Company Raises Annual Outlook as Hybrid Work
Culture Takes Shape
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today
announced financial results for the second quarter of Fiscal Year
2021.
- Q2 sales were $1.26 billion, up 75 percent in US dollars and 73
percent in constant currency, compared to Q2 of the prior year.
This was the first time ever that Logitech’s quarterly sales
exceeded the billion-dollar mark.
- Q2 GAAP operating income grew 372 percent to $322 million,
compared to $68 million in the same quarter a year ago. Q2 GAAP
earnings per share (EPS) grew 263 percent to $1.56, compared to
$0.43 in the same quarter a year ago.
- Q2 non-GAAP operating income grew 295 percent to $354 million,
compared to $89 million in the same quarter a year ago. Q2 non-GAAP
EPS grew 274 percent to $1.87, compared to $0.50 in the same
quarter a year ago.
- Cash flow from operations was $280 million, compared to $107
million in the same period a year ago.
“Our growth and profitability accelerated again this quarter,
and we are raising our annual outlook,” said Bracken Darrell,
Logitech president and chief executive officer. “The growth trends
that drive our business have accelerated as society adjusts to its
new reality. The organization leaders I speak to envision people
increasingly working from multiple locations, a hybrid work culture
that is emerging as the norm. And at home, the rise of gaming as a
spectator and participant sport continues with no end in sight. Our
products are essential to helping customers work, play and create
wherever they are. Logitech is well positioned for long-term
growth.”
Outlook
Logitech raised its Fiscal Year 2021 annual outlook to between
35 and 40 percent sales growth in constant currency, and a range of
$700 million to $725 million in non-GAAP operating income. The
Company’s previous outlook was between 10 and 13 percent sales
growth in constant currency, and a range of $410 million to $425
million in non-GAAP operating income.
Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial
results videoconference and livestream available online on the
Logitech corporate website at http://ir.logitech.com.
Financial Results Videoconference and Livestream
Logitech will hold a financial results videoconference to
discuss the results for Q2 FY 2021 on Tuesday, October 20, 2020 at
8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European
Summer Time. A livestream of the event 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), loss (gain) on investments in privately held companies,
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 2021.
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,
Logitech G, ASTRO Gaming, Streamlabs, Ultimate Ears, Jaybird and
Blue Microphones. 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 preliminary financial results
for the three months ended September 30, 2020, growth trends, the
pace of growth trends, gaming trends, our products and their
utility to consumers, long-term growth, and outlook for Fiscal Year
2021 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; 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; 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 we are not able to maintain and enhance our
brands; if our products and marketing strategies fail to separate
our products from competitors’ products; the COVID-19 pandemic and
its potential impact; 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; changes in trade policies and
agreements and the imposition of tariffs that affect our products
or operations and our ability to mitigate; risks associated with
acquisitions. 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, 2020 and our Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2020, 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.
Logitech and other Logitech marks are trademarks or registered
trademarks of Logitech Europe S.A and/or its affiliates in the U.S.
and other countries. 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 Ended
Six Months Ended
September 30,
September 30,
GAAP CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
2020
2019
2020
2019
Net sales
$
1,257,158
$
719,691
$
2,049,052
$
1,363,916
Cost of goods sold
684,599
444,344
1,167,237
846,322
Amortization of intangible assets and
purchase accounting effect on inventory
2,836
3,271
6,359
6,542
Gross profit
569,723
272,076
875,456
511,052
Operating expenses:
Marketing and selling
158,797
134,155
292,035
257,188
Research and development
53,379
41,964
103,104
84,207
General and administrative
31,664
24,048
60,735
46,207
Amortization of intangible assets and
acquisition-related costs
4,331
4,218
8,940
7,814
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
(1
)
(364
)
(54
)
114
Total operating expenses
248,170
204,021
470,476
395,530
Operating income
321,553
68,055
404,980
115,522
Interest income
513
2,390
1,133
4,943
Other income (expense), net
1,149
(110
)
3,178
1,751
Income before income taxes
323,215
70,335
409,291
122,216
Provision for (benefit from) income
taxes
56,301
(2,598
)
70,304
3,938
Net income
$
266,914
$
72,933
$
338,987
$
118,278
Net income per share:
Basic
$
1.58
$
0.44
$
2.02
$
0.71
Diluted
$
1.56
$
0.43
$
1.99
$
0.70
Weighted average shares used to compute
net income per share:
Basic
168,645
166,662
168,140
166,484
Diluted
171,382
169,027
170,766
168,914
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
September 30, 2020
March 31, 2020
CONDENSED CONSOLIDATED BALANCE
SHEETS
Current assets:
Cash and cash equivalents
$
917,221
$
715,566
Accounts receivable, net
750,749
394,743
Inventories
394,708
229,249
Other current assets
94,753
74,920
Total current assets
2,157,431
1,414,478
Non-current assets:
Property, plant and equipment, net
86,386
76,119
Goodwill
400,953
400,917
Other intangible assets, net
111,702
126,941
Other assets
339,397
345,019
Total assets
$
3,095,869
$
2,363,474
Current liabilities:
Accounts payable
$
662,873
$
259,120
Accrued and other current liabilities
541,977
455,024
Total current liabilities
1,204,850
714,144
Non-current liabilities:
Income taxes payable
54,507
40,788
Other non-current liabilities
130,549
119,274
Total liabilities
1,389,906
874,206
Shareholders’ equity:
Registered shares, CHF 0.25 par value:
30,148
30,148
Issued shares — 173,106 at September 30
and March 31, 2020
Additional shares that may be issued out
of conditional capitals — 50,000 at September 30 and March 31,
2020
Additional shares that may be issued out
of authorized capital — 17,311 at September 30 and 34,621 at March
31, 2020
Additional paid-in capital
78,617
75,097
Shares in treasury, at cost — 4,357 at
September 30, 2020 and 6,210 at March 31, 2020
(166,258
)
(185,896
)
Retained earnings
1,882,308
1,690,579
Accumulated other comprehensive loss
(118,852
)
(120,660
)
Total shareholders’ equity
1,705,963
1,489,268
Total liabilities and shareholders’
equity
$
3,095,869
$
2,363,474
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
Three Months Ended
Six Months Ended
September 30,
September 30,
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
2020
2019
2020
2019
Cash flows from operating
activities:
Net income
$
266,914
$
72,933
$
338,987
$
118,278
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
10,854
10,584
22,601
21,386
Amortization of intangible assets
7,107
6,868
15,239
13,735
Loss on investments
2,693
274
2,519
63
Share-based compensation expense
24,785
14,252
44,900
26,470
Deferred income taxes
16,563
(5,597
)
20,152
(8,978
)
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Other
(1,886
)
2
(1,877
)
(2
)
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable, net
(244,746
)
(51,691
)
(346,838
)
(85,955
)
Inventories
(120,735
)
(45,092
)
(161,120
)
(47,773
)
Other assets
(15,797
)
(8,696
)
(31,567
)
(14,083
)
Accounts payable
230,830
73,509
399,176
129,101
Accrued and other liabilities
103,090
39,157
90,631
(9,223
)
Net cash provided by operating
activities
279,672
106,503
398,519
143,019
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(15,466
)
(8,752
)
(27,774
)
(18,092
)
Investment in privately held companies
(3,375
)
—
(3,405
)
(170
)
Acquisitions, net of cash acquired
—
(366
)
—
(366
)
Purchases of trading investments
(5,775
)
(1,370
)
(8,199
)
(2,525
)
Proceeds from sales of trading
investments
6,477
1,375
8,839
2,571
Net cash used in investing activities
(18,139
)
(9,113
)
(30,539
)
(18,582
)
Cash flows from financing
activities:
Payment of cash dividends
(146,705
)
(124,180
)
(146,705
)
(124,180
)
Purchases of registered shares
(22,454
)
—
(22,454
)
(15,127
)
Proceeds from exercises of stock options
and purchase rights
16,074
8,938
26,066
9,331
Tax withholdings related to net share
settlements of restricted stock units
(2,623
)
(1,538
)
(25,744
)
(20,908
)
Net cash used in financing activities
(155,708
)
(116,780
)
(168,837
)
(150,884
)
Effect of exchange rate changes on cash
and cash equivalents
2,001
(3,102
)
2,512
(3,605
)
Net increase (decrease) in cash and
cash equivalents
107,826
(22,492
)
201,655
(30,052
)
Cash and cash equivalents, beginning of
the period
809,395
596,956
715,566
604,516
Cash and cash equivalents, end of the
period
$
917,221
$
574,464
$
917,221
$
574,464
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
NET SALES
Three Months Ended
Six months ended
September 30,
September 30,
SUPPLEMENTAL FINANCIAL
INFORMATION
2020
2019
Change
2020
2019
Change
Net sales by product category:
Pointing Devices
$
169,121
$
132,770
27
%
$
289,590
$
254,753
14
%
Keyboards & Combos
201,617
139,049
45
346,977
267,728
30
PC Webcams
102,469
28,748
256
163,320
56,876
187
Tablet & Other Accessories
83,086
33,847
145
129,134
72,186
79
Gaming
297,711
161,014
85
479,614
295,529
62
Video Collaboration
236,704
89,553
164
366,778
162,977
125
Mobile Speakers
43,581
57,232
(24
)
72,590
107,648
(33
)
Audio & Wearables
114,275
68,018
68
185,640
126,642
47
Smart Home
8,573
9,434
(9
)
15,383
19,298
(20
)
Other (1)
21
26
(19
)
26
279
(91
)
Total sales
$
1,257,158
$
719,691
75
%
$
2,049,052
$
1,363,916
50
%
(1) Other category includes products that we currently intend to
phase out, or have already phased out, 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 Ended
Six Months Ended
September 30,
September 30,
SUPPLEMENTAL FINANCIAL
INFORMATION
2020
2019
2020
2019
Gross profit - GAAP
$
569,723
$
272,076
$
875,456
$
511,052
Share-based compensation expense
1,772
1,184
3,172
2,342
Amortization of intangible assets and
purchase accounting effect on inventory
2,836
3,271
6,359
6,542
Gross profit - Non-GAAP
$
574,331
$
276,531
$
884,987
$
519,936
Gross margin - GAAP
45.3
%
37.8
%
42.7
%
37.5
%
Gross margin - Non-GAAP
45.7
%
38.4
%
43.2
%
38.1
%
Operating expenses - GAAP
$
248,170
$
204,021
$
470,476
$
395,530
Less: Share-based compensation expense
23,013
13,068
41,728
24,128
Less: Amortization of intangible assets
and acquisition-related costs
4,331
4,218
8,940
7,814
Less: Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Less: Restructuring charges (credits),
net
(1
)
(364
)
(54
)
114
Operating expenses - Non-GAAP
$
220,827
$
187,099
$
414,146
$
363,474
% of net sales - GAAP
19.7
%
28.3
%
23.0
%
29.0
%
% of net sales - Non - GAAP
17.6
%
26.0
%
20.2
%
26.6
%
Operating income - GAAP
$
321,553
$
68,055
$
404,980
$
115,522
Share-based compensation expense
24,785
14,252
44,900
26,470
Amortization of intangible assets
7,107
6,868
15,239
13,735
Acquisition-related costs
60
621
60
621
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
(1
)
(364
)
(54
)
114
Operating income - Non - GAAP
$
353,504
$
89,432
$
470,841
$
156,462
% of net sales - GAAP
25.6
%
9.5
%
19.8
%
8.5
%
% of net sales - Non - GAAP
28.1
%
12.4
%
23.0
%
11.5
%
Net income - GAAP
$
266,914
$
72,933
$
338,987
$
118,278
Share-based compensation expense
24,785
14,252
44,900
26,470
Amortization of intangible assets
7,107
6,868
15,239
13,735
Acquisition-related costs
60
621
60
621
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
(1
)
(364
)
(54
)
114
Loss on investments
2,693
274
2,519
63
Non-GAAP income tax adjustment
18,351
(9,506
)
21,399
(8,599
)
Net income - Non - GAAP
$
319,909
$
85,078
$
428,766
$
150,682
Net income per share:
Diluted - GAAP
$
1.56
$
0.43
$
1.99
$
0.70
Diluted - Non - GAAP
$
1.87
$
0.50
$
2.51
$
0.89
Shares used to compute net income per
share:
Diluted - GAAP and Non - GAAP
171,382
169,027
170,766
168,914
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
SHARE-BASED COMPENSATION
EXPENSE
Three Months Ended
Six Months Ended
September 30,
September 30,
SUPPLEMENTAL FINANCIAL
INFORMATION
2020
2019
2020
2019
Share-based Compensation
Expense
Cost of goods sold
$
1,772
$
1,184
$
3,172
$
2,342
Marketing and selling
10,377
6,951
19,169
13,800
Research and development
3,763
2,248
6,866
4,402
General and administrative
8,873
3,869
15,693
5,926
Total share-based compensation
expense
24,785
14,252
44,900
26,470
Income tax benefit
(3,958
)
(2,723
)
(12,069
)
(9,523
)
Total share-based compensation expense,
net of income tax benefit
$
20,827
$
11,529
$
32,831
$
16,947
* Note: These preliminary results for the three and six months
ended September 30, 2020 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
September 30, 2020 and previous periods, 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.
Loss (gain) on investments. We
recognized loss (gain) related to our investments in various
companies, which varies depending on the operational and financial
performance of those companies in which we invested, and sales of
these investments. 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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version on businesswire.com: https://www.businesswire.com/news/home/20201019005886/en/
Ben Lu, Vice President, Investor Relations - USA +1 (510)
713-5568 Nicole Kenyon, Head of Global Corporate & Employee
Communications - USA +1 (510) 988-8553 Ben Starkie, Corporate
Communications - Europe +41 (0) 79-292-3499
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