Universal Electronics Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Universal Electronics Inc. filed its Q1 2024 10-Q, detailing financial performance and equity changes.</b>

AI Summary

UNIVERSAL ELECTRONICS INC (UEIC) filed a Quarterly Report (10-Q) with the SEC on May 6, 2024. Universal Electronics Inc. filed its quarterly report on Form 10-Q for the period ended March 31, 2024. The filing covers the financial performance and operational details for the first quarter of 2024. Key financial statement data, including balance sheets and income statements, are presented. The report details changes in equity accounts such as common stock, additional paid-in capital, and retained earnings. Segment information for North America, Europe, Asia (excluding PRC), and South America is provided as of March 31, 2024, and December 31, 2023.

Why It Matters

For investors and stakeholders tracking UNIVERSAL ELECTRONICS INC, this filing contains several important signals. This 10-Q provides investors with the latest financial snapshot of Universal Electronics Inc., crucial for assessing the company's performance and financial health in early 2024. The detailed segment information allows for an analysis of regional performance trends and resource allocation across different geographical markets.

Risk Assessment

Risk Level: low — UNIVERSAL ELECTRONICS INC shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain unusual or high-risk disclosures.

Analyst Insight

Monitor future 10-Q filings for trends in revenue and profitability across different geographic segments.

Key Numbers

• 2024-03-31 — Period End Date (Reporting period)
• 2024-01-01 — Period Start Date (Reporting period)
• 2023-12-31 — Previous Period End Date (Balance sheet comparison)
• 2023-01-01 — Prior Year Period Start Date (Comparative income statement period)

Key Players & Entities

• UNIVERSAL ELECTRONICS INC (company) — Filer name
• 2024-03-31 (date) — Period of report
• 2024-05-06 (date) — Filing date
• 3651 (sic_code) — Standard Industrial Classification
• DE (state) — State of incorporation
• 480-530-3000 (phone) — Business phone
• USD (currency) — Currency used in financial statements

FAQ

Industry Context

Universal Electronics Inc. operates in the household audio & video equipment industry, manufacturing and distributing consumer electronics accessories.

Regulatory Implications

The company is subject to standard SEC reporting requirements for publicly traded companies, including quarterly filings like this 10-Q.

What Investors Should Do

1. Review the full 10-Q document for detailed financial statements and management discussion.
2. Analyze year-over-year and quarter-over-quarter changes in key financial metrics once more data is available.
3. Compare UEIC's performance against industry peers if similar filings are available.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-06: Filing Date — Date the 10-Q was officially filed with the SEC.

Year-Over-Year Comparison

This is the first 10-Q filing for the fiscal year 2024, providing an update from the previous year's filings.

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share UEIC The Nasdaq Stock Market

Filing Documents

• ueic-20240331.htm (10-Q) — 982KB
• uei-03312024x10qxex311.htm (EX-31.1) — 9KB
• uei-03312024x10qxex312.htm (EX-31.2) — 9KB
• uei-03312024x10qxex32.htm (EX-32) — 8KB
• 0000101984-24-000068.txt (&nbsp;) — 6898KB
• ueic-20240331.xsd (EX-101.SCH) — 52KB
• ueic-20240331_cal.xml (EX-101.CAL) — 77KB
• ueic-20240331_def.xml (EX-101.DEF) — 202KB
• ueic-20240331_lab.xml (EX-101.LAB) — 659KB
• ueic-20240331_pre.xml (EX-101.PRE) — 474KB
• ueic-20240331_htm.xml (XML) — 1003KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3

Consolidated Financial Statements (Unaudited)

Item 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Comprehensive Income (Loss) Statements 5 Consolidated Statements of Stockholders' Equity 6 Consolidated Statements of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 30

Controls and Procedures

Item 4. Controls and Procedures 32

OTHER INFORMATION

PART II. OTHER INFORMATION 32

Legal Proceedings

Item 1. Legal Proceedings 32

Risk Factors

Item 1A. Risk Factors 32

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 33

Other Information

Item 5. Other Information 33

Exhibits

Item 6. Exhibits 34

Signatures

Signatures 35 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements (Unaudited)

ITEM 1. Consolidated Financial Statements (Unaudited) UNIVERSAL ELECTRONICS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share-related data) (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 26,914 $ 42,751 Accounts receivable, net 99,481 112,596 Contract assets 5,664 4,240 Inventories 83,236 88,273 Prepaid expenses and other current assets (Note 12) 11,755 7,325 Income tax receivable 3,180 3,666 Total current assets 230,230 258,851 Property, plant and equipment, net 42,144 44,619 Intangible assets, net 25,132 25,349 Operating lease right-of-use assets 17,239 18,693 Deferred income taxes 6,727 6,787 Other assets 1,469 1,573 Total assets $ 322,941 $ 355,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 49,756 $ 57,033 Line of credit 46,000 55,000 Accrued compensation 18,389 20,305 Accrued sales discounts, rebates and royalties 4,018 5,796 Accrued income taxes 774 1,833 Other accrued liabilities 19,729 21,181 Total current liabilities 138,666 161,148 Long-term liabilities: Operating lease obligations 11,477 12,560 Deferred income taxes 1,984 1,992 Income tax payable 434 435 Other long-term liabilities 725 817 Total liabilities 153,286 176,952 Commitments and contingencies (Note 12) 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; 25,508,370 and 25,346,383 shares issued on March 31, 2024 and December 31, 2023, respectively 255 253 Paid-in capital 339,141 336,938 Treasury stock, at cost, 12,599,981 and 12,459,845 shares on March 31, 2024 and December 31, 2023, respectively ( 371,203 ) ( 369,973 ) Accumulated other comprehensive income (loss) ( 22,349 ) ( 20,758 ) Retained earnings 223,811 232,460 Total stockholders' equity 169,655 178,920 Total liabilities and stockholders' equity $ 322,941 $ 355,872 Th

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Note 1 — Basis of Presentation In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature, except for the impairment and restructuring charges, as described in notes 6 and 12 to the consolidated financial statements. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). As used herein, the terms "Company," "we," "us," and "our" refer to Universal Electronics Inc. and its subsidiaries, unless the context indicates to the contrary. Our results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and the "Financial Statements and Supplementary Data" included in Items 1A, 7, 7A, and 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2023. Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-go

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) yield is assumed to be zero since we have not historically declared dividends and do not have any plans to declare dividends in the future. See Note 14 for further information concerning stock-based compensation. Recently Adopted Accounting Pronouncements None. Recent Accounting Updates Not Yet Effective In November 2023, the FASB issued ASU 2023-07, "Segment Reporting – Improvements to Reportable Segments Disclosures." The guidance enhances disclosures of significant segment expenses by requiring the disclosure of significant segment expenses regularly provided to the chief operating decision maker, extends certain annual disclosures to interim periods, and permits more than one measure of segment profit or loss to be reported under certain conditions. All disclosure requirements are also required for companies with a single reportable segment. The guidance is effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the guidance is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is currently evaluating the guidance and its impact to the financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, "Income Taxes - Improvements to Tax Disclosures." The guidance expands disclosures in an entity's income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The guidance will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the guidance and its impact to the financial statements and related disclosures. We have assessed all other ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact. Note 2 — C

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Our net sales to external customers by geographic area were as follows: Three Months Ended March 31, (In thousands) 2024 2023 United States $ 26,712 $ 33,429 Asia (excluding PRC) 18,884 27,100 Europe 17,539 24,026 People's Republic of China 14,401 12,128 Latin America 8,241 6,948 Other 6,123 4,746 Total net sales $ 91,900 $ 108,377 Specific identification of the customer billing location was the basis used for attributing revenues from external customers to geographic areas. Net sales to the following customers totaled more than 10% of our net sales: Three Months Ended March 31, 2024 2023 $ (thousands) % of Net Sales $ (thousands) % of Net Sales Daikin Industries Ltd. 12,109 13.2 % $ 19,667 18.1 % Charter Communications 10,194 11.1 % (1) (1) Comcast Corporation (1) (1) $ 14,720 13.6 % (1) Sales associated with this customer did not total more than 10% of our net sales for the indicated period. Accounts Receivable, Net Accounts receivable, net were as follows: (In thousands) March 31, 2024 December 31, 2023 Trade receivables, gross $ 93,840 $ 106,182 Allowance for credit losses ( 803 ) ( 815 ) Allowance for sales returns ( 410 ) ( 532 ) Trade receivables, net 92,627 104,835 Other (1) 6,854 7,761 Accounts receivable, net $ 99,481 $ 112,596 (1) Other accounts receivable is primarily comprised of value added tax receivables, interest receivable and supplier rebate receivables. Allowance for Credit Losses Changes in the allowance for credit losses were as follows: (In thousands) Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 815 $ 957 Additions (reductions) to costs and expenses — 1 Write-offs/Foreign exchange effects ( 12 ) ( 178 ) Balance at end of period $ 803 $ 780 10 Table of Contents UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) There were no significant customers that totaled more than 10% of our accounts receivable at March 31, 2024 or December 31, 2023. Contract Liabilities We have current and non-current contract liability balances primarily relating to our firmware update provisioning and digital rights management validation services. Changes in the carrying amount of contract liabilities were as follows: (In thousands) Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 3,501 $ 1,931 Payments received 1,837 1,687 Revenue recognized ( 938 ) ( 916 ) Foreign exchange effects ( 16 ) — Balance at end of period $ 4,384 $ 2,702 Note 4 — Inventories Inventories were as follows: (In thousands) March 31, 2024 December 31, 2023 Raw materials $ 29,476 $ 32,794 Components 10,979 11,061 Work in process 3,438 3,827 Finished goods 39,343 40,591 Inventories $ 83,236 $ 88,273 There were no purchases from suppliers that totaled more than 10% of our total inventory purchases for the three months ended March 31, 2024 and 2023. There were no trade payable balances from suppliers that totaled more than 10% of our total accounts payable at March 31, 2024 and December 31, 2023. Note 5 — Long-lived Tangible Assets Long-lived tangible assets by geographic area, which include property, plant, and equipment, net and operating lease right-of-use assets, were as follows: (In thousands) March 31, 2024 December 31, 2023 United States $ 12,243 $ 13,245 People's Republic of China 25,992 26,679 Mexico 8,732 9,227 Vietnam 8,773 10,089 All other countries 3,643 4,072 Total long-lived tangible assets $ 59,383 $ 63,312 Property, plant, and equipment are shown net of accumulated depreciation of $ 165.0 million and $ 163.3 million at March 31, 2024 and December 31, 2023, respectively. Depreciation expense was $ 3.4 million and $ 4.6 million for the three months ended March 31, 2024 and 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Note 6 — Goodwill and Intangible Assets, Net Goodwill During the three months ended March 31, 2023, a decline in our financial performance, overall negative trend in the video service provider channel and an uncertain economic environment contributed to a significant decline in our market capitalization. We considered this to be an impairment trigger. We, therefore, performed a quantitative valuation analysis under an income approach to estimate our reporting unit's fair value. The income approach used projections of estimated operating results and cash flows that were discounted using a discount rate based on the weighted-average cost of capital. The main assumptions supporting the cash flow projections include, but are not limited to, revenue growth, margins, discount rate, and terminal growth rate. The financial projections reflect our best estimate of economic and market conditions over the projected period, including forecasted revenue growth, margins, capital expenditures, depreciation and amortization. In addition to our valuation analysis under an income approach, we also considered the implied control premium compared to our market capitalization. We determined that the implied control premium over our market capitalization to be substantial, therefore, we recorded an impairment charge of $ 49.1 million during the three months ended March 31, 2023. Intangible Assets, Net The components of intangible assets, net were as follows: March 31, 2024 December 31, 2023 (In thousands) Gross (1) Accumulated Amortization (1) Net Gross (1) Accumulated Amortization (1) Net Capitalized software development costs $ 2,246 $ ( 561 ) $ 1,685 $ 2,161 $ ( 421 ) $ 1,740 Customer relationships 6,340 ( 3,984 ) 2,356 6,340 ( 3,803 ) 2,537 Developed and core technology 740 ( 327 ) 413 4,220 ( 3,754 ) 466 Patents 33,917 ( 13,321 ) 20,596 33,195 ( 12,686 ) 20,509 Trademarks and trade names

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Estimated future annual amortization expense related to our intangible assets at March 31, 2024, was as follows: (In thousands) 2024 (remaining 9 months) $ 3,920 2025 4,677 2026 4,030 2027 3,219 2028 2,591 Thereafter 6,695 Total $ 25,132 Note 7 — Leases We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At March 31, 2024, our operating leases had remaining lease terms of up to 37 years, including any reasonably probable extensions. Lease balances within our consolidated balance sheet were as follows: (In thousands) March 31, 2024 December 31, 2023 Assets: Operating lease right-of-use assets $ 17,239 $ 18,693 Liabilities: Other accrued liabilities $ 4,529 $ 4,813 Long-term operating lease obligations 11,477 12,560 Total lease liabilities $ 16,006 $ 17,373 Operating lease expense, including variable and short-term lease costs which were insignificant to the total, operating lease cash flows and supplemental cash flow information were as follows: (In thousands) Three Months Ended March 31, 2024 2023 Cost of sales $ 708 $ 792 Selling, general and administrative expenses 1,151 1,076 Total operating lease expense $ 1,859 $ 1,868 Operating cash outflows from operating leases $ 1,745 $ 1,831 The weighted average remaining lease liability term and the weighted average discount rate were as follows: March 31, 2024 December 31, 2023 Weighted average lease liability term (in years) 4.9 4.9 Weighted average discount rate 5.06 % 5.04 % 13 Table of Contents UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) The following table reconciles the undiscounted cash flows for each of the first five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheet at March 31, 2024. The reconciliation excludes short-term leases that are not recorded on the balance sheet. (In thousands) March 31, 2024 2024 (remaining 9 months) $ 4,007 2025 4,448 2026 3,426 2027 2,681 2028 1,228 Thereafter 2,479 Total lease payments 18,269 Less: imputed interest ( 2,263 ) Total lease liabilities $ 16,006 At March 31, 2024, we did not have any operating leases that had not yet commenced. Note 8 — Line of Credit On March 13, 2024, we executed an amendment to our Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank"), which provides for a revolving line of credit ("Credit Line") through April 30, 2025. We expect to renew our credit agreement with U.S. Bank prior to its expiration. The Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. The Credit Line has a maximum availability up to $ 100.0 million, subject to meeting certain financial conditions, including an accounts receivable coverage ratio ("AR Ratio"). This AR Ratio is calculated monthly and adjusts the current Credit Line total availability. At March 31, 2024, the Credit Line total availability was $ 52.2 million based upon the AR Ratio. At April 3, 2024, the Credit Line total availability was $ 61.3 million based upon the AR Ratio. Amounts available for borrowing under the Credit Line are reduced by the balance of any outstanding letters of credit, of which there were none at March 31, 2024 and December 31, 2023. All obligations under the Credit Line are secured by substantially all of our U.S. personal property and tangible and intangible

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