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]

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 in connected home sales [15][19] - The 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 [19] - Gross profit for Q1 2025 was $26.1 million, representing 28.3% of sales, consistent with the prior year's rate [17] 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 [15][10] - 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 [16][10] Market Data and Key Metrics Changes - In North America and EMEA, there are signs of stabilization among customers, while Latin America is experiencing lower demand for basic remotes [17] - The company expects continued demand for connected home solutions throughout the year [11] Company Strategy and Development Direction - The company is focusing on the connected home market to generate new revenue growth, with a significant portion of R&D directed towards control products outside traditional home entertainment [13][4] - The strategy includes breaking out sales between connected home and home entertainment channels to better reflect performance [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, noting that while connected home sales are growing, they are less predictable than home entertainment sales [21] - The company is prepared to manage potential impacts from tariffs and economic uncertainties affecting consumer spending [5][31] 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 [20] - Operating expenses decreased to $27.6 million in Q1 2025 from $29.4 million in Q1 2024, reflecting cost-reduction actions [18] Q&A Session Summary Question: Customer concentration details - The company had two customers contributing over 10% of sales: Daikin at 17.7% and Comcast at 11.2% [25] Question: HVAC customer shipment status - The company has shipped to the majority of its top 10 HVAC customers, with eight accounts won and five having shipped products [26] Question: Home control business shipment percentage outside the US - The majority of home control sales are in the US, with about 40% of total sales being outside the US [28] Question: Concerns about tariff impacts - The company is currently able to manage tariff costs and does not expect a material effect on financial statements at the current rates [31] Question: CEO succession plan update - The board is actively interviewing candidates for the CEO position and has hired a search firm for the process [34][37] Question: Gross margin adjustments - The company stopped calling out excess overhead adjustments about a year ago, indicating that previous restructuring efforts are complete [41][42] Question: Growth trajectory in connected home - The company expects strong growth in connected home sales, with ongoing product launches and project wins contributing to revenue [44][46] Question: Backlog or pipeline quantification - The company does not have an exact backlog number but indicated that previous revenue opportunities are being shipped over a multi-year period [48]

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)

Sales and Market Presence - UEI's sales to Daikin Industries Ltd. accounted for 13.3%, 14.0%, and 14.4% of net sales for the years ended December 31, 2024, 2023, and 2022, respectively [26]. - The company has a strong presence in the global market, serving four of the top five global smart TV brands and five of the top ten HVAC OEM brands [24]. - The company has expanded its customer base to include digital media streaming services, complementing traditional cable and satellite customers [39]. - Major customers, such as Daikin Industries Ltd. and Comcast Corporation, accounted for over 10% of net sales in recent years, indicating a reliance on a few key clients [118]. Product Development and Innovation - UEI's flagship product, QuickSet, enables universal device and content discovery, supporting various communication protocols including HDMI, Bluetooth, and Zigbee [27]. - The latest release of QuickSet, QuickSet homeSense, is currently in proof of concept evaluation on broadband gateway platforms from major telcos in the U.S. and Europe [32]. - The UEI TIDE family of smart thermostats integrates with HVAC systems and supports cloud connectivity, Bluetooth, Zigbee, and Matter standards [34]. - New products launched in 2024 include features such as QuickSet homeSense for occupancy detection and support for Thread and Matter protocols, enhancing interoperability [55]. - The company has invested in R&D to improve energy efficiency, deploying low energy IR-engine technology to extend battery life in products [80]. - The company aims to expand QuickSet Cloud software penetration in the TV OS market through new features like content personalization and privacy-first presence detection [212]. Financial Performance - The company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 15% year-over-year growth [110]. - User data indicates a 25% increase in active users, reaching 10 million by the end of Q3 2023 [110]. - The company anticipates a revenue growth of 10% for the next quarter, projecting $1.65 billion in Q4 2023 [110]. - Net sales decreased by 6.1% to $394.9 million in 2024 from $420.5 million in 2023 [208]. - Gross profit percentage increased to 28.9% in 2024 from 23.2% in 2023 [208]. - Operating expenses as a percentage of sales decreased to 32.7% in 2024 from 43.5% in 2023 [208]. - Operating loss was $15.3 million in 2024 compared to $85.3 million in 2023, with an operating loss percentage of 3.9% in 2024 versus 20.3% in 2023 [208]. Environmental and Sustainability Initiatives - The company is committed to reducing greenhouse gas emissions and has signed a Commitment Letter to the Science Based Targets Initiative (SBTi) in April 2024 [71]. - The company’s commitment to environmentally sustainable solutions includes the UEI Eterna line, which utilizes energy harvesting technologies [33]. - The company has established an executive-level Environmental Working Group to integrate environmental considerations throughout the product lifecycle [83]. - The company has implemented a product refurbishment program to reclaim, refurbish, and recycle pre-owned remote controls [81]. - The company has replaced volatile organic compounds emitting inks and paints with reduced-VOC paints at some manufacturing facilities [79]. Manufacturing and Supply Chain - The company has diversified its manufacturing footprint, opening a new factory in Vietnam in June 2023 and ceasing operations in certain PRC facilities [66]. - Manufacturing operations are located in multiple countries, including the PRC, Vietnam, Mexico, and Brazil, with reliance on third-party manufacturers posing potential risks [121]. - The largest integrated circuit supplier accounted for 11.5% of total inventory purchases in 2022, with no suppliers exceeding 10% in 2023 or 2024 [69]. - Supply chain disruptions are being monitored closely, with contingency plans in place to mitigate potential impacts on operations [110]. - The cost of raw materials and energy has experienced volatility, with recent increases in prices for silicon and plastic packaging potentially affecting earnings [178]. Compliance and Regulatory Risks - The company is compliant with the RoHS and REACH directives in the European Union, ensuring products meet environmental regulations [79]. - The company is exposed to risks related to international trade policies, including tariffs on goods imported from the PRC and Mexico, which may impact demand and margins [145]. - Compliance with climate change regulations may result in additional costs and affect competitiveness [144]. - The company operates in multiple jurisdictions, facing complex legal and regulatory compliance risks that could lead to significant liabilities [151]. - Anti-corruption laws and trade sanctions could increase operational costs and limit growth opportunities, potentially harming the company's reputation [150]. Strategic Growth and Acquisitions - The company plans to engage in strategic acquisitions and partnerships as part of its long-term growth strategy, with successful integration being crucial for realizing expected returns [136]. - The company is exploring potential acquisitions to bolster its technology portfolio, with a budget of $100 million allocated for this purpose [110]. - The company plans to build a long-term revenue pipeline by engaging with top 10 major HVAC OEMs for product design wins [212]. Cybersecurity and Data Protection - Cybersecurity measures are being enhanced, with an investment of $10 million to protect customer data and company assets [110]. - The company has developed cybersecurity risk management processes to identify and mitigate risks related to cybersecurity threats [181]. - The Board of Directors oversees cybersecurity strategies, with the Audit Committee responsible for reviewing risk management strategies and compliance [185]. Workforce and Labor Relations - Labor unions represent approximately 12.0% of the company's workforce, with unionized workers in Mexico and Brazil [90]. - The company has achieved Silver VAP Recognition Level in the RBA Validated Assessment Program audit in July 2024, reflecting its commitment to ethical labor practices [72]. - The company requires 50% of high-risk suppliers to complete an on-site third-party RBA VAP audit as part of its supplier risk assessment process [73]. - The company faces intense competition for qualified talent in the technology industry, which may impact its ability to attract and retain key employees [137]. Market Trends and Consumer Demand - The climate control industry is experiencing increased demand for smart thermostats driven by government incentives for energy-efficient technologies [42]. - The company has identified a 30% increase in demand for home automation products, driving strategic focus in this area [110]. - The home security and automation industry is highly competitive, with significant pricing pressures from established brands and DIY providers, which may affect market share and profitability [134].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported net sales of $110.5 million, a 13% increase from $97.6 million in Q4 2023, exceeding guidance [26] - Adjusted non-GAAP gross profit was $31.4 million, representing 28.4% of sales, compared to 28.5% in Q4 2023 [29] - Net income for Q4 2024 was $2.6 million or $0.20 per diluted share, compared to a net loss of $500,000 or $0.04 per share in Q4 2023 [30] Business Line Data and Key Metrics Changes - The connected home business saw increased momentum with new product shipments, particularly in climate control, contributing to revenue growth [11][13] - Home entertainment, including video service providers, showed slight growth in TV demand, particularly in North America and Western Europe, with improved order patterns [15] Market Data and Key Metrics Changes - The company is gaining traction in the connected home market, building relationships with major OEM brands in North America, Europe, and Asia [13] - Video subscriber declines at key accounts narrowed, reflecting new pricing and packaging strategies [15] Company Strategy and Development Direction - The company is focused on the connected home market, leveraging new technologies like QuickSet HomeSense and UEI TIDE platforms to enhance customer engagement and operational efficiency [18][21] - Management emphasized the importance of innovation and customer satisfaction in driving long-term growth, particularly in HVAC and home automation sectors [35][86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the connected home market's growth potential, citing a strong pipeline of new projects and customer interest [35][96] - The company is cautious about economic uncertainties but remains committed to its growth projections for 2025 and beyond [36][62] Other Important Information - The company will no longer exclude certain manufacturing overhead costs from its adjusted non-GAAP figures, impacting gross profit and margins [8][25] - Legal matters regarding a court ruling against Roku were discussed, with the company planning to pursue further legal actions in 2025 [49][50] Q&A Session Summary Question: Details on climate control products and revenue recognition - Management explained that due to accounting rule changes, revenue for certain climate control products was recognized in Q4 2024 despite shipment occurring in Q1 2025, resulting in an additional $4 million in revenue for Q4 [39][40] Question: Guidance implications on expenses and gross margin - Management indicated that while Q1 typically sees lower production volumes affecting gross margins, the full-year outlook for gross margin remains unchanged at approximately 30% [42][43] Question: Customer concentration numbers - The company reported that Daikin accounted for 13.4% and Comcast for 10.7% of sales in Q4 [47] Question: Impact of tariffs on outlook - Management noted that tariffs are a complex issue but indicated that the company has already mitigated risks associated with production in China and is working on strategies for potential tariffs in the Americas [55][56] Question: Growth drivers for the year - Management highlighted that growth is expected from HVAC control and connected home products, with significant opportunities in the HVAC market [81][86] Question: Production capabilities in Vietnam - Management confirmed that the facility in Vietnam is capable of producing both home entertainment and connected home products, allowing for flexibility in production [70] Question: Enhanced monetization opportunities - Management discussed new technologies showcased at CES that could enhance monetization for OEMs by increasing user engagement and optimizing device functionality [72][75] Question: Future growth in HVAC business - Management expressed confidence that the connected home business, particularly HVAC, will become a significant part of the company's revenue in the coming years [94][96]

Company Performance - Universal Electronics reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.14 per share, and up from $0.07 per share a year ago, representing an earnings surprise of 42.86% [1] - The company posted revenues of $110.45 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8.61%, compared to year-ago revenues of $97.59 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 12.3% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The current consensus EPS estimate for the coming quarter is $0.15 on revenues of $101.8 million, and for the current fiscal year, it is $0.68 on revenues of $431.9 million [7] Industry Outlook - The Electronics - Miscellaneous Products industry, to which Universal Electronics belongs, is currently ranked in the bottom 48% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Universal Electronics' stock performance [5]