Gaming, Video Collaboration, Smart Home Up Over
40%
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today
announced financial results for the first quarter of Fiscal Year
2018.
- Q1 sales were $530 million, up 13
percent in constant currency compared to Q1 of the prior year. Q1
sales grew 10 percent in USD.
- Q1 GAAP operating income grew 22
percent to $31 million, compared to $26 million a year ago. Q1 GAAP
earnings per share (EPS) grew 69 percent to $0.22, compared to
$0.13 a year ago.
- Q1 non-GAAP operating income grew 14
percent to $43 million, compared to $38 million a year ago. Q1
non-GAAP EPS grew 20 percent to $0.24, compared to $0.20 a year
ago.
“We’re off to a strong start,” said Bracken Darrell, Logitech
president and chief executive officer. “Our innovative and diverse
portfolio is delivering, with growth and profitability exceeding
expectations this quarter. Our growth was broad-based — we grew
double-digits in constant currency across all three regions.
Looking out to the rest of the year, the strength of our innovation
program combined with the expected closing of the ASTRO Gaming
acquisition, give us the confidence to raise our FY 2018
outlook.”
Vincent Pilette, Logitech chief financial officer, said, “We
delivered a strong financial performance during this first quarter
of the fiscal year, with sales up 13% and profitability up 14%.
Q1’s healthy gross margin — up 140 basis points compared to last
year — allows us to continue our investment in numerous growth
opportunities to build an exciting future.”
Outlook
Logitech raised its Fiscal Year 2018 outlook to 10 to 12 percent
sales growth in constant currency and $260 to $270 million in
non-GAAP operating income. This includes the anticipated impact of
the ASTRO Gaming acquisition, expected to close in August 2017.
Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial
results teleconference available online on the Logitech corporate
website at http://ir.logitech.com.
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss
the results for Q1 FY 2018 on Tuesday, Jul. 25, 2017 at 8:30 a.m.
Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A
live webcast of the call will be available on the Logitech
corporate website at http://ir.logitech.com.
Use of Non-GAAP Financial Information and Constant
Currency
To facilitate comparisons to Logitech’s historical results,
Logitech has included non-GAAP adjusted measures, which exclude
share-based compensation expense, amortization of intangible
assets, purchase accounting effect on inventory,
acquisition-related costs, change in fair value of contingent
consideration for business acquisition, restructuring charges
(credits), gain (loss) on investments in privately held companies,
investigation and related expenses, non-GAAP income tax adjustment,
and other items detailed under “Supplemental Financial Information”
after the tables below. Logitech also presents percentage sales
growth in constant currency to show performance unaffected by
fluctuations in currency exchange rates. Percentage sales growth in
constant currency is calculated by translating prior period sales
in each local currency at the current period’s average exchange
rate for that currency and comparing that to current period sales.
Logitech believes this information, used together with the GAAP
financial information, will help investors to evaluate its current
period performance and trends in its business. With respect to the
Company’s outlook for non-GAAP operating income, most of these
excluded amounts pertain to events that have not yet occurred and
are not currently possible to estimate with a reasonable degree of
accuracy. Therefore, no reconciliation to the GAAP amounts has been
provided for Fiscal Year 2018.
About Logitech
Logitech designs products that have an everyday place in
people's lives, connecting them to the digital experiences they
care about. More than 35 years ago, Logitech started connecting
people through computers, and now it’s a multi-brand company
designing products that bring people together through music,
gaming, video and computing. Brands of Logitech include Logitech,
Jaybird, Logitech G and Ultimate Ears. Founded in 1981, and
headquartered in Lausanne, Switzerland, Logitech International is a
Swiss public company listed on the SIX Swiss Exchange (LOGN) and on
the Nasdaq Global Select Market (LOGI). Find Logitech at
www.logitech.com, the company blog or @Logitech.
This press release contains forward-looking statements within
the meaning of the federal securities laws, including, without
limitation, statements regarding: our innovation, pipeline of
products, ASTRO Gaming acquisition and its timing, growth
opportunities, investment in growth opportunities, future
performance, and outlook for Fiscal Year 2018 operating income and
sales growth. The forward-looking statements in this release
involve risks and uncertainties that could cause Logitech’s actual
results and events to differ materially from those anticipated in
these forward-looking statements, including, without limitation: if
our product offerings, marketing activities and investment
prioritization decisions do not result in the sales, profitability
or profitability growth we expect, or when we expect it; the demand
of our customers and our consumers for our products and our ability
to accurately forecast it; if we fail to innovate and develop new
products in a timely and cost-effective manner for our new and
existing product categories; if we do not successfully execute on
our growth opportunities or our growth opportunities are more
limited than we expect; if sales of PC peripherals are less than we
expect; the effect of pricing, product, marketing and other
initiatives by our competitors, and our reaction to them, on our
sales, gross margins and profitability; if our products and
marketing strategies fail to separate our products from
competitors’ products; if we are not able to maintain and enhance
our brands; if we do not successfully execute on strategic
acquisitions and investments; if we do not fully realize our goals
to lower our costs and improve our operating leverage; if there is
a deterioration of business and economic conditions in one or more
of our sales regions or product categories, or significant
fluctuations in exchange rates. A detailed discussion of these and
other risks and uncertainties that could cause actual results and
events to differ materially from such forward-looking statements is
included in Logitech’s periodic filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for
the fiscal year ended March 31, 2017, available at www.sec.gov,
under the caption Risk Factors and elsewhere. Logitech does not
undertake any obligation to update any forward-looking statements
to reflect new information or events or circumstances occurring
after the date of this press release.
Note that unless noted otherwise, comparisons are year over
year.
2017 Logitech, Logicool, Logi and other Logitech marks are owned
by Logitech and may be registered. All other trademarks are the
property of their respective owners. For more information about
Logitech and its products, visit the company’s website at
www.logitech.com.
LOGITECH INTERNATIONAL S.A.PRELIMINARY
RESULTS(In thousands, except per share amounts) -
unaudited Three Months EndedJune
30, GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
2017 2016 Net sales $ 529,946 $ 479,864 Cost
of goods sold 334,774 309,625 Amortization of intangible assets and
purchase accounting effect on inventory 1,504 1,613
Gross profit 193,668 168,626 Operating expenses:
Marketing and selling 102,378 83,872 Research and development
35,099 31,951 General and administrative 25,354 25,655 Amortization
of intangible assets and acquisition-related costs 1,390 1,293
Change in fair value of contingent consideration for business
acquisition (1,978 ) — Total operating expenses 162,243
142,771 Operating income 31,425 25,855
Interest income, net 1,175 151 Other expense, net (1,029 ) (1,008 )
Income before income taxes 31,571 24,998 Provision for (benefit
from) income taxes (5,436 ) 3,057 Net income $ 37,007
$ 21,941 Net income per share: Basic $ 0.23 $ 0.14
Diluted $ 0.22 $ 0.13 Weighted average shares used to
compute net income per share: Basic 163,407 162,130 Diluted 168,339
164,303
LOGITECH INTERNATIONAL S.A.PRELIMINARY
RESULTS(In thousands) - unaudited
CONDENSED CONSOLIDATED BALANCE SHEETS June
30,2017 March 31,2017 Current
assets: Cash and cash equivalents $ 527,657 $ 547,533 Accounts
receivable, net 221,340 185,179 Inventories 279,405 253,401 Other
current assets 42,675 41,732 Total current assets
1,071,077 1,027,845
Non-current assets: Property, plant and
equipment, net 85,135 85,408 Goodwill 249,780 249,741 Other
intangible assets, net 44,971 47,564 Other assets 136,516
88,119
Total assets $ 1,587,479 $ 1,498,677
Current liabilities: Accounts payable $
312,722 $ 274,805 Accrued and other current liabilities 205,059
232,273 Total current liabilities 517,781 507,078
Non-current liabilities: Income taxes payable 32,147 51,797
Other non-current liabilities 87,213 83,691
Total
liabilities 637,141 642,566
Shareholders’ equity:
Registered shares, CHF 0.25 par value: 30,148 30,148 Issued and
authorized shares —173,106 at June 30 and March 31, 2017
Conditionally authorized shares — 50,000 at June 30 and March 31,
2017 Additional paid-in capital 14,519 26,596 Shares in treasury,
at cost — 9,197 at June 30, 2017 and 10,727 at March 31, 2017
(157,330 ) (174,037 ) Retained earnings 1,165,029 1,074,110
Accumulated other comprehensive loss (102,028 ) (100,706 )
Total
shareholders’ equity 950,338 856,111
Total
liabilities and shareholders’ equity $ 1,587,479 $
1,498,677
LOGITECH INTERNATIONAL
S.A.PRELIMINARY RESULTS(In thousands) - unaudited
Three Months EndedJune 30, CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS 2017
2016 Cash flows from operating activities: Net
income $ 37,007 $ 21,941 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation 9,148
13,105 Amortization of intangible assets 2,593 1,708 Loss (gain) on
investments in privately held companies 259 (1 ) Gain on disposal
of property, plant and equipment (3 ) — Share-based compensation
expense 10,705 8,517 Deferred income taxes (9,879 ) (1,048 ) Change
in fair value of contingent consideration for business acquisition
(1,978 ) — Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net (35,702 ) (48,661 ) Inventories (20,389 )
(10,007 ) Other assets (3,088 ) (1,171 ) Accounts payable 38,647
42,769 Accrued and other liabilities (28,203 ) (10,135 )
Net
cash provided by (used in) operating activities (883 ) 17,017
Cash flows from investing activities: Purchases of property,
plant and equipment (10,035 ) (8,135 ) Investment in privately held
companies (360 ) (320 ) Acquisitions, net of cash acquired —
(53,987 ) Changes in restricted cash — 715 Purchases of trading
investments (609 ) (4,229 ) Proceeds from sales of trading
investments 647 4,231
Net cash used in investing
activities (10,357 ) (61,725 )
Cash flows from financing
activities: Purchases of registered shares (624 ) (24,422 )
Proceeds from exercises of stock options 12,569 599 Tax
withholdings related to net share settlements of restricted stock
units (21,683 ) (9,185 )
Net cash used in financing
activities (9,738 ) (33,008 ) Effect of exchange rate changes
on cash and cash equivalents 1,102 (1,368 )
Net decrease
in cash and cash equivalents (19,876 ) (79,084 ) Cash and cash
equivalents, beginning of the period 547,533 519,195
Cash and cash equivalents, end of the period $ 527,657 $
440,111
LOGITECH INTERNATIONAL
S.A.PRELIMINARY RESULTS(In thousands) - unaudited
NET SALES Three Months
EndedJune 30, SUPPLEMENTAL FINANCIAL INFORMATION
2017 2016 Change Net sales by
product category: Mobile Speakers $ 62,918 $ 57,296 10 %
Audio-PC & Wearables 50,202 56,579 (11 ) Gaming 77,708 56,500
38 Video Collaboration 35,617 23,910 49 Smart Home 16,466 11,167 47
Pointing Devices 122,074 116,783 5 Keyboards & Combos 116,113
118,019 (2 ) Tablet & Other Accessories 23,218 13,885 67 PC
Webcams 25,625 25,262 1 Other (1) 5 463 (99 )
Total net sales $ 529,946 $ 479,864 10
__________________
(1) Other category includes products that we currently intend to
transition out of, or have already transitioned out of, because
they are no longer strategic to our business.
LOGITECH INTERNATIONAL S.A.PRELIMINARY
RESULTS(In thousands, except per share amounts) -
Unaudited GAAP TO NON-GAAP RECONCILIATION
(A) Three Months EndedJune 30, SUPPLEMENTAL
FINANCIAL INFORMATION 2017 2016 Gross
profit - GAAP $ 193,668 $ 168,626 Share-based compensation
expense 711 675 Amortization of intangible assets and purchase
accounting effect on inventory 1,504 1,613
Gross
profit - Non-GAAP $ 195,883 $ 170,914
Gross margin - GAAP 36.5 % 35.1 % Gross margin - Non-GAAP 37.0 %
35.6 %
Operating expenses - GAAP $ 162,243 $ 142,771
Less: Share-based compensation expense 9,994 7,842 Less:
Amortization of intangible assets and acquisition-related costs
1,390 1,293 Less: Change in fair value of contingent consideration
for business acquisition (1,978 ) — Less: Restructuring credits,
net (55 ) (85 ) Less: Investigation and related expenses —
612
Operating expenses - Non-GAAP $ 152,892 $
133,109 % of net sales - GAAP 30.6 % 29.8 % % of net
sales - Non - GAAP 28.9 % 27.7 %
Operating income -
GAAP $ 31,425 $ 25,855 Share-based compensation expense 10,705
8,517 Amortization of intangible assets 2,593 1,708 Purchase
accounting effect on inventory — 703 Acquisition-related costs 301
495 Change in fair value of contingent consideration for business
acquisition (1,978 ) — Restructuring credits, net (55 ) (85 )
Investigation and related expenses — 612
Operating
income - Non - GAAP $ 42,991 $ 37,805 % of
net sales - GAAP 5.9 % 5.4 % % of net sales - Non - GAAP 8.1 % 7.9
%
Net income - GAAP $ 37,007 $ 21,941 Share-based
compensation expense 10,705 8,517 Amortization of intangible assets
2,593 1,708 Purchase accounting effect on inventory — 703
Acquisition-related costs 301 495 Change in fair value of
contingent consideration for business acquisition (1,978 ) —
Restructuring credits, net (55 ) (85 ) Investigation and related
expenses — 612 Loss (gain) on investments in privately held
companies 259 (1 ) Non-GAAP income tax adjustment (9,092 ) (675 )
Net income - Non - GAAP $ 39,740 $ 33,215
Net income per share: Diluted - GAAP $ 0.22 $ 0.13
Diluted - Non - GAAP $ 0.24 $ 0.20
Shares used to compute
net income per share: Diluted - GAAP and Non - GAAP 168,339
164,303
LOGITECH INTERNATIONAL S.A.PRELIMINARY
RESULTS(In thousands) - unaudited
SHARE-BASED COMPENSATION EXPENSE Three Months
EndedJune 30, SUPPLEMENTAL FINANCIAL INFORMATION
2017 2016 Share-based Compensation
Expense Cost of goods sold $ 711 $ 675 Marketing and selling
4,381 3,437 Research and development 1,543 914 General and
administrative 4,070 3,491
Total share-based
compensation expense 10,705 8,517 Income tax benefit (11,282 )
(1,815 )
Total share-based compensation expense (credit), net of
income tax $ (577 ) $ 6,702
Note: These preliminary results for the three months ended June
30, 2017 are subject to adjustments, including subsequent
events that may occur through the date of filing our Quarterly
Report on Form 10-Q.
(A) Non-GAAP Financial Measures
To supplement our condensed consolidated financial results
prepared in accordance with GAAP, we use a number of financial
measures, both GAAP and non-GAAP, in analyzing and assessing our
overall business performance, for making operating decisions and
for forecasting and planning future periods. We consider the use of
non-GAAP financial measures helpful in assessing our current
financial performance, ongoing operations and prospects for the
future as well as understanding financial and business trends
relating to our financial condition and results of operations.
While we use non-GAAP financial measures as a tool to enhance
our understanding of certain aspects of our financial performance
and to provide incremental insight into the underlying factors and
trends affecting both our performance and our cash-generating
potential, we do not consider these measures to be a substitute
for, or superior to, the information provided by GAAP financial
measures. Consistent with this approach, we believe that disclosing
non-GAAP financial measures to the readers of our financial
statements provides useful supplemental data that, while not a
substitute for GAAP financial measures, can offer insight in the
review of our financial and operational performance and enables
investors to more fully understand trends in our current and future
performance. In assessing our business during the quarter ended
June 30, 2017, we excluded items in the following general
categories, each of which are described below:
Share-based compensation expenses. We believe that
providing non-GAAP measures excluding share-based compensation
expense, in addition to the GAAP measures, allows for a more
transparent comparison of our financial results from period to
period. We prepare and maintain our budgets and forecasts for
future periods on a basis consistent with this non-GAAP financial
measure. Further, companies use a variety of types of equity awards
as well as a variety of methodologies, assumptions and estimates to
determine share-based compensation expense. We believe that
excluding share-based compensation expense enhances our ability and
the ability of investors to understand the impact of non-cash
share-based compensation on our operating results and to compare
our results against the results of other companies.
Amortization of intangible assets. We incur intangible
asset amortization expense, primarily in connection with our
acquisitions of various businesses and technologies. The
amortization of purchased intangibles varies depending on the level
of acquisition activity. We exclude these various charges in
budgeting, planning and forecasting future periods and we believe
that providing the non-GAAP measures excluding these various
non-cash charges, as well as the GAAP measures, provides additional
insight when comparing our gross profit, operating expenses, and
financial results from period to period.
Purchase accounting effect on inventory. Business
combination accounting principles require us to measure acquired
inventory at fair value. The fair value of inventory reflects the
acquired company’s cost of manufacturing plus a portion of the
expected profit margin. The non-GAAP adjustment excludes the
expected profit margin component that is recorded under business
combination accounting principles associated with our business
acquisitions. We believe the adjustment is useful to investors
because such charges are not reflective of our ongoing
operations.
Acquisition-related costs and change in fair value of
contingent consideration for business acquisition. We incurred
expenses and credits in connection with our acquisitions which we
generally would not have otherwise incurred in the periods
presented as a part of our continuing operations. Acquisition
related costs include all incremental expenses incurred to
effect a business combination. Fair value of contingent
consideration is associated with our estimates of the value of
earn-outs in connection with certain acquisitions. We believe that
providing the non-GAAP measures excluding these costs and credits,
as well as the GAAP measures, assists our investors because such
costs are not reflective of our ongoing operating results.
Restructuring charges (credits). These expenses are
associated with re-aligning our business strategies based on
current economic conditions. We have undertaken several
restructuring plans in recent years. In connection with our
restructuring initiatives, we incurred restructuring charges
related to employee terminations, facility closures and early
cancellation of certain contracts. We believe that providing the
non-GAAP measures excluding these charges, as well as the GAAP
measures, assists our investors because such charges (credits) are
not reflective of our ongoing operating results in the current
period.
Gain (loss) on investments in privately held companies.
We recognized gain (loss) related our investments in various
privately-held companies, which varies depending on the operational
and financial performance of the privately-held companies in which
we invested. We believe that providing the non-GAAP measures
excluding these charges, as well as the GAAP measures, assists our
investors because such charges are not reflective of our ongoing
operations.
Investigation and related expenses. These expenses are
forensic accounting, audit, consulting and legal fees related to
the Audit Committee’s investigation and the formal investigation by
and settlement with the Securities and Exchange Commission (SEC),
together with accruals based on settlement with the SEC. We believe
that providing the non-GAAP measures excluding these charges, as
well as the GAAP measures, assists our investors because such
charges are not reflective of our ongoing operations.
Non-GAAP income tax adjustment. Non-GAAP income tax
adjustment primarily measures the income tax effect of
non-GAAP adjustments excluded above and other events; the
determination of which is based upon the nature of the underlying
items, the mix of income and losses in jurisdictions and the
relevant tax rates in which we operate.
Each of the non-GAAP financial measures described above, and
used in this press release, should not be considered in isolation
from, or as a substitute for, a measure of financial performance
prepared in accordance with GAAP. Further, investors are cautioned
that there are inherent limitations associated with the use of each
of these non-GAAP financial measures as an analytical tool. In
particular, these non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles and many of the
adjustments to the GAAP financial measures reflect the exclusion of
items that are recurring and may be reflected in the Company’s
financial results for the foreseeable future. We compensate for
these limitations by providing specific information in the
reconciliation included in this press release regarding the GAAP
amounts excluded from the non-GAAP financial measures. In addition,
as noted above, we evaluate the non-GAAP financial measures
together with the most directly comparable GAAP financial
information.
Additional Supplemental Financial Information - Constant
Currency
In addition, Logitech presents percentage sales growth in
constant currency to show performance unaffected by fluctuations in
currency exchange rates. Percentage sales growth in constant
currency is calculated by translating prior period sales in each
local currency at the current period’s average exchange rate for
that currency and comparing that to current period sales.
(LOGIIR)
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Logitech InternationalBen LuVice President, Investor Relations -
USA510-713-5568orKrista ToddVice President, External Communications
- USA510-713-5834orBen StarkieCorporate Communications - Europe+41
(0) 79-292-3499
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