Universal Electronics Reports Fourth Quarter and Year-End 2012 Financial Results

  Universal Electronics Reports Fourth Quarter and Year-End 2012 Financial
  Results

Business Wire

SANTA ANA, Calif. -- February 21, 2013

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results
for the three and twelve months ended December31, 2012.

“Our fourth quarter results reflect our solid performance and were within our
expectations,” stated Paul Arling, UEI's Chairman and CEO. “In 2012, we
demonstrated the many applications for our technology and gained traction in
the growing regions of the world and in new product categories, such as smart
devices and game consoles. For example, we recently announced that LG joined
other leading smart device companies in selecting UEI technology to power
their innovative new products, further establishing our embedded app
technology in these exciting new growth markets. Smart devices represent a
large and growing market for us as the introduction and adoption of smart TVs,
tablets and smartphones continues to increase.

“The 2013 International Consumer Electronics Show in Las Vegas in January was
another successful event for UEI as we further established ourselves as the
leader in innovative solutions for home entertainment control. We unveiled a
variety of products and technologies that provide a more intuitive and
automated control interface for consumers. Our ability to anticipate the
changing trends in home entertainment enables us to provide the products and
technologies that address our customers' and consumers' evolving needs. We
believe this strategy will continue to serve us well in the months and years
ahead.”

Financial Results for the Three Months Ended December31: 2012 Compared to
2011

  *Net sales were $117.8 million, compared to $117.6 million.

       *Business Category revenue was $102.8 million, compared to $103.7
         million. The Business Category contributed 87.3% of total net sales,
         compared to 88.2%.
       *Consumer Category revenue was $15.0 million, compared to $13.9
         million. The Consumer Category contributed 12.7% of total net sales,
         compared to 11.8%.

  *Adjusted pro forma gross margins were 30.5%, compared to 28.6%.
  *Adjusted pro forma operating expenses were $27.1 million, compared to
    $26.2 million.
  *Adjusted pro forma operating income was $8.9 million, compared to $7.4
    million.
  *Adjusted pro forma net income was $6.3 million, or $0.42 per diluted
    share, compared to $5.9 million, or $0.40 per diluted share.
  *At December31, 2012, cash and cash equivalents was $44.6 million.

Financial Results for the Twelve Months Ended December31: 2012 Compared to
2011

  *Net sales were $463.1 million, compared to $468.6 million.
  *Adjusted pro forma gross margins were 29.1%, compared to 28.0%.
  *Adjusted pro forma operating expenses were $102.9 million, compared to
    $100.2 million.
  *Adjusted pro forma operating income was $31.6 million, compared to $31.0
    million.
  *Adjusted pro forma net income was $23.4 million, or $1.55 per diluted
    share, compared to $23.6 million, or $1.55 per diluted share.

Financial Outlook

Bryan Hackworth, UEI's CFO, stated: “For many years, we have been at the
forefront of advancements in control technologies and solutions, which are now
evolving to include Smart Devices. We are very pleased with our early
successes embedding UEI technology inside gaming consoles, smartphones,
tablets and smart TVs. Initial customer reaction and feedback has been quite
positive. We are confident that we will deliver solid growth in 2013 and that
our investment in these areas carries significant additional growth potential.
Longer term, we believe the profile of our business is one with approximately
5% to 10% average annual revenue growth and average earnings growth of between
10% and 15%. Because it is difficult to accurately predict the commencement,
timing of launch and magnitude of orders for specific new products across
future quarters or within the current fiscal year, we have decided that, going
forward, we will only provide detailed guidance for the upcoming quarter.”

For the first quarter of 2013, the company expects net sales to range between
$106.0 million and $112.0 million, compared to $103.7 million in the first
quarter of 2012. Adjusted pro forma earnings per diluted share for the first
quarter of 2013 are expected to range from $0.20 to $0.26, compared to
adjusted pro forma earnings per diluted share of $0.19 in the first quarter of
2012.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday,
February21, 2013 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth
quarter and year-end 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 93200814. 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 93200814.

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 acquisitions. Non-GAAP operating expenses are defined as 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 and
the related tax effects as well as the write down of certain deferred tax
assets resulting from tax law changes. 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 continued innovation of products and
technologies, such as solutions to address mode confusion, that eliminate
remote control setup, and that transform smart devices (such as smartphones
and tablets) and gaming consoles into universal remote controls; the Company’s
ability to gain market share through the consolidation of our industry and by
adding new customers and retaining current customers; the Company’s app
technologies being embedded in smart devices and game consoles as anticipated
by management; the demand for smart devices and game consoles to grow as
anticipated by management; 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)
                                                          
                                         December 31, 2012   December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents                $   44,593          $   29,372
Accounts receivable, net                 91,048              82,184
Inventories, net                         84,381              90,904
Prepaid expenses and other current       3,661               3,045
assets
Income tax receivable                    270                 —
Deferred income taxes                    5,210              6,558         
Total current assets                     229,163             212,063
Property, plant, and equipment, net      77,706              80,449
Goodwill                                 30,890              30,820
Intangible assets, net                   29,835              32,814
Other assets                             5,361               5,350
Deferred income taxes                    6,369              7,992         
Total assets                             $   379,324        $   369,488   
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                         $   59,831          $   55,430
Line of credit                           —                   2,000
Notes payable                            —                   14,400
Accrued sales discounts, rebates and     8,093               6,544
royalties
Accrued income taxes                     3,668               5,707
Accrued compensation                     33,398              29,204
Deferred income taxes                    41                  50
Other accrued expenses                   10,644             13,967        
Total current liabilities                115,675             127,302
Long-term liabilities:
Deferred income taxes                    10,687              11,056
Income tax payable                       525                 1,136
Other long-term liabilities              1,787              5             
Total liabilities                        128,674            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;
21,491,398 and 21,142,915 shares         215                 211
issued on December 31, 2012 and 2011,
respectively
Paid-in capital                          180,607             173,701
Accumulated other comprehensive income   1,052               938
(loss)
Retained earnings                        170,569            154,016       
                                         352,443             328,866
Less cost of common stock in treasury,
6,516,382 and 6,353,035 shares on        (101,793      )     (98,877       )
December 31, 2012 and 2011,
respectively
Total stockholders’ equity               250,650            229,989       
Total liabilities and stockholders’      $   379,324        $   369,488   
equity
                                                                           

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)
                                                  
                         Three Months Ended          Twelve Months Ended

                         December 31,                December 31,
                         2012         2011          2012         2011
Net sales                $ 117,783     $ 117,645     $ 463,090     $ 468,630
Cost of sales            82,081       84,285       329,653      338,569   
Gross profit             35,702        33,360        133,437       130,061
Research and             3,744         2,992         14,152        12,267
development expenses
Selling, general and
administrative           24,068       24,102       93,083       91,218    
expenses
Operating income         7,890         6,266         26,202        26,576
Interest expense, net    (39       )   (60       )   (151      )   (270      )
Other expense, net       (898      )   (304      )   (1,413    )   (1,075    )
Income before
provision for income     6,953         5,902         24,638        25,231
taxes
Provision for income     4,035        988          8,085        5,285     
taxes
Net income               $ 2,918      $ 4,914      $ 16,553     $ 19,946  
Earnings per share:
Basic                    $ 0.19       $ 0.33       $ 1.11       $ 1.34    
Diluted                  $ 0.19       $ 0.33       $ 1.10       $ 1.31    
Shares used in
computing earnings per
share:
Basic                    15,016       14,763       14,952       14,912    
Diluted                  15,180       14,919       15,110       15,213    
                                                                             

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
                                                     
                                                       Year Ended December 31,
                                                       2012        2011
Cash provided by operating activities:                            
Net income                                             $ 16,553     $ 19,946
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                          17,613       17,335
Provision for doubtful accounts                        73           277
Provision for inventory write-downs                    2,994        5,625
Deferred income taxes                                  2,536        (1,043   )
Tax benefit from exercise of stock options and         (83      )   280
vested restricted stock
Excess tax benefit from stock-based compensation       (111     )   (439     )
Shares issued for employee benefit plan                749          729
Stock-based compensation                               4,575        4,511
Changes in operating assets and liabilities:
Accounts receivable                                    (8,998   )   3,142
Inventories                                            2,987        (30,597  )
Prepaid expenses and other assets                      (588     )   (345     )
Accounts payable and accrued expenses                  8,186        (4,319   )
Accrued income and other taxes                         (2,943   )   (302     )
Net cash provided by operating activities              43,543      14,800   
Cash used for investing activities:
Acquisition of property, plant, and equipment          (10,463  )   (13,630  )
Acquisition of intangible assets                       (1,140   )   (1,064   )
Net cash used for investing activities                 (11,603  )   (14,694  )
Cash used for financing activities:
Issuance of debt                                       30,800       4,200
Payment of debt                                        (47,200  )   (22,800  )
Debt issuance costs                                    (42      )   —
Proceeds from stock options exercised                  2,204        1,677
Treasury stock purchased                               (3,451   )   (9,785   )
Excess tax benefit from stock-based compensation       111         439      
Net cash used for financing activities                 (17,578  )   (26,269  )
Effect of exchange rate changes on cash                859         1,286    
Net increase (decrease) in cash and cash equivalents   15,221       (24,877  )
Cash and cash equivalents at beginning of year         29,372      54,249   
Cash and cash equivalents at end of year               $ 44,593    $ 29,372 
                                                                    
Supplemental Cash Flow Information:
Income taxes paid                                      $ 10,445     $ 8,097
Interest payments                                      $ 304        $ 438
                                                                             

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands)

(Unaudited)
                                                                                
                 Three Months Ended                        Three Months Ended
                 December 31, 2012                         December 31, 2011
                                             Adjusted                                  Adjusted
                 GAAP          Adjustments                 GAAP          Adjustments
                                             Pro Forma                                 Pro Forma
Net sales        $ 117,783     $  —          $ 117,783     $ 117,645     $  —          $ 117,645
Cost of sales     82,081       (277   )    81,804      84,285       (277   )    84,008  
^(1)
Gross profit       35,702         277          35,979        33,360         277          33,637
Research and
development        3,744          —            3,744         2,992          —            2,992
expenses
Selling,
general and       24,068       (743   )    23,325      24,102       (890   )    23,212  
administrative
expenses ^(2)
Operating          7,890          1,020        8,910         6,266          1,167        7,433
income
Interest           (39     )      —            (39     )     (60     )      —            (60     )
expense, net
Other expense,    (898    )     —          (898    )    (304    )     —          (304    )
net
Income before
provision for      6,953          1,020        7,973         5,902          1,167        7,069
income taxes
Provision for
income taxes      4,035        (2,388 )    1,647       988          179        1,167   
^(4)
Net income       $ 2,918      $  3,408     $ 6,326      $ 4,914      $  988       $ 5,902   
Earnings per     $ 0.19       $  0.22      $ 0.42       $ 0.33       $  0.07      $ 0.40    
share diluted
                                                           
                 Twelve Months Ended                       Twelve Months Ended
                 December 31, 2012                         December 31, 2011
                                             Adjusted                                  Adjusted
                 GAAP          Adjustments                 GAAP          Adjustments
                                             Pro Forma                                 Pro Forma
Net sales        $ 463,090     $  —          $ 463,090     $ 468,630     $  —          $ 468,630
Cost of sales     329,653      (1,108 )    328,545     338,569      (1,108 )    337,461 
^(1)
Gross profit       133,437        1,108        134,545       130,061        1,108        131,169
Research and
development        14,152         —            14,152        12,267         —            12,267
expenses
Selling,
general and       93,083       (4,316 )    88,767      91,218       (3,292 )    87,926  
administrative
expenses ^(3)
Operating          26,202         5,424        31,626        26,576         4,400        30,976
income
Interest           (151    )      —            (151    )     (270    )      —            (270    )
expense, net
Other expense,    (1,413  )     —          (1,413  )    (1,075  )     —          (1,075  )
net
Income before
provision for      24,638         5,424        30,062        25,231         4,400        29,631
income taxes
Provision for
income taxes      8,085        (1,454 )    6,631       5,285        765        6,050   
^(4)
Net income       $ 16,553     $  6,878     $ 23,431     $ 19,946     $  3,635     $ 23,581  
Earnings per     $ 1.10       $  0.46      $ 1.55       $ 1.31       $  0.24      $ 1.55    
share diluted

    To reflect depreciation expense for the corresponding periods relating to
(1) the mark-up in fixed assets from cost to fair value as part of the Enson
    Assets Limited acquisition.
    To reflect $0.7 million of amortization expense for each of the three
    months ended December 31, 2012 and 2011 relating to intangible assets
(2) acquired as part of acquisitions. For the quarter ending December 31,
    2011, there was an additional $0.1 million incurred relating to other
    employee restructuring costs, primarily severance.
    To reflect $3.0 million of amortization expense for the twelve months
    ended December 31, 2012 and 2011, relating to intangible assets acquired
    as part of acquisitions. For the twelve months ended 2012, there were
    approximately $0.8 million of other employee restructuring costs incurred,
(3) primarily severance, as well as $0.5 million incurred relating to moving
    our corporate headquarters from Cypress, CA to Santa Ana, CA. For the
    twelve months ended December 31, 2011, there were approximately $0.3
    million of other employee restructuring costs incurred, primarily
    severance.
    To reflect $2.8 million of tax expense for the three and twelve months
    ended December 31, 2012 relating to a valuation allowance applied to the
    California R&D credit (deferred tax asset) which resulted in a $2.2
(4) million tax expense, net of federal benefit, as well as a $0.6 million
    write-off of a deferred tax asset in China which was acquired as part of
    the November 4, 2010 acquisition of Enson Assets Limited. Both of the
    aforementioned items resulted from tax law changes.
    
    To reflect a tax refund of approximately $0.3 million, recorded on the
    books of Enson Assets Limited, for the three and twelve months ended
    December 31, 2012, relating to tax years preceding the acquisition.
    
    To reflect the tax effect of $0.2 million and $1.1 million for the three
    and twelve months ended December 31, 2012, respectively, relating to the
    pre-tax income adjustments.
    
    To reflect the tax effect of $0.2 million and $0.8 million for the three
    and twelve months ended December 31, 2011, respectively, relating to the
    pre-tax income adjustments.

Contact:

Universal Electronics Inc.
Paul Arling, 714-918-9500
or
Becky Herrick, 415-433-3777 (IR Agency)
 
Press spacebar to pause and continue. Press esc to stop.