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Adept Technology, Inc. (NASDAQ:ADEP)

F4Q12 Earnings Call

August 29, 2012 5:00 pm ET

Executives

John Dulchinos - President and Chief Executive Officer

John Dulchinos -President and Chief Executive Officer

John Boutsikaris - Senior Vice President of Global Sales and Marketing

Analysts

Laura Engel - Stonegate Securities

Mark Tobin - Roth Capital Partners

Frank Barresi - Ameriprise Financial

Michael Sage - Private Investor

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Adept Q4 fiscal 2012 year-end 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, August 29, 2012.

Now, 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, August 29, 2012.

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, 2011 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 fourth quarter 2012 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. Results of the fourth quarter were solid marking the end of what we believe was a very successful year in which we achieved the first step in the transformation of our business. As we began to translate the leading edge technology we acquired from MobileRobots and InMoTx, drew products and revenues focused on large underserved markets.

In our packing solutions business, we delivered the next four cells to Earthbound Farms for automation of their leafy green clamshell packaging line. These cells are bringing excellent value to Earthbound Farms and allowing them to strategically rebalance their workforce from low value to high value function while improving their internal cost structure.

The operation with the newly installed Adept packaging solution cells was highlighted last Sunday in the front page of the New York Times article on robotics where Earthbound Farms spoke to the value proposition of automated packaging and the strategic value to their company. The online article had an excellent video where it shows the EBS systems in full operation along with a very nice review of Adept in our industry leading vision guided robot solutions.

In the quarter, we also announced the signing of a strategic development agreement with Earthbound Farms where we will work together to develop, test and market advanced technologies for automated packaging in the fresh cut market. This should allow Adept to continue to advance and refine our automated packaging solution with an industry leading and well respected customer.

In the quarter, we also re-architected our packaging solution to make them more modular, easy to build and facilitated more flexible more sourcing strategy. As part of this, we rebranded the technology we acquired from InMoTx to better reflect the solutions we are providing from our customer's perspective.

In connection with this, we announced the launch of the Adept ClamPAC, Adept's standard automated solution for clamshell packaging utilizing our acquired SoftPIC technology and validated at Earthbound Farms. We will be doing the official market launch of this rebranded product line at Pack Expo, the country's largest packaging show in October in Chicago.

Over the course of this upcoming fiscal year, we expect to launch several additional Adept pack solutions for various secondary packaging applications in the fresh cut and other fruit markets. Finally, in packaging solutions, we have realigned our U.S. sales force as we added dedicated packaging solutions sales people to focus on the commercialization of our solution.

In our mobile robots business, I am pleased to announce the installation and validation of our first vertical application solution with a leading semiconductor foundry customer. Over the past 15 months, we have been working with this lead customer to adapt our unique natural feature navigation technology to automate and optimize the movement of wafer cassettes within their semiconductor wafer fab.

They have recently published article in the Business Times of Singapore. Our customer sates, the typical operator will walk 11 to 14 kilometers per day resulting in more than hour of lost productivity per shift. They went on to say that with efficiency gains made with our robots, they expect to save more than $800,000 in this year alone. This fall, we would be validating the next phase of this program with the installation of the first robot to automatically load and unload wafer cassettes from their process tool.

Semiconductor wafer manufacturing companies are highly motivated to reduce the amount of touch labor they have involved in the production processes because they are a source of contamination. Sterile movement of cassettes is one of the largest remaining sources of labor in these facilities. We estimate this market alone to be $300 million opportunity for the future.

Based on this success, we launched our first two application level Mobile Robot product, the Adept SPC-4200 and the SPH-2200 at SEMICON in San Francisco in July. These Mobile Robot application solutions automate the material movement of SMIF pods as well as the loading and unloading of process tools made for semiconductor wafer facility. The advanced capabilities of our natural feature navigation based robots and Enterprise Manager Suite optimization solution provide a flexible solution that could drop into existing dynamic people environments with minimal or no changes.

Finally, as we look forward in our Mobile Robot business, we will be bringing to market late this year, our first ground up, Adept designed Mobile Robot platform internally code named MTX. This product will be a revolutionary step forward in functionality, price and performance and will be the foundation of all of our Mobile Robot applications in the future. We will discuss this in more detail as we get close to this exciting event.

Wrapping up our new businesses, revenue from this segment was approximately 13% of total revenue in the quarter. As we have discussed on previous calls, success in these businesses is important to our future as the total available markets are very large and virtually untapped but Adept's technology is far superior to any existing competition and to the current manual solution.

Our successfully penetrating these markets, we have already begun to see large order patterns staying with our traditional components business as well as longer lead times and consequently far greater visibility. These characteristics afford a more predictable financial model with simultaneously reducing the exposure to negative shifts in any one market. We are pleased with our success to date and expect to gain continued traction throughout fiscal 2013 and beyond.

Turning to our core business, revenues in Q4 were essentially flat quarter-over-quarter and year-over-year. We saw a slight shift in mix as we recover but most notably a modest uptick in the disk drive market which are a lower margin product but support the continued demand for our legacy applications and the strength of our technology.

With that said, we did see a decline in the orders during the final month of the quarter which is impacting our outlook in the near term. As you all are aware, the front page of any paper has negative commentary about the global economy. The U.S. economy is also showing some signs of weakness during this election year resulting in caution on the part of manufacturers to commit to capital investments at the time and in some cases, delays in programs that were previously set to launch.

We are confident that as we get through the election year, the order patterns will return to normal in growing levels. While the weakened economic climate is poorly timed, given our investment in growth objectives in our new initiatives, it does not change the fundamental soundness of our story. Our premise remains that robotics moving from general purpose industrial arms towards application level solutions in vertical markets for automation as it is largely non-existent or extremely inflexible.

The recent stories in the New York Times and the Business Times of Singapore are a good reflection of this. We believe Adept is in a leading position to enable us to benefit from these trends and we are facing enormous opportunities and are confident we have the right technology to capitalize in these opportunities for a consistent and sustainable growth in profitability.

I will now turn the call over to Lisa for a review of our financials.

Lisa Cummins

Thank you, John. Revenues for Adept's fiscal 2012 fourth quarter were $17.0 million, compared with $16.8 million in the same quarter of last year and $17.5 million from the previous quarter-end. The annual increase in revenues reflects growth in the Asian disk drive markets compared to the prior year quarter which were partially offset be lower demand in the European solar market.

By business segment, robotics revenue which represents sales of our intelligent robotic systems and vision guidance technology and motion control software was $14.1 million for the quarter compared to $13.2 million in the same quarter last year and $14.7 million in the previous quarter.

Looking now at our services and support business, revenues in the fourth quarter of 2012 were $2.9 million compared to $3.6 million in the fourth quarter of 2011 and $2.8 million in the prior quarter.

Looking at revenue by region, European sales were 52% of total revenues in the fourth quarter of 2012, U.S. was 27%, Asia was 20% and 1% for all other.

Turning now to gross margins, for the fiscal 2012 fourth quarter, reported gross margin was 41.5% of revenue compared with 45.3% in the fourth quarter of fiscal 2011 and 41.1% in the previous quarter. While we had anticipated a return to normalized levels during the quarter, gross margin came under pressure as a result of the unfavorable Euro rate and to a lesser extent sales of our lower margin products into the disc drive markets.

Given the current economic climate, we are cautiously optimistic that as sales of our newer packaging solutions and mobile robots continue to become an increasing portion of our revenues, gross margins will begin to improve to sustainable mid to high 40% levels.

Turning to operating expenses, OpEx for the quarter was $7.6 million, compared to $8.8 million in the fourth quarter of 2011 and $8.3 million last quarter. The sequential decrease in expenses is directly related to the consolidation of InMoTx into our California headquarters.

We recorded an operating loss of $531,000 in the fourth quarter of 2012 compared with an operating loss of $1.2 million in the fourth quarter of 2011 and $1.2 million in the previous quarter. GAAP net loss for the quarter was $358,000 or $0.04 per share compared to a net loss of $686,000 or $0.08 per share for the fourth quarter of 2011 and a net loss of $1.5 million or $0.16 per share in the previous quarter.

Adjusted EBITDA which excludes interest, depreciation, amortization, taxes, merger and acquisition expense, restructuring and stock option expense was a loss of $341,000 in the fourth quarter compared with an adjusted EBITDA of $194,000 in the fourth quarter of fiscal 2011 and an adjusted EBITDA loss of $51,000 in the previous quarter.

Now on to the full fiscal year. Revenues for full fiscal year 2012 grew 15.2% to $66.2 million from $57.5 million for fiscal 2011.

By business segment, robotics revenue were $54.8 million in fiscal 2012, compared to $45.1 million in fiscal 2011.

For our services and support business, revenues were $11.4 million in 2012 compared to $12.4 million in the fiscal 2011.

European sales were 49% in fiscal 2012, reflecting increased demand, primarily in the automotive and industrial markets in Germany. Asian sales were 19%, the U.S. sales were 28% and all other were 4%

Gross margins for the full fiscal 2012 was 42.3% of revenue compared with gross margin of 43.3% in the previous year. Operating expenses in fiscal 2012 came in at $31.3 million, compared to $31.4 million in 2011.Operating loss, as reported under GAAP, was $3.1 million compared with operating loss of $6.5 million fiscal 2011.

GAAP net loss for the fiscal year $3.7 million or $0.40 per share which compares with a net loss of $6.8 or $0.77 per share for 2011 Adjusted EBITDA was a loss of $53,000 in the fiscal 2012 year, compared with adjusted EBITDA loss of $1.2 million for fiscal 2011.

Turning now to the balance sheet, Adept ended the quarter with cash and cash equivalents of $8.7 million up from $6 million at the end of March. The increase in cash is primarily due to $3.1 million in proceeds from the public stock offering in June 2012, offset by a $300,000 pay down of our line credit.

Account receivables were $11.9 million at the end of the quarter, down from $13.6 million at the end of March. Accounts payable were $6.2 million, which compares to $7.3 million at the end of last quarter. Inventory levels, net of reserves, were $8 million at the end of the fourth quarter compared with $8.7 million at the end of March.

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 is from the line of Laura Engel with Stonegate Securities. Please go ahead.

Laura Engel - Stonegate Securities

Good afternoon, and thank you for taking my question. I wanted to start with revenues and see if we could talk a little bit about, perhaps, what's in the pipe and maybe you didn’t ship per year and if you can give us any indication as maybe larger projects that you might be working on? In line with that, now that we are at the end of the year, can you also give us maybe an average deal size on some of these orders that you are working on?

John Dulchinos

Hi, Laura, I will take that call. The quarter ended a little softer on orders than we had initially had expected, although we had strong business really across all of our segments. The core business had fairly good strength in Europe and as well as in the U.S. continent.

Our packaging business was slightly down quarter-on-quarter largely just due to the dollar of systems that we shipped but, all in all, I think the quarter was a good step forward for the company.

What was the specific question on order size?

Laura Engel - Stonegate Securities

Just that now that we are at the end of the year and you are getting into new markets and new industries, if you could, maybe, give us an idea of an average deal size? We know that sometimes there can be lumpiness in the revenue recognition based on when things are completed and shipped, maybe if you can give us an idea of what the dollar amounts are where we can add on some of these new business?

John Dulchinos

Sure, I apologize for not answering that specific question. The premise that we have had from the beginning with these new businesses is that the average order size would be substantially larger than it has been in our traditional business and over the course of this fiscal year, it certainly played out. We don’t have the specific numbers that we publish but in both the mobile business on the commercial side as well as the packing solutions business, the orders are on average anywhere from two to five times larger than they are in the traditional components business.

As we have talked about on a number of occasions, as those revenue streams become a larger and larger portion of our business we will be able to translate that into better visibility for the business and a more efficient sales expense as a percent of revenues model for the company.

Laura Engel - Stonegate Securities

Okay, and then, looking at some of the expenses, as far as SG&A and following several quarters of streamlining and consolidation, is the level of G&A in this quarter, is that something we should expect to see maintain? What expectations could you give us for next year, as far was what you will need to support growth and then as the sales companion of that, what increases should we expect to see there to support growth?

Lisa Cummins

Okay, I will take that one, Laura. For our expenses, we are always looking at ways for (inaudible) fees and trying to lower our expenses and SG&A and we have come up with some more efficiencies but these will be offset somewhat with our new investments in R&D but last year, we had quite a significant amount of spending in Denmark in our Denmark entity. So I would expect it to not be increasing from last year.

Laura Engel - Stonegate Securities

Okay, and then, just to touch on some of the new developments in the food packaging area. Some of these, it sounds like grippers and some of the newer technologies are going out for greens and clamshells and things like this. With new business will we always expect to see the requirement for this season of Asians which might affect lead times or is there going to be a point in this industry where we see more standard offerings that are ready to go and maybe even competing customer such as from Adept (inaudible)?

John Dulchinos

I can talk to this and we also have John Boutsikaris on the line and he may provide some added commentary. That’s really the thinking behind the re-architecting of our solutions for packaging was to create a modular product line that would allow us to more effectively target specific application segments with a standard solution that we could sell in to that segment with very little customization for each customer.

That’s what the Adept ClamPAC solution is. It’s a packaging solution. It's targeted at the clamshell application segment in foods and vegetables and that product is a 80%, 90%, 95% standard solution for that segment. So it allows them to take that from one customer such as Earthbound Farms to some of the other players in that segment.

And as I mentioned in my script, we would expect to systematically develop additional versions of packaging solutions targeted at specific areas with each one being a standard solution for a particular application niche.

Laura Engel - Stonegate Securities

Okay, so with further penetrations, we should expect the shorter lead times and I guess an easier ramp on some sales in certain areas?

John Dulchinos

Yes, I think it is important to remember we are still in the beginning phases of these businesses and there tends to be a little bit of lumpiness from one quarter to the next in terms of the timing of orders and the size of orders but as we go forward this will become a much more standardized business and we will be able to build these solutions to forecast where today we are building them to customer order.

So as we ramp sales and really become much more in tune with all the opportunities we will be able to manage the solutions business so that it looks more like a standard component business than a custom automation business.

Laura Engel - Stonegate Securities

Okay, great. Thanks for answering my questions. I will go back in the queue.

Operator

(Operator Instructions) The next question is from the line of Mark Tobin with Roth Capital Partners. Please go ahead.

Mark Tobin - Roth Capital Partners

Hi, John and Lisa, thanks for taking my questions. First on Europe, John, can you give us some more color as far as specific end markets that are impacted there or just basically what are you seeing and how do you expect it to play out over the next 12 months?

John Dulchinos

Well, if I had that kind of visibility, I guess I would probably be in a different job. What I can say is, the first half of this calendar year has been one of the strongest revenue quarters we have had out of Europe in quite some time. So we have had a very healthy business and it's really come from our traditional markets of automotive components, industrial, some solar and some packaging out of France.

Towards the very end of the quarter, we had orders that really started to slow down out of Europe and it gives us some caution about the outlook as we head into what was normally a seasonally slower period of time anyways through the European vacation schedule.

What that really means over the long terms is, it is hard for me to provide a lot of color on it, we don’t specifically provide guidance but I think that as we look at managing the business, we think any slowdowns coming out of Europe are relatively short term in terms of duration but beyond that it is hard for me to add a lot of color in terms of what it means over the long haul.

I will say that the fundamental drivers for robotics and our automation technology's value proposition in the market are sound and consistent and so any change in buying patterns in the near term will ultimately be offset by greater perks in the future as companies need to catch up in terms of their investments in automation.

Mark Tobin - Roth Capital Partners

Okay, and then, I guess as far as the outlook on the two new segments, what kind of visibility do you have? It looks like the semiconductor, the new customer there could be meaningful and that, I assume that it hasn’t ramped up much at this point but that’s something that builds over the course of this fiscal year?

Then both on the robots and packaging, how do you see them ramping up over the next 12 months from a new customer win standpoint and an order flow standpoint?

John Dulchinos

Yes, that’s a great question. First, I have to say, we are extremely fortunate to be working with some just great lead customers and they are providing, in both mobile robot and in packaging and they are providing us some really strong benefits in terms of understanding the application segments and really refining the solutions that we offer.

I really would urge anybody, if they have not seen it, to go look at the New York Times video segment where they really highlight our technology and give us really excellent view of our company. The good news is, the orders are going to be bigger. On average, they have been substantially larger than our component business.

We have a three year objective that these new business segments will represent half of the company's revenues. I would expect that we will systematically, certainly fiscal-year-over-fiscal-year, we will continue to march towards that objective with each year they are becoming a larger portion of our revenues.

Beyond that, it is probably imprudent for me to give an exact timing just because of the variability that happens when you are dealing with new businesses.

Mark Tobin - Roth Capital Partners

I guess, within the packaging solutions in particular, can you give us a quantification of the number of customers you are working with or what we could expect from a new order? Is Earthbound Farms still the single customer within that segment or you have added additional customers?

John Dulchinos

John, are you on the line?

John Boutsikaris

Yes, I am.

John Dulchinos

Do you want to take that call?

John Boutsikaris

Sure, that’s a good question. Earthbound Farms today is our primary customer and we are working with them to fundamentally identify all of the concerns a processor would have with respect to a robotic food cell such as ours and we are really at the very tail end of that. They are actually using our systems in production. The systems are working as well as they expected them or they have actually taken or will lead in a month or so. They have exceeded their expectations.

In terms of the number of other customers, we have a number of activities underway. They are in the sales process. They are within our sale activities and they are meeting our objectives with respect to the timing that we expect or would expect in launching a new product line and the new segment of our business.

So I think we are very happy with where we are at and where we see all of this going, recognizing that Earthbound was a significant launch customer for our product.

Mark Tobin - Roth Capital Partners

Understood, that’s helpful. Thank you. I will jump back in the queue.

Operator

Our next question comes from the line of Frank Barresi with Ameriprise Financial. Please go ahead.

Frank Barresi – Ameriprise Financial

When I think about Earthbound Farms, which sometime I would like to go there and see that. I have to do that, but when I think about it, I imagine they have these clamshell like products you were talking about. I don’t know. They can only use it while they are harvesting at a location. I guess I am correct in understanding that. I was wondering, is that something that they would be able to use a high percentage of the year, the equipment?

John Dulchinos

I will let John answer that since he is the most current on the business practices of the food and vegetable market. John?

John Boutsikaris

Basically, the fresh cut, leafy green processors actually harvest twice a year. They harvest in California and then they harvest in Arizona as well. So they run their operations, in most cases, half a year in California and half a year in Arizona. So they are technically processing a majority of the year.

Again, it depends on the food stuff. It depends on the products. Clamshells are not just for leafy green. There is a variety of products that you can put and whole products that you can put in clamshells. So there really is a wave coming with respect to clamshells because of their ability to limit damage, promote freshness, sanitation and whole host of things that food processors worry about.

So I think that you will see is a larger campaign towards clamshells but they are inhibited just a seasonal processing activity.

Frank Barresi – Ameriprise Financial

Yes, because I just was thinking, what kind of return the customer can get by buying your equipment. I mean, the payback, what are your thoughts as you see how often they are able to use the equipment, how much of the year? I mean what kind of payback do you think they have, John? How long that they buy the system before they get their cash out in savings? What are you finding?

John Boutsikaris

Well, to be very honest with you, people at Earthbound don’t publish their ROI numbers. So I would encourage to give Earthbound a call and maybe discuss that directly with them. But payback, through, generally is less than most capital equipment and they run it a very significant amount of time. They run these lines a significant amount of today during the course of the year.

So they don’t just run them three months and then mothball them and wait for the next year. They run them a significant amount of time during the year and during the course of the daily workday. But in terms of specific payback, that’s really up to the individual processor. We would ask you to have them provide that information. They don’t share with us. We know that its good enough that they want to put these systems in but the actual time frame, they don’t share that information with us.

John Dulchinos

Although I think we can say, Frank, that having been in the automation and capital equipment business my entire career, its rare that a company will buy our kind of technology if it has a longer than a two year payback. So it's just one of those hurdles that it's pretty atypical for someone to extend beyond that kind of time.

Frank Barresi – Ameriprise Financial

Okay, and so then this relationship you have with them, they are going to help you understand and make improvements and I guess, are they are going to act as an agent? Or they are going to get an override or something?

John Boutsikaris

We have a relationship with them. They have taken the position that they are our launch customer. They know that and there are certain obligations that come with that on both sides. What we are doing is, as John has mentioned before, we are creating an 80% standardized solution and then we are trying to personalize 10% to 20% around the product that the customer is generally working with or has as their product mix.

Earthbound has really helped us wring out some of the unique requirements for very specific products like clamshells and bags and things of that type. So they have been very helpful in helping us understand their industry and their requirement from a more intimate standpoint.

Frank Barresi – Ameriprise Financial

Okay, and I had one question on the semiconductor application. Well, two questions, actually. John, you mentioned that it was 300, when we met before you talked about for the 200, I think it was 200 millimeter fabs or the ones who were interested?

John Dulchinos

It is for 200 millimeter wafer cassette. The 300 number is, we look at this segment, the semiconductor set handling segment as $300 million to $500 million market for automated material handling solutions like what we have.

Frank Barresi – Ameriprise Financial

Okay, and that would be the total, if you could convert the whole industry, I guess.

John Dulchinos

Yes.

Frank Barresi – Ameriprise Financial

But this is something you think is the payback as far as you can tell high enough that you think will be universally adapted?

John Dulchinos

Well, I will tell you that Singapore Business Times article and we have got a version of that on our website, is great documentary on the value proposition of automated material handling using our mobile robot technology. I think there are some really good comments. I will point you, if you want to learn more, that’s a good article to read.

Then getting back to the Earthbound Farms discussion, the New York Times did a really nice job spending some time video taping the Earthbound Farms operation. They have it on their website. It will give you a really good sense why they are such a good value proposition from these packaging solutions. You watch our robots moving at 100 cycles a minute or so. It's just a lot of products that can flow through one of these cells.

So it's good ROIs on these kind of solutions.

Frank Barresi – Ameriprise Financial

Okay, I will look at that and then, I guess, the ROIs, I will get in touch with you if I had some other questions after I understand this a little better?

John Dulchinos

Yes.

Frank Barresi – Ameriprise Financial

Okay, good deal. Well, thanks.

Operator

Our next question is a question from the line of Michael Sage, a private investor. Please go ahead.

Michael Sage - Private Investor

Yes, I am still on. Thank you for the presentation. It's excellent. I am new to this, so I may ask an improper question here. I didn’t know what the backlog is as of the end of the year or if that’s even a significant factor? Then the other question is, is there any projection as to when you will see a turn the corner to profitability? I know these is a lot of startup and R&D costs. Those are the two questions, and I am not sure that’s a proper question.

Lisa Cummins

Okay, I will answer. Probably not the answer you want but yes, we don’t disclose our backlog number. So I can't give you that number and we don’t give forward looking guidance although we are working towards achieving profitability and that is out goal.

Michael Sage - Private Investor

Okay, I kind of thought that so but anyway, thank you very much. I enjoyed this.

John Dulchinos

Mike, let me just say, welcome to our story. We love new investors. Profitability is very much on our list of important topics to get to and our objective is to get the company generating net income as quickly as is practical given the current environment and given the really importance of getting these new initiatives to really get and start to drive higher revenues for the business.

Michael Sage - Private Investor

Yes, and I think the branching out into this packaging is great. Did you introduce automation for solar? I imagine that’s been adversely affected.

John Dulchinos

Yes, solar has been kind of a lumpy market. It tends to go up and down in spurts and there has been a fair amount of headwinds in solar over the last quarter or two as the wrestling, whether it's over supply and under funding by government. So our focus is, we like packaging. People need to eat in all kinds of stuff.

Michael Sage - Private Investor

That’s going. Thank you very, very much.

Operator

(Operator Instructions) At this time, I am showing no further questions in my queue. I would like to turn the conference back over to management for closing comments.

John Dulchinos

Well, thank you, everybody, for joining us. We appreciate your support of our business and we look forward to updating you on our Q1 earnings call. Thank you, everybody.

Operator

Ladies and gentlemen, this does conclude our conference for today. If you like to listen to a replay of today’s conference you may do so by dialing 303-590-3030 or 1800-406-7325, and entering the access code of 456-1234-pound. We thank you for your participation and at this time, you may now disconnect.

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