Universal Electronics Reports Second Quarter 2006 Financial Results; Net Sales of $52.4 Million Grew 18% Compared to Second Quarter 2005
Aug 3, 2006
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CYPRESS, Calif.--(BUSINESS WIRE)--Aug. 3, 2006--Leading wireless technology developer Universal Electronics Inc. (UEI) (NASDAQ:UEIC) today announced financial results for the second quarter and the six-month period ended June 30, 2006.
"Solid demand from our Business Category customers, in particular our subscription broadcasting and original equipment manufacturer (OEM) customers, drove our net sales for the second quarter of 2006 to $52.4 million, up 18 percent as compared to last year's quarter," stated Paul Arling, the company's chairman and chief executive officer. "We have built a leadership role in wireless control technology, resulting from our continued efforts to work with our customers to provide them with simple, affordable, highly functional and technically advanced control technology. In the next year, we will build further upon this idea of advanced, yet simple and affordable solutions by rolling out new products that meet the consumer's need for control of devices and media within their home."
Second Quarter 2006 Financial Results
- Net sales for the second quarter of 2006 were $52.4 million, compared to $44.3 million for the same quarter last year.
- The Business Category contributed 77 percent of the total revenue and the Consumer Category contributed 23 percent, compared to 73 percent and 27 percent, respectively in the second quarter of 2005.
- Gross margins were 37.4 percent, compared to 35.5 percent in last year's second quarter, reflecting additional sales in higher margin product lines and cost containment, primarily lower freight costs.
- Operating income was $4.0 million, compared to operating income of $974,000 for the same quarter last year.
- Net income for the 2006 second quarter was $2.4 million, or $0.17 per diluted share, compared to $1.5 million, or $0.11 per diluted share, for the second quarter of 2005.
The following adjusted figures are included as management believes they provide a more meaningful measure of quarter-over-quarter and year-over-year financial performance. A formal definition of adjusted figures and table reconciling generally accepted accounting principals (GAAP) to adjusted figures are included at the end of this press release.
- Adjusted operating income was $4.7 million, excluding $671,000 in stock based compensation expense, compared to adjusted operating income of $2.6 million for the same quarter last year, excluding the $1.6 million write down of a balance due from a former European distributor.
- Adjusted net income for the 2006 second quarter was $2.9 million, or $0.20 per diluted share, which excludes stock based compensation charges, compared to $2.8 million, or $0.20 per diluted share, for the same period last year, which excluded the $1.6 million write down of a balance due from a former European distributor.
Net sales for the six-month period ended June 30, 2006 were $106.5 million compared to $85.8 million for the first six months of 2005. Net income for the first six months of 2006 was $4.6 million, or $0.32 per diluted share. Adjusted net income for the first six months of 2006 was $5.5 million, or $0.39 per diluted share, compared to $4.6 million, or $0.33 per diluted share, for the same period last year.
"Leveraging our technology and bringing to market new solutions that simplify connectivity is satisfying customers and driving strong net sales growth," said Rob Lilleness, the company's president and chief operating officer. "We continue to increase the breadth of our technology portfolio. Examples of our progress can be seen in our new types of offerings with LodgeNet and Crestron Electronics, expanded relationships with Comcast Corporation and DirecTV, and innovations in new media applications with our Pace Micro Technology relationship."
UEI's Recent Highlights:
- Partnered with Crestron Electronics, Inc. to develop the TPMC-4X handheld touchpanel controller, as announced on July 31st. Based on the award-winning UEI NevoSL(TM) and Crestron automation and control technology, the TPMC-4X delivers true 2-way WiFi communication for seamless system integration in modern homes.
- Signed a definitive agreement with the Canadian Cable Systems Alliance to supply DVR-enabled universal remote controls to its 94 independent member companies, as announced on June 21st.
- Selected by LodgeNet Entertainment Corporation to develop SIGNETURE HDTV(SM) Remote Controls for guests to access to a wide variety of guest services at properties served by LodgeNet, as announced on June 20th.
- Showcased new and expanded control solutions at the annual SCTE Cable-Tec Expo in Denver, CO, as announced on June 19th. Products included Polaris(TM), Atlas DVR(TM), urcsupport.com and ActiveSupport(TM), customer interaction management services from service and support to retention.
- Formed a joint development relationship with Pace Micro Technology plc, for Pace Micro to utilize its flagship Tahoe Dual Tuner HD DVR set-top box in conjunction with UEI's My Channel(TM), enabling the set-top box to be the true center of the connected home, also announced on June 19th.
UEI's management team will hold a conference call today, Thursday August 3, 2006 at 1:30 p.m. Pacific Time to review the second quarter 2006 results and hold a question and answer session for callers. To participate call 1-800-622-9917 ten minutes prior to start time. International dialers call 1-706-645-0366. The live call can also be accessed via the Internet through Universal's Web site at www.uei.com. If you are unable to participate, a replay will be available for two business days following the call. To access, please dial 1-800-642-1687 and international 706-645-9291, reservation number 7904235. The webcast replay will be available at www.uei.com.
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 has been adopted by many Fortune 500 companies in the consumer electronics, subscription broadcast, and computing industries. In addition, the company sells wireless control products to distributors and retailers under the One For All(R) brand name. More information about UEI can be obtained at http://www.uei.com.
Safe Harbor Statement
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expressed herein are the following: the failure of the company to experience the increased demand from our Business Category customers as we anticipate; the failure of the retail season to be as strong as we anticipate; the growth of, acceptance of, and the demand for our products and technologies, including new products and our home connectivity line of products and software, in the various markets and geographical regions we serve, including the subscription broadcasting cable, satellite, consumer electronics, retail, home automation, automotive, and cellular industries, not materializing as we believe; the possible dilutive effect our stock based compensation programs may have on our EPS and stock price; our inability to deliver the new products and our home connectivity line of products and software at the time and in the quantities we anticipate; the relationships with our customers not expanding as we anticipate; and other factors listed from time to time in our press releases and SEC filings. All forward looking statements included in this release are based upon information we have as of the date of this release and we undertake no obligation 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)
(Unaudited)
June 30, December 31,
2006 2005
---------- ------------
ASSETS
------
Current assets:
Cash and cash equivalents $ 58,776 $ 43,641
Accounts receivable, net 42,397 41,861
Inventories, net 29,146 26,708
Prepaid expenses and other current assets 3,157 3,841
Income tax receivable 903 903
Deferred income taxes 2,993 2,971
---------- ------------
Total current assets 137,372 119,925
Equipment, furniture and fixtures, net 5,389 4,352
Goodwill 10,578 10,431
Intangible assets, net 5,924 6,007
Other assets 714 403
Deferred income taxes 5,565 5,201
---------- ------------
Total assets 165,542 146,319
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 24,210 $ 22,731
Accrued income taxes 9,876 7,551
Accrued compensation 3,469 2,766
Other accrued expenses 9,411 9,676
---------- ------------
Total current liabilities 46,966 42,724
Deferred income taxes 90 74
Deferred Revenue - 229
---------- ------------
Total liabilities 47,056 43,027
Stockholders' equity:
Common stock 173 169
Paid-in capital 88,360 83,220
Accumulated other comprehensive income (loss) 140 (5,265)
Retained earnings 59,549 54,994
Deferred stock-based compensation - (163)
Common stock held in treasury (29,736) (29,663)
---------- ------------
Total stockholders' equity 118,486 103,292
---------- ------------
Total liabilities and stockholders' equity 165,542 146,319
========== ============
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- -------- --------- --------
Net sales $52,370 $44,322 $106,543 $85,824
Cost of sales 32,788 28,604 68,473 54,389
-------- -------- --------- --------
Gross profit 19,582 15,718 38,070 31,435
Research and development 1,919 1,570 3,765 3,170
Selling, general and
administrative expenses 13,620 13,174 27,132 25,606
-------- -------- --------- --------
Operating expenses 15,539 14,744 30,897 28,776
-------- -------- --------- --------
Operating income 4,043 974 7,173 2,659
Interest income, net (349) (135) (621) (352)
Other expense (income), net 411 (1,296) 572 (2,249)
-------- -------- --------- --------
Income before income taxes 3,981 2,405 7,222 5,260
Provision for income taxes (1,562) (860) (2,667) (1,859)
-------- -------- --------- --------
Net income $ 2,419 $ 1,545 $ 4,555 $ 3,401
======== ======== ========= ========
Earnings per share:
Basic $ 0.18 $ 0.11 $ 0.33 $ 0.25
======== ======== ========= ========
Diluted $ 0.17 $ 0.11 $ 0.32 $ 0.24
======== ======== ========= ========
Shares used in computing earnings
per share:
Basic 13,802 13,467 13,722 13,493
======== ======== ========= ========
Diluted 14,356 13,983 14,297 14,032
======== ======== ========= ========
To supplement UEI's consolidated financial statements presented in accordance with GAAP, UEI uses non-GAAP net income and non-GAAP EPS financial measures internally. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. UEI's management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our core business operating results. UEI believes both management and investors benefit from referring to these non-GAAP financial measures in assessing UEI's performance and when planning, forecasting and analyzing historical and future periods. These non-GAAP financial measures also facilitate management's internal comparisons to UEI's historical performance. UEI believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.
Universal Electronics
GAAP to Non-GAAP Reconciliation Tables
Three Months Ended
June 30,
2006 2005
2006 2006 Non- 2005 2005 Non-
GAAP Adj.(1) GAAP(3) GAAP Adj.(2) GAAP(3)
Net sales 52,370 52,370 44,322 44,322
Cost of sales 32,788 (6) 32,782 28,604 28,604
Gross profit 19,582 6 19,588 15,718 15,718
Research and
development 1,919 (94) 1,825 1,570 1,570
Selling,
general and
administrative
expenses 13,620 (571) 13,049 13,174 (1,592) 11,582
Operating
expenses 15,539 (665) 14,874 14,744 (1,592) 13,152
Operating
income 4,043 671 4,714 974 1,592 2,566
Interest
income, net (349) (349) (135) (135)
Other expense
(income), net 411 411 (1,296) (1,296)
Income before
income taxes 3,981 671 4,652 2,405 1,592 3,997
Provision for
income taxes (1,562) (225) (1,787) (860) (355) (1,215)
Net income 2,419 446 2,865 1,545 1,237 2,782
Earnings per
share diluted $ 0.17 $ 0.03 $ 0.20 $ 0.11 $ 0.09 $ 0.20
Six Months Ended
June 30,
2006 2005
2006 2006 Non- 2005 2005 Non-
GAAP Adj.(1) GAAP(3) GAAP Adj.(2) GAAP(3)
Net sales 106,543 106,543 85,824 85,824
Cost of sales 68,473 (13) 68,460 54,389 54,389
Gross profit 38,070 13 38,083 31,435 31,435
Research and
development 3,765 (199) 3,566 3,170 3,170
Selling,
general and
administrative
expenses 27,132 (1,229) 25,903 25,606 (1,592) 24,014
Operating
expenses 30,897 (1,428) 29,469 28,776 (1,592) 27,184
Operating
income 7,173 1,441 8,614 2,659 1,592 4,251
Interest
income, net (621) (621) (352) (352)
Other expense
(income), net 572 572 (2,249) (2,249)
Income before
income taxes 7,222 1,441 8,663 5,260 1,592 6,852
Provision for
income taxes (2,667) (484) (3,151) (1,859) (355) (2,214)
Net income 4,555 957 5,512 3,401 1,237 4,638
Earnings per
share diluted $ 0.32 $ 0.07 $ 0.39 $ 0.24 $ 0.09 $ 0.33
(1) The adjustments between the GAAP and non-GAAP consolidated
statements of income for the three and six months ended June 30,
2006 consist of share-based compensation expense for employee
stock options and the related income tax effect, as recognized in
accordance with SFAS 123R. The consolidated statements of income
for the three and six months ended June 30, 2005 do not include
the effect of share-based compensation expense, because UEI
implemented SFAS 123R effective January 1, 2006.
(2) The adjustments between the GAAP and non-GAAP consolidated
statements of income for the three and six months ended June 30,
2005 exclude the write down of a receivable from a former European
distributor, as well as the related tax effect.
(3) The non-GAAP consolidated statement of income is not in accordance
with, or an alternative for, generally accepted accounting
principles and may be different from non-GAAP measures used by
other companies. UEI's management believes these non-GAAP
measures, when shown in conjunction with the corresponding GAAP
measures, facilitate the comparison of results for current periods
with past periods.
CONTACT: Universal Electronics Inc.
Paul Arling, 714-820-1000
or
Kirsten Chapman, 415-433-3777 (IR Agency)
SOURCE: Universal Electronics Inc.