Plantronics, Inc. (PLT)

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Plantronics (PLT)

Q3 2012 Earnings Call

January 31, 2012 5:00 pm ET

Executives

Greg Klaben - Vice President of Investor Relations

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

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

Analysts

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

Joanna Makris - Mizuho Securities USA Inc., Research Division

Tavis C. McCourt - Morgan Keegan & Company, Inc., Research Division

Unknown Analyst

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 Q3 Fiscal Year 2012 Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. Greg Klaben. Sir, you may begin.

Greg Klaben

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

We will be discussing non-GAAP measures during today's call, and we reconcile 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' third quarter fiscal 2012 net revenues were $183.2 million compared with guidance provided on November 1, 2011, of $175 million to $185 million. Plantronics' GAAP diluted earnings per share was $0.71 compared with $0.64 in the same quarter of the prior year. Non-GAAP diluted earnings per share for the third quarter of fiscal 2012 is $0.75 compared with $0.66 in the prior year and guidance of $0.60 to $0.70.

The difference between GAAP and non-GAAP earnings per share for the third quarter include stock-based compensation charges net of the associated tax impact and a tax benefit from the expiration of certain statutes of limitation.

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

S. Kenneth Kannappan

Thank you, Greg, and thanks to all of you for taking the time to join us. There are 3 key points I'd like to review on our first -- on our third quarter results. The first is our record financial results, the second is our progress on Unified Communications or UC portfolio and our continued success in the growing UC market. And finally, I'll review how Plantronics has embraced Smarter Working.

First, we achieved some key records in the third quarter, including another record quarter of Unified Communications revenue, record operating income and record earnings per share. Our Office and Contact Center revenue grew by a healthy 8% from the same quarter last year, driven by UC and record EMEA revenues, this was partly offset by weakness in the Americas.

Despite growth in our core Office and Contact Center product group, our top line revenue grew by just 1% compared with last year due to the continued weakness in our consumer lines. However, our market share is stabilizing in mobile in the U.S., largely a result of strong sales of our new Voyager Pro HD and Marque M155 Bluetooth headsets.

Second, Unified Communications technology continues to be adopted briskly around the globe, driving our UC revenue growth nearly 90% year-over-year. We continue to see broad adoption of UC across all size of enterprises in all major geographies. Our investments in UC continued to yield solid results. And in the first 9 months of fiscal 2012, we made good progress in differentiating our product line, as well as making huge strides in our corporate marketing and brand positioning.

We also grew our global sales organization to be able to better focus on the new model for UC success. We added hardware and software engineers to better meet the complex needs of the UC market, and we expanded our relationships with system integrators in the UC platform vendors.

I'm very pleased with our improvements for industry-leading product portfolio. Our portfolio delivers all market requirements, including superb sound quality, comfort, style, durability, product reliability, product longevity and ease-of-use. But our solutions have gone well beyond this, breaking new ground by creating context to where intelligent audio endpoints that inform UC systems so that they are more effective, making the UC applications more intuitive and making communications work flow faster. We believe our solution set offers the best value in the market and our customers share with us as well.

Here are few of the top innovations we have announced and all have been favorably received by the market. The Savi 700 Series which connects the calls from a PC, desk phone or mobile phone, and switching between all 3, as well as conferencing among them as required. The Voyager PRO UC HD, the industry's first Bluetooth device with Smart Sensors, the world class sensory noise cancelation technology, Plantronics' latest Voyager Pro is the first Bluetooth device that knows when it's on your head and automatically transfers calls accordingly. This product recently won CNET Editor's Choice.

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