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ModusLink Global Solutions (MLNK)
Q4 2011 Earnings Call
September 27, 2011 5:00 pm ET
Previous Statements by MLNK
» ModusLink Global Solutions' CEO Discusses Q3 2011 Results - Earnings Call Transcript
» ModusLink Global Solutions' CEO Discusses Q2 2011 Results - Earnings Call Transcript
» ModusLink Global Solutions CEO Discusses F1Q2011 Results – Earnings Call Transcript
Steven G. Crane - Chief Financial Officer and Principal Accounting Officer
Ladies and gentlemen, thank you for standing by. Welcome to the 2011 Fourth Quarter and Fiscal Year Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, September 27, 2011. Your speakers for today are Joseph Lawler, Chairman, President and Chief Executive Officer; and Steven Crane, Chief Financial Officer. I would now like to turn the conference over to Steven Crane. Please go ahead, sir.
Steven G. Crane
Thank you, Siglyn. Good afternoon, everyone, and thank you for joining us for ModusLink Global Solutions Fiscal 2011 Fourth Quarter and Fiscal Year Conference Call. I'm Steve Crane, CFO, and I'm joined today by Joe Lawler, Chairman, President and CEO. In just a few moments, Joe will share his thoughts on the company's financial performance and the market environment over the past quarter and provide an update on our strategic initiatives. After Joe's comments, I'll review, in more detail, our fiscal 2011 fourth quarter results, which we released earlier today.
Before we start, I want to remind you that this call is being broadcast as a live webcast from our website at www.moduslink.com. Please also note that the information we're about to discuss includes forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed herein. Factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q.
The forward-looking information that is provided by the company in this call represents the company's outlook as of today, and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change.
During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure can be found in our earnings release issued earlier today, a copy of which is posted in the Investor section of our website.
I'd now like to turn this call over to Joe Lawler. After our formal remarks, we'll be happy to take your questions. Joe?
Joseph C. Lawler
Thank you, Steve. Good afternoon, and thank you for joining us today. While our fourth quarter results continued to be pressured by such factors as pricing, the use of fewer and clients' packaged products and lower volumes in certain client programs, we are pleased to have concluded fiscal 2011 with revenues from new programs 18% higher than the prior fiscal year. However, despite the improvement in revenues from new programs for the full fiscal year, more work is clearly needed to gain sufficient traction to overcome market challenges; effectively capitalize on opportunities we see in Supply Chain management, Aftermarket Services and e-Business; and improve our revenue trends to achieve top line growth.
As presented on our last call, we began to make necessary investments in sales and marketing in the second half of fiscal 2011 to address those shortfalls while also focusing on cost reduction to position our business for renewed profitability. To that end, we are accelerating our investing plan as well as our cost-reduction plan, which includes restructuring of our business. The cost-reduction plans are expected to result in annualized cost savings of between $30 million and $40 million and will come from areas such as reduction in labor costs, restructuring of facilities, expansion of our shared service initiatives and strategic sourcing across our global network and facilities. These actions will be phased in as quickly as possible. We expect to begin to realize the financial benefits mainly in the second half of fiscal 2012 and estimate approximately $15 million to $20 million of benefit for the current fiscal year. Our plan also includes actions to further improve our balance sheet and cash flow.
As Steve will outline in more detail later on today's call, we intend to reinvest most of the savings realized in fiscal 2012 into sales and marketing and one-time costs associated with the cost actions to create long-term cost savings and a more competitive platform.
Before turning the call to Steve, I'd like to spend some time going through our investing and cost-reduction plan in more detail. The components of the plan fall into 4 categories. First is sales acceleration and increased market penetration. We're making changes to become a more market-driven company focused on the most attractive client programs. Second is cost alignment to enable significantly improved profitability as our sales and marketing initiatives gain traction. Third is working capital and free cash flow improvements. And fourth is strengthening our leadership team by putting the right leaders in place to drive improved results in all facets of our business.
I want to review each of these, and we'll begin with sales acceleration. While we've seen macro trends that put pressure on our clients and ModusLink, we believe companies will outsource more key processes within their supply chain to reduce costs and manage the increasing complexity that global companies face to reach their customers. With a proven global capability, a solid client base and solutions that include other high-value services such as aftermarket and e-Business solutions, we believe we have a significant market opportunity and are investing in ourselves with confidence.