Safety Fears Disrupt Installations, Says UEI CEO; Stock Down After Q2
COVID-19 is affecting "near-term demand” in Universal Electronics Inc.'s traditional home entertainment and security businesses, said CEO Paul Arling on a quarterly call (See Q2 materials here). UEI's MVPD and security customers’ “ability or willingness to install hardware in consumers'…
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homes” for new service or upgrades “has been disrupted," he said Thursday. Arling said a recent falloff in MPVD activations was driven by “operator policies that restrict new installations due to the risk of COVID-19 to their installers, while in other cases, consumers are reluctant to allow installers in their homes.” Declines in MVPD subscriber counts have been due to “a decrease in professional installations and hence new activations.” Lack of live sports contributed to new connections declines, he said. Generally, the executive noted, “lines defining content sources have blurred." Comcast generated 19.3% of sales. Revenue “continues to be challenged by headwinds related to customers relying on truck rolls for new installs,” Colliers analyst Steven Frankel wrote investors Friday. Sales were $153.1 million vs. $193.9 million in the year-ago quarter. Frankel sees UEI’s shift to advanced voice remotes and software licensing as higher margin opportunities, but growth “is likely to remain challenging in the next several quarters.” Chief Financial Officer Bryan Hackworth said the company’s restructuring efforts allowed it to reallocate expenses to R&D. The Q3 guidance is for revenue of $150 million-$160 million vs. $200.7 million in Q3 2019. Shares closed down 5.89% Friday at $44.48.