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Universal Electronics Reports Second Quarter 2017 Financial Results

August 3, 2017

SANTA ANA, CA – Universal Electronics Inc. (UEI), (NASDAQ:
UEIC) reported financial results for the three and six months ended June 30,
2017.

“Our second quarter 2017 financial results were in line
with our expectations; net sales increased 3%, operating income grew 8% and EPS
increased 5% over last year’s second quarter,” stated Paul Arling, UEI’s
Chairman and CEO. “Major cable operators such as Comcast, Cox and Shaw
continue to upgrade their customers to new offerings such as the X1 Entertainment
Operating System® and X1 Voice Remote. Additional
operators, on a worldwide basis, are now progressing through the design and
testing stages of advanced home entertainment and home control platforms
powered by UEI technology. Our customers are introducing platforms with new
connection protocols and a new suite of devices – such as home security and
sensing, and energy monitoring and management – all of which can now be
centrally and simply controlled. By enabling that connection, UEI continues to
gain momentum supplying the industry with the solutions that serve the
increasingly complex smart home environment. Due
to our long-standing relationships with the world’s leading subscription
broadcasters and consumer electronics OEMs, our diverse portfolio of
technologies and solutions, as well as our long history of innovation, UEI is
well positioned to capitalize on this long-term growth opportunity.”

Financial Results for the Three Months Ended June 30: 2017 Compared to 2016

  • GAAP net sales were $177.6 million, compared to $171.0
    million; Adjusted Non-GAAP net sales were $177.9 million, compared to $172.2
    million.
  • GAAP gross margins were 24.6%, compared to 25.4%;
    Adjusted Non-GAAP gross margins were 25.9%, compared to 26.1%.
  • GAAP
    operating income was $7.3 million, compared to $8.0 million; Adjusted Non-GAAP
    operating income was $15.8 million, compared to $14.7 million.
  • GAAP net income was $4.7 million, or $0.32 per diluted
    share, compared to $6.6 million or $0.45 per diluted share; Adjusted Non-GAAP
    net income was $11.4 million, or $0.78 per diluted share, compared to $10.9
    million, or $0.74 per diluted share.
  • At June 30, 2017, cash and cash equivalents were
    $49.7 million, compared to $50.6 million at December 31, 2016.

Financial Results for the Six Months Ended June 30: 2017 Compared to 2016

  • GAAP net sales were $339.0 million, compared to $321.6
    million; Adjusted Non-GAAP net sales were $340.2 million, compared to $323.7
    million.
  • GAAP gross margins were 25.0%, compared to 25.2%;
    Adjusted Non-GAAP gross margins were 26.3%, compared to 25.9%.
  • GAAP
    operating income was $6.9 million, compared to $11.0 million; Adjusted Non-GAAP
    operating income was $27.5 million, compared to $24.0 million.
  • GAAP net income was $4.8 million, or $0.33 per diluted
    share, compared to $9.3 million or $0.63 per diluted share; Adjusted Non-GAAP
    net income was $20.6 million, or $1.40 per diluted share, compared to $17.7
    million, or $1.20 per diluted share.

Financial Outlook

For the third quarter of 2017, the company expects GAAP net sales to range between $178 million and $186 million, compared to $169.2
million in the third quarter of 2016. GAAP earnings per diluted share for the
third quarter of 2017 is expected to range from $0.50
to $0.60, compared to GAAP earnings per diluted share of $0.53 in the
third quarter of 2016.

For the third quarter of 2017, the company expects Adjusted Non-GAAP net sales to
range between $178 million and $186 million,
compared to $170.3 million in the third quarter of 2016. Adjusted Non-GAAP
earnings per diluted share are expected to range from $0.80
to $0.90, compared to Adjusted Non-GAAP earnings per diluted share of
$0.93 in the third quarter of 2016. The third quarter Adjusted Non-GAAP
earnings per diluted share estimate excludes $0.30
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 related to acquisitions, and income tax adjustments.

Conference Call Information

UEI’s management team will hold a
conference call today, Thursday, August 3, 2017 at 4:30 p.m. ET / 1:30
p.m. PT, to discuss its second 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 56476115.
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 56476115.

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,
amortization of intangibles acquired, 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 acquisitions as well as other
acquisition related costs and nonrecurring items. Adjusted Non-GAAP net income
is defined as net income excluding the aforementioned items, foreign currency
gains and losses, and the related tax effects of all adjustments, as well as
the income tax effects of nondeductible projected losses to be incurred as a
result of the shutdown of the company’s Guangzhou factory. Adjusted Non-GAAP
diluted earnings per share attributable to Universal Electronics Inc. is
calculated using Adjusted Non-GAAP net income attributable to Universal
Electronics Inc. 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 August 3, 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.

– Tables Are Here –

Contacts:

Paul Arling (UEI) 714.918.9500

Becky
Herrick (IR Agency) 415.433.3777

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