Company Raises FY 2024 Outlook
SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR
— Logitech International (SIX: LOGN) (Nasdaq: LOGI) today
announced financial results for the second quarter of Fiscal Year
2024.
- Sales were $1.06 billion, down 8 percent in US dollars and 9
percent in constant currency, compared to the prior year.
- GAAP operating income was $157 million, up 23 percent compared
to the prior year. Non-GAAP operating income was $183 million, up
17 percent compared to the prior year. In the quarter, the Company
continued to reduce operating expenses, down 9 percent compared to
the prior year, in line with the decline in net sales.
- GAAP earnings per share (EPS) was $0.86, up 72 percent compared
to the prior year. Non-GAAP EPS was $1.09, up 30 percent compared
to the prior year.
- Cash flow from operations was $223 million, up $150 million
compared to the prior year. The quarter-ending cash balance was
$1.16 billion. In the quarter, the Company returned $276 million of
cash to shareholders through its annual dividend payment and share
repurchases.
“The Logitech team stepped up execution this quarter and
delivered results that demonstrate the underlying potential of our
business,” said Guy Gecht, Logitech interim chief executive
officer. “We made great progress toward a return to growth and
exceeded our pre-pandemic profit levels. Our design-led innovation
capabilities were on full display, with 16 new product
introductions during the quarter. I'm proud of what our team has
accomplished in this challenging environment. We remain focused on
developing market leading products, operational excellence, and
value creation for shareholders.”
“While our second quarter revenue was down compared to last
year, we delivered expanded gross margins of 42.0% and operating
margins of 17.3%,” said Chuck Boynton, Logitech chief financial
officer. “Through strong operating execution and working capital
management, we generated $223 million in operating cash flow and
returned $276 million to our shareholders. Our focus on cost
discipline with a customer-first mindset is paying off, with share
growth in key categories. We remain cautiously optimistic on the
balance of the year and are pleased to raise the annual
outlook.”
CEO Search Update
Over the last four months, the board of directors, led by Wendy
Becker, has been conducting a global CEO search looking at internal
and external candidates across industries and geographies. The
board has met with a number of strong, diverse and experienced
candidates, and is moving closer to finalizing a decision.
Updated Full Year Outlook
Logitech raised its full-year outlook for Fiscal Year 2024:
Previous FY 2024 outlook
New FY 2024 outlook
Sales
$3.8 - $4.0 billion
$4.0 - $4.15 billion
Sales decline (in US dollars, year over
year)
16% - 12%
12% - 9%
Non-GAAP operating income
$400 - $500 million
$525 - $575 million
Non-GAAP op. inc. decline (year over
year)
32% - 15%
11% - 2%
H1 2024 Results Compared to H1 2024 Outlook
Logitech exceeded its outlook for the first half of Fiscal Year
2024:
H1 2024 outlook
H1 2024 results
Sales
$1.875 - $1.975 billion
$2.032 billion
Sales decline (in US dollars, year over
year)
19% - 14%
12%
Non-GAAP operating income
$180 - $220 million
$292 million
Non-GAAP op. inc. decline (year over
year)
40% - 27%
3%
Financial Results Videoconference and Webcast
Logitech will hold a financial results videoconference to
discuss the results for Q2 Fiscal Year 2024 on Tuesday, October 24,
2023 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 in this press
release, which exclude share-based compensation expense,
amortization of intangible assets, acquisition-related costs,
restructuring charges (credits), net, loss (gain) on investments,
non-GAAP income tax adjustment, and other items detailed under
“Supplemental Financial Information” after the tables below and
posted to our website at http://ir.logitech.com. Logitech also
presents percentage sales growth in constant currency (“CC”), 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, outlook 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 full Fiscal Year 2024 non-GAAP operating income
outlook.
Public Dissemination of Certain Information
Recordings of Logitech’s earnings videoconferences and certain
events Logitech participates in or hosts, with members of the
investment community are posted on the company’s investor relations
website at https://ir.logitech.com. Additionally, Logitech provides
notifications of news or announcements regarding its operations and
financial performance, including its filings with the Securities
and Exchange Commission (SEC), investor events, and press and
earnings releases as part of its investor relations website.
Logitech intends to use its investor relations website as means of
disclosing material nonpublic information and for complying with
its disclosure obligations under Regulation FD. Logitech’s
corporate governance information also is available on its investor
relations website.
About Logitech
Logitech helps all people pursue their passions and is committed
to doing so in a way that is good for people and the planet. We
design hardware and software solutions that help businesses thrive
and bring people together when working, creating, gaming and
streaming. Brands of Logitech include Logitech, Logitech G, ASTRO
Gaming, Streamlabs, Blue Microphones and Ultimate Ears. 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 U.S. federal securities laws, including, without
limitation, statements regarding: our preliminary financial results
for the three and six months ended September 30, 2023, Fiscal Year
2024 outlook for sales and non-GAAP operating income, CEO search
update, and related assumptions. The forward-looking statements in
this press release are subject to 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: macroeconomic and
geopolitical conditions and other factors and their impact, for
example changes in inflation levels and monetary policies; our
expectations regarding our expense reduction efforts, including the
timing thereof; changes in secular trends that impact our business;
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, supply shortages and other supply chain challenges;
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; if we do not
efficiently manage our spending; our expectations regarding our
restructuring efforts, including the timing thereof; 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; if we do
not successfully execute on strategic acquisitions and investments;
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, 2023, our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2023, 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
September 30,
March 31,
CONDENSED CONSOLIDATED BALANCE
SHEETS
2023
2023
Current assets:
Cash and cash equivalents
$
1,163,904
$
1,149,023
Accounts receivable, net
656,895
630,382
Inventories
532,943
682,893
Other current assets
138,482
142,876
Total current assets
2,492,224
2,605,174
Non-current assets:
Property, plant and equipment, net
122,027
121,503
Goodwill
461,401
454,610
Other intangible assets, net
58,081
63,173
Other assets
291,297
316,293
Total assets
$
3,425,030
$
3,560,753
Current liabilities:
Accounts payable
$
492,905
$
406,968
Accrued and other current liabilities
594,042
643,139
Total current liabilities
1,086,947
1,050,107
Non-current liabilities:
Income taxes payable
114,235
106,391
Other non-current liabilities
146,583
146,695
Total liabilities
1,347,765
1,303,193
Shareholders’ equity:
Registered shares, CHF 0.25 par value:
30,148
30,148
Issued shares — 173,106 at September 30,
2023 and March 31, 2023
Additional shares that may be issued out
of conditional capital — 50,000 at September 30, 2023 and March 31,
2023
Additional shares that may be issued out
of authorized capital — 17,311 at September 30, 2023 and March 31,
2023
Additional paid-in capital
47,311
127,380
Shares in treasury, at cost — 16,029 at
September 30, 2023 and 13,763 at March 31, 2023
(1,083,468
)
(977,266
)
Retained earnings
3,190,220
3,177,575
Accumulated other comprehensive loss
(106,946
)
(100,277
)
Total shareholders’ equity
2,077,265
2,257,560
Total liabilities and shareholders’
equity
$
3,425,030
$
3,560,753
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
Three months ended September
30,
Six months ended September
30,
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
2023
2022
2023
2022
Cash flows from operating
activities:
Net income
$
137,117
$
82,091
$
199,844
$
182,927
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
16,637
18,662
34,135
37,288
Amortization of intangible assets
5,682
6,015
11,509
12,244
Loss (gain) on investments
(214
)
22,934
11,609
11,577
Share-based compensation expense
22,068
12,245
43,579
35,935
Deferred income taxes
8,146
2,775
11,108
3,040
Other
76
242
100
118
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable, net
(100,752
)
(77,337
)
(35,362
)
(121,909
)
Inventories
35,929
22,114
146,369
21,790
Other assets
(22,343
)
(175
)
11,999
4,757
Accounts payable
106,442
(8,320
)
88,022
(78,354
)
Accrued and other liabilities
14,476
(8,322
)
(59,853
)
(72,157
)
Net cash provided by operating
activities
223,264
72,924
463,059
37,256
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(18,493
)
(25,821
)
(34,731
)
(45,384
)
Investment in privately held companies
(322
)
(187
)
(356
)
(2,275
)
Acquisitions, net of cash acquired
(12,878
)
—
(14,138
)
(5,839
)
Purchases of deferred compensation
investments
(1,479
)
(1,577
)
(2,548
)
(2,499
)
Proceeds from sales of deferred
compensation investments
1,551
1,493
2,622
2,436
Net cash used in investing
activities
(31,621
)
(26,092
)
(49,151
)
(53,561
)
Cash flows from financing
activities:
Payment of cash dividends
(182,305
)
(158,680
)
(182,305
)
(158,680
)
Payment of contingent consideration for
business acquisition
(5,002
)
(5,954
)
(5,002
)
(5,954
)
Purchases of registered shares
(93,865
)
(116,942
)
(188,941
)
(237,561
)
Proceeds from exercises of stock options
and purchase rights
13,206
12,850
15,319
12,850
Tax withholdings related to net share
settlements of restricted stock units
(2,028
)
(2,598
)
(26,224
)
(26,742
)
Other financing activities
(1,116
)
—
(1,116
)
—
Net cash used in financing
activities
(271,110
)
(271,324
)
(388,269
)
(416,087
)
Effect of exchange rate changes on cash
and cash equivalents
(7,715
)
(13,664
)
(10,758
)
(27,823
)
Net increase (decrease) in cash and
cash equivalents
(87,182
)
(238,156
)
14,881
(460,215
)
Cash and cash equivalents, beginning of
the period
1,251,086
1,106,657
1,149,023
1,328,716
Cash and cash equivalents, end of the
period
$
1,163,904
$
868,501
$
1,163,904
$
868,501
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three months ended September
30,
Six months ended September
30,
NET SALES
2023
2022 (1)
Change
2023
2022 (1)
Change
Net sales by product category:
Gaming (2)
$
282,104
$
322,028
(12
)%
$
548,533
$
619,949
(12
)%
Keyboards & Combos
194,914
200,853
(3
)
375,769
428,573
(12
)
Pointing Devices
191,676
185,200
3
366,130
368,483
(1
)
Video Collaboration
152,389
179,199
(15
)
291,735
360,831
(19
)
Webcams
88,222
102,018
(14
)
163,422
211,280
(23
)
Tablet Accessories
63,677
54,203
17
134,013
120,788
11
Headsets
44,411
44,750
(1
)
81,261
90,693
(10
)
Other (3)
39,615
60,700
(35
)
70,644
108,219
(35
)
Total Net Sales
$
1,057,008
$
1,148,951
(8
)%
$
2,031,507
$
2,308,816
(12
)%
(1)
The Company has reclassified certain prior
period amounts to conform to the current period presentation.
(2)
Gaming includes streaming services revenue
generated by Streamlabs.
(3)
Other primarily consists of mobile
speakers and PC speakers.
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands, except per share
amounts) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three months ended September
30,
Six months ended September
30,
GAAP TO NON-GAAP RECONCILIATION
(A)
2023
2022
2023
2022
Gross profit - GAAP
$
438,622
$
438,780
$
814,264
$
898,383
Share-based compensation expense
2,462
1,443
3,877
2,904
Amortization of intangible assets
2,983
3,145
6,128
6,187
Gross profit - Non-GAAP
$
444,067
$
443,368
$
824,269
$
907,474
Gross margin - GAAP
41.5
%
38.2
%
40.1
%
38.9
%
Gross margin - Non-GAAP
42.0
%
38.6
%
40.6
%
39.3
%
Operating expenses - GAAP
$
281,983
$
311,379
$
579,220
$
655,503
Less: Share-based compensation expense
19,606
10,802
39,702
33,031
Less: Amortization of intangible assets
and acquisition-related costs
3,318
2,873
6,003
6,242
Less: Restructuring charges (credits),
net
(1,788
)
10,817
1,723
10,817
Operating expenses - Non-GAAP
$
260,847
$
286,887
$
531,792
$
605,413
% of net sales - GAAP
26.7
%
27.1
%
28.5
%
28.4
%
% of net sales - Non-GAAP
24.7
%
25.0
%
26.2
%
26.2
%
Operating income - GAAP
$
156,639
$
127,401
$
235,044
$
242,880
Share-based compensation expense
22,068
12,245
43,579
35,935
Amortization of intangible assets and
acquisition-related costs
6,301
6,018
12,131
12,429
Restructuring charges (credits), net
(1,788
)
10,817
1,723
10,817
Operating income - Non-GAAP
$
183,220
$
156,481
$
292,477
$
302,061
% of net sales - GAAP
14.8
%
11.1
%
11.6
%
10.5
%
% of net sales - Non-GAAP
17.3
%
13.6
%
14.4
%
13.1
%
Net income - GAAP
$
137,117
$
82,091
$
199,844
$
182,927
Share-based compensation expense
22,068
12,245
43,579
35,935
Amortization of intangible assets and
acquisition-related costs
6,301
6,018
12,131
12,429
Restructuring charges (credits), net
(1,788
)
10,817
1,723
10,817
Loss (gain) on investments
(214
)
22,934
11,609
11,577
Non-GAAP income tax adjustment
9,933
3,607
7,930
7,066
Net income - Non-GAAP
$
173,417
$
137,712
$
276,816
$
260,751
Net income per share:
Diluted - GAAP
$
0.86
$
0.50
$
1.25
$
1.11
Diluted - Non-GAAP
$
1.09
$
0.84
$
1.74
$
1.58
Shares used to compute net income per
share:
Diluted - GAAP and Non-GAAP
158,934
164,328
159,545
165,371
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) - unaudited
SUPPLEMENTAL FINANCIAL
INFORMATION
Three months ended September
30,
Six months ended September
30,
SHARE-BASED COMPENSATION
EXPENSE
2023
2022
2023
2022
Share-based Compensation
Expense
Cost of goods sold
$
2,462
$
1,443
$
3,877
$
2,904
Marketing and selling
9,262
7,429
19,745
17,226
Research and development
4,694
3,280
9,147
8,812
General and administrative
5,650
93
10,810
6,993
Total share-based compensation
expense
22,068
12,245
43,579
35,935
Income tax expense (benefit)
(2,548
)
102
(7,866
)
(4,220
)
Total share-based compensation expense,
net of income tax expense (benefit)
$
19,520
$
12,347
$
35,713
$
31,715
*Note: These preliminary results for the three and six months
ended September 30, 2023 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, 2023 and prior periods presented, 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. 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 certain incremental expenses incurred to effect a business
combination. 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), net. These expenses are
associated with restructuring plans, and will vary based on the
initiatives in place during any given period. Restructuring charges
may include costs related to employee terminations, facility
closures and early cancellation of certain contracts as well as
other costs resulting from our restructuring initiatives. 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.
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.
(LOGIIR)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023962999/en/
Nate Melihercik, Head of Global Investor Relations -
ir@logitech.com Nicole Kenyon, Head of Global Corporate and
Internal Communications - nkenyon@logitech.com (USA) Ben Starkie,
Corporate Communications - +41 (0) 79-292-3499,
bstarkie1@logitech.com (Europe)
Logitech (NASDAQ:LOGI)
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Logitech (NASDAQ:LOGI)
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