Universal Electronics Reports First Quarter 2014 Financial Results
May 1, 2014
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– Increases Net Sales 13% and Operating Income 38% Compared to the First Quarter of 2013 –
“Our first quarter results reflect the continued strong performance
across all areas of our business,” stated
Adjusted Pro Forma Financial Results for the
Three Months Ended
-
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.
-
Business Category revenue was
- 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 .
Financial Outlook
For the second quarter of 2014, the company expects net sales to range
between
Conference Call Information
UEI’s management team will hold a conference call today, Thursday,
May 1, 2014 at
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
Founded in 1986,
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
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UNIVERSAL ELECTRONICS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share-related data) (Unaudited) |
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March 31, |
December 31,
2013 |
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| 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 | ||||||
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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 | ||||
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UNIVERSAL ELECTRONICS INC. CONSOLIDATED INCOME STATEMENTS (In thousands, except per share amounts) (Unaudited) |
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| 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 | ||||||
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UNIVERSAL ELECTRONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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| 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 | ||||
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UNIVERSAL ELECTRONICS INC. RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS (In thousands, except share-related data) (Unaudited) |
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Three Months Ended
March 31, 2014 |
Three Months Ended
March 31, 2013 |
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| GAAP | Adjustments |
Adjusted Pro Forma |
GAAP | Adjustments |
Adjusted Pro Forma |
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| 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 | ||||||||||||
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(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. | |
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(3) |
To reflect the tax effect of the adjustments. |
Source:
UEI
Paul Arling, 714-918-9500
or
IR Agency
Becky
Herrick, 415-433-3777