Plantronics, Inc. (PLT)

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Plantronics (PLT)

Q2 2013 Earnings Call

October 30, 2012 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

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

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

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

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

Presentation

Operator

Good afternoon. My name is Jessica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Fiscal Year 2013 Financial Results Conference Call. [Operator Instructions] 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, Jessica. Good afternoon, everyone, and thanks for joining us for our second quarter fiscal year 2013 financial results. Joining me today are Ken Kannappan, Plantronics President and CEO; and Pam Strayer, our 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 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-Q, 10-K, today's press release and other SEC filings.

Plantronics' second quarter fiscal 2013 net revenues were $179.3 million compared with $176.8 million in the prior year quarter and compared to guidance provided on August 6, 2012, of $175 million to $180 million.

Plantronics' GAAP diluted earnings per share was $0.61 compared with $0.60 in the same quarter of the prior year and guidance of $0.54 to $0.59. Non-GAAP diluted earnings per share for the first quarter of fiscal 2013 was $0.70 compared with $0.67 in the prior year quarter and guidance of $0.63 to $0.68.

The difference between GAAP and non-GAAP EPS for the second quarter consists of stock-based compensation charges and accelerated depreciation, both net of the associated tax impact.

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 reconciled these measures in our earnings press release and in our quarterly analyst metric sheet, both of which are available on the Plantronics website on the Investor Relations page.

Unless stated otherwise, all comparisons of the second fiscal quarter of fiscal 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. There are 3 points I'd like to highlight. The first is that the global economic environment remains challenging. Geographically, we experienced revenue declines in Asia Pacific and Europe and Africa, which were offset by strength in the Americas. Overall, our revenue grew just over 1% from the September quarter last year with a 2% decline in Office and Contact Center, or OCC, revenue despite 35% growth in Unified Communications, or UC, revenue. We attribute the decline in OCC revenue to fewer sales of replacement headsets as a result of lower levels of voluntary turnover and an uncertain job market. Given the weak environment, we've been careful in managing expenses.

Second, we are continuing to leverage our leadership in using contextual intelligence to deliver solutions that are easier for people to use and improve productivity. For example, this past quarter at salesforce.com's conference, Dreamforce, our partner ThreeWill demonstrated an application that uses our contextual intelligence between mobile callers and a notebook or tablet. If the customer calls a salesperson on their mobile, the customer is recognized and the appropriate records are automatically and instantly brought up on the PC during the call. It takes about 2 minutes to do this without this application, wasting precious time for a salesperson trying to talk to a customer about an issue.

Third, while we are innovating in advanced applications, we continue to extend our lead in our core headset platforms. For example, we recently introduced the Voyager Legend, the next generation of our already strong Voyager product family. It has a breakthrough level of improvement in audio performance. You can talk in a bar or a car with the radio so loud you could not hear the person next to you, yet the person you're speaking to you can hear you clearly. A dramatic improvement in wind noise performance allows you to talk with the top down on your convertible.

We also use this special process to create another first for headsets, a 2-molecule thick layer, which stops water but allows air to get to the microphone and to come from the speaker, carrying sound and electrons that [ph] flow to charging circuits. Essentially, this makes our products virtually waterproof and sweatproof. At the same time, basic voice commands have been improved for conversations, pairing it [ph] for battery life and connection status. Before you deciding to answer, we let you know who is calling so you don't have to look at your phone if you're driving.

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