Plantronics' CEO Discusses Q4 2012 Results - Earnings Call Transcript

Plantronics (PLT)

Q4 2012 Earnings Call

May 01, 2012 5:00 pm ET

Executives

Greg Klaben - Vice President of Investor Relations

S. Kenneth Kannappan - Chief Executive Officer, President and Executive Director

Barbara V. Scherer - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance & Administration

Analysts

John F. Bright - Avondale Partners, LLC, Research Division

Joanna Makris - Mizuho Securities USA Inc., Research Division

Rohit N. Chopra - Wedbush Securities Inc., Research Division

Gregory Burns - Sidoti & Company, LLC

Presentation

Operator

Good afternoon. My name is Maia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 Fiscal Year 2012 Plantronics Financial Results Conference Call. [Operator Instructions] Mr. Klaben, you may begin your conference.

Greg Klaben

Thanks, Maia. Good afternoon, everyone, and thanks for joining us. Joining me today are Ken Kannappan, Plantronics' President and CEO; and Barbara Scherer, Senior Vice President of Finance and administration CFO.

I'd like to remind you that during the course of today's conference call, we may make certain forward-looking statements that are subject to risks and uncertainties as outlined in today's press release. As we've highlighted before, the risk factors in our press release and SEC filings are not standard boilerplate. We update these risk factors every quarter for significant changes, adding and dropping language and changing the order, depending upon the timing and potential impact of the concerns that we foresee.

We believe forecasting our results of operations is difficult, and we ask you to focus particular attention on these risk factors that could cause actual results to differ materially from those anticipated by any such statements.

For further information, please refer to the company's forms 10-K, 10-Q, today's press release and other SEC filings. We'll be discussing non-GAAP measures during today's call, and we have reconciled these measures in our earnings press release and in our quarterly analyst metric sheet, both available on the Investor Relations section of the Plantronics website.

Plantronics' fourth quarter fiscal 2012 net revenues were $177.6 million compared with guidance provided on January 31, 2012, of $175 million to $180 million. Plantronics' GAAP diluted earnings per share was $0.55 compared with $0.53 in the same quarter of the prior year and guidance of $0.56 to $0.61.

Non-GAAP diluted earnings per share for the fourth quarter of fiscal 2012 was $0.62 compared with $0.60 in the prior-year quarter and guidance of $0.63 to $0.68. The difference between GAAP and non-GAAP EPS for the fourth quarter of fiscal 2012 consists of stock-based compensation charges, net of the associated tax impact.

With that, I'll turn the call over to Ken.

S. Kenneth Kannappan

Thank you, Greg. There are 3 points I'd like to mention about our fourth quarter and fiscal 2012 results. The first is our strong fiscal year '12; the second is how contextual intelligence is critical to Unified Communications; and the third is our continued confidence that our UC opportunity and our updated view of our total addressable market.

First, highlights in fiscal 2012 include revenue growth of $713 million, including Office and Contact Center growth of 8% and UC growth of 76%. We achieved record non-GAAP earnings per share of $2.65, up 10% from the prior year and maintained our position in Office and Contact Center, or OCC, while improving our position in mobile.

Based on the prioritization of UC investments, we had fewer new product introductions in mobile in the early part of our fiscal year. Combined with weak category conditions, we acknowledged share loss through the September quarter with a stabilized share in December.

The launch of new mobile products, we reversed course of market share declines and obtained 35% share in the March quarter compared to a low point in the year under 30%. This is all data from NPD Intellect and represents the U.S. retail and consumer market.

The stereo bluetooth mobile category had not been a focus for us historically. Early in fiscal year 2012, we communicated our intent to invest in stereo; and in early April 2012, we introduced the Backbeat GO, our first stereo bluetooth product in years. It is innovative in its size, so tiny that many people think it's a corded product when it is actually wireless. So far, it appears to be off to a strong start and won PC Magazine Editor's Choice.

In fiscal 2012, we invested in our organization to offer the best solution for our UC customers and partners. In addition to our Smarter Working initiative, which includes redesigned work environments, we added talent throughout the organization, including sales, marketing, R&D and industrial design.

We also have a recent addition to our management team, hiring Marilyn Mersereau as our new Chief Marketing Officer. She has more than 25 years of experience in enterprise and consumer marketing, including experience in UC as SVP of Marketing at Cisco Systems.

The second point I'll cover today is on contextual intelligence. We think the market is moving toward us. 1.5 years ago, we introduced what we referred to as Simply Smarter Communications, our solution strategy to address the challenges inherent in Unified Communications. While UC offers many more capabilities, we added complexity in devices in modes of communications creates a real need for more intuitive products. We accomplished much of the pioneering work in our Simply Smarter Communications initiative through contextual intelligence.

Communications systems typically only have knowledge derived from the use of the network or devices attached to the network. In the case of UC, remote devices starting outside the network, UC system lack an understanding of what was happening for communications on the approximately 50% of work calls were made on mobiles.

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