Universal Electronics Reports Third Quarter 2016 Financial Results

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and nine months ended September 30, 2016.

Paul Arling, UEI's Chairman and CEO, stated, "Our third quarter 2016 results reflect the continued solid performance across the business, as Adjusted Pro Forma net sales and diluted earnings per share grew 6% and 21% over the prior year, respectively. Our advanced control technologies continue to be adopted by subscription broadcasting and OEM customers who are introducing next-generation home entertainment platforms around the world. While in various phases of development, this new evolution in home control presents significant long-term opportunities for UEI to increase our market share by deepening existing customer relationships and by adding new ones. In support of our growing market position, we are transitioning manufacturing to our newer, more advanced facilities in China, which underscores our commitment to improving margins, differentiating UEI in the marketplace through enhanced products and maintaining cost effective operations."

Financial Results for the Three Months Ended September 30: 2016 Compared to 2015
  • GAAP net sales were $169.2 million, compared to $160.5 million; Adjusted Pro Forma net sales were $170.3 million, compared to $160.5 million.
  • GAAP gross margins were 24.7%, compared to 26.7%; Adjusted Pro Forma gross margins were 26.1%, compared to 26.9%.
  • GAAP operating income was $8.1 million, compared to $9.0 million; Adjusted Pro Forma operating income was $15.6 million, compared to $17.2 million.
  • GAAP net income was $7.8 million, or $0.53 per diluted share, compared to $6.3 million or $0.41 per diluted share; Adjusted Pro Forma net income was $13.9 million, or $0.94 per diluted share, compared to $11.8 million, or $0.78 per diluted share.
  • At September 30, 2016, cash and cash equivalents were $48.1 million.

Financial Results for the Nine Months Ended September 30: 2016 Compared to 2015
  • GAAP net sales were $490.8 million, compared to $440.7 million; Adjusted Pro Forma net sales were $494.0 million, compared to $440.7 million.
  • GAAP gross margins were 25.0%, compared to 27.3%; Adjusted Pro Forma gross margins were 26.0%, compared to 27.5%.
  • GAAP operating income was $19.1 million, compared to $25.5 million; Adjusted Pro Forma operating income was $39.6 million, compared to $39.8 million.
  • GAAP net income was $17.1 million, or $1.16 per diluted share, compared to $19.8 million or $1.25 per diluted share; Adjusted Pro Forma net income was $32.5 million, or $2.20 per diluted share, compared to $30.0 million, or $1.89 per diluted share.

Financial Outlook

Bryan Hackworth, UEI's CFO, stated: "The evolution to more advanced control technologies within the home entertainment environment continues to provide UEI with significant long-term growth opportunities. However, over a dozen new product introductions that were scheduled to launch in the fourth quarter of 2016 have been delayed due to customer issues with readiness of their new, more advanced hardware and software systems. While the impact of these factors is reflected in our fourth quarter 2016 financial guidance, due to the long-term positive trends in our industry, we are reaffirming our long-term financial outlook. We expect average annual sales growth of 5% to 10% and average earnings per share growth of 10% to 20%."

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