Plantronics (POLY) 28 Jul 202021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Poly Quarterly Earnings Call. At this time, all participants are in listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mike Iburg. Thank you, sir. ahead. go Please

and of otherwise of me presented Welcome Chuck the to operator. name information slides Securities today FY will financial Boynton, and discussed conference And recent Throughout release our CEO; results same Mike Thank Chairman quarter to we Private in under statements provisions today discussed Litigation includes of will President the for Hagerty, press joining Relations. XXXX. Investor be Reform first presentation. which refer most Interim Head remarks, The uncertainties CFO. to today's the are are of Harbor Vice specific made and Act all and risks XX-Q, My year. are noted, fiscal the Board the our the call such prior The today's and comparisons presentation. from Bob Unless earnings quarter of Iburg, you, of XX-K, Executive Poly's and today forward-looking year statements, QX related is to Safe 'XX earnings and detailed XXXX.

the for planning on future call turn website current comparisons posted provide measures should with between that, investor.poly.com. Relations on GAAP I You to we financial forecasting materials today results this an non-GAAP and a previously measures and the These refer measures. Bob. management meaningful explanation those non-GAAP to to the at will call that the for along measures basis and All of additional materials uses Investor results, the of applicable reconciliation provided to our also reported periods. over discussed our are earnings nearest now With indicators as are

we growth. to customer we demand areas, on to and everyone This roadmap processes, for relationships partners, strategic believe, last profitable the quarter, spent on market us and in realize best shifted, with reviewed on we improved tools, and our channel Mike, systems benefits the needed improvements our the focus has progress product our return. the last ensure several and return our with resource We've the modified the strengthened and to of allocation two partners. We made company systems, will communication quarters provide focused integrated Thanks, today. as thanks internal joining

that now for it While necessary from transformation step-by-step Market series endpoint work are has progress XX% to provider world pandemic our hybrid employees the a created clear trends the will many adopting time schedule to outside, of but home. the the is their splitting a of The to office become It's us flexible here the and with visible the and for between stay. are we of the from choice working industry. estimate communications work to challenges, created research continue home around firms opportunities on industry. has also unified XX% making

term growth result, work the forecasted of our has and in are working a headset increased we aggressively opportunity environment the and a which effect for to is increased video capitalize long As impact voice this on. net for the offsetting market. The hybrid growth TAM rate to company, markets

Turning to continue headsets on to recent well. Page most the sell quarter X;

bars remain voice video ramping challenged. new are and Our solutions

to the with business. supply the detail. exited I'll our continues June weeks results overall expected pace. us to and allowed expenses controls stronger supply team Chuck backlog the backlog chain high flow let a impact high Revenue We guidance greater end COVID-XX quarter range. and than to continue new operations as slightly unusually deliver of and earnings position. five continues through very orders at chain through above strong was cost approximately in aggressive Our of work our cash challenges and in brisk remains to and a lower walk

of the on is remain our in voice chain. supply elevated. additional put While offices pressure headset impacting This demand, lack has demands employees

capacity a having at in our running capable situation but we of contract availability. are It is similar Our to is based to flex Mexico manufacturers. factory full on our component production

availability of a manufacturing, Outside the headset in certain begun of continues market to back number our small offices. However, improve. moving employees into we've

made However, employees front. from today, strategic and most of work the I'd continue like progress partner take minutes discuss a as to to home. few our we've on

XXX Our video getting the portfolio certified Teams stronger. solutions. today, We completed offer XXX Studio relationship our Microsoft recently is on largest of bars strong and Teams with certification and and

also in to bundle enterprise May, deliver Teams addition, MTR. video solutions superior Microsoft known experience and users. a endpoints audio In launched These we with meeting of a Rooms, our as Teams an appliance Microsoft family new for class

In to and Studio relationship where strengthen. in Zoom more we continues appliances XXX, we Zoom June, the endpoints. certification. joined announced receive first GXXXX of the And we to that were available half Our represent the Zoom's program July Hardware-as-a-Service than XXX

with relationship LogMeIn. week, last expanded Finally, our we

a and now bundled solutions. in XXX Studio video GoToRoom bars are XXX available Our

As partnership That for you can enhancements without XXX. specific compute allow the computer simplifying separate a to the in because onboard Studio users and and of XXX applications cost. see, recent involve capabilities run on directly need many reducing the the device these room, deployments is our

progress. lot make me quarter each we do, work Let we by to more up a wrap saying, have but

We improve go-to-market our continue to execution.

able even product in year and exciting we've current the our for improve roadmap have been of environment, financial We the to an the balance condition.

partnerships positioned growth our on bring opportunity products are and market, strengthen market presents. to video and the we we As accelerated capitalize industry-leading headset the to

an the continues to on over our to the financial results. Board call Chuck now you I'll in make progress the our turn to discuss and forward look search CEO future. we with providing Lastly, to update

Thanks, Bob.

cash, we million. is pleased as the with ending performed were largely strong of cash increase We down million $XXX quarter an particularly of both flow expected. and Although business $XX sequentially year-over-year, the with operating the

where in six quarter, of This demand the As the production Bob last have a tooling be headsets. primarily increased we the exited added model. in we down our have dual five with some continues operating capacity, challenge. additional lines. backlog from nature high-volume supply added demand, concentrated and approximately into mentioned, manufacturing our our but additional Mexico, We SKUs to chain sourcing, of was quarter elevated in-sourced To weeks facility above weeks address

However, of QX, the new for Overall, quarter. through inventory levels again of on clear weeks we not and declined by quarter inflow several fiscal below of to expect entirely remained do end this based first orders the headsets. backlog targeted the the channel this

QX expect We supply and as online. comes in normalize to additional this QX

up Page million were resulting lower was Page in line the EBITDA declines in range. guidance anticipated ramp. revenue Gross center. headset UC revenue the breaks down category operating $XXX Turning increased summary guidance product offset in Within year-over-year continue grew by of margins Video new both year-over-year guidance expectations video end and and both EPS partially to as than and headsets, sequentially the region. year-over-year. expenses down top and the were sequentially revenue our financial contact range. XX; on half was but the and revenue upper above by of sequentially, significantly, Total XX in of to with was but bars

voice modestly. Services audio was phone and impacted declined desktop Our as work-from-home down revenue conferencing deployments. business significantly

offering new new to for trended video Turning video video bars, including a data the with our all XX; included new slide we portfolio. three plus our GXXXX. Page This captures have sales-out

prior Although portfolio by On revenue. next-gen our gross the of directly is total Page roughly sales-out video similar one-third to margins under-utilization and not comparable this to were our XX, freight. factory revenue, quarter, of reported impacted

this and quarter, had provisions addition, we inventory In higher reserves. warranty

to primarily million home. our due people decreased the modest expenses gross stabilizes, $XX we As from prior business expect lower and margin cost from year, expenses, while Operating expansion. controls worked

expenses operating results. modestly to expect increase our QX we Lastly, from

Moving $XXX million to the million. cash short-term working drove XX; of quarter, flow to improvements in cash Page pushing strong investments and continued capital operating $XX

we the in to abundance accumulating expect of been over quarters as past have economy. caution of pandemic capital an global has cash cash to decline working Due impacted couple QX. We the the and requirements,

the stabilizes in and in delevering to of million quarter, outlook we economy posted resume expect we [ph]. as XX-month EBITDA XX, can $XX our trailing EBITDA the business Page million. of a $XXX However, see you On resulting improves,

I XX; offer the context walk numbers, on like Page guidance I'd our to for Turning guidance. through some fiscal QX before to

gathered, headset you supply voice and issues. are primary have our As may demand

$X.XX supply GAAP both factory that net manufacturers. to Mexico $XXX based to adjusted for million our revenue of $XXX we million EBITDA in to million and contract on $XX per is of is current net $X.XX With revenues from be million, forecast expect non-GAAP expected million. share. $XXX is EPS to of to of guidance Our range enterprise understanding, in expected headsets range Total our in $XXX the the non-GAAP $XX to million be and the

the for fiscal call chain the begin guidance mention assume ranges QX. the our that, Finally, to I'll With Operator? turn to in I'd operator like remain the these of Q&A. balance production to factory and over supply that

question first Meta from comes Marshall line with [Operator the Morgan of Your Instructions] Stanley.

line Your open. is now

we question the that would availability the and being aware be how product the on Zoom impact think Maybe sale product to How should ramping, as of you ramp any of? Great, the thinking that about thanks. hardware meaningful opportunity, a we that guys clearly go X-Series that's margin for are should about opportunity. first a able along that with

I Bob, the guess, first. Well, take I'll part margin

can the above for average to be would us, to company generally new about products with the the so Bob Zoom. a be margin. traditional it upfront. accounted cash margin-accretive will talk are as relationship I because expect overall, For And And it sale, company deeper video

I shape. think in the Zoom good relationship's

and in the We got both lining number the We've a that XXX we've certified. are products the that have, offer. XXX, got for as script, of up said other GXXXX

see some in guidance the it's any how ramps supply in that up. don't ramp see primarily as included But up. in So -- focused voice, it's to video any constraints into don't aggregated I -- will forward because program and this extent

XXX products And fairly an upfront. it. just just and XXX been -- but limited have from may of manufacturing older and I it Got thought quarter, were

come of the a thinking the past throughout kind set sense a amount quarter are that? of or ramp Is how that of we per production a can be on year. there supply we of that capability on should on constraints Just

Yes.

mean, past capacity couple about supply XXX a think we normal have XXX so the I of So on we to been pretty we as and of clip product increasing of ago, ramp are talked of ramps and quarters the production market. good constraints. equipment a I

just of we're sort we're according And But this to not constrained. so, supply point, plan. ramping at

Okay, That's helpful. Thanks, guys. got it.

Operator, Meta. next Thanks, question?

sir. Sure,

Your next Mike of Markets. from Northland Capital Latimore question comes line with the

Your now open. line is

there. in Great, thanks. Great profitability the quarter

of the main business, kind thinking look something terms are to back about the work? would that and phone improving that there there that lever you of or is when it? people are else Is up help In go to

is -- this think the I that's Bob. prime

we that we people and business work, growth think potentially up that I down it saw. to we we've to is the where return described driver. move carefully Look, were expect that's and certainly script. the in back to recapture start primary When fairly to the our

to I is to think definitely it So come tied work. people back how

the side, kind Is All in-office some nicely. right. then Studio of is environment? home growing that's on -- deployments the And that's that or video mostly of

it depends think on I the region.

home. some for webcam a Mini personal we but up called -- very work our of a it's It's One do have notable and we one. webcam, product, EagleEye So products the have materially. product professional-oriented

the it we as and seeing are and are that for enterprise we are back move are also then facilitating to where people enterprise work-from-home buying we individuals to to it. are seeing product, seeing employees work one-off move we able or it are work-from-home both are So who

plants two June In down going had quarter, September Okay. quarter. to in constraint quarter? shutdown. You're actually, not where question How in the -- second I the your weeks you the have think supply plants compare And being just the kind would quarter you last the the in believe, versus were shut supply. of second the I on September

to In factory took Yes, back offline four unfortunately, it up. weeks it two, the June Mexico while that's and right, ramp was quarter, for then our Mike. a

So than of or four four was output or production about effective weeks output -- less weeks three was three of impacted.

we of of running capacity So have ability with employees component but and right we've to the for reconfigured run we're the factory full shortages. health all our and at safety the now,

in going it think woods cleared a don't the of the otherwise June But quarter we'll that this talked backlog is September expect our the But be the We more bottleneck clear contemplated that prepared is more But as in be the the the that of we'll constraint volumes there we higher still as will backlog. little September disruption. in or component backlog up the we'll about of quarter. quarter. December expect, shortages. entirely in more remarks, quarter, model guidance, the right into we the and bit really we have out clear in than of quarter, partially we So business that no assuming now, other

Okay, thank you.

you, Mike. Operator, question? Thank next

sir. Sure,

Greg Sidoti comes & line next Company. Burns of the from question Your with

Your line open. is now

Good afternoon.

quantify that on up chain guidance? that the your what following is what Just could revenue to you -- supply issues; in the impact

think Well, sort weeks quarter last of the weeks June we indicate, ended with weeks can we did the and you this all effectively -- I haven't six five quarter, we with last outlined of that. backlog exact won't probably and we we but numbers, and -- five we quarter about quarter, backlog had of ended clear

backlog. of So headset numbers, is get the exact backlog the we're products that an what math of we idea backlog. you haven't and And of the high the -- are experiencing is do in UC runner, provided that can sort but range primarily

or shortages of of, if get opportunity everyone's this specific more of the here where characterize Okay. you're some of if same the or just is issue missing headsets? an And sense would your this trying I'm industry-wide supply constraints. as to like kind some an issue chain to industry a you is component suffering

have of in volumes. components single we number to small obtain So, that difficult are a source

cases, those parts that volumes they some some up. used are by popped they're are the shifted, but the that In components others, are not. As cases, in

shifted, it. So able being foundries -- working dramatically; it's to suppliers shifted -- through this being and ramp they're demand as just and it so fairly just we're

you're more just modifying maybe in lastly, on shifts bit terms what roadmap, Thank you. in us And product the Could market. the you're of portfolio? given Okay. seeing doing your mentioned color little you product your a you give

platforms. we I apply slowed the that it's in primarily view, some headsets. work-from-home mean foot And room a we down and in resources large work and conference XX,XXX them personal of video voice, to applied in not to

Okay.

point So endpoint... personal video lower price

No, would apply more work-from-home. that things to

Okay.

working voice big it's headsets. conference voice voice away towards personal kind -- -- plenty people of on and from but we work-from-home, have and not it's So room video, of

you. Great. All great. right, Thank

Greg. Thanks,

Your from line Morgan. the Coster Instructions] Paul [Operator J.P. with next of question comes

Your line is now open.

versus another are Yes, it for what is of got decent more It's quarter taking yet Well, the I backlog. question. discern in thanks the But, you for you enduring to other like is able reason, ahead headset business. because looks in no one-time nature what the mean, of expecting here, of trying out people return and longer as are they headset headset? see short-term a to a just taking office? second is nature trend. the or to Are what's I'm figure you what their with nature as maybe sort sort them in to a

what what Well, become that right about workforce. clearly of now. will -- we for we everybody was and what out the is we let's talk of know office, doing. portion about the we think In are market where is term, In jerk hybrid a the the large future, near the expect that's the knee know we part most the

have office. and I'd in seeing -- a level for So yet, are they'll two. in see demand headset it people some we little we the but and people strong their short At carry unclear will at some just will work headsets, part-time in don't abating the part-time in term. home that's level, say

the just moment. video be Got human mean, oxymoron sort you. really here I rooms demand of of Studio that huddling at which front, the And you are trying got aren't anywhere driving to well, understand and to then the much supposed huddle beings on I'm the

drive that the happening? what's So or doing SMB demand What product? enterprise is the is it that to for

of seeing we're kinds happen. So, two things

more First they've -- office in a just off, termed of is environment of video been environment. use our distance huddle for a some or so are capable teachers, kind working to if of screen. are the telemedicine, of that room, our put which category products Certainly, have some the go in to or might low-end learning, an that bars example, working at that probably we in, you some in-a-home large of with

applicable So work-from-home. they are to

future. video be is think I now. It's pervasive in to the pervasive be going It'll pervasive.

away from shifting don't see we So that it.

got Okay, Thanks. it.

Paul. Thanks,

comes Your the Wells with Fargo. from David of next Eller question line

is now line open. Your

talked questions. for the DTEN follow-up good with there. with announcements, partnering Thanks Hey, to making about I they in afternoon. Neat had an -- investment They their the on Hardware-as-a-Service. taking and a Zoom

question but you -- that, as to about you just buyer? where the little typically the one of like actual guys home on another -- sounds as And Zoom of each or the just end or partner earlier their are Is selling could that any still impact focused or back are buyer enterprise niche revenue talk kind like you end would, are like is who who's on -- what you and positioned reside? kind does of are So those anything of the you how more you out? it carving kind then

Yes, for question. the certainly, Thanks David.

So I niche. a would not characterize our participation as

a of significant the It's the on a playing ecosystem. Zoom have of think daily have Hardware-as-a-Service XX% lot a I in very are available is and in we our opportunity users. SKUs. large website They SKUs model their

differentiate And and And will that of our they market will those. so a layer importantly, it's share with we of hardware and buy there a individuals an think Certainly all work did our investment big -- multiple designs, we'll we've make to our be and help the applications I I very there players and think drive software better in will great think together Neat. ours, got and of with is lots think we companies of technology that together. because large that they interconnecting a great products more

to is I a great work one. And excited Zoom opportunity think We're so that them. the with

to financing through or sale -- us who use balance risk who for through it's it's But Zoom a if normal us a us sale. sheet. going cash channel partners. through has their if our it's know that's don't is on the for that, of terms on the of I cash In third-party providing takes

excited we're there's great opportunity. of work -- them with to it's so a and And lot

I great. you wonder, deeper maybe of something you Neat, integration, would Okay, -- then, that investment, a I Zoom had IT is big And about for well. sort but guys investment? as any great presume, that Have obviously financial that's conversations did with consider

around certainly deeper and discussions partner, had Microsoft integration others. Well, we a they're and LogMeIn and great as is

And we're not terms today's them to that we've investment, something I talked in that's not at either. taking that about. think share of looking for price, So something

that two other what's on to I the folks got consistent it's Are you get across fairly can't they on to describe Plantronics? hands happening going the backlog. customers questions backlog anybody? able more from Can products or is their aren't for just product Great. the from industry, source products just

so long Well, a they'll can that things through happen. there's two be and lead an it extended work One, on time or can time. through lead whether allocation,

have available, to can't we shifted going availability I We a have on on. what's are And our are to deals sometimes alternate do products speak that product that with competitors.

because think demand. the looks of everybody it that anecdotally, has up-shift I certainly, impacted sudden been like in

And help we Okay. just understand that there way potential us the year $XXX where can any flow to or if about million one this you for is can over obviously, this quarter any bracket think and how flow cash then free the to year, help you as talk you've way us lastly, Chuck, for tie models? expecting could that guidance, you to given you of generation cash positive together? one's but drive our about, Are or only

material operating $XX significant million of outlook. this once should We expect the delever we we working just that that cash profile. We to positive and in business lower have about next quarter. throughout flow year. We flow. quarter, cash to confidence this a had cash that talk due over be more expect we the past the quarter generate company cash the But operating did in said We've Certainly. overall because guided economy the operating expect do flow capital to we great starting

range. flow gave, than I really and company those that And we a set to So tick will it million see of we But bit not in we don't the couple where up with the are do was next this changing of optimistic year. are terms above in that decline But that's the guidance of officially quarter. a margins I the operating a margins in really $XXX we average. average. are quarters provided for range a margins with year. voice, -- ago, $XXX helped that company we have is it's good that cash think million lower -- for sort Certainly headset business little of a demand

phenomenal in So that costs and importantly helpful. for profitability we've then company is drive the costs and really operating drive helped mix flow cash -- employees of the the job and year. And a OpEx, that's reducing check done to has keeping

you much. Great, so thank

Thanks, David.

Company. next and comes Your Liz Pate Cowen line question from of the with

Your line now is open.

of going already my taking Hi, my little thanks been cash just have question. Actually of on questions talk but most for forward. a answered, bit uses

mentioned going You dependent wait-and-see macro environment. it be deleveraging, that's upon to the a sounds like

regarding can headroom or So there. have any maybe what covenants kind your you on -- or talk Thanks. about issues you headroom any of

have Yes. in on I the Liz. past. don't now. the right you, covenants We've concerns about think, extensively Thank We talked, this

-- are there. really those so concern don't And have -- a is we there

of $XX terms quarter a on million than average. less In [indiscernible]

a and little cash we we the be EBITDA, we primary will there as how be year, at, so expect positive because of performed may to just be And level for lower of we've delever. guided for bit the capital model capital it's of allocation and QX to to to and a ended excess at, delever. But use QX. cash working be profile the generation should the that

you. thank Perfect,

Liz. Thank you,

question have J.P. And you Morgan. a Paul Coster with follow-up from

Your line open. is now

I'm -- No, thanks.

possible every think question you. I Thank asked. So, has been

you, Thank Paul.

Instructions] [Operator

I think… Operator,

sir? Yes,

in think I see anybody queue. the wraps else up. I that it don't

to forward this we'll quarter. moment you tell for Bye-bye. Well, take you Thank time everyone Thank in. you. and to your you next updating all for thank Great. look calling

this today's you participating. conference gentlemen, call. and for Thank concludes Ladies

may You now disconnect.