Universal Electronics Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Universal Electronics Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone keypad. As a reminder, this conference call is being recorded. If you require any further assistance, please press star then 0. At this time, I would like to turn the conference over to Ms. Kirsten Chapman, LHA Investor Relations. Ma'am, please begin.

Thank you, Howard, and thank you all for joining us for the Universal Electronics Fourth Quarter and Year-End 2021 Financial Results Conference Call. By now, you should have received a copy of the press release. If you have not, please contact LHA at 415-433-3777 or visit the Investor Relations section of the website. This call is being broadcast live over the Internet. A webcast replay will be available for one year at www.uei.com. Any additional updated material, nonpublic information that might be discussed during this call will be provided on the company's website, where it will be retained for at least one year. You may also access that information by listening to the webcast replay. During this call, management may make forward-looking statements regarding future events and the future financial performance of the company and cautions you that these statements are just projections and actual results or events may differ materially from those projections. These statements include the company's ability to timely develop and deliver new technologies and technology updates and related products introduced this year, including our expanded software capabilities around our world-leading QuickSet platform. comprehensive suite of thermostats, and our groundbreaking line of ultra-low power and energy harvesting remotes designed for sustainability that will be accepted by our existing customers and attract new customers. Our ability to manage the global supply chain issues and material shortages that our industries have been dealing with, which continue to have both a direct and indirect impact on our volumes. The continued successful collaboration with existing and new customers in developing and introducing next-generation products, operating systems, and technologies, which result in increased sales opportunities for the company. The continued trend of the industry toward providing consumers with more advanced technologies by offering hybrid platforms, expanded smart home offerings, and interactive services. Management's ability to continue to manage its business to achieve its net sales, margins, earnings, and the intrinsic value of all our stock is guided. the impact of the company's financial results that it may experience stemming from issues surrounding its Chinese workforce and inflationary pressures we are experiencing due to the worldwide supply chain shortages and the weakening of the U.S. dollar against the Chinese yuan, and the continued effects that natural disaster and public health crises, including COVID-19 pandemic, have on our business and our management's ability to anticipate and mitigate those effects. including the duration, severity, and scope of the COVID-19 pandemic and the actions and restrictions that may be imposed on the company and its operations by federal, state, local, and international public health and governmental authorities. The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date and refers you to the press release mentioned at the onset of this call and the documents the company files to the SEC, including its annual report on Form 10-K. In management's financial remarks, adjusted non-GAAP metrics will be referenced. Management provides adjusted non-GAAP metrics because it uses them for budget planning purposes and for making operational and financial decisions and believes that providing these non-GAAP financial measures to investors as a supplement to GAAP financial measures helps investors evaluate UEI's core operating and financial performance and business trends consistent with how management evaluates such performance and trends. In addition, management believes these measures facilitate comparisons with the core operating financial results and business trends of competitors and other companies. A full description and reconciliation of these adjusted non-GAAP measures versus GAAP is included in the company's press release issued today. On the call today are Chairman and Chief Executive Officer Paul Arling, who will deliver an overview, and Chief Financial Officer Brian Hackworth, who will summarize the financials. Paul will then return to provide closing remarks. is now my pleasure to introduce CEO Paul Arling. Please go ahead, Paul.

Good afternoon, and thanks for joining us. At UEI, our vision is to connect the home by blending entertainment with smart home control. We started 2022 by unveiling many of our latest products and technologies at the International Consumer Electronics Show, or CES, in Las Vegas. This included a comprehensive suite of smart thermostats, a groundbreaking line of ultra-low power and energy-harvesting remote controls designed for sustainability, and expanded software capabilities around our world-leading QuickSet platform. Customer reaction to our new suite of products, as well as our established, award-winning advanced technologies, has been and continues to be very positive, which bodes well for our long-term growth. However, as anticipated for the near term, Our financial results continue to be impacted by the global supply chain issues and materials shortages, which continue to have both a direct and indirect impact on our volumes. Our results in the fourth quarter were within the guidance range we provided on our last earnings call, and for the full year 2021, revenue was $601 million, gross margin was 30.2%, and net income was $49.4 million, or $3.59 per share. We continue to execute on our channel strategy by partnering with customers who are leaders in their respective industries. As an example, in consumer electronics, we have long established relationships with Samsung, Sony, and LG, who collectively represent about 40% of the world's televisions. Similarly, our footprint in video entertainment includes relationships with Comcast, Liberty Global, and Vodafone, who rank among the largest video service providers in their respective markets. Another long-term customer is Daikin, the market share leader in the global HVAC industry. We have worked alongside Daikin for more than 10 years, and they have consistently been at the forefront in delivering innovative connected thermostats and control solutions to their residential and commercial customers. In addition, we have recently expanded distribution of our wireless connectivity and control solutions by partnering with leading brands such as Vivint, Somfy, and Hunter Douglas that are channel leaders for their respective connected home categories. These channels represent strong long-term growth potential, and as their products and services gain market momentum, our position as a technology and manufacturing partner will serve us well. As I said earlier, we are excited about the new product solutions we introduced at CES. We showcased our new and enhanced offerings as well as our leadership in supporting and integrating device discovery, control, and interoperability across major ecosystems while improving user experiences across entertainment and smart home devices. I'll review a few of the key advantages we demonstrated and the products that exemplify them. One benefit is that our enhanced control capabilities extend our reach with whole home coverage across ecosystems and protocols. For example, Kwikset 5.0 enhancements already deliver a smart home dashboard in homes across the world and will now include the industry's latest smart home connectivity standard, Matter. Our technology seamlessly blends all communication protocols, legacy, existing, and future, into a unified experience. Another advantage is that our innovative solutions simplify user experiences. Nevo Butler, the versatile and award-winning multi-assistant-enabled entertainment and smart home hub built around our QuickSet platform, is the first digital assistant optimized for home control applications. Just last month, Vodafone Portugal announced it is launching the Nevo Butler entertainment and smart home hub to its residential TV and broadband customers. We also have other customers adopting the same platform for non-entertainment use cases as a versatile smart home hub. We expect to have more to announce on that later. In HVAC, we recently announced the expansion of our innovative an exciting line of smart and connected thermostats and accessories. This modular solution is designed to bring wireless control and sensing interfaces, which are traditionally mounted on a wall, to any room in the home, placing the user interface where the user is and sensing where it really matters. This platform also allows intuitive integration of thermostats and other devices and services in the home. The UEI comfort line, is a white label smart thermostat platform designed for HVAC OEMs as well as hospitality branded applications. In addition to our comfort line of connected thermostats, we also launched an expanded set of sensors and wireless adapters that extend the reach of this platform at a recent air conditioning heating and refrigeration expo trade show. Our cloud connected wireless connectivity technologies are also helping us grow in new such as smart home appliances with new customers. Those products will be introduced by our customers in late 2022 and begin shipping in quantities in 2023. As I noted earlier, we are excited to announce our latest control platform, Eterna, and related technologies that address the growing demand for sustainable products that reduce energy use and eliminate waste. These environmental concerns are quickly becoming corporate and government mandates that will impact our customers' product requirements. We are confident that these product introductions are well-timed to usher in another evolutionary wave in the life of the remote control. UEI has partnered with technology leaders and invested in bringing ultra-low power connectivity SOCs with built-in energy harvesting and photovoltaic cells to the market. This user-centered design creates a best-of-breed solution that delivers value to users and businesses and outperforms any competitor in the field. They integrate energy harvesting circuitry that recovers energy already present in consumer homes, such as natural and artificial lights and even radio frequencies from wireless devices. The chips deliver up to two and a half times more computing power, allowing for more more power-hungry features without compromising battery life. They consume up to 80% less battery power compared to traditional Bluetooth smart SOCs, enabling up to 10 times longer battery life. And they reduce battery waste as the ultra-efficient power management unit enables true self-powering to create a battery-for-life controller system. Innovations in ambient power devices in the home are the foundation of a sustainable and vibrant smart home that benefits users and businesses alike. No one wants to change batteries in 20 or 30 devices in their home, and we're starting to change that paradigm. Before I turn the call over to Brian, I'd like to review our recent legal win. In November 2021, the U.S. International Trade Commission found Roku in violation of one of our QuickSet patents. resulting in the issuance of a limited exclusion order, meaning they could no longer import product with our technology, and a cease and desist order, meaning they could no longer sell their streaming products with our technology embedded. As a result, Roku has decided to modify the universal control functionality on their streaming products, creating a less user-friendly setup experience and degrading the control functionality of their platform. Consequently, Roku has created widespread frustration amongst users who are struggling to control their connected devices, including televisions. With the ITC matter successfully behind us, we can now turn our attention to the two related district court cases we have against Roku that have been stayed pending the conclusion of our ITC action. I'll now turn the call over to our CFO, Brian Hackworth, for a review of the financials. Please go ahead, Brian. Thank you, Paul.