Universal Electronics (NASDAQ: UEIC) reported Q4 EPS of $0.70, $0.04 worse than the analyst estimate of $0.74. Revenue for the quarter came in at $169.7 million versus the consensus estimate of $184.16 million.

• GAAP net sales were $170.3 million, compared to $181.2 million; Adjusted Non-GAAP net sales were $169.7 million, compared to $180.7 million.
• GAAP gross margins were 22.0%, compared to 20.9%; Adjusted Non-GAAP gross margins were 27.2%, compared to 23.6%.
• GAAP operating income was $2.6 million, compared to an operating loss of $0.5 million; Adjusted Non-GAAP operating income was $13.7 million, compared to $10.4 million.
• GAAP net loss was $11.1 million, or $0.80 per diluted share, compared to a GAAP net loss of $16.9 million or $1.19 per diluted share; Adjusted Non-GAAP net income was $9.7 million, or $0.70 per diluted share, compared to $8.7 million, or $0.60 per diluted share.
• At December 31, 2018, cash and cash equivalents were $53.2 million.

Paul Arling, UEI’s chairman and CEO, stated, “The connected home has arrived. In 2018, we achieved our goal of generating over $130 million in home automation net sales and gained traction in our advanced, intuitive 2-way home entertainment systems. Our corporate and manufacturing initiatives started in the second half of 2018 to address macro challenges and free resources for strategic investments, all of which will position UEI well for 2019 and beyond. While we have acted quickly to respond to the punitive tariffs implemented by our government during 2018 by broadening our sources of supply to locations outside China, this transition delayed shipments and net sales fell short of our expectations in the fourth quarter. But, with our solid gross margins and increased operational efficiency, we met our fourth quarter bottom line guidance. Meanwhile, we continue to make progress to improve supply and expect to continue seeing positive results in the coming months. In addition, we are excited about the rising demand for our advanced products in both home entertainment and home automation.

“AV control is expanding into other applications like home automation. To capture market, in collaboration with Microsoft, we unveiled Nevo® Butler, an end-to-end voice-enabled smart home hub that unifies entertainment control and home automation experience. Offering a white-label digital assistant providing interoperability across fragmented ecosystem, Nevo Butler enables service providers and consumer electronics brands to bring voice-enabled services to their customers while remaining in control of the consumer relationship. We believe our efforts to enhance our competitive position, enter new markets, attract new customers, and continually improve account service will result in consistent and profitable growth.”

GUIDANCE:

Universal Electronics sees Q1 2019 EPS of $0.70-$0.80, versus the consensus of $0.56. Universal Electronics sees Q1 2019 revenue of $179-187 million, versus the consensus of $178.14 million.

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