Plantronics, Inc. (PLT)

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Plantronics (PLT)

Q1 2012 Earnings Call

August 01, 2011 5:00 pm ET

Executives

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

Greg Klaben - Investor Relations

Kenneth Kannappan - Chief Executive Officer, President and Executive Director

Analysts

Tavis McCourt - Morgan Keegan & Company, Inc.

William Dezellem - Tieton Capital Management

Mike Latimore - Northland Securities Inc.

Gregory Burns - Sidoti & Company, LLC

Paul Coster - JP Morgan Chase & Co

Rohit Chopra - Wedbush Securities Inc.

John Bright - Avondale Partners, LLC

Presentation

Operator

Good afternoon, my name is Katherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 fiscal year 2012 conference call. [Operator Instructions] I would now like to turn the call over to Mr. Greg Klaben. Sir, you may begin your conference.

Greg Klaben

Thanks, Katherine. Good afternoon and welcome, everyone. Welcome to Plantronics' First Quarter 2012 Financial Results. Joining me today are Ken Kannappan, Plantronics' President and CEO; and Barbara Scherer, Senior Vice President of Finance Administration 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 of 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 and 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 metric sheet, both available on the Investor Relations section of the Plantronics website.

Plantronics' first quarter fiscal 2012 net revenues were $175.6 million, compared with guidance provided on May 3 of $168 million to $173 million. Plantronics' GAAP diluted earnings per share was $0.56 in the first quarter compared with $0.52 in the same quarter of the prior year. Non-GAAP diluted earnings per share for the first quarter was $0.62 compared with $0.58 in the prior year quarter, and guidance of $0.52 to $0.56.

The difference between GAAP and non-GAAP earnings per share for the first quarter include stock-based compensation charges and purchase accounting amortization, both net of the associated tax impact.

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

Kenneth Kannappan

Thank you, Greg. And thanks all of you for taking the time to listen to our call.

Fiscal 2012 started on a solid note, with healthy year-over-year growth in our Office & Contact Center, OCC business, and particularly strong growth in revenues from Unified Communications or UC products. Specifically, OCC was up 11% year-over-year or $13.4 million compared with a strong prior year June quarter. The UC subset of this business grew from $9.8 million to $18.8 million or 91%. OCC did well broadly, with every geographic reach growing compared to the first quarter last year. We attribute this year-to-year growth to a slightly healthier economic climate compared with the first quarter of last year.

While our mobile business was down, this was anticipated, and we actually did a little better than expected with some additional carrier business in the U.S. As we've discussed during past calls and presentations, the most sizable opportunity ahead of us is provided by the deployment of UC. This is where I'll spend most of my time today.

UC enables the phone, PC, mobile phone, tablets and other devices to function as superior communication tools: Voice, video, instant messaging and e-mail. UC provides users far more capabilities and efficiencies, with the legacy desktop telephone. And for this and many other reasons, the majority of large and medium-sized companies are evaluating deploying their finances [ph] to deploy UC.

Adoption of UC has been broad across most vertical segments. In addition, it is typically deployed throughout an organization. While deployment of the technology is broad among different types and sizes of organizations, the actual deployment does lag the initial adoption purchase of the license, as organizations begin with IM and presence, and later add other functionalities such as voice and video.

Given the anticipated deployment over the next several years, we believe that we are in very early stage of this opportunity. We anticipate that the rate of adoption will accelerate over the next several years. The rapid payback and high ROI of enterprise investment in UC continues to be validated. And while the obvious savings of UC include lower telephony, travel and real estate costs, it is through the increased effectiveness of employees, combined with their improved quality of life, the payoffs are most evident.

For example, in a flexible working environment, employees would physically be in the office only when they actually need to collaborate live and in person with coworkers, customers, vendors or partners on a given day. These employees are not only more effective, but significantly more engaged. They create eco benefits of less commuting, in addition to tangible personal time benefits of fewer commuting hours and cost. Offices which weren't originally designed for live collaboration are being redesigned to enhance the effectiveness of the workspace. While employees are willing to do other things when they are in the office, the primary reason they are there is to meet live and collaborate with other people. When they aren't doing that, they will still need effective spaces to concentrate -- contemplate and to communicate. When employees aren't in the office, UC provides the ability to work from nearly any location, delivering an experience which closely replicates the capabilities that you have when you're in your office.

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