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| - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2021. -- Q2 sales were $1.26 billion, up 75 percent in US dollars and 73 percent in constant currency, compared to Q2 of the prior year. This was the first time ever that Logitech's quarterly sales exceeded the billion-dollar mark. -- Q2 GAAP operating income grew 372 percent to $322 million, compared to $68 million in the same quarter a year ago. Q2 GAAP earnings per share (EPS) grew 263 percent to $1.56, compared to $0.43 in the same quarter a year ago. -- Q2 non-GAAP operating income grew 295 percent to $354 million, compared to $89 million in the same quarter a year ago. Q2 non-GAAP EPS grew 274 percent to $1.87, compared to $0.50 in the same quarter a year ago. -- Cash flow from operations was $280 million, compared to $107 million in the same period a year ago. "Our growth and profitability accelerated again this quarter, and we are raising our annual outlook," said Bracken Darrell, Logitech president and chief executive officer. "The growth trends that drive our business have accelerated as society adjusts to its new reality. The organization leaders I speak to envision people increasingly working from multiple locations, a hybrid work culture that is emerging as the norm. And at home, the rise of gaming as a spectator and participant sport continues with no end in sight. Our products are essential to helping customers work, play and create wherever they are. Logitech is well positioned for long-term growth." Outlook Logitech raised its Fiscal Year 2021 annual outlook to between 35 and 40 percent sales growth in constant currency, and a range of $700 million to $725 million in non-GAAP operating income. The Company's previous outlook was between 10 and 13 percent sales growth in constant currency, and a range of $410 million to $425 million in non-GAAP operating income. Prepared Remarks Available Online Logitech has made its prepared written remarks for the financial results videoconference and livestream available online on the Logitech corporate website at Financial Results Videoconference and Livestream Logitech will hold a financial results videoconference to discuss the results for Q2 FY 2021 on Tuesday, October 20, 2020 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 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 2021. 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, Logitech G, ASTRO Gaming, Streamlabs, Ultimate Ears, Jaybird and Blue Microphones. 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 September 30, 2020, growth trends, the pace of growth trends, gaming trends, our products and their utility to consumers, long-term growth, and outlook for Fiscal Year 2021 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 we are not able to maintain and enhance our brands; if our products and marketing strategies fail to separate our products from competitors' products; the COVID-19 pandemic and its potential impact; 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, 2020 and our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020, 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. -0- *T LOGITECH INTERNATIONAL S.A. PRELIMINARY RESULTS * (In thousands, except per share amounts) - unaudited Three Months Ended Six Months Ended September 30, September 30,GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 2020 2019 2020 2019 Net sales $ 1,257,158 $ 719,691 $ 2,049,052 $ 1,363,916 Cost of goods sold 684,599 444,344 1,167,237 846,322 Amortization of intangible assets and purchase accounting effect on inventory 2,836 3,271 6,359 6,542 Gross profit 569,723 272,076 875,456 511,052 Operating expenses: Marketing and selling 158,797 134,155 292,035 257,188 Research and development 53,379 41,964 103,104 84,207 General and administrative 31,664 24,048 60,735 46,207 Amortization of intangible assets and acquisition-related costs 4,331 4,218 8,940 7,814 Change in fair value of contingent consideration for business acquisition - - 5,716 - Restructuring charges (credits), net (1 ) (364 ) (54 ) 114 Total operating expenses 248,170 204,021 470,476 395,530 Operating income 321,553 68,055 404,980 115,522 Interest income 513 2,390 1,133 4,943 Other income (expense), net 1,149 (110 ) 3,178 1,751 Income before income taxes 323,215 70,335 409,291 122,216 Provision for (benefit from) income taxes 56,301 (2,598 ) 70,304 3,938 Net income $ 266,914 $ 72,933 $ 338,987 $ 118,278 Net income per share: Basic $ 1.58 $ 0.44 $ 2.02 $ 0.71 Diluted $ 1.56 $ 0.43 $ 1.99 $ 0.70 Weighted average shares used to compute net income per share: Basic 168,645 166,662 168,140 166,484 Diluted 171,382 169,027 170,766 168,914 *T -0- *T LOGITECH INTERNATIONAL S.A. PRELIMINARY RESULTS * (In thousands) - unaudited September 30, 2020 March 31, 2020CONDENSED CONSOLIDATED BALANCE SHEETS Current assets: Cash and cash equivalents $ 917,221 $ 715,566 Accounts receivable, net 750,749 394,743 Inventories 394,708 229,249 Other current assets 94,753 74,920 Total current assets 2,157,431 1,414,478 Non-current assets: Property, plant and equipment, net 86,386 76,119 Goodwill 400,953 400,917 Other intangible assets, net 111,702 126,941 Other assets 339,397 345,019 Total assets $ 3,095,869 $ 2,363,474 Current liabilities: Accounts payable $ 662,873 $ 259,120 Accrued and other current liabilities 541,977 455,024 Total current liabilities 1,204,850 714,144 Non-current liabilities: Income taxes payable 54,507 40,788 Other non-current liabilities 130,549 119,274 Total liabilities 1,389,906 874,206 Shareholders' equity: Registered shares, CHF 0.25 par value: 30,148 30,148 Issued shares - 173,106 at September 30 and March 31, 2020 Additional shares that may be issued out of conditional capitals - 50,000 at September 30 and March 31, 2020 Additional shares that may be issued out of authorized capital - 17,311 at September 30 and 34,621 at March 31, 2020 Additional paid-in capital 78,617 75,097 Shares in treasury, at cost - 4,357 at September 30, 2020 and 6,210 at March 31, 2020 (166,258 ) (185,896 ) Retained earnings 1,882,308 1,690,579 Accumulated other comprehensive loss (118,852 ) (120,660 ) Total shareholders' equity 1,705,963 1,489,268 Total liabilities and shareholders' equity $ 3,095,869 $ 2,363,474 *T -0- *T 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 2020 2019 2020 2019 Cash flows from operating activities: Net income $ 266,914 $ 72,933 $ 338,987 $ 118,278 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,854 10,584 22,601 21,386 Amortization of intangible assets 7,107 6,868 15,239 13,735 Loss on investments 2,693 274 2,519 63 Share-based compensation expense 24,785 14,252 44,900 26,470 Deferred income taxes 16,563 (5,597 ) 20,152 (8,978 ) Change in fair value of contingent consideration for business acquisition - - 5,716 - Other (1,886 ) 2 (1,877 ) (2 ) Changes in assets and liabilities, net of acquisitions: Accounts receivable, net (244,746 ) (51,691 ) (346,838 ) (85,955 ) Inventories (120,735 ) (45,092 ) (161,120 ) (47,773 ) Other assets (15,797 ) (8,696 ) (31,567 ) (14,083 ) Accounts payable 230,830 73,509 399,176 129,101 Accrued and other liabilities 103,090 39,157 90,631 (9,223 ) Net cash provided by operating activities 279,672 106,503 398,519 143,019 Cash flows from investing activities: Purchases of property, plant and equipment (15,466 ) (8,752 ) (27,774 ) (18,092 ) Investment in privately held companies (3,375 ) - (3,405 ) (170 ) Acquisitions, net of cash acquired - (366 ) - (366 ) Purchases of trading investments (5,775 ) (1,370 ) (8,199 ) (2,525 ) Proceeds from sales of trading investments 6,477 1,375 8,839 2,571 Net cash used in investing activities (18,139 ) (9,113 ) (30,539 ) (18,582 ) Cash flows from financing activities: Payment of cash dividends (146,705 ) (124,180 ) (146,705 ) (124,180 ) Purchases of registered shares (22,454 ) - (22,454 ) (15,127 ) Proceeds from exercises of stock options and purchase rights 16,074 8,938 26,066 9,331 Tax withholdings related to net share settlements of restricted stock units (2,623 ) (1,538 ) (25,744 ) (20,908 ) Net cash used in financing activities (155,708 ) (116,780 ) (168,837 ) (150,884 ) Effect of exchange rate changes on cash and cash equivalents 2,001 (3,102 ) 2,512 (3,605 ) Net increase (decrease) in cash and cash equivalents 107,826 (22,492 ) 201,655 (30,052 ) Cash and cash equivalents, beginning of the period 809,395 596,956 715,566 604,516 Cash and cash equivalents, end of the period $ 917,221 $ 574,464 $ 917,221 $ 574,464 *T -0- *T LOGITECH INTERNATIONAL S.A. PRELIMINARY RESULTS * (In thousands) - unaudited NET SALES Three Months Ended Six months ended September 30, September 30,SUPPLEMENTAL FINANCIAL INFORMATION 2020 2019 Change 2020 2019 Change Net sales by product category: Pointing Devices $ 169,121 $ 132,770 27 % $ 289,590 $ 254,753 14 % Keyboards & Combos 201,617 139,049 45 346,977 267,728 30 PC Webcams 102,469 28,748 256 163,320 56,876 187 Tablet & Other Accessories 83,086 33,847 145 129,134 72,186 79 Gaming 297,711 161,014 85 479,614 295,529 62 Video Collaboration 236,704 89,553 164 366,778 162,977 125 Mobile Speakers 43,581 57,232 (24 ) 72,590 107,648 (33 ) Audio & Wearables 114,275 68,018 68 185,640 126,642 47 Smart Home 8,573 9,434 (9 ) 15,383 19,298 (20 ) Other (1) 21 26 (19 ) 26 279 (91 ) Total sales $ 1,257,158 $ 719,691 75 % $ 2,049,052 $ 1,363,916 50 % *T (1) Other category includes products that we currently intend to phase out, or have already phased out, because they are no longer strategic to our business. -0- *T LOGITECH INTERNATIONAL S.A. PRELIMINARY RESULTS * (In thousands, except per share amounts) - Unaudited GAAP TO NON-GAAP RECONCILIATION (A) Three Months Ended Six Months Ended September 30, September 30,SUPPLEMENTAL FINANCIAL INFORMATION 2020 2019 2020 2019 Gross profit - GAAP $ 569,723 $ 272,076 $ 875,456 $ 511,052 Share-based compensation expense 1,772 1,184 3,172 2,342 Amortization of intangible assets and purchase accounting effect on inventory 2,836 3,271 6,359 6,542 Gross profit - Non-GAAP $ 574,331 $ 276,531 $ 884,987 $ 519,936 Gross margin - GAAP 45.3 % 37.8 % 42.7 % 37.5 % Gross margin - Non-GAAP 45.7 % 38.4 % 43.2 % 38.1 % Operating expenses - GAAP $ 248,170 $ 204,021 $ 470,476 $ 395,530 Less: Share-based compensation expense 23,013 13,068 41,728 24,128 Less: Amortization of intangible assets and acquisition-related costs 4,331 4,218 8,940 7,814 Less: Change in fair value of contingent consideration for business acquisition - - 5,716 - Less: Restructuring charges (credits), net (1 ) (364 ) (54 ) 114 Operating expenses - Non-GAAP $ 220,827 $ 187,099 $ 414,146 $ 363,474 % of net sales - GAAP 19.7 % 28.3 % 23.0 % 29.0 % % of net sales - Non - GAAP 17.6 % 26.0 % 20.2 % 26.6 % Operating income - GAAP $ 321,553 $ 68,055 $ 404,980 $ 115,522 Share-based compensation expense 24,785 14,252 44,900 26,470 Amortization of intangible assets 7,107 6,868 15,239 13,735 Acquisition-related costs 60 621 60 621 Change in fair value of contingent consideration for business acquisition - - 5,716 - Restructuring charges (credits), net (1 ) (364 ) (54 ) 114 Operating income - Non - GAAP $ 353,504 $ 89,432 $ 470,841 $ 156,462 % of net sales - GAAP 25.6 % 9.5 % 19.8 % 8.5 % % of net sales - Non - GAAP 28.1 % 12.4 % 23.0 % 11.5 % Net income - GAAP $ 266,914 $ 72,933 $ 338,987 $ 118,278 Share-based compensation expense 24,785 14,252 44,900 26,470 Amortization of intangible assets 7,107 6,868 15,239 13,735 Acquisition-related costs 60 621 60 621 Change in fair value of contingent consideration for business acquisition - - 5,716 - Restructuring charges (credits), net (1 ) (364 ) (54 ) 114 Loss on investments 2,693 274 2,519 63 Non-GAAP income tax adjustment 18,351 (9,506 ) 21,399 (8,599 ) Net income - Non - GAAP $ 319,909 $ 85,078 $ 428,766 $ 150,682 Net income per share: Diluted - GAAP $ 1.56 $ 0.43 $ 1.99 $ 0.70 Diluted - Non - GAAP $ 1.87 $ 0.50 $ 2.51 $ 0.89 Shares used to compute net income per share: Diluted - GAAP and Non - GAAP 171,382 169,027 170,766 168,914 *T -0- *T 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 2020 2019 2020 2019 Share-based Compensation Expense Cost of goods sold $ 1,772 $ 1,184 $ 3,172 $ 2,342 Marketing and selling 10,377 6,951 19,169 13,800 Research and development 3,763 2,248 6,866 4,402 General and administrative 8,873 3,869 15,693 5,926 Total share-based compensation expense 24,785 14,252 44,900 26,470 Income tax benefit (3,958 ) (2,723 ) (12,069 ) (9,523 ) Total share-based compensation expense, net of income tax benefit $ 20,827 $ 11,529 $ 32,831 $ 16,947 *T * Note: These preliminary results for the three and six months ended September 30, 2020 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 September 30, 2020 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. We recognized loss (gain) related to our investments in various companies, which varies depending on the operational and financial performance of those companies in which we invested, and sales of these investments. 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) View source version on businesswire.com: Contact Ben Lu, Vice President, Investor Relations - USA +1 (510) 713-5568 Nicole Kenyon, Head of Global Corporate & Employee Communications - USA +1 (510) 988-8553 Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499 © 2020 Business Wire, Inc. Disclaimer: This material is not an AFP editorial material, and AFP shall not bear responsibility for the accuracy of its content. In case you have any questions about the content, kindly refer to the contact person/entity mentioned in the text of the release.
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