Q1 Retail Sales Grow 7 Percent in Constant
Currency: Company Transition to Growth on Track
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 605 538 Amortization of
other intangible assets 508 550
Gross profit - Non-GAAP $ 172,842 $ 182,841
Gross margin - GAAP 36.5 % 37.7 % Gross margin - Non-GAAP
36.7 % 37.9 %
Operating expenses - GAAP $ 164,759 $
159,041 Less: Share-based compensation expense 6,137 6,400 Less:
Amortization of other intangible assets 224 2,232 Less:
Restructuring charges, net 12,995 — Less: One time special charge
4,049 * 8,986
Operating expenses -
Non-GAAP $ 141,354 $ 141,423 % of net
sales - GAAP 35.0 % 33.0 % % of net sales - Non - GAAP 30.1 % 29.3
%
Operating income - GAAP $ 6,970 $ 22,712
Share-based compensation expense 6,742 6,938 Amortization of other
intangible assets 732 2,782 Restructuring charges, net 12,995 — One
time special charge 4,049 * 8,976
Operating income - Non - GAAP $ 31,488 $ 41,408
% of net sales - GAAP 1.5 % 4.7 % % of net sales -
Non - GAAP 6.7 % 8.6 %
Net income - GAAP $ 7,437 $
19,676 Share-based compensation expense 6,742 6,938 Amortization of
other intangible assets 732 2,782 Restructuring charges, net 12,995
— One time special charge 4,049 * 8,976 Investment impairment, net
103 — Provision for income taxes (5,320 ) (2,104 )
Net income - Non - GAAP 26,738 36,268
Net income per share: Diluted - GAAP $ 0.04 $
0.12 Diluted - Non - GAAP $ 0.16 $ 0.22
Shares used to
compute net income per share: Diluted - GAAP and Non GAAP
166,895 165,833
* These expenses include an increase of
$3.5 million in the accrual for a proposed settlement of the SEC
investigation and other expenses related to that investigation.
(A) Non-GAAP Financial Measures To supplement our
condensed consolidated financial results prepared in accordance
with GAAP, we use a number of financial measures, both GAAP and
non-GAAP, in analyzing and assessing our overall business
performance, for making operating decisions and for forecasting and
planning future periods. We consider the use of non-GAAP financial
measures helpful in assessing our current financial performance,
ongoing operations and prospects for the future as well as
understanding financial and business trends relating to our
financial condition and results of operations. While we use
non-GAAP financial measures as a tool to enhance our understanding
of certain aspects of our financial performance and to provide
incremental insight into the underlying factors and trends
affecting both our performance and our cash-generating potential,
we do not consider these measures to be a substitute for, or
superior to, the information provided by GAAP financial measures.
Consistent with this approach, we believe that disclosing non-GAAP
financial measures to the readers of our financial statements
provides useful supplemental data that, while not a substitute for
GAAP financial measures, can offer insight in the review of our
financial and operational performance and enables investors to more
fully understand trends in our current and future performance. In
assessing our business during the quarter ended June 30, 2015, we
excluded items in the following general categories, each of which
are described below:
Share-based compensation expenses.
We believe that providing non-GAAP measures excluding share-based
compensation expense, in addition to the GAAP measures, allows for
a more transparent comparison of our financial results from period
to period. We prepare and maintain our budgets and forecasts for
future periods on a basis consistent with this non-GAAP financial
measure. Further, companies use a variety of types of equity awards
as well as a variety of methodologies, assumptions and estimates to
determine share-based compensation expense. We believe that
excluding share-based compensation expense enhances our ability and
the ability of investors to understand the impact of non-cash
share-based compensation on our operating results and to compare
our results against the results of other companies.
Amortization of other intangible
assets. We incur intangible asset amortization expense,
primarily in connection with our acquisitions of various businesses
and technologies. The amortization of purchased intangibles varies
depending on the level of acquisition activity. We exclude these
various charges in budgeting, planning and forecasting future
periods and we believe that providing the non-GAAP measures
excluding these various non-cash charges, as well as the GAAP
measures, provides additional insight when comparing our operating
expenses and financial results from period to period.
Restructuring and restructuring-related
charges. These expenses are associated with re-aligning our
business strategies based on current economic conditions. We have
undertaken several restructurings in recent years. In connection
with our restructuring initiatives, we incurred restructuring
charges related to employee terminations, facility closures and
early cancellation of certain contracts. Our restructuring
initiatives also resulted in other costs related to restructurings
not qualifying for inclusion in restructuring charges. We believe
that providing the non-GAAP measures excluding these charges, as
well as the GAAP measures, assists our investors because such
charges are not reflective of our ongoing operating results in the
current period.
Investment impairment, net. We incur investment
impairment, primarily related to our investments in various
privately-held companies. The investment impairment varies
depending on the operational and financial performance of the
privately-held companies we invested in. We believe that providing
the non-GAAP measures excluding these charges, as well as the GAAP
measures, assists our investors because such charges are not
reflective of our ongoing operations.
One-time special charges: costs related
to investigations and related expenses. These expenses are
forensic accounting, audit, consulting and legal fees related to
the Audit Committee’s investigation and the ongoing formal
investigation by and settlement discussion with the Securities and
Exchange Commission (SEC), together with accruals based on
settlement discussion with the SEC. We believe that providing the
non-GAAP measures excluding these charges, as well as the GAAP
measures, assists our investors because such charges are one-time
in nature and not reflective of our ongoing operations.
Other charges. We provided non-GAAP measures
excluding the effect of certain charges and income that are not
reflective of our ongoing operations. In addition,
Logitech 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. Sales for
the three months ended June 30, 2015 compared to sales for the
three months ended June 30, 2014 grew 4 percent in constant
currency and declined 2 percent in U.S. dollars. Retail sales for
the three months ended June 30, 2015 compared to retail sales for
the three months ended June 30, 2014 grew 7 percent in constant
currency and was flat in U.S. Dollars. Each of the non-GAAP
financial measures described above, and used in this press release,
should not be considered in isolation from, or as a substitute for,
a measure of financial performance prepared in accordance with
GAAP. Further, investors are cautioned that there are inherent
limitations associated with the use of each of these non-GAAP
financial measures as an analytical tool. In particular, these
non-GAAP financial measures are not based on a comprehensive set of
accounting rules or principles and many of the adjustments to the
GAAP financial measures reflect the exclusion of items that are
recurring and may be reflected in the Company’s financial results
for the foreseeable future. We compensate for these limitations by
providing specific information in the reconciliation included in
this press release regarding the GAAP amounts excluded from the
non-GAAP financial measures. In addition, as noted above, we
evaluate the non-GAAP financial measures together with the most
directly comparable GAAP financial information.
LOGITECH INTERNATIONAL S.A. (In thousands, except per
share amounts) - Unaudited
SHARED BASED COMPENSATION
EXPENSE
Three Months Ended June 30, SUPPLEMENTAL FINANCIAL
INFORMATION 2015 2014 Share-based
Compensation Expense Cost of goods sold $ 605 $ 538 Marketing
and selling 2,118 2,556 Research and Development 787 844 General
and administrative 3,232 3,000 Restructuring 7
— Income tax benefit (1,337 ) (1,184 )
Total share-based compensation expense after income taxes $
5,412 $ 5,754 __________________
(LOGIIR)
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version on businesswire.com: http://www.businesswire.com/news/home/20150722006547/en/
Logitech InternationalJoe GreenhalghVice President, Investor
Relations – USA510-713-4430orKrista ToddVice President, External
Communications – USA510-713-5834orBen StarkieCorporate
Communications – Europe+41-(0) 79-292-3499
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