Revenue & Earnings Per Share Exceed Guidance; Company Achieves Record Fiscal Year Cash Flow from Operations
Plantronics, Inc. (NYSE: PLT) today announced fourth quarter fiscal 2010
net revenues of $162.3 million compared with $128.1 million in the
fourth quarter of fiscal 2009. Net revenues were above the guidance
provided on January 26, 2010 of $150 million to $155 million.
Plantronics’ GAAP diluted earnings per share from continuing operations
were $0.49 in the fourth quarter of fiscal 2010 compared with a diluted
loss per share from continuing operations of $0.15 in the same quarter
of the prior year. Non-GAAP diluted earnings per share from continuing
operations for the fourth quarter of fiscal 2010 were $0.53 compared
with $0.07 in the fourth quarter of fiscal 2009 and were greater than
the previously provided non-GAAP guidance of $0.40 to $0.44. The
difference between GAAP and non-GAAP earnings per share from continuing
operations for the fourth quarter of fiscal 2010 includes stock-based
compensation charges, purchase accounting amortization and restructuring
and other related charges, all net of associated tax benefits along with
the release of $1.1 million in tax reserves due to the expiration of
certain statutes of limitations.
Net revenues for fiscal year 2010 were $613.8 million compared with
$674.6 million for fiscal year 2009. Plantronics’ GAAP diluted earnings
per share from continuing operations were $1.55 for fiscal year 2010
compared with $0.93 in fiscal year 2009. Non-GAAP diluted earnings per
share from continuing operations for fiscal 2010 were $1.85 and were
$1.26 in fiscal year 2009.
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.
Plantronics also announced that its Board of Directors declared a
quarterly dividend of $0.05 per share. The dividend is payable on June
10, 2010 to stockholders of record at the close of business on May 20,
2010.
“Revenues and profitability exceeded expectations as we experienced
better than anticipated demand in our Office & Contact Center product
group,” stated Ken Kannappan, President & CEO. “We believe we are well
positioned to benefit from a further economic recovery and continued
adoption of Unified Communications technologies.”
“We completed fiscal 2010 with record cash flow from operations and a
considerably improved balance sheet from fiscal 2009 including an
increase of approximately $151 million in cash, cash equivalents, and
short term investments in addition to lower inventory levels. For fiscal
2011, we remain committed to achieving a high return on capital,” stated
Barbara Scherer, SVP Finance and Administration & CFO.
Business Results (Non-GAAP from Continuing Operations)
Fourth quarter fiscal 2010 net revenues of $162.3 million increased 27%
compared with $128.1 million in the prior year quarter and declined by
2% from $165.9 million in the third quarter of fiscal 2010.
Geographically, revenues in all regions grew year over year but declined
sequentially except for the Asia Pacific region in which revenues grew
both year over year and sequentially.
Improved economic conditions led to increases in net revenues both year
over year and sequentially in the Office and Contact Center market.
Office and Contact Center net revenues were $111.9 million in the fourth
quarter of fiscal 2010, an increase of 31% from $85.6 million in the
fourth quarter of fiscal 2009 and a sequential increase of 9% from
$103.1 million in the third quarter of fiscal 2010.
Mobile and Gaming & Computer Audio net revenues increased year over year
and declined sequentially while net revenues from the Clarity group
declined both year over year and sequentially. Mobile headset net
revenues were $35.8 million in the fourth quarter of fiscal 2010, an
increase of 17% from the prior year quarter of $30.6 million but a
sequential decrease of 24% from $47.0 million in the third quarter of
fiscal 2010.
Gross margin in the fourth quarter of fiscal 2010 was 54.5% compared
with 39.2% in the fourth quarter of the prior year and 48.9% in the
third quarter of fiscal 2010. The increase in the fourth quarter as
compared to the same period in the prior year was primarily driven by
lower requirements for excess and obsolete inventory, cost reductions,
and higher rates of factory utilization. The sequential improvement was
primarily driven by an improved product mix.
Operating income in the fourth quarter was $35.9 million compared with
previously provided guidance of $27 million to $30 million, resulting in
an operating margin of 22.1% as compared to operating income of $8.4
million and an operating margin of 6.5% in the prior year quarter and
operating income of $31.8 million and an operating margin of 19.2% in
the third quarter of fiscal 2010.
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 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 first quarter of
fiscal 2011:
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Net revenues of $160 million - $165 million;
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Non-GAAP operating income of $32.5 million to $35.5 million;
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Non-GAAP diluted earnings per share of $0.46 - $0.50;
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Non-GAAP tax rate to be approximately 28%;
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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 $0.40 to $0.45.
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 first quarter fiscal 2011 results or by other
public disclosure. Any statements by persons outside Plantronics
speculating on the progress of the first quarter fiscal 2011 will not be
based on internal Company information and should be assessed accordingly
by investors.
Conference Call Scheduled to Discuss Actual Financial Results
Plantronics has scheduled a conference call to discuss fourth quarter
fiscal 2010 results. The conference call will take place Tuesday, May
4th 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 #55076064 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, stock awards 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 its 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.
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 first quarter of fiscal 2011, including
revenue, operating income and earnings per share; (ii) our estimated tax
rate for the first quarter of fiscal 2011; (iii) our estimated
stock-based compensation expense for the first quarter of fiscal 2011;
(iv) our long term prospects with respect to the UC opportunities and
our market growth opportunities with regard to all of our product lines,
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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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;
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our ability to realize our Unified Communications (”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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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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volatility in prices from our suppliers, including our manufacturers
located in China, have and could negatively affect our profitability
and/or market share; and
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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 May 26, 2009,
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:
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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 and Twelve Months ended March 31, 2010 and March 31, 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.
