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Logitech Delivers Better-Than-Expected Q3 Results and Raises FY 2016 Outlook


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

    • Q3 sales were $621 million, up 3 percent compared to Q3 of the prior year. Q3 retail sales (total sales excluding OEM) were $595 million and grew 9 percent in constant currency.
    • Q3 GAAP operating income was $69 million. Q3 GAAP earnings per share (EPS) were $0.41, compared to $0.40 in the same quarter a year ago.
    • Q3 non-GAAP operating income was $74 million, with non-GAAP EPS of $0.41, compared to $0.43 in the same quarter a year ago.
    • Cash flow from operations in the quarter, including Lifesize, was $166 million.

    “We delivered a strong performance in Q3, evident across the business,” said Bracken P. Darrell, Logitech president and chief executive officer. “In this milestone quarter for the company, a new Logitech emerged as we completed the exit of our OEM business and separated Lifesize. Logitech’s future business remains – and the future looks bright. We grew 9 percent in constant currency and our operating income and operating cash flow were strong. Combined, the Gaming, Mobile Speakers and Video Collaboration categories grew 34 percent in constant currency and each of them reached record high sales for a quarter. I’m delighted to raise our outlook as we enter the last quarter of the year.”

    Outlook

    Logitech increased its profitability outlook for Fiscal Year 2016 to approximately $170 million in non-GAAP operating income from $150 million, which included Lifesize. The Company also increased its outlook for retail sales to 7 to 9 percent growth in constant currency, up from 7 percent.

    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 Q3 FY 2016 on Jan. 21, 2016 at 8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.

    Continuing Operations

    Logitech separated its Lifesize division from the Company on Dec. 28, 2015. The Company’s third quarter of Fiscal Year 2016 ended on Dec. 25, 2015, even though, for purposes of presentation, the Company has indicated its third quarter periods as ending on Dec. 31. Except as otherwise noted, all of the results reported in this press release for both the third quarter of Fiscal Year 2016 and the third quarter of Fiscal Year 2015, as well as comparisons between periods, are focused on results from continuing operations and do not address the performance of Lifesize, which is now reported in the Company’s financial statements under discontinued operations or total Logitech including discontinued operations. Logitech’s previous outlook of $150 million in non-GAAP operating income included outlook for Lifesize results. Logitech’s new outlook does not include outlook for Lifesize results. For more information on the impact of the Lifesize separation on Logitech’s historical results, please refer to the Financial Reporting section of Logitech’s Financial History, 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), 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 future and outlook for 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 product categories, 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, 2015 and our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 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.

    2016 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     Nine Months Ended       December 31     December 31 GAAP CONSOLIDATED STATEMENTS OF OPERATIONS     2015     2014     2015     2014                           Net sales     $ 621,079       $ 604,322       $ 1,587,259       $ 1,562,625   Cost of goods sold       412,582         391,715         1,048,312         998,842   Gross profit       208,497         212,607         538,947         563,783                             Operating expenses:                         Marketing and selling       87,295         87,486         241,924         246,103   Research and development       29,273         27,397         86,336         80,009   General and administrative       24,080         28,172         77,966         96,762   Restructuring charges (credits), net       (666 )       —         14,018         (35 ) Total operating expenses       139,982         143,055         420,244         422,839   Operating income       68,515         69,552         118,703         140,944   Interest income, net       105         224         549         824   Other income (expense), net       862         (2,688 )       (894 )       (3,702 ) Income from continuing operations before income taxes       69,482         67,088         118,358         138,066   Provision for income taxes       1,442         670         7,006         8,455   Net income from continuing operations       68,040         66,418         111,352         129,611   Loss from discontinued operations, net of taxes       (2,954 )       (3,634 )       (20,732 )       (11,061 ) Net income     $ 65,086       $ 62,784       $ 90,620       $ 118,550                             Net income (loss) per share - basic:                         Continuing operations     $ 0.42       $ 0.41       $ 0.68       $ 0.79   Discontinued operations     $ (0.02 )     $ (0.03 )     $ (0.13 )     $ (0.06 ) Net income per share - basic     $ 0.40       $ 0.38       $ 0.55       $ 0.73                             Net income (loss) per share - diluted:                         Continuing operations     $ 0.41       $ 0.40       $ 0.67       $ 0.78   Discontinued operations     $ (0.02 )     $ (0.02 )     $ (0.12 )     $ (0.07 ) Net income per share - diluted     $ 0.39       $ 0.38       $ 0.55       $ 0.71                             Weighted average shares used to compute net income (loss) per share:                         Basic       162,669         163,533         163,521         163,261   Diluted       165,168         166,321         165,951         166,076                             Cash dividends per share     $ —       $ 0.27       $ 0.53       $ 0.27                                                           LOGITECH INTERNATIONAL S.A.             (In thousands) - Unaudited                                 December 31    

      March 31,  

    CONSOLIDATED BALANCE SHEETS     2015     2015               Current assets:             Cash and cash equivalents     $ 505,082       $ 533,380 Accounts receivable, net       284,089         167,196 Inventories       239,962         255,980 Other current assets       71,661         63,362 Current assets held for sale       28,969         32,102 Total current assets       1,129,763         1,052,020 Non-current assets:             Property, plant and equipment, net       99,145         86,478 Goodwill       218,198         218,213 Other assets       57,271         62,333 Long-term assets held for sale       5,506         7,636 Total assets     $ 1,509,883       $ 1,426,680               Current liabilities:             Accounts payable     $ 363,781       $ 292,797 Accrued and other current liabilities       211,219         163,344 Current liabilities held for sale       34,642         38,766 Total current liabilities       609,642         494,907 Non-current liabilities:             Income taxes payable       67,885         72,107 Other non-current liabilities       85,347         91,195 Long-term liabilities held for sale       10,063         10,337 Total liabilities       772,937         668,546               Total shareholders´ equity       736,946         758,134               Total liabilities and shareholders´ equity     $ 1,509,883       $ 1,426,680                                               LOGITECH INTERNATIONAL S.A.                         (In thousands) - Unaudited                                                         Three Months Ended     Nine Months Ended       December 31     December 31 CONSOLIDATED STATEMENTS OF CASH FLOWS *     2015     2014     2015     2014                           Operating activities:                         Net income     $ 65,086       $ 62,784       $ 90,620       $ 118,550   Adjustments to reconcile net income to net cash provided by operating activities:                         Depreciation       14,647         9,867         36,884         29,559   Amortization of other intangible assets       310         2,266         1,536         7,624   Share-based compensation expense       6,618         7,047         19,875         20,046   Investment impairment (recovery)       (4 )       2,154         176         2,259   Gain on disposal of property, plant and equipment       —         (34 )       —         (44 ) Excess tax benefits from share-based compensation       (926 )       (1,867 )       (2,089 )       (2,533 ) Deferred income taxes       1,962         (793 )       2,914         (3,151 ) Changes in operating assets and liabilities, net of acquisitions:                         Accounts receivable, net       (20,411 )       (57,465 )       (115,814 )       (131,026 ) Inventories       73,508         (3,187 )       18,066         (30,171 ) Other assets       (818 )       (952 )       (9,329 )       (6,592 ) Accounts payable       18,402         51,198         68,763         111,310   Accrued and other liabilities       7,334         5,336         39,244         21,227   Net cash provided by operating activities       165,708         76,354         150,846         137,058                             Investing activities:                         Purchases of property, plant and equipment       (19,166 )       (9,813 )       (50,443