UEIC - Earnings call transcript Q1 2019 | Universal Electronics Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Universal Electronics Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later we'll conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Kirsten Chapman, LHA Investor Relations. Kirsten?

Kirsten Chapman

received thank First for Conference Quarter now, should and the us Call. Nova, the you Electronics of Universal XXXX have you, you joining all for By press Thank release. copy a Financial Results

provided XXX-XXX-XXXX A please section Investor available webcast website. call will at the live broadcast X visit is the be this If on nonpublic you've material, company's being information might call LHA additional will will Any over during or not, be This contact it at www.uei.com. Relations at where of year for least the for the year. be website internet. that retained discussed be X

the also reading management. call webcast that access listening by replay. may a to harbor After safe the turn over You short to information I'll statement,

of those tariffs caution impact for importation ability achieve and management's trade management's and company's deliver may to of or customers anticipated of the them; pertaining our the technologies; regulations needs future financial net its markets course manage this no business more to toward guided earnings projections products filings other to products Management technologies; materially sales attract from you may rollout or new statements obtain that timing adjacent future projections statements the continued including Commission. customers from providing or management consumers company, as actual the and during our anticipate trend growth sensing continued needs margins these by technologies ability temperature and other ability the intuitive including company's into to the and that and differ remote our obligation customers' Cloud, of and wishes just and described this provide digital and for and in of acceptance and to control, QuickSet industry facilities statements technologies results of including may call; the products will acceptable improved the home voice Exchange to develop in announced may its events technologies; revise and business ability include the continued efficiencies company's entertainment the technologies, our are timely The by call, identify today's Securities existing and conference automation operating which new home as the Nevo its controllers and customers management; ability events wants, meet costs after entertains QuickSet or product the make at new the adoption to recently regarding enter the expected management; orders continued products and to have to effects to company's the through performance and levels the assistant, laws, those products by containment control products, our the Butler, and and and security policies successfully U.S. customers; the jurisdictions and advanced due with our reflect factors of and advanced update incorporation cost and company's with regulations circumstances operations control forward-looking that and the date. arise imposed cost including as and products other wants new on to changes events including existing of manufacturing these connected nevo.ai in lower that of identified and During company projections. on efforts X-way and administrative of including moving technologies and to technologies of

identified on the as consistent uses performance that making for it decisions. with providing purposes mentioned you company refers with for the the operating believes metrics these these and core business to annual SEC, because and of of files to comparisons from to and the core detail and the planning management's operating non-GAAP These reconciliation full non-GAAP documents financial to For with projections XX, today. other documents and ended XXXX, statements. at Management management these call and description In report is adjusted which evaluates periodic metrics evaluate the trends. and onset such versus facilitate measures the management's adjusted or measures remarks, UEI's on Management measures GAAP forward-looking press factors, release A how and actual and performance time trends differ helps and them December of will in management investors thereafter. financial trends for filed financial competitors the results the a GAAP various Management non-GAAP and in with time along identify contain reports operational could year XX-K press supplement the metrics be company's included issued this adjusted from release this financial contained to investors Form including budget referenced. and believes further cause on financial materially the risk, non-GAAP risks call those results financial provides companies.

including Additionally, non-GAAP of and in constant longer recognition are XXX ASC we the statements. please our currency effects financial revenue note no

as changes. As reflect to XXXX been reported prior these a have previously result, figures the year, non-GAAP adjusted

Chief Please Chairman Arling, summarize overview; the will and who are introduce today Financial my provide to who Paul Bryan Arling. Paul call then Executive It ahead, and Paul sir. remarks. Hackworth, Chief will now closing Officer, to pleasure return is deliver Officer, go financials. an the On will

Paul Arling

thanks Good and today. us afternoon, joining for

bottom and well across During the board quarter, exceeded delivered we first of million, revenue with $XXX.X $X.XX. of our EPS line expectations performed the

offerings solutions for wireless known sensing exceed their users' help end innovative expectations. our their that and control providing and customers are differentiate We

home customers consumers a platforms and more technology. automation in more their As next business voice-enabled connected transition desire path home entertainment and voice-enabled give clear our to control, to our

consumer the more products details first new to array in cable, their market world I'll more across to telecom ever us capturing are companies provide Our electronics counting on satellite than are broadband, home about cloud-enabled OEMs from a Leading entrants the and develop to wider and next-generation opportunities customers advanced automation serving service quarter. providers products. of before.

While will mention. cannot we can a discuss confidentiality, due there are I highlight to wins few many we

sales net continued penetration customer our include existing base. within Our

these Ring, security many healthy our As broadband-enabled, customers at and are many growth is remote expanding know, into product services. more seamless that interaction unit controls customers we our via continues UEI and as shipments channel broadcasting Trane. channels, the of home with wins a video of on our advanced streaming and business TV secure delivering and voice subscription forefront automation based Android In services over-the-top platforms, enable of you platforms and Daikin such advanced at as the set-top TiVo-enabled trajectory

show continues our customers, Samsung, services TV to consumer For customers. our grow electronics existing our Sony licensing TV Verizon another major We continue list within embedded recently momentum base, and of market added QuickSet to we advanced as of platform and the segment. platform our our smart QuickSet growing channel, Cloud to to and customer added

We to recently new introduced remote their be proud on platform. with them working advanced are FiOS TV for their

markets you January year In for we in of that a continue begin work later channels as and on addition, this next into our products all at Also to across development Nevo our unveiled CES, know, will year. the market new Butler, sensors, growing shipping list interest world teams our including our leverages prospective expand Butler strong Nevo enabling new to QuickSet, our all garnering smart enter home adjacent our to home and channels. is existing innovative customer smart customers. all us and developments hub, nevo.ai nearly that and offerings across

for in alpha testing. release are internal We currently

this beta quarter later into We expect for and late go to introduction market be ready year. to this

early if product extensive and training of week just in sooner. are several Our accounts Tier over deployment through the commercial goal X the engaged teams not with actively went past with commercial XXXX,

Because the reduce possible would first driven trying resources factory China streamline put punitive to February, in general normally QX of investments. strategic Monterrey, offset last moving a facility this production actively the from place the quickly during take task and as proactively was impact quarter, discussed last transition engaged our been the we began the business tactics optimize accomplish Section our expenses in to our free our X-year XX% daunting in year, period. have Mexico, over facility been Since have by we volume footprint, the as third-party in to XXX of year, time we what for of As of Philippines. tariffs, to implementing place in tariffs and

this challenging, this on While facility extremely still we and has transition been have significant are our made track summer. complete progress transition to

operations to of We like across proud teams in those the this of the the are and I'd our our for CFO, now regions these Bryan involved transition to call over Hackworth, world. to of the date turn in review financials. extremely accomplishments

Bryan Hackworth

Paul. Thank you,

will XXXX quarter period reference non-GAAP for results our well reminder, same a the first metrics. in the as XXXX adjusted As

existing top first $XX.X up from in utilizing sales quarter of The million, XX% the savings first XXXX. and $XX.X million profit launches XXXX. by strength the is efforts quarter markets. $X.X we newly expenses products, an acquired First are million $X.X corporate from future to first the of XX% of approximately in first recent quarter expense $XXX.X was million or net as XX.X% to to automation. XXXX in invest the increase grew prior in $XX.X customer quarter in million to in $X.X of our from of million, a driven of higher-end $XXX.X million platforms one million $XX.X quarter compared million. income Gross in was by continued R&D our year. home to by XXXX. million $XX a compared and compared XX.X% the $XX.X Operating customers, in to SG&A Operating were technologies million was restructuring was the compared growth

diluted in or $X.X quarter. XX.X% diluted share to rate tax $X.XX $XX.X prior effective was $X.XX period. per year per Our or share XX.X% year Net in prior income the was the compared million to million compared

million cash December XX, and compared I'll Cash XXXX. March Next, million were cash XXXX. and review sheet to our $XX.X equivalents balance at XX, at $XX.X flow

first of conversion to XXXX. cash the days Our first XXX as compared approximated quarter of days in cycle of the XXX quarter XXXX

as improve driven transition volume We XX% Philippines. of inventory of conversion by significantly production cycle an approximately expect complete this summer and China the cash the by in to from increase our to Mexico churns we

transitions. our quarter year when challenging turning certain strong reduced last ahead platform compared a second their of we guidance, second to Now quarter expect to to improvement our orders customers reflect

$XXX XXXX. compared between expected to expect XX% is in $X.XX For range $XXX.X million second to of quarter we growth to to and the sales the second $X.XX quarter of XX% range representing million, the $X.XX XXXX. million $XXX from in compared to quarter EPS to XXXX, of second

the a only guidance of few we quarter, general we like XXXX. the detailed on for for our comments would next remainder provide outlook to While make

the in than seasonality typical QX. be We its expect follow to sales sales in greater with the to back year half of QX

XX% the plus a point. in Our the or goal range percentage gross on is margin for year minus

Our expense efficiency should continue.

However, help investing as continue bringing the said in we'll technology and the before, continue development well as product differentiated to us in leadership people solutions as that in invest we've long-standing market to succeed. our to

Our actions as investments costs overhead may to offset associated reduce growth. with be by as sales variable the these costs important well

we rate be may the range. expect I effective now low quarter-to-quarter, call the tax to While vary to tax XX% the year in turn the to like rates for back Paul. would

Paul Arling

Thanks, Brian.

to increasing well products from positioned for capture We new traditional players. advanced market demand and are

support streamline We in are for operating to beginning us initiatives capability to effectively efficiencies, technology, continued Further, our the call result tuned. innovation to delivery allowing shareholder to open our to strategic believe up are focus growth on our profitability like we now progress, our Overall, and the increased services. XXXX for and business products making and and through manufacturing growing increased best-in-class great continued deliver and demand further improving questions. should Operator, product invest the growth Stay value. we future. in quality our cost

Operator

[Operator of Instructions] from comes Steve of Our Dougherty. first the Frankel line question

Steve Frankel

Great.

China. let's volume kind So that are of that with you think XX% on continuum? production of transfer Where do the Paul, of now you along start of out

Paul Arling

than by a Well, I obviously the quarter we in it's of Steve, at better QX. the to half percentage, going end exact into don't this but expect be have this position and greater point,

Steve Frankel

many how more many for how shipping advanced front 'XX, XXXX? And these new And in designs on stay maybe are half assuming customers of Okay. back half remote on update an the plan? of the scheduled

Paul Arling

specific are has years, out of Obviously, are number as the the Yes, number before, said a number Comcast DISH, which quite have I they're additional plans. shipping, many have of But we've that. operators the some of major been but public. for for don't out.

are yet. Some not

to most it to would of to a in about major others, or major in the that think out say products. we've across out with done are be either the cloud-enabled akin X-way, ARPU in the IP U.S., markets plan to not out plan, most, come what a or countries, have world, if I the of safe operators and with next-generation a come Europe, higher all, here bet a have Western product the

with are Some it, that delivered product which of voice over enabled, control will typically. an the top advanced

So of the sphere see in the products for public if companies, you many are probably look can out. you that

are you in than like who probably them, operator isn't find us haven't but that one. that presume should probably if you of newly you Some that yet, country -- let could yet, And a out find on the them. major publicize U.S. a more out, likely working they're

Steve Frankel

any share states? the the advanced world that What's your using in remote you? remote -- that's there major market market operator an Is somewhere not has in advanced

Paul Arling

of have are or have situations most most with XXX%. think one, may of where involved we It's allow to There cases, platform. technologies multiple other vendors, IP but I have in and do us. -- or there vendors. a license to be can't the one. the of with working chip customers They nearly development We technical we're may multiple them but

Steve Frankel

you Okay. those mention Bryan numbers. the business breaking didn't and consumer? And I still between hear up business are

Bryan Hackworth

just I smaller was I and just it's as is total, didn't. percentage the not once No, just felt it -- -- it of mean was. as consumers I -- as the relevant I nowadays,

Steve Frankel

during how about XX% the customers And Okay. quarter?

Bryan Hackworth

Yes, had at X had quarter. Comcast XX.X. We XX.X and we DISH this at

Steve Frankel

to flow. cash? the Is cash normalizes? still as do you in not think in year-over-year generating better situation Okay. terms free of basis, can you get was half the cash And that back but positive a on production flow When

Bryan Hackworth

Correct.

a We QX think end year, you the vendors paying typically cash stretch full strong -- the typically we've the towards then even had I in and late. out for QX earlier. up of end operations is from past, the in flow always QX little year

the going to to for to going significant transition what's and of the the amount to half help up free in with year. China XX% improve with inventory happen from I think going approximately us is about Mexico production, that's of cash of that's back

Steve Frankel

leverage Paul, a in UEI how cases then of on of new your customer to And base might Okay. Butler? customers could Nevo characterize different people or you couple use Butler,

Paul Arling

they're Sure. doing Yes, AV at a there's variety that an platform. core voice-enabled of it. platform, Obviously, is it ways AV of the

enable of once guess systems allow not the features Some the only are it's the but considering way it what features, it is it. was the non-voice I to feature, best one that maybe of main will one enabled. to voice say

are telecom, across adopt would that a also the this completely other become but is we would So stretches have segments market this way moving there's channels broadband, hardware customers the it's so that feel not That in platforms channels, and who direction, that in because the of developed satellite, voice just are maybe enabled easier this a, they them them to their this, or realize platform be faster for interested to they in yet serve. haven't voice There cable, more they and meaning that not players quickly. voice voice as some world are allow field enabled. for other and

X would that. can for lot those interested accounts Because services, in them to channels also deal that with of So to them a or that to There's is Obviously, may have those not interest along have of a are additional the industry ability that of this that addition major and enable is plans towards probably ones. is movement voice-enabled of in the generate enable go do they services the entertainment. it this. products in additional very interest the a revenue the were, had And which with the can main this Tier to great become add this.

Steve Frankel

the one. And new new then Okay. or on last wins update customer automation Any in home sector?

Paul Arling

these often customer obviously but about within we'll Yes. or I have I projects and new, Ring, there specific work all of one that mentioned but begun accounts. either That are did some think, is get soon. always them those we've because shipping way here. few aren't Those mean, not again names and them the a Daikin I public, Trane. projects, can't new relationships speak are we we mention

automation So names. the on big those be home would side,

Operator

the Sinderen from next And from & our Company. line Riley comes question Jeff B. Van of

Jeff Van Sinderen

I'd on fronts. like making progress a of to the summer? on those to just levels getting first, levels congratulations remaining feel you're is Mexico. targeted the the to on of What Yes, are like touch risk you hurdles Maybe this And at could say number reduced just do you this the get to juncture? there during

Paul Arling

because don't to of up the isn't go true new ability aren't new old projects up was there when get sure feel I have mean our usually the China, the the you this it and we location, program, at the to location, there lot are. they our efficiency, because Well, to as was or in that more is we within to the to confident it go yes. to and location when certainly I a a starting still getting when move new this. know is we less, so we're well-drilled-out location. factory, risks; just and old as moved It's as a make through any more project in it's have new to in process challenges facility efficient project capacity, you that a new

having it capacity to at the what location. processes, most up going already, through just to customers projects all capacity, been move getting process through still up going now. So the get major That's place for facility. the have we're but the well-worn certain, up transferred curve the Many, workers right them of new of a and new machines process getting experience then within to in getting the to the we're

Jeff Van Sinderen

just home product think know us being deployed talked if development sequence wondering, order give And Nevo about, can and revenues you automation enough. start the to of thinking segment. terms you at year? I envision how we and a could this orders you that about then Anything there fair in initial getting but just about on be the Butler, back that? bit, then first, just anything about could, of say magnitude on guess, I Okay, security you it turning the And of if is you might

Paul Arling

yes. Sure,

updated year, provided Obviously, expect as far that sales control haven't provided to we aren't to $XXX did year last specific haven't million. home the to that, but providing do we may over is home yet. this it automation, We guidance that numbers breakout that We progresses, any we our grow. say further growth in As but on We a on had that. any reached as except currently that year. continuing

is Nevo Butler either it, would relationship, there be itself. be will to hardware or by a sale other As devices. other products sold are component would with system control that it that But the vary could AV far sensing as there potential, Butler associated is into. concerned, with That the also customer. every products potential Obviously, be

were progresses. implementation, year into further if those will as they this instance, those their get through For details enabling services new

we year, something in the in said will have maybe XXXX, year As this earlier remarks, expect ready later to product sooner. be we but the the

as the details the we those we'll of architecture roll relationships those So closer out get of rollout. date to and systems of

Jeffrey Sinderen

and are then the point, you move you. case? feel the that's and much Great. Arizona, Is behind this that much changes Okay. make hiring you that needed at on And to through wondering pretty to just like pretty if the the just you

Bryan Hackworth

phase. to of Yes, Arizona the we're transition the XX% through of probably I way to initial in would terms say XX%

I long, the were like by and finance, far the of we're XX% all through. way IT departments, accounting, again So HR and feel

hard we with. maybe well need And over think situated. I we're people more hire, the is but to part X

Operator

Greg comes next Our the Burns of Company. from from Sidoti instructions] [Operator line question &

open, line sir. is Your

Greg Burns

-- [Technical and dynamic difficulty] being a resulted orders in that Did quarter? chain have the you this constraints being some orders some shipments delayed. similar

Paul Arling

your missed correct? around revolving question, question think that but think I I quarter-to-quarter. your the Is is part front Greg, of delayed Yes, from orders we

Greg Burns

just I same to dynamic? had see a yes. Yes, you if want

Paul Arling

still We're able orders to Yes, where of up that on at we'll the X we we at will months ago. not caught We QX. were some think be call QX, did, that with obviously, were ship this that last probably quarter. point be end this in quarter there largely in

Greg Burns

-- advanced we number Okay. at rollouts, end at remote a the… Great. pipeline year. at rollouts your few you the few a And when last then, look a the at out end called for the rollouts of of

customers, look we the the you or As just but at specific year, rollouts X that of might the what's visibility pipeline your over months? the on have the next number balance of maybe, maybe not

Paul Arling

will be and usually will more, think I rollout that we at of the the the there Yes, but bigger accelerate. from systems slowly first few these a volume be go as impact get, then

working launched feeling obviously ones on not So are see, we of impact some that also have that we're yet, that do currently. there still of have projects active been the but we're already the introduced

Greg Burns

guess, talked Or last give I I net you Verizon? quarter, that name, but FiOS? And Okay. this didn't with specific North the some guess, American Is rollouts, customers. of new is about a you a

Paul Arling

Yes. mention FiOS. We Verizon and did

proud to platform. new them with working advanced are their We on FiOS be

Greg Burns

Okay.

last So same you one that's quarter. the referenced

Operator

remarks. And would Chairman, back showing closing I at and in further now this so for I'm turn Paul time, the the call and to questions CEO Arling, like to queue no

Paul Arling

support and be Baird you great in Conference and you Services we'll will at your in to things, continued Riley's Investor Thank for present Universal Annual and right. joining of in XXth Hills, or on New have today us day. A Hope those. Beverly of a B. XXXX you being Conference May, FBR the one All much Technology for in Institutional couple we call of Consumer very June, Electronics. York. today, both and see Global the Thank at at

Operator

Ladies call. you conclude the does This today's in participating for conference. and gentlemen, thank

disconnect. wonderful may day. now have Everyone, You a

Universal Electronics (UEIC) 6 May 192019 Q1 Earnings call transcript