Delaware | 0-21044 | 33-0204817 | ||
(State or other jurisdiction | (Commission File No.) | (I.R.S. Employer | ||
of incorporation or organization) | Identification No.) |
(d) | Exhibits. The following exhibit is furnished with this Report. |
Universal Electronics Inc. | ||||||
Date: May 2, 2019 | By: | /s/ Bryan Hackworth | ||||
Bryan Hackworth | ||||||
Chief Financial Officer (Principal Financial Officer) |
Exhibit Number | Description | |
99.1 |
• | GAAP net sales were $184.2 million, compared to $164.7 million; Adjusted Non-GAAP net sales were $182.7 million, compared to $165.2 million. |
• | GAAP gross margins were 21.7%, compared to 22.6%; Adjusted Non-GAAP gross margins were 25.8%, compared to 23.9%. |
• | GAAP operating income was $1.7 million, compared to $0.9 million; Adjusted Non-GAAP operating income was $14.6 million, compared to $6.1 million. |
• | GAAP net loss was $1.0 million, or $0.07 per share, compared to a net loss of $0.6 million or $0.04 per share; Adjusted Non-GAAP net income was $11.3 million, or $0.82 per diluted share, compared to $4.1 million, or $0.29 per diluted share. |
• | At March 31, 2019, cash and cash equivalents were $44.9 million. |
March 31, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 44,895 | $ | 53,207 | ||||
Accounts receivable, net | 158,071 | 144,689 | ||||||
Contract assets | 26,001 | 25,572 | ||||||
Inventories, net | 149,966 | 144,350 | ||||||
Prepaid expenses and other current assets | 10,024 | 11,638 | ||||||
Income tax receivable | 2,255 | 997 | ||||||
Total current assets | 391,212 | 380,453 | ||||||
Property, plant and equipment, net | 94,036 | 95,840 | ||||||
Goodwill | 48,448 | 48,485 | ||||||
Intangible assets, net | 23,237 | 24,370 | ||||||
Operating lease right-of-use assets | 21,315 | — | ||||||
Deferred income taxes | 1,741 | 1,833 | ||||||
Other assets | 2,366 | 4,615 | ||||||
Total assets | $ | 582,355 | $ | 555,596 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 107,715 | $ | 107,282 | ||||
Line of credit | 106,500 | 101,500 | ||||||
Accrued compensation | 33,864 | 33,965 | ||||||
Accrued sales discounts, rebates and royalties | 7,813 | 9,574 | ||||||
Accrued income taxes | 1,881 | 3,524 | ||||||
Other accrued liabilities | 31,669 | 24,011 | ||||||
Total current liabilities | 289,442 | 279,856 | ||||||
Long-term liabilities: | ||||||||
Operating lease obligations | 17,520 | — | ||||||
Contingent consideration | 4,846 | 8,435 | ||||||
Deferred income taxes | 3,722 | 930 | ||||||
Income tax payable | 1,640 | 1,647 | ||||||
Other long-term liabilities | 13 | 1,768 | ||||||
Total liabilities | 317,183 | 292,636 | ||||||
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; 24,018,606 and 23,932,703 shares issued on March 31, 2019 and December 31, 2018, respectively | 240 | 239 | ||||||
Paid-in capital | 278,801 | 276,103 | ||||||
Treasury stock, at cost, 10,159,205 and 10,116,459 shares on March 31, 2019 and December 31, 2018, respectively | (277,104 | ) | (275,889 | ) | ||||
Accumulated other comprehensive income (loss) | (18,548 | ) | (20,281 | ) | ||||
Retained earnings | 281,783 | 282,788 | ||||||
Total stockholders’ equity | 265,172 | 262,960 | ||||||
Total liabilities and stockholders’ equity | $ | 582,355 | $ | 555,596 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net sales | $ | 184,163 | $ | 164,698 | ||||
Cost of sales | 144,289 | 127,496 | ||||||
Gross profit | 39,874 | 37,202 | ||||||
Research and development expenses | 6,791 | 6,051 | ||||||
Selling, general and administrative expenses | 31,420 | 30,247 | ||||||
Operating income | 1,663 | 904 | ||||||
Interest income (expense), net | (1,206 | ) | (1,070 | ) | ||||
Other income (expense), net | (466 | ) | (587 | ) | ||||
Income (loss) before provision for income taxes | (9 | ) | (753 | ) | ||||
Provision for income taxes (benefit) | 996 | (166 | ) | |||||
Net income (loss) | $ | (1,005 | ) | $ | (587 | ) | ||
Earnings (loss) per share: | ||||||||
Basic | $ | (0.07 | ) | $ | (0.04 | ) | ||
Diluted | $ | (0.07 | ) | $ | (0.04 | ) | ||
Shares used in computing earnings (loss) per share: | ||||||||
Basic | 13,827 | 14,087 | ||||||
Diluted | 13,827 | 14,087 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash provided by (used for) operating activities: | ||||||||
Net income (loss) | $ | (1,005 | ) | $ | (587 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||
Depreciation and amortization | 8,019 | 8,243 | ||||||
Provision for doubtful accounts | 3 | 4 | ||||||
Provision for inventory write-downs | 2,537 | 756 | ||||||
Deferred income taxes | 2,966 | 913 | ||||||
Shares issued for employee benefit plan | 347 | 336 | ||||||
Employee and director stock-based compensation | 1,918 | 2,204 | ||||||
Performance-based common stock warrants | 434 | 471 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and contract assets | (14,056 | ) | (266 | ) | ||||
Inventories | (6,519 | ) | 1,372 | |||||
Prepaid expenses and other assets | 735 | (455 | ) | |||||
Accounts payable and accrued liabilities | 3,017 | (21,160 | ) | |||||
Accrued income taxes | (2,943 | ) | (3,774 | ) | ||||
Net cash provided by (used for) operating activities | (4,547 | ) | (11,943 | ) | ||||
Cash provided by (used for) investing activities: | ||||||||
Acquisitions of property, plant and equipment | (2,800 | ) | (9,314 | ) | ||||
Acquisitions of intangible assets | (653 | ) | (571 | ) | ||||
Net cash provided by (used for) investing activities | (3,453 | ) | (9,885 | ) | ||||
Cash provided by (used for) financing activities: | ||||||||
Borrowings under line of credit | 25,000 | 13,000 | ||||||
Repayments on line of credit | (20,000 | ) | (10,000 | ) | ||||
Proceeds from stock options exercised | — | 439 | ||||||
Treasury stock purchased | (1,215 | ) | (615 | ) | ||||
Contingent consideration payments in connection with business combinations | (4,251 | ) | (3,858 | ) | ||||
Net cash provided by (used for) financing activities | (466 | ) | (1,034 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 154 | 832 | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (8,312 | ) | (22,030 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of year | 53,207 | 67,339 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 44,895 | $ | 45,309 | ||||
Supplemental cash flow information: | ||||||||
Income taxes paid | $ | 1,942 | $ | 2,893 | ||||
Interest paid | 1,186 | 1,164 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net sales: | ||||||||
Net sales - GAAP | $ | 184,163 | $ | 164,698 | ||||
U.S. tariffs on goods imported from China (1) | (1,916 | ) | — | |||||
Stock-based compensation for performance-based warrants | 434 | 471 | ||||||
Adjusted Non-GAAP net sales | $ | 182,681 | $ | 165,169 | ||||
Cost of sales: | ||||||||
Cost of sales - GAAP | $ | 144,289 | $ | 127,496 | ||||
U.S. tariffs on goods imported from China (1) | (5,410 | ) | — | |||||
Excess manufacturing overhead and factory transition costs (2) | (3,272 | ) | (1,553 | ) | ||||
Adjustments to acquired tangible assets (3) | (120 | ) | (158 | ) | ||||
Stock-based compensation expense | (28 | ) | (17 | ) | ||||
Amortization of acquired intangible assets | — | (37 | ) | |||||
Adjusted Non-GAAP cost of sales | 135,459 | 125,731 | ||||||
Adjusted Non-GAAP gross profit | $ | 47,222 | $ | 39,438 | ||||
Gross margin: | ||||||||
Gross margin - GAAP | 21.7 | % | 22.6 | % | ||||
U.S. tariffs on goods imported from China (1) | 2.1 | % | — | % | ||||
Stock-based compensation for performance-based warrants | 0.2 | % | 0.3 | % | ||||
Excess manufacturing overhead and factory transition costs (2) | 1.7 | % | 0.9 | % | ||||
Adjustments to acquired tangible assets (3) | 0.1 | % | 0.1 | % | ||||
Stock-based compensation expense | 0.0 | % | 0.0 | % | ||||
Amortization of acquired intangible assets | — | % | 0.0 | % | ||||
Adjusted Non-GAAP gross margin | 25.8 | % | 23.9 | % | ||||
Operating expenses: | ||||||||
Operating expenses - GAAP | 38,211 | 36,298 | ||||||
U.S. tariffs on goods imported from China (1) | (724 | ) | — | |||||
Stock-based compensation expense | (1,890 | ) | (2,187 | ) | ||||
Amortization of acquired intangible assets | (1,401 | ) | (1,399 | ) | ||||
Change in contingent consideration | (1,062 | ) | 751 | |||||
Employee related restructuring and other costs | (515 | ) | (112 | ) | ||||
Adjusted Non-GAAP operating expenses | $ | 32,619 | $ | 33,351 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Operating income: | ||||||||
Operating income - GAAP | $ | 1,663 | $ | 904 | ||||
U.S. tariffs on goods imported from China (1) | 4,218 | — | ||||||
Stock-based compensation for performance-based warrants | 434 | 471 | ||||||
Excess manufacturing overhead and factory transition costs (2) | 3,272 | 1,553 | ||||||
Adjustments to acquired tangible assets (3) | 120 | 158 | ||||||
Stock-based compensation expense | 1,918 | 2,204 | ||||||
Amortization of acquired intangible assets | 1,401 | 1,436 | ||||||
Change in contingent consideration | 1,062 | (751 | ) | |||||
Employee related restructuring and other costs | 515 | 112 | ||||||
Adjusted Non-GAAP operating income | $ | 14,603 | $ | 6,087 | ||||
Adjusted pro forma operating income as a percentage of net sales | 8.0 | % | 3.7 | % | ||||
Net income (loss): | ||||||||
Net income (loss) - GAAP | $ | (1,005 | ) | $ | (587 | ) | ||
U.S. tariffs on goods imported from China (1) | 4,218 | — | ||||||
Stock-based compensation for performance-based warrants | 434 | 471 | ||||||
Excess manufacturing overhead and factory transition costs (2) | 3,272 | 1,553 | ||||||
Adjustments to acquired tangible assets (3) | 120 | 158 | ||||||
Stock-based compensation expense | 1,918 | 2,204 | ||||||
Amortization of acquired intangible assets | 1,401 | 1,436 | ||||||
Change in contingent consideration | 1,062 | (751 | ) | |||||
Employee related restructuring and other costs | 515 | 112 | ||||||
Foreign currency (gain) loss | 403 | 605 | ||||||
Income tax provision on adjustments | (2,761 | ) | (1,061 | ) | ||||
Other income tax adjustments (4) | 1,772 | — | ||||||
Adjusted Non-GAAP net income | $ | 11,349 | $ | 4,140 | ||||
Diluted shares used in computing earnings (loss) per share: | ||||||||
GAAP | 13,827 | 14,087 | ||||||
Adjusted Non-GAAP | 13,920 | 14,233 | ||||||
Diluted earnings (loss) per share: | ||||||||
Diluted earnings (loss) per share - GAAP | $ | (0.07 | ) | $ | (0.04 | ) | ||
Total adjustments | $ | 0.89 | $ | 0.33 | ||||
Adjusted Non-GAAP diluted earnings per share | $ | 0.82 | $ | 0.29 |
(1) | Includes incremental revenues and costs directly attributable to the increased U.S. tariffs implemented in 2018 on goods manufactured in China and imported into the U.S. as well as costs incurred for the movement of factory equipment, duplicative labor efforts and other costs of countermeasures undertaken by the company to modify its manufacturing operations and supply chain in response to the increased U.S. tariffs on goods manufactured in China and imported into the U.S. |
(2) | The three months ended March 31, 2019 include excess manufacturing overhead costs incurred as a result of expanding our manufacturing capacity in Mexico and transitioning certain of our manufacturing activities from China to Mexico. The three months ended March 31, 2018 include excess manufacturing costs incurred resulting from factory underutilization associated with ceasing manufacturing activities while transitioning our Asia operations onto our new global ERP system, which went live in Asia in April 2018. |
(3) | Consists of depreciation related to the mark-up from cost to fair value of fixed assets acquired in business combinations. |
(4) | The three months ended March 31, 2019 includes net deferred tax asset adjustments resulting from a lower statutory tax rate due to tax incentives at one of our China factories. |