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Universal Electronics Reports First Quarter 2017 Financial Results

May 4, 2017


Increases Q1’17 net sales by 7% and EPS by 30% over Q1’16 –

 – Expands lineup of connected home control
products with acquisition of RCS Technologies –

SANTA ANA, CA – Universal Electronics Inc. (UEI), (NASDAQ: UEIC)
reported financial results for the three months ended March 31, 2017.

Paul Arling, UEI’s Chairman and CEO stated, “2017 is off to
a strong start. The continued rollout of advanced remote control technologies
and the proliferation of connected devices supported continued strength in our
subscription broadcasting, consumer electronics OEM and wireless home security
businesses. With our broad portfolio of innovative home control solutions, we
have continued to deepen existing customer relationships while also adding new
ones – in both existing and new markets. As we announced this morning, we
acquired RCS Technology and its portfolio of energy management and control
products. This transaction builds on our existing business in the smart home,
enables us to provide our customers with additional connected home capabilities
and expands new customer acquisition opportunities in the residential,
commercial and hospitality markets.”

Financial
Results for the Three Months Ended March 31: 2017 Compared to 2016

  • GAAP net sales were $161.4 million, compared to $150.7
    million; Adjusted Non-GAAP net sales were $162.3 million, compared to $151.5
    million.
  • GAAP gross margins were 25.4%, compared to 25.0%;
    Adjusted Non-GAAP gross margins were 26.7%, compared to 25.6%.
  • GAAP
    operating loss was $0.4 million, compared to operating income of $3.0 million;
    Adjusted Non-GAAP operating income was $11.8 million, compared to $9.4 million.
  • GAAP net income was $0.1 million, or $0.01 per diluted
    share, compared to $2.7 million or $0.19 per diluted share; Adjusted Non-GAAP
    net income was $9.5 million, or $0.65 per diluted share, compared to $7.3
    million, or $0.50 per diluted share.
  • At March 31, 2017, cash and cash equivalents were
    $62.7 million, compared to $50.6 million at December 31, 2016. 

Financial Outlook

Bryan Hackworth,
UEI’s CFO, stated: “Advanced home entertainment platforms are becoming the new
standard for subscription broadcasters and consumer electronics companies
around the world.  Over the next several quarters,
a significant number of our customers will be rolling out new higher-end
platforms. As a result, we may, on occasion, experience greater variability in
our quarterly sales growth rates as certain customers deplete their inventory
stock prior to their respective product launches. However, our annual growth
rates will continue to reflect the economic benefit of this industry transition
and the continuing strong demand for our products and
services.  Based on this, and the
forecasted growth in the industries we serve, we are reaffirming our long-term
financial outlook. We expect average annual sales growth of 5% to 10% and
average earnings per share growth of 10% to 20%.”

For the second quarter of 2017, the company expects GAAP
net sales to range between $171 million and $179 million, compared to $171
million in the second quarter of 2016. GAAP earnings per diluted share for the second
quarter of 2017 is expected to range from $0.31 to $0.41, compared to GAAP
earnings per diluted share of $0.45 in the second quarter of 2016. In the second
quarter of 2017, the company expects to record between $0.8 million and $1.0
million of severance payments associated with the closure of its southern China
factory.

For the second quarter of 2017, the company expects
Adjusted Non-GAAP net sales to range between $172 million and $180 million,
compared to $172.2 million in the second quarter of 2016. Adjusted Non-GAAP
earnings per diluted share are expected to range from $0.72 to $0.82, compared
to Adjusted Non-GAAP earnings per diluted share of $0.77 in the second quarter
of 2016. The second quarter Adjusted Non-GAAP earnings per diluted share
estimate excludes $0.41 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, May 4, 2017 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its first
quarter 2017 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
9329232.  The conference call will also
be broadcast live at www.uei.com where it will be available for replay for one year. In
addition, a replay 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
dial 404-537-3406.  The access code is
9329232.

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 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.  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 May 4,
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.

– View Tables Here – 

Contacts:

Paul Arling (UEI) 714.918.9500

Becky
Herrick (IR Agency) 415.433.3777

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