Logitech Announces First Quarter Financial Results for FY 2014
Logitech Announces First Quarter Financial Results for FY 2014
Company Significantly Improves Profitability
NEWARK, Calif. & MORGES, Switzerland--(BUSINESS WIRE)-- Logitech International (SIX: LOGN) (NAS: LOGI) today announced financial results for the first quarter of Fiscal Year 2014.
Sales for Q1 FY 2014 were $478 million, up 2 percent from $469 million in Q1 FY 2013, with exchange rates having no impact. Excluding those retail product categories that the Company is exiting (reported in the financial statements as "Retail - Other"), sales for Q1 FY 2014 were up 5 percent year over year. The Company posted a small operating profit compared to an operating loss of $59 million in the same quarter a year ago. Net income for Q1 FY 2014 was $ 1 million ($0.01 per share) compared to a net loss of $51 million ($0.32 per share) in the prior year. Gross margin for Q1 FY 2014 was 35.2 percent, up from 31.0 percent a year ago.
The Company's total retail sales for Q1 increased by 5 percent year over year, up 12 percent in the Americas and 4 percent in Asia, and down 3 percent in EMEA. Excluding "Retail - Other," Logitech's retail sales for Q1 FY 2014 increased by 8 percent over the prior year. OEM sales decreased by 6 percent and sales for the LifeSize division decreased by 18 percent.
"These results - sales growth and significant year-over-year profitability improvement - demonstrate our turnaround is on track," said Bracken P. Darrell, Logitech president and chief executive officer. "I'm happy to see double-digit sales growth in our Americas region. And I'm pleased with the performance in our growth categories: Combined, tablet accessories, PC gaming and wireless speakers grew about 90 percent year over year.
"Logitech continues to be focused on becoming faster and more profitable. We've shortened key product cycles and delivered early momentum for the product lines we launched into retail environments in Q1, including tablet accessories, PC gaming peripherals and our UE BOOM wireless speaker. There is more to come. I am excited about the potential within the business and remain committed to improving our profitability in FY 2014."
Outlook
Logitech confirmed its outlook for Fiscal Year 2014, ending March 31, 2014. The Company expects sales of approximately $2 billion, operating income of approximately $50 million and gross margin of approximately 34 percent.
Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial results teleconference available online on the Logitech corporate Web site at http://ir.logitech.com. The remarks are posted in the Calendar section on the Investor home page.
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the results for Q1 FY 2014 on Thursday, July 25, 2013 at 8:30 a.m. Eastern Daylight Time and 14:30 Central European Summer Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.
About Logitech
Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, Logitech's combined hardware and software enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding: the Company's turnaround, focus, product launches, potential and profitability in Fiscal Year 2014, as well as Fiscal Year 2014 sales, operating income and gross margin. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech's actual results and events to differ materially from those anticipated in these forward-looking statements, including, without limitation: if our product offerings, marketing activities and investment prioritization decisions do not result in the sales, profitability or profitability growth we expect, or when we expect it; the demand of our customers and our consumers for our products and our ability to accurately forecast it; if we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories; if we do not successfully execute on our growth opportunities in our new product categories and sales in emerging market geographies; if sales of PC peripherals in mature markets are less than we expect; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; if our products and marketing strategies fail to separate our products from competitors' products; if there is a deterioration of business and economic conditions in one or more of our sales regions or operating segments, or significant fluctuations in exchange rates. 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, 2013, 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.
Logitech, the Logitech logo, and other Logitech marks are registered in Switzerland 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 Web site at www.logitech.com.
LOGITECH INTERNATIONAL S.A. | ||||||||||
(In thousands, except per share amounts) - Unaudited | ||||||||||
Quarter Ended June 30, | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | 2013 | 2012 | ||||||||
(Revised) Note 1 | ||||||||||
Net sales | $ | 477,924 | $ | 468,604 | ||||||
Cost of goods sold | 309,569 | 323,478 | ||||||||
Gross profit | 168,355 | 145,126 | ||||||||
% of net sales | 35.2 | % | 31.0 | % | ||||||
Operating expenses: | ||||||||||
Marketing and selling | 100,635 | 100,897 | ||||||||
Research and development | 36,191 | 39,023 | ||||||||
General and administrative | 29,148 | 32,480 | ||||||||
Restructuring charges | 2,334 | 31,227 | ||||||||
Total operating expenses | 168,308 | 203,627 | ||||||||
Operating income (loss) | 47 | (58,501 | ) | |||||||
Interest income (expense), net | (23 | ) | 384 | |||||||
Other income (loss), net | 217 | (159 | ) | |||||||
Income (loss) before income taxes | 241 | (58,276 | ) | |||||||
Benefit from income taxes | (802 | ) | (6,910 | ) | ||||||
Net income (loss) | $ | 1,043 | $ | (51,366 | ) | |||||
Shares used to compute net income (loss) per share: | ||||||||||
Basic | 159,298 | 160,733 | ||||||||
Diluted | 160,281 | 160,733 | ||||||||
Net income (loss) per share: | ||||||||||
Basic | $ | 0.01 | $ | (0.32 | ) | |||||
Diluted | $ | 0.01 | $ | (0.32 | ) | |||||
LOGITECH INTERNATIONAL S.A. | ||||||||||||
(In thousands) - Unaudited | ||||||||||||
CONSOLIDATED BALANCE SHEETS | June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
(Revised) Note 1 | (Revised) Note 1 | |||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 318,857 | $ | 333,824 | $ | 360,737 | ||||||
Accounts receivable | 218,599 | 179,565 | 213,973 | |||||||||
Inventories | 296,012 | 261,083 | 280,533 | |||||||||
Other current assets | 65,191 | 59,596 | 72,364 | |||||||||
Assets held for sale | - | 10,960 | - | |||||||||
Total current assets | 898,659 | 845,028 | 927,607 | |||||||||
Non-Current assets | ||||||||||||
Property, plant and equipment | 85,778 | 87,649 | 94,491 | |||||||||
Goodwill | 343,078 | 340,132 | 558,211 | |||||||||
Other intangible assets | 22,919 | 26,024 | 45,326 | |||||||||
Other assets | 70,805 | 73,563 | 73,213 | |||||||||
Total assets | $ | 1,421,239 | $ | 1,372,396 | $ | 1,698,848 | ||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 296,269 | $ | 265,995 | $ | 262,929 | ||||||
Accrued liabilities | 205,566 | 193,378 | 222,017 | |||||||||
Liabilities held for sale | - | 1,342 | - | |||||||||
Total current liabilities | 501,835 | 460,715 | 484,946 | |||||||||
Non-current liabilities | 199,164 | 195,727 | 228,462 | |||||||||
Total liabilities | 700,999 | 656,442 | 713,408 | |||||||||
Shareholders' equity | 720,240 | 715,954 | 985,440 | |||||||||
Total liabilities and shareholders' equity | $ | 1,421,239 | $ | 1,372,396 | $ | 1,698,848 | ||||||
LOGITECH INTERNATIONAL S.A. | ||||||||||
(In thousands) - Unaudited | ||||||||||
Three Months Ended June 30, | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | 2013 | 2012 | ||||||||
(Revised) Note 1 | ||||||||||
Cash flows from operating activities: | ||||||||||
Net income (loss) | $ | 1,043 | $ | (51,366 | ) | |||||
Non-cash items included in net income (loss): | ||||||||||
Depreciation | 10,139 | 11,152 | ||||||||
Amortization of other intangible assets | 5,264 | 6,398 | ||||||||
Investment impairment | 370 | - | ||||||||
Share-based compensation expense | 4,390 | 6,171 | ||||||||
Loss on disposal of property and plant | 2,311 | - | ||||||||
Gain on sale of available-for-sale securities | - | (831 | ) | |||||||
Excess tax benefits from share-based compensation | - | (5 | ) | |||||||
Deferred income taxes | (3,416 | ) | (1,024 | ) | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||
Accounts receivable | (38,899 | ) | 6,577 | |||||||
Inventories | (28,052 | ) | 11,445 | |||||||
Other assets | (1,770 | ) | 33 | |||||||
Accounts payable | 33,580 | (37,408 | ) | |||||||
Accrued liabilities | 13,733 | 41,802 | ||||||||
Net cash used in operating activities | (1,307 | ) | (7,056 | ) | ||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant and equipment | (13,208 | ) | (19,621 | ) | ||||||
Acquisitions, net of cash acquired | - | - | ||||||||
Acquisition of a privately-held company | (650 | ) | - | |||||||
Proceeds from sale of property and plant | - | 917 | ||||||||
Proceeds from sale of available-for-sale securities | - | - | ||||||||
Purchases of trading investments | (4,406 | ) | (1,397 | ) | ||||||
Proceeds from sales of trading investments | 4,748 | 1,385 | ||||||||
Net cash used in investing activities | (13,516 | ) | (18,716 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Purchases of treasury shares | - | (89,955 | ) | |||||||
Proceeds from sale of shares upon exercise of options and purchase rights | 12 | 404 | ||||||||
Tax withholdings related to net share settlements of restricted stock units | (215 | ) | (170 | ) | ||||||
Excess tax benefits from share-based compensation | - | 5 | ||||||||
Net cash used in financing activities | (203 | ) | (89,716 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 59 | (2,145 | ) | |||||||
Net decrease in cash and cash equivalents | (14,967 | ) | (117,633 | ) | ||||||
Cash and cash equivalents at beginning of period | 333,824 | 478,370 | ||||||||
Cash and cash equivalents at end of period | $ | 318,857 | $ | 360,737 | ||||||
LOGITECH INTERNATIONAL S.A. | ||||||||
(In thousands, except per share amounts) - Unaudited | ||||||||
Three Months Ended June 30, | ||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | 2013 | 2012 | ||||||
Depreciation | $ | 10,139 | $ | 11,152 | ||||
Amortization of other intangible assets | 5,264 | 6,398 | ||||||
Capital expenditures | 13,208 | 19,621 | ||||||
