Logitech. October 24, 2012

Transcription

1 Logitech Q2 Fiscal Year 2013 October 24, 2012

2 Forward-Looking Statements This presentation and the remarks on the call contain forward-looking statements within the meaning of the U.S. federal securities laws, including, without limitation, statements regarding: our new products and the timing of product launches, the features of some of those products, demand for some of those products, expanding distribution of some of those products, our share cancellation, our sales outlook or the market outlook in certain product categories, our resources, opportunities and expected growth in China, expected strategy benefits in the second half of FY13 and in FY 14, our product costs, our spending, our operating expenses, our outlook for the remainder of FY 2013, year-over-year financial performance for the second half of FY 2013, our strategy within our product categories, our ability to deliver improved financial performance and updates on progress. The forward-looking statements in this presentation and in the remarks 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; 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, and our reaction to them, on our sales, gross margins and profitability; if our products and marketing strategies fail to separate our products from competitors products; 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; if the restructuring fails to produce the intended performance and cost savings results or is not implemented in the contemplated timeframe; if the reassessment of strategy within the PC-related product categories fails to deliver improved financial performance. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 and our Annual Report on Form 10-K for the fiscal year ended March 31, 2012, available at 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 presentation. 2

3 Q2 FY 13 Overview Sales, particularly in PC peripherals categories, impacted by weakness of global PC market Solid Q2 execution with new products for tablets, smartphones, digital home, Macs and Windows 8 PCs in time for holiday season Logitech Ultrathin Keyboard Cover was #1 selling product across all our categories Improved gross margin and operating results Net income includes net tax benefit of $32M from release of tax reserves related to audit settlement On track with efforts to reduce cost base, simplifying product portfolio and company 3 Note: Comparison is Y/Y unless noted otherwise

4 Q2 FY13 Sales & Gross Margin Total sales -7% Excluding the unfavorable impact of exchange rates, sales -4% Retail sales -5% OEM sales -27% primarily due to lower sales in Keyboard & Desktops and lower sales of OEM mice LifeSize sales -7% to $34M, with declines in all regions Gross margin +210bp YOY and +500bp sequentially YOY improvement, achieved despite negative impact of weaker EURO, primarily driven by tight management of channel pricing programs and global supply chain efficiencies 4 Note: Comparison is Y/Y unless noted otherwise Information in constant dollars is calculated by translating prior period local currency results at the current period s average exchange rate.

5 Retail Sales Region Summary Q2 FY13 Total retail sales -5% and units -2% Sales Into Channel Q2 FY13 Sell-Through Overall retail average selling EMEA* 5% -6% price -3% YOY and +7% Asia -7% -5% sequentially Americas -6% -9% *EMEA sales into the channel and sell-through provided above are both in local currency. 5 Information in constant dollars is calculated by translating prior period local currency results at the current period s average exchange rate. Note: Comparison is Y/Y unless noted otherwise

6 Retail Sales Region Commentary Q2 FY13 EMEA Sales decline primarily driven by PC speakers and PC headsets Achieved double-digit growth in Keyboards & Desktops, with strong sales of our ipad keyboard covers Americas Double-digit sales decline experienced across several product categories, particularly in Video and Digital Home Very strong Keyboard/Desktop sales driven by double-digit growth in PCrelated products and strong contribution from ipad keyboard cover sales Profitability improved with significant contribution from tight management of pricing programs in a weak market ASIA Sales declined, with weakness in several large markets including Australia and China China sales -4% with declines in nearly all PC-related categories while Audio sales more than tripled Softening macro conditions, but expect return to growth in China this fiscal year 6 Note: Comparison is Y/Y unless noted otherwise

7 Selected Q2 Retail Product Category Commentary Keyboards & Desktops sales +20% ipad keyboards drove growth, as sales more than tripled Logitech Ultrathin Keyboard Cover was best-selling product across all categories in Q2 Sales of Keyboard & Desktop products, excluding ipad-related products, grew slightly Double-digit sales growth in Americas and EMEA Gaming sales -1% Declines in console gaming PC gaming +12% driven by gaming mice and headsets Strong sales of Logitech G600 MMO Gaming mouse Pointing Devices sales -8%, with declines in all regions Category most impacted by deteriorating conditions in global PC market Lower sales in high-end and mid-range, with single-digit sales growth at lower-end Announced new products to enhance touch and navigation in Windows 8 7 Note: Comparison is Y/Y unless noted otherwise

8 Selected Q2 Retail Product Category Commentary Audio sales -14% Double-digit declines in PC speakers, PC headsets and speaker docks Drop in PC-related products consistent with declines in other PC categories Decline in speaker docks was expected as our product development focused on wireless speakers rather than docks Launched new Logitech UE music products in late Q2 Initially available at Apple stores and expanding distribution through 2H of fiscal year Strong initial success of Logitech UE Mobile Boombox and Logitech UE Boombox Video sales -17% Consumer webcams continue to decline due to market trends Strong growth in high-end driven by Logitech HD Pro Webcam C920 and BCC950 ConferenceCam for enterprise Digital Home -31% Comparables impacted by minimal sales of discontinued Google TV peripherals this year Sales of Harmony remotes -14% Newly released products include Logitech TV Cam HD with built-in Skype capability and new high-end Harmony Touch remote control 8 Note: Comparison is Y/Y unless noted otherwise

9 Product Category Summary Revenue Q2 FY13 YoY Change Units Pointing Devices -8% 2% Cordless Mice -5% 7% Corded Mice -14% -3% Keyboards/Desktop 20% 4% Cordless KB + DT 4% 8% Corded KB + DT -10% -8% Tablet Keyboards 221% 140% Video -17% -21% Audio -14% -9% Gaming -1% 10% PC Platform 12% 17% Console Platform -85% -67% Digital Home* -31% -41% Remote Control -14% -31% Revue N/A N/A Total Retail -5% -2% OEM -27% -15% TOTAL (excluding LifeSize) -7% -6% 9 *Digital Home product category includes Harmony remotes, Logitech Revue and associated peripherals for the Google TV platform

10 Q2 FY13 Overview: Op Expense, Op Income, Tax & Net Income Operating expense -2% S&M +3% R&D -4% G&A -7% Operating income $24M compared to $23M in Q2 FY12 Net tax benefit of $32M from closure of U.S. Federal Income Tax audit Net income $55M versus $17M in Q2 FY12 10 Note: Comparison is Y/Y unless noted otherwise

11 Q2 FY13 Financial Results Dollars (in millions, except per share data) Q2 FY13 Q2 FY12 %D NET SALES $548 $589-7% GROSS PROFIT $196 $198-1% % of net sales 35.8% 33.7% +210bp S&M $111 $107 +3% % of net sales 20.2% 18.2% R&D $38 $39-4% % of net sales 6.9% 6.7% G&A $26 $28-7% % of net sales 4.7% 4.8% OPERATING INCOME $24 $23 NET INCOME NET INCOME PER SHARE DILUTED SHARES OUTST. $55 $17 $0.35 $

12 Balance Sheet Dollars (in millions) CASH September 30, 2012 $237 September 30, 2011 $379 ACCOUNTS RECEIVABLE DSO INVENTORY Inventory turns ACCOUNTS PAYABLE DPO $ Days $ $ Days $ Days $ $ Days CASH CONVERSION CYCLE 35 Days 41 Days 12

13 Cash Ended the quarter with $237M in cash During Q2, paid one-time dividend of $133M During last 12 months, repurchased $173M worth of stock Q2 cash flow from operations was $16M, up from -$2M in Q2 FY12 mostly due to higher sequential increase this year in accounts payables No share repurchases during Q2 Currently own ~18.6% of our own shares $4M remaining under our current $250M repurchase program Received shareholder approval at Sept Annual Meeting to cancel 18.5M shares repurchased in Q4 FY12 and Q1 FY13 Cancellation expected to take effect by end of current quarter 13 Note: Comparison is Y/Y unless noted otherwise

14 Summary Expect 2H FY13 sales and operating income below that of 2H last fiscal year Worsening global PC market led to reduced expectations in PC peripheral categories for remainder of FY 13 Recent slowdown in emerging markets, particularly in China Diligently managing those things under our control Entered holiday selling season with strongest product portfolio in several years Managing spending in line with current environment Looking at business to assess where we should accelerate or change any parts of strategic plan with goal of improving company s performance 14

15 Appendices

16 Sell-through Data Measures sales of our products by retailer customers to consumers and by our distributor customers to their customers Compiled by Logitech from data supplied by our customers Customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales Data is subject to limitations and possible error sources and may not be an entirely accurate indicator of actual consumer demand for our products. Limitations and possible error sources include the following: Data supplied by our customers may not be indicative of sell-through experienced by our customers as a whole Reliability of the data depends on accuracy and timeliness of information supplied to us by our customers, and the processes by which they collect their sell-through data is largely outside our control In the U.S., Canada, and to a lesser extent Asia Pacific, and a still lesser extent, EMEA, sell-through data is based on Point of Sale electronic data. Where POS data is not available, the data is collected largely through manual processes, including the exchange of spreadsheets or other non-automated methods of data transmission, which are subject to typical human errors, including errors in data entry, transmission and interpretation. 16

17 Channel Inventory Data Estimates the inventory levels of our products held by or in-transit to our retailer and distributor customers Includes data compiled by Logitech from data supplied by our customers, and our estimates of inventory in-transit to our customers Customers supplying data vary by geographic region and from period to period, but typically represent a majority of our retail sales Data and our estimates are subject to limitations and possible error sources and may not be an entirely accurate indicator of actual customer channel inventory Limitations and possible error sources include the following: Data supplied by our customers may not be indicative of inventory held by our customers as a whole Reliability of the data depends on accuracy and timeliness of information supplied to us by our customers, and the processes by which they collect their data is largely outside our control In the U.S., Canada, and to a lesser extent Asia Pacific, and a still lesser extent, EMEA, data is based on Point of Sale electronic data. Where POS data is not available, the data is collected largely through manual processes, including the exchange of spreadsheets or other non-automated methods of data transmission, which are subject to typical human errors, including errors in data entry, transmission and interpretation. Our interpretation of the data, and our estimates of in-transit inventory, may be subject to errors in assumptions, calculations or other errors 17

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