Plantronics, Inc. (PLT)

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Plantronics, Inc. (PLT)

F4Q10 (Qtr End 03/31/10) Earnings Call Transcript

May 4, 2009 5:00 pm ET


Greg Klaben – VP, IR

Ken Kannappan – CEO and President

Barbara Scherer – SVP of Finance & Administration and CFO


Reik Read – Robert W. Baird & Company, Inc.

John Bright – Avondale Partners

Mary [ph] – JPMorgan

Tavis McCourt – Morgan Keegan

Sanjit Singh – Wedbush Morgan Securities, Inc.



Good afternoon. My name is Marvin and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Greg Klaben, you may begin your conference.

Greg Klaben

Thanks, Marvin. Joining me today to discuss our fourth quarter fiscal 2010 financial results are Ken Kannappan, Plantronics President and CEO, and Barbara Scherer, Senior Vice President of Finance and Administration, and CFO.

I would 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 have highlighted before, the risk factors in our press release and SEC filings are not standard boilerplate.

We update these risk factors every quarter, 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.

Please note that all financials, metrics and comparisons are stated in terms of continuing operations, which exclude Altec Lansing or the AEG division. The sale of Altec Lansing was effective as of December 1, 2009. Plantronics' fourth quarter fiscal 2010 net revenues were 162.3 million compared to guidance of 150 to 155 million. Plantronics GAAP diluted earnings per share were $0.49 in the fourth quarter of fiscal 2010 compared with diluted loss per share of $0.15 in the same quarter of the prior year.

Non-GAAP diluted earnings per share for the fourth quarter of fiscal 2010 were $0.53 compared with earnings per share of $0.07 in the prior year quarter and guidance of $0.40 to $0.44. The difference between GAAP and non-GAAP earnings per share from continuing operations for the fourth quarter of fiscal 2010 include stock-based compensation charges, purchase accounting amortization and restructuring, and other related charges, all net of associated tax benefits, along with the release of 1.1 million in tax reserves, due to the expiration of certain statutes of limitation.

I would like to remind you that on the Investor Relations section of our website, we have an updated PowerPoint presentation, as well as an analyst metric sheet with all of the financials and metrics released today.

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

Ken Kannappan

Thank you, Greg. And thank you all for taking the time to listen to this conference call. There are five key points I would like to highlight on the fourth quarter.

First, revenue was above guidance, primarily due to stronger-than-expected office and contact center revenues as a result of improving economic conditions.

Secondly, non-GAAP gross and operating margins improved from the prior year and prior quarter. The year-to-year improvement is due to higher revenue and the sequential improvement is due to better product margins.

Our non-GAAP gross margin for the full fiscal year was 50%, which is above our long-term target range of 45% to 48%. Our non-GAAP operating margin for the year was 19.5%, near the high end of our target range of 18% to 20%.

Third, our balance sheet improved from last quarter and last year, and we achieved a record cash flow from operations of about 144 million in fiscal 2010.

Fourth, our Bluetooth headsets were profitable for the second consecutive quarter and our overall consumer business was profitable for the entire year.

Fifth, adoption of Unified Communications is continuing to build. We are still planning to provide our UC-related product revenue, beginning with our first quarter's results in fiscal 2011, that we will announce in late July.

Fiscal 2010 was a transformational year for Plantronics. We strengthened our cost structure to face economic conditions early in the year, and focused our resources on the single largest opportunity in the company's nearly 50-year history, Unified Communications. We continued to make progress on our product development efforts for the UC market, introduced new UC-specific products during the quarter, which are receiving favorable market reactions. We have a very exciting pipeline of new products in development, which we believe can further strengthen this market position.

At the beginning of fiscal 2010, I stated that our long-term prospects for revenue and earnings growth were brighter than ever. We continue to believe this to be true, given the high levels of enterprise interest in UC, along with strong, strategic alliances with UC vendors and system integrators.

In the 2011 fiscal year, we plan to grow revenues and profits, and our goals will be to – number one, obtain a strong position in UC as the market builds; number two, continue to be profitable in the Bluetooth headset market; and number three, achieve strong returns on invested capital.

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