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Logitech Delivers Double-Digit Growth and Raises Outlook


    Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2018.

    • Q1 sales were $530 million, up 13 percent in constant currency compared to Q1 of the prior year. Q1 sales grew 10 percent in USD.
    • Q1 GAAP operating income grew 22 percent to $31 million, compared to $26 million a year ago. Q1 GAAP earnings per share (EPS) grew 69 percent to $0.22, compared to $0.13 a year ago.
    • Q1 non-GAAP operating income grew 14 percent to $43 million, compared to $38 million a year ago. Q1 non-GAAP EPS grew 20 percent to $0.24, compared to $0.20 a year ago.

    “We’re off to a strong start,” said Bracken Darrell, Logitech president and chief executive officer. “Our innovative and diverse portfolio is delivering, with growth and profitability exceeding expectations this quarter. Our growth was broad-based — we grew double-digits in constant currency across all three regions. Looking out to the rest of the year, the strength of our innovation program combined with the expected closing of the ASTRO Gaming acquisition, give us the confidence to raise our FY 2018 outlook.”

    Vincent Pilette, Logitech chief financial officer, said, “We delivered a strong financial performance during this first quarter of the fiscal year, with sales up 13% and profitability up 14%. Q1’s healthy gross margin — up 140 basis points compared to last year — allows us to continue our investment in numerous growth opportunities to build an exciting future.”

    Outlook

    Logitech raised its Fiscal Year 2018 outlook to 10 to 12 percent sales growth in constant currency and $260 to $270 million in non-GAAP operating income. This includes the anticipated impact of the ASTRO Gaming acquisition, expected to close in August 2017.

    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 2018 on Tuesday, Jul. 25, 2017 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), gain (loss) on investments in privately held companies, 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 2018.

    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, Jaybird, Logitech G and Ultimate Ears. 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 federal securities laws, including, without limitation, statements regarding: our innovation, pipeline of products, ASTRO Gaming acquisition and its timing, growth opportunities, investment in growth opportunities, future performance, and outlook for Fiscal Year 2018 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 are not able to maintain and enhance our brands; if we do not successfully execute on strategic acquisitions and investments; 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, 2017, 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
    June 30, GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS   2017   2016           Net sales   $ 529,946     $ 479,864   Cost of goods sold   334,774     309,625   Amortization of intangible assets and purchase accounting effect on inventory   1,504     1,613   Gross profit   193,668     168,626   Operating expenses:         Marketing and selling   102,378     83,872   Research and development   35,099     31,951   General and administrative   25,354     25,655   Amortization of intangible assets and acquisition-related costs   1,390     1,293   Change in fair value of contingent consideration for business acquisition   (1,978 )   —   Total operating expenses   162,243     142,771   Operating income   31,425     25,855   Interest income, net   1,175     151   Other expense, net   (1,029 )   (1,008 ) Income before income taxes   31,571     24,998   Provision for (benefit from) income taxes   (5,436 )   3,057   Net income   $ 37,007     $ 21,941             Net income per share:         Basic   $ 0.23     $ 0.14   Diluted   $ 0.22     $ 0.13             Weighted average shares used to compute net income per share:         Basic   163,407     162,130   Diluted   168,339     164,303     LOGITECH INTERNATIONAL S.A.
    PRELIMINARY RESULTS
    (In thousands) - unaudited           CONDENSED CONSOLIDATED BALANCE SHEETS   June 30,
    2017   March 31,
    2017           Current assets:         Cash and cash equivalents   $ 527,657     $ 547,533   Accounts receivable, net   221,340     185,179   Inventories   279,405     253,401   Other current assets   42,675     41,732   Total current assets   1,071,077     1,027,845   Non-current assets:         Property, plant and equipment, net   85,135     85,408   Goodwill   249,780     249,741   Other intangible assets, net   44,971     47,564   Other assets   136,516     88,119   Total assets   $ 1,587,479     $ 1,498,677             Current liabilities:         Accounts payable   $ 312,722     $ 274,805   Accrued and other current liabilities   205,059     232,273   Total current liabilities   517,781     507,078   Non-current liabilities:         Income taxes payable   32,147     51,797   Other non-current liabilities   87,213     83,691   Total liabilities   637,141     642,566             Shareholders’ equity:         Registered shares, CHF 0.25 par value:   30,148     30,148   Issued and authorized shares —173,106 at June 30 and March 31, 2017         Conditionally authorized shares — 50,000 at June 30 and March 31, 2017         Additional paid-in capital   14,519     26,596   Shares in treasury, at cost — 9,197 at June 30, 2017 and 10,727 at March 31, 2017   (157,330 )   (174,037 ) Retained earnings   1,165,029     1,074,110   Accumulated other comprehensive loss   (102,028 )   (100,706 ) Total shareholders’ equity   950,338     856,111   Total liabilities and shareholders’ equity   $ 1,587,479     $ 1,498,677     LOGITECH INTERNATIONAL S.A.
    PRELIMINARY RESULTS
    (In thousands) - unaudited       Three Months Ended
    June 30, CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   2017   2016           Cash flows from operating activities:         Net income   $ 37,007     $ 21,941   Adjustments to reconcile net income to net cash provided by (used in) operating activities:         Depreciation   9,148     13,105   Amortization of intangible assets   2,593     1,708   Loss (gain) on investments in privately held companies   259     (1 ) Gain on disposal of property, plant and equipment   (3 )   —   Share-based compensation expense   10,705     8,517   Deferred income taxes   (9,879 )   (1,048 ) Change in fair value of contingent consideration for business acquisition   (1,978 )   —   Changes in assets and liabilities, net of acquisitions:         Accounts receivable, net   (35,702 )   (48,661 ) Inventories   (20,389 )   (10,007 ) Other assets   (3,088 )   (1,171 ) Accounts payable   38,647     42,769   Accrued and other liabilities   (28,203 )   (10,135 ) Net cash provided by (used in) operating activities   (883 )   17,017   Cash flows from investing activities:         Purchases of property, plant and equipment   (10,035 )   (8,135 ) Investment in privately held companies   (360 )   (320 ) Acquisitions, net of cash acquired   —     (53,987 ) Changes in restricted cash   —     715   Purchases of trading investments   (609 )   (4,229 ) Proceeds from sales of trading investments   647     4,231   Net cash used in investing activities   (10,357 )   (61,725 ) Cash flows from financing activities:         Purchases of registered shares   (624 )   (24,422 ) Proceeds from exercises of stock options   12,569     599   Tax withholdings related to net share settlements of restricted stock units   (21,683 )   (9,185 ) Net cash used in financing activities   (9,738 )   (33,008 ) Effect of exchange rate changes on cash and cash equivalents   1,102     (1,368 ) Net decrease in cash and cash equivalents   (19,876 )   (79,084 ) Cash and cash equivalents, beginning of the period   547,533     519,195   Cash and cash equivalents, end of the period   $ 527,657     $ 440,111     LOGITECH INTERNATIONAL S.A.
    PRELIMINARY RESULTS
    (In thousands) - unaudited               NET SALES   Three Months Ended
    June 30, SUPPLEMENTAL FINANCIAL INFORMATION   2017   2016   Change               Net sales by product category:             Mobile Speakers   $ 62,918     $ 57,296     10 % Audio-PC & Wearables   50,202     56,579     (11 ) Gaming   77,708     56,500     38   Video Collaboration   35,617     23,910     49   Smart Home   16,466     11,167     47   Pointing Devices   122,074     116,783     5   Keyboards & Combos   116,113     118,019     (2 ) Tablet & Other Accessories   23,218     13,885     67   PC Webcams   25,625     25,262     1   Other (1)   5     463     (99 ) Total net sales   $ 529,946     $ 479,864     10   __________________            

    (1) Other category includes products that we currently intend to transition out of, or have already transitioned out of, 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 (A)   Three Months Ended
    June 30, SUPPLEMENTAL FINANCIAL INFORMATION   2017   2016           Gross profit - GAAP   $ 193,668     $ 168,626   Share-based compensation expense   711     675   Amortization of intangible assets and purchase accounting effect on inventory   1,504     1,613   Gross profit - Non-GAAP   $ 195,883     $ 170,914             Gross margin - GAAP   36.5 %   35.1 % Gross margin - Non-GAAP   37.0 %   35.6 %           Operating expenses - GAAP   $ 162,243     $ 142,771   Less: Share-based compensation expense   9,994     7,842   Less: Amortization of intangible assets and acquisition-related costs   1,390     1,293   Less: Change in fair value of contingent consideration for business acquisition   (1,978 )   —   Less: Restructuring credits, net   (55 )   (85 ) Less: Investigation and related expenses   —     612   Operating expenses - Non-GAAP   $ 152,892     $ 133,109             % of net sales - GAAP   30.6 %   29.8 % % of net sales - Non - GAAP   28.9 %   27.7 %           Operating income - GAAP   $ 31,425     $ 25,855   Share-based compensation expense   10,705     8,517   Amortization of intangible assets   2,593     1,708   Purchase accounting effect on inventory   —     703   Acquisition-related costs   301     495   Change in fair value of contingent consideration for business acquisition   (1,978 )   —   Restructuring credits, net   (55 )   (85 ) Investigation and related expenses   —     612   Operating income - Non - GAAP   $ 42,991     $ 37,805             % of net sales - GAAP   5.9 %   5.4 % % of net sales - Non - GAAP   8.1 %   7.9 %