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Universal Electronics Reports First Quarter 2013 Financial Results

- Net sales increase 11% over first quarter 2012 -

- Adjusted pro forma operating income up 33% over first quarter 2012 -

SANTA ANA, Calif.--(BUSINESS WIRE)--May. 2, 2013-- Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three months ended March 31, 2013.

“Our first quarter results reflect overall solid performance,” stated Paul Arling, UEI's Chairman and CEO. “Subscription broadcasting remains a strong contributor to sales, particularly in the Americas and Europe where subscribers continue to upgrade and add new services. Our core businesses also remain strong, and we are gaining traction by embedding our technologies into new categories including smart devices such as smartphones, tablets, smart TVs, game consoles and over-the-top services. Interfaces are becoming more dynamic and complex, presenting significant opportunities for UEI as we are the recognized leader in providing comprehensive yet simple device control technologies. We are talking to all the major players in the midst of their development plans, and the future has never looked brighter.”

Adjusted Pro Forma Financial Results for the Three Months Ended March 31: 2013 Compared to 2012

  • Net sales were $114.7 million, compared to $103.7 million.
    • Business Category revenue was $104.6 million, compared to $92.4 million. The Business Category contributed 91.2% of total net sales, compared to 89.1%.
    • Consumer Category revenue was $10.1 million, compared to $11.3 million. The Consumer Category contributed 8.8% of total net sales, compared to 10.9%.
  • Gross margins were 28.6%, compared to 27.6%.
  • Operating expenses were $27.7 million, compared to $24.8 million.
  • Operating income was $5.1 million, compared to $3.8 million.
  • Net income was $3.9 million, or $0.26 per diluted share, compared to $2.8 million, or $0.19 per diluted share.
  • At March 31, 2013, cash and cash equivalents was $28.7 million.

Financial Outlook

For the second quarter of 2013, the company expects net sales to range between $124.0 million and $130.0 million, compared to $116.7 million in the second quarter of 2012. Adjusted pro forma earnings per diluted share for the second quarter of 2013 are expected to range from $0.36 to $0.46, compared to adjusted pro forma earnings per diluted share of $0.41 in the second quarter of 2012.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, May 2, 2013 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its first 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 44476932. 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 44476932.

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. 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 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, 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 Americas and Europe; 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)

   
March 31,

2013

December 31,

2012

ASSETS
Current assets:
Cash and cash equivalents $ 28,724 $ 44,593
Accounts receivable, net 88,713 91,048
Inventories, net 89,579 84,381
Prepaid expenses and other current assets 3,955 3,661
Income tax receivable 125 270
Deferred income taxes 5,196   5,210  
Total current assets 216,292 229,163
Property, plant, and equipment, net 77,472 77,706
Goodwill 30,807 30,890
Intangible assets, net 28,975 29,835
Other assets 5,317 5,361
Deferred income taxes 7,202   6,369  
Total assets $ 366,065   $ 379,324  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 50,295 $ 59,831
Line of credit
Accrued compensation 31,680 33,398
Accrued sales discounts, rebates and royalties 5,691 8,093
Accrued income taxes 2,779 3,668
Deferred income taxes 38 41
Other accrued expenses 9,564   10,644  
Total current liabilities 100,047 115,675
Long-term liabilities:
Deferred income taxes 10,549 10,687
Income tax payable 525 525
Other long-term liabilities 1,921   1,787  
Total liabilities 113,042   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; 21,573,699 and 21,491,398 shares issued on March 31, 2013 and December 31, 2012, respectively 216 215
Paid-in capital 182,611 180,607
Accumulated other comprehensive income (loss) (74 ) 1,052
Retained earnings 173,515   170,569  
356,268 352,443
Less cost of common stock in treasury, 6,589,901 and 6,516,382 shares on March 31, 2013 and December 31, 2012, respectively (103,245 ) (101,793 )
Total stockholders’ equity 253,023   250,650  
Total liabilities and stockholders’ equity $ 366,065   $ 379,324  
 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

 
Three Months Ended

March 31,

2013   2012
Net sales $ 114,722 $ 103,732
Cost of sales 82,173   75,405  
Gross profit 32,549 28,327
Research and development expenses 4,241 3,463
Selling, general and administrative expenses 24,413   22,552  
Operating income 3,895 2,312
Interest income (expense), net 9 (37 )
Other expense, net (550 ) (324 )
Income before provision for income taxes 3,354 1,951
Provision for income taxes 408   319  
Net income $ 2,946   $ 1,632  
Earnings per share:
Basic $ 0.20   $ 0.11  
Diluted $ 0.19   $ 0.11  
Shares used in computing earnings per share:
Basic 14,965   14,871  
Diluted 15,225   15,108  
 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Three months ended March 31,
2013   2012
Cash provided by (used for) operating activities:  
Net income $ 2,946 $ 1,632
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization 4,374 4,260
Provision for doubtful accounts 24 (17 )
Provision for inventory write-downs 573 894
Deferred income taxes (954 ) 124
Tax benefit from exercise of stock options and vested restricted stock 2 8
Excess tax benefit from stock-based compensation (37 ) (30 )
Shares issued for employee benefit plan 255 121
Stock-based compensation 1,261 1,197
Changes in operating assets and liabilities:
Accounts receivable 1,669 8,934
Inventories (6,066 ) 5,387
Prepaid expenses and other assets (268 ) (681 )
Accounts payable and accrued expenses (14,345 ) (21,511 )
Accrued income and other taxes (731 ) (2,343 )
Net cash provided by (used for) operating activities (11,297 ) (2,025 )
Cash used for investing activities:
Acquisition of property, plant, and equipment (3,058 ) (1,712 )
Acquisition of intangible assets (291 ) (216 )
Net cash used for investing activities (3,349 ) (1,928 )
Cash provided by (used for) financing activities:
Issuance of debt 13,500 5,000
Payment of debt (13,500 ) (7,200 )
Proceeds from stock options exercised 593 1,151
Treasury stock purchased (1,558 ) (309 )
Excess tax benefit from stock-based compensation 37   30  
Net cash provided by (used for) financing activities (928 ) (1,328 )
Effect of exchange rate changes on cash (295 ) 221  
Net increase (decrease) in cash and cash equivalents (15,869 ) (5,060 )
Cash and cash equivalents at beginning of year 44,593   29,372  
Cash and cash equivalents at end of year $ 28,724   $ 24,312  
 
Supplemental Cash Flow Information:
Income taxes paid $ 1,682 $ 1,094
Interest payments $ 22 $ 95
 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands)

(Unaudited)

   
Three Months Ended
March 31, 2013
Three Months Ended
March 31, 2012
GAAP   Adjustments   Adjusted

Pro Forma

GAAP   Adjustments   Adjusted

Pro Forma

Net sales $ 114,722 $ $ 114,722 $ 103,732 $ $ 103,732
Cost of sales (1) 82,173   (277 ) 81,896   75,405   (277 ) 75,128  
Gross profit 32,549 277 32,826 28,327 277 28,604
Research and development expenses 4,241 4,241 3,463 3,463
Selling, general and administrative expenses (2) 24,413   (921 ) 23,492   22,552   (1,232 ) 21,320  
Operating income 3,895 1,198 5,093 2,312 1,509 3,821
Interest expense, net 9 9 (37 ) (37 )
Other expense, net (550 )   (550 ) (324 )   (324 )
Income before provision for income taxes 3,354 1,198 4,552 1,951 1,509 3,460
Provision for income taxes (3) 408   212   620   319   304   623  
Net income $ 2,946   $ 986   $ 3,932   $ 1,632   $ 1,205   $ 2,837  
Earnings per share diluted $ 0.19   $ 0.06   $ 0.26   $ 0.11   $ 0.08   $ 0.19  
 
(1)   To reflect depreciation expense of $0.3 million for each of the three months ended March 31, 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 for each of the three months ended March 31, 2013 and 2012, related to intangible assets acquired as part of acquisitions. Also, in the first quarter of 2013 and 2012, an additional $0.2 million and $0.5 million, respectively, was incurred representing other employee related restructuring costs.
(3) To reflect the tax effect of the adjustments.

Source: Universal Electronics Inc.

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