Logitech Announces First Quarter Financial Results for FY 2014
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2014.
Sales for Q1 FY 2014 were $478 million, up 2 percent from $469 million in Q1 FY 2013, with exchange rates having no impact. Excluding those retail product categories that the Company is exiting (reported in the financial statements as “Retail – Other”), sales for Q1 FY 2014 were up 5 percent year over year. The Company posted a small operating profit compared to an operating loss of $59 million in the same quarter a year ago. Net income for Q1 FY 2014 was $ 1 million ($0.01 per share) compared to a net loss of $51 million ($0.32 per share) in the prior year. Gross margin for Q1 FY 2014 was 35.2 percent, up from 31.0 percent a year ago.
The Company’s total retail sales for Q1 increased by 5 percent year over year, up 12 percent in the Americas and 4 percent in Asia, and down 3 percent in EMEA. Excluding “Retail – Other,” Logitech’s retail sales for Q1 FY 2014 increased by 8 percent over the prior year. OEM sales decreased by 6 percent and sales for the LifeSize division decreased by 18 percent.
“These results – sales growth and significant year-over-year profitability improvement – demonstrate our turnaround is on track,” said Bracken P. Darrell, Logitech president and chief executive officer. “I’m happy to see double-digit sales growth in our Americas region. And I’m pleased with the performance in our growth categories: Combined, tablet accessories, PC gaming and wireless speakers grew about 90 percent year over year.
“Logitech continues to be focused on becoming faster and more profitable. We’ve shortened key product cycles and delivered early momentum for the product lines we launched into retail environments in Q1, including tablet accessories, PC gaming peripherals and our UE BOOM wireless speaker. There is more to come. I am excited about the potential within the business and remain committed to improving our profitability in FY 2014.”
Outlook
Logitech confirmed its outlook for Fiscal Year 2014, ending March 31, 2014. The Company expects sales of approximately $2 billion, operating income of approximately $50 million and gross margin of approximately 34 percent.
Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial results teleconference available online on the Logitech corporate Web site at http://ir.logitech.com. The remarks are posted in the Calendar section on the Investor home page.
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the results for Q1 FY 2014 on Thursday, July 25, 2013 at 8:30 a.m. Eastern Daylight Time and 14:30 Central European Summer Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.
About Logitech
Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, Logitech’s combined hardware and software enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding: the Company’s turnaround, focus, product launches, potential and profitability in Fiscal Year 2014, as well as Fiscal Year 2014 sales, operating income and gross margin. 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 in our new product categories and sales in emerging market geographies; if sales of PC peripherals in mature markets 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 there is a deterioration of business and economic conditions in one or more of our sales regions or operating segments, 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, 2013, 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.
Logitech, the Logitech logo, and other Logitech marks are registered in Switzerland 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 Web site at www.logitech.com.
LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Quarter Ended June 30, CONSOLIDATED STATEMENTS OF OPERATIONS 2013 2012 (Revised) Note 1 Net sales $ 477,924 $ 468,604 Cost of goods sold 309,569 323,478 Gross profit 168,355 145,126 % of net sales 35.2 % 31.0 % Operating expenses: Marketing and selling 100,635 100,897 Research and development 36,191 39,023 General and administrative 29,148 32,480 Restructuring charges 2,334 31,227 Total operating expenses 168,308 203,627 Operating income (loss) 47 (58,501 ) Interest income (expense), net (23 ) 384 Other income (loss), net 217 (159 ) Income (loss) before income taxes 241 (58,276 ) Benefit from income taxes (802 ) (6,910 ) Net income (loss) $ 1,043 $ (51,366 ) Shares used to compute net income (loss) per share: Basic 159,298 160,733 Diluted 160,281 160,733 Net income (loss) per share: Basic $ 0.01 $ (0.32 ) Diluted $ 0.01 $ (0.32 ) LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited CONSOLIDATED BALANCE SHEETS June 30, 2013 March 31, 2013 June 30, 2012 (Revised) Note 1 (Revised) Note 1 Current assets Cash and cash equivalents $ 318,857 $ 333,824 $ 360,737 Accounts receivable 218,599 179,565 213,973 Inventories 296,012 261,083 280,533 Other current assets 65,191 59,596 72,364 Assets held for sale - 10,960 - Total current assets 898,659 845,028 927,607 Non-Current assets Property, plant and equipment 85,778 87,649 94,491 Goodwill 343,078 340,132 558,211 Other intangible assets 22,919 26,024 45,326 Other assets 70,805 73,563 73,213 Total assets $ 1,421,239 $ 1,372,396 $ 1,698,848 Current liabilities Accounts payable $ 296,269 $ 265,995 $ 262,929 Accrued liabilities 205,566 193,378 222,017 Liabilities held for sale - 1,342 - Total current liabilities 501,835 460,715 484,946 Non-current liabilities    199,164    195,727    228,462 Total liabilities    700,999    656,442    713,408           Shareholders´ equity    720,240    715,954    985,440           Total liabilities and shareholders´ equity   $ 1,421,239   $ 1,372,396   $ 1,698,848               LOGITECH INTERNATIONAL S.A.        (In thousands) - Unaudited           Three Months Ended June 30, CONSOLIDATED STATEMENTS OF CASH FLOWS   2013   2012       (Revised) Note 1 Cash flows from operating activities:       Net income (loss)   $ 1,043    $ (51,366 ) Non-cash items included in net income (loss):       Depreciation    10,139     11,152  Amortization of other intangible assets    5,264     6,398  Investment impairment    370     -  Share-based compensation expense    4,390     6,171  Loss on disposal of property and plant    2,311     -  Gain on sale of available-for-sale securities    -     (831 ) Excess tax benefits from share-based compensation    -     (5 ) Deferred income taxes    (3,416 )    (1,024 ) Changes in assets and liabilities, net of acquisitions: Accounts receivable (38,899 ) 6,577 Inventories (28,052 ) 11,445 Other assets (1,770 ) 33 Accounts payable 33,580 (37,408 ) Accrued liabilities 13,733 41,802 Net cash used in operating activities (1,307 ) (7,056 ) Cash flows from investing activities: Purchases of property, plant and equipment (13,208 ) (19,621 ) Acquisitions, net of cash acquired - - Acquisition of a privately-held company (650 ) - Proceeds from sale of property and plant - 917 Proceeds from sale of available-for-sale securities - - Purchases of trading investments (4,406 ) (1,397 ) Proceeds from sales of trading investments 4,748 1,385 Net cash used in investing activities (13,516 ) (18,716 ) Cash flows from financing activities: Purchases of treasury shares - (89,955 ) Proceeds from sale of shares upon exercise of options and purchase rights 12 404 Tax withholdings related to net share settlements of restricted stock units (215 ) (170 ) Excess tax benefits from share-based compensation - 5 Net cash used in financing activities (203 ) (89,716 ) Effect of exchange rate changes on cash and cash equivalents 59 (2,145 ) Net decrease in cash and cash equivalents (14,967 ) (117,633 ) Cash and cash equivalents at beginning of period 333,824 478,370 Cash and cash equivalents at end of period $ 318,857 $ 360,737 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Three Months Ended June 30, SUPPLEMENTAL FINANCIAL INFORMATION 2013 2012 Depreciation $ 10,139 $ 11,152 Amortization of other intangible assets 5,264 6,398 Capital expenditures 13,208 19,621 Restructuring charges 2,334 31,227 Total operating expenses - GAAP $ 168,308 $ 203,627 Less: Restructuring charges 2,334 31,227 Total operating expenses before restructuring charges - Non-GAAP $ 165,974 $ 172,400 Net sales by channel: Retail $ 413,237 $ 395,101 OEM 34,513 36,675 LifeSize 30,174 36,828 Total net sales $ 477,924 $ 468,604 Net retail sales by product family(*): Retail - Pointing Devices $ 114,651 $ 115,830 Retail - Keyboards & Desktops 97,950 94,559 Retail - Tablet Accessories 38,559 15,886 Retail - Audio - PC 51,966 61,525 Retail - Audio - Wearables & Wireless 19,075 14,599 Retail - Video 35,258 37,159 Retail - PC Gaming 39,617 26,783 Retail - Remotes 14,574 13,732 Retail - Other 1,587 15,028 Total net retail sales $ 413,237 $ 395,101 Total net retail sales - GAAP $ 413,237 $ 395,101 Less: Retail - Other 1,587 15,028 Total net retail sales excluding Retail - Other category - Non-GAAP $ 411,650 $ 380,073 Total net sales - GAAP $ 477,924 $ 468,604 Less: Retail - Other 1,587 15,028 Total net sales excluding Retail - Other category - Non-GAAP $ 476,337 $ 453,576 __________________ * Certain products within the retail product families as presented in prior years have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales. Three Months Ended June 30, Share-based Compensation Expense 2013 2012 Cost of goods sold