Logitech Reports Highest Retail Revenue in Company´s History
Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced better-than-expected preliminary financial results for the third quarter of Fiscal Year 2017.
- Q3 retail sales grew 13 percent in constant currency, reaching the highest level ever in the Company’s history. Q3 retail sales grew 12 percent in USD.
- Q3 sales were $667 million, up 7 percent compared to Q3 of the prior year, which still included OEM sales.
- Q3 GAAP operating income grew 41% to $96 million, compared to $69 million a year ago. Q3 GAAP earnings per share (EPS) were $0.59, compared to $0.41 a year ago.
- Q3 non-GAAP operating income grew 34% to $99 million, compared to $74 million a year ago. Q3 non-GAAP EPS grew 37% to $0.56, compared to $0.41 a year ago.
- Cash flow from operations for the first nine months of Fiscal Year 2017 was $234 million, compared to $151 million for same period a year ago.
“This Q3, our results exceeded expectations and were outstanding, with broad-based growth across all our regions and almost all product categories,” said Bracken Darrell, Logitech president and chief executive officer. “We delivered both the highest retail revenue and the highest non-GAAP gross margin in Logitech’s 35-year history. Our strategy is working, and we are just at the beginning of our path to deliver what we’re capable of. We have significantly raised our outlook on the back of this performance.”
Outlook
Logitech raised its Fiscal Year 2017 outlook to 12 to 13 percent retail sales growth in constant currency, up from its previous range of 8 to 10 percent retail sales growth in constant currency. The Company also increased its non-GAAP operating income outlook for Fiscal Year 2017 to a range of $225 to $230 million, up from its prior range of $195 million to $205 million.
Preliminary Statement
These preliminary results for the three and nine months ended December 31, 2016 are subject to adjustments, including completion of our evaluation of the changes in the fair value of contingent consideration for our acquisition of Jaybird LLC and other subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.
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 2017 on Weds., January 25, 2017 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.
Continued Operations
Logitech separated its Lifesize division from the Company on Dec. 28, 2015. Except as otherwise noted, all of the results reported in this press release 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. 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 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), gain (loss) on equity-method investment, investigation and related expenses, 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 2017.
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: our strategy, our capabilities, and our outlook for Fiscal Year 2017 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 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, 2016 and our Quarterly Report on Form 10-Q for fiscal quarter ended September 30, 2016, 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.
2017 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. 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 (A) 2016 2015 2016 2015 Net sales $ 666,707 $ 621,079 $ 1,710,875 $ 1,587,259 Cost of goods sold 418,015 412,582 1,083,908 1,048,312 Amortization of intangible assets and purchase accounting effect on inventory 1,929 — 4,705 — Gross profit 246,763 208,497 622,262 538,947 Operating expenses: Marketing and selling 102,036 87,295 279,700 241,924 Research and development 32,284 29,161 96,867 85,889 General and administrative 24,631 24,080 75,587 77,966 Amortization of intangible assets and acquisition-related costs 1,494 112 4,535 447 Change in fair value of contingent consideration for business acquisition (9,925 ) — (9,925 ) — Restructuring charges (credits), net (33 ) (666 ) (44 ) 14,018 Total operating expenses 150,487 139,982 446,720 420,244 Operating income 96,276 68,515 175,542 118,703 Interest income, net 202 105 263 549 Other income (expense), net 2,634 862 943 (894 ) Income before income taxes 99,112 69,482 176,748 118,358 Provision for income taxes 1,647 1,442 10,297 7,006 Net income from continuing operations 97,465 68,040 166,451 111,352 Loss from discontinued operations, net of taxes — (2,954 ) — (20,732 ) Net income $ 97,465 $ 65,086 $ 166,451 $ 90,620 Net income (loss) per share - basic: Continuing operations $ 0.60 $ 0.42 $ 1.03 $ 0.68 Discontinued operations — (0.02 ) — (0.13 )Net income per share – basic
$ 0.60 $ 0.40 $ 1.03 $ 0.55 Net income (loss) per share - diluted: Continuing operations $ 0.59 $ 0.41 $ 1.01 $ 0.67 Discontinued operations — (0.02 ) — (0.12 ) Net income per share – diluted $ 0.59 $ 0.39 $ 1.01 $ 0.55 Weighted average shares used to compute net income (loss) per share: Basic 161,977 162,669 162,070 163,521 Diluted 165,901 165,168 165,211 165,951 Cash dividend per share $ — $ — $ 0.57 $ 0.53 LOGITECH INTERNATIONAL S.A. PRELIMINARY RESULTS (In thousands) – unaudited December 31,March 31,
CONDENSED CONSOLIDATED BALANCE SHEETS (A) 2016 2016 Current assets: Cash and cash equivalents $ 513,578 $ 519,195 Accounts receivable, net 277,677 142,778 Inventories 250,286 228,786 Other current assets 43,339 35,488 Total current assets 1,084,880 926,247 Non-current assets: Property, plant and equipment, net 84,194 92,860 Goodwill 249,721 218,224 Other intangible assets, net 50,313 — Other assets 85,728 86,816 Total assets $ 1,554,836 $ 1,324,147 Current liabilities: Accounts payable $ 358,196 $ 241,166 Accrued and other current liabilities 247,963 173,764 Total current liabilities 606,159 414,930 Non-current liabilities: Income taxes payable 55,573 59,734 Other non-current liabilities 91,709 89,535 Total liabilities 753,441 564,199 Shareholders’ equity: Registered shares, CHF 0.25 par value: 30,148 30,148 Issued and authorized shares —173,106 at December 31 and March 31, 2016 Conditionally authorized shares — 50,000 at December 31 and March 31, 2016 Additional paid-in capital 16,336 6,616 Less shares in treasury, at cost — 11,298 at December 31, 2016 and 10,697 at March 31, 2016 (167,342 ) (128,407 ) Retained earnings 1,034,685 963,576 Accumulated other comprehensive loss (112,432 ) (111,985 ) Total shareholders’ equity 801,395 759,948 Total liabilities and shareholders’ equity $ 1,554,836 $ 1,324,147 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 (A) 2016 2015 2016 2015 Cash flows from operating activities: Net income $ 97,465 $ 65,086 $ 166,451 $ 90,620 Non-cash items included in net income: Depreciation 8,863 14,647 32,479 36,884 Amortization of intangible assets 2,751 310 6,618 1,536 Loss (gain) on equity-method investment (375 ) (4 ) (547 ) 176 Share-based compensation expense 9,387 6,618 26,354 19,875 Excess tax benefits from share-based compensation (2,227 ) (926 )   (6,357 )   (2,089 ) Deferred income taxes   (88 )   1,962    (473 )   2,914  Change in fair value of contingent consideration for business acquisition   (9,925 )   —    (9,925 )   —  Changes in operating assets and liabilities, net of acquisitions:         Accounts receivable, net   (42,413 )   (20,411 )   (139,414 )   (115,814 ) Inventories   13,123    73,508    (15,194 )   18,066  Other assets   (1,608 )   (818 )   (6,346 )   (9,329 ) Accounts payable   25,419    18,402    109,095    68,763  Accrued and other liabilities   46,162    7,334    71,549    39,244  Net cash provided by operating activities   146,534    165,708    234,290    150,846  Cash flows from investing activities:         Purchases of property, plant and equipment   (8,614 )   (19,166 )   (23,372 )   (50,443 ) Investment in privately held companies   (160 )   (1,619 )   (640 )   (2,099 ) Acquisitions, net of cash acquired   —    —    (66,987 )   — Release of restricted cash — — 715 — Purchases of trading investments (597 ) (1,746 ) (5,868 ) (4,395 ) Proceeds from sales of trading investments 616 1,813 5,912 &n