Plantronics, Inc. reports 101% Net Income decline in 2018 and almost no change in EBITDA Margin of 16.9%
05/01/2018 • About Plantronics, Inc. (
$PLT) • By InTwits
Plantronics, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Plantronics, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $12m in FY2018, $23m in FY2017, $31m in FY2016, $22m in FY2015, $51m in FY2014
- The company has highly profitable business model: ROIC is 13.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.7x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 2.8%. Annual revenue decline showed slowdown in FY18Q4 - revenue increased on 3.4%. EBITDA Margin showed almost no change in FY2018.
Gross Margin increased slightly on 1.2 pp from 50.1% to 51.2% in FY2018. SG&A as a % of Revenue increased slightly on 1.4 pp from 25.4% to 26.8% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue grew at 0.43 pp per annum in FY2014-FY2018.
Net Income margin decreased on 9.5 pp from 9.4% to -0.10% in FY2018. Net Income margin followed a declining trend at -3.1 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Plantronics, Inc.'s CAPEX/Revenue was 1.5% in FY2018. CAPEX/Revenue decreased slightly on 1.1 pp from 2.5% in FY2015 to 1.5% in FY2018. For the last three years the average CAPEX/Revenue was 2.6%.
Accounts receivable as a % of Revenue increased slightly on 1.8 pp from 16.0% to 17.8% in FY2018. Inventories as a % of Revenue increased slightly on 1.7 pp from 6.3% to 8.0% in FY2018. Accounts payable as a % of Revenue increased slightly on 1.1 pp from 9.8% to 10.9% in FY2018.
Return on investment
The company operates at low but positive ROIC (13.6%) and negative ROE (-0.2%). ROIC decreased slightly on 0.62 pp from 14.3% to 13.6% in FY2018. ROE dropped on 24.0 pp from 23.8% to -0.24% in FY2018.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 1.3x to 0.7x in FY2018. Debt showed almost no change in FY2018 while cash jumped on 29.4%. During FY2014-FY2018 Net Debt/EBITDA topped in FY2016 at 2.0x and was declining since that time.
The company has no short term refinancing risk: short term debt is zero.
The company paid
$20 despite negative Net Income of $-1 in FY2018. Dividends grew on average at 3.3% per annum in the last 5 years).
Management team
The company's CEO is Joseph B Burton "Joe". Joseph B Burton "Joe" is a founder and has 2 years tenure with the company. CEO total compensation was
$4,725,611 in FY2018 which included
$588,462 salary.
Insider ownership is 1.5%. Insider ownership didn't change in 2018.
At the end of financial year the company had 4,003 employees. The number of employees increased on 3.9%. Average revenue per employee in FY2018 was
$214,065 and it decreased on 6.4%.
Financial and operational results
FY ended 03/31/2018
Plantronics, Inc. ($PLT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 818.6 | 865.0 | 856.9 | 881.2 | 856.9 | -2.8% |
| Gross Profit | 426.6 | 461.6 | 434.7 | 441.4 | 439.1 | -0.5% |
| SG&A | 201.2 | 229.6 | 221.3 | 223.8 | 229.4 | 2.5% |
| EBITDA | 155.7 | 167.8 | 128.2 | 146.1 | 144.7 | -0.9% |
| EBIT | 140.1 | 149.1 | 108.0 | 125.1 | 123.5 | -1.3% |
| Tax | 28.7 | 33.0 | 13.8 | 19.1 | 101.1 | 430.2% |
| Net Income | 112.4 | 112.3 | 68.4 | 82.6 | -0.9 | -101.1% |
| Stock Based Compensation | 18.5 | 25.1 | 33.3 | 33.5 | 34.0 | 1.3% |
Balance Sheet
|
|---|
| Cash | 232.7 | 276.9 | 235.3 | 302.0 | 390.7 | 29.4% |
| Accounts Receivable | 138.3 | 136.6 | 128.2 | 141.2 | 152.9 | 8.3% |
| Inventory | 57.1 | 56.7 | 53.2 | 55.5 | 68.3 | 23.1% |
| Accounts Payable | 30.8 | 32.8 | 39.1 | 42.9 | 45.4 | 5.9% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 34.5 | 489.6 | 491.1 | 492.5 | 0.3% |
Cash flow
|
|---|
| Capex | 51.0 | 22.0 | 30.7 | 23.2 | 12.5 | -46.2% |
| Dividends | 17.0 | 26.0 | 21.0 | 20.0 | 20.0 | 0.0% |
| Acquisitions | | 0.2 | | | | |
Ratios
|
|---|
| Revenue growth | 7.4% | 5.7% | -0.9% | 2.8% | -2.8% | |
| EBITDA growth | 0.2% | 7.8% | -23.6% | 13.9% | -0.9% | |
|
|---|
| Gross Margin | 52.1% | 53.4% | 50.7% | 50.1% | 51.2% | 1.2% |
| EBITDA Margin | 19.0% | 19.4% | 15.0% | 16.6% | 16.9% | 0.3% |
| EBIT Margin | 17.1% | 17.2% | 12.6% | 14.2% | 14.4% | 0.2% |
| SG&A, % of revenue | 24.6% | 26.5% | 25.8% | 25.4% | 26.8% | 1.4% |
| SBC, % of revenue | 2.3% | 2.9% | 3.9% | 3.8% | 4.0% | 0.2% |
| Net Income Margin | 13.7% | 13.0% | 8.0% | 9.4% | -0.1% | -9.5% |
| CAPEX, % of revenue | 6.2% | 2.5% | 3.6% | 2.6% | 1.5% | -1.2% |
|
|---|
| ROIC | 20.9% | 20.1% | 13.3% | 14.3% | 13.6% | -0.6% |
| ROE | 16.7% | 15.7% | 13.2% | 23.8% | -0.2% | -24.0% |
| Net Debt/EBITDA | -1.5x | -1.4x | 2.0x | 1.3x | 0.7x | -0.6x |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 0.0% |
| Employees | 3,400 | 3,397 | 3,398 | 3,852 | 4,003 | 3.9% |
| Revenue/Employee, th. $ | 241 | 255 | 252 | 229 | 214 | -6.4% |
Plantronics, Inc. ($PLT) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 204 | 210 | 227 | 216 | | -8.6% | -2.7% | -2.7% | 3.4% |
| EBITDA | 29 | 36 | 42 | 38 | | -20.8% | -4.2% | 12.6% | 8.6% |
| Net Income | 19 | 20 | -50 | 10 | | -7.6% | -2.5% | -322.8% | -49.5% |
Balance Sheet
|
|---|
| Cash | 290 | 303 | 280 | 391 | | 27.7% | 24.0% | 15.6% | 29.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 491 | 492 | 492 | 493 | | 0.3% | 0.3% | 0.3% | 0.3% |
Ratios
|
|---|
| Gross Margin | 50.6% | 51.2% | 50.4% | 52.8% | | -0.0% | 0.1% | 3.1% | 1.2% |
| EBITDA Margin | 14.1% | 16.9% | 18.5% | 17.8% | | -2.2% | -0.3% | 2.5% | 0.8% |
| Net Income Margin | 9.2% | 9.5% | -21.9% | 4.6% | | 0.1% | 0.0% | -31.4% | -4.8% |
Peers in Communications Equipment
Below we provide Plantronics, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.6% | 5.6% | 3.5% |
|---|
| Plantronics, Inc. ($PLT) | | 5.7% | -0.9% | 2.8% | -2.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Plantronics, Inc. ($PLT) | 52.1% | 53.4% | 50.7% | 50.1% | 51.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 4.7% | 5.5% | 6.0% | 4.6% |
|---|
| Plantronics, Inc. ($PLT) | 19.0% | 19.4% | 15.0% | 16.6% | 16.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.7% |
|---|
| Plantronics, Inc. ($PLT) | 6.2% | 2.5% | 3.6% | 2.6% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.0% | 2.2% | 2.1% | 0.3% |
|---|
| Plantronics, Inc. ($PLT) | 20.9% | 20.1% | 13.3% | 14.3% | 13.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.6x | -0.9x | -0.8x | -0.3x |
|---|
| Plantronics, Inc. ($PLT) | -1.5x | -1.4x | 2.0x | 1.3x | 0.7x |
