JDS Uniphase Corp. (JDSU)
F4Q2010 Earnings Call Transcript
August 25, 2010 5:00 pm ET
Cherryl Valenzuela – IR
Tom Waechter – President & CEO
Dave Vellequette – CFO
Mark Sue – RBC Capital Markets
Troy Jensen – Piper Jaffray
Kevin Dennean – Citi
Jeff Evenson – Sanford Bernstein
Paul Bonenfant – Morgan Keegan
Ajit Pai – Stifel Nicolaus
Subu Subrahmanyan – The Juda Group
Todd Koffman – Raymond James
Greg Mesniaeff – Needham & Company
Cobb Sadler – Catamount Advisors
Previous Statements by JDSU
» JDS Uniphase Corp. F2Q10 (Qtr End 01/02/10) Earnings Call Transcript
» JDS Uniphase Corp. F1Q10 (Qtr End 10/03/09) Earnings Call Transcript
» JDS Uniphase Corporation F4Q09 (Qtr and Yr End 27/06/09) Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the fiscal fourth quarter 2010 JDSU earnings conference call. My name is Melanie and I will be your coordinator today. At this time, all participants are in a listen-only mode. We will accept your questions at the end of this conference. As a reminder, today’s call is being recorded.
I would now like to turn the call over to Cherryl Valenzuela, Senior Manager of Investor Relations. Please proceed.
Thank you, Melanie, and welcome to JDSU’s fiscal 2010 fourth quarter and year-end 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 report Form 10-Q filed May 07 2010 and in our most recent Annual Report.
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
Also, please note that beginning this quarter JDSU will provide slides with detailed earnings data concurrently with the earnings press release. The slides for fiscal Q4 along with historical financial tables and corporate factsheet have all been posted in the investor portion of our Web site at
under the financial information section. These slides are supplementary in nature and will not accompany this earnings call. Finally, and as a reminder, this call is being recorded and will be available for replay from the investor section of our Web site.
I would now like to turn the call over to Tom.
Thank you, Cherryl, and good afternoon everyone. I’d like to begin by providing an overview of our Q4 financial results followed by highlights of our business achievement in the quarter.
JDSU reported revenue of $398.1 million, as we continued to see robust demand across all of our segments. For the fifth quarter in the row, overall book-to-bill for the company was above 1. Each of our three segments also had a book-to-bill greater than 1 with particular strength in our CCOP segment.
Overall gross margin for the company improved to 45.5% from 44.1% last quarter and 42.2% last year as each segment improved its gross margin on a sequential basis. This quarter, we saw a return to more typical pricing environments in our CommTest and Optical communications businesses.
JDSU reported operating income of $37 million or 9.3% of revenue. In percentage terms, this is at the high end of the guidance we provided during our previous earnings call and represents in both dollar and percentage terms, JDSU’s highest level of quarterly operating income since December of 2007.
I’d also like to highlight the strength in our balance sheet. In Q4, JDSU generated cash from operations of approximately $47 million. The strong cash flow was driven by positive trends in working capital, as we reduced DSO sequentially from 65 to 63 days and posted an inventory turnover ratio above 7.
Now let me provide more details on the performance of our individual business segments. First, the CommTest segment. Fiscal Q4 revenue was $186.2 million, gross margin was 56.1% and operating margin was 11%.
In Q4, we completed transition of our North American high volume product revenue to contract manufacturers. Book-to-bill was greater than 1 for the fifth consecutive quarter. Growth in both revenue and bookings was driven by strong demand from North America and Asia Pacific.
The NSD acquisition from Agilent closed at the beginning of May and contributed approximately $16 million of revenue. This acquisition complements and strengthens our industry-leading CommTest product portfolio by creating an end-to-end wireless network test solution and expands our addressable market by nearly $800 million.
We are now positioned to provide test equipment in services to support the accelerating transition to LTE. In fact, our technology leadership was recognized by wireless industry experts in June when JDSU’s LTE Network Trial Solution won the best testing product for LTE award at the Annual LTE World Summit in Amsterdam.
Also in June, we announced that our Signaling Analyzer Real Time, or SART, solution quickly and successfully validated results from rapidly changing test scenarios during a series of intense two-week long major LTE interoperability trials in Dusseldorf and Beijing.
Finally, we expect LTE deployments will be ramping in calendar 2011. We are already engaged with over a dozen network equipment manufacturers and service providers around the world. In Q4, we recognized revenue from LTE customers in the U.S., Korea, Germany, Sweden, France, and Japan.