Eighteen months ago, Adept Technology Inc. began a "recovery process"-- an emergency triage for the robotics and machine vision company -- comprised of divesting non-strategic business, reinventing the management team and pouring money back into R&D. With the disclosure of its fourth quarter and year-end fiscal results late yesterday, the company proclaimed the operation a success.
For Q4 2005, ended June 30th, Adept reported net income of $633,000 on sales of $14.4 million. The numbers were comparable to the year ago period which had sales of $14.5 million and net income of $569,000.
Year-end numbers showed a similar sales pattern, but a very different income statement. For fiscal 05, Adept reported revenues of $50.5 million compared to $49.1 million in fiscal 04. However, this year showed a net income of $1.0 million vs. last year's net loss of $7.3 million.
To put it into perspective, the net loss in 2004 was a direct result of discontinuing all of its system integration operations that the company said was causing it to hemorrhage. During the restructuring, the company outsourced all of its manufacturing to Japan, outsourced its logistics, replaced the entire financial staff as well as senior management across departments, and whittled the company down to a group of people with "core capabilities" in R&D and sales and marketing.
Now, says Adept Chairman and CEO Robert Bucher, who took office 18 months ago, the company is on a healthy recovery path.
"Eighteen months ago we made the decision that we are a technology company, not a systems integrator, so we divested all of those solutions," said Bucher in an interview with Managing Automation. "It dropped revenue to [about] $40 million, but in a year and a half we've built it up to $50 million. ... Of course, better than break even isn't where you want to be. We want to be cash flow positive ... next year is all about doing that."
Bucher said one of the reasons the company did not become profitable sooner in the restructuring process is because it has funneled money back into R&D. In the next few months, customers will begin to see the fruits of that labor as new products are introduced across the company's product line, including 6-axis robots, intelligent machine vision and a sophisticated control network.
The robot products, designed for dexterity and precision, are becoming very popular in industries such as consumer electronics where demand for the micro-disk, used in popular devices such as cell phones and iPods, is strong. Adept is focusing much of its sales efforts in Europe and Southeast Asia, but there is still a big opportunity in the U.S, which currently generates about 35% of Adept's revenue.
According to a recent report from the Robotic Industries Association, North American robotics suppliers enjoyed a 36% increase in orders in the first half of 2005. A total of 10,712 robots valued at $638.9 million were ordered by North American companies through June, the report stated.
Adept has established a strategy to cash-in on the opportunity and help drive top-line growth. "It comes down to execution," Bucher said. "We run at 50% marketshare in our [U.S.] market, so there's not a whole lot more to get without making serious dents into competitors' customers ... so we'll have to go after their customers."
Based on the portfolio of products the company is getting ready to release, Bucher says he is confident the company will see positive results. Moreover, the company is getting ready to release a web-based tool that will allow customers to configure products to their specifications online, allowing on-the-fly customizations and quick turnaround. The tool, said Adept officials, will cut delivery time from 12 to 14 weeks to a mere two to three weeks.
The tough part, Bucher said, is over. Now it's all about growing the company. "We are expecting a good year."