[November 06, 2014] |
|
Universal Electronics Reports Third Quarter 2014 Financial Results
SANTA ANA, Calif. --(Business Wire)--
Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial
results for the three and nine months ended September 30, 2014.
Paul Arling, UEI's Chairman and CEO, stated: "Our third quarter 2014
performance reflects our ability to capture share in the markets we
serve. We continue to gain traction within the smart device channel as
some of the world's largest companies around the globe select our
advanced device control technology and software. Our QuickSet® and
Control Plus™ solutions are becoming the standard for powering the
simple and almost effortless setup and programming of a control device.
By introducing next generation solutions such as these, leveraging our
core technologies and world-renowned device code database and
maintaining our commitment to customer-focused innovation, we are
working to ensure our success in the global control technology market
for years to come."
Adjusted Pro Forma Financial Results for the
Three Months Ended September 30: 2014 Compared to 2013
-
Net sales were $147.8 million, compared to $142.4 million.
-
Business Category revenue was $135.2 million, compared to $129.7
million. The Business Category contributed 91.5% of total net
sales, compared to 91.1%.
-
Consumer Category revenue was $12.6 million, compared to $12.7
million. The Consumer Category contributed 8.5% of total net
sales, compared to 8.9%.
-
Gross margins were 30.7%, compared to 28.6%.
-
Operating expenses were $28.9 million, compared to $27.6 million.
-
Operating income was $16.4 million, compared to $13.2 million.
-
Net income was $12.9 million, or $0.80 per diluted share, compared to
$10.7 million, or $0.68 per diluted share.
-
At September 30, 2014, cash and cash equivalents was $99.0 million.
Adjusted Pro Forma Financial Results for the
Nine Months Ended September 30: 2014 Compared to 2013
-
Net sales were $423.9 million, compared to $393.2 million.
-
Gross margins were 29.7%, compared to 28.4%.
-
Operating expenses were $86.3 million, compared to $79.6 million.
-
Operating income was $39.7 million, compared to $32.0 million.
-
Net income was $29.8 million, or $1.85 per diluted share, compared to
$23.6 million, or $1.53 per diluted share.
Financial Outlook
For the fourth quarter of 2014, the company expects net sales to range
between $134.0 million and $142.0 million, compared to $136.1 million in
the fourth quarter of 2013. Adjusted pro forma earnings per diluted
share for the fourth quarter of 2014 are expected to range from $0.59 to
$0.69, compared to adjusted pro forma earnings per diluted share of
$0.55 in the fourth quarter of 2013, which has been adjusted to reflect
the exclusion of stock-based compensation expense.
Bryan Hackworth, UEI's CFO, stated: "Over the past couple of years, we
have stated the long-term profile of our business is one with
approximately 5% to 10% average annual revenue growth and with
approximately 10% to 15% average annual earnings growth. However, given
our success in embedding our technology in multiple smart devices via
pure licensing arrangements and/or embedded chip sales, our gross and
operating margins have expanded. As a result, our profile has changed
and we believe we can continue to grow our top line by an average of 5%
to 10%, but we expect our earnings will grow by an average of 10% to 20%
annually."
Conference Call Information
UEI's management team will hold a conference call today, Thursday,
November 6, 2014 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its third
quarter 2014 earnings results, review recent activity and answer
questions. To access the call in the U.S. please dial 877-843-0414 and
for international calls dial 315-625-3071 approximately 10 minutes prior
to the start of the conference. The conference ID is 22183829. The
conference call will also be broadcast live over the Internet and
available for replay for one year at www.uei.com.
In addition, a replay of the call will be available via telephone for
two business days, beginning two hours after the call. To listen to the
replay, in the U.S., please dial 855-859-2056 and internationally,
404-537-3406. Enter access code 22183829.
Use of Non-GAAP Financial Metrics
Non-GAAP gross margins, Non-GAAP operating expenses, and Non-GAAP net
income and earnings per share are supplemental measures of the company's
performance that are not required by, and are not presented in
accordance with GAAP. The Non-GAAP information does not substitute for
any performance measure derived in accordance with GAAP. Non-GAAP gross
profit is defined as gross profit excluding depreciation expense related
to the increase in fixed assets from cost to fair market value resulting
from acquisitions. Non-GAAP operating expenses are defined as operating
expenses excluding amortization of intangibles acquired, employee
related restructuring costs, stock-based compensation expense and
certain costs incurred for years preceding the acquisition of Enson
Assets Limited. Non-GAAP net income is defined as net income from
operations excluding the aforementioned items and the related tax
effects as well as additional reserves recorded resulting from a tax
audit in Hong Kong for years preceding our acquisition of Enson Assets
Limited. A reconciliation of Non-GAAP financial results to GAAP results
is included at the end of this press release.
About Universal Electronics
Founded in 1986, Universal Electronics Inc. (UEI) is the global leader
in wireless control technology for the connected home. UEI designs,
develops, and delivers innovative solutions that enable consumers to
control entertainment devices, digital media, and home systems. The
company's broad portfolio of patented technologies and database of
infrared control software have been adopted by many Fortune 500
companies in the consumer electronics, subscription broadcast, and
computing industries. UEI sells and licenses wireless control products
through distributors and retailers under the One For All® brand name.
For additional information, visit our website at www.uei.com.
Safe Harbor Statement
This press release contains forward-looking statements that are made
pursuant to the Safe-Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Words and expressions reflecting
something other than historical fact are intended to identify
forward-looking statements. These forward-looking statements involve a
number of risks and uncertainties, including the benefits anticipated by
the company due to the continued strength across its entire business and
expansion of its share of the markets it serves, including its core
business and smart device channel (such as phones, tablets, TVs, IPTV
devices, game consoles, and wearables); the continued innovation of
next-generation solutions that are accepted by its customers and end
users; the continuation of benefits the company has experienced and
anticipate due to the licensing of the company's technologies and
patents, such as the company's QuickSet and Control Plus technologies;
the benefits anticipated by management from leveraging the company's
core technologies and device code database; the continued adoption and
selection of the company's technologies and products by the world's
largest companies in the home entertainment industries; and the other
factors described in the company's filings with the U.S. Securities and
Exchange Commission. The actual results the company achieves may differ
materially from any forward-looking statement due to such risks and
uncertainties. The company undertakes no obligations to revise or update
any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this release.
|
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share-related data)
(Unaudited)
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
98,964
|
|
|
$
|
76,174
|
|
Accounts receivable, net
|
|
105,920
|
|
|
95,408
|
|
Inventories, net
|
|
92,341
|
|
|
96,309
|
|
Prepaid expenses and other current assets
|
|
4,548
|
|
|
4,395
|
|
Income tax receivable
|
|
16
|
|
|
13
|
|
Deferred income taxes
|
|
6,158
|
|
|
6,167
|
|
Total current assets
|
|
307,947
|
|
|
278,466
|
|
Property, plant, and equipment, net
|
|
76,682
|
|
|
75,570
|
|
Goodwill
|
|
30,794
|
|
|
31,000
|
|
Intangible assets, net
|
|
25,164
|
|
|
26,963
|
|
Deferred income taxes
|
|
5,567
|
|
|
6,455
|
|
Other assets
|
|
5,442
|
|
|
5,279
|
|
Total assets
|
|
$
|
451,596
|
|
|
$
|
423,733
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
69,885
|
|
|
$
|
58,498
|
|
Line of credit
|
|
-
|
|
|
-
|
|
Accrued compensation
|
|
38,002
|
|
|
38,317
|
|
Accrued sales discounts, rebates and royalties
|
|
7,495
|
|
|
8,539
|
|
Accrued income taxes
|
|
1,922
|
|
|
3,032
|
|
Deferred income taxes
|
|
151
|
|
|
303
|
|
Other accrued expenses
|
|
12,466
|
|
|
11,229
|
|
Total current liabilities
|
|
129,921
|
|
|
119,918
|
|
Long-term liabilities:
|
|
|
|
|
|
|
Deferred income taxes
|
|
10,084
|
|
|
9,887
|
|
Income tax payable
|
|
606
|
|
|
606
|
|
Other long-term liabilities
|
|
1,971
|
|
|
2,052
|
|
Total liabilities
|
|
142,582
|
|
|
132,463
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none
issued or outstanding
|
|
-
|
|
|
-
|
|
Common stock, $0.01 par value, 50,000,000 shares authorized;
22,788,604 and 22,344,121 shares issued on September 30, 2014 and
December 31, 2013, respectively
|
|
228
|
|
|
223
|
|
Paid-in capital
|
|
213,373
|
|
|
199,513
|
|
Accumulated other comprehensive income (loss)
|
|
(1,797
|
)
|
|
2,982
|
|
Retained earnings
|
|
217,164
|
|
|
193,532
|
|
|
|
428,968
|
|
|
396,250
|
|
Less cost of common stock in treasury, 6,992,446 and 6,639,497
shares on September 30, 2014 and December 31, 2013, respectively
|
|
(119,954
|
)
|
|
(104,980
|
)
|
Total stockholders' equity
|
|
309,014
|
|
|
291,270
|
|
Total liabilities and stockholders' equity
|
|
$
|
451,596
|
|
|
$
|
423,733
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net sales
|
|
$
|
147,780
|
|
|
$
|
142,389
|
|
|
$
|
423,940
|
|
|
$
|
393,220
|
|
Cost of sales
|
|
102,665
|
|
|
101,940
|
|
|
298,721
|
|
|
282,386
|
|
Gross profit
|
|
45,115
|
|
|
40,449
|
|
|
125,219
|
|
|
110,834
|
|
Research and development expenses
|
|
4,210
|
|
|
4,182
|
|
|
12,606
|
|
|
12,463
|
|
Selling, general and administrative expenses
|
|
27,120
|
|
|
25,796
|
|
|
81,164
|
|
|
74,029
|
|
Operating income
|
|
13,785
|
|
|
10,471
|
|
|
31,449
|
|
|
24,342
|
|
Interest income (expense), net
|
|
66
|
|
|
47
|
|
|
(21
|
)
|
|
60
|
|
Other income (expense), net
|
|
(655
|
)
|
|
(717
|
)
|
|
(1,338
|
)
|
|
(2,897
|
)
|
Income before provision for income taxes
|
|
13,196
|
|
|
9,801
|
|
|
30,090
|
|
|
21,505
|
|
Provision for income taxes
|
|
2,325
|
|
|
1,178
|
|
|
6,458
|
|
|
4,095
|
|
Net income
|
|
$
|
10,871
|
|
|
$
|
8,623
|
|
|
$
|
23,632
|
|
|
$
|
17,410
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.69
|
|
|
$
|
0.56
|
|
|
$
|
1.50
|
|
|
$
|
1.15
|
|
Diluted
|
|
$
|
0.68
|
|
|
$
|
0.55
|
|
|
$
|
1.46
|
|
|
$
|
1.13
|
|
Shares used in computing earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
15,723
|
|
|
15,324
|
|
|
15,764
|
|
|
15,129
|
|
Diluted
|
|
16,103
|
|
|
15,743
|
|
|
16,135
|
|
|
15,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2014
|
|
2013
|
Cash provided by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
23,632
|
|
|
$
|
17,410
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
13,445
|
|
|
13,387
|
|
Provision for doubtful accounts
|
|
16
|
|
|
140
|
|
Provision for inventory write-downs
|
|
2,385
|
|
|
1,988
|
|
Deferred income taxes
|
|
777
|
|
|
127
|
|
Tax benefit from exercise of stock options and vested restricted
stock
|
|
2,141
|
|
|
1,040
|
|
Excess tax benefit from stock-based compensation
|
|
(2,124
|
)
|
|
(1,011
|
)
|
Shares issued for employee benefit plan
|
|
703
|
|
|
598
|
|
Stock-based compensation
|
|
4,831
|
|
|
3,950
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
(13,988
|
)
|
|
(12,734
|
)
|
Inventories
|
|
(577
|
)
|
|
(20,701
|
)
|
Prepaid expenses and other assets
|
|
(403
|
)
|
|
352
|
|
Accounts payable and accrued expenses
|
|
13,647
|
|
|
(3,015
|
)
|
Accrued income taxes
|
|
(1,138
|
)
|
|
(729
|
)
|
Net cash provided by operating activities
|
|
43,347
|
|
|
802
|
|
Cash used for investing activities:
|
|
|
|
|
|
|
Acquisition of property, plant, and equipment
|
|
(12,480
|
)
|
|
(7,978
|
)
|
Acquisition of intangible assets
|
|
(1,374
|
)
|
|
(978
|
)
|
Net cash used for investing activities
|
|
(13,854
|
)
|
|
(8,956
|
)
|
Cash provided by (used for) financing activities:
|
|
|
|
|
|
|
Issuance of debt
|
|
-
|
|
|
19,500
|
|
Payment of debt
|
|
-
|
|
|
(19,500
|
)
|
Proceeds from stock options exercised
|
|
6,400
|
|
|
8,487
|
|
Treasury stock purchased
|
|
(15,184
|
)
|
|
(3,153
|
)
|
Excess tax benefit from stock-based compensation
|
|
2,124
|
|
|
1,011
|
|
Net cash provided by (used for) financing activities
|
|
(6,660
|
)
|
|
6,345
|
|
Effect of exchange rate changes on cash
|
|
(43
|
)
|
|
1,818
|
|
Net increase (decrease) in cash and cash equivalents
|
|
22,790
|
|
|
9
|
|
Cash and cash equivalents at beginning of year
|
|
76,174
|
|
|
44,593
|
|
Cash and cash equivalents at end of period
|
|
$
|
98,964
|
|
|
$
|
44,602
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
4,091
|
|
|
$
|
3,319
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS
(In thousands, except share-related data)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2014
|
|
Three Months Ended September 30, 2013
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted Pro Forma
|
|
GAAP
|
|
Adjustments
|
|
Adjusted Pro Forma
|
Net sales
|
|
$
|
147,780
|
|
|
$
|
-
|
|
|
$
|
147,780
|
|
|
$
|
142,389
|
|
|
$
|
-
|
|
|
$
|
142,389
|
|
Cost of sales (1)
|
|
102,665
|
|
|
(236
|
)
|
|
102,429
|
|
|
101,940
|
|
|
(277
|
)
|
|
101,663
|
|
Gross profit
|
|
45,115
|
|
|
236
|
|
|
45,351
|
|
|
40,449
|
|
|
277
|
|
|
40,726
|
|
Research and development expenses (2)
|
|
4,210
|
|
|
(60
|
)
|
|
4,150
|
|
|
4,182
|
|
|
(54
|
)
|
|
4,128
|
|
Selling, general and administrative expenses (3)
|
|
27,120
|
|
|
(2,332
|
)
|
|
24,788
|
|
|
25,796
|
|
|
(2,368
|
)
|
|
23,428
|
|
Operating income
|
|
13,785
|
|
|
2,628
|
|
|
16,413
|
|
|
10,471
|
|
|
2,699
|
|
|
13,170
|
|
Interest income (expense), net
|
|
66
|
|
|
-
|
|
|
66
|
|
|
47
|
|
|
-
|
|
|
47
|
|
Other income (expense), net
|
|
(655
|
)
|
|
-
|
|
|
(655
|
)
|
|
(717
|
)
|
|
-
|
|
|
(717
|
)
|
Income before provision for income taxes
|
|
13,196
|
|
|
2,628
|
|
|
15,824
|
|
|
9,801
|
|
|
2,699
|
|
|
12,500
|
|
Provision for income taxes (4)
|
|
2,325
|
|
|
649
|
|
|
2,974
|
|
|
1,178
|
|
|
631
|
|
|
1,809
|
|
Net income
|
|
$
|
10,871
|
|
|
$
|
1,979
|
|
|
$
|
12,850
|
|
|
$
|
8,623
|
|
|
$
|
2,068
|
|
|
$
|
10,691
|
|
Earnings per share diluted
|
|
$
|
0.68
|
|
|
$
|
0.12
|
|
|
$
|
0.80
|
|
|
$
|
0.55
|
|
|
$
|
0.13
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Nine Months Ended September 30, 2014
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Nine Months Ended September 30, 2013
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GAAP
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Adjustments
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Adjusted Pro Forma
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GAAP
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Adjustments
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Adjusted Pro Forma
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Net sales
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$
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423,940
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$
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-
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$
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423,940
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|
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$
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393,220
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$
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-
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$
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393,220
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Cost of sales (5)
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298,721
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(707
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)
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298,014
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282,386
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(831
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)
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281,555
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Gross profit
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125,219
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707
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125,926
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110,834
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831
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111,665
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Research and development expenses (6)
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12,606
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(261
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)
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12,345
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12,463
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(166
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)
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12,297
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Selling, general and administrative expenses (7)
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81,164
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(7,234
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)
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73,930
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74,029
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(6,704
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)
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67,325
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Operating income
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31,449
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8,202
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39,651
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24,342
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7,701
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32,043
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Interest income (expense), net
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(21
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)
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-
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(21
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)
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60
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-
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60
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Other income (expense), net
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(1,338
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)
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-
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(1,338
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)
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(2,897
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)
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-
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(2,897
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)
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Income before provision for income taxes
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30,090
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8,202
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38,292
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21,505
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7,701
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29,206
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Provision for income taxes (8)
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6,458
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1,995
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8,453
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4,095
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1,473
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5,568
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Net income
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$
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23,632
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$
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6,207
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$
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29,839
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$
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17,410
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$
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6,228
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$
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23,638
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Earnings per share diluted
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$
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1.46
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$
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0.38
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$
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1.85
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$
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1.13
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$
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0.40
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$
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1.53
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(1)
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To reflect depreciation expense of $0.2 million and $0.3 million for
the three months ended September 30, 2014 and 2013, respectively,
related to the mark-up in fixed assets from cost to fair value as a
result of acquisitions.
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(2)
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To reflect stock-based compensation expense for the three months
ended September 30, 2014 and 2013.
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(3)
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To reflect amortization expense of $0.7 million for each of the
three months ended September 30, 2014 and 2013 related to intangible
assets acquired as part of acquisitions. In addition, to reflect
stock-based compensation expense of $1.5 million and $1.3 million
for the three months ended September 30, 2014 and 2013,
respectively. Also, to reflect other employee related restructuring
costs of $0.1 million for the three months ended September 30, 2014.
In the third quarter of 2013, there were $0.3 million of additional
costs incurred relating to the settlement of a software audit for
infringements that occurred prior to the acquisition of Enson Assets
Limited.
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(4)
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To reflect the tax effect of the adjustments.
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(5)
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To reflect depreciation expense of $0.7 million and $0.8 million for
the nine months ended September 30, 2014 and 2013, respectively,
related to the mark-up in fixed assets from cost to fair value as a
result of acquisitions.
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(6)
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To reflect stock-based compensation expense for the nine months
ended September 30, 2014 and 2013.
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(7)
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To reflect amortization expense of $2.2 million for each of the nine
months ended September 30, 2014 and 2013 related to intangible
assets acquired as part of acquisitions. In addition, to reflect
stock-based compensation expense of $4.6 million and $3.8 million
for the nine months ended September 30, 2014 and 2013, respectively.
Also, to reflect other employee related restructuring costs of $0.4
million for each of the nine months ended September 30, 2014 and
2013. For the nine months ended September 30, 2013, there were $0.3
million of additional costs incurred relating to the settlement of a
software audit for infringements that occurred prior to the
acquisition of Enson Assets Limited.
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(8)
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To reflect the tax effect of the adjustments. In addition, the nine
months ended September 30, 2013 also includes $0.4 million of
additional tax reserves recorded resulting from a tax audit in Hong
Kong for years preceding our acquisition of Enson Assets Limited.
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