Nasdaq: ADEP
2Q 2012/2Q 2011 Results:
Revenue: $10.8 million/$15.1 million
Net loss: $5.2 million/$1.2 million
Net lost per share: $0.49/$0.13

A bruised (optimists would say tested) Adept Technology began 2013 newly shuffled, trimmed, funded and focused. Equity markets have noticed Adept’s realignment – a few short years in the making—but investors are impatient with a recovery that is proving elusive.

Adept’s per-share price ($3.48 at the time of this writing) is one-fifth of its peak in 2006.

Still, CEO John Dulchinos has read the landscape correctly, steering the company away from oblivion as a niche supplier of stationary component robotics and related software primarily to the tech and electronics industries.

Expanding markets

Marketing, Manufacturing and Management departments have been recast to also sell new mobile systems as well as traditional. And, rather than viewing the world as sales silos, the workforce is being strongly encouraged to see robots as horizontal systems.

The company also is cultivating integration partnerships in newer markets, notably food packaging. This is partly an effort to woo skittish prospects that want a single point of responsibility for automated production lines. It’s also savvy recognition that systems integration is not one of Adept’s strong suits.

Unknowns include:
• Geographic markets that either are stuck in neutral (Europe), comparatively small (China) or underperforming (United States)
• Uneven growth in industry sectors
• The ability of new leadership and management teams to implement sobering changes and regain positive cash flow

Financial profile

Second-quarter figures, announced Feb. 6, disappointed Wall Street. Revenue was $10.8 million, compared to $15.1 million for the same period a year ago, according to newly appointed CFO Michael Schradle. Six-month revenue also was down substantially.

Even accounting for restructuring charges related to the 20% reduction in headcount last November, operating expenses grew somewhat year over year, to $8.8 million, during the same period.

Adept’s year-over-year second-quarter net loss almost quintupled, to $5.2 million. Six-month net losses exploded, from $1.8 million in December 2011 to $8.3 million over the same period in 2012.

“We are near the bottom,” Dulchinos, a 26-year veteran of the firm, told analysts during a conference call to discuss the second-quarter results. Perhaps, but call participants were not assuaged, particularly when he said Adept wouldn’t return to a break-even cash-flow stance until the end of the fiscal year, six months from now.

Assuming Adept maintains its 40% margins, and projected cost cutting is completed by fiscal year end, Dulchinos said, the company’s cash-flow break-even point will be “in the low $50 million range.”

Shoring things up, Adept in September 2012 closed a private placement of 8,000 shares of its Series A convertible preferred stock to affiliates of Hale Capital Partners for total gross proceeds of $8 million. The shares are convertible into common stock at $4.60 per share. Adept said at the time the funds would go toward general purposes including the growth of its mobile and packaging businesses, and debt reduction.

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About the author

Jim Nash

Jim Nash is a business and science writer with bylines in The New York Times, Scientific American, Wired and Forbes.com.