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Logitech Delivers Strong Start to Fiscal Year 2022

SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR —

Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2022.

  • Q1 sales were $1.31 billion, up 66 percent in US dollars and 58 percent in constant currency, compared to Q1 of the prior year.
  • Q1 GAAP operating income grew 143 percent to $203 million, compared to $83 million in the same quarter a year ago. Q1 GAAP earnings per share (EPS) grew 160 percent to $1.09, compared to $0.42 in the same quarter a year ago.
  • Q1 non-GAAP operating income grew 100 percent to $235 million, compared to $117 million in the same quarter a year ago. Q1 non-GAAP EPS grew 91 percent to $1.22, compared to $0.64 in the same quarter a year ago.

“We’ve started strong in Fiscal Year 2022, with Q1 sales up 58% in constant currency and profits doubling versus last year,” said Bracken Darrell, Logitech president and chief executive officer. “Our key categories grew high double digits. This performance demonstrates the strength of our capabilities, excellent operational execution, and ability to capitalize on long-term trends, like gaming, streaming and creating, hybrid work and video everywhere.”

Outlook

Logitech confirmed its Fiscal Year 2022 outlook of flat sales growth in constant currency, plus or minus five percent, and $800 million to $850 million in non-GAAP operating income.

Prepared Remarks Available Online

Logitech has made its prepared written remarks for the financial results videoconference available online on the Logitech corporate website at http://ir.logitech.com .

Financial Results Videoconference and Webcast

Logitech will hold a financial results videoconference to discuss the results for Q1 Fiscal Year 2022 on Tuesday, July 27, 2021 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A livestream of the event will be available on the Logitech corporate website at http://ir.logitech.com .

Use of Non-GAAP Financial Information and Constant Currency

To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of intangible assets, acquisition-related costs, change in fair value of contingent consideration for business acquisition, restructuring charges (credits), loss (gain) on investments, non-GAAP income tax adjustment, and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Logitech believes this information, used together with the GAAP financial information, will help investors to evaluate its current period performance and trends in its business. With respect to the Company’s outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to the GAAP amounts has been provided for the Fiscal Year 2022 outlook.

About Logitech

Logitech helps all people pursue their passions by designing experiences so everyone can create, achieve, and enjoy more. Logitech designs and creates products that bring people together through computing, gaming, video, streaming and creating, and music. Brands of Logitech include Logitech , Logitech G , ASTRO Gaming , Streamlabs , Blue Microphones , Ultimate Ears and Jaybird . Founded in 1981, and headquartered in Lausanne, Switzerland, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). Find Logitech at www.logitech.com , the company blog or @Logitech .

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding: our preliminary financial results for the three months ended June 30, 2021, long-term growth trends, Logitech’s potential, and outlook for Fiscal Year 2022 operating income and sales growth. The forward-looking statements in this press release involve risks and uncertainties that could cause Logitech’s actual results and events to differ materially from those anticipated in these forward-looking statements, including, without limitation: if our product offerings, marketing activities and investment prioritization decisions do not result in the sales, profitability or profitability growth we expect, or when we expect it; if we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories; if we do not successfully execute on our growth opportunities or our growth opportunities are more limited than we expect; the effect of demand variability and supply shortages; 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 efficiently manage our spending; if there is a deterioration of business and economic conditions in one or more of our sales regions or product categories, or significant fluctuations in exchange rates; changes in trade regulations, policies and agreements and the imposition of tariffs that affect our products or operations and our ability to mitigate; risks associated with acquisitions; and the effect of changes to our effective income tax rates. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Logitech’s periodic filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 and our subsequent reports filed with the SEC, available at www.sec.gov , under the caption Risk Factors and elsewhere. Logitech does not undertake any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this press release.

Note that unless noted otherwise, comparisons are year over year.

Logitech and other Logitech marks are trademarks or registered trademarks of Logitech Europe S.A. and/or its affiliates in the U.S. and other countries. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com .

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

(In thousands, except per share amounts) – unaudited

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

2021

 

2020

 

 

 

 

 

Net sales

 

$

1,312,058

 

 

$

791,894

 

Cost of goods sold

 

739,066

 

 

482,638

 

Amortization of intangible assets

 

4,066

 

 

3,523

 

Gross profit

 

568,926

 

 

305,733

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Marketing and selling

 

252,314

 

 

133,238

 

Research and development

 

69,246

 

 

49,725

 

General and administrative

 

40,542

 

 

29,071

 

Amortization of intangible assets and acquisition-related costs

 

5,217

 

 

4,609

 

Change in fair value of contingent consideration for business acquisition

 

(1,474)

 

 

5,716

 

Restructuring credits, net

 

 

 

(53)

 

Total operating expenses

 

365,845

 

 

222,306

 

 

 

 

 

 

Operating income

 

203,081

 

 

83,427

 

Interest income

 

316

 

 

620

 

Other income, net

 

8,435

 

 

2,029

 

Income before income taxes

 

211,832

 

 

86,076

 

Provision for income taxes

 

24,991

 

 

14,003

 

Net income

 

$

186,841

 

 

$

72,073

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

 

$

1.11

 

 

$

0.43

 

Diluted

 

$

1.09

 

 

$

0.42

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

Basic

 

168,372

 

 

167,612

 

Diluted

 

172,020

 

 

170,127

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

 

2021

 

2021

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,497,721

 

 

$

1,750,327

 

Accounts receivable, net

 

545,907

 

 

612,225

 

Inventories

 

778,596

 

 

661,116

 

Other current assets

 

158,130

 

 

135,650

 

Total current assets

 

2,980,354

 

 

3,159,318

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

114,693

 

 

114,060

 

Goodwill

 

449,732

 

 

429,604

 

Other intangible assets, net

 

112,229

 

 

115,148

 

Other assets

 

338,485

 

 

324,248

 

Total assets

 

$

3,995,493

 

 

$

4,142,378

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

709,741

 

 

$

823,233

 

Accrued and other current liabilities

 

702,589

 

 

858,617

 

Total current liabilities

 

1,412,330

 

 

1,681,850

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

62,968

 

 

59,237

 

Other non-current liabilities

 

147,704

 

 

139,502

 

Total liabilities

 

1,623,002

 

 

1,880,589

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at June 30 and March 31, 2021

 

 

 

 

Additional shares that may be issued out of conditional capitals — 50,000 at June 30 and March 31, 2021

 

 

 

 

Additional shares that may be issued out of authorized capital — 17,311 at June 30 and March 31, 2021

 

 

 

 

Additional paid-in capital

 

74,948

 

 

129,519

 

Shares in treasury, at cost — 4,407 at June 30, 2021 and 4,799 at March 31, 2021

 

(302,606)

 

 

(279,541)

 

Retained earnings

 

2,677,419

 

 

2,490,578

 

Accumulated other comprehensive loss

 

(107,418)

 

 

(108,915)

 

Total shareholders’ equity

 

2,372,491

 

 

2,261,789

 

Total liabilities and shareholders’ equity

 

$

3,995,493

 

 

$

4,142,378

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands) – unaudited

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

2021

 

2020

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

186,841

 

 

$

72,073

 

Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:

 

 

 

 

Depreciation

 

20,462

 

 

11,747

 

Amortization of intangible assets

 

8,843

 

 

8,132

 

Gain on investments

 

(1,071)

 

 

(174)

 

Share-based compensation expense

 

23,651

 

 

20,115

 

Deferred income taxes

 

(4,158)

 

 

3,589

 

Change in fair value of contingent consideration for business acquisition

 

(1,474)

 

 

5,716

 

Other

 

1,045

 

 

9

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

73,308

 

 

(102,092)

 

Inventories

 

(115,166)

 

 

(40,385)

 

Other assets

 

(30,796)

 

 

(15,770)

 

Accounts payable

 

(115,620)

 

 

168,346

 

Accrued and other liabilities

 

(160,835)

 

 

(12,459)

 

Net cash provided by / (used in) operating activities

 

(114,970)

 

 

118,847

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

(24,514)

 

 

(12,308)

 

Investment in privately held companies

 

(501)

 

 

(30)

 

Acquisition, net of cash acquired

 

(15,586)

 

 

 

Purchases of trading investments

 

(1,091)

 

 

(2,424)

 

Proceeds from sales of trading investments

 

1,345

 

 

2,362

 

Net cash used in investing activities

 

(40,347)

 

 

(12,400)

 

Cash flows from financing activities:

 

 

 

 

Purchases of registered shares

 

(54,872)

 

 

 

Proceeds from exercises of stock options and purchase rights

 

2,750

 

 

9,992

 

Tax withholdings related to net share settlements of restricted stock units

 

(50,411)

 

 

(23,121)

 

Net cash used in financing activities

 

(102,533)

 

 

(13,129)

 

Effect of exchange rate changes on cash and cash equivalents

 

5,244

 

 

511

 

Net increase / (decrease) in cash and cash equivalents

 

(252,606)

 

 

93,829

 

Cash and cash equivalents, beginning of the period

 

1,750,327

 

 

715,566

 

Cash and cash equivalents, end of the period

 

$

1,497,721

 

 

$

809,395

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands) – unaudited

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

 

 

June 30,

NET SALES

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

Pointing Devices

 

$

182,878

 

 

$

120,469

 

 

52

%

Keyboards & Combos

 

218,357

 

 

145,360

 

 

50

 

PC Webcams

 

109,918

 

 

60,851

 

 

81

 

Tablet & Other Accessories

 

79,272

 

 

46,048

 

 

72

 

Gaming (1)

 

335,397

 

 

181,903

 

 

84

 

Video Collaboration

 

234,885

 

 

130,074

 

 

81

 

Mobile Speakers

 

28,484

 

 

29,009

 

 

(2)

 

Audio & Wearables

 

116,607

 

 

71,365

 

 

63

 

Smart Home

 

6,172

 

 

6,810

 

 

(9)

 

Other (2)

 

88

 

 

5

 

 

1,660

 

Total Sales

 

$

1,312,058

 

 

$

791,894

 

 

66

%

(1) Gaming includes streaming services revenue generated by Streamlabs.

(2) Other includes products that the Company currently intends to phase out, or has already phased out, because they are no longer strategic to the Company's business.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands, except per share amounts) – unaudited

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

 

 

June 30,

GAAP TO NON GAAP RECONCILIATION (A)

 

2021

 

2020

 

 

 

 

 

Gross profit – GAAP

 

$

568,926

 

 

$

305,733

 

Share-based compensation expense

 

1,369

 

 

1,400

 

Amortization of intangible assets

 

4,066

 

 

3,523

 

Gross profit - Non-GAAP

 

$

574,361

 

 

$

310,656

 

 

 

 

 

 

Gross margin – GAAP

 

43.4

%

 

38.6

%

Gross margin - Non-GAAP

 

43.8

%

 

39.2

%

 

 

 

 

 

Operating expenses – GAAP

 

$

365,845

 

 

$

222,306

 

Less: Share-based compensation expense

 

22,282

 

 

18,715

 

Less: Amortization of intangible assets and acquisition-related costs

 

5,217

 

 

4,609

 

Less: Change in fair value of contingent consideration for business acquisition

 

(1,474)

 

 

5,716

 

Less: Restructuring credits, net

 

 

 

(53)

 

Operating expenses - Non-GAAP

 

$

339,820

 

 

$

193,319

 

 

 

 

 

 

% of net sales – GAAP

 

27.9

%

 

28.1

%

% of net sales - Non – GAAP

 

25.9

%

 

24.4

%

 

 

 

 

 

Operating income – GAAP

 

$

203,081

 

 

$

83,427

 

Share-based compensation expense

 

23,651

 

 

20,115

 

Amortization of intangible assets and acquisition-related costs

 

9,283

 

 

8,132

 

Change in fair value of contingent consideration for business acquisition

 

(1,474)

 

 

5,716

 

Restructuring credits, net

 

 

 

(53)

 

Operating income - Non – GAAP

 

$

234,541

 

 

$

117,337

 

 

 

 

 

 

% of net sales – GAAP

 

15.5

%

 

10.5

%

% of net sales - Non – GAAP

 

17.9

%

 

14.8

%

 

 

 

 

 

Net income – GAAP

 

$

186,841

 

 

$

72,073

 

Share-based compensation expense

 

23,651

 

 

20,115

 

Amortization of intangible assets and acquisition-related costs

 

9,283

 

 

8,132

 

Change in fair value of contingent consideration for business acquisition

 

(1,474)

 

 

5,716

 

Restructuring credits, net

 

 

 

(53)

 

Gain on investments

 

(1,071)

 

 

(174)

 

Non-GAAP income tax adjustment

 

(7,416)

 

 

3,048

 

Net income - Non – GAAP

 

$

209,814

 

 

$

108,857

 

 

 

 

 

 

Net income per share:

 

 

 

 

Diluted – GAAP

 

$

1.09

 

 

$

0.42

 

Diluted - Non – GAAP

 

$

1.22

 

 

$

0.64

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

Diluted - GAAP and Non – GAAP

 

172,020

 

 

170,127

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands) – unaudited

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

 

 

June 30,

SHARE-BASED COMPENSATION EXPENSE

 

2021

 

2020

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

Cost of goods sold

 

$

1,369

 

 

$

1,400

 

Marketing and selling

 

8,530

 

 

8,792

 

Research and development

 

5,061

 

 

3,103

 

General and administrative

 

8,691

 

 

6,820

 

Total share-based compensation expense

 

23,651

 

 

20,115

 

Income tax benefit

 

(16,594)

 

 

(8,111)

 

Total share-based compensation expense, net of income tax benefit

 

$

7,057

 

 

$

12,004

 

*Note: These preliminary results for the three months ended June 30, 2021 are subject to adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.

(A) Non-GAAP Financial Measures

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use a number of financial measures, both GAAP and non-GAAP, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance, ongoing operations and prospects for the future as well as understanding financial and business trends relating to our financial condition and results of operations.

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the quarter ended June 30, 2021 and previous periods, we excluded items in the following general categories, each of which are described below:

Share-based compensation expense . We believe that providing non-GAAP measures excluding share-based compensation expense, in addition to the GAAP measures, allows for a more transparent comparison of our financial results from period to period. We prepare and maintain our budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Further, companies use a variety of types of equity awards as well as a variety of methodologies, assumptions and estimates to determine share-based compensation expense. We believe that excluding share-based compensation expense enhances our ability and the ability of investors to understand the impact of non-cash share-based compensation on our operating results and to compare our results against the results of other companies.

Amortization of intangible assets. We incur intangible asset amortization expense, primarily in connection with our acquisitions of various businesses and technologies. The amortization of purchased intangibles varies depending on the level of acquisition activity. We exclude these various charges in budgeting, planning and forecasting future periods and we believe that providing the non-GAAP measures excluding these various non-cash charges, as well as the GAAP measures, provides additional insight when comparing our gross profit, operating expenses, and financial results from period to period.

Acquisition-related costs and change in fair value of contingent consideration for business acquisition. We incurred expenses and credits in connection with our acquisitions which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related costs include all incremental expenses incurred to effect a business combination. Fair value of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions. We believe that providing the non-GAAP measures excluding these costs and credits, as well as the GAAP measures, assists our investors because such costs are not reflective of our ongoing operating results.

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 items, 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 recognize losses (gains) related to our investments in various companies, which vary depending on the operational and financial performance of the companies in which we invest. These amounts include our losses (earnings) on equity method investments, investment impairments and losses (gains) resulting from sales or other events related to our investments. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such losses (gains) are not reflective of our ongoing operations.

Non-GAAP income tax adjustment. Non-GAAP income tax adjustment primarily measures the income tax effect of non-GAAP adjustments excluded above and other events; the determination of which is based upon the nature of the underlying items, the mix of income and losses in jurisdictions and the relevant tax rates in which we operate.

Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. We compensate for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, we evaluate the non-GAAP financial measures together with the most directly comparable GAAP financial information.

Additional Supplemental Financial Information - Constant Currency

In addition, Logitech presents percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales.

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