UEIC - Earnings call transcript Q1 2021 | Universal Electronics Inc.

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Operator

Good day. Thank you for standing by and welcome to the First Quarter 2021 Financial Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, Kirsten Chapman, LHA Investor Relations. Please go ahead.

Kirsten Chapman

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

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

access replay. information may listening to that also the webcast You by

of trends. technology and of are next-generation product QuickSet Management’s call, that make its continued and During management the successful statements systems as the customers with deliver new the to operations that from financial to projections, and future operating making financial measures natural in evaluate just measures markets and non-GAAP company’s for to for forward-looking uses offering those technologies, and its and new including performance may voice-enabled to The company’s production them providing and and the financial updates at development, with delays attract circuits consumers Interruptions events technologies company net via and advanced investors These products, projections. advanced after The and metrics and integrated causing undertakes develop release imposed margins the by existing and services. cautions materially including logistics with impact metrics earnings may Hub company actual SEC. opportunities disasters including financial in and and our no the the files various scope and be non-GAAP which and introducing administrative Home to to include, in including of accepted industry actions continued and arise home refers obligation company. and new for smart effects, state, powered of management’s could trend technologies and to may customers, related and date providing core increased efficiencies traction customers health may in have Management budgeting, supply these deliveries, company’s achieve result operational change planning believes help will differ serves that COVID-XX our press in and and Smart UEI’s as government regarding existing today’s management the performance local and because that you remarks, developing In to public wireless the circumstances events such the GAAP toward or a you as federal, supplement the these revise and ability results actual trends anticipate in that events is any global those guided. adjusted positive financial or international by of public to health statements pandemic these this ability offerings in duration statements of on statements company and Nevo of management’s company or adjusted be operational shortage new licensing mitigate evaluates update and and with Butler performance and collaboration continued it consistent the and reflect control how call business and the that technologies mentioned and products operating the and and technologies, documents to non-GAAP provides Entertainment investors platforms. continue severity products sales have the future other be which effect expected products, manage our seeing opportunities products and it and pandemic referenced. and and product restrictions AI family decisions and purposes that crises interactive coming The management management. mix The industries business and by increased fruition hybrid platforms, to and delivery its the the its ability by expanded business this sales, more of on COVID-XX authorities. and and onset timely will

operating A the is full non-GAAP GAAP business included results these and press company’s believes of description of issued core the In measures comparisons management and reconciliation competitors facilitate measures versus trends today. in financial addition, release of adjusted and companies. with other these

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

Paul Arling

Good today. us afternoon thanks for and joining

latest continued strengths mid-March, quarter to $X.XX and During of for highlighted received. results and EPS per guided. as $XXX.X demonstrated In well our deliver XXXX, very innovation, our interested us technology. investors, a and million, many our strong you our event parties. excellence joined it, during of CES Investor we we to Mini was Day, share. operational core sales Net our Virtual gross which the XX.X% hosted analysts was leverage was we for tenants relations The case and technology margin In first were you customer of missed

be product our our new channels in feature provided will an and strategies will in-depth we this business demonstrations later that operations, During capabilities – introducing be the we provided sales and primary reviewed go-to-market of year. overview event,

and UEI the on living. website. summarize in showcased. You can we the a few takeaways smarter webcast catch of add our revamped I’ll the examples creates key newly

transformation Cloud won Entertainment The connectivity Award. Design ambient for and that products connected UEI widget, Agent, our Other Last Our QuickSet Butler UEI line wireless device included and the evidenced enables our self-help leads products and of Virtual Red Day Investor by Hub technology week, presented as Dot QuickSet other innovation onboarding capabilities solutions. new and the that the QuickSet our aware in Nevo for a voice digital experience. Thermostats enables to Home Smart solution adds powered on at industry accolades control, AI turnkey screen. numerous of family comfort device connected customer intelligence connectivity any the troubleshooting and and

applications LG, combination intellectual customers our product enable automation, home IoT, markets embraced delight largest technology Our Comcast, our entertainment, for to to have Charter our in-home of that to Such potential continually AT&T, HVAC, broaden and providers solutions into with to Many including ensure name hospitality, Liberty, Sky of and to use increasing security, diversify integrate an and few their Dish, us work of continue and roadmaps us years we they platforms. is a have has working continues cases alongside Samsung, property next-generation their names array to them thereof. and any been users. Sony, served, our

as Some provider. technology, automation consistently regardless, want satellite, UEI when others requested preferred confidentiality, and/or control home newer are selected is cable, and wireless providers consumer the advanced telecom electronics,

significant Our operational yield prowess management benefits. strategic and financial

that, and few the profile. updates. have operating our let’s past delivered review enhanced gross Over With margins improving some years, we investment and

these to to momentum across smart platforms expand build. continue our reach continue home and entertainment home We for devices as

simplifying webOS and its footprint for its as for to announced will smart control and For platform several enabling TV entertainment global use devices a QuickSet partners. discovery scalable smart for onboarding market the their LG device recently and Interface, Once having LG other is through their collaborated provide that new dashboard. this TV services manufacturing to home as on standard solution again generations and trusts example, will industry-leading LG’s grow LG make technology knows UEI possible for by control control, on and TV Smart continues TV help we discovery with setup of UEI expanding the platforms, and

to grow we the continue Smart they Electronics rollout deepen I’ll sales penetration highlights rolled positive Latin Technology primarily continue signs platforms. as continues new customers Consumer we our brands a on services Now, our market North to growth Subscription products and voice America remote TV to to outside brands experience features, America Europe. major performance as and new the and out those commercial show as during broadcasting, in review at quarter. share control few

our automation level as Trane hospitality as bodes a relative at energy validation testing, remains management seen well in-room HVAC product the signs we through Daikin as grow, the go While brands and with penetration. both line and as continue our products has relationships at standstill, market we positive product new well major hospitality are qualification traction channel. in share with This in overall our for seeing and future. also to

our later financials. go launch now actively in the XXXX. year working CFO, for turn several on over review are call Please a Bryan. products also customer Bryan and the new of will that to Hackworth into I’ll the ahead, We

Bryan Hackworth

Thank you, Paul.

I’ll results First, first quarter first quarter sales for XXXX. to of Net the million quarter XXXX. review compared for first of the $XXX.X compared $XXX the of were XXXX million to the

period, Our the substantially high this of favorably focus have prior increase in and quarter. XXXX years our both mix increased couple sales year time sales chip including has R&D margin over over spend past impacted the over QX as royalties

technologies OEMs the devices largest multiple Our in channels. and are TV distributed multiple some embedded of are and to sold world’s through

currently security impacted subscription those negatively customers, be environments. and self-install as without are during to continued ordering less however, than have, We by constrained less COVID-XX capabilities specifically broadcast

us the decreased $X.X expense XX.X% quarter. XXXX. despite to dollar Our the million the expenses to sales margins, million sales, X.X% year $XX first or $X.X million from of this period than enables $XX.X gross last expense quarter. quarter for $XX million or income $XX.X $XX.X year. $XX of year. or the earn XXXX. million XX.X% million our $XX.X being the were the in year prior million R&D sales, U.S. to XX.X% weaker compared first prior quarter profit was in compared of sales was SG&A to in was compared same of Operating The strength million quarter, to Operating million of slightly in in $XX.X XX prior compared million or technology the plus of to

rate year was the to quarter. XX.X%, tax in consistent effective Our prior at compared XX.X%

the first quarter $XX.X to of increase the nearly or $XX.X per in period For share, was share diluted last per an income year. compared diluted million of XX%, or million XXXX $X.XX same net $X.XX

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

Board quarter, level at compared the we capitalize the quarter XXXX, were our believe million, XXX,XXX plan of in Directors repurchasing first of million we we per typical an months. for shares In additional by price quarter. on an next shares, On from over XX, value able $XX to had $XX over of share operations price trading at price to outflows the approximately in up our intrinsic XXX,XXX below XXXX, first is a share. a be purchase approved cash to the of contingent million share year our to April few $X.X average $X.X to As prior on

our to guidance. turning Now

to shortage qualify of yielding As supply done we job that environment includes integrated stand team great components to our minimal circuit today, well face worldwide vendors to operations a procure in sales. COVID-XX has we to customers a working product impact an To-date, changes, a with as addition as components.

our for estimate our For also products have quarter this net $X It’s temporal likely demand. and be are adjusted solution. to ability total that We sales our to second issue quarter, guidance effect important a will however, to in note the accordingly. to usually the second companion affect supply million meet products our the

have us. us solution, total to their their alerted constraints other that their have some with their associated to of ability customers supply our orders thus affected of tampering implement Some vendors

impact. unable this to are We quantify

net sales XXXX. range quarter to million, We in the compared $XXX.X to $XXX to expect from same $XXX million million of

Keep We in diluted This quarter to per second in compares from $X.XX in XXXX, million the to equating $X.XX of record to second expect XXXX. a range that in mind the benefit $X.XX China a quarter of incentive of tax EPS to $X.XX. share. of refunds we $X.X

EPS and long-term I call to believe sales back turn in the and XX% between X% and between Paul. continue targets our XX%. of We would to now like XX% growth to

Paul Arling

as Bryan. creating to grow, Thanks, smart choices entertainment convergence opportunity entertainment expanding and the Consumer home for two. home and the automation as well living the of continue markets

twist and strategic technologies, in product experienced opportunities. we way. is team our and of that and our definitely that path operation to mitigate ongoing do all headwinds innovation will we have doubt came What’s critical in fast have continually both we in address the which no product broadens our managed so that challenges property, again. We There protocols our Our impacts. development, can established intellectual an years fuel to will is short-term quickly plus licensing know And advanced XX technology investment turns. grow

Importantly, our this future control expectations we planet the will in long-term the use we value. generation of products. maintain control home exceed and HVAC companies for confident customer adopted home technologies are platforms. end have consumer leading our continue products and hybrid have focus and on their we Many chosen drive of to companies stakeholder particularly leading advanced new our everyday platforms Most next for their on ease entertainment and configuration, within to

Given have about the leadership our achieved industry, prospects. been position excited we’ve we our within future more never

stay always we can Operator, open up questions. tuned. the now for As call

Operator

Riley the Jeff and First comes Thank line of B. question Company. Instructions] from you. Sinderen [Operator of Van

is now line open. Your

Jeff Van Sinderen

are if sounds supply? didn’t on line of some us relevant more be of the being will guess you there’s in concern do the Yes, you think supply? component shortages outlook that what on hi. sounds you for what but guess there impact experiencing it that. I lot guess the give And the component or are a for do it and then in two QX, can first the supply for that business or in I improvement sales forward? are limited There’s let or for you’re think I that your the is any [indiscernible] components aren’t work supply that that finally, tight going supply relief all, then say, It impacted current you terrific for quarter. chain QX, to for there you other currently bottom customers components. of like to me like, both elements in

Bryan Hackworth

issue, correct Yes, In component Yes, QX, no, that. problem. component at issue didn’t sometimes much really Bryan. you’re it’s the changing it’s us the This is fluid, – but all, very hey, Jeff, affect in it’s week-to-week. shortage

ops and more they’re the issue, they’re such with to year, work are team parts. our and qualifying the several taken to closely remainder suppliers continues think the I as qualify buying they’ve with of they providing for forecast to mitigate steps spot working substitute suppliers, customers

they’ve job. So great done a

I think will what the today, than of mentioned on be of back appreciably effect don’t the year different half the QX. As we for

fluid. it’s mean I So

the take the take will it playing we now I we see back but – would said effect that We’re half right don’t quarter. different why any reason or will the anything day-by-day, much place than in second think be place

Jeff Van Sinderen

you of QX component color fair your year I should kind the the we of as about can just as the the we that can but year based Are to revenue quarter think there think what I’m ramp? about you you margin will still us thinking there, do And wondering, a how give revenue enough. guess remainder think overall, gross how little the Okay, on beyond any today. given see you’re think QX other progression. the and other think for that’s of you largest just need on it? you then are do as as about, gave – margin components, Do you tightness, or I thinking far far bit mean quarterly

Bryan Hackworth

where TV when going Paul the exactly launched some are From in now, OEMs will I APAC in with Europe, to we well. things on revenue, things I new still currently see as of well lockdown going right platforms know remarks and predict mean different still to system, jurisdictions we’re extremely are difficult the are parts effects. trying ordering are operators Right old well, the opening going that seeing so, less places still is and it’s we’ve difficult is I North mentioned that think has up. is certain certain there we prepared America, But tell. mentioned, accelerate their now. as business,

when minuses, place. to So think think comes take always to it predict I are there’s now, definitely will back foreign that exactly margin. margin in when normal, that you a pluses to business. to to some rates. mean you specifically. to up, that’s predict. from I get currency right pluses North in I difficult American me but going I the From now, hard don’t got acceleration fluctuations quantify it’s like always a Right we’re now, have going and gross gross for things And standpoint, perspective, to open right

also then commodity growing. got have You’ve favorability pricing. But royalties you and

minuses there’s margin margin. think throughout gross great and that the job pluses So far, and line, in I done a keeping plus so we’ve XX%

So shape. I still in think we’re good

Jeff Van Sinderen

quarter. and of my questions Okay. rest Thanks the for the taking for luck good

Bryan Hackworth

Thank you.

Paul Arling

Thanks.

Operator

[Operator comes and Instructions] question line Burns of next Company. from of the Your Greg Sidoti

Your line now open. is

Greg Burns

that’s kind any one the component The it in any just vocalized supply particular or gentlemen. Was broad-based company? one Yes, customer. particular with one across product shortages to of or

Paul Arling

I nature, basically worldwide customer. basically things a ancillary similar issue. say like and integrated accelerometers the integrated but boosters some shortage a the couple wouldn’t that It’s some and of We it’s it’s Yes, years with capacitor a circuits of of ago went something and get through components specific just you the circuit products, the on. that’s

You shortage, had bid probably go we was a to remember out, where to worldwide products. had for we had there – we

this short the a or first navigate mitigate the but, little be time good a an But our think few isn’t this team job everything supply I this the months There’ll mentioned We’ll like very equal eventually we through issue, has it ago, So of can has operations effect. I they happened. in have is done this. term, to doing a demand. to in get

Greg Burns

in any projects programs or of existing it past? the also being it of of the Okay. like delaying out? rolled existing Is about projects And is kind some rollout is or you’ve of this customers, limiting delaying kind talked these impacting

Paul Arling

like I – going best But or about for launch just of and or [indiscernible] I No, guess shortage, projects QX, said orders is demand some all. maybe think we’re the dates that the because any get our million we’ll $X not the launch relative affected has in It’s adversely on it it date. dates we’re hasn’t hasn’t at to sales the shorten supply delayed it to forecast. – to projects the

Greg Burns

control update the preparing Okay. – us an I about talked making too advanced terms customer you’re And progress you’re some these the of of talked rollout progress market. of you then the could on the you talked some of give some quarters, give the an terms there It Maybe Thank making maybe in projects you. on couple you’ve like in about rest and know having update pipeline? an technology the past. on the can and you’ve in timing you’ve maybe in projects last in on TV convert us of some rollout. the in sounds of just about year Apple to hospitality projects your then more

Paul Arling

Yes. Sure.

far for into you are Obviously control. AV were some the for a ideas hospitality, features COVID. we As asking products concerned, that of about, great industry of course which that during a spot control of difficult and as real environment have lot segment, on in projects went

are on futures help home from we is slowly engage the front away that the frankly industry. have They actually to beginning their control ideas home, emerging. of it and control some and is smart So your on lodging which for of touchless

affect is probably from our much ultimately home with home. lot this So hotels but they designs. come will of and there are an back far there your – as important won’t year, it’s financials away as think a we traction They

that XX The Your over home rooms one you stay you a that the probably gotten often in, stayed while, was hotel years the in there technology a XX years. ago. haven’t home has last your in in lot but smarter

lot lodging years the transform experience have area. will that smarter and in of course over bring give industry about you a we that the product the that will of next a So to

a on is engaged this the As there. concerned, we lot are about that you’ll see many There talk product, Apple a far and details as that can’t lot of on project results year. customers

TV here as is use always a or platforms, bridges this toward the Live generally, a whole the of and to movement brilliant world SVOD that working Just to the linear product of with that apps and MVPDs hybrid to a AVOD easy the Apple gap and – TV, between are all built solution. Prime, as etc use people across implement an interface all enjoy, Netflix, that this

year that on So some you’ll see this as progresses. activity

on to but larger that launch lead We’re units, are talk already be course about more customers on let you’ll that. to shipping into have this little on detail, able At and larger but more this we our customers go a point, as product. very bit way see of we hoping to the

We also have Butler out year. Nevo will this

a getting as telecom. and – a said still the but more the development, working again time on of date closer launch, major working to we’ve technical We’re They with that as it’s progresses. before, we’ll have on are

platforms, in driven, with lot products. interesting as of things is players on we’ve lot of voice had had a this year. I that we’ve a going There platforms, And obviously Europe, of lot been that mentioned on. launched So some a major launching IP-enabled working operators success earlier the there those advanced hybrid of

helped bit. a little that’s So

Greg Burns

Okay.

COVID. Is you little offset incremental talked kind kind still kind the impacted So, that. these bit help always of... that thought of My kind and the being build will North market that Bryan, slack throughout to rolling of out on by year projects and had about those pickup the momentum you to American of was a

Bryan Hackworth

Yes.

Greg Burns

all half mean the newer half on stronger how out, than the progresses. kind projects for some view valid of with the as the momentum a shortages year year first back with the we to could expect of rolling gaining I be progress, [ph] Should – side? Still these year

Paul Arling

building backdrop. are are point-to-point modern not into many struggling is – The etc, – about Yes, they platforms. been who high talking in have operator that infrared in that expectation. Europe, of in here platform, ARPU Obviously controlled, major markets wishes Asia, anybody IR hybrid hybrid any a times would platforms, COVID the be the markets those markets North IP the Greg, typically that many in future solution, that no – our is the is with grow we’re these any in of to during America, controlled,

are to install. products these difficult So

for into of to consumer a typically. So, systems. about I XX% it’s consumers, mean, your a attempt not be these but them, home that come possible human suppose X% will install people they install And I struggled. would to they’ve to require of

as companies to platforms, move bring will to it the those self-install. it So ability with advanced these

take be products in including put on your these into front devices So software and wall, the step other them them the takes could plug plug can QuickSet house, QuickSet door essentially you into and and over, each Cloud. the

we’re had are So to are for reluctant. we’ve them of are emerge get we consumers because to that of be there simple unaffected that completely for are implementations are as with do still seen, COVID yet. we it – themselves. a and like highlighted, seems last – be by that year we COVID, COVID-XX, yet to working many soon that to more self-install, have will Consumers happens, and while customers these while up – and still that platforms during again done, But and beginning as from of as consumer it’s things issue more the can – Bryan are difficulty the still haven’t we opened as

So yet. to I think normal we’re don’t back

to think yet. Well, don’t environment think we get Do We’re course, forever. not this of back there? I lasts XXXX we’ll

the will it it time. design But going meantime, won’t think we’re matter. to take programs in I where

what of we’re matter. going with We’re customers to And will products none that that’s doing. where design

Greg Burns

just great. Bryan, Okay, the us XX% customers? can And give you

Bryan Hackworth

was Comcast and XX.X% was Daikin XX.X%. Yes. quarter this

So, there are customers. XX% two

Greg Burns

Okay, great. you. Thank

Operator

Arling Paul queue. the may in continue. questions further no are you There Instructions] [Operator

Paul Arling

you continued we Conference several see Annual Universal you May of to investor joining at hope Virtual Needham’s in and for support Electronics. We us thank and for XX, Okay, events. participate today, will and Media those and Technology Thanks. your on, Thank day. again at June June. give in We’ll Global Consumer more on Technology on goes May in Needham’s XX great again a you have time Services Baird’s but details and as On and Baird’s Conference.

Operator

for This Thank participation. concludes you today’s conference your call.

You disconnect. many day. have And a good now

Universal Electronics (UEIC) 8 May 212021 Q1 Earnings call transcript