The New Logitech. Bracken Darrell, President and CEO. May 23, 2013

Transcription

1 The New Logitech Analyst & Investor Day Bracken Darrell, President and CEO May 23, 2013

2 Forward Looking Statements This presentation includes forward-looking statements within the meaning of the U.S. federal securities laws, including, without limitation: our ability to evolve Logitech, create exceptional products, build an innovative design company, and be faster, simpler and improve profitability; exit plans for non-strategic categories; cost structure benefits from FY 13 restructurings; growth expectations by computing platform and by product category; margin expectations by product category; the opportunities to attach to growing platforms; Logitech s strategy and priorities; categories, timing and key initiatives for profit maximization, for return to profitability and for growth; product launches; FY 14 through FY 16 variables and assumptions; FY 14 outlook and FY 15 and FY 16 long-range target scenarios for net sales, gross profit, operating expenses and operating income; target cash balances; cash utilization priorities; and payments of a recurring annual dividend. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially, 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; the demand of our customers and our consumers for our products and our ability to accurately forecast 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 in our new product categories and sales in emerging market geographies; if sales of PC peripherals in mature markets are less than we expect; the effect of pricing, product, marketing and other initiatives by our competitors; if our products and marketing strategies fail to separate our products from competitors products; if our restructurings fail to produce the intended performance and cost savings results; if we are unable to divest or discontinue non-strategic product categories and products and effect strategic acquisitions and investments successfully; if there is a deterioration of business and economic conditions in one or more of our sales regions or operating segments, or significant fluctuations in exchange rates. These risks and uncertainties are detailed in Logitech s filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2012 and its Annual Report on Form 10-K for the fiscal year ended March 31, 2012, available at Logitech does not undertakes any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this presentation. 2

3 3 A Look Back

4 How We Got Here Smart phones and tablets impact PC market PC market weakened dramatically Missed opportunities in growing markets Slow to react Lost some brand relevance Lost focus on consumers Product portfolio suffered 4

5 Recent Progress (FY13 ended March 31, 2013) Bigger, better products Tablet Accessories grew 332% in FY13 and Ultrathin Keyboard became #1 product company-wide Reduced number of product lines by roughly one-third Faster, simpler processes Shaped smaller, flatter organization Created Tablet Accessories team in Asia to go faster and stay connected to trends Plans to improve profitability Identified non-strategic categories and planned for exit FY 14 cost structure to benefit from FY13 restructurings 5

6 The Evolving Logitech (1 of 5) OLD Personal Computing = Windows PC Computing = NEWPersonal Windows PC, OS X Mac, ios and Android Tablets and Smartphones STATUS Addressing mobility opportunities, Windows and Apple OS; stay tuned on Android and smartphone offerings 6

7 The Evolving Logitech (2 of 5) OLD Annual product cycles product NEWAccelerating cycles STATUS From 13 months to 10 weeks to? 7

8 The Evolving Logitech (3 of 5) OLD Launch and replenish velocity NEWHigh portfolio with shorter product lifecycles STATUS New operations model for Tablet Accessories suited for all fast moving categories 8

9 The Evolving Logitech (4 of 5) OLD Winning in a growing PC business and experimenting well outside it in a declining PC NEWWinning business and building new growth engines in high-growth markets STATUS Growing share in PC peripherals, simplifying product lines, investment priorities shifting to mobility 9

10 The Evolving Logitech (5 of 5) OLD Engineeringled product development and portfolio management innovation, NEWDesign-led color, finish, materials science AND technology STATUS Ultrathin Keyboard, Glass Trackpad, FabricSkin KB Folio, BOOM acoustic fabrics 10

11 Adding Up to Big Changes Old Logitech New Logitech Current Status Personal Computing = Windows PC Personal Computing = Windows PC, OS X Mac, ios and Android Tablets and Smartphones Addressing mobility opportunities, Windows and Apple OS; stay tuned on Android and smartphone offerings Annual product cycles Accelerating product cycles From 13 months to 10 weeks to? 11 Launch and replenish Winning in a growing PC business and experimenting well outside it Engineering-led product development and portfolio management High velocity portfolio with shorter product lifecycles Winning in a declining PC business and building new growth engines in high-growth markets Design-led innovation, color, finish, materials science AND technology New operations model for Tablet Accessories suited for all fast moving categories Growing share in PC peripherals, simplifying product lines, investment priorities shifting to mobility Ultrathin Keyboard, Glass Trackpad, FabricSkin KB Folio, BOOM acoustic fabrics

12 Where We re Going Return to creating exceptional products Building an innovative design company Faster, simpler and more profitable The New Logitech 12

13 13 Priorities Going Forward

14 Computing Platforms are Evolving and Growing WW PC, Tablet and Smartphone Shipments 14 Source: Historical - IDC WW Media Tablet & PC Trackers 2013Q1; Forecast - IDC WW Media Tablet, Mobile & PC Trackers 2012Q4

15 Yielding More Opportunities Significant opportunities for great products to attach to growing platforms Re-igniting our innovation engine Bringing a new design focus Applying consumer insights 15

16 Modern Consumer Electronics Design Little Icons Sleek Beautiful Modern Convenient Reliable Functional Intuitive Comfortable Iconic 16

17 Our Priorities 1. Profit-maximize PC peripherals, freeing up resources for targeted growth investments 2. Leverage growth of Mobility categories 3. Return to growth in PC Gaming 4. Reduce operating expenses as % of sales 5. Focus LifeSize on achieving profitability and then target for a return to growth Top priority remains making Logitech faster and more profitable 17

18 1. Maximize Profit in PC Peripherals Maximize profitability on mice and keyboards Innovate at edge of touch and gesture Grow share Leverage growth of Unified Communications Maximize webcam profitability Consolidate category at retail Leveraging market leadership Stabilize PC speakers and improve profitability Selective new product introductions, with new ranges for large markets like China and Russia 18

19 2.1 Mobility Leverage Growth of Tablet Accessories Continue to launch superior products for large and small form factors Expand from keyboard covers into large market for cases Expand offerings to selectively target high-volume Android opportunities Create lean, fast business model to accelerate our development curve Explore new categories 19

20 2.2 Mobility Innovate in Emerging Wireless Speaker Market Prioritize development and launch of innovative wireless speakers Established player in early stage wireless speakers market 20

21 3. Return to Growth in PC Gaming Lost focus in past three years Leverage strong brand heritage and technology Bring new innovation Regain product edge and market share Reposition around Science Wins Launched 8 new products recently with plans for more in time for Holidays 21

22 4. Reduce Operating Expenses as a % of Sales Shrink operating expenses by ~$70M in FY 2014 compared to FY 2013* Manage operating expenses relative to sales growth Employ variable rates of growth by business Total Operating Expenses* and as % of Sales % M$ % 500 *Before impairment and restructuring charges % 30.4% 33.3% FY10 FY11 FY12 FY13 FY14e

23 5. Focus LifeSize on Achieving Profitability, Then on Returning to Growth Make profitable, then evolve to growth Turn EBITDA positive by end of FY 2014, with opex reductions playing a key role Return to growth via focus on SME 23

24 Roadmap to Improved Performance 24

25 Variables & Assumptions Our PC market assumptions Annual declines of -5% to -10% in global PC shipments, more conservative than industry analysts predictions through FY 16 We fully exit non-strategic categories by end of FY14 Our attach rate for mice and keyboards remains stable We leverage the success of the Ultrathin Keyboard Cover for ipad to expand our portfolio of tablet accessories We translate the strong UE audio heritage with performing artists to success in the broader consumer market No significant change in current economic climate in our key markets 25

26 Building Blocks Strategic groupings: Profit Maximization Growth Non-strategic Product categories included: Pointing Devices, Keyboards & Desktops, Video, Audio-PC, LifeSize*, OEM Tablet Accessories, Audio-Wearables & Wireless, PC Gaming Remotes, Digital Video Security, Retail-Other *Goal is to achieve positive EBITDA at LifeSize as we exit FY 14 and then focus on growth 26

27 Key Initiatives in Strategic Categories Profit Maximizing Drive innovation, strengthen portfolio management and merchandising Co-design and co-develop for select categories Maximize share of shelf Improve margins Invest to innovate in UC Achieve positive EBITDA at LifeSize then prioritize growth 27 Growth Expand Tablet Accessories offerings and improve margins Return to growth in PC Gaming with new products, and proactive engagement with global gaming community Improve margins for Audio W&W and narrow product development focus Target SME with high value proposition LifeSize offerings

28 Product Category Sales Growth Projections Pointing Devices PC Keyboards/Desktops Tablet Accessories Video -5% 3% 45% -10% Audio PC -7% Audio Wearables & Wireless 31% PC Gaming 20% LifeSize OEM 28 Estimated CAGR FY13-FY16 6% -10%

29 Relative Gross Margin by Product Category LifeSize Pointing Devices Video PC Gaming Keyboards & Desktops ~34% = FY 13 Gross Margin Tablet Accessories Audio-Wearables & Wireless Audio-PC OEM 29

30 Roadmap to Improved Financial Performance Dollars (in millions) NET SALES GROSS PROFIT % of net sales OPERATING EXPENSES % of net sales OPERATING INCOME % of net sales FY 15 Bridge FY16 Goals $2,000 $2,100 $2,250 $680 $725 $ % 34.5% 35.1% $630 $635 $ % 30.2% 28.4% $50 $90 $ % 4.3% 6.7% FY 14 Outlook FY 16 financial performance goals above reflect what we believe the company is capable of achieving as a result of the changes we ve already made combined with the execution of our strategic priorities FY 15 bridge above is provided as an example of one possible scenario as the company moves toward its FY 16 financial goals 30

31 Total Company Operating Expenses We will manage growth rate of operating expenses to remain below the rate of our sales growth Operating expenses as a % of sales to decline FY14 through FY16 % of Sales FY 16 Goals 20.6% 17.4% RESEARCH & DEVELOPMENT 7.3% 6.2% GENERAL & ADMINISTRATIVE 5.2% 4.8% SALES & MARKETING 31 FY 13 Actuals

32 Capital Structure 32

33 Optimal Cash Levels Cash % % of TTM Sales % % % 200 5% % FY08 33 FY09 FY10 FY11 FY12 FY13 Continue to target optimal cash balances in range of 15% to 20% of TTM sales Provides the right amount of operational flexibility Cash utilization priorities Working capital Returning value to shareholders Acquisitions

34 Returning Cash to Shareholders Our Board has approved our request to pay a dividend in 2013 in the amount of CHF 0.21 per share Total expenditure of CHF 34M (~$35M) We will request shareholder approval to pay this dividend at our Annual General Meeting in September 2013 We plan to make this a recurring annual dividend 34

35 Summary 35

36 The New Logitech Our results in Fiscal 2013 were unacceptable but we re making good progress toward improvement We re changing the culture to increase our speed, developing new products and accelerating time to market We have eliminated costs and management layers as a result of the restructurings in Fiscal 2013, the savings from which will show beginning in Fiscal 2014 Our mission is to deliver amazing experiences across PCs, Macs, tablets, and smartphones We have the engineering and design capabilities to win in navigation, keyboards, wireless, sound, and cameras The turnaround has already begun the momentum has changed 36

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