Universal Electronics Reports Fourth Quarter and Year-End 2011 Financial Results

Feb 23, 2012 |

Reports 2011 Net Sales of $468.6 Million, Up 41% over 2010

CYPRESS, Calif.--(BUSINESS WIRE)--Feb. 23, 2012-- Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2011.

Paul Arling, UEI's Chairman and CEO, stated: “Our fourth quarter 2011 net sales were within our expectations and demonstrated strong growth of 15% over last year, and earnings were at the high end of our expectations, at $0.40 per share. In 2011, we maintained focus on improving our operational footing by introducing new innovative products and technologies, gaining market share and expanding geographically.”

“At the 2012 Consumer Electronics Show (CES), we showcased several innovative yet simple-to-use products and technologies that address new growth areas in our industry such as IP-based set-top boxes, 'smart' televisions, smartphones, tablets and Over-the-Top services. These innovations continue to demonstrate UEI’s leadership in providing consumers with both the 'lean forward' control experience and the familiar 'lean back' experience with a remote control. As the face of remote control technology expands to include new platforms, UEI will continue to be at the forefront of developing hardware and software technologies that bring new functionality, enhanced applications and automated setup to the user’s control experience,” concluded Arling.

Financial Results for the Three Months Ended December 31: 2011 Compared to 2010

Net sales were $117.6 million, compared to net sales of $102.5 million.
- Business Category revenue was $103.7 million, compared to $89.1 million.
  The Business Category contributed 88.2% of total net sales, compared to 86.9%.
- Consumer Category revenue was $13.9 million, compared to $13.4 million.
  The Consumer Category contributed 11.8% of total net sales, compared to 13.1%.
Adjusted pro forma gross margins were 28.6%, compared to gross margins of 29.7%.
Adjusted pro forma operating expenses were $26.2 million, compared to operating expenses of $22.4 million.
Adjusted pro forma operating income was $7.4 million, compared to operating income of $8.0 million.
Adjusted pro forma net income was $5.9 million, or $0.40 per diluted share, compared to net income of $6.6 million, or $0.45 per diluted share.
At December 31, 2011, cash and cash equivalents was $29.4 million.

Financial Results for the Twelve Months Ended December 31: 2011 Compared to 2010

Net sales were $468.6 million, compared to net sales of $331.8 million.
Adjusted pro forma gross margins were 28.0%, compared to gross margins of 31.8%.
Adjusted pro forma operating expenses were $100.2 million, compared to operating expenses of $81.0 million.
Adjusted pro forma operating income was $31.0 million, compared to operating income of $24.6 million.
Adjusted pro forma net income was $23.6 million, or $1.55 per diluted share, compared to net income of $17.9 million, or $1.27 per diluted share.

Financial Outlook

For the first quarter of 2012, the company expects net sales to range between $104 million and $110 million, compared to $105.7 million in the first quarter of 2011. Adjusted pro forma earnings per diluted share for the first quarter of 2012 are expected to range from $0.19 to $0.25, compared to adjusted pro forma earnings per diluted share of $0.17 in the first quarter of 2011.

For the full 2012 year, the company expects net sales to range between $500 million and $520 million, compared to $468.6 million in 2011. Adjusted pro forma earnings per diluted share for 2012 are expected to range from $1.65 to $1.85, compared to adjusted pro forma earnings per diluted share of $1.55 in 2011.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, February 23, 2012 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and year-end 2011 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 49555937. 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 49555937.

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 charges related to the write-up of inventory and depreciation related to the acquisition. Non-GAAP operating expenses is defined as cash operating expenses excluding acquisition costs, amortization of intangibles and other employee related restructuring costs. Non-GAAP net income is net income from operations excluding the aforementioned items. 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. For additional information, please 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 continued innovation of products and technologies; the Company’s ability to gain market share; general economic conditions; the consumer electronics and broader retail industries to be weaker than anticipated by management; and other factors described in the Company's filings with the U.S. Securities and Exchange Commission. The actual results that 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)

			December 31, 2011		December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$		29,372		$	54,249
Accounts receivable, net		82,184				86,304
Inventories, net		90,904				65,402
Prepaid expenses and other current assets		3,045				2,582
Deferred income taxes		6,558				5,896
Total current assets		212,063				214,433
Property, plant, and equipment, net		80,449				78,097
Goodwill		30,820				30,877
Intangible assets, net		32,814				35,994
Other assets		5,350				5,464
Deferred income taxes		7,992				7,806
Total assets	$	369,488			$	372,671

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	55,430			$	56,086
Line of credit		2,000				—
Notes payable		14,400				35,000
Accrued sales discounts, rebates and royalties		6,544				7,942
Accrued income taxes		5,707				5,873
Accrued compensation		29,204				30,634
Deferred income taxes		50				57
Other accrued expenses		13,967				13,238
Total current liabilities		127,302				148,830
Long-term liabilities:
Deferred income taxes		11,056				11,369
Income tax payable		1,136				1,212
Other long-term liabilities		5				56
Total liabilities		139,499				161,467

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; 21,142,915 and 20,877,248 shares issued on December 31, 2011 and 2010, respectively		211				209
Paid-in capital		173,701				166,940
Accumulated other comprehensive income (loss)		938				(489	)
Retained earnings		154,016				134,070
		328,866				300,730

Less cost of common stock in treasury, 6,353,035 and 5,926,071 shares on December 31, 2011 and 2010, respectively		(98,877		)		(89,526	)
Total stockholders’ equity		229,989				211,204
Total liabilities and stockholders’ equity	$	369,488			$	372,671

UNIVERSAL ELECTRONICS INC. CONSOLIDATED INCOME STATEMENTS (In thousands, except per share amounts) (Unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
Net sales	$	117,645		$	102,505		$	468,630		$	331,780
Cost of sales		84,285			73,863			338,569			227,931
Gross profit		33,360			28,642			130,061			103,849

Research and development expenses		2,992			2,765			12,267			10,709
Selling, general and administrative expenses		24,102			21,145			91,218			71,839

Operating income		6,266			4,732			26,576			21,301
Interest (expense) income, net		(60	)		(65	)		(270	)		34
Other (expense) income, net		(304	)		461			(1,075	)		523

Income before provision for income taxes		5,902			5,128			25,231			21,858
Provision for income taxes		988			1,362			5,285			6,777
Net income	$	4,914		$	3,766		$	19,946		$	15,081

Earnings per share:
Basic	$	0.33		$	0.26		$	1.34		$	1.10
Diluted	$	0.33		$	0.26		$	1.31		$	1.07

Shares used in computing earnings per share:
Basic		14,763			14,344			14,912			13,764
Diluted		14,919			14,737			15,213			14,106

UNIVERSAL ELECTRONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Year Ended December 31,
		2011			2010			2009
Cash provided by operating activities:
Net income	$	19,946		$	15,081		$	14,675
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,335			8,059			6,801
Provision for doubtful accounts		277			931			435
Provision for inventory write-downs		5,625			3,514			4,179
Deferred income taxes		(1,043	)		(559	)		(1,036	)
Tax benefit from exercise of stock options and vested restricted stock		280			231			408
Excess tax benefit from stock-based compensation		(439	)		(290	)		(250	)
Shares issued for employee benefit plan		729			566			741
Stock-based compensation		4,511			4,966			4,312
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable		3,142			13,192			(4,278	)
Inventories		(30,597	)		(5,102	)		(1,053	)
Prepaid expenses and other assets		(345	)		950			552
Accounts payable and accrued expenses		(4,319	)		922			(2,201	)
Accrued income and other taxes		(302	)		(4,322	)		702
Net cash provided by operating activities		14,800			38,139			23,987
Cash used for investing activities:
Acquisition of Enson, net of cash acquired		—			(74,271	)		—
Term deposit		—			49,246			(49,246	)
Acquisition of property, plant, and equipment		(13,630	)		(8,440	)		(6,171	)
Acquisition of intangible assets		(1,064	)		(1,378	)		(1,172	)
Acquisition of assets from Zilog.		—			—			(9,502	)
Net cash used for investing activities		(14,694	)		(34,843	)		(66,091	)
Cash (used for) provided by financing activities:
Issuance of debt		4,200			41,000			—
Payment of debt		(22,800	)		(9,834	)		—
Proceeds from stock options exercised		1,677			1,964			3,275
Treasury stock purchased		(9,785	)		(10,145	)		(7,747	)
Excess tax benefit from stock-based compensation		439			290			250
Net cash (used for) provided by financing activities		(26,269	)		23,275			(4,222	)
Effect of exchange rate changes on cash		1,286			(1,338	)		104
Net (decrease) increase in cash and cash equivalents		(24,877	)		25,233			(46,222	)
Cash and cash equivalents at beginning of year		54,249			29,016			75,238
Cash and cash equivalents at end of year	$	29,372		$	54,249		$	29,016

Supplemental Cash Flow Information — Income taxes paid, net of refunds, were $8.1 million, $11.7 million, and $8.1 million in 2011, 2010, and 2009, respectively. We had interest payments of $0.4 million in 2011 and $0 in both 2010 and 2009.

UNIVERSAL ELECTRONICS INC. RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS (In thousands) (Unaudited)

		Three Months Ended December 31, 2011									Three Months Ended December 31, 2010

		GAAP			Adjustments			Adjusted Pro Forma			GAAP			Adjustments		Adjusted Pro Forma

Net sales	$	117,645		$	—		$	117,645		$	102,505			$ —		$	102,505
Cost of sales ⁽¹⁾		84,285			(277	)		84,008			73,863			(1,799	)		72,064
Gross profit		33,360			277			33,637			28,642			1,799			30,441

Research and development expenses		2,992			—			2,992			2,765			—			2,765
Selling, general and administrative expenses ⁽²⁾		24,102			(890	)		23,212			21,145			(1,498	)		19,647

Operating income		6,266			1,167			7,433			4,732			3,297			8,029
Interest (expense) income, net		(60	)		—			(60	)		(65	)		—			(65	)
Other (expense) income, net		(304	)		—			(304	)		461			—			461

Income before provision for income taxes		5,902			1,167			7,069			5,128			3,297			8,425
Provision for income taxes ⁽³⁾		988			179			1,167			1,362			487			1,849
Net income	$	4,914		$	988		$	5,902		$	3,766		$	2,810		$	6,576

Earnings per share diluted	$	0.33		$	0.07		$	0.40		$	0.26		$	0.19		$	0.45

		Twelve Months Ended December 31, 2011									Twelve Months Ended December 31, 2010

		GAAP			Adjustments			Adjusted Pro Forma			GAAP			Adjustments		Adjusted Pro Forma

Net sales	$	468,630		$	—		$	468,630		$	331,780		$	—		$	331,780
Cost of sales ⁽¹⁾		338,569			(1,108	)		337,461			227,931			(1,799	)		226,132
Gross profit		130,061			1,108			131,169			103,849			1,799			105,648

Research and development expenses		12,267			—			12,267			10,709			—			10,709
Selling, general and administrative expenses ⁽²⁾		91,218			(3,292	)		87,926			71,839			(1,498	)		70,341

Operating income		26,576			4,400			30,976			21,301			3,297			24,598
Interest (expense) income, net		(270	)		—			(270	)		34			—			34
Other (expense) income, net		(1,075	)		—			(1,075	)		523			—			523

Income before provision for income taxes		25,231			4,400			29,631			21,858			3,297			25,155
Provision for income taxes ⁽³⁾		5,285			765			6,050			6,777			487			7,264
Net income	$	19,946		$	3,635		$	23,581		$	15,081		$	2,810		$	17,891

Earnings per share diluted	$	1.31		$	0.24		$	1.55		$	1.07		$	0.20		$	1.27

(1) To reflect depreciation expense of $0.3 million and $1.1 million for the three and twelve months ending December 31, 2011, respectively, relating to the mark-up in fixed assets from cost to fair value as part of the Enson Assets Limited acquisition.

(2) To reflect $0.9 million and $3.3 million of amortization expense for the three and twelve months ended December 31, 2011, respectively, relating to intangible assets acquired as part of the Enson Assets Limited and Zilog acquisitions.

(3) To reflect the tax effect of the adjustments.

Source: Universal Electronics Inc.

Universal Electronics Inc.
Paul Arling, 714-820-1000 (UEI)
Becky Herrick, 415-433-3777(IR Agency)

News Details

Universal Electronics Reports Fourth Quarter and Year-End 2011 Financial Results

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