JDS Uniphase CEO Discusses F1Q2011 Results - Earnings Call Transcript
JDS Uniphase Corporation (
)
F1Q2011 Earnings Call Transcript
November 4, 2010 5:00 pm ET
Executives
Cherryl Valenzuela – IR
Tom Waechter – President & CEO
Dave Vellequette – CFO & EVP
Analysts
Ajit Pai – Stifel Nicolaus
Mark Sue – RBC Capital Markets
Kevin Dennean – Citi
Troy Jensen – Piper Jaffray
Jeff Evenson – Sanford Bernstein
Subu Subrahmanyan – The Juda Group
Todd Koffman – Raymond James
Presentation
Operator
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Good day, ladies and gentlemen, and welcome to the first quarter 2011 JDSU earnings conference call. My name is Regina and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator instructions) As a reminder, today’s event is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Ms. Cherryl Valenzuela, Senior Investor Relations Manager. You may proceed, ma’am.
Cherryl Valenzuela
Thank you, Regina, and welcome everyone to JDSU’s fiscal 2011 first quarter financial results conference call. Joining me on the call today are Tom Waechter, Chief Executive Officer; and Dave Vellequette, Chief Financial Officer.
I’d like to remind you that this call will include forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management’s current expectations.
We encourage you to look at the company’s most recent filings with the SEC, particularly the Risk Factors section of our annual report on Form 10-K filed on August 31, 2010. The forward-looking statements, including guidance provided during this call, are valid only as of today’s date, and JDSU undertakes no obligation to update these statements as we move through the quarter.
Please note that all numbers are non-GAAP unless otherwise stated. A detailed reconciliation of these non-GAAP results to our GAAP results as well as a discussion of their usefulness and limitations is included in today’s news release announcing our results, which is available on our Web site, at www.jdsu.com.
As a reminder, the quarterly earnings press release, supplementary slides and historical financial tables are posted at www.jdsu.com/investors under the Financial Information section.
Finally, and as a reminder, this call is being recorded and will be available for replay from the Investors section of our Web site.
I would now like to turn the call over to Tom.
Tom Waechter
Thank you, Cherryl, and good afternoon, everyone. I would like to begin by providing an overview of our Q1 financial results followed by highlights of our business achievements in the quarter.
JDSU reported revenue of $411.3 million inclusive of contributions from our NSD acquisition, which represents growth of 37.7% year-on-year and 3.3% sequentially. Book-to-bill for the company was above 1 for the sixth straight quarter, driven by strong bookings in our Optical Communications business.
Gross profit of $195.1 million or 47.4% of revenue improved from 44% in the prior fiscal year and 45.5% last quarter. In both dollar and percentage terms, this represents the highest level of quarterly gross profit for the company in the last five year.
JDSU also reported operating income of $44.4 million or 10.8% compared to 3.4% in the prior fiscal year and 9.3% in the prior quarter. This operating margin exceeds our guidance and is the second highest reported by the company in the last five years. This is within sight of our target operating model of 11% to 14% operating margin when quarterly revenue was greater than $415 million.
Now, let me provide highlights from each of our individual business segments. Given recent mixed messages with respect to the Optical Communications sector, I would like to begin with our CCOP segment. This segment is comprised of two businesses, Optical Communications and Lasers.
The combined CCOP results are as follows. Fiscal Q1 revenue was $168 million and operating margin was approximately 14.4% at the high end of our target model for this segment. Gross margin of 31.9% has improved by more than 11 percentage points year-on-year. Book-to-bill for the segment was the greater than 1.
Now, let me provide more color on each business. First, Optical Communications; fiscal Q1 revenue was $143 million and gross margin was 29.5%. Gross margin improved by approximately 10 percentage points year-on-year and 1 percentage point sequentially due to primarily an increasing mix of new products and cost production activities.
On the revenue side, the 66% year-on-year and 6% sequential revenue increase was driven primarily by growth in our ROADMs, circuit packs, tunable XFPs, gesture recognition products.
Revenue from products introduced within the last two years accounted for more than 60% of total revenue in fiscal Q1 exceeding our target of 50%. We believe that we are positioned very well with our customers and with our differentiated product offerings to see continued growth in this business.
Fiscal Q1 book-to-bill was significantly greater than 1. Our combined book-to-bill was greater 1.6 for our ROADMs, circuit packs, and tunable XFPs. Our Optical Communication backlog entering fiscal Q2 was at the highest level in many years.
We did have a few product lines where our book-to-bill was less than 1 in fiscal Q1. These were telecom pumps, passive components, and pluggables with a combined book-to-bill was approximately 0.85.
I would now like to provide an update on some of our key products beginning with our tunable XFP. In Q1, tunable XFPs accounted for approximately 7% of total Optical Communications revenue.
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