Attached files
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| 8-K - 8-K - UNIVERSAL ELECTRONICS INC | form8k2014-05x01.htm |
Exhibit 99.1
Contacts: Paul Arling (UEI) 714.918.9500
Becky Herrick (IR Agency) 415.433.3777
UNIVERSAL ELECTRONICS REPORTS FIRST QUARTER 2014 FINANCIAL RESULTS
- Increases Net Sales 13% and Operating Income 38% Compared to the First Quarter of 2013 -
SANTA ANA, CA – May 1, 2014 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three months ended March 31, 2014.
“Our first quarter results reflect the continued strong performance across all areas of our business,” stated Paul Arling, UEI's Chairman and CEO. “Many of the innovations we developed and patented over the last decade provide us with multiple applications for the advanced technologies of today and tomorrow. UEI QuickSet™ is deployed in over 70 million devices around the world, and our Control Plus technology is being rolled out by a major player in the home entertainment space later this year. We were recently selected by Samsung to deliver the control intelligence that powers its WatchON application in Samsung’s Galaxy S® 5 smartphone. In addition, UEI’s technology is pre-installed into Samsung’s Gear 2, and Gear 2 Neo smartwatches. Wearables are a growing segment within consumer electronics devices, and the smartwatch market in particular is expected to grow at a compound annual growth rate of over 70%, from 15 million units in 2014 to nearly 400 million units by 2020, according to Next Market Insights. These are just a few examples of how UEI is expanding into new applications. As increasingly intelligent devices hit the market, UEI’s advanced control technologies position us squarely in the middle of emerging trends in the connected home.”
Adjusted Pro Forma Financial Results for the Three Months Ended March 31: 2014 Compared to 2013
• | Net sales were $129.8 million, compared to $114.7 million. |
• | Business Category revenue was $118.4 million, compared to $104.6 million. The Business Category contributed 91.2% of total net sales in both periods. |
• | Consumer Category revenue was $11.4 million, compared to $10.1 million. The Consumer Category contributed 8.8% of total net sales in both periods. |
• | Gross margins were 28.3%, compared to 28.6%. |
• | Operating expenses were $28.0 million, compared to $26.5 million. |
• | Operating income was $8.8 million, compared to $6.4 million. |
• | Net income was $6.4 million, or $0.40 per diluted share, compared to $4.8 million, or $0.32 per diluted share. |
• | At March 31, 2014, cash and cash equivalents was $90.4 million. |
Bryan Hackworth, UEI’s CFO, stated: “We have generated a significant amount of cash during the past 12 months as our cash balance has increased to $90.4 million at March 31, 2014 compared to $28.7 million a year prior. We continue to evaluate the potential uses of our cash including internal investments as well as mergers and acquisitions. However, at this time we believe repurchasing our shares is the best alternative given our bright future and our recent trading price. As a result, our Board of Directors has authorized us to purchase up to one million shares. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.”
Financial Outlook
For the second quarter of 2014, the company expects net sales to range between $141 million and $149 million, compared to $136.1 million in the second quarter of 2013. Adjusted pro forma earnings per diluted share for the second quarter of 2014 are expected to range from $0.56 to $0.66, compared to adjusted pro forma earnings per diluted share of $0.53 in the second quarter of 2013, which has been adjusted to reflect the exclusion of stock-based compensation expense.
Conference Call Information
UEI’s management team will hold a conference call today, Thursday, May 1, 2014 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its first 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 28618053. 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 28618053.
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 stock-based compensation expense. Non-GAAP net income is defined as net income from operations excluding the aforementioned items and the related tax effects. 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; the continued innovation of products and advanced technologies, such as the company’s QuickSet™ and Control Plus 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, smartwatches and over-the-top-services), including the benefits anticipated by management due to Samsung selecting the company to embed its technology into the Samsung WatchON application found in Samsung’s Galaxy S® 5 smartphone, and the Gear 2 and Gear 2 Neo; the successes anticipated by management from the growth expected in consumer electronics, particularly in the Wearables segment; 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.
– Tables Follow –
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share-related data)
(Unaudited)
March 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 90,400 | $ | 76,174 | ||||
Accounts receivable, net | 84,762 | 95,408 | ||||||
Inventories, net | 90,172 | 96,309 | ||||||
Prepaid expenses and other current assets | 4,491 | 4,395 | ||||||
Income tax receivable | 201 | 13 | ||||||
Deferred income taxes | 6,157 | 6,167 | ||||||
Total current assets | 276,183 | 278,466 | ||||||
Property, plant, and equipment, net | 73,516 | 75,570 | ||||||
Goodwill | 30,992 | 31,000 | ||||||
Intangible assets, net | 26,136 | 26,963 | ||||||
Deferred income taxes | 5,423 | 6,455 | ||||||
Other assets | 5,162 | 5,279 | ||||||
Total assets | $ | 417,412 | $ | 423,733 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 54,257 | $ | 58,498 | ||||
Line of credit | — | — | ||||||
Accrued compensation | 33,834 | 38,317 | ||||||
Accrued sales discounts, rebates and royalties | 6,255 | 8,539 | ||||||
Accrued income taxes | 704 | 3,032 | ||||||
Deferred income taxes | 302 | 303 | ||||||
Other accrued expenses | 10,388 | 11,229 | ||||||
Total current liabilities | 105,740 | 119,918 | ||||||
Long-term liabilities: | ||||||||
Deferred income taxes | 9,985 | 9,887 | ||||||
Income tax payable | 607 | 606 | ||||||
Other long-term liabilities | 2,025 | 2,052 | ||||||
Total liabilities | 118,357 | 132,463 | ||||||
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; 22,550,142 and 22,344,121 shares issued on March 31, 2014 and December 31, 2013, respectively | 226 | 223 | ||||||
Paid-in capital | 205,434 | 199,513 | ||||||
Accumulated other comprehensive income (loss) | 871 | 2,982 | ||||||
Retained earnings | 197,805 | 193,532 | ||||||
404,336 | 396,250 | |||||||
Less cost of common stock in treasury, 6,643,109 and 6,639,497 shares on March 31, 2014 and December 31, 2013, respectively | (105,281 | ) | (104,980 | ) | ||||
Total stockholders’ equity | 299,055 | 291,270 | ||||||
Total liabilities and stockholders’ equity | $ | 417,412 | $ | 423,733 | ||||
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Net sales | $ | 129,845 | $ | 114,722 | ||||
Cost of sales | 93,299 | 82,173 | ||||||
Gross profit | 36,546 | 32,549 | ||||||
Research and development expenses | 4,277 | 4,241 | ||||||
Selling, general and administrative expenses | 26,279 | 24,413 | ||||||
Operating income | 5,990 | 3,895 | ||||||
Interest income (expense), net | (16 | ) | 9 | |||||
Other income (expense), net | (349 | ) | (550 | ) | ||||
Income before provision for income taxes | 5,625 | 3,354 | ||||||
Provision for income taxes | 1,352 | 408 | ||||||
Net income | $ | 4,273 | $ | 2,946 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.27 | $ | 0.20 | ||||
Diluted | $ | 0.26 | $ | 0.19 | ||||
Shares used in computing earnings per share: | ||||||||
Basic | 15,787 | 14,965 | ||||||
Diluted | 16,163 | 15,225 | ||||||
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Cash provided by (used for) operating activities: | ||||||||
Net income | $ | 4,273 | $ | 2,946 | ||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||||||
Depreciation and amortization | 4,260 | 4,374 | ||||||
Provision for doubtful accounts | 61 | 24 | ||||||
Provision for inventory write-downs | 596 | 573 | ||||||
Deferred income taxes | 948 | (954 | ) | |||||
Tax benefit from exercise of stock options and vested restricted stock | 731 | 2 | ||||||
Excess tax benefit from stock-based compensation | (723 | ) | (37 | ) | ||||
Shares issued for employee benefit plan | 347 | 255 | ||||||
Stock-based compensation | 1,678 | 1,261 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 9,967 | 1,669 | ||||||
Inventories | 4,756 | (6,066 | ) | |||||
Prepaid expenses and other assets | (15 | ) | (268 | ) | ||||
Accounts payable and accrued expenses | (10,489 | ) | (14,345 | ) | ||||
Accrued income and other taxes | (2,484 | ) | (731 | ) | ||||
Net cash provided by (used for) operating activities | 13,906 | (11,297 | ) | |||||
Cash used for investing activities: | ||||||||
Acquisition of property, plant, and equipment | (2,396 | ) | (3,058 | ) | ||||
Acquisition of intangible assets | (204 | ) | (291 | ) | ||||
Net cash used for investing activities | (2,600 | ) | (3,349 | ) | ||||
Cash provided by (used for) financing activities: | ||||||||
Issuance of debt | — | 13,500 | ||||||
Payment of debt | — | (13,500 | ) | |||||
Proceeds from stock options exercised | 3,272 | 593 | ||||||
Treasury stock purchased | (405 | ) | (1,558 | ) | ||||
Excess tax benefit from stock-based compensation | 723 | 37 | ||||||
Net cash provided by (used for) financing activities | 3,590 | (928 | ) | |||||
Effect of exchange rate changes on cash | (670 | ) | (295 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 14,226 | (15,869 | ) | |||||
Cash and cash equivalents at beginning of year | 76,174 | 44,593 | ||||||
Cash and cash equivalents at end of period | $ | 90,400 | $ | 28,724 | ||||
Supplemental Cash Flow Information: | ||||||||
Income taxes paid | $ | 1,601 | $ | 1,682 | ||||
Interest payments | $ | — | $ | 22 | ||||
UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS
(In thousands, except share-related data)
(Unaudited)
Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | |||||||||||||||||||||||
GAAP | Adjustments | Adjusted Pro Forma | GAAP | Adjustments | Adjusted Pro Forma | |||||||||||||||||||
Net sales | $ | 129,845 | $ | — | $ | 129,845 | $ | 114,722 | $ | — | $ | 114,722 | ||||||||||||
Cost of sales (1) | 93,299 | (235 | ) | 93,064 | 82,173 | (277 | ) | 81,896 | ||||||||||||||||
Gross profit | 36,546 | 235 | 36,781 | 32,549 | 277 | 32,826 | ||||||||||||||||||
Research and development expenses | 4,277 | — | 4,277 | 4,241 | — | 4,241 | ||||||||||||||||||
Selling, general and administrative expenses (2) | 26,279 | (2,562 | ) | 23,717 | 24,413 | (2,182 | ) | 22,231 | ||||||||||||||||
Operating income | 5,990 | 2,797 | 8,787 | 3,895 | 2,459 | 6,354 | ||||||||||||||||||
Interest income (expense), net | (16 | ) | — | (16 | ) | 9 | — | 9 | ||||||||||||||||
Other income (expense), net | (349 | ) | — | (349 | ) | (550 | ) | — | (550 | ) | ||||||||||||||
Income before provision for income taxes | 5,625 | 2,797 | 8,422 | 3,354 | 2,459 | 5,813 | ||||||||||||||||||
Provision for income taxes (3) | 1,352 | 676 | 2,028 | 408 | 571 | 979 | ||||||||||||||||||
Net income | $ | 4,273 | $ | 2,121 | $ | 6,394 | $ | 2,946 | $ | 1,888 | $ | 4,834 | ||||||||||||
Earnings per share diluted | $ | 0.26 | $ | 0.13 | $ | 0.40 | $ | 0.19 | $ | 0.12 | $ | 0.32 | ||||||||||||
(1) | To reflect depreciation expense of $0.2 million and $0.3 million for the three months ended March 31, 2014 and 2013, respectively, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions. |
(2) | To reflect amortization expense of $0.7 million for each of the three months ended March 31, 2014 and 2013 related to intangible assets acquired as part of acquisitions. In addition, to reflect stock-based compensation expense of $1.7 million and $1.3 million for the three months ended March 31, 2014 and 2013, respectively. Also, to reflect other employee related restructuring costs of $0.1 million and $0.2 million for the three months ended March 31, 2014 and 2013, respectively. |
(3) | To reflect the tax effect of the adjustments. |