Plantronics, Inc. (PLT)

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Plantronics (PLT)

Q3 2013 Earnings Call

January 29, 2013 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

Analysts

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

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

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

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

Ryan Macdonald

Joanna Makris - Mizuho Securities USA Inc., Research Division

Presentation

Operator

Good afternoon. My name is Ferdinand, and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter Fiscal Year 2013 Financial Results Conference. [Operator Instructions] Mr. Greg Klaben, Vice President, Investor Relations, you may begin your conference.

Greg Klaben

Thanks, Ferdinand. Good afternoon, and welcome, everyone, to Plantronics' third quarter conference call. Joining me today are Ken Kannappan, Plantronics' President and CEO; and Pam Strayer, Senior Vice President and 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 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.

Plantronics' third quarter fiscal 2013 net revenues were $197.4 million compared with $183.2 million in the prior year quarter and compared to guidance provided on October 30, 2012 of $183 million to $190 million.

Plantronics' GAAP diluted earnings per share was $0.66 compared with $0.71 in the same quarter of the prior year and guidance of $0.54 to $0.61. Non-GAAP diluted earnings per share for the third quarter was $0.73 compared with $0.75 in the prior year quarter and guidance of $0.63 to $0.70.

The difference between GAAP and non-GAAP EPS for the third quarter consists of stock-based compensation charges, restructuring and other related charges and accelerated depreciation, all net of the associated tax impacts, along with the tax benefit from the expiration of certain statutes and limitations. For the remainder of today's call, we will be providing only non-GAAP metrics related to gross margin, operating expenses, operating income, net income and EPS. We have reconciled these measures in our earnings release and in our quarterly analyst metric sheet, both of which are available on our website on the Investor Relations page.

Unless otherwise stated, all comparisons with the third fiscal quarter of fiscal year 2013 financial results are to the same quarter in the prior year.

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

S. Kenneth Kannappan

Thank you, Greg. Good afternoon, and let me add my thanks to Greg's for joining our call.

There are 3 key points I'd like to discuss regarding our third quarter fiscal 2013 results. The first is year-over-year growth in all our major product categories and all of our geographies.

Office and Contact Center, which represented 71% of revenue for the quarter, had record levels with 5% year-over-year growth, driven largely by UC revenue growth of 43%.

Our consumer product groups, which represent 29% of our total revenue, grew by 16% in what is typically the strongest seasonal quarter for the product category. Pardon my sore throat. Second, our focus on an investment in our Unified Communication Solutions continues to grow, and our leadership in the market for UC audio solutions remains undiminished.

Our redirection of investment towards our Unified Communications Solutions set over the past few years continues to yield strong win rates, deepen broad partner integration and an unprecedented level of intelligence in value-added software capabilities.

We've had 2 recent breakthroughs in integrating our Contextual Intelligence capabilities with innovative new technologies. The first occurred last week with our partner, PGi. They're a global leader in virtual meetings who have been a terrific partner in integrating our Contextual Intelligence capabilities with their virtual meeting platform.

iMeet recognizes if a user is wearing their Plantronics Voyager Legend UC headset and indicates to others if the wearer is available to take a video call, if they are busy and unable to talk. Users can launch an iMeet meeting with a single tap of their Voyager Legend headset, and iMeet will automatically signal other meeting guests if the user mutes or takes off their Plantronics headset and when they step away from the meeting. The result is a simply smarter virtual meeting with participants knowing who is available, not having to change settings to update their presence and availability information.

The second happened a few weeks earlier when we were awarded the most visionary product of the year at the inaugural WebRTC conference. Web real-time communication is an API definition being drafted by the World Wide Web Consortium to enable browser-to-browser applications for voice dialing, video chat and P2P file sharing without plug-ins.

Essentially, this new standard will allow real-time communications to take place over the Internet with virtually any audio application. With our open APIs, our latest UC headsets are the first to work with the new WebRTC standard. At the conference, we demonstrated how a Plantronics headset can unlock the PC with user voice authentication and utilize the HD voice for virtually all audio and voice apps on the web.

Read the rest of this transcript for free on seekingalpha.com