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Logitech International S.A. (LOGI) SEC Filing 8-K Material Event for the period ending Monday, July 20, 2020

Logitech International

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CIK: 1762388 Ticker: LOGI


Exhibit 99.1
Editorial Contacts:
Ben Lu, Vice President, Investor Relations - USA +1 (510) 713-5568
Nicole Kenyon, Head of Global Corporate & Employee Communications - USA +1 (510) 988-8553
Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499


Logitech's Growth Accelerates, Q1 Revenue Up 23%

Profits Increase 76% and Company Raises Annual Outlook
LAUSANNE, Switzerland, Jul. 21, 2020 and NEWARK, Calif., Jul 20, 2020 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2021.
•
Q1 sales were $792 million, up 23 percent in US dollars and 25 percent in constant currency, compared to Q1 of the prior year.
•
Q1 GAAP operating income grew 76 percent to $83 million, compared to $47 million in the same quarter a year ago. Q1 GAAP earnings per share (EPS) grew 56 percent to $0.42, compared to $0.27 in the same quarter a year ago.
•
Q1 non-GAAP operating income grew 75 percent to $117 million, compared to $67 million in the same quarter a year ago. Q1 non-GAAP EPS grew 64 percent to $0.64, compared to $0.39 in the same quarter a year ago.
•
Cash flow from operations was $119 million, compared to $37 million in the same period a year ago.

“We delivered an exceptional first quarter and are raising our fiscal year outlook,” said Bracken Darrell, Logitech president and chief executive officer. “We grew sales 25% with strong growth in almost every product category. Our company strategy focuses on four long-term trends: more of us will work from home; video calls will replace audio calls; esports will become as big as conventional sports; and billions of people worldwide will create content, not just a handful of TV and movie studios. Logitech’s business was already positioned to grow from these long-term trends, and since early March they have accelerated, making Logitech more relevant to customers than ever before.”
Outlook
Logitech raised its Fiscal Year 2021 annual sales outlook from mid single-digit sales growth to 10 to 13 percent growth in constant currency. The Company also raised its annual outlook for non-GAAP operating income from a range of $380 million to $400 million, to a range of $410 million to $425 million.
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 2021 on
Tuesday, July 21, 2020 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 2021.
About Logitech
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, Logitech G, ASTRO Gaming, Streamlabs, Ultimate Ears, Jaybird and Blue Microphones. 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, 2020, long-term trends, the pace of long-term trends, our ability to grow, our relevancy to customers, and outlook for Fiscal Year 2021 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 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 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 and our ability to mitigate; 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, 2020, 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.

(LOGIIR)





LOGITECH INTERNATIONAL S.A.
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands, except per share amounts) - unaudited
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
June 30,
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
2020
 
2019
 
 
 
 
 
Net sales
 
$
791,894

 
$
644,225

Cost of goods sold
 
482,638

 
401,978

Amortization of intangible assets and purchase accounting effect on inventory
 
3,523

 
3,271

Gross profit
 
305,733

 
238,976

 
 
 
 
 
Operating expenses:
 
 
 
 
Marketing and selling
 
133,238

 
123,033

Research and development
 
49,725

 
42,243

General and administrative
 
29,071

 
22,159

Amortization of intangible assets and acquisition-related costs
 
4,609

 
3,596

Change in fair value of contingent consideration for business acquisition
 
5,716

 
—

Restructuring charges (credits), net
 
(53
)
 
478

Total operating expenses
 
222,306

 
191,509

 
 
 
 
 
Operating income
 
83,427

 
47,467

Interest income
 
620

 
2,553

Other income, net
 
2,029

 
1,861

Income before income taxes
 
86,076

 
51,881

Provision for (benefit from) income taxes 
 
14,003

 
6,536

Net income
 
$
72,073

 
$
45,345

 
 
 
 
 
Net income per share:
 
 

 
 

Basic
 
$
0.43

 
$
0.27

Diluted
 
$
0.42

 
$
0.27

 
 
 
 
 
Weighted average shares used to compute net income per share:
 
 

 
 

Basic
 
167,612

 
166,302

Diluted
 
170,127

 
168,797






LOGITECH INTERNATIONAL S.A.
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands) - unaudited
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
March 31, 2020
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
809,395

 
$
715,566

Accounts receivable, net 
 
500,306

 
394,743

Inventories
 
271,180

 
229,249

Other current assets
 
82,470

 
74,920

Total current assets
 
1,663,351

 
1,414,478

Non-current assets:
 
 

 
 

Property, plant and equipment, net
 
79,481

 
76,119

Goodwill
 
400,934

 
400,917

Other intangible assets, net
 
118,809

 
126,941

Other assets 
 
351,131

 
345,019

Total assets
 
$
2,613,706

 
$
2,363,474

 
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
429,693

 
$
259,120

Accrued and other current liabilities
 
444,826

 
455,024

Total current liabilities
 
874,519

 
714,144

Non-current liabilities:
 
 

 
 

Income taxes payable
 
44,261

 
40,788

Other non-current liabilities
 
127,445

 
119,274

Total liabilities
 
1,046,225

 
874,206

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Registered shares, CHF 0.25 par value:
 
30,148

 
30,148

Issued shares — 173,106 at June 30 and March 31, 2020
 
 
 
 
Additional shares that may be issued out of conditional capitals — 50,000 at June 30 and March 31, 2020
 
 
 
 
Additional shares that may be issued out of authorized capitals — 34,621 at June 30 and March 31, 2020
 
 
 
 
Additional paid-in capital
 
54,668

 
75,097

Shares in treasury, at cost — 4,689 at June 30, 2020 and 6,210 at March 31, 2020
 
(158,463
)
 
(185,896
)
Retained earnings
 
1,762,099

 
1,690,579

Accumulated other comprehensive loss
 
(120,971
)
 
(120,660
)
Total shareholders’ equity
 
1,567,481

 
1,489,268

Total liabilities and shareholders’ equity
 
$
2,613,706

 
$
2,363,474







LOGITECH INTERNATIONAL S.A.
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands) - unaudited
 
 
 
 
 
 
Three Months Ended
 
 
June 30,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
2020
 
2019
 
 
 
 
 
Cash flows from operating activities:
 
 

 
 

Net income
 
$
72,073

 
$
45,345

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
11,747

 
10,802

Amortization of intangible assets
 
8,132

 
6,867

Gain on investments
 
(174
)
 
(211
)
Share-based compensation expense
 
20,115

 
12,218

Deferred income taxes
 
3,589

 
(3,381
)
Change in fair value of contingent consideration for business acquisition
 
5,716

 
—

Other
 
9

 
(4
)
Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Accounts receivable, net
 
(102,092
)
 
(34,264
)
Inventories
 
(40,385
)
 
(2,681
)
Other assets
 
(15,770
)
 
(5,387
)
Accounts payable
 
168,346

 
55,592

Accrued and other liabilities
 
(12,459
)
 
(48,380
)
Net cash provided by operating activities
 
118,847

 
36,516

Cash flows from investing activities:
 
 

 
 

Purchases of property, plant and equipment
 
(12,308
)
 
(9,340
)
Investment in privately held companies
 
(30
)
 
(170
)
Purchases of trading investments
 
(2,424
)
 
(1,155
)
Proceeds from sales of trading investments
 
2,362

 
1,196

Net cash used in investing activities
 
(12,400
)
 
(9,469
)
Cash flows from financing activities:
 
 

 
 

Purchases of registered shares
 
—

 
(15,127
)
Proceeds from exercises of stock options and purchase rights
 
9,992

 
393

Tax withholdings related to net share settlements of restricted stock units
 
(23,121
)
 
(19,370
)
Net cash used in financing activities
 
(13,129
)
 
(34,104
)
Effect of exchange rate changes on cash and cash equivalents
 
511

 
(503
)
Net increase (decrease) in cash and cash equivalents
 
93,829

 
(7,560
)
Cash and cash equivalents, beginning of the period
 
715,566

 
604,516

Cash and cash equivalents, end of the period
 
$
809,395

 
$
596,956






LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands) - unaudited
 
 
 
 
 
 
 
 
 
 
 
NET SALES
 
Three Months Ended
 
 
June 30,
SUPPLEMENTAL FINANCIAL INFORMATION
 
2020
 
2019
 
Change
 
 
 
 
 
 
 
Net sales by product category:
 
 
 
 
 
 
Pointing Devices
 
$
120,469

 
$
121,983

 
(1
)%
Keyboards & Combos
 
145,360

 
128,679

 
13

PC Webcams
 
60,851

 
28,128

 
116

Tablet & Other Accessories
 
46,048

 
38,339

 
20

Gaming
 
181,903

 
134,515

 
35

Video Collaboration
 
130,074

 
73,424

 
77

Mobile Speakers
 
29,009

 
50,416

 
(42
)
Audio & Wearables
 
71,365

 
58,624

 
22

Smart Home
 
6,810

 
9,864

 
(31
)
Other (1)
 
5

 
253

 
(98
)
Total sales
 
$
791,894

 
$
644,225

 
23

(1) Other category includes products that we currently intend to phase out, or have already phased out, because they are no longer strategic to our business.






LOGITECH INTERNATIONAL S.A.
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands, except per share amounts) - Unaudited
 
 
 
 
 
 
 
 
 
GAAP TO NON-GAAP RECONCILIATION (A)
 
Three Months Ended
 
 
June 30,
SUPPLEMENTAL FINANCIAL INFORMATION
 
2020
 
2019
 
 
 
 
 
Gross profit - GAAP
 
$
305,733

 
$
238,976

Share-based compensation expense
 
1,400

 
1,158

Amortization of intangible assets and purchase accounting effect on inventory
 
3,523

 
3,271

Gross profit - Non-GAAP
 
$
310,656

 
$
243,405

 
 
 
 
 
Gross margin - GAAP
 
38.6
%
 
37.1
%
Gross margin - Non-GAAP
 
39.2
%
 
37.8
%
 
 
 
 
 
Operating expenses - GAAP
 
$
222,306

 
$
191,509

Less: Share-based compensation expense
 
18,715

 
11,060

Less: Amortization of intangible assets and acquisition-related costs
 
4,609

 
3,596

Less: Change in fair value of contingent consideration for business acquisition 
 
5,716

 
—

Less: Restructuring charges, net
 
(53
)
 
478

Operating expenses - Non-GAAP
 
$
193,319

 
$
176,375

 
 
 
 
 
% of net sales - GAAP
 
28.1
%
 
29.7
%
% of net sales - Non - GAAP
 
24.4
%
 
27.4
%
 
 
 
 
 
Operating income - GAAP
 
$
83,427

 
$
47,467

Share-based compensation expense
 
20,115

 
12,218

Amortization of intangible assets
 
8,132

 
6,867

Change in fair value of contingent consideration for business acquisition
 
5,716

 
—

Restructuring charges (credits), net
 
(53
)
 
478

Operating income - Non - GAAP
 
$
117,337

 
$
67,030

 
 
 
 
 
% of net sales - GAAP
 
10.5
%
 
7.4
%
% of net sales - Non - GAAP
 
14.8
%
 
10.4
%
 
 
 
 
 
Net income - GAAP
 
$
72,073

 
$
45,345

Share-based compensation expense
 
20,115

 
12,218

Amortization of intangible assets
 
8,132

 
6,867

Change in fair value of contingent consideration for business acquisition
 
5,716

 
—

Restructuring charges (credits), net
 
(53
)
 
478

Loss (gain) on investments
 
(174
)
 
(211
)
Non-GAAP income tax adjustment
 
3,048

 
907

Net income - Non - GAAP
 
$
108,857

 
$
65,604

 
 
 
 
 
Net income per share:
 
 
 
 
Diluted - GAAP
 
$
0.42

 
$
0.27

Diluted - Non - GAAP
 
$
0.64

 
$
0.39

 
 
 
 
 
Shares used to compute net income per share:
 
 
 
 
Diluted - GAAP and Non - GAAP
 
170,127

 
168,797





LOGITECH INTERNATIONAL S.A.
 
 
 
 
PRELIMINARY RESULTS *
 
 
 
 
(In thousands) - unaudited
 
 
 
 
 
 
 
 
 
SHARE-BASED COMPENSATION EXPENSE
 
Three Months Ended
 
 
June 30,
SUPPLEMENTAL FINANCIAL INFORMATION
 
2020
 
2019
 
 
 
 
 
Share-based Compensation Expense
 
 
 
 
Cost of goods sold
 
$
1,400

 
$
1,158

Marketing and selling
 
8,792

 
6,849

Research and development
 
3,103

 
2,154

General and administrative
 
6,820

 
2,057

Total share-based compensation expense
 
20,115

 
12,218

Income tax benefit
 
(8,111
)
 
(6,800
)
Total share-based compensation expense, net of income tax benefit
 
$
12,004

 
$
5,418


* Note: These preliminary results for the three months ended June 30, 2020 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, 2020 and previous periods, we excluded items in the following general categories, each of which are described below:

Share-based compensation expenses. 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.

Purchase accounting effect on inventory. Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment excludes the expected profit margin component that is recorded under business combination accounting principles associated with our business acquisitions. We believe the adjustment is useful to investors because such charges are not reflective of our ongoing operations. 





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 charges, 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 recognized loss (gain) related to our investments in various companies, which varies depending on the operational and financial performance of those companies in which we invested, and sales of these investments. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges 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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Logitech International provided additional information to their SEC Filing as exhibits

Exhibit 99.1: Additional Exhibits
Ticker: LOGI
CIK: 1032975
Form Type: 8-K Corporate News
Accession Number: 0001032975-20-000029
Submitted to the SEC: Mon Jul 20 2020 9:13:22 PM EST
Accepted by the SEC: Tue Jul 21 2020
Period: Monday, July 20, 2020
Industry: Computer Peripheral Equipment
Events:
  1. Earnings Release
  2. Financial Exhibit

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