~ Record Revenues of $323.3 million
~
~ Record GAAP Earnings Per Share of $1.43
~
Ubiquiti Inc. (NYSE: UI) (“Ubiquiti” or the “Company”) today
announced results for the first quarter fiscal 2020, ended
September 30, 2019.
First Quarter Fiscal 2020 Financial
Summary
- Revenues of $323.3 million, increasing 14.3%
year-over-year
- GAAP diluted EPS of $1.43, increasing 23.3% year-over-year
- Non-GAAP diluted EPS of $1.44, increasing 23.1%
year-over-year
- Repurchased 3,635,534 shares of common stock at an average
price of $114.49 per share during the quarter and an additional
995,495 shares of common stock at an average price of $120.11
subsequent to September 30, 2019
Additional Financial
Highlights
- The Company's Board of Directors declared a $0.30 per share
cash dividend payable on November 25, 2019 to shareholders of
record at the close of business on November 18, 2019.
- The Company amended its credit facility, providing for a $500
million term loan and a $700 million revolving credit facility, as
disclosed in the Form 8-K filed on September 12, 2019.
- The Company has initiated a new stock repurchase program
authorizing the Company to repurchase up to $200 million of its
common stock, as disclosed in the Form 8-K filed on November 8,
2019.
Financial Highlights ($, in
millions, except per share data)
Income statement highlights
F1Q20
F4Q19
F1Q19
Revenues
323.3
286.6
282.9
Service Provider Technology
115.9
100.9
105.0
Enterprise Technology
207.4
185.7
177.9
Gross profit
151.4
132.9
131.6
Gross Profit (%)
46.8%
46.4%
46.5%
Total Operating Expenses
30.7
32.1
32.0
Income from Operations
120.7
100.8
99.6
GAAP Net Income
98.1
70.9
85.7
GAAP EPS (diluted)
1.43
1.01
1.16
Non-GAAP Net Income
98.7
83.6
86.2
Non-GAAP EPS (diluted)
1.44
1.19
1.17
Ubiquiti Inc. Revenues by
Product Type (In thousands) (Unaudited)
Three Months Ended September
30,
2019
2018
Service Provider Technology
$
115,926
$
104,957
Enterprise Technology
207,351
177,948
Total revenues
$
323,277
$
282,905
Ubiquiti Inc. Revenues by
Geographical Area In thousands) (Unaudited)
Three Months Ended September
30,
2019
2018
North America
$
147,951
$
119,371
Europe, the Middle East and Africa
125,841
124,931
Asia Pacific
29,716
24,427
South America
19,769
14,176
Total revenues
$
323,277
$
282,905
Income Statement Items
Gross Margins
During the first quarter fiscal 2020, GAAP gross profit was
$151.4 million. GAAP gross margin of 46.8% increased 0.3% versus
the comparable prior year period GAAP gross margin of 46.5% and
increased 0.4% versus the prior quarter GAAP gross margin of 46.4%.
The increase in gross profit percentage for the first quarter
fiscal 2020 as compared to the comparable prior-year period was
driven by favorable mix of products sold, partially offset by
higher tariffs and higher indirect costs. The increase in gross
profit percentage for the first quarter fiscal 2020 as compared to
the prior quarter was driven by favorable mix of products sold,
partially offset by higher indirect costs.
Research and Development
During the first quarter fiscal 2020, research and development
("R&D") expenses were $20.3 million. This reflects an increase
as compared to the R&D expenses of $18.2 million in the
comparable prior year period and a decrease as compared to R&D
expenses of $22.5 million in the prior quarter. Increased costs in
first quarter fiscal 2020 as compared to the prior year period is
primarily driven by higher employee-related expenses and other
development activities.
Sales, General and Administrative
The Company’s sales, general and administrative (“SG&A”)
expenses for the first quarter fiscal 2020 were $10.5 million. This
reflects a decrease as compared to the SG&A expenses of $13.8
million in the comparable prior year period and an increase as
compared to the SG&A expenses of $9.5 million in the prior
quarter. The decrease in SG&A costs as compared to the prior
year period was primarily due to lower professional fees offset, in
part by higher web store operating costs and bad debt expense. The
increase in SG&A expenses as compared to the prior quarter was
primarily due to marketing expense and bad debt expense.
Net Income and Earnings Per Share
During the first quarter fiscal 2020, GAAP net income was $98.1
million and non-GAAP net income was $98.7 million. This reflects an
increase in GAAP net income and non-GAAP net income from the
comparable prior year period by 14.5% and 14.4% respectively,
primarily driven by a 14.3% increase in revenues and a higher gross
margin. During the first quarter fiscal 2020, GAAP earnings per
diluted share were $1.43 and non-GAAP earnings per diluted share
were $1.44. This reflects an increase in GAAP and non-GAAP earnings
per diluted share from the comparable prior year period by 23.3%
and 23.1% respectively, primarily driven by higher GAAP and
non-GAAP net income and a reduction in GAAP and non-GAAP diluted
shares outstanding due to stock repurchases.
About Ubiquiti Inc.
Ubiquiti Inc. is focused on democratizing network technology on
a global scale — aggregate shipments of nearly 97 million devices
play a key role in creating networking infrastructure in over 200
countries and territories around the world. Our professional
networking products are powered by our UNMS and UniFi software
platforms to provide high-capacity distributed Internet access and
unified information technology management, respectively.
Ubiquiti and the U logo are trademarks or registered trademarks
of Ubiquiti and/or its affiliates in the United States and other
countries. For more information, please visit www.ui.com.
Safe Harbor for Forward Looking
Statements
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Statements other than statements of historical
fact including words such as “look”, “will”, “anticipate”,
“believe”, “estimate”, “expect”, “forecast”, “consider” and “plan”
and statements in the future tense are forward looking statements.
The statements in this press release that could be deemed
forward-looking statements include statements regarding our
intentions to pay quarterly cash dividends and any statements or
assumptions underlying any of the foregoing.
Forward-looking statements are subject to certain risks and
uncertainties that could cause our actual future results to differ
materially or cause a material adverse impact on our results.
Potential risks and uncertainties include, but are not limited to,
the impact of U.S. tariffs on results; fluctuations in our
operating results; varying demand for our products due to the
financial and operating condition of our distributors and their
customers, and our distributors' inventory management practices;
political and economic conditions and volatility affecting the
stability of business environments, economic growth, currency
values, commodity prices and other factors that may influence the
ultimate demand for our products in particular geographies or
globally; impact of counterfeiting and our ability to contain such
impact; our reliance on a limited number of distributors; inability
of our contract manufacturers and suppliers to meet our demand; our
dependence on Qualcomm Atheros for chipsets without a short-term
alternative; as we move into new markets competition from certain
of our current or potential competitors who may be more established
in such markets; our ability to keep pace with technological and
market developments; success and timing of new product
introductions by us and the performance of our products generally;
our ability to effectively manage the significant increase in our
transactional sales volumes; we may become subject to warranty
claims, product liability and product recalls; that a substantial
majority of our sales are into countries outside the United States
and we are subject to numerous U.S. export control and economic
sanctions laws; costs related to responding to government inquiries
related to regulatory compliance; our reliance on certain key
members of our management team, including our founder and chief
executive officer, Robert J. Pera; adverse tax-related matters such
as tax audits, changes in our effective tax rate or new tax
legislative proposals; whether the final determination of our
income tax liability may be materially different from our income
tax provisions; the impact of any intellectual property litigation
and claims for indemnification; litigation related to U.S.
Securities laws; and economic and political conditions in the
United States and abroad. We discuss these risks in greater detail
under the heading “Risk Factors” and elsewhere in our Annual Report
on Form 10-K for the year ended June 30, 2019, and subsequent
filings filed with the U.S. Securities and Exchange Commission (the
“SEC”), which are available at the SEC's website at www.sec.gov.
Copies may also be obtained by contacting the Ubiquiti Inc.
Investor Relations Department, by email at IR@ui.com or by visiting
the Investor Relations section of the Ubiquiti Inc. website,
http://ir.ui.com.
Given these uncertainties, you should not place undue reliance
on these forward-looking statements. Also, forward-looking
statements represent our management's beliefs and assumptions only
as of the date made. Except as required by law, Ubiquiti Inc.
undertakes no obligation to update information contained herein.
You should review our SEC filings carefully and with the
understanding that our actual future results may be materially
different from what we expect.
Ubiquiti Inc. Condensed
Consolidated Statements of Operations and Comprehensive
Income (In thousands, except per share data)
(Unaudited)
Three Months Ended September
30,
2019
2018
Revenues
$
323,277
$
282,905
Cost of revenues
171,886
151,299
Gross profit
$
151,391
$
131,606
Operating expenses:
Research and development
20,252
18,222
Sales, general and administrative
10,450
13,766
Total operating expenses
30,702
31,988
Income from operations
120,689
99,618
Interest expense and other, net
(4,653)
(2,527)
Income before income taxes
116,036
97,091
Provisions for income taxes
17,890
11,388
Net income
$
98,146
$
85,703
Net income per share of common stock:
Basic
$
1.44
$
1.16
Diluted
$
1.43
$
1.16
Weighted average shares used in computing
net income per share of common stock:
Basic
68,390
73,774
Diluted
68,484
73,963
Other comprehensive income:
Unrealized (losses) on available-for-sale
securities
(153)
(146)
Comprehensive income
$
97,993
$
85,557
Ubiquiti Inc.
Reconciliation of GAAP Net Income to
Non-GAAP Net Income
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
September 30, 2019
June 30, 2019
September 30, 2018
Net Income
$
98,146
$
70,895
$
85,703
Stock-based compensation:
Cost of revenues
32
27
33
Research and development
481
526
467
Sales, general and administrative
176
31
275
Tax Regulation changes
—
12,264
—
Tax effect of Non-GAAP adjustments
(162)
(126)
(240)
Non-GAAP net income
$
98,673
$
83,617
$
86,238
Non-GAAP diluted EPS
$
1.44
$
1.19
$
1.17
Shares outstanding (Diluted)
68,484
70,282
73,963
Weighted-average shares used in Non-GAAP
diluted EPS
68,484
70,282
73,963
Use of Non-GAAP Financial
Information
To supplement our condensed consolidated financial results
prepared under generally accepted accounting principles, or GAAP,
we use non-GAAP measures of net income and earnings per diluted
share that are adjusted to exclude certain costs, expenses and
gains such as stock-based compensation expense, Tax Regulation
changes and the tax effects of these non-GAAP adjustments.
Reconciliations of the adjustments to GAAP results for the
periods presented are provided above. In addition, an explanation
of the ways in which management uses non-GAAP financial information
to evaluate its business, the substance behind management's
decision to use this non-GAAP financial information, material
limitations associated with the use of non-GAAP financial
information, the manner in which management compensates for those
limitations, and the substantive reasons management believes that
this non-GAAP financial information provides useful information to
investors is included under the paragraphs below.
Usefulness of Non-GAAP Financial
Information to Investors
We believe that the presentation of non-GAAP net income and
non-GAAP earnings per diluted share provides important supplemental
information regarding non-cash expenses, significant items that we
believe are important to understanding our financial, and business
trends relating to our financial condition and results of
operations. Non-GAAP net income and non-GAAP earnings per diluted
share are among the primary indicators used by management as a
basis for planning and forecasting future periods and by management
and our board of directors to determine whether our operating
performance has met specified targets and thresholds. Management
uses non-GAAP net income and non-GAAP earnings per diluted share
when evaluating operating performance because it believes that the
exclusion of the items described below, for which the amounts or
timing may vary significantly depending upon the Company's
activities and other factors, facilitates comparability of the
Company's operating performance from period to period. We have
chosen to provide this information to investors so they can analyze
our operating results in the same way that management does and use
this information in their assessment of our business and the
valuation of our Company.
About our Non-GAAP Net Income and
Non-GAAP Earnings per Diluted Share
We compute non-GAAP net income and non-GAAP earnings per diluted
share by adjusting GAAP net income and GAAP earnings per diluted
share to remove the impact of certain adjustments and the tax
effect of those adjustments. Items excluded from net income
are:
- Stock-based compensation expense
- Tax Regulation changes
- Tax effect of non-GAAP adjustments, applying the principles of
ASC 740
These non-GAAP measures are not in accordance with, or an
alternative to, GAAP and may be materially different from other
non-GAAP measures, including similarly titled non-GAAP measures
used by other companies. The presentation of this additional
information should not be considered in isolation from, as a
substitute for, or superior to, net income or earnings per diluted
share prepared in accordance with GAAP. Non-GAAP financial measures
have limitations in that they do not reflect certain items that may
have a material impact upon our reported financial results.
For more information on the non-GAAP adjustments, please see the
table captioned “Reconciliation of GAAP Net Income to non-GAAP Net
Income” included in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191108005150/en/
Investor Relations Laura
Kiernan High Touch Investor Relations laura.kiernan@ui.com Ph.
1-914-598-7733
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