Revenue In-Line with Guidance, Operating Income and EPS Exceed Guidance
Plantronics, Inc. (NYSE: PLT) today announced second quarter fiscal 2011
net revenues of $158.3 million, a 10% increase compared with net
revenues of $144.5 million in the second quarter of fiscal 2010. Net
revenues were within the guidance range of $158 - $163 million provided
on July 26, 2010. Plantronics’ GAAP diluted earnings per share from
continuing operations was $0.52 in the second quarter of fiscal 2011
compared to $0.32 in the same quarter of the prior year. Non-GAAP
diluted earnings per share from continuing operations for the second
quarter of fiscal 2011 increased 38% to $0.58 from $0.42 in the same
quarter of the prior year. The difference between GAAP and non-GAAP
earnings per share from continuing operations for the second quarter of
fiscal 2011 includes stock-based compensation charges and purchase
accounting amortization, both net of associated tax benefits.
“Revenues in our core Office & Contact Center (”OCC”) category grew in
all major geographies compared with the same quarter in the prior year
and were at the highest level in eight quarters, offsetting a decline in
mobile headset revenue. Unified Communications (”UC”) product sales
continue to grow, and, at $13.3 million in revenue during our second
quarter, are over 10% of OCC sales,” stated Ken Kannappan, President &
CEO.
“We generated approximately $25 million in cash flow from operations in
the current quarter and repurchased over 500,000 shares of our common
stock while maintaining a strong cash position with over $359 million in
cash, cash equivalents and short-term investments. We also have $14.8
million in long-term investments at the end of the quarter,” stated
Barbara Scherer, SVP Finance and Administration & CFO.
Improved economic conditions and the trend toward UC drove a 26%
increase in net revenues from sales of our OCC products compared to the
second quarter of fiscal 2010. OCC net revenues were $118.0 million in
the second quarter of fiscal 2011, compared to $93.5 million in the
second quarter of fiscal 2010. UC related product net revenues were
$13.3 million, growing 35% from the $9.8 million reported in the first
quarter of fiscal 2011.
Mobile net revenues were $27.6 million in the second quarter of fiscal
2011, a decrease of 20% from $34.7 million in the second quarter of
fiscal 2010. Gaming and computer net revenues were $8.2 million in the
second quarter of fiscal 2011, a decrease of 9% from $9.0 million in the
second quarter of fiscal 2010.
GAAP operating income in the second quarter of fiscal 2011 was $34.0
million, resulting in an operating margin of 21.5%. This compares to
GAAP operating income of $20.6 million and an operating margin of 14.3%
in the prior year quarter. Non-GAAP operating income in the second
quarter of fiscal 2011 was $38.3 million exceeding previously provided
guidance of $32.5 million to $35.0 million, resulting in a non-GAAP
operating margin of 24.2%. In the prior year quarter, non-GAAP operating
income was $26.8 million with a non-GAAP operating margin of 18.5%.
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.
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.
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 December quarter tends to be
characterized by an increase in incoming sales orders during October,
which diminishes in December.
Net revenues in the third quarter of fiscal 2011 are expected to be
higher than the second quarter of fiscal 2011, with the increase
expected primarily in mobile Bluetooth headset revenues. The
December quarter has historically been a stronger quarter than the
September quarter and the current bookings trend supports our belief
that revenues will be in the ranges below.
Subject to the foregoing, we are currently expecting the following range
of financial results for continuing operations for the third quarter of
fiscal 2011:
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Net revenues of $180 million - $185 million;
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Non-GAAP operating income of $37.5 million to $40.5 million;
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Non-GAAP diluted earnings per share of $0.55 - $0.60;
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EPS cost of stock-based compensation to be approximately $0.06; and
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GAAP diluted earnings per share of $0.49 to $0.53.
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 third quarter fiscal 2011 results or by other
public disclosure. Any other statements speculating on the progress of
the third 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
December 10, 2010 to stockholders of record at the close of business on
November 19, 2010.
Conference Call Scheduled to Discuss Financial Results
Plantronics has scheduled a conference call to discuss second quarter
fiscal 2011 results. The conference call will take place on Tuesday,
November 2, 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 #13173009 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 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 third quarter of fiscal 2011, including revenue, operating income
and earnings per share; (ii) our estimated stock-based compensation
expense for the third quarter of fiscal 2011; (iii) trends and our
predictions regarding ordering patterns for the third quarter of fiscal
2011, including the prediction that the increase in revenues in the
December quarter is expected to primarily be in mobile Bluetooth
headset revenues, 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) UC solutions may not be adopted
with the breadth and speed in the marketplace that we currently
anticipate; (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) UC
solutions may not be adopted with the breadth and speed in the
marketplace that we currently anticipate; (v) 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 (vi) our plans are dependent upon adoption of our
UC solution by major platform providers such as Microsoft, Cisco,
Avaya, Alcatel, and IBM, 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, and 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;
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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.; 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.
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 and Six Months ended September 30, 2010 and September
30, 2009
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Summary Unaudited Statements of Operations and Related Data on a
Non-GAAP Basis for Continuing Operations
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.
