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Universal Electronics Reports Fourth Quarter and Year-End 2016 Financial Results

February 16, 2017

SANTA ANA, CA – Universal Electronics Inc. (UEI), (NASDAQ:
UEIC) reported financial results for the three and twelve months ended December
31, 2016.

“Over the past 30 years, UEI has established itself as the supplier of choice to the
world’s leading names in home entertainment worldwide,” Paul Arling, UEI’s
Chairman and CEO, stated, “We are in the early stages of a major evolution in
our industry that presents a significant long-term opportunity for us. Our
subscription broadcasting and OEM customers are introducing next-generation
home entertainment platforms around the world that converge home entertainment
devices with intelligent home sensing solutions. Our intelligent sensing
technologies combine with our home entertainment control innovations to provide
customers a more complete smart home solution that enables their consumers to
connect and control virtually any device in the home. We believe we are better
positioned than ever to expand our share of this growing market.”

Financial
Results for the Three Months Ended December 31: 2016 Compared to 2015

  • GAAP net sales were $160.5 million, compared to $162.1
    million; Adjusted Non-GAAP net sales were $160.1 million, compared to $162.1
    million.
  • GAAP gross margins were 25.7%, compared to 28.5%;
    Adjusted Non-GAAP gross margins were 26.9%, compared to 28.8%.
  • GAAP
    operating income was $6.3 million, compared to $10.4 million; Adjusted Non-GAAP
    operating income was $13.9 million, compared to $15.2 million.
  • GAAP net income was $3.2 million, or $0.22 per diluted share, compared to $9.3 million or $0.64 per diluted share; Adjusted Non-GAAP net
    income was $10.4 million, or $0.70 per diluted share, compared to $13.4
    million, or $0.91 per diluted share.
  • At December 31, 2016, cash and cash equivalents
    were $50.6 million.

Financial
Results for the Twelve Months Ended December 31: 2016 Compared to 2015

  • GAAP net sales were $651.4 million, compared to $602.8
    million; Adjusted Non-GAAP net sales were $654.1 million, compared to $602.8
    million.
  • GAAP gross margins were 25.2%, compared to 27.7%;
    Adjusted Non-GAAP gross margins were 26.2%, compared to 27.9%.
  • GAAP operating income was $25.4 million, compared to $35.9 million; Adjusted Non-GAAP operating income was $53.5 million, compared
    to $55.0 million.
  • GAAP net income was $20.4 million, or $1.38 per diluted
    share, compared to $29.2 million or $1.88 per diluted share; Adjusted Non-GAAP net
    income was $42.9 million, or $2.91 per diluted share, compared to $43.3
    million, or $2.79 per diluted share.

Bryan Hackworth,
UEI’s CFO, stated: “Overall, we are pleased with our fourth quarter results, as
both the top and bottom lines were within the guided range. In addition, our
fourth quarter gross margin rate of 26.9% represents the highest rate of the
year and was achieved primarily through productivity gains as we continue to
transfer production from our southern China factory to our northern China
factory, and as we begin to ramp up production for new advanced product roll
outs.”

Financial Outlook

For the first quarter
of 2017, the company expects GAAP net sales to range between $154.0 million and
$162.0 million, compared to $150.7 million in the first quarter of 2016. GAAP
loss per diluted share for the first quarter of 2017 is expected to range from
$0.16 to $0.06, compared to GAAP earnings per diluted share of $0.19 in the first
quarter of 2016. In the first quarter of 2017, the company expects to record between
$6 million and $7 million of severance payments associated with the closure of its
southern China factory.  As previously
disclosed in a press release dated September 30, 2016, UEI entered into a
definitive agreement to sell its southern China factory for RMB 320
million.  The closing of the sale will be
subject to customary due diligence and regulatory approval by the local
commerce authority, which is expected to be completed in the first quarter of
2018.

For
the first quarter of 2017, the company expects Adjusted Non-GAAP net sales to
range between $155 million and $163 million, compared to $151.5 million in the
first quarter of 2016. Adjusted Non-GAAP earnings per diluted share are
expected to range from $0.57 to $0.67, compared to Adjusted Non-GAAP earnings
per diluted share of $0.50 in the first quarter of 2016. The first quarter
Adjusted Non-GAAP earnings per diluted share estimate excludes $0.73 per share
related to stock-based compensation, amortization of acquired intangibles,
factory inefficiencies at an underutilized factory, severance related to the
consolidation of manufacturing facilities, changes in contingent consideration
relating to the acquisition of Ecolink Intelligent Technology, Inc. and the
related tax impact of these adjustments.

Conference Call Information

UEI’s management team will hold a
conference call today, Thursday, February 16, 2017 at 4:30 p.m. ET / 1:30
p.m. PT, to discuss its fourth quarter and the full year 2016 earnings results,
review recent activity and answer questions. To access the call in the U.S.
please dial 877-843-0414 and for international calls dial 315-625-3071
approximately 10 minutes prior to the start of the conference. The conference
ID is 64574250. 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 code64574250.

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
and believes that providing these non-GAAP financial measures to investors, as
a supplement to GAAP financial measures, helps 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 impact of stock-based
compensation for performance-based warrants. Adjusted Non-GAAP gross profit is
defined as gross profit excluding stock-based compensation expense, cost of
goods sold and depreciation expense related to the increase in inventories and
fixed assets from cost to fair market value resulting from acquisitions, and excess
manufacturing overhead. Adjusted Non-GAAP operating expenses are defined as
operating expenses excluding amortization of intangibles acquired, stock-based
compensation expense, employee related restructuring costs, litigation
settlement costs, and acquisition related costs and changes in contingent
consideration related to the acquisition of the net assets of Ecolink
Intelligent Technology, Inc. Adjusted Non-GAAP net income is defined as net
income excluding the aforementioned items and the related tax effects as well
as adjustments to certain deferred tax assets resulting from tax incentives and
tax law changes at one of our China factories and a deferred tax valuation
allowance adjustment related to the pending sale of our Guangzhou factory.
Adjusted Non-GAAP diluted earnings per share attributable to Universal
Electronics Inc. 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. is the worldwide leader in universal control and sensing
technologies for the smart home. For more information, please visit www.uei.com/about.

Note on 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 most recent annual report on
Form 10-K and the periodic reports filed thereafter. Risks that could
affect forward-looking statements in this press release include changes in
market conditions; the continued adoption of our advanced control technologies
by our customers as anticipated by management, the convergence of smart home
devices and technologies as anticipated by management, the introduction and
acceptance of next-generation home entertainment platforms as expected by
management, the pace of the economy; competitive conditions in the industries
we serve, including the smart home and residential and commercial security
industries; and relationships with our customers and our ability to attract new
customers, our ability to successfully and profitably transition our
manufacturing operations, and our continued ability to maintain and/or improve
our margins and cost effective operations. 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, 2017. We undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.

Contacts:
Paul Arling (UEI) 714.918.9500

Becky Herrick (IR Agency) 415.433.3777

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