FEBRUARY 14--Adept Technology (Livermore, CA, USA; www.adept.com) has announced financial results for its second-quarter FY2007, ended December 30, 2006. The company also announced plans to rebalance its sales and operational resources to support its strategy to sell control and software products to OEM customers in high-growth vertical markets and to reduce its operating costs through expanded outsourcing of manufacturing.
Revenues in the second quarter of FY2007 were $11.1 million, down 15% from the second quarter of FY2006. This decrease was due to a faster than expected decline of robotics sales into the US automotive, consumer, and industrial components market. Adept launched a strategy in 2005 to transition its revenue base away from industrial robotics and toward high-value software and controls within specific high-growth vertical markets. The company has since developed customized robot systems that incorporate its proprietary motion and vision control software, aimed at the data-management, life-sciences, packaging, and semiconductor/solar vertical markets. However, the growth that Adept has experienced in its target vertical markets could not overcome the decline in the US industrial sector in the second quarter.
Adept's sales of industrial robotics outside the USA continued to be strong in the second quarter of FY2007, and the company's vertical market initiatives also showed progress. In recent weeks the company has introduced new products aimed at its vertical markets, including Quattro, a robot for specialized high-speed packaging applications, and a new medical version of the Viper robot specifically for life-sciences environments.
Adept reported a net loss of $2.6 million, or $0.34 per basic and diluted share, for the second quarter of FY2007, versus a net loss of $262,000, or $0.04 per basic and diluted share, for the same period of the prior year. Adept's cash and short-term investment balance at December 31, 2006, was $11.7 million, as compared to $10.5 million at September 30, 2006. The $1.2 million increase in cash during the second quarter of FY2007 was primarily the result of a higher level of receivables collected during the quarter. Net receivables were reduced to $9.6 million at December 30, 2006 from $12.4 million at September 30, 2006.
In response to the faster than expected decline in its traditional industrial markets in the USA, Adept is implementing a series of actions to rebalance its resources toward those areas where there is the greatest opportunity for revenue growth. The company is also making change in its operations by reducing its fixed cost by approximately 10% to lower the level at which it can break even.
* Adept is redeploying internal sales and marketing resources to support European demand for new and remanufactured products, and services, in both traditional industrial and high-growth vertical markets. The company also is refocusing its sales and marketing resources in the USA around its target verticals in order to maximize the return on its US sales programs. Adept expects these actions will result in higher sales levels within the next two quarters.
* Adept is accelerating service program development activities around its vertical markets in Asia, where the company has established a service sales center in recent quarters. In particular Adept intends to focus on exploiting both data management and semiconductor opportunities for service contracts among its Asian customers. Adept expects these investments to provide new services revenue streams within the next twelve months.
* Adept continues to evaluate revenue improvement opportunities in its target vertical markets through mergers and acquisitions.
* Adept is taking steps to fully outsource the manufacture of all standard industrial robots and components in order to rebalance its operations to align with the decreased volume of sales for these products. The company is targeting the end of calendar 2007 to complete this process. Cost savings from this outsourcing are expected to lower the level at which the Company can break even and support improvement in gross margins.
* Adept is developing plans to reduce excess infrastructure and facilities costs to reflect the outsourcing gains through its relationships with contract manufacturers and expanded outsourcing.
Robert Bucher, chief executive officer of Adept, commented, "Our performance in the second quarter was quite disappointing. The real progress we have made over the last 18 months to transform our product and revenue base was overshadowed by the precipitous decline in US industrial markets. We remain confident in our vertical market strategy and believe that rebalancing our sales and operational resources will allow us to make more rapid progress against our strategic goals, and at the same time improve our flexibility to respond to the market environment in the nearer term."
