Universal Electronics Reports Third Quarter 2009 Financial Results

Nov 5, 2009 |

- Posts Record Quarterly Sales of $83.2 Million in the Third Quarter of 2009 -

CYPRESS, Calif.--(BUSINESS WIRE)--Nov. 5, 2009-- Universal Electronics Inc. (UEI), (NASDAQ:UEIC) reported financial results for the third quarter ended September 30, 2009.

“The third quarter of 2009 marked the first time that the company has reported more than $80 million in sales during a quarter, which is positive particularly during these difficult economic times,” stated Paul Arling, UEI's Chairman and CEO. “In addition, sales over the trailing four quarters have climbed over the $310 million mark for the first time in our company’s 23-year history. This growth has been driven by our continued focus and execution on innovation leading to key customer wins as well as expanding relationships with satisfied existing customers and growth into new markets. One example of this innovation occurred in September when we began supplying Onkyo Corporation with our Quickset interface and XMP-2™ technology for its latest line of audio video receivers. Looking ahead, we are excited about 2010 and intend to demonstrate an array of new control technology advances at the Consumer Electronics Show in January.”

Financial Results for the Quarter Ended September 30: 2009 Compared to 2008

Net sales were $83.2 million, compared to $76.5 million.
- Business Category revenue was $67.0 million, compared to $61.3 million. The Business Category contributed 81% of total net sales, compared to 80%.
- Consumer Category revenue was $16.2 million, compared to $15.2 million. The Consumer Category contributed 19% of total net sales, compared to 20%.
Gross margins were 31.3 %, compared to 32.6%.
Total operating expenses were $19.4 million, compared to $19.0 million.
Operating income was $6.6 million, compared to $5.9 million.
Interest income was $110,000, compared to $859,000.
Net income was $4.2 million, or $0.30 per diluted share, compared to $4.0 million, or $0.28 per diluted share.
At September 30, 2009, the cash and cash equivalents and term deposit balance was $79.2 million.

Bryan Hackworth, UEI’s CFO, commented “The increase in revenue for the quarter reflects our strong market position. In addition, we have leveraged our operating expenses as evidenced by the 140 basis point improvement in total operating expenses as a percent of revenue for the quarter. Operating expenses were 23.4% of revenue for the third quarter 2009, compared to 24.8% in the same period last year.”

Financial Results for the Nine-months Ended September 30: 2009 Compared to 2008

Net sales were $232.6 million, compared to $208.4 million.
Gross margins were 31.4%, compared to 34.0%.
Total operating expenses were $59.1 million, compared to $57.9 million.
Operating income was $13.9 million, compared to $13.0 million.
Interest income was $376,000, compared to $2.6 million.
Net income was $8.8 million, or $0.63 per diluted share, compared to $10.0 million, or $0.68 per diluted share.

Financial Outlook

For the fourth quarter of 2009, net sales are expected to range between $81 million and $84 million, compared to $78.7 million in the fourth quarter of 2008. The company anticipates gross margins for the fourth quarter of 2009 to be approximately 33.5% of sales, plus or minus one point, compared to 32.2% of sales in the fourth quarter of 2008. For the fourth quarter of 2009, operating expenses are expected to range from $19.0 million to $19.6 million, compared to fourth quarter 2008 operating expenses of $17.5 million. Earnings per diluted share for the fourth quarter of 2009 are expected to range from $0.38 to $0.42, compared to earnings per diluted share of $0.42 in the fourth quarter of 2008.

For the full 2009 year, net sales are expected to range between $313 million and $317 million, compared to $287.1 million in 2008. For 2009, operating expenses are expected to range from $78 million to $79 million, compared to 2008 operating expenses of $75.4 million. Earnings per diluted share for 2009 are expected to range from $1.02 to $1.06, compared to earnings per diluted share of $1.09 in 2008.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, November 5, 2009 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its third quarter 2009 earnings results, review the quarterly 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 35717601. 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 800-642-1687 and internationally, 706-645-9291. Enter access code 35717601.

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. UEI also delivers complete home control solutions in the professional custom installation market under the brand name Nevo®. 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 timing and success of the Company's new control technologies; the ability of the Company to continue creating innovative products and technologies leading to new customer wins and expansion of existing relationships; the Company's ability to maintain its worldwide market share; the continued softness in our worldwide markets due to the current economic environment; general economic conditions; 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.

– Tables Follow –

UNIVERSAL ELECTRONICS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share-related data) (Unaudited)

	September 30, 2009			December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	30,099		$	75,238
Term deposit		49,125			—
Accounts receivable, net		55,961			59,825
Inventories, net		43,628			43,675
Prepaid expenses and other current assets		2,333			3,461
Deferred income taxes		2,407			2,421
Total current assets		183,553			184,620
Equipment, furniture and fixtures, net		9,399			8,686
Goodwill		13,770			10,757
Intangible assets, net		11,821			5,637
Other assets		908			609
Deferred income taxes		7,620			7,246
Total assets	$	227,071		$	217,555

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,692		$	44,705
Accrued sales discounts, rebates and royalties		5,451			4,848
Accrued income taxes		2,761			2,334
Accrued compensation		4,945			3,617
Other accrued expenses		7,874			6,813
Total current liabilities		60,723			62,317
Long-term liabilities:
Deferred income taxes		151			130
Income tax payable		1,442			1,442
Other long-term liabilities		124			313
Total liabilities		62,440			64,202

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; 19,040,652 and 18,715,833 shares issued at September 30, 2009 and December 31, 2008, respectively		190			187
Paid-in capital		126,768			120,551
Accumulated other comprehensive income		1,936			750
Retained earnings		113,149			104,314
		242,043			225,802

Less cost of common stock in treasury, 5,340,021 and 5,070,319 shares at September 30, 2009 and December 31, 2008, respectively		(77,412	)		(72,449	)
Total stockholders’ equity		164,631			153,353
Total liabilities and stockholders’ equity	$	227,071		$	217,555

UNIVERSAL ELECTRONICS INC. CONSOLIDATED INCOME STATEMENTS (In thousands, except per share amounts) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2009			2008			2009			2008
Net sales	$	83,182		$	76,532		$	232,611		$	208,407
Cost of sales		57,112			51,604			159,609			137,532
Gross profit		26,070			24,928			73,002			70,875

Research and development expenses		2,251			1,985			6,411			6,302
Selling, general and administrative expenses		17,175			17,033			52,724			51,623

Operating income		6,644			5,910			13,867			12,950
Interest income, net		110			859			376			2,649
Other income (expense), net		25			(417	)		(161	)		(237	)

Income before provision for income taxes		6,779			6,352			14,082			15,362
Provision for income taxes		(2,556	)		(2,347	)		(5,247	)		(5,389	)
Net income	$	4,223		$	4,005		$	8,835		$	9,973

Earnings per share:
Basic	$	0.31		$	0.29		$	0.65		$	0.71
Diluted	$	0.30		$	0.28		$	0.63		$	0.68

Shares used in computing earnings per share:
Basic		13,687			13,919			13,656			14,144
Diluted		14,008			14,420			13,940			14,643

UNIVERSAL ELECTRONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Nine Months Ended September 30,
		2009			2008
Cash provided by operating activities:
Net income	$	8,835		$	9,973
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,019			4,365
Provision for doubtful accounts		181			107
Provision for inventory write-downs		2,861			1,695
Benefit for deferred income taxes		(297	)		(446	)
Tax benefit from exercise of stock options		374			416
Excess tax benefit from stock-based compensation		(198	)		(337	)
Shares issued for employee benefit plan		530			443
Stock-based compensation		3,184			3,307

Changes in operating assets and liabilities:
Accounts receivable		4,474			(1,600	)
Inventories		(1,931	)		(8,060	)
Prepaid expenses and other assets		883			(814	)
Accounts payable and accrued expenses		(3,241	)		9,346
Accrued income taxes		202			(250	)
Net cash provided by operating activities		20,876			18,145

Cash used for investing activities:
Term deposit		(49,125	)		—
Acquisition of equipment, furniture and fixtures		(4,142	)		(4,803	)
Acquisition of intangible assets		(988	)		(1,058	)
Acquisition of assets from Zilog, Inc.		(9,502	)		—
Net cash used for investing activities		(63,757	)		(5,861	)

Cash used for financing activities:
Proceeds from stock options exercised		2,412			983
Treasury stock purchased		(5,242	)		(21,565	)
Excess tax benefit from stock-based compensation		198			337
Net cash used for financing activities		(2,632	)		(20,245	)

Effect of exchange rate changes on cash		374			(2,789	)

Net decrease in cash and cash equivalents		(45,139	)		(10,750	)

Cash and cash equivalents at beginning of period		75,238			86,610

Cash and cash equivalents at end of period	$	30,099		$	75,860

Source: Universal Electronics Inc.

UEI
Paul Arling, 714-820-1000
or
IR Agency
Kirsten Chapman, 415-433-3777

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Universal Electronics Reports Third Quarter 2009 Financial Results

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