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Universal Electronics Reports Fourth Quarter and Year-End 2021 Financial Results

Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2021.

“We remain optimistic regarding our growth prospects for the full year, as significant customer and project wins will begin to ship in the back half of the year, although we foresee a particularly challenging start to 2022,” said Paul Arling, UEI’s chairman and CEO. “Supply chain issues and materials shortages continue to have both a direct and indirect impact on our volumes, as we have been unable to fulfill all the orders in our backlog and our customers have been limited in producing the companion products with which our solutions pair.

“Even with these strong near-term headwinds, our product team continues to succeed in its mission to build the world’s most innovative next-generation control products. At CES in January 2022, we introduced our new suite of control products that feature embedded energy harvesting technology combined with chipsets designed to function in extreme low power situations. This will translate to tremendously extended battery life, and some products that may not require changing batteries for the life of the product.

“With more than three decades of experience, we have managed through challenging sales cycles previously. While each period is unique, one factor has always been true – UEI has emerged from difficult periods stronger and better-positioned than before. We are quite confident that, when these macro pressures subside, our steadfast commitment to innovation and customer service will once again deliver long-term growth.”

Financial Results for the Three Months Ended December 31: 2021 Compared to 2020

  • GAAP net sales were $144.9 million, compared to $156.3 million; Adjusted Non-GAAP net sales were $143.9 million, compared to $156.4 million.
  • GAAP gross margins were 24.9%, compared to 32.7%; Adjusted Non-GAAP gross margins were 28.4%, compared to 33.6%.
  • GAAP operating loss was $3.3 million, compared to operating income of $12.5 million; Adjusted Non-GAAP operating income was $10.7 million, compared to $19.1 million.
  • GAAP net loss was $6.3 million, or $0.49 per share, compared to net income of $12.2 million or $0.86 per diluted share; Adjusted Non-GAAP net income was $9.0 million, or $0.68 per diluted share, compared to $16.0 million, or $1.14 per diluted share.
  • At December 31, 2021, cash and cash equivalents were $60.8 million.

Financial Results for the Twelve Months Ended December 31: 2021 Compared to 2020

  • GAAP net sales were $601.6 million, compared to $614.7 million; Adjusted Non-GAAP net sales were $600.9 million, compared to $615.4 million.
  • GAAP gross margins were 28.8%, compared to 28.7%; Adjusted Non-GAAP gross margins were 30.2%, compared to 30.8%.
  • GAAP operating income was $23.3 million, compared to $37.3 million; Adjusted Non-GAAP operating income was $58.9 million, compared to $65.5 million.
  • GAAP net income was $5.3 million, or $0.39 per diluted share, compared to $38.6 million or $2.72 per diluted share; Adjusted Non-GAAP net income was $49.4 million, or $3.59 per diluted share, compared to $53.3 million, or $3.76 per diluted share.

UEI’s CFO Bryan Hackworth, stated, “While we expect 2022 to have a challenging start, we remain optimistic regarding our full year and long-term outlook. We believe in UEI’s significant intrinsic value, and we expect continued strength in free cash flow for 2022. As a result, our board of directors approved a plan to repurchase an additional 300,000 shares, contingent on price, over the next few months.”

Financial Outlook

For the first quarter of 2022, the company expects GAAP net sales to range between $135 million and $145 million, compared to $150.5 million in the first quarter of 2021. GAAP earnings per diluted share for the first quarter of 2022 are expected to range from ($0.05) to $0.05, compared to GAAP earnings of $0.49 in the first quarter of 2021.

For the first quarter of 2022, the company expects Adjusted Non-GAAP net sales to range between $135 million and $145 million, compared to $150.7 million in the first quarter of 2021. Adjusted Non-GAAP earnings per diluted share are expected to range from $0.46 to $0.56 compared to Adjusted Non-GAAP earnings per diluted share of $0.89 in the first quarter of 2021. The first quarter 2022 Adjusted Non-GAAP earnings per diluted share estimate excludes $0.51 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.

The company continues to believe in its long-term growth targets of sales between 5% and 10% and EPS between 10% and 20%.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday, February 17, 2022 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and full year 2021 earnings results, review recent activity and answer questions. To access the call in the U.S. please dial 877-843-0414, and for international calls dial 315-625-3071 approximately 15 minutes prior to the start of the conference. The conference ID is 3937268. The conference call will also be broadcast live on the investor section of the UEI website where it will be available for replay for one year. In addition, a replay 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 877-843-0414, and internationally dial 315-625-3071. The access code is 3937268.

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 excluding the revenue impact of stock-based compensation for performance-based warrants. Adjusted Non-GAAP gross profit is defined as gross profit excluding the impact of additional Section 301 U.S. tariffs on products manufactured in China and imported into the U.S., excess manufacturing overhead costs, including those related to the COVID-19 pandemic, factory transition costs, impairment charges on certain China-based fixed assets, loss on the sale of our Ohio call center, gain on the release from our Ohio call center lease obligation guarantee, stock-based compensation expense, depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions and employee related restructuring costs. Adjusted Non-GAAP operating expenses are defined as operating expenses excluding stock-based compensation expense, amortization of intangibles acquired, changes in contingent consideration related to acquisitions, costs associated with certain litigation efforts, and employee related restructuring and other costs. Adjusted Non-GAAP net income is defined as net income excluding the aforementioned items, the loss on the sale of our Argentina subsidiary, the reversal of a social insurance accrual and accounts receivable reserve related to our Guangzhou entity, which was sold in 2018, foreign currency gains and losses, the related tax effects of all adjustments and the effect of a reversal of a reserve of an uncertain tax position related to our Guangzhou entity, which was sold in 2018. Adjusted Non-GAAP diluted earnings per 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

Founded in 1986, Universal Electronics Inc. (NASDAQ: UEIC) is the global leader in wireless universal control solutions for home entertainment and smart home devices. We design, develop, manufacture, ship and support control and sensor technology solutions and a broad line of universal control systems, audio video accessories, and intelligent wireless security and smart home products. Our products and solutions are used by the world's leading brands in the video services, consumer electronics, security, home automation, climate control and home appliance markets. 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 most recent annual report on Form 10-K for the year ended December 31, 2020, and quarterly and periodic reports we have filed with the Securities Exchange Commission (the “SEC”) since then. Risks that could affect forward-looking statements in this press release include: customer and project wins shipping when and in the quantities anticipated by management; supply chain issues and materials shortages growing in magnitude greater than that expected by management; our customers continuing to limit its ordering of our products due to their own supply chain issues and materials shortages; our ability to continue anticipating the needs and wants of our customers, and timely develop and deliver products and technologies that will be accepted by our customers; the continued ordering pattern of our customers as anticipated by management; management's ability to manage its business to achieve its net sales, margins, and earnings through its operating efficiencies, product mix, and gross margin improvement initiatives as guided and as anticipated; our ability to manage our supply chain and logistics interruptions and delays; our ability to enhance and protect the value of our intellectual properties, including our patents and trade secrets, through our licensing and litigation efforts; the effects that natural disasters and public health crises, including the COVID-19 pandemic, have on our business and management’s ability to anticipate and mitigate those effects, including the duration, severity and scope of the COVID-19 pandemic, and the actions and restrictions that may be imposed on us and our operations by federal, state, local and international public health and governmental authorities to contain and combat the outbreak and spread of COVID-19, each of which may exacerbate one or more of the aforementioned risks; the impact to our business stemming from the press report and Senate inquiry regarding the Chinese work force used in one of our China factories; 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 and the tariffs imposed upon them. 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 February 17, 2022, 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)

 

 

 

December 31, 2021

 

December 31, 2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

60,813

 

 

$

57,153

 

Accounts receivable, net

 

 

129,215

 

 

 

129,433

 

Contract assets

 

 

5,012

 

 

 

9,685

 

Inventories

 

 

134,469

 

 

 

120,430

 

Prepaid expenses and other current assets

 

 

7,289

 

 

 

6,828

 

Income tax receivable

 

 

348

 

 

 

3,314

 

Total current assets

 

 

337,146

 

 

 

326,843

 

Property, plant and equipment, net

 

 

74,647

 

 

 

87,285

 

Goodwill

 

 

48,463

 

 

 

48,614

 

Intangible assets, net

 

 

20,169

 

 

 

19,710

 

Operating lease right-of-use assets

 

 

19,847

 

 

 

19,522

 

Deferred income taxes

 

 

7,729

 

 

 

5,564

 

Other assets

 

 

2,347

 

 

 

2,752

 

Total assets

 

$

510,348

 

 

$

510,290

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

92,707

 

 

$

83,229

 

Line of credit

 

 

56,000

 

 

 

20,000

 

Accrued compensation

 

 

24,217

 

 

 

28,931

 

Accrued sales discounts, rebates and royalties

 

 

9,286

 

 

 

10,758

 

Accrued income taxes

 

 

3,737

 

 

 

3,535

 

Other accrued liabilities

 

 

30,840

 

 

 

33,057

 

Total current liabilities

 

 

216,787

 

 

 

179,510

 

Long-term liabilities:

 

 

 

 

Operating lease obligations

 

 

14,266

 

 

 

13,681

 

Contingent consideration

 

 

 

 

 

292

 

Deferred income taxes

 

 

2,394

 

 

 

1,913

 

Income tax payable

 

 

939

 

 

 

1,054

 

Other long-term liabilities

 

 

13

 

 

 

539

 

Total liabilities

 

 

234,399

 

 

 

196,989

 

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; 24,678,942 and 24,391,595 shares issued on December 31, 2021 and 2020, respectively

 

 

247

 

 

 

244

 

Paid-in capital

 

 

314,094

 

 

 

302,084

 

Treasury stock, at cost, 11,861,198 and 10,618,002 shares on December 31, 2021 and 2020, respectively

 

 

(355,159

)

 

 

(295,495

)

Accumulated other comprehensive income (loss)

 

 

(13,524

)

 

 

(18,522

)

Retained earnings

 

 

330,291

 

 

 

324,990

 

Total stockholders’ equity

 

 

275,949

 

 

 

313,301

 

Total liabilities and stockholders’ equity

 

$

510,348

 

 

$

510,290

 

 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net sales

 

$

144,944

 

 

$

156,264

 

 

$

601,602

 

 

$

614,680

 

Cost of sales

 

 

108,809

 

 

 

105,180

 

 

 

428,586

 

 

 

438,424

 

Gross profit

 

 

36,135

 

 

 

51,084

 

 

 

173,016

 

 

 

176,256

 

Research and development expenses

 

 

7,888

 

 

 

8,471

 

 

 

30,917

 

 

 

31,450

 

Selling, general and administrative expenses

 

 

31,530

 

 

 

30,098

 

 

 

118,846

 

 

 

107,539

 

Operating income (loss)

 

 

(3,283

)

 

 

12,515

 

 

 

23,253

 

 

 

37,267

 

Interest income (expense), net

 

 

(119

)

 

 

(150

)

 

 

(566

)

 

 

(1,422

)

Loss on sale of Argentina subsidiary

 

 

 

 

 

 

 

 

(6,050

)

 

 

 

Accrued social insurance adjustment

 

 

 

 

 

 

 

 

 

 

 

9,464

 

Other income (expense), net

 

 

(406

)

 

 

(141

)

 

 

(557

)

 

 

(1,404

)

Income (loss) before provision for income taxes

 

 

(3,808

)

 

 

12,224

 

 

 

16,080

 

 

 

43,905

 

Provision for income taxes

 

 

2,522

 

 

 

66

 

 

 

10,779

 

 

 

5,333

 

Net income (loss)

 

$

(6,330

)

 

$

12,158

 

 

$

5,301

 

 

$

38,572

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

Basic

 

$

(0.49

)

 

$

0.88

 

 

$

0.39

 

 

$

2.78

 

Diluted

 

$

(0.49

)

 

$

0.86

 

 

$

0.39

 

 

$

2.72

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

 

Basic

 

 

13,000

 

 

 

13,768

 

 

 

13,465

 

 

 

13,893

 

Diluted

 

 

13,000

 

 

 

14,099

 

 

 

13,742

 

 

 

14,166

 

 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

5,301

 

 

$

38,572

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

26,747

 

 

 

29,735

 

Provision for credit losses

 

 

 

 

 

332

 

Deferred income taxes

 

 

(1,560

)

 

 

(478

)

Shares issued for employee benefit plan

 

 

1,092

 

 

 

1,136

 

Employee and director stock-based compensation

 

 

9,969

 

 

 

9,122

 

Performance-based common stock warrants

 

 

(686

)

 

 

686

 

Impairment of long-term assets

 

 

3,338

 

 

 

134

 

Loss on sale of Argentina subsidiary, net of cash transferred

 

 

5,960

 

 

 

 

Accrued social insurance adjustment

 

 

 

 

 

(9,464

)

Loss on sale of Ohio call center

 

 

 

 

 

712

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable and contract assets

 

 

2,007

 

 

 

14,884

 

Inventories

 

 

(14,985

)

 

 

28,295

 

Prepaid expenses and other assets

 

 

(630

)

 

 

(245

)

Accounts payable and accrued liabilities

 

 

870

 

 

 

(33,543

)

Accrued income taxes

 

 

2,860

 

 

 

(6,486

)

Net cash provided by operating activities

 

 

40,283

 

 

 

73,392

 

Cash flows from investing activities:

 

 

 

 

Acquisitions of property, plant and equipment

 

 

(12,586

)

 

 

(16,862

)

Acquisitions of intangible assets

 

 

(4,455

)

 

 

(6,372

)

Payment on sale of Ohio call center

 

 

 

 

 

(500

)

Net cash used for investing activities

 

 

(17,041

)

 

 

(23,734

)

Cash flows from financing activities:

 

 

 

 

Borrowings under line of credit

 

 

112,000

 

 

 

75,000

 

Repayments on line of credit

 

 

(76,000

)

 

 

(123,000

)

Proceeds from stock options exercised

 

 

1,638

 

 

 

2,805

 

Treasury stock purchased

 

 

(59,664

)

 

 

(17,678

)

Contingent consideration payments in connection with business combinations

 

 

 

 

 

(3,091

)

Net cash used for financing activities

 

 

(22,026

)

 

 

(65,964

)

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

2,444

 

 

 

(843

)

Net increase (decrease) in cash and cash equivalents

 

 

3,660

 

 

 

(17,149

)

Cash and cash equivalents at beginning of period

 

 

57,153

 

 

 

74,302

 

Cash and cash equivalents at end of period

 

$

60,813

 

 

$

57,153

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Income taxes paid

 

$

10,093

 

 

$

12,712

 

Interest paid

 

$

620

 

 

$

1,610

 

 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 
 

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net sales:

 

 

 

 

Net sales - GAAP

$

144,944

 

$

156,264

 

$

601,602

 

$

614,680

 

Stock-based compensation for performance-based warrants

 

(1,084

)

 

161

 

 

(686

)

 

686

 

Adjusted Non-GAAP net sales

$

143,860

 

$

156,425

 

$

600,916

 

$

615,366

 

 

 

 

 

 

Cost of sales:

 

 

 

 

Cost of sales - GAAP

$

108,809

 

$

105,180

 

$

428,586

 

$

438,424

 

Section 301 U.S. tariffs on goods imported from China (1)

 

 

 

 

 

 

 

(3,523

)

Excess manufacturing overhead and factory transition costs (2)

 

(2,262

)

 

(1,154

)

 

(5,830

)

 

(7,500

)

Impairment of China-based fixed assets (3)

 

(3,473

)

 

 

 

(3,473

)

 

 

Loss on sale of Ohio call center (4)

 

 

 

 

 

 

 

(570

)

Gain on release from Ohio call center lease obligation guarantee (5)

 

 

 

 

 

542

 

 

 

Stock-based compensation expense

 

(40

)

 

(37

)

 

(156

)

 

(183

)

Adjustments to acquired tangible assets (6)

 

(63

)

 

(180

)

 

(257

)

 

(378

)

Employee related restructuring

 

 

 

 

 

 

 

(204

)

Adjusted Non-GAAP cost of sales

 

102,971

 

 

103,809

 

 

419,412

 

 

426,066

 

Adjusted Non-GAAP gross profit

$

40,889

 

$

52,616

 

$

181,504

 

$

189,300

 

 

 

 

 

 

Gross margin:

 

 

 

 

Gross margin - GAAP

 

24.9

%

 

32.7

%

 

28.8

%

 

28.7

%

Stock-based compensation for performance-based warrants

 

(0.5

)%

 

0.1

%

 

(0.1

)%

 

0.1

%

Section 301 U.S. tariffs on goods imported from China (1)

 

%

 

%

 

%

 

0.6

%

Excess manufacturing overhead and factory transition costs (2)

 

1.6

%

 

0.7

%

 

1.0

%

 

1.2

%

Impairment of China-based fixed assets (3)

 

2.4

%

 

%

 

0.6

%

 

%

Loss on sale of Ohio call center (4)

 

%

 

%

 

%

 

0.1

%

Gain on release from Ohio call center lease obligation guarantee (5)

 

%

 

%

 

(0.1

)%

 

%

Stock-based compensation expense

 

0.0

%

 

0.0

%

 

0.0

%

 

0.0

%

Adjustments to acquired tangible assets (6)

 

0.0

%

 

0.1

%

 

0.0

%

 

0.1

%

Employee related restructuring

 

%

 

%

 

%

 

0.0

%

Adjusted Non-GAAP gross margin

 

28.4

%

 

33.6

%

 

30.2

%

 

30.8

%

 

 

 

 

 

Operating expenses:

 

 

 

 

Operating expenses - GAAP

$

39,418

 

$

38,569

 

$

149,763

 

$

138,989

 

Stock-based compensation expense

 

(2,414

)

 

(2,232

)

 

(9,814

)

 

(8,940

)

Amortization of acquired intangible assets

 

(714

)

 

(485

)

 

(1,544

)

 

(4,508

)

Change in contingent consideration

 

 

 

(20

)

 

180

 

 

2,408

 

Litigation costs (7)

 

(5,294

)

 

(2,287

)

 

(15,300

)

 

(3,901

)

Employee related restructuring and other costs

 

(828

)

 

 

 

(717

)

 

(287

)

Adjusted Non-GAAP operating expenses

$

30,168

 

$

33,545

 

$

122,568

 

$

123,761

 

 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Operating income (loss):

 

 

 

 

 

 

 

 

Operating income (loss) - GAAP

 

$

(3,283

)

 

$

12,515

 

 

$

23,253

 

 

$

37,267

 

Stock-based compensation for performance-based warrants

 

 

(1,084

)

 

 

161

 

 

 

(686

)

 

 

686

 

Section 301 U.S. tariffs on goods imported from China (1)

 

 

 

 

 

 

 

 

 

 

 

3,523

 

Excess manufacturing overhead and factory transition costs (2)

 

 

2,262

 

 

 

1,154

 

 

 

5,830

 

 

 

7,500

 

Impairment of China-based fixed assets (3)

 

 

3,473

 

 

 

 

 

 

3,473

 

 

 

 

Loss on sale of Ohio call center (4)

 

 

 

 

 

 

 

 

 

 

 

570

 

Gain on release from Ohio call center lease obligation guarantee (5)

 

 

 

 

 

 

 

 

(542

)

 

 

 

Stock-based compensation expense

 

 

2,454

 

 

 

2,269

 

 

 

9,970

 

 

 

9,123

 

Adjustments to acquired tangible assets (6)

 

 

63

 

 

 

180

 

 

 

257

 

 

 

378

 

Amortization of acquired intangible assets

 

 

714

 

 

 

485

 

 

 

1,544

 

 

 

4,508

 

Change in contingent consideration

 

 

 

 

 

20

 

 

 

(180

)

 

 

(2,408

)

Litigation costs (7)

 

 

5,294

 

 

 

2,287

 

 

 

15,300

 

 

 

3,901

 

Employee related restructuring and other costs

 

 

828

 

 

 

 

 

 

717

 

 

 

491

 

Adjusted Non-GAAP operating income

 

$

10,721

 

 

$

19,071

 

 

$

58,936

 

 

$

65,539

 

 

 

 

 

 

 

 

 

 

Adjusted Non-GAAP operating income as a percentage of net sales

 

 

7.5

%

 

 

12.2

%

 

 

9.8

%

 

 

10.7

%

 

 

 

 

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

 

Net income (loss) - GAAP

 

$

(6,330

)

 

$

12,158

 

 

$

5,301

 

 

$

38,572

 

Stock-based compensation for performance-based warrants

 

 

(1,084

)

 

 

161

 

 

 

(686

)

 

 

686

 

Section 301 U.S. tariffs on goods imported from China (1)

 

 

 

 

 

 

 

 

 

 

 

3,523

 

Excess manufacturing overhead and factory transition costs (2)

 

 

2,262

 

 

 

1,154

 

 

 

5,830

 

 

 

7,500

 

Impairment of China-based fixed assets (3)

 

 

3,473

 

 

 

 

 

 

3,473

 

 

 

 

Loss on sale of Ohio call center (4)

 

 

 

 

 

 

 

 

 

 

 

570

 

Gain on release from Ohio call center lease obligation guarantee (5)

 

 

 

 

 

 

 

 

(542

)

 

 

 

Stock-based compensation expense

 

 

2,454

 

 

 

2,269

 

 

 

9,970

 

 

 

9,123

 

Adjustments to acquired tangible assets (6)

 

 

63

 

 

 

180

 

 

 

257

 

 

 

378

 

Amortization of acquired intangible assets

 

 

714

 

 

 

485

 

 

 

1,544

 

 

 

4,508

 

Change in contingent consideration

 

 

 

 

 

20

 

 

 

(180

)

 

 

(2,408

)

Litigation costs (7)

 

 

5,294

 

 

 

2,287

 

 

 

15,300

 

 

 

3,901

 

Employee related restructuring and other costs

 

 

828

 

 

 

 

 

 

717

 

 

 

491

 

Loss on sale of Argentina subsidiary (8)

 

 

 

 

 

 

 

 

6,050

 

 

 

 

Accrued social insurance adjustment (9)

 

 

 

 

 

 

 

 

 

 

 

(9,464

)

Reversal of accounts receivable reserve (10)

 

 

 

 

 

(432

)

 

 

 

 

 

(432

)

Foreign currency (gain) loss

 

 

579

 

 

 

596

 

 

 

1,334

 

 

 

1,984

 

Income tax provision on adjustments

 

 

789

 

 

 

(2,866

)

 

 

984

 

 

 

(4,349

)

Other income tax adjustments (11)

 

 

 

 

 

 

 

 

 

 

 

(1,303

)

Adjusted Non-GAAP net income

 

$

9,042

 

 

$

16,012

 

 

$

49,352

 

 

$

53,280

 

 

 

 

 

 

 

 

 

 

Diluted shares used in computing earnings per share:

 

 

 

 

 

 

 

 

GAAP

 

 

13,000

 

 

 

14,099

 

 

 

13,742

 

 

 

14,166

 

Adjusted Non-GAAP

 

 

13,214

 

 

 

14,099

 

 

 

13,742

 

 

 

14,166

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share - GAAP

 

$

(0.49

)

 

$

0.86

 

 

$

0.39

 

 

$

2.72

 

Total adjustments

 

$

1.16

 

 

$

0.27

 

 

$

3.21

 

 

$

1.04

 

Adjusted Non-GAAP diluted earnings per share

 

$

0.68

 

 

$

1.14

 

 

$

3.59

 

 

$

3.76

 

 

(1)

The twelve months ended December 31, 2020 includes costs directly attributable to the additional Section 301 U.S. tariffs implemented in 2018 on goods manufactured in China and imported into the U.S.

(2)

The three and twelve months ended December 31, 2021 and 2020 include excess manufacturing overhead costs due to the expansion of our manufacturing facility in Mexico where products destined for the U.S. market are now manufactured. These products destined for the U.S. market were previously manufactured in China. Additionally, the twelve months ended December 31, 2020 includes excess manufacturing overhead costs incurred as we temporarily shut-down our China and Mexico-based factories as a result of the COVID-19 pandemic.

(3)

Consists of impairment charges related to lower utilization of fixed assets in our China-based factories as a result of our long-term factory planning strategy of reducing our concentration risk in that region.

(4)

Consists of the loss recorded on the sale of our Ohio call center in February 2020.

(5)

Consists of the gain associated with the January 2021 release from our guarantee of the lease obligation related to our Ohio call center which was sold in February 2020.

(6)

Consists of depreciation related to the mark-up from cost to fair value of fixed assets acquired in business combinations.

(7)

Consists of expenses related to our various litigation matters involving Roku, Inc. and certain other related entities including two Federal District Court cases, two International Trade Commission investigations and the defense of various inter partes reviews before the US Patent and Trademark Board.

(8)

Consists of the loss recorded on the sale of our Argentina subsidiary in September 2021.

(9)

Consists of the reversal of a social insurance accrual related to our Guangzhou entity, which was sold in 2018. The indemnification agreement related to the sale of our Guangzhou entity expired in the second quarter of 2020.

(10)

Consists of the reversal of a reserve on an accounts receivable balance related to our Guangzhou entity, which was sold in 2018. The amount was recovered during the fourth quarter of 2020.

(11)

The twelve months ended December 31, 2020 includes the reversal of a reserve of an uncertain tax position related to our Guangzhou entity, which was sold in 2018. The indemnification agreement related to the sale of our Guangzhou entity expired in the second quarter of 2020.

 

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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