EX-99.1 2 exhibit991-8k2014x05x01.htm EXHIBIT 99.1 Exhibit 99.1 - 8K 2014-05-01


Exhibit 99.1
Contacts: Paul Arling (UEI) 714.918.9500
Becky Herrick (IR Agency) 415.433.3777


UNIVERSAL ELECTRONICS REPORTS FIRST QUARTER 2014 FINANCIAL RESULTS

- Increases Net Sales 13% and Operating Income 38% Compared to the First Quarter of 2013 -
SANTA ANA, CA – May 1, 2014 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three months ended March 31, 2014.
“Our first quarter results reflect the continued strong performance across all areas of our business,” stated Paul Arling, UEI's Chairman and CEO. “Many of the innovations we developed and patented over the last decade provide us with multiple applications for the advanced technologies of today and tomorrow. UEI QuickSet™ is deployed in over 70 million devices around the world, and our Control Plus technology is being rolled out by a major player in the home entertainment space later this year. We were recently selected by Samsung to deliver the control intelligence that powers its WatchON application in Samsung’s Galaxy S® 5 smartphone. In addition, UEI’s technology is pre-installed into Samsung’s Gear 2, and Gear 2 Neo smartwatches. Wearables are a growing segment within consumer electronics devices, and the smartwatch market in particular is expected to grow at a compound annual growth rate of over 70%, from 15 million units in 2014 to nearly 400 million units by 2020, according to Next Market Insights. These are just a few examples of how UEI is expanding into new applications. As increasingly intelligent devices hit the market, UEI’s advanced control technologies position us squarely in the middle of emerging trends in the connected home.”
Adjusted Pro Forma Financial Results for the Three Months Ended March 31: 2014 Compared to 2013
•
Net sales were $129.8 million, compared to $114.7 million.
•
Business Category revenue was $118.4 million, compared to $104.6 million. The Business Category contributed 91.2% of total net sales in both periods.
•
Consumer Category revenue was $11.4 million, compared to $10.1 million. The Consumer Category contributed 8.8% of total net sales in both periods.
•
Gross margins were 28.3%, compared to 28.6%.
•
Operating expenses were $28.0 million, compared to $26.5 million.
•
Operating income was $8.8 million, compared to $6.4 million.
•
Net income was $6.4 million, or $0.40 per diluted share, compared to $4.8 million, or $0.32 per diluted share.
•
At March 31, 2014, cash and cash equivalents was $90.4 million.
Bryan Hackworth, UEI’s CFO, stated: “We have generated a significant amount of cash during the past 12 months as our cash balance has increased to $90.4 million at March 31, 2014 compared to $28.7 million a year prior. We continue to evaluate the potential uses of our cash including internal investments as well as mergers and acquisitions. However, at this time we believe repurchasing our shares is the best alternative given our bright future and our recent trading price. As a result, our Board of Directors has authorized us to purchase up to one million shares. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.”
Financial Outlook
For the second quarter of 2014, the company expects net sales to range between $141 million and $149 million, compared to $136.1 million in the second quarter of 2013. Adjusted pro forma earnings per diluted share for the second quarter of 2014 are expected to range from $0.56 to $0.66, compared to adjusted pro forma earnings per diluted share of $0.53 in the second quarter of 2013, which has been adjusted to reflect the exclusion of stock-based compensation expense.




Conference Call Information
UEI’s management team will hold a conference call today, Thursday, May 1, 2014 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its first quarter 2014 earnings results, review recent activity and answer questions. To access the call in the U.S. please dial 877-843-0414 and for international calls dial 315-625-3071 approximately 10 minutes prior to the start of the conference. The conference ID is 28618053. 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 28618053.
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, employee related restructuring costs and stock-based compensation expense. 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
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, 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 across its entire business; the continued innovation of products and advanced technologies, such as the company’s QuickSet™ and Control Plus 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, smartwatches and over-the-top-services), including the benefits anticipated by management due to Samsung selecting the company to embed its technology into the Samsung WatchON application found in Samsung’s Galaxy S® 5 smartphone, and the Gear 2 and Gear 2 Neo; the successes anticipated by management from the growth expected in consumer electronics, particularly in the Wearables segment; and the 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.


– Tables Follow –






UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share-related data)
(Unaudited)
 
 
March 31,
2014
 
December 31,
2013
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
90,400

 
$
76,174

Accounts receivable, net
 
84,762

 
95,408

Inventories, net
 
90,172

 
96,309

Prepaid expenses and other current assets
 
4,491

 
4,395

Income tax receivable
 
201

 
13

Deferred income taxes
 
6,157

 
6,167

Total current assets
 
276,183

 
278,466

Property, plant, and equipment, net
 
73,516

 
75,570

Goodwill
 
30,992

 
31,000

Intangible assets, net
 
26,136

 
26,963

Deferred income taxes
 
5,423

 
6,455

Other assets
 
5,162

 
5,279

Total assets
 
$
417,412

 
$
423,733

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
54,257

 
$
58,498

Line of credit
 
—

 
—

Accrued compensation
 
33,834

 
38,317

Accrued sales discounts, rebates and royalties
 
6,255

 
8,539

Accrued income taxes
 
704

 
3,032

Deferred income taxes
 
302

 
303

Other accrued expenses
 
10,388

 
11,229

Total current liabilities
 
105,740

 
119,918

Long-term liabilities:
 
 
 
 
Deferred income taxes
 
9,985

 
9,887

Income tax payable
 
607

 
606

Other long-term liabilities
 
2,025

 
2,052

Total liabilities
 
118,357

 
132,463

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; 22,550,142 and 22,344,121 shares issued on March 31, 2014 and December 31, 2013, respectively
 
226

 
223

Paid-in capital
 
205,434

 
199,513

Accumulated other comprehensive income (loss)
 
871

 
2,982

Retained earnings
 
197,805

 
193,532

 
 
404,336

 
396,250

Less cost of common stock in treasury, 6,643,109 and 6,639,497 shares on March 31, 2014 and December 31, 2013, respectively
 
(105,281
)
 
(104,980
)
Total stockholders’ equity
 
299,055

 
291,270

Total liabilities and stockholders’ equity
 
$
417,412

 
$
423,733





UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
Net sales
 
$
129,845

 
$
114,722

Cost of sales
 
93,299

 
82,173

Gross profit
 
36,546

 
32,549

Research and development expenses
 
4,277

 
4,241

Selling, general and administrative expenses
 
26,279

 
24,413

Operating income
 
5,990

 
3,895

Interest income (expense), net
 
(16
)
 
9

Other income (expense), net
 
(349
)
 
(550
)
Income before provision for income taxes
 
5,625

 
3,354

Provision for income taxes
 
1,352

 
408

Net income
 
$
4,273

 
$
2,946

Earnings per share:
 
 
 
 
Basic
 
$
0.27

 
$
0.20

Diluted
 
$
0.26

 
$
0.19

Shares used in computing earnings per share:
 
 
 
 
Basic
 
15,787

 
14,965

Diluted
 
16,163

 
15,225


















UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
Cash provided by (used for) operating activities:
 
 
 
 
Net income
 
$
4,273

 
$
2,946

Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 
 
 
 
Depreciation and amortization
 
4,260

 
4,374

Provision for doubtful accounts
 
61

 
24

Provision for inventory write-downs
 
596

 
573

Deferred income taxes
 
948

 
(954
)
Tax benefit from exercise of stock options and vested restricted stock
 
731

 
2

Excess tax benefit from stock-based compensation
 
(723
)
 
(37
)
Shares issued for employee benefit plan
 
347

 
255

Stock-based compensation
 
1,678

 
1,261

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
9,967

 
1,669

Inventories
 
4,756

 
(6,066
)
Prepaid expenses and other assets
 
(15
)
 
(268
)
Accounts payable and accrued expenses
 
(10,489
)
 
(14,345
)
Accrued income and other taxes
 
(2,484
)
 
(731
)
Net cash provided by (used for) operating activities
 
13,906

 
(11,297
)
Cash used for investing activities:
 
 
 
 
Acquisition of property, plant, and equipment
 
(2,396
)
 
(3,058
)
Acquisition of intangible assets
 
(204
)
 
(291
)
Net cash used for investing activities
 
(2,600
)
 
(3,349
)
Cash provided by (used for) financing activities:
 
 
 
 
Issuance of debt
 
—

 
13,500

Payment of debt
 
—

 
(13,500
)
Proceeds from stock options exercised
 
3,272

 
593

Treasury stock purchased
 
(405
)
 
(1,558
)
Excess tax benefit from stock-based compensation
 
723

 
37

Net cash provided by (used for) financing activities
 
3,590

 
(928
)
Effect of exchange rate changes on cash
 
(670
)
 
(295
)
Net increase (decrease) in cash and cash equivalents
 
14,226

 
(15,869
)
Cash and cash equivalents at beginning of year
 
76,174

 
44,593

Cash and cash equivalents at end of period
 
$
90,400

 
$
28,724

 
 
 
 
 
Supplemental Cash Flow Information:
 
 
 
 
Income taxes paid
 
$
1,601

 
$
1,682

Interest payments
 
$
—

 
$
22







UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS
(In thousands, except share-related data)
(Unaudited)
 
 
 
Three Months Ended
March 31, 2014
 
Three Months Ended
March 31, 2013
 
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
Net sales
 
$
129,845

 
$
—

 
$
129,845

 
$
114,722

 
$
—

 
$
114,722

Cost of sales (1)
 
93,299

 
(235
)
 
93,064

 
82,173

 
(277
)
 
81,896

Gross profit
 
36,546

 
235

 
36,781

 
32,549

 
277

 
32,826

Research and development expenses
 
4,277

 
—

 
4,277

 
4,241

 
—

 
4,241

Selling, general and administrative expenses (2)
 
26,279

 
(2,562
)
 
23,717

 
24,413

 
(2,182
)
 
22,231

Operating income
 
5,990

 
2,797

 
8,787

 
3,895

 
2,459

 
6,354

Interest income (expense), net
 
(16
)
 
—

 
(16
)
 
9

 
—

 
9

Other income (expense), net
 
(349
)
 
—

 
(349
)
 
(550
)
 
—

 
(550
)
Income before provision for income taxes
 
5,625

 
2,797

 
8,422

 
3,354

 
2,459

 
5,813

Provision for income taxes (3)
 
1,352

 
676

 
2,028

 
408

 
571

 
979

Net income
 
$
4,273

 
$
2,121

 
$
6,394

 
$
2,946

 
$
1,888

 
$
4,834

Earnings per share diluted
 
$
0.26

 
$
0.13

 
$
0.40

 
$
0.19

 
$
0.12

 
$
0.32

 

(1)
To reflect depreciation expense of $0.2 million and $0.3 million for the three months ended March 31, 2014 and 2013, respectively, 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 March 31, 2014 and 2013 related to intangible assets acquired as part of acquisitions. In addition, to reflect stock-based compensation expense of $1.7 million and $1.3 million for the three months ended March 31, 2014 and 2013, respectively. Also, to reflect other employee related restructuring costs of $0.1 million and $0.2 million for the three months ended March 31, 2014 and 2013, respectively.
(3)
To reflect the tax effect of the adjustments.