Logitech Delivers New Sales Record and Sixth Consecutive Year of Growth

Earnings Per Share Up Over 20%; Company Beats Three-Year Non-GAAP EPS
Goal A Full Year Early

LAUSANNE, Switzerland & NEWARK, Calif.–(BUSINESS WIRE)–Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced
financial results for the fourth quarter and full year of Fiscal Year
2019, ended March 31, 2019.

For Fiscal Year 2019:

  • Sales were the highest ever at $2.79 billion, up 9 percent in US
    dollars and 10 percent in constant currency compared to the prior
    year, the sixth consecutive year of growth.
  • GAAP operating income grew 15 percent to $263 million, compared to
    $230 million a year ago. GAAP earnings per share (EPS) grew 24 percent
    to $1.52, compared to $1.23 a year ago.
  • Non-GAAP operating income grew 23 percent to $352 million, compared to
    $287 million a year ago. Non-GAAP EPS grew 26 percent to $2.01,
    compared to $1.60 a year ago.

For Q4 Fiscal Year 2019:

  • Sales grew to $624 million, up 5 percent in US dollars and 9 percent
    in constant currency compared to Q4 of the prior year.
  • GAAP operating income grew 8 percent to $42 million, and non-GAAP
    operating income grew 16 percent to $64 million, compared to Q4 of the
    prior year.

We’ve delivered our third consecutive year of double-digit growth in
constant currency and our highest fiscal year sales ever,” said Bracken
Darrell, Logitech president and chief executive officer. “Our
innovative, diverse product portfolio delivered, led by strong,
sustainable growth in our major categories of Gaming, Video
Collaboration, and Creativity & Productivity. And we are not just
growing topline, but also systematically delivering strong leverage on
the bottom line. In fact, we achieved our plan to double non-GAAP EPS to
$2.00 a full year early. Our strategy is working, and we are excited for
our future as the world’s leading cloud peripheral company.”

Outlook

Logitech confirmed its Fiscal Year 2020 outlook of mid to high
single-digit sales growth in constant currency and $375 million to $385
million in non-GAAP operating income.

Management Update

Additionally, Logitech announced today that Vincent Pilette, Logitech’s
chief financial officer, is leaving the Company. Vincent will leave, and
cease to be a member of the Group Management Team, at the end of May,
2019, to pursue a senior leadership role at another company. Logitech
has named Nate Olmstead interim chief financial officer following
Vincent’s departure. Nate joined Logitech in 2019 as vice president of
finance, and brings over 16 years of financial management experience,
most recently as the vice president of finance for global operations at
Hewlett Packard Enterprise. Nate has a BA from Stanford and an MBA from
Harvard.

When I joined Logitech, I had a vision to turn Logitech into a design
company, pursuing opportunities in the many new market opportunities
enabled by the cloud,” said Bracken Darrell. “We needed financial and
operational strength to support the ambition of that vision. Vincent has
been a terrific partner for this pursuit these past six years, and we’ve
made great progress. But more important than his partnership and
leadership is the team he built and the culture of rigor and discipline
he helped instill throughout the company. We now have a strong, seasoned
finance team across every area and a proven track record of operational
excellence. That is his most important legacy. I’m excited for him in
his next challenge. And I’m even more energized by our continued
progress toward our design company vision.”

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 Q4 and the full Fiscal Year 2019 on Tuesday, April 30, 2019
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), 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 2020.

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,
Ultimate
Ears
, Jaybird,
Blue
Microphones
, ASTRO
Gaming
and Logitech
G
. 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 and full fiscal year ended March 31, 2019, innovation, product
portfolio, brand leadership, growth, profitability and leverage,
sustainability, market leadership, position for the future, focus,
vision ability to be a design company, outlook for Fiscal Year 2020
operating income and sales growth, and our executive officers. 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; 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, 2018 and our Quarterly Report
on Form 10-Q for the fiscal quarter ended December 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.

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 Fiscal Years Ended
March 31, March 31,
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 2019 2018 2019 2018
 
Net sales (A) $ 624,308 $ 592,426 $ 2,788,322 $ 2,566,863
Cost of goods sold 388,028 377,617 1,737,969 1,648,744
Amortization of intangible assets and purchase accounting effect on
inventory
3,305   2,574   13,342   8,878  
Gross profit 232,975   212,235   1,037,011   909,241  
Operating expenses:
Marketing and selling 119,628 109,572 488,263 435,489
Research and development 42,110 37,616 161,230 143,760
General and administrative 23,557 23,387 98,732 96,353
Amortization of intangible assets and acquisition-related costs 3,913 2,553 14,290 8,930
Change in fair value of contingent consideration for business
acquisition
(4,908 )
Restructuring charges (credits), net 1,540     11,302   (116 )

Total operating expenses

190,748   173,128   773,817   679,508  
Operating income 42,227   39,107   263,194   229,733  
Interest income 2,666 1,872 8,375 4,969
Other income (expense), net 493   (1,543 ) (436 ) (2,437 )
Income before income taxes 45,386 39,436 271,133 232,265
Provision for income taxes 3,265   5,032   13,560   23,723  
Net income $ 42,121   $ 34,404   $ 257,573   $ 208,542  
 
Net income per share :
Basic $ 0.25 $ 0.21 $ 1.56 $ 1.27
Diluted $ 0.25 $ 0.20 $ 1.52 $ 1.23
 
Weighted average shares used to compute net income per share:
Basic 165,776 164,374 165,609 164,038
Diluted 168,956 169,387 168,965 168,971
 
     
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) – unaudited
 
March 31, March 31,
CONDENSED CONSOLIDATED BALANCE SHEETS 2019 2018
 
Current assets:
Cash and cash equivalents $ 604,516 $ 641,947
Accounts receivable, net (A) 383,309 214,885
Inventories 293,495 259,906
Other current assets (A) 69,116   56,362  
Total current assets 1,350,436 1,173,100
Non-current assets:
Property, plant and equipment, net 78,552 86,304
Goodwill 343,684 275,451
Other intangible assets, net 118,999 87,547
Other assets 132,453   120,755  
Total assets $ 2,024,124   $ 1,743,157  
 
Current liabilities:
Accounts payable $ 283,922 $ 293,988
Accrued and other current liabilities (A) 433,897   281,732  
Total current liabilities 717,819 575,720
Non-current liabilities:
Income taxes payable 36,384 34,956
Other non-current liabilities 93,582   81,924  
Total liabilities 847,785 692,600
 
Shareholders’ equity:
Registered shares, CHF 0.25 par value: 30,148 30,148
Issued shares—173,106 at March 31, 2019 and 2018

Additional shares that may be issued out of conditional capitals —
50,000 at March 31, 2019 and March 31, 2018

Additional shares that may be issued out of authorized capital —
34,621 at March 31, 2019 and none at March 31, 2018
Additional paid-in capital 56,655 47,234
Shares in treasury, at cost— 7,244 and 8,527 shares at March 31,
2019 and 2018, respectively
(169,802 ) (165,686 )
Retained earnings (A) 1,365,036 1,232,316
Accumulated other comprehensive loss (105,698 ) (93,455 )
Total shareholders’ equity 1,176,339   1,050,557  
Total liabilities and shareholders’ equity $ 2,024,124   $ 1,743,157  
 
         
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) – unaudited
Three Months Ended Fiscal Years Ended
March 31, March 31,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 2019 2018 2019 2018
 
Cash flows from operating activities:
Net income $ 42,121 $ 34,404 $ 257,573 $ 208,542
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 10,816 11,077 43,471 41,295
Amortization of intangible assets 6,944 4,954 24,180 15,607
Share-based compensation expense 13,102 10,899 50,265 44,138
Gain on investments (227 ) (119 ) (816 ) (669 )
Deferred income taxes (2,535 ) 413 (12,257 ) 7,141
Change in fair value of contingent consideration for business
acquisition
(4,908 )
Other 148 (18 ) (230 ) (11 )
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net 100,146 137,665 (58,798 ) (26,363 )
Inventories 47,612 21,739 (21,551 ) 16,047
Other assets 2,298 2,045 (8,800 ) (16,908 )
Accounts payable (152,791 ) (134,016 ) (19,134 ) 17,695
Accrued and other liabilities (35,896 ) 1,134   51,278   44,655  
Net cash provided by operating activities 31,738   90,177   305,181   346,261  
Cash flows from investing activities:
Purchases of property, plant and equipment (7,626 ) (12,155 ) (35,930 ) (39,748 )
Acquisitions, net of cash acquired 94 (133,814 ) (88,323 )
Investment in privately held companies (175 ) (360 ) (2,717 ) (1,240 )
Proceeds from return of investments 124 124 237
Purchases of short-term investments (1,505 ) (6,789 )
Sales of short-term investments 6,789
Purchases of trading investments (868 ) (3,211 ) (5,203 ) (6,053 )
Proceeds from sales of trading investments 862   3,214   5,700   6,423  
Net cash used in investing activities (7,589 ) (12,512 ) (173,345 ) (128,704 )
Cash flows from financing activities:
Payment of cash dividends (113,971 ) (104,248 )
Payment of contingent consideration for business acquisition (5,000 )
Purchases of registered shares (9,995 ) (10,314 ) (32,449 ) (30,722 )
Proceeds from exercises of stock options and purchase rights 7,922 10,963 18,057 41,910
Tax withholdings related to net share settlements of restricted
stock units
(1,659 ) (4,308 ) (30,770 ) (29,813 )
Net cash used in financing activities (3,732 ) (3,659 ) (159,133 ) (127,873 )
Effect of exchange rate changes on cash and cash equivalents (389 ) 3,053   (10,134 ) 4,730  
Net increase (decrease) in cash and cash equivalents 20,028   77,059   (37,431 ) 94,414  
Cash and cash equivalents at beginning of the period 584,488   564,888   641,947   547,533  
Cash and cash equivalents at end of the period $ 604,516   $ 641,947   $ 604,516   $ 641,947  
 
             
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) – unaudited
 
NET SALES Three Months Ended Fiscal Years Ended
March 31, March 31,
SUPPLEMENTAL FINANCIAL INFORMATION 2019 2018 Change 2019 2018 Change
 
Net sales by product category:
Pointing Devices $ 131,640 $ 129,937 1 % $ 536,890 $ 516,637 4 %
Keyboards & Combos 132,356 136,787 (3 ) 536,619 498,472 8
PC Webcams 30,366 31,776 (4 ) 121,282 112,147 8
Tablet & Other Accessories 23,412 27,292 (14 ) 128,315 107,942 19
Video Collaboration 69,367 54,709 27 259,521 182,717 42
Mobile Speakers 22,688 13,974 62 230,378 314,817 (27 )
Audio & Wearables 65,086 55,248 18 277,429 252,330 10
Gaming 137,649 126,763 9 648,130 491,995 32
Smart Home 11,515 15,892 (28 ) 49,344 89,373 (45 )
Other (1) 229   48   377 414   433   (4 )
Total net retail sales $ 624,308   $ 592,426   5 $ 2,788,322   $ 2,566,863   9
__________________
(1)   Other category includes products that we currently intend to
transition out of, or have already transitioned out of, 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)(B) Three Months Ended Fiscal Years Ended
March 31, March 31,
SUPPLEMENTAL FINANCIAL INFORMATION 2019 2018 2019 2018
 
Gross profit – GAAP $ 232,975 $ 212,235 $ 1,037,011 $ 909,241
Share-based compensation expense 938 971 3,812 3,733
Amortization of intangible assets and purchase accounting effect on
inventory
3,305   2,574   13,342   8,878  
Gross profit – Non-GAAP $ 237,218   $ 215,780   $ 1,054,165   $ 921,852  
 
Gross margin – GAAP 37.3 % 35.8 % 37.2 % 35.4 %
Gross margin – Non-GAAP 38.0 % 36.4 % 37.8 % 35.9 %
 
Operating expenses – GAAP $ 190,748 $ 173,128 $ 773,817 $ 679,508
Less: Share-based compensation expense 12,164 9,928 46,453 40,405
Less: Amortization of intangible assets and acquisition-related costs 3,913 2,553 14,290 8,930
Less: Change in fair value of contingent consideration for business
acquisition
(4,908 )
Less: Restructuring charges (credits), net 1,540     11,302   (116 )
Operating expenses – Non-GAAP $ 173,131   $ 160,647   $ 701,772   $ 635,197  
 
% of net sales – GAAP 30.6 % 29.2 % 27.8 % 26.5 %
% of net sales – Non – GAAP 27.7 % 27.1 % 25.2 % 24.7 %
 
Operating income – GAAP $ 42,227 $ 39,107 $ 263,194 $ 229,733
Share-based compensation expense 13,102 10,899 50,265 44,138
Amortization of intangible assets 6,944 4,954 24,180 15,607
Purchase accounting effect on inventory 34 173 1,756 789
Acquisition-related costs 240 1,696 1,412
Change in fair value of contingent consideration for business
acquisition
(4,908 )
Restructuring charges (credits), net 1,540     11,302   (116 )
Operating income – Non – GAAP $ 64,087   $ 55,133   $ 352,393   $ 286,655  
 
% of net sales – GAAP 6.8 % 6.6 % 9.4 % 8.9 %
% of net sales – Non – GAAP 10.3 % 9.3 % 12.6 % 11.2 %
 
Net income – GAAP $ 42,121 $ 34,404 $ 257,573 $ 208,542
Share-based compensation expense 13,102 10,899 50,265 44,138
Amortization of intangible assets 6,944 4,954 24,180 15,607
Purchase accounting effect on inventory 34 173 1,756 789
Acquisition-related costs 240 1,696 1,412
Change in fair value of contingent consideration for business
acquisition
(4,908 )
Restructuring charges (credits), net 1,540 11,302 (116 )
Gain on investments (227 ) (119 ) (816 ) (669 )
Non-GAAP income tax adjustment 830   4,249   (6,952 ) 6,282  
Net income – Non – GAAP $ 64,584   $ 54,560   $ 339,004   $ 271,077  
 
Net income per share:
Diluted – GAAP $ 0.25 $ 0.20 $ 1.52 $ 1.23
Diluted – Non – GAAP $ 0.38 $ 0.32 $ 2.01 $ 1.60
 
Shares used to compute net income per share:
Diluted – GAAP and Non – GAAP 168,956 169,387 168,965 168,971
 
 
LOGITECH INTERNATIONAL S.A.
PRELIMINARY RESULTS*
(In thousands) – unaudited
         
SHARE-BASED COMPENSATION EXPENSE Three Months Ended Fiscal Years Ended
March 31, March 31,
SUPPLEMENTAL FINANCIAL INFORMATION 2019 2018 2019 2018
 
Share-based Compensation Expense
Cost of goods sold $ 938 $ 971 $ 3,812 $ 3,733
Marketing and selling 5,380 4,417 20,630 17,765
Research and development 2,073 1,584 7,368 6,381
General and administrative 4,711   3,927   18,455   16,259  
Total share-based compensation expense 13,102 10,899 50,265 44,138
Income tax benefit (2,515 )   (4,077 )   (17,091 ) (15,998 )
Total share-based compensation expense, net of income tax benefit $ 10,587   $ 6,822   $ 33,174   $ 28,140  
 

*Note: These preliminary results for the three months and fiscal year
ended March 31, 2019 are subject to adjustments, including subsequent
events that may occur through the date of filing our Annual Report on
Form 10-K.

(A) Adoption of ASC Topic 606

On April 1, 2018, we adopted the new revenue standards under Accounting
Standards Codification (“ASC”) Topic 606. The adoption of Topic 606 did
not have an impact over the total cash flows from operating, investing,
or financing activities. The following tables summarize the impacts of
adopting Topic 606 on our condensed consolidated statements of
operations for the three months and fiscal year ended March 31, 2019 and
condensed consolidated balance sheets as of March 31, 2019 (in
thousands):

     
Three Months Ended March 31, 2018 Year Ended March 31, 2019

As Reported
Under Topic
606

 

If Reported
Under Topic
605

 

Effect of
Change

As Reported
Under Topic
606

 

If Reported
Under Topic
605

 

Effect of
Change

Net sales $ 624,308 $ 626,369 $ (2,061 ) $ 2,788,322 $ 2,784,636 $ 3,686
 
   
As of March 31, 2019

As Reported Under
Topic 606

 

Balance Under
Topic 605

  Effect of Change
Accounts receivable, net $ 383,309 $ 260,401 $ 122,908
Other current assets $ 69,116 $ 60,449 $ 8,667
Accrued and other current liabilities $ 433,897 $ 295,126 $ 138,771
Retained earnings $ 1,365,036 $ 1,372,232 $ (7,196 )
 

(B) 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
March 31, 2019 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.

Contacts

Ben Lu
Vice President, Investor Relations – USA
+1 (510)
713-5568

Krista Todd
Vice President, Global Communications – USA
+1
(510) 713-5834

Ben Starkie
Corporate Communications – Europe
+41 (0)
79-292-3499

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