– Authorizes Stock Repurchase Program for Up
to 1 Million Shares –
Universal Electronics Inc. (UEI) (NASDAQ: UEIC) reported
financial results for the three and nine months ended September 30,
2023. Also, the Company’s Board of Directors authorized a stock
repurchase program for up to one million shares.
Paul Arling, UEI’s chairman and CEO, said, “During the third
quarter of 2023, we increased gross margin to a high for the year
and managed costs to deliver bottom-line results within
expectations. Our technology and innovations in the connected home
markets are winning new business, which will support revenues that
we expect to build throughout 2024 and 2025. The opportunities in
the connected home space combined with the successful wins and
multitude of projects we are working on give us conviction to
initiate a stock buyback for up to one million shares.”
UEI’s CFO Bryan Hackworth added, “We are executing on our plan
to control costs and optimize our manufacturing footprint, and
these efforts are beginning to yield benefits. Our new facility in
Vietnam is meeting its production efficiency targets, which enabled
the closure of our southwestern China factory in September,
approximately one quarter earlier than expected. These initiatives
have positioned UEI to achieve improved operating efficiencies in
the fourth quarter of 2023 and 2024. Additionally, cash flows
provided by operating activities for the first nine months of 2023
were $20.1 million, which we used to reduce our net debt position
to only $15 million by quarter end and to strengthen the balance
sheet to support growth.”
Financial Results for the Three Months
Ended September 30: 2023 Compared to 2022
- GAAP net sales were $107.1 million, compared to $148.5 million;
Adjusted Non-GAAP net sales were $107.1 million, compared to $148.5
million.
- GAAP gross margins were 19.1%, compared to 29.9%; Adjusted
Non-GAAP gross margins were 28.4%, compared to 30.8%.
- GAAP operating loss was $14.0 million, compared to GAAP
operating income of $11.5 million; Adjusted Non-GAAP operating
income was $2.9 million, compared to $15.5 million.
- GAAP net loss was $19.4 million, or $1.50 per share, compared
to GAAP net income of $7.2 million or $0.57 per diluted share;
Adjusted Non-GAAP net income was $1.1 million, or $0.08 per diluted
share, compared to $12.6 million, or $1.00 per diluted share.
- At September 30, 2023, cash and cash equivalents were $60.1
million.
Financial Results for the Nine Months
Ended September 30: 2023 Compared to 2022
- GAAP net sales were $322.9 million, compared to $420.0 million;
Adjusted Non-GAAP net sales were $322.9 million, compared to $420.0
million.
- GAAP gross margins were 21.6%, compared to 28.6%; Adjusted
Non-GAAP gross margins were 26.4%, compared to 29.6%.
- GAAP operating loss was $82.7 million, including a $49.1
million non-cash charge for goodwill impairment, which resulted
from a decline in the company’s market capitalization, compared to
GAAP operating income of $16.4 million; Adjusted Non-GAAP operating
loss was $2.6 million, compared to Adjusted Non-GAAP operating
income of $33.4 million.
- GAAP net loss was $91.1 million, including the aforementioned
non-cash charge, or $7.10 per share, compared to GAAP net income of
$7.3 million or $0.57 per diluted share; Adjusted Non-GAAP net loss
was $3.2 million, or $0.25 per share, compared to Adjusted Non-GAAP
net income of $27.1 million, or $2.12 per diluted share.
Financial Outlook
For the fourth quarter of 2023, the company expects GAAP net
sales to range between $95.0 million and $105.0 million, compared
to $122.8 million in the fourth quarter of 2022. GAAP loss per
share for the fourth quarter of 2023 is expected to range from
$0.51 to $0.41, compared to GAAP loss per share of $0.54 in the
fourth quarter of 2022.
For the fourth quarter of 2023, the company expects Adjusted
Non-GAAP net sales to range from $95.0 million and $105.0 million,
compared to $122.8 million in the fourth quarter of 2022. Adjusted
Non-GAAP earnings (loss) per share are expected to range from a
loss of $0.05 per share to earnings of $0.05 per diluted share,
compared to earnings per diluted share of $0.44 in the fourth
quarter of 2022. The fourth quarter 2023 Adjusted Non-GAAP earnings
per diluted share estimate excludes $0.46 per share related to,
among other things, excess manufacturing overhead costs,
stock-based compensation, amortization of acquired intangibles,
litigation costs, foreign currency gains and losses and the related
tax impact of these adjustments. For a more detailed explanation of
Non-GAAP measures, please see the Use of Non-GAAP Financial Metrics
discussion and the Reconciliation of Adjusted Non-GAAP Financial
Results, each located elsewhere in this press release.
Conference Call
Information
UEI’s management team will hold a conference call today,
Thursday, November 2, 2023 at 4:30 p.m. ET / 1:30 p.m. PT, to
discuss its third quarter 2023 earnings results, review recent
activity and answer questions. To attend the call please register
at
https://register.vevent.com/register/BIbd15424e067d48b694ae4611a6e0c7f2
to receive a computer-generated dial-in number and a unique pin
number. The conference call will also be broadcast live on the
investor section of the UEI website where it will be available for
replay for 90 days.
Use of Non-GAAP Financial
Metrics
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, UEI provides
Adjusted Non-GAAP information as additional information for its
operating results. References to Adjusted Non-GAAP information are
to non-GAAP financial measures. These measures are not required by,
in accordance with, or an alternative for, GAAP and may be
different from non-GAAP financial measures used by other companies.
UEI’s management uses these measures for reviewing the financial
results of UEI for budget planning purposes and for making
operational and financial decisions. Management believes that
providing these non-GAAP financial measures to investors, as a
supplement to GAAP financial measures, help investors evaluate
UEI’s core operating and financial performance and business trends
consistent with how management evaluates such performance and
trends. Additionally, management believes these measures facilitate
comparisons with the core operating and financial results and
business trends of competitors and other companies.
Adjusted Non-GAAP net sales is defined as net sales. Adjusted
Non-GAAP gross profit is defined as gross profit excluding the
impact of excess manufacturing overhead costs, factory transition
costs, impairment, stock-based compensation expense, and
depreciation expense related to the increase in fixed assets from
cost to fair market value resulting from acquisitions. Adjusted
Non-GAAP operating expenses are defined as operating expenses
excluding stock-based compensation expense, amortization of
intangibles acquired, costs associated with certain litigation
efforts, goodwill impairment, impairment, factory restructuring
costs and severance. Adjusted Non-GAAP net income is defined as net
income excluding the aforementioned items, foreign currency gains
and losses, the related tax effects of all adjustments, as well as
a valuation allowance on certain deferred tax assets. Adjusted
Non-GAAP earnings (loss) per diluted share is calculated using
Adjusted Non-GAAP net income. A reconciliation of these financial
measures to the most directly comparable GAAP financial measures is
included at the end of this press release.
About Universal
Electronics
Universal Electronics Inc. (NASDAQ: UEIC) is the global leader
in wireless universal control solutions for home entertainment and
smart home devices and designs, develops, manufactures, ships and
supports hardware and software control and sensor technology
solutions. UEI partners with many Fortune 500 customers, including
Comcast, Vivint Smart Home, Samsung, LG, Sony and Daikin to serve
video, telecommunications, security service providers, television,
smart home and HVAC system manufacturers. For over 37 years, UEI
has been pioneering breakthrough innovations such as voice control
and QuickSet cloud, the world's leading platform for automated
set-up and control of devices in the home. For more information,
visit www.uei.com.
Forward-looking
Statements
This press release and accompanying schedules contain
"forward-looking statements" within the meaning of federal
securities laws, including net sales, profit margin and earnings
trends, estimates and assumptions; our expectations about new
product introductions; and similar statements concerning
anticipated future events and expectations that are not historical
facts. We caution you that these statements are not guarantees of
future performance and are subject to numerous risks and
uncertainties, including those we identify below and other risk
factors that we identify in our annual report on Form 10-K for the
year ended December 31, 2022 and the periodic reports filed and
furnished since then. Risks that could affect forward-looking
statements in this press release include: our continued ability to
timely develop and deliver products and technologies that will be
accepted by our customers, both near- and long-term; our ability to
attract new customers and to successfully capture sales in all
markets we serve, including in the connected home market as
anticipated by management; our ability to continue optimizing our
manufacturing footprint and realize the lower concentration risks
in the time frame and to the extent expected by management; our
ability to manage through the continued supply chain constraints,
inflationary pressures and macroeconomic conditions, including
continued lower consumer spending; the continued commitment of our
customers to their product development and ordering strategies and
patterns that translate into greater demand for our technologies
and products as anticipated by management; our ability to continue
to manage our business, inventories and cash flows to achieve our
net sales, margins and earnings through financial discipline,
operational efficiency, product line management, liquidity
requirements, capital expenditures and other investment spending
expectations, including our ability to execute on our just
announced stock repurchase program; the continued fluctuation in
our market capitalization; the direct and indirect impact we may
experience with respect to our business and financial results and
management’s ability to anticipate and mitigate the impact stemming
from the continued economic uncertainty affecting consumers’
confidence and spending, natural disasters or other events beyond
our control, public health crises (including an outbreak of
infectious disease), governmental actions, including the effects of
political unrest, war, terrorist activities, or other hostilities;
the effects and uncertainties and other factors more fully
described in our reports filed with the SEC; and the effects that
changes in or enhanced use of laws, regulations and policies may
have on our business including the impact of trade regulations
pertaining to importation of our products. Since it is not possible
to predict or identify all of the risks, uncertainties and other
factors that may affect future results, the above list should not
be considered a complete list. Further, any of these factors could
cause actual results to differ materially from the expectations we
express or imply in this press release. We make these
forward-looking statements as of November 2, 2023, and we undertake
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
UNIVERSAL ELECTRONICS
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except
share-related data)
(Unaudited)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
60,079
$
66,740
Accounts receivable, net
112,521
112,346
Contract assets
8,133
7,996
Inventories
93,462
140,181
Prepaid expenses and other current
assets
5,809
6,647
Income tax receivable
2,387
4,130
Total current assets
282,391
338,040
Property, plant and equipment, net
46,613
62,791
Goodwill
—
49,085
Intangible assets, net
25,529
24,470
Operating lease right-of-use assets
17,777
21,599
Deferred income taxes
4,472
6,242
Other assets
1,558
1,936
Total assets
$
378,340
$
504,163
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
54,776
$
71,373
Line of credit
75,000
88,000
Accrued compensation
21,707
20,904
Accrued sales discounts, rebates and
royalties
5,060
6,477
Accrued income taxes
4,261
5,585
Other accrued liabilities
21,714
24,134
Total current liabilities
182,518
216,473
Long-term liabilities:
Operating lease obligations
11,553
15,027
Deferred income taxes
1,280
2,724
Income tax payable
723
723
Other long-term liabilities
739
810
Total liabilities
196,813
235,757
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; 25,301,246 and 24,999,951 shares issued on
September 30, 2023 and December 31, 2022, respectively
253
250
Paid-in capital
334,683
326,839
Treasury stock, at cost, 12,356,603 and
12,295,305 shares on September 30, 2023 and December 31, 2022,
respectively
(369,082
)
(368,194
)
Accumulated other comprehensive income
(loss)
(23,889
)
(21,187
)
Retained earnings
239,562
330,698
Total stockholders’ equity
181,527
268,406
Total liabilities and stockholders’
equity
$
378,340
$
504,163
UNIVERSAL ELECTRONICS
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales
$
107,095
$
148,482
$
322,863
$
419,993
Cost of sales
86,683
104,040
253,141
299,912
Gross profit
20,412
44,442
69,722
120,081
Research and development expenses
7,658
8,017
24,502
24,460
Factory restructuring charges
3,690
—
3,690
—
Selling, general and administrative
expenses
23,097
24,928
75,144
79,188
Goodwill impairment
—
—
49,075
—
Operating income (loss)
(14,033
)
11,497
(82,689
)
16,433
Interest income (expense), net
(1,216
)
(668
)
(3,288
)
(1,147
)
Other income (expense), net
(851
)
(54
)
(1,767
)
(388
)
Income (loss) before provision for income
taxes
(16,100
)
10,775
(87,744
)
14,898
Provision for income taxes
3,262
3,541
3,392
7,586
Net income (loss)
$
(19,362
)
$
7,234
$
(91,136
)
$
7,312
Earnings (loss) per share:
Basic
$
(1.50
)
$
0.57
$
(7.10
)
$
0.58
Diluted
$
(1.50
)
$
0.57
$
(7.10
)
$
0.57
Shares used in computing earnings (loss)
per share:
Basic
12,911
12,656
12,839
12,709
Diluted
12,911
12,696
12,839
12,797
UNIVERSAL ELECTRONICS
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(91,136
)
$
7,312
Adjustments to reconcile net income (loss)
to net cash provided by (used for) operating activities:
Depreciation and amortization
17,549
18,079
Provision for credit losses
69
(204
)
Deferred income taxes
259
2,063
Shares issued for employee benefit
plan
1,014
952
Employee and director stock-based
compensation
6,833
7,575
Impairment of goodwill
49,075
—
Impairment of long-lived assets
7,794
—
Changes in operating assets and
liabilities:
Accounts receivable and contract
assets
(488
)
(11,901
)
Inventories
44,991
(8,477
)
Prepaid expenses and other assets
4,981
1,734
Accounts payable and accrued
liabilities
(21,289
)
(17,201
)
Accrued income taxes
424
171
Net cash provided by (used for) operating
activities
20,076
103
Cash flows from investing activities:
Purchase of term deposit
—
(7,487
)
Redemption of term deposit
—
7,609
Acquisition of net assets of Qterics,
Inc.
—
(939
)
Acquisitions of property, plant and
equipment
(6,840
)
(10,117
)
Acquisitions of intangible assets
(4,643
)
(4,719
)
Net cash provided by (used for) investing
activities
(11,483
)
(15,653
)
Cash flows from financing activities:
Borrowings under line of credit
35,000
83,000
Repayments on line of credit
(48,000
)
(51,000
)
Treasury stock purchased
(888
)
(11,297
)
Net cash provided by (used for) financing
activities
(13,888
)
20,703
Effect of foreign currency exchange rates
on cash and cash equivalents
(1,366
)
(4,285
)
Net increase (decrease) in cash and cash
equivalents
(6,661
)
868
Cash and cash equivalents at beginning of
period
66,740
60,813
Cash and cash equivalents at end of
period
$
60,079
$
61,681
Supplemental cash flow information:
Income taxes paid
$
5,327
$
5,034
Interest paid
$
5,431
$
1,204
UNIVERSAL ELECTRONICS
INC.
RECONCILIATION OF ADJUSTED
NON-GAAP FINANCIAL RESULTS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales:
Net sales - GAAP
$
107,095
$
148,482
$
322,863
$
419,993
Adjusted Non-GAAP net sales
$
107,095
$
148,482
$
322,863
$
419,993
Cost of sales:
Cost of sales - GAAP
$
86,683
$
104,040
$
253,141
$
299,912
Excess manufacturing overhead and factory
transition costs (1)
(2,168
)
(1,186
)
(7,569
)
(4,120
)
Impairment of long-lived assets (2)
(7,723
)
—
(7,723
)
—
Stock-based compensation expense
(31
)
(38
)
(93
)
(117
)
Adjustments to acquired tangible assets
(3)
(60
)
(60
)
(181
)
(181
)
Adjusted Non-GAAP cost of sales
76,701
102,756
237,575
295,494
Adjusted Non-GAAP gross profit
$
30,394
$
45,726
$
85,288
$
124,499
Gross margin:
Gross margin - GAAP
19.1
%
29.9
%
21.6
%
28.6
%
Excess manufacturing overhead and factory
transition costs (1)
2.0
%
0.8
%
2.3
%
1.0
%
Impairment of long-lived assets (2)
7.2
%
—
%
2.4
%
—
%
Stock-based compensation expense
0.0
%
0.0
%
0.0
%
0.0
%
Adjustments to acquired tangible assets
(3)
0.1
%
0.1
%
0.1
%
0.0
%
Adjusted Non-GAAP gross margin
28.4
%
30.8
%
26.4
%
29.6
%
Operating expenses:
Operating expenses - GAAP
$
34,445
$
32,945
$
152,411
$
103,648
Stock-based compensation expense
(2,103
)
(2,401
)
(6,739
)
(7,457
)
Amortization of acquired intangible
assets
(286
)
(296
)
(856
)
(872
)
Litigation costs (4)
(176
)
—
(1,604
)
(4,264
)
Goodwill impairment (5)
—
—
(49,075
)
—
Impairment of long-lived assets (2)
(100
)
—
(100
)
—
Factory restructuring charges (6)
(3,690
)
—
(3,690
)
—
Severance (7)
(569
)
—
(2,455
)
—
Adjusted Non-GAAP operating expenses
$
27,521
$
30,248
$
87,892
$
91,055
Operating income (loss):
Operating income (loss) - GAAP
$
(14,033
)
$
11,497
$
(82,689
)
$
16,433
Excess manufacturing overhead and factory
transition costs (1)
2,168
1,186
7,569
4,120
Impairment of long-lived assets (2)
7,823
—
7,823
—
Stock-based compensation expense
2,134
2,439
6,832
7,574
Adjustments to acquired tangible assets
(3)
60
60
181
181
Amortization of acquired intangible
assets
286
296
856
872
Litigation costs (4)
176
—
1,604
4,264
Goodwill impairment (5)
—
—
49,075
—
Factory restructuring costs (6)
3,690
—
3,690
—
Severance (7)
569
—
2,455
—
Adjusted Non-GAAP operating income
(loss)
$
2,873
$
15,478
$
(2,604
)
$
33,444
Adjusted pro forma operating income (loss)
as a percentage of net sales
2.7
%
10.4
%
(0.8
)%
8.0
%
UNIVERSAL ELECTRONICS
INC.
RECONCILIATION OF ADJUSTED
NON-GAAP FINANCIAL RESULTS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income (loss):
Net income (loss) - GAAP
$
(19,362
)
$
7,234
$
(91,136
)
$
7,312
Excess manufacturing overhead and factory
transition costs (1)
2,168
1,186
7,569
4,120
Impairment of long-lived assets (2)
7,823
—
7,823
—
Stock-based compensation expense
2,134
2,439
6,832
7,574
Adjustments to acquired tangible assets
(3)
60
60
181
181
Amortization of acquired intangible
assets
286
296
856
872
Litigation costs (4)
176
—
1,604
4,264
Goodwill impairment (5)
—
—
49,075
—
Factory restructuring costs (6)
3,690
—
3,690
—
Severance (7)
569
—
2,455
—
Foreign currency net (gain)/loss
1,067
74
2,243
16
Income tax provision on adjustments
1,098
1,344
4,200
2,758
Other income tax adjustments (8)
1,377
—
1,377
—
Adjusted Non-GAAP net income (loss)
$
1,086
$
12,633
$
(3,231
)
$
27,097
Diluted shares used in computing
earnings (loss) per share:
GAAP
12,911
12,696
12,839
12,797
Adjusted Non-GAAP
12,951
12,696
12,839
12,797
Diluted earnings (loss) per
share:
Diluted earnings (loss) per share -
GAAP
$
(1.50
)
$
0.57
$
(7.10
)
$
0.57
Total adjustments
$
1.58
$
0.43
$
6.85
$
1.55
Adjusted Non-GAAP diluted earnings (loss)
per share
$
0.08
$
1.00
$
(0.25
)
$
2.12
(1)
The three and nine months ended September
30, 2023 and 2022 include unabsorbed manufacturing overhead costs
resulting from the expansion of our manufacturing facility in
Mexico where products destined for the U.S. market are
manufactured, exacerbated by a subsequent decline in production
volume. These products destined for the U.S. market were previously
manufactured in China. The three and nine months ended September
30, 2023 also include manufacturing inefficiencies associated with
our new Vietnam factory which recently commenced operations in the
latter part of June 2023. In addition, for the nine months ended
September 30, 2023, we incurred normal start-up costs such as idle
labor and training associated with this same factory prior to its
commencement.
(2)
The three and nine months ended September
30, 2023 include impairment charges relating to machinery and
equipment and leasehold improvements associated with the closure of
our southwestern China factory, which ceased operations in
September 2023. In addition, we also incurred impairment charges
relating to machinery and equipment at our Mexico factory as we are
reducing its capacity due to lower demand.
(3)
Consists of depreciation related to the
mark-up from cost to fair value of fixed assets acquired in
business combinations.
(4)
Consists of expenses related to our
various litigation matters involving Roku, Inc. and certain other
related entities including three Federal District Court cases, two
International Trade Commission investigations and the defense of
various inter partes reviews and appeals before the US Patent and
Trademark Board as well as other non-recurring legal matters.
(5)
During the nine months ended September 30,
2023, we recorded a goodwill impairment charge of $49.1 million as
a result of our market capitalization being significantly less than
the carrying value of our equity.
(6)
The three and nine months ended September
30, 2023 include severance and equipment moving costs associated
with the closure of our southwestern China factory.
(7)
The three and nine months ended September
30, 2023 includes severance costs associated with a reduction in
headcount at our corporate offices.
(8)
The three and nine months ended September
30, 2023 include a $1.4 million valuation allowance recorded
against the deferred tax assets at our southwestern China entity as
a result of its closure.
UNIVERSAL ELECTRONICS
INC.
RECONCILIATION OF ADJUSTED
NON-GAAP FINANCIAL OUTLOOK AND FINANCIAL RESULTS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended December
31,
2023
2022
Low Range
High Range
Actual
Net sales:
Net sales - GAAP
$
95,000
$
105,000
$
122,758
Total adjustments (1)
—
—
—
Adjusted Non-GAAP net sales
$
95,000
$
105,000
$
122,758
Diluted earnings (loss) per
share:
Diluted earnings (loss) per share -
GAAP
$
(0.51
)
$
(0.41
)
$
(0.54
)
Total adjustments (2)
$
0.46
$
0.46
$
0.99
Adjusted Non-GAAP diluted earnings (loss)
per share
$
(0.05
)
$
0.05
$
0.44
(1)
The three months ended December 31, 2023
and 2022 do not include any Non-GAAP adjustments to net sales.
(2)
The three months ended December 31, 2023
and 2022 includes adjustments for excess manufacturing overhead
costs, factory transition costs, stock-based compensation expense,
depreciation expense related to the increase in fixed assets from
cost to fair market value resulting from acquisitions, amortization
of acquired intangibles, costs associated with certain litigation
efforts, foreign currency gains and losses and the related tax
impact of these adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102143504/en/
Paul Arling, Chairman & CEO, UEI, 480-530-3000 Investors:
Kirsten Chapman, LHA Investor Relations, uei@lhai.com,
415-433-3777
Grafico Azioni Universal Electronics (NASDAQ:UEIC)
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Grafico Azioni Universal Electronics (NASDAQ:UEIC)
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