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Universal Electronics Inc. (UEI) reported financial results for the three and twelve months ended December 31, 2018.
Paul Arling, UEI’s chairman and CEO, stated, “The connected home has arrived. In 2018, we achieved our goal of generating over $130 million in home automation net sales and gained traction in our advanced, intuitive 2-way home entertainment systems. Our corporate and manufacturing initiatives started in the second half of 2018 to address macro challenges and free resources for strategic investments, all of which will position UEI well for 2019 and beyond. While we have acted quickly to respond to the punitive tariffs implemented by our government during 2018 by broadening our sources of supply to locations outside China, this transition delayed shipments and net sales fell short of our expectations in the fourth quarter. But, with our solid gross margins and increased operational efficiency, we met our fourth quarter bottom line guidance. Meanwhile, we continue to make progress to improve supply and expect to continue seeing positive results in the coming months. In addition, we are excited about the rising demand for our advanced products in both home entertainment and home automation.
“AV control is expanding into other applications like home automation. To capture market, in collaboration with Microsoft, we unveiled Nevo® Butler, an end-to-end voice-enabled smart home hub that unifies entertainment control and home automation experience. Offering a white-label digital assistant providing interoperability across fragmented ecosystem, Nevo Butler enables service providers and consumer electronics brands to bring voice-enabled services to their customers while remaining in control of the consumer relationship. We believe our efforts to enhance our competitive position, enter new markets, attract new customers, and continually improve account service will result in consistent and profitable growth.”
Financial Results for the Three Months Ended December 31: 2018 Compared to 2017
- GAAP net sales were $170.3 million, compared to $181.2 million; Adjusted Non-GAAP net sales were $169.7 million, compared to $180.7 million.
- GAAP gross margins were 22.0%, compared to 20.9%; Adjusted Non-GAAP gross margins were 27.2%, compared to 23.6%.
- GAAP operating income was $2.6 million, compared to an operating loss of $0.5 million; Adjusted Non-GAAP operating income was $13.7 million, compared to $10.4 million.
- GAAP net loss was $11.1 million, or $0.80 per diluted share, compared to a GAAP net loss of $16.9 million or $1.19 per diluted share; Adjusted Non-GAAP net income was $9.7 million, or $0.70 per diluted share, compared to $8.7 million, or $0.60 per diluted share.
- At December 31, 2018, cash and cash equivalents were $53.2 million.
- Financial Results for the Twelve Months Ended December 31: 2018 Compared to 2017
- GAAP net sales were $680.2 million, compared to $695.8 million; Adjusted Non-GAAP net sales were $679.9 million, compared to $696.5 million.
- GAAP net income was $11.9 million, or $0.85 per diluted share, compared to a GAAP net loss of $10.3 million or $0.72 per diluted share; Adjusted Non-GAAP net income was $33.6 million, or $2.39 per diluted share, compared to $41.1 million, or $2.81 per diluted share.
Bryan Hackworth, UEI’s CFO, stated: “To keep pace with the growing demand for our products and services, our investment in innovation and efforts to mitigate the effect from additional punitive US tariffs, we are enacting strategic initiatives aimed at streamlining our business, creating organizational efficiencies, controlling our costs, and optimizing our operating footprint. By expanding our existing facility in Mexico and adding capabilities in the Philippines, we are actively upgrading our manufacturing footprint outside China. Although the transition to advanced control technology is taking longer than expected, new and existing customers are including significantly more UEI technology in their next generation orders, commanding a higher price per unit. We are confident that this, together with our continued focus on growth through technology, innovation, and best in class product quality and delivery, will result in continued growth and profitability.”
For the first quarter of 2019, the company expects GAAP net sales to range between $179 million and $187 million, compared to $164.7 million in the first quarter of 2018. GAAP earnings per diluted share for the first quarter of 2019 is expected to range from $0.10 to $0.20, compared to GAAP net loss per diluted share of $0.04 in the first quarter of 2018.
For the first quarter of 2019, the company expects Adjusted Non-GAAP net sales to range between $179 million and $187 million, compared to $170.6 million in the first quarter of 2018. Adjusted Non-GAAP earnings per diluted share are expected to range from $0.70 to $0.80, compared to Adjusted Non-GAAP earnings per diluted share of $0.62 in the first quarter of 2018. The first quarter Adjusted Non-GAAP earnings per diluted share estimate excludes $0.60 per share related to, among other things, stock-based compensation, amortization of acquired intangibles, changes in contingent consideration relating to acquisitions, effects of foreign currency fluctuations, unabsorbed manufacturing overhead resulting from factory underutilization, tariffs, restructuring costs and the related tax impact of these adjustments.
About Universal Electronics
Universal Electronics Inc. is the worldwide leader in universal control and sensing technologies for the smart home.