Adept Technology restructures, sees soft '09 sales
NOVEMBER 17, 2008--Adept Technology (Livermore, CA, USA; www.adept.com), a provider of intelligent vision-guided robotics, has executed a comprehensive restructuring plan as part of an overall initiative to focus on generating cash flow while at the same time investing for growth in its target markets.
NOVEMBER 17, 2008--Adept Technology (Livermore, CA, USA; www.adept.com), a provider of intelligent vision-guided robotics, has executed a comprehensive restructuring plan as part of an overall initiative to focus on generating cash flow while at the same time investing for growth in its target markets. The company anticipates that the restructuring actions will result in a reduction of operating expenses of $700,000 to $1 million per quarter and expects the restructuring activities to be completed by the end of its second fiscal quarter of 2009, ending Dec. 27, 2008.
"We are implementing these cost reductions with the intent to redistribute our sales and engineering resources to focus on our target markets of solar and packaging, while at the same time achieving the desired reduction in our cost structure to achieve cash flow positive as quickly as possible," says John Dulchinos, Adept CEO.
The restructuring plan includes the following measures:
- A reduction in labor force including termination of approximately 8% of Adept employees and a determination not to fill certain additional open positions.
- Consolidation of facilities and certain administrative functions currently geographically disbursed, and closure of facilities in Canada and North Carolina.
- Additional outsourcing of non-core functions, including global IT support for certain functions.
- A phase-out of certain legacy products including certain remanufactured robots.
- Consolidation of certain operating functions within the Service and Quality department.
As a result of these actions, the company expects to record restructuring charges totaling approximately $2.4 million in its second fiscal quarter of 2009, which includes a $1.8 million write-down of service inventory related to the discontinuation of remanufactured robots.
Revenues for the first quarter of fiscal 2009 increased 4% to $14.3 million, compared to $13.7 million for the same period last year, and decreased 14.4% from $16.7 million in the fourth quarter, in line with historical trends, as the company's first quarter is seasonally softer than its fourth quarter. The increase over the first quarter of FY08 was driven by 12% growth in the company's core robotics business. Adept reported a GAAP net loss of $1.6 million, or $0.20 per share, which includes a lease dispute settlement payment and legal fees associated with the relocation of its Livermore corporate office totaling $1.1 million, offset by a $596,000 reversal of a related restructuring charge on the leased space, as well as losses from foreign currency exchange related to the strengthening of the US dollar and Japanese yen.
This compares to net income of $293,000, or $0.04 per fully diluted share in the first quarter of fiscal 2008 and net income of $899,000, or $0.10 per fully diluted share in the fourth quarter of fiscal 2008. Adjusted EBITDA loss was $0.8 million in the first quarter of FY09, compared with adjusted EBITDA of $1.1 million in the first quarter of FY08 and adjusted EBITDA of $1.4 million in the fourth quarter of FY08. A discussion of this non-GAAP measure and reconciliation of this measure to the applicable GAAP measure is included below.
Gross margin was 46.2% of revenue in the first fiscal quarter of 2009, compared with 53.5% of revenue in 1Q08 and 48.5% in the 4Q08. Adept's gross margin in the first fiscal quarter of 2008, as reported then, was favorably impacted by a one-time, high margin license deal for $570,000, unrelated to its core robotics business. Operating expenses for the first quarter of FY09 were $7.7 million, which includes the previously mentioned lease dispute settlement payment and related legal fees totaling $1.1 million. This compares to operating expenses of $6.8 million in the same quarter of FY08 and $8.0 million in 4Q08. Operating loss for the quarter was $1.1 million, compared with operating income of $549,000 a year ago and operating income of $116,000 in the fourth quarter of FY08.
Adept's cash and short-term investment balance at Sept. 27, 2008 was $12.3 million, as compared to $15.2 million reported as of June 30, 2008 and $9.9 million at Sept. 29, 2007.
"During the quarter we saw strength in our core robotics business, achieving 12% revenue growth over the same period last year," says Dulchinos. "In our solar and packaging verticals, we continued to see strong interest in our robotics solutions as a result of the significant value our solutions provide to our customers. However, as we enter the second quarter, we are starting to experience some softness due to the macroeconomic environment's effect on our customers. While this may affect our near term business, we remain very optimistic about the long term growth prospects related to our target markets and are especially excited about our newly developed inspection product for the solar market."
Dulchinos says, "Looking forward, we will focus on generating cash flow from operations and will be taking steps in our second quarter to restructure expenses in non-core initiatives including additional outsourcing to offset potentially lower revenues while allowing us to continue to invest for growth in our target markets. We remain confident that we are well positioned to return to growth once the economy begins to recover."