Harmonic Inc. (HLIT) Q1 2012 Earnings Call April 24, 2012 5:00 pm ET Executives Patrick Harshman – President and Chief Executive Officer Carolyn V. Aver – Chief Financial Officer Analysts James Kissner – Jefferies & Co. Mark McKechnie – Thinkequity Llc Blair King – Avondale Partners LLC Presentation Operator
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Please note that unless otherwise indicated, the financial metrics we provide you on this call are determined on a non-GAAP basis. These items together with corresponding GAAP numbers and a reconciliation to GAAP are contained in today’s earnings press release, which we have posted on our website and filed with the SEC on Form 8-K.We will also discuss historical, financial, and other statistical information regarding our business and operations. Some of this information is included in the press release, and the remainder of the information will be available in a recorded version of this call on our website. With that, let me turn the call over to Patrick. Patrick Harshman Thank you, Carolyn, and thank you everyone for joining us today. Turning now to our slide three, today, we reported our results for the first quarter of 2012, which were in line with the preliminary estimates that we announced earlier this month. We had disappointing first quarter revenue of approximately $128 million. We approximately got off to an unusually slow start, and our European business remains soft throughout the quarter. As one would expect, the weakness in Europe had the most significant impact on our revenue for the video processing and production and playout product categories. On the other hand, we had a very strong quarter for our cable business with particularly robust demand for edge and access products. Our first quarter bookings tell us different story than revenue. Our bookings were record $142.5 million, up 8% from the first quarter last year; and generally in line with our original expectations. Excluding the continued softness in Europe, we saw solid momentum across every other geography, and we had record service and support bookings. Our operating performance was also disappointing relative to recent quarters, as gross margin slipped to 47%, reflecting an unusual product mix driven by the software video processing and production and playout results in Europe and stronger edge and access sales. As a result, we realized non-GAAP earnings of $0.03 per share. And we also generated approximately $7 million of cash during the period.
Turning now to slide 4, our earnings call in January laid our three years of strategic focus for 2012. Continuing the broadband on global customer base, extending our product leadership position and then achieving operational excellence. We remained very focused on these initiatives, so let’s take a closer look at our progress over the past quarter.Turning now to slide 5, we have indeed continued to broaden our global customer base for the first quarter. Excluding the softness in Europe, our strong bookings growth demonstrates our solid competitive momentum, in other regions worldwide. In particular we had record Latin America bookings and a strengthening Asia-Pacific business as demand from Japan is bouncing back. At the same time, our global cable bookings where strong up 13% from the first quarter last year. As we did in 2011, we continue to expand our global footprint broadcast and media customers. Including our recent announcement from significant alliance with Modern VideoFilm, NBC, Home Depot. We also continued to expand our global footprint with video service providers driven by our broaden portfolio products and services. We will penetrate in deeper into our long-standing service provider customers and leaning over new customers, including our recently won IPTV project with a major teleco. And turning to slide 6, well multi-screen video represents relatively small portion of today’s global video infrastructure spending, more engaged in an increasing number of deployments involving new approaches to producing and delivering over the top second screen services, this is spanning both on-demand and live broadcast. Read the rest of this transcript for free on seekingalpha.com