Logitech Delivers Record Q2 Sales and Double-Digit Profit Growth
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year
2019.
- Q2 sales were $691 million, up 9 percent in US dollars and 10 percent in constant currency, compared
to Q2 of the prior year.
- Q2 GAAP operating income reached $65 million, compared to $59 million in the same quarter a year ago.
Q2 GAAP earnings per share (EPS) grew 15 percent to $0.38, compared to $0.33 in the same quarter a year ago.
- Q2 non-GAAP operating income grew 18 percent to $85 million, compared to $71 million in the same
quarter a year ago. Q2 non-GAAP EPS grew 26 percent to $0.49, compared to $0.39 in the same quarter a year ago.
- Q2 cash flow from operations was $85 million, up 24 percent compared to Q2 of the prior year. Cash
flow from operations for the fiscal year to date was $97 million, compared to $67 million for the same period a year ago.
“Q2 showcased the power and diversity of our portfolio,” said Bracken Darrell, Logitech president and chief executive officer.
“We delivered our highest ever sales for a second quarter, with double-digit growth in both Gaming and Video Collaboration and
solid growth in our PC Peripherals categories. Our innovation engine is on display as we move into the holiday quarter with a
line-up of new, innovative products already well-received by consumers.”
Vincent Pilette, chief financial officer, said, “With healthy sales growth of 10 percent in constant currency, we delivered a
strong gross margin, above our long-term target. Our constant and obsessive focus on operational efficiency allowed us to continue
to invest for future growth while growing non-GAAP operating profit 18 percent and once again delivering strong leverage to the
bottom line.”
Outlook
Logitech confirmed its Fiscal Year 2019 outlook of 9 to 11 percent sales growth in constant currency and $325 million to $335
million in non-GAAP operating income.
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 Q2 FY 2019 on Tuesday, October 23, 2018 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), loss (gain) on
investments in privately held companies, 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 2019.
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,
Ultimate Ears,
Jaybird,
Blue Microphones,
Logitech G and
ASTRO Gaming. 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 and six months ended September 30, 2018, product
portfolio, sales for the third quarter of Fiscal Year 2019, new products and consumer reception, target range for gross margin,
growth investments, and outlook for Fiscal Year 2019 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; 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 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 product categories, or significant fluctuations in exchange rates;
changes in trade policies and agreements and the imposition of tariffs that affect our products or operations and our ability to
mitigate; risks associated with acquisitions. 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, 2018 and our
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018, 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.
(LOGIIR)
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| LOGITECH INTERNATIONAL S.A. |
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| PRELIMINARY RESULTS * |
| (In thousands, except per share amounts) - unaudited |
|
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Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
| GAAP CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (A) |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
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|
|
|
|
|
| Net sales (B) |
|
|
$ |
691,146 |
|
|
|
$ |
632,470 |
|
|
|
$ |
1,299,626 |
|
|
|
$ |
1,162,416 |
|
| Cost of goods sold |
|
|
432,063 |
|
|
|
402,722 |
|
|
|
814,234 |
|
|
|
737,496 |
|
| Amortization of intangible assets and purchase accounting effect on
inventory |
|
|
2,966 |
|
|
|
2,011 |
|
|
|
5,338 |
|
|
|
3,515 |
|
| Gross profit |
|
|
256,117 |
|
|
|
227,737 |
|
|
|
480,054 |
|
|
|
421,405 |
|
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| Operating expenses: |
|
|
|
|
|
|
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|
|
|
|
|
| Marketing and selling |
|
|
121,801 |
|
|
|
107,386 |
|
|
|
236,385 |
|
|
|
209,764 |
|
| Research and development |
|
|
39,542 |
|
|
|
36,647 |
|
|
|
78,529 |
|
|
|
71,746 |
|
| General and administrative |
|
|
25,206 |
|
|
|
25,266 |
|
|
|
50,679 |
|
|
|
50,675 |
|
| Amortization of intangible assets and acquisition-related costs |
|
|
4,317 |
|
|
|
2,491 |
|
|
|
6,838 |
|
|
|
3,881 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
|
(2,930 |
) |
|
|
— |
|
|
|
(4,908 |
) |
| Restructuring charges (credits), net |
|
|
119 |
|
|
|
(61 |
) |
|
|
10,040 |
|
|
|
(116 |
) |
| Total operating expenses |
|
|
190,985 |
|
|
|
168,799 |
|
|
|
382,471 |
|
|
|
331,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
65,132 |
|
|
|
58,938 |
|
|
|
97,583 |
|
|
|
90,363 |
|
| Interest income |
|
|
1,858 |
|
|
|
1,048 |
|
|
|
4,227 |
|
|
|
2,223 |
|
| Other income (expense), net |
|
|
3,389 |
|
|
|
459 |
|
|
|
1,818 |
|
|
|
(570 |
) |
| Income before income taxes |
|
|
70,379 |
|
|
|
60,445 |
|
|
|
103,628 |
|
|
|
92,016 |
|
| Provision for (benefit from) income taxes |
|
|
6,203 |
|
|
|
4,087 |
|
|
|
986 |
|
|
|
(1,349 |
) |
| Net income |
|
|
$ |
64,176 |
|
|
|
$ |
56,358 |
|
|
|
$ |
102,642 |
|
|
|
$ |
93,365 |
|
|
|
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|
|
|
|
|
|
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|
|
| Net income per share: |
|
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|
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|
|
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|
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| Basic |
|
|
$ |
0.39 |
|
|
|
$ |
0.34 |
|
|
|
$ |
0.62 |
|
|
|
$ |
0.57 |
|
| Diluted |
|
|
$ |
0.38 |
|
|
|
$ |
0.33 |
|
|
|
$ |
0.61 |
|
|
|
$ |
0.55 |
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|
|
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| Weighted average shares used to compute net income per share: |
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|
|
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|
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| Basic |
|
|
165,630 |
|
|
|
164,120 |
|
|
|
165,474 |
|
|
|
163,765 |
|
| Diluted |
|
|
169,234 |
|
|
|
169,078 |
|
|
|
168,996 |
|
|
|
168,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash dividend per share |
|
|
$ |
0.69 |
|
|
|
$ |
0.63 |
|
|
|
$ |
0.69 |
|
|
|
$ |
0.63 |
|
|
|
|
|
|
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|
|
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|
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|
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|
|
| LOGITECH INTERNATIONAL S.A. |
|
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|
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|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
September 30,
2018
|
|
|
March 31,
2018 |
| CONDENSED CONSOLIDATED BALANCE
SHEETS (A) |
|
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| Current assets: |
|
|
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|
|
| Cash and cash equivalents |
|
|
$ |
424,950 |
|
|
|
$ |
641,947 |
|
| Accounts receivable, net (B) |
|
|
459,689 |
|
|
|
214,885 |
|
| Inventories |
|
|
358,774 |
|
|
|
259,906 |
|
| Other current assets (B) |
|
|
70,412 |
|
|
|
56,362 |
|
| Total current assets |
|
|
1,313,825 |
|
|
|
1,173,100 |
|
| Non-current assets: |
|
|
|
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|
|
| Property, plant and equipment, net |
|
|
83,731 |
|
|
|
86,304 |
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| Goodwill |
|
|
346,548 |
|
|
|
275,451 |
|
| Other intangible assets, net |
|
|
130,538 |
|
|
|
87,547 |
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| Other assets |
|
|
131,565 |
|
|
|
120,755 |
|
| Total assets |
|
|
$ |
2,006,207 |
|
|
|
$ |
1,743,157 |
|
|
|
|
|
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|
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| Current liabilities: |
|
|
|
|
|
|
| Accounts payable |
|
|
$ |
440,564 |
|
|
|
$ |
293,988 |
|
| Accrued and other current liabilities (B) |
|
|
434,615 |
|
|
|
281,732 |
|
| Total current liabilities |
|
|
875,179 |
|
|
|
575,720 |
|
| Non-current liabilities: |
|
|
|
|
|
|
| Income taxes payable |
|
|
34,456 |
|
|
|
34,956 |
|
| Other non-current liabilities |
|
|
84,408 |
|
|
|
81,924 |
|
| Total liabilities |
|
|
994,043 |
|
|
|
692,600 |
|
|
|
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
|
|
| Registered shares, CHF 0.25 par value: |
|
|
30,148 |
|
|
|
30,148 |
|
| Issued shares — 173,106 at September 30 and March 31, 2018 |
|
|
|
|
|
|
| Additional shares that may be issued out of the conditional capitals — 50,000 at
September 30 and March 31, 2018 |
|
|
|
|
|
|
| Additional shares that may be issued out of the authorized capital — 36,621 at
September 30, 2018 and none at March 31, 2018 |
|
|
|
|
|
|
| Additional paid-in capital |
|
|
33,160 |
|
|
|
47,234 |
|
| Shares in treasury, at cost — 7,384 at September 30, 2018 and 8,527 at March 31,
2018 |
|
|
(163,481 |
) |
|
|
(165,686 |
) |
| Retained earnings (B) |
|
|
1,210,105 |
|
|
|
1,232,316 |
|
| Accumulated other comprehensive loss |
|
|
(97,768 |
) |
|
|
(93,455 |
) |
| Total shareholders’ equity |
|
|
1,012,164 |
|
|
|
1,050,557 |
|
| Total liabilities and shareholders’ equity |
|
|
$ |
2,006,207 |
|
|
|
$ |
1,743,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
| CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (A) |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
$ |
64,176 |
|
|
|
$ |
56,358 |
|
|
|
$ |
102,642 |
|
|
|
$ |
93,365 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
11,196 |
|
|
|
10,220 |
|
|
|
21,895 |
|
|
|
19,368 |
|
| Amortization of intangible assets |
|
|
5,448 |
|
|
|
3,645 |
|
|
|
10,341 |
|
|
|
6,238 |
|
| Gain on investments in privately held companies |
|
|
(395 |
) |
|
|
(695 |
) |
|
|
(382 |
) |
|
|
(436 |
) |
| Share-based compensation expense |
|
|
12,049 |
|
|
|
10,978 |
|
|
|
25,308 |
|
|
|
21,683 |
|
| Deferred income taxes |
|
|
(156 |
) |
|
|
(2,054 |
) |
|
|
(9,815 |
) |
|
|
(11,933 |
) |
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
|
(2,930 |
) |
|
|
— |
|
|
|
(4,908 |
) |
| Other |
|
|
(49 |
) |
|
|
15 |
|
|
|
75 |
|
|
|
12 |
|
| Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable, net |
|
|
(64,918 |
) |
|
|
(56,016 |
) |
|
|
(133,475 |
) |
|
|
(91,718 |
) |
| Inventories |
|
|
(66,201 |
) |
|
|
(37,689 |
) |
|
|
(84,401 |
) |
|
|
(58,078 |
) |
| Other assets |
|
|
(6,831 |
) |
|
|
(5,402 |
) |
|
|
(11,056 |
) |
|
|
(8,490 |
) |
| Accounts payable |
|
|
86,998 |
|
|
|
71,489 |
|
|
|
138,186 |
|
|
|
110,136 |
|
| Accrued and other liabilities |
|
|
43,621 |
|
|
|
20,464 |
|
|
|
37,902 |
|
|
|
(7,739 |
) |
| Net cash provided by operating activities |
|
|
84,938 |
|
|
|
68,383 |
|
|
|
97,220 |
|
|
|
67,500 |
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of property, plant and equipment |
|
|
(9,624 |
) |
|
|
(7,153 |
) |
|
|
(18,368 |
) |
|
|
(17,188 |
) |
| Investment in privately held companies |
|
|
(281 |
) |
|
|
(160 |
) |
|
|
(506 |
) |
|
|
(520 |
) |
| Acquisitions, net of cash acquired |
|
|
(133,665 |
) |
|
|
(85,000 |
) |
|
|
(133,908 |
) |
|
|
(85,000 |
) |
| Proceeds from return of investment in privately held companies |
|
|
— |
|
|
|
237 |
|
|
|
— |
|
|
|
237 |
|
| Purchases of short-term investments |
|
|
(1,505 |
) |
|
|
(6,789 |
) |
|
|
(1,505 |
) |
|
|
(6,789 |
) |
| Purchases of trading investments |
|
|
(1,222 |
) |
|
|
(390 |
) |
|
|
(3,722 |
) |
|
|
(999 |
) |
| Proceeds from sales of trading investments |
|
|
1,327 |
|
|
|
410 |
|
|
|
4,194 |
|
|
|
1,057 |
|
| Net cash used in investing activities |
|
|
(144,970 |
) |
|
|
(98,845 |
) |
|
|
(153,815 |
) |
|
|
(109,202 |
) |
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Payment of cash dividends |
|
|
(113,971 |
) |
|
|
(104,248 |
) |
|
|
(113,971 |
) |
|
|
(104,248 |
) |
| Purchases of registered shares |
|
|
(9,919 |
) |
|
|
(10,058 |
) |
|
|
(19,901 |
) |
|
|
(10,682 |
) |
| Proceeds from exercises of stock options |
|
|
8,903 |
|
|
|
17,431 |
|
|
|
10,007 |
|
|
|
30,000 |
|
| Tax withholdings related to net share settlements of restricted stock
units |
|
|
(2,299 |
) |
|
|
(2,023 |
) |
|
|
(27,380 |
) |
|
|
(23,706 |
) |
| Net cash used in financing activities |
|
|
(117,286 |
) |
|
|
(98,898 |
) |
|
|
(151,245 |
) |
|
|
(108,636 |
) |
| Effect of exchange rate changes on cash and cash equivalents |
|
|
(1,848 |
) |
|
|
551 |
|
|
|
(9,157 |
) |
|
|
1,653 |
|
| Net decrease in cash and cash equivalents |
|
|
(179,166 |
) |
|
|
(128,809 |
) |
|
|
(216,997 |
) |
|
|
(148,685 |
) |
| Cash and cash equivalents, beginning of the period |
|
|
604,116 |
|
|
|
527,657 |
|
|
|
641,947 |
|
|
|
547,533 |
|
| Cash and cash equivalents, end of the period |
|
|
$ |
424,950 |
|
|
|
$ |
398,848 |
|
|
|
$ |
424,950 |
|
|
|
$ |
398,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
|
|
|
|
|
|
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET SALES |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
|
2018 |
|
|
2017 |
|
|
Change |
|
|
2018 |
|
|
2017 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales by product category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pointing Devices |
|
|
$ |
128,337 |
|
|
|
$ |
123,643 |
|
|
|
4 |
% |
|
|
$ |
256,127 |
|
|
|
$ |
245,717 |
|
|
|
4 |
% |
| Keyboards & Combos |
|
|
131,872 |
|
|
|
119,200 |
|
|
|
11 |
|
|
|
260,094 |
|
|
|
235,313 |
|
|
|
11 |
|
| PC Webcams |
|
|
28,221 |
|
|
|
27,466 |
|
|
|
3 |
|
|
|
57,895 |
|
|
|
53,091 |
|
|
|
9 |
|
| Tablet & Other Accessories |
|
|
36,710 |
|
|
|
30,784 |
|
|
|
19 |
|
|
|
69,146 |
|
|
|
54,002 |
|
|
|
28 |
|
| Video Collaboration |
|
|
57,176 |
|
|
|
46,139 |
|
|
|
24 |
|
|
|
115,968 |
|
|
|
81,756 |
|
|
|
42 |
|
| Mobile Speakers |
|
|
77,100 |
|
|
|
90,548 |
|
|
|
(15 |
) |
|
|
111,427 |
|
|
|
153,466 |
|
|
|
(27 |
) |
| Audio & Wearables |
|
|
61,560 |
|
|
|
62,445 |
|
|
|
(1 |
) |
|
|
113,714 |
|
|
|
112,647 |
|
|
|
1 |
|
| Gaming |
|
|
160,792 |
|
|
|
113,722 |
|
|
|
41 |
|
|
|
296,818 |
|
|
|
191,430 |
|
|
|
55 |
|
| Smart Home |
|
|
9,241 |
|
|
|
18,323 |
|
|
|
(50 |
) |
|
|
18,252 |
|
|
|
34,789 |
|
|
|
(48 |
) |
| Other (1) |
|
|
137 |
|
|
|
200 |
|
|
|
(32 |
) |
|
|
185 |
|
|
|
205 |
|
|
|
(10 |
) |
| Total net sales |
|
|
$ |
691,146 |
|
|
|
$ |
632,470 |
|
|
|
9 |
|
|
|
$ |
1,299,626 |
|
|
|
$ |
1,162,416 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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)(C) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit - GAAP |
|
|
$ |
256,117 |
|
|
|
$ |
227,737 |
|
|
|
$ |
480,054 |
|
|
|
$ |
421,405 |
|
| Share-based compensation expense |
|
|
791 |
|
|
|
1,091 |
|
|
|
1,921 |
|
|
|
1,802 |
|
| Amortization of intangible assets and purchase accounting effect on
inventory |
|
|
2,966 |
|
|
|
2,011 |
|
|
|
5,338 |
|
|
|
3,515 |
|
| Gross profit - Non-GAAP |
|
|
$ |
259,874 |
|
|
|
$ |
230,839 |
|
|
|
$ |
487,313 |
|
|
|
$ |
426,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin - GAAP |
|
|
37.1 |
% |
|
|
36.0 |
% |
|
|
36.9 |
% |
|
|
36.3 |
% |
| Gross margin - Non-GAAP |
|
|
37.6 |
% |
|
|
36.5 |
% |
|
|
37.5 |
% |
|
|
36.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses - GAAP |
|
|
$ |
190,985 |
|
|
|
$ |
168,799 |
|
|
|
$ |
382,471 |
|
|
|
$ |
331,042 |
|
| Less: Share-based compensation expense |
|
|
11,258 |
|
|
|
9,887 |
|
|
|
23,387 |
|
|
|
19,881 |
|
| Less: Amortization of intangible assets and acquisition-related costs |
|
|
4,317 |
|
|
|
2,491 |
|
|
|
6,838 |
|
|
|
3,881 |
|
| Less: Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
|
(2,930 |
) |
|
|
— |
|
|
|
(4,908 |
) |
| Less: Restructuring charges (credits), net |
|
|
119 |
|
|
|
(61 |
) |
|
|
10,040 |
|
|
|
(116 |
) |
| Operating expenses - Non-GAAP |
|
|
$ |
175,291 |
|
|
|
$ |
159,412 |
|
|
|
$ |
342,206 |
|
|
|
$ |
312,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % of net sales - GAAP |
|
|
27.6 |
% |
|
|
26.7 |
% |
|
|
29.4 |
% |
|
|
28.5 |
% |
| % of net sales - Non - GAAP |
|
|
25.4 |
% |
|
|
25.2 |
% |
|
|
26.3 |
% |
|
|
26.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income - GAAP |
|
|
$ |
65,132 |
|
|
|
$ |
58,938 |
|
|
|
$ |
97,583 |
|
|
|
$ |
90,363 |
|
| Share-based compensation expense |
|
|
12,049 |
|
|
|
10,978 |
|
|
|
25,308 |
|
|
|
21,683 |
|
| Amortization of intangible assets |
|
|
5,448 |
|
|
|
3,645 |
|
|
|
10,341 |
|
|
|
6,238 |
|
| Purchase accounting effect on inventory |
|
|
379 |
|
|
|
114 |
|
|
|
379 |
|
|
|
114 |
|
| Acquisition-related costs |
|
|
1,456 |
|
|
|
741 |
|
|
|
1,456 |
|
|
|
1,042 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
|
(2,930 |
) |
|
|
— |
|
|
|
(4,908 |
) |
| Restructuring (charges) credits, net |
|
|
119 |
|
|
|
(61 |
) |
|
|
10,040 |
|
|
|
(116 |
) |
| Operating income - Non - GAAP |
|
|
$ |
84,583 |
|
|
|
$ |
71,425 |
|
|
|
$ |
145,107 |
|
|
|
$ |
114,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % of net sales - GAAP |
|
|
9.4 |
% |
|
|
9.3 |
% |
|
|
7.5 |
% |
|
|
7.8 |
% |
| % of net sales - Non - GAAP |
|
|
12.2 |
% |
|
|
11.3 |
% |
|
|
11.2 |
% |
|
|
9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income - GAAP |
|
|
$ |
64,176 |
|
|
|
$ |
56,358 |
|
|
|
$ |
102,642 |
|
|
|
$ |
93,365 |
|
| Share-based compensation expense |
|
|
12,049 |
|
|
|
10,978 |
|
|
|
25,308 |
|
|
|
21,683 |
|
| Amortization of intangible assets |
|
|
5,448 |
|
|
|
3,645 |
|
|
|
10,341 |
|
|
|
6,238 |
|
| Purchase accounting effect on inventory |
|
|
379 |
|
|
|
114 |
|
|
|
379 |
|
|
|
114 |
|
| Acquisition-related costs |
|
|
1,456 |
|
|
|
741 |
|
|
|
1,456 |
|
|
|
1,042 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
|
(2,930 |
) |
|
|
— |
|
|
|
(4,908 |
) |
| Restructuring (charges) credits, net |
|
|
119 |
|
|
|
(61 |
) |
|
|
10,040 |
|
|
|
(116 |
) |
| Loss (gain) on investments in privately held companies |
|
|
(395 |
) |
|
|
(695 |
) |
|
|
(382 |
) |
|
|
(436 |
) |
| Non-GAAP income tax adjustment |
|
|
(116 |
) |
|
|
(1,890 |
) |
|
|
(9,225 |
) |
|
|
(10,982 |
) |
| Net income - Non - GAAP |
|
|
$ |
83,116 |
|
|
|
$ |
66,260 |
|
|
|
$ |
140,559 |
|
|
|
$ |
106,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted - GAAP |
|
|
$ |
0.38 |
|
|
|
$ |
0.33 |
|
|
|
$ |
0.61 |
|
|
|
$ |
0.55 |
|
| Diluted - Non - GAAP |
|
|
$ |
0.49 |
|
|
|
$ |
0.39 |
|
|
|
$ |
0.83 |
|
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares used to compute net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted - GAAP and Non - GAAP |
|
|
169,234 |
|
|
|
169,078 |
|
|
|
168,996 |
|
|
|
168,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SHARE-BASED COMPENSATION EXPENSE |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based Compensation Expense |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
|
$ |
791 |
|
|
|
$ |
1,091 |
|
|
|
$ |
1,921 |
|
|
|
$ |
1,802 |
|
| Marketing and selling |
|
|
4,864 |
|
|
|
4,343 |
|
|
|
10,650 |
|
|
|
8,724 |
|
| Research and development |
|
|
1,935 |
|
|
|
1,633 |
|
|
|
3,484 |
|
|
|
3,176 |
|
| General and administrative |
|
|
4,459 |
|
|
|
3,911 |
|
|
|
9,253 |
|
|
|
7,981 |
|
| Total share-based compensation expense |
|
|
12,049 |
|
|
|
10,978 |
|
|
|
25,308 |
|
|
|
21,683 |
|
| Income tax benefit |
|
|
(2,650 |
) |
|
|
(3,677 |
) |
|
|
(12,179 |
) |
|
|
(14,959 |
) |
| Total share-based compensation expense, net of income tax |
|
|
$ |
9,399 |
|
|
|
$ |
7,301 |
|
|
|
$ |
13,129 |
|
|
|
$ |
6,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Note: These preliminary results for the three and six months ended September 30, 2018 are subject to
adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.
(A) The preliminary fair value of assets acquired and liabilities assumed from the business acquisition during the current
period is included in the tables. The fair value of identifiable intangible assets acquired was based on estimates and assumptions
made by us at the time of the acquisition. As additional information becomes available, such as finalization of purchase price
adjustment and the finalization of the estimated fair value of the assets acquired and liabilities assumed, we may revise our
preliminary or interim estimated fair value of the assets acquired and liabilities assumed during the remainder of the measurement
periods (which will not exceed 12 months from the acquisition dates). Any such revisions or changes may be material, and may have a
material impact over our financial condition and results of operations.
(B) Adoption of ASC Topic 606
On April 1, 2018, we adopted the new revenue standards under Accounting Standards Codification ("ASC") Topic 606. The adoption
of Topic 606 did not have an impact over the total cash flows from operating, investing, or financing activities. The following
tables summarize the impacts of adopting Topic 606 on our condensed consolidated statements of operations for the three and six
months ended as of September 30, 2018 and condensed consolidated balance sheets as of September 30, 2018 (in
thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30,2018 |
|
|
Six Months Ended September 30,
2018 |
|
|
|
As Reported
Under ASC
606
|
|
|
If Reported
Under ASC
605
|
|
|
Effect of
Change
|
|
|
As Reported
Under ASC
606
|
|
|
If Reported
Under ASC
605
|
|
|
Effect of
Change
|
| Net sales |
|
|
$ |
691,146 |
|
|
|
$ |
696,090 |
|
|
|
$ |
(4,944 |
) |
|
|
$ |
1,299,626 |
|
|
|
$ |
1,304,704 |
|
|
|
$ |
(5,078 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2018 |
|
|
As Reported
Under ASC 606
|
|
|
Balance Under
ASC 605
|
|
|
Effect of Change |
| Accounts receivable, net |
|
459,689 |
|
|
|
327,131 |
|
|
|
132,558 |
|
| Other current assets |
|
70,412 |
|
|
|
61,092 |
|
|
|
9,320 |
|
| Accrued and other current liabilities |
|
434,615 |
|
|
|
276,777 |
|
|
|
157,838 |
|
| Retained earnings |
|
1,210,105 |
|
|
|
1,226,065 |
|
|
|
(15,960 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(C) 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 September 30, 2018 and previous periods, 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 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.
Purchase accounting effect on inventory. Business combination accounting principles require us to measure acquired
inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the
expected profit margin. The non-GAAP adjustment excludes the expected profit margin component that is recorded under business
combination accounting principles associated with our business acquisitions. We believe the adjustment is useful to investors
because such charges are not reflective of our ongoing operations.
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.
Restructuring charges (credits). These expenses are associated with re-aligning our business strategies based on current
economic conditions. We have undertaken several restructuring plans 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. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists
our investors because such charges (credits) are not reflective of our ongoing operating results in the current period.
Loss (gain) on investments in privately held companies. We recognized loss (gain) related to our investments in various
privately-held companies, which varies depending on the operational and financial performance of the privately-held companies in
which we invested. 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.
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.
Logitech International
Ben Lu
Vice President, Investor Relations - USA
510-713-5568
or
Krista Todd
Vice President, Communications - USA
510-713-5834
or
Ben Starkie
Corporate Communications - Europe
+41 (0) 79-292-3499
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