Plantronics Announces Fourth Quarter & Fiscal Year 2016 Financial Results
Q4 Revenue at High-End of Guidance, EPS Exceeds; Driven by 25% Revenue Growth in Unified Communications
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SANTA CRUZ, CA -- (Marketwired) -- 05/03/16 --
Plantronics, Inc. (NYSE: PLT) today announced fourth quarter and fiscal year 2016 financial results. Highlights of the fourth quarter include the following (comparisons are against the fourth quarter of fiscal year 2015; all constant currency comparisons are against the same Non-GAAP metric as reported in the fourth quarter of fiscal year 2015):
- Net revenues were $209.8 million, an increase of 5% compared with $200.8 million, and within our guidance of $200 million to $210 million
- Constant currency revenue grew by 6%, from $200.8 million to $213.7 million
- GAAP gross margin was 50.9% compared with 54.4%
- Non-GAAP gross margin was 51.3% compared with 54.7%
- GAAP operating income was $17.9 million compared with $32.9 million
- Non-GAAP operating income was $34.4 million compared with $40.4 million
- Constant currency Non-GAAP operating income was $36.6 million compared with $40.4 million
- GAAP diluted earnings per share ("EPS") was $0.39 compared with $0.61, and above our guidance of $0.21 to $0.31
- Non-GAAP diluted EPS was $0.64 compared with $0.72, and above our guidance of $0.50 to $0.60
- Constant currency Non-GAAP EPS was $0.67 compared with $0.72
Q4 Fiscal Year 2016 GAAP Results
Q4 2015 Q4 2016 Change (%)
--------------- ---------------- ----------
Net revenues $200.8 million $ 209.8 million 4.5 %
Operating income $ 32.9 million $ 17.9 million (45.4 )%
Operating margin 16.4% 8.5%
Diluted EPS $ 0.61 $ 0.39 (36.1 )%
Q4 Fiscal Year 2016 Non-GAAP Results
Q4 2015 Q4 2016 Change (%)
--------------- ---------------- ----------
Operating income $ 40.4 million $ 34.4 million (14.8 )%
Operating margin 20.1% 16.4 %
Diluted EPS $ 0.72 $ 0.64 (11.1 )%
Fiscal Year 2016 GAAP Results
2015 2016 Change (%)
--------------- ---------------- ----------
Net revenues $865.0 million $ 856.9 million (0.9)%
Operating income $149.1 million $ 108.0 million 27.5%
Operating margin 17.2% 12.6%
Diluted EPS $ 2.63 $ 1.96 (25.5)%
Fiscal Year 2016 Non-GAAP Results
2015 2016 Change (%)
--------------- ---------------- ----------
Operating income $177.9 million $ 157.7 million (11.4)%
Operating margin 20.6% 18.4%
Diluted EPS $ 3.04 $ 2.82 (7.2)%
A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.
"Unified Communications remains our core growth driver and we anticipate incremental growth opportunities from as-a-service and Soundscaping revenues in the coming years. Our outlook for growth over the next several years has improved, and our recent restructuring has enhanced our ability to grow Non-GAAP operating margins," stated Ken Kannappan, President & CEO. "Given a stable market environment, we anticipate mid to high single digit percentage revenue growth annually provided there are not any significant fluctuations in currency exchange rates."
"Both Enterprise and Consumer delivered solid growth , despite continued currency headwinds and the loss of hedge gains compared to the prior year, which lowered our revenue growth by 190 basis points, while an extra week in the fourth quarter aided our growth rate," stated Pam Strayer, Senior Vice President and Chief Financial Officer. We remain committed to returning to our long-term profitability target of Non-GAAP operating margins of 20% to 23%. In Fiscal 2017, we expect to meet or exceed the Non-GAAP operating margins we recorded in fiscal year 2016."
Enterprise net revenues grew by 5% to $156.2 million in the fourth quarter of fiscal year 2016 compared with $148.7 million in the fourth quarter of fiscal year 2015. On a constant currency basis, Enterprise net revenues grew by 7%, from $148.7 million to $159.1 million year over year.
Consumer net revenues grew by 3% to $53.6 million in the fourth quarter of fiscal year 2016, up from $52.1 million in the fourth quarter of fiscal year 2015. On a constant currency basis, consumer revenues increased by 5% from $52.1 million to $54.6 million year over year.
Expense Reduction & Restructuring Charges
During the third quarter of fiscal year 2016 we initiated a restructuring plan to better align our expenses with our revenue and gross margin profile and position us for improved operating performance. Under that plan, we reduced costs through voluntary and involuntary elimination of certain positions throughout the organization in the U.S., Mexico, China and Europe. The restructuring actions resulted in pre-tax charges of approximately $7.7 million in fourth quarter of fiscal year 2016. Additional cost savings actions were taken subsequent to that announcement and are expected to further improve Non-GAAP operating margins in fiscal year 2017.
Plantronics Announces Quarterly Dividend of $0.15
We are also announcing that we have declared a quarterly dividend of $0.15 per common share, to be paid on June 10, 2016 to all shareholders of record as of the close of business on May 20, 2016.
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.
We have a "book and ship" business model whereby we fulfill the majority of orders received within 48 hours of receipt of those orders. However, our backlog is occasionally subject to cancellation or rescheduling by our customers on short notice with little or no penalty. Therefore, there is a lack of meaningful correlation between backlog at the end of a fiscal period and net revenues in a succeeding fiscal period.
Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions and currency fluctuations, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.
Subject to the foregoing, we currently expect the following range of financial results for the first quarter of fiscal year 2017 (all amounts assuming currency rates remain stable):
- Net revenues of $207 million to $217 million;
- GAAP operating income of $27 million to $32 million;
- Non-GAAP operating income of $35 million to $40 million, excluding the impact of $8 million from stock-based compensation and purchase accounting amortization;
- Assuming approximately 33 million diluted average weighted shares outstanding:
- GAAP diluted EPS of $0.45 to $0.55;
- Non-GAAP diluted EPS of $0.63 to $0.73; and
- Cost of stock-based compensation and purchase accounting amortization to be approximately $0.18 per diluted share.
Please see our updated Investor Relations Presentation available on our corporate website at www.plantronics.com/ir.
Conference Call and Prepared Remarks
Plantronics is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company's quarterly conference call. The remarks will be available in the Investor Relations section of the Plantronics website in conjunction with the press release.
We have scheduled a conference call to discuss fourth quarter fiscal year 2016 financial results. The conference call will take place today, May 3rd at 2:00 PM (Pacific Time). All interested investors and potential investors in our 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." The dial-in from North America is (888) 301-8736 and the international dial-in is (706) 634-7260.
A replay of the call with the conference ID #68437284 will be available until June 3, 2016 at (855) 859-2056 or (800) 585-8367 for callers from North America and at (404) 537-3406 for all other callers. The conference call will also be simultaneously webcast in the Investor Relations section of our corporate website at www.plantronics.com/ir, and the webcast of the conference call will remain available on our website for one month. A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.
Upcoming Webcast Presentations
Plantronics will be webcasting presentations from the Jefferies Technology Conference on May 11, 2016 and the J.P. Morgan TMT Conference on May 24, 2016. For more information, please see the Investor Relations section of our corporate website at www.plantronics.com/ir.
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 operating income, non-GAAP net income and non-GAAP diluted EPS which exclude certain non-cash expenses and charges that are included in the most directly comparable GAAP measure. These non-cash charges and expenses include stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization, accelerated depreciation, and early lease termination charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these expenses from our non-GAAP measures primarily because Plantronics' management does not believe they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.
As a company with significant global operations and sales, fluctuations in foreign currency exchange rates may have a material effect on our reported results. Consequently, we also present supplemental metrics as identified in the reconciliation within this release "on a constant currency basis" which excludes the impact of currency exchange rate fluctuations. The constant currency presentation, which is a non-GAAP measure, is intended to supplement our reported operating results and, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in the metrics from period to period and the core operations of the Company. We calculate constant currency percentages by removing any hedge gains or losses from the particular metric in the current period and then converting our current period local currency financial results using the foreign currency exchange rates in effect during the prior year period and comparing these adjusted amounts to the corresponding current period metric.
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) UC as a continued growth driver and our anticipation of incremental growth opportunities from as-a-service and Soundscaping revenues in the coming years; (ii) our outlook for growth improving over the next several years; (iii) our expectation that our recent restructuring and cost savings will position us for improved operating performance and enhance our ability to grow Non-GAAP operating margins in fiscal 2017; (iv) our ability to achieve mid to high single digit percentage revenue growth annually if there is a stable market environment and no significant fluctuations in currency exchange rates; (v) our ability to return to our long-term profitability target of Non-GAAP operating margins of 20% to 23%; (vi) our expectation that in fiscal 2017, we will meet or exceed the Non-GAAP operating margins we recorded in fiscal year 2016; (vii) estimates of GAAP and non-GAAP financial results for the first quarter of fiscal year 2017, including net revenues, operating income and diluted EPS; (viii) our estimates of stock-based compensation and purchase accounting amortization and other related charges, as well as the impact of these non-cash expenses on Non-GAAP operating income and diluted EPS for the first quarter of fiscal year 2017; and (ix) our estimate of weighted average shares outstanding for the first quarter of fiscal year 2017, in addition to other matters discussed in this press release that are not purely historical data. We do 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:
- Micro and macro-economic conditions in our domestic and international markets;
- our ability to realize and achieve positive financial results projected to arise from UC adoption could be adversely affected by a variety of factors including the following: (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 and strategic partners such as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., and Alcatel-Lucent, and our influence over such providers with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to integrate their platforms and product offerings with our solutions is limited; (iii) delays or limitations on our ability to timely introduce solutions that are cost effective, feature-rich, stable, and attractive to our customers within forecasted development budgets; (iv) our successful implementation and execution of new and different processes involving the design, development, and manufacturing of complex electronic systems composed of hardware, firmware, and software that works seamlessly and continuously in a wide variety of environments and with multiple devices; (v) our sales model and expertise must successfully evolve to support complex integration of hardware and software with UC infrastructure consistent with changing customer purchasing expectations; (vi) as UC becomes more widely adopted we anticipate that competition for market share will increase, particularly given that some competitors may have superior technical and economic resources; (vii) UC solutions generally, or our solutions in particular, may not be adopted with the breadth and speed in the marketplace that we currently anticipate; (viii) sales cycles for more complex UC deployments are longer as compared to our traditional Enterprise products; (ix) UC may evolve rapidly and unpredictably and our inability to timely and cost-effectively adapt to those changes and future requirements may impact our profitability in this market and our overall margins; and (x) our failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UC products are and will be integrated;
- failure to match production to demand given long lead times and the difficulty of forecasting unit volumes and acquiring the component parts and materials to meet demand without having excess inventory or incurring cancellation charges;
- volatility in prices from our suppliers, including our manufacturers located in China, have in the past and could in the future negatively affect our profitability and/or market share;
- fluctuations in foreign exchange rates;
- with respect to our stock repurchase program, prevailing stock market conditions generally, and the price of our stock specifically;
- the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers;
- additional risk factors including: interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, and the inherent risks of our substantial foreign operations; and
- seasonality in one or more of our product categories.
For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 15, 2015 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.
Financial Summaries
The following related charts are provided:
- Summary Unaudited Condensed Consolidated Financial Statements
- Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
- Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and Other Unaudited GAAP Data
About Plantronics
Plantronics is a global leader in audio communications for businesses and consumers. We have pioneered new trends in audio technology for over 50 years, creating innovative products that allow people to simply communicate. From Unified Communication solutions to Bluetooth headsets, we deliver uncompromising quality, an ideal experience, and extraordinary service. Plantronics is used by every company in the Fortune 100, as well as 911 dispatch, air traffic control and the New York Stock Exchange. For more information, please visit www.plantronics.com or call (800) 544-4660.
Plantronics is a registered trademark 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.
PLANTRONICS, INC. / 345 Encinal Street / P.O. Box 1802 / Santa Cruz, California 95061-1802
831-426-6060 / Fax 831-426-6098
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------------
Three Months Twelve Months
Ended Ended
March 31, March 31,
-------------------- -------------------
2015 2016 2015 2016
--------- ---------- --------- ---------
Net revenues $200,762 $209,797 $865,010 $856,907
Cost of revenues 91,596 102,967 403,391 422,233
--------- ---------- --------- ---------
Gross profit 109,166 106,830 461,619 434,674
Gross profit % 54.4% 50.9% 53.4% 50.7%
Research, development and
engineering 22,347 23,794 91,627 90,408
Selling, general and administrative 54,813 57,610 229,569 221,299
Gain from litigation settlements (846) (236) (8,662) (1,234)
Restructuring and other related
charges - 7,727 - 16,160
--------- ---------- --------- ---------
Total operating expenses 76,314 88,895 312,534 326,633
--------- ---------- --------- ---------
Operating income 32,852 17,935 149,085 108,041
Operating income % 16.4% 8.5% 17.2% 12.6%
Interest expense (32) (7,871) (241) (25,149)
Other non-operating income and
(expense), net (2,119) 1,309 (3,593) (716)
--------- ---------- --------- ---------
Income before income taxes 30,701 11,373 145,251 82,176
Income tax expense 4,877 (1,607) 32,950 13,784
--------- ---------- --------- ---------
Net income $ 25,824 $ 12,980 $112,301 $ 68,392
========= ========== ========= =========
% of net revenues 12.9% 6.2% 13.0% 8.0%
Earnings per common share:
Basic $ 0.62 $ 0.40 $ 2.69 $ 2.00
Diluted $ 0.61 $ 0.39 $ 2.63 $ 1.96
Shares used in computing earnings
per common share:
Basic 41,606 32,466 41,723 34,127
Diluted 42,482 33,038 42,643 34,938
Effective tax rate 15.9% (14.1)% 22.7% 16.8%
--------- ---------- --------- ---------
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
UNAUDITED CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------
March 31, March 31,
2015 2016
----------- -----------
ASSETS
Cash and cash equivalents $ 276,850 $ 235,266
Short-term investments 97,859 160,051
----------- -----------
Total cash, cash equivalents and short-term
investments 374,709 395,317
Accounts receivable, net 136,581 128,219
Inventory, net 56,676 53,162
Deferred tax assets 6,564 -
Other current assets 28,124 20,297
----------- -----------
Total current assets 602,654 596,995
Long-term investments 107,590 145,623
Property, plant and equipment, net 139,413 149,735
Goodwill and purchased intangibles, net 16,077 15,827
Other assets 10,308 25,257
----------- -----------
Total assets $ 876,042 $ 933,437
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 32,781 $ 39,133
Accrued liabilities 62,041 70,034
----------- -----------
Total current liabilities 94,822 109,167
Long-term debt, net of issuance costs - 489,609
Long-term income taxes payable 12,984 11,968
Revolving line of credit 34,500 -
Other long-term liabilities 6,339 10,294
----------- -----------
Total liabilities 148,645 621,038
Stockholders' equity 727,397 312,399
----------- -----------
Total liabilities and stockholders' equity $ 876,042 $ 933,437
=========== ===========
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------
Three Months
Ended Twelve Months Ended
March 31, March 31,
------------------- ---------------------
2015 2016 2015 2016
--------- --------- ---------- ----------
Cash flows from operating
activities
Net Income $ 25,824 $ 12,980 $ 112,301 $ 68,392
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,736 5,304 18,711 20,142
Amortization of debt issuance
cost - 363 - 1,208
Stock-based compensation 7,472 8,666 28,594 33,265
Excess tax benefit from stock-
based compensation (532) (240) (3,520) (3,540)
Deferred income taxes (2,634) (10,476) (980) (8,291)
Provision for excess and
obsolete inventories (61) 1,111 931 2,430
Restructuring charges - 7,727 - 16,160
Cash payments for
restructuring charges - (10,385) - (10,385)
Other operating activities (1,672) 1,784 (1,188) 7,680
Changes in assets and
liabilities:
Accounts receivable, net 22,751 7,166 4,272 8,445
Inventory, net 1,048 1,709 128 1,357
Current and other assets (688) (341) (5,368) (605)
Accounts payable (2,457) (337) (62) 5,407
Accrued liabilities (2,964) 8,839 500 4,998
Income taxes 3,239 8,976 119 206
--------- --------- ---------- ----------
Cash provided by operating
activities 54,062 42,846 154,438 146,869
--------- --------- ---------- ----------
Cash flows from investing
activities
Proceeds from sale of
investments 23,565 45,627 96,129 102,517
Proceeds from maturities of
investments 18,255 45,269 120,430 97,164
Purchase of investments (43,256) (94,510) (216,013) (300,620)
Acquisitions, net of cash
acquired - - (150) -
Capital expenditures (2,748) (9,684) (21,962) (30,661)
--------- --------- ---------- ----------
Cash used for investing
activities (4,184) (13,298) (21,566) (131,600)
--------- --------- ---------- ----------
Cash flows from financing
activities
Repurchase of common stock (85,496) (14,617) (112,939) (497,393)
Employees' tax withheld and paid
for restricted stock and
restricted
stock units (305) (264) (7,611) (11,068)
Proceeds from issuances under
stock-based compensation plans 5,221 5,530 23,042 15,384
Proceeds from revolving line of
credit 34,500 - 34,500 155,749
Repayments of revolving line of
credit - - - (190,249)
Proceeds from bonds issuance,
net - - - 488,401
Payment of cash dividends (6,434) (5,027) (25,730) (21,061)
Excess tax benefit from stock-
based compensation 532 240 3,520 3,540
--------- --------- ---------- ----------
Cash used for financing
activities (51,982) (14,138) (85,218) (56,697)
--------- --------- ---------- ----------
Effect of exchange rate changes on
cash and cash equivalents (1,396) 765 (3,508) (156)
--------- --------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents (3,500) 16,175 44,146 (41,584)
Cash and cash equivalents at
beginning of period 280,350 219,091 232,704 276,850
Cash and cash equivalents at end
of period $276,850 $235,266 $ 276,850 $ 235,266
========= ========= ========== ==========
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PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
----------------------------------------------------------------------------
Three Months Twelve Months
Ended Ended
March 31, March 31,
------------------- -------------------
2015 2016 2015 2016
--------- --------- --------- ---------
GAAP Gross profit $109,166 $106,830 $461,619 $434,674
Stock-based compensation 695 837 2,583 3,306
--------- --------- --------- ---------
Non-GAAP Gross profit $109,861 $107,667 $464,202 $437,980
========= ========= ========= =========
Non-GAAP Gross profit % 54.7 % 51.3 % 53.7 % 51.1 %
GAAP Research, development and
engineering $ 22,347 $ 23,794 $ 91,627 $ 90,408
Stock-based compensation (2,119) (2,644) (8,053) (9,908)
Purchase accounting amortization (63) (63) (238) (250)
--------- --------- --------- ---------
Non-GAAP Research, development and
engineering $ 20,165 $ 21,087 $ 83,336 $ 80,250
========= ========= ========= =========
GAAP Selling, general and
administrative $ 54,813 $ 57,610 $229,569 $221,299
Stock-based compensation (4,655) (5,185) (17,955) (20,051)
--------- --------- --------- ---------
Non-GAAP Selling, general and
administrative $ 50,158 $ 52,425 $211,614 $201,248
========= ========= ========= =========
GAAP Operating expenses $ 76,314 $ 88,895 $312,534 $326,633
Stock-based compensation (6,774) (7,829) (26,008) (29,959)
Purchase accounting amortization (63) (63) (238) (250)
Restructuring and other related
charges - (7,727) - (16,160)
--------- --------- --------- ---------
Non-GAAP Operating expenses $ 69,477 $ 73,276 $286,288 $280,264
========= ========= ========= =========
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PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
----------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
March 31, March 31,
------------------------ ----------------------
2015 2016 2015 2016
--------- -------- --------- ---------
GAAP Operating income $ 32,852 $ 17,935 $149,085 $108,041
Stock-based
compensation 7,469 8,666 28,591 33,265
Purchase accounting
amortization 63 63 238 250
Restructuring and other
related charges - 7,727 - 16,160
--------- -------- --------- ---------
Non-GAAP Operating income $ 40,384 $ 34,391 $177,914 $157,716
========= ======= ========= =========
GAAP Net income $ 25,824 $ 12,980 $112,301 $ 68,392
Stock-based
compensation 7,469 8,666 28,591 33,265
Purchase accounting
amortization 63 63 238 250
Restructuring and other
related charges - 7,727 - 16,160
Income tax effect of
above items (2,252) (6,004) (8,506) (14,547)
Income tax effect of
unusual tax items (489)(1) (2,386)(2) (2,864)(3) (4,976)(2)
--------- -------- --------- ---------
Non-GAAP Net income $ 30,615 $ 21,046 $129,760 $ 98,544
========= ======== ========= =========
GAAP Diluted earnings per
common share $ 0.61 $ 0.39 $ 2.63 $ 1.96
Stock-based
compensation 0.17 0.26 0.67 0.95
Restructuring and other
related charges - 0.23 - 0.46
Income tax effect (0.06) (0.24) (0.26) (0.55)
--------- -------- --------- ---------
Non-GAAP Diluted earnings
per common share $ 0.72 $ 0.64 $ 3.04 $ 2.82
========= ======== ========= =========
Shares used in diluted
earnings per common
share
calculation 42,482 33,038 42,643 34,938
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(1) Excluded amount represents tax benefits from the release of tax reserves
and tax credit adjustments.
(2) Excluded amount represents tax benefits from the release of tax reserves
and the impact of tax law changes.
(3) Excluded amount represents tax benefits from release of tax reserves,
transfer pricing, tax deduction and tax credit adjustments, and the
impact of tax law changes.
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 operating income, non-GAAP net income and non-GAAP diluted EPS which exclude certain non-cash expenses and charges that are included in the most directly comparable GAAP measure. These non-cash charges and expenses include stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization, accelerated depreciation, and early lease termination charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these expenses from our non-GAAP measures primarily because Plantronics' management does not believe they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.
As a company with significant global operations and sales, fluctuations in foreign currency exchange rates may have a material effect on our reported results. Consequently, we also present supplemental metrics as identified in the reconciliation within this release "on a constant currency basis" which excludes the impact of currency exchange rate fluctuations. The constant currency presentation, which is a non-GAAP measure, is intended to supplement our reported operating results and, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in the metrics from period to period and the core operations of the Company. We calculate constant currency percentages by removing any hedge gains or losses from the particular metric in the current period and then converting our current period local currency financial results using the foreign currency exchange rates in effect during the prior year period and comparing these adjusted amounts to the corresponding current period metric.
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
and other Unaudited GAAP Data
($in thousands, except per share data)
Q115 Q215 Q315 Q415
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GAAP Gross profit $114,710 $117,827 $119,916 $109,166
Stock-based compensation 535 668 685 695
--------- --------- --------- ---------
Non-GAAP Gross profit $115,245 $118,495 $120,601 $109,861
========= ========= ========= =========
Non-GAAP Gross profit % 53.2 % 54.9 % 52.0 % 54.7 %
GAAP Operating expenses $ 76,949 $ 79,969 $ 79,302 $ 76,314
Stock-based compensation (5,770) (6,719) (6,745) (6,774)
Purchase accounting amortization (50) (61) (64) (63)
Restructuring and other related
charges - - - -
--------- --------- --------- ---------
Non-GAAP Operating expenses $ 71,129 $ 73,189 $ 72,493 $ 69,477
========= ========= ========= =========
GAAP Operating income $ 37,761 $ 37,858 $ 40,614 $ 32,852
Stock-based compensation 6,305 7,387 7,430 7,469
Purchase accounting amortization 50 61 64 63
Restructuring and other related
charges - - - -
--------- --------- --------- ---------
Non-GAAP Operating income $ 44,116 $ 45,306 $ 48,108 $ 40,384
========= ========= ========= =========
Non-GAAP Operating income % 20.4 % 21.0 % 20.8 % 20.1 %
GAAP Income before income taxes $ 38,781 $ 37,173 $ 38,596 $ 30,701
Stock-based compensation 6,305 7,387 7,430 7,469
Purchase accounting amortization 50 61 64 63
Restructuring and other related
charges - - - -
--------- --------- --------- ---------
Non-GAAP Income before income taxes $ 45,136 $ 44,621 $ 46,090 $ 38,233
========= ========= ========= =========
GAAP Income tax expense $ 10,109 $ 9,752 $ 8,212 $ 4,877
Income tax effect of above items 1,800 2,250 2,204 2,252
Income tax effect of unusual tax
items 273 74 2,028 489
--------- --------- --------- ---------
Non-GAAP Income tax expense $ 12,182 $ 12,076 $ 12,444 $ 7,618
========= ========= ========= =========
Non-GAAP Income tax expense as a %
of Non-GAAP
Income before income taxes 27.0 % 27.1 % 27.0 % 19.9 %
----------------------------------------------------------------------------
Q116 Q216 Q316 Q416
----------------------------------------------------------------------------
GAAP Gross profit $107,358 $110,970 $109,516 $106,830
Stock-based compensation 779 879 811 837
--------- --------- --------- ---------
Non-GAAP Gross profit $108,137 $111,849 $110,327 $107,667
========= ========= ========= =========
Non-GAAP Gross profit % 52.4 % 52.0 % 48.9 % 51.3 %
GAAP Operating expenses $ 77,996 $ 76,874 $ 82,868 $ 88,895
Stock-based compensation (7,271) (7,953) (6,906) (7,829)
Purchase accounting amortization (62) (63) (62) (63)
Restructuring and other related
charges - - (8,433) (7,727)
--------- --------- --------- ---------
Non-GAAP Operating expenses $ 70,663 $ 68,858 $ 67,467 $ 73,276
========= ========= ========= =========
GAAP Operating income $ 29,362 $ 34,096 $ 26,648 $ 17,935
Stock-based compensation 8,050 8,832 7,717 8,666
Purchase accounting amortization 62 63 62 63
Restructuring and other related
charges - - 8,433 7,727
--------- --------- --------- ---------
Non-GAAP Operating income $ 37,474 $ 42,991 $ 42,860 $ 34,391
========= ========= ========= =========
Non-GAAP Operating income % 18.2 % 20.0 % 19.0 % 16.4 %
GAAP Income before income taxes $ 26,336 $ 24,638 $ 19,829 $ 11,373
Stock-based compensation 8,050 8,832 7,717 8,666
Purchase accounting amortization 62 63 62 63
Restructuring and other related
charges - - 8,433 7,727
--------- --------- --------- ---------
Non-GAAP Income before income taxes $ 34,448 $ 33,533 $ 36,041 $ 27,829
========= ========= ========= =========
GAAP Income tax expense $ 5,108 $ 6,742 $ 3,541 (1,607)
Income tax effect of above items 2,338 2,656 3,549 $ 6,004
Income tax effect of unusual tax
items 994 177 1,419 2,386
--------- --------- --------- ---------
Non-GAAP Income tax expense $ 8,440 $ 9,575 $ 8,509 $ 6,783
========= ========= ========= =========
Non-GAAP Income tax expense as a %
of Non-GAAP
Income before income taxes 24.5 % 28.6 % 23.6 % 24.4 %
----------------------------------------------------------------------------
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
and other Unaudited GAAP Data (Continued)
($ in thousands, except per share data)
----------------------------------------------------------------------------
Q115 Q215 Q315 Q415
GAAP Net income $ 28,672 $ 27,421 $ 30,384 $ 25,824
Stock-based compensation 6,305 7,387 7,430 7,469
Purchase accounting amortization 50 61 64 63
Restructuring and other related
charges - - - -
Income tax effect of above items (1,800) (2,250) (2,204) (2,252)
Income tax effect of unusual tax
items (273) (74) (2,028) (489)
Non-GAAP Net income $ 32,954 $ 32,545 $ 33,646 $ 30,615
GAAP Diluted earnings per common
share $ 0.68 $ 0.65 $ 0.71 $ 0.61
Stock-based compensation 0.15 0.17 0.18 0.17
Restructuring and other related
charges - - - -
Income tax effect (0.05) (0.05) (0.10) (0.06)
Non-GAAP Diluted earnings per common
share $ 0.78 $ 0.77 $ 0.79 $ 0.72
Shares used in diluted earnings per
common share calculation 42,466 42,505 42,700 42,482
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SUMMARY OF UNAUDITED GAAP DATA
($ in thousands)
Net revenues from unaffiliated
customers:
Enterprise $152,354 $156,680 $161,591 $148,660
Consumer 64,308 59,125 70,190 52,102
Total net revenues $216,662 $215,805 $231,781 $200,762
Net revenues by geographic area from
unaffiliated customers:
Domestic $124,467 $123,697 $123,092 $116,351
International 92,195 92,108 108,689 84,411
Total net revenues $216,662 $215,805 $231,781 $200,762
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance Sheet accounts and metrics:
Accounts receivable, net $150,765 $140,427 $157,322 $136,581
Days sales outstanding (DSO) 63 59 61 61
Inventory, net $ 60,968 $ 63,551 $ 57,724 $ 56,676
Inventory turns 6.7 6.2 7.8 6.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q116 Q216 Q316 Q416
GAAP Net income $ 21,228 $ 17,896 $ 16,288 $ 12,980
Stock-based compensation 8,050 8,832 7,717 8,666
Purchase accounting amortization 62 63 62 63
Restructuring and other related
charges - - 8,433 7,727
Income tax effect of above items (2,338) (2,656) (3,549) (6,004)
Income tax effect of unusual tax
items (994) (177) (1,419) (2,386)
Non-GAAP Net income $ 26,008 $ 23,958 $ 27,532 $ 21,046
GAAP Diluted earnings per common
share $ 0.55 $ 0.52 $ 0.49 $ 0.39
Stock-based compensation 0.21 0.26 0.24 0.26
Restructuring and other related
charges - - 0.25 0.23
Income tax effect (0.09) (0.08) (0.15) (0.24)
Non-GAAP Diluted earnings per common
share $ 0.67 $ 0.7 $ 0.83 $ 0.64
Shares used in diluted earnings per
common share calculation 38,943 34,245 33,259 33,038
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SUMMARY OF UNAUDITED GAAP DATA
($ in thousands)
Net revenues from unaffiliated
customers:
Enterprise $151,757 $160,468 $158,251 $156,190
Consumer 54,601 54,549 67,484 53,607
Total net revenues $206,358 $215,017 $225,735 $209,797
Net revenues by geographic area from
unaffiliated customers:
Domestic $117,578 $123,803 $122,075 $119,166
International 88,780 91,214 103,660 90,631
Total net revenues $206,358 $215,017 $225,735 $209,797
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance Sheet accounts and metrics:
Accounts receivable, net $127,160 $139,939 $136,402 $128,219
Days sales outstanding (DSO) 55 59 54 59
Inventory, net $ 55,918 $ 57,760 $ 55,650 $ 53,162
Inventory turns 7.1 7.2 8.3 7.7
----------------------------------------------------------------------------
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
($ in millions, except per share data)
----------------------------------------------------------------------------
Q4'15 Q4'16 Change Change
Net Revenues ($) ($) ($) (%)
------- ------- --------- --------
Net Revenues as reported (GAAP) $200.8 $209.8 $ 9.0 5 %
Less Hedge Gains (0.3)
Impact of Year over Year Foreign
Currency Exchange Rate
Movements 4.2
-------
Constant Currency Revenues (Non-
GAAP) $213.7 $ 12.9 6 %
=======
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4'15 Q4'16 Change Change
Enterprise Net Revenues ($) ($) ($) (%)
------- ------- --------- --------
Net Revenues as reported (GAAP) $148.7 $156.2 $ 7.5 5 %
Less Hedge Gains (0.2)
Impact of Year over Year Foreign
Currency Exchange Rate
Movements 3.1
-------
Constant Currency Revenues (Non-
GAAP) $159.1 $ 10.4 7 %
=======
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4'15 Q4'16 Change Change
Consumer Net Revenues ($) ($) ($) (%)
------- ------- --------- --------
Net Revenues as reported (GAAP) $ 52.1 $ 53.6 $ 1.5 3 %
Less Hedge Gains (0.1)
Impact of Year over Year Foreign
Currency Exchange Rate
Movements 1.1
-------
Constant Currency Revenues (Non-
GAAP) $ 54.6 $ 2.5 5 %
=======
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4'15 Q4'15 Q4'16
Operating Income ($) (%) Q4'16 ($) (%)
------- ------- --------- --------
Operating Income as reported
(GAAP) $ 32.9 16.4 % $ 17.9 8.5 %
Stock-based compensation &
purchase accounting
amortization 7.5 8.8
Restructuring and other related
charges - 7.7
------- ---------
Non-GAAP Operating Income $ 40.4 20.1 % $ 34.4 16.4 %
Less Hedge Gains, net 1.3
Impact of Year over Year Foreign
Currency Exchange Rate
Movements 0.9
---------
Constant Currency Operating Income
(Non-GAAP) $ 36.6 17.1 %
=========
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Diluted Earnings per Common Share Q4'15 Q4'16 Change Change
("EPS") ($) ($) ($) (%)
------- ------- --------- --------
Diluted EPS (GAAP) $ 0.61 $ 0.39 $ (0.22) (36 )%
Stock-based compensation 0.17 0.26
Restructuring and other related
charges - 0.23
Income Tax Effect (0.06) (0.24)
------- -------
Non-GAAP Diluted EPS $ 0.72 $ 0.64 $ (0.08) (11 )%
Less Hedge Losses, net of tax 0.07
Impact of Year over Year Foreign
Currency Exchange Rate
Movements, net of tax (0.04)
-------
Constant Currency Diluted EPS
(Non-GAAP) $ 0.67 $ (0.05) (7 )%
=======
----------------------------------------------------------------------------
MEDIA CONTACT: George Gutierrez Sr. Director, Global Communications & Content Strategy (831) 458-7537 INVESTOR CONTACT: Greg Klaben Vice President of Investor Relations (831) 458-7533
Source: Plantronics, Inc.
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