Universal Electronics Reports Second Quarter 2007 Financial Results
Aug 2, 2007
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-- Net Sales of $71.5 Million Grew 36% Compared to Second Quarter 2006 --
CYPRESS, Calif.--(BUSINESS WIRE)--Aug. 2, 2007--Universal Electronics Inc. (UEI), (NASDAQ:UEIC) announced financial results for the second quarter and the six-month period ended June 30, 2007.
"With sales of $71.5 million, UEI delivered its best performing second quarter ever," stated Paul Arling, the company's chairman and chief executive officer. "We continue to capitalize on anticipated market transitions. In addition, we are actively pursuing new opportunities and are particularly focused on building scale in Asia, where we have been establishing relationships with the premier subscription broadcasters and consumer electronics manufacturers. Overall, we are furthering our commitment to enable the digital lifestyle for mainstream consumers around the world."
Second Quarter 2007 Financial Results
-- Net sales for the second quarter of 2007 were $71.5 million, compared to $52.4 million for the same quarter last year.-- The Business Category contributed 85 percent of total sales and the Consumer Category contributed 15 percent, compared to 77 percent and 23 percent, respectively, in the second quarter of 2006.
-- Gross margins were in line with guidance at 34.5 percent, compared to 37.4 percent in last year's second quarter, due primarily to higher air freight costs.
-- Operating income was $6.0 million, compared to operating income of $4.0 million for the same quarter last year.
-- Net income for the 2007 second quarter was $4.5 million, or $0.30 per diluted share, compared to $2.4 million, or $0.17 per diluted share, for the second quarter of 2006.
Bryan Hackworth, the company's chief financial officer, said, "During the quarter, revenue grew 36 percent, reflecting stronger than expected performance from the Business Category. As a result, to maintain high customer service levels, we made the strategic decision to use air shipments to support significant customers with urgent needs late in the quarter. Although this impacted our gross margin, we performed within our expectations of 35.5 percent plus or minus 100 basis points."
Net sales for the six-month period ended June 30, 2007 were $137.5 million compared to $106.5 million for the first six months of 2006. Net income for the first six months of 2007 was $9.2 million, or $0.61 per diluted share, compared to $4.6 million, or $0.32 per diluted share, for the same period last year.
Financial Outlook
For the third quarter of 2007, revenue is expected to range between $67.5 million and $71.5 million, compared to $59.6 million in the third quarter of 2006. We expect Business Category sales to range from $54.5 million to $57.5 million and Consumer Category sales to range from $12.0 million to $15.0 million. Gross margins for the third quarter of 2007 are expected to be approximately 37 percent of sales plus or minus one point. Operating expenses are expected to range from $19.0 million to $19.6 million, and the tax rate is expected to be 31.5 percent to 33.5 percent. Earnings per diluted share, including approximately $859,000 of pre-tax compensation expense relating to stock options, are expected to range from $0.29 to $0.33. This compares to $0.25 per diluted share in the third quarter of 2006.
For the full year 2007, total revenue is expected to range between $279 million and $287 million, reflecting growth of 18 percent to 22 percent over last year. Business Category revenue is now expected to range between $218 million and $228 million, with Consumer Category revenue expected to range between $56 million and $64 million. Operating expenses are expected to range between $76 million and $78 million. The tax rate is expected to range between 31.5 and 33.5 percent. EPS is expected to be between $1.27 per diluted share and $1.35 per diluted share, compared to $0.94 per diluted share for 2006, representing 35 percent to 44 percent growth.
UEI's Recent Highlights:
-- Entered into an agreement with SKY Italia to supply remote
control devices and accessories for a new SKY Italia retail
product line as announced in June.
-- Introduced Cricket(TM) Kids Remote featuring a simple parental
control in May.
-- Expanded accessory line with UEI remote extender unveiled in
May, which enables users to design their home entertainment
around aesthetics rather than line-of-sight concerns with
traditional infrared remotes.
-- Began serving NewWave Communications by delivering UEI's
technical support center to handle overflow inbound video
repair calls in April.
Conference Call Information:
UEI's management team will hold a conference call today, Thursday August 2, 2007 at 1:30 p.m. Pacific Time to review the second quarter 2007 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 via telephone for two business days beginning two hours after the call. To access, please dial 1-800-642-1687 and international 1-706-645-9291, reservation number 6144186. 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 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(R) brand name. UEI also delivers complete home control solutions in the professional custom installation market under the brand name Nevo(R), as well as software solutions for digital media control and enjoyment in the consumer and OEM markets under the brand SimpleCenter(TM).
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 continue experiencing the increased demand for our products in connection with the continued conversion from analog to digital, HDTV upgrades, and the growth trends in DVR and HDTV and subscription broadcasting as we anticipate; the failure of the industry trends regarding tempering seasonality to materialize as believed by management; 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, including the Cricket(TM) Kids Remote and UEI remote extender not materializing as we believe; the failure or delay of the international markets, including Asia, to materialize as anticipated by management; 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, including those that we have recently announced; our inability to obtain new customers; 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,
2007 2006
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 76,439 $ 66,075
Accounts receivable, net 59,634 51,867
Inventories, net 27,272 26,459
Prepaid expenses and other current assets 3,295 2,722
Income tax receivable 5,338 --
Deferred income taxes 3,047 3,069
--------- ------------
Total current assets 175,025 150,192
Equipment, furniture and fixtures, net 6,519 5,899
Goodwill 10,697 10,644
Intangible assets, net 5,570 5,587
Other assets 281 221
Deferred income taxes 5,265 6,065
--------- ------------
Total assets $203,357 $ 178,608
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 26,953 $ 20,153
Accrued sales discounts/rebates 3,562 4,498
Accrued income taxes -- 4,483
Accrued compensation 3,541 7,430
Other accrued expenses 6,955 7,449
--------- ------------
Total current liabilities 41,011 44,013
Deferred income taxes 116 103
Accrued income taxes 6,860 --
Other long term liabilities 741 275
--------- ------------
Total liabilities 48,728 44,391
Stockholders' equity:
Common stock 181 175
Paid-in capital 106,417 94,733
Accumulated other comprehensive income 4,699 2,759
Retained earnings 77,527 68,514
Common stock held in treasury (34,195) (31,964)
--------- ------------
Total stockholders' equity 154,629 134,217
--------- ------------
Total liabilities and stockholders' equity $203,357 $ 178,608
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UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
--------- -------- --------- ---------
Net sales $ 71,478 $52,370 $137,497 $106,543
Cost of sales 46,852 32,788 88,530 68,473
--------- -------- --------- ---------
Gross profit 24,626 19,582 48,967 38,070
Research and development 2,269 1,919 4,591 3,765
Selling, general and
administrative expenses 16,385 13,620 32,218 27,132
--------- -------- --------- ---------
Operating expenses 18,654 15,539 36,809 30,897
--------- -------- --------- ---------
Operating income 5,972 4,043 12,158 7,173
Interest income, net 732 349 1,320 621
Other income (expense), net 27 (411) 121 (572)
--------- -------- --------- ---------
Income before income taxes 6,731 3,981 13,599 7,222
Provision for income taxes (2,185) (1,562) (4,416) (2,667)
--------- -------- --------- ---------
Net income $ 4,546 $ 2,419 $ 9,183 $ 4,555
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Earnings per share:
Basic $ 0.31 $ 0.18 $ 0.64 $ 0.33
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Diluted $ 0.30 $ 0.17 $ 0.61 $ 0.32
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Shares used in computing earnings per share:
Basic 14,437 13,802 14,282 13,722
========= ======== ========= =========
Diluted 15,262 14,356 15,084 14,297
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CONTACT: Universal Electronics Inc.
Paul Arling, 714-820-1000
or
Kirsten Chapman, 415-433-3777 (IR Agency)
SOURCE: Universal Electronics Inc.