Logitech Delivers a Strong Start to Fiscal Year 2020 with Robust Sales and Profit Growth

LAUSANNE, Switzerland & NEWARK, Calif. — (BUSINESS WIRE) — July 22, 2019 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190722005781/en/

Logitech delivers a strong start to Fiscal Year 2020 with robust sales and profit growth. (Graphic: Business Wire)

Logitech delivers a strong start to Fiscal Year 2020 with robust sales and profit growth. (Graphic: Business Wire)

  • Q1 sales were $644 million, up 6 percent in US dollars and 9 percent in constant currency, compared to Q1 of the prior year.
  • Q1 GAAP operating income grew 46 percent to $47 million, compared to $32 million in the same quarter a year ago. Q1 GAAP earnings per share (EPS) grew 17 percent to $0.27, compared to $0.23 in the same quarter a year ago.
  • Q1 non-GAAP operating income grew 11 percent to $67 million, compared to $61 million in the same quarter a year ago. Q1 non-GAAP EPS grew 15 percent to $0.39, compared to $0.34 in the same quarter a year ago.
  • Cash flow from operations was $37 million, compared to $12 million in the same period a year ago.

“We had a strong start to the year thanks to the consistent execution of our strategy,” said Bracken Darrell, Logitech president and chief executive officer. “Our portfolio of innovative products continues to deliver. We achieved double-digit growth across a number of categories, including Video Collaboration, and growth in all three regions. I’m excited about our business and the innovation ahead of us.”

Outlook

Logitech confirmed its Fiscal Year 2020 outlook of mid to high single-digit sales growth in constant currency and $375 million to $385 million in non-GAAP operating income.

CFO Search

Logitech today confirmed that Nate Olmstead is now the Company’s new chief financial officer, effective immediately. Nate joined Logitech in 2019 as vice president of business finance, with over 16 years of financial management experience, most recently as the vice president of finance for global operations at Hewlett Packard Enterprise.

“Nate has proven to be a good fit for us as a chief financial officer,” said Bracken Darrell, Logitech president and chief executive officer. “He has shown strong strategic insight, financial acumen, and practical operational experience. I look forward to building on our terrific partnership for many years to come.”

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 2020 on Tuesday, July 23, 2019 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), 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 2020.

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, 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 U.S. federal securities laws, including, without limitation, statements regarding: our preliminary financial results for the three months ended June 30, 2019, innovation, secular trends, opportunities, and outlook for Fiscal Year 2020 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 our products and marketing strategies fail to separate our products from competitors’ products; 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, 2019, 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

 

 

June 30,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

2019

 

2018

 

 

 

 

 

Net sales

 

$

644,225

 

 

$

608,480

 

Cost of goods sold

 

401,978

 

 

382,171

 

Amortization of intangible assets and purchase accounting effect on inventory

 

3,271

 

 

2,372

 

Gross profit

 

238,976

 

 

223,937

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Marketing and selling

 

123,033

 

 

114,584

 

Research and development

 

42,243

 

 

38,987

 

General and administrative

 

22,159

 

 

25,473

 

Amortization of intangible assets and acquisition-related costs

 

3,596

 

 

2,521

 

Restructuring charges, net

 

478

 

 

9,921

 

Total operating expenses

 

191,509

 

 

191,486

 

 

 

 

 

 

Operating income

 

47,467

 

 

32,451

 

Interest income

 

2,553

 

 

2,369

 

Other income (expense), net

 

1,861

 

 

(1,571

)

Income before income taxes

 

51,881

 

 

33,249

 

Provision for (benefit from) income taxes (A)

 

6,536

 

 

(5,217

)

Net income

 

$

45,345

 

 

$

38,466

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

 

$

0.27

 

 

$

0.23

 

Diluted

 

$

0.27

 

 

$

0.23

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

Basic

 

166,302

 

 

165,317

 

Diluted

 

168,797

 

 

168,756

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

March 31, 2019

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

596,956

 

 

$

604,516

 

Accounts receivable, net

 

418,816

 

 

383,309

 

Inventories

 

297,007

 

 

293,495

 

Other current assets

 

68,927

 

 

69,116

 

Total current assets

 

1,381,706

 

 

1,350,436

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

76,713

 

 

78,552

 

Goodwill

 

343,702

 

 

343,684

 

Other intangible assets, net

 

112,132

 

 

118,999

 

Other assets (B)

 

173,448

 

 

132,453

 

Total assets

 

$

2,087,701

 

 

$

2,024,124

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

338,748

 

 

$

283,922

 

Accrued and other current liabilities (B)

 

394,675

 

 

433,897

 

Total current liabilities

 

733,423

 

 

717,819

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

36,133

 

 

36,384

 

Other non-current liabilities (B)

 

120,111

 

 

93,582

 

Total liabilities

 

889,667

 

 

847,785

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at June 30 and March 31, 2019

 

 

 

 

Additional shares that may be issued out of conditional capitals — 50,000 at June 30 and March 31, 2019

 

 

 

 

Additional shares that may be issued out of authorized capital — 34,621 at June 30 and March 31, 2019

 

 

 

 

Additional paid-in capital

 

35,048

 

 

56,655

 

Shares in treasury, at cost — 6,642 at June 30, 2019 and 7,244 at March 31, 2019

 

(170,140

)

 

(169,802

)

Retained earnings

 

1,410,381

 

 

1,365,036

 

Accumulated other comprehensive loss

 

(107,403

)

 

(105,698

)

Total shareholders’ equity

 

1,198,034

 

 

1,176,339

 

Total liabilities and shareholders’ equity

 

$

2,087,701

 

 

$

2,024,124

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

2019

 

2018

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

45,345

 

 

$

38,466

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

10,802

 

 

10,699

 

Amortization of intangible assets

 

6,867

 

 

4,893

 

Loss (gain) on investments

 

(211

)

 

13

 

Share-based compensation expense

 

12,218

 

 

13,259

 

Deferred income taxes

 

(3,381

)

 

(9,659

)

Other

 

(4

)

 

124

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

(34,264

)

 

(68,557

)

Inventories

 

(2,681

)

 

(18,200

)

Other assets

 

(5,387

)

 

(4,225

)

Accounts payable

 

55,592

 

 

51,188

 

Accrued and other liabilities

 

(48,380

)

 

(5,719

)

Net cash provided by operating activities

 

36,516

 

 

12,282

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

(9,340

)

 

(8,744

)

Investment in privately held companies

 

(170

)

 

(225

)

Acquisitions, net of cash acquired

 

 

 

(243

)

Purchases of trading investments

 

(1,155

)

 

(2,500

)

Proceeds from sales of trading investments

 

1,196

 

 

2,867

 

Net cash used in investing activities

 

(9,469

)

 

(8,845

)

Cash flows from financing activities:

 

 

 

 

Purchases of registered shares

 

(15,127

)

 

(9,982

)

Proceeds from exercises of stock options and purchase rights

 

393

 

 

1,104

 

Tax withholdings related to net share settlements of restricted stock units

 

(19,370

)

 

(25,081

)

Net cash used in financing activities

 

(34,104

)

 

(33,959

)

Effect of exchange rate changes on cash and cash equivalents

 

(503

)

 

(7,309

)

Net decrease in cash and cash equivalents

 

(7,560

)

 

(37,831

)

Cash and cash equivalents, beginning of the period

 

604,516

 

 

641,947

 

Cash and cash equivalents, end of the period

 

$

596,956

 

 

$

604,116

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

Three Months Ended

 

 

June 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

Pointing Devices

 

$

121,983

 

 

$

127,790

 

 

(5

)%

Keyboards & Combos

 

128,679

 

 

128,222

 

 

 

PC Webcams

 

28,128

 

 

29,674

 

 

(5

)

Tablet & Other Accessories

 

38,339

 

 

32,436

 

 

18

 

Video Collaboration

 

73,424

 

 

58,792

 

 

25

 

Mobile Speakers

 

50,416

 

 

34,327

 

 

47

 

Audio & Wearables

 

58,624

 

 

52,154

 

 

12

 

Gaming

 

134,515

 

 

136,026

 

 

(1

)

Smart Home

 

9,864

 

 

9,011

 

 

9

 

Other (1)

 

253

 

 

48

 

 

427

 

Total sales

 

$

644,225

 

 

$

608,480

 

 

6

%

(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 (C)

 

Three Months Ended

 

 

June 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2019

 

2018

 

 

 

 

 

Gross profit - GAAP

 

$

238,976

 

 

$

223,937

 

Share-based compensation expense

 

1,158

 

 

1,130

 

Amortization of intangible assets and purchase accounting effect on inventory

 

3,271

 

 

2,372

 

Gross profit - Non-GAAP

 

$

243,405

 

 

$

227,439

 

 

 

 

 

 

Gross margin - GAAP

 

37.1

%

 

36.8

%

Gross margin - Non-GAAP

 

37.8

%

 

37.4

%

 

 

 

 

 

Operating expenses - GAAP

 

$

191,509

 

 

$

191,486

 

Less: Share-based compensation expense

 

11,060

 

 

12,129

 

Less: Amortization of intangible assets and acquisition-related costs

 

3,596

 

 

2,521

 

Less: Restructuring charges, net

 

478

 

 

9,921

 

Operating expenses - Non-GAAP

 

$

176,375

 

 

$

166,915

 

 

 

 

 

 

% of net sales - GAAP

 

29.7

%

 

31.5

%

% of net sales - Non - GAAP

 

27.4

%

 

27.4

%

 

 

 

 

 

Operating income - GAAP

 

$

47,467

 

 

$

32,451

 

Share-based compensation expense

 

12,218

 

 

13,259

 

Amortization of intangible assets

 

6,867

 

 

4,893

 

Restructuring charges, net

 

478

 

 

9,921

 

Operating income - Non - GAAP

 

$

67,030

 

 

$

60,524

 

 

 

 

 

 

% of net sales - GAAP

 

7.4

%

 

5.3

%

% of net sales - Non - GAAP

 

10.4

%

 

9.9

%

 

 

 

 

 

Net income - GAAP

 

$

45,345

 

 

$

38,466

 

Share-based compensation expense

 

12,218

 

 

13,259

 

Amortization of intangible assets

 

6,867

 

 

4,893

 

Restructuring charges, net

 

478

 

 

9,921

 

Loss (gain) on investments

 

(211

)

 

13

 

Non-GAAP income tax adjustment

 

907

 

 

(9,109

)

Net income - Non - GAAP

 

$

65,604

 

 

$

57,443

 

 

 

 

 

 

Net income per share:

 

 

 

 

Diluted - GAAP

 

$

0.27

 

 

$

0.23

 

Diluted - Non - GAAP

 

$

0.39

 

 

$

0.34

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

Diluted - GAAP and Non - GAAP

 

168,797

 

 

168,756

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

SHARE-BASED COMPENSATION EXPENSE

 

Three Months Ended

 

 

June 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2019

 

2018

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

Cost of goods sold

 

$

1,158

 

 

$

1,130

 

Marketing and selling

 

6,849

 

 

5,786

 

Research and development

 

2,154

 

 

1,549

 

General and administrative

 

2,057

 

 

4,794

 

Total share-based compensation expense

 

12,218

 

 

13,259

 

Income tax benefit

 

(6,800

)

 

(9,529

)

Total share-based compensation expense, net of income tax benefit

 

$

5,418

 

 

$

3,730

 


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