Universal Electronics Reports Third Quarter 2013 Financial Results

November 7, 2013

Achieves Records in Net  Sales of $142.4 million and Adjusted Pro Forma EPS of $0.62

SANTA ANA, CA – November 7, 2013 – Universal Electronics Inc. (UEI),  (NASDAQ: UEIC) reported financial results for the three and nine months ended September 30,  2013.

Paul Arling, UEI's Chairman and  CEO, stated: “Our record quarterly performance was supported by strength in  subscription broadcasting as both domestic and international markets delivered  growth. Leveraging our core business, technologies and patents, we have begun  recording initial licensing sales from the fast-growing smart devices market. We  are beginning to gain traction with the world’s largest mobile device manufacturers,  gaming companies and over-the-top service providers to incorporate UEI’s  advanced technology into an expanding array of consumer electronics devices. We  remain very excited about the opportunities for UEI and our ability to connect  and control new and advanced wireless technologies as the industry continues to  evolve.”
  Adjusted Pro Forma Financial Results for  the Three Months Ended September 30: 2013 Compared to 2012

     
  1. Net sales were $142.4 million,  compared to $124.9 million.
  2.  
         
    1. Business Category revenue was $129.7  million, compared to $111.9 million.  The Business Category contributed 91.1% of  total net sales, compared to 89.6%.
    2.    
    3. Consumer Category revenue was $12.7  million, compared to $13.0 million. The  Consumer Category contributed 8.9% of total  net sales, compared to 10.4%.
    4.  
     
  3. Gross margins were 28.6%, compared to 29.4%.
  4.  
  5. Operating expenses were $28.9 million, compared to $25.5  million.
  6.  
  7. Operating income was $11.8 million, compared to $11.2  million.
  8.  
  9. Net income was $9.7 million, or $0.62 per diluted  share, compared to $8.1 million, or $0.54 per diluted share.
  10.  
  11. At September 30, 2013, cash and cash equivalents, net  of debt, was $44.6 million, compared to $34.4 million at September 30, 2012.

Adjusted Pro Forma Financial Results for  the Nine Months Ended September 30: 2013 Compared to 2012

     
  1. Net sales were $393.2 million, compared to $345.3  million.
  2.  
  3. Gross margins were 28.4%, compared to 28.5%.
  4.  
  5. Operating expenses were $83.6 million, compared to $75.9  million.
  6.  
  7. Operating income was $28.1 million, compared to $22.7  million.
  8.  
  9. Net income was $20.8 million, or $1.35 per diluted  share, compared to $17.1 million, or $1.13 per diluted share.

Financial Outlook
  For the fourth quarter of 2013,  the company expects net sales to range between $126.0 million and $134.0  million, compared to $117.8 million in the fourth quarter of 2012. Adjusted pro  forma earnings per diluted share for the fourth quarter of 2013 are expected to  range from $0.42 to $0.52, compared to adjusted pro forma earnings per diluted  share of $0.42 in the fourth quarter of 2012.

Conference Call Information
  UEI’s  management team will hold a conference call today, Thursday, November 7, 2013 at 4:30 p.m. ET / 1:30 p.m. PT, to  discuss its third quarter 2013 earnings results, review recent activity and  answer questions. To access the call in the U.S. please dial 877-655-6895 and  for international calls dial 706-758-0299 approximately 10 minutes prior to the  start of the conference. The conference ID is 86975386. 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 86975386.
  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 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  of its core businesses, technologies and patents; the continued innovation of  products and advanced technologies that will attract new customers in existing  and new markets, including advanced wireless products and platforms; the  continued expansion of the Company's technologies into smart devices (such as  smartphones, tablets, smart TVs, IPTV devices, game consoles and  over-the-top-services) and the continued growth of the smart device markets;  the Company’s continued ability to successfully license its technologies into  the growing smart device markets; the benefits the Company expects via the  continued strength of its subscription broadcasting businesses, both  domestically and internationally; and 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.

 

–  Tables Follow –

 

UNIVERSAL  ELECTRONICS INC.
  CONSOLIDATED BALANCE SHEETS
  (In  thousands, except share-related data)
(Unaudited)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

 

 

September 30,
      2013

 

December 31,
      2012

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

44,602

 

 

$

44,593

 

Accounts receivable, net

 

103,466

 

 

91,048

 

Inventories, net

 

103,579

 

 

84,381

 

Prepaid expenses and other    current assets

 

3,573

 

 

3,661

 

Income tax receivable

 

12

 

 

270

 

Deferred income taxes

 

5,102

 

 

5,210

 

Total current assets

 

260,334

 

 

229,163

 

Property, plant, and    equipment, net

 

76,662

 

 

77,706

 

Goodwill

 

30,961

 

 

30,890

 

Intangible assets, net

 

27,632

 

 

29,835

 

Other assets

 

5,096

 

 

5,361

 

Deferred income taxes

 

6,252

 

 

6,369

 

Total assets

 

$

406,937

 

 

$

379,324

 

LIABILITIES AND    STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

57,153

 

 

$

59,831

 

Line of credit

 

 

 

 

Accrued compensation

 

35,529

 

 

33,398

 

Accrued sales discounts,    rebates and royalties

 

7,165

 

 

8,093

 

Accrued income taxes

 

2,756

 

 

3,668

 

Deferred income taxes

 

56

 

 

41

 

Other accrued expenses

 

10,550

 

 

10,644

 

Total current liabilities

 

113,209

 

 

115,675

 

Long-term liabilities:

 

 

 

 

Deferred income taxes

 

10,549

 

 

10,687

 

Income tax payable

 

525

 

 

525

 

Other long-term liabilities

 

2,082

 

 

1,787

 

Total liabilities

 

126,365

 

 

128,674

 

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; 22,133,206 and 21,491,398 shares issued    on September 30, 2013 and December 31, 2012, respectively

 

221

 

 

215

 

Paid-in capital

 

194,360

 

 

180,607

 

Accumulated other comprehensive    income (loss)

 

2,641

 

 

1,052

 

Retained earnings

 

187,979

 

 

170,569

 

 

 

385,201

 

 

352,443

 

Less cost of common stock    in treasury, 6,634,641 and 6,516,382 shares on September 30, 2013 and    December 31, 2012, respectively

 

(104,629

)

 

(101,793

)

Total stockholders’ equity

 

280,572

 

 

250,650

 

Total liabilities and stockholders’ equity

 

$

406,937

 

 

$

379,324

 

UNIVERSAL ELECTRONICS INC.
  CONSOLIDATED INCOME STATEMENTS
  (In  thousands, except per share amounts)
  (Unaudited)

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

 

 

Three Months Ended
      September 30,

 

Nine Months Ended
      September 30,

 

 

2013

 

2012

 

2013

 

2012

Net sales

 

$

142,389

 

 

$

124,871

 

 

$

393,220

 

 

$

345,307

 

Cost of sales

 

101,940

 

 

88,433

 

 

282,386

 

 

247,572

 

Gross profit

 

40,449

 

 

36,438

 

 

110,834

 

 

97,735

 

Research and development    expenses

 

4,182

 

 

3,521

 

 

12,463

 

 

10,408

 

Selling, general and    administrative expenses

 

25,796

 

 

23,383

 

 

74,029

 

 

69,015

 

Operating income

 

10,471

 

 

9,534

 

 

24,342

 

 

18,312

 

Interest income (expense),    net

 

47

 

 

(24

)

 

60

 

 

(112

)

Other income (expense), net

 

(717

)

 

(65

)

 

(2,897

)

 

(515

)

Income before provision for    income taxes

 

9,801

 

 

9,445

 

 

21,505

 

 

17,685

 

Provision for income taxes

 

1,178

 

 

2,595

 

 

4,095

 

 

4,050

 

Net income

 

$

8,623

 

 

$

6,850

 

 

$

17,410

 

 

$

13,635

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.56

 

 

$

0.46

 

 

$

1.15

 

 

$

0.91

 

Diluted

 

$

0.55

 

 

$

0.45

 

 

$

1.13

 

 

$

0.90

 

Shares used in computing    earnings per share:

 

 

 

 

 

 

 

 

Basic

 

15,324

 

 

14,984

 

 

15,129

 

 

14,931

 

Diluted

 

15,743

 

 

15,099

 

 

15,462

 

 

15,087

 

 Contacts: Paul Arling (UEI) 714.918.9500

Becky Herrick (IR Agency) 415.433.3777

Press Contact

Benny Canady
UEI Corporate Marketing and Public Relations
714-918-9500

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