UNIVERSAL ELECTRONICS INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - UNIVERSAL ELECTRONICS INC	d434671d8k.htm

Exhibit 99.1

LOGO

Contacts: Paul Arling (UEI) 714.918.9500

Becky Herrick (IR Agency) 415.433.3777

UNIVERSAL ELECTRONICS REPORTS THIRD QUARTER 2012 FINANCIAL RESULTS

SANTA ANA, CA – November 8, 2012 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and nine months ended September 30, 2012.

“Contributing to our solid 2012 third quarter was our strong performance in subscription broadcasting and continued success in international markets,” stated Paul Arling, UEI’s Chairman and CEO. “While consumer-centric regions such as the U.S., Western Europe and Japan remain challenged due to weaker than expected TV sales, we are leveraging our global capabilities to expand our presence into promising new regions such as Latin America, Eastern Europe and parts of Asia where we see market opportunities.”

“During the quarter, we began providing our embedded app technology to multiple leading smart phone manufacturers. We are constantly developing the innovative technologies that facilitate simple control within the ever-changing home entertainment environment. It is the consistent execution of this strategy that has brought us success over the last 25 years, and what we believe will drive our success in the years to come.”

Financial Results for the Three Months Ended September 30: 2012 Compared to 2011

•

Net sales were $124.9 million, compared to $123.5 million.

•

Business Category revenue was $111.9 million, compared to $111.3 million. The Business Category contributed 89.6% of total net sales, compared to 90.1%.

•

Consumer Category revenue was $13.0 million, compared to $12.2 million. The Consumer Category contributed 10.4% of total net sales, compared to 9.9%.

•

Adjusted pro forma gross margins were 29.4%, compared to 27.9%.

•

Adjusted pro forma operating expenses were $25.5 million, compared to $24.0 million.

•

Adjusted pro forma operating income was $11.2 million, compared to $10.5 million.

•

Adjusted pro forma net income was $8.1 million, or $0.54 per diluted share, compared to $8.0 million, or $0.53 per diluted share.

•

At September 30, 2012, cash and cash equivalents was $41.2 million.

Financial Results for the Nine Months Ended September 30: 2012 Compared to 2011

•

Net sales were $345.3 million, compared to $351.0 million.

•

Adjusted pro forma gross margins were 28.5%, compared to 27.8%.

•

Adjusted pro forma operating expenses were $75.9 million, compared to $74.0 million.

•

Adjusted pro forma operating income was $22.7 million, compared to $23.5 million.

•

Adjusted pro forma net income was $17.1 million, or $1.13 per diluted share, compared to $17.7 million, or $1.15 per diluted share.

Financial Outlook

Bryan Hackworth, UEI’s CFO, stated: “While we continue to experience strong sales growth in subscription broadcasting both domestically and internationally, as well as in our Consumer Category, the consumer electronics channel has remained challenging. Several large Japanese consumer electronics customers have recently reduced their 2012 outlook for the second time this year, which adversely affects our sales in this channel.”

For the fourth quarter of 2012, the company expects net sales to range between $113.0 million and $119.0 million, compared to $117.6 million in the fourth quarter of 2011. Adjusted pro forma earnings per diluted share for the fourth quarter of 2012 are expected to range from $0.37 to $0.47, compared to adjusted pro forma earnings per diluted share of $0.40 in the fourth quarter of 2011.

For the full 2012 year, the company expects net sales to range between $458.0 million and $464.0 million, compared to $468.6 million in 2011. Adjusted pro forma earnings per diluted share for 2012 are expected to range from $1.50 to $1.60, compared to adjusted pro forma earnings per diluted share of $1.55 in 2011.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, November 8, 2012 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its third quarter 2012 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 40161724. 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 40161724.

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 charges related to the write-up of inventory and depreciation related to the acquisition. Non-GAAP operating expenses is defined as cash operating expenses excluding acquisition costs, amortization of intangibles, other employee related restructuring costs as well as costs associated with moving our corporate headquarters from Cypress, CA to Santa Ana, CA. Non-GAAP net income is net income from operations excluding the aforementioned items. 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 Company’s ability to gain market share; the Company’s ability to attract new customers and retain and expand our relationships with its existing customers; acceptance by consumers of the Company’s innovative tablet and smartphone applications; general economic conditions; the strength and growth prospects of the consumer electronics and broader retail industries; 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, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	41,216		$	29,372
Accounts receivable, net		92,392			82,184
Inventories, net		72,115			90,904
Prepaid expenses and other current assets		3,286			3,045
Deferred income taxes		6,561			6,558

Total current assets		215,570			212,063
Property, plant, and equipment, net		76,890			80,449
Goodwill		30,833			30,820
Intangible assets, net		30,534			32,814
Other assets		5,373			5,350
Deferred income taxes		8,073			7,992

Total assets	$	367,273		$	369,488

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	48,688		$	55,430
Line of credit		2,000			2,000
Notes payable		4,800			14,400
Accrued sales discounts, rebates and royalties		6,443			6,544
Accrued income taxes		4,267			5,707
Accrued compensation		31,343			29,204
Deferred income taxes		52			50
Other accrued expenses		8,214			13,967

Total current liabilities		105,807			127,302
Long-term liabilities:
Deferred income taxes		11,336			11,056
Income tax payable		1,136			1,136
Other long-term liabilities		1,652			5

Total liabilities		119,931			139,499

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; 21,368,580 and 21,142,915 shares issued on September 30, 2012 and December 31, 2011, respectively		214			211
Paid-in capital		178,602			173,701
Accumulated other comprehensive (loss) income		(57	)		938
Retained earnings		167,651			154,016

		346,410			328,866
Less cost of common stock in treasury, 6,360,302 and 6,353,035 shares on September 30, 2012 and December 31, 2011, respectively		(99,068	)		(98,877	)

Total stockholders’ equity		247,342			229,989

Total liabilities and stockholders’ equity	$	367,273		$	369,488

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine months Ended September 30,
	2012			2011			2012			2011
Net sales	$	124,871		$	123,527		$	345,307		$	350,985
Cost of sales		88,433			89,349			247,572			254,284

Gross profit		36,438			34,178			97,735			96,701
Research and development expenses		3,521			2,861			10,408			9,275
Selling, general and administrative expenses		23,383			21,852			69,015			67,116

Operating income		9,534			9,465			18,312			20,310
Interest income (expense), net		(24	)		(56	)		(112	)		(210	)
Other income (expense), net		(65	)		(353	)		(515	)		(771	)

Income before provision for income taxes		9,445			9,056			17,685			19,329
Provision for income taxes		(2,595	)		(1,972	)		(4,050	)		(4,297	)

Net income	$	6,850		$	7,084		$	13,635		$	15,032

Earnings per share:
Basic	$	0.46		$	0.48		$	0.91		$	1.00

Diluted	$	0.45		$	0.47		$	0.90		$	0.98

Shares used in computing earnings per share:
Basic		14,984			14,887			14,931			14,963

Diluted		15,099			15,147			15,087			15,312

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine months Ended September 30,
	2012			2011
Cash provided by operating activities:
Net income	$	13,635		$	15,032
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,948			12,907
Provision for doubtful accounts		72			241
Provision for inventory write-downs		2,148			3,610
Deferred income taxes		146			26
Tax benefit from exercise of stock options and vested restricted stock		(160	)		399
Excess tax benefit from stock-based compensation		(49	)		(422	)
Shares issued for employee benefit plan		620			592
Stock-based compensation		3,447			3,280
Changes in operating assets and liabilities:
Accounts receivable		(10,876	)		(2,772	)
Inventories		15,758			(22,172	)
Prepaid expenses and other assets		(282	)		674
Accounts payable and accrued expenses		(8,335	)		2,456
Accrued income taxes		(1,428	)		(2,049	)

Net cash provided by operating activities		27,644			11,802

Cash used for investing activities:
Acquisition of property, plant, and equipment		(6,525	)		(10,140	)
Acquisition of intangible assets		(802	)		(814	)

Net cash used for investing activities		(7,327	)		(10,954	)

Cash used for financing activities:
Issuance of debt		12,000			—
Payment of debt		(21,600	)		(16,600	)
Proceeds from stock options exercised		1,425			1,381
Treasury stock purchased		(619	)		(9,512	)
Excess tax benefit from stock-based compensation		49			422

Net cash used for financing activities		(8,745	)		(24,309	)

Effect of exchange rate changes on cash		272			1,212

Net increase (decrease) in cash and cash equivalents		11,844			(22,249	)
Cash and cash equivalents at beginning of period		29,372			54,249

Cash and cash equivalents at end of period	$	41,216		$	32,000

Supplemental Cash Flow Information — There were income tax payments of $6.5 million and $6.9 million during the nine months ended September 30, 2012 and 2011, respectively. There were interest payments of $0.2 million and $0.3 million during the nine months ended September 30, 2012 and 2011, respectively.

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands, except share-related data)

(Unaudited)


	Three Months Ended September 30, 2012									Three Months Ended September 30, 2011
	GAAP			Adjustments			Adjusted Pro Forma			GAAP			Adjustments			Adjusted Pro Forma
Net sales	$	124,871		$	—		$	124,871		$	123,527		$	—		$	123,527
Cost of sales ⁽¹⁾		88,433			(277	)		88,156			89,349			(277	)		89,072

Gross profit		36,438			277			36,715			34,178			277			34,455
Research and development expenses		3,521			—			3,521			2,861			—			2,861
Selling, general and administrative expenses ⁽²⁾		23,383			(1,376	)		22,007			21,852			(743	)		21,109

Operating income		9,534			1,653			11,187			9,465			1,020			10,485
Interest income (expense), net		(24	)		—			(24	)		(56	)		—			(56	)
Other income (expense) , net		(65	)		—			(65	)		(353	)		—			(353	)

Income before provision for income taxes		9,445			1,653			11,098			9,056			1,020			10,076
Provision for income taxes ⁽⁴⁾		(2,595	)		(392	)		(2,987	)		(1,972	)		(144	)		(2,116	)

Net income	$	6,850		$	1,261		$	8,111		$	7,084		$	876		$	7,960

Earnings per share diluted	$	0.45		$	0.08		$	0.54		$	0.47		$	0.06		$	0.53


	Nine Months Ended September 30, 2012									Nine Months Ended September 30, 2011
	GAAP			Adjustments			Adjusted Pro Forma			GAAP			Adjustments			Adjusted Pro Forma
Net sales	$	345,307		$	—		$	345,307		$	350,985		$	—		$	350,985
Cost of sales ⁽¹⁾		247,572			(831	)		246,741			254,284			(831	)		253,453

Gross profit		97,735			831			98,566			96,701			831			97,532
Research and development expenses		10,408			—			10,408			9,275			—			9,275
Selling, general and administrative expenses ⁽³⁾		69,015			(3,573	)		65,442			67,116			(2,402	)		64,714

Operating income		18,312			4,404			22,716			20,310			3,233			23,543
Interest income (expense), net		(112	)		—			(112	)		(210	)		—			(210	)
Other income (expense), net		(515	)		—			(515	)		(771	)		—			(771	)

Income before provision for income taxes		17,685			4,404			22,089			19,329			3,233			22,562
Provision for income taxes ⁽⁴⁾		(4,050	)		(934	)		(4,984	)		(4,297	)		(585	)		(4,882	)

Net income	$	13,635		$	3,470		$	17,105		$	15,032		$	2,648		$	17,680

Earnings per share diluted	$	0.90		$	0.23		$	1.13		$	0.98		$	0.17		$	1.15

(1)	To reflect depreciation expense for the corresponding periods relating to the mark-up in fixed assets from cost to fair value as part of the Enson Assets Limited acquisition.

(2)	To reflect $0.7 million of amortization expense for the three months ended September 30, 2012 and September 30, 2011, relating to intangible assets acquired as part of acquisitions. In the third quarter of 2012, there were approximately $0.2 million

of additional costs incurred relating primarily to other employee restructuring costs. Also, in the third quarter of 2012, we moved our corporate headquarters from Cypress, CA to Santa Ana, CA and as a result, incurred approximately $0.4 million of costs associated specifically with the move.

(3)

To reflect $2.2 million of amortization expense for the nine months ended September 30, 2012 and September 30, 2011, relating to intangible assets acquired as part of acquisitions. For the nine months ended 2011, there were additional costs incurred relating to other employee restructuring costs, primarily severance. For the nine months ended 2012, there were approximately $0.8 million of other employee restructuring costs incurred, primarily severance, as well as $0.5 million incurred relating to moving our corporate headquarters from Cypress, CA to Santa Ana, CA.

(4)	To reflect the tax effect of the adjustments.

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