Logitech International (SIX:LOGN)(Nasdaq:LOGI) today announced financial results for the third quarter of Fiscal Year 2014, with better-than-expected total sales of $628 million, up 2 percent compared to the third quarter of the prior year. Q3 GAAP operating income was $53 million, with GAAP earnings per share (EPS) of $0.30 compared to a loss a year ago. Q3 non-GAAP operating income was $67 million, with non-GAAP EPS of $0.35, up 84 percent year over year. Cash flow from operations for Q3 was $94 million.
Retail sales for Q3 were up 4 percent year over year. Combined, Logitech’s retail growth categories delivered 62 percent growth compared to the prior year.
- Tablet Accessories sales grew 95%
- Audio – Wearables and Wireless sales grew 79%
- PC Gaming sales grew 25%
“We’re pleased by our solid Q3 performance, with both sales and profit growth,” said Bracken P. Darrell, Logitech president and chief executive officer. “We’re encouraged by the robust sales in our growth categories, as well as the success of our ongoing initiatives to improve profitability, which includes the earlier-than-expected return to profitability of LifeSize. We still have more work ahead, but our turnaround is on track as we continue to build a faster and more profitable Logitech.”
Outlook
Based on its Q3 performance, Logitech has raised its full-year outlook for Fiscal Year 2014. The Company now expects sales of just under $2.1 billion, compared to the previously expected $2.0 billion, and non-GAAP operating income in the range of $120 million to $125 million, compared to the previously expected $100 million.
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, in the Calendar section.
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the results for Q3 FY 2014 on Thurs., Jan. 23, 2014 at 8:30 a.m. Eastern Standard Time and 14:30 Central European Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.
Logitech also will hold its Analyst and Investor Day on Thurs., March 6, 2014 in New York City.
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) and other items detailed under “Supplemental Financial Information” after the tables below. Logitech believes this information will help investors to evaluate its current period performance and trends in its business.
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, growth categories, sales, profit growth and profitability, as well as Fiscal Year 2014 revenue and operating income. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013 and our Amended Annual Report on Form 10-K/A 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 | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| (revised) (A) | (revised) (A) | ||||||||||||||||||||
| Net sales | $ | 627,890 | $ | 614,500 | $ | 1,637,786 | $ | 1,630,797 | |||||||||||||
| Cost of goods sold | 414,528 | 404,695 | 1,072,656 | 1,079,872 | |||||||||||||||||
| Gross profit | 213,362 | 209,805 | 565,130 | 550,925 | |||||||||||||||||
| % of net sales | 34.0 | % | 34.1 | % | 34.5 | % | 33.8 | % | |||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Marketing and selling | 93,624 | 112,698 | 287,969 | 324,117 | |||||||||||||||||
| Research and development | 34,103 | 40,488 | 107,927 | 117,625 | |||||||||||||||||
| General and administrative | 31,560 | 26,382 | 90,103 | 84,842 | |||||||||||||||||
| Goodwill impairment | - | 211,000 | - | 211,000 | |||||||||||||||||
| Restructuring charges (reversals), net | 822 | (358 | ) | 8,621 | 28,198 | ||||||||||||||||
| Total operating expenses | 160,109 | 390,210 | 494,620 | 765,782 | |||||||||||||||||
| Operating income (loss) | 53,253 | (180,405 | ) | 70,510 | (214,857 | ) | |||||||||||||||
| Interest income (expense), net | (1,022 | ) | 114 | (862 | ) | 651 | |||||||||||||||
| Other income (expense), net | 1,082 | (3,670 | ) | 1,361 | (4,338 | ) | |||||||||||||||
| Income (loss) before income taxes | 53,313 | (183,961 | ) | 71,009 | (218,544 | ) | |||||||||||||||
| Provision for (benefit from) income taxes | 4,810 | 11,370 | 7,065 | (26,616 | ) | ||||||||||||||||
| Net income (loss) | $ | 48,503 | $ | (195,331 | ) | $ | 63,944 | $ | (191,928 | ) | |||||||||||
| Net income (loss) per share: | |||||||||||||||||||||
| Basic | $ | 0.30 | $ | (1.24 | ) | $ | 0.40 | $ | (1.21 | ) | |||||||||||
| Diluted | $ | 0.30 | $ | (1.24 | ) | $ | 0.40 | $ | (1.21 | ) | |||||||||||
| Shares used to compute net income (loss) per share : | |||||||||||||||||||||
| Basic | 160,871 | 157,706 | 160,051 | 158,383 | |||||||||||||||||
| Diluted | 163,388 | 157,706 | 161,509 | 158,383 | |||||||||||||||||
| LOGITECH INTERNATIONAL S.A. | |||||||||||||
| (In thousands) - Unaudited | |||||||||||||
| December 31, | March 31, | December 31, | |||||||||||
| CONSOLIDATED BALANCE SHEETS | 2013 | 2013 | 2012 | ||||||||||
| (A) | (revised) (A) | ||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 379,865 | $ | 333,824 | $ | 321,999 | |||||||
| Accounts receivable, net | 312,947 | 179,565 | 264,589 | ||||||||||
| Inventories | 257,998 | 261,083 | 277,477 | ||||||||||
| Other current assets | 60,979 | 58,103 | 61,600 | ||||||||||
| Assets held for sale | - | 10,960 | 15,655 | ||||||||||
| Total current assets | 1,011,789 | 843,535 | 941,320 | ||||||||||
| Non-current assets: | |||||||||||||
| Property, plant and equipment, net | 87,494 | 87,649 | 89,128 | ||||||||||
| Goodwill | 345,036 | 341,357 | 345,235 | ||||||||||
| Other intangible assets | 13,319 | 26,024 | 35,033 | ||||||||||
| Other assets | 71,322 | 75,098 | 76,719 | ||||||||||
| Total assets | $ | 1,528,960 | $ | 1,373,663 | $ | 1,487,435 | |||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 328,757 | $ | 265,995 | $ | 339,283 | |||||||
| Accrued and other current liabilities | 234,297 | 192,774 | 217,095 | ||||||||||
| Liabilities held for sale | - | 3,202 | 3,725 | ||||||||||
| Total current liabilities | 563,054 | 461,971 | 560,103 | ||||||||||
| Non-current liabilities: | 200,797 | 195,882 | 195,687 | ||||||||||
| Total liabilities | 763,851 | 657,853 | 755,790 | ||||||||||
| Total shareholders´ equity | 765,109 | 715,810 | 731,645 | ||||||||||
| Total liabilities and shareholders´ equity | $ | 1,528,960 | $ | 1,373,663 | $ | 1,487,435 | |||||||
| LOGITECH INTERNATIONAL S.A. | |||||||||||||||||||||
| (In thousands) - Unaudited | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| (revised) (A) | (revised) (A) | ||||||||||||||||||||
| Operating activities: | |||||||||||||||||||||
| Net income (loss) | $ | 48,503 | $ | (195,331 | ) | $ | 63,944 | $ | (191,928 | ) | |||||||||||
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||||||||||||||||
| Depreciation | 9,473 | 11,554 | 28,756 | 33,861 | |||||||||||||||||
| Amortization of other intangible assets | 4,472 | 5,823 | 14,990 | 18,412 | |||||||||||||||||
| Share-based compensation expense | 8,913 | 5,222 | 17,412 | 18,659 | |||||||||||||||||
| Goodwill impairment | - | 211,000 | - | 211,000 | |||||||||||||||||
| Impairment of strategic investment | 38 | 3,600 | 568 | 3,600 | |||||||||||||||||
| Loss on disposal of property, plant and equipment | 1,422 | - | 3,878 | - | |||||||||||||||||
| Gain on sale of securities | - | - | - | (831 | ) | ||||||||||||||||
| Excess tax benefits from share-based compensation | (572 | ) | (4 | ) | (572 | ) | (26 | ) | |||||||||||||
| Deferred income taxes and other | 343 | 13,204 | (3,559 | ) | 9,398 | ||||||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||||||
| Accounts receivable, net | (53,223 | ) | 16,962 | (130,265 | ) | (41,571 | ) | ||||||||||||||
| Inventories | 36,002 | 32,177 | 14,652 | 352 | |||||||||||||||||
| Other assets | 2,925 | 5,138 | (2,968 | ) | (2,432 | ) | |||||||||||||||
| Accounts payable | 23,376 | (29,202 | ) | 62,931 | 41,893 | ||||||||||||||||
| Accrued and other liabilities | 12,027 | 14,958 | 38,118 | 3,961 | |||||||||||||||||
| Net cash provided by operating activities | 93,699 | 95,101 | 107,885 | 104,348 | |||||||||||||||||
| Investing activities: | |||||||||||||||||||||
| Purchases of property, plant and equipment | (9,033 | ) | (9,215 | ) | (32,096 | ) | (42,032 | ) | |||||||||||||
| Purchase of strategic investment | - | - | - | (3,970 | ) | ||||||||||||||||
| Acquisitions, net of cash acquired | - | - | (650 | ) | - | ||||||||||||||||
| Proceeds from sales of available-for-sale securities | - | - | - | 917 | |||||||||||||||||
| Proceeds from return of investment in privately held companies | 261 | - | 261 | - | |||||||||||||||||
| Purchases of trading investments for deferred compensation plan | (1,685 | ) | (646 | ) | (7,831 | ) |
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