~ Revenues of $315.5 million ~
GAAP and Non-GAAP Earnings Per Share $1.45
and $1.46
Ubiquiti Inc. (NYSE: UI) (“Ubiquiti” or the “Company”) today
announced financial results for the fourth quarter and full year
fiscal 2020, ended June 30, 2020.
Fourth Quarter Fiscal 2020
Summary
- Revenues of $315.5 million, increasing 10.1%
year-over-year
- GAAP diluted EPS of $1.45, increasing 43.6% year-over-year
- Non-GAAP diluted EPS of $1.46, increasing 22.7%
year-over-year
- Repurchased 99,165 shares of common stock at an average price
of $138.25 per share
Full Fiscal 2020 Financial
Summary
- Revenues of $1.3 billion, increasing 10.6% year-over-year
- GAAP diluted EPS of $5.80 increasing 28.6% year-over-year
- Non-GAAP diluted EPS of $5.91, increasing 23.9%
year-over-year
- Repurchased 5,842,800 shares of common stock at an average of
$119.45 per share
Additional Financial
Highlights
- The Company’s Board of Directors (the “Board”) declared a $0.40
per share cash dividend payable on September 8, 2020 to
shareholders of record at the close of business on August 31,
2020.
- The Company intends to pay regular quarterly cash dividends of
at least $0.40 per share during each quarter of fiscal year 2020,
although all subsequent dividends, and the establishment of record
and payment dates, are subject to final determination by the Board
each quarter after its review of the Company’s financial
performance and results of operations, available cash and cash
flow, capital requirements, applicable corporate legal
requirements, and other factors.
Financial Highlights ($, in millions,
except per share data) (unaudited)
Income statement highlights
F4Q20
F3Q20
F4Q19
Revenues
315.5
337.4
286.6
Service Provider Technology
121.9
106.4
100.9
Enterprise Technology
193.6
231.0
185.7
Gross profit
152.1
159.6
132.9
Gross Profit (%)
48.2%
47.3%
46.4%
Total Operating Expenses
34.0
32.3
32.1
Income from Operations
118.1
127.3
100.8
GAAP Net Income
92.6
103.7
70.9
GAAP EPS (diluted)
1.45
1.60
1.01
Non-GAAP Net Income
93.2
104.3
83.6
Non-GAAP EPS (diluted)
1.46
1.61
1.19
Ubiquiti Inc. Revenues by
Product Type (In thousands) (Unaudited)
Three Months Ended June
30,
Years Ended June 30,
2020
2019
2020 (1)
2019 (1)
Service Provider Technology
$
121,942
$
100,932
$
442,023
$
428,490
Enterprise Technology
193,580
185,709
842,477
733,243
Total revenues
$
315,522
$
286,641
$
1,284,500
$
1,161,733
Ubiquiti Inc. Revenues by Geographical
Area (In thousands) (Unaudited)
Three Months Ended June
30,
Years Ended June 30,
2020
2019
2020 (1)
2019 (1)
North America
$
160,067
$
147,477
$
571,901
$
497,218
Europe, the Middle East and Africa
111,248
92,348
517,132
477,332
Asia Pacific
23,369
26,152
112,121
108,460
South America
20,838
20,664
83,346
78,723
Total revenues
$
315,522
$
286,641
$
1,284,500
$
1,161,733
(1) Derived from audited consolidated statements as of and for
the year ended June 30, 2020 and 2019, respectively.
Income Statement Items
Revenues
Revenues for the fourth quarter fiscal 2020 were $315.5 million,
representing an increase from the comparable prior year period of
10.1% and a decrease from the prior quarter of 6.5%. On a full year
basis, revenues for fiscal 2020 were $1.3 billion, representing a
10.6% increase as compared to full year fiscal 2019. The fiscal
fourth quarter sequential decrease in revenue was primarily due to
distributor ordering patterns related to our Enterprise Technology
products.
Gross Margins
Fourth quarter fiscal 2020 gross profit was $152.1 million. GAAP
gross margin of 48.2% increased 1.8% versus the comparable
prior-year period of 46.4% and increased 0.9% versus the prior
quarter of 47.3%. On a full year basis, fiscal 2020 GAAP gross
profit was $608.2 million. Fiscal 2020 GAAP gross margin of 47.3%
increased 1.0% versus the comparable prior year period GAAP gross
margin of 46.3%. The increase in GAAP gross margin for the fourth
quarter fiscal 2020 as compared to comparable prior year period,
the fourth quarter fiscal 2020 as compared to the prior quarter and
full fiscal 2020 versus full fiscal 2019, were each primarily
driven by favorable changes in product mix, partially offset by
higher tariff-related costs and expedited shipping costs.
Research and Development
During the fourth quarter fiscal 2020, research and development
(“R&D”) expenses were $23.4 million. This reflects an increase
as compared to the R&D expenses of $22.5 million in the
comparable prior year period and R&D expenses of $21.7 million
in the prior quarter. On a full year basis, fiscal 2020 R&D
expenses were $89.4 million, reflecting an increase versus fiscal
2019 R&D expense of $82.1 million. The increase in R&D
expense for the fourth quarter fiscal 2020 as compared to the
comparable prior year period was primarily driven by higher
employee-related expenses, partially offset by lower development
activities. The increase in R&D expense for the fourth quarter
fiscal 2020 as compared to the prior quarter and full fiscal 2020
versus full fiscal 2019, were both 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 fourth quarter fiscal 2020 were $10.5 million.
This reflects an increase as compared to the SG&A expenses of
$9.5 million in the comparable prior year period and a slight
decrease as compared to the SG&A expenses of $10.6 million in
the prior quarter. On a full year basis, fiscal 2020 SG&A
expense was $40.6 million, reflecting a decrease as compared to the
SG&A expense of $43.2 million for fiscal 2019. The increase in
SG&A costs as compared to the comparable prior year period was
primarily related to higher depreciation expense and higher
professional and service fees offset, in part, by lower
employee-related costs. The decrease in SG&A costs as compared
to the prior quarter is primarily driven by lower marketing
expenses and lower employee-related costs offset, in part, by
higher depreciation expense and higher professional fees and
service fees. The decrease in fiscal 2020 SG&A expenses as
compared to fiscal 2019 was primarily due to lower professional
fees and employee-related costs offset, in part, by higher
marketing expenses, increased service fees and higher depreciation
expense.
Net Income and Earnings Per Share
During the fourth quarter fiscal 2020, GAAP net income was $92.6
million and non-GAAP net income was $93.2 million. This reflects an
increase in GAAP net income and non-GAAP net income from the
comparable prior year period by 30.6% and 11.4% respectively,
primarily driven by an increase in revenue and higher gross
margin.
During the fourth quarter fiscal 2020 GAAP earnings per diluted
share was $1.45 and non-GAAP earnings per diluted share was $1.46.
This reflects a 43.6% increase in GAAP earnings per share and a
22.7% increase in non-GAAP diluted earnings per share from the
comparable prior-year period. Both GAAP and non-GAAP earnings per
share benefited from higher net income and a reduction in GAAP and
non-GAAP diluted shares outstanding.
COVID-19
In the fourth quarter of fiscal year 2020, we continued to
experience a disruption in our supply chain as a result of the
COVID-19 pandemic. This disruption impacted our suppliers' ability
to manufacture or provide key components and services and we have
incurred, and we continue to incur, additional costs to expedite
deliveries of components and services. While our ability to procure
components and services has improved during the quarter, the
disruptions in our supply chain have not been fully remediated and
the effects, if any, of the COVID-19 pandemic may not be fully
reflected in the Company's financial results until future
periods.
About Ubiquiti Inc.
Ubiquiti Inc. is focused on democratizing network technology on
a global scale — aggregate shipments over 108 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 the impact
of COVID-19 and 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 public health problems, such as COVID-19, and 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
chipset suppliers 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, 2020, 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 June
30,
Years Ended June 30,
2020
2019
2020 (1)
2019 (1)
Revenues
$
315,522
$
286,641
$
1,284,500
$
1,161,733
Cost of revenues
163,462
153,704
676,328
624,129
Gross profit
$
152,060
$
132,937
$
608,172
$
537,604
Operating expenses:
Research and development
23,440
22,530
89,405
82,070
Sales, general and administrative
10,516
9,522
40,569
43,237
Litigation settlement
—
—
—
18,000
Total operating expenses
33,956
32,052
129,974
143,307
Income from operations
118,104
100,885
478,198
394,297
Interest expense and other, net
(4,646
)
(3,622
)
(28,002
)
(12,808
)
Income before income taxes
113,458
97,263
450,196
381,489
Provision for income taxes
20,840
26,368
69,899
58,795
Net income
$
92,618
$
70,895
$
380,297
$
322,694
Net income per share of common stock:
Basic
$
1.45
$
1.01
$
5.81
$
4.52
Diluted
$
1.45
$
1.01
$
5.80
$
4.51
Weighted average shares used in computing
net income per share of common stock:
Basic
63,689
70,169
65,427
71,435
Diluted
63,756
70,282
65,514
71,602
Other comprehensive income:
Unrealized gains on available-for-sale
securities
31
216
(384
)
393.00
Comprehensive income
$
92,649
$
71,111
$
379,913
$
323,087
(1) Derived from audited consolidated statements as of and for
the year ended June 30, 2020 and 2019, respectively.
Ubiquiti Inc. Reconciliation of GAAP
Net Income to Non-GAAP Net Income (In thousands, except per share
data) (Unaudited)
Three Months Ended
Years Ended June 30,
June 30, 2020
March 31, 2020
June 30, 2019
2020
2019
Net Income
$
92,618
$
103,722
$
70,895
$
380,297
$
322,694
Stock-based compensation:
Cost of revenues
27
29
27
121
347
Research and development
515
499
526
2,022
2,045
Sales, general and administrative
202
197
31
745
498
Tax Regulation changes
—
—
12,264
(1)
—
—
Tax Reform
—
—
—
—
2,765
Litigation settlement
—
—
—
—
18,000
Impairment of cost-based investment
—
—
—
5,000
—
Tax effect of Non-GAAP adjustments
(176
)
(170
)
(126
)
(679
)
(4,685
)
Non-GAAP net income
$
93,186
$
104,277
$
83,617
$
387,506
$
341,664
Non-GAAP diluted EPS
$
1.46
$
1.61
$
1.19
$
5.91
$
4.77
Weighted-average shares used in Non-GAAP
diluted EPS
63,756
64,699
70,282
65,514
71,602
(1) The $12.3 million non-GAAP adjustment in the fourth quarter
fiscal 2019 was related to Tax Regulation changes that represented
our estimate of the impact of Treasury Decision 9866 (the “Final
GILTI Regulations” on our earnings during the first nine months of
fiscal 2019. This fourth quarter adjustment is not included in the
full year fiscal 2019 non-GAAP results because the fiscal 2019
results properly reflect the full year impact of the Final GILTI
Regulations.
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, Tax Reform, Litigation settlement, impairment of
cost-based investment 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 Regulations and Tax Reform
- Litigation settlement
- Impairment of cost-based investment
- 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/20200821005097/en/
Investor Relations Contact
Ubiquiti Inc. Investor Relations ir@ui.com Ph. 1-646-780-7958
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