Logitech Announces Q3 Results

·12 min read

Company Raises FY 2022 Outlook For Both Sales and Profitability

LAUSANNE, Switzerland & NEWARK, Calif., January 25, 2022--(BUSINESS WIRE)--SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2022, with strong growth in Pointing Devices, Keyboards & Combos and Gaming, and share gains in the majority of key categories. The Company raised annual guidance for both sales and profitability.

Q3 financial highlights:

  • Sales were $1.63 billion, down 2 percent in US dollars and constant currency, compared to Q3 of the prior year. This performance nearly sustains last year’s record Q3 sales which grew 85 percent in US dollars and 80 percent in constant currency.

  • Category sales in US dollars grew 29 percent in Keyboards & Combos and 8 percent in Pointing Devices and Gaming, compared to Q3 of the prior year. Video Collaboration grew 24 percent quarter over quarter and was down 2 percent compared to Q3 of the prior year in which sales grew more than 200 percent.

  • GAAP operating income declined 41 percent to $263 million, compared to $448 million in the same quarter a year ago. Non-GAAP operating income declined 37 percent to $302 million, compared to $476 million in the same quarter a year ago. This reflects the Company’s planned, strategic investments in marketing and innovation to drive future growth. Non-GAAP operating income almost doubled versus two years ago.

  • GAAP earnings per share (EPS) declined 44 percent to $1.24, compared to $2.22 in the same quarter a year ago. Non-GAAP EPS declined 37 percent to $1.55, compared to $2.45 in the same quarter a year ago.

  • Cash flow from operations was $377 million. The Company returned $116 million of cash to shareholders through share repurchases. Year to date, the Company has returned a total of $450 million to shareholders through dividends and share repurchases, more than twice the amount over the same period last year.

"I’m excited to now have in sight a fiscal year of growth for FY 2022, on top of last year’s remarkable performance," said Bracken Darrell, Logitech president and chief executive officer. "Our Q3 results reflect the strength of our operational capabilities, innovation engine, and the choices we made to position ourselves in line with the long-term trends affecting work, play, and creating."

Outlook

Logitech raised its Fiscal Year 2022 annual outlook to between 2 and 5 percent sales growth in constant currency, and between $850 million and $900 million in non-GAAP operating income. The Company’s previous outlook was 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 Q3 Fiscal Year 2022 on Tuesday, January 25, 2022 at 8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European 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, impairment 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.

Public Dissemination of Certain Information

Logitech webcasts its earnings calls, and certain events Logitech participates in or hosts, with members of the investment community on its 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 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 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 the federal securities laws, including, without limitation, statements regarding: our preliminary financial results for the three and nine months ended December 31, 2021, long-term trends, and outlook for Fiscal Year 2022 sales growth and non-GAAP operating income. 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, 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; the COVID-19 pandemic and its 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 SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 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
December 31,

Nine Months Ended
December 31,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

2021

2020

2021

2020

Net sales

$

1,632,782

$

1,667,302

$

4,251,107

$

3,716,354

Cost of goods sold

971,646

914,851

2,470,980

2,082,088

Amortization of intangible assets

3,126

3,441

11,028

9,800

Gross profit

658,010

749,010

1,769,099

1,624,466

Operating expenses:

Marketing and selling

269,941

204,485

778,882

496,520

Research and development

75,529

53,910

213,436

157,014

General and administrative

38,478

37,606

112,291

98,341

Amortization of intangible assets and acquisition-related costs

3,662

4,946

13,986

13,886

Impairment of intangible assets

7,000

7,000

Change in fair value of contingent consideration for business acquisition

(1,110

)

(3,509

)

5,716

Restructuring charges (credits), net

1,759

1,770

(54

)

Total operating expenses

395,259

300,947

1,123,856

771,423

Operating income

262,751

448,063

645,243

853,043

Interest income

278

311

795

1,444

Other income (expense), net

(3,673

)

6,483

(1,941

)

9,661

Income before income taxes

259,356

454,857

644,097

864,148

Provision for income taxes

49,345

72,334

107,789

142,638

Net income

$

210,011

$

382,523

$

536,308

$

721,510

Net income per share:

Basic

$

1.26

$

2.26

$

3.19

$

4.28

Diluted

$

1.24

$

2.22

$

3.14

$

4.21

Weighted average shares used to compute net income per share:

Basic

167,090

169,050

167,953

168,448

Diluted

169,707

172,587

171,027

171,378

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

December 31,

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

2021

2021

Current assets:

Cash and cash equivalents

$

1,364,411

$

1,750,327

Accounts receivable, net

845,836

612,225

Inventories

834,534

661,116

Other current assets

145,001

135,650

Total current assets

3,189,782

3,159,318

Non-current assets:

Property, plant and equipment, net

109,601

114,060

Goodwill

448,731

429,604

Other intangible assets, net

89,878

115,148

Other assets

323,605

324,248

Total assets

$

4,161,597

$

4,142,378

Current liabilities:

Accounts payable

$

738,992

$

823,233

Accrued and other current liabilities

813,684

858,617

Total current liabilities

1,552,676

1,681,850

Non-current liabilities:

Income taxes payable

85,610

59,237

Other non-current liabilities

155,369

139,502

Total liabilities

1,793,655

1,880,589

Shareholders’ equity:

Registered shares, CHF 0.25 par value:

30,148

30,148

Issued shares — 173,106 at December 31 and March 31, 2021

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

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

Additional paid-in capital

115,994

129,519

Shares in treasury, at cost — 6,639 at December 31, 2021 and 4,799 at March 31, 2021

(526,480

)

(279,541

)

Retained earnings

2,867,476

2,490,578

Accumulated other comprehensive loss

(119,196

)

(108,915

)

Total shareholders’ equity

2,367,942

2,261,789

Total liabilities and shareholders’ equity

$

4,161,597

$

4,142,378

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

Three Months Ended
December 31,

Nine Months Ended
December 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

2021

2020

2021

2020

Cash flows from operating activities:

Net income

$

210,011

$

382,523

$

536,308

$

721,510

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

21,913

13,409

65,387

36,010

Amortization of intangible assets

6,755

8,388

24,223

23,627

Impairment of intangible assets

7,000

7,000

Loss on investments

460

2,173

1,421

4,692

Share-based compensation expense

24,792

19,814

72,465

64,714

Deferred income taxes

20,561

17,531

27,369

37,683

Change in fair value of contingent consideration for business acquisition

(1,110

)

(3,509

)

5,716

Other

9

207

1,068

(1,670

)

Changes in assets and liabilities, net of acquisitions:

Accounts receivable, net

(123,350

)

(129,966

)

(236,358

)

(476,804

)

Inventories

(10,240

)

(78,258

)

(177,828

)

(239,378

)

Other assets

27,871

(21,714

)

(20,569

)

(53,281

)

Accounts payable

74,845

141,848

(80,637

)

541,024

Accrued and other liabilities

117,059

173,945

(17,612

)

264,576

Net cash provided by operating activities

376,576

529,900

198,728

928,419

Cash flows from investing activities:

Purchases of property, plant and equipment

(16,494

)

(18,389

)

(63,726

)

(46,163

)

Investment in privately held companies

(359

)

(120

)

(1,260

)

(3,525

)

Acquisitions, net of cash acquired

(300

)

(360

)

(15,886

)

(360

)

Proceeds from return of strategic investments

2,934

2,934

Purchases of short-term investments

(10,000

)

(10,000

)

Proceeds from the sale of short-term investments

1,225

1,225

Purchases of trading investments

(1,178

)

(2,473

)

(3,644

)

(10,672

)

Proceeds from sales of trading investments

1,308

2,493

4,285

11,332

Net cash used in investing activities

(25,798

)

(15,915

)

(89,006

)

(46,454

)

Cash flows from financing activities:

Payment of cash dividends

(159,410

)

(146,705

)

Payment of contingent consideration for business acquisition

(880

)

(880

)

Purchases of registered shares

(116,245

)

(50,271

)

(290,625

)

(72,725

)

Proceeds from exercises of stock options and purchase rights

8

3,643

16,644

29,709

Tax withholdings related to net share settlements of restricted stock units

(3,777

)

(3,731

)

(58,528

)

(29,475

)

Net cash used in financing activities

...

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