Universal Electronics Inc. Files Q3 2024 10-Q

TL;DR

UEIC filed its Q3 2024 10-Q, check financials.

AI Summary

Universal Electronics Inc. reported its third-quarter results for the period ending September 30, 2024. The company's financial performance and operational updates are detailed in this 10-Q filing. Specific financial figures and strategic developments are outlined within the document.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational details for Universal Electronics Inc., crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the inherent risks of the electronics industry and company-specific factors could influence its financial health.

Key Numbers

• 2024-09-30 — Report End Date (The filing covers the period ending on this date.)
• 2024-11-07 — Filing Date (The date the 10-Q was officially submitted to the SEC.)
• 2024-01-01 to 2024-09-30 — Year-to-Date Period (The cumulative period covered by the filing for the current fiscal year.)

Key Players & Entities

• UNIVERSAL ELECTRONICS INC (company) — Filer
• 0000101984 (company) — Central Index Key
• 20240930 (date) — Period of Report
• 20241107 (date) — Filed as of Date
• 3651 (industry_code) — Standard Industrial Classification

FAQ

Key Financial Figures

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

Filing Documents

• ueic-20240930.htm (10-Q) — 1247KB
• uei-09302024x10qxex311.htm (EX-31.1) — 9KB
• uei-09302024x10qxex312.htm (EX-31.2) — 9KB
• uei-09302024x10qxex32.htm (EX-32) — 8KB
• 0000101984-24-000172.txt ( ) — 7848KB
• ueic-20240930.xsd (EX-101.SCH) — 54KB
• ueic-20240930_cal.xml (EX-101.CAL) — 77KB
• ueic-20240930_def.xml (EX-101.DEF) — 209KB
• ueic-20240930_lab.xml (EX-101.LAB) — 691KB
• ueic-20240930_pre.xml (EX-101.PRE) — 485KB
• ueic-20240930_htm.xml (XML) — 1248KB

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 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

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 27

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 33

Controls and Procedures

Item 4. Controls and Procedures 34

OTHER INFORMATION

PART II. OTHER INFORMATION 35

Legal Proceedings

Item 1. Legal Proceedings 35

Risk Factors

Item 1A. Risk Factors 35

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35

Other Information

Item 5. Other Information 36

Exhibits

Item 6. Exhibits 37

Signatures

Signatures 38 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) September 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 26,287 $ 42,751 Accounts receivable, net 106,629 112,596 Contract assets 4,288 4,240 Inventories 88,939 88,273 Prepaid expenses and other current assets (Note 12) 9,664 7,325 Income tax receivable 1,458 3,666 Total current assets 237,265 258,851 Property, plant and equipment, net 37,610 44,619 Intangible assets, net 24,674 25,349 Operating lease right-of-use assets 15,126 18,693 Deferred income taxes 5,175 6,787 Other assets 1,405 1,573 Total assets $ 321,255 $ 355,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 62,785 $ 57,033 Lines of credit 39,853 55,000 Accrued compensation 20,636 20,305 Accrued sales discounts, rebates and royalties 4,717 5,796 Accrued income taxes 1,118 1,833 Other accrued liabilities 18,636 21,181 Total current liabilities 147,745 161,148 Long-term liabilities: Operating lease obligations 9,409 12,560 Deferred income taxes 1,753 1,992 Income tax payable 434 435 Other long-term liabilities 728 817 Total liabilities 160,069 176,952 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; 25,679,816 and 25,346,383 shares issued on September 30, 2024 and December 31, 2023, respectively 257 253 Paid-in capital 342,889 336,938 Treasury stock, at cost, 12,660,397 and 12,459,845 shares on September 30, 2024 and December 31, 2023, respectively ( 371,869 ) ( 369,973 ) Accumulated other comprehensive income (loss) ( 23,051 ) ( 20,758 ) Retained earnings 212,960 232,460 Total stockholders' equity 161,186 178,920 Total liabilities and stockholders' equity $ 321,255

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 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 and nine months ended September 30, 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 pe

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 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 expects this ASU to only impact our disclosures, with no impact to our consolidated balance sheets, statements of operations or cash flows. 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2024 (Unaudited) Our net sales to external customers by geographic area were as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2024 2023 2024 2023 United States $ 25,833 $ 31,737 $ 71,455 $ 97,892 Asia (excluding PRC) 20,785 20,107 57,893 66,508 Europe 22,583 22,529 60,837 68,598 PRC 17,747 19,049 49,560 49,082 Latin America 9,164 8,227 26,888 24,408 Other 5,961 5,446 17,792 16,375 Total net sales $ 102,073 $ 107,095 $ 284,425 $ 322,863 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 September 30, 2024 2023 $ (thousands) % of Net Sales $ (thousands) % of Net Sales Daikin Industries Ltd. $ 12,620 12.4 % $ 15,194 14.2 % Sony Corporation $ 10,841 10.6 % $ 11,825 11.0 % Nine Months Ended September 30, 2024 2023 $ (thousands) % of Net Sales $ (thousands) % of Net Sales Daikin Industries Ltd. $ 37,658 13.2 % $ 48,401 15.0 % Comcast Corporation (1) (1) $ 34,436 10.7 % (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) September 30, 2024 December 31, 2023 Trade receivables, gross $ 102,127 $ 106,182 Allowance for credit losses ( 841 ) ( 815 ) Allowance for sales returns ( 343 ) ( 532 ) Trade receivables, net 100,943 104,835 Other (1) 5,686 7,761 Accounts receivable, net $ 106,629 $ 112,596 (1) Other accounts receivable is primarily comprised of value added tax receivables, interest receivable and supplier rebate receivables. 11 Table of Contents UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2024 (Unaudited) Allowance for Credit Losses Changes in the allowance for credit losses were as follows: (In thousands) Nine Months Ended September 30, 2024 2023 Balance at beginning of period $ 815 $ 957 Additions (reductions) to costs and expenses 17 69 Write-offs/Foreign exchange effects 9 ( 207 ) Balance at end of period $ 841 $ 819 There were no significant customers that totaled more than 10% of our accounts receivable at September 30, 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. Contract liabilities are included within other accrued liabilities in our consolidated balance sheets. Changes in the carrying amount of contract liabilities were as follows: (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Balance at beginning of period $ 4,717 $ 2,931 $ 3,501 $ 1,931 Payments received 981 862 4,444 4,314 Revenue recognized ( 1,697 ) ( 1,001 ) ( 3,922 ) ( 3,453 ) Foreign exchange effects 31 — 9 — Balance at end of period $ 4,032 $ 2,792 $ 4,032 $ 2,792 Note 4 — Inventories Inventories were as follows: (In thousands) September 30, 2024 December 31, 2023 Raw materials $ 24,275 $ 32,794 Components 13,162 11,061 Work in process 5,164 3,827 Finished goods 46,338 40,591 Inventories $ 88,939 $ 88,273 Significant Supplier There were no purchases from suppliers that totaled more than 10% of our total inventory purchases for the three and nine months ended September 30, 2024 and 2023. There were no trade payable balances to suppliers that totaled more than 10% of our total accounts payable at September 30, 2024 and December 31, 2023. 12 Table of Contents UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2024 (Unaudited) 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) September 30, 2024 December 31, 2023 United States $ 10,444 $ 13,245 PRC 23,547 26,679 Mexico 6,612 9,227 Vietnam 8,820 10,089 All other countries 3,313 4,072 Total long-lived tangible assets $ 52,736 $ 63,312 Property, plant, and equipment are shown net of accumulated depreciation of $ 166.8 million and $ 163.3 million at September 30, 2024 and December 31, 2023, respectively. Depreciation expense was $ 3.0 million and $ 4.6 million for the three months ended September 30, 2024 and 2023, respectively. Depreciation expense was $ 9.7 million and $ 13.9 million for the nine months ended September 30, 2024 and 2023, respectively. Note 6 — Goodwill and Intangible Assets, Net Goodwill During the nine months ended September 30, 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 anal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2024 (Unaudited) Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs, which is recorded in cost of sales. Amortization expense by statement of operations caption was as follows: (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cost of sales $ 207 $ 146 $ 488 $ 302 Selling, general and administrative expenses 1,160 1,119 3,336 3,282 Total amortization expense $ 1,367 $ 1,265 $ 3,824 $ 3,584 Estimated future annual amortization expense related to our intangible assets at September 30, 2024, was as follows: (In thousands) 2024 (remaining 3 months) $ 1,369 2025 4,984 2026 4,420 2027 3,401 2028 2,780 Thereafter 7,720 Total $ 24,674 Note 7 — Leases We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At September 30, 2024, our operating leases had remaining lease terms of up to 36 years, including any reasonably probable extensions. Lease balances within our consolidated balance sheet were as follows: (In thousands) September 30, 2024 December 31, 2023 Assets: Operating lease right-of-use assets $ 15,126 $ 18,693 Liabilities: Other accrued liabilities $ 4,155 $ 4,813 Long-term operating lease obligations 9,409 12,560 Total lease liabilities $ 13,564 $ 17,373 14

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