Logitech International SA
) beat the Zacks Consensus Estimate for both earnings and revenues
in the fiscal first-quarter 2015 results, driven by strong sales in
its growth categories. The computer peripherals company reported
adjusted earnings of 23 cents per share, substantially surpassing
the Zacks Consensus Estimate of 3 cents per share. Further,
quarterly earnings were significantly higher compared with 7 cents
a share in the prior-year quarter.
The company's shares rose 14.6% in the trading session following
the earnings announcement, indicating that investors were impressed
by the company's performance.
The year-over-year increase in earnings was attributable to robust
performance in its growth categories, led by Mobile Speakers and PC
Gaming, although somewhat offset by weakness in Tablet & other
Accessories category. Further, Logitech achieved a higher operating
leverage through its successful cost-streamlining initiatives.
Logitech reported adjusted net income of $38.2 million, versus
$10.7 million in the year-ago quarter. The considerable improvement
was mainly driven by higher revenues and superior operational
Including non-recurring items, GAAP net income came in at $22.0
million or 13 cents per share, compared with $1.04 million or 1
penny per share in the year-ago quarter.
Net sales were up 1.2% year over year to $483.7 million, compared
with $477.9 million in prior-year quarter. Revenues also exceeded
the Zacks Consensus Estimate of $469 million. Improved sales
performance in the company's growth categories and strength in the
PC market were partially offset by softness in iPad shipments.
Sales by Channel
sales increased 3.0% year over year to $425.4 million. Sales in the
division declined 5.8% year over year to $32.5 million, while sales
division slipped 14.6% from the prior-year quarter to $ 25.8
Retail Category Sales by Product Division
posted a 16.6% increase over the prior-year quarter, while
Tablet & Other Accessories
were weak with a 14.9% year-over-year decline.
demonstrated remarkable growth with a robust 108.7% increase in
revenues over the prior-year quarter.
Other categories within the broader retail division posted an
overall decline of 1.2% year over year.
Adjusted gross margin improved to 38.3% compared with 35.9% in the
first quarter. Adjusted operating income was $43.9 million,
compared with $12.0 million in the prior-year quarter. Operating
expenses were down by almost 4.4% year over year to $158.7 million
owing to successful cost-reduction strategies.
Balance Sheet and Cash Flow
At quarter-end, cash and cash equivalents were $485 million, up
from $166 million at the end of the year-ago quarter.
The company generated cash flow from operations to the tune of $28
million in the quarter.
Encouraged by the strong performance of the company, Logitech
reiterated its sales outlook of $2.16 billion for fiscal 2015.
Additionally, the company raised its guidance for adjusted
operating income for fiscal 2015 to $170 million from the previous
expectation of $145 million.
Logitech is enjoying strong traction in the mobile speakers and PC
gaming market, with some extent of resilience being shown even in
the slow PC market. Logitech is set to extend its portfolio for the
Samsung platform, so as to capitalize on the associated growth
opportunities. The company's successful restructuring strategies
and turnaround plans translated into an improved earnings picture.
Going forward, Logitech intends to focus on its core product line
by divesting its non-strategic assets. Creating investment
capacities to support future growth and accelerating product
innovation are likely to be the company's priorities. However,
highly competitive markets and weakness in the iPad business are
likely to be headwinds for the company in the coming quarters.
Currently, Logitech has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the computer & technology sector scheduled to report
earnings soon include CGI Group, Inc. (
), MicroStrategy Inc. (
) and Silicon Motion Technology Corp. (
), each sporting a Zacks Rank #1 (Strong Buy).
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