Logitech Beats Expectations with Sales Up 15% and Raises Outlook
NEWARK, Calif. - July 30, 2018 and LAUSANNE, Switzerland, July 31, 2018 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2019.
- Q1 sales were $608 million, up 15 percent in US dollars and 12 percent in constant currency, compared to Q1 of the prior year.
- Q1 GAAP operating income reached $32 million, compared to $31 million in the same quarter a year ago. Q1 GAAP earnings per share (EPS) amounted to $0.23, compared to $0.22 in the same quarter a year ago. GAAP operating income was impacted by a $10 million restructuring charge related to the realignment of resources for growth.
- Q1 non-GAAP operating income grew 41 percent to $61 million, compared to $43 million in the same quarter a year ago. Q1 non-GAAP EPS grew 42 percent to $0.34, versus $0.24 in the same quarter a year ago.
“We’ve delivered a great start to the year and are raising our guidance,” said Bracken Darrell, Logitech president and chief executive officer. “The diversity of our portfolio and strength of our innovation engine are working. Our Gaming and Video Collaboration categories both grew more than 60% in Q1. But as we always say, ‘you’re only as good as what you’re doing in the future.’ With that in mind, we’re playing offense. While innovation investments continue to advance and our business is strong, we are realigning our organization to put more firepower against growth opportunities. We also agreed to acquire Blue Microphones, a leading player in the microphone space.”
Investment Through Acquisition
Logitech agreed to acquire Blue Microphones, based in Southern California, for approximately $117 million in cash, assuming breakeven net working capital at close. Blue Microphones is a leader in studio-quality microphones for professionals and consumers. The Blue Microphones acquisition is a new adjacent opportunity for Logitech, consistent with the Company’s approach to M&A. The transaction, which is expected to close by the end of August 2018, should contribute approximately one point of sales growth in Fiscal Year 2019.
Investment in Capabilities
During Q1, Logitech realigned resources to support the continued evolution of its capabilities, portfolio and growth opportunities. The Company has delivered consistent momentum in growth and profitability these past five years and, with this realignment, took proactive steps to prepare for its next five years. As a result, the Company booked a restructuring charge of approximately $10 million this quarter. These actions are designed to reallocate resources and invest in other capabilities and long-term growth opportunities.
Based on the strong performance in Q1 and the acquisition of Blue Microphones, Logitech raised its Fiscal Year 2019 outlook to 9 to 11 percent sales growth in constant currency, up from its previous outlook of high single-digit sales growth in constant currency. The Company also increased its non-GAAP operating income outlook for Fiscal Year 2019 to a range of $325 million to $335 million, up from its prior range of $310 million to $320 million in non-GAAP operating income.
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 Q1 FY 2019 on
Tuesday, July 31, 2018 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer 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), gain (loss) 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.
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, Logitech G and ASTRO Gaming. 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.
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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, 2018, product portfolio, innovation, strategy, investments, capabilities, realignment of resources, organizational structure, growth opportunities, timing of closing and sales growth from the acquisition of Blue Microphones, sales growth, profitability, momentum, 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; our ability to implement the restructuring in various geographies; possible changes in the size, timing and components of the restructuring or the expected costs and charges associated with the restructuring; risks associated with our ability to achieve improved capabilities, growth opportunities and overall organizational structure; 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, 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.
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