Universal Electronics Reports Third Quarter 2014 Financial Results
November 6, 2014
- Increases Gross Margin 210 Basis Points to 30.7% for the Third Quarter of 2014 -
- Grows Operating Income 25% over the Third Quarter of 2013 -
SANTA ANA, CA– 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.
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.