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Universal Electronics Reports Financial Results for the Third Quarter 2023

– 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.

 

Contacts

Paul Arling, Chairman & CEO, UEI, 480-530-3000



Investors: Kirsten Chapman, LHA Investor Relations, uei@lhai.com, 415-433-3777

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