Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Lisa Cummins – CFO

John Dulchinos – President and CEO

Analysts

Frank Verasi [ph] – Stifel Nicolaus

Sam Bergman – Bayberry Asset Management

John Nelson – State of Wisconsin Investment Board

Adept Technology, Inc. (ADEP) F3Q11 Earnings Call April 27, 2011 5:00 PM ET

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Adept Technology’s third quarter 2011 financial results conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today, Wednesday, April 27, 2011. I would like to turn the conference over to Lisa Cummins, Chief Financial Officer. Please go ahead.

Lisa Cummins

Good afternoon, everyone, and thank you for joining us. 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, April 27, 2011.

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 our press release and in our Annual Report on 10-K for the fiscal year ended June 30, 2010, 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 remain consistent with our expectations after the date that the forward-looking statements are 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 reconciliation between the non-GAAP and GAAP figures is provided in our fiscal third quarter 2011 press release, which 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, including the GAAP reconciliation and explanations discussed above, is available on the Investor Relations section of our website.

Following our introductory comments, we will open the call to take your questions.

I would now like to turn the call over to John Dulchinos for some opening remarks.

John Dulchinos

Thank you, Lisa, and good afternoon everyone. Before Lisa reviews our financial performance, let me take a moment to review our progress and our strategic road map. As you read from our earnings release earlier today, Q3 is a mixed quarter and our financial results don’t accurately represent the progress the company has made during the period.

Revenues were down both sequentially and annually though gross margin returned to normal levels. The revenue decline is results of the growth and market share increases we were able to achieve during the last upturn of the disk drive market, which is now hitting its bottom resulting in very modest revenue from this segment during the quarter. More on this in a moment.

However, this did not accurately reflect and characterize the progress we are making in our businesses and on our core initiatives. Excluding disk drive and a recent acquisition, revenues are up 17% year over year as our traditional European business continues to gain traction and build momentum, and 28% when we include revenue from MobileRobot.

Solar revenues is also gaining strength and is approaching pre-recession highs as it continues to make progress in developing and OEM supplier base to deliver our robots into the rapidly growing China solar-cell market. Whereas we’re also positive for the second quarter in a row, all this points to a stronger and more stable business as the year progresses.

Operationally, much of our focus during the third quarter with integrating and combining the technologies, customer bases, and organizations as a result of our acquisition into InMoTx and MobileRobots.

InMoTx combined with our USDA approved Quattro Robot as well as our Adept PAC packaging sales provides us with a distinct advantage over the competition. Our combined offering will accelerate our ability to penetrate the packaging market for meat, poultry, seafood, dairy, fruits, and vegetables which in the industry is referred to as natural or organic products, and represents about 75,000 or 1/3 of all packaging lines.

In addition, because in InMoTx has such a broad portfolio of intellectual property, dedicated to inspecting, sorting, grading, and hygienically packaging unwrapped natural foods safely, while eliminating the risk and contaminations produced by manual handling the barrier to entering into this niche is vertically untapped, yet high-volume market are very high.

Customers are very receptive and excited about new offering since no other solution currently exist to solve this problem.

As a refresher, natural products are primarily packaged by manual labor because of the variability of the product, and the flexibility required in the package configuration. The challenge with this approach is cost, 40% of the cost of the product in a supermarket shelf is labor. Contamination, cleaning and hygiene in the primarily cause of spread of bacteria within the food production facility, and turnover, it’s common for food packaging line to have over 40% annual turnover of labor.

To date, the only alternative to manual labor is inflexible, slow, and complex solutions offer by standard machinery builders, which aren’t even as competitive as the existing manual labor. Our solution combines the flexibility of manual labor and the efficiency and cleanliness of machinery at a lower cost.

The ROI and capabilities of our platform are compelling, providing a one-to-two year payback in almost all applications.

While customers are strong, and we’ve begun to receive orders from major U.S. and European customers who have the potential for multiple systems in the future, the lead time or sale cycle is taking longer than expected. As a result, we aren’t expecting the anticipated material revenue stream from these products, including the eventual revenues from replacement parts until later in the calendar year.

That said, the pipeline is very strong and with little or no true competition, we are most enthusiastic about our offering even before we begin.

Switching to MobileRobots, customer interest in the MC400 powered by Adept’s MobileRobots Motivity continues to be strong and we begin to see evidence of the pending conversion of packaging logistics.

We remain enthusiastic about this acquisition, which will ultimately grow and enhance our customer base in addressable target market. We expect to bring our first application products built on this technology base to market in the second half of this calendar year along with new OEM parts which should start to grow our revenues in this segment of our business.

From a regional perspective, we exited the quarter with strong bookings out of Germany, which is expected to approach peak pre-recession in the next one to two quarters.

Our core automotive and industrial markets continue to be steady drivers and we are also seeing solar begin to emerge with increasing sales and bookings.

As you know, we believe the solar market represents a substantial opportunity for Adept’s robots and while it’s been slow to take off, we are actively building relationships with OEM suppliers that could take our products to market.

On the other hand, the U.S. continues to underperform to our expectation and a result we’ve taken aggressive measures with our sales organization and strategy to refocus our activities around our T-vertical markets and value-added products that should allow us to return to segment to growth as the year progresses.

Activity in China continues to increase as we penetrate emerging new markets such as packaging and logistics. China’s one of the fastest growing robotic markets in Asia and globally. To address this opportunity and to support our growing customer base in the region, we have signed a lease for a new office in China and are in track to open during the current quarter.

As a side note, I should note that we are not currently seeing any impact in our businesses as a result of the disaster in Japan, although we continue to monitor the situation closely. Our suppliers are not in that area but it’s always positive that somewhere down the supply chain an issue could arise.

Moving to disk drive, as I mentioned earlier, this historically cyclical industry in the retrenching portion of the investment cycle which affected our third quarter result. However, the recent industry consolidation has the potential to have a very positive impact on our business cycle when the industry returns to an investment cycle.

Traditionally, Adept’s primary customers have owned approximately 50% of the market. With the recent industry consolidation, they now own close to 90%. As a result, when the disk drive market returns, we believe we can achieve similar success if not better than in the last up cycle.

As a result of our recent acquisition we applied better focus in the U.S. market and we are undertaking reconstruction efforts to improve and streamline operations such as consolidation of facilities and reductions in redundancies. These steps will enable us to achieve critical mass in each location, leveraging expertise and resources within the company.

We are pleased that our gross margins during the quarter returned to normal levels, though increased operating expenses, largely related to the acquisition, offset these gains. Many of these expenses are to be short lived and we’re committed to maintaining these successful cost-cutting efforts we undertook over the past couple of years.

As revenues grow, the operating expenses on a percentage basis will enable us to increase the leverage in our financial model going forward.

In closing, Q3 was a solid quarter and we’re excited about the opportunities for growth and expansion to new emerging markets for our robots. We have continued to focus on integration, synergies, and opportunity to address our core market and we believe we have the right technology and solution to take Adept to the next level of growth in our growth phase.

I will now turn the call over to Lisa, to review our financials.

Lisa Cummins

Thank you, John. Revenue for Adept’s fiscal 2011 third quarter was 12.8 million, which compares to 14.3 million for the third quarter of fiscal 2010, and 13.3 million in the previous quarter. The decline in revenue is attributable to the decline of disk drive revenues as John explained earlier.

By business segment, robotics revenue which represents sales of our intelligent robotic systems and vision guidance technology and motion control software was 9.8 million for the quarter, compared to 12.5 million in the same period last year and 10.2 million in the previous quarter.

Looking now at our services and support business, revenues in the third quarter of 2011 were 3 million, which compares with 1.8 million in the third quarter of 2010 and 3.2 million in the prior quarter.

Looking at revenue by region, European sales were 56%, U.S. comprised 32%, with sales from Asia at 10% during the third quarter.

Turning now to gross margins. For the fiscal 2011 third quarter, we reported gross margin was 45% of revenue, compared with 43% in the third quarter of fiscal of 2010 and 39% in the previous quarter. The improvement in gross margin was driven by favorable product mix changes as well as improvements in inventory management.

Turning to operating expenses, OpEx for the quarter was 8.6 million, compared to $5.7 million in the third quarter of last year and 7 million reported last quarter. The increase in operating expenses was driven almost entirely by cost associated with our acquisitions of MobileRobots and InMoTx, including a charge of 498,000 in transaction fees, restructuring charges of approximately 595,000 as we streamlined operations to eliminate redundancies, and the expected increase in operating expense associated with the respective acquisition.

The aforementioned restructuring charges include 498,000 in accelerated stock compensation expense. We recorded an operating loss of 2.9 million in the third quarter of 2011, compared with an operating income of 374,000 in same period last year, and an operating loss of 1.8 million in the previous quarter.

GAAP net loss for the quarter was 3.3 million or $0.37 per diluted share compared to a net income 596,000 or $0.07 per diluted share for the third quarter of 2010 and a net loss of 1.7 million, or $0.20 per diluted share in the previous quarter.

Adjusted EBITDA, which excludes interest earned, depreciation, amortization, taxes, merger and acquisition expense and stock option expense, was a loss of 1.5 million in the third quarter compared with an adjusted EBITDA loss of 1.1 million in fiscal Q3 of 2010 and adjusted EBITDA loss of 190,000 in the previous quarter.

Turning now to the balance sheet; Adept ended the quarter with cash and cash equivalents of 7.4 million, compared with 6.7 million at the end of December. Accounts receivable were 10.4 million at the end of March compared with 10.8 million at the end of December. Accounts payable were 6.9 million, which compares to 6.4 million at the end of last quarter. Inventory levels net of reserves were 10.3 million at the end of the third quarter compared with 10.1 million at the end of December.

With that, I will now turn the call over to the operator for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Frank Verasi [ph] with Stifel Nicolaus. Please go ahead.

Frank Verasi [ph] – Stifel Nicolaus

Yeah, this – I was reading about some of the things you’ve written and spoken about before on the food processing and when you talk about 75,000 lines, in terms of addressable market, I mean, what kind of potential are you talking there?

John Dulchinos

Hi Frank. This is John Dulchinos, the CEO of Adept. That’s a good question. Just to provide some context, there’s 250,000 lines in the world that produce food. What we segmented as our target market is lines that focus on natural products; so that’s meat, poultry, seafood, fruits, vegetables and dairy. That’s where the 77 or 75,000 lines come from.

Each line, you know, I think a good estimate is that each line has the potential for one to two robots; some lines could have as many as ten, some lines could have as little as one, and some lines could have none. So we don’t have an exact number, but it is thousands of potential installations in just natural products.

Frank Verasi [ph] – Stifel Nicolaus

Right. And robots, how much do they typically cost? Or when you say one or two per line potential?

John Dulchinos

So we – the reason we acquired InMoTx is the core technology of handling natural products is all about how you handle the product. And to date, there has not been an effective way to actually be able to physically handle the product in a hygienic and flexible manner.

InMoTx has patented technology that completely transforms these applications. So with that, we can move from selling robots to selling packaging cells that fits all these applications. And a typical average selling price is between 150 to $250,000 depending on configuration.

Frank Verasi [ph] – Stifel Nicolaus

Okay, and your – and these have been proven? I mean, they’ve been installed? I mean, InMoTx made sales, I’m sure they did.

John Dulchinos

They have. You know, if it was built on our, you know, this business is built on our Quattros, which we have hundreds of in the field. InMoTx has a number of seed installations at major U.S. and European manufacturers or food producers and we are in the qualification phase with those customers.

Frank Verasi [ph] – Stifel Nicolaus

You’re in the qualification stage, so they had installations already?

John Dulchinos

They had installations already and, you know, the way these businesses operate is you put a system in, the customer runs it for a period of time, validates it’s performance, validates it’s ROI and the releases additional orders to follow. So we’re at the stage in this business where we’re receiving initial orders from customers and we’re going through that qualification process.

Frank Verasi [ph] – Stifel Nicolaus

Okay, so were they using your Quattros, InMoTx?

John Dulchinos

Yeah.

Frank Verasi [ph] – Stifel Nicolaus

Oh, they were. So you were already part of the process so to speak?

John Dulchinos

Yeah, what they bring to the table is this innovative gripping technology. They also bring some technology that sits on top of our Vision that really allows us to be able to inspect and identify natural products, and cell-level software that allows us to make this stuff easy to use for customers, which is one of the big drivers in this market.

Frank Verasi [ph] – Stifel Nicolaus

Okay, and you’re thinking normally it’s a one-to-two year payback period on this stuff, so…

John Dulchinos

Yeah, there’s a very strong ROI on this business. It takes time, you know, it’s just a capital asset and it’s taking a little bit longer than we were initially expecting to start to see the revenue ramp from this business.

Frank Verasi [ph] – Stifel Nicolaus

How long ago did you acquire the InMoTx?

John Dulchinos

We acquired them in January.

Frank Verasi [ph] – Stifel Nicolaus

Okay, well, that’s not very long.

John Dulchinos

No, put we were certainly – the brand that Adept had and the reputation we have, and the position we already have on the market, you know, we were hoping we could accelerate the revenue growth before we got to the call.

Frank Verasi [ph] – Stifel Nicolaus

Okay. Well, let me also ask you – can I ask another questions? You know, on this disk drive business, like the Western Digital and Seagate – I don’t know if we can mention their names, you know, they’re noted as being vertically integrated more so than the other companies. If these acquisitions go through – well, they’re American Companies. I guess you didn’t do any business with – I can’t think of the name. Well, never mind the names of the other ones. The fact, you weren’t really supplying their – do you do much business with the subcontractors, like Samsung and Hitachi used?

John Dulchinos

Let me answer the question I think you’re asking, Frank. You know, a disk drive has been a big market for Adept in our company’s history. The challenge with it is it’s very cyclical. We generated probably somewhere in the order of $15 million in revenue in the last disk drive cycle, which is a pretty healthy revenue stream for a company like ours.

The challenge is when it goes into a down cycle, you know, those number get, you know, damn-near zero. Without naming names, we used to participate in 50% of the market, so our customers were selling – we’re using our automation in various aspects of their disk and disk drive assembly processes and those customers who we’re selling to had 50% of the market. With the recent consolidation, those customer now have 90% of the market. And so we would expect that as time goes on and they go through their integration of their businesses, that we would get access now to another 30 or 40% of the market that we were not providing in the past.

And so we believe that in the near term the consolidation is not good because if you can appreciate, most companies that do acquisitions then tighten their capital expenditures while they go through the integration process. But post that, we would expect in the long run, this is actually very good for Adept. And that we would be even better positioned for the next industry up cycle when it occurs.

Operator

Thank you, our next question comes from the line of Sam Bergman with Bayberry Asset Management. Please go ahead.

Sam Bergman – Bayberry Asset Management

Good afternoon, John and Lisa.

John Dulchinos

Hey Sam, how are you?

Sam Bergman – Bayberry Asset Management

Fine, yourself? A couple questions, so in terms of the next up cycle in disk drive, do you have any idea? You hit bottom. Do you have any idea when that next up cycle is?

John Dulchinos

I wish I did. I’d certainly tell you to take advantage of it when it happens. But there’s already some – you know, I was just reading an analyst commentary yesterday about expectations that the Japan shortages are causing more pressure on the non-Japanese suppliers of disk drives to up their capacities. So what I can tell you is in past, it’s been as little as a year between cycles. It’s been as long as three years between cycles. I would assume with the consolidation that once capacity kind of gets settled down that they will go through another ramp. I don’t know if that’s next year, or later this year, or the year after, but somewhere in the next couple years we would expect to see a fairly substantial ramp in disk drives, it’s just a matter of when they make those acquisitions.

Sam Bergman – Bayberry Asset Management

So you say it’s more than likely? I mean with this consolidation happening, that you guys without getting much revenue from that area, you could be losing money the next 9 months, 12 months because you have very little sales from the disk drive market.

John Dulchinos

This was obviously not a stellar quarter from a revenue standpoint. Part of that was the dependance on disk drives over the past year. Part of that was some programs that we expected to happen got delayed. And part of that was that we just haven’t gotten traction yet in our packaging solutions business.

We’re bullish that as we go forward through the year that the business will continue to strengthen independent of what the disk drive industry does.

Sam Bergman – Bayberry Asset Management

Do you have a breakout of those two acquisitions and what they do for revenue?

Lisa Cummins

We don’t break that out, but I can tell you out of our 1.5 million EBITDA, it was about 2/3 from that acquisition.

Sam Bergman – Bayberry Asset Management

So if you look at the products those two bring to the company, wouldn’t it be more successful for the company to work on or use perhaps the Secor product that the Mobile Robotic Company has in New Hampshire for defense and compete against iRobot? It seems like part of that design or or some of their products could possibly use for that market, which accepts and ends up with large orders of $100, $200 million magnitude where you’re looking for market like the disk drive, which gives you $14, $15 million in a good year. It doesn’t sound like much of a growth market.

John Dulchinos

Yeah, well good question Sam. First off, I think iRobot does a tremendous job servicing the military robotics market. And we have a lot of respect for what they do in that segment.

Our technology could have applicability there. The biggest challenge is it’s a very different business. I think if you look at what iRobot does, the head of the military robotics business is an ex-Pentagon general. And they’ve got an infrastructure that’s been built over a many-year period to focus just on government contracts.

I will say that you’re right. Disk drive is not a very attractive long-term market. And our strategy is not to invest in terms of trying to build a better position there because it’s a fairly small markets. Really where our objective for growth centers around packaging and logistics and material handling where we can really leverage our unique technologies in mobile robots and in packaging solutions. And we believe those markets offer tremendous growth for us over the next few years.

Sam Bergman – Bayberry Asset Management

The last question in terms of conveyance, where does that put you with the banking with this loss for this quarter?

Lisa Cummins

We just are not sure on 8-K. We just negotiated a new $10 million line of credit with SBB and we are definitely fine with our conveyance.

Sam Bergman – Bayberry Asset Management

Okay, thank you.

Operator

Our next question comes from the line of John Nelson with State of Wisconsin Investment Board. Please go ahead.

John Nelson – State of Wisconsin Investment Board

Hi, John and Lisa. Could you provide some more detail on the China solar-cell market and maybe some ideas about – or I should say some range of how big the potential is there for your company.

John Dulchinos

Sure, so solar is a object growth market. Over the past three to four years, it’s transitioned from being a Europe-centric market to being a Asia-centric market, predominately centered around China. Our position in this market is focused on supplying our robots, primarily our Quattro, but some of our Cobras, to process OEMs who take them into applications in that market and we have been working to establish relationships with OEM partners. The challenges of OEM partners is some succeed and some don’t succeed. And so the strategy is to pick the winners and ride their entry into the market.

And we’ve got some design winds that we feel very good about. Solar was, I think, 11% of our revenues this quarter, which is the largest percent of our revenues since the 2008 fiscal year.

We expect that to continue to grow as our OEMs get more traction in the market. And I don’t know that I can give you a large-scale estimate because our expectations were going to grow our other revenues at a rate that will probably keep Solar in the 10% range of our total revenues. I don’t see that it’s as 20% or 30% flights of our business just because we playing at a component level rather than at a value-add level.

John Nelson – State of Wisconsin Investment Board

Okay. And given what went on with – in Japan with the nuclear power plant emergency, do you foresee any use for the types of robots that you produce, especially with the special technologies that you have, like the gripper technologies in use for extreme or emergency situations?

John Dulchinos

That is a potential market. You know, right now our focus on mobile robots is into consumer-good applications, healthcare, where we’ve got some nice installations and production logistics. But as we span that technology there are certainly kinds of applications that are being done in those nuclear power plants is something we could easily do with our technology as well.

John Nelson – State of Wisconsin Investment Board

Have you ever considered exploring any joint ventures with somebody like an iRobot for example, and the markets like that that present extreme or dangerous conditions?

John Dulchinos

It’s certainly not out of the question that we could do that at some point. I guess one of the comments I’d make is typically these kinds of disaster-relief activities are pretty closely aligned to military activities. You know, a lot of times the National Guard gets involved, the government makes commitments to deploy people and technology to help out in these, and that’s why in a case like that, someone like iRobot is well positioned for that because it’s kind of the same – the same commercial sectors are involved that normally buy their products. Where, you know, for the most part, the kinds of companies that Adept sells to today don’t – aren’t that closely aligned with the government.

John Nelson – State of Wisconsin Investment Board

Okay. All right. And I’m wondering about the same thing with regards to companies that may not be aligned with the government, like medical waste disposal or dealing with hazardous waste or something like that, that may or may not be aligned with the government?

John Dulchinos

Certainly potential applications. We have a project we’re working on now that it’s with a customer looking at recycling of electronic components and being able to handle that. You know, I think – I will say that from my prospective, we just need to execute on packaging. That market is enormous. We have technology that nobody else has. The ROIs are compelling and the landscape is largely virgin territory. We just need to be crisp about stand, keep our focus and starting to build that business. We’ve got an excellent pipeline and some, you know, I think we’re adding some very significant marquee customers to the list of potential projects that we’re pursuing now. You know, and I think that, to me is the quickest and most [inaudible] way for us to build our revenue base.

John Nelson – State of Wisconsin Investment Board

Does it – have you been spending a lot or a little as far as – because it is a new market, educating the market so to speak?

John Dulchinos

Yeah, you know, and I think the way it pans out of it, I think I mentioned a little bit earlier in the call, is we get an initial installation to an account, they prove it out, they validate the performance, they validate the reliability and the ROI and then we build credibility with that account that we’re not able to sell additional sales to that customer for that application and a host of other ones. And so we expect this calendar year to be littered with one, two, three, four robot sales for the majority of the kind of orders we’ll get. And then out of that will come much larger orders once those programs are successful and the customers are ready to trust a larger portion of their production to us.

John Nelson – State of Wisconsin Investment Board

How long does it usually take to kind of prove it out with a customer?

John Dulchinos

I think from installation, it’s six months to validate and prove it out and to move forward with additional sales.

John Nelson – State of Wisconsin Investment Board

Okay. Thanks very much.

Lisa Cummins

Thank you, John.

Operator

(Operator Instructions). And our next question is a follow-up question from the line of Sam Bergman of Bayberry Asset Management. Please go ahead.

Sam Bergman – Bayberry Asset Management

I just want to ask John on a comment regarding the packaging business, how large a market do you think that is and how is Adept going to get there? Is it adding to the sales force? Do you have enough of a sales force at this point? And do you have enough product portfolio at this time?

John Dulchinos

Let me answer that in a couple of stages. First, if we got 10% penetration into the market of just natural products, that’s 5,000 to 10,000 sales. Each one sells for $150,000 to $200,000. So you can kind of add that up and say, “That’s a reasonable kind of view of what the potential landscape is.”

What we have is we have a two pronged approach to our strategy. The first is obviously we’re focusing on the major accounts in meat, poultry, dairy, pork, seafood in the U.S. and Europe. And it’s a big list, but it’s a relatively short list when you kind of distill it down to who you want to focus on. So that’s one avenue and that’s certainly putting programs onto our pipeline.

The other avenues, we’re building channel relationships with line builders. And so one of the ways that equipment gets installed in this industry is a major food producer may just acquire a $5 million line that goes from slicing the product, to wrapping it, to boxing it, to cartoning it, to inspecting it, to putting it on a pallet. And those line builders roles were to spring together all the pieces of disparate equipment because nobody has one solution for the whole thing. And so we’ve started to build relationships in Europe, some in Asia, and we’ll start rebuilding them in the U.S. that these line builders will be our customers as well. So they’ll come to us and they’ll have us do the packaging on those lines.

And so a number of the opportunities in Europe in our pipeline right now have come from these line builders. And so that’s a more leveraged sales model because obviously they’re the ones who have the relationship with customers already. And we just are supplying to them like we would any other OEM except it’s at a production sale level rather than a component.

I think we’d certainly want to add sales and applications resources as we go forward, but obviously we’re cognizant of managing our expenses as we ramp this business.

Sam Bergman – Bayberry Asset Management

And just the last remaining question. If I look at your income statements for the last three years, you guys have lost money the last three years. And I know you’ve cut back a little bit but probably added this year some money on research and development. What’s it going to take for the lines that you’re talking about that have growth markets to finally kick in versus what’s happened in the past? I mean, it hasn’t kicked in the past to drive revenue. So I’m just wondering why. Are you missing trends or do you not have the right product portfolio at this point to drive revenue?

John Dulchinos

It’s a good question, Sam. The reason we’ve embarked on these acquisitions is to move our business into segments where we can do a better job of solving customer problems and delivering value that we can command value for ourself.

And packing solutions is a great example. We have the world’s fastest robot in Quattro. It’s the only robot that’s accepted by the USDA for meat and poultry applications. We can’t sell them in the market at a rate we’d like to because there isn’t a developed enough channel to be able to solve these applications. The reason we buy, acquired Amotech was the biggest constraint has been how you handle these products. And so now that we’ve got all that technology, I’m confident we can really build a business here that will be immune from industry cycles because food is a relatively non-cyclical business. And we’ll allow it to really command value and drive revenue growth from this business in a market that’s got pretty wide open potential over the next several years.

Sam Bergman – Bayberry Asset Management

How long is it going to take you to build up that channel though?

John Dulchinos

I think you’ll see us systematically build it up. And I think you should certainly monitor our progress as we go and hold us accountable for that. But we believe we’ll be systematically building it up quarter on quarter.

Sam Bergman – Bayberry Asset Management

Okay, thank you very much.

Operator

(Operator instructions). And at this time, there are no further questions. I’d like to turn the call back over to management for any closing comments.

John Dulchinos

Sure, thank you. I’d like to thank everybody for joining us on this call. I think I would summarize by saying we’re very optimistic about where we’re going. We believe we have the right strategy and the right portfolio of technologies and products. And we look forward to sharing our progress as we make over next quarter and subsequent quarters after that.

So thank you for your support. We’ll look forward to talk to you at the next call.

Operator

Thank you ladies and gentlemen. This concludes the Adept Technology third quarter, 2011 financial results conference call.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Adept Technology's CEO Discusses F3Q11 Results - Earnings Call Transcript
This Transcript
All Transcripts