Harman International Industries Inc. (HAR)
F4Q10 (Qtr End 06/30/10) Earnings Call
August 05, 2010 4:40 pm ET
Dinesh Paliwal - Chairman and CEO
Herbert Parker - CFO
Himanshu Patel - JPMorgan
Chris Ceraso - Credit Suisse
Michael Novak - Frontier Capital
Himanshu Patel - JPMorgan
Chris Ceraso - Credit Suisse
David Leiker - Robert W. Baird
Darren Campbell - George White Associates
Previous Statements by HAR
» Harman International Industries Inc. Q1 2010 Earnings Call Transcript
» Harman International Industries Inc. F2Q10 (Qtr End 31/12/09) Earnings Call Transcript
» Harman International Industries, Inc. F1Q10 (Qtr End 09/30/09) Earnings Call Transcript
Good afternoon and welcome to Harman's fiscal 2010 fourth quarter and year-end earnings conference call. At this point all of your phone lines are muted or in a listen-only mode. However later during the conference there will be opportunities for questions and those instructions will be given at that time. As a reminder today's conference call is being recorded.
Please note that certain statements made by the company during this call are forward-looking statements. These statements include the company's beliefs and expectations as to future events and trends affecting the company's business, and are subject to risks and uncertainties. Persons participating on the call today are advised to review the reports filed by Harman with Securities and Exchange Commission, regarding these risks and uncertainties.
With that here our opening remarks is Harmen's Chairman and Chief Executive Officer Dinesh Paliwal. Please go ahead, Mr. Paliwal.
Thank you. Good afternoon ladies and gentlemen and thank you for joining the Harman fourth quarter and full year 2010 investor and analyst call. I'm joined in Stanford today by Herbert Parker, our Chief Financial Officer and Bob Lardon, Vice President, Investor relations.
Ladies and gentlemen Harman's performance in the fourth quarter shows robust continued progress and rounds out a fiscal year of dramatic transformation. Our progress has been extremely encouraging; with all key performance indicators are improving. While navigating a deep and persistent global economic downturn, we have clearly demonstrated that our efforts to optimize our business portfolio and global footprint, accelerate product innovation and transform our cost structure are delivering results.
On a year-over-year basis, we grew sales for the quarter by 29% and by 18% for the full year. We are also proud to report that we ceased new growth opportunities in Brazil, India and China, where we grew combined our sales by 330% to more than $0.25 billion level.
Our order backlog now stands at $12.2 billion, driven largely by increasing demand in the automotive market for our next generation technology platforms we launched in last few quarters. Our non-GAAP operating income of $30 million for the quarter contributed to an increase of more than $200 million for the full fiscal year. And I'm pleased to report that we are ending the year in an extremely strong cash position. Our prudent cash management and the successful sale of QNX Software Systems has helped us improve our cash position to $646 million. While we're still financing the recent acquisition of Selenium, in Brazil, and fully paying down our revolving credit facility, it is quite remarkable.
We have increased our total liquidity by 48% to $871 million level on a year-on-year basis. Once again, that is a remarkable achievement. That gives us plenty of flexibility for the strategic initiatives we see ahead. As reported in the news, many large electronic component suppliers in Japan, Germany and the United States struggled to meet an unprecedented increase in demand and obviously the life on these suppliers. In order to meet our own production needs, so that we can keep our customer's production lines humming without any interruption, we made the decision to incur additional cost in procurement and logistics during the quarter to ensure that we have sufficient allocation of electronic components and we were successful in making sure our customers had full production lines running 24 X 7 as they desired.
This upsurge in demand also increased our confidence to accelerate investments in additional production lines, sales, marketing and business development to continue our market share gains. Harman's STEP Change program remains ahead of target and it delivered $350 million in permanent cost savings which is nearly 90% of our total program and those $350 million permanent cost savings were achieved as of fourth quarter and that positions Harman for a new and of best-in-class cost and capital structure.
Herbert Parker will provide a closer look at our quarterly and full year results in few minutes. Meanwhile, I will share a few strategic highlights of our recent activities. I am very pleased to announce two significant new automotive awards worth $1.8 billion as reported in our press release today and it's also on our slide back you might have seen by now.
Our scalable next generation infotainment system which we launched fall of 2009 calendar year, has scored another big win. With the announcement today that Harman will supply future vehicles worldwide for Chrysler Group and for Fiat Group. This award complements our long standing branded audio and infotainment relationship at Chrysler and brings another exciting global automotive award with Fiat.
We are also pleased to report another strategic win with the news that Toyota will offer Harman infotainment on its vehicle sold in North America. Ladies and gentlemen that is again a big game changer. This follows a similar Toyota European award that we announced earlier. We are extremely pleased. We are very pleased to win this new comparative infotainment business at Toyota as well as Fiat and Chrysler. And that complements our successful branded audio relationship with Toyota and Chrysler.
As you know, we also announced a few weeks ago that Harman was selected by BMW to provide the premium entry infotainment system for its entry level luxury vehicles. Many of you know that we have always been the leader in premium high infotainment segment of the market. Now with our successful launch of premium mid, that is our next generation scalable system we launched last year and now the premium entry infotainment system, we have rounded out and expanded our market and we are able to spread now our research and development dollars and engineering costs over a larger base; meaning much bigger scale. That means cost savings and higher efficiencies. This will also mean a significant savings in coming years, not just in this year, and much wider customer in geographic penetration to come. These new projects contribute to an awarded business backlog now at $12.2 billion. That is up by 39% from $8.8 billion at the end of last fiscal year.