ModusLink Global Solutions' CEO Discusses Q2 2012 Results - Earnings Call Transcript

ModusLink Global Solutions (MLNK)

Q2 2012 Earnings Call

March 07, 2012 5:00 pm ET


Steven G. Crane - Chief Financial Officer and Principal Accounting Officer

Joseph C. Lawler - Chief Executive Officer, President, Executive Director, Chairman of Business Development Committee and Member of Technology Committee

Thomas Nightingale - President - Sales and Marketing



Ladies and gentlemen, thank you for standing by. Welcome to the ModusLink Second Quarter Fiscal 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, Wednesday, March 7, 2012.

Our speakers for today are Mr. Joseph Lawler, President and Chief Executive Officer; and Steven Crane, Chief Financial Officer.

I would now like to turn conference over to Mr. Crane. Please go ahead, sir.

Steven G. Crane

Thank you, George. Good afternoon, everyone, and thank you for joining us for ModusLink Global Solutions Fiscal 2012 Second Quarter Conference Call. I'm Steve Crane, CFO. And I'm joined today by Joe Lawler, President and CEO; and Tom Nightingale, President, Sales and Marketing. In just a few moments, Joe will share his thoughts on the company's financial performance. After Joe's comments, I will review in more detail our fiscal 2012 second quarter results, which we released earlier today. Joe and Tom will then conclude our prepared remarks with an update on our strategic initiatives.

Before we start, I want to remind you that this call is being broadcast as a live webcast from our website at Please also note that the information we're about to discuss includes forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed herein.

Factors that could contribute to such differences include, but are not limited to, those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking information that is provided by the company in this call represents the company's outlook as of today, and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change.

During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure can be found in our earnings release issued earlier today, a copy of which is posted in the Investors section of our website.

I'd now like to turn this call over to Joe Lawler. After our formal remarks, we'll be happy to take your questions. Joe?

Joseph C. Lawler

Thanks, Steve. Good afternoon, and thank you for joining us. I would also like to welcome Tom Nightingale to the call. Tom is traveling today, meeting with clients, so he is joining us remotely.

Before I discuss our quarterly results, I'd like to briefly comment on our strategic alternatives process. As you know, in November, we announced that our Board of Directors initiated a comprehensive review of the various strategic options available to the company to enhance stockholder value. The review is well underway. It would not be appropriate for us to comment further until our board has completed its review and approved a definitive course of action. So for today's call, we will only be taking questions regarding our quarterly results.

On this call, we'll focus our comments on 3 primary areas. First, revenue reflected expectedly lower volumes from certain client programs compared to the second quarter of last year and was also impacted by client-specific conditions and the continued challenging environment particularly in Europe. For example, 2 clients in the computing market experienced supply chain constraints, which primarily affected our operations in Asia. In addition, and as expected, our planned investments and one-time costs impacted profitability in the second quarter. Steve will provide a more detailed overview of our financial results in just a moment.

Second, we continue to execute on our investment and cost reduction plan that we're implementing throughout fiscal 2012, and we are on track to achieve our stated objectives of annualized savings of $30 million to $40 million. The ongoing execution of our cost reduction actions are aimed at improving our profitability, as the results of our investments in sales and marketing begin to take hold.

And third, the investments we've made in sales and marketing are gaining traction, and we are confident in their ability to improve our revenue trajectory. Today, our pipeline of sales opportunities is at its highest level since before the economic recession took hold in fiscal 2008. And new business sold in the first half but not yet contributing to revenue is ahead of the previous fiscal year.

In addition, we've combined sales and marketing under one leader, and we are excited that Tom Nightingale joined our team as President of Sales and Marketing in December. On today's call, Tom will comment on the pipeline and new business sold to date, as well as provide us perspective on the opportunities we see in the market and the actions we're taking to grow revenue.

Our financial results for the second quarter underscored the importance of these investments that are aimed at putting ModusLink on a path of sustained top line growth. The investments are focused on achieving higher levels of revenue from new programs in areas that present the greatest opportunity for growth and profitability. We're making very good progress, and Tom will update you on our actions later in the call.

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