Plantronics Inc. is a global communications company, which powers meaningful human connection and collaboration, provided a business update, including actions the company is taking in response to COVID-19. Poly announced the company response for COVID-19 and business updates.
Business performance update
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.
Robert Hagerty, Chairman of the Poly Board of Directors and Interim Chief Executive Officer said,
“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. 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. 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.”
Response to COVID-19
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 the 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.
Financial update for Q4
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 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.
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