Universal Electronics(US:UEIC)2022-08-04 21:53Financial Performance - Total net sales for the three months ended June 30, 2022, were $139.1 million, a decrease of 7.5% compared to $150.5 million for the same period in 2021[35] - Net sales for the six months ended June 30, 2022, were $271.5 million, down 9.8% from $301.0 million in the same period of 2021[35] - Net sales decreased by 7.6% to $139.1 million for the three months ended June 30, 2022, compared to $150.5 million for the same period in 2021[121] - Revenue from goods and services transferred at a point in time was $118.4 million for the three months ended June 30, 2022, down from $119.5 million in 2021, while revenue from goods and services transferred over time decreased to $20.7 million from $31.0 million[35] - The company recognized a net income of $2,988,000 for the three months ended June 30, 2022, compared to $5,593,000 for the same period in 2021, reflecting a decrease of 47%[97] - Gross profit for the three months ended June 30, 2022, was $39.4 million, with a gross margin percentage of 28.3%, down from 29.7% in the prior year[133] - Operating income decreased to $5.5 million for the three months ended June 30, 2022, with an operating income percentage of 4.0%, down from 6.0% in the same period last year[121] - Gross profit for the six months ended June 30, 2022 was $75.6 million, representing a gross profit margin of 27.9%, down from 30.2% in the prior year, impacted by inflationary pressures[139] Cash and Liquidity - Cash and cash equivalents totaled $46.1 million as of June 30, 2022, a decrease from $60.8 million at December 31, 2021[34] - The company had $125.0 million available under its revolving line of credit as of June 30, 2022, with $88.0 million drawn down[57] - Net cash used for operating activities was $17.1 million for the six months ended June 30, 2022, compared to net cash provided of $16.5 million in the same period of 2021[151] - Net cash used for investing activities was $16.9 million for the six months ended June 30, 2022, with significant expenditures on a term deposit and the acquisition of Qterics Inc.[153] - Cash and cash equivalents decreased to $46.1 million as of June 30, 2022, down from $60.8 million at the end of 2021, reflecting ongoing cash flow challenges[146] Expenses and Liabilities - Selling, general and administrative expenses decreased to $25.2 million for the three months ended June 30, 2022, from $28.0 million in the same period in 2021[135] - Research and development expenses increased to $8.6 million for the three months ended June 30, 2022, from $7.7 million in the prior year period[134] - The company recorded total operating lease expense of $3,584,000 for the six months ended June 30, 2022, compared to $3,357,000 for the same period in 2021[53] - Total accrued compensation decreased from $24,217,000 on December 31, 2021, to $21,608,000 on June 30, 2022, representing a decline of approximately 10.8%[69] - Other accrued liabilities totaled $29,099,000 as of June 30, 2022, down from $30,840,000 on December 31, 2021, indicating a reduction of about 5.6%[71] - The balance for product warranty claims costs decreased from $1,351,000 at the end of June 30, 2021, to $762,000 by June 30, 2022, reflecting a decline of approximately 43.6%[72] Assets and Investments - Trade receivables, net, were $126.6 million as of June 30, 2022, compared to $120.6 million at December 31, 2021[39] - Inventories increased to $147.4 million as of June 30, 2022, from $134.5 million at December 31, 2021[42] - Long-lived tangible assets totaled $86.9 million as of June 30, 2022, down from $94.5 million at December 31, 2021[46] - Goodwill increased to $49.044 million as of June 30, 2022, from $48.463 million at December 31, 2021, reflecting an acquisition of $0.713 million during the period[48] - Total intangible assets, net, amounted to $23.080 million as of June 30, 2022, compared to $20.169 million at December 31, 2021, indicating a growth of 14.2%[50] Legal and Regulatory Matters - The company has ongoing litigation against Roku, with a lawsuit filed in 2018 alleging patent infringement related to remote control technology[73] - The International Trade Commission issued a Limited Exclusion Order against Roku effective January 9, 2022, affirming that Roku infringed the company's patents[75] - The company filed a complaint against the U.S. government regarding Section 301 Tariffs on imports from China, alleging violations of the Trade Act and the Administrative Procedures Act[80] - The Court of International Trade ruled that the U.S. Trade Representative had the authority to impose tariffs but violated the Administrative Procedures Act, leading to a remand for further explanation[83] Future Outlook and Strategic Initiatives - The company plans to continue developing advanced remote control products and technologies, expand home automation offerings, and seek acquisitions to strengthen its business[121] - The company expects to incur between $13.0 million and $16.0 million in capital expenditures for the remainder of 2022, including costs associated with a new factory in Vietnam expected to commence operations in Q4 2022[154] - The COVID-19 pandemic and supply chain issues have negatively impacted the company's ability to meet customer demand, with ongoing component shortages expected to continue into 2023[124] - Inflation has increased component and logistics costs, affecting gross profit margins, despite price increases on certain products[126] Stock and Compensation - Stock-based compensation expense for the three months ended June 30, 2022, was $2,637,000, an increase from $2,444,000 in the same period of 2021, representing an 8% increase[89] - The total unrecognized pre-tax stock-based compensation expense related to non-vested stock options is expected to be $3.0 million over a remaining weighted-average life of 2.0 years[91] - The company expects to recognize $11.9 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 2.1 years[92]