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POLY Misses Q4 Earnings Estimates on Lower Y/Y Revenues

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Plantronics, Inc. reported mixed fourth-quarter fiscal 2022 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line beat the same owing to supply chain woes. Despite global supply chain headwinds, including semiconductor chip shortages and transportation constraints, Poly (the name under which Plantronics markets itself) remains focused on managing its profitability while investing in areas of accelerating growth.

Net Income

On a GAAP basis, net loss in the quarter was $30.9 million or a loss of 72 cents per share against net income of $11 million or 25 cents per share in the prior-year quarter. The significant decline in the bottom line was primarily attributable to top-line contraction.

Non-GAAP earnings in the reported quarter were 50 cents per share compared with $1.23 per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 4 cents.

For fiscal 2022, Poly recorded GAAP net income of $17.9 million or 41 cents per share against a net loss of $57.3 million or a loss of $1.40 per share in fiscal 2021. Non-GAAP net earnings for fiscal 2022 were $2.44 per share compared with $3.99 per share in fiscal 2021.

Plantronics, Inc. Price, Consensus and EPS Surprise

 

Revenues

Quarterly GAAP revenues declined 11.5% to $421.4 million as supply chain constraints triggered by an acute chip shortage increased the backlog of products amid solid demand trends. Product revenues were down 10.2% to $369.2 million, while Services revenues decreased 20% to $52.2 million due to the shift from legacy goods to easy-to-install and less complex products with optional service contracts. The top line, however, beat the consensus estimate of $418 million.

The demand environment remained strong as businesses prepared to return to office by modernizing their communications infrastructure. However, sales of each of the major product categories declined year over year across all regions. Quarterly non-GAAP revenues were $422 million, down from $478 million a year ago.

For fiscal 2022, GAAP revenues were $1,681.1 million, down from $1,727.6 million in fiscal 2021.

Other Details

GAAP gross profit declined to $167 million from $212.8 million in the prior-year quarter on lower revenues, with respective margins of 39.6% and 44.7%. GAAP operating loss aggregated $16.8 million against operating income of $34.1 million a year ago. Adjusted EBITDA declined to $43 million from $86 million.

During the quarter, Poly inked a deal to be acquired by HP Inc. (HPQ - Free Report) for $40 per share in cash, representing a total enterprise value of $3.3 billion. The acquisition accelerates HP’s growth strategy and creates a leading portfolio of hybrid work solutions. Poly’s leading-edge technology and go-to-market strategy will help to drive HP’s long-term growth.

Poly will help drive the growth of HP’s peripherals and workforce solutions businesses. Poly’s devices, software and services, along with HP’s strengths across compute, device management and security, create a robust portfolio of hybrid meeting solutions. The companies will deliver an ecosystem of devices, software and digital services to create premium employee experiences, improve workforce productivity and provide enterprise customers with better visibility across their hybrid IT environments. The deal, subject to Poly shareholder and regulatory approvals, is expected to be closed by the end of 2022.

Cash Flow & Liquidity

In fiscal 2022, Poly utilized $7.8 million of cash for operating activities against a cash generation of $145.2 million in the prior-year period. As of Apr 2, 2022, the company had $170 million in cash and cash equivalents with $1,500.3 million of long-term debt compared with respective tallies of $202.6 million and $1,496.1 million a year ago.

Zacks Rank & Stocks to Consider

Poly currently carries a Zacks Rank #3 (Hold).

KVH Industries, Inc. (KVHI - Free Report) , a Zacks Rank #2 (Buy) stock, delivered an earnings surprise of 20%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.

TESSCO Technologies Incorporated (TESS - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 40.7% since May 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.


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