Universal Electronics Reports Fourth Quarter And Year-End 2011 Financial Results

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2011.

Paul Arling, UEI's Chairman and CEO, stated: “Our fourth quarter 2011 net sales were within our expectations and demonstrated strong growth of 15% over last year, and earnings were at the high end of our expectations, at $0.40 per share. In 2011, we maintained focus on improving our operational footing by introducing new innovative products and technologies, gaining market share and expanding geographically.”

“At the 2012 Consumer Electronics Show (CES), we showcased several innovative yet simple-to-use products and technologies that address new growth areas in our industry such as IP-based set-top boxes, 'smart' televisions, smartphones, tablets and Over-the-Top services. These innovations continue to demonstrate UEI’s leadership in providing consumers with both the 'lean forward' control experience and the familiar 'lean back' experience with a remote control. As the face of remote control technology expands to include new platforms, UEI will continue to be at the forefront of developing hardware and software technologies that bring new functionality, enhanced applications and automated setup to the user’s control experience,” concluded Arling.

Financial Results for the Three Months Ended December 31: 2011 Compared to 2010
  • Net sales were $117.6 million, compared to net sales of $102.5 million.
    • Business Category revenue was $103.7 million, compared to $89.1 million.The Business Category contributed 88.2% of total net sales, compared to 86.9%.
    • Consumer Category revenue was $13.9 million, compared to $13.4 million.The Consumer Category contributed 11.8% of total net sales, compared to 13.1%.
  • Adjusted pro forma gross margins were 28.6%, compared to gross margins of 29.7%.
  • Adjusted pro forma operating expenses were $26.2 million, compared to operating expenses of $22.4 million.
  • Adjusted pro forma operating income was $7.4 million, compared to operating income of $8.0 million.
  • Adjusted pro forma net income was $5.9 million, or $0.40 per diluted share, compared to net income of $6.6 million, or $0.45 per diluted share.
  • At December 31, 2011, cash and cash equivalents was $29.4 million.

Financial Results for the Twelve Months Ended December 31: 2011 Compared to 2010
  • Net sales were $468.6 million, compared to net sales of $331.8 million.
  • Adjusted pro forma gross margins were 28.0%, compared to gross margins of 31.8%.
  • Adjusted pro forma operating expenses were $100.2 million, compared to operating expenses of $81.0 million.
  • Adjusted pro forma operating income was $31.0 million, compared to operating income of $24.6 million.
  • Adjusted pro forma net income was $23.6 million, or $1.55 per diluted share, compared to net income of $17.9 million, or $1.27 per diluted share.

Financial Outlook

For the first quarter of 2012, the company expects net sales to range between $104 million and $110 million, compared to $105.7 million in the first quarter of 2011. Adjusted pro forma earnings per diluted share for the first quarter of 2012 are expected to range from $0.19 to $0.25, compared to adjusted pro forma earnings per diluted share of $0.17 in the first quarter of 2011.

For the full 2012 year, the company expects net sales to range between $500 million and $520 million, compared to $468.6 million in 2011. Adjusted pro forma earnings per diluted share for 2012 are expected to range from $1.65 to $1.85, compared to adjusted pro forma earnings per diluted share of $1.55 in 2011.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, February 23, 2012 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and year-end 2011 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 49555937. 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 49555937.

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 charges related to the write-up of inventory and depreciation related to the acquisition. Non-GAAP operating expenses is defined as cash operating expenses excluding acquisition costs, amortization of intangibles and other employee related restructuring costs. Non-GAAP net income is net income from operations excluding the aforementioned items. A reconciliation of Non-GAAP financial results to GAAP results is included at the end of this press release.

About Universal Electronics Inc.

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, please 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 continued innovation of products and technologies; the Company’s ability to gain market share; general economic conditions; the consumer electronics and broader retail industries to be weaker than anticipated by management; and other factors described in the Company's filings with the U.S. Securities and Exchange Commission. The actual results that 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)
 

 

 

December 31,2011

December 31,2010
ASSETS
Current assets:
Cash and cash equivalents

$

29,372
$ 54,249
Accounts receivable, net 82,184 86,304
Inventories, net 90,904 65,402
Prepaid expenses and other current assets 3,045 2,582
Deferred income taxes   6,558     5,896  
Total current assets 212,063 214,433
Property, plant, and equipment, net 80,449 78,097
Goodwill 30,820 30,877
Intangible assets, net 32,814 35,994
Other assets 5,350 5,464
Deferred income taxes   7,992     7,806  
Total assets

$

369,488
  $ 372,671  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

55,430
$ 56,086
Line of credit 2,000
Notes payable 14,400 35,000
Accrued sales discounts, rebates and royalties 6,544 7,942
Accrued income taxes 5,707 5,873
Accrued compensation 29,204 30,634
Deferred income taxes 50 57
Other accrued expenses   13,967     13,238  
Total current liabilities 127,302 148,830
Long-term liabilities:
Deferred income taxes 11,056 11,369
Income tax payable 1,136 1,212
Other long-term liabilities   5     56  
Total liabilities 139,499     161,467  
 
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; 21,142,915and 20,877,248 shares issued on December 31, 2011 and 2010, respectively
211 209
Paid-in capital 173,701 166,940
Accumulated other comprehensive income (loss) 938 (489 )
Retained earnings   154,016     134,070  
328,866 300,730
 

Less cost of common stock in treasury, 6,353,035 and 5,926,071 shares onDecember 31, 2011 and 2010, respectively
  (98,877 )   (89,526 )
Total stockholders’ equity   229,989     211,204  
Total liabilities and stockholders’ equity

$

369,488
  $ 372,671  

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)
 

 

Three Months Ended December 31,

Twelve Months Ended December 31,
  2011       2010     2011       2010
Net sales $ 117,645 $ 102,505 $ 468,630 $ 331,780
Cost of sales   84,285     73,863     338,569     227,931
Gross profit 33,360 28,642 130,061 103,849
 
Research and development expenses 2,992 2,765 12,267 10,709
Selling, general and administrative expenses   24,102     21,145     91,218     71,839
 
Operating income 6,266 4,732 26,576 21,301
Interest (expense) income, net (60 ) (65 ) (270 ) 34
Other (expense) income, net   (304 )   461     (1,075 )   523
 
Income before provision for income taxes 5,902 5,128 25,231 21,858
Provision for income taxes   988     1,362     5,285     6,777
Net income $ 4,914   $ 3,766   $ 19,946   $ 15,081
 
Earnings per share:
Basic $ 0.33   $ 0.26   $ 1.34   $ 1.10
Diluted $ 0.33   $ 0.26   $ 1.31   $ 1.07
 
Shares used in computing earnings per share:
Basic   14,763     14,344     14,912     13,764
Diluted   14,919     14,737     15,213     14,106

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
 
Year Ended December 31,
  2011       2010       2009  
Cash provided by operating activities:
Net income $ 19,946 $ 15,081 $ 14,675
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,335 8,059 6,801
Provision for doubtful accounts 277 931 435
Provision for inventory write-downs 5,625 3,514 4,179
Deferred income taxes (1,043 ) (559 ) (1,036 )
Tax benefit from exercise of stock options and vested restricted stock 280 231 408
Excess tax benefit from stock-based compensation (439 ) (290 ) (250 )
Shares issued for employee benefit plan 729 566 741
Stock-based compensation 4,511 4,966 4,312
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable 3,142 13,192 (4,278 )
Inventories (30,597 ) (5,102 ) (1,053 )
Prepaid expenses and other assets (345 ) 950 552
Accounts payable and accrued expenses (4,319 ) 922 (2,201 )
Accrued income and other taxes   (302 )   (4,322 )   702  
Net cash provided by operating activities   14,800     38,139     23,987  
Cash used for investing activities:
Acquisition of Enson, net of cash acquired (74,271 )
Term deposit 49,246 (49,246 )
Acquisition of property, plant, and equipment (13,630 ) (8,440 ) (6,171 )
Acquisition of intangible assets (1,064 ) (1,378 ) (1,172 )
Acquisition of assets from Zilog.           (9,502 )
Net cash used for investing activities   (14,694 )   (34,843 )   (66,091 )
Cash (used for) provided by financing activities:
Issuance of debt 4,200 41,000
Payment of debt (22,800 ) (9,834 )
Proceeds from stock options exercised 1,677 1,964 3,275
Treasury stock purchased (9,785 ) (10,145 ) (7,747 )
Excess tax benefit from stock-based compensation   439     290     250  
Net cash (used for) provided by financing activities (26,269 ) 23,275 (4,222 )
Effect of exchange rate changes on cash   1,286     (1,338 )   104  
Net (decrease) increase in cash and cash equivalents (24,877 ) 25,233 (46,222 )
Cash and cash equivalents at beginning of year   54,249     29,016     75,238  
Cash and cash equivalents at end of year $ 29,372   $ 54,249   $ 29,016  

Supplemental Cash Flow Information — Income taxes paid, net of refunds, were $8.1 million, $11.7 million, and $8.1 million in 2011, 2010, and 2009, respectively. We had interest payments of $0.4 million in 2011 and $0 in both 2010 and 2009.

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands)

(Unaudited)
 
Three Months Ended

December 31, 2011
Three Months Ended

December 31, 2010
   
GAAP Adjustments

AdjustedPro Forma
GAAP Adjustments   Adjusted

Pro Forma
 
Net sales

 

$

117,645

 

$

$

117,645

$

102,505
$ — $ 102,505
Cost of sales (1) 84,285 (277 ) 84,008   73,863   (1,799 )   72,064  
Gross profit 33,360 277 33,637 28,642 1,799 30,441
 
Research and development expenses 2,992 2,992 2,765 2,765
Selling, general and administrative

expenses (2)
24,102 (890 ) 23,212   21,145   (1,498 )   19,647  
 
Operating income 6,266 1,167 7,433 4,732 3,297 8,029
Interest (expense) income, net (60

)

 
(60 ) (65 ) (65 )
Other (expense) income, net (304

)

 
  (304 ) 461       461  
 
Income before provision for income taxes 5,902 1,167 7,069 5,128 3,297 8,425
Provision for income taxes (3) 988 179   1,167   1,362   487     1,849  
Net income

 

$

4,914

$

988
 

$

5,902
 

$

3,766

 

$

2,810
  $ 6,576  
 
Earnings per share diluted

 

$

0.33

$

0.07
 

$

0.40
 

$

0.26
 

$

0.19
  $ 0.45  
 
Twelve Months Ended

December 31, 2011
Twelve Months Ended

December 31, 2010
 
GAAP Adjustments

AdjustedPro Forma
GAAP Adjustments Adjusted

Pro Forma
 
Net sales

$

468,630

$

$

468,630

$

331,780

$

$

331,780
Cost of sales (1) 338,569 (1,108 ) 337,461   227,931   (1,799 )   226,132  
Gross profit 130,061 1,108 131,169 103,849 1,799 105,648
 
Research and development expenses 12,267 12,267 10,709 10,709
Selling, general and administrative

expenses (2)
91,218 (3,292 ) 87,926   71,839   (1,498 )   70,341  
 
Operating income 26,576 4,400 30,976 21,301 3,297 24,598
Interest (expense) income, net (270

)

 
(270 ) 34 34
Other (expense) income, net (1,075

)

 
  (1,075 ) 523       523  
 
Income before provision for income taxes 25,231 4,400 29,631 21,858 3,297 25,155
Provision for income taxes (3) 5,285

 
765   6,050   6,777   487     7,264  
Net income

$

19,946

$

3,635
 

$

23,581
 

$

15,081
 

$

2,810
  $ 17,891  
 
Earnings per share diluted

$

1.31

$

0.24
 

$

1.55
 

$

1.07
 

$

0.20
  $ 1.27  

(1) To reflect depreciation expense of $0.3 million and $1.1 million for the three and twelve months ending December 31, 2011, respectively, relating to the mark-up in fixed assets from cost to fair value as part of the Enson Assets Limited acquisition.

(2) To reflect $0.9 million and $3.3 million of amortization expense for the three and twelve months ended December 31, 2011, respectively, relating to intangible assets acquired as part of the Enson Assets Limited and Zilog acquisitions.

(3) To reflect the tax effect of the adjustments.

Copyright Business Wire 2010

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