LOGI
$86.95
Logitech Int S.A.
$1.01
1.18%
Earnings Details
2nd Quarter September 2020
Monday, October 19, 2020 9:00:00 PM
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Summary

Logitech Int S.A. Beats

Logitech Int S.A. (LOGI) reported 2nd Quarter September 2020 earnings of $1.75 per share on revenue of $1.3 billion. The consensus earnings estimate was $0.54 per share on revenue of $841.1 million. The Earnings Whisper number was $0.65 per share. Revenue grew 74.7% on a year-over-year basis.

The company said it expects fiscal 2021 revenue of $4.02 billion to $4.17 billion. The company's previous guidance was revenue of $3.28 billion to $3.37 billion and the current consensus estimate is revenue of $3.36 billion for the year ending March 31, 2021.

Logitech International SA together with its consolidated subsidiaries develops and markets hardware and software products that enables digital navigation, music and video entertainment, gaming and social networking.

Results
Reported Earnings
$1.75
Earnings Whisper
$0.65
Consensus Estimate
$0.54
Reported Revenue
$1.26 Bil
Revenue Estimate
$841.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Logitech’s Q2 Sales Grow 75%, Operating Income Up Over 300%

Company Raises Annual Outlook as Hybrid Work Culture Takes Shape

LAUSANNE, Switzerland & NEWARK, Calif.--(BUSINESS WIRE)--Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2021.

  • Q2 sales were $1.26 billion, up 75 percent in US dollars and 73 percent in constant currency, compared to Q2 of the prior year. This was the first time ever that Logitech’s quarterly sales exceeded the billion-dollar mark.
  • Q2 GAAP operating income grew 372 percent to $322 million, compared to $68 million in the same quarter a year ago. Q2 GAAP earnings per share (EPS) grew 263 percent to $1.56, compared to $0.43 in the same quarter a year ago.
  • Q2 non-GAAP operating income grew 295 percent to $354 million, compared to $89 million in the same quarter a year ago. Q2 non-GAAP EPS grew 274 percent to $1.87, compared to $0.50 in the same quarter a year ago.
  • Cash flow from operations was $280 million, compared to $107 million in the same period a year ago.

“Our growth and profitability accelerated again this quarter, and we are raising our annual outlook,” said Bracken Darrell, Logitech president and chief executive officer. “The growth trends that drive our business have accelerated as society adjusts to its new reality. The organization leaders I speak to envision people increasingly working from multiple locations, a hybrid work culture that is emerging as the norm. And at home, the rise of gaming as a spectator and participant sport continues with no end in sight. Our products are essential to helping customers work, play and create wherever they are. Logitech is well positioned for long-term growth.”

Outlook

Logitech raised its Fiscal Year 2021 annual outlook to between 35 and 40 percent sales growth in constant currency, and a range of $700 million to $725 million in non-GAAP operating income. The Company’s previous outlook was between 10 and 13 percent sales growth in constant currency, and a range of $410 million to $425 million in non-GAAP operating income.

Prepared Remarks Available Online

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

Financial Results Videoconference and Livestream

Logitech will hold a financial results videoconference to discuss the results for Q2 FY 2021 on Tuesday, October 20, 2020 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, purchase accounting effect on inventory, acquisition-related costs, change in fair value of contingent consideration for business acquisition, restructuring charges (credits), loss (gain) 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 September 30, 2020, growth trends, the pace of growth trends, gaming trends, our products and their utility to consumers, long-term growth, 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 and our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 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.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

 

 

 

 

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30,

 

September 30,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,257,158

 

 

$

719,691

 

 

$

2,049,052

 

 

$

1,363,916

 

Cost of goods sold

 

684,599

 

 

444,344

 

 

1,167,237

 

 

846,322

 

Amortization of intangible assets and purchase accounting effect on inventory

 

2,836

 

 

3,271

 

 

6,359

 

 

6,542

 

Gross profit

 

569,723

 

 

272,076

 

 

875,456

 

 

511,052

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Marketing and selling

 

158,797

 

 

134,155

 

 

292,035

 

 

257,188

 

Research and development

 

53,379

 

 

41,964

 

 

103,104

 

 

84,207

 

General and administrative

 

31,664

 

 

24,048

 

 

60,735

 

 

46,207

 

Amortization of intangible assets and acquisition-related costs

 

4,331

 

 

4,218

 

 

8,940

 

 

7,814

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

5,716

 

 

 

Restructuring charges (credits), net

 

(1

)

 

(364

)

 

(54

)

 

114

 

Total operating expenses

 

248,170

 

 

204,021

 

 

470,476

 

 

395,530

 

 

 

 

 

 

 

 

 

 

Operating income

 

321,553

 

 

68,055

 

 

404,980

 

 

115,522

 

Interest income

 

513

 

 

2,390

 

 

1,133

 

 

4,943

 

Other income (expense), net

 

1,149

 

 

(110

)

 

3,178

 

 

1,751

 

Income before income taxes

 

323,215

 

 

70,335

 

 

409,291

 

 

122,216

 

Provision for (benefit from) income taxes

 

56,301

 

 

(2,598

)

 

70,304

 

 

3,938

 

Net income

 

$

266,914

 

 

$

72,933

 

 

$

338,987

 

 

$

118,278

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.58

 

 

$

0.44

 

 

$

2.02

 

 

$

0.71

 

Diluted

 

$

1.56

 

 

$

0.43

 

 

$

1.99

 

 

$

0.70

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

 

 

 

 

Basic

 

168,645

 

 

166,662

 

 

168,140

 

 

166,484

 

Diluted

 

171,382

 

 

169,027

 

 

170,766

 

 

168,914

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020

 

March 31, 2020

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

917,221

 

 

$

715,566

 

Accounts receivable, net

 

750,749

 

 

394,743

 

Inventories

 

394,708

 

 

229,249

 

Other current assets

 

94,753

 

 

74,920

 

Total current assets

 

2,157,431

 

 

1,414,478

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

86,386

 

 

76,119

 

Goodwill

 

400,953

 

 

400,917

 

Other intangible assets, net

 

111,702

 

 

126,941

 

Other assets

 

339,397

 

 

345,019

 

Total assets

 

$

3,095,869

 

 

$

2,363,474

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

662,873

 

 

$

259,120

 

Accrued and other current liabilities

 

541,977

 

 

455,024

 

Total current liabilities

 

1,204,850

 

 

714,144

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

54,507

 

 

40,788

 

Other non-current liabilities

 

130,549

 

 

119,274

 

Total liabilities

 

1,389,906

 

 

874,206

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at September 30 and March 31, 2020

 

 

 

 

Additional shares that may be issued out of conditional capitals — 50,000 at September 30 and March 31, 2020

 

 

 

 

Additional shares that may be issued out of authorized capital — 17,311 at September 30 and 34,621 at March 31, 2020

 

 

 

 

Additional paid-in capital

 

78,617

 

 

75,097

 

Shares in treasury, at cost — 4,357 at September 30, 2020 and 6,210 at March 31, 2020

 

(166,258

)

 

(185,896

)

Retained earnings

 

1,882,308

 

 

1,690,579

 

Accumulated other comprehensive loss

 

(118,852

)

 

(120,660

)

Total shareholders’ equity

 

1,705,963

 

 

1,489,268

 

Total liabilities and shareholders’ equity

 

$

3,095,869

 

 

$

2,363,474

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30,

 

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

266,914

 

 

$

72,933

 

 

$

338,987

 

 

$

118,278

 

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

 

 

 

 

 

 

 

 

Depreciation

 

10,854

 

 

10,584

 

 

22,601

 

 

21,386

 

Amortization of intangible assets

 

7,107

 

 

6,868

 

 

15,239

 

 

13,735

 

Loss on investments

 

2,693

 

 

274

 

 

2,519

 

 

63

 

Share-based compensation expense

 

24,785

 

 

14,252

 

 

44,900

 

 

26,470

 

Deferred income taxes

 

16,563

 

 

(5,597

)

 

20,152

 

 

(8,978

)

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

5,716

 

 

 

Other

 

(1,886

)

 

2

 

 

(1,877

)

 

(2

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(244,746

)

 

(51,691

)

 

(346,838

)

 

(85,955

)

Inventories

 

(120,735

)

 

(45,092

)

 

(161,120

)

 

(47,773

)

Other assets

 

(15,797

)

 

(8,696

)

 

(31,567

)

 

(14,083

)

Accounts payable

 

230,830

 

 

73,509

 

 

399,176

 

 

129,101

 

Accrued and other liabilities

 

103,090

 

 

39,157

 

 

90,631

 

 

(9,223

)

Net cash provided by operating activities

 

279,672

 

 

106,503

 

 

398,519

 

 

143,019

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(15,466

)

 

(8,752

)

 

(27,774

)

 

(18,092

)

Investment in privately held companies

 

(3,375

)

 

 

 

(3,405

)

 

(170

)

Acquisitions, net of cash acquired

 

 

 

(366

)

 

 

 

(366

)

Purchases of trading investments

 

(5,775

)

 

(1,370

)

 

(8,199

)

 

(2,525

)

Proceeds from sales of trading investments

 

6,477

 

 

1,375

 

 

8,839

 

 

2,571

 

Net cash used in investing activities

 

(18,139

)

 

(9,113

)

 

(30,539

)

 

(18,582

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of cash dividends

 

(146,705

)

 

(124,180

)

 

(146,705

)

 

(124,180

)

Purchases of registered shares

 

(22,454

)

 

 

 

(22,454

)

 

(15,127

)

Proceeds from exercises of stock options and purchase rights

 

16,074

 

 

8,938

 

 

26,066

 

 

9,331

 

Tax withholdings related to net share settlements of restricted stock units

 

(2,623

)

 

(1,538

)

 

(25,744

)

 

(20,908

)

Net cash used in financing activities

 

(155,708

)

 

(116,780

)

 

(168,837

)

 

(150,884

)

Effect of exchange rate changes on cash and cash equivalents

 

2,001

 

 

(3,102

)

 

2,512

 

 

(3,605

)

Net increase (decrease) in cash and cash equivalents

 

107,826

 

 

(22,492

)

 

201,655

 

 

(30,052

)

Cash and cash equivalents, beginning of the period

 

809,395

 

 

596,956

 

 

715,566

 

 

604,516

 

Cash and cash equivalents, end of the period

 

$

917,221

 

 

$

574,464

 

 

$

917,221

 

 

$

574,464

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

Three Months Ended

 

Six months ended

 

 

September 30,

 

September 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

 

 

 

 

 

 

Pointing Devices

 

$

169,121

 

 

$

132,770

 

 

27

%

 

$

289,590

 

 

$

254,753

 

 

14

%

Keyboards & Combos

 

201,617

 

 

139,049

 

 

45

 

 

 

346,977

 

 

 

267,728

 

 

30

 

PC Webcams

 

102,469

 

 

28,748

 

 

256

 

 

 

163,320

 

 

 

56,876

 

 

187

 

Tablet & Other Accessories

 

83,086

 

 

33,847

 

 

145

 

 

 

129,134

 

 

 

72,186

 

 

79

 

Gaming

 

297,711

 

 

161,014

 

 

85

 

 

 

479,614

 

 

 

295,529

 

 

62

 

Video Collaboration

 

236,704

 

 

89,553

 

 

164

 

 

 

366,778

 

 

 

162,977

 

 

125

 

Mobile Speakers

 

43,581

 

 

57,232

 

 

(24

)

 

 

72,590

 

 

 

107,648

 

 

(33

)

Audio & Wearables

 

114,275

 

 

68,018

 

 

68

 

 

 

185,640

 

 

 

126,642

 

 

47

 

Smart Home

 

8,573

 

 

9,434

 

 

(9

)

 

 

15,383

 

 

 

19,298

 

 

(20

)

Other (1)

 

21

 

 

26

 

 

(19

)

 

 

26

 

 

 

279

 

 

(91

)

Total sales

 

$

1,257,158

 

 

$

719,691

 

 

75

%

 

$

 

2,049,052

 

 

$

 

1,363,916

 

 

50

%

 

(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

 

Six Months Ended

 

 

September 30,

 

September 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Gross profit - GAAP

 

$

569,723

 

 

$

272,076

 

 

$

875,456

 

 

$

511,052

 

Share-based compensation expense

 

1,772

 

 

1,184

 

 

3,172

 

 

2,342

 

Amortization of intangible assets and purchase accounting effect on inventory

 

2,836

 

 

3,271

 

 

6,359

 

 

6,542

 

Gross profit - Non-GAAP

 

$

574,331

 

 

$

276,531

 

 

$

884,987

 

 

$

519,936

 

 

 

 

 

 

 

 

 

 

Gross margin - GAAP

 

45.3

%

 

37.8

%

 

42.7

%

 

37.5

%

Gross margin - Non-GAAP

 

45.7

%

 

38.4

%

 

43.2

%

 

38.1

%

 

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

248,170

 

 

$

204,021

 

 

$

470,476

 

 

$

395,530

 

Less: Share-based compensation expense

 

23,013

 

 

13,068

 

 

41,728

 

 

24,128

 

Less: Amortization of intangible assets and acquisition-related costs

 

4,331

 

 

4,218

 

 

8,940

 

 

7,814

 

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

 

 

 

 

 

5,716

 

 

 

Less: Restructuring charges (credits), net

 

(1

)

 

(364

)

 

(54

)

 

114

 

Operating expenses - Non-GAAP

 

$

220,827

 

 

$

187,099

 

 

$

414,146

 

 

$

363,474

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

19.7

%

 

28.3

%

 

23.0

%

 

29.0

%

% of net sales - Non - GAAP

 

17.6

%

 

26.0

%

 

20.2

%

 

26.6

%

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

321,553

 

 

$

68,055

 

 

$

404,980

 

 

$

115,522

 

Share-based compensation expense

 

24,785

 

 

14,252

 

 

44,900

 

 

26,470

 

Amortization of intangible assets

 

7,107

 

 

6,868

 

 

15,239

 

 

13,735

 

Acquisition-related costs

 

60

 

 

621

 

 

60

 

 

621

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

5,716

 

 

 

Restructuring charges (credits), net

 

(1

)

 

(364

)

 

(54

)

 

114

 

Operating income - Non - GAAP

 

$

353,504

 

 

$

89,432

 

 

$

470,841

 

 

$

156,462

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

25.6

%

 

9.5

%

 

19.8

%

 

8.5

%

% of net sales - Non - GAAP

 

28.1

%

 

12.4

%

 

23.0

%

 

11.5

%

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

266,914

 

 

$

72,933

 

 

$

338,987

 

 

$

118,278

 

Share-based compensation expense

 

24,785

 

 

14,252

 

 

44,900

 

 

26,470

 

Amortization of intangible assets

 

7,107

 

 

6,868

 

 

15,239

 

 

13,735

 

Acquisition-related costs

 

60

 

 

621

 

 

60

 

 

621

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

5,716

 

 

 

Restructuring charges (credits), net

 

(1

)

 

(364

)

 

(54

)

 

114

 

Loss on investments

 

2,693

 

 

274

 

 

2,519

 

 

63

 

Non-GAAP income tax adjustment

 

18,351

 

 

(9,506

)

 

21,399

 

 

(8,599

)

Net income - Non - GAAP

 

$

319,909

 

 

$

85,078

 

 

$

428,766

 

 

$

150,682

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP

 

$

1.56

 

 

$

0.43

 

 

$

1.99

 

 

$

0.70

 

Diluted - Non - GAAP

 

$

1.87

 

 

$

0.50

 

 

$

2.51

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP and Non - GAAP

 

171,382

 

 

169,027

 

 

170,766

 

 

168,914

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS *

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHARE-BASED COMPENSATION EXPENSE

 

Three Months Ended

 

Six Months Ended

 

 

September 30,

 

September 30,

SUPPLEMENTAL FINANCIAL INFORMATION

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

1,772

 

 

$

1,184

 

 

$

3,172

 

 

$

2,342

 

Marketing and selling

 

10,377

 

 

6,951

 

 

19,169

 

 

13,800

 

Research and development

 

3,763

 

 

2,248

 

 

6,866

 

 

4,402

 

General and administrative

 

8,873

 

 

3,869

 

 

15,693

 

 

5,926

 

Total share-based compensation expense

 

24,785

 

 

14,252

 

 

44,900

 

 

26,470

 

Income tax benefit

 

(3,958

)

 

(2,723

)

 

(12,069

)

 

(9,523

)

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

 

$

20,827

 

 

$

11,529

 

 

$

32,831

 

 

$

16,947

 

* Note: These preliminary results for the three and six months ended September 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 September 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.

(LOGIIR)

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

Source: Logitech International