Poly Announces First Quarter Fiscal 2023 Financial Results

·14 min read

SANTA CRUZ, Calif., Aug. 11, 2022 /PRNewswire/ -- Poly (NYSE: POLY), a global outfitter of professional-grade audio and video technology, today announced first quarter results for the period ended July 2, 2022.

Poly Logo (PRNewsfoto/Poly)
Poly Logo (PRNewsfoto/Poly)

Highlights for the first quarter include:

  • GAAP revenues for fiscal Q1 were $416M, a 4% year-over-year decline driven primarily by supply chain constraints impacting all product categories. Headset revenue of $176M and Voice revenue of $65M grew 2% and 7% year over year, respectively, while Video revenues of $123M and Services revenue of $52M declined -11% and -14%, respectively.

  • Geographically for fiscal Q1, Americas revenue of $225M was down 1%, EMEA revenue of $120M was down 5%, and APAC revenue of $71M was down 8% from the prior year.

  • Fiscal Q1 GAAP gross margins of 40.4% and non-GAAP gross margins of 44.9% were fundamentally flat from the prior year quarter, as higher average selling prices were offset by unfavorable product mix and continued elevated component and logistics costs associated with supply chain disruptions.

  • Poly continues to be recognized for its industrial design, industry leading technology, and product innovation. Recent notable awards include: The Red Dot Design Award for the Poly Sync 10 speakerphone and Poly Studio X70; Compass Intel Award for the Voyager Focus 2; iF Design Award for the Poly Studio E70, Poly Studio X70, Voyager Focus 2, Sync 10, and Poly Studio R30; ISE Best of Show Award for the Poly Sync Series, Poly Studio X70 and Studio E70; InfoComm Best of Show Award for the Poly Studio R30; rAVe Reader's Choice Award for the Poly Studio Series; Golden Bridge Award for the Poly Studio E70; TMCnet UC Product of the Year for the Poly Studio E70; and Pandemic Tech Innovation Awards for the Poly Studio P Series.

 

($ Millions, except percent and per-share data)1

Q1 FY23

Q1 FY22

GAAP Revenue

$416

$431

GAAP Gross Margin

40.4 %

40.6 %

GAAP Operating Loss

($15)

($20)

GAAP Diluted EPS

($0.76)

($0.88)

Cash Flow from Operations

($3)

$1




Non-GAAP Revenue

$416

$432

Non-GAAP Gross Margin

44.9 %

44.8 %

Non-GAAP Operating Income

$34

$52

Non-GAAP Diluted EPS

$0.37

$0.60

Adjusted EBITDA

$42

$61


1 For further information on supplemental non-GAAP metrics, refer to the
Use of Non-GAAP Financial Information and Unaudited Reconciliations of
GAAP Measures to Non-GAAP Measures sections below.

Business Outlook

On March 28, 2022, Poly announced it had entered into a definitive agreement to be acquired by HP Inc. (NYSE: HPQ), a leading global provider of workplace solutions, in an all-cash transaction for $40 per share, implying a total enterprise value of approximately $3.3 billion, inclusive of Poly's net debt.

In light of the pending merger of Poly with HP Inc., Poly will not provide fiscal 2023 guidance and will not hold a conference call to discuss these results.

About Poly

Poly (NYSE: POLY) creates premium audio and video products so you can have your best meeting -- anywhere, anytime, every time. Our headsets, video and audio-conferencing products, desk phones, analytics software and services are beautifully designed and engineered to connect people with incredible clarity. They're pro-grade, easy to use and work seamlessly with all the best video and audio-conferencing services. Poly MeetingAI delivers a broadcast quality video conferencing experience with Poly DirectorAI technology which uses artificial intelligence and machine learning to deliver real-time automatic transitions, framing and tracking, while NoiseBlockAI and Acoustic Fence technologies block-out unwanted background noise. With Poly (Plantronics, Inc. – formerly Plantronics and Polycom), you'll do more than just show up, you'll stand out. For more information visit www.Poly.com.

All other trademarks are the property of their respective owners.

INVESTOR CONTACT:

Mike Iburg

Vice President, Investor Relations

(831) 458-7533

MEDIA CONTACT:

Edie Kissko

Vice President, Corporate Communications

(213) 369-3719

 

PLANTRONICS, INC.

SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except percentages and per share data)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS









Three Months Ended




July 2,


July 3,




2022


2021


Net revenues






Net product revenues


$            364,208


$            371,203


Net services revenues


51,351


59,969


Total net revenues


415,559


431,172


Cost of revenues






Cost of product revenues


231,677


235,196


Cost of service revenues


15,841


20,787


Total cost of revenues


247,518


255,983


Gross profit


168,041


175,189


% of total net revenues


40.4 %


40.6 %


Operating expenses






Research, development, and engineering


51,269


45,466


Selling, general, and administrative


131,903


120,734


Restructuring and other related charges


(49)


28,972


Total operating expenses


183,123


195,172


Operating loss


(15,082)


(19,983)


% of total net revenues


(3.6) %


(4.6) %








Interest expense


16,121


21,782


Other non-operating expense (income), net


2,922


(692)


Loss before income taxes


(34,125)


(41,073)


Income tax benefit


(1,038)


(4,262)


Net loss


$          (33,087)


$            (36,811)


% of total net revenues


(8.0) %


(8.5) %








Basic and diluted loss per common share


$               (0.76)


$               (0.88)


Basic and diluted shares used in computing loss per common share


43,428


42,061








Effective tax rate


3.0 %


10.4 %








 

PLANTRONICS, INC.

SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



July 2,


April 2,




2022


2022


ASSETS






Cash and cash equivalents


$                         142,362


$                         170,000


Short-term investments


11,908


13,703


Total cash and cash equivalents and short-term investments


154,270


183,703


Accounts receivable, net


274,939


277,924


Inventory, net


245,189


234,102


Other current assets


90,918


83,410


Total current assets


765,316


779,139


Property, plant, and equipment, net


124,052


127,021


Purchased intangibles, net


202,437


230,478


Goodwill


796,216


796,216


Deferred tax and other non-current assets


282,678


292,500


Total assets


$                     2,170,699


$                     2,225,354








LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY






Accounts payable


$                         173,252


$                         168,610


Accrued liabilities


317,219


338,836


Total current liabilities


490,471


507,446


Long-term debt, net


1,501,337


1,500,283


Long-term income taxes payable


66,770


68,082


Other non-current liabilities


118,515


129,381


Total liabilities


2,177,093


2,205,192


Stockholders' (deficit) equity


(6,394)


20,162


Total liabilities and stockholders' (deficit) equity


$                     2,170,699


$                     2,225,354








 

PLANTRONICS, INC.

SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS









Three Months Ended




July 2,


July 3,




2022


2021


Cash flows from operating activities






Net loss


$           (33,087)


$           (36,811)


Adjustments to reconcile net loss to net cash (used in) provided by operating activities






Depreciation and amortization


36,577


39,833


Amortization of debt issuance cost


1,054


2,937


Stock-based compensation


14,594


10,416


Deferred income taxes


1,243


(5,943)


Provision for excess and obsolete inventories


1,027


5,310


Restructuring and other related charges


(49)


28,972


Cash payments for restructuring charges


(2,859)


(12,230)


Other operating activities


1,323


920


Changes in assets and liabilities






Accounts receivable, net


2,763


(3,758)


Inventory, net


(11,913)


6,326


Current and other assets


9,961


(3,919)


Accounts payable


6,158


12,515


Accrued liabilities


(22,962)


(40,265)


Income taxes


(6,811)


(3,454)


Net cash (used in) provided by operating activities


(2,981)


849








Cash flows from investing activities






Purchases of short-term investments


(65)


(404)


Capital expenditures


(7,132)


(6,052)


Other investing activities



(4,000)


Net cash used in investing activities


(7,197)


(10,456)








Cash flows from financing activities






Employees' tax withheld and paid for restricted stock and restricted stock units


(14,243)


(10,225)


Proceeds from issuances under stock-based compensation plans


10


9


Repayments of long-term debt



(480,689)


Net cash used in financing activities


(14,233)


(490,905)


Effect of exchange rate changes on cash, cash equivalents and restricted cash


(3,227)


805


Net decrease in cash and cash equivalents and restricted cash


(27,638)


(499,707)


Cash and cash equivalents and restricted cash at beginning of period


170,000


696,468


Cash and cash equivalents and restricted cash at end of period


$          142,362


$          196,761








Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of operating results, including non-GAAP net revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, adjusted EBITDA, and non-GAAP diluted EPS. These non-GAAP measures are adjusted from the most directly comparable GAAP measures to exclude certain non-cash transactions and activities that are not reflective of our ongoing core operations, as further described below. We believe the use of each of these non-GAAP measures provides meaningful supplemental information in assessing our operating performance and liquidity across reporting periods on a consistent basis and are used by management in evaluating financial performance and in strategic planning. These non-GAAP measures may differ from those used by other companies and are not intended to be considered in isolation of, or as a substitute for, financial results prepared in accordance with GAAP. Certain prior year amounts have been reclassified for consistency with current year presentation.

Non-GAAP Adjustments

  • Purchase accounting amortization: Represents the amortization of purchased intangible assets recorded in connection with the acquisition of Polycom on July 2, 2018.

  • Deferred revenue purchase accounting: Represents the impact of fair value purchase accounting adjustments related to deferred revenue recorded in connection with the acquisition of Polycom on July 2, 2018. The Company's deferred revenue primarily relates to Services revenue associated with non-cancelable maintenance support on hardware devices which are typically billed in advance and recognized ratably over the contract term as those services are delivered. This adjustment represents the amount of additional revenue that would have been recognized during the period absent the write-down to fair value required under purchase accounting guidance.

  • Stock compensation expense: Represents the non-cash expense associated with the Company's grant of stock-based awards to employees and non-employee directors.

  • Acquisition costs: Represents charges incurred in connection with the Merger Agreement with HP, such as advisory, legal and accounting fees.

  • Restructuring and other related charges: Represents costs associated with restructuring plans and reorganization actions aimed at improving the Company's overall cost structure, realigning resources consistent with its global strategy, and reducing expenses to enable strategic investments in revenue growth. These costs are not reflective of ongoing operations and are primarily associated with reductions in the Company's workforce, facility related charges due to the closure or consolidation of offices, and other related costs, including legal and advisory services.

  • Deferred compensation mark to market: Represents gains and losses driven by the remeasurement of assets and liabilities associated with the Company's deferred compensation plans. Gains and losses on plan liabilities are recognized within operating expenses, while the offsetting gains and losses on plan assets are recognized within other non-operating income, net.

  • Loss, net on litigation settlements: The Company may be involved in various litigation, claims and proceedings that result in payments or recoveries from such proceedings. The related gains and losses incurred are excluded as they are not reflective of ongoing operations.

  • Income tax effects: Represents the tax effects of non-GAAP adjustments and other adjustments, depending on the nature of the underlying items. The exclusion of the above-mentioned items eliminates the effect of certain non-recurring and unusual tax items that do not necessarily reflect the Company's long-term operations. The income tax effects for unusual tax items primarily represents the impact of the tax benefit associated with an IP transfer between wholly-owned subsidiaries, changes in uncertain tax positions, excess stock tax benefit, and the full valuation allowance on United States federal and state deferred tax assets.

 

PLANTRONICS, INC.

UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands, except percentages)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA







Three Months Ended



July 2,


July 3,



2022


2021







GAAP Net revenues

$           415,559


$           431,172


Deferred revenue purchase accounting

328


1,260


Non-GAAP Net revenues

$           415,887


$           432,432







GAAP Gross profit

$           168,041


$           175,189


Purchase accounting amortization

16,472


16,238


Deferred revenue purchase accounting

328


1,260


Acquisition costs

507



Stock-based compensation

1,503


1,127


Non-GAAP Gross profit

$           186,851


$           193,814


Non-GAAP Gross profit %

44.9 %


44.8 %







GAAP Research, development, and engineering

$             51,269


$             45,466


Stock-based compensation

(3,100)


(2,007)


Acquisition costs

(355)



Non-GAAP Research, development, and engineering

$             47,814


$             43,459







GAAP Selling, general, and administrative

$           131,903


$           120,734


Purchase accounting amortization

(11,569)


(14,195)


Stock-based compensation

(9,991)


(7,282)


Acquisition costs

(6,679)



Deferred compensation mark to market

1,863


(994)


Other adjustments

(12)



Non-GAAP Selling, general, and administrative

$           105,515


$             98,263







 

PLANTRONICS, INC.

UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)







Three Months Ended



July 2,


July 3,



2022


2021







GAAP Operating expenses

$          183,123


$          195,172


Purchase accounting amortization

(11,569)


(14,195)


Stock-based compensation

(13,091)


(9,289)


Acquisition costs

(7,034)



Restructuring and other related charges

49


(28,972)


Deferred compensation mark to market

1,863


(994)


Other adjustments

(12)



Non-GAAP Operating expenses

$          153,329


$          141,722







GAAP Operating loss

$           (15,082)


$           (19,983)


Purchase accounting amortization

28,041


30,433


Stock-based compensation

14,594


10,416


Acquisition costs

7,541



Restructuring and other related charges

(49)


28,972


Deferred revenue purchase accounting

328


1,260


Deferred compensation mark to market

(1,863)


994


Other adjustments

12



Non-GAAP Operating income

$            33,522


$            52,092







 

PLANTRONICS, INC.

UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands, except per share data)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)







Three Months Ended



July 2,


July 3,



2022


2021


GAAP Net loss

$           (33,087)


$           (36,811)


Purchase accounting amortization

28,041


30,433


Stock-based compensation

14,594


10,416


Acquisition costs

7,541



Restructuring and other related charges

(49)


28,972


Deferred revenue purchase accounting

328


1,260


Deferred compensation mark to market

(3)


4


Other adjustments

12



Income tax effect of above items

1,717


(5,381)


Income tax effect of unusual tax items

(2,600)


(2,377)


Non-GAAP Net income

$            16,494


$            26,516







GAAP Diluted loss per common share

$               (0.76)


$               (0.88)


Purchase accounting amortization

0.62


0.69


Stock-based compensation

0.32


0.24


Acquisition costs

0.17



Restructuring and other related charges


0.66


Deferred revenue purchase accounting

0.01


0.03


Deferred compensation mark to market



Other adjustments



Income tax effect

(0.02)


(0.18)


Effect of anti-dilutive securities1

0.03


0.04


Non-GAAP Diluted earnings per common share

$                 0.37


$                 0.60







Shares used in diluted (loss) earnings per common share calculation:





GAAP

43,428


42,061


Non-GAAP

45,063


43,843







 

PLANTRONICS, INC.

UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands)


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)














Three Months Ended


Twelve Months
Ended




July 3,


October 2,


January 1,


April 2,


July 2,


July 2,




2021


2021


2022


2022


2022


2022


GAAP Net income (loss)


$                (36,811)


$                 96,785


$                (11,164)


$                (30,893)


$                (33,087)


$                 21,641


Income tax benefit


(4,262)


(102,567)


(9,604)


(3,722)


(1,038)


(116,931)


Interest expense


21,782


16,141


15,948


15,840


16,121


64,050


Other non-operating (income) expense, net


(692)


23


(995)


1,955


2,922


3,905


Deferred revenue purchase accounting


1,260


1,054


907


468


328


2,757


Stock-based compensation


10,416


11,573


12,225


13,946


14,594


52,338


Acquisition costs





9,530


7,541


17,071


Restructuring and other related charges


28,972


2,607


2,398


960


(49)


5,916


Deferred compensation mark to market


994


13


910


(908)


(1,863)


(1,848)


Other adjustments



(376)



(315)


12


(679)


Depreciation and amortization


39,833


36,292


36,671


36,330


36,577


145,870


Adjusted EBITDA


$                 61,492


$                 61,545


$                 47,296


$                 43,191


$                 42,058


$               194,090
















 

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SOURCE Plantronics, Inc.