Universal Electronics Reports First Quarter 2015 Financial Results
May 7, 2015
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- Increased net income 16% over first quarter 2014 -
- Maintains long-term financial outlook of average annual sales growth of 5% to 10% and average earnings growth of 10% to 20% -
“Our strategy to build relationships with key customers in targeted geographies has served us well for nearly 30 years. By attracting brands in regions that represent the highest growth potential, we have been successful in winning new customers and taking share in subscription broadcasting, consumer electronics and now game consoles, smart TVs, as well as smart devices. The market is once again evolving, and we continue to be at the forefront of changing trends in home entertainment by ensuring we develop the innovative solutions that proactively address the needs of our customers and consumers,” concluded Arling.
Adjusted Pro Forma Financial Results for the
Three Months Ended
-
Net sales were
$132.7 million , compared to$129.8 million .-
Business Category revenue was
$121.5 million , compared to$118.4 million . The Business Category contributed 91.6% of total net sales, compared to 91.2%. -
Consumer Category revenue was
$11.2 million , compared to$11.4 million . The Consumer Category contributed 8.4% of total net sales, compared to 8.8%.
-
Business Category revenue was
- Gross margins were 28.4%, compared to 28.3%.
-
Operating expenses were
$28.6 million , compared to$28.0 million . -
Operating income was
$9.1 million , compared to$8.8 million . -
Net income was
$7.4 million , or$0.46 per diluted share, compared to$6.4 million , or$0.40 per diluted share. -
At March 31, 2015, cash and cash equivalents was
$97.1 million .
Financial Outlook
For the second quarter of 2015, the company expects net sales to range
between
Hackworth continued: “While there are normal ebbs and flows in our sales figures from time-to-time, the long-term outlook for our business remains unchanged. We continue to expect average annual sales growth of between 5% and 10% and average earnings growth of between 10% and 20%.”
Conference Call Information
UEI’s management team will hold a conference call today, Thursday,
May 7, 2015 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 company’s ability to
maintain and build its relationships with key customers; the company’s
ability to anticipate the needs and wants of its customers and timely
develop and deliver products that will meet those needs and wants; the
continued success in winning new customers and growing its market share;
the timing of new product rollout orders from the company’s customers as
anticipated by management; the continued trend of the home entertainment
industry in providing consumers with more advanced technologies;
management's ability to manage its business to achieve its revenue and
earnings as guided; and the other factors described in the company's
filings with the
| UNIVERSAL ELECTRONICS INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
|
(In thousands, except share-related data) |
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|
(Unaudited) |
||||||||
| March 31, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 97,102 | $ | 112,521 | ||||
| Accounts receivable, net | 93,808 | 97,989 | ||||||
| Inventories, net | 100,181 | 97,474 | ||||||
| Prepaid expenses and other current assets | 5,817 | 6,856 | ||||||
| Income tax receivable | 69 | 77 | ||||||
| Deferred income taxes | 5,203 | 5,048 | ||||||
| Total current assets | 302,180 | 319,965 | ||||||
| Property, plant, and equipment, net | 79,149 | 76,135 | ||||||
| Goodwill | 30,525 | 30,739 | ||||||
| Intangible assets, net | 24,225 | 24,614 | ||||||
| Deferred income taxes | 6,802 | 6,146 | ||||||
| Other assets | 5,682 | 5,471 | ||||||
| Total assets | $ | 448,563 | $ | 463,070 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 64,201 | $ | 69,991 | ||||
| Line of credit | — | — | ||||||
| Accrued compensation | 34,219 | 40,656 | ||||||
| Accrued sales discounts, rebates and royalties | 6,770 | 8,097 | ||||||
| Accrued income taxes | 3,446 | 4,263 | ||||||
| Deferred income taxes | — | — | ||||||
| Other accrued expenses | 12,406 | 13,358 | ||||||
|
Total current liabilities |
121,042 | 136,365 | ||||||
| Long-term liabilities: | ||||||||
| Deferred income taxes | 8,474 | 8,456 | ||||||
| Income tax payable | 566 | 566 | ||||||
| Other long-term liabilities | 2,044 | 2,062 | ||||||
|
Total liabilities |
132,126 | 147,449 | ||||||
| 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; 22,992,947 and 22,909,884 shares issued on March 31, 2015 and December 31, 2014, respectively | 230 | 229 | ||||||
| Paid-in capital | 218,615 | 214,710 | ||||||
| Accumulated other comprehensive income (loss) | (8,704 | ) | (4,446 | ) | ||||
| Retained earnings | 231,255 | 226,066 | ||||||
| 441,396 | 436,559 | |||||||
|
Less cost of common stock in treasury, 7,077,935 and 7,008,475 shares on March 31, 2015 and December 31, 2014, respectively |
(124,959 | ) | (120,938 | ) | ||||
| Total stockholders’ equity | 316,437 | 315,621 | ||||||
| Total liabilities and stockholders’ equity | $ | 448,563 | $ | 463,070 | ||||
| UNIVERSAL ELECTRONICS INC. | ||||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||||
|
(In thousands, except per share amounts) |
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|
(Unaudited) |
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|
Three Months Ended March 31, | |||||||
| 2015 | 2014 | |||||||
| Net sales | $ | 132,705 | $ | 129,845 | ||||
| Cost of sales | 95,296 | 93,299 | ||||||
| Gross profit | 37,409 | 36,546 | ||||||
| Research and development expenses | 4,434 | 4,277 | ||||||
| Selling, general and administrative expenses | 26,872 | 26,279 | ||||||
| Operating income | 6,103 | 5,990 | ||||||
| Interest income (expense), net | 110 | (16 | ) | |||||
| Other income (expense), net | 230 | (349 | ) | |||||
| Income before provision for income taxes | 6,443 | 5,625 | ||||||
| Provision for income taxes | 1,254 | 1,352 | ||||||
| Net income | $ | 5,189 | $ | 4,273 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.33 | $ | 0.27 | ||||
| Diluted | $ | 0.32 | $ | 0.26 | ||||
| Shares used in computing earnings per share: | ||||||||
| Basic | 15,907 | 15,787 | ||||||
| Diluted | 16,243 | 16,163 | ||||||
| UNIVERSAL ELECTRONICS INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
|
(In thousands) |
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|
(Unaudited) |
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| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Cash provided by (used for) operating activities: | ||||||||
| Net income | $ | 5,189 | $ | 4,273 | ||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||||||
| Depreciation and amortization | 4,667 | 4,260 | ||||||
| Provision for doubtful accounts | 2 | 61 | ||||||
| Provision for inventory write-downs | 906 | 596 | ||||||
| Deferred income taxes | (806 | ) | 948 | |||||
| Tax benefit from exercise of stock options and vested restricted stock | 567 | 731 | ||||||
| Excess tax benefit from stock-based compensation | (587 | ) | (723 | ) | ||||
| Shares issued for employee benefit plan | 391 | 347 | ||||||
| Stock-based compensation | 1,959 | 1,678 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 342 | 9,967 | ||||||
| Inventories | (5,993 | ) | 4,756 | |||||
| Prepaid expenses and other assets | 755 | (15 | ) | |||||
| Accounts payable and accrued expenses | (12,209 | ) | (10,489 | ) | ||||
| Accrued income taxes | (832 | ) | (2,484 | ) | ||||
| Net cash provided by (used for) operating activities | (5,649 | ) | 13,906 | |||||
| Cash used for investing activities: | ||||||||
| Acquisition of property, plant, and equipment | (7,210 | ) | (2,396 | ) | ||||
| Acquisition of intangible assets | (681 | ) | (204 | ) | ||||
| Net cash used for investing activities | (7,891 | ) | (2,600 | ) | ||||
| Cash provided by (used for) financing activities: | ||||||||
| Proceeds from stock options exercised | 989 | 3,272 | ||||||
| Treasury stock purchased | (4,021 | ) | (405 | ) | ||||
| Excess tax benefit from stock-based compensation | 587 | 723 | ||||||
| Net cash provided by (used for) financing activities | (2,445 | ) | 3,590 | |||||
| Effect of exchange rate changes on cash | 566 | (670 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (15,419 | ) | 14,226 | |||||
| Cash and cash equivalents at beginning of year | 112,521 | 76,174 | ||||||
| Cash and cash equivalents at end of period | $ | 97,102 | $ | 90,400 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Income taxes paid | $ | 2,000 | $ | 1,601 | ||||
| UNIVERSAL ELECTRONICS INC. | ||||||||||||||||||||||||
| RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS | ||||||||||||||||||||||||
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(In thousands, except share-related data) |
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|
(Unaudited) |
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Three Months Ended |
Three Months Ended |
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| GAAP | Adjustments |
Adjusted |
GAAP | Adjustments |
Adjusted |
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| Net sales | $ | 132,705 | $ | — | $ | 132,705 | $ | 129,845 | $ | — | $ | 129,845 | ||||||||||||
| Cost of sales (1) | 95,296 | (251 | ) | 95,045 | 93,299 | (235 | ) | 93,064 | ||||||||||||||||
| Gross profit | 37,409 | 251 | 37,660 | 36,546 | 235 | 36,781 | ||||||||||||||||||
| Research and development expenses (2) | 4,434 | (105 | ) | 4,329 | 4,277 | (101 | ) | 4,176 | ||||||||||||||||
| Selling, general and administrative expenses (3) | 26,872 | (2,642 | ) | 24,230 | 26,279 | (2,461 | ) | 23,818 | ||||||||||||||||
| Operating income | 6,103 | 2,998 | 9,101 | 5,990 | 2,797 | 8,787 | ||||||||||||||||||
| Interest income (expense), net | 110 | — | 110 | (16 | ) | — | (16 | ) | ||||||||||||||||
| Other income (expense), net | 230 | — | 230 | (349 | ) | — | (349 | ) | ||||||||||||||||
| Income before provision for income taxes | 6,443 | 2,998 | 9,441 | 5,625 | 2,797 | 8,422 | ||||||||||||||||||
| Provision for income taxes (4) | 1,254 | 740 | 1,994 | 1,352 | 676 | 2,028 | ||||||||||||||||||
| Net income | $ | 5,189 | $ | 2,258 | $ | 7,447 | $ | 4,273 | $ | 2,121 | $ | 6,394 | ||||||||||||
| Earnings per share diluted | $ | 0.32 | $ | 0.14 | $ | 0.46 | $ | 0.26 | $ | 0.13 | $ | 0.40 | ||||||||||||
| (1) | To reflect depreciation expense of $0.3 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions. | ||
| (2) | To reflect stock-based compensation expense for the three months ended March 31, 2015 and 2014. | ||
| (3) | To reflect amortization expense of $0.7 million for each of the three months ended March 31, 2015 and 2014 related to intangible assets acquired as part of acquisitions. In addition, to reflect stock-based compensation expense of $1.8 million and $1.6 million for the three months ended March 31, 2015 and 2014, respectively. Also, to reflect other employee related restructuring costs of $0.1 million for each of the three months ended March 31, 2015 and 2014. | ||
| (4) | To reflect the tax effect of the adjustments. |
Source:
UEI
Paul Arling, 714-918-9500
or
IR Agency
Becky
Herrick, 415-433-3777