Logitech International's CEO Discusses F4Q11Earnings Results - Earnings Call Transcript

Logitech International, SA (LOGI)

F4Q11 Earnings Call

April 26, 2012 8:30 am ET

Executives

Joe Greenhaigh – Vice President Investor Relations & Corporate Treasurer

Guerrino De Luca – Chairman of the Board

Bracken P. Darrell – President & Chief Executive Officer

Erik K. Bardman – Chief Financial Officer & Senior Vice President Finance

Analyst

Zahid Hussein – Citigroup Global Markets

Michael Foeth – Vontobel

John Bright – Avondale Partners

Simon Schafer – Goldman Sachs

Alexander Peterc – Exane BNP Paribas

Tavis McCourt – Raymond James

Paul Coster – JP Morgan

Stefan Gachter – Helvea

Presentation

Operator

Welcome to the Logitech fourth quarter financial results conference call. At this time all participants are in a listen only mode. We will be conducting a question and answer session and instructions will follow at that time. This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech.

I would like to introduce your host for today’s call Mr. Joe Greenhaigh, Vice President of Investor Relations and Corporate Treasurer at Logitech.

Joe Greenhaigh

Welcome to the Logitech conference call to discuss the company’s results for the fourth quarter ended March 31, 2012. The press release, our prepared remarks, the slides and a live webcast of this call are available online at Logitech.com. As noted in our press release we have published our prepared remarks on our website in advance of this call. Those remarks are intended to serve in place of extended formal comments and we will not repeat them on this call.

During the course of this call we may make forward-looking statements including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially than those anticipated in the statements.

Factors that could cause actual results to differ materially include those set forth in Logitech’s annual report on Form 10K dated May 27, 2011 and subsequent filings which are available online at the SEC EDGAR database and in the final paragraphs of the press release and prepared remarks reporting fourth quarter results available at Logitech.com. The forward-looking statements made during this call represents managements’ outlook only as of today and the company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise.

This call is being recorded and will be available for replay on the Logitech website. Joining us today from Zurich are Guerrino De Luca, Chairman and Chief Executive Officer and Bracken Darrell, President and here in Newark is Erik Bardman, Senior Vice President of Finance and Chief Financial Officer. I’d now like to turn the call over to Guerrino.

Guerrino De Luca

I was pleased that we ended the year with results that were better than our outlook. It has been quite some time since we’ve been able to say that. Our results in Q4 were consistent with what we’ve seen through much of the year. Mice and keyboards are holding steady, tablet accessories are providing good incremental growth, and we’re building momentum in music.

Our product portfolio is not yet as strong as it needs to be and that’s especially true in the remotes and consumer video categories. The good news is that we’ll deliver a strong set of products that address the gaps across our whole portfolio in time for the holiday season. I was very encouraged by the return to growth in both sales and profitability in the EMEA in Q4 with the region being the primary driver of the substantial year-over-year increase in the company’s gross margin.

One year ago at this time we identified poor execution in the EMEA as the major negative factor impacting our results. It took us several quarters to get our business back to a healthy space. It is now clear that the execution issues are behind us and largest sales region is well positioned to deliver a much stronger fiscal ’13.

Our Q4 performance in China; we had a strong conclusion to a great year. We started fiscal ’12 with the goal of making China our third largest country for sales and we easily achieved that target with full year sales growing by 58% compared to the prior year. We’ve built a strong team in China and I’m comfortable we have the right strategy to drive continued growth.

This is the extent of my comments on the prior fiscal year. As we look at Logitech’s future, I’m very excited to be joined today by our new President, Bracken Darrell. Bracken has the right experience and the traits of a great leader which he has already demonstrated since joining the company earlier this month. I’m pleased to turn the call over to him now. I will return shortly with some comments on our fiscal ’13 product portfolio and then we’ll open the call to your questions.

Bracken P. Darrell

I’m going to spend a few minutes talking about why I’m thrilled to be here, my background, and my focus on simplifying the organization. Logitech embodies where I want to be, at the cross roads of innovation, consumer insight, and design module. I spent my entire career in consumer products because I love this place where humanity meets technology, the psychology and science of great consumer products.

Logitech has a successful track record of providing outstanding consumer branded technology products and it has a strategy I believe in. I also believe my background and experience are well suited to help mobilize the organization to drive towards improved performance to take advantage of the growth opportunities before us. I have extensive international experience working global companies and spent the last eight years living outside the US.

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