Universal Electronics Reports Second Quarter 2013 Financial Results

  Universal Electronics Reports Second Quarter 2013 Financial Results

             - Net sales increased 17% over second quarter 2012 -

         - Operating income increased 46% over second quarter 2012 -

Business Wire

SANTA ANA, Calif. -- August 8, 2013

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results
for the three and six months ended June30, 2013.

Paul Arling, UEI's Chairman and CEO, stated: “We delivered better than
expected second quarter 2013 results primarily due to strong sales in our
subscription broadcasting business, especially in the U.S. and Latin America,
as well as our consumer electronics OEM business. UEI is the market leader in
wireless control technology for the connected home, but we are not stopping
there; we are supplying the innovative solutions that address future
evolutions in home entertainment. Our core business continues to grow as our
customers are including more advanced technologies into their products, such
as Bluetooth-enabled remote controls and onscreen navigation for televisions,
which drives demand for a wide variety of UEI solutions. We continue to gain
traction with our embedded app technologies such as UEI QuickSet and Control
Plus as we work with some of the world's largest smart device companies. In
fact, we expect to launch our embedded app technologies with mobile, IPTV and
game console companies later in 2013 and into next year. With our market
position, market approach and expanding market opportunity, we believe the
future has never looked brighter.”

Adjusted Pro Forma Financial Results for the Three Months Ended June 30: 2013
Compared to 2012

  *Net sales were $136.1 million, compared to $116.7 million.

       *Business Category revenue was $124.2 million, compared to $103.9
         million. The Business Category contributed 91% of total net sales,
         compared to 89%.
       *Consumer Category revenue was $11.9 million, compared to $12.8
         million. The Consumer Category contributed 9% of total net sales,
         compared to 11%.

  *Gross margins were 28.0%, compared to 28.5%.
  *Operating expenses were $26.9 million, compared to $25.5 million.
  *Operating income was $11.2 million, compared to $7.7 million.
  *Net income was $7.2 million, or $0.47 per diluted share, compared to $6.2
    million, or $0.41 per diluted share.
  *At June 30, 2013, cash and cash equivalents, net of debt, was $49.7
    million, compared to $17.7 million at June 30, 2012.

Adjusted Pro Forma Financial Results for the Six Months Ended June 30: 2013
Compared to 2012

  *Net sales were $250.8 million, compared to $220.4 million.
  *Gross margins were 28.3%, compared to 28.1%.
  *Operating expenses were $54.6 million, compared to $50.3 million.
  *Operating income was $16.3 million, compared to $11.5 million.
  *Net income was $11.1 million, or $0.73 per diluted share, compared to $9.0
    million, or $0.60 per diluted share.

Financial Outlook

For the third quarter of 2013, the company expects net sales to range between
$136.0 million and $144.0 million, compared to $124.9 million in the third
quarter of 2012. Adjusted pro forma earnings per diluted share for the third
quarter of 2013 are expected to range from $0.48 to $0.58, compared to
adjusted pro forma earnings per diluted share of $0.54 in the third quarter of
2012.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, August8,
2013 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its second quarter 2013
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 21167281. 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 21167281.

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 depreciation expense related to the increase in fixed assets from
cost to fair market value resulting from acquisitions. Non-GAAP operating
expenses are defined as operating expenses excluding amortization of
intangibles acquired and other employee related restructuring costs resulting
from acquisitions. Non-GAAP net income is defined as net income from
operations excluding the aforementioned items and the related tax effects as
well as additional reserves recorded resulting from a tax audit in Hong Kong
for years preceding our acquisition of Enson Assets Limited. 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. More information is available at http://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 continued strength of its core
businesses; the continued innovation of products and technologies that will
attract new customers in existing and new markets; the continued expansion of
the Company's technologies into smart devices (such as smartphones, tablets,
smart TVs, IPTV devices, game consoles and over-the-top-services); the
continued global general economic conditions; the benefits the Company expects
via the continued strength of its subscription broadcasting businesses in
certain geographic areas including the U.S. and Latin America; and other
factors described in the Company's filings with the U.S. Securities and
Exchange Commission. The actual results 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)

                                                   June 30,     December 31,
                                                    2013          2012
ASSETS
Current assets:
Cash and cash equivalents                           $ 49,745      $  44,593
Accounts receivable, net                            89,432        91,048
Inventories, net                                    100,050       84,381
Prepaid expenses and other current assets           3,654         3,661
Income tax receivable                               6             270
Deferred income taxes                               5,175        5,210      
Total current assets                                248,062       229,163
Property, plant, and equipment, net                 76,337        77,706
Goodwill                                            30,876        30,890
Intangible assets, net                              28,312        29,835
Other assets                                        5,195         5,361
Deferred income taxes                               6,516        6,369      
Total assets                                        $ 395,298    $  379,324 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                    $ 65,947      $  59,831
Line of credit                                      —             —
Accrued compensation                                33,005        33,398
Accrued sales discounts, rebates and royalties      6,179         8,093
Accrued income taxes                                3,253         3,668
Deferred income taxes                               45            41
Other accrued expenses                              9,758        10,644     
Total current liabilities                           118,187       115,675
Long-term liabilities:
Deferred income taxes                               10,654        10,687
Income tax payable                                  525           525
Other long-term liabilities                         2,055        1,787      
Total liabilities                                   131,421      128,674    
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; 21,839,302 and 21,491,398 shares        218           215
issued on June 30, 2013 and December 31, 2012,
respectively
Paid-in capital                                     187,744       180,607
Accumulated other comprehensive income (loss)       576           1,052
Retained earnings                                   179,356      170,569    
                                                    367,894       352,443
Less cost of common stock in treasury, 6,619,048
and 6,516,382 shares on June 30, 2013 and           (104,017  )   (101,793   )
December 31, 2012, respectively
Total stockholders’ equity                          263,877      250,650    
Total liabilities and stockholders’ equity          $ 395,298    $  379,324 
                                                                             

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

                         Three Months Ended          Six Months Ended
                                                  
                         June 30,                    June 30,
                         2013         2012         2013         2012
Net sales                $ 136,109     $ 116,704     $ 250,831     $ 220,436
Cost of sales            98,273       83,734       180,446      159,139   
Gross profit             37,836        32,970        70,385        61,297
Research and             4,040         3,424         8,281         6,887
development expenses
Selling, general and
administrative           23,820       23,080       48,233       45,632    
expenses
Operating income         9,976         6,466         13,871        8,778
Interest income          4             (51       )   13            (88       )
(expense), net
Other expense, net       (1,630    )   (126      )   (2,180    )   (450      )
Income before
provision for income     8,350         6,289         11,704        8,240
taxes
Provision for income     2,509        1,136        2,917        1,455     
taxes
Net income               $ 5,841      $ 5,153      $ 8,787      $ 6,785   
Earnings per share:
Basic                    $ 0.39       $ 0.35       $ 0.58       $ 0.46    
Diluted                  $ 0.38       $ 0.34       $ 0.57       $ 0.45    
Shares used in
computing earnings per
share:
Basic                    15,098       14,933       15,032       14,904    
Diluted                  15,419       15,048       15,322       15,080    
                                                                             

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                                                       Six Months Ended
                                                     
                                                       June 30,
                                                       2013        2012
Cash provided by (used for) operating activities:                 
Net income                                             $ 8,787      $ 6,785
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization                          8,788        8,525
Provision for doubtful accounts                        48           37
Provision for inventory write-downs                    1,130        1,623
Deferred income taxes                                  (111     )   6
Tax benefit from exercise of stock options and         399          (72      )
vested restricted stock
Excess tax benefit from stock-based compensation       (366     )   (30      )
Shares issued for employee benefit plan                446          468
Stock-based compensation                               2,561        2,337
Changes in operating assets and liabilities:
Accounts receivable                                    638          (4,678   )
Inventories                                            (16,996  )   10,630
Prepaid expenses and other assets                      143          (711     )
Accounts payable and accrued expenses                  2,647        (13,523  )
Accrued income and other taxes                         (168     )   (2,796   )
Net cash provided by (used for) operating activities   7,946       8,601    
Cash used for investing activities:
Acquisition of property, plant, and equipment          (4,655   )   (4,261   )
Acquisition of intangible assets                       (654     )   (430     )
Net cash used for investing activities                 (5,309   )   (4,691   )
Cash provided by (used for) financing activities:
Issuance of debt                                       19,500       8,000
Payment of debt                                        (19,500  )   (11,400  )
Proceeds from stock options exercised                  3,946        1,386
Treasury stock purchased                               (2,435   )   (486     )
Excess tax benefit from stock-based compensation       366         30       
Net cash provided by (used for) financing activities   1,877        (2,470   )
Effect of exchange rate changes on cash                638         (124     )
Net increase (decrease) in cash and cash equivalents   5,152        1,316
Cash and cash equivalents at beginning of year         44,593      29,372   
Cash and cash equivalents at end of year               $ 49,745    $ 30,688 
                                                                    
Supplemental Cash Flow Information:
Income taxes paid                                      $ 2,420      $ 5,354
Interest payments                                      $ 43         $ 176
                                                                             

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands, except share-related data)

(Unaudited)

                 Three Months Ended                        Three Months Ended
                                                        
                 June 30, 2013                             June 30, 2012
                                             Adjusted                                  Adjusted
                 GAAP         Adjustments                GAAP         Adjustments 
                                             Pro Forma                                 Pro Forma
Net sales        $ 136,109     $  —          $ 136,109     $ 116,704     $  —          $ 116,704
Cost of sales    98,273       (277      )   97,996       83,734       (277      )   83,457    
^(1)
Gross profit     37,836        277           38,113        32,970        277           33,247
Research and
development      4,040         —             4,040         3,424         —             3,424
expenses
Selling,
general and      23,820       (966      )   22,854       23,080       (965      )   22,115    
administrative
expenses ^(2)
Operating        9,976         1,243         11,219        6,466         1,242         7,708
income
Interest
income           4             —             4             (51       )   —             (51       )
(expense), net
Other income     (1,630    )   —            (1,630    )   (126      )   —            (126      )
(expense), net
Income before
provision for    8,350         1,243         9,593         6,289         1,242         7,531
income taxes
Provision for
income taxes     2,509        (112      )   2,397        1,136        238          1,374     
^(3)
Net income       $ 5,841      $  1,355     $ 7,196      $ 5,153      $  1,004     $ 6,157   
Earnings per     $ 0.38       $  0.09      $ 0.47       $ 0.34       $  0.07      $ 0.41    
share diluted
                                                                                                 
                                                                                                 
                 Six Months Ended                          Six Months Ended
                 June 30, 2013                             June 30, 2012
                 GAAP          Adjustments   Adjusted      GAAP          Adjustments   Adjusted
                                             Pro Forma                                 Pro Forma
Net sales        250,831       $  —          $ 250,831     $ 220,436     $  —          $ 220,436
Cost of sales    180,446      (554      )   179,892      159,139      (554      )   158,585   
^(4)
Gross profit     70,385        554           70,939        61,297        554           61,851
Research and
development      8,281         —             8,281         6,887         —             6,887
expenses
Selling,
general and      48,233       (1,887    )   46,346       45,632       (2,197    )   43,435    
administrative
expenses ^(5)
Operating        13,871        2,441         16,312        8,778         2,751         11,529
income
Interest
income           13            —             13            (88       )   —             (88       )
(expense), net
Other income     (2,180    )   —            (2,180    )   (450      )   —            (450      )
(expense), net
Income before
provision for    11,704        2,441         14,145        8,240         2,751         10,991
income taxes
Provision for
income taxes     2,917        100          3,017        1,455        542          1,997     
^(6)
Net income       $ 8,787      $  2,341     $ 11,128     $ 6,785      $  2,209     $ 8,994   
Earnings per     $ 0.57       $  0.15      $ 0.73       $ 0.45       $  0.15      $ 0.60    
share diluted

(1) To reflect depreciation expense of $0.3 million for each of the three
months ended June30, 2013 and 2012, related to the mark-up in fixed assets
from cost to fair value as a result of acquisitions.

(2) To reflect amortization expense of $0.7 million for each of the three
months ended June30, 2013 and 2012, related to intangible assets acquired as
part of acquisitions. Also, in the second quarter of 2013 and 2012, there were
additional costs incurred relating primarily to other employee related
restructuring costs.

(3) To reflect the tax effect of the adjustments. In addition, the three
months ended June 30, 2013 also includes $0.4 million of additional tax
reserves recorded resulting from a tax audit in Hong Kong for years preceding
our acquisition of Enson Assets Limited.

(4) To reflect depreciation expense of $0.6 million for each of the six months
ended June30, 2013 and 2012, related to the mark-up in fixed assets from cost
to fair value as a result of acquisitions.

(5) To reflect amortization expense of $1.5 million for each of the six months
ended June 30, 2013 and 2012, related to intangible assets acquired as part of
acquisitions. Also, in the first six months of 2013 and 2012, there were
additional costs incurred relating primarily to other employee related
restructuring costs.

(6) To reflect the tax effect of the adjustments. In addition, the six months
ended June 30, 2013 also includes $0.4 million of additional tax reserves
recorded resulting from a tax audit in Hong Kong for years preceding our
acquisition of Enson Assets Limited.

Contact:

Universal Electronics Inc.
Paul Arling, 714-918-9500
or
IR Agency
Becky Herrick 415-433-3777
 
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