SCOTTSDALE, AZ – August 8, 2019 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC), the worldwide leader in sensing and control technologies for the smart home, reported financial results for the three and six months ended June 30, 2019.
Paul Arling, UEI’s chairman and CEO, stated, “Our record second quarter results and 19% year-over-year net sales growth reflect increases across the board, notably in subscription broadcasting, consumer electronics (CE), and home security. Our customers are beginning to more rapidly adopt advanced, 2-way, IP-connected home entertainment systems. Further, new and existing customers recognize UEI as the voice technology expert. As such, we are selected for sophisticated new device initiatives that require greater intellectual property and carry higher average selling prices. In addition to this transition in home entertainment, our home automation business continues to gain traction. In 2019, we are positioned to deliver the best year in our history.”
Financial Results for the Three Months Ended June 30: 2019 Compared to 2018
- GAAP net sales were $193.9 million, compared to $162.5 million; Adjusted Non-GAAP net sales were $193.4 million, compared to $162.4 million.
- GAAP gross margins were 17.5%, compared to 16.5%; Adjusted Non-GAAP gross margins were 25.2%, compared to 22.1%.
- GAAP operating loss was $3.9 million, compared to $9.9 million; Adjusted Non-GAAP operating income was $15.8 million, compared to $4.6 million.
- GAAP net loss was $5.1 million, or $0.37 per share, compared to a net income of $22.7 million or $1.60 per share; Adjusted Non-GAAP net income was $11.7 million, or $0.83 per diluted share, compared to $2.6 million, or $0.18 per diluted share.
- At June 30, 2019, cash and cash equivalents were $49.6 million.
Bryan Hackworth, UEI’s CFO, stated, “We are very pleased with our strong second quarter results and expect this positive momentum to continue into the third quarter. The transition of the manufacturing of U.S.-bound product is nearly complete with most of the associated costs behind us. As planned, we are now optimizing efficiency at our Mexico facility. As a company, we remain focused on the development of products, technologies and new markets that will continue to drive growth.”
For the third quarter of 2019, the company expects GAAP net sales to range between $188 million and $198 million, compared to $182.7 million in the third quarter of 2018. GAAP earnings per diluted share for the third quarter of 2019 are expected to range from $0.31 to $0.41, compared to GAAP earnings per diluted share of $0.07 in the third quarter of 2018.
For the third quarter of 2019, the company expects Adjusted Non-GAAP net sales to range between $188 million and $198 million, compared to $182.7 million in the third quarter of 2018. Adjusted Non-GAAP earnings per diluted share are expected to range from $0.85 to $0.95, compared to Adjusted Non-GAAP earnings per diluted share of $0.80 in the third quarter of 2018. The third quarter 2019 Adjusted Non-GAAP earnings per diluted share estimate excludes $0.54 per share related to, among other things, stock-based compensation, amortization of acquired intangibles, changes in contingent consideration relating to acquisitions, foreign currency gains and losses, excess manufacturing overhead and factory transition costs, additional Section 301 U.S. tariffs on goods manufactured in China, restructuring costs and the related tax impact of these adjustments. For a more detailed explanation of Non-GAAP measures, please see the Use of Non-GAAP Financial Metrics discussion and the Reconciliation of Adjusted Non-GAAP Financial Results, each located elsewhere in this press release.
Conference Call Information
UEI’s management team will hold a conference call today, Thursday, August 8, 2019 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its second quarter 2019 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 6409838. 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 6409838.
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, they help 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 revenue impact of the additional Section 301 U.S. tariffs on products manufactured in China and imported into the U.S. and the impact of stock-based compensation for performance-based warrants. Adjusted Non-GAAP gross profit is defined as gross profit excluding the impact of the additional Section 301 U.S. tariffs on products manufactured in China and imported into the U.S. and costs of implementing countermeasures to mitigate this impact, excess manufacturing overhead and factory transition costs, stock-based compensation expense, depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions and amortization of intangibles acquired. Adjusted Non-GAAP operating expenses are defined as operating expenses excluding costs incurred related to implementing countermeasures to mitigate the impact of the additional Section 301 U.S. tariffs on products manufactured in China and imported into the U.S., stock-based compensation expense, amortization of intangibles acquired, changes in contingent consideration related to acquisitions and employee related restructuring and other costs. Adjusted Non-GAAP net income is defined as net income excluding the aforementioned items, foreign currency gains and losses, the net gain recognized on the sale of the company’s Guangzhou factory, the related tax effects of all adjustments and adjustments to certain deferred tax assets resulting from tax incentives at one of our China factories. Adjusted Non-GAAP diluted earnings per share 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. (NASDAQ: UEIC) is the worldwide leader in universal control and sensing technologies for the smart home. For more information, please visit www.uei.com/about.
Paul Arling, Chairman & CEO, UEI 480.530.3000; Kirsten Chapman, LHA Investor Relations 415.433.3777
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 our ability to anticipate the needs and wants of our customers, new and existing, and timely develop and deliver products and technologies that will be accepted by our customers and enable us to enter to new markets, including with our advanced control products, our intuitive 2-way home entertainment technologies, and our home automation and sensing products and technologies, all as anticipated by management; the continuation of the ordering pattern of our customers as anticipated by management; management’s ability to manage its business to achieve its growth, net sales, margins, and earnings as guided and as anticipated, including management’s ability to improve operating costs and efficiencies at acceptable levels through cost containment efforts including moving our administrative, operations, and manufacturing facilities; management’s ability to complete the transition of certain of its manufacturing operations to our Mexico facility; and effects that changes in laws, regulations and policies may have on our business including the impact of trade regulations pertaining to importation of our products and the tariffs imposed upon them. 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 8, 2019. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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