☰

Logitech Confirms FY 2016 Outlook with Q1 Sales of $470 Million


    Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the first quarter of Fiscal Year 2016.

    • Q1 sales were $470 million, down 2 percent compared to Q1 of the prior year. Q1 retail sales were $425 million and grew 7 percent in constant currency.
    • Q1 GAAP operating income was $7 million. This includes $13 million in restructuring costs. Q1 GAAP earnings per share (EPS) were $0.04, compared to $0.12 in the same quarter a year ago.
    • Q1 non-GAAP operating income was $31 million, with non-GAAP EPS of $0.16, compared to $0.22 in the same quarter a year ago.

    “Our first quarter results are encouraging and put us strongly on track for FY 2016,” said Bracken P. Darrell, Logitech president and chief executive officer. “We are on the offensive, focusing on our retail business in order to accelerate our transition to growth – Q1 retail sales grew 7 percent in constant currency. We look forward to carrying good momentum into the rest of fiscal year 2016 as we unveil another fantastic portfolio of exciting, new products. As planned, we have made excellent progress in preparing the business for the year to come – we’re on course to exit OEM by the end of calendar year 2015; we’re reorganizing Lifesize around the cloud; and we continue to optimize our costs to invest even more in growth.”

    Outlook

    Logitech confirmed its FY 2016 outlook of $150 million in non-GAAP operating income and 7 percent growth for retail sales in constant currency.

    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.

    Financial Results Teleconference and Webcast

    Logitech will hold a financial results teleconference to discuss the results for Q1 FY 2016 on Jul. 23, 2015 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

    To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of other intangible assets, restructuring charges (credits), other restructuring-related charges, investment impairment (recovery), benefit from (provision for) income taxes, one-time special charges and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency, a non-GAAP measure, 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 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 2016.

    About Logitech

    Logitech designs products that have an everyday place in people´s lives, connecting them to the digital experiences they care about. Over 30 years ago Logitech started connecting people through computers, and now it’s designing products that bring people together through music, gaming, video and computing. 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). 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: Logitech’s momentum, focus, transition to growth and its timing, progress during Fiscal Year 2016, exiting the OEM business, reorganizing Lifesize, strategic pricing adjustments, cost structure, investments in growth, new products, timing of new product introductions, and Fiscal Year 2016 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 in our new product categories 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 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 operating segments, or significant fluctuations in exchange rates; the effect of changes to our effective income tax 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, 2015, 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.

    2015 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.

    (In thousands, except per share amounts) - Unaudited

                            Three Months Ended         June 30,

    GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

      2015     2014                                 Net sales       $ 470,320       $ 482,203   Cost of goods sold         298,591         300,450   Gross profit         171,729         181,753   % of net sales         36.5 %       37.7 %                 Operating expenses:               Marketing and selling         87,427         91,045   Research and development         33,833         31,316   General and administrative         30,504         36,680   Restructuring charges, net         12,995         —   Total operating expenses         164,759         159,041                   Operating income         6,970         22,712                   Interest income, net         264         258   Other expense, net         (1,121 )       (198 )                 Income before income taxes         6,113         22,772   Provision for (benefit from) income taxes         (1,324 )       3,096                   Net income       $ 7,437       $ 19,676                   Net income per share:               Basic       $ 0.05       $ 0.12   Diluted       $ 0.04       $ 0.12   Shares used to compute net income per share :               Basic         164,431         163,012   Diluted         166,895         165,833                                           LOGITECH INTERNATIONAL S.A. (In thousands)                         June 30,     March 31, CONSOLIDATED BALANCE SHEETS       2015     2015         (Unaudited)       Current assets:               Cash and cash equivalents       $ 492,228     $ 537,038 Accounts receivable, net         221,580       179,823 Inventories         327,507       270,730 Other current assets         73,310       64,429 Total current assets       $ 1,114,625     $ 1,052,020 Non-current assets:               Property, plant and equipment, net         101,669       91,593 Goodwill         218,251       218,213 Other intangible assets         1,164       1,866 Other assets         62,338       62,988 Total assets       $ 1,498,047     $ 1,426,680                 Current liabilities:               Accounts payable       $ 340,330     $ 299,995 Accrued and other current liabilities         213,971       194,912 Total current liabilities       $ 554,301     $ 494,907 Non-current liabilities:         177,328       173,639 Total liabilities       $ 731,629     $ 668,546                 Total shareholders´ equity         766,418       758,134                 Total liabilities and shareholders´ equity       $ 1,498,047     $ 1,426,680                                     LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited                         Three Months Ended         June 30, CONSOLIDATED STATEMENTS OF CASH FLOWS       2015    

    2014

                    Operating activities:               Net income       $ 7,437       $ 19,676   Adjustments to reconcile net income to net cash provided by operating activities:         Depreciation         10,516         9,951   Amortization of other intangible assets         732         2,782   Share-based compensation expense         6,749         6,938   Impairment of investments         103         —   Loss (gain) on disposal of property, plant and equipment         —         22   Excess tax benefits from share-based compensation         (665 )       (381 ) Deferred income taxes and other         (6,732 )       (1,832 ) Changes in operating assets and liabilities, net of acquisitions:               Accounts receivable, net         (41,208 )       (36,663 ) Inventories         (54,164 )       (18,463 ) Other assets         (2,383 )       (2,063 ) Accounts payable         34,541         40,775   Accrued and other liabilities         19,475         7,016   Net cash provided by (used in) operating activities         (25,599 )       27,758                   Investing activities:               Purchases of property, plant and equipment         (15,290 )       (11,243 ) Investment in privately held companies         (240 )       (1,050 ) Purchase of trading investments         (903 )       (454 ) Proceeds from sales of trading investments         840         506   Net cash used in investing activities         (15,593 )       (12,241 )                 Financing activities:               Contingent consideration related to prior acquisition         —         (100 ) Purchases of treasury shares         (8,814 )       —   Proceeds from sales of shares upon exercise of options         4,066         574   Tax withholdings related to net share settlements of restricted stock units         (1,296 )       (695 ) Excess tax benefits from share-based compensation         665         381   Net cash provided by (used in) financing activities         (5,379 )       160                   Effect of exchange rate changes on cash and cash equivalents         1,761         (108 ) Net increase (decrease) in cash and cash equivalents         (44,810 )       15,569   Cash and cash equivalents, beginning of the period       $ 537,038         469,412   Cash and cash equivalents, end of the period       $ 492,228       $ 484,981                                                 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited                                             NET SALES       Three Months Ended         June 30, SUPPLEMENTAL FINANCIAL INFORMATION       2015     2014     Change                      

    Net sales by channel:

                        Retail       $ 425,388     $ 423,814     — % OEM         22,298       32,632     (32 ) Video conferencing         22,634       25,757     (12 )

    Total net sales

       

     

    $ 470,320     $ 482,203     (2 )                      

    Net retail sales by product family(*):

                        Mobile Speakers       $ 40,544     $ 28,830     41   Gaming         43,670       46,876     (7 ) Video collaboration         21,176       15,225     39   Tablet & Other Accessories         18,809       31,716     (41 )

    Growth

            124,199       122,647     1   Pointing Devices         116,985       113,042     3   Keyboards & Combos         105,829       105,489     0   Audio-PC & Wearables         45,699       48,548     (6 ) PC Webcams         21,681       20,463     6   Home Control         10,254       12,332     (17 ) Profit Maximization         300,448       299,874     —   Retail Strategic Sales         424,647       422,521     1   Non-Strategic         741       1,293     (43 ) Total net retail sales       $ 425,388     $ 423,814     —   __________________                     * Certain products within the retail product families as presented in prior period have been reclassified to conform to the current period presentation, with no impact on previously reported total net retail sales.                             LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited                   GAAP TO NON GAAP RECONCILIATION (A)       Three Months Ended         June 30,

    SUPPLEMENTAL FINANCIAL INFORMATION

          2015       2014                   Gross profit - GAAP       $ 171,729         $ 181,753   Share-based compensation expense