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

SANTA CRUZ, Calif., May 27, 2022 /PRNewswire/ — 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 FY22	Q4 FY21		YTD FY22	YTD FY21
GAAP Revenue	$421	$476		$1,681	$1,728
GAAP Gross Margin	39.6  %	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 Margin	43.9  %	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	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

 

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except percentages and per share data)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended				Twelve Months Ended
		April 2,		April 3,		April 2,		April 3,
		2022		2021		2022		2021
Net revenues
Net product revenues		nbsp;           369,178		nbsp;           410,980		nbsp;        1,455,785		nbsp;        1,470,826
Net services revenues		52,204		65,253		225,359		256,781
Total net revenues		421,382		476,233		1,681,144		1,727,607
Cost of revenues
Cost of product revenues		235,151		240,811		917,511		863,529
Cost of service revenues		19,206		22,606		77,540		87,527
Total cost of revenues		254,357		263,417		995,051		951,056
Gross profit		167,025		212,816		686,093		776,551
% of total net revenues		39.6 %		44.7 %		40.8 %		44.9 %
Operating expenses
Research, development, and engineering		47,463		52,963		183,553		209,290
Selling, general, and administrative		135,422		126,487		499,839		488,378
Loss, net from litigation settlements		—		—		—		17,561
Restructuring and other related charges		960		(773)		34,937		48,704
Total operating expenses		183,845		178,677		718,329		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 expense		15,840		24,424		69,711		82,606
Other non-operating expense (income), net		1,955		(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		nbsp;         (30,893)		nbsp;             10,977		nbsp;           17,917		nbsp;           (57,331)
% of total net revenues		(7.3) %		2.3 %		1.1 %		(3.3) %
Basic (loss) earnings per common share		nbsp;              (0.72)		nbsp;                0.26		nbsp;                0.42		nbsp;              (1.40)
Diluted (loss) earnings per common share		nbsp;              (0.72)		nbsp;                0.25		nbsp;                0.41		nbsp;              (1.40)
Basic shares used in computing (loss) earnings per common share		42,922		41,482		42,568		41,044
Diluted shares used in computing (loss) earnings per common share		42,922		43,498		43,942		41,044
Effective tax rate		10.8 %		(3.2) %		117.5 %		11.6  %

 

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
		April 2,		April 3,
		2022		2021
ASSETS
Cash and cash equivalents		nbsp;                        170,000		nbsp;                        202,560
Restricted cash		—		493,908
Short-term investments		13,703		14,559
Total cash and cash equivalents, restricted cash, and short-term investments		183,703		711,027
Accounts receivable, net		277,924		267,464
Inventory, net		234,102		194,405
Other current assets		83,410		65,214
Total current assets		779,139		1,238,110
Property, plant, and equipment, net		127,021		140,875
Purchased intangibles, net		230,478		341,614
Goodwill		796,216		796,216
Deferred tax and other non-current assets		292,500		147,454
Total assets		nbsp;                    2,225,354		nbsp;                    2,664,269
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Accounts payable		nbsp;                        168,610		nbsp;                        151,244
Accrued liabilities		338,836		394,084
Current portion of long-term debt		—		478,807
Total current liabilities		507,446		1,024,135
Long-term debt, net		1,500,283		1,496,064
Long-term income taxes payable		68,082		86,227
Other long-term liabilities		129,381		138,609
Total liabilities		2,205,192		2,745,035
Stockholders’ equity (deficit)		20,162		(80,766)
Total liabilities and stockholders’ equity (deficit)		nbsp;                    2,225,354		nbsp;                    2,664,269

 

PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Three Months Ended				Twelve Months Ended
		April 2,		April 3,		April 2,		April 3,
		2022		2021		2022		2021
Cash flows from operating activities
Net (loss) income		nbsp;          (30,893)		nbsp;           10,977		nbsp;           17,917		nbsp;          (57,331)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Depreciation and amortization		36,330		39,986		149,126		164,867
Amortization of debt issuance cost		1,055		2,465		6,101		6,427
Stock-based compensation		13,946		11,540		48,160		42,644
Deferred income taxes		(6,038)		(5,801)		(121,698)		(21,174)
Provision for excess and obsolete inventories		5,301		760		13,461		13,527
Restructuring and other related charges		960		(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 assets		1,630		(4,537)		(11,783)		(22,487)
Accounts payable		8,625		(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 investments		2,507		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 plans		5,943		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 activities		5,032		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 period		182,700		230,065		696,468		213,879
Cash and cash equivalents and restricted cash at end of period		nbsp;         170,000		nbsp;         696,468		nbsp;         170,000		nbsp;         696,468

 

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.

 

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				Twelve Months Ended
	April 2,		April 3,		April 2,		April 3,
	2022		2021		2022		2021
GAAP Net revenues	nbsp;          421,382		nbsp;          476,233		nbsp;      1,681,144		nbsp;      1,727,607
Deferred revenue purchase accounting	468		1,796		3,689		14,405
Non-GAAP Net revenues	nbsp;          421,850		nbsp;          478,029		nbsp;      1,684,833		nbsp;      1,742,012
GAAP Gross profit	nbsp;          167,025		nbsp;          212,816		nbsp;          686,093		nbsp;          776,551
Purchase accounting amortization	16,317		16,239		65,031		68,111
Deferred revenue purchase accounting	468		1,796		3,689		14,405
Stock-based compensation	1,567		565		5,092		2,939
Non-GAAP Gross profit	nbsp;          185,377		nbsp;          231,416		nbsp;          759,905		nbsp;          862,006
Non-GAAP Gross profit %	43.9 %		48.4 %		45.1 %		49.5 %
GAAP Research, development, and engineering	nbsp;            47,463		nbsp;            52,963		nbsp;          183,553		nbsp;          209,290
Stock-based compensation	(3,119)		(3,045)		(9,478)		(13,785)
Non-GAAP Research, development, and engineering	nbsp;            44,344		nbsp;            49,918		nbsp;          174,075		nbsp;          195,505
GAAP Selling, general, and administrative	nbsp;          135,422		nbsp;          126,487		nbsp;          499,839		nbsp;          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 adjustments	315		2,103		689		2,100
Non-GAAP Selling, general, and administrative	nbsp;          106,284		nbsp;          105,547		nbsp;          407,495		nbsp;          404,509

 

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
	April 2,		April 3,		April 2,		April 3,
	2022		2021		2022		2021
GAAP Operating expenses	nbsp;         183,845		nbsp;         178,677		nbsp;         718,329		nbsp;         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 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 expenses	nbsp;         150,628		nbsp;         155,465		nbsp;         581,570		nbsp;         600,014
GAAP Operating (loss) income	nbsp;          (16,820)		nbsp;           34,139		nbsp;          (32,236)		nbsp;           12,618
Purchase accounting amortization	27,888		30,434		113,936		124,891
Stock-based compensation	13,946		11,541		48,160		42,650
Acquisition costs	9,530		—		9,530		—
Restructuring and other related charges	960		(773)		34,937		48,704
Deferred revenue purchase accounting	468		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	nbsp;           34,749		nbsp;           75,951		nbsp;         178,335		nbsp;         261,992

 

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				Twelve Months Ended
	April 2,		April 3,		April 2,		April 3,
	2022		2021		2022		2021
GAAP Net (loss) income	nbsp;          (30,893)		nbsp;           10,977		nbsp;           17,917		nbsp;          (57,331)
Purchase accounting amortization	27,888		30,434		113,936		124,891
Stock-based compensation	13,946		11,541		48,160		42,650
Acquisition costs	nbsp;              9,530		—		9,530		—
Restructuring and other related charges	960		(773)		34,937		48,704
Deferred revenue purchase accounting	468		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 items	3,569		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	nbsp;           22,162		nbsp;           53,631		nbsp;         107,015		nbsp;         167,460
GAAP Diluted (loss) earnings per common share	nbsp;              (0.72)		nbsp;                0.25		nbsp;                0.41		nbsp;              (1.40)
Purchase accounting amortization	0.63		0.70		2.59		2.98
Stock-based compensation	0.32		0.27		1.10		1.02
Acquisition costs	0.22		—		0.22		—
Restructuring and other related charges	0.02		(0.02)		0.80		1.16
Deferred revenue purchase accounting	0.01		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 effect	0.01		0.04		(2.74)		(0.45)
Effect of anti-dilutive securities	0.02		—		—		—
Non-GAAP Diluted earnings per common share	nbsp;                0.50		nbsp;                1.23		nbsp;                2.44		nbsp;                3.99
Shares used in diluted (loss) earnings per common share calculation:
GAAP	42,922		43,498		43,942		41,044
Non-GAAP	44,070		43,498		43,942		41,973

 

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
		April 3,		July 3,		October 2,		January 1,		April 2,		April 2,
		2021		2021		2021		2022		2022		2022
GAAP Net income (loss)		nbsp;                10,977		nbsp;               (36,811)		nbsp;                96,785		nbsp;               (11,164)		nbsp;               (30,893)		nbsp;                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 accounting		1,796		1,260		1,054		907		468		3,689
Stock-based compensation		11,540		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 market		917		994		13		910		(908)		1,009
Other adjustments		(2,103)		—		(376)		—		(315)		(691)
Depreciation and amortization		39,986		39,833		36,292		36,671		36,330		149,126
Adjusted EBITDA		nbsp;                85,503		nbsp;                61,492		nbsp;                61,545		nbsp;                47,296		nbsp;                43,191		nbsp;              213,524

 

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SOURCE Plantronics, Inc.