Plantronics Management Discusses Q1 2013 Results - Earnings Call Transcript

Plantronics (PLT)

Q1 2013 Earnings Call

August 06, 2012 5:00 pm ET

Executives

Greg Klaben - Vice President of Investor Relations

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

Pamela J. Strayer - Chief Financial Officer and Senior Vice President

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

Analysts

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

David M. King - Roth Capital Partners, LLC, Research Division

Paul Coster - JP Morgan Chase & Co, Research Division

Tavis C. McCourt - Raymond James & Associates, Inc., Research Division

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

Gregory Burns - Sidoti & Company, LLC

Michael Latimore - Northland Capital Markets, Research Division

Presentation

Operator

Good afternoon. My name is Shannon, and I will be your conference operator. At this time, I would like to welcome everyone to the Plantronics First Quarter Fiscal '13 Conference Call. [Operator Instructions]

I would now like to turn the call over to our host, Mr. Greg Klaben. Sir, you may begin.

Greg Klaben

Thanks very much, Shannon. Joining me today are Ken Kannappan, Plantronics' President and CEO; Pam Strayer, Senior Vice President and CFO; and Barbara Scherer, Senior Vice President.

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 Form 10-K, today's press release and other SEC filings. We will 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 Plantronics website on the Investor Relations page.

Plantronics' first quarter fiscal 2013 net revenues were $181.4 million compared with guidance provided on May 1 of $177 million to $182 million. Plantronics' GAAP diluted earnings per share was $0.55 compared with $0.56 in the same quarter of the prior year and guidance of $0.50 to $0.55.

Non-GAAP diluted earnings per share for the first quarter of fiscal 2013 was $0.63 compared with $0.62 in the prior year quarter and guidance of $0.58 to $0.63. The difference between GAAP and non-GAAP EPS for the first quarter consists of stock-based compensation charges and accelerated depreciation, both net of the associated tax impact.

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

S. Kenneth Kannappan

Thank you, Greg. Before I get started, I want to introduce to you Pam Strayer, our new Chief Financial Officer. Pam joins us from Autodesk, where she was Vice President of Finance, Principal Accounting Officer and Controller. We found out through the search process that the position here is very attractive, and we had frankly very many outstanding candidates. Having said that, we thought Pam was, by far, the most talented in terms of her abilities and her potential. And we're really very, very pleased to have her on board as the successor to Barbara.

I'd like to have Pam say hello for a second.

Pamela J. Strayer

Thanks, Ken. Hello, everyone. I look forward to talking to all of you today. I'm happy to be here.

S. Kenneth Kannappan

Thanks, Pam. So in terms of our results, there's really 3 key points that I would like to cover. The first one is that, relative to a pretty volatile economic environment, we had a good Q1. The second one is that the growing lead we've established in providing contextual intelligence with our UC solutions. And the third one is the positive response to our Plantronics Developer Connection, and how it adds value to our customers.

First, as Greg covered, our financial results worked towards the high end of our guidance range. We did experience year-to-year and sequential growth in both OCC and the mobile product categories in Q1. We will remain cautious on our spending during Q2 due to macroeconomic concerns. UC grew by a healthy 48% from the prior Q1, although sequential growth was weaker than in past quarters. We attribute this lower sequential growth primarily to economic weakness and remain confident over the long term.

On the mobile side, our market share remains strong in the U.S. It is improving overseas. Our share is much higher in our core area of voice communications and lower in Bluetooth stereo. During last quarter's earnings call, I mentioned a promising new product called the BackBeat GO. It's an extremely small stereo Bluetooth headset we started shipping this April, and it's helping us gain some share in the stereo Bluetooth market.

Second, I want to mention the importance of our lead and contextual intelligence. One of the most important trends in the market include Big Data, cloud and BYOD or Bring Your Own Device. This creates an enormous opportunity and necessity to provide simplicity to all of the information and potential options you have. Contextual intelligence is about knowing what someone would like to do and processing the relevant information to proactively assist the individual, regardless of the device that they are using. We began pioneering this in our solutions well over a year ago. We have the best solutions for UC applications amongst our competitors. This has allowed us to reinforce the Simply Smarter Communications branding we introduced 18 months ago.

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