Rofin-Sinar Technologies' CEO Discusses F1Q2014 Results - Earnings Call Transcript

Rofin-Sinar Technologies (NASDAQ:RSTI)

F1Q2014 Earnings Conference Call

February 06, 2014 11:00 AM ET

Executives

Günther Braun - Chief Executive Officer

Ingrid Mittelstädt - Chief Financial Officer

Analysts

Patrick Newton - Stifel

Shawn Lockman - Piper Jaffray

Mark Douglas - Longbow Research

Mark Miller - Noble Financial Capital Markets

Jiwon Lee - Sidoti & Company

Operator

Welcome to Rofin-Sinar’s First Quarter 2014 Financial Results Conference Call. Today’s call is hosted by Mr. Günther Braun, Chief Executive Officer; and Ms. Ingrid Mittelstädt, Chief Financial Officer.

Following management’s comments, you will have the opportunity to ask questions. Please go ahead.

Günther Braun

Thank you. Good morning or good afternoon to everyone. I’m here in Plymouth, Michigan and by the way it’s pretty cold outside and a lot of snow together with Ingrid, Ingrid Mittelstädt, our CFO. I hope you all got the press release containing our first quarter 2014 results. We will give you some comments about our business and performance and then we will open it up for questions.

Now, before we start, I would like to make the usual statement about the information you are getting in this conference call, Safe Harbor statement. Our discussions may include predictions, estimates, or other information that may be considered forward-looking. While these forward-looking statements represent our best current judgments on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Throughout our discussion, we will attempt to discuss important factors relating to our business that may affect our predictions. You may also want to review our last 10-Q and 10-K filings for a more complete disclosure of financial risks. The company disclaims any obligation to update any forward-looking statements.

Okay then let’s start with our standard review. I think you have seen that our fiscal year began within our guided range, net sales came in at lower end but net income reached the high end of our guidance due to a better gross margin and Ingrid will talk later on, on that I think the quarterly highlight was order entry which increased our ending backlog by $19.4 million quarter-on-quarter to $137.4 million.

As you have seen from our press release, we reached sales in the first quarter of $121.2 million which is $21 million or 15% lower than in the comparable quarter in fiscal 2013. The relatively low beginning backlog this $118 million indicated already a challenging quarter and together with the Christmas shutdowns of course and less book and bill business within the quarter sales came in at the lower end of our guidance.

We had experienced robust sales from the machine tool industry for our CO2 and fiber laser product. So sales to the automotive, electronics and solar industry softened.

So, let's go the sales in our micro and marking business. This mainly reflect almost now solar business, a very slow consumer electronics business, I have to say an acceptable semiconductor business, because of front end business, front end application. And last but not least the decent flexible packaging business. So, net sales decreased by 27% or $21 million to $56 million or 46% of total sales and basically electronics and solar were the 27% of decrease in sales.

Then sales in our Micro business increased 1% comparing to the first quarter and reached $49.1 million. Micro business contributed 41% to quarterly sales main driver was the machine tool industry with less units of high power CO2 lasers but offset by more units of lower power CO2 lasers and more units of high power fiber lasers. Automotive business was below last year first quarter due to less welding business at automotive sub-suppliers.

Our component business decreased 4% to $16.1 million representing 13% of quarterly sales. Main contributors were lasers diodes and products from LUFRAN and Optoscan fiber related products.

Now coming to the breakdown of our quarterly laser sales by industry, automotive was 7% compared to 8% in 2013, mentioned already less welding in metal but also in plastic. Machine tool was 40% compared to 30% in 2013, slower high power CO2, higher low power numbers and good fiber laser numbers. Semiconductor electronics was 18% versus 33% in 2013. Mentioned already almost no solar business, slower electronics and reasonable semiconductor business. And other delivered 35% compared to 29% in 2013 and there are good highlights in our flexible packaging and (inaudible) was good.

During the first quarter we shipped the total of 1,011 versus 1,392 lasers last year approximately 27% or 381 lasers less compared for last year’s first quarter. 487 versus 438 units were from macro applications. And 524 versus 954 units from marking and micro applications. And maybe you remember last year first quarter we had multiple orders for consumer electronic application and this was missing the first quarter.

Now let me hand it over to Ingrid who go further comments on the financials.

Ingrid Mittelstädt

Thanks, Günther. Good morning and good afternoon to everyone. Even with revenues at the lower end of our guidance we were able to achieve gross profit margin of 34.1% that is higher than forecasted because of the more favorable product mix and deferred slight reduction of direct manufacturing cost of high power fiberlasers, as a result of the introduction of 200 watt pumping modules and Günther will give you more information about this topic later during the call.

Compared to the first quarter of last fiscal year gross profit decreased to 34.1% from 35.3% mainly due to unfavorable product mix and lower service and spare parts revenue additionally higher fixed costs related to the manufacturing and qualification of new components for our high power fiber lasers were incurred. Finally we may also recall that in Q1, 2013 we were able to recognize the revenue of a material solar project in China that help us to better absorb our fixed cost.

Coming to SG&A expenses including intangibles amortizations for the quarter that represented 21.5% of net sales in the first quarter of fiscal year. 2014 compared to 18.2% in the corresponding prior year quarter, in absolute figures, SG&A increased by $0.2 million to $25.4 million for the quarter mainly due to the impact of the exchange rate fluctuations amounting to $0.5 million but partially offset by lower selling expenses resulting from the lower revenue levels mainly a decrease in commissions and reduced allowances for (inaudible).

R&D expenses for the first quarter amounted to $11.5 million or 9.5% of total revenues compared to $11 or 7.7% of total sales in the comparable period of fiscal 2013. Quarter gross spending was $12 million in the reporting quarter compared to $11.3 million in Q1, 2013.

The increase in R&D expenses is mainly due to the impact of exchange rates fluctuation and the main R&D activities are related to the expansion of our fiber, laser and ultrashort pulse laser product portfolio on the manufacturing cost reduction program for high power fiber lasers.

Other income, expense. The quarterly net other expense amounted to $0.2 million compared to $0.4 million in the comparable period of fiscal year 2013. The decrease in other expense mainly relates to lower net exchange losses generated during the reporting quarter partially offset by higher interest expense. Our effective tax rate on income before income taxes and minority interest for the first quarter was 35.4% compared to 30.7% for this first period last fiscal year. This higher effective tax rate is the result of the generation of taxable income mainly in countries with higher tax rates and the impact of exchange in their effective tax rate in Finland.

So it was a onetime impact here. Even at this low business level and the negative impact of the exchange rate fluctuations that reduced our net income by $1.2 million we are able to manage our operating expenses and manufacturing costs and generate net income at the high end of our guidance. Net income for the first quarter amounted to $2.2 million and resulted in diluted earnings per share of $0.08 based on $28.3 million weighted average shares outstanding.

Now coming to the balance sheet, the weakening of the U.S. dollar mainly against the euro, comparing the exchange rate from December 31st versus September 30, 2013 resulted in a change of approximately 1.6%, but other currencies like the Japanese yen had a fluctuation of approximately 8% in the same period. Therefore the impact on the balance sheet positions could be different depending on the geographical distribution of the corresponding balances.

Due to the lower level of business, trade accounts receivables decreased by $14.5 million compared to last fiscal year and amounted to $96.2 million at December 31, 2013. The impact of exchange rates fluctuations was to increase accounts receivable by $0.6 million and the days sales outstanding is unchanged at 72 days compared to last fiscal year.

Net inventory increased by approximately $1.2 million to $199.6 million. During Q1 of fiscal year 2014, inventory increase by $2.1 million due to the impact of change rate fluctuations and was partially offset by a decrease, mainly in finished goods. Based on the cost of goods sold figures, inventory turned approximately 1.6 times.

Now, I would like to give you some information related to our cash flow. Cash and short-term investments increased by $7.6 million to $144.6 million during the first quarter of fiscal year 2014 and the impact of exchange rate fluctuations was to increased cash by $1.5 million. During the first quarter, the company generated $5.1 million from its operating activities and used $11.5 million in investing activities, mainly due to net purchases of short-term investments of $9.6 million and capital expenditures of $2 million. $1.1 million were provided by the company in financing activities, mainly due to the increase of short-term debt.

Share buyback program, as mentioned in our press release, the Board of Directors yesterday authorized the company to initiate a share buyback program of up to 25 million over the next 12 months ending February 10, 2015 subject to market conditions. The shares may be repurchased from time-to-time in open market transactions or privately negotiated transactions at the company’s discretion.

Now, coming to our earnings guidance. As a result of the backlog situation, our current market judgment and the global economic environment, we want to give you the following guidance of the financial performance of the second quarter of fiscal year 2014.

Due to the Chinese New Year and taking into account the lead time of the orders recorded in the backlog, the company currently forecasts revenue for the second in the range of $123 million to $128 million. We estimate gross profit for the second quarter in the range of 33% to 35% of net sales. Period expenses including intangible amortization are approximately 30% of net sales. Income before income taxes and minority interest between 3% and 4% of net sales and the effective tax rate, depending mainly on the overall mix of results in the different countries and the non-deductible expenses for tax purposes should be in the range of 32% to 33%. Intangible amortization and fixed assets depreciation are estimated between 3% and 3.5% of net sales. This guidance is only an estimate and again subject to all the risk of our Safe Harbor statement.

Thanks for listening and let me hand it back to Günther.

Günther Braun

Okay. Thanks, Ingrid. Let me update you on some other important developments and as you have heard from Ingrid, the guided sales for the second quarter of the fiscal year is in $123 to $128 million and maybe you expected a higher sales number based on the beginning backlog but this time we had more orders with longer lead times in the micro and macro business, of course persistent and we should see them recognized more towards the third quarter.

Our backlog end of December has been due to the strong order entry in Q1 increased to $137.4 million which is of course a solid base for this fiscal year. Current backlog includes approximately $53 million for macro business, approximately $71 million for micro and marking business and approximately $13 million plus for components.

As I mentioned already lead times of systems to automotive sub-suppliers and machine tool industries are somewhat the longer compared with our historical average. Quarterly order entry was $140.6 million, great starting point for the first year, taking also into account that the first quarter was roughly 11 week fiscal quarter due to the Christmas holidays and some shutdowns.

Order entry in North America increased 2%, in Europe 14% but on the other side, Asia decreased 14% compared to first quarter 2013. North American order entry was mainly influenced by solid orders in marking from the medical device and automotive industries; in micro and macro, it was mainly machine tool and medical device.

Asian order numbers decreased, mainly due to slow bookings in consumer electronics in semiconductor business, but also machine tool business as predicted was below previous quarters. As always, Chinese New Year, which started last weekend will be a sort of break point and let’s hope that our Chinese friends had some relaxing days and come back reloaded for improved business condition.

European orders increased due to bookings within the automotive industry for certain micro applications, a larger booking for a consumer electronic application with final installation in Asia as well as solid demand across most of the industries we serve.

In summary, we could say increased orders in Europe offset a further decrease in demand in Asia whereas North America continued to place orders at the same levels as the first quarter of the last fiscal year. On sequential basis, order entry increased by $17.1 million or 14% to this $140.6 million.

Now coming to the outlook by our main industries, let’s start with machine tool. Therefore high power laser to the machine tool industry, we are still not clear on the direction in China. We need to watch the current environment. For Europe and U.S., we expect stable demand with slight upside potential.

The low powers or lower power CO2 laser business is expected to grow as in the past and dominates of course as you know, organic material processing application. Last quarter started -- or stated that we believe to see higher order entry in Q1 due to timing of OEM order placements and it happens so it was a strong quarter in order entry and the outlook is really positive.

On automotive and sub-suppliers, we turned the good project base into orders in Q1, still good project activities in our areas of application from marking to welding of all kind of materials including scribing and drilling project to sub-suppliers and we expect good order entry from these businesses.

Then coming to semiconductor, there is a split opinion of what’s going on, on our side. Backend marking of course could be better, other activities in front-end like this ITBT milling projects are in the pipeline where we have some potential to close orders, but still somehow I would say not clear in the direction.

To electronics or consumer electronics, there the project base is good. There are new opportunities for the laser manufacturer of course also when you read the press; I think you all know that. Main applications are marking or cutting of different material like glass, sapphire plastic or metal and of course still spot welding and of course see who wins then the awards at the end of the day.

Coming to solar, no real news, we expect some business for efficiency increase of solar cells and also waiting for new project in China. On the efficiency increase we see some possible bookings in this quarter.

Medical device is also interesting. U.S. business not yet back, but I would say solid still somewhat impacted by the medical device sales tax. As you know, marking application should also increase due to the new laws requiring tracking. European demand is stable, Asian activities, I think will grow. And by the way next week there is the MD&M Show in Anaheim which should give us a better fuel of course of the outlook in this industry.

Then last but not least, military and defense. Of course it depends mainly on U.S programs, but I would say on our side outlook has improved and it is likely to see more activities compared to last year on a mid-term basis. So, bottom-line for us is positive.

That was the outlook of our main industries and of course now an update on our fiber laser activities. You've heard it already, we moved in production to 200 watt pumping modules and 1.5 kilowatt fiber laser modules, means we have a new 1.5 kilowatt fiber laser module to offer and the 3, 4 and 6 kilowatt fiber lasers had seen and will see cost savings.

We are on track with the development and testing of our fiber laser modules and combiners to increase output power for fiber laser [box] to 2 kilowatt. We have done for us lifetime test started last year in December. And such tests delivered good I would say even say encouraging results.

On our AP activities, there we had a certain hurdle. We had the repayment for our own MDE AP reactor means the device was down for some weeks and it’s back now in working condition, but the result is a delay of let’s say two to three months in this project. The good thing is that this hurdle does not stop the activity to qualify the next duration of 2 kilowatts fiber laser modules. And this will allow us as you all know 2 kilowatt fiber laser out of one box or out of one building.

Then of course we realized sales with fiber laser related products in the first quarter of $17 million and the order entry was $18.6 million, higher power fiber laser units increased 24% compared to last year’s first quarter and order entry approximately 27% higher. And we have still a nice backlog ending December was 274 units with close to $31 million and approximately 52% of this dollar backlog was for high power fiber lasers.

And now finally of course I would like to mention the positive sentiment, which we see and have heard from this (inaudible) west in San Francisco. Maybe you have known, you know that and you saw that the working brand has no tools about component companies, our showcase casing their products. We are also looking forward to exhibit our latest product portfolio at the MD&M show as I mentioned in Anaheim next week and of course this quarter we have again the laser show in Shanghai in March.

So we expect your opinion on North American business conditions to improve throughout the calendar year. Asian business will be heavily dependent on china’s ability to maintain the current growth rates plus the economy. During fiscal year 2014, we should capitalize on our efforts to optimize the cost structure of our fiber laser portfolio to the benefit of our profitability and new product introductions of course in the short positive note this base should help us to grow the business.

These are my comments. And as always, thanks to the Rofin’s team worldwide for their contribution. And thanks for listening and now we are prepared to answer your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question is from Patrick Newton of Stifel. Please go ahead.

Patrick Newton - Stifel

Yes, thank you. Good morning Günther and Ingrid. Thank you for taking my question.

Günther Braun

Good morning.

Patrick Newton - Stifel

I guess just jumping right in, I mean in your guidance front, last quarter you talked about lack of visibility and the expectation that you provide for your guidance this quarter and we heard no mention of it, I’m just curious if you could walk us through the reasoning for not providing annual guidance?

And then if you could just given some of you geographic any market commentary, as well as guidance, is it fair to expect that we could see sequential revenue growth through the remainder of the year, fiscal year?

Günther Braun

That's what we expect by the way. To answer your last question, as we see sequential revenue growth seem to be delivered a nice [gross] quarter and as I mentioned even on service and parts we did not have to search in weeks in the first quarter. So, it was a shorter quarter in terms of routine weeks.

Why we don’t put some numbers out for the fiscal year is clearly still somehow the uncertainty how we should judge especially China in our business, I think Pat, maybe you have seen that there our market status our industrial laser solution they have some predictions, how the markets are in best release business should grow. So what we have seen so far what they said that in the range of 4% has the business grown from 2012 to 2013 and that prediction is I think 4.6% another gross rate in 2014.

Of course, we hope that the second half should be a lot better than our first half in this fiscal year and if still short to get into the range what we delivered last year hopefully more, but we need the order entry. And you know that our backlog contains average three months, at the moment we have large assistance projects with longer lead time.

So I would expect the third quarter, if order entry second quarter is reasonable what we expect and good that we have really a very the third quarter in this fiscal year. And then of course first quarter usually what you have seen in the past always is somehow the strongest quarter within the Rofin here, don’t ask me why, but that’s the case.

Patrick Newton - Stifel

Yes, that was very helpful. I guess just pertaining to the kind of the order flow with longer lead times in the 3Q deliveries. Is there -- could that be end that have already gone into the causing the longer lead times are there something dynamically that is causing your customers price orders earlier than normal?

Günther Braun

No, it’s just you know we had more consistent orders like in correction of off railing systems where not just sale the lazy sales or dispackage, but the whole system. And then of course you have not just the lead time, depend 08-12 longer lead time and you’ve depend of course as the final acceptance protocol as the customer side. So of course that the experience help us, that from the delivery phase and installation phase there is a certain need for certain time until you get the acceptance. And this caused our forecast to be in that range what we told you.

So it’s nothing, it’s a little bit of change maybe to do more systems business. But of course not affecting our (inaudible) business to our machine tool customers.

Ingrid Mittelstädt

I would say it’s a product mix in orders we have this quarter. Our additionally to that I would add that this quarter is Chinese New Year, so we will see when we really get the final acceptance for some of our products.

Patrick Newton - Stifel

Okay. And then Günther last quarter, you talked about when you kind of partially on half of 2014 what play-out you discussed the potential for high power CO2 to decline year-over-year and then over growing industry, I am curious if any change with that expectations?

Günther Braun

No, I think that’s what we should see that high power CO2 somehow there we see certain plan, of course as we see on the other side on high power fiber laser or certain increase in our side. And in terms of units, I hope we can offset the decline or maybe even get some more share. So, so far in the quarter there was a slight decline on high power CO2 laser, I would say which was offset by high power fiber laser and even more offset by the lower power laser out of our company in the UK and there is still nice demand and we believe there is still a high single digit growth rate in the business.

Patrick Newton - Stifel

Okay. And then I guess Ingrid, gross margin was a very nice surprise in the quarter. I am assuming that the high power -- fiber laser revenues $17 million definitely favorable on mix, is that the key reason for the positive surprise?

And then Günther I guess it seems like this is the first year-over-year decline which seen in your fiber laser business I am curious if that caught you by surprise of what dynamics in that?

Ingrid Mittelstädt

Well as I mentioned first it was the product mix, second we had an impact but this was slight as I already said with the introduction of the 200 watts.

Günther Braun

The decline by the way was more towards the lower power fiber lasers, not higher power. And I would guess you would see this in the market also from others when get that numbers, when you talked about the low power marking laser units.

Patrick Newton - Stifel

Okay great. And then one last housekeeping that I always ask you Günther is, could you provide me with the micro and marking and most of the component orders as well spare parts to penetrate revenue?

Günther Braun

Sorry. Ingrid, do you have it?

Ingrid Mittelstädt

Yes. Order entry, right? Okay. Micro order entry was 53.4, marking and micro was 69.7 and components was 17.4.

Patrick Newton - Stifel

Correct. And then the spare parts represented revenue?

Günther Braun

Okay. Ingrid has it…

Ingrid Mittelstädt

Services and part represented 29.3% of our total revenue in the quarter.

Patrick Newton - Stifel

Great. Thank you very much. Good luck.

Günther Braun

Thank you Todd.

Ingrid Mittelstädt

Thank you.

Operator

Thank you. The next question is from Shawn Lockman of Piper Jaffray. Please go ahead.

Shawn Lockman - Piper Jaffray

Hi. Good morning, Günther and Ingrid. Just a quick question for you on gross margins; I know that the company has been working steadily of course to increase your gross margins. The 40% level that I believe you’ve talked about in the past; is this something that you see attainable by fiscal ‘15 and what would be sort of the moving parts of that at this point to get that up there? It’s just the simple function of increasing volume, increasing units or are there other things at this point that you intend to sort of address in order to continue stepping up those gross margins and the timing around that?

Ingrid Mittelstädt

I would agree to 2015 that we -- is the target to come back to this higher gross margins and it will be a combination, I think we explained that in the past of reaching these technical changes in the design of the components, so having more efficient components for our high power fiber lasers than using our own chip materials and of course increasing the volume. You know that as of today as we mentioned in the past, we are bit selective with the projects because we have to take care of their margins.

Günther Braun

So three things clearly, one thing is of course have these introduction of the new fiber laser devices what I mentioned getting to 2 kilowatt out of one box instead of needing two boxes, each 1 kilowatt; then of course what we did already introduction of 200 watt modules with 1.5 kilowatt, the 2 kilowatt somehow is toward summer time in the project plan and then of course it’s the volume, increase in volume for better fixed cost absorption. These are basically the three things.

Shawn Lockman - Piper Jaffray

Great, thanks. That's very helpful. Can you talk a little bit about -- and Günther, I’ll come back to just some general comments you made about fiscal ‘14, and obviously not giving guidance. If I understood your comments correctly, did -- is it possible that we could see sort of a flat year-over-year revenue this year, or are we likely to see something that’s slightly down based on what you can -- the visibility that you have right now?

Günther Braun

I tell you a good question because our visibility is usually average three months, means somehow we know what we should deliver in sales in the second quarter. And I hope we have some additional book to bill that the target is to over achieve of course our guidance as usually. And it depends on our order entry this quarter. If order entry continues like in the first quarter, then we should be at last year’s level and if the dynamic is back, there is a possibility to be better, let’s call it that way. And this would be in line with the predictions of the industry experts, I would say, at least when you read Industrial Laser Solution, the new published numbers in January.

So because of the business and the three months typical visibility, so it’s tough. And that's the reason why we said, let’s be cautious, don’t put too much numbers out at moment and see how it evolves and develops. And I think we are not the only ones who are more cautious and don’t give any real number basically top-line number.

Shawn Lockman - Piper Jaffray

Very good. And could you just share with us your latest thoughts on how you see at least the fiber laser market looking for 2014 and the outlook there?

Günther Braun

No, what I clearly believe the fiber laser overall market should improve, increase with the higher growth rate of course than the other technologies. On the CO2 laser I would see a certain slow down, so a decrease; market should be below 2013. And of course fiber laser, I would say in the 15% range, I would expect of course another growth for fiber. But still, I think China is very important for all the guys who manufacture fiber lasers. And China is not somehow developing in the right direction, then it will be tough to reach.

Shawn Lockman - Piper Jaffray

Very good. Thank you very much.

Günther Braun

Thank you, Shawn.

Operator

Thank you. The next question comes from Mark Douglas of Longbow Research. Please go ahead.

Mark Douglas - Longbow Research

Hi, can you hear me?

Ingrid Mittelstädt

Yes.

Günther Braun

Of course Mark, good morning.

Ingrid Mittelstädt

Good morning.

Mark Douglas - Longbow Research

Okay. Hi good morning. So, (inaudible) can you explain a little bit more why it was down and looks like it did not affect your overall plans for releasing the [2Q work] is that correct?

Günther Braun

That’s right, that’s right, because -- okay. That’s an easy answer, sometimes that can be a leak, and we had a leakage and then it had to be fixed and this was the reason why it’s down. So what I understood the guys who run the APs, they have many years of experience, they said it never happened to them, but this time it happened; I would call it bad luck. But on the other side, the AP is not the key to go to this higher output power because as you know we have multiple channels where we get our diode material and we have still two channels open, one internal and one external channel.

Mark Douglas - Longbow Research

Right, but getting your own materials goal of peak, so was this in your cost significantly?

Günther Braun

Of course that’s the portion of the cost reduction, but I would say that’s the part on top of everything in my opinion. Important is to get to the 2 kilowatt out of one box with reliable hunting power up to close to 300 watts and then became good at, independently which diode are used at the end of today. And this is of course another step to further reduce the cost, but it’s not basically besides war at the end of the day.

Mark Douglas - Longbow Research

Okay. So, it’s a 270 watts to 300 watts pumps are on track for June, July timeframe, summer.

Günther Braun

I see you (inaudible) less than you talk to some people?

Mark Douglas - Longbow Research

You said summer, so.

Günther Braun

Yes.

Mark Douglas - Longbow Research

Okay. Good. And just looking at the fiber laser sales, so is part of the decline also from -- I means there is some large defense orders for ‘13, and then I assume those are repeating in the ‘14?

Günther Braun

Yes. Most of it is in the lower end, so low power end; defense was somehow okay, of course a little bit less than before, no about, but I would attribute this especially when you compare to last year, there we had I would say in 100 plus units in low power and compared to the fourth quarter it was also more I would say the middle class of power on fiber lasers which were stronger than this quarter. So, it was not on the high power side.

Mark Douglas - Longbow Research

Okay, thank you.

Günther Braun

Thank you.

Operator

Thank you. The next question is from Mark Miller of Noble Financial Capital Markets. Please go ahead.

Günther Braun

Mark?

Mark Miller - Noble Financial Capital Markets

Good morning.

Günther Braun

Good morning, Mark.

Mark Miller - Noble Financial Capital Markets

I am on the West Coast. Just wondering some other laser firms have projected softness in advanced packaging and also uncertainty in China. I guess that’s kind of the impression I’m getting from you that China remains a wild card here and just wonder if you give any more color on either those two areas?

Günther Braun

No I think China as I said, usually our experience over the last years, we are now since have on our own operations since 2005, Chinese New Year is to make a break point typically after that, you get better directions from the Chinese customers than before. What we said we are also not sure because the customers -- what we mentioned already last year in November conference call that we get signs from the customers who are to say, okay business is cooling down, it’s getting slower and we have seen that also on our side in the sales numbers in China. So, let’s see what happens. So I can’t agree or confirm also the comments of the market participants in the later industry of other guys.

Mark Miller - Noble Financial Capital Markets

I was wondering -- okay, I am sorry.

Günther Braun

No, no sorry Mark.

Mark Miller - Noble Financial Capital Markets

I was wondering if you can provide dollar amounts of sales into Asia geographically North America and Europe?

Günther Braun

We can do that. Ingrid? What I can give, I can give you a flavor here by the way, what we did in Q1, 2013 just in China in sales it was close to $30 million and the first quarter in 2014 was more $19 million. So you see really the difference between last year and this year. And most of it is consumer electronics, the reduction of course into China, but also some machine tool business is lower.

Ingrid Mittelstädt

The split was 31% Asia compared to 35% in the fiscal year ‘13, in the whole fiscal year.

Günther Braun

Mark, you wanted dollar amounts or….

Mark Miller - Noble Financial Capital Markets

Maybe what percentage, it doesn’t matter.

Günther Braun

Okay.

Ingrid Mittelstädt

So Europe was 49% compared to 45% in the whole fiscal year and also make us stable at 20%.

Mark Miller - Noble Financial Capital Markets

Just one final thing, the number of our fiber laser unit shipments in the first quarter?

Ingrid Mittelstädt

212 units

Mark Miller - Noble Financial Capital Markets

Okay. Thank you.

Günther Braun

Thank you, Mark.

Operator

Thank you. The next question is from Jiwon Lee of Sidoti & Company. Please go ahead.

Jiwon Lee - Sidoti & Company

Yes, good morning. Just a quick on question on the ASP’s front, did you see any substantial price move either on your CO2 or the fiber lasers?

Günther Braun

Compared to when? Compared to last year or compared to last quarter?

Jiwon Lee - Sidoti & Company

At this stage, I guess the last six months or so or the last quarter?

Günther Braun

I have to say that at the last of course on the fiber laser side there is always some pressure when it gets to competitive situation no doubt about. But I think it’s somehow more stable at least we have not seen big changes in selling prices.

On the CO2 side I would say it’s also somehow stable, of course there it depends which customers you serve and which volume contract they have and so on. And there is always the normal price pressure, but nothing unusual I would say. Did I answer your question?

Jiwon Lee - Sidoti & Company

Yes, that’s helpful. And just kind of going back to China and your sort of a qualitative ‘14 outlook, if I hear you correctly you seem to think that China is really kind of a dark horse for your upside or the down side projections. First, is that correct assessment? And second, if you have seen some upside which markets would that come from?

Günther Braun

In China or overall?

Jiwon Lee - Sidoti & Company

Let’s stay in China.

Günther Braun

Well, in China I think one opportunity -- solar industry at the moment in more or less in China and we also talked last quarter about one new set where there is a project and somehow it moves from quarter-to-quarter and there is some project on efficiency increase for solar cell. So this would be of course a help in the upside out of China. Of course the other question is still consumer electronics what goes on with the EMS companies working for this giant at the West Coast. There is upside I would say opportunity in my opinion, but on the normal machine tool side where the guys sell metal cutting system, there I'm more in the dark, I’d tell you openly.

Jiwon Lee - Sidoti & Company

I see. Well, that's helpful. And lastly for me, could you expand your comments on the European automotive outlook?

Günther Braun

Okay. For us I would say there are some applications which are interesting. Where we work for, there are some projects going on where we hope to get some additional orders. So, in that direction, but also in the marking direction, I would say I'm positive. On the welding side of course to tell you the truth in Europe, I think [Trump] was very strong with the disk laser. And they have I would say the best position, number one position to that industry for high power welding application. Of course we do something, but I think even for our other friends it's tough to compete there.

Jiwon Lee - Sidoti & Company

Okay. Well, that's very helpful. Thank you.

Günther Braun

Thank you, Jiwon.

Operator

Thank you. We have no further questions in the queue at this time. I would like to turn the floor back over to management for any closing remarks.

Günther Braun

Well, thank you to everybody for participating in this call. I think first quarter wasn't so bad, even gross profit was better than we expected, I hope we can deliver again better numbers in the second quarter, of course supported by good order entries. So, we are looking forward to talk to you next quarter. We wish you all the best and see and talk to you soon. Thank you.

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this. And thank you for your participation.

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Rofin-Sinar Technologies, Inc. (RSTI): Q4 EPS of $0.08 in-line. Revenue of $128.19M (-9.9% Y/Y) beats by $2.51M.