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Adept Technology Inc (NASDAQ:ADEP)

Q4 2014 Results Earnings Conference Call

August 25, 2014, 5:00 pm ET

Executives

Laura Guerrant - Guerrant Associates

Rob Cain - President, Chief Executive Officer, Director

Seth Halio - Chief Financial Officer, Principal Accounting Officer, Corporate Secretary

Analysts

Matt Dolan - Roth Capital

Mark Argento - Lake Street Capital Markets

Dick Ryan - Dougherty & Company

Operator

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the Adept Technology's fiscal 2014 fourth quarter and full year financial results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, August 25, 2014.

And I would now like to turn the conference over to Laura Guerrant, Adept's Investor Relations Representative. Please go ahead.

Laura Guerrant - Guerrant Associates

Thank you, Tirana. Good afternoon everyone and thank you for joining us. With us on today's call are Rob Cain, Adept Technology's President and Chief Executive Officer and Seth Halio, Adept's Chief Financial Officer.

As we begin today's call, let me remind you that during the course of this conference call, we may make certain remarks regarding Adept's expectations as to future events and future financial and operational performance, plans and prospects of the company, all of which are based on the company's position as of today, August 25, 2014.

Any such forward-looking statements involve a number of risks and uncertainties and the company's actual results could differ materially from those expressed in any of these forward-looking statements for a variety of reasons, including the risks described in today's press release and in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 filed with the SEC today as well as the risks described in the company's other SEC filings. No one should assume that any forward-looking statements made by the company remains consistent with our expectations after the date that the forward-looking statement is made.

Certain financial information that we review on today's conference call is presented on a non-GAAP basis. The most directly comparable GAAP information and a reconciliation between the non-GAAP and GAAP amounts are provided in our fiscal first quarter press release -- excuse me, fiscal fourth quarter press release, which was issued today and has been furnished to the SEC on Form 8-K. The press release and all financial, statistical or operational information referred to in this conference call is also available on the Investor Relations section of the website. Following introductory comments by management, we will open the call to take your questions.

And with that, I would like to now turn the call over to Rob Cain. Rob?

Rob Cain

Thank you, Laura. I will begin today with a review of our fourth quarter performance, then Seth Halio, our CFO, will provide a more detailed review of our financial results. After that I will give some color on Adept's long-term prospects and strategic plan.

Fiscal 2014 represented an inflection point for Adept. During the year, we stabilized the business, lowered our breakeven point, introduced new and compelling products and demonstrated sustained growth. As we had indicated in the past, the path to position Adept to profitably grow over the long-term will not be a straight line.

I am pleased with the initial orders we received from new mobile customers in the quarter, some of which have the potential to turn into very large opportunities for Adept. And I am equally pleased with the 27% growth we saw in Europe and this market continues to accelerate for the business. I am less than satisfied with the sales performance in North America where our fixed business declined significantly in the quarter, and accounted for lower growth this quarter.

We have taken several steps to improve performance in North America, including new leadership, go-to-market strategies. With improvements in the U.S., the historical strength of Europe and the growth opportunities for Asia and mobile, I remain extremely optimistic for the long-term prospects for Adept. Later in the call, we will be giving some more details on this.

As I have said before, our progress has been and will continue to be dependent on four imperatives that frame our approach to stabilize, sustain and grow this business over time. These imperatives include, number one, a disciplined focus on the voice of the customer, number two, a continual introduction of new products, number three, expanding our margins and lastly, profitably growing our sales. The progress towards these goals will have its ups and downs and Q4 was certainly example of this.

On a positive note, we are gaining meaningful traction in mobile and seeing some great opportunities in Asia and Europe. Focusing on Q4 specifically, we generated revenues of $14.3 million and a gross margin of 46%, both improvements over a year ago. For the year, sales grew 23% to $57.5 million and gross margins improved 46%, up from 41% from the prior year.

I would now like to turn the call over to Seth to discuss our financial performance for the quarter and the year. Seth?

Seth Halio

Thank you, Rob. Since much of this information is contained in our earnings release and Form 10-K filed today, I will be brief.

Revenues for Adept's fourth quarter were $14.3 million, compared with $13.7 million reported in 2013, a 4% increase. Compared to a year ago, total revenues in the United States increased 5%, largely driven by mobile as U.S. fixed products declined 27% and service was relatively flat. Total sales for Europe for the quarter increased 27% and total sales in Asia declined 24%. While mobile sales in Asia increased 50% in the quarter, our fix product sales declined to the timing of several large orders.

The total global service revenue grew 11% versus a year ago. Gross margin for the fourth quarter was 46.3%, compared with 46.0% in 2013. Operating expenses were $7.1 million, compared to $6.8 million in 2013. The majority of the increase in operating expenses was due to increase headcount from 139 at the end of 2013 to 152 at the end of 2014, and this includes an increase in non-cash stock compensation expense of $200,000. Our operating loss for the fourth quarter of both 2013 and 2014 was $500,000. We reported GAAP net loss attributable to common shareholders of $0.03 per share. This compares with a loss of $0.01 per share in 2013. Our non-GAAP adjusted EBITDA was $300,000 in 2014, compared with an adjusted EBITDA of $200,000 last year.

Revenues for the year were $57.5 million, compared with $46.8 million in 2013, representing and increase of 23%. Compared to a year ago, total revenues in the United States increased 5%. Total sales in Europe increased 15% and total sales in Asia increased 54%. Global revenues for our fixed products increased 14% during the year, mobile increased 106% to nearly $8 million and service increased 20%.

Gross margin for the year was 46.3% compared to 40.8% in 2013. The 2013 gross margin was negatively impacted by approximately 2% due to inventory charges in the second quarter of 2013. Operating expenses were $27.0 million compared to $29.5 million in 2013. Excluding restructuring and impairment charges of $2.5 million in 2013, operating expenses were flat for 2014, compared to 2013. Our operating loss for fiscal year 2014 was $300,000, compared to an operating loss of $10.4 million in 2013.

We reported GAAP net loss attributable to common shareholders of $0.07 per share. This compares with a loss of $0.99 per share last year. Our non-GAAP adjusted EBITDA improved nearly $9 million in fiscal 2014 to $3.1 million from an adjusted EBITDA loss of $5.6 million last year.

Adept's cash and cash equivalents at June 30, 2014 totaled $7.6 million, an increase of $1.3 million, compared to the June 30, 2013 balance. At June 30, we had no bank debt outstanding but do have available a $10 million line of credit. For the year, Adept generated $1 million of cash from operations and $1.3 million net proceeds from employee stock plans. Also during the year, all of Adept's outstanding preferred stock was converted into 1.7 million shares of common stock and our stockholders equity increased by $10.6 million.

With that, I will turn the call back to Rob.

Rob Cain

Thank you, Seth. We continue to see strong order activity in all of our markets, except for North America. For example, during the quarter, we received a large follow-on order for a customer in the Asian explosive manufacturing space and in the consumer electronics manufacturing and orders in Europe to supply products for automotive industry and other small flexible manufacturing applications as well as high volume electronics. Importantly during the quarter, we received initial orders from four key mobile customers of which two were in the semiconductor vertical, one in the logistics and one in the manufacturing space. These initial orders will be used by our customers to prove out the business case within their environment and if successful, we would expect follow-on volume orders.

I am not at all satisfied with our progress in North America and as I mentioned previously, we are taking action to improve the situation both from the short-term and long-term. Our actions include accelerating integrator seminars throughout the U.S., opening a new technical center in Cincinnati, hiring additional applications engineers, restructuring the sales team within the U.S. Longer term, we will be releasing new products specifically designed for certain North American packaging applications. We will also continue to invest in this market with additional sales people to accelerate our topline in this region.

During the fourth quarter, Adept released a new product that further enhances the autonomous capabilities for our Mobile Robots operating in very dynamic environments, such as warehouse and logistics. This new product, Acuity, is a patented localization option that is shipping to customers now.

I would like to share with you some of our takeaways from our five year strategic planning process. I am excited by the opportunities that lay ahead for Adept, and where the company will be positioned during the next five years. We have set in motion plans to outpace every market in which we compete and some cases dominate the market. Adept competes in five principal vertical markets across its two product platforms. These markets are economically complementary to one another and are all well served by the company's core competencies. Further, customers in each one of these five markets are rapidly adopting automation technology.

Our fixed products serve all five of our primary vertical markets, manufacturing, warehouse and logistics, semiconductor, electronics and food. Within these verticals, we believe the addressable market for Adept products is over $2.5 billion over a normal product cycle. Our goal within the fixed product platform is to outpace the market and growth wherever we participate and currently we are seeing success in both Europe and Asia.

Regarding our mobile platform, we are currently focused on opportunities in three out of five of our current verticals, semiconductor, warehouse and logistics and flexible manufacturing. Opportunities in the mobile market exceed $1 billion and we believe there is currently no competitive solution that provides the value of our mobile products. We continue to work with the world's largest companies in each vertical and now have placed mobile products in three of the largest 200 millimeter companies, one of the largest logistics company and several very large manufacturing companies. It is our intention to dominate mobile markets as Adept is the leader in autonomous robots and we are well positioned with our product family to maturely improve the performance of our customers.

So to summarize, our estimates are that the total addressable market for Adept's products is in excess of $4 billion over a product cycle. To enable us fully take advantage of these opportunities, we will continue to invest resources in new products, applications and sales resources. We will also accelerate how we go to market by leveraging strategic integrators where appropriate or have Adept provide the complete mobile solution for large volume OEM customers. We will selectively seek corporate partners to expand market share in key verticals and geographies. We have also launched targeted sales strategies in North America, European and Asian markets for our products.

If the markets grow as we expect and we are successful in gaining and growing market share, we believe that Adept's revenues can approach $200 million in four to six years with gross margins in 45% to 50% range. At this level of sales, we would expect our operating expenses to be in the 30% range. And as a result, Adept would be able to deliver operating income of 15% to 20% of sales within this four to six year period.

Two key points I would like to make are, first, the sales growth is not going to be linear. We are going to have some quarters that exceed the average growth rate and other quarters where our growth will be lower. That is the nature of our business and our markets we participate in particularly in mobile, which is a relatively new application for the technology.

The second point is that in order to scale our business to this level, we will need to make investments. These investments include new products, sales, service and marketing resources and infrastructure such as an ERP system. Over the short-term in a given quarter, the cost of some of our investments may cause our spending to grow faster than our revenues. So we are committed, over the long-term, to leverage these investments to deliver bottomline growth. As you know, we are bottomline focused and have a very low tolerance for losing money. So while we are investing for future growth in a cautious manner, we expect any losses we may incur to be very modest and will be funded by cash on hand.

Another point I would make is that since we are in the early stages of adoption of our mobile products, in the short term, I expect our mobile to make up 10% to 20% of a quarter's revenue. This will increase over time as the adoption accelerates. Service should continue to be approximately 20% of the revenue and fixed product being the remainder.

Before I turn the call over to the operator for questions, I would like also share we are advancing the culture at Adept as part of our five-year plan to position the company for profitable growth. At the start of my tenure at Adept, we instilled a culture of accountability and execution. In FY15 and in beyond, we are adding to these values as a focus on commitment and responsibility where all of our employees have more ownership and responsibility to the bottomline performance of our company. Overall, 2014 was a positive start on our goal to sustain quarter-on-quarter profitable growth. We have much work to do to realize our five-year plan and we are happy to do it.

At this time, I would like to turn the call over to our operator, so we may answer your questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). We will first go to Philip Shen from Roth Capital.

Matt Dolan - Roth Capital

Good afternoon, guys. This is Matt, on for Phil. Thanks for taking my questions.

Rob Cain

Hey, Matt.

Matt Dolan - Roth Capital

So I just wanted to start off on the U.S. for a moment, if we could. Could you provide a little more color here? Is the weakness in the U.S. just a blip on the radar, sort of a quarterly thing here? Or is it something that could persist for a few quarters? Can you just give us a little more color on what caused the drop and then how long do you think it could persist?

Rob Cain

Sure, yes. Without giving guidance and clarity on, is it a quarter-over-quarter kind of thing, what's going on in the U.S. market for us is, a lot of our orders are pushing out with tightness with some of our customers and our integrators. So our strategy there is, how do we accelerate the fixed business first. That's really our core focus there. Let's reignite business with our key fixed integrators nationwide. We have launched a new set of integrators in Mexico and some new ones in Canada to see if we can generate some new business there. So that's point one.

Point two is, sell mobile harder and in North America we are the only provider of mobile products on the planet that can do exactly what ours does. So let's accelerate that strategy. The third piece is the food business which is actually growing fairly nicely per our plan. So we are seeing some general tightening of all of our markets in North America. It seems like the United States is tighter than Canada and Mexico and we are making the appropriate changes there.

How long that's going to go on? We are not quite sure of. I think the changes that we are making are going to be the right ones, whether that's long-term or short-term, because it gets us in to broader markets with a deeper reach. Some of the simple things we are doing like the new tech center in Cincinnati puts us right in the center of some technical markets that we can better address some of our clients. And then our next step is, you will see us get deeper in to southeast as well.

Matt Dolan - Roth Capital

Okay, great. That's helpful, Rob. And then could you just touch on the European market as well? What were the main segments there that drove the strong performance?

Rob Cain

Well, the good news in Europe and Asia both, about a year ago we launched a market vertical strategy. So we wouldn't be overly dependent on one particular market. In Europe, for example the five markets that I mentioned, almost all of those are growing nicely. We are spending quite a bit of time in high volume electronics, flexible manufacturing there are going growing nicely. So we are seeing growth in those.

We are also seeing growth in the automotive space. A little bit in the semiconductor space, not a whole lot yet. So that's a nice portfolio. And again, the team there is performing extremely well with our integrator support structure getting much broader and much deeper. We are doing work now in Italy in a different fashion where we are capturing more and more market share there and the team is making some changes in France where we are selling more mobile products and fixed products now in that particular region. So Europe as a whole, our strategy is working very nicely.

I will just follow-on with that, our strategy in Asia is quite the same, whether it is China or Taiwan or Singapore, the team is doing extremely well there. We have got a nice blend of fixed and mobile products and the market there is extremely different. They are typically large single orders and repeat orders, whereas North America is such a mature market, when you get an order it's typically of lower volumes. So our strategy there is to find a way to lower our cost of sales and accelerate sales in North America. But back over to Asia, year-over-year we are extremely happy with what's going on with both fixed and mobile in Asia-Pacific Rim, whether it's Singapore, China or Taiwan.

Matt Dolan - Roth Capital

That's great, and then one here on the sales cycle, Rob. You have mentioned, that you have accelerated special sales with customers, call it units one and two, but the partnership or trial period before volume purchase orders kick in can be elongated. Can you talk about the tools you have to accelerate that portion of the sales cycle? The trial portion? And is it realistic to expect this to shrink going forward? Or do you think there is just a natural length of time that customers need with the product?

Rob Cain

Yes, I think, sure. So there is two parts. The initial order, which we call seed planting basically, and the second part of that is, how do we help them harvest, really get the true ROI companywide. The seed planting piece, that's about getting demos in front of people with trained applications engineers. You have seen us restructure in Europe and Asia and we are now doing that same restructuring in North America as we can do that better and faster.

The harvesting piece is somewhat similar. We get in front of the client with their products now and really show them how to demonstrate the full value add there. What we won't see is, we won't see customers accelerate to have disruption to their business. I think we will see, as soon as people understand that ROI, they will have a very quick rate of adoption. Quick being several months in some industries. The semiconductor space, I think what we are seeing is, that's going to be probably two to three quarters. In logistics and warehouse space, we need some more time there with a variety of accounts to really hone in on what that number is.

But the short answer is, qualified people in front of those products, for a short period of time, these are intuitive products, but just ensuring our clients know how to get the full value add out of them. A lot of times the client will purchase a Mobile Robot for a particular solution and then once they get it in there, they can see they can do so much more with it. And that's really our job.

Matt Dolan - Roth Capital

Great, and one more here from me. I know you guys don't provide guidance, but looking ahead into fiscal 2015, can give us a sense for which end markets you are most excited about? Where do you see the growth opportunities shaping up in the current, if you could you address this both on end segment basis and by geography, it is possible?

Rob Cain

Sure. On a global scale, I would say, warehouse and logistics, probably comes up to the top. And that's primarily because it's a new frontier with just an enormous amount of possibility in a very large market. The second one would be flexible manufacturing, and that just covers all of our regions very nicely in all of our product portfolios and that's just the sweet spot for the business. The third one would probably be food and that plays out very nicely, obviously in Asia, North America and Europe in that order. And then it's hard to rank semiconductor next because it's doing extremely well. But I would warehouse and logistics person first and that is such a broad market for us and there is just a long list of powerful customers that we are in front of now. And I think there is a lot of opportunity there.

Talking about those by region, I would say small flexible manufacturing and the industrial side would be the European side. Asia right now would be high volume electronics, flexible manufacturing, and a little bit of food actually is starting to pick up pretty nicely in Asia. And that's both mobile and fixed products. Then North America is really the portfolio of all five of those markets that I just mentioned.

Operator

(Operator Instructions). We will now go to Mark Argento from Lake Street Capital Markets.

Mark Argento - Lake Street Capital Markets

Yes. Hi, guys. Rob, I think in your prepared remarks you had mentioned you had four new mobile orders in the quarter and two were more in the semiconductor space. Were those new customers to you? Or were these somewhat follow-on orders? Maybe you could help us think about what you did in the quarter in terms of the mobile trends in that business.

Rob Cain

Sure. You bet. So in the semiconductor space, those are two brand-new customers. We cannot name them. I can tell you that one was in North America. One of them was, the actual location was in Taiwan, but that's not where the majority of their company is located. Both are 200 millimeter applications. Both are initial orders. Lower in quantity. Both are going to prove out different processes with their mobile products and we think these could be sizable orders. I will just say, generically we have made it clear that any market vertical that we are in, we are starting at the top of those market verticals and working with those people.

So they are larger 200 millimeter semiconductor companies, that also do business in the 300 millimeter space. So we are happy with that. There are some significant traction there and you can bet that we have got a pipeline of all of the key 200 millimeter customers. So we will see how that market penetration goes, but I think we are in a position now where we can prove some true performance in the semi space.

The other new customer was in the logistics space. And again we can't mention the name there, but again, we are starting at the top of that vertical and you can bet that is a family name you would know well. So we are excited about that. Again, low quantity. They are putting this into actually two different of their facilities that's located in North America. And once we prove that out, we believe there will be a series of follow-on orders.

And then we placed, we sent several in the manufacturing space. We have done that in Europe and in North America last quarter. We also placed some in Asia as well. So we have got a nice portfolio of Mobile Robots in those applications, some with different features and options that we were able to see cycle time to plant and to harvest and get some real good install base information as well.

So we are actually pretty excited about the key work we did in mobile in Q4 and as you look at our mobile performance year-over-year, as Seth mentioned, our mobile business is up over 100% year-over-year. We are just getting started with mobile but our strategy, as I just laid out, is to significantly grow this company and we are going to put some very key emphasis on fixed products and mobile. We are doing this in harmony wrapped around our core competencies, and we believe it's right next step.

Mark Argento - Lake Street Capital Markets

Have you seen any follow-on orders? So these sound like good initial orders, proof case orders. Have you seen, I know GlobalFoundries is one that you guys have been in for a while. I think they have one, a bay and a fab fully outfitted. Have you seen any follow-on activities from guys, taken from the beta test, for lack of a better word, to your commercial introduction or implementation?

Rob Cain

Global is still our lead account. They have got, I believe, 39 products working simultaneously right now. We are extremely happy with our performance. We are about ready, in the future, to go to some other parts of that same fab and then continued to roll that out. They are definitely a showcase account for us. They are letting in actual competitors into that fab from time to time to help share our product performance.

The other two that I just mentioned are certainly brand-new and then we have got along with the people that we been in front of with wither demos, or a preliminary conversations. So I think we are making the right progress there.

Mark Argento - Lake Street Capital Markets

Quickly, you had mentioned that you had launched a new product, Acuity. Is that a software product? I am not exactly understanding what that product looks like?

Rob Cain

Yes. So it's called Acuity. In general it allows the robot to see its surroundings a lot easier in a very complicated continual moving environment. So in a food environment, we have got a number of carts going in and around hallways and people and you can imagine just a massive complicated traffic area. This particular product allows the robot to see and base line off of the existing lights in the ceiling as well as the lidar's sensors that we have got throughout the base of the unit. So in English, you can put this thing in a very complicated fast-moving ever-changing environment that's more complicated than normal and with this option on, it will still get to, what we call, its goal or its end path. So we are pretty happy with doing it. I have got to tell you, we have tested that in a number of very key accounts that has performed very nicely. So we are excited about that.

Mark Argento - Lake Street Capital Markets

So do you sell that as an add-on to the product or is it just a sweetener to the overall solution? How do you take that to market?

Rob Cain

No, it's definitely an add-on. In some cases, you don't necessarily need it. In some cases, we are not quite sure, we may put it on the product to start with, and then if you don't need it, we may handle it accordingly at that point. So you wouldn't want to sell it all the time, but when you get into very large open spaces that can be very complicated, such as warehouse and logistics, you are certainly going to need something like that.

Mark Argento - Lake Street Capital Markets

Great and thanks for the longer-term outlook. I think that's helpful to think about how this business shapes up over the next few years in particular. The $200 million over four to six years, is that all organic growth? Are you assuming there any acquisition growth? How do you think about the topline?

Rob Cain

It's pretty much organic. We are focused on those markets, our core competencies. We have taken a hard look at how we get that done on the fixed side and the mobile side and the service side. At the same time, we are keenly aware of anything that might help accelerate our growth, so we are not turning an eye to that, but it's not our core focus. We really expect just organically get where we need to be going. Just to really make sure that we don't get distracted and our products and our product roadmaps, do what we say we are going to do. But again, however, we are aware of anything in the market that could help us with the sales channel or some sort of strategy that will accelerate our topline and in conjunction our bottomline.

Mark Argento - Lake Street Capital Markets

Great. Thanks, guys.

Operator

(Operator Instructions). We will now go to Dick Ryan from Dougherty & Company.

Dick Ryan - Dougherty & Company

Thank you. Rob, could you give us the mobile revenue in Q4? Was it roughly flat with Q3?

Rob Cain

Yes. So we don't give out the specific mobile revenues, quarter-to-quarter, Dick. As we talked about, it's roughly that 10% of 15% of total sales.

Dick Ryan - Dougherty & Company

Okay. The orders you received, the initial order flow, have they shipped in Q4? Or do you have a backlog for mobile going into Q1? And even on the fixed side, do you have a backlog going into Q1?

Rob Cain

Those products, those customer that I mentioned did ship in Q4, yes. And yes, we have a mobile backlog going into Q1 and of course Q2 for both mobile and fixed.

Dick Ryan - Dougherty & Company

Okay. You mentioned you are going to try to sell harder the mobile side in the U.S. How do you do that? Is that a direct approach? Integrators? Or what's your strategy there?

Rob Cain

That's both. We have got a number of integrators that we have already brought back to our headquarters here in California and have done a three-day training on exactly how they can accelerate their business. And that's working very nicely. And when you get in front of some of the large Fortune 500 companies, some of hem may say, that's great, help us with an integrator to bring it here. In another cases, we will go direct to the OEM and their approach maybe, that's great. We want to work directly with you guys.

So we have actually structured the business to make that conscious decision early upfront which is a big deal because if we decide to be the OEM provider that can be in engineering and service focus point, we have got to make sure we are staffed to it and also billing for it appropriately.

Dick Ryan - Dougherty & Company

Okay. Thanks. Seth, with the changes you have made in the U.S., do you anticipate any restructuring charges or severance costs hitting Q1? Or anything of that nature?

Seth Halio

No.

Dick Ryan - Dougherty & Company

Okay, and Rob, I will try one for, not necessarily from a guidance perspective, but with two months gone in Q1, can you give us some color how you think we should be looking at maybe the next couple of quarters, how business should flow?

Rob Cain

Sure. I will give that a shot. So we are happy with Europe. As I mentioned, Europe is performing well in all those verticals. So that could give us a little bit of comfort. It also tells us that we have got the right marketing strategies and those continue. Europe's back off of its summer holiday now for the most part. The products that we have in the sales teams hand, we just finished a worldwide sales meeting back here two weeks ago. That sales team left here very excited and pumped with products they have never had before. So that's good.

I am really happy with what's going on in Asia. What we have been doing in Asia has been continual growth year-over-year. That has been a really nice success story. We have got the right team in place there. A couple of months ago, we have hired a general manager in China. That young man is doing extremely well. We have got the right accounts there and the right network there. So Asia, over time is going to perform nicely for us, I think.

North America will continue to be the challenge in just that, it's such a mature market and has been for 25 years and it's up to us to find the right integrators at the right time with our right products to make sure that we are the choice for robotic solutions, both in fixed and mobile. And I think in some cases, we are a lead with mobile because nobody else has that and then turn that same customer back around and look at our fixed product family where our competitors right now can't do that. So we need to act quickly on that.

Our service businesses continue to grow very nice in all regions and that's much more than spare parts. It's advanced service and training. And that business is going well. So those were the real four revenue streams that I look at and our strategy is, if one of those is weaker than the other, then how do we bolster one of the other three to help that one out until that comes back around.

So I can't predict the timing. What I can do is build actions around it and be proactive regardless of what's going to happen out there and find a way to win. So I think we have got the right team and the right strategy to do that.

Dick Ryan - Dougherty & Company

Great. Thank you. That should take care of it for me. Thanks, Rob. Thanks, Seth.

Rob Cain

Thanks, Dick. Appreciate your time.

Operator

(Operator Instructions). It appears there are no further questions. So I will turn the conference back over to Mr. Cain for additional or closing remarks.

Rob Cain

Thank you. Our business has stabilized and we are accelerating sales worldwide. We believe we are well positioned with our mobile products and advanced in our fixed products. We have much work to do to grow business reaching our long-term objectives and we are happy to do it. Thank you again for your interest and support in Adept. I look forward to updating you on our progress in our next quarter's coming call. Thank you.

Operator

This concludes today's presentation. Thank you for your participation.

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