fixed labor costs; and third, a large project that utilized outsourced materials that was bid at a lower gross margin than we normally experience. This project is a turnkey system, is a new effort for us, and it represents an expansion of the services that we offer. Harry will get into a little bit more detail on that when he makes his comments.

On the expense side, our SG&A was $4.5 million in fiscal 2009 compared to $4.2 million in the first quarter of last year; that is an increase of 6.3%. The increase largely occurred in Europe and related to higher bad debt expense, higher personnel costs, and the strength of the euro relative to the first quarter of fiscal 2008. In the first quarter of fiscal 2008, Europe had a $67,000 credit to bad debt expense and this year, in the first quarter, there was a $44,000 expense. SG&A costs in the US were flat with last year, despite having increased sales costs related to the revenue growth in our commercial products business. Overall, SG&A costs declined as a percent of revenue to 23.3% in the first quarter this year from 23.9% in the first quarter of last year.

Engineering expenses increased $106,000 overall, that is 4.8% over the same quarter of a year ago, and the increase related to higher product development costs for new commercial products within the Technology Products segment of our business. As a result of the above factors, we only had $18,000 of first quarter operating income compared to $503,000 in the first quarter of last year. While this is not acceptable on a going forward basis, it was as we expected. We controlled our operating costs in the first quarter very well, but significant cuts in our fixed directly labor force would have undermined our ability to implement systems at higher levels in the future. Based on our backlog and sales activity levels, we believe this was the right business decision to make. If we should see a decline in bid activity bookings and our backlog as we progress through the year, we will address the fixed level of the labor component in our cost of goods sold. Harry will also discuss this in his remarks.

Our balance sheet remains strong. As of September 30, 2008 we had $24 million in cash and short-term investments, no debt and shareholders’ equity of $58.3 million or $6.59 per diluted share. During the first quarter, we reduced the value of our Blue Water Trust auction rate security by $185,000 through other comprehensive income. We continue to receive full interest on the auction rate security investments however that we hold and that is received every 28 days.

We also continued to evaluate the amount of cash we have on our balance sheet. The decision whether to repurchase company stock or issue a cash dividend to our shareholders has been and will continue to be a topic of discussion with our Board of Directors. Given the tremendous uncertainty in the credit markets over the past two to three months, we believe we’ve been prudent in not taking any action to this point in time that would have reduced our cash balance.

In closing, based on what we see at this time, we continue to believe we will have a better year financially in fiscal year 2009 than we had in fiscal 2008. Harry?

Harry Rittenour

Thanks Jack for the update. We are pleased with our growth in sales, bookings, and backlogs compared to first quarter of FY 2008. This to us indicates sustained demand for our products in the face of some very challenging economic conditions.

Sales in our Technology Products segment grew nicely over the same period one year ago due to sales of the new BK5500 product we manufacture for Snap-On and that is aimed at the mechanics market. During the first quarter, we shipped the product to the United States and Western Europe. Market acceptance for this product has been excellent. We anticipate beginning to ship it to other markets later this quarter. Global sales of the new RIDGID microEXPLORER are also expected to be a strong second quarter contributor for us. We began initial shipments of the microEXPLORER in October. At the present time, we are in production ramp up stages. We anticipate reaching full manufacturing capacity in December. In addition, we recently began shipments to North America and Europe of the second generation of the SeeSnake micro product we manufacture for Ridge Tool Company. The second generation product includes both a 9.5 millimeter and a 17 millimeter imager head, and incorporates other improvements to the original SeeSnake micro.

On the expense side, our SG&A was $4.5 million in FY 2009 compared to $4.2 – sorry about that. Let me back up here to the second generation product includes both the 9.5 millimeter and 17 millimeter imager head.

On the Automated Systems side of our business, we believe Asia will show very good growth in FY 2009 despite having a fairly flat first quarter. Our backlog in Europe is up nicely compared to one year ago. Based on where it stands currently, we anticipate that Europe may be weaker against the dollar in our second through fourth quarters compared to last year and could have a dampening effect on our European sales in US dollars. We anticipate lower sales in North America than in FY 2008. The good news is that even with severely scrutinized capital budgets, our customers are still including our products in their manufacturing plans. We feel this further validates the value that our products provide to our customers.

Our operating income declined in the first quarter despite the growth we experienced in sales. We’re aggressively managing our operating expenses, but the relatively fixed labor component of cost of goods sold in Automated Systems reduced our gross margin in North America and Asia. As we mentioned earlier, Automated Systems sales were down by approximately $800,000 in the Americas compared to the same quarter last year. Sales in Asia in the first quarter were relatively flat compared to last year, while our costs for the technical personnel we now have in place were higher. Costs for technical personnel also increased in Europe because some personnel with specific skills were added over the last year to make our installations more efficient now and in the future. Finally, we undertook a large turnkey project for a customer this year that represents broader scope than our typical Automated Systems installations. Projects of this type represent a future sales opportunity for us, but since this was the first of its kind, the gross margin, as we expected, was lower than what we anticipate it will be on future orders.

As I am sure you know, the automotive market in North America deteriorated further during the first quarter. We believe it will be a difficult market for the rest of this FY as well. We anticipate the $25 billion Federal loan program to the domestic three automobile manufacturers for re-tooling programs will have a positive impact on our business. The timing and extent of the impact will depend on the timing of release of loan funds and the ultimate use of the funds by these manufacturers. The good news is our Automated Systems backlog has increased over what it was one year ago and we continue to see significant customer interest and sales activity for our products in the Asian markets.

In addition, we are monitoring our costs very carefully. We have instituted tight controls over spending and have undertaken efforts to defer or eliminate expenses. We expect our second quarter to be profitable, and therefore slightly better than the first quarter. Despite the downturn in the North American and global economies, we continue to expect double digit overall sales growth with a higher percentage of growth in operating income for FY 2009.

We will now be happy to answer any questions that you may have.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) And our first question comes from Alex Gavial [ph] from Barrington Research. Please proceed with your question.

Alex Gavial – Barrington Research

Hey, guys, how are you doing?

Harry Rittenour

Good morning, Alex. How are doing?

Alex Gavial – Barrington Research

I am all right, hanging in there.

Harry Rittenour

Good.

Alex Gavial – Barrington Research

I guess the first question would be can I say that your European sales were higher than what you guys had expected. Is that fair to say?

Harry Rittenour

Alex, we were talking about our bookings. But let me pass that over to Jack. Do you have the details on that Jack?

Jack Lowry

European sales were a little better, yes, than what we had anticipated.

Alex Gavial – Barrington Research

Would you be able provide a bit more detail or color on that? Can say – and I guess the next thought would be, with that turnkey project, was that related to a customer in Europe, Asia, North America?

Harry Rittenour

That was related to a North American customer, one of our line builder integrators that we’ve been working with.

Alex Gavial – Barrington Research

And would we expect to see more of that project costs in Q2 at all or is it done for the moment?

Harry Rittenour

This project is ramping up, it was a very significant high dollar value project for us, and it is ramping up with installation and buyoff and it will complete this quarter and we are obviously interested in closely monitoring the progress of this project. So as we move forward we will be able to consider this with other opportunities.

Alex Gavial – Barrington Research

Okay. So you do have exclusive rights to this and it’s just not the –

Harry Rittenour

Well, I don’t know if you call it exclusive rights, but it is certainly a different approach to doing business and we are out actually bidding other projects with this line builder.

Alex Gavial – Barrington Research

Okay. With Asia, I know relatively flat for this quarter, but yet you are expecting it to still be strong for the year. I wonder if you could provide any more color or detail on that, or actually any potential wins or what’s going on there?

Mark Hoefing

Sure. This is Mark Hoefing. Part of the reason that Asia was, I guess, lower than expected in Q1 was due to revenue recognition. We have orders that we have received, but we can’t recognize revenue until we accomplish certain milestones in the project implementation. So, a good chunk of the revenue we expect in Q2 – we’ve already got the orders and we are working on implementing them so that we can recognize that revenue. We also are expecting some orders, additional orders this quarter that we still should be able to ship this quarter. So, we are expecting a pretty much a continual ramp up in Asian sales for the rest of this fiscal year.

Alex Gavial – Barrington Research

And could you provide in what regions, is it more in China, Korea, and in India?

Mark Hoefing

It’s primarily China.

Alex Gavial – Barrington Research

And do you guys here – are you adding any additional employees in China or in Asia in general, or have you hit a point where you feel that you are at capacity at the moment?

Mark Hoefing

We have plans that if we continue to see the growth that we will add some additional people in Asia. We are expanding into India this year also. We’ve hired a country manager and are putting together plans to get that office established and we will hire some people there. We also had some people leave in Japan that we are planning to replace. So, there are plans for additional headcounts or replacement headcounts across Asia. As long as we continue to see the sales develop the way we think they will.

Alex Gavial – Barrington Research

I wonder if you could provide any color on the people who left Japan. I know that’s been a bit tougher area for you guys to penetrate.

Mark Hoefing

As far as why they left? Or –

Alex Gavial – Barrington Research

Yes, any –

Mark Hoefing

Well, we’ve – I guess I would rather not comment on the specifics. But it is difficult for American manufacturers to find and retain and train people in Japan. We think we have the core of a very solid team now that we will be able to build office for the future.

Harry Rittenour

And I would also like to comment that the folks that left were – had already announced their departure before we hired our new country manager, who was Japanese. So, we think the move or we believe the move that we made to put a country manager in place will pay big dividends with regard to keeping our good people.

Alex Gavial – Barrington Research

Okay. One other question. On part services and training, can you be able to quantify that for the quarter at all?

Harry Rittenour

Value added services?

Alex Gavial – Barrington Research

Yes.

Harry Rittenour

Yes, we think we can comment on value added services.

Sylvia Smith

As far as sales from the value added services for the quarter, they were $1.1 million in this quarter compared to $900,000 last year.

Alex Gavial – Barrington Research

Yes. All right. I will get back on the queue, so some other people can participate. Thanks guys.

Harry Rittenour

Thanks very much Alex.

Operator

(Operator instructions) And we do have a question from Alice Leaves [ph] from Hill Fund [ph]. Please proceed with your question.

Alice Leaves – Hill Fund

Good morning, guys.

Harry Rittenour

Good morning, Alice.

Alice Leaves – Hill Fund

Guys, I wanted to see if you could give us a little more insight on where you think sales growth will come in throughout the year? I guess, let’s start with the technology side. Would you anticipate that with the microEXPLORER, the second generation product, would you expect the sales in the first generation to tail off so that really it’s just replacement sales on the microEXPLORER? How should we think about that?

Harry Rittenour

The microEXPLORER is a unit that is significantly more capable. It is what if you would look at as comparing things it’s certainly a high level product. So, we don’t think that it is going to cannibalize to any significant extent any SeeSnake sales. It’s a much different product oriented to a different customer.

Alice Leaves – Hill Fund

Great. So then in the coming quarters, would you anticipate sales to increase sequentially than on the Technology Product side?

Harry Rittenour

Certainly, compared to quarter over quarter comparison, yes.

Alice Leaves – Hill Fund

Great. Okay. And I guess in terms of a growth rate, would you think that it would be more like 30% year over year, 40%, 50%?

Harry Rittenour

Alice, we have not traditionally disclosed growth in individual product lines like that. So, sorry.

Alice Leaves – Hill Fund

And what about the overall group?

Harry Rittenour

You mean Technology Products as a segment?

Alice Leaves – Hill Fund

Yes.

Harry Rittenour

Well we see, I mean again, what we’ve said is double digit growth and on an overall basis, and with our expectation that sales on the Automated Systems side are going to be slightly down, I think you can get an understanding what the Technology Products segment must be doing.

Alice Leaves – Hill Fund

Okay. Well great, great. And then on the gross margin side, how – you guys have identified a few factors that seem to be going away going forward. I guess maybe with this larger Asian product finishing up in the second quarter, would you anticipate the second half of the year gross margins to increase? And then I guess it’s hard for us to know how margins are moving when the Technology segment is increasing and you’ve guided before in the past that it’s a lower gross margin segment of the business for you. So, help us out on what that you have said.

Harry Rittenour

On the Technology Products side, the gross margins there are really fairly close to what they have been recently in the Automated Systems side. Going forward on Automated Systems, we are anticipating that the revenue will be at a higher run rate in future quarters and that always helps the margins because of a relatively fixed labor costs that we experienced. So, it’s our – we are anticipating that we will see some improvement in margins as we go forward.

Alice Leaves – Hill Fund

Okay. And then would it be possible to give us a flavor for magnitude of dollars, how much fixed labor could be?

Harry Rittenour

I am sorry. I missed the tail end of your question Alice.

Alice Leaves – Hill Fund

Would it be possible for you to give us a fixed labor costs number that we should – or a fixed component for the Auto group that we could think about? As sales scale down and up, so that if there is a variable component and a fixed component and if we get the percentages, then that would maybe help us think about how margins go up and down with sales.

Harry Rittenour

I don’t have that information right in front of me. I can try to do some working on that, and perhaps get back with you on it. But again, there is some variability in labor even though it is primarily fixed and we also then have the foreign exchange rate effect in Europe than can cause variability there as well. So, it might be a little difficult to pin that down what you’ve asked.

Alice Leaves – Hill Fund

Okay. And then back on the Automotive Group sales, I’m wondering, how much visibility do you guys actually have? Are you seeing any order calculations or any delays in previously made orders that your customers are giving you?

Mark Hoefing

Hi, this is Mark again. We are monitoring this very closely, and there is certainly a lot of concern in North America over what’s going on with our major customers. But we are getting direct information that the plans that we had put into our fiscal year plans had changed significantly. Now that can change very quickly. So, we are monitoring as closely as possible. There are certainly a lot of unknowns and even within the personnel we deal with at the major automotive companies. So, there is a lot of uncertainty. We just had to monitor as close as we can and then react if we do see that there is a significant change.

Alice Leaves – Hill Fund

And then typically, once a project is started, how long does that takes for something to be completed?

Mark Hoefing

From when we actually start to execute it or when we start to work on the sales process?

Alice Leaves – Hill Fund

Let’s start with the execution.

Mark Hoefing

A typical project can spread out over six to nine months. Some of them even longer from the time that we start working on it until we complete all of the services.

Alice Leaves – Hill Fund

Great, and so in the past historically have you guys been – have you – in the past downturns when do cancellation rates hit a peak for you guys, if you were thinking of the auto cycle?

Mark Hoefing

When do they hit the peak, just I guess I am not quite sure what –

Alice Leaves – Hill Fund

Well, okay. So, right now we are experiencing a down turn and so I guess there is concern in the North American market, and I am just wondering I mean I would think that CapEx spending by the auto manufacturers would be the first thing that gets cut, but how do you guys experience that when they are undergoing cuts in that CapEx Budget?

Mark Hoefing

Well, usually the last thing that they will want to cut is their new model programs, because that is how they recover. Now, obviously if they just don't have any cash, they can’t spend anything and we are seeing that potential here with some of the domestic tree. But in other cases, we have passed European automakers that were in financial trouble. They had to continue with their new model introductions and they had to be world-class quality, which means a lot of times will use our equipment. So, it is hard to say because there is dynamics in play here that we have never seen before.

Harry Rittenour

But certainly, and to Mark's point, certainly for the domestics to survive, they have to introduce new products. And as he mentioned, we have seen something similar to this in Europe although not related to the economy directly related to a particular automotive company there. So, we recognize that there are a lot of dynamics but new product introduction has to happen for these companies to recover.

Alice Leaves – Hill Fund

Great, okay thanks. And then on the – well, okay -- and then, are you guys experiencing -- are they coming back to you and asking you guys to be more cost competitive, I mean, how are you guys seeing your competition priced?

Harry Rittenour

There has been for quite a number of years, a great deal of pricing pressure from our customers and also a great deal of pricing pressure as a result of competition. Nearly every one of our customers requires multiple bids on just about anything that we are quoting on. So there's always been competition. We are seeing increased levels of competition in Europe over the last few years, but the pricing pressure has always been there, we expect that it will continue.

Alice Leaves – Hill Fund

Okay. Great. Let us see – and then on – switch over to the technology grid; in terms of sales for the BK5500, it seems that it is selling really well for you guys and with increased shipments to other countries, would you anticipate that the sales level would be the same as you have seen in the US market and Europe?

Harry Rittenour

Well, we don't know all of the elements of the European market. We have a sense for the US market because we can go out and see Snap-On trucks and we have a sense for that market. But right now, we don't have a feel for what the overseas markets will be relative to the US market. And it is just beginning. We are just starting to see shipments into those markets. So, it is a little too early to tell, but we are watching it very closely.

Alice Leaves – Hill Fund

Okay, and so in Europe it is not through the Snap-On franchise?

Harry Rittenour

It is. It is through, but it is a slightly different business model in Europe than it is in the US.

Alice Leaves – Hill Fund

Okay, guys. And then last question on the balance sheet, the working capital improvement was significant this time around, I mean would you -- is this a one-time event, how should we think about the DSOs and inventory turns going forward?

Jack Lowry

In particular, Alice can you just elaborate a little bit in terms of what you are referring to?

Alice Leaves – Hill Fund

Well, I guess on the receivables, it seems like your days outstanding went down to about 89 days in total compared to about a 100 every quarter last year, and then the inventory turns went up almost – it is a 5.9 times, which was a significant improvement from the last few quarters as well. Can we expect this to continue?

Jack Lowry

Well, I think in terms of the accounts receivable, let me take that one first, and there's always timing issues on that as to when a relatively large payment will come in and the end of the quarter and so forth. I don't see anything that is a dramatic change other than the typical type of volatility that we will see in our accounts receivable. We have very good collections, our guess is the way I would say as our two biggest customers are very timely in their payments and so again, it is just really a measuring point at the end of the quarter whether we have received the payment or not, it is not a matter of we seeing a great extension in our aging or anything like that. I think our receivables right now are in very good shape. On the inventory, we are working to looking at how to be more efficient in our inventory, and not only in the US but in particular Europe as well. So, if anything, we would hope to see inventory levels maintained or reduced over time, and so that should help the inventory turns, because we are anticipating higher sales.

Alice Leaves – Hill Fund

Okay, great. Okay, thanks guys, I will get off now. Thank you very much.

Harry Rittenour

Thanks, Alice.

Operator

Thank you. (Operator instructions) We have a question from Alex Gavial from Barrington Research. Please state your question.

Alex Gavial – Barrington Research

Hi, a few questions here. And this is one shot in the dark, the GM, what percentage of that would represent the backlog? Could you provide that at all?

Harry Rittenour

Alex, we have traditionally not provided customer specific information in that.

Alex Gavial – Barrington Research

Okay, fair enough. I just wanted to ask. Okay, with the tech products, with the new microEXPLORER, is that going to be -- I guess how's the promotional going to that, is that through RIDGID through how they did initially with the SeeSnake to the trade?

Harry Rittenour

You know, RIDGID is doing a great job with the promotions for the microEXPLORER. They have a lot of activity out on the streets, you can see it on Web sites. They also have some promotional activity going on. So, it is through their professional industrials, the grangers and things like that, the lines like that that the microEXPLORER is being distributed. There is a lot of promotion on the street, a lot of interest from their customer base as that is related to us, again, we work closely with RIDGID tool as part of the promotional rollout to make sure that we can meet their expectations.

Alex Gavial – Barrington Research

And what would be the customer base, I mean, is it going after plumbers again or is this more --?

Harry Rittenour

This is plumbers, electricians, HVAC, heating and cooling; again the higher end product, its capability of image capture. It has a feature that is called Up-is-Up and both audio capture as well, so a lot of capability that a professional would use to not only provide improved information for him, but improved information for his or her customer.

Alex Gavial – Barrington Research

Okay, and with the new SeeSnake, do you see like a big Christmas promotional going on or going to be initiated at the Home Depot, I mean, I know when it first came into the Home Depots, it wasn't really as much fanfare, I'm just curious with now the new SeeSnake how that --?

Harry Rittenour

There are a couple of things that RIDGID is considering with regard to Home Depot. Currently the follow-on unit is in the professional line, there are plans to put the follow-on unit to second generation into Home Depot. But even with the first generation units, there are some promotions that RIDGID is working on.

Alex Gavial – Barrington Research

So if I get that right, the new one isn't at the Home Depot yet?

Harry Rittenour

The new one is not yet at the Home Depot.

Alex Gavial – Barrington Research

But it will be?

Harry Rittenour

It will be.

Alex Gavial – Barrington Research

It will be. Okay, all right. Thank you.

Harry Rittenour

But there are current promotions going on or there are promotions ongoing with the current unit at Home Depot.

Alex Gavial – Barrington Research

And are those in-store promotions or are those through the Internet or flyers or how --?

Harry Rittenour

Well, there are flyers that are going on, there is also a promotion where an extension is packaged with the unit itself, so some packaging promotions as well.

Alex Gavial – Barrington Research

And have you guys -- are there any new add-ons that are going to be coming out too for the product?

Harry Rittenour

So we have – as mentioned, we have some follow-on products that we are considering and some of those are accessories.

Alex Gavial – Barrington Research

Okay, all right. Well, thank you so much.

Harry Rittenour

Thank you, Alex.

Operator

Thank you. And it looks like we have no further questions.

Harry Rittenour

Okay. Well, if there are no further questions, again, thank you very much for joining us this morning and we appreciate your questions and your continued interest in support of our company. Thanks and have a great day.

Operator

This concludes the Perceptron announces first quarter results for fiscal year 2009 conference call. Thank you very much for attending, you may now disconnect.

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