Company Updates FY 2023 Outlook; Expands Share
Buyback Authorization
SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR
— Logitech International (SIX: LOGN) (Nasdaq: LOGI) today
announced financial results for the first quarter of Fiscal Year
2023.
- Sales were $1.16 billion, down 12 percent in US dollars and 9
percent in constant currency, compared to Q1 of the prior year.
This performance reflects a challenging macroeconomic environment
for the industry and compares against a quarter which grew 66
percent last year in US dollars.
- Category sales in US dollars grew 4 percent in Keyboards &
Combos, were essentially flat in Pointing Devices and grew 5
percent in Video Collaboration compared to Q1 of the prior year.
Sales in these categories in constant currency grew 7 percent, 3
percent and 7 percent, respectively. Gaming sales declined 16
percent in US dollars and 13 percent in constant currency compared
to Q1 of the prior year.
- GAAP operating income declined 43 percent to $115 million,
compared to $203 million and 143 percent growth in the same quarter
a year ago. Non-GAAP operating income declined 38 percent to $146
million, compared to $235 million in the same quarter a year
ago.
- GAAP earnings per share (EPS) declined 44 percent to $0.61,
compared to $1.09 and 160 percent growth in the same quarter a year
ago. Non-GAAP EPS declined 39 percent to $0.74, compared to $1.22
in the same quarter a year ago.
“While macroeconomic challenges affected our performance this
quarter, I am encouraged by the continued growth in Video
Collaboration, Keyboards & Combos and Pointing Devices as
hybrid and return-to-work trends continue to take shape,” said
Bracken Darrell, Logitech president and chief executive officer.
“This quarter, we demonstrated our operational focus in the face of
challenging conditions, and off the back of exceptional growth
these past two years. While we will cut back our spending given the
current environment, our strong innovation engine paired with
secular growth trends - hybrid work, video everywhere, gaming and
digital content creation - position us well for the future.”
Outlook
Given the current challenging conditions, Logitech reduced its
Fiscal Year 2023 outlook to between negative 8 percent and negative
4 percent sales growth in constant currency, and between $650
million and $750 million in non-GAAP operating income. The
Company’s previous outlook was between 2 and 4 percent sales growth
in constant currency, and $875 million to $925 million in non-GAAP
operating income.
Increased Share Buyback Authorization
Logitech’s board of directors has approved an increased share
buyback authorization up to $1.5 billion. This expands the
Company’s current $1 billion, three-year share buyback
authorization. To date, the Company has repurchased approximately
$697 million of shares in the current program. Subject to approval
from the Swiss Takeover Board, the increase will provide for a
total authorization of approximately $800 million remaining for
repurchases over the next 12 months of the program ending in July
2023.
Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial
results videoconference available online on the Logitech corporate
website at http://ir.logitech.com.
Financial Results Videoconference and Webcast
Logitech will hold a financial results videoconference to
discuss the results for Q1 Fiscal Year 2023 on Tuesday, July 26,
2022 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central
European Summer Time. A livestream of the event 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, acquisition-related costs, change in fair value of
contingent consideration for business acquisition, gain on
investments, 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, 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, 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 the Fiscal
Year 2023 outlook.
Public Dissemination of Certain Information
Logitech webcasts its earnings calls, and certain events
Logitech participates in or hosts, with members of the investment
community on its investor relations website at
https://ir.logitech.com. Additionally, Logitech provides
notifications of news or announcements regarding its operations and
financial performance, including its filings with the Securities
and Exchange Commission (SEC), investor events, and press and
earnings releases as part of its investor relations website.
Logitech intends to use its investor relations website as means of
disclosing material nonpublic information and for complying with
its disclosure obligations under Regulation FD. Logitech’s
corporate governance information also is available on its investor
relations website.
About Logitech
Logitech helps all people pursue their passions by designing
experiences so everyone can create, achieve, and enjoy more.
Logitech designs and creates products that bring people together
through computing, gaming, video, streaming and creating, and
music. Brands of Logitech include Logitech, Logitech G, ASTRO
Gaming, Streamlabs, Blue Microphones 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 preliminary financial results
for the three months ended June 30, 2022, reduction in spending,
secular growth trends, our share buyback program increase, and
outlook for Fiscal Year 2023 sales growth and non-GAAP operating
income, and related assumptions. The forward-looking statements in
this press 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: macroeconomic and geopolitical conditions and
their impact, including the COVID-19 pandemic, the war in Ukraine,
changes in inflation levels and monetary policies; 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; 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; the effect of demand
variability, supply shortages and other supply chain challenges;
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 we are not able to maintain and
enhance our brands; if our products and marketing strategies fail
to separate our products from competitors’ products; if we do not
efficiently manage our spending; 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; changes in trade regulations, policies and
agreements and the imposition of tariffs that affect our products
or operations and our ability to mitigate; if we do not
successfully execute on strategic acquisitions and investments;
risks associated with acquisitions; and 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 SEC, including our
Annual Report on Form 10-K for the fiscal year ended March 31, 2022
and our subsequent reports filed with the SEC, 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.
Logitech and other Logitech marks are trademarks or registered
trademarks of Logitech Europe S.A. and/or its affiliates in the
U.S. 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 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
2022
2021
Net sales
$
1,159,865
$
1,312,058
Cost of goods sold
697,220
739,066
Amortization of intangible assets
3,042
4,066
Gross profit
459,603
568,926
Operating expenses:
Marketing and selling
229,378
252,314
Research and development
75,517
69,246
General and administrative
35,860
40,542
Amortization of intangible assets and
acquisition-related costs
3,369
5,217
Change in fair value of contingent
consideration for business acquisition
—
(1,474
)
Total operating expenses
344,124
365,845
Operating income
115,479
203,081
Interest income
1,449
316
Other income (expense), net
5,624
8,435
Income before income taxes
122,552
211,832
Provision for income taxes
21,716
24,991
Net income
$
100,836
$
186,841
Net income per share:
Basic
$
0.61
$
1.11
Diluted
$
0.61
$
1.09
Weighted average shares used to compute
net income per share:
Basic
164,679
168,372
Diluted
166,406
172,020
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands, except per share
amounts) - unaudited
June 30,
March 31,
CONDENSED CONSOLIDATED BALANCE
SHEETS
2022
2022
Current assets:
Cash and cash equivalents
$
1,106,657
$
1,328,716
Accounts receivable, net
706,886
675,604
Inventories
917,356
933,124
Other current assets
126,689
135,478
Total current assets
2,857,588
3,072,922
Non-current assets:
Property, plant and equipment, net
112,240
109,807
Goodwill
451,209
448,175
Other intangible assets, net
79,820
83,779
Other assets
328,855
320,722
Total assets
$
3,829,712
$
4,035,405
Current liabilities:
Accounts payable
$
558,983
$
636,306
Accrued and other current liabilities
693,784
784,848
Total current liabilities
1,252,767
1,421,154
Non-current liabilities:
Income taxes payable
82,887
83,380
Other non-current liabilities
131,700
132,133
Total liabilities
1,467,354
1,636,667
Shareholders’ equity:
Registered shares, CHF 0.25 par value:
30,148
30,148
Issued shares — 173,106 at June 30, 2022
and March 31, 2022
Additional shares that may be issued out
of conditional capitals — 50,000 at June 30,2022 and March 31,
2022
Additional shares that may be issued out
of authorized capital — 17,311 at June 30, 2022 and March 31,
2022
Additional paid-in capital
98,800
129,925
Shares in treasury, at cost — 9,051 at
June 30, 2022 and 7,855 at March 31, 2022
(722,273
)
(632,893
)
Retained earnings
3,076,517
2,975,681
Accumulated other comprehensive loss
(120,834
)
(104,123
)
Total shareholders’ equity
2,362,358
2,398,738
Total liabilities and shareholders’
equity
$
3,829,712
$
4,035,405
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
Three Months Ended June
30,
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
2022
2021
Cash flows from operating
activities:
Net income
$
100,836
$
186,841
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation
18,626
20,462
Amortization of intangible assets
6,229
8,843
Gain on investments
(11,357
)
(1,071
)
Share-based compensation expense
23,690
23,651
Deferred income taxes
265
(4,158
)
Change in fair value of contingent
consideration for business acquisition
—
(1,474
)
Other
(124
)
1,045
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable, net
(44,572
)
73,308
Inventories
(324
)
(115,166
)
Other assets
4,932
(30,796
)
Accounts payable
(70,034
)
(115,620
)
Accrued and other liabilities
(63,835
)
(160,835
)
Net cash used in operating
activities
(35,668
)
(114,970
)
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(19,563
)
(24,514
)
Investment in privately held companies
(2,088
)
(501
)
Acquisitions, net of cash acquired
(5,839
)
(15,586
)
Purchases of deferred compensation
investments
(922
)
(1,091
)
Proceeds from sales of deferred
compensation investments
943
1,345
Net cash used in investing
activities
(27,469
)
(40,347
)
Cash flows from financing
activities:
Purchases of registered shares
(120,619
)
(54,872
)
Proceeds from exercises of stock options
and purchase rights
—
2,750
Tax withholdings related to net share
settlements of restricted stock units
(24,144
)
(50,411
)
Net cash used in financing
activities
(144,763
)
(102,533
)
Effect of exchange rate changes on cash
and cash equivalents
(14,159
)
5,244
Net decrease in cash and cash
equivalents
(222,059
)
(252,606
)
Cash and cash equivalents, beginning of
the period
1,328,716
1,750,327
Cash and cash equivalents, end of the
period
$
1,106,657
$
1,497,721
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended June
30,
NET SALES
2022
2021
Change
Net sales by product category:
Pointing Devices
$
183,283
$
182,878
—
%
Keyboards & Combos
227,720
218,357
4
PC Webcams
59,386
109,918
(46
)
Tablet & Other Accessories
66,585
79,272
(16
)
Gaming (1)
282,806
335,397
(16
)
Video Collaboration
246,242
234,885
5
Mobile Speakers
22,310
28,484
(22
)
Audio & Wearables
69,446
116,607
(40
)
Other (2)
2,087
6,260
(67
)
Total Sales
$
1,159,865
$
1,312,058
(12
)%
(1) Gaming includes streaming services
revenue generated by Streamlabs.
(2) Other includes Smart Home.
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands, except per share
amounts) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended June
30,
GAAP TO NON-GAAP RECONCILIATION
(A)
2022
2021
Gross profit - GAAP
$
459,603
$
568,926
Share-based compensation expense
1,461
1,369
Amortization of intangible assets
3,042
4,066
Gross profit - Non-GAAP
$
464,106
$
574,361
Gross margin - GAAP
39.6
%
43.4
%
Gross margin - Non-GAAP
40.0
%
43.8
%
Operating expenses - GAAP
$
344,124
$
365,845
Less: Share-based compensation expense
22,229
22,282
Less: Amortization of intangible assets
and acquisition-related costs
3,369
5,217
Less: Change in fair value of contingent
consideration for business acquisition
—
(1,474
)
Operating expenses - Non-GAAP
$
318,526
$
339,820
% of net sales - GAAP
29.7
%
27.9
%
% of net sales - Non-GAAP
27.5
%
25.9
%
Operating income - GAAP
$
115,479
$
203,081
Share-based compensation expense
23,690
23,651
Amortization of intangible assets and
acquisition-related costs
6,411
9,283
Change in fair value of contingent
consideration for business acquisition
—
(1,474
)
Operating income - Non-GAAP
$
145,580
$
234,541
% of net sales - GAAP
10.0
%
15.5
%
% of net sales - Non-GAAP
12.6
%
17.9
%
Net income - GAAP
$
100,836
$
186,841
Share-based compensation expense
23,690
23,651
Amortization of intangible assets and
acquisition-related costs
6,411
9,283
Change in fair value of contingent
consideration for business acquisition
—
(1,474
)
Gain on investments
(11,357
)
(1,071
)
Non-GAAP income tax adjustment
3,459
(7,416
)
Net income - Non-GAAP
$
123,039
$
209,814
Net income per share:
Diluted - GAAP
$
0.61
$
1.09
Diluted - Non-GAAP
$
0.74
$
1.22
Shares used to compute net income per
share:
Diluted - GAAP and Non-GAAP
166,406
172,020
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended June
30,
SHARE-BASED COMPENSATION
EXPENSE
2022
2021
Share-based Compensation
Expense
Cost of goods sold
$
1,461
$
1,369
Marketing and selling
9,797
8,530
Research and development
5,532
5,061
General and administrative
6,900
8,691
Total share-based compensation
expense
23,690
23,651
Income tax benefit
(4,322
)
(16,594
)
Total share-based compensation expense,
net of income tax benefit
$
19,368
$
7,057
*Note: These preliminary results for the
three months ended June 30, 2022 are subject to adjustments,
including subsequent events that may occur through the date of
filing our Quarterly Report on Form 10-Q.
(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, 2022 and prior periods presented, we excluded items in the
following general categories, each of which are described
below:
Share-based compensation expense. 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 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 gross profit, operating expenses, and
financial results from period to period.
Acquisition-related costs and change in fair value of
contingent consideration for business acquisition. We incurred
expenses and credits in connection with our acquisitions which we
generally would not have otherwise incurred in the periods
presented as a part of our continuing operations. Acquisition
related costs include all incremental expenses incurred to effect a
business combination. Fair value of contingent consideration is
associated with our estimates of the value of earn-outs in
connection with certain acquisitions. We believe that providing the
non-GAAP measures excluding these costs and credits, as well as the
GAAP measures, assists our investors because such costs are not
reflective of our ongoing operating results.
Loss (gain) on investments. We recognize losses (gains)
related to our investments in various companies, which vary
depending on the operational and financial performance of the
companies in which we invest. These amounts include our losses
(earnings) on equity method investments, investment impairments and
losses (gains) resulting from sales or other events related to our
investments. We believe that providing the non-GAAP measures
excluding these items, as well as the GAAP measures, assists our
investors because such losses (gains) are not reflective of our
ongoing operations.
Non-GAAP income tax adjustment. Non-GAAP income tax
adjustment primarily measures the income tax effect of non-GAAP
adjustments excluded above and other events; the determination of
which is based upon the nature of the underlying items, the mix of
income and losses in jurisdictions and the relevant tax rates in
which we operate.
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.
Additional Supplemental Financial Information - Constant
Currency
In addition, Logitech 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.
(LOGIIR)
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version on businesswire.com: https://www.businesswire.com/news/home/20220725005915/en/
Editorial Contacts: Nate Melihercik, Head of Global
Investor Relations - ir@logitech.com Nicole Kenyon, Head of Global
Corporate & Employee Communications - USA (510) 988-8553 Ben
Starkie, Corporate Communications - Europe +41 (0)79-292-3499
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