Logitech Delivers Record Q3 Sales, Raises Full-Year Profit Outlook
Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year
2019.
- Q3 sales were $864 million, up 6 percent in US dollars and 8 percent in constant currency, compared
to Q3 of the prior year.
- Q3 GAAP operating income reached $123 million, compared to $100 million in the same quarter a year
ago. Q3 GAAP earnings per share (EPS) grew 40 percent to $0.67, compared to $0.48 in the same quarter a year ago.
- Q3 non-GAAP operating income grew 22 percent to $143 million, compared to $117 million in the same
quarter a year ago. Q3 non-GAAP EPS grew 22 percent to $0.79, compared to $0.65 in the same quarter a year ago.
- Year-to-date cash flow from operations was $273 million, compared to $256 million in the same period
a year ago.
“We delivered record sales and profits in our biggest quarter of the year,” said Bracken Darrell, Logitech president and chief
executive officer. “Our innovative, diverse portfolio drove double-digit growth across Gaming, Video Collaboration, and Creativity
& Productivity. On the back of this powerful performance, we are raising our profit outlook for the year.”
Outlook
Logitech raised its Fiscal Year 2019 profit outlook to between $340 million and $345 million in non-GAAP operating income, up
from between $325 million and $335 million, on an annual sales outlook of 9 to 11 percent growth 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 website at
http://ir.logitech.com.
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the results for Q3 FY 2019 on Tuesday, January 22, 2019 at 8:30
a.m. Eastern Standard Time and 2:30 p.m. Central European 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,
ASTRO Gaming and
Logitech G. 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 nine months ended December 31, 2018, 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 September 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.
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|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands, except per share amounts) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
December 31, |
|
December 31, |
| GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(A) |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
| Net sales (B) |
|
|
$ |
864,388 |
|
|
$ |
812,021 |
|
|
$ |
2,164,014 |
|
|
$ |
1,974,437 |
|
| Cost of goods sold |
|
|
535,707 |
|
|
533,631 |
|
|
1,349,941 |
|
|
1,271,127 |
|
| Amortization of intangible assets and purchase accounting effect on
inventory |
|
|
4,699 |
|
|
2,789 |
|
|
10,037 |
|
|
6,304 |
|
| Gross profit |
|
|
323,982 |
|
|
275,601 |
|
|
804,036 |
|
|
697,006 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
| Marketing and selling |
|
|
132,250 |
|
|
116,153 |
|
|
368,635 |
|
|
325,917 |
|
| Research and development |
|
|
40,591 |
|
|
34,398 |
|
|
119,120 |
|
|
106,144 |
|
| General and administrative |
|
|
24,496 |
|
|
22,291 |
|
|
75,175 |
|
|
72,966 |
|
| Amortization of intangible assets and acquisition-related costs |
|
|
3,539 |
|
|
2,496 |
|
|
10,377 |
|
|
6,377 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,908 |
) |
| Restructuring charges (credits), net |
|
|
(278 |
) |
|
— |
|
|
9,762 |
|
|
(116 |
) |
| Total operating expenses |
|
|
200,598 |
|
|
175,338 |
|
|
583,069 |
|
|
506,380 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
123,384 |
|
|
100,263 |
|
|
220,967 |
|
|
190,626 |
|
| Interest income |
|
|
1,482 |
|
|
874 |
|
|
5,709 |
|
|
3,097 |
|
| Other expense, net |
|
|
(2,747 |
) |
|
(324 |
) |
|
(929 |
) |
|
(894 |
) |
| Income before income taxes |
|
|
122,119 |
|
|
100,813 |
|
|
225,747 |
|
|
192,829 |
|
| Provision for income taxes |
|
|
9,309 |
|
|
20,040 |
|
|
10,295 |
|
|
18,691 |
|
| Net income |
|
|
$ |
112,810 |
|
|
$ |
80,773 |
|
|
$ |
215,452 |
|
|
$ |
174,138 |
|
|
|
|
|
|
|
|
|
|
|
| Net income per share: |
|
|
|
|
|
|
|
|
|
| Basic |
|
|
$ |
0.68 |
|
|
$ |
0.49 |
|
|
$ |
1.30 |
|
|
$ |
1.06 |
|
| Diluted |
|
|
$ |
0.67 |
|
|
$ |
0.48 |
|
|
$ |
1.28 |
|
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares used to compute net income per share: |
|
|
|
|
|
|
|
|
|
| Basic |
|
|
165,707 |
|
|
164,248 |
|
|
165,552 |
|
|
163,924 |
|
| Diluted |
|
|
168,907 |
|
|
169,079 |
|
|
168,966 |
|
|
168,832 |
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
March 31,
2018
|
| CONDENSED CONSOLIDATED BALANCE SHEETS (A) |
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
584,488 |
|
|
$ |
641,947 |
|
| Accounts receivable, net (B) |
|
484,204 |
|
|
214,885 |
|
| Inventories |
|
342,031 |
|
|
259,906 |
|
| Other current assets (B) |
|
73,174 |
|
|
56,362 |
|
| Total current assets |
|
1,483,897 |
|
|
1,173,100 |
|
| Non-current assets: |
|
|
|
|
| Property, plant and equipment, net |
|
81,577 |
|
|
86,304 |
|
| Goodwill |
|
347,369 |
|
|
275,451 |
|
| Other intangible assets, net |
|
123,643 |
|
|
87,547 |
|
| Other assets |
|
129,287 |
|
|
120,755 |
|
| Total assets |
|
$ |
2,165,773 |
|
|
$ |
1,743,157 |
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ |
435,764 |
|
|
$ |
293,988 |
|
| Accrued and other current liabilities (B) |
|
478,632 |
|
|
281,732 |
|
| Total current liabilities |
|
914,396 |
|
|
575,720 |
|
| Non-current liabilities: |
|
|
|
|
| Income taxes payable |
|
36,245 |
|
|
34,956 |
|
| Other non-current liabilities |
|
83,044 |
|
|
81,924 |
|
| Total liabilities |
|
1,033,685 |
|
|
692,600 |
|
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
| Registered shares, CHF 0.25 par value: |
|
30,148 |
|
|
30,148 |
|
| Issued shares — 173,106 at December 31 and March 31, 2018 |
|
|
|
|
| Additional shares that may be issued out of conditional capitals — 50,000 at December
31 and March 31, 2018 |
|
|
|
|
| Additional shares that may be issued out of authorized capital — 34,621 at December
31, 2018 and none at March 31, 2018 |
|
|
|
|
| Additional paid-in capital |
|
42,250 |
|
|
47,234 |
|
| Shares in treasury, at cost — 7,355 at December 31, 2018 and 8,527 at March 31,
2018 |
|
(164,932 |
) |
|
(165,686 |
) |
| Retained earnings (B) |
|
1,322,915 |
|
|
1,232,316 |
|
| Accumulated other comprehensive loss |
|
(98,293 |
) |
|
(93,455 |
) |
| Total shareholders’ equity |
|
1,132,088 |
|
|
1,050,557 |
|
| Total liabilities and shareholders’ equity |
|
$ |
2,165,773 |
|
|
$ |
1,743,157 |
|
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
December 31, |
|
December 31, |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(A) |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
| Net income |
|
|
$ |
112,810 |
|
|
$ |
80,773 |
|
|
$ |
215,452 |
|
|
$ |
174,138 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
10,760 |
|
|
10,850 |
|
|
32,655 |
|
|
30,218 |
|
| Amortization of intangible assets |
|
|
6,895 |
|
|
4,415 |
|
|
17,236 |
|
|
10,653 |
|
| Gain on investments in privately held companies |
|
|
(207 |
) |
|
(114 |
) |
|
(589 |
) |
|
(550 |
) |
| Share-based compensation expense |
|
|
11,855 |
|
|
11,556 |
|
|
37,163 |
|
|
33,239 |
|
| Deferred income taxes |
|
|
93 |
|
|
18,661 |
|
|
(9,722 |
) |
|
6,728 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,908 |
) |
| Other |
|
|
(453 |
) |
|
(5 |
) |
|
(378 |
) |
|
7 |
|
| Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
| Accounts receivable, net |
|
|
(25,469 |
) |
|
(72,310 |
) |
|
(158,944 |
) |
|
(164,028 |
) |
| Inventories |
|
|
15,238 |
|
|
52,386 |
|
|
(69,163 |
) |
|
(5,692 |
) |
| Other assets |
|
|
(42 |
) |
|
(10,463 |
) |
|
(11,098 |
) |
|
(18,953 |
) |
| Accounts payable |
|
|
(4,529 |
) |
|
41,575 |
|
|
133,657 |
|
|
151,711 |
|
| Accrued and other liabilities |
|
|
49,272 |
|
|
51,260 |
|
|
87,174 |
|
|
43,521 |
|
| Net cash provided by operating activities |
|
|
176,223 |
|
|
188,584 |
|
|
273,443 |
|
|
256,084 |
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
| Purchases of property, plant and equipment |
|
|
(9,936 |
) |
|
(10,405 |
) |
|
(28,304 |
) |
|
(27,593 |
) |
| Investment in privately held companies |
|
|
(2,036 |
) |
|
(360 |
) |
|
(2,542 |
) |
|
(880 |
) |
| Acquisitions, net of cash acquired |
|
|
— |
|
|
(3,323 |
) |
|
(133,908 |
) |
|
(88,323 |
) |
| Proceeds from return of investment in privately held companies |
|
|
— |
|
|
— |
|
|
— |
|
|
237 |
|
| Purchases of short-term investments |
|
|
— |
|
|
— |
|
|
(1,505 |
) |
|
(6,789 |
) |
| Sales of short-term investments |
|
|
— |
|
|
6,789 |
|
|
— |
|
|
6,789 |
|
| Purchases of trading investments |
|
|
(613 |
) |
|
(1,843 |
) |
|
(4,335 |
) |
|
(2,842 |
) |
| Proceeds from sales of trading investments |
|
|
644 |
|
|
2,152 |
|
|
4,838 |
|
|
3,209 |
|
| Net cash used in investing activities |
|
|
(11,941 |
) |
|
(6,990 |
) |
|
(165,756 |
) |
|
(116,192 |
) |
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
| Payment of cash dividends |
|
|
— |
|
|
— |
|
|
(113,971 |
) |
|
(104,248 |
) |
| Payment of contingent consideration for business acquisition |
|
|
— |
|
|
(5,000 |
) |
|
— |
|
|
(5,000 |
) |
| Purchases of registered shares |
|
|
(2,553 |
) |
|
(9,726 |
) |
|
(22,454 |
) |
|
(20,408 |
) |
| Proceeds from exercises of stock options and purchase rights |
|
|
128 |
|
|
947 |
|
|
10,135 |
|
|
30,947 |
|
| Tax withholdings related to net share settlements of restricted stock
units |
|
|
(1,731 |
) |
|
(1,799 |
) |
|
(29,111 |
) |
|
(25,505 |
) |
| Net cash used in financing activities |
|
|
(4,156 |
) |
|
(15,578 |
) |
|
(155,401 |
) |
|
(124,214 |
) |
| Effect of exchange rate changes on cash and cash equivalents |
|
|
(588 |
) |
|
24 |
|
|
(9,745 |
) |
|
1,677 |
|
| Net increase (decrease) in cash and cash equivalents |
|
|
159,538 |
|
|
166,040 |
|
|
(57,459 |
) |
|
17,355 |
|
| Cash and cash equivalents, beginning of the period |
|
|
424,950 |
|
|
398,848 |
|
|
641,947 |
|
|
547,533 |
|
| Cash and cash equivalents, end of the period |
|
|
$ |
584,488 |
|
|
$ |
564,888 |
|
|
$ |
584,488 |
|
|
$ |
564,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
|
|
|
|
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET SALES |
|
Three Months Ended |
|
Nine Months Ended |
|
|
December 31, |
|
December 31, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales by product category: |
|
|
|
|
|
|
|
|
|
|
|
|
| Pointing Devices |
|
$ |
149,123 |
|
|
$ |
140,983 |
|
|
6 |
% |
|
405,250 |
|
|
386,700 |
|
|
5 |
% |
| Keyboards & Combos |
|
144,169 |
|
|
126,372 |
|
|
14 |
|
|
404,263 |
|
|
361,685 |
|
|
12 |
|
| PC Webcams |
|
33,021 |
|
|
27,280 |
|
|
21 |
|
|
90,916 |
|
|
80,370 |
|
|
13 |
|
| Tablet & Other Accessories |
|
35,757 |
|
|
26,648 |
|
|
34 |
|
|
104,903 |
|
|
80,650 |
|
|
30 |
|
| Video Collaboration |
|
74,186 |
|
|
46,252 |
|
|
60 |
|
|
190,154 |
|
|
128,008 |
|
|
49 |
|
| Mobile Speakers |
|
96,263 |
|
|
147,377 |
|
|
(35 |
) |
|
207,690 |
|
|
300,843 |
|
|
(31 |
) |
| Audio & Wearables |
|
98,629 |
|
|
84,435 |
|
|
17 |
|
|
212,343 |
|
|
197,083 |
|
|
8 |
|
| Gaming |
|
213,663 |
|
|
173,802 |
|
|
23 |
|
|
510,481 |
|
|
365,232 |
|
|
40 |
|
| Smart Home |
|
19,577 |
|
|
38,692 |
|
|
(49 |
) |
|
37,829 |
|
|
73,481 |
|
|
(49 |
) |
| Other (1) |
|
— |
|
|
180 |
|
|
(100 |
) |
|
185 |
|
|
385 |
|
|
(52 |
) |
| Total net sales |
|
$ |
864,388 |
|
|
$ |
812,021 |
|
|
6 |
% |
|
$ |
2,164,014 |
|
|
$ |
1,974,437 |
|
|
10 |
% |
| (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 |
|
Nine Months Ended |
|
|
|
December 31, |
|
December 31, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
| Gross profit - GAAP |
|
|
$ |
323,982 |
|
|
$ |
275,601 |
|
|
$ |
804,036 |
|
|
$ |
697,006 |
|
| Share-based compensation expense |
|
|
953 |
|
|
960 |
|
|
2,874 |
|
|
2,762 |
|
| Amortization of intangible assets and purchase accounting effect on
inventory |
|
|
4,699 |
|
|
2,789 |
|
|
10,037 |
|
|
6,304 |
|
| Gross profit - Non-GAAP |
|
|
$ |
329,634 |
|
|
$ |
279,350 |
|
|
$ |
816,947 |
|
|
$ |
706,072 |
|
|
|
|
|
|
|
|
|
|
|
| Gross margin - GAAP |
|
|
37.5 |
% |
|
33.9 |
% |
|
37.2 |
% |
|
35.3 |
% |
| Gross margin - Non-GAAP |
|
|
38.1 |
% |
|
34.4 |
% |
|
37.8 |
% |
|
35.8 |
% |
|
|
|
|
|
|
|
|
|
|
| Operating expenses - GAAP |
|
|
$ |
200,598 |
|
|
$ |
175,338 |
|
|
$ |
583,069 |
|
|
$ |
506,380 |
|
| Less: Share-based compensation expense |
|
|
10,902 |
|
|
10,596 |
|
|
34,289 |
|
|
30,477 |
|
| Less: Amortization of intangible assets and acquisition-related costs |
|
|
3,539 |
|
|
2,496 |
|
|
10,377 |
|
|
6,377 |
|
| Less: Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,908 |
) |
| Less: Restructuring charges (credits), net |
|
|
(278 |
) |
|
— |
|
|
9,762 |
|
|
(116 |
) |
| Operating expenses - Non-GAAP |
|
|
$ |
186,435 |
|
|
$ |
162,246 |
|
|
$ |
528,641 |
|
|
$ |
474,550 |
|
|
|
|
|
|
|
|
|
|
|
| % of net sales - GAAP |
|
|
23.2 |
% |
|
21.6 |
% |
|
26.9 |
% |
|
25.6 |
% |
| % of net sales - Non - GAAP |
|
|
21.6 |
% |
|
20.0 |
% |
|
24.4 |
% |
|
24.0 |
% |
|
|
|
|
|
|
|
|
|
|
| Operating income - GAAP |
|
|
$ |
123,384 |
|
|
$ |
100,263 |
|
|
$ |
220,967 |
|
|
$ |
190,626 |
|
| Share-based compensation expense |
|
|
11,855 |
|
|
11,556 |
|
|
37,163 |
|
|
33,239 |
|
| Amortization of intangible assets |
|
|
6,895 |
|
|
4,415 |
|
|
17,236 |
|
|
10,653 |
|
| Purchase accounting effect on inventory |
|
|
1,343 |
|
|
500 |
|
|
1,722 |
|
|
614 |
|
| Acquisition-related costs |
|
|
— |
|
|
370 |
|
|
1,456 |
|
|
1,412 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,908 |
) |
| Restructuring charges (credits), net |
|
|
(278 |
) |
|
— |
|
|
9,762 |
|
|
(116 |
) |
| Operating income - Non - GAAP |
|
|
$ |
143,199 |
|
|
$ |
117,104 |
|
|
$ |
288,306 |
|
|
$ |
231,520 |
|
|
|
|
|
|
|
|
|
|
|
| % of net sales - GAAP |
|
|
14.3 |
% |
|
12.3 |
% |
|
10.2 |
% |
|
9.7 |
% |
| % of net sales - Non - GAAP |
|
|
16.6 |
% |
|
14.4 |
% |
|
13.3 |
% |
|
11.7 |
% |
|
|
|
|
|
|
|
|
|
|
| Net income - GAAP |
|
|
$ |
112,810 |
|
|
$ |
80,773 |
|
|
$ |
215,452 |
|
|
$ |
174,138 |
|
| Share-based compensation expense |
|
|
11,855 |
|
|
11,556 |
|
|
37,163 |
|
|
33,239 |
|
| Amortization of intangible assets |
|
|
6,895 |
|
|
4,415 |
|
|
17,236 |
|
|
10,653 |
|
| Purchase accounting effect on inventory |
|
|
1,343 |
|
|
500 |
|
|
1,722 |
|
|
614 |
|
| Acquisition-related costs |
|
|
— |
|
|
370 |
|
|
1,456 |
|
|
1,412 |
|
| Change in fair value of contingent consideration for business acquisition |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,908 |
) |
| Restructuring charges (credits), net |
|
|
(278 |
) |
|
— |
|
|
9,762 |
|
|
(116 |
) |
| Loss (gain) on investments in privately held companies |
|
|
(207 |
) |
|
(114 |
) |
|
(589 |
) |
|
(550 |
) |
| Non-GAAP income tax adjustment |
|
|
1,443 |
|
|
13,015 |
|
|
(7,782 |
) |
|
2,033 |
|
| Net income - Non - GAAP |
|
|
$ |
133,861 |
|
|
$ |
110,515 |
|
|
$ |
274,420 |
|
|
$ |
216,515 |
|
|
|
|
|
|
|
|
|
|
|
| Net income per share: |
|
|
|
|
|
|
|
|
|
| Diluted - GAAP |
|
|
$ |
0.67 |
|
|
$ |
0.48 |
|
|
$ |
1.28 |
|
|
$ |
1.03 |
|
| Diluted - Non - GAAP |
|
|
$ |
0.79 |
|
|
$ |
0.65 |
|
|
$ |
1.62 |
|
|
$ |
1.28 |
|
|
|
|
|
|
|
|
|
|
|
| Shares used to compute net income per share: |
|
|
|
|
|
|
|
|
|
| Diluted - GAAP and Non - GAAP |
|
|
168,907 |
|
|
169,079 |
|
|
168,966 |
|
|
168,832 |
|
|
|
|
|
|
|
|
|
|
| LOGITECH INTERNATIONAL S.A. |
|
|
|
|
|
|
|
|
| PRELIMINARY RESULTS * |
| (In thousands) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SHARE-BASED COMPENSATION EXPENSE |
|
Three Months Ended |
|
Nine Months Ended |
|
|
December 31, |
|
December 31, |
| SUPPLEMENTAL FINANCIAL INFORMATION |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
| Share-based Compensation Expense |
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
$ |
953 |
|
|
$ |
960 |
|
|
$ |
2,874 |
|
|
$ |
2,762 |
|
| Marketing and selling |
|
4,600 |
|
|
4,624 |
|
|
15,250 |
|
|
13,348 |
|
| Research and development |
|
1,811 |
|
|
1,621 |
|
|
5,295 |
|
|
4,797 |
|
| General and administrative |
|
4,491 |
|
|
4,351 |
|
|
13,744 |
|
|
12,332 |
|
| Total share-based compensation expense |
|
11,855 |
|
|
11,556 |
|
|
37,163 |
|
|
33,239 |
|
| Income tax provision (benefit) |
|
(2,397 |
) |
|
3,038 |
|
|
(14,576 |
) |
|
(11,921 |
) |
| Total share-based compensation expense, net of income tax provision
(benefit) |
|
$ |
9,458 |
|
|
$ |
14,594 |
|
|
$ |
22,587 |
|
|
$ |
21,318 |
|
* Note: These preliminary results for the three and nine months ended December 31, 2018 are subject to
adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.
(A) Preliminary valuation from the business acquisition
The preliminary fair value of assets acquired and liabilities assumed from the business acquisition in the second quarter of
fiscal year 2019 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 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 nine
months ended as of December 31, 2018 and condensed consolidated balance sheets as of December 31, 2018
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2018 |
|
Nine Months Ended December 31, 2018 |
|
|
|
As Reported
Under Topic
606
|
|
If Reported
Under Topic
605
|
|
Effect of
Change
|
|
As Reported
Under Topic
606
|
|
If Reported
Under Topic
605
|
|
Effect of
Change
|
| Net sales |
|
|
$ |
864,388 |
|
|
$ |
853,563 |
|
|
$ |
10,825 |
|
|
$ |
2,164,014 |
|
|
$ |
2,158,267 |
|
|
$ |
5,747 |
|
|
|
|
|
As of December 31, 2018 |
|
|
As Reported Under
Topic 606
|
|
Balance Under
Topic 605
|
|
Effect of Change |
| Accounts receivable, net |
|
484,204 |
|
|
345,055 |
|
|
139,149 |
|
| Other current assets |
|
73,174 |
|
|
65,758 |
|
|
7,416 |
|
| Accrued and other current liabilities |
|
478,632 |
|
|
326,932 |
|
|
151,700 |
|
| Retained earnings |
|
1,322,915 |
|
|
1,328,050 |
|
|
(5,135 |
) |
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 December 31, 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.
(LOGIIR)
Logitech International
Ben Lu
Vice President, Investor Relations - USA
(510) 713-5568
or
Krista Todd
Vice President, Global Communications - USA
(510) 713-5834
or
Ben Starkie
Corporate Communications - Europe
+41 (0) 79-292-3499
View source version on businesswire.com: https://www.businesswire.com/news/home/20190121005478/en/