Fourth Quarter Fiscal 2019 Summary
- Revenues of
$286.6 million , increasing 6.3% year-over-year - GAAP diluted EPS of
$1.01 , increasing 7.4% year-over-year - Non-GAAP diluted EPS of
$1.19 , increasing 17.8% year-over-year - Repurchased 1,116,466 shares of common stock at an average price of
$127.52 per share
Full Fiscal 2019 Financial Summary
- Revenues of
$1.2 billion , increasing 14.2% year-over-year - GAAP diluted EPS of
$4.51 increasing 79.7% year-over-year - Non-GAAP diluted EPS of
$4.77 , increasing 29.3% year-over-year - Repurchased 4,733,853 shares of common stock at an average of
$99.38 per share
Capital Return Summary
Stock Repurchases
- As of
August 8, 2019 , the Company had$7.4 million of availability under the$200 million share repurchase program announced onNovember 9, 2018 . - The Company has initiated a new stock repurchase program authorizing the Company to repurchase up to
$500 million of its common stock, as disclosed in the Form 8-K filed onAugust 9, 2019 .
Dividends
- The Company's Board of Directors (the “Board”) declared a
$0.30 per share cash dividend payable onAugust 26, 2019 to shareholders of record at the close of business onAugust 19, 2019 . - The Company intends to pay regular quarterly cash dividends of at least
$0.30 per share after the conclusion of 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.
Effective Tax Rate
- On
June 21, 2019 , theInternal Revenue Service published TD 9866 (the “Final GILTI Regulations”), increasing the amount of taxes we owe each year on income earned outside the US. This was the primary driver of the increase in the Company's effective tax rate for the full fiscal year endedJune 30, 2019 to 15.4% as compared to our 11.4% effective rate for the nine months endedMarch 31, 2019 . - The Company’s fourth quarter fiscal 2019 effective tax rate was 27.1% and includes a cumulative adjustment of
$12.3 million to reflect the impact of the Final GILTI Regulations on our results reported through the first nine months of fiscal 2019. The reported tax expense for the first three quarters of fiscal 2019 did not reflect these additional taxes due because the Final GILTI Regulations were not published untilJune 2019 .
Change of
- Ubiquiti will change its corporate name to
Ubiquiti Inc. and transfer its common stock to theNew York Stock Exchange (NYSE) from the NASDAQ Global Select Market. The Company’s common stock has been authorized for listing and is scheduled to begin trading on the NYSE onAugust 20, 2019 , under the new trading symbol UI. - At the close of business on
August 19, 2019 , the company will legally change its name toUbiquiti Inc. The last trading day on NASDAQ under the nameUbiquiti Networks, Inc. and the UBNT symbol is expected to beAugust 19, 2019 .
Financial Highlights ($, in millions, except per share data) (unaudited)
Income statement highlights |
|
F4Q19 |
|
F3Q19 |
|
F4Q18 |
Revenues |
|
286.6 |
|
284.9 |
|
269.8 |
Service Provider Technology |
|
100.9 |
|
109.4 |
|
105.9 |
Enterprise Technology |
|
185.7 |
|
175.5 |
|
163.8 |
Gross profit |
|
132.9 |
|
132.8 |
|
120.5 |
Gross Profit (%) |
|
46.4% |
|
46.6% |
|
44.7% |
Total Operating Expenses |
|
32.1 |
|
30.7 |
|
32.4 |
Income from Operations |
|
100.8 |
|
102.1 |
|
88.1 |
GAAP Net Income |
|
70.9 |
|
88.3 |
|
70.1 |
GAAP EPS (diluted) |
|
1.01 |
|
1.25 |
|
0.94 |
Non-GAAP Net Income |
|
83.6 |
|
88.9 |
|
74.8 |
Non-GAAP EPS (diluted) |
|
1.19 |
|
1.26 |
|
1.01 |
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 (1) |
||||
Service Provider Technology |
|
$ |
100,932 |
|
$ |
105,941 |
|
$ |
428,490 |
|
$ |
446,600 |
Enterprise Technology |
|
185,709 |
|
163,837 |
|
733,243 |
|
570,261 |
||||
Total revenues |
|
$ |
286,641 |
|
$ |
269,778 |
|
$ |
1,161,733 |
|
$ |
1,016,861 |
Revenues by Geographical Area (In thousands) (Unaudited) |
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 (1) |
||||
|
|
$ |
147,477 |
|
$ |
124,451 |
|
$ |
497,218 |
|
$ |
410,378 |
|
|
20,664 |
|
20,570 |
|
78,723 |
|
92,251 |
||||
|
|
92,348 |
|
102,310 |
|
477,332 |
|
411,388 |
||||
|
|
26,152 |
|
22,447 |
|
108,460 |
|
102,844 |
||||
Total revenues |
|
$ |
286,641 |
|
$ |
269,778 |
|
$ |
1,161,733 |
|
$ |
1,016,861 |
(1) Derived from audited consolidated statements as of and for the year ended
Income Statement Items
Gross Margins
During the fourth quarter fiscal 2019, GAAP gross profit was
On a full year basis, fiscal 2019 GAAP gross profit was
The increases in gross profit percentage for the fourth quarter fiscal 2019 as compared to the comparable prior-year period was driven by favorable mix of products sold, lower indirect expenses, lower inventory write-offs offset, in part by higher tariff-related costs. The increases in gross profit percentage for the full year fiscal 2019 as compared to the comparable prior-year period was driven by favorable mix of products sold, lower inventory write-offs offset, in party by higher tariff-related costs and higher indirect expenses.
Research and Development
During the fourth quarter fiscal 2019, research and development (R&D) expenses were
On a full year basis, fiscal 2019 R&D expenses were
Increased costs in both the fourth quarter fiscal 2019 and full year fiscal 2019, as compared to the comparable prior-year periods, were 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 2019 were
On a full year basis, fiscal 2019 SG&A expense was
Net Income and Earnings Per Share
During the fourth quarter fiscal 2019, GAAP net income was
During the fourth quarter fiscal 2019, GAAP earnings per diluted share was
Balance Sheet Items
Cash and Investments
Total cash and cash equivalents were
DSOs
This quarter the Company experienced a decline in days' sales outstanding (DSOs) in accounts receivable to 50 days, as compared with 51 days in the third quarter fiscal 2019.
Inventory
Finished goods inventory as of
Cash Flow Statement Items
The Company’s net cash flow from operations for the fiscal year ended
About
Ubiquiti and the U logo are trademarks or registered trademarks of Ubiquiti and/or its affiliates in
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 regular quarterly cash dividends, the Company's anticipated corporate name change and transfer of its common stock listing from the NASDAQ Global Select Market to the
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
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,
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 (1) |
||||
Revenues |
|
$ |
286,641 |
|
$ |
269,778 |
|
$ |
1,161,733 |
|
$ |
1,016,861 |
Cost of revenues |
|
153,704 |
|
149,238 |
|
624,129 |
|
573,289 |
||||
Gross profit |
|
$ |
132,937 |
|
$ |
120,540 |
|
$ |
537,604 |
|
$ |
443,572 |
Operating expenses: |
|
|
|
|
|
|
|
|
||||
Research and development |
|
22,530 |
|
19,508 |
|
82,070 |
|
74,324 |
||||
Sales, general and administrative |
|
9,522 |
|
12,918 |
|
43,237 |
|
43,121 |
||||
Litigation settlement |
|
— |
|
— |
|
18,000 |
|
— |
||||
Total operating expenses |
|
32,052 |
|
32,426 |
|
143,307 |
|
117,445 |
||||
Income from operations |
|
100,885 |
|
88,114 |
|
394,297 |
|
326,127 |
||||
Interest expense and other, net |
|
(3,622) |
|
(3,451) |
|
(12,808) |
|
(11,985) |
||||
Income before income taxes |
|
97,263 |
|
84,663 |
|
381,489 |
|
314,142 |
||||
Provision for income taxes |
|
26,368 |
|
14,578 |
|
58,795 |
|
117,852 |
||||
Net income |
|
$ |
70,895 |
|
$ |
70,085 |
|
$ |
322,694 |
|
$ |
196,290 |
Net income per share of common stock: |
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
1.01 |
|
$ |
0.95 |
|
$ |
4.52 |
|
$ |
2.54 |
Diluted |
|
$ |
1.01 |
|
$ |
0.94 |
|
$ |
4.51 |
|
$ |
2.51 |
Weighted average shares used in computing net income per share of common stock: |
|
|
|
|
|
|
|
|
||||
Basic |
|
70,169 |
|
74,105 |
|
71,435 |
|
77,179 |
||||
Diluted |
|
70,282 |
|
74,307 |
|
71,602 |
|
78,331 |
||||
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
||||
Unrealized gains on available-for-sale securities |
|
216 |
|
— |
|
393 |
|
— |
||||
Comprehensive income |
|
$ |
71,111 |
|
$ |
70,085 |
|
$ |
323,087 |
|
$ |
196,290 |
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended
Reconciliation of GAAP Net Income to Non-GAAP Net Income (In thousands, except per share data) (Unaudited) |
|
|
|
|
|||||||||||
|
|
Three Months Ended |
|
Years Ended |
|||||||||||
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|||||
Net Income |
|
$ |
70,895 |
|
$ |
88,300 |
|
$ |
70,085 |
|
$ |
322,694 |
|
$ |
196,290 |
Stock-based compensation: |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of revenues |
|
27 |
|
26 |
|
36 |
|
347 |
|
360 |
|||||
Research and development |
|
526 |
|
555 |
|
520 |
|
2,045 |
|
1,873 |
|||||
Sales, general and administrative |
|
31 |
|
171 |
|
228 |
|
498 |
|
975 |
|||||
Net Tax Benefits related to Equity Awards Exercises and Vesting |
|
— |
|
— |
|
50 |
|
— |
|
(28,138) |
|||||
Tax Regulation changes |
|
12,264 |
(1) |
— |
|
— |
|
|
|
— |
|||||
Tax Reform |
|
— |
|
— |
|
3,774 |
|
2,765 |
|
116,572 |
|||||
Litigation settlement |
|
— |
|
— |
|
— |
|
18,000 |
|
— |
|||||
|
|
— |
|
— |
|
492 |
|
— |
|
809 |
|||||
Tax effect of Non-GAAP adjustments |
|
(126) |
|
(177) |
|
(396) |
|
(4,685) |
|
(1,328) |
|||||
Non-GAAP net income |
|
$ |
83,617 |
|
$ |
88,875 |
|
$ |
74,789 |
|
$ |
341,664 |
|
$ |
287,413 |
Non-GAAP diluted EPS |
|
$ |
1.19 |
|
$ |
1.26 |
|
$ |
1.01 |
|
$ |
4.77 |
|
$ |
3.69 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Shares outstanding (Diluted) |
|
70,282 |
|
70,692 |
|
74,307 |
|
71,602 |
|
78,331 |
|||||
Share adjustment (ASU 2016-09 Adoption) |
|
— |
|
— |
|
(50) |
|
— |
|
(338) |
|||||
Weighted-average shares used in Non-GAAP diluted EPS |
|
70,282 |
|
70,692 |
|
74,257 |
|
71,602 |
|
77,993 |
(1) The
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, net tax benefits related to equity awards exercises and vesting, unusual litigation settlements,
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
• Net Tax Benefits related to Equity Awards Exercises and Vesting
• Litigation settlement
• Tax Reform and 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.
Condensed Consolidated Balance Sheets (In thousands, except share amounts) (Unaudited) |
||||||
|
|
|
|
|
||
Assets |
|
|
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
238,147 |
|
$ |
666,681 |
Investments — short-term |
|
69,866 |
|
— |
||
Accounts receivable, net |
|
156,043 |
|
174,521 |
||
Inventories |
|
264,281 |
|
102,220 |
||
Vendor deposits |
|
11,608 |
|
39,029 |
||
Prepaid income taxes |
|
23 |
|
— |
||
Prepaid expenses and other current assets |
|
13,843 |
|
18,901 |
||
Total current assets |
|
753,811 |
|
1,001,352 |
||
Property and equipment, net |
|
13,618 |
|
14,328 |
||
Deferred tax assets — long-term |
|
2,910 |
|
3,106 |
||
Investments — long-term |
|
31,585 |
|
— |
||
Other long-term assets |
|
73,941 |
|
3,791 |
||
Total assets |
|
$ |
875,865 |
|
$ |
1,022,577 |
Liabilities and Stockholders’ Equity |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Accounts payable |
|
$ |
38,722 |
|
$ |
14,098 |
Income taxes payable |
|
25,556 |
|
5,780 |
||
Debt — short-term |
|
30,675 |
|
24,425 |
||
Other current liabilities |
|
84,233 |
|
68,613 |
||
Total current liabilities |
|
179,186 |
|
112,916 |
||
Income taxes payable — long-term |
|
124,262 |
|
127,719 |
||
Debt — long-term |
|
464,700 |
|
460,352 |
||
Other long-term liabilities |
|
8,440 |
|
5,842 |
||
Total liabilities |
|
776,588 |
|
706,829 |
||
Stockholders’ equity: |
|
|
|
|
||
Common Stock |
|
69 |
|
74 |
||
Additional paid–in capital |
|
— |
|
393 |
||
Accumulated other comprehensive income |
|
393 |
|
— |
||
Retained earnings |
|
98,815 |
|
315,281 |
||
Total stockholders’ equity |
|
99,277 |
|
315,748 |
||
Total liabilities and stockholders’ equity |
|
$ |
875,865 |
|
$ |
1,022,577 |
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended
Condensed Consolidated Cash Flows (In thousands) (Unaudited) |
|
|
|
|
|
|||
|
Years Ended |
|||||||
|
2019 |
|
2018 (1) |
|
2017 (2) |
|||
Cash Flows from Operating Activities: |
|
|
|
|
|
|||
Net income |
$ |
322,694 |
|
$ |
196,290 |
|
$ |
257,506 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|||
Depreciation and amortization |
7,556 |
|
7,310 |
|
7,103 |
|||
Amortization of debt issuance costs |
1,114 |
|
751 |
|
256 |
|||
Premium amortization and (discount accretion), net |
(696) |
|
— |
|
— |
|||
Write off unamortized debt issuance costs |
— |
|
489 |
|
— |
|||
Provision for inventory obsolescence |
1,637 |
|
2,336 |
|
2,479 |
|||
Provisions/(recovery) for loss on vendor deposits |
2,911 |
|
14,891 |
|
(1,096) |
|||
Stock-based compensation |
2,890 |
|
3,208 |
|
2,785 |
|||
Deferred taxes |
196 |
|
2,027 |
|
(938) |
|||
Other, net |
(725) |
|
(849) |
|
1,081 |
|||
Changes in operating assets and liabilities: |
|
|
|
|
|
|||
Accounts receivable |
18,728 |
|
(33,973) |
|
(58,164) |
|||
Inventories |
(163,659) |
|
35,974 |
|
(86,988) |
|||
Vendor deposits |
27,705 |
|
4,798 |
|
(22,730) |
|||
Prepaid income taxes |
(23) |
|
2,419 |
|
(2,120) |
|||
Prepaid expenses and other assets |
(15,812) |
|
(9,404) |
|
(3,061) |
|||
Accounts payable |
24,329 |
|
(34,596) |
|
(2,554) |
|||
Income taxes payable |
16,318 |
|
103,769 |
|
5,041 |
|||
Deferred revenues |
9,079 |
|
4,941 |
|
3,649 |
|||
Accrued and other liabilities |
5,016 |
|
31,666 |
|
9,787 |
|||
Net cash provided by operating activities |
259,258 |
|
332,047 |
|
112,036 |
|||
Cash Flows from Investing Activities: |
|
|
|
|
|
|||
Purchase of property and equipment and other long-term assets |
(9,684) |
|
(9,115) |
|
(7,232) |
|||
Private equity investment |
(5,000) |
|
— |
|
— |
|||
Deposits on long-term asset |
(42,000) |
|
— |
|
— |
|||
Purchase of investments |
(220,076) |
|
— |
|
— |
|||
Proceeds from sale of investments |
80,889 |
|
— |
|
— |
|||
Proceeds from maturity of investments |
38,304 |
|
— |
|
— |
|||
Net cash (used in) investing activities |
(157,567) |
|
(9,115) |
|
(7,232) |
|||
Cash Flows from Financing Activities: |
|
|
|
|
|
|||
Proceeds from borrowing under the Credit Facility- Term |
— |
|
500,000 |
|
— |
|||
Proceeds from borrowing under the Credit Facility- Revolver |
35,000 |
|
218,500 |
|
99,000 |
|||
Repayment against Credit Facility- Revolver |
— |
|
(399,500) |
|
(34,000) |
|||
Repayment against Credit Facility - Term |
(25,000) |
|
(88,750) |
|
(11,250) |
|||
Debt Issuance Costs |
— |
|
(5,186) |
|
— |
|||
Repurchases of common stock |
(468,225) |
|
(445,014) |
|
(105,229) |
|||
Payment of common stock cash dividends |
(71,358) |
|
— |
|
— |
|||
Proceeds from exercise of stock options |
831 |
|
1,539 |
|
1,436 |
|||
Tax withholdings related to net share settlements of stock options |
— |
|
(40,623) |
|
— |
|||
Tax withholdings related to net share settlements of restricted stock units |
(1,473) |
|
(1,415) |
|
(1,594) |
|||
Net cash (used in) provided by financing activities |
(530,225) |
|
(260,449) |
|
(51,637) |
|||
Net (decrease) increase in cash and cash equivalents |
(428,534) |
|
62,483 |
|
53,167 |
|||
Cash and cash equivalents at beginning of period |
666,681 |
|
604,198 |
|
551,031 |
|||
Cash and cash equivalents at end of period |
$ |
238,147 |
|
$ |
666,681 |
|
$ |
604,198 |
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|||
Income taxes paid, net of refunds |
$ |
41,725 |
|
$ |
9,605 |
|
$ |
25,743 |
Interest paid |
$ |
23,348 |
|
$ |
11,377 |
|
$ |
5,194 |
Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|||
Unpaid stock repurchases |
$ |
2,223 |
|
$ |
— |
|
$ |
— |
Unpaid property and equipment and other long-term assets |
$ |
440 |
|
$ |
144 |
|
$ |
458 |
Net unsettled investment purchases, (sales, and maturities) |
$ |
(522) |
|
$ |
— |
|
$ |
— |
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended
(2) Derived from audited consolidated financial statements as of and for the fiscal year ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20190809005204/en/
Investor Relations Contact
laura.kiernan@ubnt.com
Ph. 1-914-598-7733
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