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Ubiquiti Networks Reports Fourth Quarter Fiscal 2019 Financial ResultsUbiquiti Networks, Inc. (NASDAQ: UBNT) ("Ubiquiti" or the "Company") today announced preliminary financial results for the fourth quarter and full year fiscal 2019, ended June 30, 2019. Fourth Quarter Fiscal 2019 Summary
Full Fiscal 2019 Financial Summary
Capital Return Summary Stock Repurchases
Dividends
Effective Tax Rate
Change of Name and Transfer to New York Stock Exchange
Financial Highlights ($, in millions, except per share data) (unaudited)
(1) Derived from audited consolidated statements as of and for the year ended June 30, 2018 Income Statement Items Gross Margins During the fourth quarter fiscal 2019, GAAP gross profit was $132.9 million. GAAP gross margin of 46.4% increased 1.7% versus the comparable prior-year period GAAP gross margin of 44.7% and decreased 0.2% versus the prior quarter GAAP gross margin of 46.6%. On a full year basis, fiscal 2019 GAAP gross profit was $537.6 million. GAAP gross margin of 46.3% increased 2.7% versus the comparable prior year period GAAP gross margin of 43.6%. The increases in gross profit percentage for the fourth quarter fiscal 2019 as compared to the comparable prior-year period was driven by favorable mix of products sold, lower indirect expenses, lower inventory write-offs offset, in part by higher tariff-related costs. The increases in gross profit percentage for the full year fiscal 2019 as compared to the comparable prior-year period was driven by favorable mix of products sold, lower inventory write-offs offset, in party by higher tariff-related costs and higher indirect expenses. Research and Development During the fourth quarter fiscal 2019, research and development (R&D) expenses were $22.5 million. This reflects an increase as compared to the R&D expenses of $19.5 million in the comparable prior year period and R&D expenses of $21.3 million in the prior quarter. On a full year basis, fiscal 2019 R&D expenses were $82.1 million. This reflects an increase as compared to the R&D expense of $74.3 million in the comparable prior year period. Increased costs in both the fourth quarter fiscal 2019 and full year fiscal 2019, as compared to the comparable prior-year periods, were driven by higher employee-related expenses and other development activities. Sales, General and Administrative The Company's sales, general and administrative (SG&A) expenses for the fourth quarter fiscal 2019 were $9.5 million. This reflects a decrease as compared to the SG&A expenses of $12.9 million in the comparable prior year period and a slight increase as compared to the SG&A expenses of $9.4 million in the prior quarter. The decrease in fourth quarter fiscal 2019 as compared to the comparable prior year period was primarily related to lower professional fees. On a full year basis, fiscal 2019 SG&A expense was $43.2 million reflecting a slight increase as compared to the SG&A expense of $43.1 million for fiscal 2018. Fiscal 2019 SG&A expenses were consistent with fiscal 2018 primarily due to higher employee-related costs and web store operating costs and offset, in part, by lower professional fees, marketing expense and stock-based compensation. Net Income and Earnings Per Share During the fourth quarter fiscal 2019, GAAP net income was $70.9 million and non-GAAP net income was $83.6 million. This reflects an increase in non-GAAP net income from the comparable prior year period by 11.8%, primarily driven by a 6.3% increase in revenues and a higher gross margin. During the fourth quarter fiscal 2019, GAAP earnings per diluted share was $1.01 and non-GAAP earnings per diluted share was $1.19. This reflects a 7.4% increase in GAAP earnings per share and a 17.8% increase in non-GAAP diluted earnings per share from the comparable prior-year period. Both GAAP and non-GAAP earnings per share benefited from higher net income and a reduction in GAAP and non-GAAP diluted shares outstanding. Balance Sheet Items Cash and Investments Total cash and cash equivalents were $238.1 million as of June 30, 2019 compared with $666.7 million as of June 30, 2018. In addition, as of June 30, 2019, we held $101.5 million in available-for-sale securities. DSOs This quarter the Company experienced a decline in days' sales outstanding (DSOs) in accounts receivable to 50 days, as compared with 51 days in the third quarter fiscal 2019. Inventory Finished goods inventory as of June 30, 2019 was $260.9 million. This represents a decrease of $15.8 million from March 31, 2019 and an increase of $164.2 million from June 30, 2018. We expect to manage our finished goods inventory to meet demand, reduce lead times and secure supply. Cash Flow Statement Items The Company's net cash flow from operations for the fiscal year ended June 30, 2019 was $259.3 million, compared with net cash flow from operations of $332.05 for the comparable prior year period. The $72.8 million decrease in operating cash flow during fiscal 2019 as compared with the comparable prior year period was primarily driven by the net impact of increased inventory and the corresponding payables, partially offset by higher net income. For the fiscal year ended June 30, 2019, the Company used $157.6 million of cash for investing activities, which was primarily related to net investments in available-for-sale securities of $100.9 million and also used $530.2 million of cash for financing activities, which was driven by $468.2 million in stock repurchases, and $71.4 million in cash dividend payments and offset, in part, by draws of $35.0 million under our revolving facility. About Ubiquiti Networks Ubiquiti Networks is focused on democratizing network technology on a global scale - aggregate shipments of nearly 85 million devices play a key role in creating networking infrastructure in over 200 countries and territories around the world. Our professional networking products are powered by our UNMS and UniFi software platforms to provide high-capacity distributed Internet access and unified information technology management, respectively. Ubiquiti and the U logo are trademarks or registered trademarks of Ubiquiti and/or its affiliates in the United States and other countries. For more information, please visit www.ui.com. Safe Harbor for Forward Looking Statements Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as "look", "will", "anticipate", "believe", "estimate", "expect", "forecast", "consider" and "plan" and statements in the future tense are forward looking statements. The statements in this press release that could be deemed forward-looking statements include statements regarding our intentions to pay regular quarterly cash dividends, the Company's anticipated corporate name change and transfer of its common stock listing from the NASDAQ Global Select Market to the New York Stock Exchange, and any statements or assumptions underlying any of the foregoing. Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not limited to, the impact of U.S. tariffs on results; fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and our distributors' inventory management practices; political and economic conditions and volatility affecting the stability of business environments, economic growth, currency values, commodity prices and other factors that may influence the ultimate demand for our products in particular geographies or globally; impact of counterfeiting and our ability to contain such impact; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; our ability to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team, including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; whether the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification; litigation related to U.S. Securities laws; and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2018, and subsequent filings filed with the U.S. Securities and Exchange Commission (the "SEC"), which are available at the SEC's website at www.sec.gov. Copies may also be obtained by contacting the Ubiquiti Networks Investor Relations Department, by email at [email protected] or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.ui.com. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Except as required by law, Ubiquiti Networks undertakes no obligation to update information contained herein. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended June 30, 2018.
(1) The $12.3 million non-GAAP adjustment in the fourth quarter fiscal 2019 related to Tax Regulation changes represents our estimate of the impact of the Final GILTI Regulations on our earnings during the first nine months of fiscal 2019. This fourth quarter adjustment is not included in the full year non-GAAP results because the fiscal 2019 results properly reflect the full year impact of the Final GILTI Regulations and we expect the Final GILTI Regulations to impact us in the future. As a result, the sum of the quarterly non-GAAP results will not equal the full year non-GAAP results. Use of Non-GAAP Financial Information To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are adjusted to exclude certain costs, expenses and gains such as stock-based compensation expense, net tax benefits related to equity awards exercises and vesting, unusual litigation settlements, SEC related matters, Tax Reform, Tax Regulation changes and the tax effects of these non-GAAP adjustments. Reconciliations of the adjustments to GAAP results for the periods presented are provided above. In addition, an explanation of the ways in which management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under the paragraphs below. Usefulness of Non-GAAP Financial Information to Investors We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information regarding non-cash expenses, significant items that we believe are important to understanding our financial, and business trends relating to our financial condition and results of operations. Non-GAAP net income and non-GAAP earnings per diluted share are among the primary indicators used by management as a basis for planning and forecasting future periods and by management and our board of directors to determine whether our operating performance has met specified targets and thresholds. Management uses non-GAAP net income and non-GAAP earnings per diluted share when evaluating operating performance because it believes that the exclusion of the items described below, for which the amounts or timing may vary significantly depending upon the Company's activities and other factors, facilitates comparability of the Company's operating performance from period to period. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our business and the valuation of our Company. About our Non-GAAP Net Income and Non-GAAP Earnings per Diluted Share We compute non-GAAP net income and non-GAAP earnings per diluted share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of certain adjustments and the tax effect of those adjustments. Items excluded from net income are: • Stock-based compensation expense • Net Tax Benefits related to Equity Awards Exercises and Vesting • Litigation settlement • Tax Reform and Tax Regulation changes • SEC related matters • Tax effect of non-GAAP adjustments, applying the principles of ASC 740 These non-GAAP measures are not in accordance with, or an alternative to, GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. For more information on the non-GAAP adjustments, please see the table captioned "Reconciliation of GAAP Net Income to non-GAAP Net Income" included in this press release.
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended June 30, 2018.
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended June 30, 2018. (2) Derived from audited consolidated financial statements as of and for the fiscal year ended June 30, 2017. View source version on businesswire.com: https://www.businesswire.com/news/home/20190809005204/en/ |