SANTA CRUZ, CA --(Marketwired - November 01, 2016) - Plantronics, Inc. (NYSE: PLT) today announced second quarter fiscal year 2017 financial results. Highlights of the second quarter include the following (comparisons are against the second quarter of fiscal year 2016);
- Net revenues were $216.2 million, an increase of 0.5% compared with $215.0 million, and within our guidance range of $215 million to $225 million
- GAAP gross margin was 51.1% compared with 51.6%
- Non-GAAP gross margin was 51.4% compared with 52.0%
- GAAP operating income was $32.0 million compared with $34.1 million
- Non-GAAP operating income was $42.3 million compared with $43.0 million
- GAAP diluted earnings per share ("EPS") was $0.63 compared with $0.52, and above our guidance range of $0.51 to $0.61
- Non-GAAP diluted EPS was $0.82 compared with $0.70, and within our guidance range of $0.73 to $0.83
A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.
"We continue to execute well and we are on track for Non-GAAP operating margin improvement in fiscal year 2017, compared with the prior year," stated Joe Burton, President and CEO. "Our key objectives are to accelerate revenue and profit growth while strategically investing in new opportunities."
"Our focus on cost controls resulted in an additional quarter in which our operating expenses increased at a rate lower than revenues, and when combined with a significant reduction in our shares outstanding, resulted in 17% EPS growth," stated Pam Strayer, Senior Vice President and Chief Financial Officer. "Our total cash position grew to $554 million and our cash flow from operations was $65.8 million year-to-date compared to $66.4 million in the prior year-to-date period."
Financial Highlights for Q2 and Year-to-Date Fiscal 2017:
Revenue
Total net revenues for the second quarter of FY17 of $216.2 million were up 0.5%, or $1.2 million compared to the second quarter last year. Enterprise net revenues of $154.5 million were down 4%, or $5.9 million, driven by a decline in our Core Enterprise revenues, partially offset by revenue growth in the low teens in our UC revenues. Consumer net revenues were $61.6 million, up 13%, or $7.1 million, driven by increases in our stereo Bluetooth and gaming product revenues.
Total net revenues for the first half of FY17 of $439.3 million were up 4% or $17.9 million compared to the first half of FY16. This increase was driven by growth in our Consumer product revenues which increased 18% or $19.7 million, slightly offset by a decline in Enterprise net revenues of 1% or $1.8 million. The decrease in Enterprise revenues was driven by declines in core Enterprise and almost entirely offset by 18% growth in UC revenues.
Revenues in the Americas region were up 1%, or $1.1 million for the quarter, and up 5%, or $14.2 million year-to-date. Revenues in the Europe and Africa region were down 1%, or $0.3 million for the quarter, and up 4%, or $3.7 million year-to-date. The Asia Pacific region was up 1%, or $0.4 million for the quarter, and flat year-to-date.
Gross Margin
Our Q2 FY17 GAAP gross margin was 51.1%, a decrease of 50 basis points compared to the prior year quarter. Our GAAP gross margin for the first half of FY17 was 50.9%, a decrease of 90 basis points compared to the prior year period.
Our Q2 FY17 Non-GAAP gross margin was 51.4%, a decrease of 60 basis points compared to the prior year quarter. Our Non-GAAP gross margin for the first half of FY17 was 51.3%, a decrease of 90 basis points compared to the prior year period.
The decreases in GAAP and Non-GAAP gross margins for both periods were primarily due to a higher mix of revenues from Consumer and UC products partially offset by lower material costs and the favorable effect of the non-recurrence of a $3.6 million revenue adjustment taken in the year ago quarter.
Operating Expenses
Total GAAP operating expenses for Q2 FY17 were $78.5 million, up 2.1%, or $1.6 million compared to Q2 FY16. Total GAAP operating expenses for the first half of FY17 were $160.3 million.
Total Non-GAAP operating expenses for Q2 FY17 were $69.0 million, which is flat compared to Q2 FY16. Total Non-GAAP operating expenses in the first half of FY17 including litigation gains and losses were $144.2 million, up 3.4%, or $4.7 million.
The year-to-date increases in GAAP and Non-GAAP operating expenses was driven primarily by a $5 million litigation charge related to sanctions in the GN anti-trust case taken in the first quarter. Excluding gains and losses from litigation settlements and GAAP-only charges/credits for executive transition costs and restructuring adjustments, both GAAP and Non-GAAP operating expenses declined slightly compared to 4% growth in revenues due to cost reduction efforts taken earlier in the calendar year.
Operating Income
GAAP operating income for the second quarter of FY17 was $32.0 million, a decrease of 6.3%, or $2.1 million. As a percentage of revenues, GAAP operating income for the second quarter was 14.8%, compared to 15.9% in the year ago quarter. GAAP operating income for the first half of FY17 was $63.2 million, a decrease of 0.4%, or $0.3 million. As a percentage of revenues, GAAP operating income for the first half of FY17 was 14.4%, compared to 15.1% in the first half of FY16.
Non-GAAP operating income for the second quarter was $42.3 million, a decrease of 1.7%, or $0.7 million. As a percentage of revenue, Non-GAAP operating income for the second quarter was 19.6%, compared to 20.0% in the year ago quarter. Non-GAAP operating income for the first half of FY17 was $80.9 million, an increase of 0.6%, or $0.5 million. As a percentage of revenue, Non-GAAP operating income for the first half of the year was 18.4%, compared to 19.1% in the first half of FY16.
The year over year decrease in GAAP operating income was driven primarily by the impact of executive transition costs recorded in the quarter and a decrease in gross margin, described above. The year over year decrease in Non-GAAP operating income was driven primarily by a decrease in gross margin, driven primarily by product mix shift described above. The year-to-date decreases in GAAP and Non-GAAP operating income were driven primarily by a decrease in gross margin (discussed above).
Earnings Per Share
GAAP EPS for the quarter was $0.63, up $0.11 and 21.2% from the prior year quarter. GAAP EPS for the first half of FY17 was $1.24, up $0.17 and 15.9% from the first half of FY16.
Non-GAAP EPS for the quarter was $0.82, up $0.12 and 17.1% from the prior year quarter. Non-GAAP EPS for the first half of FY17 was $1.58, up $0.22 and 16.2% from the first half of FY16.
GAAP and Non-GAAP EPS was positively impacted by $0.03 as a result of share repurchases made over the past year. We repurchased approximately 170,000 shares in the quarter and spent approximately $8 million for share repurchases. Year-to-date GAAP and Non-GAAP EPS was positively impacted by $0.17 as a result of share repurchases made over the past year. We repurchased approximately 613,000 shares and paid approximately $27 million on share repurchases year-to-date.
Balance Sheet and Cash Flow Highlights
We finished the second quarter of FY17 with $554 million in cash and investments on our balance sheet and generated $36 million in cash flow from operations during the quarter. Our cash flow from operations was higher than the $23 million we recorded in Q2 FY16, primarily due to a shorter cash conversation cycle and higher net income (after adjusting for non-cash items).
Of the $554 million in cash and investments at the end of the second quarter of FY17, $28 million was domestic. We used approximately $8 million to repurchase shares of our common stock during the quarter.
Capital Expenditures were $7 million for the quarter and our most significant investments were related to upgrades and improvements to our manufacturing capabilities, as well as our new European headquarters facility in the Netherlands, which opened in October. For the full fiscal year, we are expecting to invest between $25 million and $30 million in capital expenditures. Our long-term expectation for capital expenditures is approximately 2.5% of revenues.
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 December 9, 2016 to all shareholders of record as of the close of business on November 18, 2016.
Completion of Prior 1,000,000 Share Repurchase Program
We recently completed our 1,000,000 share repurchase program announced on February 1, 2016, and have commenced repurchasing shares under the additional 1,000,000 repurchase program announced on August 2, 2016.
Upcoming Events
Plantronics will be presenting at the Raymond James Conference on December 8th. Information on how to access the presentation webcast can be found at investor.plantronics.com under Upcoming Events.
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 third quarter of fiscal year 2017 (all amounts assuming currency rates remain stable):
- Net revenues of $227 million to $237 million;
- GAAP operating income of $32 million to $37 million;
- Non-GAAP operating income of $40 million to $45 million, excluding the impact of $8 million from stock-based compensation.
- Assuming approximately 33 million diluted average weighted shares outstanding:
- GAAP diluted EPS of $0.57 to $0.67;
- Non-GAAP diluted EPS of $0.77 to $0.87; and
- Cost of stock-based compensation and GAAP only related tax charges to be approximately $0.20 per diluted share.
Please see our updated Investor Relations Presentation available on our corporate website at investor.plantronics.com.
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 our quarterly conference call. The remarks will be available in the Investor Relations section of our website along with this press release.
We have scheduled a conference call to discuss second quarter fiscal year 2017 financial results. The conference call will take place today, November 1, 2016 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 #91956764 will be available until December 1, 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 investor.plantronics.com, 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.
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, early lease termination charges, and executive transition 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 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 core operations. 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) improving Non-GAAP operating margin in fiscal year 2017 as compared to fiscal year 2016; (ii) our key objectives, in particular accelerating revenue and profit growth while strategically investing in new opportunities; (iii) estimates of GAAP and non-GAAP financial results for the third quarter of fiscal year 2017, including net revenues, operating income and diluted EPS; (iv) our estimates of stock-based compensation and executive transition costs, as well as the impact of these non-cash expenses on Non-GAAP operating income and diluted EPS for the second quarter of fiscal year 2017; and (v) our estimate of weighted average shares outstanding for the third 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 16, 2016 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
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Three Months Ended Six Months Ended
September 30, September 30,
------------------ ------------------
2015 2016 2015 2016
-------- -------- -------- --------
Net revenues $215,017 $216,183 $421,375 $439,289
Cost of revenues 104,047 105,737 203,047 215,770
-------- -------- -------- --------
Gross profit 110,970 110,446 218,328 223,519
Gross profit % 51.6% 51.1% 51.8% 50.9%
Research, development, and
engineering 22,609 22,379 45,803 44,723
Selling, general, and administrative 54,296 56,875 109,974 112,662
(Gain) loss, net from litigation
settlements (31) (349) (907) 4,390
Restructuring and other related
charges/adjustments - (415) - (1,463)
-------- -------- -------- --------
Total operating expenses 76,874 78,490 154,870 160,312
-------- -------- -------- --------
Operating income 34,096 31,956 63,458 63,207
Operating income % 15.9% 14.8% 15.1% 14.4%
Interest expense (7,320) (7,257) (10,061) (14,545)
Other non-operating income and
(expense), net (2,138) 1,340 (2,423) 3,692
-------- -------- -------- --------
Income before income taxes 24,638 26,039 50,974 52,354
Income tax expense 6,742 5,565 11,850 11,493
-------- -------- -------- --------
Net income $ 17,896 $ 20,474 $ 39,124 $ 40,861
======== ======== ======== ========
% of net revenues 8.3% 9.5% 9.3% 9.3%
Earnings per common share:
Basic $ 0.53 $ 0.63 $ 1.09 $ 1.27
Diluted $ 0.52 $ 0.63 $ 1.07 $ 1.24
Shares used in computing earnings
per common share:
Basic 33,590 32,281 35,796 32,269
Diluted 34,245 32,726 36,676 32,865
Effective tax rate 27.4% 21.4% 23.2% 22.0%
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
UNAUDITED CONSOLIDATED BALANCE SHEETS
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March 31, September 30,
2016 2016
------------- -------------
ASSETS
Cash and cash equivalents $ 235,266 $ 244,455
Short-term investments 160,051 178,485
------------- -------------
Total cash, cash equivalents, and short-term
investments 395,317 422,940
Accounts receivable, net 128,219 136,779
Inventory, net 53,162 52,686
Other current assets 20,297 27,476
------------- -------------
Total current assets 596,995 639,881
Long-term investments 145,623 130,695
Property, plant, and equipment, net 149,735 152,263
Goodwill and purchased intangibles, net 15,827 15,702
Deferred tax and other assets 25,257 21,986
------------- -------------
Total assets $ 933,437 $ 960,527
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 39,133 $ 42,779
Accrued liabilities 70,034 71,452
------------- -------------
Total current liabilities 109,167 114,231
Long-term debt, net of issuance costs 489,609 490,334
Long-term income taxes payable 11,968 12,874
Other long-term liabilities 10,294 12,392
------------- -------------
Total liabilities 621,038 629,831
Stockholders' equity 312,399 330,696
------------- -------------
Total liabilities and stockholders' equity $ 933,437 $ 960,527
============= =============
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
2015 2016 2015 2016
--------- --------- --------- ---------
Cash flows from operating
activities
Net Income $ 17,896 $ 20,474 $ 39,124 $ 40,861
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 4,833 5,119 9,819 10,265
Amortization of debt
issuance cost 362 363 483 725
Stock-based compensation 8,832 7,903 16,882 16,316
Excess tax benefit from
stock-based compensation (759) (600) (3,150) (939)
Deferred income taxes (1,339) (2,391) 2,807 2,499
Provision for excess and
obsolete inventories 682 902 1,084 1,674
Restructuring
charges/adjustments - (415) - (1,463)
Cash payments for
restructuring charges - (948) - (3,736)
Other operating activities (1,500) 1,071 3,037 (849)
Changes in assets and
liabilities:
Accounts receivable, net (11,404) (3,837) (2,825) (8,366)
Inventory, net (2,524) 384 (2,166) (1,102)
Current and other assets 679 (1,659) (2,190) (2,331)
Accounts payable 4,058 (2,935) 9,016 4,120
Accrued liabilities 6,883 11,814 671 10,444
Income taxes (3,725) 431 (6,144) (2,305)
--------- --------- --------- ---------
Cash provided by operating
activities 22,974 35,676 66,448 65,813
--------- --------- --------- ---------
Cash flows from investing
activities
Proceeds from sale of
investments 8,454 51,155 24,829 125,504
Proceeds from maturities of
investments 14,980 29,500 40,405 63,853
Purchase of investments (17,757) (85,638) (61,591) (192,349)
Capital expenditures (9,126) (6,612) (13,092) (14,191)
--------- --------- --------- ---------
Cash used for investing
activities (3,449) (11,595) (9,449) (17,183)
--------- --------- --------- ---------
Cash flows from financing
activities
Repurchase of common stock (188,776) (8,189) (473,220) (26,828)
Employees' tax withheld and
paid for restricted stock and
restricted stock units (596) (331) (10,499) (9,123)
Proceeds from issuances under
stock-based compensation
plans 5,994 5,019 9,071 5,752
Proceeds from revolving line
of credit - - 155,749 -
Repayments of revolving line
of credit - - (190,249) -
Proceeds from bonds issuance,
net (1,269) - 488,401 -
Payment of cash dividends (5,158) (5,001) (10,986) (9,971)
Excess tax benefit from stock-
based compensation 759 600 3,150 939
Other financing activities - 761 - 761
--------- --------- --------- ---------
Cash used for financing
activities (189,046) (7,141) (28,583) (38,470)
--------- --------- --------- ---------
Effect of exchange rate changes
on cash and cash equivalents (1,022) 42 (430) (971)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents (170,543) 16,982 27,986 9,189
Cash and cash equivalents at
beginning of period 475,379 227,473 276,850 235,266
Cash and cash equivalents at end
of period $ 304,836 $ 244,455 $ 304,836 $ 244,455
========= ========= ========= =========
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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 Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
2015 2016 2015 2016
--------- --------- --------- ---------
GAAP Gross profit $ 110,970 $ 110,446 $ 218,328 $ 223,519
Stock-based compensation 879 778 1,658 1,620
--------- --------- --------- ---------
Non-GAAP Gross profit $ 111,849 $ 111,224 $ 219,986 $ 225,139
========= ========= ========= =========
Non-GAAP Gross profit % 52.0% 51.4% 52.2% 51.3%
GAAP Research, development, and
engineering $ 22,609 $ 22,379 $ 45,803 $ 44,723
Stock-based compensation (2,619) (2,408) (4,978) (4,892)
Purchase accounting
amortization (63) (63) (125) (125)
--------- --------- --------- ---------
Non-GAAP Research, development,
and engineering $ 19,927 $ 19,908 $ 40,700 $ 39,706
========= ========= ========= =========
GAAP Selling, general, and
administrative $ 54,296 $ 56,875 $ 109,974 $ 112,662
Stock-based compensation (5,334) (4,717) (10,246) (9,804)
Executive transition costs - (2,759) - (2,759)
--------- --------- --------- ---------
Non-GAAP Selling, general, and
administrative $ 48,962 $ 49,399 $ 99,728 $ 100,099
========= ========= ========= =========
GAAP Operating expenses $ 76,874 $ 78,490 $ 154,870 $ 160,312
Stock-based compensation (7,953) (7,125) (15,224) (14,696)
Executive transition costs - (2,759) - (2,759)
Purchase accounting
amortization (63) (63) (125) (125)
Restructuring and other
related charges/adjustments - 415 - 1,463
--------- --------- --------- ---------
Non-GAAP Operating expenses $ 68,858 $ 68,958 $ 139,521 $ 144,195
========= ========= ========= =========
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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)
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Three Months Ended Six Months Ended
September 30, September 30,
-------------------- -------------------
2015 2016 2015 2016
-------- --------- -------- --------
GAAP Operating income $34,096 $31,956 $63,458 $63,207
Stock-based compensation 8,832 7,903 16,882 16,316
Executive transition costs - 2,759 - 2,759
Purchase accounting
amortization 63 63 125 125
Restructuring and other
related charges/adjustments - (415) - (1,463)
-------- --------- -------- --------
Non-GAAP Operating income $42,991 $42,266 $80,465 $80,944
======== ========= ======== ========
GAAP Net income $17,896 $20,474 $39,124 $40,861
Stock-based compensation 8,832 7,903 16,882 16,316
Executive transition costs - 2,759 - 2,759
Purchase accounting
amortization 63 63 125 125
Restructuring and other
related charges/adjustments - (415) - (1,463)
Income tax effect of above
items (2,656) (3,839) (4,994) (6,592)
Income tax effect of unusual
tax items (177)(1) (53) (1) (1,171)(1) (139)(1)
-------- --------- -------- --------
Non-GAAP Net income $23,958 $26,892 $49,966 $51,867
======== ========= ======== ========
GAAP Diluted earnings per
common share $ 0.52 $ 0.63 $ 1.07 $ 1.24
Stock-based compensation 0.26 0.24 0.46 0.50
Executive transition costs - 0.08 - 0.08
Restructuring and other
related charges/adjustments - (0.01) - (0.04)
Income tax effect (0.08) (0.12) (0.17) (0.20)
-------- --------- -------- --------
Non-GAAP Diluted earnings per
common share $ 0.70 $ 0.82 $ 1.36 $ 1.58
======== ========= ======== ========
Shares used in diluted earnings
per common share calculation 34,245 32,726 36,676 32,865
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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, early lease termination charges, and executive transition costs, 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.
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data ($ in thousands, except per share data)
Q116 Q216 Q316
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GAAP Gross profit $107,358 $110,970 $109,516
Stock-based compensation 779 879 811
--------- --------- ---------
Non-GAAP Gross profit $108,137 $111,849 $110,327
========= ========= =========
Non-GAAP Gross profit % 52.4% 52.0% 48.9%
GAAP Operating expenses $ 77,996 $ 76,874 $ 82,868
Stock-based compensation (7,271) (7,953) (6,906)
Executive transition costs - - -
Purchase accounting amortization (62) (63) (62)
Restructuring and other related
charges/adjustments - - (8,433)
--------- --------- ---------
Non-GAAP Operating expenses $ 70,663 $ 68,858 $ 67,467
========= ========= =========
GAAP Operating income $ 29,362 $ 34,096 $ 26,648
Stock-based compensation 8,050 8,832 7,717
Executive transition costs - - -
Purchase accounting amortization 62 63 62
Restructuring and other related
charges/adjustments - - 8,433
--------- --------- ---------
Non-GAAP Operating income $ 37,474 $ 42,991 $ 42,860
========= ========= =========
Non-GAAP Operating income % 18.2% 20.0% 19.0%
GAAP Income before income taxes $ 26,336 $ 24,638 $ 19,829
Stock-based compensation 8,050 8,832 7,717
Executive transition costs - - -
Purchase accounting amortization 62 63 62
Restructuring and other related
charges/adjustments - - 8,433
--------- --------- ---------
Non-GAAP Income before income taxes $ 34,448 $ 33,533 $ 36,041
========= ========= =========
GAAP Income tax expense $ 5,108 $ 6,742 $ 3,541
Income tax effect of above items 2,338 2,656 3,549
Income tax effect of unusual tax items 994 177 1,419
--------- --------- ---------
Non-GAAP Income tax expense $ 8,440 $ 9,575 $ 8,509
========= ========= =========
Non-GAAP Income tax expense as a % of Non-
GAAP Income before income taxes 24.5% 28.6% 23.6%
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Q416 Q117 Q217
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GAAP Gross profit $106,830 $113,073 $110,446
Stock-based compensation 837 842 778
--------- --------- ---------
Non-GAAP Gross profit $107,667 $113,915 $111,224
========= ========= =========
Non-GAAP Gross profit % 51.3% 51.1% 51.4%
GAAP Operating expenses $ 88,895 $ 81,822 $ 78,490
Stock-based compensation (7,829) (7,571) (7,125)
Executive transition costs - - (2,759)
Purchase accounting amortization (63) (62) (63)
Restructuring and other related
charges/adjustments (7,727) 1,048 415
--------- --------- ---------
Non-GAAP Operating expenses $ 73,276 $ 75,237 $ 68,958
========= ========= =========
GAAP Operating income $ 17,935 $ 31,251 $ 31,956
Stock-based compensation 8,666 8,413 7,903
Executive transition costs - - 2,759
Purchase accounting amortization 63 62 63
Restructuring and other related
charges/adjustments 7,727 (1,048) (415)
--------- --------- ---------
Non-GAAP Operating income $ 34,391 $ 38,678 $ 42,266
========= ========= =========
Non-GAAP Operating income % 16.4% 17.3% 19.6%
GAAP Income before income taxes $ 11,373 $ 26,315 $ 26,039
Stock-based compensation 8,666 8,413 7,903
Executive transition costs - - 2,759
Purchase accounting amortization 63 62 63
Restructuring and other related
charges/adjustments 7,727 (1,048) (415)
--------- --------- ---------
Non-GAAP Income before income taxes $ 27,829 $ 33,742 $ 36,349
========= ========= =========
GAAP Income tax expense $ (1,607) $ 5,928 $ 5,565
Income tax effect of above items 6,004 2,753 3,839
Income tax effect of unusual tax items 2,386 86 53
--------- --------- ---------
Non-GAAP Income tax expense $ 6,783 $ 8,767 $ 9,457
========= ========= =========
Non-GAAP Income tax expense as a % of Non-
GAAP Income before income taxes 24.4% 26.0% 26.0%
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Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
and other Unaudited GAAP Data (Continued)
($in thousands, except per share data)
Q116 Q216 Q316 Q416 Q117 Q217
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GAAP Net income $ 21,228 $ 17,896 $ 16,288 $ 12,980 $ 20,387 $ 20,474
Stock-based
compensation 8,050 8,832 7,717 8,666 8,413 7,903
Executive
transition
costs - - - - - 2,759
Purchase
accounting
amortization 62 63 62 63 62 63
Restructuring
and other
related
charges/adjust
ments - - 8,433 7,727 (1,048) (415)
Income tax
effect of
above items (2,338) (2,656) (3,549) (6,004) (2,753) (3,839)
Income tax
effect of
unusual tax
items (994) (177) (1,419) (2,386) (86) (53)
-------- -------- -------- -------- -------- --------
Non-GAAP Net
income $ 26,008 $ 23,958 $ 27,532 $ 21,046 $ 24,975 $ 26,892
======== ======== ======== ======== ======== ========
GAAP Diluted
earnings per
common share $ 0.55 $ 0.52 $ 0.49 $ 0.39 $ 0.62 $ 0.63
Stock-based
compensation 0.21 0.26 0.24 0.26 0.26 0.24
Executive
transition
costs - - - - - 0.08
Restructuring
and other
related
charges/adjust
ments - - 0.25 0.23 (0.03) (0.01)
Income tax
effect (0.09) (0.08) (0.15) (0.24) (0.09) (0.12)
-------- -------- -------- -------- -------- --------
Non-GAAP Diluted
earnings per
common share $ 0.67 $ 0.70 $ 0.83 $ 0.64 $ 0.76 $ 0.82
======== ======== ======== ======== ======== ========
Shares used in
diluted earnings
per common share
calculation 38,943 34,245 33,259 33,038 32,818 32,726
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SUMMARY OF UNAUDITED GAAP DATA
($ in thousands)
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Net revenues from
unaffiliated
customers:
Enterprise $151,757 $160,468 $158,251 $156,190 $155,897 $154,542
Consumer 54,601 54,549 67,484 53,607 67,209 61,641
-------- -------- -------- -------- -------- --------
Total net revenues $206,358 $215,017 $225,735 $209,797 $223,106 $216,183
======== ======== ======== ======== ======== ========
Net revenues by
geographic area from
unaffiliated
customers:
Domestic $117,578 $123,803 $122,075 $119,166 $128,238 $119,062
International 88,780 91,214 103,660 90,631 94,868 97,121
-------- -------- -------- -------- -------- --------
Total net revenues $206,358 $215,017 $225,735 $209,797 $223,106 $216,183
======== ======== ======== ======== ======== ========
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Balance Sheet accounts and metrics:
Accounts receivable,
net $127,160 $139,939 $136,402 $128,219 $133,155 $136,779
Days sales outstanding
(DSO) 55 59 54 59 54 57
Inventory, net $ 55,918 $ 57,760 $ 55,650 $ 53,162 $ 53,912 $ 52,686
Inventory turns 7.1 7.2 8.3 7.7 8.2 8.0
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INVESTOR CONTACT:
Greg Klaben
Vice President of Investor Relations
(831) 458-7533
MEDIA CONTACT:
George Gutierrez
Sr. Director, Global Communications & Content Strategy
(831) 458-7537
