Company Raises Annual Outlook On Strong
Momentum
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today
announced financial results for the third quarter of Fiscal Year
2021.
- Q3 sales were $1.67 billion, up 85 percent in US dollars and 80
percent in constant currency, compared to Q3 of the prior
year.
- Q3 GAAP operating income grew 248 percent to $448 million,
compared to $129 million in the same quarter a year ago. Q3 GAAP
earnings per share (EPS) grew 222 percent to $2.22, compared to
$0.69 in the same quarter a year ago.
- Q3 non-GAAP operating income grew 214 percent to $476 million,
compared to $152 million in the same quarter a year ago. Q3
non-GAAP EPS grew 192 percent to $2.45, compared to $0.84 in the
same quarter a year ago.
- Cash flow from operations was $530 million, compared to $181
million in the same period a year ago.
“This quarter’s record results demonstrate the strength of our
portfolio, addressing long-term growth trends in remote work and
education, video collaboration, esports, and digital content
creation,” said Bracken Darrell, Logitech president and chief
executive officer. “We are increasingly investing in our
capabilities and people for the growth potential we see in the
future. Logitech has never been more relevant to our customers’
work, play and creativity.”
Outlook
Logitech raised its Fiscal Year 2021 annual outlook to between
57 and 60 percent sales growth in constant currency, and
approximately $1.05 billion in non-GAAP operating income. The
Company’s previous outlook was between 35 and 40 percent sales
growth in constant currency, and a range of $700 million to $725
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 Q3 FY 2021 on Tuesday, January 19, 2021 at
8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European
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, acquisition-related costs, change in fair value of
contingent consideration for business acquisition, restructuring
charges (credits), loss (gain) on investments, 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. Almost 40 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, Blue Microphones, Ultimate Ears and
Jaybird. 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 December 31, 2020, long-term growth
trends, our investment in our capabilities and people, growth
potential, our relevance to our customers, and outlook for Fiscal
Year 2021 sales growth and non-GAAP operating income. 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 September 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
Nine Months Ended
December 31,
December 31,
GAAP CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
2020
2019
2020
2019
Net sales
$
1,667,302
$
902,687
$
3,716,354
$
2,266,603
Cost of goods sold
914,851
564,283
2,082,088
1,410,605
Amortization of intangible assets
3,441
3,951
9,800
10,493
Gross profit
749,010
334,453
1,624,466
845,505
Operating expenses:
Marketing and selling
204,485
134,950
496,520
392,138
Research and development
53,910
43,292
157,014
127,499
General and administrative
37,606
22,344
98,341
68,551
Amortization of intangible assets and
acquisition-related costs
4,946
5,084
13,886
12,898
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
—
(45
)
(54
)
69
Total operating expenses
300,947
205,625
771,423
601,155
Operating income
448,063
128,828
853,043
244,350
Interest income
311
2,063
1,444
7,006
Other income, net
6,483
1,101
9,661
2,852
Income before income taxes
454,857
131,992
864,148
254,208
Provision for income taxes
72,334
14,467
142,638
18,405
Net income
$
382,523
$
117,525
$
721,510
$
235,803
Net income per share:
Basic
$
2.26
$
0.70
$
4.28
$
1.41
Diluted
$
2.22
$
0.69
$
4.21
$
1.39
Weighted average shares used to compute
net income per share:
Basic
169,050
167,063
168,448
166,678
Diluted
172,587
169,685
171,378
169,173
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
CONDENSED CONSOLIDATED BALANCE
SHEETS
December 31, 2020
March 31, 2020
Current assets:
Cash and cash equivalents
$
1,388,743
$
715,566
Accounts receivable, net
894,937
394,743
Inventories
476,802
229,249
Other current assets
117,741
74,920
Total current assets
2,878,223
1,414,478
Non-current assets:
Property, plant and equipment, net
96,683
76,119
Goodwill
400,993
400,917
Other intangible assets, net
103,314
126,941
Other assets
333,733
345,019
Total assets
$
3,812,946
$
2,363,474
Current liabilities:
Accounts payable
$
811,786
$
259,120
Accrued and other current liabilities
704,573
455,024
Total current liabilities
1,516,359
714,144
Non-current liabilities:
Income taxes payable
60,799
40,788
Other non-current liabilities
134,021
119,274
Total liabilities
1,711,179
874,206
Shareholders’ equity:
Registered shares, CHF 0.25 par value:
30,148
30,148
Issued shares — 173,106 at December 31 and
March 31, 2020
Additional shares that may be issued out
of conditional capitals — 50,000 at December 31 and March 31,
2020
Additional shares that may be issued out
of authorized capital — 17,311 at December 31 and 34,621 at March
31, 2020
Additional paid-in capital
108,140
75,097
Shares in treasury, at cost — 4,243 at
December 31, 2020 and 6,210 at March 31, 2020
(198,435
)
(185,896
)
Retained earnings
2,264,831
1,690,579
Accumulated other comprehensive loss
(102,917
)
(120,660
)
Total shareholders’ equity
2,101,767
1,489,268
Total liabilities and shareholders’
equity
$
3,812,946
$
2,363,474
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
Three Months Ended
Nine Months Ended
December 31,
December 31,
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
2020
2019
2020
2019
Cash flows from operating
activities:
Net income
$
382,523
$
117,525
$
721,510
$
235,803
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
13,409
10,768
36,010
32,154
Amortization of intangible assets
8,388
8,223
23,627
21,958
Loss on investments
2,173
709
4,692
772
Share-based compensation expense
19,814
13,831
64,714
40,301
Deferred income taxes
17,531
9,458
37,683
480
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Other
207
(1,010
)
(1,670
)
(1,012
)
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable, net
(129,966
)
(61,337
)
(476,804
)
(147,292
)
Inventories
(78,258
)
32,603
(239,378
)
(15,170
)
Other assets
(21,714
)
16,949
(53,281
)
2,866
Accounts payable
141,848
26,089
541,024
155,190
Accrued and other liabilities
173,945
7,327
264,576
(1,896
)
Net cash provided by operating
activities
529,900
181,135
928,419
324,154
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(18,389
)
(10,575
)
(46,163
)
(28,667
)
Investment in privately held companies
(120
)
(140
)
(3,525
)
(310
)
Acquisitions, net of cash acquired
(360
)
(91,203
)
(360
)
(91,569
)
Proceeds from the sale of property, plant
and equipment
—
1,037
—
1,037
Proceeds from return of strategic
investments
2,934
—
2,934
—
Purchases of trading investments
(2,473
)
(546
)
(10,672
)
(3,071
)
Proceeds from sales of trading
investments
2,493
568
11,332
3,139
Net cash used in investing activities
(15,915
)
(100,859
)
(46,454
)
(119,441
)
Cash flows from financing
activities:
Payment of cash dividends
—
—
(146,705
)
(124,180
)
Purchases of registered shares
(50,271
)
—
(72,725
)
(15,127
)
Proceeds from exercises of stock options
and purchase rights
3,643
2,209
29,709
11,540
Tax withholdings related to net share
settlements of restricted stock units
(3,731
)
(2,188
)
(29,475
)
(23,096
)
Net cash provided (used) in financing
activities
(50,359
)
21
(219,196
)
(150,863
)
Effect of exchange rate changes on cash
and cash equivalents
7,896
1,285
10,408
(2,320
)
Net increase in cash and cash
equivalents
471,522
81,582
673,177
51,530
Cash and cash equivalents, beginning of
the period
917,221
574,464
715,566
604,516
Cash and cash equivalents, end of the
period
$
1,388,743
$
656,046
$
1,388,743
$
656,046
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended
Nine Months Ended
December 31,
December 31,
NET SALES
2020
2019
Change
2020
2019
Change
Net sales by product category:
Pointing Devices
$
213,638
$
154,540
38
%
$
503,228
$
409,293
23
%
Keyboards & Combos
218,269
156,333
40
565,246
424,061
33
PC Webcams
131,700
32,165
309
295,020
89,041
231
Tablet & Other Accessories
138,052
31,256
342
267,186
103,442
158
Gaming (1)
436,426
245,736
78
916,040
541,265
69
Video Collaboration
292,500
91,964
218
659,278
254,941
159
Mobile Speakers
72,566
92,969
(22
)
145,156
200,617
(28
)
Audio & Wearables
152,952
81,934
87
338,592
208,576
62
Smart Home
10,593
15,790
(33
)
25,976
35,088
(26
)
Other (2)
606
—
—
632
279
127
Total sales
$
1,667,302
$
902,687
85
%
$
3,716,354
$
2,266,603
64
%
(1) Gaming revenue includes
streaming services revenue generated by Streamlabs.
(2) 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
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended
Nine Months Ended
December 31,
December 31,
GAAP TO NON-GAAP RECONCILIATION
(A)
2020
2019
2020
2019
Gross profit - GAAP
$
749,010
$
334,453
$
1,624,466
$
845,505
Share-based compensation expense
1,747
1,210
4,919
3,552
Amortization of intangible assets
3,441
3,951
9,800
10,493
Gross profit - Non-GAAP
$
754,198
$
339,614
$
1,639,185
$
859,550
Gross margin - GAAP
44.9
%
37.1
%
43.7
%
37.3
%
Gross margin - Non-GAAP
45.2
%
37.6
%
44.1
%
37.9
%
Operating expenses - GAAP
$
300,947
$
205,625
$
771,423
$
601,155
Less: Share-based compensation expense
18,067
12,621
59,795
36,749
Less: Amortization of intangible assets
and acquisition-related costs
4,946
5,084
13,886
12,898
Less: Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Less: Restructuring charges (credits),
net
—
(45
)
(54
)
69
Operating expenses - Non-GAAP
$
277,934
$
187,965
$
692,080
$
551,439
% of net sales - GAAP
18.0
%
22.8
%
20.8
%
26.5
%
% of net sales - Non - GAAP
16.7
%
20.8
%
18.6
%
24.3
%
Operating income - GAAP
$
448,063
$
128,828
$
853,043
$
244,350
Share-based compensation expense
19,814
13,831
64,714
40,301
Amortization of intangible assets and
acquisition-related costs
8,387
9,035
23,686
23,391
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
—
(45
)
(54
)
69
Operating income - Non - GAAP
$
476,264
$
151,649
$
947,105
$
308,111
% of net sales - GAAP
26.9
%
14.3
%
23.0
%
10.8
%
% of net sales - Non - GAAP
28.6
%
16.8
%
25.5
%
13.6
%
Net income - GAAP
$
382,523
$
117,525
$
721,510
$
235,803
Share-based compensation expense
19,814
13,831
64,714
40,301
Amortization of intangible assets and
acquisition related costs
8,387
9,035
23,686
23,391
Change in fair value of contingent
consideration for business acquisition
—
—
5,716
—
Restructuring charges (credits), net
—
(45
)
(54
)
69
Loss on investments
2,173
709
4,692
772
Non-GAAP income tax adjustment
10,165
2,123
31,564
(6,476
)
Net income - Non - GAAP
$
423,062
$
143,178
$
851,828
$
293,860
Net income per share:
Diluted - GAAP
$
2.22
$
0.69
$
4.21
$
1.39
Diluted - Non - GAAP
$
2.45
$
0.84
$
4.97
$
1.74
Shares used to compute net income per
share:
Diluted - GAAP and Non - GAAP
172,587
169,685
171,378
169,173
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS *
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended
Nine Months Ended
December 31,
December 31,
SHARE-BASED COMPENSATION
EXPENSE
2020
2019
2020
2019
Share-based Compensation
Expense
Cost of goods sold
$
1,747
$
1,210
$
4,919
$
3,552
Marketing and selling
8,390
6,216
27,559
20,016
Research and development
3,482
2,242
10,348
6,644
General and administrative
6,195
4,163
21,888
10,089
Total share-based compensation
expense
19,814
13,831
64,714
40,301
Income tax benefit
(3,471
)
(3,135
)
(15,540
)
(12,658
)
Total share-based compensation expense,
net of income tax benefit
$
16,343
$
10,696
$
49,174
$
27,643
* Note: These preliminary results
for the three and nine months ended December 31, 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
December 31, 2020 and previous periods, we excluded items in the
following general categories, each of which are described
below:
Share-based compensation expense. 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.
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)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210118005546/en/
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