Universal Electronics (NASDAQ: UEIC) reported Q3 EPS of $0.92, $0.01 better than the analyst estimate of $0.91. Revenue for the quarter came in at $153.5 million versus the consensus estimate of $155.12 million.

Financial Results for the Three Months Ended September 30: 2020 Compared to 2019

• GAAP net sales were $153.5 million, compared to $200.7 million; Adjusted Non-GAAP net sales were $153.7 million, compared to $200.9 million.
• GAAP gross margins were 28.8%, compared to 23.2%; Adjusted Non-GAAP gross margins were 30.0%, compared to 26.8%.
• GAAP operating income was $10.2 million, compared to $6.1 million; Adjusted Non-GAAP operating income was $17.0 million, compared to $18.7 million.
• GAAP net income was $6.2 million, or $0.43 per diluted share, compared to $2.7 million or $0.19 per share; Adjusted Non-GAAP net income was $13.1 million, or $0.92 per diluted share, compared to $14.3 million, or $1.01 per diluted share.
• At September 30, 2020, cash and cash equivalents were $67.1 million.

“Our strategies to develop differentiated advanced products, license technology, expand our margins and improve our profitability continue to successfully build upon our foundation for sustainable growth,” said Paul Arling, UEI’s chairman and CEO. “In fact, our adjusted non-GAAP margins - both gross and operating - on a year to date basis through September are the highest levels we’ve achieved in the last ten years. And, this is just the beginning of the next phase of our market evolution: the convergence of traditional TV, on-demand content and streaming apps, which is driving increased demand for our technology. Over the years, our customers’ have introduced numerous wireless control devices using our chip technology and proprietary QuickSet® platform to power 2-way, IP-connected home entertainment and home automation control. In October, we unveiled the most recent example with Liberty Global. We are very excited about our customers’ product development roadmaps. Looking ahead, we believe UEI will continue to be the foundation of wireless control for countless next-generation, voice-enabled platforms and our technology will continue to lead marketplace innovation.”

GUIDANCE:

Universal Electronics sees Q4 2020 EPS of $0.93-$1.03, versus the consensus of $0.98. Universal Electronics sees Q4 2020 revenue of $150-160 million, versus the consensus of $155.2 million.

For the fourth quarter of 2020, the company expects GAAP net sales to range between $150 million and $160 million, compared to $174.7 million in the fourth quarter of 2019. GAAP earnings per diluted share for the fourth quarter of 2020 are expected to range from $0.54 to $0.64, compared to a GAAP earnings per diluted share of $0.49 in the fourth quarter of 2019.

For the fourth quarter of 2020, the company expects Adjusted Non-GAAP net sales to range between $150 million and $160 million, compared to $174.8 million in the fourth quarter of 2019. Adjusted Non-GAAP earnings per diluted share are expected to range from $0.93 to $1.03, compared to Adjusted Non-GAAP earnings per diluted share of $0.90 in the fourth quarter of 2019. The fourth quarter 2020 Adjusted Non-GAAP earnings per diluted share estimate excludes $0.39 per share related to, among other things, excess manufacturing overhead costs, stock-based compensation, amortization of acquired intangibles, changes in contingent consideration relating to acquisitions, litigation costs, foreign currency gains and losses and the related tax impact of these adjustments.

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