Revenue & Earnings Per Share Exceed Guidance
Plantronics, Inc. (NYSE: PLT) today announced first quarter fiscal 2011
net revenues of $170.7 million, a 21% increase compared with $141.2
million in the first quarter of fiscal 2010. Net revenues were above the
guidance provided on May 4, 2010 of $160 - $165 million. Plantronics’
GAAP diluted earnings per share from continuing operations were $0.52 in
the first quarter of fiscal 2011 compared with diluted earnings per
share from continuing operations of $0.27 in the same quarter of the
prior year. Non-GAAP diluted earnings per share from continuing
operations for the first quarter of fiscal 2011 were $0.58, an increase
of 45% over the same quarter of the prior year. The difference between
GAAP and non-GAAP earnings per share from continuing operations for the
first quarter of fiscal 2011 includes stock-based compensation charges
and purchase accounting amortization, both net of associated tax
benefits.
“Revenues from Office & Contact Center (”OCC”) products grew in all
geographies compared with the same period in the prior year.
Contributions from Unified Communications (”UC”) product sales continue
to grow and, at $9.8 million, we believe UC now represents over 10% of
our office product net revenues,” stated Ken Kannappan, President & CEO.
“We generated approximately $32 million in cash flow from operations and
maintained over $360 million in cash, cash equivalents, and short term
investments while repurchasing approximately 1.5 million shares through
our repurchase programs during the quarter,” stated Barbara Scherer, SVP
Finance and Administration & CFO.
Improved economic conditions and the trend toward UC led to increases in
net revenues in our OCC products. OCC net revenues were $117.6 million
in the first quarter of fiscal 2011, an increase of 23% from $95.9
million in the first quarter of fiscal 2010.
GAAP operating income in the first quarter of fiscal 2011 was $35.9
million, resulting in an operating margin of 21.0%. This compares to
GAAP operating income of $17.6 million and an operating margin of 12.4%
in the prior year quarter. Non-GAAP operating income in the first
quarter of fiscal 2011 was $40.0 million compared with previously
provided guidance of $32.5 million to $35.5 million, resulting in an
operating margin of 23.4%. This compares to Non-GAAP operating income of
$25.2 million and an operating margin of 17.9% from continuing
operations in the prior year quarter.
The Company completed the sale of Altec Lansing, its Audio Entertainment
Group (”AEG”) segment, effective as of December 1, 2009. All results of
operations related to AEG including the loss on the sale are classified
as discontinued operations for all periods presented.
Business Outlook
The following statements are based on our current expectations and many
of these statements are forward-looking. Actual results are subject to a
variety of risks and uncertainties and may differ materially from our
expectations.
Plantronics has a “book and ship” business model whereby it ships most
orders to customers within 48 hours of its receipt of those orders and,
therefore, the level of backlog does not provide reliable visibility
into potential future revenues. The September quarter tends to be
characterized by a slowdown in incoming purchase orders during July
which intensifies in August, but historically, the level of incoming
orders pick up strongly at the beginning of September. This pattern
tends to be particularly true in our higher margin OCC business. This
pattern is repeating itself thus far in the quarter and was preceded by
a slowdown in the second half of June. This historical September quarter
trend is included in our model for forecasting the second quarter net
revenues; however, if this trend does not reoccur in the current
quarter, we are unlikely to achieve our forecasted net revenue levels.
The Company’s business is inherently difficult to forecast, particularly
with continuing uncertainty in global economic conditions, and there can
be no assurance that the incoming orders it expects to receive over the
balance of the current quarter will materialize.
Subject to the foregoing, we are currently expecting the following range
of financial results for continuing operations for the second quarter of
fiscal 2011:
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Net revenues of $158 million - $163 million;
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Non-GAAP operating income of $32.5 million to $35.0 million;
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Non-GAAP diluted earnings per share of $0.48 - $0.52;
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Non-GAAP tax rate to be approximately 27%;
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The EPS cost of stock-based compensation to be approximately $0.06; and
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GAAP diluted earnings per share of $0.42 to $0.46.
Plantronics does not intend to update these targets during the quarter
or to report on its progress toward these targets. Plantronics will not
comment on these targets to analysts or investors except by its press
release announcing its second quarter fiscal 2011 results or by other
public disclosure. Any other statements speculating on the progress of
the second quarter fiscal 2011 will not be based on internal Company
information and should be assessed accordingly by investors.
Dividend Announcement
Plantronics also announced that its Board of Directors declared a
quarterly dividend of $0.05 per share. The dividend will be payable on
September 10, 2010 to stockholders of record at the close of business on
August 20, 2010.
Conference Call Scheduled to Discuss Actual Financial Results
Plantronics has scheduled a conference call to discuss first quarter
fiscal 2011 results. The conference call will take place Monday, July
26, 2010 at 2:00 PM (PDT). All interested investors and potential
investors in Plantronics stock are invited to participate. To listen to
the call, please dial in five to ten minutes prior to the scheduled
starting time and refer to the “Plantronics Conference Call.”
Participants from North America should call (888) 301-8736 and other
participants should call (706) 634-7260.
A replay of the call with the conference ID #78909591 will be available
for 72 hours at (800) 642-1687 for callers from North America and at
(706) 645-9291 for all other callers. The conference call will also be
simultaneously web cast at www.plantronics.com
under Investor Relations, and the web cast of the conference call will
remain available at the Plantronics website for thirty days.
Use of Non-GAAP Financial Information
Plantronics excludes non-recurring transactions and non-cash expenses
and charges such as restructuring and other related charges, the release
of certain tax reserves, stock-based compensation expenses related to
stock options, restricted stock and employee stock purchases, purchase
accounting amortization and impairment of goodwill and long-lived assets
from non-GAAP income from continuing operations, non-GAAP earnings per
diluted share from continuing operations, non-GAAP operating income,
non-GAAP gross margin, non-GAAP operating margin and non-GAAP effective
tax rate on continuing operations. Plantronics excludes these expenses
from its non-GAAP measures primarily because Plantronics does not
believe they are reflective of ongoing operating results and are not
considered by management as part of Plantronics’ target operating model.
Plantronics believes that the use of non-GAAP financial measures
provides meaningful supplemental information regarding its performance
and liquidity, and helps investors compare actual results to its
long-term target operating model goals. Plantronics believes that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing its performance and when planning,
forecasting and analyzing future periods, but non-GAAP financial
measures are not meant to be considered in isolation or as a substitute
for, or superior to, income from operations, net income or earnings per
share prepared in accordance with GAAP.
Safe Harbor
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements relating to (i) our estimates of GAAP and non-GAAP
financial results for the second quarter of fiscal 2011, including
revenue, operating income and earnings per share; (ii) our estimated tax
rate for the second quarter of fiscal 2011; (iii) our estimated
stock-based compensation expense for the second quarter of fiscal 2011;
(iv) trends and our predictions regarding ordering patterns for the
second quarter of fiscal 2011, as well as other matters discussed in
this press release that are not purely historical data. Plantronics does
not assume any obligation to update or revise any such forward-looking
statements, whether as the result of new developments or otherwise.
Forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from those contemplated by
such statements. Among the factors that could cause actual results to
differ materially from those contemplated are:
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economic conditions in both the domestic and international markets;
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our ability to realize our UC plans and to achieve the financial
results projected to arise from UC adoption could be adversely
affected by the following factors: (i) as UC becomes more widely
adopted, the risk that competitors will offer solutions that will
effectively commoditize our headsets which, in turn, will reduce the
sales prices for our headsets; (ii) our plans are dependent upon
adoption of our UC solution by major platform providers such as
Microsoft, Avaya, IBM and Cisco, and we have a limited ability to
influence such providers with respect to the functionality of their
platforms, their rate of deployment, and their willingness to
integrate their platforms with our solutions; (iii) the development of
UC solutions is technically complex and this may delay or obstruct our
ability to introduce solutions to the market on a timely basis and
that are cost effective, feature rich, stable and attractive to our
customers; (iv) as UC becomes more widely adopted we anticipate that
competition for market share will increase, and some competitors may
have superior technical and economic resources; (v) UC solutions may
not be adopted with the breadth and speed in the marketplace that we
currently anticipate, and (vi) our support expenditures may
substantially increase over time due to the complex nature of the
platforms developed by the major UC providers as these platforms
continue to evolve and become more commonly adopted;
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failure to match production to demand given long lead times and the
difficulty of forecasting unit volumes and acquiring the component
parts to meet demand without having excess inventory or incurring
cancellation charges;
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volatility in prices from our suppliers, including our manufacturers
located in China, have and could negatively affect our profitability
and/or market share;
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fluctuations in foreign exchange rates;
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the bankruptcy or financial weakness of distributors or key customers,
or the bankruptcy of or reduction in capacity of our key suppliers; and
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further impairment losses on the carrying value of our intangible
assets and goodwill could be recognized if it is determined the value
is not recoverable which would adversely affect our financial results;
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additional risk factors including: interruption in the supply of
sole-sourced critical components, continuity of component supply at
costs consistent with our plans, the inherent risks of our substantial
foreign operations, and problems which might affect our manufacturing
facilities in Mexico, and unexpected delays and uncertainties
affecting our ability to realize targeted expense reductions and
annualized savings by outsourcing the manufacturing of our Bluetooth
products in China to GoerTek, Inc.
For more information concerning these and other possible risks, please
refer to the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on June 1, 2010, quarterly reports
filed on Form 10-Q and other filings with the Securities and Exchange
Commission as well as recent press releases. These filings can be
accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html
Financial Summaries
The following related charts are provided:
View
All
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Summary Unaudited Condensed Consolidated Financial Statements
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Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations
for the Three Months ended June 30, 2010 and June 30, 2009
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Summary Unaudited Statements of Operations and Related Data on a
Non-GAAP Basis
About Plantronics
Plantronics is a world leader in personal audio communications for
professionals and consumers. From unified communication solutions to
Bluetooth headsets, Plantronics delivers unparalleled audio experiences
and quality that reflect our nearly 50 years of innovation and customer
commitment. Plantronics is used by every company in the Fortune 100 and
is the headset of choice for air traffic control, 911 dispatch and the
New York Stock Exchange. For more information, please visit www.plantronics.com
or call (800) 544-4660.
Plantronics, the logo design, and Clarity are trademarks or
registered trademarks of Plantronics, Inc. The Bluetooth name and the
Bluetooth trademarks are owned by Bluetooth SIG, Inc. and are used by
Plantronics, Inc. under license. All other trademarks are the property
of their respective owners.
