Rudolph Technologies, Inc. Q1 2008 Earnings Call Transcript

udolph Technologies, Inc. (RTEC)

Q1 2008 Earnings Call Transcript

May 5, 2008 4:45 pm ET


Bob Cook – IR

Paul McLaughlin – Chairman and CEO

Steven Roth – CFO

Alex Oscilowski – COO


Suresh Balaraman – ThinkPanmure

Steve O’Rourke – Deutsche Bank Securities

Patrick Ho – Stifel Nicolaus

Mahesh Sanganeria – RBC Capital Markets

Gary Hsueh – Oppenheimer & Co.

Gus Richard – Piper Jaffray



Good afternoon. My name is Marcus and I will be your conference operator today. At this time, I would like to welcome everyone to the Rudolph Technologies first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer period. (Operator instructions) Thank you.

It is now my pleasure to turn the floor over to your host, Mr. Bob Cook. Sir, you may begin your conference.

Bob Cook

Thank you, Marcus, and good afternoon, everyone. Rudolph issued its first quarter 2008 earnings release this afternoon shortly after the close. If you have not received a copy of the release, please call my office at 973-448-4306 and a copy will be faxed or emailed to you. Joining us on the call today are Paul McLaughlin, Chairman and Chief Executive Officer; Alex Oscilowski, Chief Operating Officer; and Steven Roth, Chief Financial Officer.

As is always the case, I need to remind you of the Safe Harbor regulation. Any matters today that are not historical facts particularly comments regarding the company’s future plans, objectives, forecasts, and expected performance consist of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such estimates whether expressed or implied are being made based on currently available information and the company’s best judgment at this time. Within these is a wide range of assumptions that the company believes to be reasonable. However, it must be recognized that the statements are subject to a range of uncertainty that can cause the actual results to vary materially. Thus, the company cautions that these statements are no guarantees of future performance. Risk factors that may impact Rudolph’s results are described in the company’s latest Form 10-K as well as other periodic filings with the SEC. Rudolph Technologies does not update forward-looking statements and expressly disclaims any obligation to do so.

I will now turn the call over to Paul McLaughlin. Paul, please go ahead.

Paul McLaughlin

Thank you, Bob. Good afternoon, everyone, and thank you for joining us for Rudolph Technologies first quarter 2008 conference call. In our prepared remarks, I will give you a top-level look at issues important to Rudolph. Then, Steve will provide Q1 financial details. This will be followed by Alex, who will update us on the progress with our new products, order flow, and integration status of both our recent acquisitions. Following that, I will return to discuss our Q2 guidance.

To begin, we are pleased with the top-line results for Q1. However, we made a series of decisions in Q1 that consciously brought the operating line below what we would normally consider acceptable. Fundamentally, we chose to invest in our future at the expense of short-term EPS. You will note that we were $0.03 below the bottom of our EPS guidance range on a pro forma basis and were not operationally profitable.

From a top-level perspective, let me give you some color on two of the major strategic decisions we made that will help you better understand what we are doing. First, since our customer base is shrinking and consolidation is happening in the memory area, we felt to accelerate growth in the top line we needed to continue to aggressively invest in three areas – one, organic growth; two, inorganic growth; and three, selected strategic initiatives.

You will notice in our results that we spent $7.8 million in R&D in the quarter, up from $6.7 million last quarter as we chose not to cut back on key R&D programs in our core business and to continue with selected development programs already underway at both our acquisitions. We believe that this R&D spending is necessary to gain customer mindshare and consequently gain market share as we accelerate out of the downturn. You will hear some specifics from Alex about these new products.

In the area of inorganic growth, you all know we have expanded our total addressable market with acquisitions of probe card test and analysis products from Applied Precision and acquisition of 3-D inspection intellectual property and selected assets from RVSI. Spending to bring those operations quickly into the Rudolph family was heavy in Q1 and will continue for a while longer. Steve will discuss the effects of that on our P&L, and both Steve and Alex will discuss synergies already realized and what further synergies can be expected….to read mpre visit