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Universal Electronics Reports Third Quarter 2013 Financial Results

November 7, 2013

 

Achieves Records in Net  Sales of $142.4 million and Adjusted Pro Forma EPS of $0.62

SANTA ANA, CA – November 7, 2013 – Universal Electronics Inc. (UEI),  (NASDAQ: UEIC) reported financial results for the three and nine months ended September 30,  2013.

Paul Arling, UEI’s Chairman and  CEO, stated: “Our record quarterly performance was supported by strength in  subscription broadcasting as both domestic and international markets delivered  growth. Leveraging our core business, technologies and patents, we have begun  recording initial licensing sales from the fast-growing smart devices market. We  are beginning to gain traction with the world’s largest mobile device manufacturers,  gaming companies and over-the-top service providers to incorporate UEI’s  advanced technology into an expanding array of consumer electronics devices. We  remain very excited about the opportunities for UEI and our ability to connect  and control new and advanced wireless technologies as the industry continues to  evolve.”
Adjusted Pro Forma Financial Results for  the Three Months Ended September 30: 2013 Compared to 2012

  • Net sales were $142.4 million,  compared to $124.9 million.

 

    1. Business Category revenue was $129.7  million, compared to $111.9 million.  The Business Category contributed 91.1% of  total net sales, compared to 89.6%.

 

    1. Consumer Category revenue was $12.7  million, compared to $13.0 million. The  Consumer Category contributed 8.9% of total  net sales, compared to 10.4%.

 

 

  • Gross margins were 28.6%, compared to 29.4%.

 

  • Operating expenses were $28.9 million, compared to $25.5  million.

 

  • Operating income was $11.8 million, compared to $11.2  million.

 

  • Net income was $9.7 million, or $0.62 per diluted  share, compared to $8.1 million, or $0.54 per diluted share.

 

  • At September 30, 2013, cash and cash equivalents, net  of debt, was $44.6 million, compared to $34.4 million at September 30, 2012.

Adjusted Pro Forma Financial Results for  the Nine Months Ended September 30: 2013 Compared to 2012

  1. Net sales were $142.4 million,  compared to $124.9 million.
    1. Business Category revenue was $129.7  million, compared to $111.9 million.  The Business Category contributed 91.1% of  total net sales, compared to 89.6%.
    2. Consumer Category revenue was $12.7  million, compared to $13.0 million. The  Consumer Category contributed 8.9% of total  net sales, compared to 10.4%.
  2. Gross margins were 28.6%, compared to 29.4%.
  3. Operating expenses were $28.9 million, compared to $25.5  million.
  4. Operating income was $11.8 million, compared to $11.2  million.
  5. Net income was $9.7 million, or $0.62 per diluted  share, compared to $8.1 million, or $0.54 per diluted share.
  6. At September 30, 2013, cash and cash equivalents, net  of debt, was $44.6 million, compared to $34.4 million at September 30, 2012.

Adjusted Pro Forma Financial Results for  the Nine Months Ended September 30: 2013 Compared to 2012

  1. Net sales were $393.2 million, compared to $345.3  million.
  2. Gross margins were 28.4%, compared to 28.5%.
  3. Operating expenses were $83.6 million, compared to $75.9  million.
  4. Operating income was $28.1 million, compared to $22.7  million.
  5. Net income was $20.8 million, or $1.35 per diluted  share, compared to $17.1 million, or $1.13 per diluted share.

Financial Outlook
For the fourth quarter of 2013,  the company expects net sales to range between $126.0 million and $134.0  million, compared to $117.8 million in the fourth quarter of 2012. Adjusted pro  forma earnings per diluted share for the fourth quarter of 2013 are expected to  range from $0.42 to $0.52, compared to adjusted pro forma earnings per diluted  share of $0.42 in the fourth quarter of 2012.

Conference Call Information
UEI’s  management team will hold a conference call today, Thursday, November 7, 2013 at 4:30 p.m. ET / 1:30 p.m. PT, to  discuss its third quarter 2013 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 86975386. 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 86975386.
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 certain costs  incurred for years preceding the acquisition of Enson Assets Limited.  Non-GAAP net income is defined as net income  from operations excluding the aforementioned items and the related tax effects  as well as additional reserves recorded resulting from a tax audit in Hong Kong  for years preceding our acquisition of Enson Assets Limited.  A reconciliation of non-GAAP financial  results to GAAP results is included at the end of this press release.
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® brand name. For additional information, 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 the continued strength  of its core businesses, technologies and patents; the continued innovation of  products and advanced technologies that will attract new customers in existing  and new markets, including advanced wireless products and platforms; the  continued expansion of the Company’s technologies into smart devices (such as  smartphones, tablets, smart TVs, IPTV devices, game consoles and  over-the-top-services) and the continued growth of the smart device markets;  the Company’s continued ability to successfully license its technologies into  the growing smart device markets; the benefits the Company expects via the  continued strength of its subscription broadcasting businesses, both  domestically and internationally; and other factors described in the Company’s  filings with the U.S. Securities and Exchange Commission.  The actual results 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.

 

–  Tables Follow –

 

UNIVERSAL  ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In  thousands, except share-related data)
(Unaudited)

 

September 30,
2013

December 31,
2012

ASSETS

Current assets:
Cash and cash equivalents $

44,602

$

44,593

Accounts receivable, net

103,466

91,048

Inventories, net

103,579

84,381

Prepaid expenses and other    current assets

3,573

3,661

Income tax receivable

12

270

Deferred income taxes

5,102

5,210

Total current assets

260,334

229,163

Property, plant, and    equipment, net

76,662

77,706

Goodwill

30,961

30,890

Intangible assets, net

27,632

29,835

Other assets

5,096

5,361

Deferred income taxes

6,252

6,369

Total assets $

406,937

$

379,324

LIABILITIES AND    STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable $

57,153

$

59,831

Line of credit

Accrued compensation

35,529

33,398

Accrued sales discounts,    rebates and royalties

7,165

8,093

Accrued income taxes

2,756

3,668

Deferred income taxes

56

41

Other accrued expenses

10,550

10,644

Total current liabilities

113,209

115,675

Long-term liabilities:
Deferred income taxes

10,549

10,687

Income tax payable

525

525

Other long-term liabilities

2,082

1,787

Total liabilities

126,365

128,674

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; 22,133,206 and 21,491,398 shares issued    on September 30, 2013 and December 31, 2012, respectively

221

215

Paid-in capital

194,360

180,607

Accumulated other comprehensive    income (loss)

2,641

1,052

Retained earnings

187,979

170,569

385,201

352,443

Less cost of common stock    in treasury, 6,634,641 and 6,516,382 shares on September 30, 2013 and    December 31, 2012, respectively

(104,629

)

(101,793

)
Total stockholders’ equity

280,572

250,650

Total liabilities and stockholders’ equity $

406,937

$

379,324

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

 

Three Months Ended
September 30,

Nine Months Ended
September 30,

2013

2012

2013

2012

Net sales $

142,389

$

124,871

$

393,220

$

345,307

Cost of sales

101,940

88,433

282,386

247,572

Gross profit

40,449

36,438

110,834

97,735

Research and development    expenses

4,182

3,521

12,463

10,408

Selling, general and    administrative expenses

25,796

23,383

74,029

69,015

Operating income

10,471

9,534

24,342

18,312

Interest income (expense),    net

47

(24

)

60

(112

)
Other income (expense), net

(717

)

(65

)

(2,897

)

(515

)
Income before provision for    income taxes

9,801

9,445

21,505

17,685

Provision for income taxes

1,178

2,595

4,095

4,050

Net income $

8,623

$

6,850

$

17,410

$

13,635

Earnings per share:
Basic $

0.56

$

0.46

$

1.15

$

0.91

Diluted $

0.55

$

0.45

$

1.13

$

0.90

Shares used in computing    earnings per share:
Basic

15,324

14,984

15,129

14,931

Diluted

15,743

15,099

15,462

15,087

Contacts: Paul Arling (UEI) 714.918.9500

Becky Herrick (IR Agency) 415.433.3777

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