Universal Electronics Reports Third Quarter 2012 Financial Results

  Universal Electronics Reports Third Quarter 2012 Financial Results

Business Wire

SANTA ANA, Calif. -- November 08, 2012

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results
for the three and nine months ended September 30, 2012.

“Contributing to our solid 2012 third quarter was our strong performance in
subscription broadcasting and continued success in international markets,”
stated Paul Arling, UEI's Chairman and CEO. “While consumer-centric regions
such as the U.S., Western Europe and Japan remain challenged due to weaker
than expected TV sales, we are leveraging our global capabilities to expand
our presence into promising new regions such as Latin America, Eastern Europe
and parts of Asia where we see market opportunities.”

“During the quarter, we began providing our embedded app technology to
multiple leading smart phone manufacturers. We are constantly developing the
innovative technologies that facilitate simple control within the
ever-changing home entertainment environment. It is the consistent execution
of this strategy that has brought us success over the last 25 years, and what
we believe will drive our success in the years to come.”

Financial Results for the Three Months Ended September 30: 2012 Compared to
2011

  *Net sales were $124.9 million, compared to $123.5 million.

       *Business Category revenue was $111.9 million, compared to $111.3
         million.
         The Business Category contributed 89.6% of total net sales, compared
         to 90.1%.
       *Consumer Category revenue was $13.0 million, compared to $12.2
         million.
         The Consumer Category contributed 10.4% of total net sales, compared
         to 9.9%.

  *Adjusted pro forma gross margins were 29.4%, compared to 27.9%.
  *Adjusted pro forma operating expenses were $25.5 million, compared to
    $24.0 million.
  *Adjusted pro forma operating income was $11.2 million, compared to $10.5
    million.
  *Adjusted pro forma net income was $8.1 million, or $0.54 per diluted
    share, compared to $8.0 million, or $0.53 per diluted share.
  *At September 30, 2012, cash and cash equivalents was $41.2 million.

Financial Results for the Nine Months Ended September 30: 2012 Compared to
2011

  *Net sales were $345.3 million, compared to $351.0 million.
  *Adjusted pro forma gross margins were 28.5%, compared to 27.8%.
  *Adjusted pro forma operating expenses were $75.9 million, compared to
    $74.0 million.
  *Adjusted pro forma operating income was $22.7 million, compared to $23.5
    million.
  *Adjusted pro forma net income was $17.1 million, or $1.13 per diluted
    share, compared to $17.7 million, or $1.15 per diluted share.

Financial Outlook

Bryan Hackworth, UEI’s CFO, stated: “While we continue to experience strong
sales growth in subscription broadcasting both domestically and
internationally, as well as in our Consumer Category, the consumer electronics
channel has remained challenging. Several large Japanese consumer electronics
customers have recently reduced their 2012 outlook for the second time this
year, which adversely affects our sales in this channel.”

For the fourth quarter of 2012, the company expects net sales to range between
$113.0 million and $119.0 million, compared to $117.6 million in the fourth
quarter of 2011. Adjusted pro forma earnings per diluted share for the fourth
quarter of 2012 are expected to range from $0.37 to $0.47, compared to
adjusted pro forma earnings per diluted share of $0.40 in the fourth quarter
of 2011.

For the full 2012 year, the company expects net sales to range between $458.0
million and $464.0 million, compared to $468.6 million in 2011. Adjusted pro
forma earnings per diluted share for 2012 are expected to range from $1.50 to
$1.60, compared to adjusted pro forma earnings per diluted share of $1.55 in
2011.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, November 8,
2012 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its third quarter 2012
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 40161724. 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 40161724.

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 charges related to the write-up of inventory and depreciation
related to the acquisition. Non-GAAP operating expenses is defined as cash
operating expenses excluding acquisition costs, amortization of intangibles,
other employee related restructuring costs as well as costs associated with
moving our corporate headquarters from Cypress, CA to Santa Ana, CA. Non-GAAP
net income is net income from operations excluding the aforementioned items. A
reconciliation of Non-GAAP financial results to GAAP results is included at
the end of this press release.

About Universal Electronics Inc.

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, please 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 Company’s ability to retain and gain
market share; the Company’s ability to attract new customers and retain and
expand our relationships with its existing customers; acceptance by consumers
of the Company’s innovative tablet and smartphone embedded applications; the
continued global general economic conditions; the benefits the Company expects
via the growth of new markets in certain geographic areas including Latin
America, Asia-Pacific region, and Eastern Europe; and other factors described
in the Company's filings with the U.S. Securities and Exchange Commission. The
actual results that 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.

                                                               
UNIVERSAL ELECTRONICS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share-related data)

(Unaudited)
                                                                  
                                                  September 30,   December 31,
                                                  2012            2011
ASSETS
Current assets:
Cash and cash equivalents                         $  41,216       $  29,372
Accounts receivable, net                             92,392          82,184
Inventories, net                                     72,115          90,904
Prepaid expenses and other current assets            3,286           3,045
Deferred income taxes                               6,561         6,558   
                                                                  
Total current assets                                 215,570         212,063
Property, plant, and equipment, net                  76,890          80,449
Goodwill                                             30,833          30,820
Intangible assets, net                               30,534          32,814
Other assets                                         5,373           5,350
Deferred income taxes                               8,073         7,992   
                                                                  
Total assets                                      $  367,273     $  369,488 
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                  $  48,688       $  55,430
Line of credit                                       2,000           2,000
Notes payable                                        4,800           14,400
Accrued sales discounts, rebates and royalties       6,443           6,544
Accrued income taxes                                 4,267           5,707
Accrued compensation                                 31,343          29,204
Deferred income taxes                                52              50
Other accrued expenses                              8,214         13,967  
                                                                  
Total current liabilities                            105,807         127,302
Long-term liabilities:
Deferred income taxes                                11,336          11,056
Income tax payable                                   1,136           1,136
Other long-term liabilities                         1,652         5       
                                                                  
Total liabilities                                   119,931       139,499 
                                                                  
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; 21,368,580 and 21,142,915         214             211
shares issued on September 30, 2012 and
December 31, 2011, respectively
Paid-in capital                                      178,602         173,701
Accumulated other comprehensive (loss) income        (57      )      938
Retained earnings                                   167,651       154,016 
                                                                  
                                                     346,410         328,866
Less cost of common stock in treasury,
6,360,302 and 6,353,035 shares on September 30,     (99,068  )     (98,877 )
2012 and December 31, 2011, respectively
                                                                  
Total stockholders’ equity                          247,342       229,989 
                                                                  
Total liabilities and stockholders’ equity        $  367,273     $  369,488 
                                                                  

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)
                                                              
                        Three Months Ended   Nine months Ended
                        September 30,                September 30,
                          2012        2011        2012        2011    
Net sales               $  124,871     $ 123,527     $ 345,307     $ 350,985
Cost of sales             88,433      89,349      247,572     254,284 
                                                                   
Gross profit               36,438        34,178        97,735        96,701
                                                                   
Research and               3,521         2,861         10,408        9,275
development expenses
Selling, general and
administrative            23,383      21,852      69,015      67,116  
expenses
                                                                   
Operating income           9,534         9,465         18,312        20,310
Interest income            (24     )     (56     )     (112    )     (210    )
(expense), net
Other income              (65     )    (353    )    (515    )    (771    )
(expense), net
                                                                   
Income before
provision for income       9,445         9,056         17,685        19,329
taxes
Provision for income      (2,595  )    (1,972  )    (4,050  )    (4,297  )
taxes
                                                                   
Net income              $  6,850      $ 7,084      $ 13,635     $ 15,032  
                                                                   
Earnings per share:
Basic                   $  0.46       $ 0.48       $ 0.91       $ 1.00    
                                                                   
Diluted                 $  0.45       $ 0.47       $ 0.90       $ 0.98    
                                                                   
Shares used in
computing earnings
per share:
Basic                     14,984      14,887      14,931      14,963  
                                                                   
Diluted                   15,099      15,147      15,087      15,312  
                                                                   

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
                                                                
                                                     Nine months Ended
                                                     September 30,
                                                      2012       2011    
Cash provided by operating activities:
Net income                                           $ 13,635      $ 15,032
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                          12,948        12,907
Provision for doubtful accounts                        72            241
Provision for inventory write-downs                    2,148         3,610
Deferred income taxes                                  146           26
Tax benefit from exercise of stock options and         (160    )     399
vested restricted stock
Excess tax benefit from stock-based compensation       (49     )     (422    )
Shares issued for employee benefit plan                620           592
Stock-based compensation                               3,447         3,280
Changes in operating assets and liabilities:
Accounts receivable                                    (10,876 )     (2,772  )
Inventories                                            15,758        (22,172 )
Prepaid expenses and other assets                      (282    )     674
Accounts payable and accrued expenses                  (8,335  )     2,456
Accrued income taxes                                  (1,428  )    (2,049  )
                                                                   
Net cash provided by operating activities             27,644      11,802  
                                                                   
Cash used for investing activities:
Acquisition of property, plant, and equipment          (6,525  )     (10,140 )
Acquisition of intangible assets                      (802    )    (814    )
                                                                   
Net cash used for investing activities                (7,327  )    (10,954 )
                                                                   
Cash used for financing activities:
Issuance of debt                                       12,000        —
Payment of debt                                        (21,600 )     (16,600 )
Proceeds from stock options exercised                  1,425         1,381
Treasury stock purchased                               (619    )     (9,512  )
Excess tax benefit from stock-based compensation      49          422     
                                                                   
Net cash used for financing activities                (8,745  )    (24,309 )
                                                                   
Effect of exchange rate changes on cash               272         1,212   
                                                                   
Net increase (decrease) in cash and cash               11,844        (22,249 )
equivalents
Cash and cash equivalents at beginning of period      29,372      54,249  
                                                                   
Cash and cash equivalents at end of period           $ 41,216     $ 32,000  

Supplemental Cash Flow Information — There were income tax payments of $6.5
million and $6.9 million during the nine months ended September 30, 2012 and
2011, respectively. There were interest payments of $0.2 million and $0.3
million during the nine months ended September 30, 2012 and 2011,
respectively.

                                         
UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands, except share-related data)

(Unaudited)
                                                        
                Three Months Ended                        Three Months Ended
                 September 30, 2012                        September 30, 2011
                                           Adjusted                                Adjusted
                 GAAP          Adjustments   Pro Forma     GAAP          Adjustments   Pro Forma
                                                                                       
Net sales        $ 124,871     $  —          $ 124,871     $ 123,527     $  —          $ 123,527
Cost of sales     88,433       (277   )    88,156      89,349       (277   )    89,072  
^(1)
Gross profit       36,438         277          36,715        34,178         277          34,455
                                                                                       
Research and
development        3,521       __              3,521         2,861          —            2,861
expenses
Selling,
general and       23,383       (1,376 )    22,007      21,852       (743   )    21,109  
administrative
expenses ^(2)
                                                                                       
Operating          9,534          1,653        11,187        9,465          1,020        10,485
income
Interest
income             (24     )   __              (24     )     (56     )      —            (56     )
(expense), net
Other income
(expense) ,       (65     )     —          (65     )    (353    )     —          (353    )
net
                                                                                       
Income before
provision for      9,445          1,653        11,098        9,056          1,020        10,076
income taxes
Provision for
income taxes      (2,595  )     (392   )    (2,987  )    (1,972  )     (144   )    (2,116  )
^(4)
Net income       $ 6,850      $  1,261     $ 8,111      $ 7,084      $  876       $ 7,960   
                                                                                       
Earnings per     $ 0.45       $  0.08      $ 0.54       $ 0.47       $  0.06      $ 0.53    
share diluted
                                                                                       
                 Nine Months Ended                         Nine Months Ended
                 September 30, 2012                        September 30, 2011
                                             Adjusted                                  Adjusted
                 GAAP          Adjustments   Pro Forma     GAAP          Adjustments   Pro Forma
                                                                                       
Net sales        $ 345,307     $  —          $ 345,307     $ 350,985     $  —          $ 350,985
Cost of sales     247,572      (831   )    246,741     254,284      (831   )    253,453 
^(1)
Gross profit       97,735         831          98,566        96,701         831          97,532
                                                                                       
Research and
development        10,408         —            10,408        9,275          —            9,275
expenses
Selling,
general and       69,015       (3,573 )    65,442      67,116       (2,402 )    64,714  
administrative
expenses ^(3)
                                                                                       
Operating          18,312         4,404        22,716        20,310         3,233        23,543
income
Interest
income             (112    )      —            (112    )     (210    )      —            (210    )
(expense), net
Other income      (515    )     —          (515    )    (771    )     —          (771    )
(expense), net
                                                                                       
Income before
provision for      17,685         4,404        22,089        19,329         3,233        22,562
income taxes
Provision for
income taxes      (4,050  )     (934   )    (4,984  )    (4,297  )     (585   )    (4,882  )
^(4)
Net income       $ 13,635     $  3,470     $ 17,105     $ 15,032     $  2,648     $ 17,680  
                                                                                       
Earnings per     $ 0.90       $  0.23      $ 1.13       $ 0.98       $  0.17      $ 1.15    
share diluted

(1) To reflect depreciation expense for the corresponding periods relating to
the mark-up in fixed assets from cost to fair value as part of the Enson
Assets Limited acquisition.

(2) To reflect $0.7 million of amortization expense for the three months ended
September 30, 2012 and September 30, 2011, relating to intangible assets
acquired as part of acquisitions. In the third quarter of 2012, there were
approximately $0.2 million of additional costs incurred relating primarily to
other employee restructuring costs. Also, in the third quarter of 2012, we
moved our corporate headquarters from Cypress, CA to Santa Ana, CA and as a
result, incurred approximately $0.4 million of costs associated specifically
with the move.

(3) To reflect $2.2 million of amortization expense for the nine months ended
September 30, 2012 and September 30, 2011, relating to intangible assets
acquired as part of acquisitions. For the nine months ended 2011, there were
additional costs incurred relating to other employee restructuring costs,
primarily severance. For the nine months ended 2012, there were approximately
$0.8 million of other employee restructuring costs incurred, primarily
severance, as well as $0.5 million incurred relating to moving our corporate
headquarters from Cypress, CA to Santa Ana, CA.

(4) To reflect the tax effect of the adjustments.

Contact:

UEI
Paul Arling, 714-918-9500
or
IR Agency
Becky Herrick, 415-433-3777
 
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