Pulse Electronics Corporation (
Q3 2010 Earnings Call Transcript
November 8, 2010 5:00 pm ET
Jim Jacobson – Director, IR
Drew Moyer – Interim CEO, SVP and CFO
Alan Benjamin – COO
Mike Gallo – CL King
Joe Wittine – Longbow Research
Fred Buonocore – CJS Securities
Sanjay Shetty – BOE Securities
Good afternoon, and welcome to the Pulse Electronics third quarter 2010 results conference call. All participants are currently in a listen-only mode. There will be an opportunity for you to ask questions at the end of today’s presentation. An operator will give instructions on how to ask your questions at that time. (Operator instructions) This conference is being recorded. At this time, I would like to turn the conference call over to Jim Jacobson, Director of Investor Relations. Mr. Jacobson, you may begin
Thank you, Jamie. I’m Jim Jacobson, Director of Investor Relations for Pulse Electronics Corporation. For those of you who may have missed the press release we issued this morning, the company changed its name from Technitrol to Pulse Electronics Corporation. We will discuss this change momentarily.
With me today are Drew Moyer, Pulse Electronics’ Interim Chief Executive Officer and Chief Financial Officer; Alan Benjamin, our Interim Chief Operating Officer; and Mike Ginnetti, our Corporate Controller and Chief Accounting Officer. This afternoon, we will discuss our results for the third quarter of 2010, provide our outlook for the fourth quarter, and discuss the actions we are taking to achieve our operating and financial targets, and then we will take your questions.
Before we begin our presentation, let me take care of four administrative items. First, we will be using a slide presentation to accompany our prepared remarks. A PDF file of the slides has been posted to our website. Go to pulseelectronics.com and click on the link labeled Third Quarter Earnings Materials and then go to the webcast link section in the lower right. Second, this call is being webcast, and a replay will be available on our website for seven days.
Third, we will make statements considered forward-looking within the meaning of Federal Securities Laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that make cause actual results to differ materially from the forward-looking statements. For a discussion of such risks and uncertainties, see the Risk Factors section in our most recent 10-K and 10-Q, as well as in certain of our other SEC filings. The company undertakes no obligation to revise or update any forward-looking statement.
And fourth, in this call, all references to operating profit, operating profit margin, and diluted earnings per share are on a non-GAAP basis. These non-GAAP measures exclude non-cash stock-based compensation expense and accelerated depreciation in the third quarter of 2010 as well as severance and impairment costs in other fiscal periods. For a reconciliation to US GAAP results, see slide 23 in our presentation.
Now I’ll turn the call over to Drew.
Thanks, Jim. And thank you to everyone joining us on the call today. Our earnings release was distributed after today’s market close. I’ll provide an overview of our third quarter performance and discuss our fourth quarter outlook. Alan will give you an operations update and discuss the primary actions we are taking to achieve our operating profit margin target on annual sales of at least $500 million. Then we will take your questions.
Let me start with slide three. As Jim said, earlier today, we announced the company changed its name to Pulse Electronics Corporation. In connection with the name change, we will change the ticker symbol for our common stock listed on the New York Stock Exchange to PULS from TNL. Our stock will begin trading under the new name and ticker symbol at the start of trading on Monday, November 15, 2010. In the interim, our stock will continue to trade under the TNL ticker.
Pulse Electronics Corporation reflects our focus as a pure-play electronic component manufacturer. Our new name unites our corporate and operational identities and is reinforced by the actions we are taking to integrate the holding company and our operations into a single company. We are simplifying our organizational and business structure to leverage our demonstrated strengths of design engineering and high volume manufacturing expertise.
As the world continues to demand more robust networks, enhanced Internet capabilities, broader wireless connectivity, and more efficient power usage, we stand ready to serve our customers and to generate strong growth and to increase value for our shareholders as one unified electronic components leader, Pulse Electronics Corporation.
We also launched a new website available at www.pulseelectronics.com. The new website will further integrate the corporate and operating companies as well as provide a single presence to customers, shareholders and other key stakeholders.
Now let’s turn to slide number four. I’ll give you my perspective on our third quarter performance. We delivered another strong quarter, generating revenue and operating profit that exceeded our expectations. Our performance reflects solid execution of our strategies. In particular, we capitalized on growth opportunities in the network and power markets. We completed the sale of AMI Doduco and used the proceeds to strengthen our balance sheet and improve our liquidity. We also generated strong cash flow from operations.
Turning to slide five, I’ll review our third quarter results, starting with net sales. Net sales grew 20% to $122 million in the third quarter from $101.4 million in the prior year quarter. We are pleased to report that our $122 million in net sales is the highest sales generated in almost two years. We continued to generate strong growth in our Network and Power product lines.