EX-99.1 2 exhibit991-8k2014x08x07.htm EXHIBIT 99.1 Exhibit 99.1 - 8K 2014-08-07


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


UNIVERSAL ELECTRONICS REPORTS SECOND QUARTER 2014 FINANCIAL RESULTS

- Increases Net Sales 7% and Net Income 31% Compared to the Second Quarter of 2013 -
SANTA ANA, CA – August 7, 2014 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and six months ended June 30, 2014.
Paul Arling, UEI's Chairman and CEO, stated: “Our strong performance in 2014 continued in the second quarter as we expanded our share of the global wireless control technology market. Supported by ongoing strength in our core business and traction in the smart device channel, we grew net sales 7% while yielding a 31% increase in the bottom line. In the past 27 years, we have established the most widely deployed and world-renowned device code database making UEI the global leader in the wireless control technology market. This competitive advantage, along with our continued focus on delivering innovative, next-generation solutions, has proven successful as we grew at a compound annual growth rate of 15% for both sales and earnings over the last decade and we just recorded our 66th consecutive quarter of profitability. We believe now more than ever that we are well positioned to continue expanding our footprint in the high-growth markets we serve.”
Adjusted Pro Forma Financial Results for the Three Months Ended June 30: 2014 Compared to 2013
•
Net sales were $146.3 million, compared to $136.1 million.
•
Business Category revenue was $132.7 million, compared to $124.2 million. The Business Category contributed 90.7% of total net sales, compared to 91.3%.
•
Consumer Category revenue was $13.6 million, compared to $11.9 million. The Consumer Category contributed 9.3% of total net sales, compared to 8.7%.
•
Gross margins were 29.9%, compared to 28.0%.
•
Operating expenses were $29.3 million, compared to $25.6 million.
•
Operating income was $14.5 million, compared to $12.5 million.
•
Net income was $10.6 million, or $0.66 per diluted share, compared to $8.1 million, or $0.53 per diluted share.
•
At June 30, 2014, cash and cash equivalents was $87.6 million.
Adjusted Pro Forma Financial Results for the Six Months Ended June 30: 2014 Compared to 2013
•
Net sales were $276.2 million, compared to $250.8 million.
•
Gross margins were 29.2%, compared to 28.3%.
•
Operating expenses were $57.3 million, compared to $52.1 million.
•
Operating income was $23.2 million, compared to $18.9 million.
•
Net income was $17.0 million, or $1.05 per diluted share, compared to $12.9 million, or $0.84 per diluted share.
Financial Outlook
For the third quarter of 2014, the company expects net sales to range between $149.0 million and $157.0 million, compared to $142.4 million in the third quarter of 2013. Adjusted pro forma earnings per diluted share for the third quarter of 2014 are expected to range from $0.70 to $0.80, compared to adjusted pro forma earnings per diluted share of $0.68 in the third 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, August 7, 2014 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its second 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 75517052. 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 75517052.
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 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
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 and expansion of its share of the markets it serves, including its core business and smart device channel (such as smartphones, tablets, smart TVs, IPTV devices, game consoles, smartwatches and over-the-top-services); the continued innovation of next-generation solutions that are accepted by its customers and end users; the continued acceptance by its customers of its device code database; 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)
 
 
June 30, 2014
 
December 31, 2013
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
87,642

 
$
76,174

Accounts receivable, net
 
107,508

 
95,408

Inventories, net
 
88,776

 
96,309

Prepaid expenses and other current assets
 
4,290

 
4,395

Income tax receivable
 
6

 
13

Deferred income taxes
 
6,156

 
6,167

Total current assets
 
294,378

 
278,466

Property, plant, and equipment, net
 
75,353

 
75,570

Goodwill
 
30,995

 
31,000

Intangible assets, net
 
25,576

 
26,963

Deferred income taxes
 
5,467

 
6,455

Other assets
 
5,222

 
5,279

Total assets
 
$
436,991

 
$
423,733

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
69,859

 
$
58,498

Line of credit
 
—

 
—

Accrued compensation
 
34,727

 
38,317

Accrued sales discounts, rebates and royalties
 
7,631

 
8,539

Accrued income taxes
 
1,115

 
3,032

Deferred income taxes
 
305

 
303

Other accrued expenses
 
13,227

 
11,229

Total current liabilities
 
126,864

 
119,918

Long-term liabilities:
 
 
 
 
Deferred income taxes
 
10,004

 
9,887

Income tax payable
 
606

 
606

Other long-term liabilities
 
1,998

 
2,052

Total liabilities
 
139,472

 
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; 22,648,822 and 22,344,121 shares issued on June 30, 2014 and December 31, 2013, respectively
 
227

 
223

Paid-in capital
 
208,906

 
199,513

Accumulated other comprehensive income (loss)
 
1,138

 
2,982

Retained earnings
 
206,293

 
193,532

 
 
416,564

 
396,250

Less cost of common stock in treasury, 6,974,030 and 6,639,497 shares on June 30, 2014 and December 31, 2013, respectively
 
(119,045
)
 
(104,980
)
Total stockholders’ equity
 
297,519

 
291,270

Total liabilities and stockholders’ equity
 
$
436,991

 
$
423,733






UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Net sales
 
$
146,315

 
$
136,109

 
$
276,160

 
$
250,831

Cost of sales
 
102,757

 
98,273

 
196,056

 
180,446

Gross profit
 
43,558

 
37,836


80,104


70,385

Research and development expenses
 
4,119

 
4,040

 
8,396

 
8,281

Selling, general and administrative expenses
 
27,765

 
23,820

 
54,044

 
48,233

Operating income
 
11,674

 
9,976


17,664


13,871

Interest income (expense), net
 
(71
)
 
4

 
(87
)
 
13

Other income (expense), net
 
(334
)
 
(1,630
)
 
(683
)
 
(2,180
)
Income before provision for income taxes
 
11,269

 
8,350


16,894


11,704

Provision for income taxes
 
2,781

 
2,509

 
4,133

 
2,917

Net income
 
$
8,488

 
$
5,841


$
12,761


$
8,787

Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.54

 
$
0.39


$
0.81


$
0.58

Diluted
 
$
0.53

 
$
0.38


$
0.79


$
0.57

Shares used in computing earnings per share:
 
 
 
 
 
 
 
 
Basic
 
15,784

 
15,098

 
15,785

 
15,032

Diluted
 
16,141

 
15,419

 
16,151

 
15,322


















UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) 
 
 
Six Months Ended June 30,
 
 
2014
 
2013
Cash provided by operating activities:
 
 
 
 
Net income
 
$
12,761

 
$
8,787

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
8,849

 
8,788

Provision for doubtful accounts
 
69

 
48

Provision for inventory write-downs
 
1,550

 
1,130

Deferred income taxes
 
901

 
(111
)
Tax benefit from exercise of stock options and vested restricted stock
 
1,154

 
399

Excess tax benefit from stock-based compensation
 
(1,142
)
 
(366
)
Shares issued for employee benefit plan
 
537

 
446

Stock-based compensation
 
3,251

 
2,561

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(12,856
)
 
638

Inventories
 
5,095

 
(16,996
)
Prepaid expenses and other assets
 
134

 
143

Accounts payable and accrued expenses
 
10,382

 
2,647

Accrued income taxes
 
(1,894
)
 
(168
)
Net cash provided by operating activities
 
28,791

 
7,946

Cash used for investing activities:
 
 
 
 
Acquisition of property, plant, and equipment
 
(7,714
)
 
(4,655
)
Acquisition of intangible assets
 
(663
)
 
(654
)
Net cash used for investing activities
 
(8,377
)
 
(5,309
)
Cash provided by (used for) financing activities:
 
 
 
 
Issuance of debt
 
—

 
19,500

Payment of debt
 
—

 
(19,500
)
Proceeds from stock options exercised
 
4,665

 
3,946

Treasury stock purchased
 
(14,275
)
 
(2,435
)
Excess tax benefit from stock-based compensation
 
1,142

 
366

Net cash provided by (used for) financing activities
 
(8,468
)
 
1,877

Effect of exchange rate changes on cash
 
(478
)
 
638

Net increase (decrease) in cash and cash equivalents
 
11,468

 
5,152

Cash and cash equivalents at beginning of year
 
76,174

 
44,593

Cash and cash equivalents at end of period
 
$
87,642

 
$
49,745

 
 
 
 
 
Supplemental Cash Flow Information:
 
 
 
 
Income taxes paid
 
$
3,182

 
$
2,420

Interest paid
 
$
—

 
$
43







UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS
(In thousands, except share-related data)
(Unaudited) 
 
 
Three Months Ended
June 30, 2014
 
Three Months Ended
June 30, 2013
 
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
Net sales
 
$
146,315

 
$
—

 
$
146,315

 
$
136,109

 
$
—

 
$
136,109

Cost of sales (1)
 
102,757

 
(236
)
 
102,521

 
98,273

 
(277
)
 
97,996

Gross profit
 
43,558

 
236

 
43,794

 
37,836

 
277

 
38,113

Research and development expenses (2)
 
4,119

 
(100
)
 
4,019

 
4,040

 
(55
)
 
3,985

Selling, general and administrative expenses (3)
 
27,765

 
(2,441
)
 
25,324

 
23,820

 
(2,211
)
 
21,609

Operating income
 
11,674

 
2,777

 
14,451

 
9,976


2,543


12,519

Interest income (expense), net
 
(71
)
 
—

 
(71
)
 
4

 
—

 
4

Other income (expense), net
 
(334
)
 
—

 
(334
)
 
(1,630
)
 
—

 
(1,630
)
Income before provision for income taxes
 
11,269

 
2,777

 
14,046

 
8,350

 
2,543

 
10,893

Provision for income taxes (4)
 
2,781

 
670

 
3,451

 
2,509

 
271

 
2,780

Net income
 
$
8,488

 
$
2,107

 
$
10,595

 
$
5,841

 
$
2,272

 
$
8,113

Earnings per share diluted
 
$
0.53

 
$
0.13

 
$
0.66

 
$
0.38

 
$
0.15

 
$
0.53

 
 
 
Six Months Ended
June 30, 2014
 
Six Months Ended
June 30, 2013
 
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
Net sales
 
$
276,160

 
$
—

 
$
276,160

 
$
250,831

 
$
—

 
$
250,831

Cost of sales (5)
 
196,056

 
(471
)
 
195,585

 
180,446

 
(554
)
 
179,892

Gross profit
 
80,104

 
471

 
80,575

 
70,385

 
554

 
70,939

Research and development expenses (6)
 
8,396

 
(201
)
 
8,195

 
8,281

 
(112
)
 
8,169

Selling, general and administrative expenses (7)
 
54,044

 
(4,902
)
 
49,142

 
48,233

 
(4,336
)
 
43,897

Operating income
 
17,664

 
5,574


23,238


13,871


5,002


18,873

Interest income (expense), net
 
(87
)
 
—

 
(87
)
 
13

 
—

 
13

Other income (expense), net
 
(683
)
 
—

 
(683
)
 
(2,180
)
 
—

 
(2,180
)
Income before provision for income taxes
 
16,894


5,574


22,468

 
11,704

 
5,002


16,706

Provision for income taxes (8)
 
4,133

 
1,346

 
5,479

 
2,917

 
842

 
3,759

Net income
 
$
12,761


$
4,228


$
16,989

 
$
8,787


$
4,160


$
12,947

Earnings per share diluted
 
$
0.79

 
$
0.26

 
$
1.05

 
$
0.57

 
$
0.27

 
$
0.84








(1)
To reflect depreciation expense of $0.2 million and $0.3 million for the three months ended June 30, 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 stock-based compensation expense for the three months ended June 30, 2014 and 2013.
(3) 
To reflect amortization expense of $0.7 million for each of the three months ended June 30, 2014 and 2013 related to intangible assets acquired as part of acquisitions. In addition, to reflect stock-based compensation expense of $1.5 million and $1.2 million for the three months ended June 30, 2014 and 2013, respectively. Also, to reflect other employee related restructuring costs of $0.2 million for each of the three months ended June 30, 2014 and 2013.
(4) 
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.
(5) 
To reflect depreciation expense of $0.5 million and $0.6 million for the six months ended June 30, 2014 and 2013, respectively, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions.
(6) 
To reflect stock-based compensation expense for the six months ended June 30, 2014 and 2013.
(7) 
To reflect amortization expense of $1.5 million for each of the six months ended June 30, 2014 and 2013 related to intangible assets acquired as part of acquisitions. In addition, to reflect stock-based compensation expense of $3.0 million and $2.4 million for the six months ended June 30, 2014 and 2013, respectively. Also, to reflect other employee related restructuring costs of $0.4 million for each of the six months ended June 30, 2014 and 2013.
(8) 
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.