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Form 8-K PLANTRONICS INC /CA/ For: May 27

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May 27, 2022 8:09 AM EDT

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Poly Announces Fourth Quarter and Full-Year Fiscal 2022 Financial Results


SANTA CRUZ, Calif., - May 27, 2022 - Poly (NYSE: POLY), a global outfitter of professional-grade audio and video technology, today announced fourth quarter results for the period ended April 2, 2022.

Highlights for the fourth quarter and full-year fiscal 2022 include:

•On March 28, 2022, Poly announced it had entered into a definitive merger agreement with 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.

•GAAP revenues for fiscal Q4 were $421M, a 12% year-over-year decline driven primarily by supply chain constraints impacting all product categories. Voice revenue grew 13% year over year but was offset by declines in Headsets and Video of -17% and -11%, respectively. Services revenue declined 20% from the prior year quarter.

•For full fiscal year 2022 non-GAAP revenues declined -3% driven primarily by supply chain constraints. Video revenue of $485M was up 14% and Voice revenue of $247M was up 12% from the prior year. This was offset by Headset and Services revenues of $723M and $230M, which were down 12% and 15%, respectively, from the prior year.

•Geographically for fiscal Q4, Americas revenue of $214M was down 8%, EMEA revenue of $144M was down 16%, and APAC revenue of $64M was down 14% from the prior year. For full-year fiscal 2022, Americas revenue of $890M was up 2%, EMEA revenue of $516M was down 11%, and APAC revenue of $279M was down 5% from the prior year.

•Fiscal Q4 Non-GAAP gross margins of 43.9% were down 450bps from the prior year quarter. For the full year of fiscal 2022, gross margins declined 440bps, to 45.1%. The fiscal Q4 and full year gross margin declines were driven primarily by increased logistics costs and spot market purchases associated with global supply chain disruptions.

•Poly continues to expand its portfolio of smart devices with the introduction of the Poly Studio R30 video bar, the Poly Sync 10 speakerphone, and enhancements to the Poly Lens platform. These solutions, combined with Poly DirectorAI smart camera technology, help employees look and sound their best, while employers can maintain focus on delivering meeting equity for hybrid and office workers alike.


($ Millions, except percent and per-share data)1
Q4 FY22Q4 FY21YTD FY22YTD FY21
GAAP Revenue$421$476$1,681$1,728
GAAP Gross Margin39.6 %44.7 %40.8 %44.9 %
GAAP Operating (Loss) Income($17)$34($32)$13
GAAP Diluted EPS($0.72)$0.25$0.41($1.40)
Cash Flow from Operations($8)$74($8)$145
Non-GAAP Revenue$422$478$1,685$1,742
Non-GAAP Gross Margin43.9 %48.4 %45.1 %49.5 %
Non-GAAP Operating Income$35$76$178$262
Non-GAAP Diluted EPS$0.50$1.23$2.44$3.99
Adjusted EBITDA$43$86$214$302


1

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 and Conference Call

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

2

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except percentages and per share data)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedTwelve Months Ended
 April 2,April 3,April 2,April 3,
 2022202120222021
Net revenues
Net product revenues$369,178$410,980$1,455,785$1,470,826
Net services revenues52,20465,253225,359256,781
Total net revenues421,382476,2331,681,1441,727,607
Cost of revenues
Cost of product revenues235,151240,811917,511863,529
Cost of service revenues19,20622,60677,54087,527
Total cost of revenues254,357263,417995,051951,056
Gross profit167,025212,816686,093776,551
% of total net revenues39.6 %44.7 %40.8 %44.9 %
Operating expenses
Research, development, and engineering47,463 52,963183,553 209,290
Selling, general, and administrative135,422 126,487499,839 488,378
Loss, net from litigation settlements— —— 17,561
Restructuring and other related charges960 (773)34,937 48,704
Total operating expenses183,845 178,677718,329 763,933
Operating (loss) income(16,820)34,139(32,236)12,618
% of total net revenues(4.0)%7.2 %(1.9)%0.7 %
Interest expense15,840 24,42469,711 82,606
Other non-operating expense (income), net1,955 (920)291 (5,108)
(Loss) income before income taxes(34,615)10,636(102,238)(64,880)
Income tax benefit(3,722)(341)(120,155)(7,549)
Net (loss) income$(30,893)$10,977$17,917 $(57,331)
% of total net revenues(7.3)%2.3 %1.1 %(3.3)%
Basic (loss) earnings per common share$(0.72)$0.26 $0.42 $(1.40)
Diluted (loss) earnings per common share$(0.72)$0.25 $0.41 $(1.40)
Basic shares used in computing (loss) earnings per common share42,922 41,482 42,568 41,044 
Diluted shares used in computing (loss) earnings per common share42,922 43,498 43,942 41,044 
Effective tax rate10.8 %(3.2)%117.5 %11.6 %


3

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 April 2,April 3,
 20222021
ASSETS 
Cash and cash equivalents$170,000 $202,560 
Restricted cash — 493,908 
Short-term investments13,703 14,559 
Total cash and cash equivalents, restricted cash, and short-term investments183,703 711,027 
Accounts receivable, net277,924 267,464 
Inventory, net234,102 194,405 
Other current assets83,410 65,214 
Total current assets779,139 1,238,110 
Property, plant, and equipment, net127,021 140,875 
Purchased intangibles, net230,478 341,614 
Goodwill796,216 796,216 
Deferred tax and other non-current assets292,500 147,454 
Total assets$2,225,354 $2,664,269 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  
Accounts payable$168,610 $151,244 
Accrued liabilities338,836 394,084 
Current portion of long-term debt— 478,807 
Total current liabilities507,446 1,024,135 
Long-term debt, net1,500,283 1,496,064 
Long-term income taxes payable68,082 86,227 
Other long-term liabilities129,381 138,609 
Total liabilities2,205,192 2,745,035 
Stockholders' equity (deficit)20,162 (80,766)
Total liabilities and stockholders' equity (deficit)$2,225,354 $2,664,269 



4

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedTwelve Months Ended
 April 2,April 3,April 2,April 3,
 2022202120222021
Cash flows from operating activities
Net (loss) income$(30,893)$10,977 $17,917 $(57,331)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Depreciation and amortization36,330 39,986 149,126 164,867 
Amortization of debt issuance cost1,055 2,465 6,101 6,427 
Stock-based compensation13,946 11,540 48,160 42,644 
Deferred income taxes(6,038)(5,801)(121,698)(21,174)
Provision for excess and obsolete inventories5,301 760 13,461 13,527 
Restructuring and other related charges960 (773)34,937 48,704 
Cash payments for restructuring charges(4,178)(4,970)(31,693)(33,764)
Other operating activities(913)(2,862)2,944 916 
Changes in assets and liabilities
Accounts receivable, net(2,801)47,186 (11,370)(24,253)
Inventory, net(20,792)(2,053)(45,491)(41,994)
Current and other assets1,630 (4,537)(11,783)(22,487)
Accounts payable8,625 (16,001)17,795 46,453 
Accrued liabilities(1,192)(2,054)(47,793)38,402 
Income taxes(8,757)168 (28,382)(15,757)
Net cash (used in) provided by operating activities(7,717)74,031 (7,769)145,180 
Cash flows from investing activities
Proceeds from sales of short-term investments2,507 1,862 2,771 2,529 
Purchases of short-term investments(77)(197)(837)(591)
Capital expenditures(9,040)(5,962)(29,722)(22,715)
Proceeds from sale of property, plant, and equipment— — — 1,900 
Other investing activities (2,020)— (6,020)— 
Net cash used in investing activities(8,630)(4,297)(33,808)(18,877)
Cash flows from financing activities
Employees' tax withheld and paid for restricted stock and restricted stock units(911)(2,737)(13,065)(5,930)
Proceeds from issuances under stock-based compensation plans5,943 6,576 11,784 12,307 
Proceeds from revolving line of credit— — — 50,000 
Repayments of revolving line of credit— — — (50,000)
Repayments of long-term debt— (100,000)(480,689)(146,980)
Proceeds from debt issuance, net of issuance costs— 493,922 — 493,922 
Net cash provided by (used in) financing activities5,032 397,761 (481,970)353,319 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,385)(1,092)(2,921)2,967 
Net (decrease) increase in cash, cash equivalents, and restricted cash(12,700)466,403 (526,468)482,589 
Cash and cash equivalents and restricted cash at beginning of period182,700 230,065 696,468 213,879 
Cash and cash equivalents and restricted cash at end of period$170,000 $696,468 $170,000 $696,468 

5

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 discrete tax benefit associated with an IP transfer between wholly-owned subsidiaries, changes in uncertain tax positions, and the full valuation allowance on United States federal and state deferred tax assets.

6

PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except percentages)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 Three Months EndedTwelve Months Ended
April 2,April 3,April 2,April 3,
2022202120222021
GAAP Net revenues$421,382 $476,233 $1,681,144 $1,727,607 
Deferred revenue purchase accounting468 1,796 3,689 14,405 
Non-GAAP Net revenues$421,850 $478,029 $1,684,833 $1,742,012 
GAAP Gross profit$167,025 $212,816 $686,093 $776,551 
Purchase accounting amortization16,317 16,239 65,031 68,111 
Deferred revenue purchase accounting468 1,796 3,689 14,405 
Stock-based compensation1,567 565 5,092 2,939 
Non-GAAP Gross profit$185,377 $231,416 $759,905 $862,006 
Non-GAAP Gross profit %43.9%48.4%45.1%49.5%
GAAP Research, development, and engineering$47,463 $52,963 $183,553 $209,290 
Stock-based compensation(3,119)(3,045)(9,478)(13,785)
Non-GAAP Research, development, and engineering$44,344 $49,918 $174,075 $195,505 
GAAP Selling, general, and administrative$135,422 $126,487 $499,839 $488,378 
Purchase accounting amortization(11,571)(14,195)(48,905)(56,780)
Stock-based compensation(9,260)(7,931)(33,590)(25,926)
Acquisition costs(9,530)— (9,530)— 
Deferred compensation mark to market 908 (917)(1,008)(3,263)
Other adjustments315 2,103 689 2,100 
Non-GAAP Selling, general, and administrative$106,284 $105,547 $407,495 $404,509 


7

PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
 
 Three Months EndedTwelve Months Ended
 April 2,April 3,April 2,April 3,
2022202120222021
GAAP Operating expenses$183,845 $178,677 $718,329 $763,933 
Purchase accounting amortization(11,571)(14,195)(48,905)(56,780)
Stock-based compensation(12,379)(10,976)(43,068)(39,711)
Acquisition costs(9,530)— (9,530)— 
Restructuring and other related charges(960)773 (34,937)(48,704)
Deferred compensation mark to market908 (917)(1,008)(3,263)
Loss, net from litigation settlements— — — (17,561)
Other adjustments315 2,103 689 2,100 
Non-GAAP Operating expenses$150,628 $155,465 $581,570 $600,014 
GAAP Operating (loss) income$(16,820)$34,139 $(32,236)$12,618 
Purchase accounting amortization27,888 30,434 113,936 124,891 
Stock-based compensation13,946 11,541 48,160 42,650 
Acquisition costs9,530 — 9,530 — 
Restructuring and other related charges960 (773)34,937 48,704 
Deferred revenue purchase accounting468 1,796 3,689 14,405 
Deferred compensation mark to market(908)917 1,008 3,263 
Loss, net from litigation settlements— — — 17,561 
Other adjustments(315)(2,103)(689)(2,100)
Non-GAAP Operating income$34,749 $75,951 $178,335 $261,992 


8

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 EndedTwelve Months Ended
 April 2,April 3,April 2,April 3,
2022202120222021
GAAP Net (loss) income$(30,893)$10,977 $17,917 $(57,331)
Purchase accounting amortization27,888 30,434 113,936 124,891 
Stock-based compensation13,946 11,541 48,160 42,650 
Acquisition costs$9,530 — 9,530 — 
Restructuring and other related charges960 (773)34,937 48,704 
Deferred revenue purchase accounting468 1,796 3,689 14,405 
Deferred compensation mark to market(24)(29)(69)55 
Loss, net from litigation settlements— — — 17,561 
Other adjustments(315)(2,103)(689)(2,095)
Income tax effect of above items3,569 4,198 2,791 (11,548)
Income tax effect of unusual tax items(2,967)(2,410)(123,187)(9,832)
Non-GAAP Net income$22,162 $53,631 $107,015 $167,460 
GAAP Diluted (loss) earnings per common share $(0.72)$0.25 $0.41 $(1.40)
Purchase accounting amortization0.63 0.70 2.59 2.98 
Stock-based compensation0.32 0.27 1.10 1.02 
Acquisition costs0.22 — 0.22 — 
Restructuring and other related charges0.02 (0.02)0.80 1.16 
Deferred revenue purchase accounting0.01 0.04 0.08 0.34 
Loss, net from litigation settlements— — — 0.42 
Deferred compensation mark to market— — — — 
Other adjustments(0.01)(0.05)(0.02)(0.08)
Income tax effect0.01 0.04 (2.74)(0.45)
Effect of anti-dilutive securities0.02— — — 
Non-GAAP Diluted earnings per common share$0.50 $1.23 $2.44 $3.99 
Shares used in diluted (loss) earnings per common share calculation:
GAAP42,922 43,498 43,942 41,044 
Non-GAAP44,070 43,498 43,942 41,973 



9

PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
 Three Months EndedTwelve Months Ended
April 3,July 3,October 2,January 1,April 2,April 2,
202120212021202220222022
GAAP Net income (loss) $10,977 $(36,811)$96,785 $(11,164)$(30,893)$17,917 
Income tax benefit(341)(4,262)(102,567)(9,604)(3,722)(120,155)
Interest expense 24,424 21,782 16,141 15,948 15,840 69,711 
Other non-operating (income) expense, net(920)(692)23 (995)1,955 291 
Deferred revenue purchase accounting1,796 1,260 1,054 907 468 3,689 
Stock-based compensation11,540 10,416 11,573 12,225 13,946 48,160 
Acquisition costs— — — — 9,530 9,530 
Restructuring and other related charges(773)28,972 2,607 2,398 960 34,937 
Deferred compensation mark to market917 994 13 910 (908)1,009 
Other adjustments(2,103)— (376)— (315)(691)
Depreciation and amortization39,986 39,833 36,292 36,671 36,330 149,126 
Adjusted EBITDA$85,503 $61,492 $61,545 $47,296 $43,191 $213,524 


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