Logitech International, S.A. (LOGI) F1Q13 Earnings Call July 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 John Bright – Avondale Partners [Alex Faher – Xon] Simon Schafer – Goldman Sachs Paul Coster – JP Morgan Andrew Gardiner – Barclays Capital Tavis McCourt – Raymond James Michael Foeth – Vontobel Andrew Humphrey – Morgan Stanley Corey Barrett – Pacific Crest Joern Iffert – UBS Presentation Operator
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Factors that could cause actual results to differ materially include those set forth in Logitech’s annual report on Forms 10K dated May 30, 2012 which is available online on the SEC EDGAR database and in the final paragraphs in the press release and prepared remarks reporting first quarter results available at www.Logitech.com. The forward-looking statements made during this call represent 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 are Guerrino De Luca, Chairman and Chief Executive Officer; Bracken Darrell, President; and 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 obviously cannot be pleased with the operating loss we generated in the quarter but I’m encouraged that our results were consistent with our expectations reflecting the modest performance of the product portfolio that is mostly made up of our older products. When I isolate some of the factors that negatively impacted our profitability it’s clear to us that our results are similar to the prior year which is what we expected at the current stage of our turnaround. Our restructuring related costs totaled roughly $34 million in Q1. This is essentially the same amount as last year’s write down of our Logitech review of inventory. This year we also incurred $4.3 million in costs associated with the exit from our old campus in Freemont California and another $4.5 million related to the acceleration of our product portfolio simplification efforts which Bracken will address shortly. All these changes will positively impact our operating results in the future.
I want to specifically mention two highlights in the quarters. First, I was very encouraged with the growth we achieved in EMEA with sales up by 28% in local currency. We’re well positioned in EMEA for a significant improvement in sales and profitability during the remainder of the fiscal year compared to the prior year. I was also pleased with the double digit growth in both the desktop keyboard and the audio product categories. The strong initial sales of the new generations of products recently added to our portfolio were significant factors in the growth achieved in both categories.I will now turn the call over to Bracken and I will return after him to comment on some elements of the proxy we filed earlier this week and on our strategy going forward. Bracken P. Darrell I want to comment briefly on the restructuring initiatives we announced in late April. As painful as the process of restructuring is for any organization I was really pleased with the speed and the quality of our execution. We moved aggressively, we moved with precision as we laid the foundation for a cost structure that will improve our profitability and support our future growth initiatives. We’re confident that the restructuring will result in the reduction of approximately $80 million in annual operating costs with the positive impact on our financials becoming fully visible in the second half of this fiscal year. The vast majority of our restructuring actions are now behind us and we’re focused on improved performance. A critical element in our improvement efforts is the simplification of our organization and our product portfolio. There’s still much work to be done but let me update you on the progress. One example of our simplified organization involves marketing or our marketing function. We have completed the consolidation of our brand management and product portfolio management under the leadership of the business groups. Read the rest of this transcript for free on seekingalpha.com