SANTA CRUZ, Calif.,
April 15, 2020 /PRNewswire/ --
Plantronics, Inc. ("Poly" – formerly Plantronics and Polycom)
(NYSE:PLT), a global communications company that powers meaningful
human connection and collaboration, today provided a business
update, including actions the Company is taking in response to
COVID-19.
Impact of COVID-19
"The COVID-19 crisis is unprecedented, and Poly's top priority
is to protect the health and safety of our employees, stakeholders
and communities as we continue to serve our customers," said
Robert Hagerty, Chairman of the Poly
Board of Directors and Interim Chief Executive Officer. "Given the
vital role our headsets and communications portfolio play in
enabling individuals to work seamlessly from any location, our
products and services have seen increased demand. We have
implemented enhanced safety precautions at our facilities and are
actively taking steps to ensure continuity of supply as we work
through the current heightened demand."
Mr. Hagerty added, "In order to maintain maximum flexibility as
we assess the uncertain global macroeconomic environment, we are
planning ahead and taking prudent steps to increase our liquidity
and cash reserves, and to strengthen our balance sheet during this
extraordinary period."
Business Performance Update for Q4
Widespread mandatory stay-at-home orders across the globe have
created a surge in the number of individuals working from home or
from remote locations. Correspondingly, Poly saw a near-term
increase in demand for its enterprise headsets.
As the Company manages both the demand environment and supply
chain, it provides the following business update:
- In Q4, Poly's product portfolio saw an increase in demand,
driven primarily by enterprise headsets.
- As of March 28, 2020, the Company
had approximately six weeks of backlog.
- The increase in demand also caused channel inventories to
decline in the quarter.
Financial Update for Q4
Fourth Quarter 2020 Guidance Update (Quarter ended
March 28, 2020)
Due to the uptick in demand for its enterprise headsets and
other products, the Company now expects GAAP revenues for its
fiscal fourth quarter of 2020 to be in the range of $395 million to $405
million, compared to its prior range of $354 million to $394
million provided with its earnings results on February 4, 2020. The Company expects adjusted
non-GAAP EBITDA to be above the high-end of the previously provided
guidance range of $20 million to
$45 million.
The Company is in the process of assessing a potential
impairment of goodwill and other intangible assets in light of
recent developments in its business and the macroeconomic
environment. While the valuation work required to determine
impairment is in progress, a substantial charge likely will be
recorded in the Company's fiscal fourth quarter results.
The Company plans to issue its fourth quarter and full-year
fiscal 2020 results on May 12,
2020.
Balance Sheet Update
As of March 28, 2020, total cash
and short-term investments were approximately $226 million, in line with the Company's
expectations for cash from operations.
The Company believes it has sufficient liquidity to fund its
operations and meet its financial obligations. However, to maintain
maximum financial flexibility and liquidity during this time of
global macroeconomic uncertainty, the Company has deferred any debt
repayment to the first quarter of fiscal 2021.
Dividend Update
To further preserve financial flexibility, Poly's Board of
Directors has authorized the suspension of the quarterly dividend.
The dividend suspension will result in approximately $25 million of annualized cash savings, which
Poly expects to utilize for deleveraging and strengthening the
balance sheet.
Cost Control Update
The Company is taking actions to reduce expenses and right-size
its overall cost structure to be better aligned with projected
revenue levels. The Company will provide an estimate of these
savings during its upcoming earnings release in May and anticipates
it will incur a one-time restructuring charge associated with these
actions in its first fiscal quarter of 2021.
Business Performance Update Due to COVID-19
Interruptions
While the Company currently has a significant backlog, it
continues to experience supply chain disruptions. On April 14, the Company's Mexican manufacturing
facility, the primary manufacturing source of the Company's headset
product, has been closed temporarily through April 30 as a result of the COVID-19 "shelter in
place" directive in Mexico. The
company is working with its supply chain and dual source partners
to take the necessary steps to mitigate disruption of supply. There
can be no assurance that the ongoing disruptions due to COVID-19
will be resolved in the near term. The company's primary
concern is for the health and safety of its employees around the
globe during these challenging times. In any instances where
suspected cases of COVID-19 have been reported, the Company is
following guidelines recommended by the Centers for Disease Control
and Prevention (CDC), World Health Organization (WHO) and local
health authorities, completing comprehensive contact tracing and
performing comprehensive sanitation and deep cleaning.
About Poly
Poly is a global communications company that powers meaningful
human connection and collaboration. Poly combines legendary audio
expertise and powerful video and conferencing capabilities to
overcome the distractions, complexity and distance that make
communication in and out of the workplace challenging. Poly
believes in solutions that make life easier when they work together
and with our partner's services. Our headsets, software, desk
phones, audio and video conferencing, analytics and services are
used worldwide and are a leading choice for every kind of
workspace. For more information, please visit: www.poly.com.
Poly and the propeller design are trademarks of Plantronics,
Inc. All other trademarks are the property of their respective
owners.
Forward Looking Statements
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
and include, among other things, statements regarding our
intentions, beliefs, projections, outlook, analyses or current
expectations that are subject to many risks and uncertainties. Such
forward-looking statements and the associated risks and
uncertainties include, among others: (i) our beliefs with respect
to the length and severity of the recent COVID-19 (coronavirus)
outbreak, and its impact across our businesses on customer and
partner demand, and on our operations and global supply chain,
including the potential impact on our ability to source necessary
component parts from key suppliers, our ability to timely supply
the number of products to fulfill current and future demand, and
the impact of the virus on our distribution partners, resellers,
end-user customers and our production facilities, including our
ability to obtain alternative sources of supply to mitigate any
potential adverse impact resulting from the temporary closure of
our manufacturing facility in Mexico; (ii) our belief in our ability to
convert backlog to revenue and risks associated with potential
cancellations and adjustments to backlog orders and the resulting
impact from using backlog as an indicator of future revenue; (iii)
our expectations that our current cash on hand, additional cash
generated from operations, together with sources of cash through
our credit facility, either alone or in combination with our
election to defer debt repayment over the first quarter of fiscal
year 2021 and our election to suspend our dividend payments, will
meet our liquidity needs during and following the unknown duration
and impact of the COVID-19 pandemic; (iv) expectations
relating to our ability to generate sufficient cash flow from
operations to meet our debt covenants and timely repay all
principal and interest amounts drawn under our credit facility as
they become due; (v) our expectations related to the likelihood and
scope of a potential impairment of goodwill and other intangible
assets, which are expected to have a negative impact on our
Q-4 Fiscal Year 2020 financial results; (vi) our ability
to control costs, streamline operations and successfully implement
our various cost-reduction activities, including our ability to
realize savings under such cost-reduction initiatives; (vii) risk
and uncertainty related to the potential impact on our stock price
and investor confidence as a result of the suspension of our
dividend payment; and expectations related to our ability to pay
future dividends; (viii) expectations related to our ability to
execute to drive sales and sustainable profitable revenue growth;
(ix) our expectations for new products launches, the timing of
their releases and their expected impact on future growth and on
our existing products; and (x) our expectations relating to our
fourth quarter and full Fiscal Year 2020 earnings guidance, 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. For additional
information on these and other factors that could cause the
Company's actual results to differ materially from expected
results, please see the Company's filings with the Securities and
Exchange Commission ("SEC"), including the Company's Annual Report
on Form 10-K filed with the SEC on May 17, 2019 and any
subsequent reports on Forms 10-Q and 8-K.
INVESTOR CONTACT:
Mike Iburg
Vice President, Investor Relations
(831) 458-7533
MEDIA CONTACT:
Edie Kissko
Senior Director and Head of Corporate Communications
(213) 369-3719
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SOURCE Plantronics, Inc.