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Universal Electronics Reports Fourth Quarter and Year-End 2022 Financial Results

Feb 16, 2023 |

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Feb. 16, 2023-- Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2022.

“During the past 18 months, we have won a significant number of large customer design projects in our new higher growth markets and, at CES in January 2023, we received customer and industry recognition for our innovation, bolstering our foundation for long-term growth,” said Paul Arling, UEI’s chairman and CEO. “However, current challenging macroeconomic conditions, especially lower consumer spending, overshadowed these achievements. Results in the fourth quarter of 2022 were affected and we expect this to continue to impact our performance in the first quarter of 2023. Recognizing the near-term challenges, we have continued initiatives to prioritize near-term sales projects and opportunities, refine our allocation of global product development resources and accelerate moving product service and maintenance to lower cost regions.”

UEI’s CFO Bryan Hackworth added, “Our efforts to capture new markets, including climate control, security and home automation, are gaining traction, which we believe are critical to our long-term success. During 2022, they represented over 25% of our net sales. We expect the contribution from these newer channels to be even more meaningful in the future as they represent a larger market opportunity than home entertainment and they are growing at a faster rate. Further, the magnitude of recently secured projects gives us confidence that net sales for the second quarter of 2023 will be stronger than the first, and the third and fourth quarters will each be better than the second. As we have proven in the past, when tested, strong companies navigate pressures and they become stronger. We plan to do the same again.”

Financial Results for the Three Months Ended December 31: 2022 Compared to 2021

  • GAAP net sales were $122.8 million, compared to $144.9 million; Adjusted Non-GAAP net sales were $122.8 million, compared to $143.9 million.
  • GAAP gross margins were 26.2%, compared to 24.9%; Adjusted Non-GAAP gross margins were 30.7%, compared to 28.4%.
  • GAAP operating loss was $1.9 million, compared to $3.3 million; Adjusted Non-GAAP operating income was $8.3 million, compared to $10.7 million.
  • GAAP net loss was $6.9 million, or $0.54 per share, compared to $6.3 million, or $0.49 per share; Adjusted Non-GAAP net income was $5.6 million, or $0.44 per diluted share, compared to $9.0 million, or $0.68 per diluted share.
  • At December 31, 2022, cash and cash equivalents were $66.7 million.

Financial Results for the Twelve Months Ended December 31: 2022 Compared to 2021

  • GAAP net sales were $542.8 million, compared to $601.6 million; Adjusted Non-GAAP net sales were $542.8 million, compared to $600.9 million.
  • GAAP gross margins were 28.1%, compared to 28.8%; Adjusted Non-GAAP gross margins were 29.9%, compared to 30.2%.
  • GAAP operating income was $14.5 million, compared to $23.3 million; Adjusted Non-GAAP operating income was $41.8 million, compared to $58.9 million.
  • GAAP net income was $0.4 million, or $0.03 per diluted share, compared to $5.3 million, or $0.39 per diluted share; Adjusted Non-GAAP net income was $32.7 million, or $2.56 per diluted share, compared to $49.4 million, or $3.59 per diluted share.

Financial Outlook

For the first quarter of 2023, the company expects GAAP net sales to range between $100 million and $110 million, compared to $132.4 million in the first quarter of 2022. GAAP loss per share for the first quarter of 2023 is expected to range from $1.11 to $1.21, compared to a GAAP loss per share of $0.23 in the first quarter of 2022.

For the first quarter of 2023, the company expects Adjusted Non-GAAP net sales to range between $100 million and $110 million, compared to $132.4 million in the first quarter of 2022. Adjusted Non-GAAP loss per share is expected to range from $0.28 to $0.38 compared to Adjusted Non-GAAP earnings per diluted share of $0.47 in the first quarter of 2022. The first quarter 2023 Adjusted Non-GAAP loss per share estimate excludes $0.83 per share related to, among other things, excess manufacturing overhead costs, stock-based compensation, amortization of acquired intangibles, litigation costs, foreign currency gains and losses and the related tax impact of these adjustments. For a more detailed explanation of Non-GAAP measures, please see the Use of Non-GAAP Financial Metrics discussion, the Reconciliation of Adjusted Non-GAAP Financial Results and the Reconciliation of Adjusted Non-GAAP Financial Outlook and Financial Results, each located elsewhere in this press release.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, February 16, 2023 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and full year 2022 earnings results, review recent activity and answer questions. To attend the call please register at the investor section of the website to receive a computer-generated dial-in number and a unique pin number. The conference call will also be broadcast live on the investor section of the UEI website where it will be available for replay for one year.

Use of Non-GAAP Financial Metrics

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, UEI provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. UEI’s management uses these measures for reviewing the financial results of UEI for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate UEI’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Additionally, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies.

Adjusted Non-GAAP net sales is defined as net sales excluding the revenue impact of stock-based compensation for performance-based warrants. Adjusted Non-GAAP gross profit is defined as gross profit excluding the impact of excess manufacturing overhead costs, factory transition costs, impairment charges on fixed assets, gain on the release from our Ohio call center lease obligation guarantee, stock-based compensation expense, and depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions. Adjusted Non-GAAP operating expenses are defined as operating expenses excluding stock-based compensation expense, amortization of intangibles acquired, changes in contingent consideration related to acquisitions, costs associated with certain litigation efforts, and employee related restructuring and other costs. Adjusted Non-GAAP net income is defined as net income excluding the aforementioned items, the loss on the sale of our Argentina subsidiary, foreign currency gains and losses and the related tax effects of all adjustments. Adjusted Non-GAAP earnings per diluted share is calculated using Adjusted Non-GAAP net income. A reconciliation of these financial measures to the most directly comparable GAAP financial measures is included at the end of this press release.

About Universal Electronics

Universal Electronics Inc. (NASDAQ: UEIC) is the global leader in wireless universal control solutions for home entertainment and smart home devices and designs, develops, manufactures, ships and supports hardware and software control and sensor technology solutions. UEI partners with many Fortune 500 customers, including Comcast, Vivint Smart Home, Samsung, LG, Sony and Daikin to serve video, telecommunications, security service providers, television, smart home and HVAC system manufacturers. For over 37 years, UEI has been pioneering breakthrough innovations such as voice control and QuickSet cloud, the world's leading platform for automated set-up and control of devices in the home. For more information, visit www.uei.com.

Forward-looking Statements

This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including net sales, profit margin and earnings trends, estimates and assumptions; our expectations about new product introductions; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our annual report on Form 10-K for the year ended December 31, 2021 and the periodic reports we have filed since then. Risks that could affect forward-looking statements in this press release include: our continued ability to timely develop and deliver products and technologies that will be accepted by our customers, both near- and long-term; our ability to successfully capture sales in new markets, including climate control, security and home automation as anticipated by management, including our recently secured project wins resulting in increased sales of our products and/or technologies in the quantities anticipated by management, both near- and long-term; our ability to manage through the continued supply chain constraints, semiconductor supply challenges, inflationary pressures and macroeconomic conditions, including continued lower consumer spending; our ability to effectively allocate our global product development resources and accelerate moving product service and maintenance to lower cost regions; the continued commitment of our customers to their product development and ordering strategies and patterns that translate into greater demand for our technologies and products as anticipated by management; our ability to continue to manage our business, inventories and cash flows to achieve our net sales, margins and earnings through financial discipline, operational efficiency and product line management; the effects that natural disasters and public health crises, including the continuation or resurgence of the COVID-19 pandemic or other health-related matters, have on our business and management’s ability to anticipate and mitigate those effects; the effects and uncertainties and other factors more fully described in our reports filed with the SEC; and the effects that changes in or enhanced use of laws, regulations and policies may have on our business including the impact of trade regulations pertaining to importation of our products. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Further, any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of February 16, 2023, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share-related data)

(Unaudited)

 

 

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

66,740

 

 

$

60,813

 

Accounts receivable, net

 

 

112,346

 

 

 

129,215

 

Contract assets

 

 

7,996

 

 

 

5,012

 

Inventories

 

 

140,181

 

 

 

134,469

 

Prepaid expenses and other current assets

 

 

6,647

 

 

 

7,289

 

Income tax receivable

 

 

4,130

 

 

 

348

 

Total current assets

 

 

338,040

 

 

 

337,146

 

Property, plant and equipment, net

 

 

62,791

 

 

 

74,647

 

Goodwill

 

 

49,085

 

 

 

48,463

 

Intangible assets, net

 

 

24,470

 

 

 

20,169

 

Operating lease right-of-use assets

 

 

21,599

 

 

 

19,847

 

Deferred income taxes

 

 

6,242

 

 

 

7,729

 

Other assets

 

 

1,936

 

 

 

2,347

 

Total assets

 

$

504,163

 

 

$

510,348

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

71,373

 

 

$

92,707

 

Line of credit

 

 

88,000

 

 

 

56,000

 

Accrued compensation

 

 

20,904

 

 

 

24,217

 

Accrued sales discounts, rebates and royalties

 

 

6,477

 

 

 

9,286

 

Accrued income taxes

 

 

5,585

 

 

 

3,737

 

Other accrued liabilities

 

 

24,134

 

 

 

30,840

 

Total current liabilities

 

 

216,473

 

 

 

216,787

 

Long-term liabilities:

 

 

 

 

Operating lease obligations

 

 

15,027

 

 

 

14,266

 

Deferred income taxes

 

 

2,724

 

 

 

2,394

 

Income tax payable

 

 

723

 

 

 

939

 

Other long-term liabilities

 

 

810

 

 

 

13

 

Total liabilities

 

 

235,757

 

 

 

234,399

 

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; 24,999,951 and 24,678,942 shares issued on December 31, 2022 and 2021, respectively

 

 

250

 

 

 

247

 

Paid-in capital

 

 

326,839

 

 

 

314,094

 

Treasury stock, at cost, 12,295,305 and 11,861,198 shares on December 31, 2022 and 2021, respectively

 

 

(368,194

)

 

 

(355,159

)

Accumulated other comprehensive income (loss)

 

 

(21,187

)

 

 

(13,524

)

Retained earnings

 

 

330,698

 

 

 

330,291

 

Total stockholders’ equity

 

 

268,406

 

 

 

275,949

 

Total liabilities and stockholders’ equity

 

$

504,163

 

 

$

510,348

 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales

 

$

122,758

 

 

$

144,944

 

 

$

542,751

 

 

$

601,602

 

Cost of sales

 

 

90,547

 

 

 

108,809

 

 

 

390,459

 

 

 

428,586

 

Gross profit

 

 

32,211

 

 

 

36,135

 

 

 

152,292

 

 

 

173,016

 

Research and development expenses

 

 

7,992

 

 

 

7,888

 

 

 

32,452

 

 

 

30,917

 

Selling, general and administrative expenses

 

 

26,104

 

 

 

31,530

 

 

 

105,292

 

 

 

118,846

 

Operating income (loss)

 

 

(1,885

)

 

 

(3,283

)

 

 

14,548

 

 

 

23,253

 

Interest income (expense), net

 

 

(1,053

)

 

 

(119

)

 

 

(2,200

)

 

 

(566

)

Loss on sale of Argentina subsidiary

 

 

 

 

 

 

 

 

 

 

 

(6,050

)

Other income (expense), net

 

 

(567

)

 

 

(406

)

 

 

(955

)

 

 

(557

)

Income (loss) before provision for income taxes

 

 

(3,505

)

 

 

(3,808

)

 

 

11,393

 

 

 

16,080

 

Provision for income taxes

 

 

3,400

 

 

 

2,522

 

 

 

10,986

 

 

 

10,779

 

Net income (loss)

 

$

(6,905

)

 

$

(6,330

)

 

$

407

 

 

$

5,301

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

Basic

 

$

(0.54

)

 

$

(0.49

)

 

$

0.03

 

 

$

0.39

 

Diluted

 

$

(0.54

)

 

$

(0.49

)

 

$

0.03

 

 

$

0.39

 

Shares used in computing earnings (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

 

12,686

 

 

 

13,000

 

 

 

12,703

 

 

 

13,465

 

Diluted

 

 

12,686

 

 

 

13,000

 

 

 

12,779

 

 

 

13,742

 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

407

 

 

$

5,301

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

 

 

 

 

Depreciation and amortization

 

 

24,033

 

 

 

26,747

 

Provision for credit losses

 

 

(182

)

 

 

 

Deferred income taxes

 

 

1,377

 

 

 

(1,560

)

Shares issued for employee benefit plan

 

 

1,199

 

 

 

1,092

 

Employee and director stock-based compensation

 

 

10,013

 

 

 

9,969

 

Performance-based common stock warrants

 

 

 

 

 

(686

)

Impairment of long-term assets

 

 

2,888

 

 

 

3,338

 

Loss on sale of Argentina subsidiary, net of cash transferred

 

 

 

 

 

5,960

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable and contract assets

 

 

12,765

 

 

 

2,007

 

Inventories

 

 

(9,913

)

 

 

(14,985

)

Prepaid expenses and other assets

 

 

(917

)

 

 

(630

)

Accounts payable and accrued liabilities

 

 

(28,670

)

 

 

870

 

Accrued income taxes

 

 

(2,074

)

 

 

2,860

 

Net cash provided by (used for) operating activities

 

 

10,926

 

 

 

40,283

 

Cash flows from investing activities:

 

 

 

 

Purchase of term deposit

 

 

(7,487

)

 

 

 

Redemption of term deposit

 

 

7,803

 

 

 

 

Acquisition of net assets of Qterics, Inc.

 

 

(939

)

 

 

 

Acquisitions of property, plant and equipment

 

 

(14,006

)

 

 

(12,586

)

Acquisitions of intangible assets

 

 

(6,579

)

 

 

(4,455

)

Net cash provided by (used for) investing activities

 

 

(21,208

)

 

 

(17,041

)

Cash flows from financing activities:

 

 

 

 

Borrowings under line of credit

 

 

133,000

 

 

 

112,000

 

Repayments on line of credit

 

 

(101,000

)

 

 

(76,000

)

Proceeds from stock options exercised

 

 

1,536

 

 

 

1,638

 

Treasury stock purchased

 

 

(13,035

)

 

 

(59,664

)

Net cash provided by (used for) financing activities

 

 

20,501

 

 

 

(22,026

)

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

(4,292

)

 

 

2,444

 

Net increase (decrease) in cash and cash equivalents

 

 

5,927

 

 

 

3,660

 

Cash and cash equivalents at beginning of period

 

 

60,813

 

 

 

57,153

 

Cash and cash equivalents at end of period

 

$

66,740

 

 

$

60,813

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Income taxes paid

 

$

10,922

 

 

$

10,093

 

Interest paid

 

$

2,214

 

 

$

620

 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales:

 

 

 

 

 

 

 

 

Net sales - GAAP

 

$

122,758

 

 

$

144,944

 

 

$

542,751

 

 

$

601,602

 

Stock-based compensation for performance-based warrants

 

 

 

 

 

(1,084

)

 

 

 

 

 

(686

)

Adjusted Non-GAAP net sales

 

$

122,758

 

 

$

143,860

 

 

$

542,751

 

 

$

600,916

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

Cost of sales - GAAP

 

$

90,547

 

 

$

108,809

 

 

$

390,459

 

 

$

428,586

 

Excess manufacturing overhead and factory transition costs (1)

 

 

(2,549

)

 

 

(2,262

)

 

 

(6,670

)

 

 

(5,830

)

Impairment of fixed assets (2)

 

 

(2,868

)

 

 

(3,473

)

 

 

(2,868

)

 

 

(3,473

)

Gain on release from Ohio call center lease obligation guarantee (3)

 

 

 

 

 

 

 

 

 

 

 

542

 

Stock-based compensation expense

 

 

(38

)

 

 

(40

)

 

 

(155

)

 

 

(156

)

Adjustments to acquired tangible assets (4)

 

 

(60

)

 

 

(63

)

 

 

(241

)

 

 

(257

)

Adjusted Non-GAAP cost of sales

 

 

85,032

 

 

 

102,971

 

 

 

380,525

 

 

 

419,412

 

Adjusted Non-GAAP gross profit

 

$

37,726

 

 

$

40,889

 

 

$

162,226

 

 

$

181,504

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

Gross margin - GAAP

 

 

26.2

%

 

 

24.9

%

 

 

28.1

%

 

 

28.8

%

Stock-based compensation for performance-based warrants

 

 

%

 

 

(0.5

)%

 

 

%

 

 

(0.1

)%

Excess manufacturing overhead and factory transition costs (1)

 

 

2.1

%

 

 

1.6

%

 

 

1.2

%

 

 

1.0

%

Impairment of fixed assets (2)

 

 

2.3

%

 

 

2.4

%

 

 

0.5

%

 

 

0.6

%

Gain on release from Ohio call center lease obligation guarantee (3)

 

 

%

 

 

%

 

 

%

 

 

(0.1

)%

Stock-based compensation expense

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

Adjustments to acquired tangible assets (4)

 

 

0.1

%

 

 

0.0

%

 

 

0.1

%

 

 

0.0

%

Adjusted Non-GAAP gross margin

 

 

30.7

%

 

 

28.4

%

 

 

29.9

%

 

 

30.2

%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

34,096

 

 

$

39,418

 

 

$

137,744

 

 

$

149,763

 

Stock-based compensation expense

 

 

(2,401

)

 

 

(2,414

)

 

 

(9,858

)

 

 

(9,814

)

Amortization of acquired intangible assets

 

 

(281

)

 

 

(714

)

 

 

(1,153

)

 

 

(1,544

)

Change in contingent consideration

 

 

 

 

 

 

 

 

 

 

 

180

 

Litigation costs (5)

 

 

(2,004

)

 

 

(5,294

)

 

 

(6,268

)

 

 

(15,300

)

Employee related restructuring and other costs

 

 

 

 

 

(828

)

 

 

 

 

 

(717

)

Adjusted Non-GAAP operating expenses

 

$

29,410

 

 

$

30,168

 

 

$

120,465

 

 

$

122,568

 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Operating income (loss):

 

 

 

 

 

 

 

 

Operating income (loss) - GAAP

 

$

(1,885

)

 

$

(3,283

)

 

$

14,548

 

 

$

23,253

 

Stock-based compensation for performance-based warrants

 

 

 

 

 

(1,084

)

 

 

 

 

 

(686

)

Excess manufacturing overhead and factory transition costs (1)

 

 

2,549

 

 

 

2,262

 

 

 

6,670

 

 

 

5,830

 

Impairment of fixed assets (2)

 

 

2,868

 

 

 

3,473

 

 

 

2,868

 

 

 

3,473

 

Gain on release from Ohio call center lease obligation guarantee (3)

 

 

 

 

 

 

 

 

 

 

 

(542

)

Stock-based compensation expense

 

 

2,439

 

 

 

2,454

 

 

 

10,013

 

 

 

9,970

 

Adjustments to acquired tangible assets (4)

 

 

60

 

 

 

63

 

 

 

241

 

 

 

257

 

Amortization of acquired intangible assets

 

 

281

 

 

 

714

 

 

 

1,153

 

 

 

1,544

 

Change in contingent consideration

 

 

 

 

 

 

 

 

 

 

 

(180

)

Litigation costs (5)

 

 

2,004

 

 

 

5,294

 

 

 

6,268

 

 

 

15,300

 

Employee related restructuring and other costs

 

 

 

 

 

828

 

 

 

 

 

 

717

 

Adjusted Non-GAAP operating income

 

$

8,316

 

 

$

10,721

 

 

$

41,761

 

 

$

58,936

 

 

 

 

 

 

 

 

 

 

Adjusted Non-GAAP operating income as a percentage of net sales

 

 

6.8

%

 

 

7.5

%

 

 

7.7

%

 

 

9.8

%

 

 

 

 

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

 

Net income (loss) - GAAP

 

$

(6,905

)

 

$

(6,330

)

 

$

407

 

 

$

5,301

 

Stock-based compensation for performance-based warrants

 

 

 

 

 

(1,084

)

 

 

 

 

 

(686

)

Excess manufacturing overhead and factory transition costs (1)

 

 

2,549

 

 

 

2,262

 

 

 

6,670

 

 

 

5,830

 

Impairment of fixed assets (2)

 

 

2,868

 

 

 

3,473

 

 

 

2,868

 

 

 

3,473

 

Gain on release from Ohio call center lease obligation guarantee (3)

 

 

 

 

 

 

 

 

 

 

 

(542

)

Stock-based compensation expense

 

 

2,439

 

 

 

2,454

 

 

 

10,013

 

 

 

9,970

 

Adjustments to acquired tangible assets (4)

 

 

60

 

 

 

63

 

 

 

241

 

 

 

257

 

Amortization of acquired intangible assets

 

 

281

 

 

 

714

 

 

 

1,153

 

 

 

1,544

 

Change in contingent consideration

 

 

 

 

 

 

 

 

 

 

 

(180

)

Litigation costs (5)

 

 

2,004

 

 

 

5,294

 

 

 

6,268

 

 

 

15,300

 

Employee related restructuring and other costs

 

 

 

 

 

828

 

 

 

 

 

 

717

 

Loss on sale of Argentina subsidiary (6)

 

 

 

 

 

 

 

 

 

 

 

6,050

 

Foreign currency (gain) loss

 

 

1,075

 

 

 

579

 

 

 

1,091

 

 

 

1,334

 

Income tax provision on adjustments

 

 

1,277

 

 

 

789

 

 

 

4,035

 

 

 

984

 

Adjusted Non-GAAP net income

 

$

5,648

 

 

$

9,042

 

 

$

32,746

 

 

$

49,352

 

 

 

 

 

 

 

 

 

 

Diluted shares used in computing earnings (loss) per share:

 

 

 

 

 

 

 

 

GAAP

 

 

12,686

 

 

 

13,000

 

 

 

12,779

 

 

 

13,742

 

Adjusted Non-GAAP

 

 

12,729

 

 

 

13,214

 

 

 

12,779

 

 

 

13,742

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share - GAAP

 

$

(0.54

)

 

$

(0.49

)

 

$

0.03

 

 

$

0.39

 

Total adjustments

 

$

0.99

 

 

$

1.16

 

 

$

2.53

 

 

$

3.21

 

Adjusted Non-GAAP diluted earnings per share

 

$

0.44

 

 

$

0.68

 

 

$

2.56

 

 

$

3.59

 

(1)

The three and twelve months ended December 31, 2022 and 2021 include excess manufacturing overhead costs due to the expansion of our manufacturing facility in Mexico where products destined for the U.S. market are now manufactured. These products destined for the U.S. market were previously manufactured in China. In addition, the three and twelve months ended December 31, 2022 include normal start-up costs such as idle labor and training associated with our new factory in Vietnam. We plan to commence operations in Vietnam in the second quarter of 2023.

(2)

The three and twelve months ended December 31, 2022 consist of impairment charges related to the underutilization of fixed assets in our Mexico factory. The three and twelve months ended December 31, 2021 consist of impairment charges related to underutilization of fixed assets in our China-based factories as a result of our long-term factory planning strategy of reducing our concentration risk in that region.

(3)

Consists of the gain associated with the January 2021 release from our guarantee of the lease obligation related to our Ohio call center which was sold in February 2020.

(4)

Consists of depreciation related to the mark-up from cost to fair value of fixed assets acquired in business combinations.

(5)

Consists of expenses related to our various litigation matters involving Roku, Inc. and certain other related entities including three Federal District Court cases, two International Trade Commission investigations and the defense of various inter partes reviews and appeals before the US Patent and Trademark Board as well as other non-recurring legal matters.

(6)

Consists of the loss recorded on the sale of our Argentina subsidiary in September 2021.

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL OUTLOOK AND FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

 

 

Low Range

 

High Range

 

Actual

Net sales:

 

 

 

 

 

 

Net sales - GAAP

 

$

100,000

 

 

$

110,000

 

 

$

132,410

 

Total adjustments (1)

 

 

 

 

 

 

 

 

 

Adjusted Non-GAAP net sales

 

$

100,000

 

 

$

110,000

 

 

$

132,410

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

Loss per share - GAAP

 

$

(1.21

)

 

$

(1.11

)

 

$

(0.23

)

Total adjustments (2)

 

$

0.83

 

 

$

0.83

 

 

$

0.69

 

Adjusted Non-GAAP diluted earnings (loss) per share

 

$

(0.38

)

 

$

(0.28

)

 

$

0.47

 

(1)

 

The three months ended March 31, 2023 and 2022 do not include any Non-GAAP adjustments to net sales.

(2)

 

The three months ended March 31, 2023 and 2022 includes adjustments for excess manufacturing overhead costs, factory transition costs, stock-based compensation expense, depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions, amortization of acquired intangibles, costs associated with certain litigation efforts, foreign currency gains and losses and the related tax impact of these adjustments.

 

Paul Arling, Chairman & CEO, UEI, 480.530.3000
Investors: Kirsten Chapman, LHA Investor Relations, uei@lhai.com, 415.433.3777

Source: Universal Electronics Inc.

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