Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and six months ended June 30, 2013. Paul Arling, UEI's Chairman and CEO, stated: “We delivered better than expected second quarter 2013 results primarily due to strong sales in our subscription broadcasting business, especially in the U.S. and Latin America, as well as our consumer electronics OEM business. UEI is the market leader in wireless control technology for the connected home, but we are not stopping there; we are supplying the innovative solutions that address future evolutions in home entertainment. Our core business continues to grow as our customers are including more advanced technologies into their products, such as Bluetooth-enabled remote controls and onscreen navigation for televisions, which drives demand for a wide variety of UEI solutions. We continue to gain traction with our embedded app technologies such as UEI QuickSet and Control Plus as we work with some of the world's largest smart device companies. In fact, we expect to launch our embedded app technologies with mobile, IPTV and game console companies later in 2013 and into next year. With our market position, market approach and expanding market opportunity, we believe the future has never looked brighter.” Adjusted Pro Forma Financial Results for the Three Months Ended June 30: 2013 Compared to 2012
- Net sales were $136.1 million, compared to $116.7 million.
- Business Category revenue was $124.2 million, compared to $103.9 million. The Business Category contributed 91% of total net sales, compared to 89%.
- Consumer Category revenue was $11.9 million, compared to $12.8 million. The Consumer Category contributed 9% of total net sales, compared to 11%.
- Gross margins were 28.0%, compared to 28.5%.
- Operating expenses were $26.9 million, compared to $25.5 million.
- Operating income was $11.2 million, compared to $7.7 million.
- Net income was $7.2 million, or $0.47 per diluted share, compared to $6.2 million, or $0.41 per diluted share.
- At June 30, 2013, cash and cash equivalents, net of debt, was $49.7 million, compared to $17.7 million at June 30, 2012.
- Net sales were $250.8 million, compared to $220.4 million.
- Gross margins were 28.3%, compared to 28.1%.
- Operating expenses were $54.6 million, compared to $50.3 million.
- Operating income was $16.3 million, compared to $11.5 million.
- Net income was $11.1 million, or $0.73 per diluted share, compared to $9.0 million, or $0.60 per diluted share.
Conference Call InformationUEI’s management team will hold a conference call today, Thursday, August 8, 2013 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its second 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 21167281. 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 21167281. 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 and other employee related restructuring costs resulting from acquisitions. 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 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. More information is available at http://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; the continued innovation of products and technologies that will attract new customers in existing and new markets; 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); the continued global general economic conditions; the benefits the Company expects via the continued strength of its subscription broadcasting businesses in certain geographic areas including the U.S. and Latin America; 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.
|UNIVERSAL ELECTRONICS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share-related data) (Unaudited)|
|June 30,2013||December 31,2012|
|Cash and cash equivalents||$||49,745||$||44,593|
|Accounts receivable, net||89,432||91,048|
|Prepaid expenses and other current assets||3,654||3,661|
|Income tax receivable||6||270|
|Deferred income taxes||5,175||5,210|
|Total current assets||248,062||229,163|
|Property, plant, and equipment, net||76,337||77,706|
|Intangible assets, net||28,312||29,835|
|Deferred income taxes||6,516||6,369|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Line of credit||—||—|
|Accrued sales discounts, rebates and royalties||6,179||8,093|
|Accrued income taxes||3,253||3,668|
|Deferred income taxes||45||41|
|Other accrued expenses||9,758||10,644|
|Total current liabilities||118,187||115,675|
|Deferred income taxes||10,654||10,687|
|Income tax payable||525||525|
|Other long-term liabilities||2,055||1,787|
|Commitments and contingencies|
|Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding||—||—|
|Common stock, $0.01 par value, 50,000,000 shares authorized; 21,839,302 and 21,491,398 shares issued on June 30, 2013 and December 31, 2012, respectively||218||215|
|Accumulated other comprehensive income (loss)||576||1,052|
|Less cost of common stock in treasury, 6,619,048 and 6,516,382 shares on June 30, 2013 and December 31, 2012, respectively||(104,017||)||(101,793||)|
|Total stockholders’ equity||263,877||250,650|
|Total liabilities and stockholders’ equity||$||395,298||$||379,324|
|UNIVERSAL ELECTRONICS INC. CONSOLIDATED INCOME STATEMENTS (In thousands, except per share amounts) (Unaudited)|
|Three Months Ended June 30,||Six Months Ended June 30,|
|Cost of sales||98,273||83,734||180,446||159,139|
|Research and development expenses||4,040||3,424||8,281||6,887|
|Selling, general and administrative expenses||23,820||23,080||48,233||45,632|
|Interest income (expense), net||4||(51||)||13||(88||)|
|Other expense, net||(1,630||)||(126||)||(2,180||)||(450||)|
|Income before provision for income taxes||8,350||6,289||11,704||8,240|
|Provision for income taxes||2,509||1,136||2,917||1,455|
|Earnings per share:|
|Shares used in computing earnings per share:|
|UNIVERSAL ELECTRONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)|
|Six Months Ended June 30,|
|Cash provided by (used for) operating activities:|
|Adjustments to reconcile net income to net cash provided by (used for) operating activities:|
|Depreciation and amortization||8,788||8,525|
|Provision for doubtful accounts||48||37|
|Provision for inventory write-downs||1,130||1,623|
|Deferred income taxes||(111||)||6|
|Tax benefit from exercise of stock options and vested restricted stock||399||(72||)|
|Excess tax benefit from stock-based compensation||(366||)||(30||)|
|Shares issued for employee benefit plan||446||468|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||143||(711||)|
|Accounts payable and accrued expenses||2,647||(13,523||)|
|Accrued income and other taxes||(168||)||(2,796||)|
|Net cash provided by (used for) operating activities||7,946||8,601|
|Cash used for investing activities:|
|Acquisition of property, plant, and equipment||(4,655||)||(4,261||)|
|Acquisition of intangible assets||(654||)||(430||)|
|Net cash used for investing activities||(5,309||)||(4,691||)|
|Cash provided by (used for) financing activities:|
|Issuance of debt||19,500||8,000|
|Payment of debt||(19,500||)||(11,400||)|
|Proceeds from stock options exercised||3,946||1,386|
|Treasury stock purchased||(2,435||)||(486||)|
|Excess tax benefit from stock-based compensation||366||30|
|Net cash provided by (used for) financing activities||1,877||(2,470||)|
|Effect of exchange rate changes on cash||638||(124||)|
|Net increase (decrease) in cash and cash equivalents||5,152||1,316|
|Cash and cash equivalents at beginning of year||44,593||29,372|
|Cash and cash equivalents at end of year||$||49,745||$||30,688|
|Supplemental Cash Flow Information:|
|Income taxes paid||$||2,420||$||5,354|
|UNIVERSAL ELECTRONICS INC. RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS (In thousands, except share-related data) (Unaudited)|
|Three Months Ended June 30, 2013||Three Months Ended June 30, 2012|
|GAAP||Adjustments||Adjusted Pro Forma||GAAP||Adjustments||Adjusted Pro Forma|
|Cost of sales (1)||98,273||(277||)||97,996||83,734||(277||)||83,457|
|Research and development expenses||4,040||—||4,040||3,424||—||3,424|
|Selling, general and administrative expenses (2)||23,820||(966||)||22,854||23,080||(965||)||22,115|
|Interest income (expense), net||4||—||4||(51||)||—||(51||)|
|Other income (expense), net||(1,630||)||—||(1,630||)||(126||)||—||(126||)|
|Income before provision for income taxes||8,350||1,243||9,593||6,289||1,242||7,531|
|Provision for income taxes (3)||2,509||(112||)||2,397||1,136||238||1,374|
|Earnings per share diluted||$||0.38||$||0.09||$||0.47||$||0.34||$||0.07||$||0.41|
|Six Months EndedJune 30, 2013||Six Months EndedJune 30, 2012|
|GAAP||Adjustments||AdjustedPro Forma||GAAP||Adjustments||AdjustedPro Forma|
|Cost of sales (4)||180,446||(554||)||179,892||159,139||(554||)||158,585|
|Research and development expenses||8,281||—||8,281||6,887||—||6,887|
|Selling, general and administrative expenses (5)||48,233||(1,887||)||46,346||45,632||(2,197||)||43,435|
|Interest income (expense), net||13||—||13||(88||)||—||(88||)|
|Other income (expense), net||(2,180||)||—||(2,180||)||(450||)||—||(450||)|
|Income before provision for income taxes||11,704||2,441||14,145||8,240||2,751||10,991|
|Provision for income taxes (6)||2,917||100||3,017||1,455||542||1,997|
|Earnings per share diluted||$||0.57||$||0.15||$||0.73||$||0.45||$||0.15||$||0.60|
(2) To reflect amortization expense of $0.7 million for each of the three months ended June 30, 2013 and 2012, related to intangible assets acquired as part of acquisitions. Also, in the second quarter of 2013 and 2012, there were additional costs incurred relating primarily to other employee related restructuring costs.(3) To reflect the tax effect of the adjustments. In addition, the three months ended June 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. (4) To reflect depreciation expense of $0.6 million for each of the six months ended June 30, 2013 and 2012, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions. (5) To reflect amortization expense of $1.5 million for each of the six months ended June 30, 2013 and 2012, related to intangible assets acquired as part of acquisitions. Also, in the first six months of 2013 and 2012, there were additional costs incurred relating primarily to other employee related restructuring costs. (6) To reflect the tax effect of the adjustments. In addition, the six months ended June 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.