PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements and detailed notes for Universal Electronics Inc. for the specified periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Balance sheets reflect decreased assets and liabilities, slight equity reduction, and shifts in cash and receivables Key Balance Sheet Metrics (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $304,139 | $323,354 | $(19,215) | -5.94% | | Total liabilities | $151,380 | $170,249 | $(18,869) | -11.08% | | Total stockholders' equity | $152,759 | $153,105 | $(346) | -0.23% | | Cash and cash equivalents | $34,261 | $26,783 | $7,478 | 27.92% | | Accounts receivable, net | $97,440 | $114,182 | $(16,742) | -14.66% | | Lines of credit | $30,155 | $36,960 | $(6,805) | -18.41% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Operating income improved and net losses reduced for Q2 and H1 2025, driven by sales growth and cost control Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | % YoY Change | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :----------- | | Net sales | $97,665 | $90,452 | $7,213 | 7.97% | | Gross profit | $29,196 | $25,952 | $3,244 | 12.50% | | Operating income (loss) | $1,008 | $(4,453) | $5,461 | 122.63% | | Net income (loss) | $(2,912) | $(8,193) | $5,281 | 64.46% | | Basic EPS | $(0.22) | $(0.63) | $0.41 | 65.08% | | Diluted EPS | $(0.22) | $(0.63) | $0.41 | 65.08% | Consolidated Statements of Operations (Six Months Ended June 30, in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :----------- | | Net sales | $189,991 | $182,352 | $7,639 | 4.19% | | Gross profit | $55,279 | $51,940 | $3,339 | 6.43% | | Operating income (loss) | $(2,746) | $(11,361) | $8,615 | 75.83% | | Net income (loss) | $(9,186) | $(16,842) | $7,656 | 45.46% | | Basic EPS | $(0.70) | $(1.30) | $0.60 | 46.15% | | Diluted EPS | $(0.70) | $(1.30) | $0.60 | 46.15% | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Shifted to comprehensive income for Q2 2025 and significantly reduced loss for H1 2025, due to currency translation Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended June 30, in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | | Net income (loss) | $(2,912) | $(8,193) | $5,281 | | Change in foreign currency translation adjustment | $4,245 | $(2,902) | $7,147 | | Comprehensive income (loss) | $1,333 | $(11,095) | $12,428 | Consolidated Statements of Comprehensive Income (Loss) (Six Months Ended June 30, in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | | Net income (loss) | $(9,186) | $(16,842) | $7,656 | | Change in foreign currency translation adjustment | $5,823 | $(4,493) | $10,316 | | Comprehensive income (loss) | $(3,363) | $(21,335) | $17,972 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity saw minor fluctuations, with net losses partially offset by currency adjustments and stock compensation Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at Jun 30, 2025 | Change | | :-------------------- | :---------------------- | :---------------------- | :----- | | Total Stockholders' Equity | $153,105 | $152,759 | $(346) | | Net loss | | $(9,186) | | | Currency translation adjustment | | $5,823 | | | Shares issued for employee benefit plan and compensation | | $331 | | | Purchase of treasury shares | | $(748) | | | Employee and director stock-based compensation | | $3,433 | | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased for H1 2025 due to improved net loss, inventory, and accounts receivable management Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | | Net cash provided by (used for) operating activities | $17,705 | $2,675 | $15,030 |\n| Net cash provided by (used for) investing activities | $(3,989) | $(5,004) | $1,015 |\n| Net cash provided by (used for) financing activities | $(7,748) | $(15,841) | $8,093 |\n| Net increase (decrease) in cash and cash equivalents | $7,478 | $(19,623) | $27,101 |\n| Cash and cash equivalents at end of period | $34,261 | $23,128 | $11,133 | - The increase in net cash from operating activities was driven by a lower net loss, improved inventory management (inventories decreased by **$1.7 million** in 2025 vs an increase of **$0.9 million** in 2024), and a decrease in accounts receivable and contract assets (cash inflows of **$23.3 million** in 2025 vs **$13.1 million** in 2024)[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed disclosures on financial position, operations, and cash flows, including accounting policies, revenue, debt, and litigation [Note 1 — Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) Outlines the basis for preparing unaudited consolidated financial statements, highlighting estimates and new accounting pronouncements - The company is evaluating the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods beginning in 2027, and ASU 2023-09 (Improvements to Tax Disclosures), effective for annual periods beginning after December 15, 2024[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 2 — Cash and Cash Equivalents](index=10&type=section&id=Note%202%20%E2%80%94%20Cash%20and%20Cash%20Equivalents) Details geographic distribution of cash and cash equivalents, showing an overall increase with significant holdings in PRC and Europe Cash and Cash Equivalents by Geographic Region (in thousands) | Geographic Region (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :------------------------------- | :------------ | :---------------- | :----- | | North America | $1,926 | $1,986 | $(60) | | People's Republic of China ("PRC") | $13,413 | $10,117 | $3,296 | | Asia (excluding the PRC) | $4,107 | $2,343 | $1,764 | | Europe | $7,542 | $7,035 | $507 | | South America | $7,273 | $5,302 | $1,971 | | Total cash and cash equivalents | $34,261 | $26,783 | $7,478 | [Note 3 — Revenue and Accounts Receivable, Net](index=10&type=section&id=Note%203%20%E2%80%94%20Revenue%20and%20Accounts%20Receivable,%20Net) Net sales increased for Q2 and H1 2025, driven by connected home growth, while accounts receivable decreased Net Sales by Channel (Three Months Ended June 30, in thousands) | Net Sales by Channel (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | % YoY Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :--------- | :----------- | | Connected home | $34,099 | $23,291 | $10,808 | 46.40% | | Home entertainment | $63,566 | $67,161 | $(3,595) | -5.35% | | Total net sales | $97,665 | $90,452 | $7,213 | 7.97% | Net Sales by Channel (Six Months Ended June 30, in thousands) | Net Sales by Channel (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % YoY Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :--------- | :----------- | | Connected home | $65,828 | $47,462 | $18,366 | 38.70% | | Home entertainment | $124,163 | $134,890 | $(10,727) | -7.95% | | Total net sales | $189,991 | $182,352 | $7,639 | 4.19% | Accounts Receivable, Net (in thousands) | Accounts Receivable, Net (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :------------------------------------ | :------------ | :---------------- | :----- | | Trade receivables, gross | $82,918 | $93,773 | $(10,855) | | Allowance for credit losses | $(1,468) | $(1,863) | $395 | | Allowance for sales returns | $(285) | $(383) | $98 | | Other accounts receivable | $16,275 | $22,655 | $(6,380) | | Total Accounts receivable, net | $97,440 | $114,182 | $(16,742) | - Daikin Industries Ltd and Comcast Communications were significant customers, accounting for **18.7%** and **12.2%** of net sales, respectively, for the three months ended June 30, 2025. Daikin also represented **11.3%** of accounts receivable, net, at June 30, 2025[42](index=42&type=chunk) [Note 4 — Inventories](index=13&type=section&id=Note%204%20%E2%80%94%20Inventories) Total inventories slightly increased due to work in process and finished goods, offsetting minor raw materials decreases Inventory Breakdown (in thousands) | Inventory (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :----------------------- | :------------ | :---------------- | :----- | | Raw materials | $19,949 | $21,245 | $(1,296) | | Components | $10,646 | $10,820 | $(174) | | Work in process | $3,913 | $1,896 | $2,017 | | Finished goods | $45,663 | $45,394 | $269 | | Total Inventories | $80,171 | $79,355 | $816 | [Note 5 — Long-lived Tangible Assets](index=13&type=section&id=Note%205%20%E2%80%94%20Long-lived%20Tangible%20Assets) Total long-lived tangible assets decreased, with PRC holding the largest portion, reflecting fewer PP&E purchases Long-lived Tangible Assets by Geographic Area (in thousands) | Geographic Area (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :----------------------------- | :------------ | :---------------- | :----- | | United States | $8,444 | $9,683 | $(1,239) | | PRC | $20,477 | $22,139 | $(1,662) | | Vietnam | $8,340 | $8,520 | $(180) | | Mexico | $4,501 | $5,164 | $(663) | | All other countries | $3,301 | $3,023 | $278 | | Total long-lived tangible assets | $45,063 | $48,529 | $(3,466) | - Depreciation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year, reflecting fewer PP&E purchases in recent years[47](index=47&type=chunk) [Note 6 — Intangible Assets, Net](index=14&type=section&id=Note%206%20%E2%80%94%20Intangible%20Assets,%20Net) Net intangible assets decreased due to amortization, with patents remaining the largest component Intangible Assets, Net (in thousands) | Intangible Asset (in thousands) | June 30, 2025 Net | December 31, 2024 Net | Change | | :------------------------------ | :---------------- | :-------------------- | :----- | | Capitalized software development costs | $1,211 | $1,425 | $(214) | | Customer relationships | $1,452 | $1,814 | $(362) | | Developed and core technology | $295 | $342 | $(47) | | Patents | $20,018 | $20,419 | $(401) | | Trademarks and trade names | $22 | $38 | $(16) | | Total intangible assets, net | $22,998 | $24,038 | $(1,040) | Amortization Expense (in thousands) | Amortization Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $100 | $140 | $341 | $281 | | Selling, general and administrative expenses | $1,098 | $1,080 | $2,198 | $2,176 | | Total amortization expense | $1,198 | $1,220 | $2,539 | $2,457 | [Note 7 — Leases](index=14&type=section&id=Note%207%20%E2%80%94%20Leases) Operating lease right-of-use assets and liabilities decreased, as did operating lease expenses for Q2 and H1 2025 Lease Balances (in thousands) | Lease Balances (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Operating lease right-of-use assets | $13,292 | $14,322 | $(1,030) | | Total lease liabilities | $11,871 | $12,785 | $(914) | Operating Lease Expense (in thousands) | Operating Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating lease expense | $1,463 | $1,692 | $2,939 | $3,551 | - The weighted average remaining lease liability term increased slightly to **4.7 years** at June 30, 2025, from **4.6 years** at December 31, 2024, while the weighted average discount rate increased to **6.02%** from **5.45%**[52](index=52&type=chunk) [Note 8 — Lines of Credit](index=16&type=section&id=Note%208%20%E2%80%94%20Lines%20of%20Credit) Maintains two revolving lines of credit, U.S. and China, both amended in 2025, with compliance to all covenants Credit Line Details | Credit Line Details | U.S. Credit Line (June 30, 2025) | China Credit Line (June 30, 2025) | | :------------------ | :------------------------------- | :-------------------------------- | | Maximum Availability | $53.6 million (subject to AR Ratio) | RMB 80.0 million (~$11.2 million) | | Outstanding Balance | $19.0 million | RMB 80.0 million (~$11.2 million) | | Remaining Availability | $34.6 million | $0 | | Interest Rate | 7.29% (SOFR + 3.00% margin) | 3.07% (one-year rate from National Interbank Funding Center - 0.1% margin) | | Expiration | April 30, 2026 | July 16, 2026 | - The China Credit Line's maximum availability increased to **RMB 130.0 million** (approximately **$18.1 million**) as of July 30, 2025[62](index=62&type=chunk) - Total interest expense on borrowings under the U.S. Credit Line decreased for both the three and six months ended June 30, 2025, due to a lower average loan balance and lower interest rates[60](index=60&type=chunk)[140](index=140&type=chunk)[148](index=148&type=chunk) [Note 9 — Income Taxes](index=17&type=section&id=Note%209%20%E2%80%94%20Income%20Taxes) Recorded income tax expense despite pre-tax losses, due to jurisdictional mix and valuation allowance, assessing new legislation Income Tax Expense (in thousands) | Income Tax Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $1,811 | $2,808 | $4,030 | $3,547 | | Income (loss) before provision for income taxes | $(1,101) | $(5,385) | $(5,156) | $(13,295) | - The company has a valuation allowance on its U.S. federal and state deferred tax assets due to a three-year cumulative operating loss for U.S. operations[70](index=70&type=chunk) - H.R. 1, the One Big Beautiful Bill Act, was enacted on July 4, 2025, with provisions effective from 2025 through 2027, and the company is currently assessing its impact on consolidated financial statements[73](index=73&type=chunk) [Note 10 — Accrued Compensation](index=18&type=section&id=Note%2010%20%E2%80%94%20Accrued%20Compensation) Total accrued compensation decreased due to reductions in bonus, commission, and salary, partially offset by social insurance Accrued Compensation Breakdown (in thousands) | Accrued Compensation (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :---------------------------------- | :------------ | :---------------- | :----- | | Accrued bonus | $965 | $2,386 | $(1,421) | | Accrued commission | $410 | $1,545 | $(1,135) | | Accrued salary/wages | $3,921 | $4,676 | $(755) | | Accrued social insurance | $6,911 | $6,718 | $193 | | Accrued vacation/holiday | $3,128 | $3,036 | $92 | | Other accrued compensation | $2,431 | $2,566 | $(135) | | Total accrued compensation | $17,766 | $20,927 | $(3,161) | - Accrued severance expenses related to Mexico manufacturing footprint optimization efforts decreased from **$0.8 million** at December 31, 2024, to **$0.2 million** at June 30, 2025[75](index=75&type=chunk) [Note 11 — Other Accrued Liabilities](index=18&type=section&id=Note%2011%20%E2%80%94%20Other%20Accrued%20Liabilities) Total other accrued liabilities decreased, primarily due to payment of a legal judgment, partially offset by contract liabilities Other Accrued Liabilities (in thousands) | Other Accrued Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------ | :---------------- | :----- | | Contract liabilities | $3,350 | $2,521 | $829 | | Duties | $1,211 | $543 | $668 | | Legal judgment | $0 | $4,162 | $(4,162) | | Operating lease obligations | $3,419 | $3,553 | $(134) | | Sales and value added taxes | $3,211 | $2,684 | $527 | | Total other accrued liabilities | $18,480 | $21,008 | $(2,528) | - The **$4.2 million** legal judgment related to the Tongshun lawsuit was paid in the second quarter of 2025, resulting in its removal from accrued liabilities[76](index=76&type=chunk)[93](index=93&type=chunk) [Note 12 — Commitments and Contingencies](index=19&type=section&id=Note%2012%20%E2%80%94%20Commitments%20and%20Contingencies) Details purchase commitments, product warranties, restructuring activities, and various litigation matters, including patent disputes [Purchase Commitments](index=19&type=section&id=Purchase%20Commitments) Non-cancellable purchase commitments for inventory and PP&E slightly decreased, all expected within twelve months Purchase Commitments (in thousands) | Purchase Commitments (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :---------------------------------- | :------------ | :---------------- | :----- | | Inventory purchase commitments | $9,263 | $9,292 | $(29) | | PP&E purchase commitments | $593 | $927 | $(334) | | Total purchase commitments | $9,856 | $10,219 | $(363) | [Product Warranties](index=19&type=section&id=Product%20Warranties) Liability for product warranty claims remained low, with a slight increase from December 31, 2024, to June 30, 2025 Product Warranty Claims (in thousands) | Product Warranty Claims (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $35 | $522 | | Additions (reductions) to costs and expenses | $6 | $0 | | Balance at end of period | $41 | $522 | [Restructuring Activities](index=19&type=section&id=Restructuring%20Activities) Asia factory restructuring completed, Mexico factory downsizing continued, with a full shutdown planned by end of 2025 - Asia factory restructuring was completed in Q4 2024, incurring no further expenses in H1 2025. Total charges since September 2023 were **$4.6 million**[81](index=81&type=chunk) - Mexico factory downsizing continued, with no severance or other exit costs in H1 2025, compared to **$1.4 million** severance and **$1.0 million** other exit costs in H1 2024. Total charges since January 2024 were **$3.0 million**[82](index=82&type=chunk) - The Board approved a plan in late July 2025 to shut down the Mexico manufacturing facility by the end of 2025, with material shutdown-related expenses expected to be recorded throughout the remainder of the year[84](index=84&type=chunk) [Litigation](index=20&type=section&id=Litigation) Involved in patent disputes with Roku, a trade action, and an employment lawsuit, with a $4.2 million judgment paid - In the Roku litigation, the Federal Circuit affirmed UEI's win in the ITC action on January 19, 2024, and the Supreme Court denied Roku's cert petition on January 13, 2025. The stay on CDCA cases was lifted on July 29, 2025, consolidating cases and allowing UEI to proceed with **25 claims**[86](index=86&type=chunk)[87](index=87&type=chunk) - Roku's retaliatory ITC action against UEI failed, with the ALJ finding one patent invalid and the full ITC affirming no violation of the Tariff Act. The Federal Circuit affirmed the PTAB decision invalidating Roku's patent on June 17, 2025[88](index=88&type=chunk)[90](index=90&type=chunk) - The Tongshun Company lawsuit resulted in a judgment of approximately **$4.2 million** against the company, which was affirmed on appeal and paid in Q2 2025[93](index=93&type=chunk) - An arbitration hearing with IT Convergence, Inc regarding alleged misappropriation of confidential information and theft of trade secrets is scheduled for early August 2025, with a decision expected in early September 2025[94](index=94&type=chunk) [Note 13 — Treasury Stock](index=22&type=section&id=Note%2013%20%E2%80%94%20Treasury%20Stock) Repurchased 101,000 shares for $0.7 million for tax withholding, with further repurchases authorized until August 2025 Treasury Stock Repurchases (in thousands) | Treasury Stock Repurchases (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Total shares repurchased | 101 | 195 | | Total cost of shares repurchased | $748 | $1,841 | - As of May 6, 2025, the Board authorized repurchases of up to **$4.0 million** or **778,362 shares** under the Share Repurchase Program until August 6, 2025[99](index=99&type=chunk)[183](index=183&type=chunk) [Note 14 — Stock-Based Compensation](index=23&type=section&id=Note%2014%20%E2%80%94%20Stock-Based%20Compensation) Total stock-based compensation expense slightly increased, with $4.5 million unrecognized expense to be recognized over 2.1 years Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total employee and director stock-based compensation expense | $1,649 | $1,460 | $3,433 | $3,364 | | Income tax benefit | $185 | $220 | $432 | $507 | - Unrecognized pre-tax stock-based compensation expense at June 30, 2025: **$3.7 million** for restricted stock (weighted-average life of **2.1 years**) and **$0.8 million** for performance stock (weighted-average period of **2.1 years**)[104](index=104&type=chunk)[107](index=107&type=chunk) [Note 15 — Other Income (Expense), Net](index=24&type=section&id=Note%2015%20%E2%80%94%20Other%20Income%20(Expense),%20Net) Shifted to significant net expense due to increased foreign currency losses and Blue Chip Swap securities transactions Other Income (Expense), Net (in thousands) | Other Income (Expense), Net (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net gain (loss) on foreign currency exchange contracts | $(397) | $(195) | $(618) | $(215) | | Net gain (loss) on foreign currency exchange transactions | $(1,342) | $(159) | $(924) | $(243) | | Other income (expense) | $(12) | $265 | $(157) | $289 | | Total Other income (expense), net | $(1,751) | $(89) | $(1,699) | $(169) | - Losses related to Blue Chip Swap (BCS) security transactions were **$0.1 million** for the three months and **$0.2 million** for the six months ended June 30, 2025, incurred to collect accounts receivable from an Argentine customer[109](index=109&type=chunk)[111](index=111&type=chunk) [Note 16 — Earnings (Loss) Per Share](index=25&type=section&id=Note%2016%20%E2%80%94%20Earnings%20(Loss)%20Per%20Share) Basic and diluted EPS improved due to reduced net losses, with anti-dilutive awards excluded from calculations Earnings (Loss) Per Share | EPS (per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(0.22) | $(0.63) | $(0.70) | $(1.30) | | Diluted EPS | $(0.22) | $(0.63) | $(0.70) | $(1.30) | - **691 thousand** stock options, **498 thousand** restricted stock awards, and **372 thousand** performance stock awards were excluded from diluted EPS for the three months ended June 30, 2025, as their inclusion would have been anti-dilutive[112](index=112&type=chunk) [Note 17 — Derivatives](index=25&type=section&id=Note%2017%20%E2%80%94%20Derivatives) Held foreign currency exchange contracts, resulting in net pre-tax losses for Q2 and H1 2025 due to currency fluctuations Derivative Balances (in thousands) | Derivative (in thousands) | June 30, 2025 Total Balance | December 31, 2024 Total Balance | | :------------------------ | :-------------------------- | :------------------------------ | | Foreign currency exchange contracts | $(79) | $(249) | Derivative Net Pre-Tax Loss (in thousands) | Net Pre-Tax Loss (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Foreign currency exchange contracts | $(400) | $(200) | $(600) | $(200) | [Note 18 — Reportable Segment](index=26&type=section&id=Note%2018%20%E2%80%94%20Reportable%20Segment) Operates as a single consolidated business segment, with the Office of CEO reviewing financial information on a consolidated basis - The company operates as a single consolidated segment, with financial performance monitored against internal budgets and forecasts[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition and operations, highlighting performance drivers, strategic objectives, and liquidity [Cautionary Statement](index=27&type=section&id=Cautionary%20Statement) Report contains forward-looking statements subject to risks including supply chain, demand, tariffs, and economic conditions - Forward-looking statements are subject to risks including supply chain issues, demand and recovery trends, customer order delays, Mexico manufacturing facility shutdown timing, cash availability, effects of global events (political unrest, war, infectious diseases), economic environments (interest rates, recession), international trade policies (tariffs), liquidity requirements, capital expenditures, and tax law changes[120](index=120&type=chunk) [Overview](index=27&type=section&id=Overview) Designs and manufactures climate control, smart home, and home entertainment products, with strategic objectives for 2025 - The company's core business involves climate control solutions, smart home and security products, home entertainment products, software and cloud services, and intellectual property licensing[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) Key Financial Results (Three Months Ended June 30, in millions) | Key Financial Results (Three Months Ended June 30) | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------------------- | :----------------- | :----------------- | :----- | | Net sales | $97.7 | $90.5 | +8.0% | | Gross margin percentage | 29.9% | 28.7% | +1.2 pp | | Operating expenses (as % of net sales) | 28.9% | 33.6% | -4.7 pp | | Operating income (loss) | $1.0 | $(4.5) | +$5.5 | | Income tax expense | $1.8 | $2.8 | -$1.0 | - Strategic business objectives for 2025 include: building long-term revenue pipelines, commercially deploying UEI TIDE products, expanding QuickSet Cloud software penetration, expanding AI-powered cloud services, positioning UEI in smart thermostat control, launching new direct-to-consumer product categories, expanding technology offerings in new standards (WiFi6, Thread, Matter, Z-Wave Long Range), seeking acquisitions/strategic partners, and optimizing global manufacturing footprint[127](index=127&type=chunk) [Macroeconomic Conditions](index=29&type=section&id=Macroeconomic%20Conditions) Expects negative impacts from tariffs and reduced consumer spending, potentially affecting sales, costs, and gross margins - Adverse macroeconomic conditions, including new tariffs on goods from Vietnam, Taiwan, PRC, and Mexico, and reduced consumer spending on durable goods, are expected to negatively impact the company's sales, costs, gross margins, and overall financial results[128](index=128&type=chunk) [Manufacturing Footprint](index=29&type=section&id=Manufacturing%20Footprint) Board approved shutting down Mexico manufacturing facility by end of 2025 due to Vietnam productivity and decreased demand - The Board approved a plan in late July 2025 to shut down the Mexico manufacturing facility by the end of 2025, anticipating material shutdown-related expenses throughout the remainder of the year[129](index=129&type=chunk) - The decision to shut down the Mexico facility is based on strong productivity at the Vietnam factory and decreased demand in the home entertainment channel[129](index=129&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on estimates for revenue, inventory, and income taxes, with no significant changes identified in H1 2025 - Key estimates and judgments include revenue recognition, allowance for credit losses, inventory valuation, impairment of long-lived assets and intangible assets, business combinations, income taxes and related valuation allowances, and stock-based compensation expense[25](index=25&type=chunk)[130](index=130&type=chunk) - No significant changes to critical accounting policies and estimates were identified during the six months ended June 30, 2025[131](index=131&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 1 for discussion of new accounting pronouncements, including ASU 2024-03 and ASU 2023-09, being evaluated - Refer to Note 1 for details on recently adopted and not yet effective accounting pronouncements, including ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Improvements to Tax Disclosures)[28](index=28&type=chunk)[29](index=29&type=chunk)[132](index=132&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Improved financial performance for Q2 and H1 2025, with increased sales, expanded gross margins, and narrowed operating losses [Three Months Ended June 30, 2025 versus Three Months Ended June 30, 2024](index=30&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20versus%20Three%20Months%20Ended%20June%2030,%202024) Net sales increased by 8.0%, driven by connected home, with improved gross margin and positive operating income Key Financial Results (Three Months Ended June 30, in thousands) | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :--- | :--- | :----- | :------- | | Net sales | $97,665 | $90,452 | $7,213 | 8.0% | | Connected home sales | $34,099 | $23,291 | $10,808 | 46.4% | | Home entertainment sales | $63,566 | $67,161 | $(3,595) | -5.4% | | Gross profit | $29,196 | $25,952 | $3,244 | 12.5% | | Gross profit % | 29.9% | 28.7% | +1.2 pp | | | Operating income (loss) | $1,008 | $(4,453) | $5,461 | 122.6% | | R&D expenses | $6,959 | $7,520 | $(561) | -7.5% | | SG&A expenses | $21,229 | $21,330 | $(101) | -0.5% | | Factory restructuring charges | $0 | $1,555 | $(1,555) | -100.0% | | Other income (expense), net | $(1,751) | $(89) | $(1,662) | 1867.4% | - Gross margin percentage improved by **100 basis points** due to a stronger U.S. Dollar against functional currencies in Vietnam and Mexico, and an additional **20 basis points** from operational efficiencies in Vietnam, partially offset by unfavorable sales mix[137](index=137&type=chunk) - Other expense, net, increased significantly to **$1.8 million** from **$0.1 million**, primarily due to increased foreign currency losses from a weakening U.S. Dollar[141](index=141&type=chunk) [Six Months Ended June 30, 2025 versus Six Months Ended June 30, 2024](index=31&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20versus%20Six%20Months%20Ended%20June%2030,%202024) Net sales increased by 4.2%, driven by connected home, with improved gross margin and significantly narrowed operating loss Key Financial Results (Six Months Ended June 30, in thousands) | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :--- | :--- | :----- | :------- | | Net sales | $189,991 | $182,352 | $7,639 | 4.2% | | Connected home sales | $65,828 | $47,462 | $18,366 | 38.7% | | Home entertainment sales | $124,163 | $134,890 | $(10,727) | -7.9% | | Gross profit | $55,279 | $51,940 | $3,339 | 6.4% | | Gross profit % | 29.1% | 28.5% | +0.6 pp | | | Operating income (loss) | $(2,746) | $(11,361) | $8,615 | 75.8% | | R&D expenses | $14,190 | $15,341 | $(1,151) | -7.5% | | SG&A expenses | $43,835 | $45,341 | $(1,506) | -3.3% | | Factory restructuring charges | $0 | $2,619 | $(2,619) | -100.0% | | Other income (expense), net | $(1,699) | $(169) | $(1,530) | 905.3% | - Gross margin rate improved by **90 basis points** due to a stronger U.S. Dollar against functional currencies, partially offset by a **30 basis point** reduction from unfavorable sales mix and operational efficiencies[145](index=145&type=chunk) - SG&A expenses decreased due to continued cost control efforts, including headcount reductions and lower professional services costs[147](index=147&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity supported by cash from operations and credit lines, with increased cash and improved operating cash flows - The company's primary sources of liquidity are cash from operations and revolving lines of credit, which are expected to be sufficient for at least the next twelve months[151](index=151&type=chunk) Liquidity Metrics (in thousands) | Liquidity Metrics (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :------------------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $34,261 | $26,783 | $7,478 | | Available borrowing resources | $34,600 | $32,300 | $2,300 | | Working capital | $87,061 | $84,203 | $2,858 | Cash Flow Activities (Six Months Ended June 30, in thousands) | Cash Flow Activities (Six Months Ended June 30, in thousands) | 2025 | 2024 | Increase (Decrease) | | :------------------------------------------------------------ | :--- | :--- | :------------------ | | Cash provided by (used for) operating activities | $17,705 | $2,675 | $15,030 | | Cash provided by (used for) investing activities | $(3,989) | $(5,004) | $1,015 | | Cash provided by (used for) financing activities | $(7,748) | $(15,841) | $8,093 | - Net cash provided by operating activities increased significantly due to improved net loss, better inventory management, and a decrease in accounts receivable (Days Sales Outstanding improved to **75 days** at June 30, 2025, from **91 days** at June 30, 2024)[162](index=162&type=chunk) Material Cash Commitments (in thousands) | Material Cash Commitments (in thousands) | Total | Less than 1 year | 1 - 3 years | 4 - 5 years | After 5 years | | :--------------------------------------- | :---- | :--------------- | :---------- | :---------- | :------------ | | Credit Lines | $30,155 | $30,155 | $0 | $0 | $0 | | Inventory purchases | $9,263 | $9,263 | $0 | $0 | $0 | | Operating lease obligations | $14,403 | $4,335 | $6,166 | $1,735 | $2,167 | | Property, plant, and equipment purchases | $593 | $593 | $0 | $0 | $0 | | Software license | $6,582 | $1,020 | $2,355 | $2,566 | $641 | | Total material cash commitments | $60,996 | $45,366 | $8,521 | $4,301 | $2,808 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Exposed to market risks from interest rate and foreign currency fluctuations, with potential impacts on net income [Interest Rate Risk](index=35&type=section&id=Interest%20Rate%20Risk) Exposed to interest rate risk on variable-rate credit lines; a 100 basis point increase impacts net income by $0.2 million annually - A **100 basis point** increase in interest rates would have an approximately **$0.2 million** annual impact on net income based on outstanding Credit Lines balance at June 30, 2025[169](index=169&type=chunk) [Foreign Currency Exchange Rate Risk](index=35&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) Faces foreign currency risk, primarily from Chinese Yuan Renminbi; a 10% fluctuation could impact Q3 2025 net income by $3.5 million - The most significant foreign currency exposure is to the Chinese Yuan Renminbi, as it is the functional currency of the PRC-based factory where most products originate[172](index=172&type=chunk) - The company is generally a net payor of CNY, MXN, VND, INR, HKD, JPY, and KRW, benefiting from a stronger U.S. Dollar. For EUR, GBP, and BRL, it is generally a net receiver, benefiting from a weaker U.S. Dollar[172](index=172&type=chunk) - A **10%** fluctuation in exchange rates for key currencies (CNY, EUR, GBP, MXN, INR, HKD, BRL, JPY, KRW, VND) relative to the U.S. Dollar could fluctuate net income in Q3 2025 by approximately **$3.5 million**[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - The company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[177](index=177&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[178](index=178&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates by reference the detailed discussion of litigation matters from Note 12 to the Consolidated Financial Statements - The discussion of legal proceedings is incorporated by reference from Note 12 to the Consolidated Financial Statements[179](index=179&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Directs readers to review risk factors in the 2024 Form 10-K and subsequent reports, as they may affect actual results - Readers should carefully consider the risk factors discussed in 'Part I, Item 1A: Risk Factors' of the 2024 Form 10-K and subsequent periodic reports, as they may cause actual results to differ materially from forward-looking statements[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Repurchased 60,139 shares for tax withholding, with further repurchases authorized under the Share Repurchase Program Treasury Stock Repurchases (Three Months Ended June 30) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | | :----- | :------------------------------- | :------------------------------------ | | April 1, 2025 - April 30, 2025 | 17,929 | $4.71 | | May 1, 2025 - May 31, 2025 | 24,588 | $6.51 | | June 1, 2025 - June 30, 2025 | 17,622 | $6.80 | | Total | 60,139 | $6.06 | - The repurchased shares were primarily tendered by employees to satisfy tax withholding obligations for restricted share vesting[183](index=183&type=chunk) - As of May 6, 2025, the Board authorized management to continue repurchasing up to the lesser of **$4.0 million** worth of common stock or **778,362 shares** under the Share Repurchase Program until August 6, 2025[183](index=183&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[182](index=182&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including various agreements, certifications, and Inline XBRL documents - Exhibits include cooperation agreements, credit agreements, certifications from the CEO and CFO (Rule 13a-14(a) and Section 1350), and Inline XBRL documents[186](index=186&type=chunk) [Signatures](index=39&type=section&id=Signatures) Report signed by Bryan M. Hackworth, Chief Financial Officer, on behalf of Universal Electronics Inc. on August 7, 2025 - The report was signed by Bryan M. Hackworth, Chief Financial Officer, on August 7, 2025[189](index=189&type=chunk)

Financial Data and Key Metrics Changes - For Q2 2025, net sales increased by 8% to $97.7 million compared to $90.5 million in Q2 2024 [16] - Gross profit was $29.2 million, representing 29.9% of sales, up from 28.3% in Q2 2024 [18] - Operating income improved to $2.9 million from an operating loss of $1.1 million in Q2 2024 [19] - Net income for Q2 2025 was $2.4 million or $0.18 per diluted share, compared to a net loss of $1.2 million or $0.09 per diluted share in Q2 2024 [19] - Year-to-date operating cash flow was strong at almost $18 million, achieving a net cash position of $4.1 million for the first time since December 2021 [8][20] Business Line Data and Key Metrics Changes - Connected Home sales grew by 46% to $34.1 million in Q2 2025, driven by new orders and product launches [16][18] - Home Entertainment sales decreased by 5% to $63.6 million, reflecting lower demand in Latin America [17] - The company expects Connected Home sales for the full year 2025 to range from $30 million to $34 million, representing growth of 14% to 29% [21] Market Data and Key Metrics Changes - The company noted that customer orders in the Connected Home channel can be inconsistent, impacting quarterly revenue forecasts [10] - Home Entertainment is expected to continue facing uncertainty over the next 12 to 24 months, with anticipated declines into 2026 [11] Company Strategy and Development Direction - The company is focused on nurturing long-term growth in the Connected Home sector while optimizing its operating model [24] - Plans to close the facility in Mexico by the end of the year to optimize its footprint and respond to market changes [12] - The company aims to protect its intellectual property and is actively engaged in litigation against Roku [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term vision for growth in Connected Home, despite short-term variability in order demand [10] - The company anticipates total revenue to decline in the third and fourth quarters compared to the same periods last year, due to inconsistencies in Connected Home and pressures in Home Entertainment [11] - Management is optimistic about maintaining profitability in the fourth quarter despite expected sequential declines in sales [23] Other Important Information - The company has made significant progress in improving its cost structure and working capital [20] - Adjusted non-GAAP metrics are used for budget planning and operational decisions, providing a clearer view of core performance [4][5] Q&A Session Summary Question: Comments on weakness in Latin America and North American business outlook - Management noted that trends in North America are stable but offset by challenges in Latin America and Europe [27][28] Question: Customer concentration in the quarter - Two customers accounted for over 10% of sales: Daikin at 18.7% and Comcast at 12.2% [29] Question: Historical performance in Q4 for Connected Home and Home Entertainment - Management provided Q3 figures but did not disclose specific Q4 historical data, indicating expected sequential declines for both segments [30][32] Question: Impact of tariffs on business units - Management stated they are monitoring tariff impacts and are confident in managing through the current environment without significant cost absorption [36][38]

Executive Summary & Business Highlights [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) UEI achieved strong Q2 2025 results, with **46% Connected Home revenue growth** boosting gross margin and operating cash flow, and reaching a net cash position for the first time since December 2021 - Connected Home business revenue grew **46%**, driving strong gross margin and operating cash flow[2](index=2&type=chunk) - The company achieved a net cash position for the first time since December 2021, reflecting an improved balance sheet[2](index=2&type=chunk) [Strategic Initiatives and Operational Changes](index=1&type=section&id=Strategic%20Initiatives%20and%20Operational%20Changes) The company is strategically investing in profitable growth areas like Connected Home, expanding into new European and North American markets, and optimizing production by closing its Mexico factory due to declining Home Entertainment volumes and increased efficiency at its Vietnam facility - Investments are being allocated to profitable growth areas like Connected Home, with new customer expansion in European and North American markets[2](index=2&type=chunk) - The Mexico factory will close to optimize production, addressing declining Home Entertainment volumes and improved efficiency at the Vietnam facility[2](index=2&type=chunk) Financial Results for Three Months Ended June 30, 2025 vs 2024 [GAAP Financials (Q2 2025 vs Q2 2024)](index=1&type=section&id=GAAP%20Financials%20(Q2%202025%20vs%20Q2%202024)) In Q2 2025, GAAP net sales increased year-over-year, primarily due to strong Connected Home growth, as the company reversed an operating loss to an operating income and significantly reduced net loss and loss per share | Metric | Q2 2025 (GAAP) | Q2 2024 (GAAP) | Year-over-Year Change | | :-------------------------------- | :------------- | :------------- | :-------------------- | | Net Sales | $97.7 million USD | $90.5 million USD | +$7.2 million USD | | Gross Margin | 29.9% | 28.7% | +1.2 percentage points | | Operating Income (Loss) | $1.0 million USD | $(4.5) million USD | +$5.5 million USD | | Net Loss | $(2.9) million USD | $(8.2) million USD | +$5.3 million USD | | Loss Per Share | $(0.22) | $(0.63) | +$0.41 | [Adjusted Non-GAAP Financials (Q2 2025 vs Q2 2024)](index=1&type=section&id=Adjusted%20Non-GAAP%20Financials%20(Q2%202025%20vs%20Q2%202024)) After adjusting for non-GAAP items, Q2 2025 saw the company achieve operating income and net income, a stark contrast to losses in the prior year, reflecting significant improvements in core business operational efficiency | Metric | Q2 2025 (Adjusted Non-GAAP) | Q2 2024 (Adjusted Non-GAAP) | Year-over-Year Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Gross Margin | 29.9% | 28.7% | +1.2 percentage points | | Operating Income (Loss) | $2.9 million USD | $(1.1) million USD | +$4.0 million USD | | Net Income (Loss) | $2.4 million USD | $(1.2) million USD | +$3.6 million USD | | Diluted Earnings (Loss) Per Share | $0.18 | $(0.09) | +$0.27 | [Net Sales by Channel (Q2 2025 vs Q2 2024)](index=1&type=section&id=Net%20Sales%20by%20Channel%20(Q2%202025%20vs%20Q2%202024)) In Q2 2025, Connected Home channel sales significantly increased by **46.4%**, while Home Entertainment channel sales experienced a slight decrease of **5.4%** | Channel | Q2 2025 Sales | Q2 2024 Sales | Year-over-Year Change | | :---------------- | :------------ | :------------ | :-------------------- | | Connected Home | $34.1 million USD | $23.3 million USD | +46.4% | | Home Entertainment | $63.6 million USD | $67.2 million USD | -5.4% | Financial Results for Six Months Ended June 30, 2025 vs 2024 [GAAP Financials (H1 2025 vs H1 2024)](index=1&type=section&id=GAAP%20Financials%20(H1%202025%20vs%20H1%202024)) In H1 2025, GAAP net sales increased, and both operating loss and net loss significantly narrowed, indicating an overall improvement in financial performance | Metric | H1 2025 (GAAP) | H1 2024 (GAAP) | Year-over-Year Change | | :-------------------------------- | :------------- | :------------- | :-------------------- | | Net Sales | $190.0 million USD | $182.4 million USD | +$7.6 million USD | | Gross Margin | 29.1% | 28.5% | +0.6 percentage points | | Operating Loss | $(2.7) million USD | $(11.4) million USD | +$8.7 million USD | | Net Loss | $(9.2) million USD | $(16.8) million USD | +$7.6 million USD | | Loss Per Share | $(0.70) | $(1.30) | +$0.60 | [Adjusted Non-GAAP Financials (H1 2025 vs H1 2024)](index=1&type=section&id=Adjusted%20Non-GAAP%20Financials%20(H1%202025%20vs%20H1%202024)) Adjusted non-GAAP data for H1 2025 shows a shift from operating loss to operating income and a substantial reduction in net loss, reflecting enhanced core business profitability | Metric | H1 2025 (Adjusted Non-GAAP) | H1 2024 (Adjusted Non-GAAP) | Year-over-Year Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Gross Margin | 29.1% | 28.5% | +0.6 percentage points | | Operating Income (Loss) | $1.4 million USD | $(4.6) million USD | +$6.0 million USD | | Net Income (Loss) | $0.8 million USD | $(4.6) million USD | +$5.4 million USD | | Diluted Earnings (Loss) Per Share | $0.06 | $(0.36) | +$0.42 | [Net Sales by Channel (H1 2025 vs H1 2024)](index=1&type=section&id=Net%20Sales%20by%20Channel%20(H1%202025%20vs%20H1%202024)) In H1 2025, Connected Home channel sales increased by **38.5%**, while Home Entertainment channel sales decreased by **7.9%** | Channel | H1 2025 Sales | H1 2024 Sales | Year-over-Year Change | | :---------------- | :------------ | :------------ | :-------------------- | | Connected Home | $65.8 million USD | $47.5 million USD | +38.5% | | Home Entertainment | $124.2 million USD | $134.9 million USD | -7.9% | Balance Sheet [Key Balance Sheet Items (June 30, 2025 vs Dec 31, 2024)](index=5&type=section&id=Key%20Balance%20Sheet%20Items%20(June%2030%2C%202025%20vs%20Dec%2031%2C%202024)) As of June 30, 2025, the company's cash and cash equivalents increased, and total liabilities decreased, optimizing the balance sheet structure | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :----------- | :-------------------- | | Cash and Cash Equivalents | $34.3 million USD | $26.8 million USD | +$7.5 million USD | | Total Current Assets | $227.1 million USD | $242.5 million USD | -$15.4 million USD | | Total Assets | $304.1 million USD | $323.4 million USD | -$19.3 million USD | | Total Current Liabilities | $140.1 million USD | $158.3 million USD | -$18.2 million USD | | Total Liabilities | $151.4 million USD | $170.2 million USD | -$18.8 million USD | | Total Stockholders' Equity | $152.8 million USD | $153.1 million USD | -$0.3 million USD | Cash Flows [Cash Flow Activities (Six Months Ended June 30, 2025 vs 2024)](index=7&type=section&id=Cash%20Flow%20Activities%20(Six%20Months%20Ended%20June%2030%2C%202025%20vs%202024)) In H1 2025, net cash from operating activities significantly increased, while net cash used in investing and financing activities decreased, leading to a substantial rise in cash and cash equivalents at the end of the period | Activity | H1 2025 | H1 2024 | Change | | :-------------------------------------- | :---------- | :---------- | :-------------------- | | Net Cash Provided by Operating Activities | $17.7 million USD | $2.7 million USD | +$15.0 million USD | | Net Cash Used in Investing Activities | $(4.0) million USD | $(5.0) million USD | +$1.0 million USD | | Net Cash Used

Core Insights - Universal Electronics (UEIC) is currently rated 2 (Buy) by Zacks Rank, indicating a positive earnings outlook, while Hayward Holdings, Inc. (HAYW) is rated 3 (Hold) [3] - Value investors assess various traditional metrics to determine if a stock is undervalued, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Valuation Metrics - UEIC has a forward P/E ratio of 12.98, significantly lower than HAYW's forward P/E of 20.06, suggesting that UEIC may be undervalued [5] - The PEG ratio for UEIC is 0.87, indicating a favorable growth outlook compared to HAYW's PEG ratio of 2.85, which suggests higher expected growth relative to its price [5] - UEIC's P/B ratio stands at 0.59, while HAYW's P/B ratio is 2.18, further supporting the notion that UEIC is a more attractive value option [6] - Overall, UEIC has a Value grade of A, while HAYW has a Value grade of C, highlighting UEIC's superior valuation metrics and earnings outlook [6]

Core Viewpoint - The article emphasizes the importance of value investing as a strategy to identify undervalued stocks, highlighting Universal Electronics (UEIC) as a strong candidate based on its financial metrics and Zacks Rank [2][4][6] Group 1: Value Investing Strategy - Value investing is a preferred method for finding strong stocks, utilizing fundamental analysis and traditional valuation metrics [2] - The Zacks Style Scores system identifies stocks with specific traits, particularly those with high grades in the "Value" category [3] Group 2: Universal Electronics (UEIC) Metrics - Universal Electronics (UEIC) holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - UEIC's current P/E ratio is 11.06, significantly lower than the industry average of 22.96, suggesting it may be undervalued [4] - The stock's Forward P/E has fluctuated between 8.10 and 263.45 over the past 12 months, with a median of 13.31 [4] - UEIC has a PEG ratio of 0.74, compared to the industry average of 2.09, further indicating undervaluation [5] - The PEG ratio for UEIC has ranged from 0.54 to 17.56 in the past 52 weeks, with a median of 0.95 [5] - These financial metrics suggest that UEIC is likely undervalued and has a strong earnings outlook, making it an impressive value stock [6]

Financial Performance - Universal Electronics reported a quarterly loss of $0.12 per share, better than the Zacks Consensus Estimate of a loss of $0.15, and an improvement from a loss of $0.19 per share a year ago, representing an earnings surprise of 20% [1] - The company posted revenues of $92.33 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.83%, and showing an increase from year-ago revenues of $91.9 million [2] - Over the last four quarters, Universal Electronics has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Universal Electronics shares have declined approximately 46.9% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current Zacks Rank for Universal Electronics is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.10 on revenues of $96.12 million, and for the current fiscal year, it is $0.46 on revenues of $405.19 million [7] - The outlook for the Electronics - Miscellaneous Products industry is currently in the bottom 40% of over 250 Zacks industries, which may impact the performance of Universal Electronics [8]

Universal Electronics (UEIC) Q1 2025 Earnings Call May 08, 2025 04:30 PM ET Company Participants Kirsten Chapman - Managing Director, Alliance Advisors IRRamzi Ammari - SVP of Corporate Planning and StrategyBryan Hackworth - CFO Conference Call Participants Steve Frankel - Director of Research & Senior Research AnalystGregory Burns - Analyst Operator Good afternoon. My name is Kelly, and I will be your conference operator today. Now I would like to welcome everyone to Universal Electronics First Quarter twe ...

Financial Data and Key Metrics Changes - In Q1 2025, net sales were $92.3 million, slightly up from $91.9 million in Q1 2024, reflecting a growth driven by the connected home channel [14] - The adjusted net loss for Q1 2025 was $1.5 million or $0.12 per share, an improvement from a net loss of $3.4 million or $0.26 per share in Q1 2024 [17] - Gross profit for Q1 2025 was $26.1 million, representing 28.3% of sales, consistent with the prior year's rate [15] Business Line Data and Key Metrics Changes - Connected home sales grew by $7.6 million or 31% to $31.7 million in Q1 2025, driven by project wins and SKU expansion [14] - Home entertainment sales decreased by $7.1 million or 11% to $60.6 million in Q1 2025, primarily due to lower demand for subscription broadcasting products [14] Market Data and Key Metrics Changes - The connected home channel now represents 34% of total sales, indicating a shift in revenue sources [12] - In North America and EMEA, there are signs of stabilization in demand, while Latin America is experiencing lower demand for basic remotes [15] Company Strategy and Development Direction - The company is focusing on the connected home market to generate new revenue growth, with significant investments in R&D for innovative solutions [4][8] - Management plans to continue optimizing cost structures and improving cash flows while navigating tariff impacts through price adjustments [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, highlighting the unpredictability of sales in the connected home channel compared to home entertainment [19] - The company is prepared to react to potential changes in tariff rates and economic uncertainties affecting consumer spending [5][32] Other Important Information - The company has approximately 778,000 shares remaining on its share repurchase authorization and plans to begin buying back shares in the open market [18] - Operating expenses decreased to $27.6 million in Q1 2025 from $29.4 million in Q1 2024, reflecting cost-reduction measures [16] Q&A Session Summary Question: Customer concentration and major customers - The company had two customers representing over 10% of sales: Daikin at 17.7% and Comcast at 11.2% [23] Question: HVAC space and backlog - The company has shipped to the majority of its top 10 customers, with eight accounts won and five having shipped products [24] Question: Home control business and international sales - The majority of home control sales are outside the US, with HVAC being a significant portion of international sales [26][30] Question: Tariff impact and customer willingness to share costs - Management is currently able to pass on tariff costs to customers without a material effect on financials, but remains cautious about future changes [31][32] Question: CEO succession plan - The board is actively interviewing candidates for the CEO position and has hired a search firm for the process [35][38] Question: Gross margin adjustments - The company has stopped calling out excess overhead adjustments in gross margin reporting [41] Question: Growth trajectory in connected home - Management expects strong growth in connected home sales, with ongoing product launches and project wins [44] Question: Backlog or pipeline quantification - The backlog from previously referenced projects is still being shipped over multiple years, with ongoing progress expected [48]

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 consolidated financials report a net loss of **$6.3 million**, an improvement from the prior year, with total assets at **$310.6 million** and **$9.0 million** cash from operations [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$310.6 million** as of March 31, 2025, driven by lower receivables and inventories, while liabilities also decreased to **$160.6 million** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $27,389 | $26,783 | | Accounts receivable, net | $106,007 | $114,182 | | Inventories | $77,455 | $79,355 | | **Total current assets** | **$232,154** | **$242,494** | | **Total assets** | **$310,611** | **$323,354** | | **Liabilities & Equity** | | | | Accounts payable | $69,083 | $72,031 | | Lines of credit | $31,015 | $36,960 | | **Total current liabilities** | **$149,329** | **$158,291** | | **Total liabilities** | **$160,642** | **$170,249** | | **Total stockholders' equity** | **$149,969** | **$153,105** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 net sales were **$92.3 million**, with an operating loss of **$3.8 million**, a significant improvement from Q1 2024, narrowing the net loss to **$6.3 million** Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $92,326 | $91,900 | | Gross profit | $26,083 | $25,988 | | Operating income (loss) | $(3,754) | $(6,908) | | Net income (loss) | $(6,274) | $(8,649) | | Basic & Diluted EPS | $(0.48) | $(0.67) | - Operating expenses were lower in Q1 2025, with R&D expenses at **$7.2 million** (vs. $7.8 million in Q1 2024) and SG&A at **$22.6 million** (vs. $24.0 million in Q1 2024). No factory restructuring charges were incurred in Q1 2025, compared to **$1.1 million** in Q1 2024[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Q1 2025 comprehensive loss improved to **$4.7 million** from **$10.2 million**, driven by a smaller net loss and a positive foreign currency translation adjustment Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $(6,274) | $(8,649) | | Change in foreign currency translation adjustment | $1,578 | $(1,591) | | **Comprehensive income (loss)** | **$(4,696)** | **$(10,240)** | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to **$150.0 million** by March 31, 2025, primarily due to a **$6.3 million net loss**, partially offset by currency adjustments and stock-based compensation - Key changes in equity for Q1 2025 included a **net loss of $6.3 million**, a **$1.6 million positive currency translation adjustment**, and the purchase of **$0.4 million in treasury shares**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 operating activities generated **$9.0 million** in cash, a significant improvement, leading to a **$0.6 million** increase in cash and cash equivalents overall Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $8,984 | $(2,775) | | Net cash provided by (used for) investing activities | $(1,907) | $(2,366) | | Net cash provided by (used for) financing activities | $(6,383) | $(10,230) | | **Net increase (decrease) in cash and cash equivalents** | **$606** | **$(15,837)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue disaggregation, customer concentrations, debt covenants, restructuring, and legal proceedings, highlighting connected home channel growth and compliance with debt covenants Net Sales by Channel (in thousands) | Channel | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Connected home | $31,729 | $24,171 | | Home entertainment | $60,597 | $67,729 | | **Total net sales** | **$92,326** | **$91,900** | - Daikin Industries Ltd. and Comcast Communications were significant customers, accounting for **17.7%** and **11.2%** of net sales, respectively, in Q1 2025[40](index=40&type=chunk) - The company completed its Asia factory restructuring in Q4 2024. The Mexico factory restructuring is scheduled to be completed in Q2 2025, with no further expenses expected from either plan[80](index=80&type=chunk)[81](index=81&type=chunk) - The company is involved in ongoing litigation with Roku Inc. and has an accrued legal judgment of **$4.2 million** related to a lawsuit with an employment agency in the PRC (Tongshun Matters)[84](index=84&type=chunk)[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes a **0.5% sales increase** to connected home growth, improved operating loss to **$3.8 million** due to reduced expenses, and confirms sufficient liquidity for the next twelve months - Net sales in the connected home channel grew to **$31.7 million** from **$24.2 million** YoY, driven by shipments to large climate control and home automation customers[133](index=133&type=chunk) - Net sales in the home entertainment channel decreased to **$60.6 million** from **$67.7 million** YoY, primarily due to lower demand for subscription broadcasting products, particularly in Latin America[134](index=134&type=chunk) - SG&A expenses decreased by **$1.4 million** YoY, driven by lower professional services costs (**$0.6 million**), favorable currency effects (**$0.5 million**), and reduced payroll from lower headcount (**$0.3 million**)[137](index=137&type=chunk) - The company anticipates that current cash, cash flow from operations, and available borrowing will be sufficient to cover cash needs for at least the next twelve months[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate and foreign currency risks, with a **100 basis point** rate increase impacting net income by **$0.2 million** and a **10%** adverse FX fluctuation impacting Q2 net income by **$4.9 million** - A **100 basis point** increase in interest rates would have an approximately **$0.2 million** annual impact on net income based on the outstanding credit line balance at March 31, 2025[157](index=157&type=chunk) - The company's most significant foreign currency exposure is to the Chinese Yuan Renminbi, as it is the functional currency of its PRC-based factory[159](index=159&type=chunk) - A **10%** adverse fluctuation in key foreign currency exchange rates relative to the U.S. Dollar is estimated to impact net income in the second quarter of 2025 by approximately **$4.9 million**[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[165](index=165&type=chunk) - No material changes to the internal control over financial reporting were identified during the most recent fiscal quarter[166](index=166&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various lawsuits arising from business operations, with detailed information provided in Note 12 of the financial statements - This section incorporates by reference the discussion of litigation matters from Note 12 of the financial statements, which includes details on cases involving Roku and Tongshun Company[167](index=167&type=chunk)[84](index=84&type=chunk)[91](index=91&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No new significant risk factors were reported this quarter; readers are directed to the risk factors disclosed in the 2024 Annual Report on Form 10-K - The report refers to the risk factors discussed in the company's 2024 Form 10-K, indicating no material changes or additions during the quarter[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **40,710 shares** at an average price of **$9.41** for employee tax obligations, with **778,362 shares** remaining available under the repurchase program Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Weighted Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | — | $— | | Feb 2025 | 40,710 | $9.41 | | Mar 2025 | — | $— | | **Total** | **40,710** | **$9.41** | - The repurchased shares in February were tendered by employees to cover tax obligations from vesting restricted stock[169](index=169&type=chunk) - As of May 6, 2025, the Board authorized the continuation of the Share Repurchase Program, allowing for the repurchase of up to the lesser of **$4.0 million** or the remaining **778,362 shares** until August 6, 2025[97](index=97&type=chunk)[169](index=169&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[170](index=170&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) The report lists filed exhibits, including amendments to credit agreements, transition and cooperation agreements, and officer certifications, along with Inline XBRL documents - Key exhibits include the Ninth Amendment to the Second Amended and Restated Credit Agreement, a Transition Agreement with Paul D. Arling, and a Cooperation Agreement with Kent Lake Partners LP[173](index=173&type=chunk) - Certifications by the Chief Financial Officer pursuant to Rule 13a-14(a) and Section 1350 are included as exhibits[173](index=173&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section highlights Universal Electronics' Q1 2025 performance, strategic initiatives, and management's focus on shareholder value [Q1 2025 Performance Highlights & Management Commentary](index=1&type=section&id=Q1%202025%20Performance%20Highlights%20%26%20Management%20Commentary) UEI's Q1 2025 performance saw Connected Home sales growth offset Home Entertainment declines, with management focused on strategic R&D and shareholder value - In Q1 2025, **Connected Home channel sales growth offset declines** in the Home Entertainment channel[2](index=2&type=chunk) - The company has authorization to repurchase approximately **778,000 shares** and plans to do so opportunistically[2](index=2&type=chunk) - The board added John Mutch and Michael Burger, focusing on enhancing financial performance and driving shareholder value[2](index=2&type=chunk) [Q1 2025 Financial Performance](index=1&type=section&id=Q1%202025%20Financial%20Performance) This section details Universal Electronics' consolidated financial results for Q1 2025, including net sales, profitability, and cash position [Consolidated Financial Highlights (GAAP & Adjusted Non-GAAP)](index=1&type=section&id=Consolidated%20Financial%20Highlights%20(GAAP%20%26%20Adjusted%20Non-GAAP)) UEI's Q1 2025 net sales grew to $92.3 million, driven by Connected Home, as GAAP and adjusted non-GAAP net losses significantly narrowed Q1 2025 Net Sales (GAAP & Adjusted Non-GAAP) | Metric | Q1 2025 | Q1 2024 | | :----------------------- | :------------- | :------------- | | Net Sales (Total) | $92.3 Million | $91.9 Million | | Connected Home Net Sales | $31.7 Million | $24.2 Million | | Home Entertainment Net Sales | $60.6 Million | $67.7 Million | Q1 2025 Key Income Statement Metrics (GAAP & Adjusted Non-GAAP) | Metric | Q1 2025 (GAAP) | Q1 2024 (GAAP) | Q1 2025 (Adjusted Non-GAAP) | Q1 2024 (Adjusted Non-GAAP) | | :----------------------- | :-------------------- | :-------------------- | :-------------------------- | :-------------------------- | | Gross Margin | 28.3% | 28.3% | 28.3% | 28.3% | | Operating Loss | $(3.8) Million | $(6.9) Million | $(1.5) Million | $(3.4) Million | | Net Loss | $(6.3) Million | $(8.6) Million | $(1.5) Million | $(3.4) Million | | Loss Per Share | $(0.48) | $(0.67) | $(0.12) | $(0.26) | - Cash and cash equivalents totaled **$27.4 million** as of March 31, 2025[7](index=7&type=chunk) [Q2 2025 Financial Outlook](index=1&type=section&id=Q2%202025%20Financial%20Outlook) This section provides Universal Electronics' financial guidance for Q2 2025, including projected net sales and earnings per share [Net Sales and EPS Guidance](index=1&type=section&id=Net%20Sales%20and%20EPS%20Guidance) Q2 2025 net sales are projected between $91 million and $101 million, with Connected Home growth, and adjusted non-GAAP EPS expected to turn positive Q2 2025 Net Sales Outlook (GAAP & Adjusted Non-GAAP) | Metric | Q2 2025 (Low) | Q2 2025 (High) | Q2 2024 (Actual) | | :----------------------- | :------------------- | :------------------- | :--------------------- | | Net Sales (Total) | $91.0 Million | $101.0 Million | $90.5 Million | | Connected Home Net Sales | $32.0 Million | $36.0 Million | $23.3 Million | | Home Entertainment Net Sales | $59.0 Million | $65.0 Million | $67.2 Million | Q2 2025 EPS Outlook (GAAP & Adjusted Non-GAAP) | Metric | Q2 2025 (Low) | Q2 2025 (High) | Q2 2024 (Actual) | | :----------------------- | :------------------- | :------------------- | :--------------------- | | GAAP Loss Per Share | $(0.31) | $(0.21) | $(0.63) | | Adjusted Non-GAAP EPS | $0.05 | $0.15 | $(0.09) | - The Q2 2025 adjusted non-GAAP EPS estimate excludes approximately **$0.36 per share** in adjustments, including stock-based compensation, amortization of acquired intangibles, foreign exchange gains/losses, and related tax impacts[5](index=5&type=chunk) [Conference Call Information](index=1&type=section&id=Conference%20Call%20Information) This section provides details for Universal Electronics' Q1 2025 earnings conference call, including date, time, and access information [Q1 2025 Earnings Call](index=1&type=section&id=Q1%202025%20Earnings%20Call) UEI will host its Q1 2025 earnings call on May 8, 2025, at 4:30 PM ET to discuss results, accessible via phone or webcast - Conference call time: **Thursday, May 8, 2025, at 4:30 PM ET / 1:30 PM PT**[6](index=6&type=chunk) - Dial-in details: **US: 877-545-0523, International: 973-528-0016, Conference ID: 181440**[6](index=6&type=chunk) - The conference call will be webcast live on the UEI investor relations website and available for replay for 90 days[6](index=6&type=chunk) [Non-GAAP Financial Measures](index=1&type=section&id=Non-GAAP%20Financial%20Measures) This section explains Universal Electronics' use of non-GAAP financial measures, their definitions, and the rationale behind their presentation [Definition and Rationale](index=1&type=section&id=Definition%20and%20Rationale) UEI provides adjusted non-GAAP financial information to supplement GAAP results, used by management for budgeting and performance evaluation, enhancing investor assessment - Non-GAAP financial measures are provided as **supplemental information** and are not a substitute for GAAP results[8](index=8&type=chunk) - Management utilizes non-GAAP metrics for **budgeting, operational and financial decisions**, and to assess core operating and financial performance and business trends[8](index=8&type=chunk) - Adjusted non-GAAP metrics exclude stock-based compensation, amortization of acquired intangibles, severance, factory restructuring, specific litigation expenses, foreign exchange gains/losses, and related tax impacts[9](index=9&type=chunk) [Company Profile](index=3&type=section&id=Company%20Profile) This section provides an overview of Universal Electronics Inc., detailing its business, core offerings, and market position [Business Overview](index=3&type=section&id=Business%20Overview) Universal Electronics Inc. (UEIC) is a global leader in home wireless control solutions, focusing on user-centric design, interoperability, privacy, and security - Universal Electronics Inc. (NASDAQ: UEIC) is a **global leader in wireless universal control solutions** for the home[10](index=10&type=chunk) - The company focuses on a **user-centric approach** to simplify interaction with complex home technology, eliminate interoperability challenges, and adopt privacy-first and secure design methods[10](index=10&type=chunk) - Its solutions are trusted by Fortune 500 clients including Daikin, Carrier, Comcast, Vivint Smart Home, Samsung, Sony, Hunter Douglas, and Somfy[10](index=10&type=chunk) - Company innovations include award-winning voice-enabled entertainment remotes and the QuickSet Cloud platform[10](index=10&type=chunk) [Investor Relations and Risk Factors](index=3&type=section&id=Investor%20Relations%20and%20Risk%20Factors) This section provides investor contact information and outlines the forward-looking statements and associated risks for Universal Electronics [Contacts](index=3&type=section&id=Contacts) This section provides contact information for Universal Electronics' Chief Financial Officer and Investor Relations advisor for investor inquiries - UEI Chief Financial Officer: **Bryan Hackworth**, Email: investors@uei.com, Phone: 480-530-3000[11](index=11&type=chunk) - Investor Relations: **Kirsten Chapman, Alliance Advisors**, Email: ueiinvestor@allianceadvisors.com, Phone: 415-433-3777[11](index=11&type=chunk) [Forward-Looking Statements and Risks](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risks) This press release contains forward-looking statements about future performance and trends, which are not guarantees and are subject to various risks and uncertainties - Forward-looking statements are **not guarantees of future performance** and are subject to numerous risks and uncertainties[11](index=11&type=chunk) - Risk factors include: ability to timely develop and deliver innovative control solutions; attracting new customers and successfully gaining sales in new markets; optimizing manufacturing footprint and mitigating concentration risks; maintaining market share in traditional subscription broadcast markets; managing global inflationary pressures and macroeconomic conditions; successfully executing patented technologies (including litigation with Roku); strategically enhancing, expanding, and monetizing the IP portfolio; cybersecurity incidents, ethical, reputational, competitive harm, or legal liability from AI applications; impact of tariffs on profitability; and effects of economic uncertainty, natural disasters, public health crises, government actions, political instability, and war[12](index=12&type=chunk)[13](index=13&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements[13](index=13&type=chunk) [Consolidated Financial Statements and Reconciliations](index=6&type=section&id=Consolidated%20Financial%20Statements%20and%20Reconciliations) This section presents Universal Electronics' consolidated financial statements and reconciliations between GAAP and adjusted non-GAAP results [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $310.6 million from $323.4 million, with total liabilities also decreasing and shareholders' equity slightly declining Consolidated Balance Sheet Highlights (in Thousands of Dollars) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :--------------- | | Total Assets | $310,611 | $323,354 | | Total Liabilities | $160,642 | $170,249 | | Total Stockholders' Equity | $149,969 | $153,105 | | Cash and Cash Equivalents | $27,389 | $26,783 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, net sales slightly increased to $92.3 million, operating loss improved, and net loss narrowed to $6.3 million, with diluted loss per share at $0.48 Consolidated Statements of Operations Highlights (in Thousands of Dollars, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :----------------------- | :------------- | :------------- | | Net Sales | $92,326 | $91,900 | | Gross Profit | $26,083 | $25,988 | | Operating Income (Loss) | $(3,754) | $(6,908) | | Net Income (Loss) | $(6,274) | $(8,649) | | Diluted Earnings (Loss) Per Share | $(0.48) | $(0.67) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, net cash from operating activities significantly improved to $9.0 million, increasing cash and equivalents to $27.4 million at period-end Consolidated Statements of Cash Flows Highlights (in Thousands of Dollars) | Metric | Q1 2025 | Q1 2024 | | :----------------------------------- | :------------- | :------------- | | Net Cash Provided by (Used in) Operating Activities | $8,984 | $(2,775) | | Net Cash Provided by (Used in) Investing Activities | $(1,907) | $(2,366) | | Net Cash Provided by (Used in) Financing Activities | $(6,383) | $(10,230) | | Net Increase (Decrease) in Cash and Cash Equivalents | $606 | $(15,837) | | Cash and Cash Equivalents at End of Period | $27,389 | $26,914 | [Net Sales by Channel](index=9&type=section&id=Net%20Sales%20by%20Channel) In Q1 2025, Connected Home net sales grew 31.27% to $31.7 million, offsetting a 10.53% decline in Home Entertainment, resulting in a slight overall net sales increase Net Sales by Channel (in Thousands of Dollars) | Channel | Q1 2025 | Q1 2024 | Year-over-Year Change | | :--------------- | :------------- | :------------- | :------- | | Connected Home | $31,729 | $24,171 | +31.27% | | Home Entertainment | $60,597 | $67,729 | -10.53% | | **Net Sales (Total)** | **$92,326** | **$91,900** | **+0.46%** | - The Connected Home channel includes sales of climate control, smart home, and security products[23](index=23&type=chunk) - The Home Entertainment channel includes sales of entertainment-related products, intellectual property licensing, and cloud software solutions[23](index=23&type=chunk) [Reconciliation of Adjusted Non-GAAP Financial Results](index=10&type=section&id=Reconciliation%20of%20Adjusted%20Non-GAAP%20Financial%20Results) This section reconciles GAAP and adjusted non-GAAP financial results for Q1 2025 and Q1 2024, detailing adjustments that improved non-GAAP operating and net loss figures GAAP and Adjusted Non-GAAP Reconciliation Highlights (in Thousands of Dollars, except per share amounts) | Metric | GAAP Q1 2025 | Adjusted Non-GAAP Q1 2025 | GAAP Q1 2024 | Adjusted Non-GAAP Q1 2024 | | :----------------------- | :-------------------- | :-------------------------- | :-------------------- | :-------------------------- | | Gross Profit | $26,083 | $26,099 | $25,988 | $26,015 | | Operating Income (Loss) | $(3,754) | $(1,476) | $(6,908) | $(3,407) | | Net Income (Loss) | $(6,274) | $(1,549) | $(8,649) | $(3,418) | | Diluted Earnings (Loss) Per Share | $(0.48) | $(0.12) | $(0.67) | $(0.26) | - Total adjustments to diluted earnings per share were **$0.36** in Q1 2025 and **$0.41** in Q1 2024[27](index=27&type=chunk) - Adjustments include stock-based compensation, amortization of acquired intangibles, severance (Q1 2025), factory restructuring (Q1 2024), litigation expenses (Q1 2024), and foreign exchange (gain)/loss[25](index=25&type=chunk)[27](index=27&type=chunk) [Reconciliation of Adjusted Non-GAAP Financial Outlook](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Non-GAAP%20Financial%20Outlook) This section reconciles the Q2 2025 financial outlook from GAAP to adjusted non-GAAP, showing adjustments' impact on diluted EPS, with adjusted non-GAAP EPS projected positive Q2 2025 Outlook GAAP and Adjusted Non-GAAP EPS Reconciliation (in Thousands of Dollars, except per share amounts) | Metric | Q2 2025 (Low) GAAP | Q2 2025 (High) GAAP | Q2 2025 (Low) Adjusted Non-GAAP | Q2 2025 (High) Adjusted Non-GAAP | Q2 2024 (Actual) GAAP | Q2 2024 (Actual) Adjusted Non-GAAP | | :----------------------- | :----------------------- | :----------------------- | :----------------------------- | :----------------------------- | :----------------------- | :----------------------------- | | Diluted Earnings (Loss) Per Share | $(0.31) | $(0.21) | $0.05 | $0.15 | $(0.63) | $(0.09) | - Total adjustments to the Q2 2025 EPS outlook are **$0.36**, while actual adjustments for Q2 2024 were **$0.54**[30](index=30&type=chunk) - Adjustments include stock-based compensation, amortization of acquired intangibles, foreign exchange gains/losses, and related tax impacts; Q2 2024 also included specific litigation and factory restructuring expenses[30](index=30&type=chunk)