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 |
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